A Project On

A STUDY ON THE GROWTH OF MUTUAL FUNDS

TEAM MEMBERS
MD SAHIL AKHTAR (12020003005032)

Under The Supervision Of

Prof. Dibyendu Chattaraj

Date of Submission: 01.12.2022

BBA DEPARTMENT
INSTITUTE OF ENGINEERING & MANAGEMENT
MAULANA ABUL KALAM AZAD UNIVERSITY OF TECHNOLOGY
KOLKATA

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 INDEX

CHAPTERS CONTENTS PAGE NO.

1. INTRODUCTION 3

2. OBJECTIVES 4

3. LITERATURE REVIEW 5

4. RESEARCH METHODOLOGY 6

5. ANALYSIS AND FINDINGS 7-8

6. CONCLUSIONS 9

7. LIMITATIONS 10

8. REFERENCES 11

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 INTRODUCTION

Mutual Funds are trusts, which accept savings from investors and invest the same in
diversified financial instruments in terms of objectives set out in the trusts deed with the view
to reduce the risk and maximize the income and capital appreciation for distribution for the
members. A Mutual Fund is a corporation and the fund manager’s interest to professionally
manage the funds provided by the investors and provide a return on them after deducting
reasonable management fees. A mutual fund is a common pool of money into which
investors place their contributions that are to be invested in accordance with a stated
objective. The ownership of the fund is thus joint or “mutual”; the fund belongs to all
investors. A single investor’s ownership of the fund is in the same proportion as the amount
of the contribution made by him or her bears to the total amount of the fund.

The Mutual fund collects money directly or through brokers from investors. The money is
invested in various instruments depending on the objective of the scheme. The income
generated by selling securities or capital appreciation of these securities is passed onto the
investors in proportion to their investment in the scheme. The investments are divided into
units and the value of the units will be reflected in Net Asset Value and NAV of the unit.
NAV is the market value of the assets of the scheme minus its liabilities.

The most important trend in the mutual fund industry is the aggressive expansion of the
foreign owned mutual fund companies and the decline of the companies floated by
nationalized banks and smaller private sector players. Reliance Mutual Fund, UTI Mutual
Fund, ICICI Prudential Mutual Fund, HDFC Mutual Fund and Birla Sun Life Mutual Fund
are the top five mutual fund company in India.

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 OBJECTIVES

Mutual Fund is one of the most preferred investment alternatives for the small investors as it
offers an opportunity to invest in a diversified and professionally managed portfolio at a
relatively low cost. A Mutual Fund is a trust that pools the savings of a number of investors
who share a common financial goal. The objectives of the study are:

1. To present the trends in the growth of Indian mutual funds.

2. To appraise the performance of selected schemes on the basis of performance

measures like Sharpe ratio, Jensen and Treynor measures to find out the risk
adjusted returns.

3. To evaluate the performance of the select equity growth schemes and compare
it with the benchmark to find out whether there is equality of means(returns).

4. To compare the risk and return of equity and debt funds for a period of 10 years to
study the long run performance.

5. To find the relationship of age, qualification, gender, marital status, occupation

and income with the preferences of mutual funds.

6. To know whether there is any association between the selected variables and investors
perception of mutual funds.

7. To suggest suitable measures for strengthening of the mutual funds in India.

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 LITERATURE REVIEW

The literature review of mutual funds goes back when Ajay Khorana, Peter Tufano and
Lei Wedgein (2007) in the study named “Board structure, mergers, and shareholders
wealth. A study of the mutual fund industry” studied mutual fund mergers between 1999
and 2001 to understand the role and effectiveness of fund boards.

The study found some fund mergers typically across family mergers benefit target
shareholders but are costly to target fund directors. Such mergers are more likely when
funds underperform and their boards have a larger percentage of independent tributes,
suggesting that more independent boards tolerate less under performance before initiating
across family mergers.

Soumya Guha Deb, Ashok Banerjee and B.B. Chakrabarti (2009) studied “Return Based
Style Analysis (RBSA) to evaluate equity mutual funds in India” using quadratic
optimization of an asset class factor model proposed by William Sharpe and analysis of the
relative performance of the funds with respect to their style benchmarks. The study found that
the mutual funds generated positive monthly returns on the average, during the study period
of January 2000 through June 2005.

The ELSS funds lagged the Growth funds or all funds taken together, with respect to
returns generated. The mean returns of the growth funds or all funds were not only positive
but also significant. The ELSS funds also demonstrated marginally higher volatility
(standard deviation) than the Growthfunds.

L.M Bhole and his book “FINANCIAL INSTITUTIONS AND MARKETS” has examined
that the information of different type of scheme of mutual fund like open ended scheme, close
ended scheme, debt scheme, balanced scheme. V.K.Bhalla and his book “INVESTMENT
MANAGEMENT” deals with concept and theories of risk factor of mutual fund have been
elaborately discussed in the book.

Sushil Mukherjee’s book has studies the various type of advantages of mutual fund and also
examined that how the risk factor of mutual fund influenced the investment of mutual fund.
Abhipsa Mishra and his book “INDIAN MUTUAL FUND AND MARKET DEVLOPMENT
IN INDIA” concerned with history of mutual fund as well as how mutual fund industry grow
and developed and also deals with how mutual fund industry influenced with a increase the
saving of Household savings.

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 RESEARCH METHODOLOGY

One of the most important use of research methodology is that it helps in identifying the
problem, collecting and analysing the required information and providing an alternative
solution to the problem.

It also helps in collecting the vital information that is required by the top management to
assist them for the better decision making both day to day decisions and critical ones.

Research Methodology is a way to systematically solve the research problems. It

may understand as a science of study how research is done scientifically.

Primary Data: There is no primary data on this research.

Secondary Data: Secondary data is the data that have been already collected by and readily
available from other sources.

The sources of secondary data are as follows • Newspapers, News channels, internet-
websites, magazines, books-libraries, other projects.

The scope of project is mainly concentrated on different category of the mutual fund such as
equity funds, debt funds and other funds as well.

The main purpose of doing this project was to know about mutual fund and its functioning.
This helps to know in details about mutual fund industry right from its inception stage,
growth and future prospects.

It also helps in understanding different schemes of mutual funds. Because my study depends
upon prominent funds in India and their schemes like equity, income, balance as well as the
returns associated with those schemes.

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 ANALYSIS & FINDINGS

Analysis of Preferred Financial Products of the Respondents:

There could be various reasons for an investor to invest in a particular type of financial
product. A study of the current investments held by the respondents will provide insight on
the various financial products preferred by investors.

Investment Avenues No. of Respondents Percentage Shared

Mutual Funds 37 51.4%
Banks And Fixed Deposits 30 41.7%
Public Provident Fund 10 13.9%
National Savings Certificate 5 6.9%
Post Office Savings 13 18.1%
Government Securities 16 22.2%
Life Insurance 18 25%
Corporate Bonds and Debentures 9 12.5%
Real Estate 13 18.1%
Gold Silver 30 41.7%

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It can be observed from table that, majority of the respondents hold Mutual Fund (51.4%)
followed by Bank and Fixed Deposits (41.7%), Gold and Silver (41.7%) and Life
Insurance (25%). All other financial product holding was on lower side.

Findings:

 There are wide range of products available in mutual in the Indian market.

 A mutual fund is a type of financial vehicle made up of a pool of money collected

from many investors to invest in securities like stocks, bonds, money market
instruments, and other
 assets.

 Mutual funds are operated by professional money managers, who allocate the fund's
 assets and attempt to produce capital gains or income for the fund's investors. A
mutual fund's portfolio is structured and maintained to match the investment
objectives stated in its
 prospectus.

 The aggressive market that can tap any individual is financial services. Investors have
their individual risk appetite and believe in the market they are entering in.

 They have been identified as one of the important factors pushing up the
market prices of securities.

 From Respondents itself it is found that the most of the peoples are investing in
mutual fund. They consider that it is they that it is best investment avenue in the
market available.

 It is found that most of the investors invest in Systematic Investment Plan Method.

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 CONCLUSIONS

In India, innumerable mutual fund schemes are available to general investors which
generally confound them to pick the best out of them. This study provides some insights
on mutual fund performance so as to assist the common investors in taking the rational
investment decisions for allocating their resources in correct mutual fund scheme. The data
employed in the study consisted of monthly NAVs for the open-ended schemes. the
performance of mutual fund in terms of Average returns, seventy five percent of the
diversified fund schemes have shown higher and superior returns and remaining have shown
inferior returns. In terms of standard deviation, sixty two percent of the selected
schemes are less risky than the market. All the funds have beta less than one and positive
which imply that they were less risky than the market portfolio and in terms of
coefficient of determination (R2), all eight funds were near to one which indicates higher
diversification of portfolio. Mutual fund is also better and preferable for those who want their
capital appreciation.

Mutual Funds now represent perhaps most appropriate investment opportunity for most
investors. As financial markets become more sophisticated and complex, investors need a
financial intermediary who provides the required knowledge and professional expertise on
successful investing. As the investor always try to maximize the returns and minimize the
risk. Mutual fund satisfies these requirements by providing attractive returns with affordable
risks: The fund industry has already overtaken the banking industry, more funds being under
mutual fund management than deposited with banks. With the emergence of tough
competition in this sector mutual funds are launching a variety of schemes which caters to the
requirement of the particular class of investors. Risk takers for getting capital appreciation
should invest in growth, equity schemes. Investors who are in need of regular income should
invest in income plans.

India's largest mutual fund, UTI, still controls nearly 80 per cent of the market. Also, the
mutual fund industry as a whole gets less than 2 per cent of household savings against the 46
per cent that go into bank deposits. Some fund managers say this only indicates the sector's
potential. "If mutual funds succeed in chipping away at bank deposits, even a triple digit
growth is possible over the next few years.

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 LIMITATIONS

• The study depend only secondary data. Secondary Data has a disadvantage that we cannot
control who the data is collected from. It also restricts the researcher to may have difficulty
obtaining information specific to his or her needs.
• The study is limited to the different schemes available under the mutual funds selected.
• The study is limited to selected mutual fund schemes.
• The lack of information sources for the analysis part.

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 REFERENCES

Websites :
I. A STUDY OF MUTUAL FUND AS AN INVESTMENT AVENUE:
Sakshi Rajesh Gandhi, Rashtrasant Tukadoji Maharaj Nagpur University, Nagpur.
Retrieved from chrome
extension://efaidnbmnnnibpcajpcglclefindmkaj/https://gscen.shikshamandal.o
rg/wp-content/uploads/2022/sp/BBA20-21/11.pdf
II. PERFORMANCE ANALYSIS OF MUTUAL FUNDS: A STUDY ON SELECTED
LARGE CAP MUTUAL FUNDS IN INDIA- Margi Choksi, Sai Institute of
Management ; Priyanka Bhatt, SAL Institute of Technology & Engineering
Research. Retrieved from https://www.studocu.com/in/document/national-
institute-of-securities-markets/finance/a-study-of-mutual-funds-in-india1-1-
vaibhavhi-pdf/
III. A STUDY OF MUTUAL FUND: RUPAM BAJORIA, THE BHAWANIPUR EDUCATION
SOCITEY COLLEGE, Kolkata: Retrieved from :
https://www.academia.edu/31624111/Title_of_the_Project_A_STUDY_OF_MUTU
AL_FUND_THE_BHAWANIPUR_EDUCATION_SOCITEY_COLLEGE

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