“COMPARATIVE ANALYSIS OF MUTUAL FUND WITH EQUITY SHARE”

A Project Submitted to

University of Mumbai for partial completion of the

degree of Bachelor in Commerce (financial market)
Under the Faculty of Commerce

By

SOHAM OTARI

SEAT NO: - 19-7827

Under the Guidance of Assistance

PROF. POOJA MATLANI

K.J. SOMAIYA COLLEGE OF SCIENCE AND COMMERCE

RE-ACCREDITED “A” GRADE BY NAAC
(AUTONOMOUS).

VIDYANAGARI, VIDYAVIHAR (E).

UNIVERSITY OF MUMBAI

March, 2020
“COMPARATIVE ANALYSIS OF MUTUAL FUND WITH EQUITY SHARE”

A Project Submitted to

University of Mumbai for partial completion of the

degree of Bachelor in Commerce (financial market)
Under the Faculty of Commerce

By

SOHAM OTARI

SEAT NO: - 19-7827

Under the Guidance of Assistance

PROF. POOJA MATLANI

K.J. SOMAIYA COLLEGE OF SCIENCE AND COMMERCE

RE-ACCREDITED “A” GRADE BY NAAC
(AUTONOMOUS).

VIDYANAGARI, VIDYAVIHAR (E).

UNIVERSITY OF MUMBAI

March, 2020
 K.J. SOMAIYA COLLEGE OF SCIENCE AND COMMERCE
RE-ACCREDITED “A” GRADE BY NAAC
(AUTONOMOUS).

VIDYANAGARI, VIDYAVIHAR (E).

UNIVERSITY OF MUMBAI

Certificate
This is to certify that Mr. Soham Otari has worked and duly completed his Project
Work for the degree of Bachelor in Commerce (Financial market) under the Faculty
of Commerce in the subject of COMMERCE and his project is entitled,
“COMPARATIVE ANALYSIS OF MUTUAL FUND WITH EQUITY SHARE”
under my supervision.

I further certify that the entire work has been done by the learner under my
guidance and that no part of it has been submitted previously for any Degree or
Diploma of any University.

It is his own work and facts reported by him personal findings and investigations.

Signature of Principal Signature of Signature of Project Guide

Course
Coordinator

Name of External Examiner: Signature of External Examiner

Date of submission:
 Declaration by learner

I the undersigned Mr. Soham Otari here by, declare that the work embodied in this project work
titled “comparative analysis of mutual fund with equity share”, forms my own contribution to the
research work carried out under the guidance of Assistant Prof. Pooja Matlani is a result of my own
research work and has not been previously submitted to any other University for any other Degree/
Diploma to this or any other University.

Wherever reference has been made to previous works of others, it has been clearly indicated as such
and included in the bibliography. I, here by further declare that all information of this document has
been obtained and presented in accordance with academic rules and ethical conduct.

Name and Signature of the learner

SOHAM OTARI

Certified by
Assistant Prof. Pooja Matlani
 Acknowledgment
To list who all have helped me is difficult because they are so numerous and the
depth is so enormous. I would like to acknowledge the following as being idealistic
channels and fresh dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do
this project.
I would like to thank my Principal, Dr. Pradnya Prabhu for providing the necessary
facilities required for completion of this project.
I take this opportunity to thank our Coordinator CA. Monica Lodha, for her moral
support and guidance.
I would also like to express my sincere gratitude towards my project guide “Assistant Prof.
Pooja Matlani” whose guidance and care made the project successful.
I would like to thank my College Library, for having provided various reference books
and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially my Parents and Peers who supported me
throughout my project.

Name and Signature of the learner

SOHAM OTARI
 EXECUTIVE SUMMARY

This project covers the comparative analysis of mutual fund with equity
share. It gives idea about investor’s perception towards investment in mutual fund and
equity share. Schemes they prefer, the plans they are opting, the reasons behind such
selections and also this project dealt with different investment options, which people
prefer along with and apart from mutual funds.
In this project there is introduction of mutual fund. It cover’s definition,
history of mutual funds.it gives detail idea about NAV i.e. net asset value of mutual
fund. In this project there are different types and different schemes of mutual funds.
So, investors can get benefit while investing in mutual fund. There are advantages and
disadvantages of mutual fund. And it includes recent trends in mutual funds, so the
investor can get the knowledge about new schemes of mutual funds. It also includes
future scenario of mutual funds so the investor can predict his mutual funds’
performance .and main point is it gives 10 tips to buy mutual fund.
This project is about comparison of mutual fund with equity share. So
there is detail study of introduction of equity share. There is on index introduction and
the shareholders preference towards equity share also covered. It also covers the
different between primary market and secondary market and their meaning. It gives
knowledge about multi-channel access to the stock market, transaction cycle in share
market and, how to a read share market in tabular form.
The main part is comparison of mutual fund with equity share. This project
covers the different between mutual funds and equity shares. It gives answer to the
main question i.e.: Which is better to Invest mutual fund or equity share.it also covers
differences and similarities between mutual funds and equity shares.
This project gives the final conclusion about Should You Invest in Mutual
Funds or Stocks?
In this project I have taken survey from 63 investors in the form of Google
forms and finded the perception towards mutual funds and equity share by asking
different question in Google forms.
INDEX
 TABLE FO CONTENT

CHAPTER SUB TITLE PAGE

NO. TOPICS NO.

1 INTRODUCTION 1

1.1 INTRODUCTION ON MUTUAL FUND 2

1.2 DEFINITION & MEANING 3

1.3 HISTORY OF MUTUAL FUND INDUSTRY 3

1.4 CONCEPT OF MUTUAL FUND 5

1.5 WHY MUTUAL FUNDS 6

1.6 NET ASSET VALUE 7

1.7 TYPES OF MUTUAL FUNDS 9

1.8 BENEFITS OF MUTUAL FUNDS 19

1.9 DRAWBACKS OF MUTUAL FUNDS 21

1.10 RECENT TRENDS IN MUTUAL FUND 22

INDUSTRY

1.11 FUTURE SCENARIO 23

1.12 TEN TIPS ON BUYING MUTUAL FUNDS 24

1.13
INTRODUCTION ON EQUITY SHARES 26

1.14 ON INDEX INTRODUCTION 30

1.15 DIFFERENCE BETWEEN PRIMARY AND 31

SECONDARY MARKETS

1.16 DYNAMICS OF THE SHARE MARKET 33

 1.17 MULTI-CHANNEL ACCESS TO THE 34
STOCK MARKET

1.18 TRANSACTION CYCLE IN SHARE 35

MARKET

1.19 HOW TO A READ SHARE MARKET 36

TABLE

1.20 COMPARATIVE ANALYSIS OF MUTUAL 37

FUND VS EQUITY SAHRES

1.21 DIRECT EQUITY INVESTING VS 39

INVESTING IN MUTUAL FUNDS
1.22
MUTUAL FUND VS SHARE 42
1.23
SHOULD YOU INVEST IN MUTUAL 43
FUND OR STOCK?
1.24
HOW MUCH MONEY CAN YOU LOSE IN 46
MUTUAL FUND?
1.25
HOW MUCH MONEY CAN YOU LOSE IN 47
STOCKS?
1.26 WHY CHOOSE MUTUAL FUNDS OVER
STOCK? 47

2 RESEARCH METHODOLOGY 50

2.1 SYNOPSIS 51

2.2 OBJECTIVES OF THE 51

2.3 SCOPE OF THE STUDY 52

2.4 APPLICATION OF THE STUDY 52

2.5 METHODOLOGY OF THE STUDY

53

2.6 TOOLS USED FOR ANALYSIS 54

2.7 LIMITATIONS 55

3 LITERATURE REVIEW 56
4 DATA ANALYSIS, INTERPRETATION, 60
PRESENTATION

4.1 INTRODUCTION 61

4.2 ANALYSIS OF STUDY 61

5 CONCLUSIONS & SUGGESTIONS 79

5.1 FINDINGS 80

5.2 CONCLUSIONS 81

5.3 SUGGESTIONS 82

BIBILIOGRAPHY 83

ANNEXURE 85
 PROJECT TITLE

“COMPARATIVE

ANALYSIS OF MUTUAL

FUND

WITH EQUITY SHARE”

 CHAPTER 1

INTRODUCTION

1
 CHAPTER 1

INTRODUCTION

1.1 INTRODUCTION ON MUTUAL FUND

The concept of “Mutual fund” is a new feature in the cap of Indian capital
market but not to international market. The concept of mutual fund spread to USA in
the beginning of 20th century and three mutual fund companies were started in 1924.
Mutual funds have been successfully working in the USA and some western
countries. These funds have been useful in filling the gap between the demand and
supply of capital in the market. A mutual fund motivates small and big investors to
entrust their savings to it so that these are professionally employed in sharing good
return. A large number of investors have small savings with them. They can at the
most buy shares of one or two companies. When small savings are pooled and
entrusted to mutual fund then these can be used to buy blue chips where regular
returns and capital appreciation are ensured.

Fund is an American concept. The terms like Investment Company, money

fund investment trust and mutual funds are used interchangeably and used to describe
the same thing in American literature. In British literature mutual funds has not been
explained but is considered as a synonym of investment trust of USA.

2
1.2 DEFINITION & MEANING

As per mutual fund book published by investment company institute of US,” Mutual
fund is a financial service organization that receives money from shareholders, invests
it, earns return on it, attempt to make it grow and agree to pay the shareholder cash on
demand for the current value of investment”

SEBI (mutual fund) regulations, 1996 defines mutual funds as

“A fund established in the form of a trust to raise monies through the sale of
units to the public or a section of public under one or more schemes for investing in
securities including money market instruments”

1.3 HISTORY OF MUTUAL FUND INDUSTRY

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

FIRST PHASE – 1964-87 Unit Trust of India (UTI) was established on

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

SECOND PHASE – 1987-1993 (Entry of Public Sector Funds) 1987

marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund
established in June 1987 followed by Canara Bank Mutual Fund (Dec 87), Punjab

3
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of
India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund
in June 1989 while GIC had set up its mutual fund in December 1990. At the end of
1993, the mutual fund industry had assets under management of Rs.47,004 crores.

THIRD PHASE – 1993-2003 (Entry of Private Sector Funds) with the

entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was
the year in which the first Mutual Fund Regulations came into being, under which all
mutual funds, except UTI were to be registered and governed. The erstwhile Kothari
Pioneer (now merged with

Franklin Templeton) was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual
fund houses went on increasing, with many foreign mutual funds setting up funds in
India and also the industry has witnessed several mergers and acquisitions. As at the
end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805
crores. The Unit Trust of India with Rs.44,541 crores of assets under management
was way ahead of other mutual funds.

FOURTH PHASE – since February 2003 In February 2003, following the

repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate
entities. One is the Specified Undertaking of the Unit Trust of India with assets under
management of Rs.29,835 crores as at the end of January 2003, representing broadly,
the assets of US 64 scheme, assured return and certain other schemes. The Specified
Undertaking of Unit Trust of India, functioning under an administrator and under the
rules framed by Government of India and does not come under the purview of the
Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI,
PNB, BOB and LIC.

4
 It is registered with SEBI and functions under the Mutual Fund Regulations.
With the bifurcation of the erstwhile UTI which had in March 2000 more than
Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual
Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers
taking place among different private sector funds, the mutual fund industry has
entered its current phase of consolidation and growth. As at the end of September,
2004, there were 29 funds, which manage assets of Rs.153108 crores under 421
schemes. The graph indicates the growth of assets over the years.

1.4 CONCEPT OF MUTUAL FUND

A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is then invested in capital
market instruments such as shares, debentures and other securities. The income
earned through these investments and the capital appreciation realized are shared by
its unit holders in proportion to the number of units owned by them. Thus a Mutual
Fund is the most suitable investment for the common man as it offers an opportunity
to invest in a diversified, professionally managed basket of securities at a relatively
low cost. The flow chart below describes broadly the working of a mutual fund:

Mutual Fund Operation Flow Chart

5
 ORGANISATION STRUCTURE OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the
organizational set up of a mutual fund:

1.5 WHY MUTUAL FUNDS

Let's suppose you're just getting started as an investor and have $5,000 to
invest and you have three important goals you want to achieve. First, you don't want
to lose your money in a risky venture so you want security, like that found in a
certificate of deposit or other fixed income investment. But you also want to make the
most money you can, so you want the prospect for growth potential, too. Finally,
since you don't have the time or knowledge to actively manage your money, you want
professional money management -- occasionally diversifying your investments into
promising new opportunities. That sounds like a very good plan, but where can you
invest your money and have a chance to meet all three criteria? Certificates of deposit
and other fixed income investments offer security, but often with low rates of interest
and a fixed potential for growth.

Individual stocks may carry greater potential for growth, but $5,000 isn't a lot
to invest and if you put it all in one stock, you risk everything if it performs poorly.
And, brokers and investment advisors can offer you advice and money management,

6
but at a price -- you pay for their services, which reduces further the amount you have
available to invest.

More than 80 million people, or one out of every two households in America,
invest in mutual funds. Currently, over $6 trillion is invested in mutual funds. While
funds have been around since the 1920's, their popularity over the past 25 years has
soared. The reasons:

 Mutual funds make it easy and less costly for investors to

satisfy their need for capital growth, income and/or income
preservation
 Mutual funds bring diversification and professional money
management to the individual investor

A mutual fund is a company that pools the money of many investors -- its
shareholders -- to invest in a variety of different securities. Investments may be in
stocks, bonds, money market securities or some combination of these. Those
securities are professionally managed on behalf of the shareholders, and each investor
holds a pro rata share of the portfolio -- entitled to any profits when the securities are
sold, but subject to any losses in value as well.

For the individual investor, mutual funds provide the benefit of having
someone else manage your investments, take care of record keeping for your account,
and diversify your dollars over many different securities that may not be available or
affordable to you otherwise. Today, minimum investment requirements on many
funds are low enough that even the smallest investor can get started in mutual funds.

1.6 NET ASSET VALUE

The net asset value of the fund is the cumulative market value of the assets
fund net of its liabilities. In other words, if the fund is dissolved or liquidated, by
selling off all the assets in the fund, this is the amount that the shareholders would
collectively own. This gives rise to the concept of net asset value per unit, which is

7
the value, represented by the ownership of one unit in the fund. It is calculated simply
by dividing the net asset value of the fund by the number of units. However, most
people refer loosely to the NAV per unit as NAV, ignoring the "per unit". We also
abide by the same convention.

The price measured per unit is called the Net asset value NAV of the unit. Just
as a share or a bond is brought at a price, a mutual fund is bought and sold at its NAV.
If for example u were to invest Rs.10000 in a scheme when its NAV is Rs.10 you will
be

Allotted 1000 units (10000/10) roughly –the fund charges a nominal processing fee.
The NAV of any scheme tells how much each unit of it is worth at any point in time,
and is therefore the simplest measure of how it is performing. A scheme’s NAV is its
Net assets (market value of the securities is owns minus whatever it owes) divided by
the number of units it has issued.

A scheme’s NAV is a dynamic figure. The market value of the scheme’s

portfolio changes from day to day as prices of shares and bonds move up or down.
The number of units outstanding also changes, as new investors come into the scheme
and old ones leave. If the NAV of your schemes rises from Rs.10 to Rs.11 over a
period of time, your scheme is said to have generated a return of 10 percent. Similarly
if its Net NAV falls form Rs.10 to Rs. 9, it is said to have lost 10 percent. Fund
houses have to calculate and disclose, the NAVs of their schemes daily. Fund NAVs
can be easily looked up. While the general dailies give a random listing of schemes,
the financial papers are more exhaustive in their

8
1.7 TYPES OF MUTUAL FUNDS

This section provides descriptions of the characteristics -- such as investment

objective and potential for volatility of your investment -- of various categories of
funds. These descriptions are organized by the type of securities purchased by each
fund: equities, fixed-income, money market instruments, or some combination of
these.

This table organizes these fund types by how aggressive or conservative they
are and by investment objective. Because mutual funds have specific investment
objectives such as growth of capital, safety of principal, current income or tax-exempt
income, you can select one fund or any number of different funds to help you meet
your specific goals.

In general mutual funds fall into these general categories:

 Equity Funds invest in shares of common stocks.

 Fixed-Income Funds invest in government or corporate securities which offer
fixed rates of return.
 Balanced Funds invest in a combination of both stocks and bonds.
 Money Market Funds for high stability of principal, liquidity and income.
 Bond Funds, both tax-exempt and taxable funds to generate income.
 Specialty/Sector Funds to diversify holdings within an industry.

9
 Equity Funds

Aggressive Growth Funds

What they invest in: These funds seek maximum growth of capital
with secondary emphasis on dividend or interest
income. They invest in common stocks with a
high potential for rapid growth and capital
appreciation.

Because they invest in stocks which can

experience wide swings up or down, these funds
have a relatively low stability of principal. They
often invest in the stocks of small emerging
growth companies and generally provide low
current income because these companies usually
reinvest their profits in their businesses and pay
small dividends, if any. Aggressive growth funds
generally incur higher risks than growth funds in
an effort to secure more pronounced growth.
These funds may invest in a broad range of
industries or concentrate on one or more industry
sectors. Some use borrowing, short-selling,
options and other speculative strategies to
leverage their results.

Suitable for: Investors who can assume the risk of potential

loss in value of their investment in the hope of
achieving substantial and rapid gains. They are
not suitable for investors who must conserve their
principal or who must maximize current income.

Growth Funds

10
What they invest in: Generally invest in stocks for growth rather than current
income. Growth funds are more likely to invest in well-
established companies where the company itself and the
industry in which it operates are thought to have good long-
term growth potential.

Growth funds provide low current income, but the investor's

principal is more stable than it would be in an aggressive
growth fund. While the growth potential may be less over the
short term, many growth funds have superior long-term
performance records. They are less likely than aggressive
growth funds to invest in smaller companies which may
provide short-term substantial gains at the risk of substantial
declines.

Suitable for: Although growth funds are more conservative than aggressive
growth funds, they are still relatively volatile. They are
suitable for growth-oriented investors but not investors who
are unable to assume risk or who are dependent on maximizing
current income from their investments.

International/Global Funds

What they invest in: International funds seek growth through investments in
companies outside the United States. Global funds seek
growth by investing in securities around the world, including
the United States. Both provide investors with another
opportunity to diversify their mutual fund portfolio, since
foreign markets do not always move in the same direction as
the U.S.

The best way to invest abroad is through mutual funds, rather

11
 than direct investment in a foreign security. Most investors
are unfamiliar with foreign investment practices and
currencies and may not have a clear understanding of how
economic or political events can affect foreign securities. An
investor in an international mutual fund doesn't have to worry
about trading practices, recordkeeping, time zones or other
laws and customs of a foreign country -- that is all handled by
the fund's money manager.

International and global funds can invest in common stocks or

bonds of foreign firms and governments. Many international
funds invest in a particular country or region of the world.

Suitable for: While international and global funds offer opportunities for
growth and diversification, these types of funds do carry some
additional risks over domestic funds and should be carefully
evaluated and selected according to the investor's objectives,
timeframe and risk profile. Because most international and
global funds are considered to be aggressive growth funds or
growth funds, investors must be willing to assume the risk of
potential loss in value in the hope of achieving substantial
gains. They are not suitable for investors who must conserve
their principal or maximize current income.

Growth and Income Funds

What they invest in: Growth and income funds seek long-term growth of
capital as well as current income. The investment
strategies used to reach these goals vary among funds

Some invest in a dual portfolio consisting of growth

stocks and income stocks, or a combination of growth
stocks, stocks paying high dividends, preferred stocks,

12
 convertible securities or fixed-income securities such as
corporate bonds and money market instruments. Others
may invest in growth stocks and earn current income by
selling covered call options on their portfolio stocks.
Suitable for: Growth and income funds have low to moderate
stability of principal and moderate potential for current
income and growth. They are suitable for investors who
can assume some risk to achieve growth of capital but
who also want to maintain a moderate level of current
income.

Fixed-Income Funds

What they invest in: The goal of fixed income funds is to provide high current
income consistent with the preservation of capital. Growth of
capital is of secondary importance
Income funds that invest primarily in common stocks are
classified as equity income funds (see next listing). Those that
invest primarily in bonds and preferred stocks are classified as
fixed-income funds. These funds invest in corporate bonds or
government-backed mortgage securities that have a fixed rate
of return.
Since bond prices fluctuate with changing interest rates, there
is some risk involved despite the fund's conservative nature.
When interest rates rise, the market price of fixed-income
securities declines and so will the value of the income funds'
investments. Conversely, in periods of declining interest rates,
the value of fixed-income funds will rise and investors will
enjoy capital appreciation as well as income
Fixed-income funds offer a higher level of current income
than money market funds, but a lower stability of principal.
They are generally more stable in price than funds that invest

13
 in stocks. Within the fixed-income category, funds vary
greatly in their stability of principal and in their dividend
yields. High-yield funds, which seek to maximize yield by
investing in lower-rated bonds of longer maturities, entail less
stability of principal than fixed-income funds that invest in
higher-rated but lower-yielding securities.
Some fixed-income funds seek to minimize risk by investing
exclusively in securities whose timely payment of interest and
principal is backed by the full faith and credit of the U.S.
Government. These include securities issued by the U.S.
Treasury, the Government National Mortgage Association
("Ginnie Mae" securities), the Federal National Mortgage
Association ("Fannie Maes") and Federal Home Loan
Mortgage Corporation ("Freddie Macs"). All are backed by
pools of mortgages.

Suitable for: Fixed-income funds are suitable for investors who want to
maximize current income and who can assume a degree of
capital risk in order to do so. Again, carefully read the
prospectus to learn if a fund's investment policy with respect
to yield and risk coincides with your own objectives.

Balanced/Equity Income funds

What they invest in: Equity income funds seek high current yield by investing
primarily in equity securities of companies which pay high
dividends. Unlike interest payments on bonds, dividends on
equity securities can change as companies raise or lower their
dividends. Since yield-oriented stocks are more volatile than
comparably rated fixed-income securities, equity income
funds offer less stability of principal than fixed-income funds.
Balanced funds are more evenly invested in equities and

14
 income securities.
Suitable for: Balanced and equity income funds are suitable for
conservative investors who want high current yield with some
growth.

Money Market Funds

What they invest in: For the cautious investor, these funds provide a very high
stability of principal while seeking a moderate to high current
income. They invest in highly-liquid, virtually risk-free, short-
term debt securities of agencies of the U.S. Government,
banks and corporations and U.S. Treasury Bills. They have no
potential for capital appreciation.

Tax-exempt money market funds invest in securities that

provide safety of principal, liquidity and income exempt from
federal income taxes by investing in short-term, high-rated
municipal obligations.

Because of their short-term investments, money market

mutual funds are able to keep a constant share price; only the
yield fluctuates. Therefore, they are an attractive alternative to
bank accounts. With yields that are generally competitive with
-- and usually somewhat higher than -- yields on bank
certificates of deposit (CDs), they offer several advantages:

 Money can be withdrawn any time without penalty.

Money market funds also offer check writing
privileges.
 Although not insured by the FDIC or FSLIC, money
market funds invest only in highly-liquid, short-term,
top-rated money market instruments.

15
  Money market funds are suitable for conservative
investors who want high stability of principal and
moderate current income with immediate liquidity.

Suitable for: Money market funds are suitable for conservative investors
who want high stability of principal and moderate current
income with immediate liquidity.

Municipal Bond Funds

What they invest in: "Muni" bond funds provide higher tax-exempt income than tax-
exempt money market funds by investing in longer-maturity (and
often lower-rated) securities, which generally offer higher yields
than the short-term, high-rated securities in which tax-exempt
money market funds invest
Municipal bond funds vary greatly in the quality and maturity of
the municipal bonds they invest in. The longer the maturity, the
higher the yield. Also, the lower the credit rating of the issuer, the
greater the risk and the higher the yield
While municipal bond funds generally provide lower yields than
income funds with debt obligations of similar maturities and
ratings, for an investor in a high marginal tax bracket the after-tax
yields of municipal bond funds will be higher. The price and yield
of municipal bond funds will fluctuate moderately with interest
rates. As interest rates decline, the value of principal increases
while yield decreases; as rates increase, bond prices decline but
yields increase.

Suitable for: Suitable for investors in medium to higher tax brackets who want
current income free from federal income tax.

16
Double & Triple Tax-Exempt Bond Funds

What they invest in: These bond funds provide the investor with an even greater
tax advantage by investing in municipal bonds of a single
state. Triple tax-exempt funds are exempt from income tax in
a specific city. Thus they generate income exempt from not
only federal income tax but also from state and/or city income
tax for residents of those jurisdictions. Like all bond funds,
the value of the shares will fluctuate with interest rates, as will
the current yield. Also, the stability of principal and yield
levels vary with the quality and maturity length of the bonds
in which the funds invest. Lack of geographic diversification
increases credit risk of these funds compared with national
funds.
Suitable for: These funds are suitable for investors in medium to high tax
brackets in high tax states who want income with maximum
exemption from taxes.

Specialty/Sector Funds

What they invest in: These funds invest in securities of a specific industry or sector
of the economy such as health care, high technology, leisure,
utilities or precious metals
Because such funds invest primarily in one sector, they do not
offer the element of downside risk protection found in mutual
funds that invest in a broad range of industries. However, the
funds do enable investors to diversify holdings among many
companies within an industry, a more conservative approach
than investing directly in one particular company

Sector funds offer the opportunity for sharp capital gains in

17
 cases where the fund's industry is "in favor" but also entail the
risk of capital losses when the industry is out of favor
While sector funds restrict holdings to a particular industry,
other specialty funds such as index funds give investors a
broadly-diversified portfolio and attempt to mirror the
performance of various market averages. Index funds generally
buy shares in all the companies composing the S&P 500 Stock
Index or other broad stock market indices
Asset allocation funds move funds among a variety of markets
and instruments in response to the fund manager's view of
relative market prospects. They are broadly diversified and
sometimes have higher management fees since there may be a
variety of securities in the portfolio. These funds are suitable
for investors, who can tolerate a moderate to high degree of
risk, are seeking capital appreciation and to whom dividend
income is secondary in importance. And whatever the
instruments, social responsibility funds apply moral and ethical
as well as economic principles in the selection of securities.
Suitable for: Specialty funds are suitable for investors seeking to invest in a
particular industry who can monitor industry performance
regularly and alter investment strategies accordingly. Investors
must be willing to assume the risk of potential loss in value of
their investment in the hope of achieving substantial gains.
They are not suitable for investors who must conserve their
principal or maximize current income.

18
1.8 BENEFITS OF MUTUAL FUNDS

1) Professional Investment Management: By pooling the funds of thousands of

investors, mutual funds provide full-time, high-level professional management
that few individual investors can afford to obtain independently. Such
management is vital to achieving results in today's complex markets. Your fund
managers' interests are tied to yours, because their compensation is based not on
sales commissions, but on how well the fund performs. These managers have
instantaneous access to crucial market information and are able to execute trades
on the largest and most cost-effective scale. In short, managing investments is a
full-time job for professionals.

2) Diversification: Mutual funds invest in a broad range of securities. This limits

investment risk by reducing the effect of a possible decline in the value of any one
security. Mutual fund shareowners can benefit from diversification techniques
usually available only to investors wealthy enough to buy significant positions in a
wide variety of securities.

3) Low Cost: If you tried to create your own diversified portfolio of 50 stocks, you'd
need at least $100,000 and you'd pay thousands of dollars in commissions to
assemble your portfolio. A mutual fund lets you participate in a diversified
portfolio for as little as $1,000, and sometimes less. And if you buy a no-load
fund, you pay or no sale charges to own them.

4) Convenience and Flexibility: You own just one security rather than many, yet
enjoy the benefits of a diversified portfolio and a wide range of services. Fund
managers decide what securities to trade, clip the bond coupons, collect the
interest payments and see that your dividends on portfolio securities are received
and your rights exercised. It's easy to purchase and redeem mutual fund shares,
either directly online or with a phone call.

5) Quick, Personalized Service: Most funds now offer extensive websites with a
host of shareholder services for immediate access to information about your fund
account. Or a phone call puts you in touch with a trained investment specialist at a
mutual fund company who can provide information you can use to make your

19
 own investment choices, assist you with buying and selling your fund shares, and
answer questions about your account status.

6) Ease of Investing: You may open or add to your account and conduct
transactions or business with the fund by mail, telephone or bank wire. You can
even arrange for automatic monthly investments by authorizing electronic fund
transfers from your checking account in any amount and on a date you choose.
Also, many of the companies featured at this site allow account transactions
online.

7) Total Liquidity, Easy Withdrawal: You can easily redeem your shares anytime
you need cash by letter, telephone, bank wire or check, depending on the fund.
Your proceeds are usually available within a day or two.

8) Life Cycle Planning: With no-load mutual funds, you can link your investment
plans to future individual and family needs -- and make changes as your life
cycles change. You can invest in growth funds for future college tuition needs,
then move to income funds for retirement, and adjust your investments as your
needs change throughout your life. With no-load funds, there are no commissions
to pay when you change your investments.

9) Market Cycle Planning: For investors who understand how to actively manage
their portfolio, mutual fund investments can be moved as market conditions
change. You can place your funds in equities when the market is on the upswing
and move into money market funds on the downswing or take any number of steps
to ensure that your investments are meeting your needs in changing market
climates. A word of caution: since it is impossible to predict what the market will
do at any point in time, staying on course with a long-term, diversified investment
view is recommended for most investors.

10) Investor Information: Shareholders receive regular reports from the funds,
including details of transactions on a year-to-date basis. The current net asset
value of your shares (the price at which you may purchase or redeem them)
appears in the mutual fund price listings of daily newspapers. You can also obtain

20
 pricing and performance results for the all mutual funds at this site, or it can be
obtained by phone from the fund.

1.9 DRAWBACKS OF MUTUAL FUNDS

1) No Guarantees: No investment is risk free. If the entire stock market declines

in value, the value of mutual fund shares will go down as well, no matter how
balanced the portfolio. Investors encounter fewer risks when they invest in
mutual funds than when they buy and sell stocks on their own. However,
anyone who invests through a mutual fund runs the risk of losing money.

2) Fees and commissions: All funds charge administrative fees to cover their
day-to-day expenses. Some funds also charge sales commissions or "loads" to
compensate brokers, financial consultants, or financial planners. Even if you
don't use a broker or other financial adviser, you will pay a sales commission
if you buy shares in a Load Fund.

3) Taxes: During a typical year, most actively managed mutual funds sell
anywhere from 20 to 70 percent of the securities in their portfolios. If your
fund makes a profit on its sales, you will pay taxes on the income you receive,
even if you reinvest the money you made.

4) Management risk: When you invest in a mutual fund, you depend on the
fund's manager to make the right decisions regarding the fund's portfolio. If
the manager does not perform as well as you had hoped, you might not make
as much money on your investment as you expected. Of course, if you invest
in Index Funds, you forego management risk, because these funds do not
employ managers.

21
1.10 RECENT TRENDS IN MUTUAL FUND INDUSTRY

Key Trends in the Mutual Fund Industry

The mutual fund industry is expecting to witness the following major trends:
1. Mass Adoption
Fund houses are extremely optimistic about the industry’s future. Their expectations
have got a major boost after the AUM increased by Rs. 5.5 trillion (or Rs. 5.5 lakh
crore) between March 2017 and March 2019. Paytm Money’s Whole-time Director
Pravin Jadhav believes that there would be mass adoption of MFs among Indian
investors, thanks to increasing digitization as well as lower minimum investment
amount being promoted by platforms such as Paytm. Jadhav also said that most of the
investments (around 70%) come in the form of SIPs and from the age group of 18-32
years, including the millennials. He believes lowering of the minimum investment
amount has helped in increasing the adoption rate among investors. Another trend is
start-ups like Kaleidofin that have launched with the goal of providing financial
inclusion to the masses, including vegetable vendors and farm labour. Such platforms
use technology to provide wealth generation to low income groups, by facilitating
small incremental investments in MFs.

2. SIPs will Keep Increasing

Systematic investment plan (SIP) has emerged as the backbone of the MF industry.
SIP inflows increased by 158% (Rs. 3,122 crore to Rs. 8,055 crore) from April 2016
to March 2019. Investonline.in’s founder Abhinav Anguish believes that the per
capita income has increased by 9.7% (CAGR) in the last 5 years and the pace is
expected to continue in the coming future too. Abhinav believes that this continued
per capita growth will continue fuelling SIPs and will ultimately “do wonders for the
mutual fund industry”.

3. Changes in Regulatory Environment

The total expense ratio of the funds has decreased, following a string of regulations.
In fact, there has also been a consequent fall in the revenues of the distributors as well
as independent financial advisors. Therefore, the distributors may refrain from
pushing the MF products due to lack of incentives.

22
1.11 FUTURE SCENARIO (Published on July 19, 2018)

'Huge growth potential for mutual fund industry in India'

The country’s mutual fund industry has a huge growth potential as Indian households’
savings amount to Rs 20-30 lakh crore, top official of an asset management company
said today.

“We are already witnessing a gradual shift in household savings as dominance of

physical savings (real estate and gold) is going down, while share of financial savings
is growing,” HDFC AMC Managing Director Milind Brave told reporters here while
launching the company’s initial public offer.

Brave highlighted the fact that India lags most major nations of the world in terms of
assets under management (AUM) of mutual funds as a percentage of gross domestic
products (GDP).

In India, asset base of mutual funds as a percentage of GDP is just 11 per cent, while
the world average is 62 per cent.

“When it comes to the share of MFs in the market capitalization, it is less than 5 per
cent in India, which only proves the huge market potential,” he said. “India has a very
saving culture as Indians save Rs 20-30 lakh crore every year, which indicates
immense scope for channelizing this saving into MF industry,” he added.

The country has 42 mutual fund houses managing assets to the tune of over Rs 23
lakh crore. Speaking about the upcoming IPO, Brave said HDFC Asset Management
Company (AMC) will launch its Rs 2,800 crore initial share-sale on July 25. The
price band has been fixed at Rs 1,095-1,100 per share.

The proposed IPO offers up to 2.54 crore equity shares of the fund house through an
offer for sale of 85.92 lakh shares (4.08 per cent stake) by HDFC and up to 1.68 crore
shares (7.95 per cent holding) by Standard Life. HDFC AMC operates as a joint

23
venture between Housing Development Finance Corporation (HDFC) and Standard
Life Investments.

The fund house, which has a total AUM of over Rs 3 lakh crore at the end of March,
is the country’s second largest fund house after ICICI Prudential AMC that has an
asset base of Rs 3.06 lakh crore. It will become the second AMC to hit the markets
after Reliance Nippon Life AMC, which had raised Rs 1,542 crore last year.

1.12 TEN TIPS ON BUYING MUTUAL FUNDS

1. Determine your financial objectives and how much money you can afford to
invest.

Make sure the fund’s objectives coincide with your own. Do not change your
objectives or exceed the amount set aside for investment without careful
consideration.

2. Research and obtain all available information before you invest.

Request a copy of the fund’s prospectus and read it carefully. Also look over the SAI
and the latest shareholder report from each fund you are considering.

3. Determine the amount of all sales charges, management fees and

Administrative expenses before you invest.

Some funds charge for reinvestment of dividends and capital gains distributions,
which can add to your costs. See the fund’s prospectus for a description of all fees and
expenses.

4. Never treat the risks of investing in mutual funds lightly.

All mutual funds involve some degree of risk. Unlike money market accounts and
certificates of deposit, mutual funds are not federally insured.

5. Exercise caution when considering investing in funds with junk bond portfolios.

24
While junk bonds pay a high-rate of return, junk bond companies are more volatile
and more likely to default on bond payments. These factors can seriously affect the
fund’s performance

6. Do not invest in periodic payment plans unless you are absolutely certain that
you will hold your shares for a long time.

If you sell or redeem early – or do not complete the plan – you may find that a large
portion of your investment has gone to pay sales charges.

7. Learn the consequences of redemptions.

Besides the sales charges for redeeming periodic payment plans before completion,
some funds may charge a redemption fee or a proportion of your investment, known
as a contingent deferred sales load.

8. Call Secretary of State office to find out whether your broker/financial advisor
and the mutual fund are properly registered in Indian.

Secretary office can tell you if a company or an individual has failed to properly
register or if there is a history of trouble with securities regulators. If there is a history
of problems, this should serve as a red flag to prospective investors.

9. Even after investing in a mutual fund, review the shareholder reports and any
amendments to the prospectus and the Statement of Additional Information (SAI).

10. If you believe you have encountered investment fraud, call Secretary Office.

If something does not seem right, or if you are not satisfied with the answers you have
received, contact the Secretary of State’s office. We are here to help you!

25
1.13 INTRODUCTION ON EQUITY SHARES

What Is Equity Shares Definition?

What is equity shares definition? Equity shares are the shares joint stock companies
issue to the public as the main source of long-term financing.
What is equity shares definition? Equity shares are the shares joint stock companies
issue to the public as the main source of long-term financing. The reason it's referred
to as long-term financing is because equity shares are legally not redeemable in
nature. Equity share value is stated in terms of the face value of each share, which is
also called issue price, par value, book value, or market value. Usually, the asset's
value minus liabilities equals the asset's equity value. To shorten this to an equation
for accounting purposes, it's Assets-Liabilities=Equity.

Equity as a Share of Ownership

The term equity has more than one possible meaning, depending on how it's used. For
example, in the financial sense equity describes how much of an asset each person
owns after all debts have been paid and liabilities are subtracted. Another term used
with this type of financial equity is preference. Preference indicates which
shareholders get paid first, even if the company files bankruptcy. General equity
shareholders have the advantage of voting rights, though, and preference
shareholders don't get to vote.

Equity in Different Industries

The term equity has slight variations in meaning when used in different industries.

 For traders, the term equity describes stock. Stock qualifies as equity because
the stock is representative of a person's ownership in a company. One

26
 advantage of this type of equity is that stock shares typically have no liability
attached to them.
 Equity in the real estate field describes the distance between a specific asset's
market value and how much debt is owed on that asset.
 In investing, a certificate of ownership in a given company represents shares
held. This tells how much each investor gets from the company's net profits,
and how much claim each investor has over company assets if it should end up
in a state of liquidation.

Voting rights are issued to investors, but the liability of each investor is limited to his
or her invested amount.

Ownership Interest

Securities and stocks represent an investor's ownership interest. This interest may be
in privately held companies. When held by private companies, it's referred to as
private equity. The amount of funding provided by a company's owners
and shareholders plus the company's retained earnings are referred to as stockholders'
equity and shareholders' equity when the balance sheet for the company is prepared.
When engaging in margin trading, security values of the margin account for less than
the amount the account holder borrowed.

Valuation of Equity

Referring back to the real estate market, the current fair market value of a property
minus the amount still owed on the property's mortgage equals the ownership interest.
This is how much the owner could expect to get by selling the property and after all
liens against the property are paid. This is also called the real property value. Equity is
one of the main classes of assets in investment strategy. Fixed-income bonds and cash
or cash equivalents are the other classes of assets for investment strategy purposes.

Risk and Return

Asset classes are used when determining how to distribute assets to create the ideal
balance of risk and return when setting up an investment portfolio for an investor.
During bankruptcy, a business' equity is the leftover money after all the business'
creditors have been repaid. This ownership equity can also be called risk capital and

27
liable capital. A business' equity can be determined by its total value. The equity of a
business includes the value of:

 Buildings
 Land owned by the business
 Inventory
 Capital goods
 Earnings

Subtract the value of liabilities from the total value. Liabilities include:

 Debts
 Operating overhead

These asset classes are considered risks for a business because debts must be paid by
the business.

Personal Interest of Shareholders

Equity is representative of the actual value of a shareholder's stake in a specific

investment. This is because investors have a personal interest in companies that are
linked to their personal equity or number of shares they hold in a company. The
personal equity is also part of the total equity held by the company, which

Work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Equity is a term commonly used to describe the ordinary share capital of the
business. Ordinary share in the equity capital of the business entitle the holders to all
distributed profits after the holders of debentures and preference shares have been
paid. Ordinary shares are issued to the owners of the company. It is important to
understand the market values of company’s shares have little relationship to their
nominal or face value. The market value of the company share is determined by the
price another investor is prepared to pay for them. In the case of publicly quoted

28
companied, this is reflected in the market value of the ordinary shares traded on the
stock exchange. In case of privately owned companies, where there is unlikely to be
much trading in shares, market value is often determined when the business is sold or
when the minority share holding is valued for taxation purpose.

Differed ordinary shares are a form of ordinary shares which are entitled to a
dividend only after a certain date or only if profits rise above a certain amount. Voting
rights might also differ from those attach to other ordinary shares. Financing a
company through the sale of stock in accompany is known as equity financing.
Alternatively debt financing can be done to avoid giving up shares of ownership of
the company. Equity financing are usually used for longer term investment projects
such as investment in a new factory or a new foreign market.

Equity investment generally refers to the buying and holding of shares of stock
on a stock market by individuals and funds in anticipation of income from dividends
and capital gain as the value of stock rises. It also sometimes refers to the acquisition
of equity (ownership) participation in a private (unlisted) company or a start up. (A
company being created or newly created). When the investment is in infant companies
it is refer to as venture capital investing and is generally understood to be higher risk
than investment in listing, going concern situations.

29
1.14 ON INDEX INTRODUCTION

Stock market talk is everywhere, from T.V and radio, to the newspapers and
the web. But what does it mean? When people say that “the market turned a great
performance today”. “What is the market anyway?”

As it turns out, when most people talk about “the market” they are actually
referring to an index. With the growing importance of the stock market in our society
the names of indexes such as S & P 500, NIFTY, and SENSEX have become part of
our every vocabulary.

Index can be defined as “a statistical measure of changes in the portfolio of

stocks representing the portion of the overall market.” It would be difficult to track
every single security trading in the country. To get around this we take a smaller
sample of the market that is representative of the whole. Thus, just a pollster’s use a
political survey to gauge the sentiment of population, the investors use indexes to
track the performance of the stock market. Ideally change in price of an index would
represent and exactly proportionate change in the stocks included in the index.

Indexes are great tools for telling us what direction the market is taking, what
trends are prevailing. “An index is a number use to represent the changes in a set of
values between a base time period and another time period” A stock index is number
that helps you measure the levels of the market. Most stock indexes attempt to be
proxies for the market they exist in. returns on the index are thus supposed to
represent the returns on the market i.e the returns that u could get if u had the entire
market in your portfolio.

30
 1.15 DIFFERENCE BETWEEN PRIMARY AND SECONDARY
MARKETS

In the primary market securities are issued to the public and the proceeds go to the
issuing company. Secondary market is a term used for stock exchanges, where
stocks are bought and sold after they are issued to the public.

PRIMARY MARKET

Individuals
apply to get
shares of the
company
Company
IPO

Companies share ownership by issuing shares

Company Owners

Companies allocate shares to individuals and those who get

the shares become part owners of the company.

31
 PRIMARY MARKET

The first time that a company shares are issued to the public, it is by a process called
the initial public offering (IPO). In an IPO company offloads a certain percentage of
its totals shares to the public at a certain price. Most IPOs these days do not have a
fixed offer price instead they follow a method called the book building process, where
the offer price is placed in a hand or a range with the highest and the lowest value
(refer to the newspaper ad). The public can bid for the shares at any price in the band
specified. Once the bid come in the company evaluates all the bids and decides on an
offer price in that range. After the offer price is fixed the company either allots its
shares to the people who had applied for its shares or returns them their money.

SECONDARY MARKET

Stock Broker
Company
Exchange Individual
Investors

Companies get themselves listed on popular stock exchanges like

BSE and NSE

32
 SECONDARY MARKET

Once the offer price is fixed and the shares are issued to the people, stock exchanges
facilitate the trading of shares for the general public. Once a stock is listed on an
exchange, people can start trading in its shares. In a stock exchange the existing
shareholders sell their shares to anyone who is willing to buy them at a price
agreeable to both the parties. Individuals cannot buy or sell shares in a stock exchange
directly they have to execute their transactions through authorized members of the
stock exchange who are also called stock brokers

1.16 DYNAMICS OF THE SHARE MARKET

Buyer Broker Seller

Stock Broker
He pays the His broker Exchange
money to pays it to the Seller’s broker
his broker exchange The exchange finally pays the
pays it to the money to the
seller’s broker seller

Similar process happens for the transfer of shares from the seller’s end.

33
 1.17 MULTI CHANNEL ACCESS TO THE STOCK MARKET

Relationship Manager
Live chat

Call centre
SMS

Website Email
CUSTOMER SUPPORT

Multi Channel
Investment Option

Share Shops Dial n Trade

Online Trading

34
1.18 TRANSACTION CYCLE IN SHARE MARKET

35
1.19 HOW TO A READ SHARE MARKET TABLE

Columns 1 & 2: column 1&2 shows 52- Week High and Low price rate of
shares.

Column 3: column shows Company Name & Type of Stock.

Column 4: column 4 shown Ticker Symbol of company name which companies

share has shown.

Column 5: column 5 shown Dividend per Share.

Column 6: Column 6 shown Dividend Yield per share.

Column 7: column 7 shown Price/Earnings Ratio of per share.

Column 8: column 8 shown Trading Volume in hundred volume.

Column 9 & 10: column 8 shown Day High and Low rate of share.

Column 12: column 8 shown Net Change of shares which share goes up or down
that thing is shown with the help of this table.

36
1.20 COMPARATIVE ANALYSIS OF MUTUAL FUND VS
EQUITY SHARES

Mutual Fund vs. Shares: Which is better to Invest?

Investment is the key to own a great net worth for any individual. If you thought of
becoming rich only with your salary and your savings then sadly you are ‘wrong’!
To become rich, you need to invest your money in the right place. Yes! Your
investment can be multiplied only if you invest your money in the correct financial
instrument but sadly here only where most of the investors get confused. Choosing the
right place to invest your money is the trickiest thing that an investor has to do.

37
The Difference between Mutual Fund and Shares
From the perspective of an investment instrument, both have some advantages and
disadvantages. Here is a comparison between the both which will be helpful to make
up your mind on choosing one.

 The first difference between shares and mutual fund is that shares make you a
partial owner of a company whereas mutual fund is an investment instrument for
individuals.

 Every mutual fund company appoints fund managers who take all the funding
decisions on behalf of the investors. The fund managers of the AMC takes all the
important decisions like where to invest, when to invest and how much to be
invested. So mutual fund becomes an ideal investment instrument for the investors
who are new to investing. Direct investment in shares needs a good ground study
and strong knowledge on the market fluctuations of share market.

 One can invest and earn a profit by investing in shares only if he/she invests
much time and dedication to it. The investment in mutual fund happens in the
passive way hence the primary investor needs not to worry much about the
investment decisions.

 When you start trading in the share market, you will need a demat account
without which buying or selling shares is not possible. But if you invest in mutual
funds, you don’t need any such account.

 While investing in a mutual fund, you can invest a systematic way which is
called SIP. Such systematic plans help you to be disciplined in finance. The
investment which you do every month is handled by the fund manager. In another
hand, while investing in shares you need personal attention and prompt trade
decision to continue the investment every month.

 While investing in a mutual fund, you need to pay fund management charges,
early redemption charges, a front-end load upon initial purchase, back-end load
upon sale, etc. If you invest directly in the share market, what you only need to
pay is the brokerage to the stoke broker.

 Every investor knows that a diversified portfolio is the best for earning
maximum profit with minimum risk. One can easily have a diversified portfolio if

38
 the investment is done by mutual funds. But while investing directly, creating
such a large diversified portfolio is a really confusing task.

 Another benefit of investing in the mutual fund is the tax benefit. If you invest
in ELSS you can save tax up to 1.5 lakhs under Section 80CCG and 80C. Whereas
the profit earned in shares is a taxable income.

 The profit which you earn by investing in the mutual fund is shared by the
investor and the AMC. But the earning in the share market is your sole income
and no one can take a share of it.

 The risk factor is always present in all kinds of investments, whether it may be
a mutual fund or in shares. But the negative returns in a mutual fund can be
cushioned by the diversification. The investment in a mutual fund is done with
different instruments such as stocks, bonds, securities etc. A mixed portfolio is
created by the fund manager which ensures the maximum profit and minimum
loss. The direct investment in stocks is riskier as it makes your stocks volatile. If
you invest only in single stock, you may either earn a high profit or you may have
to face a capital loss. The risk is always very high in shares.

1.21 Direct Equity Investing vs. Investing in Mutual Funds

Investing in equities can be complex

When investing in equities, you have a lot of factors to consider such as industry,
sector, size and structure of the company and management track record.
All of these factors must then be juxtaposed against the overall macro-economic
condition to assess the potential of the stock you wish to invest in. This is as far as
fundamental analysis is concerned. There are other tools for technical analysis
available for the investor who has the acumen to use such tools.
Investing in mutual funds is therefore a more suitable route to participate in the stock
markets, without specialized knowledge or experience.

39
Opting for professionally managed equity investment funds

A mutual fund scheme is a large pool of savings that is managed by a fund manager
who is a market expert. Fund managers who are in charge of running mutual fund
schemes have years of experience (often decades) behind them and receive constant
support from a well formed research department that is at the core of every successful
fund house.
Each mutual fund scheme has its objective stated upfront which determines whether it
is conservative or aggressive in its style of fund management. The performance of
mutual funds is also widely tracked and analyzed daily. Such analysis is easily
available in the public domain.
Over and above, mutual funds are regulated by the capital market regulator Securities
and Exchange Board of India (SEBI). Therefore, when you invest in mutual fund
schemes of fund houses with established track records, you are well positioned to
receive good returns over a period of time.
Let us look at the differences and similarities between investing in mutual funds vis-a-
vis direct investments in equities

40
DIFFERENCES
.

MUTUAL
FEATURES DIRECT STOCK INVESTMENT FUNDS

Control of an investor on
stock selection Complete control No control

Possible at any time when the trading On every business

Ability to buy and sell session is in progress day

Entry or exit from single

stock Possible Not possible

Exit load Not applicable Applicable

Individual selection of
stocks Possible Not Possible

Possible
Speculation Not Possible

SIMILARITIES

DIRECT STOCK MUTUAL

FEATURES INVESTMENT FUNDS

Sectorial picks Possible Possible

Systematic
Investment Yes Yes

Tax Deduction No Yes (80C)

Liquidity High High

41
1.22 MUTUAL FUNDS VS. SHARES:

 When you invest in mutual fund, your money is pooled and then invested in
shares, bonds, etc. of several companies. That is, there is diversification but
this is not possible if you invest in shares directly.

 Mutual funds are managed by professionals and all necessary research is done
by them whereas if one invests in shares, it is the responsibility of the
individual to do proper research about the company, price movement, etc.
 Mutual funds are sold as units and you are in no way connected with the
growth story of the company whereas when you invest in shares, you become
a shareholder of the company and may get dividends or profits if the company
performs well.
 Risk gets mitigated in case of mutual funds as your money is invested in
various companies but this does not happen in case if you directly invest in
shares.
 Investing in mutual fund is easy. On the other hand, investing in equity needs
more of your time and research.
 When you invest in mutual funds, you have no option of changing the stocks
in your portfolio as it is completely maintained by the fund managers. While
investing in shares, you can exit from a stock and buy some other stock
anytime.
 To invest in mutual funds, you don’t require a demat account whereas to
invest in shares, you need a demat account.
 To get better and higher returns, one has to stay invested in mutual funds for a
longer time period. While investing in shares, if you are a trader or a short
term investor, you can get better returns quickly if you use the right strategies
of sell, buy or hold.
 Mutual funds have several other chargers like entry load, exit load,
management fees, etc. When you invest or trade in shares, brokerage charges
are applicable.

42
  One has to clearly understand the differences between mutual funds vs stocks
before investing in the stock market. With clear financial goals in place and
with proper asset allocation, anyone can achieve their life goals.

1.23 Should You Invest in Mutual Funds or Stocks?

1. Understanding Stocks and Mutual Funds

When compared on the risk factor, stocks happen to be far riskier than mutual funds.
The risk in mutual funds is spread across and hence, reduced with the pooling of
diverse stocks. With stocks, you have to do extensive research before investing,
especially if you are a novice investor. Visit Clear Tax for more details on the various
areas of investments. In the case of mutual funds, the research is done by experts, and
a professional fund manager manages the pool of investment. This service is not free
and comes with an annual management fee that is charged by the fund house

2. When investing as a novice

If you are a new investor with little or no experience in the financial markets, it is
advisable to start your equity investments with mutual funds as not only the risk is
comparatively lesser but also because an expert makes the decisions. These
professionals have the insight to analyze and interpret financial data to gauge the
outlook of a prospective investment.

3. Tracking your investment

With an investment in mutual funds, you have the benefit of a fund manager who has
extensive expertise and experience in the field. Whether it is picking the stocks or
monitoring them and making allocations, you do not have to worry about it. This
service is not available in the case of stock investments. You are responsible for
picking and tracking your investment.

43
4. RISK AND RETURN

It is already established that mutual funds have the advantage of reducing the risk
by diversifying a portfolio. On the other hand, stocks are vulnerable to the
fluctuations in the market, and the performance of one stock can’t compensate for
another.

5. TAX GAINS

Note that you are levied with short-term capital gains tax at the rate of 15% if you sell
your stock holdings within one year from the date of purchase. On the other hand,
there is no tax on capital gains on the stocks that are sold by the fund. This is a
substantial benefit for you. The tax saved is also available for you to invest in further,
thus making way for further income generation through investment.

6. THE COST OF INVESTING

Though you have to pay a fee to mutual fund managers, unlike in the case of stocks
that you buy individually, the economies of scale also come into play. Active
management of funds is indeed an affair that does not come free of cost. But the truth
is that due to their large size, mutual funds pay only a small fraction of the brokerage
charges that an individual shareholder pays. Individual investors also have to pay the
fees for Demat, which can be avoided with mutual funds.

7. DIVERSIFICATION

A well-diversified portfolio should include at least 25 to 30 stocks, but that would be

a difficult task for a small investor. With mutual funds, investors with low funds can
also get a diversified portfolio. Buying units of a fund allows you to invest in multiple
stocks without having to invest a considerable corpus.

8. CONTROL ON YOUR INVESTMENT

In the case of mutual funds, the fund manager decides the stocks to be included in the
portfolio. You do not have control over which stock is to be picked and for what
duration. As an investor, if you invest in mutual funds, you do not have the option to
exit from some stocks that are in your portfolio. The decisions of the fate of the stocks

44
rest in the hands of the fund manager. This way, an individual investing in stocks has
more control over their investment than an investor who invests in mutual funds.

9. TIME

When you invest directly, you will need to have a lot of time and research into your
stock while in the case of mutual funds, you can be passive. The fund manager is the
one who invests his time to manage your portfolio.

10. INVESTMENT HORIZON

When investing in mutual funds, remember that you will have to give the funds at
least 5-7 years to generate good returns as these have a long-term growth trajectory.
In the case of stocks, you can get quick and good returns if you choose the right
stocks and sell them at the right time.

Still unsure about which investment option to choose? Visit Clear Tax to explore your
options for investment from a diverse offering of investment schemes.

This is one of the biggest dilemmas an investor faces when starting their investment
journey of market-linked financial instruments.

For those investors who are looking for extremely high returns, investment in stocks
seems to be a more attractive option compared to mutual fund investment. Certainly,
there is a good chance of getting high returns in investment in stocks, but the risk
quotient is also very high.

Mutual funds involve less risk because of the diversified investment portfolio which
mitigates the overall market risk. Also, the trading costs incurred by individual
investors for buying and selling stocks can add up to a huge amount, whereas one can
save up on these trading costs through investment in mutual funds where equity and
equity-related instruments are traded in bulk thereby reducing the cost per investor.

If you have in-depth knowledge of financial markets and full faith in your investing
strategies, coupled with high risk tolerance, then equity investment is the perfect fit
for you.

45
 1.24 How Much Money Can You Lose in Mutual Funds?

Here is a list of 5 worst performing Mutual Fund Schemes with lowest returns in the past
5 years:

Fund Name 5 years (Annualized)

Kotak PSU Bank ETF -7.01%
Reliance ETF PSU Bank BeES -7.06%
DSP World Energy Fund – Regular Plan -4.04%
Aditya Birla Sun Life Global Emerging Fund- Regular Plan -2.34%
Kotak World Gold Fund- Standard Plan –0.47%

Source: Value Research, Data as on Sep-16-2019

As the table above shows, the very worst mutual funds among the roughly 4,000
registered mutual fund schemes in India over the past 5 years have delivered -2.82%
to -4.17% CAGR. The table does not account for poor mutual funds merging with
better performing ones, but this factor will not dramatically change the picture.

46
Mutual funds can give much lower returns in the short term, UTI Transportation and
Logistics Fund (Regular) has delivered -29.49% and HSBC Infrastructure Fund
(Regular) have delivered -21.66% over the past year. However these poor
performances tend to get ironed out over time as fund managers adjust their portfolios
towards better performing companies and beaten down sectors move up again. In
addition, a host of regulatory rules ensure that mutual funds do not expose themselves
to a great deal of risk in the first place.

1.25 How Much Money Can You Lose in Stocks?

Your money in a stock, even a seemingly good company can go to zero. Recent
prominent examples of corporate failures include Jet Airways, Yes Bank, DHFL, and
Reliance Capital. An even a more ‘blue chip’ company than these, Vodafone Idea
(formed by merging Vodafone and Idea Cellular) has lost around 79% of its value in a
single year.

Needless to say, the opposite is also true. Your money in the right stock can multiply
several times over in a single year, but the probability of picking up that particular
stock is quite low.

The speed and time at which you can lose money in a stock is completely
unpredictable. If you are leveraged (borrowed money to invest in stocks) or you invest
in futures and options (F&O) or are engaged in intraday trading, you can even lose
money more than you have invested. This is because such trades involve only a small
amount of margin money rather than buying the whole stock upfront.

1.26 Why Choose Mutual Funds Over Stock?

Here we list 5 most important reasons why an investor should choose Mutual Funds
over Stocks:

1. Professional Management of Money:

Leveraging the knowledge and expertise of a professional fund manager to earn good
returns is one of the primary reasons for investing in mutual funds.

47
Investment in stocks without prior experience or knowledge of the working of
financial markets can be disastrous and easily drain away your savings. Therefore, it
is advisable to invest in mutual funds if you don’t have thorough knowledge of
financial markets and want to keep your money in safe hands.

2. Diversification:

Instead of investing in individual stocks, mutual funds invest in a variety of asset

classes to hedge the investment portfolio during turbulent market conditions. Even
equity oriented mutual funds invest some portion of their total assets in fixed income
or low-risk securities for market risk mitigation.

3. Convenience:

Buying and selling stocks require a lot of time and formalities which are not present
in mutual funds. In case of mutual funds, all these formalities are done by the Asset
Management Companies which manage the fund, for which they charge a nominal
fee.

Moreover, the investor doesn’t need to time the financial market regularly. S/he can
just keep the money invested in the scheme for a long term and earn good returns.

4. Tax-Saving Benefits:

Income generated from equity investment is taxable. However, there are certain
mutual fund schemes where you can avail tax-saving benefits. Equity Linked Savings
Schemes (ELSS) is equity mutual funds where investment up to ₹1.5 lakh is eligible
for tax deduction under Section 80(C) of the IT Act.

5. Overseen by market regulator:

Unlike stocks, mutual fund houses are subjected to certain restrictions by the national
market regulator-Securities and Exchange Board of India (SEBI).

48
 Here is the List of Top Performing Mutual Fund Schemes that can give highest
returns in FY 2020:

Fund Name AUM (cr.) 3 -Year Returns 5 – Year Returns

Mirae Asset Large Cap ₹16,873 13.71% 11.99%

SBI Bluechip ₹23,641 10.46% 9.90%

HDFC Mid-Cap Opportunities ₹23,788 7.47% 10.50%

Franklin India Prima ₹7,583 8.46% 10.25%

SBI Small Cap ₹3,156 15.05% 15.93%

Axis Small Cap ₹2,084 16.58% 14.49%

Axis Long Term Equity ₹21,997 17.58% 12.75%

Mirae Asset Tax Saver ₹3,066 16.33% —

Axis Focused 25 ₹9,627 18.56% 14.14%

Motilal Oswal Multicap 35 ₹13,131 10.00% 12.54%

{Data as on February 10, 2020; Source: Value Research}

49
 CHAPTER 2

RESEARCH
METHODOLOGY

50
 CHAPTER 2

RESEARCH METHODOLOGY

2.1 SYNOPSIS

In this project I had to undertake a comparative study on share market and

mutual funds. I had to undertake an analysis of the mutual funds, its benefits, and
drawbacks and make a detailed summary on MUTUAL FUND various aspects and
then compare it with the SHARE MARKET. I have to tell about the share market,
benefits of investing in share market, its drawbacks and make study on various
aspects of share market.

2.2 OBJECTIVES OF THE STUDY

1. To study the investor’s perceptions towards mutual fund investment and equity shares
investment.
2. To understand the calculation of NAV.
3. To identify the facilities provided by AMC to investors.
4. To understand how a customer looks at the scheme and what kind of benefits they
want from any schemes.
5. To identify the use of fundamental analysis and technical analysis in selection of
mutual funds.
6. To identify which one is people’s favorite mutual fund or equity share
7. To identify peoples priority for selection of types of mutual fund and stocks

51
2.3 SCOPE OF THE STUDY

1) The study covers the concept and details of mutual funds and introduction on
equity

2) The study also includes returns of equity, mutual funds and relative index of
different sectors.

3) The project report covers the study of Net Asset Value (NAV) of mutual funds
and equity in different sectors.

4) The study includes the information regarding the selection of portfolio for
different funds in theory part.

5) The theory part also includes following information related to mutual fund and
equity share:
 History
 Concept
 Net Asset Value (NAV)
 Types and benefits
 Trends
 Future scenario

2.4 SIGNIFICANCES OF THE STUDY

1) The study helps the investor to compare various investment schemes and the
returns from those investments.

2) The reader can have thorough knowledge on concepts and trends of mutual funds
and equity

3) The study helps to have the knowledge of various types of mutual funds.

52
4) The study enables the readers to assess the Net Asset Value (NAV) of mutual
funds and equity share

5) The study also enables us to understand the on index introduction of share market

2.5 METHODOLOGY OF THE STUDY

The objective of the present study can be accomplished by conducting a systematic

market research. Market research is the systematic design, collection, analysis and
reporting of data and findings that are relevant to different marketing situations facing
the company. The marketing research process that will be adopted in the present study
consists of the following stages

a) Defining the problem and the research objective: The research objective states
what information is needed to solve the problem. The objective of the research is to
find out the facilities provided in mutual funds and share market and what will be its
benefits in the future.

b) Developing the research plan: Once the problem is identified, the next step is to
prepare a plan for getting the information needed for the research. The present study
will adopt the exploratory approach wherein there is a need to gather large amount of
information before making a conclusion. If required, the descriptive and casual
approaches may also be used.

c) Collection and Sources of data: Market research requires two kinds of data, i.e.,
primary data and secondary data. Preparing questionnaires that will contain both
open-ended and close-ended questions may collect the primary data. Secondary data
will be collected from various journals, books and web sites.

53
d) Analyze the collected information: This involves converting raw data into useful
information. It involves tabulation of data and using statistical measures on them for
developing frequency distributions and calculating the averages and dispersions.

e) Report research findings: This phase will mark the culmination of the marketing
research effort. The report with the research findings is a formal written document.
The research findings and personal experience will be used to propose
recommendations to develop the market in online trading.

2.6 TOOLS USED FOR ANALYSIS

1. TABULATION

A Table is a systematic arrangement of statistical data in rows and columns.

Rows are horizontal arrangements whereas columns are vertical. Tabulation is a
systematic presentation of data in a form suitable for analysis and interpretation. The
tables used are as follows:

1) One way table: It presents only one characteristic and hence in answering one or
more independent questions with regard to those characteristics.

2) Two-way table: It contains sub divisions of a total and is able to answer two
mutually dependent questions.

3) Three-way table: It sub-divides the total in to three distinct categories It is capable

of answering three mutually dependent questions.

54
 2. GRAPHICAL REPRESENTATION OF DATA

A picture is worth a thousand words. The impression created by a picture has

much greater impact than any amount of detailed explanation. Statistical data can be
effectively presented in the form of diagrams and graphs. Graphs and Diagrams make
complex data simple and easily understandable. They help to compare related data
and bring out subtle data with amazing clarity. The Diagram used is as follows:

1) Bar diagrams: Bar diagrams are used specifically for categorical data or series.
They consist of the group of equidistant rectangles, one for each group or category
of data in which the values of magnitudes are represented by length or height of
rectangles.

2) Pie chart: A pie chart (or a circle chart) is a circular statistical graphic, which is
divided into slices to illustrate numerical proportion. In a pie chart, the arc
length of each slice (and consequently its central angle and area),
is proportional to the quantity it represents

2.7 LIMITATIONS

Though the present study aims to achieve the above-mentioned objectives in full earnest and
accuracy, it may be hampered due to certain limitations. Some the limitations of this study
may be summarized as follows:
 Getting accurate responses from the respondents.
 Locating the target customers of mutual funds and equity is very time consuming.
 That is why I have use Google form system.

55
 CHAPTER – 3

LITERATURE
REVIEW

56
 CHAPTER – 3

LITERATURE REVIEW

1. Dr. Sandeep Bansal, Deepak Garg and Sanjeev K Saini (2012), have studied
Impact of Sharpe Ratio & Treynor’s Ratio on Selected Mutual Fund Schemes.
This paper examines the performance of selected mutual fund schemes, that
the risk profile of the aggregate mutual fund universe can be accurately
compared by a simple market index that offers comparative monthly liquidity,
returns, systematic & unsystematic risk and complete fund analysis by using
the special reference of Sharpe ratio and Treynor’s ratio.

2. Dr. K. Veeraiah and Dr. A. Kishore Kumar (Jan 2014), conducted a research
on Comparative Performance Analysis of Select Indian Mutual Fund Schemes.
This study analyzes the performance of Indian owned mutual funds and
compares their performance. The performance of these funds was analyzed
using a five year NAVs and portfolio allocation. Findings of the study reveals
that, mutual funds out perform naïve investment. Mutual funds as a medium-
to-long term investment option are preferred as a suitable investment option
by investors.

3. Dr. Yogesh Kumar Mehta (Feb 2012), has studied Emerging Scenario of
Mutual Funds in India: An Analytical Study of Tax Funds. The present study
is based on selected equity funds of public sector and private sector mutual
fund. Corporate and Institutions who form only 1.16% of the total number of
investors accounts in the MFs industry, contribute a sizeable amount of Rs.
2,87,108.01 crore which is 56.55% of the total net assets in the MF industry. It
is also found that MFs did not prefer debt segment.

4. P. Sandeep ( September 2011) The stock market has become an essential

market which plays a vital role in economic prosperity and foster capital
formation and help in sustaining economic growth. Stock markets are more
than a place to trade securities; they operate as a facilitator between savers and

57
 users of capital by means of pooling of funds, sharing risk, and transferring
wealth. Stock markets are essential for economic growth as they insure the
flow of resources to the most productive investment opportunities.

5. Gupta (1972) in his book has studied the working of stock exchanges in India
and has given a number of suggestions to improve its working. The study
highlights the' need to regulate the volume of speculation so as to serve the
needs of liquidity and price continuity. It suggests the enlistment of corporate
securities in more than one stock exchange at the same time to improve
liquidity. The study also wishes the cost of issues to be low, in order to protect
small investors.

6. Jamadar Lal (1992) presents a profile of Indian investors and evaluates their
investment decisions. He made an effort to study their familiarity with, and
comprehension of financial information, and the extent to which this is put to
use. The information that the companies provide generally fails to meet the
needs of a variety of individual investors and there is a general impression that
the company's Annual Report and other statements are not well received by
them.

7. Nabhi Kumar Jain (1992) specified certain tips for buying shares for holding
and also for selling shares. He advised the investors to buy shares of a growing
company of a growing industry. Buy shares by diversifying in a number of
growth companies operating in a different but equally fast growing sector of
the economy. He suggested selling the shares the moment company has or
almost reached the peak of its growth. Also, sell the shares the moment you
realize you have made a mistake in the initial selection of the shares. The only
option to decide when to buy and sell high priced shares is to identify the
individual merit or demerit of each of the shares in the portfolio and arrive at a
decision.

8. Sathya Swaroop Debashish (2009) measured the performance of the equity

based mutual funds in India. 23 schemes were studied over a period of April
1996 to March 2009 (13 years). The analysis was done on the basis of mean

58
 return, beta risk, and coefficient of determination, sharp ratio, Treynor ratio
and Jensen alpha. The first analysis has been done on the basis of returns,
followed by a comparison between market returns and the return on schemes.
It was concluded that UTI mutual fund schemes and Franklin Templeton
schemes have performed excellently in public and private sectors respectively.
Further, on the basis of the parameters like Sharpe ratio, Deutsche, Franklin
Templeton, Prudential ICICI (in private sector) and SBI and UTI (in public
sector) mutual funds schemes have out- performed the market portfolio with
positive values. However, the overall analysis finds Franklin Templeton and
UTI being the best performers, and Birla Sun Life, HDFC and LIC mutual
funds showing poor below - average performance when measured against the
risk - return relationship models and measures.

9. Rohatgi (1973) states that the basic function of the stock market is to provide
ready marketability or liquidity to holdings of securities. The ideal stock
market is one that can provide instantaneous and unlimited liquidity. But it is
reasonable to assume that a prudent long-term investor in equities would
provide for his immediate cash needs. This is in agreement with the three
motives of liquidity preference. If so, one would expect not `instant' liquidity,
but moderate liquidity. It will be unreasonable for any investor to suppose that
his equity holdings are as good as cash.

10. Jack Clark Francis (1986) revealed the importance of the rate of return in
investments and reviewed the possibility of default and bankruptcy risk. He
opined that in an uncertain world, investors cannot predict exactly what rate of
return an investment will yield. However he suggested that the investors can
formulate a probability distribution of the possible rates of return.

59
 CHAPTER – 4

DATA ANALYSIS,
INTERPRETATION,
PRESENTATION

60
4.1 INTRODUCTION:

Data analysis and interpretation is the process of assigning meaning to the

collected information and determining the conclusions, significance and implications
of the findings. It is an important and exciting step in the process of research. In all
research studies, analysis follows data collection.

Data analysis has multiple facts and approaches, encompassing diverse techniques
under a variety of names, and is use in different business, science and social science
domains. In today’s business world, data analysis play a role in making decisions
more scientific and helping business operate more efficiently.

4.2 ANALYSIS OF STUDY:

 A study was conducted of 63 individuals.

 In this study various questions were asked to individual investor.
 These 63 individuals were consisting of students, businessman, and
people doing services.
 These individuals had ages between 21 to 55 years.

61
 Pie chart .1 -AGE

AGE GROUP NO OF PEOPLE PERCENTAGE

21 TO 25 48 76.2
26 TO 30 3 4.8
31 TO 35 3 4.8
36 TO 40 3 4.8
41 TO 45 3 4.8
46 TO 50 1 1.6
51 TO 55 3 4.8

INTERPRETATION:
In the above chart there is age group in which there are total 63
peoples. Most of the peoples are age group of 21 to 25 which is 48 .and remaining are
From 26 to 30 there are 3 people from 31 to 35 there are 3 people from 36 to 40 there
are 3 people from 41 to 45 there are 3 people from 46 to 50 there are only 1 person
and from 51 to 55 there are 3 peoples.it means the young generation is effectively
interested in mutual fund and equity market

62
 Pie chart .2 GENDERS

GENDER NO OF PEOPLE PERCENTAGE

MALE 39 61.9

FEMALE 24 38.1

INTERPRETATION:
In the above table there are 39 males and 24 females it shows that the
women’s are also interested in investing in mutual fund and equity markets.

63
 Pie chart .3 -YOU BELONG TO WHICH ONE OF THE CATEGORY?

CATEGORY NO OF PEOPLE PERCENTAGE

GOVT. EMPLOYEE 3 4.8

PROFESSIONAL 6 9.5

PVT. FIRMEMPLOYEE 5 7.9

SELF EMPLOYED 9 14.3

BUSINESS PERSON 6 9.5

AGRICULTIRIST 0 0

STUDENT 34 54

INTERPRETATION:
In the above table there are 63 peoples in whom govt employees
are 3, professional person are 6, pvt. Firm employees are 5, self-employees are 9,
business persons are 6, there is no agriculture person, and there are 34 students it will

64
show you that the young generation is highly interested in investing in mutual fund
and equity markets, nowadays the young generation is more financially educated
Pie chart .4 - YOUR ANNUAL INCOME IS IN THE RANGE OF:

INCOME RANGE NO OF PEOPLE PERCENTAGE

BELOW 1 LAKH 31 49.2
BETWEEN 1 TO 2 9 14.3
LAKH
BETWEEN 2 TO 3 5 7.9
LAKH
BETWEEN 3 TO 4 6 9.5
LAKH
BETWEEN 4 TO 5 6 9.5
LAKH
ABOVE 5 LAKH 6 9.5

INTERPRETATION:
As we can see in the previous question there are 34 students out
of 63 people, so they are doing their graduation study that’s why they are not earning
enough so in the above table there is income range of people. So, below 1 lakh there
are 31 peoples and all are financially educated students. Between 1 to 2 lakh there are
9 peoples , between 2 to 3 lakhs there are 5 peoples ,between 3 to 4 lakh there are 6
peoples , between 4 to 5 lakh there are 6 peoples , and above 5 lakh there are 6
peoples. So, if they are earning less then also the are investing there small part of
savings.

65
 Pie chart .5 - WHERE DO YOU INVEST YOUR SAVINGS?

SAVINGS INVESTED NO OF PEOPLE PERCENTAGE

SAVING BANK 43 68.3
FIXED DEPOSIT 30 47.6
SHARE /DEBENTURE 15 23.8
GOLD/SILVER 15 23.8
POSTAL SAVINGS 6 9.5
REAL ESTATE 6 9.5
MUTUAL FUNDS 26 41.3
INSURANCE 12 19

INTERPRETATION:
In the above table there are different types of saving investment
options. So, there are 63 people who have voted for these questions. in which 43
peoples have voted for saving bank, 30 peoples for fixed deposit, 15 peoples for share
and debenture, 15 people for gold and silver, 6 people for postal savings, 6 peoples for
real estate, 26 peoples for mutual fund, 12 peoples for insurance, as we can see that
most people are voted for saving bank and fixed deposit and then there is mutual
funds and share and debenture. We can conclude that now also the peoples are
playing safe game, they don’t want to take risk. But if people started investing in
mutual fund and equity share instead of fixed deposit they can earn more.

66
 Pie chart .6- WHAT IS THE PERCENTAGE OF SAVINGS FROM YOUR
TOTAL INCOME?

SAVINGS NO OF PEOPLE PERCENTAGE

<=25% 42 66.7

<=50% 12 19

<=75% 5 7.9

OTHER 4 6.3

INTERPRETATION:
In the above table there is saving percentage of the peoples. In
which 42 people save 25 % of their income, 12 peoples are saving 50% of their
income and 5 peoples saving 75% of their income, we can see that there are most
peoples who are saving in saving account and fixed deposit, my suggestion is that
they should take risk and start investing in share market and mutual fund so it will
help the country to increase economic development.

67
Pie charts .7 - WHAT ARE THE FACTORS TO WHICH YOU GIVE
PRIORITY WHEN YOU INVEST?

PRIORITY NO OF PEOPLE PERCENTAGE

SAFETY 38 60.3

HIGH RETURN 26 41.3

LIQUIDITY 13 20.6

LESS RISK 11 17.5

MARKETABILITY 6 9.5

INTERPRETATION:
In the above table there priority of people about safety of investment.
In which 38 people have voted for safety, 26 for high return, 13 for liquidity, 11 for
less risk, and 6 for marketability. So, it will conclude that the most of the people are
playing safe game but they also want high return. So the best option is mutual fund as
it gives both safety and high return also. But people also need high liquidity
68
Pie chart .8- YOU INVEST IN THE FINANCIAL INSTRUMENTS /
SECURITIES WHICH GIVE

FINANCIAL NO OF PEOPLE PERCENTAGE

INSTRUMENTS

HIGH RISK / HIGH 17 27

RETURN

LOW RISK/LOW 15 23.8

RETURN

LOW RISK/HIGH 31 49.2

RETURN

INTERPRETATION:
In the above table there are financial instruments and their
features. So, there are 3 types of features firstly there is High Risk / High Return ,
second is Low Risk /Low return, and third is Low Risk/ High Return . Out of 63
people 17 people are in favor of High Risk / High Return, 15 people are in the favor
of Low Risk /Low return, and 31 people are in the favor of Low Risk/ High Return. It
will conclude that investors want low risk and high return.

69
 Pie chart .9- DO YOU KNOW ABOUT MUTUAL FUNDS?

KNOW MF? NO OF PEOPLE PERCENTAGE

YES 54 85.7

NO 9 14.3

INTERPRETATION:
In the above table there is question about the mutual fund
knowledge in investors. So out of 63 peoples there are 54 people have known mutual
fund and only 9 peoples do not have knowledge about mutual funds. So the mutual
fund is very popular.

70
 Pie chart .10- ARE YOU AN INVESTOR IN MUTUAL FUNDS?

INVEST IN MF? NO OF PEOPLE PERCENTAGE

YES 54 53.4

NO 9 47.6

INTERPRETATION:
In the above table there is question about are you investing in
mutual fund? So as per previous question 9 people do not have knowledge about
mutual fund. So out of 63 peoples 54 people are regular investors of mutual fund and
only 9 peoples are not investors in mutual fund.

71
 Pie chart .11 - IF YES, THEN YOU HAVE INVESTED IN THE MUTUAL
FUND WHICH COMPANY?

WHICH MF NO OF PEOPLE PERCENTAGE

COMPANY

SMALL CAP 11 22

MEDIAM CAP 30 60

LARGE CAP 9 18

INTERPRETATION:
In the above table there question about in company in which do you
invest. So there are three types of companies they are small cap, medium cap and
large cap. Out of 63 peoples there are 11 peoples are in the favor of small cap,
30peoples are in the favor of medium cap and only 9 peoples are in the favor of large
cap. So, it’s their choice about choosing of mutual fund type according to their
income and financial goals.

72
 Pie chart .12 - DO YOU ACCEPT THE FACT THAT INVESTING IN
MUTUAL FUNDS WILL LEAD TO THE ECONOMIC DEVELOPMENT

IS MF ECONOMIC NO OF PEOPLE PERCENTAGE

DEVELOPMENT

YES 60 95.2

NO 3 4.8

INTERPRETATION:
In the above table there question about do you accept the
fact that investing in mutual funds will lead to the economic development. so out of
63 peoples there are 60 peoples who say yes and only 3 peoples who say no. so the 3
peoples who says no there are only reason that there is chances of not knowing about
mutual fund .

73
Pie chart .13- HOW IS YOUR INVEST PATTERN?

INVESTMENT NO OF PEOPLE PERCENTAGE

PATTERN

MONTHLY 27 44.3

(SIP) 19 31.1

ONCE IN SIX MONTHS 9 14.8

ONCE IN A YEAR 6 9.8

VERY RARE

INTERPRETATION:
In the above table there question about- how is your invest
pattern. So there are many investment pattern of investing in the mutual fund as per
investor preference. So there are 4 patterns they are Monthly, (SIP), Once in Six
Months, Once in a year Very Rare. So out of 63 peoples there are 27 peoples who
have chooses monthly , 19 peoples who have chooses sip , 9 peoples who have
chooses once in six months and 6 peoples who have chooses Once in a year Very
Rare. So it will conclude that the peoples have chooses their pattern as per their need.

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 Pie chart .14 - IF EQUITY FUNDS THEN, IN WHICH CATEGORY?

WHICH CATEGORY NO OF PEOPLE PERCENTAGE

DIVERSIFIED EQUITY 9 16.7

FUNDS

TAX SAVINGS FUNDS 24 44.4

MID-CAP FUNDS 17 31.5

SECTOR SPECIFIC 4 7.4

FUNDS

INTERPRETATION:
In the above table there question about if you are interested
in equity fund then which category of equity based mutual fund. So there are four
types of equity based mutual fund they are Diversified Equity Funds, Tax Savings
Funds, Mid-Cap Funds, and Sector Specific Funds. So 9 people have voted for
Diversified Equity Funds, 24 people who have voted for Tax Savings Funds, 17
peoples have voted for Mid-Cap Funds and only 4 peoples have voted for Sector
Specific Funds. So it will conclude that the people choosing mutual fund for standard
deduction for tax saving

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Pie chart .15 - DO YOU HAVE KNOWLEDGE ABOUT THE SHARE
MARKET & ITS FUNCTIONING?

DO YOU KNOW NO OF PEOPLE PERCENTAGE

SHARE MARKET?

YES 45 71.4

NO 18 28.6

INTERPRETATION:
In the above table there question about knowledge of share
market. So out of 63 peoples there are 45 peoples who have knowledge about share
market and 18 peoples who have no knowledge about share market. So the share
market is very vast concept and you need to be export in this field. So 45 people do
trading in share market and 18 peoples not even have knowledge about share market.

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Pie chart .16 - WHETHER YOU USE FUNDAMENTAL OR TECHNICAL
ANALYSIS IN EQUITY SHARE

TECHNIQUE USE NO OF PEOPLE PERCENTAGE

FUNDAMENTAL 20 36.4
ANALYSIS

TECHNIVAL 21 38.2
ANALYSIS

BOTH 14 25.5

INTERPRETATION:
In the above table there is question whether you use
fundamental or technical analysis in equity share. So out of 63 peoples there are 20
peoples who says that fundamental analysis is best , 21 people says technical analysis
is best and 14 people has given priority to both the analysis.so there is tie between this
two analysis but according to me both the analysis are important while investment.
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 Pie chart .17 - WHICH INVESTMENT GIVES YOU MAXIMUM PROFIT
WITH MINIMUM COST?

WHICH INVESTMENT? NO OF PEOPLE PERCENTAGE

EQUITY 27 42.9

MUTUAL FUND 36 57.1

INTERPRETATION:
So, finally the conclusive question. In the above table there is
final selection between equity share and mutual fund and the winner is mutual fund,
from 63 people there are 36 peoples in the favor of mutual fund and 27 peoples are in
the favor of equity 27 peoples. There are many reasons in the conclusion.

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 CHAPTER – 5

CONCLUSIONS &
SUGGESTIONS

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 CHAPTER – 5

FINDINGS:

 Young investors are increasing as there are many course are open related to
finance. They are getting knowledge about mutual fund and share market.

 Most of the people who invest in mutual fund and share market are in category of
self-employed and individual Investors.

 Most of the people invest their savings in fixed deposits or saving bank account
the reason behind this is that the people do not want to take risk. And they want
steady income.

 Most of the people save very less amount/part of their total income that’s why
they do not able to invest in mutual fund and equity shares other than fixed
deposits.

 Peoples have given top most priority to high return and safety of investment.

 Peoples have given priority to financial instruments which gives low risk/high
returns.

 Most of the peoples have knowledge about mutual funds. And they actively invest
in mutual fund.

 People have given priority to mid-cap mutual funds.

 Peoples say’s that investing in mutual funds will lead to the economic
development
 Peoples also have knowledge about share market and they use both technical as
well as fundamental analysis
 The main conclusion is that mutual fund is people’s final choise.

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 CONCLUSIONS & SUGGESTIONS

5.1 CONCLUSIONS:

Investments may be in direct equities or mutual funds require a lot of time and energy.
Each approach has its own advantages and disadvantages. Direct equity investing is
considered more dynamic by the investor community and thus, those who can keep a
continuous tab on the equity markets prefer the direct equity route as it gives them
much needed zing and excitement. However, the dynamism in the direct equity
investment comes with risk. Hence, only those investors who are able to understand
the nitty-gritty of the equity markets and who are able to devote time and energy can
adopt this route to equity

But not all investors are same in their intelligence and understanding levels. And even
if someone has the ability to understand the direct equity route, he or she lacks the
time to devote to such investment activity and thus prefer taking the indirect route to
equity investments which is mutual funds. Mutual funds provide the much needed
ease while investing in the equity asset class.

So this shows that how risky it could be investing in individual stocks in comparison
to investing through mutual fund.

So according to me an individual should firstly decide the purpose of his or her

investment than they should select investment plan according to it like if they want to
go for short term investment of 1 or 2 years than they should go for some debt
instrument or if they have long horizon for investment and they are looking to invest
in equity market than rather than investing directly in some selected equities they
should go for some top mutual fund schemes as investing directly in stock involves
high risk and one may lose his or her money or may get small return and if they will
choose the mutual fund scheme than they may get high return over five years of span.

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As return of some stocks have outperformed badly the return of the mutual fund
schemes like some have given return of 400% to 500% but investor cannot be always
sure that will get opportunity to pick such stocks as some have given negative return
to. So to be on safe side and one should intelligently go for mutual fund scheme.

In a nutshell it would be safe to conclude that you can consider investing directly in
equities, if you are skilled enough to do so and can dedicate the time and research
such investment requires. If you do not have either, it is best to opt for the mutual
fund route to make the most of the professional fund management to enhance the
value of your investments. It is however recommended that whatever route of
investment you choose, you take a look at regular intervals and assess whether your
financial goals are being met as a result of your investments.

5.2 SUGGESTIONS:

Holding a seminar and presentations or Investors meet in the stock broking firm help
the investors to remove any misconception regarding the Mutual Fund or equity share
and this will create awareness of Mutual fund and equity shares
• Agents are the main person who influences the investment decision. Company
can hire fresh graduates train them and sponsor for the AMFI exam just like insurance
companies who conduct IRDA training. This will increase the feet on street for the
mutual fund and equity shares companies.
• Company has to provide timely services to its customers so that it can compete
with its competitors

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 BIBILIOGRAPHY

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 BIBILIOGRAPHY

I. TEXT BOOK
1. Security Analysis Portfolio Management
Donald Fisher
Ronald A Jordan
2. Mutual Fund in India
H.Sadhak

II. WEB SITES

http://www.mutualfundsindia.com
http://www.amfiindia.com
http://www.utimf.com
http://www.bseindia.com
https://www.paisabazaar.com
https://www.motilaloswal.com
https://www.thebalance.com
https://cleartax.in
https://www.karvyonline.com
https://www.hdfcfund.com

III. NEWS PAPERS

Economic Times

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 ANNEXURE

85
The given below is the Primary Analysis
I.e. one variable analysis of the questionnaire.

Hello,
I’m Soham Otari, Student of KJ SOMAIYA COLLEGE OF SCIENCE AND
COMMERCE. I am working on my Black Book Project Semester VI

“COMPARATIVE ANALYSIS OF MUTUAL FUND AND EQUITY”

I would like you to respond to the survey and pass on to your friends and family.
Your responses will add a feather to my project.

1. Age

1. 21 to 25
2. 26 to 30
3. 31 to 35
4. 36 to 40
5. 41 to 45
6. 46 to 50
7. 51 to 55

2. Gender

1. Male
2. Female

3. You belong to which one of the following category?

1. Govt. Employee
2. Professional
3. Pvt. Firm Employee

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4. Self Employed
5. Business Person
6. Agriculturist
7. Student

4. Your annual income is in the range of:

1. Below Rs. 1 Lakh

2. Between 1 Lakh to 2 Lakh
3. Between 2 Lakh to 3 Lakh
4. Between 3 Lakh to 4 Lakh
5. Between 4 Lakh to 5 Lakh above Rs. 5 Lakh.
6. Above Rs 5 Lakh.

5. Where do you invest your savings?

1. Savings Bank
2. Fixed Deposit
3. Shares/Debentures
4. Gold/Silver
5. Postal savings
6. Real Estate
7. Mutual Funds
8. Insurance

6. What is the percentage of savings from your total income?

1. <=25 %
2. <= 50 %
3. <= 75 %

7. What are the factors to which you give priority when you invest?

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1. Safety
2. High Return
3. Liquidity
4. Less Risk
5. Marketability

8. You invest in the financial instruments / securities which give

1. High Risk / High Return

2. Low Risk /Low return
3. Low Risk/ High Return

9. Do you know about Mutual Funds?

1. Yes
2. No

10. Are you an investor in Mutual Funds?

1. Yes
2. No

11. If yes, then you have invested in the Mutual Fund Which Company?

1. Small cap
2. Medium cap
3. Large cap

12. Do you accept the fact that Investing in Mutual Funds will lead to the economic
development

1. Yes
2. No

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13. How is your invest pattern

1. Monthly
2. (SIP)
3. Once in Six Months
4. Once in a year Very Rare

14. If Equity Funds then, in which category?

1. Diversified Equity Funds

2. Tax Savings Funds
3. Mid-Cap Funds
4. Sector Specific Funds

15. Do you have knowledge about the share market & its functioning?

1. Yes
2. No

16. Whether you use fundamental or technical analysis in equity share

1. Fundamental analysis
2. Technical analysis
3. Both

17. Which investment gives you maximum profit with minimum cost?

1. Equity
2. Mutual fund

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