A PROJECT REPORT ON MUTUAL FUNDS

Submitted in a partial fulfillment for

MASTER OF BUSINESS ADMINISTRATION (2020-22)

(Affiliated by Uttarakhand Technical University,

Dehradun)

DOON BUSUINESS SCHOOL, DEHRADUN

Guided by, Submitted by,

MR,NITIN AMBARDAR MAYANK KUMAR SAHU
 Certificate

This is to certify that Mayank kumar sahu has done his Summer
Internship project on “Mutual Fund” in Bajaj Capital LTD. Gurugram
under the supervision and guidance of Mr. Nitin Ambardar and that
report embodies the work of candidate himself.

Prof. Neha Choksi

Internal Guide
 DECLARATION

I hereby declare that this Project Report entitled “THE STUDY OF

MUTUAL FUND” is submitted in the partial fulfillment of the
requirement of Master of Business Administration (MBA) of DOON
BUSINESS SCHOOL DEHRADUN is based on primary or secondary
data found by me in various departments books , magazines and
websites & collected by me in under guidance of Mr. Nitin Ambardar.

Date : Mayank kumar sahu

MBA (2020-2022)
 Acknowledgement

I would like to express my special thanks of gratitude to

our business research and methodology “Mr. Nitin
Ambardar” for his able guidance and supporting me to
do this project .This is the final project on the study of
mutual funds and during this project my mentor helped
me.

DATE: Mayank kumar sahu

MBA II SEM (2020-22)
CONTENTS
1. Declaration

2. Acknowledgement

3. Executive Summary

4. Introduction

5. Company

6. All about mutual funds

7. Research methodology

8. Limitations

9. Suggestions

10. Conclusion
 Executive Summary
In few years Mutual Fund has emerged as a tool for ensuring one’s
financial well-being. Mutual funds have not only contributed to the
India growth story but also helped families tap into success Indian as
information and awareness is right more people are enjoying the
benefits of investing in mutual funds. The main reason the number of
retail mutual fund investors remains small is that nine in ten people
with incomes in India do not know that mutual funds exists.

But once people are aware of mutual fund investment opportunities,

the number who decide to invest in mutual funds increases to as
many as one in five people. The trick for converting a person with no
knowledge of mutual funds to a new Mutual Fund customer is to
understand which of the potential investors are more likely to buy
mutual funds and to use the right arguments in the sales process that
customers will accept as important and relevant to their decision.

This project gave me a great learning experience and at the same time
it gave me enough scope to implement my analytically ability. The
analysis and advice presented in this Project report is based on market
research on the saving and investment in mutual funds. This report
will help to know about the investors preferences in Mutual funds
means are they prefer any particular Assets Management Company
(AMC), which type of product they prefer , which option (Growth or
Dividend) they prefer or which investment strategy they follow
(Systematic Investment Plan or One Time Plan).
 INTRODUCTION
Mutual Funds are financial instruments. These funds are collective
investments which gather money from different investors to invest in
stocks, short-term money market financial instruments, bonds and other
securities and distribute the proceeds as dividends.

The Mutual Funds in India are handled by Fund Managers, also referred
as the portfolio managers. The Securities Exchange Board of India
regulates the Mutual Funds in India. The unit value of the Mutual Funds
in India is known as net asset value per share (NAV).

The NAV is calculated on the total amount of the Mutual Funds in India,
by dividing it with the number of units issued and outstanding units on
daily basis.

For example, an equity fund would invest in stocks and equity-

related instruments, while a debt fund would invest in bonds,
debentures, etc.
• As an investor, you put your money in financial assets like stocks and
bonds. You can do so by either buying them directly or using
investment vehicles like mutual funds.
• In this segment, we will understand mutual funds and how to trade in
them.
• History of mutual funds in India
When an investor subscribes for the units of a mutual fund, he becomes part owner
of the assets of the fund in the same proportion as his contribution amount put up
with the corpus (the total amount of the fund). Mutual fund investor is also known
as a mutual fund shareholder or a unit holder.

Any change in the value of the investments made into capital market instruments
(such as debentures etc.) is reflected in the Net Assets Value (NAV) of the
scheme’s assets net of its liabilities. NAV of a scheme is calculated by dividing the
market value of scheme’s assets by the total number of units to the investors.
Advantages of Mutual Funds

• Professional management

• Liquidity

• Reduction/ diversification of Risk

• Portfolio diversification

• Flexibility & Convenience

• Reduction in transaction cost

• Safety of regulated environment

• Choice of schemes

• Transparency

Disadvantages of Mutual Funds

• Difficulty in selecting a suitable fund scheme

• No tailor-made Portfolios

• Managing a Portfolio funds

• No control over cost in the hands of an investors

ABOUT COMPANY
Bajaj Capital Ltd was incorporated in the year 1964 in New Delhi, India. It is India’s
premier financial services provider, which has been providing investment services
with about 50 years of experience in helping people protect and grow their wealth.
Bajaj Capital Ltd provides a wide variety of services, including personalized
investment services which uses 360 degree financial assessment tool. It also
provides its customers an incredible range of financial products, such as mutual
funds, fixed deposits, bonds, insurance policies, stock investment options, and
options for buying and selling of real estate properties.
Bajaj Capital provides services to its customers with 24X7 online support and has
registered its presence in over 120 offices in 70 cities across India .

Bajaj Capital: India’s Premier Financial Services Provider

2012 Receives award for ‘Best Financial Planning Company' for the year 2011–12

2008 Launches an online platform, Just Trade, for investing in equities, mutual funds and IPOs

2004 Obtains the All India Insurance Broking License

1999 Begins marketing Life and General Insurance products of LIC and GIC and also achieves the
milestone of becoming the top 'Pension Scheme' seller in India

1991 Becomes the top mobiliser with collections of over US$ 20 million for the SBI-issued India
Development Bonds for NRIs

1975 Starts offering 'need-based' investment solutions to its clients which is now known as Financial
Planning
 All About Mutual Funds
MF History
The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank of India. The
history of mutual funds in India can be broadly divided into four distinct phases

First Phase - 1964-1987

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

Second Phase - 1987-1993 (Entry of Public Sector Funds)

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

Third Phase - 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian mutual
fund industry, giving the Indian investors a wider choice of fund families. Also, 1993
was the year in which the first Mutual Fund Regulations came into being, under which
all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari
Pioneer (now merged with Franklin Templeton) was the first private sector mutual
fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
and revised Mutual Fund Regulations in 1996. The industry now functions under the
SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual
funds setting up funds in India and also the industry has witnessed several mergers
and acquisitions. As at the end of January 2003, there were 33 mutual funds with total
assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs. 44,541 crores of assets
under management was way ahead of other mutual funds.
Fourth Phase - since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust
of India with assets under management of Rs. 29,835 crores as at the end of January
2003, representing broadly, the assets of US 64 scheme, assured return and certain other
schemes. The Specified Undertaking of Unit Trust of India, functioning under an
administrator and under the rules framed by Government of India and does not come
under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs. 76,000 crores of
assets under management and with the setting up of a UTI Mutual Fund, conforming to
the SEBI Mutual Fund Regulations, and with recent mergers taking place among
different private sector funds, the mutual fund industry has entered its current phase of
consolidation and growth.

The graph indicates the growth of assets over the years.

Categories of mutual fund :
What is Mutual Fund

A mutual fund is an investment vehicle where many investors pool their

money to earn returns on their capital over a period. This corpus of funds is

managed by an investment professional known as a fund manager or

portfolio manager.

It is his/her job to invest the corpus in different securities such as bonds,

stocks, gold and other assets and seek to provide potential returns. The

gains (or losses) on the investment are shared collectively by the investors

in proportion to their contribution to the fund.

 RISK V/S RETURN

FIG. INTERPRETATION

In the above graph we see that as the risk is increasing return is also increasing. We can
say that risk is directly proportional to the return.
Research Methodology
This report is based on primary as well as secondary data, however primary data

collection was given more importance since it is overhearing factor in attitude

studies. One of the most important users of research methodology is that it helps in

identifying the problem, collecting, analyzing the required information data and

providing an alternative solution to the problem. It also helps in collecting the vital

information that is required by the top management to assist them for the better

decision making both day to day decision and critical ones.

Data sources:
Research is totally based on primary data. Secondary data can be used only for the

reference. Research has been done by primary data collection, and primary data

has been collected by interacting with various people. The secondary data has been

collected through various journals and websites.

Duration of study:
The study was carried out for a period of two months, from 15th June to 16th
August 2021.

Limitations
Every coin has two sides to it, everything has their own pros and cons.
A lot of websites and articles have been telling us about how Mutual
funds the best available investment tools are, but these have limitations,
too.

Lack of portfolio customization :

Some brokerages like IIFL, Motilal Oswal, offer Portfolio Management

Schemes (PMS) to large investors. In a PMS, the investor has better
control over what securities are bought and sold on his behalf. The investor
can get a customized portfolio in case of PMS. On the other hand, a
unitholder in a mutual fund is just one of several thousand investors in a
scheme. Once a unitholder has bought into the scheme, investment
management is left to the fund manager (within the broad parameters of
the investment objective). Thus, the unitholder cannot influence what
securities or investments the scheme would invest into.

Choice overload:

Over 2000 mutual fund schemes offered by 47 mutual funds – along with
multiple options within them – makes it a difficult choice for investors.
Greater dissemination of scheme information through various media
channels and availability of professional advisors in the market helps
investors to handle this overload.

No control over costs:

All the investor's money is pooled together in a scheme. Costs incurred for
managing the scheme are shared by all the Unitholders in proportion to
their holding of Units in the scheme. Therefore, an individual investor has
no control over the costs in a scheme. SEBI has, however, imposed certain
limits on the expenses that can be charged to any scheme. These limits
vary with the size of assets and the nature of the scheme is published by
the mutual fund company.

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

Dilution :
Dilution is the direct result of diversification. Since investors have their
money spread across different assets the high returns earned does
not make much of a difference. Thus, when we talk about
diversification as one of the key benefits of MF, over-diversification
could be one of the major disadvantages/limitations to investing in
mutual funds.
 Suggestions
Mutual funds are managed collectively by professional fund experts and have
higher return potential than many traditional investment options such as bank
deposits – fixed/recurring. However, with different type of mutual
funds available in the market, the investment process may be overwhelming for
a new investor.
Following top ten mutual fund tips can guide you through the investment
process:

❖ Clarity on investment goals:

To earn maximum returns from mutual funds, you must have clear financial
goals. If you are a new investor, consulting a financial advisor can be a good
option. If you wish to do it yourself, try to assess a few key factors such as:
• Your financial goal
• Your retirement plans
 • The period for which you want to invest

❖ Analyze different type of mutual fund schemes

As per your objective and period of investment, analyses different
schemes. Mutual fund schemes can be commonly classified based
on various factors.

❖ Mutual Funds Based on Asset Class:

Choose between equity fund, debt fund, and hybrid fund.

❖ Mutual Funds based on Investment Objective:

Choose between growth fund, liquid fund, income fund, tax saving fund.

❖ Mutual Funds Based on Structure:

Choose between open-ended funds and closed-ended funds.

1. Understand the Tax Laws:

In investments, a Rupee saved is a Rupee earned. Thus, while you pay

attention to the return potential and risk possibility of the funds, also look at
the tax liability. There are a few tax laws that you should know about
when investing in mutual funds.

1. Long-term Capital Gains Tax (LTCG):

While equity funds are liable for an LTCG tax of 10% on the capital
appreciation, LTCG on debt funds is as per the income tax slab of the
investor in a financial year. Also, debt funds held for more than 36 months
are considered long-term. On the other hand, equity funds need to be held
for only 12 months or more to be considered as long-term investments.
 2. Short-term Capital Gains Tax (STCG):

STCG on debt funds is charged at 20% on capital appreciation after

indexation. STCG on equity funds is 15% without indexation. While debt
funds held for lesser than 36 months are considered short-term, equity
funds held for less than 12 months are considered short-term funds.

3. Deductions Under Section 80D:

Tax saving equity funds or ELSS (Equity Linked Savings Schemes) allow
you to deduct up to Rs 1,50,000 in a financial year for the equivalent
amount invested in ELSS with a minimum lock-in period of 3 years. Thus,
you get a tax advantage on not only the capital appreciation but also the
invested amount.

1. Investing in SIPs (Systematic Investment Plan):

One of the simplest ways to invest in a mutual fund is through SIP.
Here you need to invest a fixed amount every month and get allocated a
certain number of units, as per the NAV. It comes with a lock-in period
that helps to ensure discipline in investment

2. Consider Schemes Focusing on Long-term Growth:

You can expect better returns from long term plans with a period of at
least five years or more. The equity markets may fluctuate more in a
short duration but generally trend upwards in the long-term.

3. Know When to Exit a Mutual Fund:

Just as entering a mutual fund is important, it is also essential to know
when to exit a fund. Investors often make the mistake of exiting a fund
when the market enters a bearish phase. This is not a recommended
strategy. Capable fund managers know how to over-rise a bearish phase
and in fact, use it to their advantage. On the flip side, it is also essential
 to know when to exit a mutual fund. There are a few cues to follow,
such as:

1. When the fund consistently performs poorly for a long time

2. When the fund changes its investment objective that may not be in
line with your goals
3. When you want to make structural changes to your portfolio
4. When you have achieved the set financial goal from a fund

4. Periodic Portfolio Review:

There may be funds in your portfolio that are promising and high-
performing. Similarly, there may be funds that are not performing as
per your expectations. You need to keep a close eye and periodically
review your portfolio to consider reallocating your funds to better-
performing assets. This will help you maximise the chances of higher
returns.

5. Get professional help:

Consider getting help from a financial advisor who can guide you in
selecting the appropriate fund as per your needs and takes care of the
investment process. Also, some mutual funds companies can help you
pick, compare, choose and invest in different schemes.

INVEST SMARTLY, INVEST WISELY

You must be aware of the above-mentioned mutual fund investment tips to
get valuable returns on your investment. Mutual funds have the potency to
generate good returns, but the associated risk should also be considered and
understood well before investment. A detailed understanding of different
schemes, investment in a diversified portfolio, awareness of the market and
regular monitoring of investment helps in getting better control over your
funds.

Conclusion
It is hopeful that this study creates awareness that the mutual funds are worth

investment practice .The various scheme of mutual fund provide the investors

with a wide range of investments options according to his risk bearing capacities

and interest besides they also give a handy return to the investor ,the project

analysis various schemes of different companies.

In India Mutual funds are playing important role .The mutual funds companies

pool the savings of small investors and invest those collected huge amount of

funds in different sector of economy .They are performing like intermediary

between small investor and Indian capital market In recent years many mutual

fund companies are established. Through this competition is increased among

the companies .To encounter the competition the different companies are

introducing different types of mutual fund schemes with attractive returns and
low risk. So it is the advantage to investor.

The stock market has been rising for over six years now, this in turn has not only

protected the money invested in funds but has also to help grow these

investments.

This has also instilled greater confidence among fund investors who are

investing more into the market through the mutual fund route than ever before.