Mutual Funds in India

MAJOR MUTUAL FUNDS IN INDIA
SPECIALIZATION: FINANCE
WELINGKAR INSTITUTE OF MANAGEMENT DEVELOPMENT AND RESEARCH
ACKNOWLEDGEMENT
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With immense pleasure I would like to present this report on MAJOR MUTUAL FUND IN INDIA I would like to thank Welingkar Institute of Management for providing me the opportunity to present this project. My Special thank to (Project Guide) for his valuable guidance, co-operation and for taking time out of his busy schedule to help me for completion of this project. Acknowledgement is due to my parents, family members, friends who have helped me directly or indirectly in the successful completion of the project. I would like to acknowledge my wife for her timely support whenever I required her help.
CERTIFICATE FROM GUIDE

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This is to certify that the project work titled MAJOR MUTUAL FUND IN INDIA is a bonafide work carried out by a candidate for
the post Graduate Diploma examination of the Welingkar Institute of Management under my guidance and direction.
SIGNATURE OF GUIDE NAME : DESIGNATION :
Date:
Place:
TABLE OF CONTENTS

TITLE PAGE ACKNOWLEGEMENT CERTIFICATE FROM THE GUIDE
1 2 3
A.
INTRODUCTION

Introduction to mutual fund and its various aspects Investment alternative in India Advantages of mutual funds Drawbacks from Mutual Funds History of Mutual Funds
5 7 10 12 16
B. C. D. E. F. G. H.
DETAILED STUDY OBJECTIVE AND SCOPE RESEARCH METHODOLOGY DATA ANALYSIS AND INTERPRETATION FINDING AND CONCLUSIONS SUGGESTIONS AND RECOMMENDATIONS BIBLIOGRAPHY
34 77 79 82 102 106 108
Chapter: 1
INTRODUCTION OF MUTUAL FUND
There are a lot of investment avenues available today in the financial market for an investor with an investable surplus. He can invest in Bank Deposits, Corporate Debentures, and Bonds where there is low risk but low return. He may invest in Stock of companies where the risk is high and the returns are also proportionately high. The recent trends in the Stock Market have shown that an average retail investor always lost with periodic bearish tends. People began opting for portfolio managers with expertise in stock markets who would invest on their behalf. Thus we had wealth management services provided by many institutions. However they proved too costly for a small investor. These investors have found a good shelter with the mutual funds.
The flow chart below describes broadly the working of a mutual fund:
CONCEPT OF MUTUAL FUND:

A mutual fund is a common pool of money into which investors place their contributions that are to be invested in accordance with a stated objective. The ownership of the fund is thus joint or mutual; the fund belongs to all investors. A single investors ownership of the fund is in the same proportion as the amount of the contribution made by him or her bears to the total amount of the fund. Mutual Funds are trusts, which accept savings from investors and invest the same in diversified financial instruments in terms of objectives set out in the trusts deed with the view to reduce the risk and maximize the income and capital appreciation for distribution for the members. A Mutual Fund is a corporation and the fund managers interest is to professionally manage the funds provided by the investors and provide a return on them after deducting reasonable management fees. The objective sought to be achieved by Mutual Fund is to provide an opportunity for lower income groups to acquire without much difficulty financial assets. They cater mainly to the needs of the individual investor whose means are small and to manage investors portfolio in a manner that provides a regular income, growth, safety, liquidity and diversification opportunities.
DEFINITION:
Mutual funds are collective savings and investment vehicles where savings of small (or sometimes big) investors are pooled together to invest for their mutual benefit and returns distributed proportionately. A mutual fund is an investment that pools your money with the money of an unlimited number of other investors. In return, you and the other investors each own shares of the fund. The
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fund's assets are invested according to an investment objective into the fund's portfolio of investments. 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.
Why Select Mutual Fund?

The risk return trade-off indicates that if investor is willing to take higher risk then correspondingly he can expect higher returns and vise versa if he pertains to lower risk instruments, which would be satisfied by lower returns. For example, if an investors opt for bank FD, which provide moderate return with minimal risk. But as he moves ahead to invest in capital protected funds and the profit-bonds that give out more return which is slightly higher as compared to the bank deposits but the risk involved also increases in the same proportion. Thus investors choose mutual funds as their primary means of investing, as Mutual funds provide professional management, diversification, convenience and liquidity. That doesnt mean mutual fund investments risk free. This is because the money that is pooled in are not invested only in debts funds which are less riskier but are also invested in the stock markets which involves a higher risk but can expect higher returns. Hedge fund involves a very high risk since it is mostly traded in the derivatives market which is considered very volatile. RETURN RISK MATRIX
HIGHIER RISK MODERATE RETURNS HIGHER RISK HIGHIER RETURNS
Ventur e Capita l
Equi ty
Bank FD P o s ta l S a v in g s
LOWER RISK LOWER RETURNS
Mutu al Funds
LOWER RISK HIGIER RETURNS
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, a new era 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 repeal of the Unit Trust of India Act 1963 UTI was bifurcated 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.
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The graph indicates the growth of assets under management over the years.
GROWTH IN ASSETS UNDER MANAGEMENT
(Source: www.amfiindia.com)
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Reasons to invest in mutual funds :
Expert on your side: When you invest in a mutual fund, you buy into the experience and skills of a fund manager and an army of professional analysts
Limited risk: Mutual funds are diversification in action and hence do not rely on the performance of a single entity.
More for less: For the price of one blue chip stock for instance, you could get yourself a number of units across a number of companies and industries when you invest in a fund!
Easy investing: You can invest in a mutual fund with as little as Rs. 5,000. Salaried individuals also have the option of investing in a monthly savings plan. Convenience: You can invest directly with a fund house, or through your bank or financial adviser, or even over the internet.
Investor protection: A mutual fund in India is registered with SEBI, which also monitors the operations of the fund to protect your interests.
Quick access to your money: It's good to know that should you need your money at short notice, you can usually get it in four working days.
Transparency: As an investor, you get updates on the value of your units, information on specific investments made by the mutual fund and the fund manager's strategy and outlook.
Low transaction costs: A mutual fund, by sheer scale of its investments is able to carry out cost-effective brokerage transactions.
Tax benefits: Over the years, tax policies on mutual funds have been favourable to investors and continue to be so.
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Organization of a Mutual Fund
Sponsor : Sponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. The sponsor of a fund is akin to promoter of a company as he gets the fund registered with SEBI. The sponsor will form a Trust and appoint a Board of Trustees. The sponsor will also generally appoint as Asset Management Company as fund managers. The sponsor, either directly or acting through the Trustees, will also appoint a Custodian to hold the fund asset. All these appointments are made in accordance with SEBI Regulations.
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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) Regulations, 1996.The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund. Trust :
The Mutual Fund in India is constituted in the form of a public Trust created under the Indian Trustees Act, 1882. The fund sponsor acts as the settler of the trust, contributing to its initial capital, and appoints Trustees to hold the asset of the Trust for the benefit of the unit holders, who are the beneficiaries of the Trust. The fund then invites investors to contribute their money in the common pool, by subscribing to Units issued by various schemes established by the trust, units being the evidence of their beneficial interest in the fund. It should be understood that a mutual fund is just a pass-through vehicle. Under the Indian trusts Act, or the fund has no independent legal capacity itself, rather it is the Trustee or Trustees who have the legal capacity and therefore all acts in relation to the trust are taken on its behalf by the Trustees. The Trustees hold the unit holders money in a fiduciary capacity, i.e the money belongs to the unit holders and is entrusted to the fund for the purpose of investment. In legal parlance, the investor or the unit-holders are the beneficial owners of the investment held by the Trust, even as these investments are held in the name of the trustees on a day to - day basis. Being public Trusts, mutual fund can invite any number of investors as beneficial owners in their investment schemes.
Trustee: The trust the mutual fund may be a Board of Trustees a body of individuals, or a Trust company a corporate body. Most of the funds in India are managed by Board of Trustees. While the board of Trustees is governed by the provisions of the Indian Trusts Act, where the Trustee is a corporate body, it would also be required to comply with the provisions of the companies Act, 1956. The Board or the Trustee Company, as an independent body, act as protector of the unit holders interests. The Trustee doesnt directly manage the portfolio of securities. For this specialist function, they
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appoint an Asset Management Company. They ensure that the fund is managed by the AMC as per the defined objectives and in accordance with the Trust Deed and SEBI regulations. The trust is created through a document called the Trust Deed that is executed by the fund sponsor in favour of the Trustees. Trust Deed is required to be stamped as registered under the provisions of the Indian Registration Act and registered with SEBI. Clauses in the Trust Deed, inter alia, deal with the establishment of the Trust, the appointment of Trustees, their powers and duties, and the obligations of the Trustees towards the unit-holders and AMC. These clauses also specify activities that the fund/ AMC cannot undertake. The third schedule of the SEBI (MF) Regulations, 1996 specifies the contents of the Trust Deed. The Trustees being the primary guardians of the unit-holders funds and assets, a Trustee has to be a person of high repute and integrity. SEBI has laid down a set of conditions to be fulfilled by the individuals being proposed as trustees of mutual funds independent and non independent. Besides specifying the disqualifications, SEBI has also set down the Right and obligations of the Trustees. Broadly, the Trustees must ensure that the investors interests are safeguarded and that the AMCs operations are along professional lines. They must also ensure that the management of the fund is in accordance with SEBI Regulations. To ensure the independence of the trustee company, SEBI mandates a minimum of two-third independent directors on the board of the trustee company. Asset Management Company (AMC) : The role of an AMC is to act the investment manager of the Trust. The sponsors or the trustees, if so authorized by the Trust Deed, appoint the AMC. The AMC so appointed is required to be approved by SEBI. Once approved, the AMC functions under the supervision of its own Board of Directors, and also under the directions of the Trustees and SEBI. The Trustees are empowered to terminate the appointment of the AMC and appoint a new AMC with the prior approval of SEBI and unit-holders The AMC would, in the name of the Trust, float and then manage the different investment schemes as per SEBI Regulations and as per the Investment 15
Management Agreement it signs with the Trustees. Mutual fund Regulations,1996 describes the issues relevant to appointment, eligibility criteria, and restrictions on business activities and obligations of the AMC. The AMC of a mutual fund must have a net worth of at least Rs. 10 crores at all times. Directors of the AMC, both independent and non independent, should have adequate professional experience in financial services and should be individuals of high moral standing, a condition also applicable to other key personnel of the AMC. The AMC cannot act as a trustee of any other mutual fund. Besides its role as the fund manager, it may undertake specified activities such as advisory services and financial consulting, provided these activities are run independently of one another and the AMCs resources are properly segregated by activity. The AMC must always act in the interest of the unit-holders and report to the trustees with respect to its activities. To ensure the independence of the asset management company, SEBI mandates that a minimum of 50% of the directors of the board of the asset management company should be independent directors. Registrar and Transfer Agent : The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund. The Registrar processes the application form; redemption requests and dispatches account statements to the unit holders. The Registrar and Transfer agent also handles communications with investors and updates investor records. Custodian : Mutual funds are in the business of buying and selling of securities in large volumes. Handling these securities in terms of physical delivery and eventual safekeeping is therefore a specialized activity. The custodian is appointed by the Board of Trustees for safe keeping of physical securities or participating in any clearing systemthrough approved depository companies on behalf of mutual fund in case of dematerialized securities. A custodian must fulfill its responsibilities in accordance with its agreement with the mutual fund. The custodian should be an entity independent of the sponsers and is required to be registered with SEBI. 16
INVESTMENT ALTERNATIVES IN INDIA: Non marketable financial assets: These are such financial assets which gives moderately high return but cannot be traded in market. Bank Deposits Post Office Schemes Company FDs PPF
Equity shares: These are shares of company and can be traded in secondary market. Investors get benefit by change in price of share and dividend given by companies. Equity shares represent ownership capital. As an equity shareholder, a person has an ownership stake in the company. This essentially means that the person has a residual interest in income and wealth of the company. These can be classified into following broad categories as per stock market: Blue chip shares Growth shares Income shares Cyclic shares Speculative shares
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Bonds: Bonds are the instruments that are considered as a relatively safer investment avenues. G sec bonds GOI relief funds Govt. agency funds PSU Bonds RBI BOND Debenture of private sector co.
Money market instrument: By convention, the term "money market" refers to the market for short-term requirement and deployment of funds. Money market instruments are those instruments, which have a maturity period of less than one year. T-Bills Certificate of Deposit Commercial Paper
Mutual Funds- A mutual fund is a trust that pools together the savings of a number of investors who share a common financial goal. The fund manager invests this pool of money in securities, ranging the scheme. The different types of schemes are Balanced Funds Index Funds Sector Fund Equity Oriented Funds
Life insurance: Now-a-days life insurance is also being considered as an investment avenue. Insurance premiums represent the sacrifice and the assured sum the benefit. Under it different schemes are: Endowment assurance policy Money back policy Whole life policy Term assurance policy
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Real estate: One of the most important assets in portfolio of investors is a residential house. In addition to a residential house, the more affluent investors are likely to be interested in the following types of real estate: Agricultural land Semi urban land Farm House
Precious objects: Investors can also invest in the objects which have value. These comprises of: Gold Silver Precious stones Art objects
Financial Derivatives: These are such instruments which derive their value from some other underlying assets. It may be viewed as a side bet on the asset. The most important financial derivatives from the point of view of investors are: Options Futures
ADVANTAGES OF MUTUAL FUNDS:

If mutual funds are emerging as the favorite investment vehicle, it is because of the many advantages they have over other forms and the avenues of investing, particularly for the investor who has limited resources available in terms of capital and the ability to carry out detailed research and market monitoring. The following are the major advantages offered by mutual funds to all investors:
1. Portfolio Diversification:
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Each investor in the fund is a part owner of all the funds assets, thus enabling him to hold a diversified investment portfolio even with a small amount of investment that would otherwise require big capital.
2. Professional Management:
Even if an investor has a big amount of capital available to him, he benefits from the professional management skills brought in by the fund in the management of the investors portfolio. The investment management skills, along with the needed research into available investment options, ensure a much better return than what an investor can manage on his own. Few investors have the skill and resources of their own to succeed in todays fast moving, global and sophisticated markets.
3. Reduction/Diversification Of Risk:
When an investor invests directly, all the risk of potential loss is his own, whether he places a deposit with a company or a bank, or he buys a share or debenture on his own or in any other from. While investing in the pool of funds with investors, the potential losses are also shared with other investors. The risk reduction is one of the most important benefits of a collective investment vehicle like the mutual fund.
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4. Reduction Of Transaction Costs:

What is true of risk as also true of the transaction costs. The investor bears all the costs of investing such as brokerage or custody of securities. When going through a fund, he has the benefit of economies of scale; the funds pay lesser costs because of larger volumes, a benefit passed on to its investors.
5. Liquidity:
Often, investors hold shares or bonds they cannot directly, easily and quickly sell. When they invest in the units of a fund, they can generally cash their investments any time, by selling their units to the fund if open-ended, or selling them in the market if the fund is close-end. Liquidity of investment is clearly a big benefit.
6. Convenience And Flexibility:

Mutual fund management companies offer many investor services that a direct market investor cannot get. Investors can easily transfer their holding from one scheme to the other; get updated market information and so on.
7. Tax Benefits:
Any income distributed after March 31, 2002 will be subject to tax in the assessment of all Unit holders. However, as a measure of concession to Unit holders of open-ended equity-oriented funds, income distributions for the year ending March 31, 2003, will be taxed at a concessional rate of 10.5%. In case of Individuals and Hindu Undivided Families a deduction upto Rs. 9,000 from the Total Income will be admissible in respect of income from investments specified in Section 80L, including income from Units of the Mutual Fund. Units of the schemes are not subject to WealthTax and Gift-Tax.
8. Choice of Schemes:
Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
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9. Well Regulated:
All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI. 10. Transparency: You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook.
DISADVANTAGES OF INVESTING THROUGH MUTUAL FUNDS:

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, albeit in return for the professional management and research. Fees are payable even if the value of his investments is declining. A mutual fund investor also pays fund distribution costs, which he would not incur in direct investing. However, this shortcoming only means that there is a cost to obtain the mutual fund services.
2.
No Tailor-Made Portfolio:
Investors who invest on their own can build their own portfolios of shares and bonds and
other securities. Investing through fund means he delegates this decision to the fund managers. The very-high-net-worth individuals or large corporate investors may find this to be a constraint in achieving their objectives. However, most mutual fund managers help investors overcome this constraint by offering families of funds- a large number of different schemes- within their own management company. An investor can choose from different investment plans and constructs a portfolio to his choice.
3. Managing A Portfolio Of Funds:

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Availability of a large number of funds can actually mean too much choice for the investor. He may again need advice on how to select a fund to achieve his objectives, quite similar to the situation when he has individual shares or bonds to select.
4. The Wisdom Of Professional Management:

That's right, this is not an advantage. The average mutual fund manager is no better at picking stocks than the average nonprofessional, but charges fees.
5. No Control:
Unlike picking your own individual stocks, a mutual fund puts you in the passenger seat of somebody else's car
6. Dilution:
Mutual funds generally have such small holdings of so many different stocks that insanely great performance by a fund's top holdings still doesn't make much of a difference in a mutual fund's total performance.
7. Buried Costs:
Many mutual funds specialize in burying their costs and in hiring salesmen who do not make those costs clear to their clients.
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RISK HIERARCHY OF MUTUAL FUNDS
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Snapshot of Mutual Fund Schemes

Mutual Fund Objective Type Risk Investment Portfolio Who should invest Investment horizon
Liquidity + Moderate Income + Money Market Negligible Reservation of Capital
Treasury Bills, Those who park Certificate of their funds in Deposits, current accounts or 2 days - 3 weeks Commercial short-term bank Papers, Call deposits Money
Short-term Funds (Floating short-term)
+ Little - Liquidity Moderate Income Rate
Call Money, Commercial Interest Papers, Treasury Those with surplus 3 weeks Bills, CDs, Short- short-term funds 3 months term Government securities.
Bond Funds Regular Income (Floating Long-term) -
Predominantly Credit Risk & Debentures, Interest Rate Government Risk securities, Corporate Bonds Rate Government securities
Salaried conservative investors
&
More than 9 - 12 months
Gilt Funds
Interest Security & Income Risk
Salaried conservative investors
& 12 months & more
Long-term Capital Equity Funds High Risk Appreciation
Stocks
Aggressive investors with long 3 years plus term out look.
Index Funds
To generate returns that are NAV varies Portfolio indices Aggressive commensurate with with index like BSE, NIFTY investors. returns of respective performance etc indices Balanced ratio of Capital Market equity and debt Growth & Regular Risk and Moderate funds to ensure Income Interest Rate Aggressive higher returns at Risk lower risk
3 years plus
Balanced Funds
&
2 years plus
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LANDMARKS IN INDIAN HISTORY OF MUTUAL FUND

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Year
1963 1964 1986 1987 1992 1993 1994 1996 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Landmarks
UTI, Indias first mutual fund launched UTI, Launched US-64 UTI Mastershare, Indias first true mutual fund scheme launched PSU banks and insurers allowed to float mutual funds, SBI first off the block Harshad Mehta-fuelled bull market arouses middle-class interest in shares and mutual funds Private sector and foreign players allowed; Kothari Pioneer first private fund house to start operating, SEBI setup to regulate the industry Morgan Stanley is the first foreign player to launch its Mutual Fund in the Indian market. SEBIs mutual funds rules and regulations, which form the basis of most current laws, come into force. UTI master Index fund is Indias first index fund The takeover of 20th Century AMC by Zurich Mutual fund is the first acquisition in the Industry The industrys asset under management(AUM) crossed Rs.1,00,000 crore US-64 scams leads to UTI overhaul UTI bifurcated, comes under the purview of SEBI, mutual fund distributors banned from giving commissions to investors. Floating rate funds and foreign debt funds debut AMFI certification made compulsory for new agents Long term capital gains exempt from tax for equity funds. Securities transaction tax introduced The industrys AUM crosses Rs. 2,00,000 crore, section 80C introduced, which allows up to Rs. 1 lacs in equity-linked savings schemes (ELSS) for total taxable income AUM crosses Rs.3,00,000 crore in October Mutual fund launches Gold ETFs schemes Bharati Axa launches its Mutual funds
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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 a collection of many stocks, an investors can go for picking a mutual fund might be easy. There are over hundreds of mutual funds scheme to choose from. It is easier to think of mutual funds in categories, mentioned below.
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A).
BY STRUCTURE
1. Open - Ended Schemes:

An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity.
2. Close - Ended Schemes:

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor.
3. Interval Schemes:
Interval Schemes are that scheme, which combines the features of open-ended and closeended 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.
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B).
BY NATURE
These funds invest a maximum part of their corpus into equities holdings. The structure of
1. Equity Fund:
the fund may vary different for different schemes and the fund managers outlook on different stocks. The Equity Funds are sub-classified depending upon their investment objective, as follows:

Diversified Equity Funds Mid-Cap Funds Sector Specific Funds Tax Savings Funds (ELSS) Equity investments are meant for a longer time horizon, thus Equity funds rank high on the
risk-return matrix.
2. Debt Funds:
The objective of these Funds is to invest in debt papers. Government authorities, private companies, banks and financial institutions are some of the major issuers of debt papers. By investing in debt instruments, these funds ensure low risk and provide stable income to the investors. Debt funds are further classified as:
Gilt Funds: Invest their corpus in securities issued by Government, popularly known as Government of India debt papers. These Funds carry zero Default risk but are associated with Interest Rate risk. These schemes are safer as they invest in papers backed by Government.
Income Funds: Invest a major portion into various debt instruments such as bonds, corporate debentures and Government securities.
MIPs: Invests maximum of their total corpus in debt instruments while they take minimum exposure in equities. It gets benefit of both equity and debt market. These scheme ranks slightly high on the risk-return matrix when compared with other debt schemes.
Short Term Plans (STPs): Meant for investment horizon for three to six months. These funds primarily invest in short term papers like Certificate of Deposits (CDs) and
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Commercial Papers (CPs). Some portion of the corpus is also invested in corporate debentures.
Liquid Funds: Also known as Money Market Schemes, These funds provides easy liquidity and preservation of capital. These schemes invest in short-term instruments like Treasury Bills, inter-bank call money market, CPs and CDs. These funds are meant for short-term cash management of corporate houses and are meant for an investment horizon of 1day to 3 months. These schemes rank low on risk-return matrix and are considered to be the safest amongst all categories of mutual funds.
3. Balanced Funds:
As the name suggest they, are a mix of both equity and debt funds. They invest in both equities and fixed income securities, which are in line with pre-defined investment objective of the scheme. These schemes aim to provide investors with the best of both the worlds. Equity part provides growth and the debt part provides stability in returns. Further the mutual funds can be broadly classified on the basis of investment parameter viz, Each category of funds is backed by an investment philosophy, which is pre-defined in the objectives of the fund. The investor can align his own investment needs with the funds objective and invest accordingly.
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C).
BY INVESTMENT OBJECTIVE:
Growth Schemes are also known as equity schemes. The aim of these schemes is to provide
Growth Schemes:
capital appreciation over medium to long term. These schemes normally invest a major part of their fund in equities and are willing to bear short-term decline in value for possible future appreciation.
Income Schemes:
Income Schemes are also known as debt schemes. The aim of these schemes is to provide regular and steady income to investors. These schemes generally invest in fixed income securities such as bonds and corporate debentures. Capital appreciation in such schemes may be limited.
Balanced Schemes:
Balanced Schemes aim to provide both growth and income by periodically distributing a part of the income and capital gains they earn. These schemes invest in both shares and fixed income securities, in the proportion indicated in their offer documents (normally 50:50).
Money Market Schemes:

Money Market Schemes aim to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer, short-term instruments, such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Load Funds: A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history. No-Load Funds: A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work.
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OTHER SCHEMES Tax Saving Schemes:

Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings Scheme (ELSS) are eligible for rebate.
Index Schemes:
Index schemes attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks that constitute the index. The percentage of each stock to the total holding will be identical to the stocks index weightage. And hence, the returns from such schemes would be more or less equivalent to those of the Index.
Sector Specific Schemes:

These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time.
35
NET ASSET VALUE (NAV):

Since each owner is a part owner of a mutual fund, it is necessary to establish the value of his part. In other words, each share or unit that an investor holds needs to be assigned a value. Since the units held by investor evidence the ownership of the funds assets, the value of the total assets of the fund when divided by the total number of units issued by the mutual fund gives us the value of one unit. This is generally called the Net Asset Value (NAV) of one unit or one share. The value of an investors part ownership is thus determined by the NAV of the number of units held. Calculation of NAV: Let us see an example. If the value of a funds assets stands at Rs. 100 and it has 10 investors who have bought 10 units each, the total numbers of units issued are 100, and the value of one unit is Rs. 10.00 (1000/100). If a single investor in fact owns 3 units, the value of his ownership of the fund will be Rs. 30.00(1000/100*3). Note that the value of the funds investments will keep fluctuating with the market-price movements, causing the Net Asset Value also to fluctuate. For example, if the value of our funds asset increased from Rs. 1000 to 1200, the value of our investors holding of 3 units will now be (1200/100*3) Rs. 36. The investment value can go up or down, depending on the markets value of the funds assets.
36
MUTUAL FUND FEES AND EXPENSES

Mutual fund fees and expenses are charges that may be incurred by investors who hold mutual funds. Running a mutual fund involves costs, including shareholder transaction costs, investment advisory fees, and marketing and distribution expenses. Funds pass along these costs to investors in a number of ways.
1. TRANSACTION FEES
i)
Purchase Fee:
It is a type of fee that some funds charge their shareholders when they buy shares. Unlike a front-end sales load, a purchase fee is paid to the fund (not to a
broker)
and is
typically imposed to defray some of the fund's costs associated with the purchase.
ii)
Redemption Fee:
It is another type of fee that some funds charge their shareholders when they sell or redeem shares. Unlike a deferred sales load, a redemption fee is paid to the fund (not to a
broker)
and is typically used to defray fund costs associated with a shareholder's redemption.
iii)
Exchange Fee:
Exchange fee that some funds impose on shareholders if they exchange (transfer) to another fund within the same fund group or "family of funds."
2. PERIODIC FEES
i)
Management Fee:
Management fees are fees that are paid out of fund assets to the fund's investment adviser for investment portfolio management, any other management fees payable to the fund's investment adviser or its affiliates, and administrative fees payable to the investment adviser that are not included in the "Other Expenses" category. They are also called maintenance fees.
37
ii)
Account Fee:
Account fees are fees that some funds separately impose on investors in connection with the maintenance of their accounts. For example, some funds impose an account maintenance fee on accounts whose value is less than a certain dollar amount.
3. OTHER OPERATING EXPENSES Transaction Costs:

These costs are incurred in the trading of the fund's assets. Funds with a high
turnover ratio,
or investing in illiquid or exotic markets usually face higher transaction costs.
Unlike the Total Expense Ratio these costs are usually not reported.
LOADS
Definition of a load Load funds exhibit a "Sales Load" with a percentage charge levied on purchase or sale of shares. A load is a type of
Commission (remuneration).
Depending on the type of load a mutual fund
exhibits, charges may be incurred at time of purchase, time of sale, or a mix of both. The different types of loads are outlined below.
Front-end load:
Also known as Sales Charge, this is a fee paid when shares are purchased. Also known as a "front-end load," this fee typically goes to the brokers that sell the fund's shares. Front-end loads reduce the amount of your investment. For example, let's say you have Rs.10,000 and want to invest it in a mutual fund with a 5% front-end load. The Rs.500 sales load you must pay comes off the top, and the remaining Rs.9500 will be invested in the fund. According to NASD rules, a frontend load cannot be higher than 8.5% of your investment.
38
Back-end load:
Also known as Deferred Sales Charge, this is a fee paid when shares are sold. Also known as a "back-end load," this fee typically goes to the brokers that sell the fund's shares. The amount of this type of load will depend on how long the investor holds his or her shares and typically decreases to zero if the investor holds his or her shares long enough.
Level load / Low load:

It's similar to a back-end load in that no sales charges are paid when buying the fund. Instead a back-end load may be charged if the shares purchased are sold within a given time frame. The distinction between level loads and low loads as opposed to back-end loads, is that this time frame where charges are levied is shorter.
No-load Fund:
As the name implies, this means that the fund does not charge any type of sales load. But, as outlined above, not every type of shareholder fee is a "sales load." A no-load fund may charge fees that are not sales loads, such as purchase fees, redemption fees, exchange fees, and account fees.
39
INVESTMENT STRATEGIES:1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed
date of a month. Payment is made through post dated cheques or direct debit facilities. The investor gets fewer units when the NAV is high and more units when the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA) 2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund.
3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month.
RISK V/S. RETURN:
40
In this balanced fund scheme segment I selected the following schemes in the selected AMCs SBI magnum Balance Fund:SBI Magnum Balance Fund has not been given any rating by CRISIL but it has been performing well. The investments of the Funds are well diversified in both Equity and Debt. The total Equity Holdings as on April 30th stands at 67.77% of the total assets. It has outperformed CRISIL Balanced Fund Index by 45.38% for the 52 weeks period. Principal Balanced Fund:Principal Balanced Fund has ranked CP3 by CRISIL, which means average in the open-ended balanced Fund category and ranks within the top 70% of the 19 schemes in this category. It has invested 67% in Equity and about 16% in Government Securities. In Equity it invested primarily in Pharmaceuticals, Construction Materials, Automobiles and banks. Franklin Templeton India Balanced Fund:Franklin Templeton India Balanced Fund invested about 70% of its assets in Equity and 75% in Debts. The recent additions to its portfolio are Reliance Industries, Asian paints and BPCL. It invests primarily in IT consulting, auto parts equipment, Banks, Tele Electrical industrial conglomerates. It invested mainly in the AAA rated Debts. Kotak Balance Fund:Kotak Balance Fund has invested close to 70% in Equity and about 30% in Debt instruments and Short Term Deposits. The Fund has a well-diversified portfolio of equity with prime investments in BHEL, Siemens EID parry, Bulrampur Chini and SBI. In the debt Instruments it has invested in Railway Bonds and 2003 maturing Government Stock.
41
SBI Magnum Income Fund is performing very well right from the inception with generous payment of dividends has been assigned AAA rating by CRISIL. The Fund invests about 90% in AAA rated securities and more than 60% of its investments have a maturity ranging between 3 to 10 years. I had come with bonuses in Jan 2003 1:3 and September 2003 1:10. However, it under perform vis--vis CRISIL Comp. Bond Fund index by 0.14. Principal Income Fund has ranked CP3 by CRISIL, which means average in the open-ended debt category and ranks within the top 70% of the 21 schemes in this category. The investments have average maturity of 7.3 years with more than 50% investments having a maturity of above 7 years. It has invested close to 50% in Government Securities, above 40% in NCD/Deep Discount Bonds. Franklin Templeton India Income Fund has most of the investments in low risk AAA and sovereign securities. Above 45% of the investments are in Gilt, 25% in PSU/PFI bonds and 24% in corporate Debts. The average maturity of this scheme is at 4.87 years. The performance of the Fund is in line with CRISIL Composite Bond Fund. Kotak Liquid Fund has invested about close to 25% in corporate Debt, 10% in public sector undertakings, about 25% in money market instruments. It has also invested 40% in term deposits. The average maturity of portfolio is 2.3 years. Almost all the instruments are well rated implying they are safe instruments also their investments are highly diversified.
42
43
Chapter 2 The Detailed Study

44
EQUITY BALANCE FUNDS- GROWTH 21 Mutual Funds schemes performance has been taken for the purpose of analysis of this study. They are
1. Birla Sun Life Tax Relief 96 - Growth

Objective:
The Scheme aims to provide growth of capital along with Income Tax exemption benefits to investors.
SCHEME PERFORMANCE (%) AS ON NOV 25, 2011

1 Month 0.31 3 Months -1.61 6 Months 2.08 1 Year -16.55 3 Years 20.71 5 Years 1.93 Since Inception 3.18
Stock
Sector
P/E
Percentage of Net Qty Assets NA NA NA NA NA NA NA NA NA NA
Value
Percentage of Change with last month NA NA NA NA NA NA NA NA NA NA
Tata Ltd.
Consultancy
Services Software and Consultancy 23.07 6.11 Services 26.31 5.66 17.46 5.22 25.48 4.88
NA NA NA NA NA NA NA NA NA NA
Housing Development HFC Finance Corporation Ltd State Bank of India HDFC Bank Ltd Reliance Industries Ltd. Larsen & Toubro Limited ITC Ltd ICICI BANK LTD. Banks Banks
Petroleum, Gas and 13.14 4.67 petrochemical products Engineering Goods FMCG Banks and Capital 22.18 3.87 30.06 3.65 18.73 3.19
Honeywell Automation India Software and Consultancy 20.57 3.14 Ltd Services Axis Bank Ltd Banks 12.67 3.09
45
Increase/Decrease in Fund Size since Sep 30, 0 2011 (Rs. in crores) Mutual Fund Birla Sun Life Mutual Fund One India Bulls Centre , Tower 1, 17th Flr 841, Senapati Bapat Marg, Elphinstone Road Mumbai Tel.-43568000 Birla Sun Life Asset Management Company Ltd. One India Bulls Centre , Tower 1, 17th Flr 841, Senapati Bapat Marg, Elphinstone Road Mumbai - 400013 Tel.- 43568000 , Computer Age Management Services Private Limited A&B, Lakshmi Bhavan 609, Anna Salai Chennai
Asset Management Company
Registrar
Type of Scheme Nature Option Inception Date Face Value (Rs/Unit) Fund Size in Rs. Cr.
Open Ended Equity Growth Oct 3, 2006 10 0 as on Oct 31, 2011
Fund Manager SIP STP SWP Expense ratio(%) Portfolio Ratio(%) Turnover
Ajay Garg .
2.43 93
Last Dividend Declared Minimum Investment (Rs) Purchase Redemptions NAV Calculation Entry Load Exit Load
NA 500 Daily Daily Amount greater than 0 then and Amount greater than 0 then Entry Load is 0%. and Amount greater than 0 then and Amount greater than 0 then Entry load is 0%. Exit Load is 0%. Exit Load is 0%. Exit Load is 0%.
46
2. DSP Blackrock Tax Saver Fund - Growth

Objective:Seeks to generate long term capital appreciation and current income from a portfolio constituted of equity and equity related securities as well as fixed income securities.
1 Month -7.53 3 Months -5.55 6 Months -13.64 1 Year -22.20 3 Years 23.40 5 Years NA Since Inception 7.14
Top 10 Holdings:-
Stock
Sector
P/E
Percentage of Net Qty Assets 126,558 678,910 324,246 145,268 224,480
Value
Percentage of Change with last month 3.20 4.79 14.82 0.73 10.21 2.14 22.50 5.92 -14.06
Infosys Technologies Ltd HDFC Bank Ltd. Reliance Industries Ltd. State Bank of India ICICI BANK LTD. Kajaria Ceramics Ltd Bharti Airtel Ltd Nestle India Ltd
Software and Consultancy 24.11 4.87 Services Banks Petroleum, Gas petrochemical products Banks Banks Glass & Ceramics Telecom Services and 25.48 4.45 13.14 3.80 17.46 3.70 18.73 2.79 12.11 2.67 20.59 2.60
36.42 33.27 28.45 27.69 20.90
1,690,500 19.96 496,693 43,817 161,098 19.46 18.62 17.98
Food & Food Processing, 45.97 2.49 Beverages
Tata Consultancy Software and Consultancy 23.07 2.40 Services Ltd. Services Custodial, Credit Rating Information Exchanges Services Of India Ltd agencies Depository, and rating 34.76 2.29
193,860
17.12
-5.21
47
48
3. HDFC Taxsaver - Growth

Objectives: The primary objective of the Scheme is to generate capital appreciation along with current income form a combined portfolio of equity & equity related and debt & money market instruments.
Equity
Debt
Cash & Equivalent
49
97.13
0.15
2.72
Open Ended Equity Growth Jan 2, 2001 10 0 as on Oct 31, 2011
Chirag Setalvad .
2.07 12.13
NA 500 Daily Daily Amount greater than 0 then and Amount greater than 0 then Entry Load is 0%. and Amount greater than 0 then and Amount greater than 0 then Entry load is 0%. Exit Load is 0%. Exit Load is 0%. Exit Load is 0%
4. Escorts Tax Plan - Growth

Objective:
50
To generate long term capital appreciation by predominantly moving investments in a portfolio of equity and equity related securities
SCH EME PERFORMAN CE (%) AS ON NOV 25, 2011
1 Month -12.25 3 Months -8.15 6 Months -20.79 1 Year -33.20 3 Years 7.28 5 Years -4.27 Since Inception 11.27
Stock
Sector
P/E
Percentage of Net Qty Assets 7,103
Value
Kalyani Investment Company NA Ltd.
17.52 8.70 8.07 6.52 6.35
0.36
Southern Petrochemicals Fertilizers, Pesticides & 8.20 Industries Corporation Ltd. Agrochemicals J Kumar Infraprojects Ltd Uflex Ltd Uttam Steel Ltd Ranbaxy Laboratories Ltd Elantas Beck India Ltd. GEI Industrial Systems Ltd. Duncans Industries Ltd. JBF Industries Ltd Construction Infrastructure and 6.18
130,000 0.34 17,175 15,000 26,225 4,000 1,000 10,000 0.27 0.26 0.20 0.20 0.18 0.15
Printing, Publishing and 4.52 Packaging Steel and Ferrous Metal Pharmaceuticals Biotechnology Chemicals &
18.62 4.91 54.82 4.82 55.32 4.40 3.59 3.36 2.99
Engineering and Capital 9.68 Goods Food & Food Processing, 0.00 Beverages Textiles 8.15
124,046 0.14 10,000 0.12
Equity 93.17
Debt 0.00
Cash & Equivalent 6.83
51
Open Ended Equity Growth Mar 31, 2000 10 4.16 as on Oct 31, 2011
Fund Manager SIP STP SWP Expense ratio(%) Portfolio Ratio(%) Turnover 2.50 16.38
NA 500 Daily Daily Entry Load is 0%. Entry Load is 0%. Exit Load is 0%. Exit Load is 0%.
5. Reliance Tax Saver (ELSS) Fund - Growth

Objective: The primary investment objective of this option is to generate consistent returns and appreciation of capital by investing in a mix of securities comprising of equity, equity related instruments & fixed income instruments.
52
1 Month -8.46
3 Months -6.61
6 Months -12.07
1 Year -18.47
3 Years 25.07
5 Years 4.87
Since Inception 9.86
Stock Other Equities Eicher Motors Ltd State Bank of India Bharat Forge Ltd ICICI BANK LTD. Maruti Suzuki India Ltd Siemens Ltd Aventis Pharma India Ltd. Divis Laboratories Limited Madras Cements Ltd
Sector Miscellaneous Auto & Auto Ancillaries Banks Steel and Ferrous Metal Banks Auto & Auto Ancillaries Power Transmission Pharmaceuticals Biotechnology Pharmaceuticals Biotechnology Construction materials & &
P/E NA 52.16 17.46 20.01 18.73 16.14 31.43 30.39 22.63 10.31
Percentage of Net Qty Assets 9.58 7.16 5.33 4.37 4.26 4.15 4.02 3.53 3.41 3.00 NA NA NA NA NA NA NA NA NA NA
Value NA NA NA NA NA NA NA NA NA NA
Equity 99.25
Debt 0.00
53
Open Ended Equity Growth Sep 22, 2005 10 0 as on Oct 31, 2011
Viral Belawala .
1.89 34
NA 500 Daily Daily Amount greater than 0 then and Amount greater than 0 then Entry Load is 0%. and Amount greater than 0 then and Amount greater than 0 then Entry load is 0%. and Amount greater than 0 then and Amount greater than 0 then Entry load is 0%. Exit Load is 0%. Exit Load is 0%. Exit Load is 0%.
6. Franklin India Taxshield - Growth

Objective: The fund aims to provide long term capital appreciation and current income by investing in equity and equity related securities and high quality fixed income instruments.

1 Month 3 Months 6 Months 1 Year 3 Years 5 Years Since Inception
54
-6.74
-1.38
-5.69
-9.53
28.20
8.86
26.35
Stock
Sector
P/E
Percentage of Net Qty Assets 235,750
Value
Percentage of Change with last month -1.20 -2.59 6.29 5.73 -13.99 25.00 -4.66 11.12 9.50 5.11
Infosys Technologies Software Ltd Services Bharti Airtel Ltd ICICI BANK LTD. Grasim Industries Ltd Reliance Ltd
and
Consultancy
24.11 8.15 20.59 7.50 18.73 6.10 16.99 4.02
67.78
Telecom Services Banks Construction materials and
1,595,000 62.43 545,018 135,000 381,000 615,000 50.71 33.45 33.44 30.08
Industries Petroleum, Gas petrochemical products Banks Telecom Services
13.14 4.02 25.48 3.62 44.43 3.51 39.79 3.14 19.18 2.24
HDFC Bank Ltd Idea Cellular Limited
3,100,000 29.20 510,600 650,000 207,500 26.08 18.67 18.35
Kotak Mahindra Bank Banks Ltd. Indusland Bank Ltd CRISIL Ltd. Banks
Custodial, Depository, 34.76 2.21 Exchanges and rating agencies
Equity 91.05
Debt 0.03
55
Open Ended Equity Growth Apr 10, 1999 10 831.87 as on Oct 31, 2011
Anand Radhakrishnan , Anil Prabhudas .
2.07 24.57
Last Divdend Declared Minimum Investment (Rs) Purchase Redemptions NAV Calculation Entry Load Exit Load
NA 500 Daily Daily Entry Load is 0%. Entry Load is 0%. Entry Load is 0%. Exit Load is 0%. Exit Load is 0%. Exit Load is 0%.
7. Birla Sun Life Tax Plan - Growth

Objective:The scheme aims to generate long term growth of capital and current income from a portfolio of equity and fixed income securities.

1 Month -7.70 3 Months -6.37 6 Months -10.78 1 Year -16.55 3 Years 20.71 5 Years 1.93 Since Inception 3.18
56
Stock
Sector
P/E
Percentage of Net Qty Assets NA NA NA NA NA NA NA NA NA NA
Value
Tata Ltd.
Consultancy
Services Software and Consultancy 23.07 6.11 Services 26.31 5.66 17.46 5.22 25.48 4.88
Housing Development HFC Finance Corporation Ltd State Bank of India HDFC Bank Ltd Reliance Industries Ltd. Larsen & Toubro Limited ITC Ltd ICICI BANK LTD. Banks Banks
Petroleum, Gas and 13.14 4.67 petrochemical products Engineering Goods FMCG Banks and Capital 22.18 3.87 30.06 3.65 18.73 3.19
Honeywell Automation India Software and Consultancy 20.57 3.14 Ltd Services Axis Bank Ltd Banks 12.67 3.09
Equity 97.83
Debt 0.00
57
Open Ended Equity Growth Oct 3, 2006 10 0 as on Oct 31, 2011
Ajay Garg .
2.43 93
8. Kotak Taxsaver - Growth

Objective:The objective of the Scheme is to achieve growth by investing in equity and equity related instruments, balanced with income generation by investing in debt and money market instruments.

58
-7.85
-3.59
-12.13
-21.19
21.04
2.56
7.43
Stock
Sector
P/E
Percentage of Net Assets 5.55 5.19 4.89 4.82 4.18 4.06 3.31 3.19 3.10 3.05
Qty
Value
Percentage of Change with last month -4.80 8.54 6.38 -12.80 13.98 -1.44 19.66 4.18 -9.49 -7.25
Infosys Technologies Ltd Reliance Industries Ltd. ICICI BANK LTD. HDFC Bank Ltd State Bank of India ITC Ltd Zuari Industries Ltd. Bharti Airtel Ltd Larsen & Toubro Limited Tata Consultancy Services Ltd.
Software and Consultancy Services Petroleum, Gas and petrochemical products Banks Banks Banks FMCG Fertilizers, Pesticides & Agrochemicals Telecom Services Engineering and Capital Goods Software and Consultancy Services
24.11 13.14 18.73 25.48 17.46 30.06 10.30 20.59 22.18 23.07
88,000 270,000 240,000 449,300 100,000 870,000 251,478 371,849 100,000 125,000
25.32 23.69 22.35 22.02 19.06 18.54 15.10 14.57 14.13 13.95
Equity 94.70
Debt 0.00
59
Open Ended Equity Growth Nov 21, 2005 10 456.58 as on Oct 31, 2011
Fund Manager SIP STP SWP Expense ratio(%) Portfolio Turnover Ratio(%)
Krishna Sanghvi , Pankaj Tibrewal .
2.25 62.95
9. LIC Nomura Tax Plan - Growth

Objective: The Scheme aims to provide regular flow of dividend and capital appreciation especially when the unit is held for a longer period.
60
Stock
Sector
P/E
Qty
Value
Percentage of Change with last month 7.84 13.65 8.69 4.61 7.13 6.45 -0.07 4.32 3.62 7.2
ITC Ltd Infosys Technologies Ltd Reliance Industries Ltd HDFC Bank Ltd Tata Consultancy Services Ltd. ICICI BANK LTD. State Bank of India Larsen & Toubro Limited Bharti Airtel Ltd Housing Development Finance Corporation Ltd
FMCG Software and Consultancy Services Petroleum, Gas and petrochemical products Banks Software and Consultancy Services Banks Banks Engineering and Capital Goods Telecom Services HFC
30.06 24.11 13.14 25.48 23.07 18.73 17.46 22.18 20.59 26.31
138,750 10,000 28,000 42,130 16,000 17,500 7,700 10,100 36,000 20,000
2.96 2.88 2.46 2.06 1.78 1.63 1.47 1.43 1.41 1.37
Equity 95.15
Debt 0.00
61
Open Ended Equity Growth Feb 3, 1999 10 35.49 as on Oct 31, 2011
Ei ichi Oka .
2.27 56
NA 500 Daily Daily Entry Load is 0%. Entry Load is 0%. Entry Load is 0%. Exit Load is 0%. Exit Load is 0%. Exit Load is 0%.
10. PRINCIPAL BALANCED FUND GROWTH

Objective: Aims to generate long term capital appreciation and current income by investing in a portfolio of equity, equity related securities and fixed income securities.

62
-6.14
-2.96
-12.05
-24.16
16.25
-1.86
14.13
Stock
Sector
P/E
Qty
Value
Percentage of Change with last month 8.48 6.38 7.56 13.57 -0.90 4.26 -5.57 7.63 11.05 NA
Reliance Industries Ltd ICICI BANK LTD. ITC Ltd Infosys Ltd. Lupin Ltd. Apollo Tyres Ltd Gujarat State Petronet Ltd. Tata Consultancy Services Ltd. Oracle Financial Services Software Limited Hathway Cable & Datacom Ltd
Petroleum, Gas and petrochemical products Banks FMCG Software and Consultancy Services Pharmaceuticals & Biotechnology Auto & Auto Ancillaries Petroleum, Gas and petrochemical products Software and Consultancy Services Software and Consultancy Services NA
13.14 18.73 30.06 24.11 28.94 14.34 10.42 23.07 17.87 0.00
129,342 119,502 417,926 25,525 155,122 1,082,420 607,009 48,491 25,500 452,007
11.35 11.13 8.91 7.35 7.29 6.23 6.05 5.41 5.39 5.37
Equity 91.65
Debt 0.00
63
P V K Mohan .
2.35 67
80 % as on Apr 7, 2008 500 Daily Daily Amount greater than 0 then and Amount greater than 0 then Entry Load is 0%. Exit Load is 0%. Exit Load is 0%. Exit Load is 0%.
11. CANARA ROBECO BALANCE GROWTH

Objective: Aims to provide combination of long term capital appreciation and income from a balanced portfolio of equity and fixed income securities.

1 Month -5.61 3 Months -4.44 6 Months -7.26 1 Year -12.83 3 Years NA 5 Years NA Since Inception 34.99
64
Stock
Sector
P/E
Qty
Value
HDFC Bank Ltd Bharti Airtel Ltd Reliance Industries Ltd Infosys Ltd. ITC Ltd Hindustan Unilever Ltd Housing Development Finance Corporation Ltd State Bank of India OIL INDIA LTD. Tata Consultancy Services Ltd.
Banks Telecom Services Petroleum, Gas and petrochemical products Software and Consultancy Services FMCG FMCG HFC Banks Petroleum, Gas and petrochemical products Software and Consultancy Services
25.48 20.59 13.14 24.11 30.06 35.70 26.31 17.46 9.62 23.07
Equity 92.59
Debt 0.00
65
Open Ended Equity Growth Feb 2, 2009 10 0 as on Oct 31, 2011
Soumendra Nath Lahiri .
2.33 19
NA 500 Daily Daily Entry Load is 0%. Exit Load is 0%.
12. ING BALANCED FUND GROWTH

Objective: The fund seeks to generate long term growth of capital and current income from a portfolio of equity and fixed income securities.

66
-6.79
-3.71
-8.08
-16.14
29.21
0.28
13.23
Stock
Sector
P/E
Qty
Value
Percentage of Change with last month 7.67 54.42 42.21 -13.10 3.71 41.47 6.73 -4.21 -1.27 -28.90
ITC Ltd Infosys Technologies Ltd Reliance Industries Ltd. HDFC Bank Ltd Bharti Airtel Ltd Indraprastha Gas Ltd ICICI BANK LTD. Bharat Petroleum Corporation Ltd Lupin Ltd. Housing Development Finance Corporation Ltd
FMCG Software and Consultancy Services Petroleum, Gas and petrochemical products Banks Telecom Services Utilities - Gas, Power Banks Petroleum, Gas and petrochemical products Pharmaceuticals & Biotechnology HFC
30.06 24.11 13.14 25.48 20.59 19.84 18.73 0.00 28.94 26.31
134,630 7,611 22,469 30,970 33,162 30,445 11,773 17,404 21,994 14,440
2.87 2.19 1.97 1.52 1.30 1.27 1.10 1.08 1.03 0.99
Equity 90.85
Debt 0.00
67
Anshul Mishra .
2.50 84.78
NA 500 Daily Daily Entry Load is 0%. Entry Load is 0%. Exit Load is 0%. Exit Load is 0%.
13. HDFC Long Term Advantage Fund - Growth

Objective: The fund aims to provide periodic returns and capital appreciation over a long period of time, from a judicious mix of equity and debt investments, with the aim to prevent/ minimized any capital erosion.
68
1 Month -6.62
3 Months -4.37
6 Months -11.07
1 Year -18.45
3 Years 27.93
5 Years 5.52
Since Inception 25.40
Stock Other Equities Tata Consultancy Services Ltd. Infosys Ltd. ICICI BANK LTD. Reliance Industries Ltd. Bharti Airtel Ltd State Bank of India Balkrishna Industries Ltd Carborundum Universal Ltd Dr Reddys Laboratories Ltd
Sector Miscellaneous Software and Consultancy Services Software and Consultancy Services Banks Petroleum, Gas and petrochemical products Telecom Services Banks Auto & Auto Ancillaries Industrial Products Pharmaceuticals & Biotechnology
P/E NA 23.07 24.11 18.73 13.14 20.59 17.46 8.20 23.98 27.75
Qty NA NA NA NA NA NA NA NA NA NA
Equity 97.13
Debt 0.15
69
Open Ended Equity Growth Jan 2, 2001 10 0 as on Oct 31, 2011
Chirag Setalvad .
2.07 12.13
14. SBI MAGNUM BALANCED FUND GROWTH

Objective: The fund aims to provide to its Investors growth through capital appreciation. It also plans to provide periodic income through declaration of dividends

70
Stock Cash Reliance Industries Ltd Tata Motors Ltd Sundaram Finance Ltd. ICICI BANK LTD. GOI Hindustan Unilever Ltd. Bharti Airtel Ltd Power Finance Corporation Ltd Bank of Baroda
Sector Current Assets Petroleum, Gas and petrochemical products Auto & Auto Ancillaries NBFC Banks Sovereign FMCG Telecom Services FI Banks
P/E NA 13.14 33.41 8.51 18.73 NA 35.70 20.59 7.47 6.64
Qty NA NA NA NA NA NA NA NA NA NA
Equity 73.60
Debt 19.14
71
Open Ended Equity & Debt Growth Oct 9, 1995 10 0 as on Oct 31, 2011
Dharmendra Grover , Dinesh Ahuja .
2.29 52
20 % as on Feb 3, 2004 1000 Daily Daily Entry Load is 0%. If redeemed bet. 0 Year to 1 Year; Exit load is 1%.
15. SUNDARAM BALANCED FUND GROWTH

Objective: The scheme seeks to generate capital appreciation and current income through a mix of investments in Equities and Fixed Income Securities.

72
Stock
Sector
P/E
Qty
Value
Percentage of Change with last month 0.85 8.72 7.74 14.21 0.22 4.36 14.51 11.18 7.95 20.86
Union Bank Of India Ltd Reliance Industries Ltd. Tata Consultancy Services Ltd. TVS Motor Company Lupin Ltd. Larsen & Toubro Limited Infosys Technologies Ltd Kotak Mahindra Bank Ltd. ICICI BANK LTD. Infrastructure Development Finance Co. Ltd
Banks Petroleum, Gas and petrochemical products Software and Consultancy Services Auto & Auto Ancillaries Pharmaceuticals & Biotechnology Engineering and Capital Goods Software and Consultancy Services Banks Banks FI
5.93 13.14 23.07 15.50 28.94 22.18 24.11 39.79 18.73 15.02
NA 67,951 52,841 634,377 91,195 26,076 12,806 67,994 36,697 257,887
10.05 5.96 5.90 4.36 4.29 3.69 3.69 3.48 3.42 3.42
Equity 73.60
Debt 22.22
73
Open Ended Equity & Debt Growth Jun 23, 2000 10 67 as on Oct 31, 2011
Satish Ramanathan , K Ramkumar .
2.48 314
NA 5000 Daily Daily Entry Load is 0%. If redeemed bet. 0 Months to 12 Months; Exit load is 1%.
16. UTI BALANCED FUND GROWTH

Objective: Aims to invest in portfolio of equity/equity related securities and fixed income securities (debt & money market instruments) with a view to generating regular income together with capital appreciation.
1 Month -6.17 3 Months -3.95 6 Months -8.39 1 Year -13.66 3 Years 19.59 5 Years NA Since Inception 12.92
74
Stock
Sector
P/E
Qty
Value
Shriram Transport Finance Company Ltd GOI Oil & Natural Gas Corpn Ltd ITC Ltd Mahindra & Mahindra Ltd Bharti Airtel Ltd ICICI BANK LTD. Reliance Industries Ltd Housing Development Finance Corporation Ltd Infosys Ltd.
NBFC Sovereign Petroleum, Gas and petrochemical products FMCG Auto & Auto Ancillaries Telecom Services Banks Petroleum, Gas and petrochemical products HFC Software and Consultancy Services
10.73 NA 12.29 30.06 20.25 20.59 18.73 13.14 26.31 24.11
600 500,000,000 1,331,690 1,472,720 343,537 738,498 295,868 309,198 380,291 80,597
Equity 71.34
Debt 27.87
75
Open Ended Equity & Debt Growth Jan 20, 1995 10 0 as on Oct 31, 2011
V Srivatsa, Amandeep Chopra .
2.06 53.62
13.5 % as on Jun 30, 1999 1000 Daily Daily Entry Load is 0%. If redeemed bet. 0 Year to 1 Year; Exit load is 1%.
17. TATA BALANCED FUND GROWTH

Objective:Aims to invest in equity and debt oriented securities so as to give investor balanced returns.

76
Stock
Sector
P/E
Qty
Value
Housing Development Finance Corporation Ltd Hindustan Unilever Ltd ITC Ltd. Union Bank Of India Ltd Infosys Ltd. HDFC Bank Ltd. Reliance Industries Ltd Mahindra & Mahindra Ltd. Bharti Airtel Ltd. Oil & Natural Gas Corpn Ltd
HFC FMCG FMCG Banks Software and Consultancy Services Banks Petroleum, Gas and petrochemical products Auto & Auto Ancillaries Telecom Services Petroleum, Gas and petrochemical products
26.31 35.70 30.06 5.93 24.11 25.48 13.14 20.25 20.59 12.29
Equity 74.66
Debt 23.52
77
Open Ended Equity & Debt Growth Oct 8, 1995 10 0 as on Oct 31, 2011
Murthy Nagarajan, M Venugopal .
2.33 66
12.5 % as on Sep 10, 2003 5000 Daily Daily Entry Load is 0%. If redeemed bet. 0 Days to 365 Days; Exit load is 1%.
18. BARODA PIONEER BALANCE FUND GROWTH

Objective:To generate long term capital appreciation along with stability through a well balanced portfolio of equity & debt instruments.

78
Stock
Sector
P/E
Qty
Value
State Bank of Patiala Net Receivables/(Payable) CBLO State Bank of India Larsen & Toubro Limited Bank of Baroda ICICI BANK LTD. Housing Development Finance Corporation Ltd Reliance Industries Ltd. Dr Reddys Laboratories Ltd
Banks Current Assets Current Assets Banks Engineering and Capital Goods Banks Banks HFC Petroleum, Gas and petrochemical products Pharmaceuticals & Biotechnology
NA NA NA 17.46 22.18 6.64 18.73 26.31 13.14 27.75
Equity 66.62
Debt 0.02
79
Open Ended Equity & Debt Growth Sep 12, 2003 10 0 as on Oct 31, 2011
Deepak Acharya .
2.50 51
NA 3000 Daily Daily Amount greater than 0 then and Amount greater than 0 then Entry Load is 0%. If redeemed bet. 0 Months to 12 Months; If redeemed bet. 0 Months to 12 Months; If redeemed bet. 0 Months to 12 Months; Exit load is 1%.
19. ICICI PRUDENTIAL BALANCED GROWTH

Objective:Aims to invest in equity and debt oriented securities so as to give investor balanced returns.

80
Stock Cholamandalam Investment & Finance Company Ltd Reliance Capital Ltd. Bharti Airtel Ltd Kotak Mahindra Primus CBLO Wipro Ltd Bank of Baroda Amara Raja Batteries Ltd Housing Development Finance Corporation Ltd Bajaj Auto Ltd
Sector
P/E
Qty
Value
NBFC NBFC Telecom Services NBFC Current Assets Software and Consultancy Services Banks Auto & Auto Ancillaries HFC Auto & Auto Ancillaries
13.75 28.62 20.59 NA NA 18.64 6.64 11.47 26.31 16.93
Equity 69.31
Debt 28.26
81
Open Ended Equity & Debt Growth Nov 3, 1999 10 0 as on Oct 31, 2011
Prashant Kothari , Avnish Jain .
2.29 46
NA 5000 Daily Daily Entry Load is 0%. If redeemed bet. 0 Year to 1 Year; Exit load is 1%.
20. ESCORTS BALANCED FUND - GROWTH

Objective:Seeks to generate long term capital appreciation and current income from a well diversified portfolio of equity shares and fixed income securities.

82
Stock
Sector
P/E
Qty
Value
Power Finance Corporation Ltd UTV Software Communication Ltd. Kalyani Investment Company Ltd. Uflex Ltd. Indian Bank Current Assets Tata Motors Ltd. Larsen & Toubro Ltd. Supreme Infrastructure India Ltd. Southern Petrochemicals Industries Corporation Ltd.
FI Media and Entertainment NA Printing, Publishing and Packaging Banks Current Assets Auto & Auto Ancillaries Engineering and Capital Goods Construction and Infrastructure Fertilizers, Pesticides & Agrochemicals
7.47 49.30 17.52 4.52 5.17 NA 33.41 22.18 4.42 8.20
NA 1,950 3,512 7,497 5,000 NA 5,139 600 3,000 25,000
0.30 0.19 0.18 0.13 0.11 0.10 0.10 0.08 0.06 0.06
Equity 66.62
Debt 0.02
83
Open Ended Equity & Debt Growth Sep 12, 2003 10 0 as on Oct 31, 2011
Deepak Acharya .
2.50 51
NA 3000 Daily Daily Amount greater than 0 then and Amount greater than 0 then Entry Load is 0%. If redeemed bet. 0 Months to 12 Months; If redeemed bet. 0 Months to 12 Months; If redeemed bet. 0 Months to 12 Months; Exit load is 1%.
21. JM BALANCED GROWTH
Objective: Aims to provide investors with liquidity and current income along with capital appreciation.
84
-5.76
-0.78
-5.85
-14.12
15.47
-2.34
8.01
Stock
Sector
P/E
Qty
Value
Union Bank Of India Ltd ITC Ltd Reliance Industries Ltd. CBLO Infosys Technologies Ltd Bajaj Auto Ltd Bharat Heavy Electricals Ltd Associated Cement Companies Ltd Mahindra & Mahindra Ltd Bharti Airtel Ltd
Banks FMCG Petroleum, Gas and petrochemical products Current Assets Software and Consultancy Services Auto & Auto Ancillaries Power & Control equipment Manufacturer Construction materials Auto & Auto Ancillaries Telecom Services
5.93 30.06 13.14 NA 24.11 16.93 12.63 21.51 20.25 20.59
85
Equity 66.09
Debt 26.48
Open Ended Equity & Debt Growth Apr 1, 1995 10 0 as on Oct 31, 2011
Sanjay Kumar Chhabaria .
2.50 17.31
40 % as on Dec 20, 2003 1000 Daily Daily Entry Load is 0%. If redeemed bet. 0 Days to 365 Days; Exit load is 1%.
86
Chapter 3 Objectives and Scope

87
Objectives of the study1. To find out the Preferences of the investors for Asset Management Company. 2. To know the Preferences for the portfolios. 3. To know why one has invested or not invested in SBI Mutual fund 4. To find out the most preferred channel. 5. To find out what should do to boost Mutual Fund Industry in India.
Scope of the study:A big boom has been witnessed in Mutual Fund Industry in recent times. A large number of new players have entered the market and trying to gain market share in this rapidly improving market. The research was carried on in Naini (U.P). I had been sent at one of the branch of State Bank of India Naini where I completed my Project work. I surveyed on my Project Topic, A study of Major Mutual Fund in India on the visiting customers of the SBI Allahabad Road Branch. The study will help to know the preferences of the customers, which company, portfolio, mode of investment, and option for getting return and so on they prefer. This project report may help the company to make further planning and strategy.
88
Chapter 4 Research Methodology

89
RESEARCH METHODOLOGY:This report is based on primary as well secondary data, however primary data collection was given more importance since it is overhearing factor in attitude studies. One of the most important users of research methodology is that it helps in identifying the problem, collecting, analyzing the required information data and providing an alternative solution to the problem .It also helps in collecting the vital information that is required by the top management to assist them for the better decision making both day to day decision and critical ones. Data sources: Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by interacting with various people. The secondary data has been collected through various journals and websites. Duration of Study: The study was carried out for a period of four month months, from 01 st July to 30th October 2011.
90
Sampling: Sampling procedure: The sample was selected of them who are the customers/visitors of State Bank if India, Boring Canal Road Branch, irrespective of them being investors or not or availing the services or not. It was also collected through personal visits to persons, by formal and informal talks and through filling up the questionnaire prepared. The data has been analyzed by using mathematical/Statistical tool.
Sample size:
The sample size of my project is limited to 200 people only. Out of which only 120 people had invested in Mutual Fund. Other 80 people did not have invested in Mutual Fund.
Sample design:
Data has been presented with the help of bar graph, pie charts, line graphs etc.
Limitation of Sampling Process:1. Some of the persons were not so responsive. 2. Possibility of error in data collection because many of investors may have not given actual answers of my questionnaire. 3. Sample size is limited to 200 visitors of State Bank of India, Mirzapur Road, ITI-zone Naini Branch, Uttar Pradesh out of these only 120 had invested in Mutual Fund. The sample size may not adequately represent the whole market. 4. Some respondents were reluctant to divulge personal information which can affect the validity of all responses. 5. The research is confined to a certain part of Naini.
91
Chapter 5 Data Analysis & Interpretation

92
ANALYSIS & INTERPRETATION OF THE DATA:1. (a) Age distribution of the Investors of Naini
Age Group <= 30
31-35
36-40
41-45
46-50
>50
No. of 12 Investor
18
30
24
20
16
Interpretation:According to this chart out of 120 Mutual Fund investors of Dehradoon the most are in the age group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of 41-45yrs i.e. 20% and the least investors are in the age group of below 30 yrs.
(b) Educational Qualification of Investors of Naini

93
Educational Qualification Graduate/Post Graduate Under Graduate Others Total
Number of Investor 88 25 7 120
Interpretation:Out of 120 Mutual Fund investors 71% of the investors in Naini are Graduate/Post Graduate, 23% are Under Graduate and 6% are others (under HSC).
(c) Occupation of the investors of Naini

94
Occupation Government Services Private Services Business Agriculture Others
No. of Investor 30 45 35 4 6
Interpretation:In Occupation group out of 120 investors, 38% are Pvt. Employees, 29% are Businessman, 25% are Govt. Employees, 3% are in Agriculture and 5% are in others.
95
(d) Occupation of the investors of Naini Income Group (in 000s) <=10 10-15 15-20 20-30 >30 No. of Investor 5 12 28 43 32
Interpretation:In the Income Group of the investors of Dehradoon, out of 120 investors 36% investors that are maximum are in the monthly income group Rs.20,000-30,000. 27% investors are in the monthly
96
income group of more than Rs. 30,000 and the minimum investors i.e. 4% are in the monthly income group of below Rs. 10,000.
2. Investors invested in different kind of investments.

Kind of Investments
Saving A/c Fixed Deposits Insurance Mutual Fund Post Office (NSC) Shares/Debentures Gold/Silver Real Estate
No. of Respondents
70 40 38 32 12 4 3 1
Interpretation:-
97
From the above graph it can be inferred that out of 200 people, 35% people have invested in Saving A/c, 19% in Insurance, 20% in Fixed Deposits, 16% in Mutual Fund, 6% in Post Office, 2% in Shares or Debentures, 1.5% in Gold/Silver and 0.5% in Real Estate.
3. Preference of factors while investing

Factors No. Respondents of 40 60 64 36 (a) Liquidity (b) Low Risk (c) High Return (d) Trust
Interpretation:Out of 200 People, 32% People prefer to invest where there is High Return, 30% prefer to invest where there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust.
98
4. Awareness about Mutual Funds and its Operations Response No. of Respondent Yes 135 No 65
Interpretation:From the above chart it is inferred that 67% People are aware of Mutual Fund and its operations and 33% are not aware of Mutual Fund and its operations.
99
5. Source of Information for Customers about Mutual Fund Source of Information Advertisement Peer Group Bank Financial Advisors No. of Respondents 18 25 30 62
Interpretation:From the above chart it can be recognised that the Financial Advisor is the most important source of information about Mutual Fund. Out of 135 Respondents, 46% know about Mutual fund Through Financial Advisor, 22% through Bank, 19% through Peer Group and 13% through Advertisement.
100
6. Investors invested in Mutual Fund Response Yes No Total No. of Respondents 120 80 200
Interpretation:Out of 200 people who were surveyed, 60% had invested in mutual fund and remaining 40% have not invested in mutual funds.
101
7. Reasons for not investing in Mutual Funds Reason Lack of Awareness Higher Risk No Specific Reason No. of Respondents 65 5 10
Interpretation:Out of 80 peoples who have not invested in mutual funds, 81% were not aware of what exactly mutual fund means. 13% of the people said they have not invested due to higher risk involved in it and remaining 6% failed to specify any specific reason for investing in mutual funds.
102
8. Investors invested in different Asset Management Company (AMU) Name of the AMC SBIMF UTI HDFC Reliance ICICI Prudential Others No. of Investors 25 30 13 34 14 4
Interpretation:Most of investor who has invested in mutual fund prefers Reliance. 28% of the investor has invested in Reliance mutual fund. 25% of the investor has invested in UTI mutual fund. 21% of the investor has invested in SBI mutual fund. 12% has invested in ICICI prudential, 11% investor has invested in HDFC and remaining 4% have invested in the other mutual funds that are available in the market.
103
9. Reason for investment in specific mutual fund
Reason for investment Associated with them Better return Agents advice
No. of Respondents 77 11 32
Interpretation:Out of 120 investors who have invested in the mutual fund, 64% of the investors have invested merely because of their association with the mutual funds firm. 27% of the investor has invested after getting advice from the agents and remaining 9% has invested because of higher returns.
104
10.
Reason for not investing in other Mutual fund other than they are investing in
Reason Not Aware Less Return Agents Advice
No. of Respondents 46 34 40
Interpretation:Out of 120 investors who have invested 39% of the investors are not aware of the different kinds of mutual funds that are available in the market. 28% of the investors have not invested in other mutual fund due to less chances of return. Remaining 33% have invested after getting the advice from the agents.
105
11 Preference of Investors for future investment in mutual fund Name of AMC SBIMF UTI HDFC Reliance ICICI Prudential Others No. of Investor 20 15 10 40 30 5
Interpretation:Out of 120 investor majority have shown their interest in the Reliance Mutual fund with 33% of the investors want to invest in Reliance, whereas 25% of investors want to invest in ICICI prudential. 17% of the investor opted for SBI, 13% want to invest in the UTI mutual fund, 8% in HDFC and remaining 4% wants to invest some other.
106
12
Channel preferred by the Investors for Mutual fund investments
Channel No. Respondent of
Financial Advisor Bank
AMC
72
18
30
Interpretation:Out of 1210 investor 60% preferred to invest through Financial Advisor, 25% prefer through AMC and remaining 15% through Bank.
107
13
Mode of Investment Preferred by the Investor One Time Investment 78 Systematic Plan (SIP) 42 Investment
Mode of Investment No. of Respondents
Interpretation:Out of 120 investor 65% have opted for one time investment and remaining 35% have opted for Systematic investment Plan (SIP).
108
14
Preferred portfolios by the Investors
Portfolio Equity Debt Balanced
No. of Investors 56 20 44
Interpretation:From the above graph it can be seen that 46% preferred equity portfolio 37% preferred Balance and 17% preferred Debt portfolio.
109
15
Option for getting Return preferred by the Investors
Option No. Respondents of
Dividend payout
Dividend Reinvestment
Growth
25
10
85
Interpretation:Out of 120 investors 71% preferred Growth option, 21% preferred Dividend option and Remaining 8% preferred Reinvestment option.
110
16
Preference of Investors whether to invest in Sectoral Funds
Response Yes No
No. of Respondents 25 75
Interpretation:Out of 120 investor 75% do not prefer to invest in sectoral fund because there is maximum risk and remaining 25% of investors prefer to invest in sectoral fund.
111
Chapter 6 Findings And Conclusions

112
Findings
In Naini in the age-group of 36-40 years were more in numbers. The second most investors were in the age group of 14-45 years and the least were in the age group of below 30 years. Most of the investors were Graduate or Post Graduate and below HSC there were very few in numbers. In occupation group most of the investors were government employees, the second most investors were private employees and the least were associated with agriculture. In family income group, between Rs. 20,000-30,000 were most in number, the second most were in the Income group of more than Rs. 30,000 and the least were in the group below Rs. 10,000. Majority of the respondents had a saving account in the bank where they had invested lots of money followed by insurance in the second place with 19% of the investors investing in insurance and 20% investing in fixed deposits. Only 16% of the investors had invested in Mutual fund. Mostly respondents preferred High return while they are investing their money in any source of investment let it be mutual funds, saving account, shares, debentures, gold etc. The second most preferred low risk then liquidity and the least preferred trust. Only 67% of the respondents were aware about mutual fund and its operations and 33% were not aware of what exactly mutual fund is and how does it operates. Among 200 respondents only 60% had invested in the mutual fund and 40% did not invest in mutual fund at all.
113
Out of 80 investors who had not invested in mutual funds 81% were not aware of mutual fund, 13% told there is not any specific reason for not investing in mutual fund and 6% told there is likely to be higher risk in Mutual Fund. Most of the investors had invested in Reliance or UTI mutual fund, ICICI prudential has also good brand position among investors, SBIMF places after ICICI prudential according to the respondents. Out of 120 investors of mutual fund 64% have invested due to their association with the Brands, 27% invested because of advisors advice and 9% due to better returns.
Most of the investors did not invest in other mutual funds due to less awareness about the various mutual funds that were available in the market. Second and most focused reason for not investing in other mutual funds is they were investing as per the advice of the market agents and very few were left who did not invest in other mutual funds due to less returns. When asked for the future investment, the most preferred mutual fund for future investment was Reliance mutual funds followed by ICICI prudential at the second spot and SBI mutual fund followed after this two. 60% Investors preferred to Invest through Financial Advisors, 25% through AMC (means Direct Investment) and 15% through Bank. 65% preferred One Time Investment and 35% preferred SIP out of both type of Mode of Investment. The most preferred Portfolio was Equity, the second most was Balance (mixture of both equity and debt), and the least preferred Portfolio was Debt portfolio. Maximum Number of Investors Preferred Growth Option for returns, the second most preferred Dividend Payout and then Dividend Reinvestment. Most of the Investors did not want to invest in Sectoral Fund, only 25% wanted to invest in Sectoral Fund.
114
Conclusions
Running a successful Mutual Fund requires complete understanding of the peculiarities of the Indian Stock Market and also the awareness 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 Mutual Fund. They think their money will not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its related terms. They have to be made aware of what is mutual fund and how does it operates. What are its advantages and how it may lead to losses? Many of people do not have invested in mutual fund due to lack of awareness although they have money to invest. As the awareness and income is growing the number of mutual fund investors are also growing. Brand plays important role for the investment for this small investors. People invest in those Companies where they have faith or they are well known with them. There are many AMCs in Naini but only some are performing well due to Brand awareness. Some AMCs are not performing well although some of the schemes of them are giving good return because of not awareness about Brand. Reliance, UTI, SBIMF, ICICI Prudential etc. they are well known Brand, they are performing well and their Assets Under Management is larger than others whose Brand name are not well known like Principle, Sundaram, etc. Distribution channels are also important for the investment in mutual fund. Financial Advisors are the most preferred channel for the investment in mutual fund. They can change investors mindset from one investment option to others. Many of investors directly invest their money through AMC because they do not have to pay entry load. Only those people invest directly who know well about mutual fund and its operations and those have time.
115
Chapter 7
Suggestions And
Recommendation
116
Suggestions and Recommendations

The most vital problem spotted is of ignorance. Investors should be made aware of the benefits. Nobody will invest until and unless he is fully convinced. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing. Mutual funds offer a lot of benefit which no other single option could offer. But most of the people are not even aware of what actually a mutual fund is? They only see it as just another investment option. So the advisors should try to change their mindsets. The advisors should target for more and more young investors. Young investors as well as persons at the height of their career would like to go for advisors due to lack of expertise and time. Mutual Fund Company needs to give the training of the Individual Financial Advisors about the Fund/Scheme and its objective, because they are the main source to influence the investors. Before making any investment Financial Advisors should first enquire about the risk tolerance of the investors/customers, their need and time (how long they want to invest). By considering these three things they can take the customers into consideration. Younger people aged less than 35 will be a key new customer group into the future, so making greater efforts with younger customers who show some interest in investing should pay off. Customers with graduate level education are easier to sell to and there is a large untapped market there. To succeed however, advisors must provide sound advice and high quality. Systematic Investment Plan (SIP) is one the innovative products launched by Assets Management companies very recently in the industry. SIP is easy for monthly salaried person as it provides the facility of do the investment in EMI. Though most of the prospects and potential investors are not aware about the SIP. There is a large scope for the companies to tap the salaried persons.
117
Divide the spectrum of Mutual Funds depending on major asset classes invested in. Presently there are only two. Equity Funds investing in stocks. Debt Funds investing in interest paying securities issued by government, semigovernment bodies, public sector units and corporate.
a) Categorizing equities Diversified invest in large capitalized stocks belonging to multiple sectors. Sectoral Invest in specific sectors like technology, FMCG, Pharma, etc. b) Categorized Debt. Gilt Invest only in government securities, long maturity securities with average of 9 to 13 years, very sensitive to interest rate movement. Medium Term Debt (Income Funds) Invest in corporate debt, government securities and PSU bonds. Average maturity is 5 to 7 years. Short Term Debt Average maturity is 1 year. Interest rate sensitivity is very low with steady returns. Liquid Invest in money market, other short term paper, and cash. Highly liquid. Average maturity is three months. Review Categories Diversified equity has done very well while sectoral categories have fared poorly in Indian market. Index Funds have delivered much less compared to actively managed Funds. Gilt and Income Funds have performed very well during the last three years. They perform best in a falling interest environment. Since interest rates are now much lower, short term Funds are preferable. Specific scheme selection Rankings are based on criteria including past performance, risk and resilience in unfavorable conditions, stability and investment style of Fund management, cost and service levels. Some recommended schemes are: Diversified equity Zurich Equity, Franklin India Bluechip, Sundaram Growth. These Funds show good resilience giving positive results. Gilt Funds DSP Merrill Lynch, Tata GSF, and HDFC Gilt have done well.
118
Income Fund HDFC, Alliance, Escorts and Zurich are top performers Short Term Funds ICICI prudential, Franklin Templeton are recommended
119
BIBLIOGRAPHY:
Websites:
1)
www.indiamutualfunds.com
2) www.bseindia.com 3) www.moneycontrol.com 4) www.google.co.in 5) www.capitalmarket.com 6) www.indiainfoline.com 7) www.yahoofinance.com 8) www.afiindia.com 9) www.valueresearchonline.com
Books:Investment Management by B.K. Bhalla Portfolio and Security Analysis by Punithavathy Pandian Securities Analysis and Portfolio Management by V.A. Avadhani Mutual Funds in India by H. Sadhak
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Mutual Funds in India

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Mutual Funds in India

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MAJOR MUTUAL FUNDS IN INDIA

WELINGKAR INSTITUTE OF MANAGEMENT DEVELOPMENT AND RESEARCH

CERTIFICATE FROM GUIDE

SIGNATURE OF GUIDE NAME : DESIGNATION :

TITLE PAGE ACKNOWLEGEMENT CERTIFICATE FROM THE GUIDE

34 77 79 82 102 106 108

CONCEPT OF MUTUAL FUND:

Why Select Mutual Fund?

HISTORY OF MUTUAL FUNDS IN INDIA:

FIRST PHASE 1964-87:

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

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

FOURTH PHASE SINCE FEBRUARY 2003:

GROWTH IN ASSETS UNDER MANAGEMENT

Reasons to invest in mutual funds :

Organization of a Mutual Fund

ADVANTAGES OF MUTUAL FUNDS:

4. Reduction Of Transaction Costs:

6. Convenience And Flexibility:

DISADVANTAGES OF INVESTING THROUGH MUTUAL FUNDS:

No Control Over Costs:

3. Managing A Portfolio Of Funds:

4. The Wisdom Of Professional Management:

RISK HIERARCHY OF MUTUAL FUNDS

Snapshot of Mutual Fund Schemes

Liquidity + Moderate Income + Money Market Negligible Reservation of Capital

Short-term Funds (Floating short-term)

+ Little - Liquidity Moderate Income Rate

Bond Funds Regular Income (Floating Long-term) -

Salaried conservative investors

More than 9 - 12 months

Interest Security & Income Risk

Salaried conservative investors

& 12 months & more

Long-term Capital Equity Funds High Risk Appreciation

Aggressive investors with long 3 years plus term out look.

LANDMARKS IN INDIAN HISTORY OF MUTUAL FUND

TYPES OF MUTUAL FUNDS SCHEMES IN INDIA

1. Open - Ended Schemes:

2. Close - Ended Schemes:

Money Market Schemes:

OTHER SCHEMES Tax Saving Schemes:

Sector Specific Schemes:

NET ASSET VALUE (NAV):

MUTUAL FUND FEES AND EXPENSES

3. OTHER OPERATING EXPENSES Transaction Costs:

or investing in illiquid or exotic markets usually face higher transaction costs.

Depending on the type of load a mutual fund

Level load / Low load:

RISK V/S. RETURN:

Chapter 2 The Detailed Study

1. Birla Sun Life Tax Relief 96 - Growth

SCHEME PERFORMANCE (%) AS ON NOV 25, 2011

Percentage of Net Qty Assets NA NA NA NA NA NA NA NA NA NA

Percentage of Change with last month NA NA NA NA NA NA NA NA NA NA

Asset Management Company

Open Ended Equity Growth Oct 3, 2006 10 0 as on Oct 31, 2011

2. DSP Blackrock Tax Saver Fund - Growth

Percentage of Net Qty Assets 126,558 678,910 324,246 145,268 224,480

36.42 33.27 28.45 27.69 20.90

1,690,500 19.96 496,693 43,817 161,098 19.46 18.62 17.98

Food & Food Processing, 45.97 2.49 Beverages

3. HDFC Taxsaver - Growth