Functional management

1
A FUNCTIONAL MANAGEMENT PROJECT REPORT ON THE TOPIC:
A PROJECT REPORT ON COMPARATIVE STUDY OF MUTUAL
FUNDS IN INDIA
Submitted in
Partial Fulfillment for the Award of the Degree
MASTER IN MANAGEMENT STUDIES (MMS)
To
THAKUR INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH
As per the guidelines of
University of Mumbai
Submitted By
Mr. Nikhil Gupta
Roll No: M2022017
MMS – Finance (2020-2022)
Under the Guidance of Dr. Leena Gadkari
Associate Professor

2
PROJECT COMPLETION CERTIFICATE
To whomsoever it may concern
This is to certify that Nikhil Manoj Gupta of Thakur Institute of Management
Studies and Research has duly completed his project as part of his MMS
curriculum for 2020- 2022 on "A Project report on Comparative study of
Mutual Funds in India" under the guidance of Dr. Leena Gadkari
Dr. Leena Gadkari Dr. Pankaj Natu
(Associate Professor, TIMSR) (Director, TIMSR)
Signature of the guide Signature

3
DECLARATION
I, Mr. Nikhil M. Gupta hereby declare that the project report entitled, “A Project
report on comparative study of Mutual Funds in India” submitted to Thakur
Institute of Management Studies and Research, Mumbai is a record of original work
done by me under the guidance of Dr. LEENA GADKARI, associate professor in
Thakur Institute of Management Studies and Research, and this project work is
submitted in fulfillment of the requirements for the degree of Master in
Management Studies. The results embodied in the study have not been submitted
to any other institute or university for the award of any other degree or diploma
Signature of the
Candidate:
Name of Student: Mr. Nikhil Gupta
Roll No: M2022017
Specialization: Finance Batch: F1

4
ACKNOWLEDGEMENT
I would like to take the opportunity to express my sincere thanks and obligation to my mentor for
the project, Dr. LEENA GADKARI who was always there to help and guide me whenever I needed
help.
It is not possible to prepare a project report without the assistance and encouragement of other
people. This one is certainly no exception. On the very outset of this report, I would like to extend
my sincere and heartfelt obligation towards all the personages who have helped me in this
endeavor. Without their active guidance, help, cooperation and encouragement, I would not have
made headway in the project.
I would like to thank our Director Dr. Pankaj Natu and Thakur Institute of Management Studies
and Research for giving me an opportunity to learn and understand about the Finance and Research
aspects. Special thanks to Dr. Leena Gadkari for her valuable guidance in completing this project
and helping me to understand this project better and supporting me with her experience on the
same to make my project worth for my own benefit and also for the overall benefit of the objective
of the summer project.
My sincere and heartfelt thanks to all my teachers at the department of MMS, Thakur Institute of
Management Studies and Research for their valuable support and guidance.

5
Executive Summary
In a developing country like India, the stock market plays a critical role in luring rural people in
recent years. All capital market investing opportunities, according to most investors, are risky.
Furthermore, if an investor intends to invest in shares in order to get larger returns in a shorter
period of time with a lower initial investment, he must have appropriate technical knowledge of
the stock market. In addition, he must commit significant time to gaining sufficient technical
knowledge in order to be an excellent investor in the stock market. As a result, there appears to be
an expanding and inclining trend toward mutual fund investment.
When it comes to saving or investing money, most Indians prefer traditional options such as
fixed deposits (FDs), Public Provident Fund (PPF) or gold. These avenues are well-known for
capital preservation and stable returns. However, mutual funds are a good alternative for short-
term as well as long-term returns For instance, they are considered relatively safe investments.
And while the returns can vary, they can help beat inflation. In addition, mutual funds are more
liquid compared to FDs. You can exit a fund any time you want to. FDs don’t provide you that
facility.
Mutual funds vs real estate has been one of the most widely debated subjects in the realm of
personal finance. While mutual funds have gained traction of late, real estate for long has been
viewed as a safe and prudent investment option.

6
List of figures and Charts
 Introduction to Mutual Funds………………………………………………………… 8
 Investors typically earn a return from a mutual fund in three ways…………………….11
 Equity Funds……………………………………………………………………………..12
 Fixed Income Fund………………………………………………………………………13
 Index Fund…………………………………………………………………….…………14
 Balance Fund…………………………………………………………………….………15
 Money Market Fund……………………………………………………………….…….16
 NAV of a Mutual Fund……………………………………………………………..……18
 ICICI Prudential Technology Fund – Scheme details and returns…………….………. 34
 UTI banking and Financial Services Fund details and returns………...……….….....….38
 Mirae Asset Healthcare Fund scheme details and returns…………...…….…………… 42
 Mutual Fund charges…………………………………………………………………….46
 SEBI Guidelines………………………………………………………………………....50
 Mutual Fund Mehcanism……………………………………………………...………...54
 SEBI Regulatory Guidelines……………………………………………………….……55

7
Table of Content
Ch. No. Description Page no.
1 INTRODUCTION
1. History of Mutual Funds
2. Mutual Fund working
3. Types of Mutual Funds
4. NAV of a Mutual Fund
5. Need for the Study
6. Objectives of the study
7. Limitations to the study
8
9
10
12
18
20
20
2 REVIEW OF LITERATURE 21
3 RESEARCH METHODOLOGY 29
4 DATA ANALYSIS & INTERPRETATION
1. Advantages and disadvantages of Mutual Fund
2. Top 3 Mutual Fund Sector wise
a) ICICI Prudential Technology Fund
b) UTI Banking and Financial Services Fund
c) Mirae Asset Healthcare Fund
3. Mutual Fund Fees
4. Mutual Fund India Regulation
30
30
33
37
41
45
47
52
5 CONCLUSION 57
6 FINDINGS 58
7 LEARNING OUTCOMES 59
8 RECOMMENDATIONS 60
9 BIBLIOGRAPHY 61

8
CH. 1 INTRODUCTION TO MUTUAL FUND:
Any good investment strategy nowadays tends to include mutual fund investments as well. While
investing in a mutual fund is a fantastic idea, it frequently leaves potential investors perplexed as
to what this whole mutual fund thing is all about. Mutual funds are really easy to comprehend.
The fundamentals of a mutual fund are that you invest money in one with a group of other
people. The fund's provider then invests the funds, and you receive the profits.
A mutual fund is a type of collective investment vehicle that pools and invests money from
several investors in shares, bonds, government securities, and money market instruments.
Mutual fund is also known as pool of investment, wherein even a small amount from the investor
is collectively invested into diversified portfolio so as to maximize the returns.
Professional fund managers invest the money collected in mutual fund schemes in stocks, bonds,
and other securities in accordance with the scheme's investment objective. After deducting
appropriate expenses and levies, the income / profits created by this collective investment
scheme are allocated proportionately among the investors by determining a scheme's "Net Asset
Value" or NAV. Mutual funds impose a nominal fee in exchange.

9
 In a nutshell, a mutual fund is a pool of money put together by a group of investors and
managed by a professional fund manager.
 In India, mutual funds are formed as a trust under the Indian Trust Act of 1882, in line
with the SEBI (Mutual Funds) Regulations of 1996.
 The fees and expenditures that mutual funds incur to operate a scheme are controlled by
SEBI and are subject to certain limits.
1.1) History of Mutual Funds
By the 1890s, the concept of pooling resources and spreading risk through closed-end investments
had made its way to the United States. The Boston Personal Property Trust was the first closed-
end fund in the United States, established in 1893. The investments were mostly in real estate,
according to Collins Advisors, and the vehicle is now more akin to a hedge fund than a mutual
fund.
The Alexander Fund, established in Philadelphia in 1907, was a significant step toward the
contemporary mutual fund. The Alexander Fund had semi-annual issues and allowed investors to
withdraw money whenever they wanted.
Historians disagree over the beginnings of investment funds, while many credit the Dutch with
being the first to create closed-end investment companies.
Subhamoy Das dates the origins of the mutual fund to Dutch businessman Adriaan van Ketwich,
who established an investing trust in 1774, in his economics textbook "Perspectives on Financial
Services." "Van Ketwich most likely believed that diversity would appeal to small-cap investors.
Van Ketwich's fund is called Eendragt Maakt Magt, which means 'union builds power.' "The book
explains everything.
Mutual funds didn't truly catch on with American investors until the 1980s and 1990s, when they
achieved all-time highs and provided great returns. They've become commonplace investments,
and they're at the heart of most people's retirement plans. The concept of pooling assets for
investing objectives, on the other hand, has a long history.

10
We examine the growth of this investment vehicle, from its origins in the Netherlands in the
nineteenth century to its current standing as a worldwide industry, with fund holdings totalling
trillions of dollars in the United States alone.
1.2) How does a mutual fund work?
It's important to resist the urge to look at the fund's performance every time the market drops or
rises dramatically. For an actively-managed equity programme, patience is required, as the fund
must generate returns in the portfolio over a period of 18 to 24 months.
When you invest in a mutual fund, your money is pooled with that of many other people. Mutual
funds units are issued in exchange for the money invested at the current NAV. Dividends,
interest, capital gains, and other income received by the mutual fund may be distributed to
investors as income distributions. If you sell mutual fund units for more (or less) than you
invested, you may have capital gains (or losses).
A mutual fund is both a financial investment and a legal entity. This dual nature may appear odd,
but it is no different than how an AAPL share represents Apple Inc. When an investor buys
Apple stock, he is purchasing a portion of the company's stock and assets. A mutual fund
investor, on the other hand, is purchasing a portion of the mutual fund firm and its assets. The
distinction is that Apple makes revolutionary devices and tablets, whereas a mutual fund
company makes investments.
If a mutual fund is viewed as a virtual corporation, the fund manager, often known as the
investment adviser, is the CEO. A board of directors hires the fund manager, who is legally
bound to operate in the best interests of mutual fund shareholders. The majority of fund
managers are also the fund's owners. In a mutual fund company, there are very few additional
employees. Some analysts may be hired by the investment adviser or fund management to assist
in the selection of investments or market research. A fund accountant is employed to calculate
the fund's NAV, or daily portfolio value, which affects whether share prices rise or fall. A
compliance officer or two, as well as a lawyer, are required for mutual funds.

11
Investors typically earn a return from a mutual fund in three ways:
- One of the main source of income becomes the dividend which is earned from the
stocks, or Interests or even coupons in case of bonds. The fund gives an option to the
investor to invest the extra earned money or the returns like Dividend further in the
Mutual Fund and purchase some extra NAV units so that in future when the stock
grows, the returns grow as well.
- Another kind of return is the capital gain from the fund. This happens when the fund sell
off some securities from the overall portfolio. These amount is given back to the
investor in the form of distribution
- The price of the fund's shares rises if the value of the fund's holdings rises but the fund
manager does not sell them. Then, on the market, you can sell your mutual fund shares
for a profit.
.

12
1.3) Types of Mutual Funds:
Equity Funds:
The most common type is equities or stock funds. This type of fund invests mostly in equities, as
the name suggests. Some of the categories in the group. Small, mid and large-cap equity funds
are named based on the size of the companies they are investing it in. Others are labelled
according to their investment strategy: aggressive growth, income-oriented, value, and so on.
Equity based funds are classified as when they invest in domestic or international (foreign)
companies. Because there are so many various kinds of equities, there are so many distinct types
of equity funds. Using a style box, such as the one shown below, is a wonderful method to grasp
the universe of equity funds.
The idea here is to classify funds based on both the size of the companies invested in (their
market caps) and the growth prospects of the invested stocks. Value fund indicates the style of
investing that looks for high-quality, low-growth companies that are out of favour with the
market. The companies are therefore referred by their low PE ratio (Price to earnings), low price-
to-book (P/B) ratios, and high dividend yields. Conversely, spectrums are growth funds, which
look to companies that have had (and are expected to have) strong growth in earnings, sales, and
cash flows. The companies does not pay dividends since their PE ratios are high.
A mutual fund's strategy may include a mix of investment styles and business sizes. A large-cap
value fund, for example, would hunt for large-cap businesses that are in good financial shape but
have lately checked their stock prices decline, and it would be in the upper left quadrant of the
style box (large and value). Small cap growth, on the other hand, is a fund that invests in new
and booming technologies businesses with strong growth prospects. A mutual fund like this can
be regarded as small and growing funds.

13
Fixed-Income Funds:
The fixed-income category is another important group. A fixed-income mutual fund invests in
fixed-income securities such as government bonds, corporate bonds, and other debt instruments
that provide a fixed rate of return. The premise is that the fund portfolio earns interest and then
distributes it to the shareholders.
Fixed Income funds are also called as bond funds as they are frequently actively managed and
seek to buy undervalued bonds in order to sell them for a profit. Bond funds are more likely to
pay larger huge returns than certificates of deposit and term deposit investments, but they are
not risk-free. These funds can change as per where it has been invested due to the many
different types of bonds available.
For an instance, investment done in junk bonds is comparatively riskier than one that invests in
government securities. In addition, practically all bond funds are vulnerable to interest rate risk,
which implies that when rates rise, the fund's value falls.

14
Index Funds:
Another type of investment that has gained a lot of traction in recent years is known as "index
funds." Their investment strategy is predicated on the premise that regularly beating the market
is difficult and expensive. As a result, the index fund manager purchases companies that
correlate to a significant market index like the S&P 500 or Dow Jones Industrial Average
(DJIA). This technique necessitates less research from analysts and consultants, resulting in
fewer expenses devouring profits before they are passed on to shareholders. These funds are
frequently created with cost-conscious investors in mind.
Index Funds today are a source of investment for investors looking at a long term, less risky
form of investment. The success of index funds depends on their low volatility and therefore the
choice of the index.
NSE Indices’ are used by a number of well-known mutual funds in India for promoting Index
Funds.

15
Balanced Funds:
Stocks, bonds, money market instruments, and alternative assets are all part of a balanced fund's
portfolio. The goal is to minimize exposure risk across asset types. This Fund is also called as
Asset Allocation Fund. There are two types of mutual funds created to meet the needs of
investors.
Some funds have a fixed allocation approach, allowing investors to have predictable exposure to
diverse asset classes. Other funds use a dynamic allocation percentages technique to
accommodate the needs of different investors. This could involve reacting to changes in market
conditions, business cycle shifts, or the investor's own life stages.
While dynamic allocation funds have similar goals to balanced funds, they are not required to
hold a certain percentage of each asset class. As a result, the portfolio manager has the authority
to change the asset class ratio as needed to keep the fund's stated strategy intact.

16
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
are the funds which involves the maximum investment in Government Securities and corporate
debts, 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
flowto investors. As such, the audience for these funds consists of conservative investors and
retirees. The reason is because the income is generated on a regular basis and tax-conscious
investors would want to avoid these funds.

17
Global Funds:
An international fund (sometimes known as a foreign fund) invests exclusively in assets outside
of your native country. Global funds, as the name says the fund can invest in any country of the
world, including India and outside country. It's difficult to say whether these funds are riskier or
safer than local investments, but these investments comes with a lot of rules and regulations
based on country to country and political risks. On the other hand, they can actually lower risk
by enhancing diversification these will lead to less loss as the portfolio is diversified, because
gains in foreign nations may be uncorrelated with returns at home. Despite the fact that the
world's economies are getting increasingly intertwined, it's still likely that another economy
elsewhere is outperforming your own.
1.4) NAV of a Mutual Fund
NAV refers to the Net Asset Value of the Mutual Fund. For both small and large investors,
mutual funds offer diversity, competent portfolio management, and liquidity. Each fund pools its
investors' money and then purchases a portfolio of securities that the fund managers hold and
trade. Each fund is a stand-alone security that may be bought and sold at its own price. The Net
Asset Value (NAV) and the Public Offering Price are two sides of the same coin (POP).
Understanding how a fund's NAV is calculated can help you recognise the link between the
fund's share price and the collective prices of the underlying securities it holds.
The performance of a Mutual Fund's strategy is measured by its Net Asset Value (NAV). NAV
stands for net asset value, which is the market value of the securities held by the scheme. Mutual
funds diversify the investment of the pooled amount collected from the investors into the stock
market. Because the market value of the securities keeps on changing daily, the NAV (Net Asset
Value) of a scheme fluctuates as well. On any given day, the NAV per unit is calculated by
dividing the market value of a scheme's securities by the total number of units in the scheme.
The formula to calculate the Net Asset Value is given below:

18
NAV of a Mutual Fund
 The per unit market value of a fund is represented as net asset value, also known as net value and
net book value, and often shortened as NAV.
 It refers to the price at which a mutual fund business sells its fund units to an investor. Investing
in a mutual fund The price at which investors sell their units back to the fund house is also known
as the NAV.
 NAV is computed by dividing the total value of all assets in an investor's portfolio by the
liabilities and expenses incurred in that portfolio. Investors can use NAV to track the performance
of their mutual fund.
 By determining the percentage rise in the mutual fund, they may compute the actual increase in
their investments.

19
1.5) Need for the Study
 The main purpose of this project is to understand the functioning of a Mutual fund.
This project helps us understand the mutual fund industry in detail.
 There are plenty of investment opportunities available when it comes to stock market
but people are unaware of Mutual funds and its potential to grow in the long term
period.
 To know the regulators of Mutual Funds and their guidelines all the Mutual Fund
Companies has to adhere and what charges or fees are incurred if an investor is
redeeming a mutual fund.
 To show a comparison of the mutual fund for each of 3 sectors IT, Banking and
Pharma and understand the factors from investor perspective before investing in the
fund.
1.6) Research Objectives
 To get an in-depth idea about the benefits available from Mutual Funds Investment.
 To analyse the mutual funds from investors perspective and take decision accordingly
before investing in the Mutual Funds
 To Study some of the mutual funds and comparison between them.
 To give an idea about the regulations of Mutual Fund

20
CH. 2 LITERATURE REVIEW
Performance Analysis of Mutual Fund: A Comparative study of SelectedDebt Mutual
Fund Scheme in India.
(Komal Sharma, May 2020)
Mutual funds playing a key role in the development of India's debt market and have emerged as a
key source of funding. Mutual funds considered as one of the best investment options as
compared to other alternatives, as low cost is the common feature of the mutual fund. Mutual
fund schemes also provide diversified portfolio management and reducing risk and maximizing
returns. Mutual fund scheme is the most ideal investment for the common man as it provides a
professionally managed stock market and low risk with maximum returns. The basic need and
objectives of this study are to evaluate the performance of selected debt mutual fund schemes in
India and to examine the risk and return component among these mutual funds. The present
study is based on secondary data of five debt mutual funds launched by the different private
sector companies between the period of January 2017 to December 2019. The study used NAV
and the total return of these selected funs along with different tools of study like alpha, beta,
Sharpe ratio, and Jenson's ratio. The study finds out that three mutual funds have performed well
and two funds had not performed well during the study period of study and the same as three
mutual fund schemes have performed well in the high volatile market expect Axis corporate debt
and HSBC fund. Investors are advised to consider the statistical parameter to ensure the
consistent performance of the mutual fund. This study is providing some insight into the
performance of mutual fund which will help them taking rational investment decisions and
allocating their resources in the right mutual fund schemes.
Overview of bond mutual funds: A systematic and bibliometric review
(Lilith B, Suman Chakraborthy, Bidyut Kumar Ghosh, Ravindra Shenoy, 12th October
2021)
The focus of this review is to exhibit a thorough analysis of prominent aspects in bond funds
literature and their conceptual developments employing the trending bibliometric analysis. The
study was conducted using the Scopus database, which found 354 scholarly documents during a
40-year period spanning from 1982 to 2021, revealing that the amount of research within these
fields has a limited presence in the academic literature. The authors, the publications, thematic
groups, distribution of keywords, country of publication, trends, and the papers most frequently
cited are examined to get an explicit view of the extant research. Thus, the present review
identifies the existing knowledge base, examines it, and demonstrates the visualizing patterns to

21
capture the fact-based insight into trending themes in the amphitheatre of bond funds. The
review further explicitly identifies three research fronts, i.e. performance measures, risk
approaches, and bond fund flows. Finally, the findings of the study would be a virtue for
researchers, practitioners, and academicians to proceed to further explore the area for an
overview of trends and their empirical investigation.
A Study on the Growth of Mutual Funds in India
(Dr. Ekta Rokade, March 2021)
Mutual Fund, today, has emerged as one of the most popular financial investment tool. The
mutual fund industry is the rising and fast growing segment of the Indian Financial Market. It
provides a variety of schemes to suit the needs and risk return profile of different categories of
investors. Mutual funds help the small and medium size investors to participate in today’s
complex and modern financial scenario. Investors can participate in the mutual fund by buying
the units of the fund. A mutual fund is a trust with professionally managed investment support
that collects and channelizes the savings of a number of investors who bear a common financial
goal and invests in shares, debt securities, money-market securities or a combination of these.
And these investors on investments in funds are known as unit holders. These securities are
professionally managed on behalf of the unit holders and each investor holds a share/unit of the
portfolio in ratio of their investment and net fund value, which is, entitled to profits as well as
losses.Income earned or loss through these investments and the capital appreciation realized is
divided among its unit holders in proportion to the number of units owned by them after
deducting applicable expenses, load and taxes. Keywords: debt securities, money-market
securities, risk, rate of return, Portfolio.
A Literature Review on Investors' Perception towards Mutual Funds with Reference to
Performance, Risk - Return, and Awareness
(Prafulla Kumar Swain, Manoranjan Dash- December 2017)
The world of finance has witnessed an exponential growth in the post information technology
revolution of the 1990s. The present study made an attempt to do a diagnostic analysis of past
literature, though a lot of research has been done on investors' perception on mutual funds. In the
present study, literature review on various dimensions with respect to the measurement of
performance, risk - return trade off of mutual funds, and investors' awareness, education, and
interest regarding mutual funds was examined to clear the gateway for the upcoming researchers
in the field of the mutual fund industry.
Review of Mutual Funds Investment in India
(Dr. Gajraj Singh Ahirwar b – 5th April 2021)
The Indian mutual fund's industry, which started its excursion with the foundation of the Unit Trust

22
of India in 1964, has seen unobtrusive development lately. There has been developing both
regarding AUM just as the assortment of items advertised. As on December 2015, the investors in
India have a choice to look over in excess of 1,000 of mutual funds plans spread across 44 fund
houses with a complete AUM estimation of '13.46 lakh crores. The passage of unfamiliar players
has prompted the presentation of an assortment of inventive items to suit the developing necessities
of Indian investors. The Indian mutual fund's industry was discovered to be overwhelmed by
institutional investors.
The creator assessed the presentation of foundation mutual funds in India. A short examination
has been made between HDFC mutual fund, Reliance mutual fund, ICICI Prudential mutual fund,
Birla Sun life mutual fund, UTI mutual fund, and SBI mutual fund. The creator discovered HDFC
and ICICI mutual fund to be safer and Birla sun life mutual fund as better entertainer. Nonetheless,
their figuring’s show that Reliance mutual fund is high riskier. The creators express the
requirement for promoting efforts by Reliance. Further, the investigation expresses that public
organization's funds are more liked because of security and less risk. For a similar explanation,
obligation funds are likewise sought after than value based funds. The paper examines the insight
and conduct of specialists and counsels with respect to investment in mutual fund's Micro SIP. It
incorporates investment design, stock selectivity, selling revenue for Micro SIP, monetary
consideration and financial improvement of mutual fund industry. It has been discovered that
larger part of specialist offer a wide range of administration, still, 10% offer either value obligation
funds and5% specialists practice just in duty saving plans. Month to month assortment premise is
generally liked by specialist than day by day, week by week or yearly premise. Additionally, the
greater parts are keen on the offer of Micro SIP, yet at the same time there is some level of specialist
who is reluctant for same. Concerning of Micro SIP, greater part position of investors gives a
positive reaction. Another reality has been uncovered that specialists will offer Micro SIP for their
own advantage as well as for financial turn of events. It has been accounted for that limit of
specialists sells mutual fund plots when contrasted with dealers of securities, protection
arrangements and Ponzi plans. Fewer specialists are discovered to be a merchant of RD and FD in
the financial area. It likewise demonstrates that advancement is exceptionally continued in mutual
fund area than in banking and protection area
The Indian Mutual Fund Industry
(G.V Satya Shekhar – April 2014)
In India, there are a few studies on mutual funds, which have a complete scientific analysis,
primarily due to the comparatively short period of existence of mutual funds. Samir et al. (1994)
reviewed the work done with respect to capital markets during the 15-year period from 1977 to
1992.1 they mentioned that a large number of works are merely descriptive or prescriptive without
rigorous analysis. However, a rigorous scientific research was carried out in this subject in other
countries. Besides this, now we can obtain a lot of information through different websites or portals
like ‘mutualfundsindia.com’
Predicting the net assetvalue ofmutual fund: an extended literature review
(Shikha Singla; Gaurav Gupta – 18th
March 2019)

23
: Mutual funds have emerged as the most dynamic segment of the Indian financial system. With
its potential to provide higher return by investment in diversified securities, mutual funds emerge
as one of the most promising investments in uncertain markets. With a variety of mutual funds
competing in the present scenario market, it becomes a challenging decision for the investor to
balance risk and return trade-off on the portfolio to maximize returns. Therefore, the important
aspect for portfolio manager is to predict the net asset value (NAV) of mutual funds. Various
methods and techniques in the field of economics and computer science have been used in the
quest to gain insights into NAV prediction. The aim of the paper is to provide an extended
literature review of different techniques in different areas of computer science in order to explore
the future possibilities. This paper explores the past research work and proposes the future
roadmap to predict the NAV of mutual funds by using different techniques with greater
accuracy.
Performance Evaluation of Mutual Funds in India: Literature
(Dr. Monty Kanodia, Kiran Khinchi – October 2017)
Mutual fund has been the foremost favored investment choice for the small
Investors since its rise. The foremost purpose for this can be the high
Investors to participate within the market securities and therefore serving
To them in increasing their business thus reducing the risk. Hence the study
Of mutual fund has been equally necessary in today’s situation because it is
Tends to possess genuine. This paper significant improves the necessity
Needed before investing in any mutual fund. With the trend of investment
In mutual fund gaining popularity day by day it also becomes important to
study the risk involved and the substantial value of returns incurred
Through it. This paper attempts to generate the knowledge about Indian
mutual funds industry.
Measuring skill in the mutual fund industry
(Jonathan B. Berk - October 2015)
Using the value that a mutual fund extracts from capital markets as the measure of skill, we find
that the average mutual fund has used this skill to generate about $3.2 million per year. Large
cross-sectional differences in skill persist for as long as ten years. Investors recognize this skill
and reward it by investing more capital with better funds. Better funds earn higher aggregate
fees, and a strong positive correlation exists between current compensation and future
performance. The cross-sectional distribution of managerial skill is predominantly reflected in
the cross-sectional distribution of fund size, not gross alpha.
Measuring Mutual Fund Performance with Characteristic-Based Benchmarks (Kent
Daniel, Mark Grinblat, Sheridan Titman – 18th April 2012)

24
This article develops and applies new measures of portfolio performance which use benchmarks
based on the characteristics of stocks held by the portfolios that are evaluated. Specifically, the
benchmarks are constructed from the returns of 125 passive portfolios that are matched with
stocks held in the evaluated portfolio on the basis of the market capitalization, book-to-market,
and prior-year return characteristics of those stocks. Based on these benchmarks, “Characteristic
Timing” and “Characteristic Selectivity” measures are developed that detect, respectively,
whether portfolio managers successfully time their portfolio weightings on these characteristics
and whether managers can select stocks that outperform the average stock having the same
characteristics. We apply these measures to a new database of mutual fund holdings covering
over 2500 equity funds from 1975 to 1994. Our results show that mutual funds, particularly
aggressive-growth funds, exhibit some selectivity ability, but that funds exhibit no characteristic
timing ability.
A Study of Fund Selection Behaviour of Individual Investors Towards Mutual Funds –
with reference to Mumbai City
(Kavitha Ranganathan – 23rd Jan 2016)
Consumer behaviour from the marketing world and financial economics has brought together to
the surface an exciting area for study and research: behavioural finance. The realization that this
is a serious subject is, however, barely dawning. Analysts seem to treat financial markets as an
aggregate of statistical observations, technical and fundamental analysis. A rich view of research
waits this sophisticated understanding of how financial markets are also affected by the 'financial
behaviour' of investors. With the reforms of industrial policy, public sector, financial sector and
the many developments in the Indian money market and capital market, Mutual Funds which has
become an important portal for the small investors, is also influenced by their financial
behaviour. Hence, this study has made an attempt to examine the related aspects of the fund
selection behaviour of individual investors towards Mutual funds, in the city of Mumbai. From
the researchers and academicians point of view, such a study will help in developing and
expanding knowledge in this field.
The success story of any economy can only be scripted on the basis of sound financial system of
the country. Economic reform process of 1991 had a great impact on the financial system of the
country leading to the overall development of the Indian economy. Today, India’s financial
system is considered to be sound and stable as compared to many other Asian countries where
the financial market is facing many crises. During last one decade or so, role of Indian mutual
funds industry as a significant financial service in financial market has really been noteworthy.
In fact, Mutual funds have emerged as an important segment of financial market of India,
especially as a result of the initiatives taken by the Govt. of India for resolving problems relating
to UTI’s US-64 and to liberalize tax liabilities on the incomes earned by the mutual funds. They

25
now play a very significant role in channelizing the saving of millions of individuals into the
investment in equity and debt instruments. This paper aims at making a critical study of the role
performed by mutual funds as a financial service in Indian financial market.
A study of performance and characteristics of open ended mutual funds
(Sweta Goel, Rahul Sharma, Mukta Mani – March 2011)
This paper has investigated the performance related characteristics of open ended mutual funds.
For the purpose of performance evaluation, risk adjusted performance, asset size and expense
ratio of the mutual funds have been studied for past five years i.e. from April’2006 to
March’2011. Through this study, the relation between performance related characteristics and
the performance of Indian mutual funds has been studied. Multiple regression model has been
used for the analysis. Results have confirmed the presence of performance persistence in mutual
funds. This shows that the past performance record is very useful in predicting the future
performance of mutual fund. Investors must look at the past performance before investing in any
fund and fund managers may track the best performing strategies by looking at the past
performing record. Also, empirical analysis has shown that low expense ratio and large asset size
of the mutual funds has resulted in their high risk adjusted returns. This study has contributed
towards existing knowledge for the relationship between mutual fund’s performance and their
characteristics. It will also help mutual fund investors to judge the investment options on the
basis of several fund’s characteristics apart from just the return performance.
India's Mutual Fund Industry (Tetsuya Kamiyama - 11 Mar 2008)
The assets managed by India's mutual funds have shown impressive growth, and had totaled 3.3 trillion
rupees (Rs 3.3 trillion) as of the end of March 2007. India's middle class, who are prospective investors in
mutual funds, has been growing, and we expect to see further growth in the mutual fund market moving
forward. In this paper,we first provide an overview of the assets managed within India's mutual fund
market, both now and in the past, and of the legal framework for mutual funds, and then discuss the
current situation and recent trends in financial products, distribution channels and asset management
companies.
Comparative Study on Mutual Funds
(Mrs.K.Neeraja –November 2020)
The Mutual fund industry is one of the rapidly growing industries in the stock exchange market
where it attracts the investors with its diversification nature. In mutual funds, the investment is
diversified within the various equities included in that fund. It controls the risk and distributes
the moderate returns where investors can expect minimum returns from the fund. In this study 14
open-ended, growth-oriented funds are considered for the study. The data was collected for the
period of 2014 to 2018 (Five years) where quarterly net asset values of the selected funds are

26
collected to calculate the return and risk of those schemes and to compare the same with the
benchmark index. In this study, BSE Sensex is considered as the benchmark index. The study
revealed that all the schemes are outperformed the benchmark index when the scheme returns are
compared with the Sensex returns. It indicates that the performance of the fund schemes is far
better than the market returns. When it comes to the risk only one scheme had better risk rate
than the market risk. It means the market had a lower risk when compared to all the schemes
selected in this study. It indicates that the schemes are facing diversification problems where the
selected equities of those schemes are not satisfying the diversification nature of the mutual funds.
Investigating performance of equity-based mutual fund schemes and Comparison with
Indian equity market
(Prof. Loomba Jatinder – 14th December, 2011)
In the backdrop of liberalization and private participation in the Indian mutual fund industry, the
challenge to survive and retain investor confidence has been a prime are of concern for fund
managers. For small investors who do not have the time or the expertise to take direct investment
decision in equities successfully, the alternative is to invest in mutual funds. The performance of
the mutual fund products become more complex in context of accommodating both return and
risk measurements while giving due importance to investment objectives. The main objective of
this paper is to evaluate the performance and growth of Indian mutual funds vis-à-vis the Indian
equity market. For the purpose of this study, Franklin Templeton Large Cap Equity mutual funds
have been studied over the time period of 15th Sept 2010 to 15th Sept 2011 (1 year).
Performance evaluation of mutual funds is one of the preferred areas of research where a good
amount of study has been carried out. The area of research provides diverse views of the same.
The analysis has been made on the basis of Sharpe ratio, Maan Whitney's U-Test and Kruskal
Wallis Test. The overall analysis finds that Nifty returns outperformed Franklin Templeton
Large Cap Equity Scheme returns. Kruskal Wallis H-test was applied to know whether the
returns significantly differ or not and the results indicated that the returns of schemes don't differ
significantly
New Evidence on Mutual Fund Performance: A Comparison of Alternative Bootstrap
Methods
(David Blake, Tristan Caulfield, Christos Ioannidis, Ian Tonks – 8th May 2017)
We compare two bootstrap methods for assessing mutual fund performance. The first produces
narrow confidence intervals due to pooling over time, whereas the second produces wider
confidence intervals because it preserves the cross correlation of fund returns. We then show that
the average U.K. equity mutual fund manager is unable to deliver outperformance net of fees
under either bootstrap. Gross of fees, 95% of fund managers on the basis of the first bootstrap

27
and all fund managers on the basis of the second bootstrap fail to outperform the luck
distribution of gross returns.
A Study on Investors’ Attitude towards Mutual Funds as an Investment Option
(Binod Kumar Singh (June 2011)
In this paper, structure of mutual fund, operations of mutual fund, comparison between
investment in mutual fund and bank and calculation of NAV etc. have been considered. In this
paper, the impacts of various demographic factors on investors’ attitude towards mutual fund
have been studied. For measuring various phenomena and analyzing the collected data
effectively and efficiently for drawing sound conclusions, Chi-square (χ2) test has been used and
for analyzing the various factors responsible for investment in mutual funds, ranking was done
on the basis of weighted scores and scoring was also done on the basis of scale.
Mutual Fund Performance: An Analysis of Monthly Returns
(M. Jayadev - 1st March 1996)
In this paper an attempt is made to evaluate the performance of two growth oriented mutual
funds (Mastergain and Magnum Express) on the basis of monthly returns compared to
benchmark returns. For this purpose, risk adjusted performance measures suggested by Jenson,
Treynor and Sharpe are employed. It is found that, Mastergain has performed better according to
Jenson and Treynor measures and on the basis of Sharpe ratio it’s performance is not upto the
benchmark. The performance of Magnum Express is poor on the basis of all these three
measures. However, Magnum Express is well diversified and has reduced it’s unique risk where
as Mastergain did not. These two funds are found to be poor in earning better returns either
adopting marketing or in selecting under priced securities. It can be concluded that, the two
growth oriented funds have not performed better in terms of total risk and the funds are not
offering advantages of diversification and professsionalism to the investors.
A comparative study ofreturns ofMutual Funds Schemes Ranked 1 by CRISIL
(M.S. Annapoorna and Pradeep K. Gupta – 1st
October 2013)
Mutual fund industry has experienced a drastic growth in the past two decades. Increase in the
number of schemes with increased mobilization of funds in the past few years notes the
importance of Indian mutual funds industry. To fulfill the expectations of millions of retail
investors, the mutual funds are required to function as successful institutional investors. Proper

28
assessment of various fund performance and their comparison with other funds helps retail
investors for making investment decisions. The main aim of this paper is to evaluate the
performance of mutual fund schemes ranked 1 by CRISILand compare these returns with SBI
domestic term deposit rates. Considering the interest of retail investors simple statistical
techniques like averages and rate of returns are used. The results obtained from the study clearly
depicts that, in most of the cases the mutual fund schemes have failed even to provide the return
of SBI domestic term deposits.

29
CH. 3 RESEARCH METHODOLOGY
The purpose of the research is to study Mutual Funds in detail. The purpose of the research is to
learn about the numerous investment opportunities an Investor gets from a Mutual fund based on
the sector the fund invests in India. In this study we will also see how different sector Mutual
fund performs over years and based on it which Mutual fund is likely to do an investment
3.1 ResearchDesign
The design used in this project is the exploratory research design for secondary data. The
secondary data usually refers to majority of the data that are available on the internet. The
secondary data that are available on internet are mainly used in this project.
3.2Data CollectionMethodology
The Majority of the data used in this project is Secondary data. The information collected is from
the Indian Journals, company websites and Magazines. It is collected with the help of the
following:
 Article in Financial Newspaper (Economic Times & Business Standard)
 Money Control website for Data and figures
 Research papers and Literature reviews from Research gate website.
Also from Data available on Internet through various websites:
3.3)Limitations to the Study
 Time and Money are the critical factors limiting the study
 The data provided is the primary data which is available on the internet and may not be
100% correct.
 Lack of information sources for the analysis part,

30
CH. 4 DATA ANALYSIS & INTERPRETATION
4.1 Advantages & Disadvantages ofInvesting in a Mutual Fund:
a) Advantages:
i. Higher Returns: Mutual funds have a proven track record of generating superior returns
than other investment options. The reason why the Mutual Fund performs is because here
the Investment is done under various sectors in the Market. A normal investor may invest
in the equity but cannot generate a better revenue/profit because in indirect equity, the
investment is done by the expertise of the Fund Manager and all the aspects are taken into
consideration before investment, a fund manager can immediately take action if any
equity stock is drastically going to fall.
ii. Diversification: The most significant benefit of mutual funds is diversification. When
you invest in mutual funds, your money is divided and spread over a variety of stocks. As
a result, the fund's overall risk is reduced. Diversification also boosts your chances of
achieving higher returns by allowing you to participate in all of the top stocks'
development.
iii. High Liquidity: Liquidity refers to the ease with which an asset can be converted into
cash. Mutual funds that are open-ended are extremely liquid. As a result, you can readily
sell these funds in the event of an emergency. The redemption proceeds for equity funds
are accessible in T+2 days. If you withdraw money from ABC Equity Fund on January
1st, the money will be credited to your account on January 3rd. Because redemption
proceeds are available in T+1 days, debt funds and liquid funds have higher liquidity. If
you redeem on January 1st, for example, your redemption will be paid to your account on
January 2nd! However, the liquidity of Equity Linked Savings Schemes (ELSS), closed-
ended funds, and Fixed Maturity Plans (FMP) is quite low.
iv. Professional Portfolio Management: Mutual fund schemes are handled by fund
managers in a professional manner. These fund managers are seasoned investors with
years of experience in the stock market. Before making any investment choice, fund
managers conduct extensive research on equities. They also keep a close eye on the
portfolio to provide the best possible results. Actively managed mutual funds have
historically outperformed passively managed funds in terms of returns.
v. Cost-effective: We all know that buying in bulk lowers the cost per item dramatically.
Economies of scale are the term for this.

31
Thousands of people invest in a mutual fund scheme. As a result, they can attain massive
economies of scale. As a result, the fund's overall expenses are reduced. Other expenses,
likewise, are shared among all unitholders. This is the reason why the cost decrease for
each unit holder. When expenses are reduced, investors earn higher returns. As a result,
mutual funds are one of India's most cost-effective investment solutions. Index funds,
which are passively managed, have a reduced expense ratio and are more cost effective.
vi. Ideal for a variety of risk profiles: Not all mutual funds are high-risk investments.
Short-term government securities, such as Treasury bills and certificates of deposit, are
held by liquid mutual funds. Liquid mutual funds are particularly safe as a result of this.
Liquid mutual funds are ideal for individuals who are looking for a low-risk investment
with a short-term financial aim. Debt funds are suitable for low-risk investors with
medium- to long-term objectives. Debt funds are significantly safer than equities funds
since they invest in 'fixed income' instruments. Debt funds provide significantly better
returns than bank fixed deposits.
vii. Tax Advantage: One of the major reason that investing in a Mutual Fund has is that
there is a tax exemption up to 150000 annually. Another significant benefit of mutual
funds is the tax advantage. ELSS Funds are a particular sort of mutual fund that is meant
to help you save money on taxes. Section 80C of the Income Tax Act of 1961 allows for
a deduction of up to 1.5 lakhs in Equity Linked funds. If redeemed after three years, even
debt funds provide the benefit of indexation. Tax advantages are also available through
equity mutual funds. If long-term capital gains on equities mutual funds do not reach 1
lakh in a financial year, they are tax-free.
viii. Mutual funds are extremely convenient for both novice and experienced investors.
Mutual funds allow you to invest in a flat payment as well as a Systematic Investment
Plan (SIP) Lump sum investment is an option for investors who have the time, resources,
and experience to time the market. The minimum lump sum investment is from 500rs to 1
lakh SIPs should be preferred by retail investors because they promote investment
discipline. A present sum is deducted every month on a set date in a SIP. Investors gain
higher rupee-cost averaging by investing throughout market ups and downs.
ix. Highly Safe from Frauds: The Securities and Exchange Board of India (SEBI) and the
Association of Mutual Funds in India (AMFI) jointly regulate mutual funds (AMFI).
Both of these organisations seek to safeguard mutual fund investors' interests. To
maintain the highest level of safety of the investors these companies, their fund
managers, and investment counsellors are all closely managed and monitored.

32
b) DisadvantagesofInvesting in Mutual Funds:
i. Fluctuating returns: Mutual funds do not offer fixed guaranteed returns in that you should
always be prepared for any eventuality including depreciation in the value of your mutual
fund. In other words, mutual funds entail a wide range of price fluctuations. Professional
management of a fund by a team of experts does not insulate you from bad performance of
your fund.
ii. Diversification: Diversification is often cited as one of the main advantages of a mutual
fund. However, there is always the risk of over diversification, which may increase the
operating cost of a fund, demands greater due diligence and dilutes the relative advantages
of diversification.
iii. Fund Evaluation: Many investors may find it difficult to extensively research and
evaluate the value of different funds. A mutual fund's net asset value (NAV) provides
investors the value of a fund's portfolio. However, investors have to study various
parameters such as Sharpe ratio and standard deviation among others to ascertain how one
fund has fared compared to another which can be complicated to some extent.
iv. Past performance: Ratings and advertisements issued by companies are only an indicator
of the past performance of a fund. It is important to note that robust past performance of a
fund is not a guarantee of a similar performance in the future. As an investor, you should
analyses the investment philosophy, transparency, ethics, compliance and overall
performance of a fund house across different phases in the market over a period of time.
Ratings can be taken as a reference point.
v. Costs: The value of a mutual fund may fluctuate depending on the changing market
conditions. Furthermore, there are fees and expenses involved towards professional
management of a mutual fund which is not the case for buying stocks or securities directly
in the market. There is an entry load which has to be borne by an investor when buying a
mutual fund. Furthermore, some companies charge an exit cost as well when an investor
chooses to exit from a mutual fund.
vi. CAGR: The performance of a mutual fund vis-a-vis the compounded annualized growth
rate (CAGR) neither provides investors adequate information about the amount of risk
facing a mutual fund nor the process of investment involved. It is therefore, only one of the
indicators to gauge the performance of a fund but is far from being comprehensive.
vii. Fund managers: According to experts, as an investor, you would do well not to be carried
away by the so-called ‘star fund managers’. Even a highly skilled manager can make a
positive difference in the short-term but cannot dramatically change the performance of a
fund in the long-term. Also, there is always the likelihood of a star fund manager joining
another company. It is, therefore, more prudent to examine the processes which are
followed by a fund house rather than the star appeal of just one individual.

33
4.2 TOP 3 MUTUAL IN INDIA BASED ONTHE RETURNS
In this Comparison of Mutual Funds I have selected 3 sector i.e. IT, Pharma and Banking and we will
be comparing the scheme details and the returns of each of these 3 sector mutual fund
a) ICICI Prudential TechnologyFund – Growth:
a. Scheme Objective:
To generate long term capital appreciation by creating a portfolio that is invested in equity and
equity related securities of technology and technology dependent company/companies.
ii. Scheme Details:
iii. Exit Load:
ICICI Prudential Technology Fund - Growth charges 1.0% of sell value; if fund sold before 15
days. There are no other charges.
iv. Tax Treatment
If sold after 1 year from purchase date, long term capital gain tax will be applicable. Current tax
rate is 10%, if your total long term capital gain exceeds 1 lakh. Any cess/surcharge is not included.
If sold before 1 year from purchase date, short term capital gain tax will be applicable. Current tax
rate is 15%. Any cess/surcharge is not included in the 15%.
v. Portfolio Summary:

34
 As we can observe in the above holdings of ICICI Prudential Technology Fund, most of
the stocks in the funds are IT stocks and all funds have performed quite well.
 Infosys, Wipro, HCL Tech, are some of the stocks with high market prices and their
shares can give good profits
 87.90% of the holdings is only in the form of equity, 5.73% in the form of Foreign
Equity Holdings with total number of 39 stocks in the portfolio

35
One year performance chart
 The above chart shows a trend line of the Mutual Fund for last one year, there is an
upward trend shown in the value of the ICICI Prudential Technology Fund
 The current NAV per unit of a mutual fund is 161.68
 The above chart shows that ICICI Prudential Technology Fund has generated
28.74% profit which is around 7% more than the Benchmark.
Returns of ICICI Prudential Technology Fund.

36
Interpretation:
 The Fund has performed extremely well and has given 1318.40% returns till date since
inception.
 From the above table we can observe that if a person X has invested 1000 Rs SIP (Every
month) from 2nd May 2021 till date 2nd May 2021, the person would have appreciated the
investment to amount Rs. 4,17,226.53
 The investment value amount 1, 20,000 in a spam of approx. 9 years will be more than
thrice its original value.
 The absolute return for 1 year period is in negative. This means that if person Y has
started the investment in May 2020, then Mr. Y’s portfolio will be 2.84% in negative.

37
b) UTI Banking and FinancialServices Fund – Growth.
i. Scheme Objectives:
The UTI banking and Financial Services Fund growth fund is an open-ended fund to provide
capital appreciation through investments in the stocks of the companies/institutions engaged in
the banking and financial services activities.
i. Scheme Details:
ii. Exit Load:
Mutual Fund exit load is a fee charged by the mutual fund houses if investors exit a scheme
partially or fully within a certain period from the date of investment, as specified in the Scheme
Information Document. UTI Banking and Financial Services Fund - Growth charges 1.0% of sell
value; if fund sold before 30 days. There are no other charges.
iii. Tax Treatment:
rate is 10%, if your total long term capital gain exceeds 1 lakh. Any cess/surcharge is not
included. If sold before 1 year from purchase date, short term capital gain tax will be applicable.
Current tax rate is 15%. Any cess/surcharge is not included in the 15%.

38
Portfolio Summary:
 As we can observe the top 10 stock holdings of the UTI Banking and Financial Services
Fund, the majority of the holdings are Banks and investment in banking sector is highly
done.
 The Top holdings of the UTI banking and financial services fund are HDFC bank, Axis
Bank, ICICI Bank, Kotak Mahindra Bank, and SBI Life insurance Fund.

39
 As we can see that the investment in equity is 98.89% and no other sector is invested
apart from equity.
 The total number of equity stocks invested are just 26, which means that the Portfolio is
focused towards equity with a very concentrated strategy
Interpretation:
 The UTI Banking and Financial Services Fund has performed 7.49% which is around
same as the Nifty’s benchmark.
 If Mr., X has invested in the UTI Mutual Fund it would have given Mr. X the same
amount of return if invested in Nifty
 The Current NAV per unit of the UTI Banking and Financial Services Fund is 117.80

40
Returns of UTI Banking and Financial Services Fund.
 If we talk about the SIP returns since inception of the Fund, the fund has performed averagely, it
has only given 63.17% in 10 years.
 It can be observed that the lump sum amount of 10000 during the inception of the fund, that
investor would have gain 71,779 Rs which is 617.7% of the invested amount

41
 The Fund performance is really great if the investment was made in one time with a huge chunk
of money, the returns are pretty attractive
c) Mirae Asset Healthcare Fund – Growth:
i. Scheme Objective:
The Objective of the scheme is to generate long term capital appreciation through investing in
equity and equity related securities of companies benefitting directly or indirectly in Healthcare
and allied sectors in India.
ii. Scheme Details:
iii. Exit load:
Mutual Fund exit load is a fee charged by the mutual fund houses if investors exit a scheme
partially or fully within a certain period from the date of investment, as specified in the Scheme
Information Document. Mirae Asset Healthcare Fund - Growth charges 1.0% of sell value; if
fund sold before 365 days. There are no other charges.
iv. Tax Treatment:
rate is 10%, if your total long term capital gain exceeds 1 lakh. Any cess/surcharge is not
included. If sold before 1 year from purchase date, short term capital gain tax will be applicable.
Current tax rate is 15%. Any cess/surcharge is not included in the 15%.

42
Portfolio Summary:
Interpretation:
 As we can observe the top 10 stock holdings of the Mirae Asset Healthcare Fund, the
majority of the holdings are Banks and investment in Pharma sector is Highly done, this
fund has purely invested in growing pharma companies
 During Covid times, pharma sector was performing really and the Mirae Asset fund as a
total of 99.94% investment in Equity which means the portfolio of the fund is
concentrated.

43
 The total number of stocks this fund has invested is only 28 stocks, the diversification is
pretty less as compared to other funds.
Interpretation:
 The above chart shows an upward as well as downward trend line of the Mutual Fund for
last one year, and most of the trend observed is a flat trend of Mirae Asset Healthcare
Fund
 The current NAV per unit of a mutual fund is 23.22 which is the lowest as compared to
all the 3 funds.
 The above chart shows the trend for only one year but the Fund has performed more
decently when taken the data of 3 or 5 years.
 The Mirae Asset Healthcare Fund has generated 7.4% profit which is around 4% more
than the Benchmark (S&P BSE Healthcare TRI)

44
Returns of Mirae Asset Healthcare Fund
Interpretation:
 The Fund has performed averagely well and has given 119.92% returns till date since
inception.
 From the above table we can observe that if a person X has invested 1000 Rs SIP (Every
month) from 2nd May 2019 till date 30th April 2021, the person would have appreciated
the investment to amount Rs. 5,25,96.75
 The investment value amount of 36000 in a spam of approx. 2 years will not even be
doubled from its original value.
 The absolute return for 1 year period is in negative. This means that if person Y has
started the investment in May 2020, then Mr. Y’s portfolio will be 3.22% in negative

45
4.3) Mutual Fund Fees & Regulations
4.3. a) Mutual Fund Fees:
Mutual funds are managed by professionals who are known as fund managers. These fund
managers work for the fund houses and apart from the fund managers, there is a team of capital
market experts and financial analysts who work collectively to manage the investments.
Managing huge investments on a daily basis requires a rich industry experience, expertise in the
subject, and a considerable amount of passion. Hence, for this task, the AMC charges a well-
earned fee to the investors and these charges are approved by the Securities and Exchange Board
of India (SEBI)
The fees include costs such as advisory fees, operational costs, investment management fees,
registrar and transfer agent fees, legal and audit fees, agent/ sales commissions, ongoing service
charges, etc. All the expenses involved in the management of mutual funds are together known
as the total expense ratio (TER) and in simple terms, it is the fee charged by a particular mutual
fund scheme to manage the investments on behalf of the investor. The expense ratio is charged
annually and its major components are management fees, administrative costs, and distribution
fees. It is expressed as a percentage and the reporting of the NAV (Net Asset Value) is done after
the deduction all the expenses. As per the guidelines laid down by SEBI, an increase in the
Assets under Management (AUM) should lower the TER and vice-versa.
Though regulated by SEBI, the expense ratio of mutual funds may vary according to the size of
the fund’s net assets in the following manner:

46
If recent inflows from cities other than those mentioned as the top 15 reach up to 15% of the
scheme's Assets under Management (AUM) or 30% of the gross inflows in the mutual fund
scheme, Asset Management Companies can charge an additional 30 basis points in Total
Expense Ratio. The most significant value is taken into account. This indicates that if the TER
limit on equity plans is set at 2.5 percent, there is a risk that it will be raised to 2.8 percent.
Any additional TER imposed, on the other hand, will be reduced if inflows from cities other than
the top 15 are redeemed within a year of the investment date.

47
i. Entry Load –
This is charged at the time of investing in a mutual fund scheme. This amount is deducted from
the fund’s Net Asset Value (NAV). Different fund houses charge different entry load fees.
Generally, the charges are 2.25% of the investment value. However, as per a recent regulation by
the SEBI, fund houses can no longer charge an entry load.
ii. Exit Load –
When an investor exits from a mutual fund scheme within a short span of holding the same, an
exit load has to be paid. This fee is levied in order to discourage investors from opting out of the
scheme and to reduce the number of withdrawals. Different fund houses charge different entry
load fees, depending on a predetermined holding period.
Entry loads and exit loads help to compensate the distribution costs.
iii. Transaction Fees - Investors are required to pay a little cost as transaction fees. This is a
one-time fee that is applied to an investment. On investments of Rs. 10,000 and higher, a
transaction fee of Rs. 150 for new investors and Rs. 100 for existing investors can be
imposed. An amount of Rs.100 would be paid as a transaction fee for SIP investments.
This fee will only be applied if the SIP commitment exceeds Rs.10, 000. There would be
no transaction fee for investments under Rs.10, 000. Intermediaries or distributors who
sell the fund are charged transaction fees.
iv. Management Fees
Management fees are fees that are paid out of fund assets to the fund’s investment adviser (or its
affiliates) for managing the fund’s investment portfolio and for administrative fees payable to the
investment adviser that are not included in the "Other Expenses" category.
v. Redemption Fee
A redemption fee is another type of fee that some funds charge their shareholders when the
shareholders redeem their shares. Although a redemption fee is deducted from redemption
proceeds just like a deferred sales load, it is not considered to be a sales load. Unlike a sales load,
which is used to pay brokers, a redemption fee is typically used to defray fund costs associated
with a shareholder’s redemption and is paid directly to the fund, not to a broker. The SEC limits
redemption fees to 2%.

48
vi. Distribution and Service Fee
This fee is charged from investors for the marketing, printing, and mailing of the AMC, which
keeps the investor informed via different marketing campaigns. It also provides the fund
manager with adequate funds.
vii. Switch Price
Some funds allow switching between mutual funds. So, a person can switch from Scheme X to
Scheme Y at a price called Switch Price. Depending upon the scheme, the investment can be
wholly or partially transferred.
viii. Exchange Fee
An exchange fee is a fee that some funds impose on shareholders if they exchange (transfer) to
another fund within the same fund group.
ix. Account Fee
An account fee is a fee that some funds separately impose on investors in connection with the
maintenance of their accounts. For example, some funds impose an account maintenance fee on
accounts whose value is less than a certain dollar amount.
x. Purchase Fee
A purchase fee is another type of fee that some funds charge their shareholders when the
shareholders purchase their shares. A purchase fee differs from, and is not considered to be, a
front-end sales load because a purchase fee is paid to the fund (not to a broker) and is typically
imposed to defray some of the fund’s costs associated with the purchase.

49
xi. Other Costs – There are some indirect costs incurred by investors during the investment
tenure. This includes charges related to opening a Demat account, maintaining the Demat
account, brokerage charges, etc. While buying and selling stocks, a security transaction
tax is levied which has to be paid by investors. Included in this category are expenses not
included in the categories "Management Fees" or "Distribution [and/or Service] (12b-1)
Fees." Examples include: shareholder service expenses that are not included in the
"Distribution [and/or Service] (12b-1) Fees" category; custodial expenses; legal
expenses; accounting expenses; transfer agent expenses; and other administrative
expenses
 Fund houses use the TER formula to finalise expense ratio per investor. TER or Total
Expense Ratio is what you get when you divide the total expense incurred in an
accounting period X 100 by the fund’s total net assets.
 Every mutual fund comes in two variants. They can directly approach the AMC or buy
through an intermediary. It is cost-efficient to invest in direct funds, that is, buying
directly from the AMC. This is because you are exempt from the potential commission
you indirectly pay to an agent or distributor. However, understanding the market trends
and how a specific fund can meet your goals require plenty of research and market
expertise and this where an intermediary plays a critical role.
 It is better to approach a qualified intermediary for guidance if you are not market savvy.
Plans bought this way are regular funds. They can be the same fund. However, availing
professional expertise means you will have to pay a commission to the distributor. This
becomes part of the overall expense ratio and pushes it higher. Regular plans come with a
host of benefits like instant and one-time KYC and convenience.

51
4.3 b) Mutual Fund India regulation:
As far as mutual funds are concerned, SEBI formulates policies, regulates and supervises mutual
funds to protect the interest of the investors. SEBI notified regulations for mutual funds in 1993.
Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital
market.
To protect the interest of investors, SEBI formulates policies and regulates the mutual funds. It
notified regulations in 1993 (fully revised in 1996) and issues guidelines from time to time.
Mutual funds, either promoted by public or by private sector entities including one promoted by
foreign entities, are governed by these regulations.
SEBI keeps in place the regulatory framework and guidelines that govern and
regulate securities markets in the country. The guidelines for investors are listed
below. Mutual funds present the most diversified form of investment options and
therefore, may carry a certain amount of risk with it. Investors must be very clear in
their assessment of their financial position and the risk-bearing capacity in the
event of the poor performance of such schemes. Investors must, therefore, consider
the risk appetite of an investment scheme.
The Market regulator SEBI oversees all mutual fund schemes in India. It issues strict guidelines
that AMCs must follow while managing funds. The guidelines call for complete transparency
related to a mutual fund scheme which include full disclosure of:
 Fund value
 Expenses
 Fund utilisation as per the scheme’s objectives

52
The term “regulation” means a rule or directive made and controlled by an authority.
 Mutual funds are regulated by the Securities and Exchange Board of India (SEBI).
 In 1996, SEBI formulated the Mutual Fund Regulation.
 SEBI is additionally the apex regulator of capital markets and its intermediaries.
 The issuance and trading of capital market instruments also come under the purview of
SEBI.
 Along with SEBI, mutual funds are regulated by RBI, Companies Act, Stock exchange,
Indian Trust Act and Ministry of Finance.
 RBI acts as a regulator of Sponsors of bank-sponsored mutual funds, especially in the
case of funds offering guaranteed returns.
 In order to provide a guaranteed returns scheme, a mutual fund needs to take approval
from RBI.
 The Ministry of Finance acts as a supervisor of RBI and SEBI and appellate authority
under SEBI regulations.

53
 Mutual funds can appeal to the Ministry of finance on the SEBI rulings.
 Primarily, mutual funds are regulated by the Securities and Exchange Board of India
(SEBI).
 A mutual fund should have the approval of RBI in order to provide a guaranteed returns
scheme.
 The Ministry of Finance acts as a supervisor of RBI and SEBI and appellate authority
under SEBI regulations.
 The Association of Mutual Funds in India (AMFI) has been made to develop this
Mutual Fund Industry of India on professional and ethical lines and to enhance and
maintain standards in all areas with a view to protect and promote the interests of mutual
funds and their unitholders.
Some important regulations to know are:
 Every mutual fund must be registered with SEBI.
 A mutual fund is always set up as a trust, with sponsors, trustees, an asset management company
(“AMC”) and a custodian.
 An AMC of a mutual fund should have at least 50% independent directors, a separate board of
trustees which includes 50% independent trustees and independent custodians so as to manage
any conflict of interest among fund managers, custodians, and trustees.
 A single mutual fund can float different schemes but they have to be individually approved by
the trustees and all offer documents have to be filed with the SEBI.
 SEBI lays down certain restrictions on the fees that AMCs can charge for mutual funds and
there is also a cap on the expenses that can be added to the fund.

54
Diagram of Regulatory Mechanism of Mutual Funds
 Mutual funds can advertise, but advertisements cannot have statements that are misleading. For
instance, no mutual fund can guarantee a return since returns depend on market performance.

55
Diagram of SEBI Guidelines on Mutual Funds

56
5. CONCLUSION
 From this study, we can conclude that some schemes may have higher returns and some with
higher risk.
 Whatever the combination, investors always look for the combination of maximum returns and
minimum risk.
 Along with this, it is important to examine the coefficient of determination of those schemes. It
indicates how well the investment in that fund is diversified among the various equities where the
better coefficient of determination will maximize the returns and minimizes the risk.
 It can be concluded that returns are not the only factor to examine at the time of investment where
an investor needs to analyse all the factors affecting the fund’s performance for better results.
 It can also be concluded that the Mutual Fund is a great way to save money, even if the mutual
fund does not perform well but it will give you some capital appreciation.
 Mutual funds if invested for more than 5 years, can give you Long Term Capital Gains.

57
6. FINDINGS
 Each Mutual Fund Scheme is capable of generating good returns but it may not always
be the same that the fund generate good returns for the next year also
 From this analysis, schemes are outperformed the benchmark returns. It shows the
profitability of the mutual fund schemes.
 The highest returns are from ICICI Prudential Technology Fund and an almost similar
return can be observed from UTI Banking and Financial Fund & Mirae Asset
Healthcare fund.
 When it comes to the holdings, the ICICI Prudential Technology fund has a major
weight to IT stocks in their portfolio and IT is one of the booming sector in today’s
world.
 Though Pharma sector is also booming during Covid times but the Mirae Asset
Healthcare fund did not perform as good as the ICICI Prudential Technology fund but it
may have a potential to grow in the future.
 If we talk about the returns, if investment was done on the very inception date of the
Mutual Fund then the returns are 1318%, 617% and 119% which is extra-ordinary result
from ICICI Prudential Technology fund and good returns from UTI Banking and
Financial Fund & very decent returns in the Mirae Asset Healthcare fund.

58
7. LEARNING OUTCOMES
 100% or more than 100% returns can be observed in a Spam of 5-6 years if invested in
Mutual Fund, it means the investment is doubled in 5-6 years of investing Mutual Fund.
 Each Mutual Fund Scheme is capable of generating good returns but it may not always be the
same that the fund generate good returns for the next year also. The Returns are purely based on
the Portfolio of securities and How diversified the portfolio in each sector is.
 As Financial Market gets more sophisticated and complex, investors needs a financial
intermediary who provides the required knowledge and professional expertise on
successful investing.
 Mutual Fund in India will be very bright in the coming years and more and more people
are investing in the Mutual Fund.
 Mutual funds are a great way to reduce the tax up to 1, 50,000. Government has given
some guidelines for tax redemption if invested in the Mutual Fund.
 The Top performing sector is the IT sector and one can invest in the Mutual Fund with
good IT stock holdings to achieve long Term capital gains.

59
8. RECOMMENDATION
 According to me, Investment in Mutual Fund in today’s world is growing rapidly
through every broker and mobile application platform like Grow that has been
introduced in the market.
 As we observed that the ICICI Prudential technology fund has given huge returns and
the main reason of it is risk diversification and every earning individual should invest in
the Mutual fund for long term
 We can also observe that Pharma sectorbeing so high in demand, the
Mutual fund of the pharma sectordidn’t perform but it has the potential to
perform in future, so one can invest in pharma sectortoo
 IT sector is the most booming sectorand I would recommend investing in
IT sector Mutual fund which has majority of the fund’s equity in IT stocks
such as ICICI Prudential Technology fund.
 Every working individual should save tax by investing in Mutual Funds
only after checking all the risks involved.

60
9. BIBLIOGRAPHY
https://www.researchgate.net/profile/Pradeep-Gupta-13/publication/321462181_
https://indianjournals.com/ijor.aspx?target=ijor:ajrbf&volume=1&issue=3&article=006
https://scholar.google.com/scholar?start=20&q=Mutual+Fund+comparison&hl=en&as_sdt=0,5
https://www.sebi.gov.in/sebi_data/faqfiles/may-2017/1494501305219.pdf
https://www.mutualfundindia.com/home/mfbasics
https://www.jstor.org/stable/2353353
https://www.etmoney.com
https://www.tandfonline.com/
https://www.jetir.org/papers
https://link.springer.com/
https://citeseerx.ist.psu.edu/
https://docplayer.net/144379102-Mutual-funds-learning-outcomes-chapter-12.html
https://www.coursehero.com/file/100258699/Mutual-Fundpdf/
https://www.researchgate.net/publication/338064009_
https://www.slideshare.net/hemanthcrpatna
PLAGIARISM REPORT

Functional management

Recommended

Recommended

More Related Content

Similar to Functional management

Similar to Functional management (20)

Recently uploaded

Recently uploaded (20)

Functional management