MUTUAL FUND ANALYSIS

A STUDY ON MUTUAL FUND AS

AN INVESTMENT AVENUE
(SYNOPSIS)

PROJECT GUIDE Ms Rajani Roshan John

SUBMITTED BY

SUVIR AGGARWAL(08D0348)

GAURAV GOEL(08D0387)

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INTRODUCTION

Mutual fund is a buzz in the market these days. The mutual fund industry is burgeoning, it is
completely untapped market. Only 5% of total potential of this industry has been grabbed.
Hence this industry has a lot of opportunities in it. That’s why it is so much interactive.

As Indian economy is growing at the rate of 8% per annum, we can see its effect in all areas.
The Indian stock market and companies have become lucrative for foreign investors. More
and more fund is pouring in our country. This is increasing liquidity in the market and hence
increasing the money in the hands of people and thus investment. As the future prospects for
Indian companies are bright, they have lots of opportunities to expand their business
worldwide, the investment in Indian companies.

A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is invested by the fund manager in different types of
securities depending upon the objective of the scheme. These could range from shares to
debentures to money market instruments. The income earned through these investments and
the capital appreciations realized by the scheme are shared by its unit holders in proportion to
the number of units owned by them (prorata). Thus a Mutual Fund is the most suitable
investment for the common man as it offers an opportunity to invest in a diversified,
professionally managed portfolio at a relatively low cost. Anybody with an investible surplus
of as little as a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme
has a defined investment objective and strategy.

A mutual fund is the ideal investment vehicle for today’s complex and modern financial
scenario. Markets for equity shares, bonds and other fixed income instruments, real estate,
derivatives and other assets have become mature and information driven. Price changes in
these assets are driven by global events occurring in faraway places. A typical individual is
unlikely to have the knowledge, skills, inclination and time to keep track of events,
understand their implications and act speedily.

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WHAT IS A MUTUAL FUND

A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. It offers an opportunity to invest in a diversified, professionally managed
basket of securities at a relatively low cost. The flow chart below describes broadly the
working of a mutual fund:
“Mutual Funds are popular among all income levels. With a mutual fund, we get a
diversified basket of stocks managed by professionals”
These Trusts are run by experienced Investment Managers who use their knowledge and
expertise to select individual securities, which are classified to form portfolios that meet
predetermined objectives and criteria

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METHODOLOGY FOLLOWED

Methodology basically means the selection of the various methods and techniques in the research-
conducted. The various methods and techniques that will be followed include: -

1)Questionnaires will be prepared to analyse :

a) Investors interest and their age group.

b) Reasons for choosing particular avenue.

c) If not mutual fund . why so ?

2)Collection of secondary data through :

a) Various investment companies

b) Other financial institutions – Banks

3)Analysis and interpretation of the collected data. Data is collected and compared to the
standards like present schemes offered by the company , returns, and risk involved
4)Concluding by the Generation of the final report.

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RESEARCH DESIGN

There are 34 fund houses currently operating in India of which four have been in existence
for less than three years. Whereas till 2004, hardly a few equity schemes were launched each
year, that number has grown by 8-10 times now. For the purpose of the research, I have
selected 5 fund houses as mentioned under:

1)SBI Mutual
2)Franklin templeton
3)Birla
4)Reliance
5)Prudential ICICI

The following methodology is adopted for Comparison.

Step1: Selection of few well-performing Funds of Big Fund Houses of India.

Step2: Collection of data (against various parameters) for comparison of Funds.
Step3: Analyses of the parameters and their relevance in comparing the funds.

Step4: Comparing and Ranking these funds on the basis of inputs from executives and the
rating agencies
Step5: Generation of a project report

SCOPE OF THE STUDY:

Geographical scope-

The geographical scope of the study is limited. This study cannot be implemented in any part
of the country; though the samples will be taken were from various Mutual Fund branch
office and various banks in the Bangalore region.

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Functional scope-

This study can be used to understand the behavioural aspect of people who invest, what is
their investment potential and how much risk can they take. The study throws some light on
best performing schemes.

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DATA COLLECTION

The primary data collection was the most important part of the project. This includes
collecting the information through field research. For collecting information, a personal
interview was conducted with the help of questionnaire and the required information was
collected for the respondents.

DATA ANALYSIS

After collecting the data, data is to be analyzed. The findings and the analysis will be

mentioned further in the report.

OBJECTIVE:

 To know the awareness of mutual funds among people.

 To see the interest of people in investing in mutual funds.

 To know the investment behaviour of investors in mutual fund according to different age
group.

 To ascertain the percentage of income the investors invest in mutual fund.

 To know the different attitudes of people regarding risk, rate of return, period of
investment.

 To know the investors preferred financial product for investment

LIMITATION OF THE STUDY

1) Only secondary data available, no access to primary data.

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2) Not much of past knowledge about mutual funds and its working.

3) Lack of transparency in interaction with the people concerned with mutual funds.

4) Limited information through secondary research report is basic hindrance in finding out the
true results related to investments in mutual fund schemes by an investor.

5) Limited time was another constraint

6) Geographical locations.

7) Unawareness among the investors choosing the right avenue for investment.

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