STUDY ON PERFORMANCE OF MUTUAL FUNDS

A Project Submitted to

University of Mumbai for partial completion of the

Degree of Bachelor in Management Studies

Under the Faculty of Commerce

By

NIKITA SUNDER PARBAT

Roll No. 440

Under the Guidance of

MS. NIKITA GHODVINDE

Jeevandeep Shaikshanik Sanstha Poi’s

Arts, Commerce and Science College, Goveli

Tal - Kaylan, Dist. - Thane

April 2021-2022

1
 CERTIFICATE

This is to certify that Mr. /MS Nikita Sunder Parbat has worked and duly

Completed her/his project for the degree of Bachelor in Management

Studies under the Faculty of Commerce and her/his project is entitled,

“A STUDY ON PERFORMANCE OF MUTUAL FUNDS”

Under my Supervision.

Name and signature of Guiding Teacher

Date of submission:

2
 DECLARATION BY STUDENT

I, the undersigned Miss / Mr. Nikita Sunder Parbat hereby,

Declare that the work embodied in this project work titled

“A Study on Performance of Mutual Fund”, forms my own

Contribution to the research work carried out

Under the guidance of Ms. Nikita Ghodvinde is a result of

My own research work and has not been previously submitted

To any other University for any other Degree/ Diploma to this or any other

University.

Wherever reference has been made to previous works of others,

It has been clearly indicated as such and included in the bibliography.

I, here by further declare that all information of this document has been obtained

And presented in accordance with academic rules and ethical conduct

Nikita Sunder Parbat

Name and Signature of the learner

Certified by

Name and Signature of the Guiding Teacher

3
 ACKNOWLEDGMENT

To list who all have helped me is difficult because they are so numerous

And the depth is so enormous.

I would like to acknowledge the following as being idealistic channels

And fresh dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me

Chance to do this project.

I would like to thank our Director (Education) and Principal for providing

The necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator, for his moral support

And guidance.

I would also like to express my sincere gratitude towards my project

Guide Ms. Whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various

Reference books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or

Indirectly helped me in the completion of the project especially

My Parents and Peers who supported me throughout my project.

4
 EXECUTIVE SUMMERY

A mutual fund is a scheme in which several people invest their money for a common
financial cause. The collected money invests in the capital market and the money, which they earned, is
divided based on the number of units, which they hold.

The mutual fund industry started in India in a small way with the UTI Act creating what
was effectively a small savings division within the RBI. Over a period of 25 years this grew fairly
successfully and gave investors a good return, and therefore in 1989, as the next logical step, public sector
banks and financial institutions were allowed to float mutual funds and their success emboldened the
government to allow the private sector to foray into this area.

The advantages of mutual fund are professional management, diversification, and

economies of scale, simplicity, and liquidity. The disadvantages of mutual fund are high costs, over-
diversification, possible tax consequences, and the inability of management to guarantee a superior return.

The biggest problems with mutual funds are their costs and fees it include Purchase fee,
Redemption fee, Exchange fee, Management fee, Account fee & Transaction Costs. There are some loads
which add to the cost of mutual fund. Load is a type of commission depending on the type of funds.

Mutual funds are easy to buy and sell. You can either buy them directly from the fund
company or through a third party. Before investing in any funds one should consider some factor like
objective, risk, Fund Manager’s and scheme track record, Cost factor etc.

There are many, many types of mutual funds. You can classify funds based Structure
(open-ended & close-ended), Nature (equity, debt, balanced), Investment objective (growth, income, money
market) etc.

A code of conduct and registration structure for mutual fund intermediaries, which
were subsequently mandated by SEBI. In addition, this year AMFI was involved in a number of
developments and enhancements to the regulatory framework.

5
 INDEX

Chapter No. Content Page No.

1 Introduction 7-35

 Topic 7
 What is a mutual fund? 8
 Definition 9
 History of mutual fund 10
 Types of mutual fund schemes in India 12
 Advantage of mutual fund 17
 Who started mutual funds 19
19
 Who started mutual funds in India
20
 How to invest in mutual fund in India
22
 Factors affecting mutual fund decision 25
 Reliance Mutual Fund (RMF) 31
 UTI Mutual Fund In India

2 Research and Methodology 36-39

 Objective 36
 Hypothesis 37
 What are the limitation of Mutual Fund 38

3. Review of Literature 40-42

4. Data, Analysis and Interpretation 43-56

 Large Cap Funds 43

 Mid Cap Funds 46
 Small Cap Funds 49
 Graphs on Questions 52

5. Chapter no 5 57-58

 Suggestions 57
 Findings 58
6. Chapter no 6 59-60

 Conclusion 59
 Bibliography 60
7. Annexure 61

6
CHAPTER NO. 1:- INTRODUCTION

TOPIC:-
In today’s world every person earns money. At the end of the month, he gets his salary. Some people have
money from their own business. Money should be saving for our future.

Now the question is where to keep the money?

There are many investment ways available in the financial market for an investor. Some people can invest in
saving bank accounts, fixed deposits, stock market, bonds, equity shares and as well as mutual funds.

SAVING BANK ACCOUNT:-

The bank pays you interest on your balance. The saving accounts are that they offer low interest rates. It
means LOW RISK and also LOW RETURN.

FIXED DEPOSITS:-
Fixed deposit is an investment instrument offered by banks. Non-banking financial companies also provide
services to their customers to help them to save their money. It provides investors a higher rate of interest
than a regular saving account. Fixed deposit provides a LOW RISK and LOW RETURN.

STOCK MARKET:-
The stock market refers to the collection of exchanges and other ways where the buying, selling and issuance
of shares publicly held companies take place. Stock market provides HIGH RISK and also HIGH
RETURN.

BONDS:-
A bond is one of the fixed income investment products that represent a loan given to a borrower by the
investors. Bond provides LOW RISK and HIGH RETURN.

EQUITY SHARES:-
Equity shares are the ordinary shares. Equity shares are the company representing the part of ownership of
the shareholder in the company. The rate of dividend is fixed. It means HIGH RISK and HIGH RETURN.

MUTUAL FUNDS:-
A mutual fund is that pool money from multiple investors and invests the collected in shares of companies.
Mutual fund provides LOW RISK and HIGH RETURN.

Indian parents do not believe in stock market. They always prefer to preserve their money. They
always want a safer side which means LOW RISK and HIGH RETURN. Each and every person wants to
gain profit. People should know how much risk is there in stock market. Today’s generation unknowingly

7
believe in stock market and any other investment. Since over a year mutual funds are most useful and
convenient investment way for investors.
That’s why I want to STUDY ON PERFORMANCE OF MUTUAL FUNDS.

WHAT IS A MUTUAL FUND?

A mutual fund is collective investment that allows many investors with a common objective. To
pool individual investments and give to professional manager who in turn would invest these money in line
with common objective. A mutual fund is company that conducts together money from many people and
invests it in stocks, bonds or other assets.
Mutual funds are trusts, which accept savings from investors and invest the same in diversified
financial instruments. In terms of objectives set in the trusts act with the view to reduce risk and maximize
income and capital appreciation for distribution for the members. A mutual fund is a corporation and the
fund manager’s interest is to professionally manage the funds provided by investors and provide a return on
them after takeoff the reasonable management fees. The objective attempt to be achieved by mutual fund is
to provide an opportunity for lower income groups to acquire without much difficulty financial assets.

8
DEFINITION:-

“Mutual funds are collective savings and investment vehicles where savings of small investors are
pooled together to invest their mutual benefit and returns distributed proportionately”. A mutual fund is an
investment that pools your money with the money of an unlimited numbers other investors. The fund’s
assets are invested according to an investment objective into the fund’s portfolio of investments. 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 investment is
a risk free. This is because the money that is pooled are not invested only in debts funds which are less risky
but are also invested in the stock markets which involves a higher risk but can expect higher returns. The
money invested in various securities counting on the objectives of the mutual fund scheme and therefore the
profits or loss is shared among investors in proportion to their investment.
The mutual funds normally begin with the variety of schemes with different investment objectives
which are launched from time to time. A mutual fund is required to be registered with Securities and
Exchange Board of India [SEBI] which regulates securities markets before can collect funds from the
general public. A mutual fund may be trust that pools the savings of variety of investors who share a
standard financial goal. Mutual fund is responsive to a special set of regulatory, accounting and tax rules.
Unlike most other sort of business entities, they’re not taxed on their income as long as they distribute
considerably all of it to their shareholders. Sponsor must contribute at least 40% of the net worth of the
investment managed and meet the eligibility criteria prescribed under the Securities and Exchange Board of
India [mutual funds] regulation in 1996.
The mutual fund is constituted as a trust in accordance with the provisions of the Indian Trust Act,
1882 by the sponsor. Trustee is usually a company [corporate body] or a board of trustees [body of
individuals]. The main responsibility of the trustee is to safeguard the interest of the unit holders and also
ensure that AMC functions in the interest of investors. Mutual fund provisions of the trust deed and the offer
document of the respective schemes. The AMC is appointed by the trustees as the investment manager of the
mutual fund. The AMC is required to be approved by SEBI to act as an asset management company of the
mutual fund. The AMC is so authorized by trust deed appoints the registrar and transfer agent also handles
communications with investors and updates investor records. It needs of the individual investor it means
small and manage investors portfolio in manner that provides a regular income, growth, safety, liquidity and
diversification opportunities. Hedge fund involves a very high risk since it is mostly traded in the derivatives
market which is considered very volatile. Aggressive growth funds seek long term capital growth by
investing primarily in stocks of fast – growing smaller companies or market segments. “Aggressive growth
funds are also called Capital Appreciation Funds”. Mutual funds in India are regulated by the Securities and
Exchange Board of India [SEBI], and investing in mutual fund is considered to be the easiest way through
which you can increase your wealth.

9
HISTORY OF MUTUAL FUNDS IN INDIA:-

The Mutual Fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank. The history of mutual funds
In India can be broadly divided into four distinct phases-

FIRST PHASE – 1964-87:-

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up
By the Reserve Bank of India and functioned under the Regulatory and administrative control of
The Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial
Development Bank of India (IDBI) took over the regulatory and administrative control in place
Of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had
Rs.6, 700 crores of assets under management.

SECOND PHASE – 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS):-

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
Banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India
(GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed
by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank
Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in December
1990. At the end of 1993, the mutual fund industry had assets under management of Rs 47, 004
Crores.

THIRD PHASE – 1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS):-

With the entry of private sector funds in 1993, started in the Indian mutual fund
Industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in
Which the first Mutual Fund Regulations came into being, under which all mutual funds, except
UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI
(Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations
in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds
Setting up funds in India and also the industry has witnessed several mergers and acquisitions. As
At the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores.
The Unit Trust of India with Rs 44, 541 crores of assets under management was way ahead of
Other mutual funds.

FOURTH PHASE – SINCE FEBRUARY 2003:-

In February 2003, following the cancel of the Unit Trust of India Act 1963 UTI was
10
Divided into two separate entities. One is the Specified Undertaking of the Unit Trust of India
With assets under management of Rs 29, 835 crores as at the end of January 2003, representing
Broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified
Undertaking of Unit Trust of India, functioning under an administrator and under the rules
Framed by Government of India and does not come under the purview of the Mutual Fund
Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
Registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of
The erstwhile UTI which had in March 2000 more than Rs 76, 000 crores of assets under
Management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector funds, the
Mutual fund industry has entered its current phase of consolidation and growth. As at the end of
September, 2004, there were 29 funds, which manage assets of Rs 153108 crores under 421
Schemes.

11
TYPES OF MUTUAL FUNDS SCHEMES IN INDIA:-

Wide 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 flavors, being 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.

A. BASED ON 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 shell units at Net Asset Value [NAV] related prices.
The key feature of open-end schemes is liquidity. Open-ended fund is a collective investment scheme that
can issue and redeem shares at any time. Open-ended funds have no limits as far as number of units that
can be traded or the time period is concerned. Investors are allowing to trade and exist from the funds at their
own appropriacy.

Types of open-ended funds:-

 Mutual funds -

 Hedge funds – The term of “hedge” is used because these funds historically focused on hedging risk
by simultaneously buying and shorting assets in long short equity strategy. Hedge fund is a private
investment that uses diverse and complex proprietary products, including listed and unlisted
derivatives. Financially regulators generally restrict hedge fund marketing to institutional investors,
high net worth individuals and other investors are considered sufficiently sophisticated.

 Exchange traded funds [ETF] -

2. Close - Ended Schemes:-

Closing the fund, its management has stopped one way it can increase its assets or become
larger. A closed – end fund has a specify 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 on the stock
exchanges where they are listed. In order to provide an exist 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 exist routes is provided to the investor. The unit
capital that is to be invested in close-ended funds is fixed and therefore, it is not possible to sell more than
the predetermined number of units. The maturity occupation of the schemes is fixed.

Types of close-ended funds:-

 Perpetual funds
 Term funds
12
  Target term funds

3. Interval schemes:-
Interval schemes combine the features of open-ended and close-ended funds. 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. Interval schemes can be purchase only at specific intervals as determined by the company.
These are open for investment for a certain period of time. Usually, the investors need to stay invested for at
least 2 years.
Fixed maturity plans or FMP’s are examples of these types of schemes.

B. BASED ON ASSET VALUE:-

1. Equity fund:-
Equity funds make investments mainly in stock of companies. Equity funds are the most of
investors as these offer high return and quick growth and it is safe. These funds are a great investment
option for capital appreciation as they have the capacity for long term wealth creation. The structure of the
fund changes in different for different schemes and the fund manager’s point of view on different stocks.
Equity investment are meant for a longer time horizon, thus equity funds rank high on the risk-return matrix.
If you have a long term goal [five years or more], then it is better to invest in equity funds. Equity funds are
also known as stock funds.

Rate of return some of the companies –

Aditya Birla Sun Life Digital India Fund

5 Yr. Returns – 33.13 %
3 Yr. Returns – 39.8 %

ICICI Prudential Technology Fund

5 Yr. Returns – 33.06 %
3 Yr. Returns – 38.92 %

Equity funds are completely safe. NO mutual fund house can steal your money because it is regulated and
supervised by the SEBI.

The equity funds are sub-classified depending upon their investment objective, as follows:
 Diversified Equity Funds – A diversified fund is an investment fund that is broadly invested across
the multiple market sectors, assets or geographic regions. Diversified funds are the good for investors
who are not willing to take much risk to invest in small stocks, but still want a kick of extra high
return from emerging stocks.

 Mid-Cap Funds – Mid cap is the term given to companies with a market cap [capitalization] or
market value. For the companies, some of the engaging features of mid cap companies are that they
are expected to grow and increase profits, market share.

13
  Sector Specific Funds – Mutual funds which invest in a particular sector or industry are said to be
sector specific funds. Investment in one particular type of sector, they offer less amount of
diversification and are considered to be risky.

 Tax Savings Funds – Tax saving mutual funds are just like any other mutual funds with an added tax-
saving benefit. The investment in the tax saving mutual funds is eligible for tax benefits under
section 80C of the Indian Income Tax Act. This is the only scheme which allows investors to save on
tax earing high returns from investment in equity funds.

2. Debt fund:-
A debt fund is an investment pool such as a mutual fund or exchange traded fund, in which the core
holdings comprise fixed income investments. A debt fund may invest in short term or long term bonds,
securitized products, money market instruments or floating rate debt. Investors should prefer debt funds
having shorter maturity in profiles in rising interest rate regime as their lower average maturity makes them
less sensitive to interest rate changes. Debt funds mainly invest in low risk fixed income instruments such as
government securities. Since these funds come with a fixed maturity date and interest rate these are ideal for
investors with low risk appetite. It is likely that funds with less than 3 years duration outperform funds with
longer maturities. The objective of these funds is to invest in debt papers. Government authorities, private
companies, banks and financial institutions, these funds ensure low risk and provide stable income to
the investors.

Debt funds are further classified as:

 Gilt Funds – Gilt funds are conservative, low yield investments that also carry very low risk. The
government bonds used to be issued in golden-edged certificates. The nickname gilt comes from
glided edged certificate. Gilt funds’ investments are made to the government, they are
considered to be safe. Invest their corpus in securities issued by government commonly 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. Income funds are a class of debt mutual funds that invest
in corporate bonds, governments bonds and money market instruments. Income funds pay any
profits directly to the investor as cash. These funds will use the initials “Inc.” for Income or “Div.”
for dividend in the fund name. Growth funds automatically reinvest any profits back into the fund.
This helps the fund grow over time.

 Monthly Income Plan – A monthly income plan [MIPs] is a type of mutual fund strategy that invest
primarily in debt and equity securities with the command of producing cash flow and preserving
capital. An MIP aims to provide a stable stream of income in the form of dividend and interest
payments. MIP is a debt of mutual fund scheme which invests a small part of the funds (15-25 per
cent) in equities. It offers regular income in the form of periodic (monthly, quarterly, half-
yearly) dividend payouts. Invests it 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 schemes
rank little high on the risk-return matrix when compared with other debt schemes.

14
  Short Term Plans – Short term plan is for investment perspective 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 debenture.

 Liquid Funds – Liquid funds are also known as Money Market Schemes. Liquid funds are debt funds
that invest in fixed income securities such as certificates of deposits, treasury bills, commercial
papers and other debt securities that mature within 91 days. A liquid fund is an efficient financial
instrument to invest or park money for a short span of time that may be needed in a few weeks or
months later. These funds provide easy liquidity and preservation of capital. These schemes rank
low on risk return matrix and are the considered to be the safest amongst all categories of mutual
funds.

3. Balanced Fund:-
Balanced funds are a class of mutual funds that contain a bond (debt) component and a stock
(equity) component in a specific ratio in a single portfolio. They invest in both equity and fixed income
securities. Equity part provides growth and the debt part provides stability in returns. These mutual funds
help investors diversify their portfolio by investing in asset classes such as equity and debt. Balance funds
are also known as Hybrid Funds. The safest the balanced funds are the MIPs as they consistently maintain
high exposure to debt. 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. BASED ON INVESTMENT OBJECTIVE

1. Growth Scheme:-
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 a short term decline in value for possible future appreciation. These funds
invest in large portion of their capital into stocks of companies having above average growth. The returns
are offered by these funds are relatively high, but risk involved with also quite high.

2. Income Schemes:-
Income schemes are also known as debt schemes. The aim of these schemes is to provide
regular and stable 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. The corpus of income
funds is invested in a combination of high dividend generating stocks and government securities. These
funds focus to offer regular income and impressive returns to investors investing for more than two years.

3. Money Market Schemes:-

Money market refers to a section of the financial market where financial instruments with high
liquidity and short-term maturities are traded. Money market schemes aim to provide is easy
liquidity, preservation of capital and average income. These schemes generally invest in safer, short-term
instruments, such as treasury bills, certificates of deposit, commercial paper and inter-bank call money.

15
D. BASED ON OTHER SCHEMES:-

1. Tax Saving Schemes:-

Tax saving schemes is the best way to make investments to save tax by claiming deductions
available under the provisions of the Income Tax Act, 1961. The tax saving schemes is providing
platform to the taxpayers through which they can easily save tax. The investment in the income tax
deductions are a way to save tax legally.

2. Index Schemes:-
Index schemes attempt to repeat the performance of a particular index such as the BSE Sensex or the NSE
50. The portfolio of these schemes wills consistency only those stocks that constitute the index. The
percentage of each stock to the total holding will be identical to the stocks index weightage. Hence, the
returns from such schemes would be more or less equivalent to those of the index.

16
ADVANTAGE OF MUTUAL FUNDS:-

If mutual funds are appeal as the favorite investment vehicle, it is because of the many
advantages they have over other forms. The ways of investing, particularly for the investor who has limited
resources available in terms of capital and the capacity to carry out detailed research and market examine.

The following are the major advantages offered by mutual funds to all investors:

1. Diversification:-
Diversification is the act of investing in a variety of different industries, areas and financial
instruments in order to reduce the risk that all the investment will drop in price at the same time. It aims to
maximize returns by investing in different areas that would each react differently to the same event.
This diversification reduces the risk because the rarely do all stocks decline at the same time and in the same
proportion. You achieve this diversification through a mutual fund with far less money than you can do on
your own. One golden rule of investing for both large and small investors is to go for asset diversification.
That involves reducing the risk to your assets by buying a mix of stocks from different types. For example,
buying both retail and industrial stocks reduces the impact on your portfolio of a poor quarter in one
of those sectors. The putting of your money in bonds protects you from a precipitous drop in stocks.

2. Professional Management:
Investors may not have time. They have lack of knowledge. Resources to conduct their
research and purchase of individual stocks or bonds. Professionally managers who have the expertise,
experience and resources to actively buy, sell and examine investment. A fund manager continuously
examines investments and rebalances the portfolio accordingly to meet the schemes objective. Mutual funds
provide in the services of experienced and skilled professionals, backed by a dedicated investment research
team that analyses the performance and prospects of companies. Few investors have the skill and
resources of their own to succeed in today’s fast moving, global and modern markets. Fund manager is
one of the most important advantages of mutual fund.

3. Risk Diversification:-
Buying shares in a mutual fund is an easy way to diversify your investments across many
securities and asset categories such as equity, debt and gold which helps in spreading the risk. This proves to
be beneficial when an underlying security of a given mutual fund scheme experiences market headwinds. If
one investment in the portfolio decreases in value, other investments may not be impacted and may even in
increase in value. While investing in the pool of funds with investors, the potential losses are also shared
with other investors.

4. Liquidity:-
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 investment any time, by selling their units to the
fund if open-ended. Selling them in the market if the fund is close-ended. Liquidity of investment is clearly
big benefit. The redemption in open-ended mutual fund schemes of the amount is credited in your bank
17
account within one day to 3-4 days, depending upon the type of schemes. Those units of close-ended
mutual fund schemes can be redeemed only on maturity. ELSS has a 3 year lock in period and can be
liquidated only thereafter.

5. Transparency:-
Investors get regular information on the value of your investment in addition to disclosure on the
specific investment made by the scheme. The proportion invested in each class of assets and the fund
managers investment strategy and outlook. Transparency helps to shows investors how much risk is
involved with buying stocks. Which can help in making more informed investment decisions?
Transparency is not just one way interaction making your processes visible to your organization can also
help facilitate and encourage feedback from your employees, allowing you to gain valuable insight into
capable areas for strategic improvement.

6. Well Regulated:-

All mutual funds are required with SEBI and they function within the provisions of strict
regulations designed to protect the interest of investors. The operations of mutual funds are regularly
monitored by SEBI.

7. Flexibility:-
The features such as regular investment plans, regular withdrawal plans and dividend
reinvestment plans, one can systematically invest or withdraw funds according to your needs and
convenience. 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.

8. Tax Benefits:-
The tax benefits associated with a particular type of mutual fund is maybe the most investors to
this investment vehicle. To encourage investments in mutual funds, the Government of India offers several
tax benefits. For e.g., investment in Equity Linked Saving Schemes (ELLS) qualify for tax deduction under
section 80C of the Income Tax Act. The only warning here is that the instrument comes with lock in period
of 3 years, which means that you would not be able to access the invested funds during this period.

9. Reduction of Transaction Costs:-

The risk is also known as transaction costs. The investor bears all the costs of investing such
as brokerage or custody of securities. When going through a fund, investor had the benefits of economies of
scale. The funds pay lesser costs because of larger volumes, a benefit passed on to its investors.

10. Choice of Schemes:-

Mutual funds offer a family of schemes to suit your changing needs over a lifetime.

18
WHO STARTED MUTUAL FUNDS?
The concept of mutual funds was invented in Europe in early 1770s. During an expose
economic situation, Adrian Van Ketwich. A Dutch merchant created the world’s first mutual fund in 1774.
He pooled money from several individuals and created diversified funds of bonds. He named it “Eendragt
Maakt Magt”, which translates to “Unity Creates Strength”. The issue was successful and van ketwich
introduced his second fund, “Concordia Res Parvae Crescent” in 1779 with more freedom in investment
policy. Van Ketwich’s fund survived until 1824. The vehicle he created is still considered to be a hallmark
of personal investing more than two centuries later. They early mutual fund bouquet was close-ended in
nature. It spread from the Netherlands to England and France before heading to the U.S. in the 1890s.

WHO STARTED MUTUAL FUNDS IN INDIA?

The Mutual Fund industry in India started in 1963 with the formation of UT I in 1963 by an
Act of Parliament. The function of the mutual fund under regulatory and administrative control of the
Reserve Bank of India (RBI). The first mutual fund scheme that was introduced in India by Unit
Trust Scheme (UTI) was in the Unit Scheme (1964). UTI had Assets under Management worth Rs. 6,700
Crores by the end of the year 1988.

MUTUAL FUND ELIGIBILITY:-

Investments in mutual funds can be made by variety of investors such as individuals,

partnership firms, Qualified Foreign Investors (QFIs), registered Foreign Institutional Investors (FIIs),
Persons of Indian Origin (POIs), Non-Resident Indians (NRIs), co-operative societies, Hindu Undivided
Families (HUFs), etc. To invest in mutual funds, applicants are required to be KYC compliant.

19
HOW TO INVEST IN MUTUAL FUND IN INDIA?
An increasing a number of individuals in India have taken to investing in mutual funds, but a good
percentage of the investors have no idea how to go about it. Here are some tips to help you kick-start your
investment in mutual funds:-

1. Identification of Goals:-

Before you put your money into an investment vehicle, it is important to identify your financial
goals. You must know how much money you wish to invest in order to achieve your goals. In case you have
short term goals and require funds, two to three years, debt schemes would be the way to go. In case you
have long term goals and require funds five years or so, equity schemes can help you achieve your goals.
Once you identify your goals, choosing the right funds becomes much easier.

2. Understanding the Various Schemes:-

As you already know, there is wide variety of mutual fund schemes within the equity and debt fund
universe. In order to choose the right scheme, you will have to take into consideration your risk appetite,
your investment horizon and your financial goals. Compare different schemes to find the ones that are in line
with your risk profile and your investment horizon.

3. Approaching Advisors:-

If you are investing in mutual funds directly by yourself, a fund advisor can be of great change in
helping you achieve your financial goals. Experienced advisors not only help in taking care of the
formalities, but they also suggest schemes that can help you generate returns. Many advisors also tend to
keep track of your investments, thereby enabling you to switch in case one of your investments is
underperforming.

4. Keeping your Documents Handy:-

All transactions made in the mutual funds domain must be well documented. It is necessary to be
compliant when transacting with mutual funds, which is just a due diligence of certain personal information
such as furnishing your photograph, address proof, PAN card as it is one of the requirements for investing in
mutual funds.

5. Considering the Risk Factor:-

Considering the wide variety of mutual funds on offer, make sure you pick only those that cater
to your risk appetite. The higher the returns offered by scheme, the higher the risk associated with it,
therefore, making it important to ensure that you choose your funds wisely.

6. Plans and Options:-

Most mutual fund schemes come with options such as growth and dividend. When choosing a
scheme and the options under it, it is essential to consider your financial objectives to get the most out of
your investment. Growth options are ideal for those who want a large amount of money to meet their

20
financial objectives. Dividend options, on the other hand, are ideal for those who require profits at regular
intervals of time.

7. Considering your Age:-

The time frame for achieving your investment objective must be finalized before you invest in
mutual funds. As you grow older and approach retirement age, your exposure to stocks must be limited as it
will ensure that your capital is preserved. A professional fund manager can help investors better understand
where to invest your money.

8. Past Performance of Funds:-

The past performance of funds does not necessarily give you an insight into how it will perform in
the future. For example, IT and pharma funds were known for generating attractive returns over the past five
to ten years, but have been underperforming over the past year or so. The return accrued by funds in the past
does not guarantee their excellent performance in the future. However, their performance can be assessed
when choosing a scheme as schemes that have performed well in the past have better potential to generate
healthy returns in comparison with other funds. Studying a scheme’s performance over different market
cycles will help investors better understand which once could help you achieve profits.

21
FACTORS AFFECTING MUTUAL FUND DECISION
The various parameters that affect the decision making of investors in mutual fund industry can be
categorized as:-

1. Risk Factors:-

All the investments in the mutual fund and securities are subjected to market risk and the Net Asset
Value (NAV) of the schemes may change depending upon the factors and forces affecting the securities
market. In this respect, the offer documents/ SAI/ SID/ KIM may be helpful to the investors. All mutual
funds also required to disclose the risk factors in their offer documents which are faced by the funds and thus
by investors. All the risks associated in a mutual fund investment can be grouped as:

a. Market Risks:-

Stock prices are always sensitive to what is happening in an economy (local, national, international).
Performance of an economy has inverse connection with the risk involved. Market risk may include:

 Country Risk – The risk in foreign investment changes as per the political instability in a country
where the investment was issued.

 Political Risk – The risk in national investment changes because of political instability in home
country like political unrest, government regulations, terrorism and other social changes.

 Interest Risk – Long term and fixed income securities such as bonds and preferred stocks have the
greatest amount of interest rate risk. Short term securities like treasury bills and money market
instruments affected less.

 Currency Risk – It refers to the possibility changes in the price of one currency which will affect
another. If the currency of home country declines against foreign currency the investment will lose
value.

 Liquidity Risk - Liquidity risk refers to the possibility that an investor may not be able to buy or sell
an investment. When desired or in sufficient quantities because opportunities are limited. The
liquidity of stock depends upon the nature of the fund. Investment equity funds hold inconstancy
from time to time whereas debt funds hold a risk of interest rates.

 Credit Risk – This refers to the possibility that a particular bond issuer will not be able to make
expected interest rate payments and principal repayment. Credit risk occurs when bonds of a
particular company being downgraded by the rating agencies causing lower price. There is risk
whether the fund has been invested in higher grade investment securities as a company can default in
terms of paying interest or principal or both. It can also be tuned as default risk. A diversified
portfolio of investments is the best way to manage risk.
22
2. Return Factors:-

It is the percentage increase or decrease in the value of the investment in a particular period. The
return on mutual funds can be calculated in three different degrees: - To
these important distinctions investment firm has established itself as a dark horse within
the space of money services worldwide and grown up quickly compared to others financial instrument. It
is wide accepted that mutual funds area unit extremely regulated and supply wonderful capitalist protection;
Government of Asian country |Bharat| Asian country |Asian nation} (GOI) through banking concern of India
(RBI) has created. Securities and Exchange Board of Bharat (SEBI) as a key body to formulate policies,
procedures and regulates the mutual funds and problems pointers from time to time. It notified laws issued
in 1993 were totally revised in 1996 publicly interest that magisterially regulates MF either promoted
by public or by personal sector entities as well as promoted by foreign entities. SEBI
approved plus Management Company (AMC) World Health Organization with following the rules manages
the funds by creating investments in numerous kinds of securities and registered the defender World Health
Organization holds the securities of assorted schemes of the fund in its custody.

 Absolute Return (Point to Point Return) - Absolute return is the simple increase (or decrease) in
investment in terms of percentage. It does not take into account the time taken for this change. The
absolute return method is used if the tenure of investment is less than 1 year.
It is called NAV End - NAV Stat

 Compounded Annual Growth Rate (CAGR) - CAGR method is used to calculate return for the period
beyond one year for the investment in mutual funds. These are annualized in compounding effect.
Hence it is also known as Annualized Return.
It is calculated as 211 │ ⎨ │ ⎩ n T B 1 100 - ⎫ │ ⎬ │ ⎭ × Where n is no. of years, T is the terminal or
maturity value of investment and B is the start value or amount invested.

 Total Return - This method overcomes the limitation of Absolute Return by including dividends.
It is calculated as ⎧ ⎨ ⎩ D t + (NAV End - NAV Start) NAV Start ⎫⎬ ⎭ × 100 DT = Dividend received
per unit. Dividends that are distributed during the holding period are added to absolute change in
NAV and divided it by NAV on the starting date.

3. Liquidity Factors:-

Before the global financial crisis liquidity factors of any investment was not on everybody’s radar. Liquidity
risk can be categorized as:-

 Funding (cash flow) liquidity: - It tends to manifest a credit risk that is inability to fund liability
produces defaults. The basic ways of its measurement are current ratios and quick ratios.
 Market (Asset) liquidity: - It tends to manifests as market risks that are inability to sell an asset at
time of requirement i.e. the market price indecipherability of a stock. The market liquidity of an
investment can be measured in respect of width (bid ask spread), depth (position size) and resiliency.

4. Consistency Factors:-

The investments in mutual funds depend upon the need of the investor. For example, debt
investments may not be appropriate for investors of short term objectives. For medium to long term
23
 objectives, equity fund investments are advisable. Historical long term performance, while a good
indicator of fund’s potential, does not guarantee future performance. The consistency of a fund’s
performance can be measured in terms of its performance with respect to its benchmarks and category
average. In a bearish mode market, the returns may be negative, but the funds that fall less than their
benchmarks or category average are outperformers.

5. Awareness Factors:-

From investor’s point of view, the level of awareness of mutual funds can be termed as the
investors have been provided more funds, 50 per cent of the investors would like to invest in the Real Estate,
followed by 23 per cent in Mutual Funds and only 2 per cent in Equity Shares. Considering the importance
of investor awareness and protection, more so after the global economic meltdown, the government has
decided to set up a committee to increase awareness among investors. “The issue of investor awareness
and protection has been one of the main focus areas for regulators, government and other
stakeholder...the global financial crisis has further highlighted the importance of financial
awareness. It was accordingly decided to set up a committee,” the government said in a release. (ET
Bureau, 4 April 2009).

6. Specialization Factors:-

The financial knowledge is needed to fully participate in the economy or to make informed
decisions about own financial futures. A financial ignorant person suffers from financial diseases like
underinsurance, debt trap, insufficient retirement funds and low return on investment. This is lower than the
worldwide average of financial literacy, but roughly in line with other BRICS and South Asian nations.
There is a need to increase the share of money from each transaction that will increase the availability of funds
for organizing more seminars and creating financial literacy.

24
 RELIANCE MUTUAL FUND

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The
sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the Trustee. It was
registered on June 30, 1995 as Reliance Capital Mutual Fund which was changed on March 11, 2004.
Reliance Mutual Fund was formed for launching of various schemes under which units are issued to the
Public with a view to contribute to the capital market and to provide investors the opportunities to make
investments in diversified securities.

RMF is one of India’s leading Mutual Funds, with Average Assets Under Management
(AAUM) of Rs. 88,388 crs (AAUM for 30th Apr 09) and an investor base of over 71.53 Lacs. Reliance
Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of the fastest growing mutual
funds in the country. RMF offers investors a well-rounded portfolio of products to meet varying investor
requirements and has presence in 118 cities across the country.

Reliance Mutual Fund constantly endeavors to launch innovative products and customer service initiatives to
increase value to investors. "Reliance Mutual Fund schemes are managed by Reliance Capital Asset
Management Limited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up
capital of RCAM, the balance paid up capital being held by minority shareholders."

1. Sponsor: Reliance Capital Limited.

2. Trustee: Reliance Capital Trustee Co. Limited.

3. Investment Manager: Reliance Capital Asset Management Limited.

The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies Act 1956.

4. Vision Statement: “To be a globally respected wealth creator with an emphasis on customer care and a
culture of good corporate governance.”

5. Mission Statement: To create and nurture a world-class, high performance environment aimed at
delighting our customers.

6. Minimum Investment: In Reliance Mutual Fund is Rs. 500

7. Investment: a. in Equity-

i. Bank: 8-15%
ii. Software: 8-19%
iii. Petroleum Products: 4-8%
iv. Pharmaceuticals: 6-10%

25
b. Invest in 12-20 sectors which include-

Auto, Auto Ancillaries, Finance, Industrial Capital Goods, Telecom Services, Power, Construction Project,
Hotels, Retailing, Media & Entertainment, Transportation etc.

8. Numbers of schemes offered: 106 schemes

9. The Main Objectives of the Trust:

 To carry on the activity of a Mutual Fund as may be permitted at law and formulate and devise
various collective Schemes of savings and investments for people in India and abroad and also ensure
liquidity of investments for the Unit holders.
 To deploy Funds thus rose so as to help the Unit holders earn reasonable returns on their savings.
 To take such steps as may be necessary from time to time to realize the effects without any
limitation.

SCHEMES

A). EQUITY/GROWTH SCHEMES:

The aim of growth funds is to provide capital appreciation over the medium to long-term.
Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high
risks. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period
of time.

1. Reliance Infrastructure Fund (Open-Ended Equity):

The primary investment objective of the scheme is to generate long term capital appreciation by
investing predominantly in equity and equity related instruments of companies engaged in infrastructure
(Airports, Construction, Telecommunication, Transportation) and infrastructure related sectors and which
are incorporated or have their area of primary activity, in India and the secondary objective is to generate
consistent returns by investing in debt and money market securities.

2. Reliance Index Fund (Open-Ended Equity):

The investment objective of the Scheme is to generate capital appreciation through investment
in equity and equity related instruments. The Scheme will seek to generate capital appreciation by investing
in an active portfolio of stocks selected from S & P CNX Nifty on the basis of a mathematical model.
An investment fund that approach stock selection process based on quantitative analysis.

3. Reliance Natural Resources Fund (Open-Ended Equity):

The primary investment objective of the scheme is to seek to generate capital appreciation &
provide long-term growth opportunities by investing in companies principally engaged in the discovery,
development, production, or distribution of natural resources and the secondary objective is to generate
consistent returns by investing in debt and money market securities. Natural resources may include, for
example, energy sources, precious and other metals, forest products, food and agriculture, and other basic
commodities.

4. Reliance Equity Linked Saving Fund (A 10 Year Close-Ended Equity):

26
The primary objective of the scheme is to generate long-term capital appreciation from a portfolio
that is invested predominantly in equities along with income tax benefit. The scheme may invest in
equity shares in foreign companies and instruments convertible into equity shares of domestic or foreign
companies and in derivatives as may be permissible under the guidelines issued by SEBI and RBI.

5. Reliance Equity Advantage Fund (Open-Ended Diversified Equity):

The primary investment objective of the scheme is to seek to generate capital appreciation &
provide long-term growth opportunities by investing in a portfolio predominantly of equity & equity related
instruments with investments generally in S & P CNX Nifty stocks and the secondary objective is to
generate consistent returns by investing in debt and money market securities.

6. Reliance Equity Fund (Open-Ended Diversified Equity):

The primary investment objective of the scheme is to seek to generate capital appreciation &
provide long-term growth opportunities by investing in a portfolio constituted of equity & equity
related securities of top 100 companies by market capitalization & of companies which are available in the
derivatives segment from time to time and the secondary objective is to generate consistent returns by
investing in debt and money market securities.

7. Reliance Tax Saver (ELSS) Fund (Open-Ended Equity):

The primary objective of the scheme is to generate long-term capital appreciation from a
portfolio that is invested predominantly in equity and equity related instruments.

Tax Benefits:

• Investment up to Rs 1 lakh by the eligible investor in this fund would enable you to available the
benefits under Section 80C (2) of the Income-tax Act, 1961.
• Dividends received will be absolutely TAX FREE.
• The dividend distribution tax (payable by the AMC) for equity schemes is also NIL.

8. Reliance Growth Fund (Open-Ended Equity):

The primary investment objective of the Scheme is to achieve long term growth of capital by
investment in equity and equity related securities through a research based investment approach.

9. Reliance Vision Fund (Open-Ended Equity):

The primary investment objective of the Scheme is to achieve long term growth of capital by
investment in equity and equity related securities through a research based investment approach.

10. Reliance Equity Opportunities Fund (Open-Ended Diversified Equity):

The primary investment objective of the scheme is to seek to generate capital appreciation &
provide long-term growth opportunities by investing in a portfolio constituted of equity securities & equity
related securities and the secondary objective is to generate consistent returns by investing in debt and
money market securities.

11. Reliance NRI Equity Fund (Open-Ended Diversified Equity):

The Primary investment objective of the scheme is to generate optimal returns by investing in
equity or equity related instruments primarily drawn from the Companies in the BSE 200 Index.

12. Reliance Long Term Equity Fund (Open-Ended Diversified Equity):

27
 The primary investment objective of the scheme is to seek to generate long term capital
appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity &
equity related securities and Derivatives and the secondary objective is to generate consistent returns by
investing in debt and money market securities. It is a 36-month close ended diversified equity fund with an
automatic conversion into an open ended scheme on expiry of 36-months from the date of allotment. It aims
to maximize returns by investing 70-100% in Equities focusing in small and midcap companies.

13. Reliance Regular Savings Fund (Open-Ended Equity):

Reliance Regular Savings Fund provides you the choice of investing in Debt, Equity or Hybrid options with
a pertinent investment objective and pattern for each option. Invest as little as Rs 100/-every month in the
Reliance Regular Savings Fund. For the first time in India, your mutual fund offers instant cash
withdrawal facility on your investment at any VISA-enabled ATM near you. With a choice of three
investment options, the fund is truly, the smart new way to invest.

B). DEBT / INCOME SCHEMES:

The aim of income funds is to provide regular and steady income to investors. Such schemes
generally invest in fixed income securities such as bonds, corporate debentures, Government securities and
money market instruments. Such funds are less risky compared to equity schemes. These funds are not
affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also
limited in such funds. The NAV of such funds are affected because of change in interest rates in the country.

1. Reliance Monthly Income Plan:

(An Open Ended Fund, Monthly Income is not assured & is subject to the availability of
distributable surplus) The Primary investment objective of the Scheme is to generate regular income in order
to make regular dividend payments to unit holders and the secondary objective is growth of capital.

2. Reliance Gilt Securities Fund:

(Open-ended Government Securities Scheme) The primary objective of the Scheme is to

generate optimal credit risk-free returns by investing in a portfolio of securities issued and guaranteed by the
central Government and State Government.

3. Reliance Income Fund:

(An Open-ended Income Scheme) The primary objective of the scheme is to generate optimal
returns consistent with moderate levels of risk. This income may be complemented by capital appreciation of
the portfolio. Accordingly, investments shall predominantly be made in Debt & Money market Instruments.

4. Reliance Medium Term Fund:

(An Open End Income Scheme with no assured returns) The primary investment objective of
the Scheme is to generate regular income in order to make regular dividend payments to unit holders and the
secondary objective is growth of capital.

5. Reliance Short Term Fund:

(An Open End Income Scheme) The primary investment objective of the scheme is to
generate stable returns for investors with a short investment horizon by investing in Fixed Income Securities
of short term maturity.

6. Reliance Liquid Fund:

28
 (Open-ended Liquid Scheme) The primary investment objective of the Scheme is to generate
optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall
predominantly be made in Debt and Money Market Instruments.

7. Reliance Floating Rate Fund:

(An Open End Liquid Scheme) The primary objective of the scheme is to generate regular
income through investment in a portfolio comprising substantially of Floating Rate Debt Securities
(including floating rate securitized debt and Money Market Instruments and Fixed Rate Debt Instruments
swapped for floating rate returns). The scheme shall also invest in fixed rate debt Securities (including fixed
rate securitized debt, Money Market Instruments and Floating Rate Debt Instruments swapped for fixed
returns.

8. Reliance NRIS Income Fund:

(An Open-ended Income scheme) The primary investment objective of the Scheme is to
generate optimal returns consistent with moderate levels of risks. This income may be complimented by
capital appreciation of the portfolio. Accordingly, investments shall predominantly be made in debt
Instruments.

9. Reliance Liquidity Fund:

(An Open - ended Liquid Scheme) The investment objective of the Scheme is to generate
optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall
predominantly be made in Debt and Money Market Instruments.

10. Reliance Interval Fund:

(A Debt Oriented Interval Scheme) The primary investment objective of the scheme is to
seek to generate regular returns and growth of capital by investing in a diversified portfolio.

11. Reliance Liquid plus Fund:

(An Open-ended Income Scheme) The investment objective of the Scheme is to generate
optimal returns consistent with moderate levels of risk and liquidity by investing in debt securities and
money market securities.

C). SECTOR SPECIFIC SCHEMES:

These are the funds/schemes which invest in the securities of specified sectors or industries
e.g. Pharmaceuticals, Software, 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.

1. Reliance Banking Fund:

Reliance Mutual Fund has an Open-Ended Banking Sector Scheme which has the primary
investment objective to generate continuous returns by actively investing in equity/equity related or fixed
income securities of banks.

2. Reliance Diversified Power Sector Fund:

29
 Reliance Diversified Power Sector Scheme is an Open-ended Power Sector Scheme. The
primary investment objective of the Scheme is to seek to generate consistent returns by actively investing in
equity / equity related or fixed income securities of Power and other associated companies.

3. Reliance Pharma Fund:

Reliance Pharma Fund is an Open-ended Pharma Sector Scheme. The primary investment objective of the
Scheme is to generate consistent returns by investing in equity/equity related or fixed income securities of
Pharma and other associated companies.

4. Reliance Media & Entertainment Fund:

Reliance Media & Entertainment Fund is an Open-ended Media & Entertainment sector
scheme. The primary investment objective of the Scheme is to generate consistent returns by investing in
equity / equity related or fixed income securities of media & entertainment and other associated companies.

D). RELIANCE GOLD EXCHANGE TRADED FUND:

(An open-ended Gold Exchange Traded Fund) The investment objective is to seek to provide
returns that closely correspond to returns provided by price of gold through investment in physical Gold (and
Gold related securities as permitted by Regulators from time to time). However, the performance of the
scheme may differ from that of the domestic prices of Gold due to expenses and or other related factors.

30
 UNIT TRUST OF INDIA MUTUAL FUND

Unit Trust of India was created by the UTI Act passed by the Parliament in 1963. For more than two
decades it remained the sole vehicle for investment in the capital market by the Indian citizens. In mid-
1980s public sector banks were allowed to open mutual funds. The real vibrancy and competition in the
MF industry came with the setting up of the Regulator SEBI and its laying down the MF Regulations in
1993. UTI maintained its pre-eminent place till 2001, when a massive decline in the market indices and
negative investor sentiments after Ketan Parekh scam created doubts about the capacity of UTI to meet its
obligations to the investors. This was further compounded by two factors; namely, its flagship and largest
scheme US 64 was sold and re-purchased not at intrinsic NAV but at artificial price and its Assured Return
Schemes had promised returns as high as 18% over a period going up to two decades.

In order to distance Government from running a mutual fund the ownership was transferred to four
institutions; namely SBI, LIC, BOB and PNB, each owning 25%. UTI lost its market dominance rapidly and
by end of 2005 .When the new share-holders actually paid the consideration money to Government its
market share had come down to close to 10%.

A new board was constituted and a new management inducted. Systematic study of its problems role and
functions was carried out with the help of a reputed international consultant. Once again UTI has emerged as
a serious player in the industry. Some of the funds have won famous awards, including the Best Infra Fund
globally from Lipper. UTI has been able to benchmark its employee compensation to the best in the market.

Besides running domestic MF Schemes UTI AMC is also a registered portfolio manager under the SEBI
(Portfolio Managers) Regulations. This company runs two successful funds with large international investors
being active participants. UTI has also launched a Private Equity Infrastructure Fund along with HSH
Nord Bank of Germany and Shinsei Bank of Japan.

1. Vision: To be the most Preferred Mutual Fund.

2. Mission:

• The most trusted brand, admired by all stakeholders.

• The largest and most efficient money manager with global presence.
• The best in class customer service provider.
• The most preferred employer.
• The most innovative and best wealth creator.
• A socially responsible organization known for best corporate governance.

31
3. Assets under Management: UTI Asset Management Co. Ltd

4. Sponsor:

• State Bank of India

• Bank of Baroda
• Punjab National Bank
• Life Insurance Corporation of India

5. Trustee: UTI Trustee Co. Limited:

6. Reliability:

UTIMF has consistently reset and upgraded transparency standards. All the branches, UFCs and registrar
offices are connected on a robust IT network to ensure cost-effective quick and efficient service. All these
have evolved UTIMF to position as a dynamic, responsive, restructured, efficient and transparent entity,
fully compliant with SEBI regulations.

SCHEMES

A). EQUITY FUND

1. UTI Energy Fund (Open Ended Fund):

Investment will be made in stocks of those companies engaged in the following are:

• Petro sector - oil and gas products & processing.

• All types of Power generation companies.
• Companies related to storage of energy.
• Companies manufacturing energy development equipment related (like petro and power).
• Consultancy & Finance Companies.

2. UTI Transportation and Logistics Fund:

Investment Objective is “capital appreciation” through investments in stocks of the companies

engaged in the transportation and logistics sector. At least 90% of the funds will be invested in equity and
equity related instruments. At least 80% of the funds will be invested in equity and equity related
instruments of the companies principally engaged in providing transportation services, companies
principally engaged in the design, manufacture, distribution, or sale of transportation equipment and
companies in the logistics sector. Upton 10% of the funds will be invested in cash/money market
instruments.

3. UTI Banking Sector Fund (Open Ended Fund):

An open-ended equity fund with the objective to provide capital appreciation through
investments in the stocks of the companies/institutions engaged in the banking and financial services
activities.

4. UTI Infrastructure Fund (Open Ended Fund):

An open-ended equity fund with the objective to provide Capital appreciation through
investing in the stocks of the companies engaged in the sectors like Metals, Building materials, oil and gas,

32
power, chemicals, engineering etc. The fund will invest in the stocks of the companies which form part of
Infrastructure Industries.

5. UTI Equity Tax Savings Plan (Open Ended Fund):

An open-ended equity fund investing a minimum of 80% in equity and equity related
instruments. It aims at enabling members to avail tax rebate under Section 80C of the IT Act and provide
them with the benefits of growth.

7. UTI Growth Sector Fund – Services (Open Ended Fund):

An open-ended fund which invests in the equities of the Services Sector companies of the
country. One of the growth sector funds aiming to provide growth of capital over a period of time as well as
to make income distribution by investing the funds in stocks of companies engaged in service sector such as
banking, finance, insurance, education, training, telecom, travel, entertainment, hotels, etc.

8. UTI Growth Sector Fund – Software (Open Ended Fund):

An open-ended fund which invests exclusively in the equities of the Software Sector
companies. One of the growth sectors funds aiming to invest in equity shares of companies belonging to
information technology sector to provide returns to investors through capital growth as well as through
regular income distribution.

9. UTI Equity Fund (Open Ended Fund):

UTI Equity Fund is open-ended equity scheme with an objective of investing at least
80% of its funds in equity and equity related instrument with medium to high risk profile and up to 20%
in debt and money market instruments with low to medium risk profile.

B). INDEX FUND:

1. UTI Master Index Fund (Open Ended Fund):

UTI MIF is an open-ended passive fund with the primary investment objective to invest
in securities of companies comprising the BSE Sensex in the same weightage as these companies have in
BSE Sensex. The fund strives to minimize performance difference with the Sensex by keeping the tracking
error to the minimum.

2. UTI Gold Exchange Traded Fund (Open Ended Fund):

To endeavor to provide returns that, before expenses, closely track the performance and
yield of Gold. However the performance of the scheme may differ from that of the underlying asset due to
racking error. There can be no assurance or guarantee that the investment objective of UTI-Gold ETF will be
achieved.

3. UTI (Open Ended Fund):

To provide investment returns that, before expenses, closely correspond to the performance
and yield of the basket of securities underlying the S & P CNX Nifty Index.

C). ASSETS FUND

1. UTI Variable Investment Scheme:

33
 UTI VIS-ILP is an open ended scheme with the objective of providing the investors with a
product that would enable them to diversify their risks through a suitable allocation between debt and equity
asset classes and thereby generate superior risk-adjusted returns through a dynamic asset allocation process.

D). BALANCED FUND:

1. UTI Mahila Unit Scheme (Open Ended Fund):

To invest in a portfolio of equity/equity related securities and debt and money market
instruments with a view to generate reasonable income with moderate capital appreciation. The asset
allocation will be-

a. Debt: Minimum 70%, Maximum 100%

b. Equity: Minimum 0%, Maximum 30%.

2. UTI Balanced Fund (Open Ended Fund):

An open-ended balanced fund investing between 40% to 75% in equity / equity related
securities and the balance in debt (fixed income securities) with a view to generate regular income together
with capital appreciation.

3. UTI Retirement Benefit Pension Fund:

The objective of the scheme is to provide pension to investors particularly self-employed

persons after they attain the age of 58 years, in the form of periodical cash flow up to the extent of
repurchase value of their holding through a systematic withdrawal plan.

4. UTI CCP (Children Career Plan) Fund:

An open ended balanced fund with 70-100% investment in Equity. Investment can be made
in the name of the children up to the age of 15 years so as to provide them, after they attain the age of 18
years, a means to receive scholarship to meet the cost of higher education / or help them in setting up a
profession, practice or business or enabling them to set up a home or finance, the cost of other social
obligations.

5. UTI Charitable, Religious Trust and Registered Society:

Open-ended debt oriented Income scheme with an objective of investing not more than 30%
of the funds in equity related instruments and the balance in debt and money market instruments with low to
medium risk profile. The scheme is catering to the Investment needs of Charitable, Religious and
Educational Trusts as well as registered societies with the goal of providing regular income.

E). INCOME FUND (DEBT FUND)

1. UTI Bond Fund (Open Ended Fund):

Open-end 100% pure debt fund, which invests in rated corporate debt papers and government securities with
relatively low risk and easy liquidity.

2. UTI Floating Rate Fund STP (Open Ended Fund):

34
To generate regular income through investment in a portfolio comprising substantially of floating rate debt /
money market instruments and fixed rate debt / money market instruments.

3. UTI Gilt Advantage Fund LTP (Open Ended Fund):

To generate credit risk-free return through investments in sovereign securities issued the Central and a State
Government.

4. UTI Gilt Advantage Fund STP:

To generate credit risk-free return through investment in sovereign securities issued the Central and / or a
State Government.

35
 CHAPTER NO 2

RESEARCH METHODOLOGY

OBJECTIVE:-
 To know the mutual funds are able to provide reward to changeability and volatility.
 Identify the people invest in mutual funds.
 To study and analyze the impact of various demographic factors on investors attitude towards mutual
fund.
 To study about the factors (on the basis of rank) responsible for the selection of mutual funds as an
investment option.
 To analyze the factor which prevent investors from investing in mutual fund?
 To identify the scheme preference of investor.
 To identify the feature of investors look for mutual funds.

36
HYPOTHESIS:-
The study tests the following hypothesis in respect of performance evaluation of the Indian Mutual Funds:-

 The sample mutual funds are earning higher returns than the market portfolio returns (benchmark
returns) in term of risks.
 The sample mutual funds are offering the advantages of diversification and superior returns due to
selectivity to their investors.
 The investment objectives of the mutual fund schemes are related to their systematic risk and total
variability.

37
WHAT ARE THE LIMITATIONS OF MUTUAL FUND?
1. No Control Over Costs:-

An investor in a mutual fund has no control of the overall costs of investing. The investor pays
investment management fees as long as he remains with the fund, although 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 suffer in direct investing. However, this
shortcoming only means 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, bonds and other
securities. Investing through fund means investor delegates the decisions to find the 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 investor’s choice.

3. Managing A Portfolio Of Fund:-

Availability of a large number of funds can actually it means too much choice for the investor.
Investor may again need advice on how to select a fund to achieve investor’s objectives. Quite similar to the
situation when investor has individual shares or bonds to select.

4. Past Performance:-

Ratings and advertisements issued by companies are only an indicator of the past performance
of a fund. It is important to note that powerful past performance of a fund is not a guarantee of a similar
performance in the future. As an investor, you should analyze the investment philosophy, transparency,
ethics, compliance and overall performance of fund house across different phase in the market over a period
of time. Ratings can be taken as a reference point.

4. Wisdom of Professional Management:-

That is right, this is not an advantage. The average mutual fund manager is no better at picking
stocks than the average is non-professional, but charges fees.

5. Size:-

Some mutual funds are too big to find enough good investments. This is especially true funds
that focus on small companies, given there are strict rules about how much of a single company a fund may
own. If a mutual fund has Rs. 5000 crores to invest and is only able to invest an average of Rs. 50 crores in
each, then it needs to find at least 100 such companies to invest in; as a result the fund might be forced to
lower its standards when selecting companies to invest in.

6. Dilution:-

Dilution is the direct result of diversification. Mutual funds generally have such small
holdings of so many different stocks that insanely great performance by fund’s top holdings still doesn’t
make much of difference in a mutual fund’s total performance. Since investors have their money spread
across different assets the high returns earned does not make much of a difference. Thus, when we talk about
38
diversification as one of the key benefits of mutual fund. Over-diversification could be one of the major
limitations to investing in mutual funds.

7. Buried Costs:-

Many mutual funds specialize in buying in their costs and in hiring salesman who do not make
those costs clear to their clients. The value of mutual fund may fluctuate depending on the changing market
conditions. Furthermore, there are fees and expenses involved toward professional management of mutual
fund which is not the case for buying stocks or securities directly in the market. There is an entry load which
has to be borne by an investor when buying a mutual fund. Furthermore, some companies charge an exit cost
as well when an investor chooses to exit from a mutual fund.

39
 CHAPTER NO. 3

REVIEW OF LITERATURE

There are different factors that affect NAV of any mutual fund scheme. These factors are also
known as performance indicators. Past performance of mutual funds explains how the fund has performed in
the past and accordingly one can expect positive or negative performance in the future as well. Majority of
studies suggest that the mutual fund companies having high turnover have performed well than companies
with lower turnover. Expense ratio affects the performance of mutual funds positively. Mutual fund
companies with larger asset base are performing better than lower asset based companies. Out of the total
paper reviewed no clear relationship of load fee with performance was found. Literature suggests that the
investment style does have an impact on the performance of the mutual funds. Mutual fund managers also do
affect the performance of the mutual funds in many ways. Out of the total paper reviewed no clear
relationship of load fee with performance was found. Literature suggests that the investment style does have
an impact on the performance of the mutual funds. Mutual fund managers also do affect the performance of
the mutual funds in many ways. Literature support that the stock picking ability and Lengthy tenure of fund
managers are favorable for mutual funds’ performance. As per the literature available, performance of the
mutual fund is also related to its ownership style. Local mutual funds perform better than the foreign
mutual funds as they have better knowledge of the local market.

A successful Mutual Fund requires complete under- standing of the peculiarities of the Indian
Stock Market and also the psyche of the small investors. This study has made an attempt to understand the
financial behavior of Mutual Fund investors in connection with the preferences of Brand (AMC), Products,
and Channels etc. I observed that many of people have fear of investment in Mutual Fund. They think their
money will not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its related terms.
Mutual fund industry has still to struggle to gain more investors. Financial literacy among females
and youths will definitely bring a huge success to this industry. For that reason the government is looking
to provide financial studies in school level. Adults who are already mutual fund investors should not
withdraw from the same as they reach experience in the field. In Indian market where financial instruments
are capturing almost every unit of society, mutual fund industry has a great scope if it gives more attention to
some factors which will ultimately lead to satisfaction of investors which will help the mutual fund industry
to boom up. The organization to boost the mutual fund investment company shall educate the public to the
benefits of mutual funds through the advertisement, publicity campaigns having stall exhibition. The
District Adoption Program [DAP] and the Investor Awareness Program [IAP] done by each AMC are
aimed at improving awareness about mutual funds in locations that have nil or minimal penetration of
mutual funds. AMCs have held, 600 IAP across 250 cities covering 0.26 million participants in the first
six months of the current fiscal year. Today a lot of investment opportunities are available to the investors
in the financial markets. Investors can invest in corporate bonds, debentures, bank deposits, post office
schemes etc. But nowadays investors opt for portfolio managers to invest money on their behalf. These
portfolio managers are experts in stock market operations and invest the money in such a way that the
investors would get minimum assured returns.

Today many institutions are busy in providing wealth management services to the investors.
But these services are very costly. Thus in order to help the investor’s mutual funds provide a protective
shed to the small and big investors. The present study analyses the mutual fund investments in relation to
investor’s behavior. Investors’ opinion and perception has been studied relating to various issues like type of
mutual fund scheme, main objective behind investing in mutual fund scheme, level of satisfaction, role
of financial advisors and brokers, investors’ opinion relating to factors that attract them to invest in
mutual funds, sources of information, deficiencies in the services provided by the mutual fund
managers, challenges before the Indian mutual fund industry etc. This study is very important in order
to judge the investors’ behavior in a market like India, where the competition increases day by day due to the
entry of large number of players with different financial strengths and strategies. The present investigation
outlined that mostly the investors have positive approach towards investing in mutual funds. In order to
40
maintain their confidence in mutual funds they should be provided with timely information relating to
different trends in the mutual fund industry. For achieving heights in the financial sector, the mutual fund
companies should formulate the strategies in such a way that helps in fulfilling the investors’ expectations.
Today the main task before mutual fund industry is to convert the potential investors into the reality
investors. New and more innovative schemes should be launched from time to time so that investor’s
confidence should be maintained. All this will lead to the overall growth and development of the mutual
fund industry.

The performance of Equity schemes in terms of return, risk, and risk adjusted return. The results
indicate that the select schemes have provided the return between 0.12 to 0.683 percent per week during
the period 2002 to 2010. The overall weekly return works out 0.405 percent for this duration. The
average weekly return between 2002 and 2005 was 0.704 percent as against to 0.304 percent during 2006
and 2010. There is no significant difference in average weekly return across fund characteristics visa;
ownership, age and size. The overall risk measured through standard deviation was found 3.97 percent
during 2006-10 and 2.09 percent during 2002-05. Most of the schemes are found having beta less than one,
as the majority values fall between 0.6 and 0.9. It implies that these schemes tend to hold portfolios which
are less risky than the market portfolio. The coefficient of determination is found above 0.70 in majority of
schemes indicating a well diversification of schemes. According to Sharpe and Trey nor ratio, the select
schemes have succeeded in providing the risk premium. In terms of Sharpe ratio, 18 schemes
outperformed the benchmark out of 27 schemes. On the other, 23 schemes outperformed the
benchmark portfolio according to Trey nor ratio.

Out of total, 85% of the schemes have reported higher risk than the risk of benchmark markets.
The hypothesis of risk return relationship was also justified by the benchmark markets also. Risk adjusted
per- formance in terms of Sharpe and Treynor ratio showed that 60% of the fund schemes bear
positive values. The findings also revealed that majority of the schemes were adequately diversified. High
positive degree of correlation coefficient between Jensen’s measure and portfolio return and Famas measure
and portfolio returns also validated. Overall Reliance Pharma Fund (G), Reliance Banking Fund (G),
SBI One India Fund (Growth) is among the best performing funds among the sampled schemes, in
terms of all the different performance evaluation measures. The objective of the study was to empirically
investigate whether the above stated perceptions are valid in the Indian context. For this purpose six
hypotheses were tested. The performance of the 47 Balanced and 72 Income Funds were analyzed in terms
of Return, Risk, Return per Risk and Sharpe ratio over the past three years (2006, 2007 and 2008) during
which period the Indian Stock Market had witnessed much volatility. Further, the performance of these
funds was compared with that of the Market and Benchmark Indices.

Mutual funds appear to provide investment services for relatively low fees because they bundle
passive and active funds management together in a way that understates the true cost of active management.
In particular, funds engaging in closet or shadow indexing charge their investors for active management
while providing them with little more than an indexed investment. Even the average mutual fund, which
ostensibly provides only active management, will have over 90% of the variance in its returns explained by
its benchmark index. This article derives a method for allocating fund expenses between active and passive
management and constructs a simple formula for finding the cost of active management. Computing this
active expense ratio requires only a fund's published expense ratio, it’s R-squared relative to a benchmark
index, and the expense ratio for a competitive fund that tracks that index. At the end of 2004, the mean
active expense ratio for the large-cap equity mutual funds tracked by Morningstar was 7%, over six times
their published expense ratio of 1.15%. More broadly, funds in the Morningstar universe had a mean active
expense ratio of 5.2%, while the largest funds averaged a percent or two less.

Mutual Funds in India are financial instruments. A mutual fund is not an alternative investment
option to stocks and bonds; rather it pools the money of several investors and invests this in stocks, bonds,
money market instruments and other types of securities. The owner of a mutual fund unit gets a proportional
share of the fund's gains losses, income and expenses. Mutual Fund is vehicle for investment in stocks and

41
Bonds_ Each mutual fund has a specific stated objecd.ve. The fund's objective is laid out in the fund's
prospectus, which is the legal document that contains information about the fund, its history officers and its
performance. Some popular objectives of a mutual fund are: Fund Objective - What the fund will invest in
Equity (Growth Only in stocks; Debt (Income); Only in fixed-income securities; Money Market
(including Gilt) - In short-term money market instruments (including government securities);
Balanced - Partly in stocks and partly in fixed-income securities, in order to maintain a 'balance' in
returns and risk. The NAV is calculated on the total amount of the Mutual Funds in India. by dividing it
with the number of shares issued and outstanding shares on daily basis. The company that puts together a
mutual fund is called an AMC. An AMC may have several mutual fund schemes with similar or varied
investment objectives. The AMC hires a professional money manager, who buys and sells securities in line
with the fund's stated objective. The Securities and Exchange Board of India (SEW) mutual fund regulations
require that the fund's objectives are clearly spelt out in the prospectus_ In addition; every mutual fund has a
board of directors that is supposed to represent the shareholders' interests, rather than the AMC's.

Two possible methods that are presumed to be used by fund managers for generating superior
performance are identified as: - Market timing: - Market timing skills imply assessing correctly the direction
of the market, whether bull or bear, and positioning their portfolios accordingly. Stock selection: - Stock
selection skills involve micro forecasting, which generally forecasts price movements of individual stocks
relative to stocks and identification of individual stocks that are under-or over-valued relative to equities in
general. Most of the other works mentioned in the paper have used these two models (which we name as
traditional/unconditional models) or slight variations of the same for testing market timing and stock
selection abilities of the fund managers. Traditional models have taken the view that ‘any information’
correlated with the future market returns is superior information; in other words, they are unconditional
models. Person and Scat’s approach used basically the same simplifying assumptions as the traditional
models but they assumed, in addition, semi-strong form of market efficiency. The idea was to distinguish
between market timing based on public information from market timing information that is superior to the
lagged publicly available information variables. Although the academic literature on stock selection and
market timing ability of mutual fund managers is rich and spans several decades, not many studies exist on
this issue using emerging market data.

Stock selection is the center in investment decision-making and diversification. Investment

performance on stock selection related to the successful micro forecasting of company specific events.
It refers to the managers' ability to identify under or overvalued securities. The present study has examined
investment managers' stock selection abilities across fund characteristics as well as the persistence of such
performance. It has also investigated performance variability across measurement criteria and the benchmark
variability for a sample of 80 investment schemes for the five-year period, January 1998–December 2002.
On the whole, the results reported document significant statistical evidence for positive stock selection
abilities of Indian investment managers. They also point to the consistency of performance across the
measurement criteria.

42
 CHAPTER NO.:- 4

DATA, ANALYSIS INTERPRETATION

Large Cap Funds:-

These are those types of funds which invest their money in Large Blue chip Companies, having with a
market capitalization of more than ₹ 1000 crores. Investing in large cap fund may be a low risk return
preposition because such funds are widely research and information available. One among the advantage of
large cap funds are that they are less volatile than mid cap and small cap funds because investors are
investing in this types of fund for a long term prospective and help to stay these fund away from the
volatility of the markets.

Top performer under this category:

 Franklin India Blue Chip: Its Compounded Annualized Returns of last 5 years is 13.13%.
 L&T Equity Fund Growth: Its Compounded Annualized Returns of last 5 years is 15.0%.
 SBI Blue-chip Fund Regular Growth: Its Compounded Annualized Returns of last 5 years is
18.8%.
 ICICI Prudential Top 100 Fund Growth: Its Compounded Annualized Returns of last 5 years is
15.8%.
 UTI Equity Fund Growth: Its Compounded Annualized Returns of last 5 years is 17.4%.

1.1 Compound Annual Growth Rate (CAGR)

Year/Scheme Franklin India L&T Equity SBI Blue-chip ICICI UTI Equity
Blue Chip Fund Growth Fund Regular Prudential Top Fund Growth
Growth 100 Fund
Growth
Last 1 0.21 0.24 0.19 0.30 0.17
Last 2 0.18 0.22 0.23 0.20 0.19
Last 5 0.13 0.15 0.19 0.16 0.17

1.2 Standard Deviation

Year/Scheme Franklin India L&T Equity SBI Blue-chip ICICI UTI Equity
Blue Chip Fund Growth Fund Regular Prudential Top Fund Growth
Growth 100 Fund
Growth

Last 1 0.21 0.19 0.21 0.19 0.22

Last 2 0.26 0.22 0.23 0.22 0.24
Last 5 0.34 0.27 0.28 0.27 0.31

1.3 Beta

Year/Scheme Franklin India L&T Equity SBI Blue-chip ICICI UTI Equity
Blue Chip Fund Growth Fund Regular Prudential Top Fund Growth
Growth: 100 Fund
43
 Growth

Last 1 1 1 1 1 1
Last 2 0.96 1.06 0.91 0.98 0.98
Last 5 0.90 0.80 0.69 0.80 0.95

1.4 Sharpe Ratio

Year/Scheme Franklin India L&T Equity SBI Blue-chip ICICI UTI Equity
Blue Chip Fund Growth Fund Regular Prudential Top Fund Growth
Growth: 100 Fund
Growth
Last 1 0.74 0.84 1.05 0.86 0.81
Last 2 0.95 0.97 1.16 1.01 0.88
Last 5 1.22 1.17 1.38 1.22 1.13

GRAPHICAL REPRESENTATION ON PERFORMANCE OF MUTUAL FUND IN LARGE CAP

FUNDS

1.1. Franklin India Blue Chip Fund

2.2. L & T Equity Fund Growth

44
 3.3. SBI Blue-chip Fund Regular Growth

4.4. ICICI Prudential Top 100 Fund Growth

5.5. UTI Equity Fund Growth

45
2. Mid Cap Funds:-
This type of funds invest their money in medium sizes companies. Companies having market capitalization
between ₹ 500 crores to ₹ 1000 crores are come under the mid-cap companies. Mid-cap funds are very
volatile and tend to fall if the market is fall in bad times. But this provides good return in short term.

Top performer under this category:


 ICICI Prudential Mid-cap fund: Its Compounded Annualized Returns of last 5 years is 22.9%.
 Sundaram Select Mid-Cap Fund: Its Compounded Annualized Returns of last 5 years is 24.9%.
 Birla Sun life Mid-cap fund: Its Compounded Annualized Returns of last 5 years is 21.4%.
 L & T Mid-cap fund: Its Compounded Annualized Returns of last 5 years is 25.7%.
 SBI magnum Mid-cap fund: Its Compounded Annualized Returns of last 5 years is 27.5%. 5.3.

2.1 Compound Annual Growth Rate (CAGR)

Year/Scheme ICICI Sundaram Birla Sun life L & T Mid- SBI magnum
Prudential Select Mid- Mid-cap fund cap fund Mid-cap fund
Mid-cap fund cap fund
Last 1 0.39 0.44 0.39 0.44 0.32
Last 2 0.32 0.36 0.31 0.37 0.31
Last 5 0.22 0.24 0.21 0.25 0.27

2.2 Standard Deviation

Year/Scheme ICICI Sundaram Birla Sun life L & T Mid- SBI magnum
Prudential Select Mid- Mid-cap fund cap fund Mid-cap fund
Mid-cap fund cap fund
Last 1 0.19 0.19 0.19 0.17 0.17
Last 2 0.19 0.19 0.19 0.17 0.17
Last 5 0.23 0.23 0.23 0.21 0.21

2.3 Beta

Year/Scheme ICICI Sundaram Birla Sun life L & T Mid-cap SBI magnum
Prudential Select Mid-cap Mid-cap fund fund Mid-cap fund
Mid-cap fund fund
Last 1 1 1 1 1 1
Last 2 1.09 1.17 1.10 1.09 0.91
Last 5 0.91 0.91 0.91 1.19 1.19

2.4 Sharpe Ratio

Year/Scheme ICICI Sundaram Birla Sun life L & T Mid-cap SBI magnum
Prudential Select Mid-cap Mid-cap fund fund Mid-cap fund
Mid-cap fund fund
Last 1 1.30 1.41 1.28 2.17 1.95
Last 2 1.32 1.43 1.30 2.07 1.86
Last 5 1.59 1.72 1.57 2.58 2.32

GRAPHICAL REPRESENTATION ON PERFORMANCE OF MUTUAL FUND IN MID CAP

FUND
46
1.1. ICICI Prudential Mid-cap fund

2.2. Sundaram Select Mid-Cap Fund

3.3. Birla Sun Life Mid Cap Funds

4.4. L&T Mid-Cap Fund

47
5.5. SBI Magnum Mid Cap Fund

48
3. Small Cap Funds:
These types of funds are investing their money in small sizes companies. Companies having market
capitalization up to ₹ 500 crores come under the categories of small-cap companies. Small-cap funds are
more flexible than Mid-cap & Large-cap Funds. Its risk-return matrix is very high.

Top performer under this category:

 Reliance Small cap fund: Its Compounded Annualized Returns of last 5 years is 29.7%.
 DSP Black rock Small cap fund: Its Compounded Annualized Returns of last 5 years is 23.5%.
 Edelweiss Small cap fund: Its Compounded Annualized Returns of last 5 years is 25.2%.
 Mirae Asset Emerging Blue chip fund: Its Compounded Annualized Returns of last 5 years is
28.7%.
 Kotak Emerging Equity Scheme- Regular Plan: Its Compounded Annualized Returns of last 5
years is 24.3%

3.1 Compound Annual Growth Rate (CAGR)

Year/Sc Reliance DSP Black rock Edelweiss Small Mirae Asset Kotak Emerging
heme Small cap Small cap fund cap fund Emerging Blue Equity Scheme-
fund chip fund Regular Plan

Last 1 0.43 0.48 0.32 0.48 0.45

Last 2 0.40 0.35 0.33 0.38 0.38
Last 5 0.29 0.23 0.25 0.29 0.24

3.2 Standard Deviation

Year/ Reliance DSP Black rock Edelweiss Small Mirae Asset Kotak Emerging
Scheme Small cap Small cap fund cap fund Emerging Blue Equity Scheme-
fund chip fund Regular Plan

Last 1 0.18 0.17 0.16 0.17 0.16

Last 2 0.17 0.19 0.19 0.19 0.17
Last 5 0.21 0.23 0.23 0.23 0.21

3.3 Beta

Year/Sc Reliance DSP Black rock Edelweiss Small Mirae Asset Kotak Emerging
heme Small cap Small cap fund cap fund Emerging Blue Equity Scheme-
fund chip fund Regular Plan

Last 1 1 1 1 1 1
Last 2 1.22 1.05 1.16 0.97 1.06
Last 5 1.23 0.92 0.92 0.92 1.23

3.4 Sharpe Ratio

Year/Sc Reliance DSP Black rock Edelweiss Small Mirae Asset Kotak Emerging
heme Small cap Small cap fund cap fund Emerging Blue Equity Scheme-

49
 fund chip fund Regular Plan

Last 1 2.13 1.62 1.06 1.59 1.61

Last 2 1.99 1.78 1.27 1.75 1.65
Last 5 2.50 2.16 1.54 2.12 2.07

GRAPHICAL REPRESENTATION ON PERFORMANCE OF MUTUAL FUND IN SMALL CAP

3.1 Reliance Small-Cap Fund

3.2 DSP Blackrock Small-Cap Fund

3.3 Edelweiss Small cap fund

3.4 Mirae Asset Emerging Blue chip fund

50
3.5 Kotak Emerging Equity Scheme

51
DATA OR GRAPHS ON QUESTIONS

1 Analyzing according to Qualification

Interpretation:-

Out of my survey of 100 people, 71% of the investors are Graduates and 14% of the investors are Post
Graduates. Undergraduate investors is 10% and other of the investor is 5%, which may include persons who
passed their 10th or 12th standard invest in Mutual Funds.

2. Analyzing data according to awareness about Mutual Fund

Interpretation:-

From The total lot of 100 people, 96 people are actually aware of the fact of Mutual Fund and regular
investors of Mutual Funds.

4 people where there who have just heard the name or rather are just aware of fact of existence of the word
called Mutual Fund, but doesn’t know anything else about Mutual Funds.

3. Analyzing data according to from where they came to know about Mutual Funds

52
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 invest after being intimated by the Banks about the benefits of Mutual Fund.

4. Analyzing data according to return in Mutual Fund

Interpretation:-

Here from the Bar Graph it can be clearly stated that 70% of the investors feels that Mutual Fund has higher
returns than other investment options.

30% of the investors feel that Mutual Fund has lower returns than other investment options.

5. Analyzing data according to the mode of investment

53
Interpretation:

It can be clearly stated form the above pie chart that 82% of the investors like to invest in SIP (Systematic
Investment Plan), 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 short term
investment.

6. Analyzing data according to the duration of investment in Mutual Fund

Interpretation:

From this above pie chart it can be clearly stated that 45% and 30% of the people like to invest for 1 to 3
years duration and 4 to 6 years duration respectively, because of market fluctuations.

15% and 10% of the invest for 7 to 10 years duration and more than 10 years duration respectively, because
of their preference of higher of returns.

7. Analyzing data according to the mode of investment in different schemes

54
Interpretation:

Here from the pie chart it can be clearly stated that 50% of investors prefer to invest in Growth Fund.

Then 20% and 18% of the investors prefer to invest in Income and Debt Schemes respectively.

Lastly 12% of the investors prefer to invest in Tax Saving Schemes.

8. Analyzing data according to the liquidity of schemes

Interpretation:

Here from the Bar Graph it can be clearly stated that 70% of the investors feel that Open-Ended Mutual
Fund has flexible and easily liquidity than other investment.

And 30% of the investors feel that Close-Ended Mutual Fund has higher return and then other investment
options.

9. Analyzing according to Monthly Family Income

55
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.

Investors of around 39% with the monthly income of Rs. 20001-30000

Investors of around 18% with the monthly income of Rs. 10001- 20000

Investors of around with 0% in a <=10000

56
 CHAPTER NO 5

SUGGESTIONS, FINDINGS

SUGGESTIONS:-

 There should provide more awareness to the age group of 25-35 about Mutual Fund.

 Mutual Fund investment is subject to market risk so it is necessary to read all schemes related
documents clearly by investors.

 The duration of investment should be more than 6 years so that return percentage will be higher.

 Investment in Mutual Fund should be started from the age of 25-28 so the investor will get more
return than expected.

 Mutual Fund is the best platform to invest in the market with minimum risk and maximum return.

 At the present scenario, the balance scheme is the best way to invest in Mutual Fund like SIP, MIP.

57
FINDING:-

 Generally, people employed in Private Sectors and Businessman are more likely to invest in Mutual
Funds, than other people working in other professsions.

 Generally investors whose monthly income is above Rs. 20,000-30,000 are more likely to invest their
income in Mutual Fund, to preserve their savings of at least more than 20%.

 People generally like to save their savings in Mutual Fund, Fixed Deposits and Savings Account.

 Investors generally like to invest in Large Cap Companies like Reliance, SBI, etc. to minimize their
risk.

 The most popular medium of investing in Mutual Fund is through SIP and more people like to invest
in Balance Fund.

 Investors are most likely to hold Mutual Fund investments for the period of 1 to 3 years and 4 to 6
years.

 The main objective is most of the invetors is to preserve their income.

58
 CHAPTER NO 6

CONCLUSION, BIBLIOGRAPHY

CONCLUSION:-

 According to survey most of the people are aware about Mutual Fund hence it is proved.

 Investors are largely prefer to invest in Mutual Fund.

 Nowadays people are moving from investing in traditional approach to Mutual Fund, that is the
impact of Mutual Fund from past 3 years that there is high rate of investment in Mutual Fund.

 Investors feels that the Mutual Fund is highly liquid than the other investment available in the
market.

 Most of the investors prefer to invest in Mutual Fund because of low risk and high return.

 Investors are most likely to invest in large and public companies like SBI and Reliance.

 Investors generally like to invest for short period as per their convenience.

 This has also greater confidence among fund investors who are investing more into the market
through the mutual fund route than ever before.

 Reliance India Mutual Funds provide major benefits to a common man who wants to make his life
better than previous.

59
 BIBLIOGRAPHY

Reference Book:-
 The Mutual Fund Industry - Author R. Glenn Hubbard
 Mutual Funds – Ladder To Wealth Creation – Author Vivek K Negi

Website:

www.utimf.com

www.reliancemutual.com

www.amfindia.com

http://www.bluechipindia.co.in/

Search Engine:

www.google.com

www.yahoo.com

60
 ANNEXURE

Ques 1. What is your Qualification?

 Under Graduation
 Graduation
 Post Graduates
 Others

Ques. 2 Do you have any idea about Mutual Fund?

 Yes
 No

Ques. 3 From where you came to know about Mutual Fund?

 Advertisement
 Peer Group
 Banks
 Financial Advisors

Ques. 4 Is investment in mutual fund have higher return than others?

 Yes
 No

Ques. 5 Which mode of investment will you prefer?

 Long Term
 Short Term

Ques. 6 How long would you like to hold your mutual funds investment?

 1 to 3 years
 4 to 6 years
 7 to 10 years
 More than 10 years

Ques. 7 Which scheme would you prefer?

 Growth
 Income
 Tax Saving
 Debt

Ques. 8 Which ended scheme do you feel is good?

61
  Open Ended
 Close Ended

Ques. 9 What is your monthly family income?

 <=10000
 10001-20000
 20001-30000

62