Research Project Report

On
"A study on Comparative Analysis of Mutual Funds Schemes"

Prepared By
Krunali Maru – 92100323150

Guided By
Prof. Hetal Upadhyaya

A Report submitted to
Marwadi University in Partial Fulfillment of the Requirements for the
MBA in Faculty of Management Studies

June – 2022

Rajkot-Morbi Road, At & Po. Gauridad,

Rajkot-360003, Gujarat, India.

Phone : 0281-2924155 / 56, www.marwadiuniversity.in

 STUDENT DECLARATION

I, KRUNALI MARU, (92100323150) hereby, declare that the Summer

Internship Project Work entitled “A STUDY ON COMPARATIVE ANALYSIS
OF MUTUAL FUND SCHEMES”, submitted in partial fulfillment of the
requirements for the award of the degree of Master of Business Administartion
(MBA) of Marwadi University, Rajkot, India is my ideas in my own words and
where others' ideas or words have been included, I have adequately cited and
referenced the original sources. I also declare that I have adhered to all
principles of academic honesty and integrity and have not misrepresented or
fabricated or falsified any idea/data/fact/source in my submission.

This authentic work has been carried out by me under the supervision of
Dr./Prof REENA RAJ. I also declare that the content of this project report does
not form a basis for the award of any previous degree to any one else.

I understand that any violation of the above will be cause for disciplinary action
by the university and can also evoke penal action from the sources which have
thus not been properly cited or from whom proper permission has not been
taken when needed.

Date: DD/MM/YYYY Signature of the

student

Place: Rajkot Krunali Maru

92100323150
PREFACE
ACKNOWLEDGEMENT
 ABSTRACT

This study is titled as “A study on Comparative Analysis of Mutual Funds

Schemes”. The main objective of the study is to evaluate the performances of
equity funds, liquid funds, balanced funds, glit funds, income funds and index
funds. Data are taken from the NSE, BSE and money control etc. This study
suggests to invest in fund which performs well in the financial market. Mutual
Funds provide a platform for a common investor to participate in the Indian
capital market with professional fund management irrespective of the amount
invested. The Indian mutual fund industry is growing rapidly and this is
reflected in the increase in Assets under management of various fund houses.
Mutual fund investment is less risky than directly investing in stocks and is
therefore a safer option for risk averse investors. This project aims at finding out
the factors affecting investment decision on mutual funds and its preference
over retail investors. This project also aims at finding about the factors that
prevent the people to invest in mutual funds. The findings will help mutual fund
companies to identify the areas required for improvement and can also improve
their marketing strategies. It will help the MF companies to create new and
innovative product according to the orientation of investors.

Keywords: Mutual fund, Performance of funds, Risk and return, Investment.

 TABLE OF CONTENTS

SR PARTICULARS PAGE
NO. NO.
1 PART A
1.1 GENERAL INFORMATION
 BACKGROUND OF THE
INDUSTRY/SECTOR
Growth and Evolution of the Industry
Key Indicators and Future Trends of the
Industry
a. World Market
Analytical Data (Facts & Figures)
b. Country Market
Analytical Data (Facts & Figures)
c. State Market
Analytical Data (Facts & Figures)
d. PESTEL ANALYSIS(Tabular Form)
2 PART B
2.1 PROBLEM IDENTIFICATION
(2.1.1) a. Introduction of the study
(2.1.2) b. Rational of the study
(2.1.3) c. Research problem/Research Questions
(2.1.4) d. Identification of Research Gap
(2.1.5) e. Literature Review
(2.1.6) f. Research Objectives
2.2 RESEARCH METHODOLOGY
Census/Population
Sample
Sampling Methods
Data Collection Methods
Data Collection Instruments
Data Analysis Methods
Hypothesis Formation
3 PART C
3.1 DATA ANALYSIS & INTREPRETATION
(3.1.1) a. Reliability and Validity of Scale
(3.1.2) b. Data Analysis and Interpretation
4 4.1 Results & Findings
5 5.1 Conclusions
6 6.1 Suggestions
7 7.1 Limitations of the study
8 8.1 Contribution of the study
9 9.1 Bibliography & References
 PART - A

GENERAL
INFORMATION

1.1 GENERAL INFORMATION

 (1.1.1) BACKGROUND OF THE INDUSTRY/SECTOR:-

History of mutual fund industry in India:

The history of Mutual Fund Industry in India can be traced back to

1963, with the launch of the Unit Trust of India by the Government of India
under an Act of Parliament. UTI was launched under the regulatory and
administrative control of RBI. In 1978, the regulatory and administrative control
of UTI was transferred from the Reserve Bank of India to IDBI (Industrial
Development Bank of India). The first mutual fund scheme that was introduced
in India by UTI was in the Unit Scheme (1964). UTI had Assets Under
Management worth Rs. 6,700 Crores, by the end of the year 1988.
In 1987, public sector enterprises such as State Bank of India, Punjab National
Bank, Canara Bank, etc. and other non-UTI segments such as General Insurance
Corporation of India (GIC) and Life Insurance Corporation of India (LIC)
entered the market and established public sector mutual funds. The funds
introduced by the public sector banks, by way of historic progression, are listed
below:

 SBI Mutual Fund

 Canbank Mutual Fund
 Punjab National Bank Mutual Fund
 Indian Bank Mutual Fund
 Bank of India Mutual Fund
 Bank of Baroda Mutual Fund
 From the year 1993 onwards, private sector funds were established in the mutual
fund industry. In the same year, Mutual Fund Regulations were introduced in
India under which all mutual funds except UTI has to be registered. The first
private sector mutual fund that was registered was the Kothari Pioneer Fund,
which was merged with Franklin Templeton later on. In 1996, the Mutual Fund
Regulations were revised and this substituted the earlier version.

In 2003, the Unit Trust of India Act 1963 was repealed and was divided into 2
separate entities - the UTI Mutual Fund, which is sponsored by Punjab National
Bank, State Bank of India, Life Insurance Corporation of India and Bank of
Baroda and the second entity is the Specified Undertaking of the Unit Trust of
India. This bifurcation was effective from February 2003.

Growth and Evolution of the Industry:

As a result of COVID-19-induced lockdowns, the mutual fund industry's SIP

collections fell by 4% to INR 96,000 crore in FY 2020-2021. This resulted in
income uncertainty. Many investors chose to halt their SIPs as a result of the
pandemic. From a peak of Rs 8,641 crore, the contribution fell for 11 months in
a row before breaking through to new highs.

The average assets under management (AAUM) of the Indian Mutual Fund
Industry for February 2022 stood at INR 38,56,140 crore. The industry’s AUM
had crossed the milestone of INR 10 trillion (INR 10 lakh crore) for the first
time in May 2014. In around three years, the AUM increased more than
twofold, and in August 2017, it crossed INR 20 trillion (INR 20 lakh crore) for
the first time. The AUM size crossed INR 30 trillion (INR 30 lakh crore) for the
first time in November 2020. The industry's AUM was INR 37.56 trillion (INR
37.56 lakh crore) as of February 28, 2022.
The rising digital penetration, smart cities, and increased data speeds also
facilitate the drift of asset shares toward smaller cities and towns. The increased
retail contribution through SIPs shows the level of digital penetration in India.

The total number of accounts (or folios, as per mutual fund parlance) as of
February 28, 2022, was 12.61 crore (126.1 million units).
Key Indicators and Future Trends of the Industry:

The strong performance of the equity markets and net inflows to equity schemes
led to an increase in the asset size of the mutual fund (MF) industry. For the
quarter ended December 31, 2021, the average assets under management
(AAUM) of the industry were worth INR 36.17 trillion, registering a growth of
nearly 30% over a year.

The value of the assets held by individual investors in mutual funds increased
from INR 17.18 lakh crore in February 2021 to INR 21.02 lakh crore in
February 2022, an increase of 22.32%. The value of institutional assets
increased from INR 15.11 lakh crore in February 2021 to INR 17.54 lakh crore
in February 2022, recording an increase of 16.08%.
 WHY COMAPARATIVE ANALYSIS OF MUTUAL FUNDS?

All over the world, mutual fund is one of the most popular instruments for
investment. Its popularity with consumer has dramatically increased over the
last couple of years worldwide; the mutual fund has a long and successful
history. The popularity of mutual fund has increased manifold. In developed
financial market like United States, mutual has almost overtaken bank deposits
and total assets of insurance funds.

The mutual fund industry in India is regulated by Association of Mutual Funds

in India (AMFI). The mutual fund industry in India is of 493,287 crores approx.
A total of over 4.6 million investors have reposed their faith in the wealth
generation expertise of the Mutual Fund. Schemes of the Mutual fund have
consistently outperformed benchmark indices and have emerged as the preferred
investment for millions of investors and HNI’s.

The project entitled “Comparative Study on Performance Evaluation of Mutual

Fund Schemes” gives me an opportunity to enhance my knowledge of mutual
funds industry and gives me an insight of business processes of different types
of investors.

MAJOR MUTUAL FUND COMPANIES IN INDIA

ABN AMRO MUTUAL FUND

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO
Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO
Asset Management (India) Ltd. was incorporated on November 4, 2003.
Deutsche Bank AG is the custodian of ABN AMRO Mutual Fund.

BIRLA SUN LIFE MUTUAL FUND

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun
Life Financial. Sun Life Financial is a global organization evolved in 1871 and
is being represented in Canada, the US, the Philippines, Japan, Indonesia and
Bermuda apart from India. Birla Sun life Mutual Fund follows a conservative
long-term approach to investment. Recently it crossed an AUM of Rs.10000
crores.
BANK OF BARODA MUTUAL FUND

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30,
1992 under the sponsorship of Bank of Baroda. BOB Assets Management
Company Limited is the AUM of BOB Mutual Fund and was incorporated on
November 5, 1992. Deutsche Bank AG is the custodian.

HDFC MUTUAL FUND

HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namely
Housing Development Finance Corporation Limited and Standard Life
Investments Limited. ING VYSYA MUTUAL FUND ING VYSYA Mutual
Fund was setup on February 11, 1999 with the same named Trustee Company.
It is a joint venture of VYSYA and ING. The AMC, ING Investment
Management (India) Pvt. Ltd. was formed on April 6, 1998.

PRUDENTIAL ICICI MUTUAL FUND

The mutual fund of ICICI is a joint venture with Prudential Plc. Of America,
one of the largest life insurance companies in the US of A. Prudential ICICI
Mutual Fund was setup on 13 October, 1993 with two sponsors, Prudential Plc.
and the AMC is Prudential ICICI Asset Management Company Limited
incorporated on 22 June, 1993.

SAHARA MUTUAL FUND

Sahara Mutual Fund was setup on July 18, 1996 with Sahara India financial
Corporation Ltd. as the sponsor. Sahara Assets Management Company Private
Limited incorporated on August 31, 1995 works as the AMC of Sahara Mutual
Fund. The paid up capital of the AMC stands at Rs.25.8 crore.

STATE BANK OF INDIA MUTUAL FUND

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to
launch offshore fund, the India Magnum Fund with a corpus of Rs.225 crore
approximately. Today it is the largest Bank sponsored Mutual Fund in India.
They already launched 35 schemes out of which 15 have already yield
handsome returns to investors. State Bank of India Mutual Fund has more than
Rs.5, 500 crores as AUM. Now it has an investor base of over 8 lakhs spread
over 18 schemes.

TATA MUTUAL FUND

TATA Mutual Fund is a Trust under the Indian Trust Act, 1882. The sponsors
for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd.
the investment manager is Tata management Limited is one of the fastest in the
country with more than Rs.7703 Crores (as on 2005) of AUM.
KOTAK MAHINDRA ASSTE MANAGEMENT COMPANY

Kotak Mahindra Asset Management Company is a subsidiary of KMBL. It is

presently having more than 1, 99,818 investors in its various schemes. KMAMC
stared its operations in December 1998. Kotak Mahindra Mutual Fund offers
schemes catering to investors with varying risk return profiles. It was the first
company to launch to dedicated gilt scheme investing only in government
securities.

UNIT TRUST OF INDIA MUTUAL FUND

UTI Asset Management Company Private Limited, established in Jan 24, 2003
manages the UTI Mutual Fund with the support of UTI Trustee Company
Private Limited. UTI Asset Management Company presently manages a corpus
of over Rs.20, 000 crore. The sponsors of UTI Mutual Fund are Bank of Baroda,
Punjab National Bank, State Bank of India, and Life Insurance Corporation of
India. The schemes of UTI Mutual Fund are Liquid Funds, assets Management
Funds, Index Funds and Balanced Funds.

RELIANCE MUTUAL FUND

Reliance Mutual Fund was established as trust under Indian Trusts Act,
1882.The sponsor of RMF is Reliance Capital Limited and Reliance Capital
Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as
Reliance Mutual Fund which was changed on March 11, 2004. Reliance Mutual
Fund was formed for launching of various schemes under which, units are
issued to the public with a view to contribute to the capital market and to
provide investors the opportunities to make investments in diversified securities.

STANDARD CHARTERED MUTUAL FUND

Standard Chartered Mutual Fund was setup on March 13, 2000 sponsored by
Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company
Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd is the AMC
which was incorporated with SEBI on December 20, 1999.

FRANKLIN TEMPLETON MUTUAL FUND

The group, Franklin Templeton investment is a California based company with

a global AUM of US $409.2(as on 2005). It is one of the largest financial
service group in the world. Investors can buy or sell the Mutual Fund through
their financial advisor or through mail or through their website. They have open
end Diversified Equity schemes, Open end Sector Equity schemes, Open end
Hybrid schemes, Open end tax saving schemes, Open end income and liquid
schemes, closed end Income schemes and Open end Fund of Funds schemes to
offer.
BENCHMARK MUTUAL FUND

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial
Services Pvt. Ltd. as the sponsor and Benchmark Trustee Company Pvt. Ltd. as
the trustee Company. It was incorporated on October 16, 2000 and
headquartered in Mumbai, Benchmark Assets Management Company Pvt. Ltd.
is the AMC.

CAN BANK MUTUAL FUND

Can Bank Mutual Fund was setup on December 19, 1987 with Canara Bank
acting as the sponsor. Canara bank investment Management Service Ltd.
incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC
is in Mumbai. CHOLA MUTUAL FUND Chola Mutual Fund under the
sponsorship of Cholamandalam Investment & Finance Company Ltd. was setup
on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company
and AMC is Cholamandalam AMC Limited.

LIC MUTUAL FUND

Life Insurance Corporation on India setup LIC Mutual Fund on 19th June 1989.
It contributed Rs.2 crore towards the corpus of the Fund. LIC Mutual Fund was
constituted as a trust in accordance with the provisions of the Indian trust Act,
1882. The Company started its business on 29th April 1994. The Trustees of
LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management
Company Ltd. as the Investment Managers for mutual fund.

GIC MUTUAL FUND

GIC Mutual Fund, sponsored by General Insurance Corporation of India, a

government of India undertaking and the four Public Sector General Insurance
Companies, viz. National Insurance Co. Ltd, the New India Assurance Co. Ltd.
the Oriental Insurance Co. Ltd and United India Insurance Co. Ltd and is
constituted as a Trust in Accordance with the provisions of the Indian Trusts
Act, 1882.
a. World Market:

The global mutual fund assets market size was valued at $54.93 trillion in 2019,
and is projected to reach $101.2 trillion by 2027, growing at a CAGR of 11.3%
from 2020 to 2027. A mutual fund is one of the most preferred investment
alternatives for small investors in the market. In addition, it offers an
opportunity to invest in a professionally managed & diversified portfolio at a
relatively low cost. Moreover, it pools money from several investors and invests
the money in securities such as stocks, bonds, short-term debt, and others.
Furthermore, each share represents an investor’s ownership in the fund and the
income generated from the investments. 

The mutual fund assets industry has been largely affected due to the outbreak of
the COVID-19 pandemic, due to the uncertainty underlying in companies’
profitability, economic slowdown, and investor ability to repay funds in the
market.

Surge in investment toward mutual fund, which enables small & large fund
savers to participate in investment plans is becoming a major growth factor to
the market. In addition, advanced portfolio management services, convenience
& fair pricing in terms of investments, and implementation of digitalized
technologies propel the mutual fund assets market growth..

COVID-19 pandemic has a moderate impact on the mutual fund assets market,
owing to increased cases of corporate defaults as the cash flow position has been
hampered tremendously. However, as lockdown in several regions has severely
impacted the movement of consumers and disruption of businesses across the
globe, customers are availing offers of mutual funds via online platforms. This,
in turn, has become one of the major growth factors for the mutual fund assets
market during the pandemic situation.

 
 a. Country Market:

The Indian mutual fund market has witnessed varying trends in fund
inflow during the last decade. The aftermath of the global credit crisis had
led to continuous outflows for the next four-five years. The situation
reversed in the last fiscal with net positive inflow, which while lower than
the 2008 levels is a welcome sign for the industry, especially the growth in
equity schemes. The average assets under management (AUM) for the
domestic mutual fund (MF) industry grew 13.8 per cent year-on-year to Rs
37.74 trillion for the quarter ended June, reveals the data furnished by
the Association of Mutual Funds in India.

The growth in assets was driven by incremental flows into equity schemes.

Biggest player State Bank of India MF cemented its position with industry-
beating 23.7 per cent growth in AUM to Rs 6.47 trillion.

Ranked No. 2, ICICI Prudential MF saw its AUM increase 11.8 per cent to
Rs 4.65 trillion.

The AUM of HDFC MF — the largest listed MF — slipped marginally to

Rs 4.15 trillion in the past year.

Kotak MF moved to fourth place, with average AUM growth of 14.6 per
cent to Rs 2.82 trillion.

It overtook Aditya Birla Sun Life MF, which clocked in just 2.2 per cent
growth in AUM.

C. State Market:
“Institutional investments in liquid and debt funds also increased from investors in
Gujarat. A few large corporates have put money in these funds, which is reflecting
in the increase in AUM,” said Mumukshu Desai, director of a city-based financial
advisory firm Experts said Gujarat has remained the third largest state for mutual
fund investments (MFI) since August this year, growing by a significant Rs
3,011.45 crore from July. AMFI data suggests that in August, the total AUM for
MFIs in Gujarat was almost the same.
“Overall inflows in India have gone down and this trend is visible across states.
However, for the past two months as equity markets have started delivering
positive returns, investors who were earlier in wait-and-watch mode are now back
and are looking at stock markets,” said Jayesh Vithalani, a city-based financial
consultant.
“Moreover, the net asset value of certain previous investments has also shown an
increase and this is why the overall AUM went up,” Vithalani further added.
Investments continued to flow into gold exchange-traded funds (ETFs) as well,
which also contributed to the increase in overall AUM.

AHMEDABAD: despite significant outflows, Gujarat still has the third highest
amount of assets under management (AUM) in mutual fund, among the states of
India. According to data from the AMFI, total assets under management in Gujarat
stood at RS 1.91 lakh crore in September 2020, led by equity-linked mutual funds
with investments worth RS 82,011 crore from Gujarat.

“The demand for digital gold has gone up vis-à-vis physical gold and therefore,
ETFs are showing a growth. In September, the AUM in gold ETFs however,
showed a marginal 2.3% decline thanks to the reduction in gold prices and
consequent downfall in the net asset value of the investments,” said Haresh
Acharya, director, India Bullion and Jewellers’ Association (IBJA).
D. Pestel Market:

 P – Political
E – Economic
S – Social
T – Technological
E – Environmental
L – Legal

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 PART – B

PROBLEM
INDENTIFICATION
2.1 PROBLEM IDENTIFICATION

(2.1.1) a. Introduction of the study:-

Mutual Fund- An Introduction

A mutual fund is a trust that pools the savings of the number of

investors who share a common financial goals and investment may be in shares,
debt, equity, money market securities or a combination of these. Those
securities are professionally managed on behalf of the unit holders and each
investor holds a pro-data share of the portfolio, that is, entitled to profits as well
as losses. Income earned through this investment and the capital appreciation
realized is shared by its unit holders in proportion to the number of unit owned
by them. A mutual funds is the most suitable investment scope for common
people as it offers an opportunity to invest in a diversified, professionally
managed basket of securities as a relatively lower cost.
Mutual funds has emerged as a tool for ensuring one’s financial well being.
Mutual funds have not only contributed to the India’s growth story, but also
helped the families tap into the success of the Indian story. The main reason the
number of mutual funds retails investor remain small is that nine out of 10
people with incomes in India do not know the mutual funds are still exists.
Although one people are aware of mutual funds investment opportunities, the
number who decided to invest in mutual funds to as many as one in five
peoples. Thus the participation of mutual funds in the transformation of Indian
economy has made it critical to view their services not only as a financial
intermediary but also plays an significant role in spreading equity culture.

What is a Mutual Fund (MF)?

Common pool of funds contributed by investors and invested in

accordance to the objective.

Investments are held in a trust of which the investors alone are

the joint beneficial owners.

Trustees oversee the management by investments manager.

 Structure of Mutual Fund

A mutual funds in India is set up like a trust. A trust is an arrangement involving

three parties (unlike a bank): the unit holder (or investor), the mutual fund
company (AMC) and the mutual fund trustee.

 Sponsor:

A sponsor is any person or entity that can set up a mutual fund scheme to
generate income through fund management. The sponsor can be said as the first
layer of the three-tier structure of mutual funds in India. The sponsor is required to
approach SEBI and get a mutual fund scheme approved. The sponsor cannot work
alone. It needs to create a Public Trust under the Indian Trust Act 1882 and get the
same registered with SEBI.

Once the trust is created, the Trustee is registered with SEBI and is appointed as the
trustee of the fund in order to safeguard the interest of the unit holders and to adhere
the SEBI Mutual Fund regulations. The Sponsor subsequently creates an Asset
Management Company under the Companies Act, 1956 to deal with the fund
management.
  Trustee:

Trust and trustees make up the second layer of the structure of mutual
funds. Trustees are also known as the protectors of the fund and are employed by the
fund sponsor. As the name suggests, they have a very important role in maintaining
the trust of the investors and to oversee the growth of the fund. SEBI mandates the
trustees to provide a report on the fund and the functioning of the AMC on a half-
yearly basis. Trustees can be created either in the form of Board of Trustees or a
Trust Company.

The Trustees supervise the entire functioning of the AMC and regulate the
operations of the mutual fund schemes. The SEBI has tightened the rule of
transparency so as to avoid any conflict of interest between the Sponsor and the
AMC. Without the permission and approval of the Trust, an AMC cannot float a
new mutual fund scheme. It is important for the Trustees to act independently and
take appropriate measures to safeguard the hard earn money of the investors.

 AMC (Asset management company):

An AMC is the third working layer in the structure of mutual funds. An

AMC floats various schemes of mutual fund in the market, pursuant to the needs of
the investors and the nature of the market. They create mutual funds along with the
trustee and the sponsor and then oversee its development. While creating the
scheme, they take help of bankers, brokers, RTAs auditors etc. and enter into an
agreement with them. An AMC is a company formed under Companies Act and
needs to be registered under SEBI. Similar to the Trustees, an AMC also needs to
ensure that there is no conflict of interest amongst them, the sponsor and the trustees.

 Other Participants:

 Custodian:
A Custodian is an entity, which is responsible for the safekeeping of the
securities. Custodians are registered with SEBI and are responsible for the transfer
and delivery of units and securities. Custodians also enable investors in updating
their holdings at a particular point of time and help them in keeping track of their
investments. Along with the primary job of safekeeping, custodians are also in
charge of the collection of corporate benefits such as bonus issue, interest, dividends
etc.

 Transfer agent:
RTAs are an important link between fund managers and investors. They
cater to the fund managers by updating them with the investor details and to
investors by delivering the benefits of the fund to them. RTAs are SEBI registered
entities who process the applications of mutual funds, help with investor KYC,
manage and deliver periodical statements of investments, update records of investors
and process investor requests.

How does a Mutual Fund Work?

Mutual funds work by pooling money together from many investors. That
money then gets used to purchase stocks, bonds and other securities. Because
mutual funds invest in a collection of companies, they offer instant
diversification (thus lower risk) to investors. Mutual fund investors share in the
fund’s profits and losses.
 TYPES OF MUTUAL FUNDS

MUTUAL FUNDS are popular investments because of their ease, flexibility and
diversification benefits. The best part of mutual funds is that they provide investment
opportunities for all kinds of investors. Currently, there are over 44 registered mutual funds in
India, offering different schemes to satisfy the dynamic needs of diverse investors.

The different types of mutual funds available can be classified broadly based on structure and
investment goals.

1. By Structure: A mutual fund can be divided into two types by its

structure. Those are,
- Open Ended

This type of fund or scheme facilitates for continuous subscription

or repurchases which, however, does not have a fixed maturity
period. Conveniently, the investors can purchase or sell the units at
 Net Asset Value (NAV) related prices which are declared on a
daily basis. The key feature of open-end schemes is liquidity.

- Close Ended

The maturity period in such a scheme is stipulated which may vary

from 5 to 7 years. Further, such scheme is open for investment
only during a specified period at the time of launch of the scheme.
During the time of public issue, the investors can invest money
and operates for a specific time. The investor, however, can buy or
sell the units of the scheme on the stock exchanges where the units
are listed. Here, the investors are provided with an exit route as
some close-ended funds give an option of selling back the units to
the mutual fund through periodic repurchase at NAV related
prices. SEBI Regulations stipulate that at least one of the two exit
routes is provided 23 to the investor

i.e. either repurchase facility or through listing on stock

exchanges. These mutual funds schemes disclose NAV generally
on weekly basis.

2. By investment objective: A mutual fund can be divided into two types by

its investment objective. Those are,

- Equity

An equity fund which otherwise is known as a stock fund is

invested in the stock. This is also identified as equity securities.
However, equity fund/stock fund is contrasted with the bond fund
and money fund. Fund assets are typically in stock, with some
amount of cash, which is generally quite small, as opposed to
bonds, notes, or other securities.

- Debt

Debt funds are concerned with an investment of debt or fixed

income securities which comprise of Treasury Bills, Government
Securities, Corporate Bonds, Money Market instruments and other
debt securities of different time horizons. The debt securities
signify to a fixed maturity date and pay a fixed rate of interest.

The return, however, comprises (i) Interest Income and (ii) Capital
appreciation/depreciation in the value of the security due to
changes in market dynamics.
 There are different types of Debt Mutual Funds that invest in
various fixed income securities of different time horizons.
Examples of such fund include
i. Liquid Funds/ Money Market Funds,
ii. Ultra short term Funds,
iii. Floating Rate Funds,
iv. Short Term and Medium term Income Funds,
v. Income Funds, Gilt Funds and other dynamically managed
debt funds etc.

- Money market

It provides easy liquidity, preservation of capital and moderate

income. This scheme invests money in safer and short-term
instruments like treasury bills, certificate of deposits, commercial
paper and inter-bank call money.

- Gold

The Gold mutual funds invest in gold ETFs (exchange-traded

funds). Ideally suitable for investor who wants to take exposure in
gold. Unlike physical gold, they are easy to purchase and redeem
(buying and selling)
 MUTUAL FUNDS INVESTMENT PROCEDURE

Investing in mutual funds is uncomplicated and straightforward.

Follow these steps to get started on your mutual fund investment journey:

Step 1: Sign up for a mutual fund account on www.franklintempletonindia.com

Step 2: Complete your KYC formalities (ignore this step if you have already done it)
Step 3: Enter the necessary details
Step 4: Identify the funds you wish to invest based on your financial goals
Step 5: Select the appropriate fund and transfer the amount
Step 6: Issue a standing instruction with your bank in case you invest through a SIP
every month.

INVESTMENT MODE

ONE TIME INVESTMENT OR LUMPSIM INVESTMENT

One time investment.

Usually, large sum of money is invested in one go.
Investor faces risk of volatility in markets.

SYSTEMATIC INVESTMENT PLAN (SIP)

Staggered investment.
period of commitment - 6 months, 1 / 3 / 5 years.
specific intervals - monthly, quartely, half-yearly.
made on specific dates e.g. 1st, 5th, 10th, 15th of every montg.
ADVANTAGES OF MUTUAL FUNDS:

Mutual funds being the financial intermediaries facilitate savings and investment for
future gain. The collected sum in the form of savings is invested in various shares
and other securities of a large number of companies and institutions.

The advantages of mutual funds by the investors can be explicitly discussed under
the following headings:

Professional Management:

Invariably, standard investors are lacking behind the knowledge of the

capital market and do not have enormous resources to collect the investment
advantages. In such situation, the investors require the help of an expert.
Identifying an expert is too difficult and even costly who has a depth of
knowledge in this regard. Mutual funds are generally managed by
professional managers so as to develop an organize investment strategy for
the companies.

Affordability:

This connotes to the sense of various types of investment in different

schemes. The mutual funds specify low amount as the minimum investments
which open multiple options for the investors for investment. It otherwise
means that the mutual funds leave a wide range of options to the investors
who can afford their investments.

Portfolio Diversification:

Mutual Fund trims down risk by diversifying the capital investment of the
investors in different companies and sectors. Investing all the funds in a
single platform may cause the investors to undertake all the risk.

Tax Benefits:

Investors of mutual fund get an advantage of tax benefits. Under section 80C
of Income Tax rules, dividends received from mutual funds’ debt schemes
are tax-exempt to the overall limit of Rs. 3, 00,000.

Diversification:

The investors of a small group are away from investing in many securities
reason being that they have small savings and hence, limit their investment to
 either single or few securities. Hence, diversification for such investors is out
of reach due to investment risk.

Flexibility:

It gives the sense to various opportunities and options to the investors who
can invest without attending to the mutual fund office physically. The mutual
funds make a smooth and convenient passage to the investors for buying,
selling and share transfer through phone and online. The mutual funds also
promote the investors to switch over from the existing scheme to another
scheme in the event of loss or less profit.

Simplicity:

It is a convenient and risk-free method of investment in the stock market

securities for small investors and meagre understanding investors about the
stock 27 markets. Such investors generally concentrate on the financial goals
and leave the options to the fund managers to manage their investment at a
reasonable fee.

Liquidity:

It denotes to the sense of converting the shares into cash in a convenient and
easy manner. It otherwise means to get cash in hand instantly from the
invested amount on request of the investor.

Transparency:

Mutual Funds patently announce their portfolio on a monthly basis which

helps the investors to know the positioning of their money. The investors,
here, can take the option of withdrawing their investment if they are unhappy
with the investment portfolio.

DISADVANTAGES OF MUTUAL FUNDS:

There are many disadvantages of mutual funds also. Following discussions

visualize the disadvantages of the same.

Brokerage Fees:

High brokers’ fees are paid by the mutual fund's investors. Such fees
are collected by the brokers at the time of buying and selling of
shares which are not included in the expense ratio. The expense ratio
is the percentage of mutual fund’s profit that holders must pay
towards management fees, administrative fees, operating costs, and
all other costs.

Cost of Diversification:

The diversification option provides the investor advantages as well as

disadvantages as they restrain the possibilities for large gains from
individual shares.

Hidden cost:

The soft or hidden money which is used by the mutual fund for
research purpose is known as a hidden cost. This money is used for
giving incentives to the employees. Further, turnover ratios which the
investors should always examine also include the hidden brokerage
cost. Mention may be made that turnover ratio of a firm happens to be
the percentage of mutual fund’s holdings that are sold over in the past
year.

High Fees and Expenses:

It also constitutes one of the important disadvantages of sales fee,

management fee and fund expenses are included in the expenses of
the mutual fund. This refers to the initial charges of the loaded funds
that comprise sales load or front-end load and it is charged at the time
of selling units to the investors. Such charges are levied on the
investors while repurchasing the units which are otherwise known as
back-end load from the shareholder. Some funds even charge a
penalty for early redemption of investment.

Risks of ownership:

The mutual fund's investors face ownership risks. When the market
falls, the worth of investors’ investment reduces, and in a stock
market crash their investment, the value may be totally eroded.
Rational of the study:

The study first tries to understand the composition of the selected funds
which determines the scope of performance for the funds, followed by use of rations
that are relevant in quantifying and understanding the risk and return relationships
for each mutual fund schemes under consideration. Then a comparative analysis of
the mutual fund schemes is done to see which fund has performed the best.
This study is significant to the company as it looks into the minute details that
differentiate the performance of funds of different companies with same theme or
sector under similar market conditions. A comparative analysis is also done between
the sectors, different investment avenues and different schemes. The future work
will consist of the study of the portfolio of each of the funds. The proportion of
investments of the funds invested in different sectors and also in different type of
stocks (like large cap, mid cap and small cap stocks) will also be found out and
analyzed. Thus, it will give an overall view of the risks and returns of the selected
funds over the last one year and also analysis of their portfolio to understand the
variability of returns over the last one year.

Research problem:

Investors step back to make the investment in the Stock market because it is
exposed to more volatility. Therefore, there is a difficulty in decision making
regarding the investments to be made. Moreover, ventures are harmful in nature and
speculators have to examine the about few of the factors which were in the venture
previously. Simultaneously, the monitoring plans to examine the values and
common reserves combine in type of the hazard, return and liquidity and adding to it
giving response shared support, plans between the financial specialists and the fund
managers. Mutual Funds do not provide assured returns. The returns are linked to
the performance. The invest in shares, debentures and deposits. All these
investments involve an element of risk. The value of funds may vary depending
upon the asset management companies. Apart from this, this study mainly focuses
on the performance analysis of selected mutual funds for five years.

Identification of Research Gap:

This comparative study aims to analyze and evaluate the performance of

different categories of mutual fund schemes and also to find out which fund
scheme performs better than the other fund schemes.

Literature Review

Bijan Roy and Saikat Sovan Deb (2003)

They are socially consistent with traditionally selected traditional funds with similar
net assets to investigate the characteristics of assets held, diversification of portfolios
and the different impacts of diversification on investment performance. Use a
sample of responsible stock mutual funds. In terms of these attributes, social
responsibility funds are not much different from traditional funds. In addition, the
impact of diversification on investment performance did not differ between the two
groups. During the study period, both groups were below the Domini 400 Social
Index and the Standard & Poor's 500 Index.

Ajay Koharna and Peter Tofano and Wedge, L (2007) they studied mutual fund
mergers between 1999 and 2001 to understand the role and effectiveness of the fund
board. Some fund mergers are beneficial for target shareholders, but they are
expensive when targeting fund directors. Here the higher paid target fund boards
were less to approve beyond the benefits of the family merge causing a substantial
reduction in their rewards.

Paramita Mukherjee and suchismita (2008)

The era of capital market reform, the Indian stock market moved with other stock
markets in India, if the sustainable interests of foreign investors in the market
increased. In the United States and other Asian markets such as Hong Kong and
Singapore, the most significant returns on the stock market in India are expected to
affect stock returns in major Asian markets.

Jack treynor (1965)

A methodology for assessing the performance of mutual funds has been developed,
known as the volatility indicator. This is defined as the average excess return on
portfolio income. Next up is Sharpe, which rewards the volatility indicator, which is
the average excess return of the mutual fund portfolio.

Kumar (Ms Nidhi Walia and Dr (Ms) Ravi 2010)

I am overburdened by the responsibility of giving investors the best return while

effectively using their abilities to properly allocate the timing. Mutual fund portfolio
management is a truly dynamic decision-making process that monitors the ongoing
assessment and demand of efficient fund managers.

Sanjay kumar Mishra and Manoj kumar (2011)

The study here is how mutual fund investors objectively influence their knowledge
about information retrieval and processing behavior. In this article they are objective
knowledge i, e, what is actually stored in memory, subjective knowledge, ie how
individuals affect different things how information retrieval and processing
information behavior I tried to prove what to do.

Deepak Agarwal (2011) is conducting test on the performance measurement of

mutual fund created in 1992 by the development of capital markets and economic
regulation in India. Here, mutual funds are a major contributor to the globalization
of financial markets. It flows to the economy. The survey revealed that performance
is influenced by people's savings and investment habits and grows at a level with the
loyalty and confidence of the manager.

Research Objectives

 To know the potential risk involved in each mutual fund scheme.

 To find out the best top 5 mutual fund scheme among the selected schemes in terms
of risk and return.
 To measure and evaluate the performance of the top 5 mutual funds in terms of
returns (Net Asset value).
 To study the performance of growth scheme of selected mutual funds.
2.2 RESEARCH METHODOLOGY:

Research methodology is a scientific and systematic problem-solving method. It

involves choosing a variety of methods and techniques, mostly from the studies
carried out. To examine the mutual funds schemes performance, 5 schemes were
selected as a random basis. NAV of different schemes have been used in this study
for the period of 5 years. Stock market has been used for market portfolio. The study
was mainly secondary data based. The simple statistical tools and techniques used in
this study are NAV (Trend Analysis), Mean, Standard Deviation, Beta, Sharpe’s
measures.

A) Net Asset Value (NAV):

Net Asset Value is the rate at which the mutual fund unit is brought or sold. It is
the value of the fund’s investment. For mutual funds, net asset value per share
generally represents, the funds market price, subject to possible sales or
redemption charge.

B) Risk:

Risk is the uncertainty or variability of the income/ capital appreciation or loss or

both. The two major types of risk are a) systematic risk b) unsystematic risk.
Systematic risk are the market problem, tax policy or any other government
policy, inflation risk or interest rate risk and financial risk. The unsystematic risk
are mismanagement, wrong financial policy, defective marketing etc.

Census/Population

The data for this study is mainly collected from Secondary Sources like Books,
Journals, Magazines, and various websites like

www.bseindia.com,
www.amfiindia.com,
www.mutualfundsindia.com,
www.sebi.gov.in
www.moneycontrol.com

NAV has been obtained from the different sources such as:
 1. SEBI annual reports
2. www.mutualfundsindia.com
3. www.amfindia.com
4. Companies Annual Reports

Sample

The study covers only the equity and mutual funds and the relationship of
comparison is ascertained between its risk, return and the liquidity. This study
includes five equity and five mutual funds for comparison in the study.

Sampling Methods