Mutual Funds

CHAPTER –I
INTRODUCTION
1.1 Introduction of the study
With the increasing emphasis on domestic savings and their mobilization and allocation
towards profitable investments, the need and scope of the mutual fund operations have
increased .Mutual fund is one of the attractive financial instruments that plays a vital
role in the economy of a country. According to Association of Mutual Funds in India
(AMFI), “A mutual fund is a trust that pools the savings of an investors who share
common financial goal. Anybody with an investible surplus of as little as a few
thousand rupees can invest in mutual funds. This investor buys with a particular mutual
funds scheme that has a defined investment objective and strategy.”
A mutual fund is a trust that pools the savings of investors who shares a common financial
goal. The money collected is then invested in capital market instruments such as shares,
debentures and other securities depending upon the objectives of the schemes. The
income earned through these investments and capital appreciations of the scheme are
shared by the unit holders in proportion to the number of units owned by them. A mutual
fund is the most suitable investment for the common man as it offers an opportunity to
invest in a diversified, professionally managed basket of securities at a relatively low cost.
The mutual fund industry in India was started in the year 1963 with the formation of the
Unit Trust of India (UTI).
The wide variety of schemes offered by these mutual fund companies gave wide
investment choice for the investors, Mutual funds provide different opportunities for the
investors. During the last few years many rapid and extraordinary changes have been seen
in the mutual fund industry and many new schemes are also launched. Due to this changed
environment it becomes important to study about the performance of mutual funds. The
need for evaluating the performance of mutual funds is to see which schemes are doing
well and to carry out risk return analysis of the funds. The aim of the project is to analyse
the performance of mutual funds schemes in Axis bank with the help of parameters such
as Standard Deviation, Beta, Sharpe Ratio, Treynor Ratio and Jensen Ratio.
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1.2 Need and importance of the study
The need of the project is to evaluate the performance of mutual funds under various
schemes. The project evaluates the performance of open-ended, close-ended and
growth-oriented equity scheme. Open-ended mutual fund schemes are the ones which
do not have a fixed maturity and are not listed in stock exchanges. Close-ended mutual
fund schemes can be redeemed only on maturity and they should be compulsorily listed
in the stock exchanges. Growth funds result in the appreciation of money invested by
the investor. The success of any mutual fund depends on the competence of
management. The performance of mutual funds is important both for investors and
portfolio managers. It enables the investors to know about how much return is generated
by portfolio managers and the risk assumed in generating returns. Thus, the need of the
study includes
 To understand the return and risk relationship for each mutual fund scheme.
 To study and analyse the mutual fund schemes offered by axis mutual fund.
1.3 Objectives of the study
 To study about mutual funds.

 To study returns of select mutual funds schemes for 3 years.
 To study risk of select mutual funds schemes for 3 years
 To study the performance of mutual fund with the help of Sharpe ratio.
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1.4 Research methodology
Data sources
To gain an overview of the current performance of mutual funds, secondary data have
been used and collected from the newspapers, journals and books. The data were also
collected from various websites of AMCs, AMFI. Moneycontrol.com, axisbank.com,
etc.
Statistical techniques used for data analytics
To analyse the performance of mutual funds various statistical tools and techniques like
average return, standard deviation and sharpe ratio are used.
 Average Return (formula: ƩR/N)

 Standard deviation (formula: √Ʃd²/N)
 Sharpe measure (formula: Rp-Rf/σp)
1.5 Scope of the study
The project provides the information regarding the performance of mutual funds and
different schemes provided by axis. The schemes were selected for evaluating the
performance. The performance of mutual funds is important both for investors and
portfolio managers. It enables the investors to know about how much return is generated
by portfolio managers and the risk assumed in generating returns.
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1.6 Chapterisation
Chapter I Introduction
This chapter consists of introduction of the study, need, objectives, research

methodology and scope of the study.
Chapter II Review of literature
Second chapter consists of review of literature which incluse conceptual framework and
10 articles in the areas related to mutual funds.
Chapter III Industry and company profile
Third chapter consists of the industry profile- Introduction to mutual funds, history of
mutual funds, growth and structure of mutual funds, Ais mutual fund vision, Investment
philosophy and business philosophy.
Chapter IV Data Presentation, Analysis and Interpretation
Fourth chapter consists of Data Presentation, Analysis and Interpretation based on the
collected data from various secondary sources.
Chapter V Findings, suggestions and conclusions
Fifth chapter consists of Findings, Suggestions and Conclusions along with Limitations
and is concluded with Bibliography.
CHAPTER-II
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REVIEW OF LITERATURE
2.1 Meaning and Definitions
Meaning:
A mutual fund pools the savings of a number of investors who share a common financial
goal. The money collected is then invested in capital market instruments such as shares,
debentures and other securities. A mutual fund is the most suitable investment for the
common man as it offers an opportunity to invest in a diversified, professionally managed
basket of securities at a relatively low cost. The mutual fund industry in India was started
in the year 1963 with the formation of Unit Trust of India (UTI). The wide variety of
schemes offered by these mutual fund companies gave wide investment choice for the
investors.
Definition:
The SEBI (Mutual Funds) Regulations 1993 define a mutual fund (MF) as a fund
established in the form of a trust by a sponsor to raise monies by the Trustees through the
sale of units to the public under one or more schemes for investing in securities in
accordance with these regulations. These regulations have since been replaced by the
SEBI (Mutual Funds) Regulations, 1996. The structure indicated by the new regulations
is indicated as under.
A mutual fund comprises four separate entities, namely sponsor, mutual fund trust, AMC
and custodian. The sponsor establishes the mutual fund and gets it registered with SEBI.
The mutual fund needs to be constituted in the form of a trust and the instrument of the
trust should be in the form of a deed registered under the provisions of the Indian
Registration Act, 1908.
The sponsor is required to contribute at least 40% of the minimum net worth (र 10 crore)
of the asset management company. The board of trustees manages the MF and the sponsor
executes the trust deeds in favour of the trustees. It is the job of the MF trustees to see
that schemes floated and managed by the AMC appointed by the trustees are in
accordance with the trust deed and SEBI guidelines.
2.2 Objectives:
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1. Professional management: Investors who do not have time and expertise can invest in
mutual funds because these funds are managed by finance professionals called as fund
managers.
2. Diversification: By investing in mutual funds one can gain the benefits of diversification
and asset allocation, without investing a large amount of money that is required to
construct an individual portfolio.
3. Liquidity: Mutual funds are highly liquid investments. Money is available to the investor
at any time subject to exit load unless they have pre specified lock-in-period.
4. Flexibility: Investors can be benefited from the convenience and flexibility offered by
mutual funds to invest in a wide range of schemes. The option of investment at regular
intervals and withdrawal is also offered to investors in most open-ended schemes.
5. Transparency: Funds provide investors with updated information related to the markets
and schemes through factsheets, offer documents, annual reports etc.
2.3 Characteristics:
 Mutual funds are managed by professional fund managers.

 Funds are invested in portfolio of marketable securities.
 Mutual funds are owned by investors in the form of units.
 Value of portfolio owned by investor changes according to the market value.
 Mutual funds and their managers have specific game plan when it comes to investment
style and strategies.
2.4 Importance:
 Mutual funds are totally exempt from tax on all income on their investment.
 Mutual funds provide valuable liquidity to capital market.
 Mutual funds provide financial resources to the industries at market rate, it creates a
demand for these capital market instruments.
 Mutual funds provide an attractive and cost effective alternative to direct purchase of
shares and units can be sold to the fund at the net asset value.
 Investment is done purely on the basis of thorough research, investor get the benefit of
the research done by fund.
Role of Mutual Funds

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Mutual funds perform different roles for different constituencies:
 Their primary role is to assist investors in earning an income or building their

wealth, by participating in the opportunities available in various securities and
markets.
 It is possible for mutual funds to structure a scheme for any kind of investment
objective. Thus, the mutual fund structure, through its various schemes, makes
it possible to tap a large corpus of money from diverse investors.
 The money that is raised from investors, ultimately benefits governments,
companies or other entities, directly or indirectly, to raise money to invest in
various projects or pay for various expenses.
 As a large investor, the mutual funds can keep a check on the operations of the
investee company, and their corporate governance and ethical standards.
 The projects that are facilitated through such financing, offer employment to
people; the income they earn helps the employees buy goods and services
offered by other companies, thus supporting projects of these goods and
services companies. Thus, overall economic development is promoted.
 The mutual fund industry itself, offers livelihood to a large number of
employees of mutual funds, distributors, registrars and various other service
providers.
 Higher employment, income and output in the economy boost the revenue
collection of the government through taxes and other means. When these are
spent prudently, it promotes further economic development and nation
building.
 Mutual funds can also act as a market stabilizer, in countering large inflows or
outflows from foreign investors. Mutual funds are therefore viewed as a key
participant in the capital market of any economy.
FEATURES OF MUTUAL FUNDS
 A mutual fund belongs to those who have contributed to that fund and thus,
the ownership of the fund lies in the hands of the investors.
 Since all investors cannot take part in the management of the fund, it is left in
the hands of investment professionals who earn a fee for their services.
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 The pool of funds collected is invested in a portfolio of marketable securities.
 The investors share in the fund is represented by ‘Units’ just like shares in the
case of share capital of a company. The unit value depends upon the value of
portfolio held by the fund. Hence, the value changes almost every day and it is
called Net Asset Value.
 Generally the investment portfolio of the mutual fund is created according to
the objective of the fund.
2.5 Process:
Step1: Get started by selecting a mutual fund. Some offer a limited selection of funds,
while others offer dozens of funds. For greater diversification, find a provider with many
options, as many as hundreds of different funds. After selecting the funds purchase price
will be the funds per share net asset value (NAV) for that day.
Step2: When the investors buy shares in a mutual fund, it means they are buying a fraction
of each investment that fund holds. Before buying reading the fund prospectus, an
informational booklet that details where the fund invests its money and its goals is
necessary. The fund manager decides when to buy or sell individual holdings within the
fund. A small percentage of investor money will be applied towards administrative
expenses.
Step3: After initial investment is done investor can either set up regular investments or
submit payments at random. Even if the investors make regular payments they can always
make an additional, extra investment. Stock and bond funds will occasionally pay
dividends or bond payouts, and investor can either collect the money or reinvest the
proceeds right back into the fund.
Step4: Even if the dividends and payouts are reinvested, investor will still have to pay
income tax on earnings. The mutual fund company sends an annual statement after the
end of each year detailing any dividends or capital gains so that investor can report them.
Step5: Selling works very much like buying. Investor can place an order to sell, and the
dollar amount or number of shares are sold based on the NAV at the end of that day.
Investor can receive the proceeds in cash, or can reinvest them into a different fund.
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2.6 Types:
In terms of ease, mutual funds are classified into two classes:
 Open-ended funds: Investors can buy and sell the units, at any point of time i.e., these
funds do not have any lock-in-period.
 Close-ended funds: The capital of close-ended funds is fixed and investors can sell
specific number of units and investors cannot buy after its NFO period is over.
There are various other classes of mutual funds depending upon the nature of investments
and risk-return profile. They are
 Equity funds
 Balanced funds
 Debt funds
 On the basis of execution and operation:

 Close-ended:
Close-ended schemes have a fixed corpus and a stipulated maturity period
ranging between 2 to 5 years. Investors can invest in the scheme when it
is launched. The scheme remains open for a period not exceeding 45 days.
Investors in close-ended schemes can buy units only from the market,
once initial subscriptions are over and thereafter the units are listed on the
stock exchanges where they can be bought and sold. The fund has no
interaction with investors till redemption except for paying
dividend/bonus. In order to provide an alternate 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. If an
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investor sells units directly to the fund, he cannot enter the fund again, as
units bought back by the fund cannot be reissued. The close-ended
scheme can be converted into an open-ended one. The units can be rolled
over by the passing of a resolution by a majority of the unit holders.
 Open-ended
In case of open-ended schemes, the mutual fund continuously offers
to sell and repurchase its units at asset value (NAV) or NAV-related prices.
Unlike Close-ended schemes, Open-ended schemes do not have a fixed corpus.
The corpus of fund increases or decreases, depending on the purchase or
redemption of units by investors.
There is no fixed redemption period in Open-ended schemes, which
can be terminated whenever the need arises. The fund offers a redemption price
at which the holder can sell units to the fund and exit. Besides, an investor can
enter the fund again by buying units from the fund at its offer price. Such funds
announce sale and repurchase prices from time-to-time.
They key feature of open-ended funds is liquidity. They increase
liquidity of the investors as the units can continuously bought and sold. The
investors can develop their income or saving plan due to free entry and exit
frame of funds. Open-ended schemes usually come as a family of schemes
which enable the investors to switch over from one scheme to another of same
family.
 Interval:
Interval scheme combines the features of open-ended and close-ended
schemes. They are open for sale or redemption during predetermined intervals
at NAV related prices.
 On the basis of yield and investment pattern

 Income funds
The aim of income funds is to provide safety of investments and
regular income to investors. Such schemes invest predominantly in income-
bearing instruments like bonds, debentures, government securities, and
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commercial paper. The return as well as the risk are lower in income funds as
compared to growth funds.
 Growth funds
The main objective of growth funds is capital appreciation over the
medium-to-long-term. They invest most of the corpus in equity shares with
significant growth potential and they offer higher return to investors in the long-
term. They assume the risks associated with equity investments. There is no
guarantee or assurance of returns. These schemes are usually close-ended and
listed stock exchanges.
 Balanced funds
This is otherwise called ‘income-cum-growth’ fund. It is nothing but
a combination of both income and growth funds. It aims at distributing regular
income as well as capital appreciation. This is achieved by balancing the
investments between the high growth equity shares and also the fixed income
earning securities.
 Specialized funds
Besides above, a large number of specialized funds are in existence
abroad. They offer special schemes so as to meet the specific needs of specific
categories of people like pensioners, widows etc. There are also funds for
investments in securities of specified areas. For instance Japan fund, South
Korea fund etc. in fact, these funds open the door for foreign investors to invest
on the domestic securities of these countries.
 Money market mutual funds
These funds are basically open-ended mutual funds and as such they
have all the features of the open-ended fund. But, they invest in highly liquid
and safe securities like commercial paper, banker’s acceptances, certificates of
deposits, Treasury bills etc. these instruments are called money market
instruments. They take the place of shares, debentures and bonds in a capital
market. They pay money market rate of interest. These funds are called ‘money
funds’ in U.S.A. and they have been functioning since 1972. Investors generally
use is as a ‘parking place’ or ‘stop gap arrangement’ for their cash resources till
they finally decide about Proper Avenue for their investment, i.e., long-term
financial assets like bonds and stocks.
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 Taxation funds
A taxation funds is basically a growth oriented fund. But, it offers tax
rebates to the investors either in the domestic or foreign capital market. It is
suitable to salaried people who want to enjoy tax rebates particularly during the
month of February and March.
 Other classification
 Leveraged funds
These funds are also called borrowed funds since they are used
primarily to increase the size of the value of portfolio of a mutual fund. When
the value increases, the earning capacity of the fund also increases. The gains
are distributed to the unit holders. This is resorted to only when the gains from
the borrowed funds are more than the cost of borrowed funds.
 Dual funds
This is a special kind of closed end fund. It provides a single
investment opportunity for two different types of investors. For this purpose, it
sells two types of investment stocks viz., income shares and capital shares.
Those investors who seek current investment income can purchase income
shares. They receive all the interest and dividends earned from the entire
investment portfolio. However, they are guaranteed a minimum annual
dividend payment. The holders of capital shares receive all the capital gains
earned on those shares and they are not entitled to receive any dividend of any
type. In this respect, the dual fund is different from a balanced fund.
 Index funds
Index funds refer to those funds where the portfolios are designed in
such a way that they reflect the composition of some broad based market index.
This is done by holding securities in the same proportion as the index itself.
The value of these index linked funds will automatically go up whenever the
market index goes up and vice versa. Since the construction of portfolio is
entirely based upon maintaining proper proportions of the index being
followed, it involves less administrative expenses, lower transaction costs, less
number of portfolio managers etc. it is so because only fewer purchases and
sales of securities would take place.
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 Bond funds
These funds portfolios consisting mainly of fixed income securities
like bonds. The main thrust of these funds is mostly an income funds offer an
average returns higher than that from bank deposits and also capital gains lesser
than that in equity shares.
 Aggressive growth funds
These funds are just the opposite of bond funds. These funds are capital
gains oriented and thus the thrust area of these funds is ‘capital gains. Hence
these funds are generally invested in speculative stocks. They may also use
specialized investment techniques like short term trading, option writing etc.
naturally these funds tend to be volatile in nature.
 Off-shore mutual funds

Off-shore mutual funds are those funds which are meant for non-
residential investors. In other words, the sources of investments for these funds
are form abroad. So, they are regulated by the provisions of the foreign
countries where those funds are registered. These funds facilitate flow of funds
across different countries, with free and efficient movement of capital for
investment and repatriation. Off-shore funds are preferred to direct foreign
investment, since it does not allow foreign domination over host country’s
corporate sector. However, these funds involve much currency and country risk
and hence they generally yield higher return.
 Property fund
It is a real estate mutual fund. It is an investment vehicle which buys,
develops, manages and sells real estate assets. Its investment also includes
shares/bonds of companies involves in real estate and mortgage backed
companies.
 Funds-of-funds
A fund of funds scheme is a mutual fund scheme that invests in other
mutual fund schemes. The concept is widely prevalent abroad. Mutual funds in
India are being allowed to launch fund-of-funds.
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 Real estate mutual funds (REMF)
The REMF scheme is a mutual fund scheme with the investment objective of direct or indirect
investment in real estate properly.
2.7 Models
Mutual Fund Portfolio Example for an Aggressive Investor
An aggressive mutual fund portfolio is appropriate for an investor with a high risk
tolerance and a time horizon longer than 10 years. The reason aggressive investors need
to have a time horizon longer than 10 years is because they will have a high allocation
to stocks.
Here is an example of 85% Stocks and 15% Bonds by mutual fund type:
30% Large-cap stock (Index)

15% Mid-cap stock
15% Small-cap stock
25% Foreign or Emerging Stock
15% Intermediate-term Bond
Aggressive portfolios are most appropriate for investors in 20s, 30s or 40s because they
typically have decades to invest.
Mutual Fund Portfolio Example for a Moderate Investor
A moderate portfolio of mutual funds is appropriate for an investor with a medium risk
tolerance and a time horizon longer than five years.
Here is a moderate portfolio example by mutual fund type: 65% Stocks, 30% Bonds,
and 5% Cash/MMKT

10% Small-cap stock
15% Foreign Stock
05% Cash/Money Market
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Most investors tend to fall into the moderate category, which means they want to
achieve good returns but are not comfortable taking high levels of market risk.
Mutual Fund Portfolio Example for a Conservative Investor
A conservative portfolio of mutual funds is appropriate for an investor with a low risk
tolerance and a time horizon from immediate to longer than 3 years.
Here is a conservative mutual fund portfolio example by fund type: 25% Stocks, 45%
Bonds, and 30% Cash/MMKT

05% Small-cap stock
05% Foreign Stock
30% Cash/Money Market
2.8 Merits and demerits:
Merits:
 Money is invested in different companies across different sector to minimize the risk and
to give better return known as Portfolio Diversification.
 Funds are managed by professional fund managers who have enough capital market
experience.
 Liquidity, flexibility, low risk and convenient.
 Limited tax benefits
Demerits
 No Control over costs

 No custom-made portfolios
 No guarantee of return especially in equity funds
 Risk of loss of capital subject to capital market rise and fall.
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2.9 Article references
Article 1
Dr Deepak Agarwal (2011) has examined in the article “Measuring performance of Indian
mutual funds” that the development of the Indian capital market and deregulations of the
economy in1992 have lead to structural changes in both primary and secondary markets.
Mutual funds are one of the main sources of capital flows to emerging economies and key
contributors to the globalization of financial markets. Despite their importance, little is
known about their strategies and allocation. This article provides an overview of mutual
fund activity in emerging markets and also describes about their size and allocation. This
paper analyzes the Indian mutual fund industry pricing mechanism with empirical studies
on its valuation and it also data at both the fund-manager and fund-investor levels. The
findings of the study showed that the performance of mutual funds is affected by the
investment and saving habits of the people and the second side the loyalty and confidence
of the fund manager and rewards affects the performance of the mutual fund industry in
India.
Reference
Dr. Deepak Agarwal (written-2007) (Evised-2011).Measuring performance of Indian

mutual funds. LNCPS; Devi ahilya vishwavidyala (DAVV) University.
Article 2
S Debasish (2009) in the article titled “Investigating performance of equity-based mutual

funds schemes in Indian scenario” opined that the backdrop of private participation and
liberalization in the Indian mutual fund industry, the prime concern of fund managers was
to survive and retain investor confidence. Successfully, Investment in mutual funds was
the alternate way of investing for the small investors who did not have the time or
expertise to take direct investment decision in equities. While giving due importance to
investment objectives the performance of mutual funds become more complex in context
of accommodating both risk and return measurements. An attempt has been made to study
the performance of selected schemes of mutual funds based on risk-return relationship
model and measures. In this study, a total of 23 schemes offered by three public sector
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mutual funds and six private sector mutual funds have been studies over the time period
April 1996 to March 2009 (13 years). The analysis has been made on the basis of beta
risk, Sharpe ratio, treynor ratio, Jensen alpha, mean return and coefficient determination.
When measured against the risk-return relationship models, the findings show that
Franklin Templeton and UTI are the best performers and HDFC, LIC and Birla Sun life
showing poor below-average performance.
Reference
S Debasish (2009). Investigating performance of equity-based mutual funds schemes in

Indian scenario KCA journal of business management 2 (2), 2009.
Article 3
Kavita arora (2015) have analyzed in the article titled “Risk-adjusted performance
evaluation of mutual fund schemes” that the study evaluates the performance of mutual
fund schemes in India using risk-adjusted measures of performance evaluation, namely,
Sharpe ratio and Treynor ratio, for a sample of 100 Indian mutual fund schemes selected
on the basis of availability of consecutive data during the period 1st April 2000 to 31st
March 2008. The findings suggest that the overall performance of mutual funds schemes
was mixed. The results of Sharpe ratio revealed that during the full study period, Sharpe
ratios of 52 per cent of schemes were better than the Sharpe ratios of their benchmark
indices. It was also found that 42 per cent of growth schemes, 40 per cent of tax planning
schemes, 75 per cent of income schemes and 91 per cent of balanced schemes,
respectively, had performed better than their respective indices in terms of Sharpe ratio.
During the full study period, 70 per cent of mutual fund schemes had higher Treynor
ratios than those of their respective indices. Analysis further revealed that in the full study
period, 64 per cent of growth schemes, 60 per cent of tax planning schemes, 76 per cent
of income schemes and 100 per cent of balanced schemes, respectively, had better
Treynor ratios than the Treynor ratios of their benchmark indices.
Reference:
Kavita arora (2015). Assistant Professor, Shyam Lal College, University of Delhi, New
Delhi, India Risk-adjusted performance evaluation of mutual fund schemes.
Volume: 19 issue: 1, page(s): 79-94. Article first published online: August 18, 2015; Issue
published: June 1, 2015
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Article 4
Muralidhar Prasad Ayaluru (2016) have discussed in the article titled “Performance
Analysis of Mutual Funds: Selected Reliance Mutual Fund Schemes” that the Indian
Financial System was reorganized with the introduction of multiple financial institutions,
financial services and financial instruments in the post LPG era. This process opened
doors to the private business entities also to start new financial institutions and offer
various financial services and instruments. One among such institution was mutual funds.
After government/ SEBI granted permission many a number of private corporate houses
have started mutual funds immediately. Reliance Mutual Funds is one and it has
significant contributions to the Mutual Fund services. In the current study 10 top
performing schemes offered by Reliance Mutual Funds are selected to make a
comparative study on the return and risk offered by these funds. The study revealed that
among the selected funds Reliance Small cap fund is considered as a fund with moderate
returns as well as moderate risk, against which the Reliance Bank Fund is considered as
high risk with high returns.
Reference:
Muralidhar Prasad Ayaluru (2016). Associate professor, dept of finance, siva sivani
institute of management. Performance Analysis of Mutual Funds: Selected Reliance
Mutual Fund Schemes. Parikalpana - KIIT Journal of Management, Vol-12(I), Jan-June
2016
Article 5
Manoj Kumar Dash & Dr.Gouri Shankar Lall have analyzed in the article titled
“Performance evaluation of equity based mutual funds in India” the performance of
fifteen equity based mutual fund schemes from1st April,2011 to 31st may, 2016 for India)
and accumulated monthly NAV for calculation of returns of different schemes . Its
performance depends on the performance of underlying portfolio. If one or more schemes
perform badly in the portfolio that can affect the investment decisions of investors.
Performance evaluation of mutual portfolio is necessary it helps the investors in taking
rational decisions. . This study evaluated the performance of selected mutual fund
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schemes using Sharpe and Treynor’s ratio, and sensitivity to the market fluctuation in
terms of beta.
Reference:
Manoj Kumar Dash & Dr.Gouri Shankar Lall (2018). PhD Scholar, Department of
Commerce, Berhampur University, Berhampur. Rader, PG Department of commerce
Berhampur University, Berhampur. Performance evaluation of equity based mutual funds
in India. International journal of engineering sciences & research technology.
Article 6
Bilal pandow opined in the article titled “Performance of mutual funds in India” that the
Indian mutual fund industry has come a long way since its inspection in 1963. The
industry has witnessed sufficient growth on all parameters be it number of fund houses,
funds mobalised, number of schemes, assets under management, etc. the industry is facing
number of challenges like low penetration ratio, lack of investor awareness and ability to
communicate value to customers, lack of interest of retail investors towards mutual funds
and evaluation nature of the industry. Based on the analysis, the study suggested that in
order to address these challenges the industry has to utilize its potential fully.
Reference:
Bilal pandow (2017). Middle east college. Performance of mutual funds in India.
Article 7
Dr.R.Narayanasamy, V. Rathnamani have examined in the article titled “Performance

Evaluation of Equity Mutual Funds (On Selected Equity Large Cap Funds)” that Capital
market provides various investment approaches to the investors in India, to help them
invest in various industries and earn a profitable return. Among various financial
products, mutual funds ensure maximum return and minimum risk to the investors.
Monitoring and evaluation of mutual funds has become essential. Therefore, choosing
profitable mutual funds is a very important issue. This study deals with the equity mutual
funds that are offered for investment by the various fund houses in India. This study
mainly focused on risk-return relationship on the performance of selected equity large
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cap mutual fund schemes. The main objectives of the research are to analysis financial
performance of selected mutual fund schemes through the statistical parameters such as
(beta, alpha, sharpe ratio, standard deviation, r-squared). The findings of the study help
investors for their future investment decisions.
Reference:
Dr.R.Narayanasamy, V. Rathnamani, HOD, Department Of Commerce, National

College, (Autonomous), Trichy -620001, Research Scholar, , Department Of Commerce,
National College, (Autonomous), Trichy -620001. Performance Evaluation of Equity
Mutual Funds (On Selected Equity Large Cap Funds). International Journal of Business
and Management Invention.
Article 8
Dr Vikas Choudhary, and Preeti Sehgal Chawla (2014) have analyzed in the article titled
“Performance Evaluation of Mutual Funds: A Study of Selected Diversified Equity
Mutual Funds in India” that a mutual fund pools the savings of a number of investors who
share a common financial goal. The money collected is then invested in capital market
instruments such as shares, debentures and other securities. A mutual fund is the most
suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost. The
mutual fund industry in India was started in the year 1963 with the formation of Unit
Trust of India (UTI). The wide variety of schemes offered by these mutual fund
companies gave wide investment choice for the investors. Among wide variety of funds
equity diversified fund is considered as substitute for direct stock market investment.
This study was conducted to analyze the performance of the growth oriented equity
diversified schemes on the basis of risk and return evaluation. The analysis was achieved
by assessing various financial tests like Average Return, Sharpe Ratio, Treynor Ratio,
Standard Deviation, Beta and Coefficient of Determination (R2 ). The analysis of the
study described that majority of funds selected for study have outperformed under Sharpe
Ratio as well as Treynor Ratio.
Reference:
Dr Vikas Choudhary, and Preeti Sehgal Chawla (2014). Performance Evaluation of

Mutual Funds: A Study of Selected Diversified Equity Mutual Funds in India.
21
International Conference on Business, Law and Corporate Social Responsibility
(ICBLCSR'14) Oct 1-2, 2014 Phuket (Thailand).
Article 9
Mamta and satish Chandra ojha (2017) have analyzed in the article titled “Performance
Evaluation of Mutual Funds: A Study of Selected Diversified Equity Mutual Funds in
India” that a mutual fund pools the savings of a number of investors who share a common
financial goal. The money collected is then invested in capital market instruments such
as shares, debentures and other securities. A mutual fund is the most suitable investment
for the common man as it offers an opportunity to invest in a diversified, professionally
managed basket of securities at a relatively low cost. The mutual fund industry in India
was started in the year 1963 with the formation of Unit Trust of India (UTI). The wide
variety of schemes offered by these mutual fund companies gave wide investment choice
for the investors. Among wide variety of funds equity diversified fund is considered as
substitute for direct stock market investment. Daily opening & closing NAV of different
schemes are been used to calculate the returns from the different fund schemes. Sensex
and BSE has been used for market portfolio. The primary objective is to evaluate the
performance of Indian equity diversified mutual funds and the secondary objective is to
analyze the relationship between risk and return of these funds, based on total risk and
systematic risk. The analysis was achieved, by assessing various financial tests like
Average Return, Sharpe Ratio, Treynor Ratio, Standard Deviation, Beta and Coefficient
of Determination (R2). The analysis depicts that, majority of funds selected for study have
outperformed, under Sharpe Ratio as well as Treynor Ratio.
Reference:
Mamta and satish Chandra ojha (2017). Performance Evaluation of Mutual Funds: A
Study of Selected Diversified Equity Mutual Funds in India.
IMPACT: International Journal of Research in Business Management, Vol. 5, Issue 11,
Nov 2017.
Article 10
Alka solanki has opined in the article titled “ A study on performance evaluation of mutual
fund and reliance mutual fund” that mutual fund is one of the most attractive financial
instrument that plays a important role in the economy of the country. The research was
conducted to evaluate the performance of Reliance open-ended equity schemes with
22
growth option. The period of the study ranges from 1st April 2007 to 31st March 2016.
Monthly returns are compared with Benchmark BSE National 100 and SENSEX returns
to evaluate the performance of the selected mutual fund schemes. Out of the total schemes
studied, all schemes showed an average return higher than in comparison to the market
return i.e. BSE 100 and SENSEX except one i.e. Reliance Focused Large Cap Fund.
Mutual funds are supposed to protect small investors against fluctuations of stock market
and the fund managers of these schemes have done well to protect them, based on both
benchmarks Reliance NRI Equity Fund, Reliance Focused Large Cap Fund Reliance
Equity Opportunities Fund and reliance pharma fund in BSE 100 and Reliance Focused
Large Cap Fund in Sensex has performed better than the other schemes in comparison of
return and risk which Indicates that investors who invested in these schemes to form well
diversified portfolio did receive adequate return per unit of total risk & systematic risk
undertaking.
Reference:
Alka solanki (2016) Research Scholar, Saurashtra University, Rajkot, India. A study on
performance evaluation of mutual fund and reliance mutual fund.
1. Performance Analysis of Mutual Funds-A Study on Selected Mid Cap and

Small Cap Funds
AUTHOR: O.V.A.M SRIDEVI (2018)
ABSTRACT: To study the current status of mutual funds in India, to measure the
risk- return relationship and market volatility of the selected mutual funds. To
examine the performance of selected schemes. Samples of mid cap and small cap
funds were collected and various tools like Sharpe, Treynor and Jensen were used
to measure performance. Results of the study have showed that out of the two
scheme of both mid cap and small cap funds have evidences of outperforming the
benchmark return. Not all the funds have represented positive values. In Mid cap
fund the performance, Axis balanced fund is very insignificant where as in the
small cap fund the performance, HSBC Balanced is considered desirable.
However from the above study it can be said that the schemes have diversified
results.
23
2. Performance evaluation of Indian equity mutual fund schemes.
AUTHOR: SARANYA, PARTHIBAN THANGAVEL (2018)
ABSTRACT: To study the performance of selected mutual funds schemes under

different 5 categories. To measure the return earned by the sample mutual funds
schemes and compare against the benchmark market returns. To examine the
degree of correlation that exists between fund and market return. To know whether
the mutual funds are able to provide reward to variability and volatility. Various
statistical tools like standard deviation, BETA tool. Treynor ratio etc were used.
From the study we conclude that the Mutual Fund is a safe investment tool. Mutual
Fund is the only opportunity many investors have for investing in an intelligent
diversified manner. After studying and analyzing different mutual fund schemes
the following conclusions can be made. The most important considerations while
making investment decision was return aspect followed by safety, liquidity, and
taxability. On the basis of the analysis the performance of the study can be
concluded to be good and those who want to eliminate risk element and want to
reap better return than it would be advisable to go for debt or arbitrage schemes,
which ensures both return and safety.
3. A study on performance evaluation of selected Debt Mutual Funds in India.
AUTHOR: YASHASVI, R. RAJPARA (2017)
ABSTRACT: To know which schemes give highest return in India. To examine

the risk and return component among these mutual funds. To evaluate and
compare the performance of debt mutual fund schemes of selected companies.
Secondary data of top five asset management companies was taken into
consideration. NAVs, ranking and return were used to compare various schemes.
The researcher found which scheme was doing in a better way. He also concluded
that people are gaining interest to invest in debt mutual funds. He also concluded
that rational investors are more interested in debt funds rather than the other funds.
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4. Performance and Analytical study of various mutual funds
AUTHOR: POONAM DEVI (2017)
ABSTRACT: To understand the perception of investors towards mutual funds,

to know the expectation of people for the return on mutual funds. Various data
interpretation methods and presentation methods were used. Mostly, primary data
was used by the researcher. Most of the investors like to invest in mutual funds.
Most of the people like to invest their money for one or three years to get returns
on their investments. People invest in mutual funds to get higher returns and tax
benefits.
5. A study of recent trends in Indian Mutual Fund Industry
AUTHOR: MITAL BHAYANI (2017)
ABSTARCT: To study recent trends in growth of Mutual Fund Industry on

following points. - Total assets, Investors types and Location wise Secondary data
were collected and it was presented through various tables and charts to
understand the recent trends. It is observed that even though mutual fund industry
seems to grow in India, the growth is concentrated both with respect to investor
category and place. It is dominated by Institutional investors, T- 15 cities and debt
oriented schemes leaving huge scope for growth. But large segment of investor
are still outside the umbrella of the industry. The reach of the fund houses to
different segments of investors is still a key challenge. One possible solution could
be increasing financial knowledge and awareness to stimulate investors in mutual
fund investment. This will attract investors towards mutual fund investment. The
limited distribution network and investor service can be enhanced for wider reach
beyond large cities.
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6. A comparative e study on performance evaluation of sectorial mutual fund
schemes of Indian companies
AUTHOR: SHEFALI GUPTA (2015)
ABSTARCT: To evaluate and compare the performance of sectorial equity

mutual funds. To compare the performance of selected equity schemes vis-à-vis
the market. The data was gathered from secondary sources. Mutual funds from
five sectors were taken and various tools like SHARPE, Jensen Alpha and
Treynor were used. All five sectors’ funds had positive return during 2008 to
2012. Banking and finance, FMCG and healthcare and technology funds have
performed well as compared to SENSEX returns.
7. Growth and Performance of Indian Mutual Fund Industry during Past

Decades
AUTHOR: V. RAMANUJAM AND A BHUBANESWARI (2015)
ABSTRACT:
To analyze Growth of Asset under Management, to analyse the growth of
Sector wise mutual fund sales and mutual fund redemption, to analyse the
Scheme wise resource mobilization by mutual fund, to examine the total number
of Schemes and Number of folios. The study is descriptive in nature. The study
is based on the secondary data includes books, journals, periodicals, publication
of various mutual fund organizations, website of AMFI, website of SEBI,
government publications and websites of various mutual fund companies. The
asset under management showed the growth of Rs. 9, 05,120. The asset under
management of all the sectors, mutual fund sales, mutual fund redemption, and
scheme wise resource mobilization, total number of schemes has been increased
from the year 2004 to 2014. The total number of folios shows decrease from the
year 2004 to 2014 due to number of folios reduced in growth and funds of fund
schemes.
26
8. A Study on Factors Affecting Investment on Mutual Funds and Its
Preference of Retail Investors
AUTHOR: ARTHY B, ASWATHY A NAIR (2015)
ABSTRACT: To analyze the factors influencing investment decisions of retail

investors in Mutual funds, to study the investors’ perception and preference
towards Mutual funds. A questionnaire was filled by the respondents and personal
interview method was also used. The mutual funds have emerged as one of the
important classes of financial intermediaries which cater to the needs of the retail
investors. The major factors influencing the investment decision of retail
investors are tax benefits, high return, and Price and capital appreciation. Equity
based schemes are the most preferred. Bitter past experience is the major
preventing factor while considering investment decisions.
9. Performance evaluation of mutual funds: A study of selected diversified

equity mutual funds in India
AUTHOR: VIKAS CHAUDHARY (2014)
ABSTARCT: To study the performance of Selected Diversified Equity Mutual

Funds in India To compare the performance of Selected Diversified Equity
Mutual Funds in India. The data of 8 mutual fund schemes was taken as secondary
source after that many tools like standard deviation and other tools were used to
consider the beta means systematic risk This study provides some insights on
mutual fund performance so as to assist the common investors in taking the
rational investment decisions for allocating their resources in correct mutual fund
scheme. The data employed in the study consisted of monthly evaluation for the
open-ended schemes. The study utilized benchmark portfolios according to the
scheme objective such as BSE Sensex for all growth/equity schemes. The
performance of sample mutual fund schemes has been evaluated in terms of
return and risk analysis, and risk adjusted performance measures such as Sharpe
ratio and trey nor ratio.
27
10. Investing performance of equity-based mutual fund schemes in Indian
scenario
AUTHOR: SATHYASWAROOP DEBASISH(2009)
ABSTARCT: To measure the return earned by the sample mutual fund schemes
and compare against the market portfolio returns, to analyze the excess return per
unit of risk evidenced by mutual fund schemes belonging to public and private
sectors. Various tools like mean return, beta tool and Sharpe and Jensen alpha
were used. The small investors are well advised to analyze the return and risk
parameters of the mutual funds over longer period of time. In times of high stock
market volatility, mutual funds are the best source of investments with assured
and adequate returns.
28
CHAPTER-III
INDUSTRY AND COMPANY PROFILE
INDUSTRY PROFILE
INTRODUCTION:
The Indian financial system is based on four basic components which are Financial
Market, Financial Institutions, Financial Service, and Financial Instruments. All of them
play an important role for the transfer of the funds and allocation of the funds. The main
aim of the Indian financial system is providing efficiently services to the capital market.
The Indian capital market has been increasing tremendously during the second generation
reforms. The first generation reforms started in 1991 that is the concept of LPG.
(Liberalization, privatization, Globalization)
Then after 1997 second generation reforms was started, still it is going on, it include
reforms of industrial investment, reforms of fiscal policy, reforms of ex- imp policy,
reforms of public sector, reforms of financial sector, reforms of foreign investment
through the institutional investors, reforms banking sectors. The economic development
model adopted by India in the post independence era has been characterized by mixed
economy with the public sector playing a dominating role and the activities in private
industrial sector control measures emaciated from time to time. The last two decades have
been a phenomenal expansion in the geographical coverage and the financial spread of
our financial system.
The spared of the banking system has been a major factor in promoting financial
intermediation in the economy and in the growth of financial savings with progressive
liberalization of economic policies, there has been a rapid growth of capital market,
money market and financial services industry including merchant banking, leasing and
venture capital, leasing, hire purchasing. Consistent with the growth of financial sector
and second generation reforms it lead to fruition of the financial sector. It is providing the
efficient service to the investor mostly if the investors supply small amount, in that point
of view the mutual fund plays vital for better service to the small investors.
29
WHAT IS A MUTUAL FUND?
Mutual fund is the pool of the money, based on the trust who invests the savings of a
number of investors who shares a common financial goal, like the capital appreciation
and dividend earning. The money thus collect is then invested in capital market
instruments such as shares, debenture, and foreign market. Investors invest money and
get the units as per the unit value which we called as NAV (net assets value). Mutual fund
is the most suitable investment for the common man as it offers an opportunity to invest
in diversified portfolio management, good research team, professionally managed Indian
stock as well as the foreign market, the main aim of the fund manager is to take the scrip
that have under value and sell out the stock when it rises in the future. Fund manager
should concentrate on risk – return trade off, in order to minimize the risk and maximize
the return through diversification of the portfolio.
HISTORY OF MUTUAL FUNDS IN INDIA
A mutual fund is a trust or a pool of investments by investors who share a common

financial goal. This pool is invested in several financial instruments such as shares, debt
instruments, bonds etc. by the company managing that trust. This company is called
an Asset Management Company. Returns so generated are later distributed among the
members of the pool in the ratio of their investments. The AMC invests its money in a
manner that while the returns are maximized, the risks are kept to a minimum level. In
India, it is mandatory for every Asset Management Firm to be registered with the
Securities and Exchange Board of India (SEBI), a body that regulates all securities
instruments.
The first company that dealt in mutual funds was the Unit Trust of India. It was set up in
1963 as a joint venture of the Reserve Bank of India and the Government of India. The
objective of the UTI was to guide small and uninformed investors who wanted to buy
shares and other financial products in larger firms. The UTI was a monopoly in those
days. One of its mutual fund products that ran for several years was the Unit Scheme
1964.
The mutual fund industry in India has undergone at least 4 phases. Let us now look at
each phase in brief:
30
Mutual Funds History: Phase of Inception (1964-87)
The first phase was marked by the setting up of the UTI. Though it was collaboration
between the RBI and the Indian Government, the latter was soon delinked from the day-
to-day operations of the Unit Trust of India. In this phase, the company was the sole
operator in the Indian mutual fund industry. In 1971, the UTI launched the Unit Linked
Insurance Plan or the ULIP. From that year until 1986, UTI introduced several plans and
played a very big role in introducing the concept of mutual funds in India.
When UTI was set up several years ago, the idea was to not just introduce the concept of
mutual funds in India; an associated idea was to set up a corpus for nation-building as
well. Therefore, to encourage the small Indian investor, the government built in several
income-tax rebates in the UTI schemes. Not surprisingly, the investible corpus of UTI
swelled from 600 crores in 1984 to 6,700 crores in 1988. Clearly, the time had come for
the Indian mutual industry to move into the next phase.
Mutual Funds History: Entry of Public Sector (1987-1993)

By the end of 1988, the mutual fund industry had acquired its own identity. From 1987,
many public sector banks had begun lobbying the government for starting their own
mutual fund arms. In November 1987, the first non-UTI Asset Management Fund was set
up by the State Bank of India. This AMC was quickly followed by the creation of other
AMCs by banks like Canara Bank, Indian Bank, Life Insurance Corporation, General
Insurance Corporation, and Punjab National Bank.
This opening up of the mutual fund industry delivered the desired results. In 1993, the
cumulative corpus of all the AMCs went up to a whopping Rs. 44,000 crores. Observers
of this industry say that in the second phase, not only the base of the industry increased
but also it encouraged investors to spend a higher percentage of their savings in mutual
funds. It was evident that the mutual fund industry in India was poised for higher growth.
31
Mutual Fund History: Entry Private Sector Phase (1993-1996)
In the period 1991-1996, the Government of India had realized the importance of the
liberalization of the Indian economy. Financial sector reforms were the need of the hour.
India needed private sector participation for the rebuilding of the economy.
Keeping this in mind, the government opened up the mutual fund industry for the private
players as well. The foreign players welcomed this move and entered the Indian market
in significant numbers. In this period, 11 private players –in collaboration with foreign
entities- launched their Asset Management Funds.
Some of the top AMCs in the private sector were:
• ICICI Prudential AMC- This Company is a joint venture between ICICI Bank of India
and Prudential Plc of UK. It manages a corpus of INR 2, 93,000 crores and has an
inventory of more than 1400 schemes.
• HDFC Mutual Fund- Launched in the 1990s, the HDFC Mutual Fund manages more
than 900 different kinds of funds.
• Kotak Mahindra Mutual Fund- This AMC has an asset base of more than Rs. 1,19,000
crores. It is a joint venture of Kotak Financial Services and the Mahindra Group.
SEBI Interventions and Growth, and AMFI

As the mutual fund industry grew further in the 1990s, the AMCs and the government
felt that it was time for regulation and some control. Investors had to be protected as well
as a level playing ground had also to be laid down. A few years ago, the Indian industry
had suffered a lot because of bank scams and there was a real threat that investors might
lose their monies yet again.
32
Consequently, the government introduced the SEBI Regulation Act in 1996 which laid
down a set of fair and transparent rules for all the stakeholders. In 1999, the Indian
government declared that all mutual fund dividends would be exempt from income tax.
The idea behind this decision was to spur further growth in the mutual fund industry.
Meanwhile, the mutual fund industry also realized the importance of self-regulation. As
a result, it set up an industry body- the Association of Mutual Funds of India (AMFI).
One of the goals of this body is investor education.
Mutual Funds History: Phase Of Consolidation (February 2003 – April 2014)

In February 2003, the Unit Trust of India was split into two separate entities, following
the repeal of the original UTI Act of 1963. The two separated entities were the UTI
Mutual Fund (which is under the SEBI regulations for MFs) and the Specified
Undertaking of the Unit Trust of India (SUUTI). Following this bifurcation of the former
UTI and occurrence numerous mergers among different private sector entities, the mutual
fund industry took a step towards the phase of consolidation.
After the global economic recession of 2009, the financial markets across the globe were
at an all-time low and Indian market was no exception to it. Majority of investors who
had put in their money during the peak time of the market had suffered great losses. This
severely shook the faith of investors in the MF products. The Indian Mutual Fund industry
struggled to recover from these hardships and remodel itself over the next two years. The
situation toughened up more with SEBI abolishing the entry load and the lasting
repercussions of the global economic crisis. This scenario is evident from the sluggish
rise in the overall AUM of the Indian MF industry.
Mutual Funds History: Phase Of Steady Development And Growth (Since May 2014):
Recognizing the lack of penetration of mutual funds in India, especially in the tier II and
tier III cities, SEBI launched numerous progressive measures in September 2012. The
idea behind these measures was to bring more transparency and security for the interest
of the stakeholders. This was SEBI’s idea to re-energize the Indian MF Industry and boost
the overall penetration of mutual funds in India.
The measures bore fruit in the due course by countering the negative trend that was set
because of the global financial crisis. The situation improved considerably after the new
government took charge at the center.
33
Since May ’14, the Indian MF industry has experienced a consistent inflow and rise in
the overall AUM as well as the total number of investor accounts (portfolio).
Currently, all the Asset Management Companies in India manage a combined worth of
around Rs. 23 lac crore of assets. Though this number looks attractive, we still have to go
a long way in order to match the west.
It is estimated that Indians save approximately Rs. 20-30 lakh crore annually. The Indian
mutual fund industry can grow immensely if Indians started parking a higher percentage
of their savings in MFs. Observers say that Indians have begun shifting a part of their
savings from physical assets like gold and land to financial instruments like bonds and
silver. However, the AMFI and the government need to encourage Indians even more for
investments in mutual funds.
MUT UAL FUNDS - INVESTMENT OBJECTIVES AND VALUATION POLICIES
What are Mutual Funds?
A Mutual fund is an organization that invests in a diversified portfolio of financial securities

on behalf of a pool of subscribers to its schemes. These securities can be in the form of equity,
debt instruments, money market instruments etc., or a mix of these securities, depending on
the scheme objectives.
Why is it such a good idea to invest in Mutual Funds?
Diversification: Mutual Funds invest their corpus in diversified portfolio’s which reduces
the risk contained in the investment. This also means that you can invest
small sum of Rs.5000/- and still be a part of a portfolio where the market value of single scrip
might be much more than the total investment.
Research: These mutual funds perform an extensive research of the company before making
an investment decision giving you the benefit of expert advice.
Liquidity: These funds are extremely liquid; some of them even have features like across-
the-counter redemption. This feature is especially useful at times when the market is rising
or falling.
Professionally Managed: These funds are managed by professionals who have the required
expertise in buying and selling stocks. As a result they make better decisions on entering and
exiting a particular stock, which is very crucial for the overall performance of a portfolio.
34
Moreover, mutual fund investment also rids the investor of maintaining records, eliminates
hassles with the broker for payment, delivery and other arduous back office tasks.
Savings on transaction costs: As purchases and sales are done in bigger quantities, the funds
also get the advantages of lesser brokerage and other reduced transaction costs.
Advantages: In India these funds become even more attractive because of the tax advantages, like
indexation benefits , long term capital gains tax , tax free dividends and much more.
INVESTMENT OBJECTIVE (REGULATION: 43)

The moneys collected under any scheme of a mutual fund shall be invested only in
transferable securities in the money market or in the capital market or in privately placed
debentures or securities debts.
Provided that moneys collected under any money market scheme of a mutual fund shall be
invested only in money market instruments in accordance with directions issued by the
Reserve Bank of India;
Provided further that in case of securities debts such fund may invest in asset backed
securities and mortgaged backed securities.
THE ADVANTAGES OF INVESTING IN A MUTUAL FUND

The advantages of investing in a Mutual Fund are:
Liquidity
In open-ended schemes, you can get your money back promptly at net asset value
related prices from the Mutual Fund itself. With close-ended schemes, you can sell your units
on a stock exchange at the prevailing market price or avail of the facility of direct repurchase
at NAV related prices which some close-ended and interval schemes offer you periodically.
1. Transparency
You get regular information on the value of your investment in addition to disclosure on the
specific investments made by your scheme, the proportion invested in each class of assets
and the fund manager's investment strategy and outlook.
2. Flexibility
Through features such as regular investment plans, regular withdrawal plans and dividend
reinvestment plans, you can systematically invest or withdraw funds according to your needs
and convenience.
35
3. Choice of Schemes
Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
4. 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.
In the following chapters we propose to discuss all relevant information about Mutual Funds
in India, the regulatory and legal structure governing them that a common investor ought to
know. The literature is mostly drawn from the website of SEB, but suitably tabulated to
provide ready information
5. Professional Management
The investor avails of the services of experienced and skilled professionals who are backed
by a dedicated investment research team which analyses the performance and prospects of
companies and selects suitable investments to achieve the objectives of the scheme.
6. Diversification
Mutual Funds invest in a number of companies across a broad cross-section of industries and
sectors. This diversification reduces the risk because seldom do all stocks decline at the same
time and in the same proportion. You achieve this diversification through a Mutual Fund with
far less money than you can do on your own.
7. Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as
bad deliveries, delayed payments and unnecessary follow up with brokers and companies.
Mutual Funds save your time and make investing easy and convenient.
8. Return Potential
Over a medium to long-term, Mutual Funds have the potential to provide a higher return as
they invest in a diversified basket of selected securities.
9. Low Costs
36
Mutual Funds are a relatively less expensive way to invest compared to directly investing in
the capital markets because the benefits of scale in brokerage, custodial and other fees
translate into lower costs for investors.
Growth of mutual fund in India
The Indian Mutual fund business has passed through three phases. The first phase was
between 1964 and 1987, when the only player was the Unit Trust of India, which had a total
asset of Rs. 6,700/- crores at the end of 1988. The second phase is between 1987 and 1993
during which period 8 funds were established (6 by banks and one each by LIC and GIC).
The total assets under management had grown to Rs. 61,028/- crores at the end of 1994 and
the number of schemes were 167. The third phase began with the entry of private and foreign
sectors in the Mutual fund industry in 1993. Kothari Pioneer Mutual fund was the first fund
to be established by the private sector in association with a foreign fund. The share of the
private players has risen rapidly since then.
Within a short period of seven years after 2000 the growth statistics of the business of Mutual
Funds in India is given in the table below:
NET ASSETS OF MUTUAL FUNDS [SOURCE: WEBSITE OF SEBI]
The net assets of all domestic schemes of mutual funds were Rs.3,23,838.30 crores as on
March 31, 2008 as against Rs. 68,193.08 crores as on March 31, 2000 . The details are given
below:
Banks Amount(Rs Crs) Percentage
AXIS 2,17,000.2 67.00
Public Sector 31,334.34 9.68
Private Sector 75,503.67 23.32
Total 3,23,838.30 100.00
During the year 2007-2008, the share of AXIS in the total assets of the mutual funds industry
has declined to 67% from 77.9% in 2007. Net assets of other public sector mutual funds have
37
also shown a decline from 12.09% in 2007-2008 to 9.68% However, net assets of private
sector mutual funds have increased from 9.97% in 2007-08 to 23.32% .
There are 34 private Mutual Funds in the fray and they have seized about 25% of the market
share in the brief period of 7 years, mobilizing above Rs.50000 Crores from the public
SCOPE FOR DEVELOPMENT OF MUTUAL FUND BUSINESS IN INDIA
A Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost. India has a burgeoning population of middle class now estimated around
300 million. A typical Indian middle class family can have liquid savings ranging from Rs.2
to Rs.10 Lacs today. Investments in Banks are liquid and safe, but with the falling rate of
interest offered by Banks on Deposits, it is no longer attractive. At best a part can be saved
in bank deposits, but what is the other sources of investment for the common man? Mutual
Fund is the ready answer. Viewed in this sense globally India is one of the best markets for
Mutual Fund Business, so also for Insurance business. This is the reason that foreign
companies compete with one another in setting up insurance and mutual fund business units
in India. The sheer magnitude of the population of educated white collar employees provides
unlimited scope for development of Mutual Fund Business in India.
The alternative to mutual fund is direct investment by the investor in equities and bonds or
corporate deposits. All investments whether in shares, debentures or deposits involve risk:
share value may go down depending upon the performance of the company, the industry,
state of capital markets and the economy; generally, however, longer the term, lesser the risk;
companies may default in payment of interest/ principal on their debentures/bonds/deposits;
the rate of interest on an investment may fall short of the rate of inflation reducing the
purchasing power. While risk cannot be eliminated, skillful management can minimize risk.
Mutual Funds help to reduce risk through diversification and professional management. The
experience and expertise of Mutual Fund managers in selecting fundamentally sound
securities and timing their purchases and sales, help them to build a diversified portfolio that
minimizes risk and maximizes returns.
BRIEF HISTORY
FIRST PHASE - 1964-87
38
Unit Trust of India (AXIS) 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 AXIS 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 AXIS was Unit Scheme 1964. At the end of 1988 AXIS had Rs.6,700 crores of assets
under management.
SECOND PHASE - 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS)
Entry of non-AXIS mutual funds. SBI Mutual Fund was the first followed by Canara bank 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 in 1989 and GIC in 1990. The end of 1993
marked Rs.47,004 as assets under management.
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 AXIS 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 MAY 2009
The second is the AXIS 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 AXIS
which had in March 2000 more than Rs.76,000 crores of AUM and with the setting up of a AXIS
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
39
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.
CONCEPT
There are many entities involved and the diagram below illustrates the organisational set up of a
mutual fund:
Organization of a Mutual Fund
FEATURES
Unique Features of AXIS their Impact on its Functioning [Extract from the Report of "Corporate
Positioning" Committee]
In the initial stages, AXIS had been performing a hybrid role of both a financial institution
and a mutual fund. However, over the last few years, its role as a financial institution has
significantly diminished and it has positioned itself purely as the largest mutual fund in the
country. There is also a significant trend emerging which suggests that financial institutions
will gradually wither away or merge into universal banks. In this scenario, commercial banks
and mutual funds will emerge as the primary institutions for the mobilization of household
savings. This reinforces the need for AXIS to evolve as a pure mutual fund. At the same time,
consideration has to be given to the fact that AXIS has promoted and holds controlling
interest in a number of institutions outside the pure mutual fund industry.
40
THE OBJECTIVES OF ASSOCIATION OF MUTUAL FUNDS IN
INDIA
The Association of Mutual Funds of India works with 30 registered AMCs of the country. It has
certain defined objectives which juxtaposes the guidelines of its Board of Directors. The objectives
are as follows:
 This mutual fund association of India maintains high professional and ethical standards in all
areas of operation of the industry.
 It also recommends and promotes the top class business practices and code of conduct which
is followed by members and related people engaged in the activities of mutual fund and asset
management. The agencies who are by any means connected or involved in the field of capital
markets and financial services also involved in this code of conduct of the association.
 AMFI interacts with SEBI and works according to SEBI’s guidelines in the mutual fund industry.
 Association of Mutual Fund of India does represent the Government of India, the Reserve
Bank of India and other related bodies on matters relating to the Mutual Fund Industry.
 It develops a team of well qualified and trained Agent distributors. It implements a program
of training and certification for all intermediaries and other engaged in the mutual fund industry.
 AMFI undertakes all India awareness program for investors in order to promote proper
understanding of the concept and working of mutual funds.
 At last but not the least association of mutual fund of India also disseminate information on
Mutual Fund Industry and undertakes studies and research either directly or in association with
other bodies.
The consorters of Association of Mutual Funds in India
BANK SPONSORED
 SBI Fund Management Ltd.
 BOB Asset Management Co. Ltd.
 Can bank Investment Management Services Ltd.
 AXIS Asset Management Company Pvt. Ltd.
INSTITUTIONS
41
 GIC Asset Management Co. Ltd.
 Jeevan Bima Sahyog Asset Management Co. Ltd.
PRIVATE SECTOR INDIAN:-
 Bench Mark Asset Management Co. Pvt. Ltd.
 Cholamandalam Asset Management Co. Ltd.
 Credit Capital Asset Management Co. Ltd.
 Escorts Asset Management Ltd.
 JM Financial Mutual Fund
 Kotak Mahindra Asset Management Co. Ltd.
 Reliance Capital Asset Management Ltd.
 Sahara Asset Management Co. Pvt. Ltd
 Sundaram Asset Management Company Ltd.
 Tata Asset Management Private Ltd.
PREDOMINANTLY INDIA JOINT VENTURES:-
 Birla Sun Life Asset Management Co. Ltd.
 DSP Merrill Lynch Fund Managers Limited
 HDFC Asset Management Company Ltd.
PREDOMINANTLY FOREIGN JOINT VENTURES:-
 ABN AMRO Asset Management (I) Ltd.
 Alliance Capital Asset Management (India) Pvt. Ltd.
 Deutsche Asset Management (India) Pvt. Ltd.
 Fidelity Fund Management Private Limited
 Franklin Templeton Asset Mgmt. (India) Pvt. Ltd.
 HSBC Asset Management (India) Private Ltd.
 ING Investment Management (India) Pvt. Ltd.
 Morgan Stanley Investment Management Pvt. Ltd.

42
 Principal Asset Management Co. Pvt. Ltd.
 Prudential ICICI Asset Management Co. Ltd.
 Standard Chartered Asset Mgmt Co. Pvt. Ltd
 AXIS Mutual Fund ties up with Dena Bank for distributing its MF schemes
 AXIS Mutual Fund (AXIS MF) and Dena Bank today announced a strategic tie-up for distribution
of AXIS MF schemes. Under the agreement, Dena Bank will offer the entire bouquet of AXIS MF's
schemes across the bank's selected branches
September 12, 2005: AXIS Mutual Fund (AXIS MF) and Dena Bank today announced a strategic tie-
up for distribution of AXIS MF schemes. Under the agreement, Dena Bank will offer the entire
bouquet of AXIS MF's schemes across the bank's selected branches.
Presently AXIS MF (with assets under management of over Rs.25000 crores) reaches out to
its investors through its wide distribution network comprising 65 Financial Centers (UFCs),
271 Chief Representative offices, 58 Chief Agents, over 19000 AMFI certified Financial
Advisors and through tie-ups with several Banks and Department of Post.
With today's tie-up, AXIS MF is further enhancing its distribution capabilities. AXIS MF
will now also be offering its schemes initially through 80 branches of Dena Bank including
41 Fin Mart branches across India.
Announcing the AXIS MF's tie-up with Dena Bank, Dr R H Patil , Chairman, AXIS AMC
said, "This initiative reflects AXIS MF's strategy to rapidly expand in the retail market and
value-add its access network to complement the Mutual Fund's growth strategy in the Indian
mutual fund sector. With this tie-up millions of customers of Dena Bank will get an
opportunity to invest in various schemes of AXIS MF closer to their doorstep at the branches
where they do their banking transactions."
"Dena Bank has got a dominant presence in Gujarat and Maharashtra which happen to be
important retail markets for AXIS MF." he added
DEFINITION OF IMPORTANT TERMS/CONCEPTS IN MUTUAL FUND

INDUSTRY
43
Before proceeding to consider the salient provisions of SEBI regulations governing mutual
funds, it is necessary to get familiar with the basic terms and phraseology used in Mutual
Fund literature.
Net Asset Value ("NAV"): The performance of a particular scheme of a mutual fund is
denoted by Net Asset Value (NAV). Mutual funds invest the money collected from the
investors in securities markets. In simple words, Net Asset Value is the market value of the
securities held by the scheme. Since market value of securities changes every day, NAV of
a scheme also varies on day to day basis. The NAV per unit is the market value of securities
of a scheme divided by the total number of units of the scheme on any particular date. For
example, if the market value of securities of a mutual fund scheme is Rs 200 lakhs and the
mutual fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per unit
of the fund is Rs.20. NAV is required to be disclosed by the mutual funds on a regular basis
- daily or weekly - depending on the type of scheme.
Why should one invest in Mutual Funds through AXIS Bank?

We meet your needs: We believe that every one has specific needs and priorities. Your
needs could vary from buying a house, getting your daughter married to providing for your
child’s education. You might even want to travel the world. All your needs are very important
for us. We can help to fulfill your needs to reality by helping you select schemes, which
would be consonance with your needs.
We work towards building an ‘Investment Culture’: It would be our constant endeavor

to inculcate saving and organized investing habits in you. We will help you plan your
investments and build a healthy mutual fund portfolio, which would be an optimal solution
for your needs. Cultivating an investment culture will not only help you but also your family.
With AXIS Bank- Mutual Fund services, you can consult with your own Investment Advisor
and invest in a Mutual Fund Scheme that is right for you. A great opportunity, to get
organized and make your investment more in line with your real needs.
Risk Factors: All the investments in the securities market are subject to market risks and the
NAV of schemes/plans may go up or down depending upon the factors and forces affecting
securities market. Past performance is not necessarily indicative of the future.
44
GROWTH OF MUTUAL FUND INDUSTRY:
2018 was a turbulent year for the Indian stock markets. Foreign investors dumped Indian
equities worth Rs 33,014 crore and debt instruments worth Rs 47,795 crore. In fact, they
have continued to be net sellers in Indian stocks even in 2019. So far in January 2019,
they have sold equities worth Rs 2,675 crore.
Had it not been for the solid participation from domestic investors, the Indian markets
would have witnessed a much steeper fall.
The chart of the day puts things in perspective.
Ten years ago, the total assets under management (AUM of the Indian mutual fund
industry were Rs 4.13 trillion (1 trillion equals 1 lakh crore) as on 31 December 2008.
Over the subsequent five years, the industry grew at a compound annual growth rate
(CAGR) of 15% to take the total AUM to Rs 8.2 trillion as on 31 December 2013.
Thereafter, the Indian mutual fund industry took off like never before, compounding at
23% CAGR, and taking the total AUM as on 31 December 2018 to Rs 22.86 trillion.
In just 10 years, the AUM of the Indian MF Industry has multiplied 5.5 times,
compounding at 19% CAGR.
45
The total number of mutual fund folios as on 31 December 2018 stood at 8.03 crore (80.3
million).
STRUCTURE OF MUTUAL FUNDS
The structure of Mutual Funds in India is a three-tier one. There are three distinct entities
involved in the process – the sponsor (who creates a Mutual Fund), trustees and the asset
management company (which oversees the fund management). The structure of Mutual
Funds has come into existence due to SEBI (Securities and Exchange Board of India)
Mutual Fund Regulations, 1996. Under these regulations, a Mutual Fund is created as a
Public Trust. We will look into the structure of Mutual Funds in a detailed manner.
The Fund Sponsor:
The Fund Sponsor is the first layer in the three-tier structure of Mutual Funds in India.
SEBI regulations say that a fund sponsor is any person or any entity that can set up a
Mutual Fund to earn money by fund management. This fund management is done through
an associate company which manages the investment of the fund. A sponsor can be seen
as the promoter of the associate company. A sponsor has to approach SEBI to seek
permission for a setting up a Mutual Fund. Once SEBI agrees to the inception, a Public
Trust is formed under the Indian Trust Act, 1882 and is registered with SEBI. Trustees
are appointed to manage the trust and an asset management company is created complying
with the Companies Act, 1956.
There are eligibility criteria given by SEBI for the fund sponsor:
46
 The sponsor must have experience in financial services for a minimum of five years with
a positive Net worth for all the previous five years.
 The net worth of the sponsor in the immediate last year has to be greater than the capital
contribution of the AMC.
 The sponsor must show profits in at least three out of five years which includes the last
year as well.
 The sponsor must have at least 40% share in the net worth of the asset management
company.
Any entity that fulfills the above criteria can be termed as a sponsor of the Mutual Fund.
Trust and Trustees:
Trust and trustees form the second layer of the structure of Mutual Funds in India. A trust
is created by the fund sponsor in favor of the trustees, through a document called a trust
deed. The trust is managed by the trustees and they are answerable to investors. They can
be seen as primary guardians of fund and assets. Trustees can be formed by two ways – a
Trustee Company or a Board of Trustees. The trustees work to monitor the activities of
the Mutual Fund and check its compliance with SEBI (Mutual Fund) regulations. They
also monitor the systems, procedures, and overall working of the asset management
company. Without the trustees’ approval, AMC cannot float any scheme in the market.
The trustees have to report to SEBI every six months about the activities of the AMC.
Asset Management Companies:
Asset Management Companies are the third layer in the structure of Mutual Funds. The
asset management company acts as the fund manager or as an investment manager for the
trust. A small fee is paid to the AMC for managing the fund. The AMC is responsible for
all the fund-related activities. It initiates various schemes and launches the same. The
AMC is bound to manage funds and provide services to the investor. It solicits these
services with other elements like brokers, auditors, bankers, registrars, lawyers, etc. and
works with them. To ensure that there is no conflict between the AMCs, there are certain
restrictions imposed on the business activities of the companies.
Other Components in the Structure of Mutual Funds
47
Custodian:
A custodian is responsible for the safekeeping of the securities of the Mutual Fund. They
manage the investment account of the Mutual Fund, ensure the delivery and transfer of
the securities. They also collect and track the dividends & interests received on the Mutual
Fund investment.
Registrar and Transfer Agents (RTAS):
These are the entities that provide services to Mutual Funds. RTAs are more like the
operational arm of Mutual Funds. Since the operations of all Mutual Fund companies are
similar, it is economical in scale and cost effective for all the 44 AMCs to seek the services
of RTAs. CAMS, Karvy, Sundaram, Principal, Templeton, etc are some of the well-
known RTAs in India.
Their services include.
 Processing investors’ application

 Keeping a record of investors’ details
 Sending out account statements to the investors
 Sending out periodic reports
 Processing the payouts of the dividends
 Updating the investor details i.e. adding new members and removing those who have
withdrawn from the fund.
Auditor:
Auditors audit and scrutinize record books of accounts and annual reports of various
schemes. Each AMC hires an independent auditor to analyze the books so as to keep their
transparency and integrity intact. Brokers AMC uses the services of brokers to buy and
sell securities on the stock market. The AMCs uses research reports and recommendations
from many brokers to plan their market moves. The three-tier structure of the Mutual
Funds is in place keeping the fiduciary nature of the Mutual Funds in mind. It ensures
that each element of the system works independently and efficiently. This structure of
Mutual Funds is in line with the international standards and thus there is a proper
separation of responsibilities and functioning of each constituent of the structure.
MUTUAL FUND & CAPITAL MARKET
48
Indian institute of capital market (IICM) aims is to educate and develop professionals for
the securities industry in India and other developing countries, other objectives like to
function on a centre for creating investors awareness through research & turning and to
provide specialized consultancy related to the securities industry. Capital market play
vital role for the growth of Mutual fund in India, capital market divided into the two parts
one is the primary market and another is secondary market, primary market concern with
issue management, as per the mutual fund concern the primary called as the NFO New
Fund Offer, all the AMC (Assets Management Company) are issuing all the funds all the
way through the NFO, Every NFO came with particularly investment objectives, style of
investment and allocation of the funds all that depend on the fund manager style of
investment. The other portion of the capital market is secondary market; secondary
market means when the market is at the bull stage the investors sell the units and when in
case of bear stage the investors buy or some of the investors wait to sell.
TAX PLANNING AND MUTUAL FUND
Investors in India opt for the tax-saving mutual fund schemes for the simple reason that
it helps them to save money. The tax-saving mutual funds or the equity-linked savings
schemes (ELSS) receive certain tax exemptions under Section 80C of the Income Tax
Act. That is one of the reasons why the investors in India add the tax-saving mutual fund
schemes to their portfolio. The tax-saving mutual fund schemes are one of the important
types of mutual funds in India that investors can option for. There are several companies
in India that offer – tax – saving mutual fund schemes in the country.
49
COMPANY PROFILE
AXIS Mutual Fund, the largest private sector Mutual Fund company in India with an asset
base of Rs 25,500 crores, will be the leading Fund Manager for Government of India's newly
created National Investment Fund (NIF).
Announcing this AXIS Asset Management Company Managing Director and Chief
Executive Officer (CEO) U K Sinha told newsmen here this evening that besides the AXIS
Mutual Fund, the other two leading financial institutions which were short listed for the
massive job were State Bank of India (SBI) and the Life Insurance Corporation(LIC) of India.
He said the new fund had been created by the Centre with a view to investing the entire
disinvestment fund into the NIF corpus and re invests them in health, education and other
social causes through a calculated manner.
Since the scheme was still in its preliminary stage, the government was yet to create a
separate corpus for the fund, which was announced only last month.
Referring to the corporate plan of AXIS Mutual Fund whose ownership had recently changed
hands following the purchase of its 25 per cent stake each by the country's four leading banks
and financial institutions like SBI, Bank of Baroda(BOB), Punjab National Bank (PNB) and
the LIC last month with a total capital infusion of Rs 1236 crores, Mr Sinha said under the
new management they were planning to leverage their own capabilities with a much higher
target oriented growth.
AXIS AMC CEO, however, categorically ruled out the possibility of any clash of interest
among the new stake holders of the company in view of their similar business interest in
terms of Mutual Fund.
Replying to a related query he said though each of these institutions had their own mutual
fund businesses, it would not clash in any manner with that of AXIS mutual Fund since the
agreement among them would prevent them from doing so.
In the wake of over 33 per cent growth in the Indian Mutual Fund industry since April this
year, Mr Sinha said it had enabled the AXIS Mutual Fund to increase its Asset base by over
Rs 5,500 crores during this period from Rs 20,000 crores achieved till
March. "We are confident to maintain a similar growth path in the coming years too." About
the huge potential and the actual position, Mr Sinha claimed that AXIS Mutual Fund had
50
already been enjoying about 67 per cent domestic market share of the country's around one
crores investors in mutual fund products.
AXIS Asset Management Company became a private company last month with the four
sponsors, Life Insurance Corporation of India, State Bank of India, Punjab National Bank
and Bank of Baroda paying back the government its equity worth Rs 1,236.95 crores in the
company. Each sponsor now owns a 25 per cent stake in the company and under the terms
of the new agreement, the owners will not be allowed to change their shareholding pattern.
“We are also keen to increase our exposure in the overseas market through the offshore
funds,” said Sinha.
“AXIS Mutual Fund is also exploring investment opportunities in emerging sectors like the
knowledge process outsourcing, textiles and biotech through the private equity and venture
capital arm, AXIS Venture Funds,” said D. S. R. Murthy, executive director, AXIS Asset
Management Company.
OUR MISSION AND VALUES

MISSION
 Customer service and product innovation tuned to diverse needs of individual and
corporate clientele
 Continuous technology up gradation while maintaining human values
 Progressive globalization and achieving international standards
 Efficiency and effectiveness built on ethical practices
After launching its first scheme in October 2009, Axis Mutual Fund has witnessed
remarkable growth. The entire success can be attributed to three basic principles i.e.
long term capital appreciation, customer view and long term relationship. It seeks to
deliver state-of-the-art financial and investment solutions thereby enabling financial
security and confidence among the customers. By focusing on risk management and
planning, investors are motivated to take a comprehensive view. Goal-oriented
investing is given priority over unplanned parking of funds.
Axis Asset Management Company Limited is a privately owned investment manager.

The firm manages equity, fixed income, and balanced mutual funds and hedge funds for
its clients. It invests in the public equity, fixed income, and alternative markets of India.
51
The firm also invests in gold for some of its funds. Axis Asset Management Company
Limited operates as a subsidiary of Axis Bank Limited.
Axis mutual fund is a well-rounded product suite that consists of more than 50 schemes,
over 20 lac active investor accounts and presence in over 90 cities
VISION
Responsibly managing money and risks to help people feel financially secure and
confident of a brighter and prosperous future.
INVESTMENT PHILOSOPHY
Our business will be built on three pillars
 Outside-in View
 Investor at the heart of every single decision.
 Communicate in his language, not in ours.
Enduring Wealth Creation
 Play a serious and credible role in investor's money basket.

 Encourage investors to build a long-term perspective of the mutual fund category.
Long-term Relationships
 Leverage the equity of the 'Axis' brand.

 Aim at building relationships rather than being transactional.
BUSINESS PHILOSOPHY
Our product, sales and service strategy is entirely guided by this. We aim to provide
quality financial and investment solutions which help customers feel financially secure
and feel confident of a brighter and prosperous future. We lay a strong emphasis on risk
management and planning. We encourage our investors and our partners to take a
holistic view which extends beyond mere investing surpluses to investing with an
underlying dream, aspiration or goal.
52
Key Information
Mutual Fund Axis Mutual Fund
Setup Date Sep-04-2009
Incorporation Date Jan-13-2009
Sponsor Axis Bank Limited
Trustee Axis Mutual Fund Trustee Limited
Chairman N.A
CEO / MD Mr. Chandresh Kumar Nigam
CIO N.A
Compliance Officer Mr. Darshan Kapadia
Investor Service Officer Mr. Milind Vengurlekar
Assets Managed Rs. 102221.15 crore (Jun-30-2019)
53
ORGANISATIONAL STRUCTURE
CHAIRMAN
DMD & CFO
DMD & CCO
DMD & CDO
CVO
MD & GE (ALL
DEPTS.)
Deputy General
Manager (Module)
Asst. General
Manager
Chief Manager
CM (Personnel &
HRD)
54
Manager (Official
Languages)
Manager (Disc.
Pro. Cell)
CM (Banking
Operations)
Security Officer
(Module)
Branch Manager
Asst. Manager
Chief Accountant
Clerks
S.W.O.T. ANALYSIS OF ORGANISATION
AXIS is a statutory corporation established under the Unit Trust of India, Act 1963 with a
view to encouraging saving and investment and participation in the income, profits and gains
accruing to the Corporation from the acquisition, holding, management and disposal of
securities. The Act came into force on 1st February 1964.
The initial capital of AXIS was Rs.5 crores which has been contributed as under:
 Reserve Bank of India (RBI) Rs.2.50 crores
 Life Insurance Corporation of India (LIC) Rs.0.75 crores
 State Bank of India (SBI) and its subsidiary banks Rs.0.75 crores
 Scheduled banks (other than SBI and its subsidiary banks) and notified financial
institutions Rs.1.00 crores
The initial capital forms part of US-64 and the subscribers hold units in that Scheme. In 1975,
the AXIS Act was amended and by virtue of the amendment, the Industrial Development
55
Bank of India (IDBI) took over the rights and responsibilities of RBI under the Act and the
share of the initial capital held by RBI was transferred to and vested in IDBI.
AXIS is the largest player in the mutual fund industry with total investible funds of domestic
schemes (at Market Value) as at 30th June, 2008 of Rs.2,17,000.2crores constituting about
67% of the total investible funds of the industry. US 64 with a total unit capital as at 30th
June 2007 of Rs.60,786 crores had a substantial share of these investible funds.
STRENGTHS
 Its large size with consequential economies of scale;
 Its nation-wide well entrenched distribution network and consequently its wide reach
and capacity to mobilize large resources;
 Its brand image arising out of a public Its large size with consequential economies of
scale;
 Its nation-wide well entrenched distribution network and consequently its wide reach
and capacity to mobilize large resources;
 Its brand image arising out of a public perception that the safety of funds is assured
by its pseudo Government character, which may not be entirely unjustified.
 The fact that it does not have an AMC to whom management fees would have to be
paid which results in higher returns available to unit holders.
WEAKNESSES
 Axis bank has to face competition from the other banks.
 It is very difficult to create a brand.
 Demands of today’s customer is very high, therefore it becomes a tough job to satisfy
the customers.
OPPORTUNITIES
 Increasing market of the mutual funds.
 Availability of the improved and latest technology.
56
 Axis can get success or high profits by fulfilling the unfulfilled needs of the
customers.
 As the education level in the country is improving there are a lots of investors who
are investing in the mutual funds.
THREATS
 With the increase in the no. of investors there is also increase in the no. of the new
competitors in the market.
 The mutual fund is totally a technology based business which is quite complex.
CHAPTER IV
DATA PRESENTATION, ANALYSIS AND

INTERPRETATION
4.1 INTRODUCTION
Secondary data of the following 5 mutual funds of Axis Bank is collected from the
websites and analysed.
1. AXIS LONG TERM EQUITY FUND
57
2. AXIS FOCUSED 25 FUND
3. AXIS BLUECHIP FUND
4. AXIS MID CAP FUND
5. AXIS SMALL CAP FUND
Only growth funds were chosen to study. The analysis is mainly based on secondary
data. Data is analysed using Average return, risk, performance of each fund have been
evaluated. The following tools were used for calculations:
 Average Return (formula: ƩR/N)

 Standard deviation (formula: √Ʃd²/N)
 Sharpe measure (formula: Rp-Rf/σp)
Apart from the above bar graphs are used to analyse the return, risk and performance of
each fund.
FOLLOWING TABLE CONSIST OF SCHEMES OF AXIS BANK
Table 4.1 Schemes of Axis bank
Returns (In percentage)
Sl. No Schemes 2017 2018 2019
1 Axis long term equity fund 13.2 13.56 21.27
2 Axis Focused 25 fund 13.27 13.31 22.65
3 Axis Blue chip fund 15.61 15.61 19.93
4 Axis Midcap fund 13.83 13.98 22.27
58
5 Axis Small cap fund 14.92 18.98 32.6
4.2 EVALUATING PERFORMANCE OF DIFFERENT SCHEMES PROVIDED BY

AXIS BANK
1. AXIS LONG TERM EQUITY FUND
Table 4.2 Axis long term equity fund
YEAR RETURNS (R) (%) D d2
2017 13.2 -2.81 7.90
2018 13.56 -2.45 6.00
2019 21.27 5.26 27.67
59
ƩR= 48.03 Ʃd²= 41.57
AVG RETURN ƩR/N= 16.01%
STANDARD DEVIATION(σ) √Ʃd²/N= 13.86%
SHARPE RATIO Rp-Rf/σp= 0.65
2. AXIS FOCUSED 25 FUND
Table 4.3 Axis focused 25 fund
YEAR RETURNS (R) (%) d d2
2017 13.27 -3.41 9.86
2018 13.31 -3.1 9.61
2019 22.65 6.24 38.94
ƩR= 49.23 Ʃd²= 58.41
AVG RETURN ƩR/N= 16.41
60
STANDARD DEVIATION(σ) √Ʃd²/N= 19.47
3. AXIS BLUE CHIP FUND
Table 4.4 Axis blue chip fund
2017 15.61 -1.44 2.07
2018 15.61 -1.44 2.07
2019 19.93 2.88 8.29
ƩR= 51.15 Ʃd²= 12.43
61
4. AXIS MID CAP FUND
Table 4.5 Axis mid cap fund
2017 13.83 -2.86 8.18
2018 13.98 -2.71 7.34
2019 22.27 5.58 31.14

ƩR= 50.08 Ʃd²= 46.66
62
5. AXIS SMALL CAP FUND
Table 4.6 Axis small cap fund
2017 14.92 -7.25 52.56

2018 18.98 -3.19 10.18
2019 32.61 10.44 108.99
ƩR= 66.51 Ʃd²= 171.73
63
I. RETURN AND RISK ANALYSIS OF DIFFERENT FUNDS
Table 4.7 Return and Risk analysis of different funds
SCHEMES AVG RETURN STANDARD

DEVIATION (RISK)
1. Axis long term equity 16.01 13.86
Fund
2. Axis focused 25 fund 16.41 19.47
3. Axis blue chip fund 17.05 4.14
4. Axis mid cap fund 16.69 15.53
5. Axis small cap fund 22.17 57.24
Chart 4.1 Return and Risk analysis of different funds
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INTERPRETATION:
From the above table and graph we can interpret that Axis small cap fund has more
return i.e., 22.17% and Axis long term fund has less return i.e., 16.01%. Axis small cap
fund has more risk i.e., 57.24 and Axis blue chip fund has less risk i.e., 4.14%.
II. SHARPE RATIO ANALYSIS OF DIFFERENT FUNDS

Table 4.8 Sharpe ratio analysis of different funds
SCHEMES Ratio Rank
1. Axis long term equity 0.65 2

Fund
2. Axis focused 25 fund 0.48 4
3. Axis bluechip fund 2.43 1
4. Axis mid cap fund 0.62 3
5. Axis small cap fund 0.27 5
4.2 Sharpe ratio analysis of different funds
65
INTERPRETATION:
From the above table and graph we can interpret that Axis blue chip fund stands 1st as it
had highest sharpe ratio i.e., 2.43, Axis long term equity fund stands 2nd with 0.65, 3rd
rank Axis mid cap fund with 0.62, 4th Axis focused 25 fund with 0.48 and Axis small
cap fund stands 5th with 0.27.
CHAPTER V
FINDINGS, SUGGESTIONS AND CONCLUSIONS
5.1 FINDINGS:
1. The following gives the fund with the highest return to lowest return i.e., Axis small
cap fund, Axis blue chip fund, Axis mid cap fund, Axis focused 25 fund and Axis long
term equity fund.
 Axis small cap fund and its return 22.17%
 Axis blue chip fund and its return 17.05%
 Axis mid cap fund and its return 16.69%
 Axis focused 25 fund and its return 16.41%
 Axis long term equity fund and its return 16.01%
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2. The following funds gives the fund with highest risk to lowest risk i.e., Axis small
cap fund, Axis focused 25 fund, Axis mid cap fund, Axis long term equity fund and
Axis blue chip fund.
 Axis small cap fund and its risk 57.24%
 Axis focused 25 fund and its risk 19.47%
 Axis mid cap fund and its risk 15.53%
 Axis long term equity fund and its risk 13.86%
 Axis blue chip fund and its risk 4.14%
3. The performance of the funds has been evaluated with the help of sharpe ratio and the
fund with highest sharpe ratio is given the top rank. The rank gives to each fund is as
follows
 Axis blue chip fund with 2.43- Rank 1
 Axis long term equity fund with 0.65- Rank 2
 Axis mid cap fund with 0.27- Rank 3
 Axis focused 25 fund- Rank 4
 Axis small cap fund- Rank 5
It is found that among the different funds Axis small cap fund are performing well with
more returns and more risk.
5.2 SUGGESTIONS:
Mutual funds are one of the most important service vehicles for investment
 If an investor likes to earn more returns then he can invest in Axis small fund but the
risk is also high.
 If an investor wants to take moderate risk then he can invest in Axis mid cap fund.
 If an investor likes to take less risk, then he can invest in Axis blue chip fund.
 Investors are needed to be made aware of the investment in mutual funds.
5.3 CONCLUSION:
Mutual funds are one of the most highly growing products in financial services market.
Mutual funds are suitable for all types of investors from risk adverse to risk bearer.
Investing in Axis small cap fund will lead to more returns. If the investor wants to take
67
less risk then Axis blue chip fund is a better option which also gives more returns and
from the study using sharpe ratio it was found that Axis blue chip fund has highest
sharpe ratio. In todays world investors are showing more interest in mutual funds. There
is no need of any financial consultant if you have good knowledge about the type of
fund to invest.
5.4 LIMITATIONS:
 This study is mainly based on secondary data.
 Only schemes provided by Axis mutual funds are taken.
 The study is limited to five funds i.e., Axis long term equity fund, Axis focused 25 fund,
Axis blue chip fund, Axis mid cap fund and Axis small cap fund.
 The study is limited for 3 years i.e., 2017, 2018, 2019.
68
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CHAPTER –I

1.3 Objectives of the study

 To study about mutual funds.

Statistical techniques used for data analytics

 Average Return (formula: ƩR/N)

1.5 Scope of the study

This chapter consists of introduction of the study, need, objectives, research

Chapter II Review of literature

Chapter III Industry and company profile

Chapter IV Data Presentation, Analysis and Interpretation

Chapter V Findings, suggestions and conclusions

2.1 Meaning and Definitions

 Mutual funds are managed by professional fund managers.

Role of Mutual Funds

 Their primary role is to assist investors in earning an income or building their

FEATURES OF MUTUAL FUNDS

In terms of ease, mutual funds are classified into two classes:

 On the basis of execution and operation:

 On the basis of yield and investment pattern

 Off-shore mutual funds

Mutual Fund Portfolio Example for an Aggressive Investor

30% Large-cap stock (Index)

Mutual Fund Portfolio Example for a Moderate Investor

40% Large-cap stock (Index)

Mutual Fund Portfolio Example for a Conservative Investor

15% Large-cap stock (Index)

2.8 Merits and demerits:

 No Control over costs

Dr. Deepak Agarwal (written-2007) (Evised-2011).Measuring performance of Indian

S Debasish (2009) in the article titled “Investigating performance of equity-based mutual

S Debasish (2009). Investigating performance of equity-based mutual funds schemes in

Dr.R.Narayanasamy, V. Rathnamani have examined in the article titled “Performance

Dr.R.Narayanasamy, V. Rathnamani, HOD, Department Of Commerce, National

Dr Vikas Choudhary, and Preeti Sehgal Chawla (2014). Performance Evaluation of

1. Performance Analysis of Mutual Funds-A Study on Selected Mid Cap and

AUTHOR: O.V.A.M SRIDEVI (2018)

AUTHOR: SARANYA, PARTHIBAN THANGAVEL (2018)

ABSTRACT: To study the performance of selected mutual funds schemes under

3. A study on performance evaluation of selected Debt Mutual Funds in India.

AUTHOR: YASHASVI, R. RAJPARA (2017)

ABSTRACT: To know which schemes give highest return in India. To examine

AUTHOR: POONAM DEVI (2017)

ABSTRACT: To understand the perception of investors towards mutual funds,

5. A study of recent trends in Indian Mutual Fund Industry

AUTHOR: MITAL BHAYANI (2017)

ABSTARCT: To study recent trends in growth of Mutual Fund Industry on

AUTHOR: SHEFALI GUPTA (2015)

ABSTARCT: To evaluate and compare the performance of sectorial equity

7. Growth and Performance of Indian Mutual Fund Industry during Past

AUTHOR: V. RAMANUJAM AND A BHUBANESWARI (2015)

AUTHOR: ARTHY B, ASWATHY A NAIR (2015)

ABSTRACT: To analyze the factors influencing investment decisions of retail

9. Performance evaluation of mutual funds: A study of selected diversified

AUTHOR: VIKAS CHAUDHARY (2014)

ABSTARCT: To study the performance of Selected Diversified Equity Mutual

AUTHOR: SATHYASWAROOP DEBASISH(2009)

INDUSTRY AND COMPANY PROFILE