1NZ18MBA47.pdf

PROJECT REPORT
on
A STUDY ON MUTUAL FUNDS
BY
Manjunath Nagur
1NZ18MBA47
Submitted to
DEPARTMENT OF MANAGEMENT STUDIES
NEW HORIZON COLLEGE OF ENGINEERING,
OUTER RING ROAD, MARATHALLI,
BENGALURU
In partial fulfilment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
Under the guidance of
Lokesh K N
Assistant Professor
2018 - 2020

CERTIFICATE
This is to certify that Manjunath Nagur bearing USN 1NZ18MBA47,
is a bonafide student of Master of Business Administration course of the
Institute 2018-20, autonomous program, affiliated to Visvesvaraya
Technological University, Belgaum. Project report on “A Study on
Mutual Funds” is prepared by him/her under the guidance of Lokesh
K N, in partial fulfilment of requirements for the award of the degree of
Master of Business Administration of Visvesvaraya Technological
University, Belgaum Karnataka.
Signature of Internal Guide Signature of HOD Principal
Name of the Examiners with affiliation Signature with date
1. External Examiner
2. Internal Examiner

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DECLARATION
I, Manjunath Nagur, hereby declare that the project report on “A Study on Mutual Funds”
with reference to “HDFC AMC Ltd.” prepared by me under the guidance of Lokesh K N,
faculty of M.B.A Department, New Horizon College of Engineering.
I also declare that this project report is towards the partial fulfilment of the university
regulations for the award of the degree of Master of Business Administration by Visvesvaraya
Technological University, Belgaum.
I have undergone an industry project for a period of Eight weeks. I further declare that this
report is based on the original study undertaken by me and has not been submitted for the award
of a degree/diploma from any other University / Institution.
Signature of Student
Place:
Date:

HDFC Asset Management Company Limited
A Joint Venture with Standard Life Investments
CIN- L65991MH1999PLC123027
Registered Office : “HDFC House”, 3rd
Floor, H.T. Parekh Marg. 165-166, Backbay Reclamation, Churchgate, Mumbai-400 020
Tel.: 022 – 6631 6631 Fax: 022 – 6658 0203 Website: www.hdfcfund.com
HDFC AMC Ltd. -Business Centre
1st Floor, Skanda Complex, 51,
Hesaraghatta Main Road,
Dasarahalli Peenya,
Bangalore - 560057
Ph: 180030106767
servicesjalahalli@hdfcfund.com
CERTIFICATE
This is to Certify that Mr. Manjunath Nagur (Reg. No. 1NZ18MBA47), MBA Student of
New Horizon College of Engineering, Bangalore has successfully completed ‘A
study on Mutual Funds’ at our office in partial fulfillment of the requirement for the
award of his MBA degree. The period of the study was from 23 December 2019 to 15
February 2020.
During his studies, he has evinced keen interest and his conduct and character were
satisfactory.
We wish him all the success in his future endeavors.
Vijayakumar
Assistant Manager

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ACKNOWLEDGEMENT
The successful completion of the project would not have been possible without
the guidance and support of many people. I express my sincere gratitude to
Vijaykumar, Assistant Manager, HDFC AMC Ltd., Bengaluru, for allowing
to do my project at HDFC AMC Ltd.
I thank the staff of HDFC AMC Ltd., Bengaluru for their support and guidance
and helping me in completion of the report.
I am thankful to my internal guide Lokesh K N, for his constant support and
inspiration throughout the project and invaluable suggestions, guidance and also
for providing valuable information.
Finally, I express my gratitude towards my parents and family for their
continuous support during the study.
MANJUNATH NAGUR
1NZ18MBA47

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TABLE OF CONTENTS
SL. NUMBER CONTENTS PAGE NUMBERS
1 Executive Summary 4
2 Theoretical Background Of The Study 5-39
3 Industry Profile &Company Profile 40-48
4 Application Of Theoretical Framework 49-61
5
Analysis And Interpretation Of Financial
Statements And Reports
62-73
6
Learning Experience- Findings,
Suggestions And Conclusion
74-77
7 Bibliography 78

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CHAPTER 1
THEORETICAL BACKGROUND OF THE STUDY

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Executive Summary
The performance evaluation of mutual fund is a vital matter of concern to the fund managers,
investors, and researchers alike. The core competence of the company is to meet objectives and
the needs of the investors and to provide optimum return for their risk. This study tries to find
out the risk and return allied with the mutual funds.
This project paper is segmented into three sections to explore the link between conventional
subjective and statistical approach of Mutual Fund analysis. To start with, the first section deals
with the introductory part of the paper by giving an overview of the Mutual fund industry and
company profile.
This section also talks about the theory of portfolio analysis and the different measures of risk
and return used for the comparison.
The second section details on the need, objective, and the limitations of the study. It also
discusses about the sources and the period for the data collection. It also deals with the data
interpretation and analysis part wherein all the key measures related to risk and return are done
with the interpretation of the results.
In the third section, an attempt is made to analyse and compare the performance of the equity
mutual fund. For this purpose β-value, standard deviation, and risk adjusted performance
measures such as Sharpe ratio, Treynor measure, Jenson Alpha, and Fema measure have been
used.
The portfolio analysis of the selected fund has been done by the measure return for the holding
period.
At the end, it illustrates the suggestions and findings based on the analysis done in the previous
sections and finally it deals with conclusion part.

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A Mutual Fund is a trust that pools together the funds of various speculators who share a typical
budgetary objective. The store chief puts this pool of cash in securities - extending from offers
and debentures to currency advertise instruments or in a blend of value and obligation,
contingent on the targets of the plan. The store directors are experts who track the market on
an on-running premise and along these lines with their blend of expert capability and market
learning, they are preferable set over the normal financial specialist to comprehend the business
sectors. Likewise another component of MF's is that they put resources into number of stocks
as well as debentures in light of which the related dangers are extraordinarily diminished. At
the point when contrasted with direct interests in the capital market, Mutual Funds cost less.
This is because of funds in business costs, demat costs, vault costs and so forth. Another
advantage which can be taken a gander at is that Investments in Mutual Funds are totally fluid
and can be reclaimed at their Net Assets Value-related cost on any working day and one can
generally approach state-of-the-art data on the estimation of their interest notwithstanding the
total arrangement of speculations, the extent allotted to various resources and the reserve chief's
venture procedure. Besides all Mutual Funds are enlisted and controlled by SEBI and capacity
inside the arrangements and guidelines that ensure the premiums of financial specialists. AMFI
is the supervisory body of the Mutual Funds industry.
1.1 Problem statement
The investment advisory division needs to know who the potential customers for selling Mutual
Funds are and wants to develop Model Portfolios for clients based on their profile and
requirements. Also identifying the major preference of investors between lump sum
investments and SIPs.
1.2 Objectives
1. To understand and analyse the current popularity of Mutual Funds among the customers
and identify the potential customer group.
2. To develop model portfolios based on clients profile and requirements.

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3. To understand selling process involved in selling mutual funds.
4. To do a comparative analysis between Lump sum investments & Systematic Investment
Plan.
5. To provide viable suggestions for effective Portfolio Management.
1.3 Relevance
This analysis would help the company to gauge who its potential customers are and how the
investment advisory division can target them. The funds picked by an average investor are
those that are heavily advertised and sell aggressively. Most of them buy on brand names and
not on basis of fundamental analysis or professional information. Thus this analysis would be
helpful in this regard.

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Literature Review
HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY
The common store industry in India began in 1963 with the development of Unit Trust
of India, at the activity of the Government of India and Reserve Bank the. The history
of shared assets in India can be comprehensively partitioned into four unmistakable
stages by AMFI1
First Phase – 1964-87 (Growth of Unit Trust of India)
Unit Trust of India (UTI) was built up on 1963 by an Act of Parliament. It was set up
by the Reserve Bank of India and worked under the Regulatory and managerial control
of the Reserve Bank of India. In 1978 UTI was de-connected from the RBI and the
Industrial Development Bank of India (IDBI) assumed control over the administrative
and authoritative control instead of RBI. The main plan propelled by UTI was Unit
Scheme 1964. Toward the finish of 1988 UTI had Rs.6, 700 crores of benefits under
administration.
Second Phase – 1987-1993 (Entry of Public Sector Funds)
1987 denoted the passage of non-UTI, open part shared supports set up by open area
banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non-UTI Mutual Fund built
up in June 1987 pursued by Can bank Mutual Fund (Dec 87), Punjab National Bank
Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90),
Bank of Baroda Mutual Fund (Oct 92). LIC built up its common reserve in June 1989
while GIC had set up its shared store in December 1990. Toward the finish of 1993, the
shared reserve industry had resources under administration of Rs.47,004 crores.

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Third Phase – 1993-1996 (Entry of Private Sector Funds)
With the passage of private part assets in 1993, another time began in the Indian
common store industry, giving the Indian financial specialists a more extensive decision
of reserve families and expanding rivalry to the current open segment reserves. Remote
store the executives organizations were permitted to work shared assets. These private
store organizations carried with them most recent item advancements, speculation the
executives methods and speculator overhauling innovation. Other critical factor was the
improvement of SEBI's administrative system for Indian Mutual Fund Industry.
Fourth Phase-1996-1999 (Growth and SEBI Regulation)
Since 1996 the common store Industry in India saw more tightly guideline and higher
development. It scaled new statures regarding activation of assets and number of
players. The past UTI will fully received SEBI rules for its new plans. Additionally the
financial plan of Union Government in 1999 made a major stride in exempting all
common reserve profits from Income Tax in the hands of speculators.
Fifth Phase-1999-2004 (Emergence of Large and Uniform Industry)
As toward the finish of January 2003, there were 33 shared assets with all out resources
of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of benefits under
administration was route in front of other MF. In February 2003, after the cancelation
of the Unit Trust of India Act 1963 UTI was bifurcated into two separate substances.
One is the Specified Undertaking of the Unit Trust of India with resources under
administration of Rs.29,835 crores as toward the finish of January 2003, speaking to
comprehensively, the benefits of US 64 plot, guaranteed return and certain different
plans. The Specified Undertaking of Unit Trust of India, working under a head and
under the standards encircled by Government of India and does not go under the domain
of the Mutual Fund Regulations.

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The second is the UTI Mutual Fund Ltd, supported by SBI, PNB, BOB and LIC. It is
enlisted with SEBI and capacities under the Mutual Fund Regulations. With the
bifurcation of the past UTI which had in March 2000 more than Rs.76,000 crores
Of benefits under administration and with the setting up of an UTI Mutual Fund,
adjusting to the SEBI Mutual Fund Regulations, and with late mergers occurring among
various private area reserves, the common store industry has entered its present period
of union and development.
6th Phase – 2004 onwards (Consolidation and Growth)
The business has seen numerous mergers and acquisitions in the meantime
progressively global players keep on entering India. Toward the finish of March 2006,
there were 29 reserves.

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Growth of Mutual Funds under different phases
Source: AMFI

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MODEL OF MUTUAL FUNDS
In mutual funds industry many investors contribute to form a common pool of money. This
pool of money is invested in accordance with a stated objective. The ownership of fund is thus
joint or mutual the fund belongs to all investors. A single investor’s ownership of fund is in the
same proportion as the amount of the contribution made by him bears to the total amount of
fund.
A mutual fund uses the money collected from investors to buy those assets which are
specifically permitted by its stated objective. Thus a growth fund would buy mainly EQUI TY
assets-ordinary shares, preference shares, warrants etc. An income fund would buy mainly debt
instruments such as debentures and bonds. The funds assets are owned by the investors in the
same proportion as their contribution bears to the total contribution of all investors put together.
Working of Mutual Fund
The risk-return Matrix below shows that as compared to various investment options Mutual
Funds offer High Returns with Lower Risk to the investors.

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Benefits of Mutual Funds
1) Professional administration: Fund administrators are experts who track the market on an
on-going premise. With their blend of expert capability and market information, they are
preferable set over the normal financial specialist to comprehend the business sectors.
2) Portfolio Diversification: Since a Mutual Fund plot puts resources into number of stocks
or potentially debentures, the related dangers are enormously diminished.
3) Reduction of exchange Cost: When contrasted with direct interests in the capital market,
Mutual Funds cost less. This is because of investment funds in business costs, demat costs, safe
expenses and so on.
4) Liquidity: Investments in Mutual Funds are totally fluid and can be reclaimed at their Net
Assets Value-related cost on any working day.

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5) Transparency: You will dependably approach exceptional data on the estimation of your
interest notwithstanding the total arrangement of speculations, the extent designated to various
resources and the store director's venture technique.
6) Flexibility: Through highlights, for example, Systematic Investment Plans, Systematic
Withdrawal Plans and Dividend Investment Plans, you can methodically contribute or pull back
assets as indicated by your requirements and accommodation.
KINDS OF MUTUAL FUNDS
Assets are commonly recognized from one another by their venture target and kinds of
securities they contribute in.3
a) Broad support types naturally of speculations
MF may put resources into values, securities or other salary securities, or transient currency
advertise securities. So we have value, security and currency market or fluid assets. All these
put resources into money related resources. Be that as it may, there are reserves that put
resources into physical resources like land reserves.
b) Broad support type by venture objective
Development reserves contribute for medium to long haul capital appreciation. Salary reserves
contribute to produce normal pay and less for capital appreciation. Esteem funs put resources
into values that are considered underestimate today and whose qualities will be opened later
on.
c) Broad Fund types by hazard profile

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Value reserves have more serious danger of capital misfortune than an obligation support that
tries to secure the capital while searching for money. Fluid assets are presented to less hazard
than even security assets since they put resources into momentary fixed salary securities when
contrasted with longer term arrangement of security reserves.
There are a wide assortment of Mutual Fund conspires that take into account your necessities,
whatever your age, money related position, chance resilience and return desire. Regardless of
whether as the establishment of your speculation program or as an enhancement, Mutual Fund
plans can enable you to meet your money related objectives. The distinctive sorts of Mutual
Funds are as per the following:
Enhanced EQUITY Mutual Fund Scheme
A shared reserve conspire that accomplishes the advantages of broadening by putting resources
into the supplies of organizations over an expansive number of parts. Accordingly, it limits the
danger of presentation to a solitary organization or division.
Sectoral EQUITY Mutual Fund Scheme
A common reserve conspire which centers around interests in the value of organizations over
a set number of segments - normally one to three.
File Funds
These assets put resources into the supplies of organizations, which include real records, for
example, the BSE Sensex or the S&P CNX Nifty in the equivalent weightage as the particular
files.

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Value Linked Tax Saving Schemes (ELSS)
Common Fund plans putting overwhelmingly in value, and offering charge refunds to financial
specialists under area 80 C of the Income Tax Act. As of now discount u/s 80C can be profited
up to a most extreme venture of Rs 1, 00,000. A lock-in of 3 YRS is required.
Month to month Income Plan Scheme
A shared reserve conspire which goes for giving standard salary (not really month to month,
don't get deceived by the name) to the unit holder, normally by method for profit, with
speculations transcendently in the red securities (up to 95%) of corporate and the legislature,
to guarantee consistency of profits, and having a littler segment of value ventures (5% to
15%)to guarantee higher return.
Pay plans
Obligation situated plans putting resources into fixed pay securities, for example, securities,
corporate debentures, Government securities and currency showcase instruments.
Drifting Rate Debt Fund
A store involving securities for which the loan fee is balanced occasionally as per a
foreordained equation, generally connected to a list.

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Plated Funds
These assets put only in government securities.
Adjusted Funds
The point of adjusted assets is to give both development and ordinary pay in that capacity plans
put both in values and fixed pay securities in the extent showed in their offer records. They for
the most part put 40-60% in value and obligation instruments.
Reserve of Funds
A Fund of Funds (FoF) is a common reserve conspire that puts resources into other shared store
plans. Similarly as store puts resources into stocks or securities for your benefit, a FoF puts
resources into other common reserve plans.
LEGAL STRUCTURE OF MUTUAL FUNDS IN INDIA

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India includes a legitimate structure inside which shared finances must be comprised. In India,
open end and close end reserves are established along one special instructure-as unit trusts. In
this way a common store may have a few unique plans (open end and close end) under it i.e.;
under one unit trust, anytime of time. The structure that is required to be trailed by shared assets
in India is set down under SEBI (Mutual Funds) guideline, 19964
Store Sponsor
Support is characterized as any individual who, acting alone or in mix with another body
corporate, sets up a common reserve. The patron of a store is similar to the advertiser of an
organization as he gets the reserve enlisted with SEBI. The support will shape a trust and
structure a leading group of trustees. The support either legitimately or acting through trustees,
will name an overseer to hold the reserve resources. Every one of these arrangements are made
as per SEBI Regulations.
According to the current guidelines, for an individual to qualify as a support, he should
contribute in any event 40% of the total assets of the AMC and have a sound budgetary
reputation more than 5 YRS before enlistment.
Shared reserve as Trusts
A shared reserve in India is established as an open trust made under the Indian Trust Act, 1882.
The reserve support goes about as the pioneer of the trust, adding to its underlying capital, and
selects a Trustee to hold the advantages of the trust to assist the unit holders, who are the
recipients of the trust. Under the Indian Trust Act, the trust or the store has no lawful limit
itself, rather it is the Trustee or Trustees who have the lawful limit and in this manner all
demonstrations in connection to the trust are taken for its sake by the trustees.

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The trustees hold the unit holder's cash in a guardian limit i.e.; the cash has a place with unit
holder and it is endowed to the store with the end goal of venture.
The trustees don't straightforwardly deal with the arrangement of the securities. For the master
work they designate an Asset Management Company. They safeguard that the reserve is
overseen by the AMC according to the characterized goals and as per the Trust Deed and SEBI
Regulations. SEBI has indicated that the gathering of the trustees ought to be held at any rate
once in at regular intervals.
Resource Management Company
The AMC so selected is required to be affirmed by SEBI. When endorsed, the AMC capacities
under the supervision of its own Board of Directors, and furthermore under the bearing of the
Trustees and SEBI. The AMC of a shared reserve must have a total assets of in any event Rs.10
crores consistently. The AMC can't go about as a trustee of some other common reserve. To
guarantee the freedom of the advantage the executives organization, SEBI orders that at least
half of the chiefs of the leading body of the benefit the executives organization ought to be
autonomous executives.
OTHER FUND CONSTITUENTS

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Caretaker and Depositories
The caretaker is delegated by the Board of Trustees for care of physical securities or taking an
interest in any clearing framework through affirmed store organizations for the benefit of the
common reserve incase of dematerialized securities. The caretaker ought to be an element
autonomous of the patrons and is required to be enlisted with SEBI.
A shared store's dematerialized securities possessions are held in a safe through a Depository
Participant. An assets physical securities will establish to be held by an overseer. Along these
lines conveyances of an assets securities are given or gotten by a caretaker or a vault member,
at the guidance of the AMC, albeit under the general bearing and duty of the trustees.
Investors
An assets exercises include managing cash consistently basically concerning purchasing and
selling units, paying for venture made, accepting the returns on special of speculations and
releasing its commitments towards working costs. Assets brokers, thusly, assume a urgent job
regarding its money related dealings by holding its financial balances and giving it settlement
administrations.
Recorders and Transfer Agents
Enlistment centers and exchange operators are in charge of issuing and reclaiming units of
common store and giving other related administrations, for example, readiness of exchange
archives and refreshing speculator's records. A reserve may do this action in-house and charge
the plan for the administration at an aggressive market rate. Where an outside Transfer Agent
is utilized, the store financial specialist will observe the exchange operator to be an essential
interface to manage, since all the speculator benefits that a reserve gives will be dependant on

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the exchange specialist. Such administrations incorporates purchasing/repurchase of units,
changing starting with one plan then onto the next, precise speculations/withdrawals, recording
of assignment and bank subtleties.
SORTS OF CHARGES IN MUTUAL FUND INDUSTRY
The Asset Management Companies (AMCs) dealing with the Mutual Funds demand a heap as
a level of NAV at the season of section into the Schemes or at the season of leaving from the
Schemes.
Passage Load - It is the heap charged by the reserve when a financial specialist puts into the
store. It expands the cost of the units to more than the NAV and is communicated as a level of
NAV.
Leave Load - It is the heap charged by the reserve when a financial specialist reclaims the
units from the store. It decreases the cost of the units to not exactly the NAV and is
communicated as a level of NAV.
Cost of Churning/Turnover cost - It alludes to the expenses related with the beating (or
changes made to the property) of the portfolio. Portfolio changes have related expenses of
business, authority charges, exchange charges and enrolment expenses, which bring down the
profits. The quantum relies upon the administration style of the store administrator.
Cost Ratio - The Expenses of a common store incorporate administration charges and every
one of the charges related with the reserve's day by day tasks. Cost Ratio alludes to the yearly
level of reserve's benefits that is paid out in costs.
Snapshot of Mutual Fund Schemes

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TAXATION
THEORIES OF INVESTMENT PLANNING
Harnessing the power of compounding
The first principle of investment planning is to invest for the long term and let the money grow
on a compound basis. It is to be understood that investment is a lifetime activity and not an
adhoc process. It is seen that more frequent the compounding, the greater is the capital. Thus
it is advised for investors with long term horizon to go for the growth option in schemes,
meaning reinvestment of dividends to benefit from power of compounding.
TAXABLE
INCOME
EQUITY FUNDS
GROWTH
LONG TERM CAPITAL
GAIN TAX (LTCG)=
NIL
SHORTERM CAPITAL
GAIN TAX (STCG)=15%
DIVIDEND
EQUITY DIVIDEND=TAX
FREE
DEBT FUNDS
GROWTH
LTCG & STCG TAX= AS
per Income tax slab
DIVIDEND
INDIVIDUAL=14.16
CORPORATE=22.66
LIQUID=28.32
LIQUID
INDIVIDUAL &
CORPORATE=28.32

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Choosing a strategy to maximize returns on investment
There are different ways of investing. One strategy may suit different investors and another
will be appropriate for another type. The strategies are:
1) Buy and Hold is the basic technique, and the most well-known error that financial
specialists make. It is required with respect to the financial specialist to follow his
ventures, dispose of the non-entertainers and keep the great entertainers. Clutching
loosing ventures implies losing the intensity of intensifying. Long haul contributing
does not mean purchase and-hold without altering the portfolio to deal with champs
from failures.
2) Rupee expense averaging underlines on advantage of contributing routinely. As
indicated by it, if a similar sum is contributed each month or at customary interims, the
expense of procurement will average out, with per unit cost being 'dependably ' not as
much as that if there should be an occurrence of unpredictable speculation made by
endeavouring to figure the highs and lows of the market. Anyway it doesn't advise the
financial specialist precisely when to purchase or sell a reserve. Or on the other hand to
change from losing to winning assets. A variation of this disparity is Value Averaging.
The financial specialist keeps the objective estimation of his speculation consistent by
contributing the sum by which the venture esteem has descended or by getting the
money for the expanded estimation of his speculations or by doing nothing if the esteem
is unaltered.
2) Jacobs' suggestion of a joined methodology consolidates the rupees cost and esteem
averaging methodologies. It suggests utilizing a forceful development and a currency
showcase store of a similar family. Spot Rs100 in a fluid Fund each month. Set the
objective incentive for the forceful value finance. Afterward if the estimation of value
support has declined exchange rs100 from fluid store to value subsidize. On the off

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chance that value subsidize has expanded by 100, do nothing. On the off chance that
esteem has ascended by 200, exchange 100 from value reserve to fluid store – book the
benefit.
CHOOSING THE RIGHT PLANNING STRATEGIES
The following are the key concepts that should be noted:
1. Timing investments and cashing out-In terms of when to invest it is advisable to
clients when they have the money because they will give their money more time to
grow. The question of when to cash out needs more thought and skills. Some are listed
below:
➢ When the goal has arrived and the purpose for which the investments were made
has to be addressed.
➢ If the market overall appears overvalued in terms of fundamentals and historic
valuations.
A buy and hold strategy works well in a good mutual fund if the client is willing to wait out a
full market cycle because fund managers do the buying and selling based on their research and
analysis. In this regard it must be noted it is the investor who has to take the decision to enter
or exit an asset class and it is not the fund manager’s role to time entry or exit irrespective of
market movements.
2. Planning & investing early-it is wise for the investors to develop good financial
planning habits early in life such as saving, budgeting, regularly investing and
periodically reviewing finances to meet changes in life stages and to handle
contingencies.
3. Having realistic expectations-Financial planning is a common sense approach to
managing ones finances to reach ones life goals. Therefore the return expectation
should be realistic.

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4. Investing regularly-investment strategies like rupees cost averaging, double rupee cost
averaging and value cost averaging can bring down the cost of investments and have
been known to harness the power of compounding to deliver superior results over time.
ASSET ALLOCATION TOOLS
Asset allocation principles
It means deciding the percentage of EQUI TY, debt and liquid instruments in an individual’s
portfolio. More than 90% of returns of a portfolio come from the right asset allocation. Asset
allocation forms the foundation of investment advisory process. Any budgetary making
arrangements for a financial specialist must decide a reasonable assignment plan. The different
portion models are talked about.
1) Benjamin Graham's 50/50 balance resource portion demonstrate
2) Bogles 50/50 Portfolio of Mutual Funds.
3) Bogles vital resource distribution
4) Fixed versus adaptable resource assignment methodology

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5) Tactical resource assignment
Benjamin Graham's 50/50 Balance
Benjamin advocates 50/50 split among values and bonds. At the point when estimation of
values goes up equalization can be re established by exchanging some portion of the value
portfolio, and the other way around. This is the essential guarded or traditionalist
speculation approach. Advantages incorporate not being into putting increasingly more into
values in rising markets. Both the additions and misfortunes will be constrained. In any
case, it is a great idea to get about a large portion of the profits of a rising business sector
and to maintain a strategic distance from the full misfortunes of a falling business sector.
50/50 Portfolio of Mutual Funds
Bogle recommends the holding of various types of mixes of arrangement of assets:
1. A Basic Managed Portfolio - half in Diversified EQUI TY Value Funds
25% in Govt. Securities Fund
25% in High Grade Corporate Bond Funds

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2. A Basic Indexed Portfolio - half in Index Funds
half in Bond Market Portfolio.
3. A Simple Managed Portfolio - 85% in Balanced 60/40 Fund
15% in Medium Term Bonds
4. A Complex Managed Portfolio- - 20% in Diversified EQUI TY Funds
20% in Aggressive Growth Funds
10% in Specialty Funds
30% in Long Term Bond Funds
20% in Short term Bond Funds
5. A Readymade Portfolio - Single Index Funds with 60/40 value/security

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Key Asset Allocation
Bogle orders financial specialists as far as their lifecycle stages. Amid the Accumulation
Phase, a financial specialist would assemble resources by intermittent ventures of capital
and reinvestment of all profits got. Amid the Distribution Phase, he will quit including
resources and begin getting profits as salary. Related to the financial specialists' age he
prescribes the accompanying vital distributions:
More established Investors in Distribution Phase : 50/50 (value/obligation)
More youthful Investors in Distribution Phase : 60/40
More established Investors in Accumulation Phase : 70/30
More youthful Investors in Accumulation Phase: 80/20
In this way more youthful financial specialists can be progressively forceful while more
seasoned speculators adopt an increasingly traditionalist strategy. So also financial
specialists in Accumulation Phase can go out on a limb than the individuals who need pay
in Distribution Phase.
Fixed versus Adaptable Asset Allocation
A fixed proportion of advantage designation implies that balance is kept up by exchanging
a piece of the situation in the benefit class with higher returns and reinvesting in the other
resource with lower returns. This isn't what speculators do. They will in general increment
the value position when value costs will in general ascend and the other way around. This

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methodology gives the financial specialist a chance to book benefits in rising markets and
increment property in falling markets.
An adaptable proportion of benefit designation implies not doing any rebalancing and
giving the benefits a chance to run. As stocks and bonds will give diverse returns after some
time, he starting resource distribution will change, by and large for value parcel as it return
would be higher than bond partition. The dispersion situated financial specialist will
discover this proportion change for values substantially more than aggregation arranged
speculators.
On the off chance that stocks keep on giving preferred returns over bonds, at that point
fixed proportion is superior to variable proportion. In any case if security returns are
superior to anything value showcase returns than variable proportion will work better.
Strategic Asset Allocation
In spite of the trouble of anticipating, individuals do it. Reserve directors themselves change
their advantage distribution rates in the light of their perspectives on future developments
in resource costs. For instance one may change the value/obligation blend itself for where
he may anticipate more prominent returns. These strategic changes in resource portion
inside the general rate holding or in vital proportion itself may yield additional profits, if
the wager is correct. In any case, there is no assurance.
Resource Allocation Strategy
The four kinds of financial specialists that are making progress toward long haul
development:

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1. The general traditionalist is searching for long haul, consistent development and does
not have any desire to go out on a limb of financial exchanges. half of the populace falls
into this classification.
2. The ambitious traditionalist is additionally searching for long haul development however
is eager to endure minor variances in stock costs. 35% of financial specialists are
venturesome traditionalists.
3. Wellbeing searchers can endure showcase changes to a point. Every day and minor
changes are to a great extent unessential. >14% of financial specialists are wellbeing
searchers.
4. Non-traditionalists care less about market or value vacillations and hope to discover
esteem and openings in each market. <1% of financial specialists are non-traditionalists.
In spite of the fact that every one of these speculators can accomplish agreeable outcomes
as time goes on, their brain research projects will enormously influence how they ought to
be contributed.
The General Conventionalist Portfolio
You don't need to be "in the business sectors" to develop your cash. Shared assets are not
the arrangement. Consider putting the whole portfolio in venture grade bonds, ideally
laddered in 10-YR increases. They incline toward safe ventures alternatives with least
hazard and stable salary. Hence the speculation choices like fixed stores, government bonds
and so on suit their need.
Anticipated return: 7-9%

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The Enterprising Conventionalist Portfolio
They feel "safe" having a portion of the cash in stocks if those stocks were, state, Coca-
Cola, Wal-Mart, Walt Disney, and General Electric. They know that "exhausting" stocks
that compensation profits don't move "to an extreme". All things considered, they ought to
consider putting half of their portfolio into a bond stepping stool (as examined above) and
half of the portfolio in vast organizations that compensation profits.
The Safety-Seeker Portfolio
They are prepared to go out on a limb of unpredictability in the market and lean toward
development in their portfolios.
Wellbeing searchers ought to likewise think about a 50/50 split in their portfolios. The
requirement for fixed pay part ought to be put resources into similarly as the ambitious
conformist's stock elixir; the staying half can be isolated in a more non-ordinary way. The
wellbeing searcher ought to never utilize edge and should keep exercise chances to a limit
of 5% of his or her portfolio.
The Non-Conventionalist Portfolio

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The non-traditionalist watches the business sectors just to the degree that the individual in
question is searching for circumstances. Non-traditionalists have a hunger for business
.Non-conformists never purchase planning to make great deals sometime in the not too
distant future; they purchase when they can get significantly more incentive than that for
which they are paying. They realize that the business sectors will inevitably remunerate
them for their great choices and they acknowledge that a definitive planning and sum is out
of their hands.
They may consider putting 80% of their advantages in long haul, underestimated
organizations and up to 30% in exercises. The 80% bit ought to be enhanced. That is, the
non-conformist financial specialist ought to consider having somewhere in the range of
three and eight organizations. Since they put their cash where they are offered the most
esteem, non-traditionalists need not hold more than the absolute best chances. The 30%
exercise bit ought to likewise be part among a wide assortment of chances. Contingent upon
the portfolio esteem, they may have as few as none and upwards of fifteen exercises at
some random time. The real sum, obviously, relies upon how much esteem every exercise
is putting forth.
Anticipated return: >15%
FUTURE OF MUTUAL FUNDS IN INDIA

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By December 2004, Indian shared reserve industry came to Rs.1, 50,537 crore. It is
evaluated that by 2012 March-end, the all out resources of all booked business banks
ought to be Rs 40, 90,000 crore.
The yearly composite rate of development is normal 13.4% amid the remainder of the
decade. Over the most recent 5 YRS we have seen YRly development rate of 9%. As
indicated by the present development rate, by YR 2012, shared store resources will be
twofold.
FACTS FOR THE GROWTH OF MUTUAL FUNDS IN INDIA
• 100% development over the most recent 6 years.
• Number of outside AMCs is in the line to enter the Indian markets.
• Our sparing rate is over 23%, most elevated on the planet. Just channelizing
these investment funds in common subsidizes part is required.
• We have roughly 29 shared subsidizes which is substantially less than US
having more than 800. There is a major extension for development.
• 'B' and 'C' class urban communities are developing quickly. Today the vast
majority of the MF are focusing on the 'A' class urban areas. Before long they will
discover scope in the developing urban communities.
• Mutual store can infiltrate rustic like the Indian protection industry with basic
and constrained items.
• SEBI enabling the MF's to dispatch ware shared assets.
• Emphasis on better corporate administration.
• Trying to control the late exchanging practices.
• Introduction of Financial Planners who can give need based counsel.
Resources Management Company: An exceptionally directed association that pools
cash from numerous individuals into portfolio organized to accomplish certain targets.
Normally an AMC deals with a few assets – open finished/close finished over a few
classes development, pay, adjusted.

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Adjusted Fund: A mixture arrangement of stocks and securities.
Close Ended Fund: They neither issue nor recover crisp units to financial specialists.
Some shut finished assets can be purchased or sold over the stock trade if the store is
recorded. Else, financial specialist need to hold up till reclamation date to exit. Most
recorded close finished finances exchange at rebate to the NAV.
Open Ended Fund: A differentiated and expertly overseen conspire, it issues new units
to approaching financial specialists at NAV in addition to any pertinent deals charge,
and it recovers shares at NAV from vendors, less any reclamation expenses.
Passage/Exit Load: A charge paid when a financial specialist purchases/sells a store.
There could be a heap at the season of passage or exit, yet once in a while at the multiple
times.
Development/Equity Fund: A reserve holding stocks with great or improving benefit
prospects. The essential accentuation is on appreciation.
Net Assets Value: A cost or estimation of one unit of a reserve. It is determined by
summing the present market estimations of all securities held by the store, including
the money and any collected pay, at that point subtracting liabilities and isolating the
outcome by the quantity of units remarkable.
Financing cost Risk: The hazard borne by fixed-intrigue securities, and by borrowers
with gliding rate credits, when loan costs vary. At the point when loan fees rise, the
market estimation of fixed-premium securities decreases and the other way around.
Credit hazard: Credit chance includes the misfortune emerging because of a client's
or counterparty's powerlessness or reluctance to meet responsibilities in connection to
loaning, exchanging, supporting, settlement and other monetary exchanges.
Capital Market hazard: Capital Market Risk is the hazard emerging because of
changes in the Stock Market conditions.

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After introducing the topic we will now move on to the methodology adopted for the study.
This chapter deals with the methodology adapted for the gathering of the information for test
contextual investigation. This incorporates comprehension of the universe of the examination
and the district of the investigation. The universe and the district of our investigation give an

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understanding into the relevance of portfolio management services and the places where we
can apply our findings.
Participants of the study
The universe of the study encompasses all the investors, both, individual and corporate where
Mutual Funds have some relevance.
Locale
The scope of our locale is investors present in Bangalore.
Sample Study
The sample size selected was 110. The investors who were surveyed were majorly shopkeepers.
Data Collection
The present study has been done based on firsthand and secondhand source of data.
Primary Research
The primary data was collected with the help of questionnaire which was to the respondent
about their awareness related to Mutual Funds and getting an insight on the type of previous
investments they were indulged in so that we can analyze the trends in investments. The data
regarding the following areas was collected from a sample of 110 people.
a) Profile of Investor
b) Risk taking capacity o investor
c) Reasons for investing or not investing in various investment options
d) Kinds of mutual funds preferred
e) Criteria that customer gives importance to while selecting a mutual fund
Secondary Research
Secondary date was used to support the primary data. The major sources of information were
various books, journals, research articles, documentaries and the World Wide Web.

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Sampling plan
A. Target population was people above 18 YRS
B. Sample size was restricted to people in Bangalore
C. Sample size was 110.
Analysis of Data
The data is analyzed through both qualitative and quantitative measures. Statistical analysis as
well as in depth analysis was done based on the information collected from both primary and
secondary data and this data was then organized into tables so as to ease the analysis part of
the study.

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CHAPTER 2
INDUSTRY PROFILE AND COMPANY PROFILE

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What Is a Mutual Fund?
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.
Mutual funds give small or individual investors access to professionally managed portfolios
of equities, bonds, and other securities. Each shareholder, therefore, participates
proportionally in the gains or losses of the fund. Mutual funds invest in a vast number of
securities, and performance is usually tracked as the change in the total market cap of the
fund—derived by the aggregating performance of the underlying investments.
Understanding Mutual Funds
Mutual funds pool money from the investing public and use that money to buy other
securities, usually stocks and bonds. The value of the mutual fund company depends on the
performance of the securities it decides to buy. So, when you buy a unit or share of a mutual
fund, you are buying the performance of its portfolio or, more precisely, a part of the
portfolio's value. Investing in a share of a mutual fund is different from investing in shares of
stock. Unlike stock, mutual fund shares do not give its holders any voting rights. A share of a
mutual fund represents investments in many different stocks (or other securities) instead of
just one holding.
That's why the price of a mutual fund share is referred to as the net asset value (NAV) per
share, sometimes expressed as NAVPS. A fund's NAV is derived by dividing the total value
of the securities in the portfolio by the total amount of shares outstanding. Outstanding shares
are those held by all shareholders, institutional investors, and company officers or insiders.
Mutual fund shares can typically be purchased or redeemed as needed at the fund's current
NAV, which—unlike a stock price—doesn't fluctuate during market hours, but it is settled at
the end of each trading day.
The average mutual fund holds hundreds of different securities, which means mutual fund
shareholders gain important diversification at a low price. Consider an investor who buys
only Google stock before the company has a bad quarter. He stands to lose a great deal of
value because all of his dollars are tied to one company. On the other hand, a different
investor may buy shares of a mutual fund that happens to own some Google stock. When
Google has a bad quarter, she loses significantly less because Google is just a small part of
the fund's portfolio.
How Mutual Funds Work
A mutual fund is both an investment and an actual company. This dual nature may seem
strange, but it is no different from how a share of AAPL is a representation of Apple Inc.
When an investor buys Apple stock, he is buying partial ownership of the company and its
assets. Similarly, a mutual fund investor is buying partial ownership of the mutual fund

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company and its assets. The difference is that Apple is in the business of making innovative
devices and tablets, while a mutual fund company is in the business of making investments.
Investors typically earn a return from a mutual fund in three ways:
1. Income is earned from dividends on stocks and interest on bonds held in the fund's
portfolio. A fund pays out nearly all of the income it receives over the year to fund
owners in the form of a distribution. Funds often give investors a choice either to
receive a check for distributions or to reinvest the earnings and get more shares.
2. If the fund sells securities that have increased in price, the fund has a capital gain.
Most funds also pass on these gains to investors in a distribution.
3. If fund holdings increase in price but are not sold by the fund manager, the fund's
shares increase in price. You can then sell your mutual fund shares for a profit in the
market.
If a mutual fund is construed as a virtual company, its CEO is the fund manager, sometimes
called its investment adviser. The fund manager is hired by a board of directors and is legally
obligated to work in the best interest of mutual fund shareholders. Most fund managers are
also owners of the fund. There are very few other employees in a mutual fund company. The
investment adviser or fund manager may employ some analysts to help pick investments or
perform market research. A fund accountant is kept on staff to calculate the fund's NAV, the
daily value of the portfolio that determines if share prices go up or down. Mutual funds need
to have a compliance officer or two, and probably an attorney, to keep up with government
regulations.
Most mutual funds are part of a much larger investment company; the biggest have hundreds
of separate mutual funds. Some of these fund companies are names familiar to the general
public, such as Fidelity Investments, The Vanguard Group, T. Rowe Price, and Oppenheimer
Funds.
Types of Mutual Funds
Mutual funds are divided into several kinds of categories, representing the kinds of securities
they have targeted for their portfolios and the type of returns they seek. There is a fund for
nearly every type of investor or investment approach. Other common types of mutual funds
include money market funds, sector funds, alternative funds, smart-beta funds, target-date
funds, and even funds-of-funds, or mutual funds that buy shares of other mutual funds.
Equity Funds
The largest category is that of equity or stock funds. As the name implies, this sort of fund
invests principally in stocks. Within this group are various subcategories. Some equity funds
are named for the size of the companies they invest in: small-, mid-, or large-cap. Others are
named by their investment approach: aggressive growth, income-oriented, value, and others.

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Equity funds are also categorized by whether they invest in domestic (U.S.) stocks or foreign
equities.
Index Funds
Another group, which has become extremely popular in the last few years, falls under the
moniker "index funds." Their investment strategy is based on the belief that it is very hard,
and often expensive, to try to beat the market consistently. So, the index fund manager buys
stocks that correspond with a major market index such as the S&P 500 or the Dow Jones
Industrial Average (DJIA). This strategy requires less research from analysts and advisors, so
there are fewer expenses to eat up returns before they are passed on to shareholders. These
funds are often designed with cost-sensitive investors in mind.
Balanced Funds
Balanced funds invest in a hybrid of asset classes, whether stocks, bonds, money market
instruments, or alternative investments. The objective is to reduce the risk of exposure across
asset classes.This kind of fund is also known as an asset allocation fund. There are two
variations of such funds designed to cater to the investors objectives.
Some funds are defined with a specific allocation strategy that is fixed, so the investor can
have a predictable exposure to various asset classes. Other funds follow a strategy for
dynamic allocation percentages to meet various investor objectives. This may include
responding to market conditions, business cycle changes, or the changing phases of the
investor's own life.
While the objectives are similar to those of a balanced fund, dynamic allocation funds do not
have to hold a specified percentage of any asset class. The portfolio manager is therefore
given freedom to switch the ratio of asset classes as needed to maintain the integrity of the
fund's stated strategy.
Money Market Funds
The money market consists of safe (risk-free), short-term debt instruments, mostly
government Treasury bills. This is a safe place to park your money. You won't get substantial
returns, but you won't have to worry about losing your principal. A typical return is a little
more than the amount you would earn in a regular checking or savings account and a little
less than the average certificate of deposit (CD). While money market funds invest in ultra-
safe assets, during the 2008 financial crisis, some money market funds did experience losses
after the share price of these funds, typically pegged at $1, fell below that level and broke the
buck.
Income Funds
Income funds are named for their purpose: to provide current income on a steady basis. These
funds invest primarily in government and high-quality corporate debt, holding these bonds
until maturity in order to provide interest streams. While fund holdings may appreciate in
value, the primary objective of these funds is to provide steady cash flow to investors. As
such, the audience for these funds consists of conservative investors and retirees. Because
they produce regular income, tax-conscious investors may want to avoid these funds.

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International/Global Funds
An international fund (or foreign fund) invests only in assets located outside your home
country. Global funds, meanwhile, can invest anywhere around the world, including within
your home country. It's tough to classify these funds as either riskier or safer than domestic
investments, but they have tended to be more volatile and have unique country and political
risks. On the flip side, they can, as part of a well-balanced portfolio, actually reduce risk by
increasing diversification, since the returns in foreign countries may be uncorrelated with
returns at home. Although the world's economies are becoming more interrelated, it is still
likely that another economy somewhere is outperforming the economy of your home country.
Specialty Funds
This classification of mutual funds is more of an all-encompassing category that consists of
funds that have proved to be popular but don't necessarily belong to the more rigid categories
we've described so far. These types of mutual funds forgo broad diversification to concentrate
on a certain segment of the economy or a targeted strategy. Sector funds are targeted strategy
funds aimed at specific sectors of the economy, such as financial, technology, health, and so
on. Sector funds can, therefore, be extremely volatile since the stocks in a given sector tend to
be highly correlated with each other. There is a greater possibility for large gains, but a sector
may also collapse (for example, the financial sector in 2008 and 2009).
Regional funds make it easier to focus on a specific geographic area of the world. This can
mean focusing on a broader region (say Latin America) or an individual country (for
example, only Brazil). An advantage of these funds is that they make it easier to buy stock in
foreign countries, which can otherwise be difficult and expensive. Just like for sector funds,
you have to accept the high risk of loss, which occurs if the region goes into a bad recession.
Socially-responsible funds (or ethical funds) invest only in companies that meet the criteria of
certain guidelines or beliefs. For example, some socially-responsible funds do not invest in
"sin" industries such as tobacco, alcoholic beverages, weapons, or nuclear power. The idea is
to get competitive performance while still maintaining a healthy conscience. Other such
funds invest primarily in green technology, such as solar and wind power or recycling.
Exchange Traded Funds (ETFs)
A twist on the mutual fund is the exchange traded fund (ETF). These ever more popular
investment vehicles pool investments and employ strategies consistent with mutual funds, but
they are structured as investment trusts that are traded on stock exchanges and have the added
benefits of the features of stocks. For example, ETFs can be bought and sold at any point
throughout the trading day. ETFs can also be sold short or purchased on margin. ETFs also
typically carry lower fees than the equivalent mutual fund. Many ETFs also benefit from
active options markets, where investors can hedge or leverage their positions. ETFs also
enjoy tax advantages from mutual funds. The popularity of ETFs speaks to their versatility
and convenience.
Mutual Fund Fees
A mutual fund will classify expenses into either annual operating fees or shareholder fees.
Annual fund operating fees are an annual percentage of the funds under management, usually
ranging from 1–3%. Annual operating fees are collectively known as the expense ratio. A
fund's expense ratio is the summation of the advisory or management fee and its
administrative costs.

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Shareholder fees, which come in the form of sales charges, commissions, and redemption
fees, are paid directly by investors when purchasing or selling the funds. Sales charges or
commissions are known as "the load" of a mutual fund. When a mutual fund has a front-
end load, fees are assessed when shares are purchased. For a back-end load, mutual fund fees
are assessed when an investor sells his shares.
Sometimes, however, an investment company offers a no-load mutual fund, which doesn't
carry any commission or sales charge. These funds are distributed directly by an investment
company, rather than through a secondary party.
Some funds also charge fees and penalties for early withdrawals or selling the holding before
a specific time has elapsed. Also, the rise of exchange-traded funds, which have much lower
fees thanks to their passive management structure, have been giving mutual funds
considerable competition for investors' dollars. Articles from financial media outlets
regarding how fund expense ratios and loads can eat into rates of return have also stirred
negative feelings about mutual funds.
Classes of Mutual Fund Shares
Mutual fund shares come in several classes. Their differences reflect the number and size of
fees associated with them.
Currently, most individual investors purchase mutual funds with A shares through a broker.
This purchase includes a front-end load of up to 5% or more, plus management fees and
ongoing fees for distributions, also known as 12b-1 fees. To top it off, loads on A shares vary
quite a bit, which can create a conflict of interest. Financial advisors selling these products
may encourage clients to buy higher-load offerings to bring in bigger commissions for
themselves. With front-end funds, the investor pays these expenses as they buy into the fund.
To remedy these problems and meet fiduciary-rule standards, investment companies have
started designating new share classes, including "level load" C shares, which generally don't
have a front-end load but carry a 1% 12b-1 annual distribution fee.
Funds that charge management and other fees when an investor sell their holdings are
classified as Class B shares.
A New Class of Fund Shares
The newest share class, developed in 2016, consists of clean shares. Clean shares do not have
front-end sales loads or annual 12b-1 fees for fund services. American Funds, Janus, and
MFS are all fund companies currently offering clean shares.
By standardizing fees and loads, the new classes enhance transparency for mutual fund
investors and, of course, save them money. For example, an investor who rolls $10,000 into
an individual retirement account (IRA) with a clean-share fund could earn nearly $1,800
more over a 30-year period as compared to an average A-share fund, according to an April
2017 Morningstar report co-written by Aron Szapiro, Morningstar director of policy research,
and Paul Ellenbogen, head of global regulatory solutions.2

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Advantages of Mutual Funds
There are a variety of reasons that mutual funds have been the retail investor's vehicle of
choice for decades. The overwhelming majority of money in employer-sponsored retirement
plans goes into mutual funds. Multiple mergers have equated to mutual funds over time.
Diversification
Diversification, or the mixing of investments and assets within a portfolio to reduce risk, is
one of the advantages of investing in mutual funds. Experts advocate diversification as a way
of enhancing a portfolio's returns, while reducing its risk. Buying individual company stocks
and offsetting them with industrial sector stocks, for example, offers some diversification.
However, a truly diversified portfolio has securities with different capitalizations and
industries and bonds with varying maturities and issuers. Buying a mutual fund can achieve
diversification cheaper and faster than by buying individual securities. Large mutual funds
typically own hundreds of different stocks in many different industries. It wouldn't be
practical for an investor to build this kind of a portfolio with a small amount of money.
Easy Access
Trading on the major stock exchanges, mutual funds can be bought and sold with relative
ease, making them highly liquid investments. Also, when it comes to certain types of assets,
like foreign equities or exotic commodities, mutual funds are often the most feasible way—in
fact, sometimes the only way—for individual investors to participate.
Economies of Scale
Mutual funds also provide economies of scale. Buying one spares the investor of the
numerous commission charges needed to create a diversified portfolio. Buying only one
security at a time leads to large transaction fees, which will eat up a good chunk of the
investment. Also, the $100 to $200 an individual investor might be able to afford is usually
not enough to buy a round lot of the stock, but it will purchase many mutual fund shares. The
smaller denominations of mutual funds allow investors to take advantage of dollar cost
averaging.
Because a mutual fund buys and sells large amounts of securities at a time, its transaction
costs are lower than what an individual would pay for securities transactions. Moreover, a
mutual fund, since it pools money from many smaller investors, can invest in certain assets or
take larger positions than a smaller investor could. For example, the fund may have access to
IPO placements or certain structured products only available to institutional investors.
Professional Management
A primary advantage of mutual funds is not having to pick stocks and manage investments.
Instead, a professional investment manager takes care of all of this using careful research and
skill ful trading. Investors purchase funds because they often do not have the time or the
expertise to manage their own portfolios, or they don't have access to the same kind of
information that a professional fund has. A mutual fund is a relatively inexpensive way for a
small investor to get a full-time manager to make and monitor investments. Most private,
non-institutional money managers deal only with high-net-worth individuals—people with at
least six figures to invest. However, mutual funds, as noted above, require much lower
investment minimums. So, these funds provide a low-cost way for individual investors to
experience and hopefully benefit from professional money management.

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Variety and Freedom of Choice
Investors have the freedom to research and select from managers with a variety of styles and
management goals. For instance, a fund manager may focus on value investing, growth
investing, developed markets, emerging markets, income, or macroeconomic investing,
among many other styles. One manager may also oversee funds that employ several different
styles. This variety allows investors to gain exposure to not only stocks and bonds but
also commodities, foreign assets, and real estate through specialized mutual funds. Some
mutual funds are even structured to profit from a falling market (known as bear funds).
Mutual funds provide opportunities for foreign and domestic investment that may not
otherwise be directly accessible to ordinary investors.
Transparency
Mutual funds are subject to industry regulation that ensures accountability and fairness to
investors.
Pros
• Liquidity
• Diversification
• Minimal investment requirements
• Professional management
• Variety of offerings
Cons
• High fees, commissions, and other expenses
• Large cash presence in portfolios
• No FDIC coverage
• Difficulty in comparing funds
• Lack of transparency in holdings
Too Many Mutual Funds?
Disadvantages of Mutual Funds
Liquidity, diversification, and professional management all make mutual funds attractive
options for younger, novice, and other individual investors who don't want to actively
manage their money. However, no asset is perfect, and mutual funds have drawbacks too.
Fluctuating Returns
Like many other investments without a guaranteed return, there is always the possibility that
the value of your mutual fund will depreciate. Equity mutual funds experience price
fluctuations, along with the stocks that make up the fund. The Federal Deposit Insurance
Corporation (FDIC) does not back up mutual fund investments, and there is no guarantee of
performance with any fund.

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CHAPTER 3
RESEARCH METHODOLGY

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A Systematic Investment Plan isn't a kind of common store. It is a strategy for putting resources
into a common reserve. A SIP is a technique for contributing a fixed aggregate, all the time, in
a shared reserve plot. It is like normal sparing plans like a common store. A SIP enables one to
purchase units on an allowed date every month, with the goal that one can actualize a sparing
arrangement for themselves. A SIP can be begun with as little as Rs 500 every month in ELSS
plans to Rs 1,000 every month in expanded value plans.
Purchase low sell high, only four words aggregate up a triumphant procedure for the financial
exchanges. In any case, timing the market isn't simple for everybody. In timing the business
sectors one can miss the bigger rally and may remain out while the business sectors were
progressing nicely. Along these lines, as opposed to timing the market, contributing a
seemingly endless amount of time after month will guarantee that one is contributed at the high
and the low, and make the best out of an open door that could be difficult to foresee ahead of
time.
Advantages of Systematic Investment Plan
Influence of intensifying: The influence of exacerbating underlines the quintessence of making
cash work if just contributed at an early age. The more one deferrals in contributing, the more
noteworthy the money related weight to meet wanted objectives. Sparing a little entirety of
cash routinely at an early age makes cash work with more noteworthy influence of exacerbating
with huge effect on riches gathering.
Rupee cost averaging: Timing the market consistency is a troublesome errand. Rupee cost
averaging is a programmed market timing instrument that disposes of the need to time one's
ventures. Here one need not stress over where share costs or premium are going as venture of
a customary entirety is done at standard interims; with less units being purchased in a declining
business sector and more units in a rising business sector. In spite of the fact that SIP does not
ensure benefit, it can go far in limiting the impacts of putting resources into unstable markets.
This implies you are averaging out your expense. In the event that you contribute Rs 1000 per
month at a cost of Rs 20 a unit, you will have purchased 50 units (1000/20). Be that as it may,

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at a cost of Rs 10 for each unit, you will have purchased 100 units (1000/10). Contributing a
fixed aggregate routinely implies averaging out the expense, as you get less units when the cost
goes up and more when the cost goes down.
Taste guarantees averaging of rupee cost as steady venture guarantees that normal expense per
unit fits in the lower scope of normal market cost. A financial specialist can either give post
dated checks or ECS guidance and the venture will be made routinely in the common reserve
wanted for the required sum. Taste for the most part begins at least measures of Rs.1000/ -
every month and furthest point of confinement for utilizing an ECS is Rs.25000/ - per guidance.
For example, in the event that one wishes to contribute Rs.1, 00,000/ - every month, at that
point they have to do it on four distinct dates.
Comfort: SIP can be worked by just furnishing post dated checks with the finished enrolment
structure or give ECS directions. The checks can be put money on the predetermined dates and
the units credited into the financial specialist's record. The SIP office is accessible in the
Principal Income Fund, Monthly Income Plan, Child Benefit Fund, Balanced Fund, Index
Fund, Growth Fund, EQUI TY store and Tax Savings Fund.
SIP INVESTOR
It is anything but difficult to turn into an efficient financial specialist. One needs to design the
sparing viably and put aside some measure of cash each month for speculation purposes in a
reserve that is in a perfect world a broadened value finance or adjusted store. Post dated checks
can be given to the store house. The financial specialist is at freedom to exit from the plan
contingent upon the economic situations.
Why is SIP beneficial than Lump-Sum Investment
Because the benefits of regular investments are manifold. Firstly, you stand to gain better
returns through an SIP than if you invest a lump sum of money in one go and stay invested for
the same period of time.
The table below shows you the NAV returns and the SIP returns from six different mutual
funds over a five-YR period and since inception. SIPs always score over lump sum investment

51 | P a g e
in the five-YR plus (since inception) period. In the five-YR period though, SIP and lump sum
investments seem to be scoring equally.
Why
does
SIP
give
such
high
returns in the long term? This is a phenomenon called Rupee Cost Averaging.
This is when you invest a sum of money in regular installments over fixed
intervals, rather than as a lump sum at one go. The strange thing about it is that
the regular investor always makes more money even if the starting price, finishing
price and average price are the same. Look at the following table that compares a
Rs 100,000 investment over six months. The unit price of the MF is varying
through the six months, but starts and ends the same. But the SIP investor ends
Name of fund
NAV
appreciation
(5 YRS)
SIP
appreciation
(5 YRS)
NAV
appreciation
(Since
inception)
SIP
appreciation
(Since
inception)
Franklin India
Opportunities
Fund
44.18 45.82 15.04 34.3
Templeton
India Growth
Fund
42.84 40.54 21.43 28.69
HDFC Capital
Builder Fund
47.07 46.95 16.14 24.75
HDFC Tax
Saver
53.93 53.13 38.33 43.18
Birla Sun life
EQUI TY
fund
55 57.01 41 40.49
Birla Sun life
Tax Relief 96
45.57 46.12 40.64 41.14

52 | P a g e
with 2036 units paying an average price of Rs 50, while the Lump sum investor
ends up with 2000 units.
SIP
Month
Price of
units
Amount
invested
No of units
bought
Amount
invested
No of units
bought
1 50 100,000 2000 10,000 200
2 47 10,000 213
3 55 10,000 182
4 45 10,000 222
5 52 10,000 192
6 45 10,000 222
7 40 10,000 250
8 68 10,000 147
9 48 10,000 208
10 50 10,000 200
Total units
bought
2000 2036
While the lump sum investor sees erosion of his capital during the six months as
his NAV drops to Rs 40 at its lowest, the SIP investor does not see his capital go
through such dizzying oscillations as his money is being injected at a much slower
rate. In other words, he is limiting his exposure to the market volatility. Moreover,
as the price falls, he acquires more units, benefiting from it, just as he acquires

53 | P a g e
fewer units when it rises. On the whole, his cost of acquiring units falls, a smart
way to take advantage of the inherent market volatility.
Remember though, that an SIP only reduces your market risk and does not assure
profits. So whether the market is doing well or not, you will always be better off
investing in an SIP and your breakeven for an SIP will always be lower. Reaching
this breakeven or crossing it is of course not guaranteed.
ANALYSIS
Thus it can be summarized from the comparison that:
I. Lump sum investments do better than SIP investments in any rising market, averaging
does not make sense in that case if one believes that market history will continue to be
true in the future.
II. If looking for long-term, then it is better to put in the money today as Lump sum
Investments and sit tight, rather than spread it over the period provided one have
sufficient cash balance to invest.
Choosing a Mutual Fund
When you've recognized your purposes behind incorporating shared assets in your portfolio,
the subsequent stage is to choose the store or assets that will give you the best execution. Keep
in mind, in any case, that the common finances you pick must accommodate your general
technique and bode well with the remainder of your portfolio. Initially, you ought to choose
what sorts of assets you need, and afterward pick ones in those territories; or in the event that
you've effectively chosen (or officially claim) some great assets, fill in the holes. You can
utilize a screen to assemble a rundown of applicants (or avoid this in the event that you
definitely know which ones you're keen on), and afterward investigate them by getting the
reserve's plan. The vast majority of the data underneath is given in the initial couple of pages
of the reserve's outline. You can likewise discover more data from the common store
organization's site or from its YRly report.

54 | P a g e
Execution
Explore execution, both when charges. Take a gander at the store's chronicled execution over
a significant lot of time (3, 5, and 10 YRS). Why? Since there's a positive relationship among's
past and future outcomes (in spite of the fact that the connection is a long way from definite,
as certain assets do great one YR and all around ineffectively the following). It's unsafe to
concentrate just on late execution: it could be an accident, or the supervisor could be great just
in positively trending markets. Remember the accompanying inquiries when exploring the
execution of a specific common store:
• Is the execution steady?
• How is the execution when contrasted and companions and files? In the event that you expect
that a store you're thinking about won't stay aware of the files, you should simply get a list
subsidize.
• How is the execution after duties and costs (front and back-end loads and costs) are figured
in? This is the thing that will finish up in your pocket.
Likewise explore the common reserve's speculation style. Think about the accompanying:
• Growth or Income? Extensive top or little? U.S. or on the other hand global?
• Does the store's venture style coordinate your objectives? Has the style been predictable
through time?
• What dimension of hazard do they take on? Is it accurate to say that you are OK with this?
Does the execution mirror this dimension of hazard? (On the off chance that the store goes out
on a limb, execution ought to be better than expected)
• The methodologies that they use: short selling, influence, subsidiaries, showcase timing.
Look past the name of the store to decide the style; names aren't constantly characteristic of the
genuine style. For instance, a store that began as a little top may have expanded in resources
for the point where it's compelled to purchase bigger top stocks, however the name of the

55 | P a g e
reserve wouldn't have changed. Explicit possessions may give a few pieces of information as
to speculation style. Remember that shared assets are just required to unveil their property two
times every YR, and few do it all the more much of the time, so when you discover what they
have, their possessions have presumably changed. Likewise, numerous assets 'window dress'
their portfolios with yesterday's champs to make the reports look great, so these semi-YRly
reports aren't an ideal marker of venture style.
Administrator
This is essential in light of the fact that the chief makes the greater part of the purchase and sell
choices. On the off chance that the supervisor has been driving the reserve for quite a while,
you can be certain that the store's speculation style and methodology (talked about above) are
the manager's. If not, decide the supervisor's style dependent on past assets that have been
overseen by him/her. Investigate what the supervisor says in the YRly report and the plan. See
whether the director has generous individual resources put resources into the reserve. If not,
discover why.
Reserve Family
Diverse store families have distinctive arrangements, specialized topics, and administrations.
You should look at a few of them to discover their specific arrangements and administrations.
Administrations
One can get this data legitimately from the store. Call them or look in the plan.
• Account data and accessibility
• Newsletters
• Annual reports
• Checking accounts
• Phone recovery and exchanging

56 | P a g e
• Phone account information and statements (24 hrs?)
• Web account information and statements (24 hrs?)
• Hours of live delegate
• Wrap accounts
• Margin credits
• Other Considerations
• Loads and different expenses
• Minimum speculation
Here are a couple of extra tips to think about while picking MF for your portfolio:
• You don't have to claim a variety of shared assets. A bunch ought to be sufficient to
accomplish broadening, on the grounds that every one of them thus puts resources into many
stocks, bonds, and so forth.
• Consider dollar cost averaging, the act of contributing a similar sum every month. This is a
simple method to overlook the market vacillations and spotlight on the long haul picture
The above guidance ought to kick you off on the correct way. You will most likely find
different interesting points as you examine further. To accumulate more data, look at shared
store magazines, converse with others about their methodologies, and look at some reserve
appraisal.
Purchasing and Redeeming Shares
Contingent upon the common store you choose to buy, you may most likely purchase shares
straightforwardly from the reserve. This would enable you to avoid any business commissions.
For some MF, be that as it may, you may need to experience a representative; look at with the
store to discover which techniques they permit. A third option is to experience a common
reserve general store where you can without much of a stretch move your cash between assets

57 | P a g e
with a solitary record. Know that not every single common store take part in general stores,
albeit hundreds do.
There will likely additionally come when you need to sell, or reclaim, your offers. For instance,
in the event that you find that your store isn't living up to your desires or in the event that your
specific arrangement of contributing destinations happens to change, at that point you may
choose to sell partakes in at least one of your MF and investigate different assets or different
speculations completely. Look at your store's plan so as to discover the subtleties of their
reclamation procedure. Most assets enable you to reclaim by phone, yet some may necessitate
that you send in a structure.
Measurable TOOLS
There are distinctive factual parameters accessible on which a reserve might be investigated.
These are:
1. Standard Deviation
The most essential of all measures-Standard Deviation permits assessing the instability of the
store. On the other hand, it permits estimating the consistency of the profits.
Unpredictability is regularly an immediate marker of the dangers taken by the store. The
standard deviation of a store estimates this hazard by estimating how much the reserve changes
in connection to its mean return, the normal return of a reserve over some stretch of time.
A security that is unpredictable is likewise viewed as higher hazard since its execution may
alter rapidly in either course at any minute.
A reserve that has a reliable four-YR return of 3%, for instance, would have a mean, or normal,
of 3%. The standard deviation for this reserve would then be zero on the grounds that the store's
arrival in some random YR does not contrast from its four-YR mean of 3%. Then again, a
reserve that in every one of the most recent four YRS returned - 5%, 17%, 2% and 30% will
have a mean return of 11%. The store will likewise show an exclusive requirement deviation
in light of the fact that every YR the arrival of the reserve varies from the mean return. This

58 | P a g e
store is along these lines increasingly hazardous in light of the fact that it changes broadly
among negative and positive returns inside a brief period.
2. Beta (ß)
Beta is a reasonably generally utilized proportion of hazard. It fundamentally shows the
dimension of unpredictability related with the reserve when contrasted with the benchmark.
So normally the accomplishment of Beta is intensely reliant on the connection between's a
reserve and its benchmark. Therefore on the off chance that the reserve's portfolio doesn't have
a pertinent benchmark file, at that point a beta would be horribly insufficient.
A beta that is more prominent than one (ß >1) implies that the reserve is more unstable than
the benchmark, while a beta of short of what one (ß <1) implies that the store is less
unpredictable than the file. A reserve with a beta extremely near 1 (ß ~1) implies the store's
execution intently coordinates the file or benchmark.
On the off chance that, for instance, a reserve has a beta of 1.03 in connection to the BSE
Sensex, the store has been moving 3% more than the record. Consequently, if the BSE Sensex
expanded 10%, the store would be required to increment 10.30%.
Speculators anticipating that the market should be bullish may pick reserves displaying high
betas, which increment financial specialists' odds of beating the market. In the event that a
financial specialist anticipates that the market should be bearish sooner rather than later, the
assets that have betas under 1 are a decent decision since they would be relied upon to decay
less in an incentive than the record.
3. R-Square
The accomplishment of Beta is reliant on the connection of a store to its benchmark or its list.
Subsequently while thinking about the beta of any security, speculators ought to likewise
consider another measurement R squared that estimates the Correlation.
The R-squared of a reserve instructs financial specialists if the beta concerning a shared store
is estimated against a fitting benchmark. Estimating the connection of a store's developments

59 | P a g e
to that of a record, R-squared portrays the dimension of relationship between the reserve's
unpredictability and market hazard, or all the more explicitly, how much a reserve's instability
is a consequence of the everyday changes experienced by the general market.
R-squared qualities run somewhere in the range of 0 and 1, where 0 speaks to no relationship
and 1 speaks to full connection. On the off chance that a reserve's beta has a R-squared esteem
that is near 1, the beta of the store ought to be trusted. Then again, a R-squared esteem that is
under 0.5 shows that the beta isn't especially valuable in light of the fact that the reserve is
being thought about against an unseemly benchmark.
4. Alpha
Alpha = (Fund return-Risk free return) - Funds beta *(Benchmark return-hazard free return)
Alpha is the distinction between the profits one would anticipate from a reserve, given its beta,
and the arrival it really delivers. An alpha of - 1.0 methods the reserve created an arrival 1%
higher than its beta would anticipate. An alpha of 1.0 methods the store created an arrival 1%
lower. In the event that a reserve returns more than its beta, at that point it has a positive alpha
and in the event that it returns less, at that point it has a negative alpha. When the beta of a
reserve is known, alpha looks at the store's execution to that of the benchmark's hazard balanced
returns. It enables you to determine if the store's profits beat the market's, given a similar
measure of hazard.
The higher an assets chance dimension, the more prominent the profits it must create so as to
deliver a high alpha.
Typically one might want to see a positive alpha for the majority of the assets claimed.
However, a high alpha does not mean a reserve is completing an awful employment nor is the
other way around valid as alpha apportions the execution with respect to beta. So the
restrictions that apply to beta would likewise apply to alpha.

60 | P a g e
Alpha can be utilized to legitimately gauge the esteem included or subtracted by a reserve's
chief.
The precision of an alpha rating relies upon two variables:
1) The supposition that showcase chance, as estimated by beta, is the main hazard measure
vital;
2) The quality of store's relationship to a picked benchmark, for example, the BSE Sensex or
the NIFTY.
5. Sharpe Ratio
Sharpe Ratio= Fund return in overabundance of hazard free return/Standard deviation of Fund
In the event that reserves have low relationship with lists or benchmarks, they ought to be
assessed utilizing the Sharpe proportion. Since it utilizes just the Standard Deviation, which
estimates the instability of the profits there is no issue of benchmark connection.
The higher the Sharpe proportion, the better an assets returns in respect to the measure of hazard
taken.
Sharpe proportions are perfect for looking at supports that have a blended resource classes.
That is adjusted subsidizes that have a part of fixed salary contributions.

61 | P a g e
CHAPTER 4
DATA ANALYSIS AND INTREPRETATION

62 | P a g e
GENDER
This chart depicts that the total population of surveyed people mainly comprised of Males with
as high as 74% and female with the rest 26%.
AGE
This diagram shows the distribution of the respondents according to their age groups. The
highest number of people lied in the age bracket of 31-45 YRS i.e. 36%. Then were people
lying in the age group of 46-55 YRS with a percentage of 32% followed by those between 18-
30 YRS of age with the total of 25%. Lastly 7% respondents were 56 YRS and above.
MALE
FEMALE
18-30Yrs
31-45Yrs
46-55Yrs
56& above

63 | P a g e
PROFESSIONS
This diagram shows the distribution of the sample size according to their professions. Thus out
of 110 people surveyed 35% of the population was Businessmen, 36% were servicemen and
the rest 29% in others category.
BUSINESS
SERVICE
OTHERS

64 | P a g e
ANNUAL INCOME
This distribution shows that maximum number of respondents lie in the income group of less
than 5 lacs with 55%percentage. Then between 5-10 lacs with 34% & and finally 11% of
income groups which are between 10-25 lacs.
<5lacs
5-10lacs
10-25lacs
>25lacs

65 | P a g e
TYPES OF INVESTMENT PREFERRED
As it is clear from the above diagram that still majority of the population has invested in the
traditional based investments schemes like Life Insurance and Fixed Deposits(in Others) as
they find these safe. However the current trend has changed to an extent that now people in
order to earn quick and excess money have started looking at other schemes like investments
in Shares, Mutual Funds. Also Real estate is being looked at as a long term investment with
huge capital requirement thus number of people having invested money into it are limited.
Real Estate
Insurance
Shares
Mutual Funds
Others

66 | P a g e
REASON FOR INVESTMENTS
This shows that majority of people look at investment so as to guard for their future needs and
thus look for products like insurance. However others look at the present and thus invest either
to avail tax benefit or avail the advantage of secondary income.
TIME HORIZON
Secondary Income
29%
Tax Rebate
30%
Covering Future
Need
41%

67 | P a g e
The trend related to the investment horizon depicts that most of the investors look at the long
term horizon to cover future needs. But the young investors do not like to keep their money
blocked and thus invest their money only for a short duration of 1 YR and hence for them
investments in shares, Mutual funds etc. are the lucrative options.
DATA ANALYSIS
Now we need to analyze the data collected in order to know the perception about Mutual Funds
and their related products in the minds of Indian Investors such that the company is able to
better target and position its offering to the potential investors.
Market for Mutual Funds
Upto 1 Year
Upto 3 Years
Upto 5 Years
Upto 10 Years
Beyond 10 Year

68 | P a g e
Thus most of the people when surveyed and asked about Mutual Funds were unaware and not
investing in MF’s. This percentage was approx 62%. This shows that there is a large potential
to tap this ignorant population of educated urban society.
Why Not Mutual Funds?
When asked about the reason for not investing in MF’s the following responses were generated:
Invest
Not Invest

69 | P a g e
Thus the analysis done was that most of the people who do not invest in MF’s presently are
either those who are unaware about it or those who find other investment options more
attractive as compared to MF’s. Thus it is crucial to spread more awareness about the benefits
of Mutual Funds in order to promote them.
Preferences among Kinds of Mutual Funds
Those investors who are already investing in MF’s showed interest towards the following
kinds of MF products:
Among mutual funds most investors prefer growth funds. Balanced funds find favour with
older and conservative investors. The importance that people give to ELSS is only 8%. This
again emphasizes on the fact that tax saving funds are still not popular with investors.
Not Aware
Lack of Time
Risk Factors
Other Options
Cant Say

70 | P a g e
Among schemes investors prefer open ended schemes primarily because they feel locking in
money into a fund for 3 YRS is not feasible.
Awareness of Systematic Investment Plan (SIP)
Thus among the investors who were investing in Mutual Funds when asked whether they were
aware about SIP’s or not. Then following result was found:
Growth
Income
Balanced
Sector
ELSS
Open Ended
Close Ended

71 | P a g e
Thus majority of the investors were unaware about SIP’s including those who had already
invested their money in Mutual Funds through their banks.
Analysis
After analyzing the data the following can be summarized:
i. Higher number of men invest in shares and go by self analysis while investing as
compared to females who majorly invest in Fixed Deposits and look for the advice of
friends or investment advisors while choosing a particular investment option.
ii. Investors who are young lying in the age group of 18-30 invest more in shares and
mutual funds as they want to make quick money and are ready to take higher risk. While
investors in older age groups invest more in products like Insurance, Fixed deposits and
Debt funds so as to earn stable income with minimum risk.
iii. Also businessmen invested their money more in Real estate as compared to service
class investors. This could be due to higher income and savings availability with
business class investors. Moreover businessmen look at longer time horizon of 10 YRS
and look for tax rebate while investors indulged in services are investing their savings
mainly for the purpose of earning secondary income and covering future needs and they
invest with shorter span of 1-3 YRS.
iv. When asked about the preference among the various kinds of investment, majority of
the investors preferred Insurance and nearly 83 out of 110 investors had already taken
Aware
Not Aware

72 | P a g e
insurance for themselves and their family members. The changing trend however
showed that more investors were investing in shares now.
v. The highest percentage of investors was those who were either looking for very short
term investment horizon of 1YR or long-term period of up to 10 YRS. The investors
who were ready to stay invested only for 1 YR were from the age group of 18-30 and
those people who were keeping in mind long term needs and investment horizon of 10
YRS were lying in the age bracket of either 31-45 or 45-54.
vi. There is large potential for the growth of Mutual Funds in the Indian Market as still
large numbers of potential investors are unaware about the benefits and scope of Mutual
Fund Industry. They still consider it best to invest in traditional based saving schemes
like FD’s, Kisan Vikas Patra or other post office schemes. However now more people
are aware about the stock markets but they are ignorant about Mutual Funds which offer
benefit of both low risk and higher returns as compared to all other investments. Thus
the onus lies on the Mutual Fund Industry to make people aware and target this potential
market.
vii. The reason for not investing in Mutual Funds is either the investors are unaware or they
find other options more attractive.
viii. It has been observed that very few investors namely 21% of the sample size chosen
were aware about Systematic Investment Plan. Thus it can be seen that still people are
aware only about the lump sum investments in mutual funds. They do not know about
schemes under MF like SIP (Systematic Investment Plan), SWP (Systematic
Withdrawal Plan), STP (Systematic Transfer Plan) etc. which can be of an advantage
to their portfolios.
ix. Majority of the investors who are investing in MF’s prefer Balanced, ELSS and Growth
funds as compared to Sectoral funds

73 | P a g e
CHAPTER 5
SUMMARY OF FINDINGS, SUGGESTIONS

74 | P a g e
Recommendations for Investors:
MF are vehicles through which financial specialists can put resources into value offers and
obligation instruments. At the point when the financial specialist picks common reserve course
to put resources into value he faces a wide selection of kinds of plans with various alternatives.
Financial specialist must be clear about the venture objectives, anticipated returns and the ideal
assignment into values and obligations. In the wake of settling on the value partition, the
speculator has a decision between effectively overseen reserves and latently overseen reserves.
Choosing a common store for speculation is a sifting procedure that includes taking out assets
dependent on the different attributes that impact the execution of the reserve. Today, these
information of reserve traits and execution is accessible on numerous online stages like Value
Research, Morning Star, and Money Control and so on. Let us accepting at this phase the
financial specialist picks to put resources into effectively overseen reserves, presently he can
take a gander at the expansive grouping of the shared store conspires that depends on the sort
of organizations (contents) they put resources into, viz. Substantial Cap, Mid-Cap, Small Cap
and Multi-Cap reserves. There are a few manners by which the classifications of assets can be
blended to shape a perfect portfolio. In the wake of picking a proper class of reserve for venture,
the financial specialist must take a gander at the long haul past return of the assets. According
to the discoveries of this examination, higher the past return, higher are the odds that the store
may keep on performing in future. This finding is negating to the disclaimer that the common
reserve organizations state in all methods of advancements and promoting that the past
execution isn't a certification for future execution. Financial specialists can sift through the
assets that have failed to meet expectations in past and hold the assets that have performed
relative better in that class in the more extended past, state recent YR or 7-YR return. Here, the
past return over the shorter period ought to be disregarded. For instance, a reserve that has
performed well in the previous a half YR or even recent YR ought not be favored over the
assets that have longer history of good execution. Consequently, speculator may relegate some
weight to 3-YR return and high weight to 5-YR as well as 7-YR return. In this procedure,
financial specialist may go over the well known reserve rankings and appraisals by a few online
stages. At the point when reserves are chosen on longer term past returns, not really the most
astounding appraised assets might be chosen. The financial specialist may disregard the
positioning and evaluations in the event that he is happy to create as a Do-it-Yourself (DIY)
speculator. Likewise, the financial specialists must take a gander at Sharpe Ratio of the
shortlisted assets. Sharpe proportion estimates the hazard balanced past return of the reserve.

75 | P a g e
Along these lines, higher this proportion better is the reserve. Presently the financial specialist
can take a gander at the hazard lattices viz. beta and standard deviation (SD). Beta, the
deliberate hazard measure and SD, the arrival instability of the store have a positive and
measurably critical effect on the execution of a reserve. Along these lines, a hazard opposed
financial specialist should choose assets with lower beta and lower SD. Alongside this, the
alpha that measurers the reserve's outflanking its benchmark list is additionally a critical factor.
A positive and higher alpha demonstrates that the aptitudes and choices of the store the board
has paid positive profits. Despite the fact that factual consequences of this examination are not
predictable but rather this is a separating factor for the effectively overseen reserves. Financial
specialist can additionally take out the assets with lower (or negative) alpha. Further, the
speculator should likewise take a gander at the portfolio qualities of the assets under thought.
Centralization of the portfolio is an essential ascribe to be considered. The consequences of
this investigation recommend a negative effect of the portfolio focus on execution. Here,
fixation is alluded as the level of portfolio in top 3 contents. In this manner, financial specialist
must choose a store with very much expanded portfolio over a reserve with exceptionally
focused portfolio. This fortifies the conviction of old fashioned of suspected that putting all
investments tied up on one place isn't fitting. A high PE proportion implies predominance of
significant worth driven stocks in the arrangement of the reserve. In the event that the financial
specialist puts stock in esteem contributing methodology may invesin subsidize with higher PE
proportion.
Conclusion

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