PERFORMANCE ANALYSIS OF MUTUAL FUNDS IN INDIA

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MASTER OF BUSINESS ADMINISTRATION (MBA)
Session:
2018-19
Dissertation
“PERFORMANCE ANALYSIS OF MUTUAL
FUNDS IN INDIA”
SUBMITTED BY
DAWOOD ANAS
(MBA 4th
Semester)
Roll No : XYZ
UNDER THE GUIDENCE OF
DR. NIRANJAN BOHRA
Dean, Faculty of Management, MAUJ

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DECLARATION
I, DAWOOD ANAS here-by declare that the project report “PERFORMANCE
ANALYSIS OF MUTUAL FUNDS IN INDIA” for the fulfillment of the
requirement of my course from MBA is an original work of mine and the data
provided in the study is authentic, to the best of my knowledge.
This study has not been submitted to any other Institution or University for award of
any other degree.
HOWEVER, I ACCEPT THE SOLE RESPONSIBILITY OF ANY POSSIBLE
ERROR OR OMISSION
DAWOOD ANAS
MBA 4th
Sem.

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CERTIFICATE
This is to certify that the present piece of research work entitled, Performance
Analysis of Mutual Funds in India has been done by Dawood Anas
under my supervision in partial fulfillment of requirements for the award of the
MASTER OF BUSINESS ADMINISTRATION (MBA) Session 2017-19. I
certify that this research work is an original study of the candidate. The study is
based on the investigations made by the candidate and its contents do not form part
of any research work on similar lines in India and abroad. I recommend that this
dissertation be accepted for submission in Maulana Azad University, Jodhpur.
DR. NIRANJAN BOHRA
Dean, Faculty of Management,
MAUJ

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ACKNOWLEDGEMENT
I am deeply indebted grateful to my supervisor MR. Dr. Niranjan Bohra, Dean
Maulana Azad University Jodhpur for his scholarly leadership and invariable
encouragement in day to day progress of this work. Getting an opportunity to study
under his talented guidance has been an immense pleasure and privilege for me during
the entire research period. I own much more than what I can express for Prof.
Niranjan Kumar Bohra, Dean, Department of Management and Prof. Dr. Imran
Khan Pathan, Academic for the help and facilities provided by them during the course
of this work. As I cannot forget the support given by my parents contributing
physically and spiritually for the successfully completion of this research work.
DAWOOD ANAS
MBA 4th
Semester

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PREFACE
Many individuals own mutual funds today. Indeed, the mutual fund industry which reached
$3.64 trillion in assets by 2019, comprises the bulk of many investors financial assets,
whether for retirement or taxable savings purposes. Toa large extent, mutual funds are the
investment vehicle for the majority of households in the India.
In the introductory chapter, I have considered the role of mutual fund in today’s investing
environment, learn just how popular mutual funds have become and consider why investors
have chosen to put so much money into funds. Clearly, mutual funds are a major financial
asset for numerous investors, and in many ways they play the dominant role in today’s
investing world for millions of households.
I have also told about the basics of mutual funds, defining terms and discussing the
mechanics about how funds work. I have also considered other alternatives. I have mainly
focused up on the study that which company’s mutual investments are mostly preferable by
investors. Today investors are becoming rational & they see all the parameters before
investing.
I had also reviewed the types of mutual funds, structure of mutual funds and their Current
scenario.
The overall objective of my study on this project is to know which company provides better
investment opportunities from HDFC & ICICI and make the investors to be able to take
better decisions. Of course, as every study needs, I’d adopted an objective view of overall
situation that examines both sides of the issue situated in HDFC &ICICI.

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EXECUTIVE SUMMERY
A mutual fund is a scheme in which several people invest their money for a common
financial cause. The collected money invests in the capital market and the money, which they
earned, is divided based on the number of units, which they hold.
The mutual fund industry started in India in a small way with the UTI Act creating what was
effectively a small savings division within the RBI. Over a period of 25 years this grew fairly
successfully and gave investors a good return, and therefore in 1989, as the next logical step,
public sector banks and financial institutions were allowed to float mutual funds and their
success emboldened the government to allow the private sector to foray into this area.
The advantages of mutual fund are professional management, diversification, economies of
scale, simplicity, and liquidity.
The disadvantages of mutual fund are high costs, over-diversification, possible tax
consequences, and the inability of management to guarantee a superior return.
The biggest problems with mutual funds are their costs and fees it includes Purchase fee,
Redemption fee, Exchange fee, Management fee, Account fee & Transaction Costs. There are
some loads which add to the cost of mutual fund. Load is a type of commission depending on
the type of funds.
Mutual funds are easy to buy and sell. You can either buy them directly from the fund
company or through a third party. Before investing in any funds one should consider some
factor like objective, risk, Fund Manager’s and scheme track record, Cost factor etc.
There are many, many types of mutual funds. You can classify funds based Structure
(open-ended & close-ended), Nature (equity, debt, balanced), Investment objective (growth,
income, money market) etc.

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A code of conduct and registration structure for mutual fund intermediaries, which were
subsequently mandated by SEBI. In addition, this year AMFI was involved in a number of
developments and enhancements to the regulatory framework.
The most important trend in the mutual fund industry is the aggressive expansion of
theforeign owned mutual fund companies and the decline of the companies floated by
nationalizedbanks 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.
Reliance mutual funding is considered to be most reliable mutual funds in India. People want
to invest in this institution because they know that this institution will never dissatisfy themat
any cost. You should always keep this into your mind that if particular mutual funding
schemeis on larger scale then next time, you might not get the same results so being a careful
investor you should take your major step diligently otherwise you will be unable to obtain the
high returns.

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INDEX
S.NO. Contents Page No.
1 Introduction to Topic 9
2 Introduction to Companies 12
3 Review of literature 14
4 Need/Scope/Objective of Study 15
5 Why Select Mutual Fund? 16
6
Advantages & Disadvantages of Mutual
Funds
17
7
Types of Mutual Funds Schemes in
India
21
8 Working of Mutual Funds 27
9 Mutual Fund Companies in India 32
10 Research Methodology 35
11 Data Analysis & Interpretation 36
12 Findings 42
13 Limitations/ Recommendations 43
14 Conclusion 44
15 Bibliography 46

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CHAPTER 1
Introduction to Topic
What is mean by mutual fund?
Mutual funds are pools of money that are managed by an investment company. Theyoffer
investors a variety of goals, depending on the fund and its investment charter. Some funds,
for example, seek to generate income on a regular basis. Others seek to preserve an investor's
money. Still others seek to invest in companies that are growing at a rapid pace.
Funds can impose a sales charge, or load, on investors when they buy or sell shares.Many
funds these days are no load and impose no sales charge. Mutual funds areinvestment
companies regulated by the Investment Company Act of 1940. Related: open-end fund,
closed-end fund.
Concept of mutual funds
A mutual fund is a trust that pools the savings of a no. 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 appreciations 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 diversified, professionally managed basket of
securities at a relatively low cost.
Historical Aspect
Mutual fund firstly was established in 1822 in the form of Society General DeBelguique. It
mainly gains the progress in Switzerland & little in franc and Germany in its initial days. The
first investment trust “The foreign and colonial govt. trust” Wasfounded in London in 1868.
Indian Scenario of Mutual Fund
The origin of mutual fund industry in India is with the introduction of the concept ofby UTI
in the year 1963. Through the growth was slow, but it accelerated from theyear 1987 when
non-UTI players entered in industry. The mutual fund industry goesthrough four phases: -

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First phase 1964-87 (Establishment of UTI).
Second phase 1987-93 (Entry of public sector funds).
Third phase 1993-2003 (Entry of a private sector funds).
Fourth phase since feb.2003 (Bifurcated of UTI).
In the first phase, UTI was established in 1963 by an act of parliament.In 1978 it was
delinked from RBI & the IDBI took over the control of UTI. In secondphase, SBI entered as
first non-UTI mutual fund provider then it was followed by canbank (Dec. 87). PNB (Aug
89) & LIC in 1989. In third phase, the private sectorentered in it. The Erstwhile Kothari
pioneer (now merged with Franklin Templeton)was first registered in July 1993 in mutual
fund. In revised registration of SEBI I n1993 the industry functions under SEBI. And the
fourth phase had bitter experiencefor UTI. It was bifurcated into two separate entities. One
is the specified under takingof UTI with AUM of 29,835cr. The second is UTI mutual fund
ltd. Sponsored bySBI, PNB, BOB and LIC& it is registered with SEBI.
Advantages of Mutual Funds
Diversification.
Professional Management.
Liquidity (mainly in case of opened mutual funds).
Regulatory.
Convenience.
Low cost.
Reduction of transaction cost.
Diverse returns.
Advantages to Industrial concern.
Tax relief.
Attract foreign Capital.
Reduction / Diversification of risk.

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Drawbacks of Mutual fund
No guaranties.
Fees & Commission.
Taxes.
Management Risk.
Special schemes
Money Market
Sector schemes
Balanced
Index schemesIncome
Industry specificGrowth
Internal
Close
Open Ended
Investment
objective
Structure
Types of
Mutual Fund

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CHAPTER 2
Introduction to Companies
HDFC Mutual Fund
HDFC mutual fund was set up on June 30, 2000 with two sponsors namelyHousing
Development Finance Corporation ltd. and Standard Life Insurance ltd.HDFC mutual fund
came into existence on 10 Dec. 1999 and got approval from theSEBI on 3rd July
2000.Housing Development Finance Corporation Limited, more popularly known asHDFC
Bank Ltd, was established in the year 1994, as a part of the liberalization ofthe Indian
Banking Industry by Reserve Bank of India (RBI). It was one of the firstbanks to receive an
'in principle' approval from RBI, for setting up a bank in theprivate sector. The bank was
incorporated with the name 'HDFC Bank Limited', withits registered office in Mumbai. The
following year, it started its operations as aScheduled Commercial Bank. Today, the bank
boasts of as many as 1412 branchesand over 3275 ATMs across India.
Products and Schemes of HDFC mutual fund

Equity funds.
Balanced funds.
Debt funds.
Liquid funds.
ICICI Prudential 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 USA. Prudential ICICI mutual fund was set up on 13th
of Oct. 1993 with two sponsors.
ICICI Bank started as a wholly owned subsidiary of ICICI Limited, an Indianfinancial
institution, in 1994. Four years later, when the company offered ICICI Bank'sshares to the
public, ICICI's shareholding was reduced to 46%. In the year 2000, ICICIBank offered made
an equity offering in the form of ADRs on the New York StockExchange (NYSE), thereby
becoming the first Indian company and the first bank orfinancial institution from non-Japan
Asia to be listed on the NYSE. In the next year, itacquired the Bank of Madura Limited in an

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all-stock amalgamation. Later in the yearand the next fiscal year, the bank made secondary
market sales to institutional investors Products and Schemes of HDFC mutual fund.
Equity funds.
Balanced funds.
Debt funds.
Liquid funds.
Children’s gift fund
Other Players in Mutual Fund
Bank of Baroda mutual fund (BOB MF) 30OCT. 1992.
Benchmark mutual funds (June 12, 2001).
Birla Sun life MF (1871).
Chola mutual fund (3 Jan. 1997).
Can bank mutual fund (Dec. 19, 1987).
LIC mutual fund (19th June, 1989).
Reliance mutual fund (30June, 1995).
Sahara mutual fund (18 July, 1996).
GIC (General Insurance Corporation of India). Etc.

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CHAPTER 3
Review of literature
ICICI Bank is India's second-largest bank with total assets of about Rs. 1trillion and a
network of about 540 branches and offices and over 1,000ATMs. ICICI Bank offers a wide
range of banking products and financialservices to corporate and retail customers through a
variety of deliverychannels and through its specialized subsidiaries and affiliates in the
areasof investment banking, life and non-Banking, venture capital, assetmanagement and
information technology. ICICI Bank's equity shares arelisted in India on stock exchanges at
Chennai, Muzaffarnagar, Kolkata andVadodara, the Stock Exchange, Mumbai and the
National Stock Exchangeof India Limited and its American Depositary Receipts (ADRs) are
listed on the New York Stock Exchange (NYSE).
HDFC Bank’s exposure to market risk a function of its trading and assetand liability
management activities and its role as a financial intermediaryin customer-related transactions.
HDFC had tried its best in mutual fund sector. It hasgrown up its market share in a
meanwhile time. The objective of market risk managementis to minimize the impact of losses
due to market risks on earning and equity capital.

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CHAPTER 4
Need/Scope/Objective of Study
Need of the study
The need of study arises for learning the variables available that distinguish the mutual
fund of two companies.
To know the risk & return associated with mutual fund.
To choose best company for mutual investment between HDFC & ICICI.
To project mutual fund as the „productive avenue for investing activities.
Scope of the study
To make people aware about concept of mutual fund.
To provide information regarding advantages and demerits of mutual fund.
To advice where to invest or not to invest.
To provide information regarding types of mutual fund which is beneficial for
whom.
Objectives
To analysis which provides better returns from HDFC &ICICI.
To analyze the concept and parameters of mutual fund.
To know how many people are satisfied by their investment (in HDFC or ICICI).
To know people behavior regarding risk factor involved in mutual fund.

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CHAPTER 5
Why Select Mutual Fund?
Why Select Mutual Fund?
The risk return trade-off indicates that if investor is willing to take higher risk
thenCorrespondingly he can expect higher returns and vise versa if he pertains to lower risk
instruments, which would be satisfied by lower returns. For example, if an investors opt for
bank FD, which provide moderate return with minimal risk. But as he moves ahead to invest
in capital protected funds and the profit-bonds that give out more return which is slightly
higher as compared to the bank deposits but the risk involved also increases in the same
proportion.
Thus investors choose mutual funds as their primary means of investing, as Mutual funds
provide professional management, diversification, convenience and liquidity. That doesn’t
mean mutual fund investments risk free.
This is because the money that is pooled in are not invested only in debts funds which are less
risky but are also invested in the stock markets which involves a higher risk but can expect
higher returns. Hedge fund involves a very high risk since it is mostly traded in the
derivatives market which is considered very volatile.

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CHAPTER 6
Advantages & Disadvantages of Mutual Funds
ADVANTAGES OF MUTUAL FUNDS:
If mutual funds are emerging as the favorite investment vehicle, it is because of the many
advantages they have over other forms and the avenues of investing, particularly for the
investor who has limited resources available in terms of capital and the ability to carry out
detailed research and market monitoring. The following are the major advantages offered by
mutual funds to all investors:
1. Portfolio Diversification:
Each investor in the fund is a part owner of all the fund’s assets, thus enabling him tohold a
diversified investment portfolio even with a small amount of investment that would otherwise
require big capital.
2. Professional Management:
Even if an investor has a big amount of capital available to him, he benefits from
theprofessional management skills brought in by the fund in the management of the
investor’s portfolio. The investment management skills, along with the needed research into
available investment options, ensure a much better return than what an investor can manage
on his own.Few investors have the skill and resources of their own to succeed in today’s fast
moving, global and sophisticated markets.
3. Reduction/Diversification of Risk:
When an investor invests directly, all the risk of potential loss is his own, whether heplaces a
deposit with a company or a bank, or he buys a share or debenture on his own or in any other
from. While investing in the pool of funds with investors, the potential losses are also shared
with other investors. The risk reduction is one of the most important benefits of a collective
investment vehicle like the mutual fund.
4. Reduction of Transaction Costs:

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What is true of risk as also true of the transaction costs. The investor bears all the costs of
investing such as brokerage or custody of securities. When going through a fund, he has the
benefit of economies of scale; the funds pay lesser costs because of larger volumes, a benefit
passed on to its investors.
5. Liquidity:
Often, investors hold shares or bonds they cannot directly, easily and quickly sell. When they
invest in the units of a fund, they can generally cash their investments any time, by selling
their units to the fund if open-ended, or selling them in the market if the fund is close-end.
Liquidity of investment is clearly a big benefit.
6. Convenience and Flexibility:
Mutual fund management companies offer many investor services that a direct
marketinvestor cannot get. Investors can easily transfer their holding from one scheme to the
other; get updated market information and so on.
7. Tax Benefits:
Any income distributed after March 31, 2002 will be subject to tax in the assessment of all
Unit holders. However, as a measure of concession to Unit holders of open-ended equity
oriented funds, income distributions for the year ending March 31, 2003, will be taxed at a
concessional rate of 10.5%.
In case of Individuals and Hindu Undivided Families a deduction upto Rs. 9,000 from the
Total Income will be admissible in respect of income from investments specified in Section
80L, including income from Units of the Mutual Fund. Units of the schemes are not subject
to Wealth-Tax and Gift-Tax.
8. Choice of Schemes:
Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
9. Well Regulated:
All Mutual Funds are registered with SEBI and they function within the provisions of strict
regulations designed to protect the interests of investors. The operations of Mutual Funds are
regularly monitored by SEBI.
10. Transparency:

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You get regular information on the value of your investment in addition to disclosure on the
specific investments made by your scheme, the proportion invested in each class of assets and
the fund manager's investment strategy and outlook.
DISADVANTAGES OF INVESTING THROUGH MUTUAL
FUNDS:
1. No Control Over Costs:
An investor in a mutual fund has no control of the overall costs of investing. The investor
pays investment management fees as long as he remains with the fund, albeit in return for the
professional management and research. Fees are payable even if the value of his investments
is declining. A mutual fund investor also pays fund distribution costs, which he would not
incur in direct investing. However, this shortcoming only means that there is a cost to obtain
the mutual fund services.
2. No Tailor-Made Portfolio:
Investors who invest on their own can build their own portfolios of shares and bonds and
other securities. Investing through fund means he delegates this decision to the fund
managers.
The very-high-net-worth individuals or large corporate investors may find this to be a
constraint in achieving their objectives. However, most mutual fund managers help investors
overcome this constraint by offering families of funds- a large number of different schemes-
within their own management company. An investor can choose from different investment
plans and constructs a portfolio to his choice.
3. Managing A Portfolio of Funds:
Availability of a large number of funds can actually mean too much choice for the
investor. He may again need advice on how to select a fund to achieve his objectives, quite
similar to the situation when he has individual shares or bonds to select.
4. The Wisdom of Professional Management:
That's right, this is not an advantage. The average mutual fund manager is no better at
picking stocks than the average nonprofessional, but charges fees.

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5. No Control:
Unlike picking your own individual stocks, a mutual fund puts you in the passenger seat of
somebody else's car
6. Dilution:
Mutual funds generally have such small holdings of so many different stocks that
insanely great performance by a fund's top holdings still doesn't make much of a difference in
a mutual fund's total performance.
7. Buried Costs:
Many mutual funds specialize in burying their costs and in hiring salesmen who do not
make those costs clear to their clients.

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CHAPTER 7
Types of Mutual Funds Schemes in India
TYPES OF MUTUAL FUNDS SCHEMES IN INDIA
Wide variety of Mutual Fund Schemes exists to cater to the needs such as financialposition,
risk tolerance and return expectations etc. thus mutual funds has Variety of flavors, being a
collection of many stocks, an investor can go for picking a mutual fund might be easy. There
are over hundreds of mutual funds scheme to choose from. It is easier to think of mutual
funds in categories, mentioned below.

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A). BY STRUCTURE
1. Open - Ended Schemes:
An open-end fund is one that is available for subscription all through the year. These do not
have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value
("NAV") related prices. The key feature of open-end schemes is liquidity.
2. Close - Ended Schemes:
A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15
years. The fund is open for subscription only during a specified period. Investors can invest
in the scheme at the time of the initial public issue and thereafter they can buy or sell the
units of the scheme on the stock exchanges where they are listed. In order to provide an exit
route to the investors, some close-ended funds give an option of selling back the units to the
Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate
that at least one of the two exit routes is provided to the investor.
3. Interval Schemes:
Interval Schemes are that scheme, which combines the features of open-ended and close
ended schemes. The units may be traded on the stock exchange or may be open for sale or
redemption during pre-determined intervals at NAV related prices.
B). BY NATURE
1. Equity Fund:
These funds invest a maximum part of their corpus into equities holdings. The structure of the
fund may vary different for different schemes and the fund manager’s outlook on different
stocks. The Equity Funds are sub-classified depending upon their investment objective, as
follows:
Diversified Equity Funds
Mid-Cap Funds
Sector Specific Funds
Tax Savings Funds (ELSS)
Equity investments are meant for a longer time horizon; thus Equity funds rank high on the
risk-return matrix.

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2. Debt Funds:
The objective of these Funds is to invest in debt papers. Government authorities, private
companies, banks and financial institutions are some of the major issuers of debt papers. By
investing in debt instruments, these funds ensure low risk and provide stable income to the
investors. Debt funds are further classified as:
Gilt Funds: Invest their corpus in securities issued by Government, popularly known as
Government of India debt papers. These Funds carry zero Default risk but are associated with
Interest Rate risk. These schemes are safer as they invest in papers backed by Government.
Income Funds: Invest a major portion into various debt instruments such as bonds,
corporate debentures and Government securities.
MIPs: Invests maximum of their total corpus in debt instruments while they takeminimum
exposure in equities. It gets benefit of both equity and debt market. Thesescheme ranks
slightly high on the risk-return matrix when compared with other debtschemes.
Short Term Plans (STPs): Meant for investment horizon for three to six months. These
funds primarily invest in short term papers like Certificate of Deposits (CDs) and
Commercial Papers (CPs). Some portion of the corpus is also invested in corporate
debentures.
Liquid Funds: Also known as Money Market Schemes, these funds provide easyliquidity
and preservation of capital. These schemes invest in short-term instruments like Treasury
Bills, inter-bank call money market, CPs and CDs. These funds are meant for short-term cash
management of corporate houses and are meant for an investment horizon of 1day to 3
months. These schemes rank low on risk-return matrix and are considered to be the safest
amongst all categories of mutual funds.
3. Balanced Funds:
As the name suggest they, are a mix of both equity and debt funds. They invest in
bothequities and fixed income securities, which are in line with pre-defined investment
objective of the scheme. These schemes aim to provide investors with the best of both the
worlds. Equity part provides growth and the debt part provides stability in returns.
Further the mutual funds can be broadly classified on the basis of investment parameter
viz,

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Each category of funds is backed by an investment philosophy, which is pre-defined in the
objectives of the fund. The investor can align his own investment needs with the funds
objective and invest accordingly.
C). BY INVESTMENT OBJECTIVE:
Growth Schemes:
Growth Schemes are also known as equity schemes. The aim of these schemes is toprovide
capital appreciation over medium to long term. These schemes normally invest a major part
of their fund in equities and are willing to bear short-term decline in value for possible future
appreciation.
Income Schemes:
Income Schemes are also known as debt schemes. The aim of these schemes is to provide
regular and steady income to investors. These schemes generally invest in fixed income
securities such as bonds and corporate debentures. Capital appreciation in such schemes may
be limited.
Balanced Schemes:
Balanced Schemes aim to provide both growth and income by periodically distributing a part
of the income and capital gains they earn. These schemes invest in both shares and fixed
income securities, in the proportion indicated in their offer documents (normally 50:50).
Money Market Schemes:
Money Market Schemes aim to provide easy liquidity, preservation of capital andmoderate
income. These schemes generally invest in safer, short-term instruments, such as treasury
bills, certificates of deposit, commercial paper and inter-bank call money.
Load Funds:
A Load Fund is one that charges a commission for entry or exit. That is, each time youbuy or
sell units in the fund, a commission will be payable. Typically, entry and exit loads range
from 1% to 2%. It could be worth paying the load, if the fund has a good performance
history.

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No-Load Funds:
A No-Load Fund is one that does not charge a commission for entry or exit. That is,
nocommission is payable on purchase or sale of units in the fund. The advantage of a no load
fund is that the entire corpus is put to work.
OTHER SCHEMES
Tax Saving Schemes:
Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to
time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings
Scheme (ELSS) are eligible for rebate.
Index Schemes:
Index schemes attempt to replicate the performance of a particular index such as the BSE
Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks that
constitute the index. The percentage of each stock to the total holding will be identical to the
stocks index weightage. And hence, the returns from such schemes would be more or less
equivalent to those of the Index.
Sector Specific Schemes:
These are the funds/schemes which invest in the securities of only those sectors or industries
as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer
Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the
performance of the respective sectors/industries. While these funds may give higher returns,
they are riskier compared to diversified funds. Investors need to keep a watch on the
performance of those sectors/industries and must exit at an appropriate time.
NET ASSET VALUE (NAV):
Since each owner is a part owner of a mutual fund, it is necessary to establish the value of his
part. In other words, each share or unit that an investor holds needs to be assigned a value.
Since the units held by investor evidence the ownership of the fund’s assets, the value of the
total assets of the fund when divided by the total number of units issued by the mutual fund
gives us the value of one unit. This is generally called the Net Asset Value (NAV) of one
unit or one share. The value of an investor’s part ownership is thus determined by the NAV
of the number of units held.

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Calculation of NAV:
Let us see an example. If the value of a fund’s assets stands at Rs. 100 and it has 10investors
who have bought 10 units each, the total numbers of units issued are 100, and the valueof one
unit is Rs. 10.00 (1000/100). If a single investor in fact owns 3 units, the value of
hisownership of the fund will be Rs. 30.00(1000/100*3). Note that the value of the
fund’sinvestments will keep fluctuating with the market-price movements, causing the Net
Asset Valuealso to fluctuate. For example, if the value of our fund’s asset increased from Rs.
1000 to 1200,the value of our investors holding of 3 units will now be (1200/100*3) Rs. 36.
The investmentvalue can go up or down, depending on the markets value of the fund’s assets.

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CHAPTER 8
Working of Mutual Funds
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 on to 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 or NAV of the unit. NAV
is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the
net asset value of the scheme divided by the number of units outstanding on the valuation
date. Mutual fund companies provide daily net asset value of their schemes to their investors.
NAV is important, as it will determine the price at which you buy or redeem the units of a
scheme. Depending on the load structure of the scheme, you have to pay entry or exit load.

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STRUCTURE OF A MUTUAL FUND:
India has a legal framework within which Mutual Fund have to be constituted. In Indiaopen
and close-end funds operate under the same regulatory structure i.e. as unit Trusts. A Mutual
Fund in India is allowed to issue open-end and close-end schemes under a common legal
structure. The structure that is required to be followed by any Mutual Fund in India is laid
down under SEBI (Mutual Fund) Regulations, 1996.
The Fund Sponsor:
Sponsor is defined under SEBI regulations as any person who, acting alone or incombination
of another corporate body establishes a Mutual Fund. The sponsor of the fund is akin to the
promoter of a company as he gets the fund registered with SEBI. The sponsor forms a trust
and appoints a Board of Trustees. The sponsor also appoints the Asset Management
Company as fund managers. The sponsor either directly or acting through the trustees will
also appoint a custodian to hold funds assets. All these are made in accordance with the
regulation and guidelines of SEBI.
As per the SEBI regulations, for the person to qualify as a sponsor, he must contribute at least
40% of the net worth of the Asset Management Company and possesses a sound financial
track record over 5 years prior to registration.

Page | 29
Mutual Funds as Trusts:
A Mutual Fund in India is constituted in the form of Public Trust Act, 1882. The
Fundsponsor acts as a settlor of the Trust, contributing to its initial capital and appoints a
trustee to hold the assets of the trust for the benefit of the unit-holders, who are the
beneficiaries of the trust. The fund then invites investors to contribute their money in
common pool, by scribing to “units” issued by various schemes established by the Trusts as
evidence of their beneficial interest in the fund.
It should be understood that the fund should be just a “pass through” vehicle. Under the
Indian Trusts Act, the trust of the fund has no independent legal capacity itself, rather it is the
Trustee or the Trustees who have the legal capacity and therefore all acts in relation to the
trusts are taken on its behalf by the Trustees. In legal parlance the investors or the unit-
holders are the beneficial owners of the investment held by the Trusts, even as these
investments are held in the name of the Trustees on a day-to-day basis. Being public trusts,
Mutual Fund can invite any number of investors as beneficial owners in their investment
schemes.
Trustees:
A Trust is created through a document called the Trust Deed that is executed by the fund
sponsor in favour of the trustees. The Trust- the Mutual Fund – may be managed by a board
of trustees- a body of individuals, or a trust company- a corporate body. Most of the funds in
India are managed by Boards of Trustees. While the boards of trustees are governed by the
Indian Trusts Act, where the trusts are a corporate body, it would also require to comply with
the Companies Act, 1956. The Board or the Trust company as an independent body, acts as a
protector of the of the unit-holders interests. The Trustees do not directly manage the
portfolio of securities. For this specialist function, the appoint an Asset Management
Company. They ensure that the Fund is managed by ht AMC as per the defined objectives
and in accordance with the
trusts deeds and SEBI regulations.
The Asset Management Companies:
The role of an Asset Management Company (AMC) is to act as the investment manager of
the Trust under the board supervision and the guidance of the Trustees. The AMC is required
to be approved and registered with SEBI as an AMC. The AMC of a Mutual Fund must have
a net worth of at least Rs. 10 Crores at all times. Directors of the AMC, both independent and

Page | 30
no independent, should have adequate professional expertise in financial services and should
be individuals of high morale standing, a condition also applicable to other key personnel of
the AMC. The AMC cannot act as a Trustee of any other Mutual Fund. Besides its role as a
fund manager, it may undertake specified activities such as advisory services and financial
consulting,provided these activities are run independent of one another and the AMC’s
resources (such as personnel, systems etc.) are properly segregated by the activity. The AMC
must always act in the interest of the unit-holders and reports to the trustees with respect to its
activities.
Custodian and Depositories:
Mutual Fund is in the business of buying and selling of securities in large volumes.Handling
these securities in terms of physical delivery and eventual safekeeping is a specialized
activity. The custodian is appointed by the Board of Trustees for safekeeping of securities or
participating in any clearance system through approved depository companies on behalf of
the Mutual Fund and it must fulfill its responsibilities in accordance with its agreement with
the Mutual Fund. The custodian should be an entity independent of the sponsors and is
required to be registered with SEBI. With the introduction of the concept of dematerialization
of shares the dematerialized shares are kept with the Depository participant while the
custodian holds the physical securities. Thus, deliveries of a fund’s securities are given or
received by a custodian or a depository participant, at the instructions of the AMC, although
under the overall direction and responsibilities of the Trustees.
Bankers:
A Fund’s activities involve dealing in money on a continuous basis primarily with respect to
buying and selling units, paying for investment made, receiving the proceeds from sale of the
investments and discharging its obligations towards operating expenses. Thus the Fund’s
banker plays an important role to determine quality of service that the fund gives in timely
delivery of remittances etc.
Transfer Agents:
Transfer agents are responsible for issuing and redeeming units of the Mutual Fund and
provide other related services such as preparation of transfer documents and updating
investor records. A fund may choose to carry out its activity in-house and charge the scheme
for the service at a competitive market rate. Where an outside Transfer agent is used, the fund

Page | 31
investor will find the agent to be an important interface to deal with, since all of the investor
services that a fund provides are going to be dependent on the transfer agent.
REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA:
The structure of mutual funds in India is guided by the SEBI. Regulations,
1996.Theseregulations make it mandatory for mutual fund to have three structures of sponsor
trustee and asset Management Company. The sponsor of the mutual fund and appoints the
trustees. The trustees are responsible to the investors in mutual fund and appoint the AMC for
managing the investment portfolio. The AMC is the business face of the mutual fund, as it
manages all the affairs of the mutual fund. The AMC and the mutual fund have to be
registered with SEBI.

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CHAPTER 9
Mutual Fund Companies in India
The concept of mutual funds in India dates back to the year 1963. The era between 1963 and
1987 marked the existence of only one mutual fund company in India with Rs. 67bn assets
under management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By
the end of the 80s decade, few other mutual fund companies in India took their position in
mutual fund market.
The new entries of mutual fund companies in India were SBI Mutual Fund, CanbankMutual
Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual
Fund.
The succeeding decade showed a new horizon in Indian mutual fund industry. By the end of
1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds started
penetrating the fund families. In the same year the first Mutual Fund Regulations came into
existence with re-registering all mutual funds except UTI. The regulations were further given
a revised shape in 1996.
Kothari Pioneer was the first private sector mutual fund company in India which has now
merged with Franklin Templeton. Just after ten years with private sector player’s penetration,
the total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund companies in India.
Major Mutual Fund Companies in India
 Reliance Mutual Fund
 Birla Sun Life Mutual Fund
 Standard Chartered Mutual Fund
 Bank of Baroda Mutual Fund
 Franklin Templeton India Mutual Fund
 HDFC Mutual Fund
 Morgan Stanley Mutual Fund India
 HSBC Mutual Fund

Page | 33
 Escorts Mutual Fund
 ING Vysya Mutual Fund
 Alliance Capital Mutual Fund
 Prudential ICICI Mutual Fund
 Benchmark Mutual Fund
 State Bank of India Mutual
 Fund Canbank Mutual Fund
 Tata Mutual Fund
 Unit Trust of India Mutual Fund
 LIC Mutual Fund

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FUTURE PROSPECT OF MUTUAL FUNDS IN INDIA
Financial experts believe that the future of Mutual Funds in India will be verybright. It has
been estimated that by March-end of 2020, the mutual fund industry of India will reach Rs
40,90,000 crore, taking into account the total assets of the Indian commercial banks. In the
coming 10 years the annual composite growth rate is expected to go up by 13.4%.
100% growth in the last 6 years.
Number of foreign AMC's are in the queue to enter the Indian markets like Fidelity
Investments, US based, with over US$1trillion assets under management worldwide.
Our saving rate is over 23%, highest in the world. Only channelizing these savings
in mutual funds sector is required.
We have approximately 29 mutual funds which is much less than US having more
than 800. There is a big scope for expansion.
'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are
concentrating on the 'A' class cities. Soon they will find scope in the growing cities.
Mutual fund can penetrate rural like the Indian insurance industry with simple and
limited products.
SEBI allowing the MF's to launch commodity mutual funds.
Emphasis on better corporate governance.
Trying to curb the late trading practices.
Introduction of Financial Planners who can provide need based advice.
Looking at the past developments and combining it with the current trends it can beconcluded
that the future of Mutual Funds in India has lot of positive things to offer to its investors.

Page | 35
CHAPTER 10
Research Methodology
This Report is based on primary as well as secondary data, however primary data
collectionwas given more important since it is overhearing factor in attitude studies.
One of the most important users of Research Methodology is that it helps in identifying
theproblem, collecting, analyzing the required information or data and providing an
alternativesolution to the problem. It also helps in collecting the vital information that is
required bythe Top Management to assist them for the better decision making both day to
daydecisions and critical ones.
Research Design: Descriptive Design
Data Collection Method: Survey Method
Universe:Maulana Azad University
Sampling Method: The sample was collected through personal visits, formally andinformal
talks and through filling up the Questionnaire prepared. The data has been
analyzed by using mathematical or statistical tools.
Sample Size: 100 respondents
Sampling Unit: Businessmen, Government Servant, Retired Individuals
Data Source: Primary data
Data Collection Instrument: Structured Questionnaire
Sample Design: Data has been presented with the help of Bar Graph, Pie Chart, and
Line Graph etc.
Duration of The Study: The study was carried out for a period of two months, from 20th
Mar 2019.

Page | 36
CHAPTER 11
Data Analysis & Interpretation
1. Analyzing to according to Age
Interpretation - Here, it is being found that most of the investors i.e,35% of the
investors who invest in Mutual Fund lies in between the age group of 36-40, they are more
reluctant as well as experienced in this field of Mutual Fund. Then the Second highest age
group lies in between the age group of 41-45 (22%), they are also aware of the benefits in
investing in mutual fund. The least interested group is the Youth Generations.

Page | 37
2. Analyzing according to Qualification
Interpretation - Out of my survey of 100 people, 71% of the investors are Graduates
and Post Graduates and 16.67% are Under Graduates and Others, around 12.5%, which may
include persons who have passed their 10th standard or 12th standard invests in Mutual
Funds.
3. Analyzing according to Occupation
Interpretation - Here it is amazed to see that around 46% of the investment is been
invested by the persons working in Private sectors, according to them investing in Mutual
Funds is more safer as well as more gainer.Then we find that the businessmen of around
25%gives more preference in investing in mutual funds, they think that investing in mutual
fund is better than investing in shares as well as Post office. Next we see that the persons
working in Government sectors of around 24% only invests in Mutual Fund.

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4. Analyzing according to Monthly Family Income
Interpretation - Here, we find that investors of around 43% with the monthly income
of Rs. >30000 are the most likely to invest in Mutual fund, than any other income group.
5. Analyzing data according to factors seen before investing
Interpretation - As it can be clearly Stated from the above Diagram that investors
before investing, the main criteria that they used to give more Preference is Low Risk.
According to them, if a scheme is low risk, it may or may not give a very good return, but
still 56% of the investors choose low risk as the option while investing in Mutual Funds.
Then we see that 27% of the investors take High return as one of their most important
criteria.

Page | 39
6. Analyzing data according to mode of investment
Interpretation - It can be clearly stated from the above Figure that 82% of the
investors like to invest in SIP, as the investor feels that they are more comfortable to save via
SIP than the Long term.While 18% of the investors find SIP as very burdensome, and they
are more reluctant to save in Long term investment.
7. Analyzing data according to objective of investment
Interpretation- Here we see that 36% of the investor’s objectives are to preserve the
principal amount, so that it can be used as a savings for the future period.While 22%
investors invest to get derive their current income through investing in Mutual Funds While
15% and 17% of the investors invest to get a conservative as well as aggressive growth.

Page | 40
8. Analyzing data according to awareness about Mutual Fund
Interpretation -. From The total lot of 100 people, 96 people are actually aware of the
fact of Mutual fund and are regular investors of Mutual Funds.4 People were there who have
just heard the name or rather are just aware of the fact of existence of the word called Mutual
Fund, but doesn’t know anything else about Mutual Funds.
9. Analyzing data according to from where they came to know
about Mutual Fund.
Interpretation - Here from the Line Graph it can be clearly stated that around 46% of
the investors came to know the benefits of Mutual Fund from Financial Advisors. According
to the suggestions given by the financial advisors, people use to choose Mutual Funds
Scheme.Then Secondly,24% and 21% of the people used to know from Advertisement and
Peer group respectively.Lastly 9% of the investors do invests after being intimated by the
Banks about the benefits of Mutual Funds.

Page | 41
10.Analyzing data according to investors choice of investing in
different Mutual Fund Companies.
Interpretation - From this above Pie Chart it can be clearly stated that 45%, 17%of the
people like to invest in large cap companies where return is comparatively less but risk is low
thus they invest in Reliance, SBI respectively.15%, 10% of the people like to invest in
Mutual Fund Companies like HDFC, UTI, etc. where risk is slightly higher than the above
two mentioned companies as well as return is also slightly high 13% of the investors like to
invest in the Small Cap’s and Mid Cap’s companies.

Page | 42
CHAPTER 12
FINDINGS
Through this Project the results that was derived are-
People who lie under the age group of 36-40 have more experience and are
more interested in investing in Mutual Funds.
There was a lot of lack of awareness or ignorance, that’s why out of 200 people,
120 people have invested in Mutual Fund and 80 people is unaware of investing
in Mutual Funds.
Generally, People employed in Private sectors and Businessman are more likely
to invest in Mutual Funds, then other people working in other professions.
Generally, investors whose monthly income is above Rs. 20001-30000 are morelikely to
invest their income in Mutual Fund, to preserve their savings of at leastmore than 20%.
People generally like to save their savings in Mutual Fund, Fixed Deposits andSavings
Account.
Many people came to know about Mutual Fund from Financial Advisors,Advertisement as
well as from their Peer group, and they generally invest in theMutual Fund by taking advices
from their Legal Advisors.
Investors generally like to invest in Large Cap Companies like Reliance, SBI,etc. to minimize
their risk.
The most popular medium of investing in Mutual Fund is through SIP andmoreover people
like to invest in Equity Fund though it is a risky game.
The main Objective of most of the Investors is to preserve their Income.

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CHAPTER 13
Limitations/ Recommendations
Limitations: - There are some limitations of my study, those are asFollowing: -
Sample limitation: - which sample is taken by me is very small in size toCompare mutual
fund of two companies.
Reliability: - The data collected by me is not much reliable because manyinvestors chosen by
me have invested in HDFC.
Parameters: - All the parameters have not been taken.
Time limitation: - I had the shortage of time because of that I was not able todo my study in a
good manner?
Awareness: - Investors chosen for study are not fully aware of all the termsand conditions
related to mutual fund. So, it is very difficult to construct rightinformation from them.
Recommendations / Suggestions: - In my study I have found some limitations.
For thatI can suggest both companies following suggestions or areas of improvement: -
ICICI bank should try to provide better returns to its investors as compare toHDFC.
Both companies should try to invest in better securities for better profits.
Both companies should try to satisfy their customer by better customer serviceor by
improving customer relationship management.
Companies should try to make people initiative towards risk.
Investors should be made fully aware of the concept of mutual fund & all theterms and
conditions.
It should more emphasize in advertising, as it is the mostPowerful tool to position ant brand
in the mindsets of customers

Page | 44
CHAPTER 14
Conclusion
Mutual Funds now represent perhaps most appropriate investment opportunity formost
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.
The stock market has been rising for over three years now. This in turn has not onlyprotected
the money invested in funds but has also to helped grow these investments.
This has also instilled greater confidence among fund investors who are investingmore into
the market through the MF route than ever before.
Reliance India mutual funds provide major benefits to a common man who wants tomake his
life better than previous.The mutual fund industry as a whole gets less than 2 per cent of
household savingsagainst the 46 per cent that go into bank deposits. Some fund managers say
this onlyindicates 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.
To conclude we can say that mutual fund is a very much profitable tool forinvestment
because of its low cost of acquiring fund, tax benefit, and diversification ofprofits &
reduction of risk. Many investors who have invested in mutual fund haveinvested with HDFC
and them also thinks that it provides better returns than ICICI.There is also an effect of age
on mutual fund investors like; old people & widows want regular returns than capital
appreciation. Companies can adopt new techniques to attract more & more investors. In my
study I was supposed to do comparative analyses the mutual fund of HDFC &ICICI and I had

Page | 45
found that people consider HDFC better than ICICI. But ICICIhave also respondents and it
can increase its investors by improving itself in some terms
To conclude we can say mutual fund is a best investment vehicle for old &widow, as well as
to those who want regular returns on their investment.
Mutual fund is also better and preferable for those who want their capitalappreciation.
Both the companies are doing considerable achievements in mutual fund industry.
There are also so many competitors involved those effects on both companies.

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CHAPTER 15
Bibliography& References
BIBLIOGRAPHY: -
 Books
 ICICI and HDFC Brochure
 Other AMCs Data
 Fact Sheet
 Websites: -
www.wiki.answers.com
www.monycontrol.com
www.hdfc.com
www.icici.com
www.google.com

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