Mutual fund perception

SUMMER INTERNSHIP PROJECT ON
“A Study of Consumer Perception towards Mutual Funds in Delhi/NCR”
FOR AXIS BANK
SUBMITTED FOR PARTIAL FULFILLMENT OF REQUIREMENT
FOR THE AWARD
OF
POST GRADUATE DIPLOMA IN MANAGEMENT
For the Period
01st
May 2018 to 30th
June 2018
G. L. Bajaj Institute of Management and Research
Plot no-2, Knowledge Park- III, Greater Noida-201306
Submitted to:
Ms. Daitri Chatterjee Tiwari
Assistant Professor
Submitted by:
Vibhu Rastogi
GM 17216

ACKNOWLEDGEMENT
I owe special debt of gratitude to G.L.BAJAJ Institute of Management & Research, Greater
Noida, and Director General Ms. Urvashi Makkar for giving me the opportunity to do my
Summer Internship at AXIS BANK LTD.
I feel very proud to say that due to keen knowledge of the working members of Axis bank Ltd.,
it was easy for me to learn a lot knowledge regarding banking.
I am greatly thankful to my Industry Mentor Ms. Priya Malhotra, Branch Head for her kind
support and guidance to successfully completing my project.
I would also like to Thanks all the employees of Axis who have helped me and co-operated
with me during my training and project work.
Special thanks to Ms. Daitri Chatterjee Tiwary, the Faculty guide of the project, for initiating
and guiding the project with attention and care. He has always been available for me to put me
on track from time to time to bring the project at its present form.
I also take the opportunity to acknowledge the contribution of their full support and assistance
during the development of the project.
VIBHU RASTOGI
Date: PGDM Batch 2017-19
Place: Greater Noida Roll No. - GM 17216

DECLARATION
I, VIBHU RASTOGI student of PGDM from GL Bajaj Institute of Management and Research,
Greater Noida hereby declare that the work which is presented in the report entitled “A STUDY
ON CONSUMER PERCEPTION TOWARDS MUTUAL FUND” in partial fulfillment of the
requirements for the award of the Degree of Post Graduate Diploma in Management and
submitted in the GL Bajaj Institute of Management & Research, Greater Noida, is an authentic
record of my own work carried out under the supervision of Ms. DAITRI CHATTERJEE
TIWARY .
I further declare that the information presented in this project is true and original to the best
of my knowledge.
Place: Greater Noida, India
Date:
Vibhu Rastogi

ABSTRACT
In few years Mutual Fund has emerged as a tool for ensuring one’s financial well-being. Mutual
Funds have not only contributed to the Indian growth story but have also helped families tap
into the success of Indian Industry. As information and awareness is rising more and more
people are enjoying the benefits of investing in mutual funds. The main reason for the study is
to know the prospect perception about mutual funds. But once people are aware of mutual fund
investment opportunities, what are the number who decide to invest in mutual funds. The trick
for converting a person with no knowledge of mutual funds to a new Mutual Funds customer.
This Project gave me a great learning experience and at the same time it gave me enough scope
to implement my analytical ability. The analysis presented in this Project Report is based on
market research on the saving and investment practices of the investors and preferences of the
investors for investment in various products of investor. This Report will help to know about
the investors’ Preferences in Mutual Fund i.e. are they prefer any other investment product
other than mutual funds. Which type of Product they prefer, which scheme they prefer or which
term they prefer and what are the reasons that investors not invest in mutual fund. This Project
as a whole can be divided into two parts.
The first part gives an insight about Mutual Fund and its various aspects, the Company Profile,
Objectives of the study, Channel Management and Research Methodology. One can have a
brief knowledge about Mutual Fund and its basics through the Project.
The second part talks about the analytical approach of survey questionnaire, hypothesis, and
interpretation of the survey.

TABLE OF CONTENT
S.No. Content Pg. No.
1. ACKNOWLEDGEMENT I
2. CERIFICATE II
3. DECLARATION III
4. ABSTRACT IV
5. CHAPTER 1-INTRODUCTION 1-25
6. CHAPTER 2- COMPANY PROFILE 27-36
7. CHAPTER 3- LITERATURE REVIEW 37-41
8. CHAPTER 4- RESEARCH OBJECTIVES & HYPOTHESIS 42
9. CHAPTER 5- RESEARCH METHODOLOGY 43
10. CHAPTER 6- DATA ANALYSIS AND INTERPRETATION 44-55
11. CHAPTER 7- CONCLUSION 56
12.
CHAPTER 8- SUGGESTIONS AND RECOMMENDATION
57-58
13.
BIBLIOGRAPHY
59
14.
APPENDIXES
60-63

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1. INTRODUCTION
1.1 Introduction of the topic
The main purpose of doing this project was to know about the consumer perception towards
mutual fund and the preference of their saving in various products. This helps to know in details
about mutual fund industry.
Concept of Mutual Funds
Mutual fund is a vehicle to mobilize money from investors, to invest in different markets and
securities, in line with the investment objectives agreed upon, between the mutual fund and
the investors. In other words, through investment in a mutual fund, an investor can get access
to markets that may otherwise be unavailable to them and avail of the professional fund
management services offered by an asset management company.

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Role of Mutual Funds
Mutual funds perform different roles for the different constituents that participate in it.
Their primary role is to assist investors in earning an income or building their wealth, by
participating in the opportunities available in various securities and markets. It is possible for
mutual funds to structure a scheme for different kinds of investment objectives. Thus, the
mutual fund structure, through its various schemes, makes it possible to tap a large corpus of
money from investors with diverse goals/objectives.
Therefore, mutual funds offer different kinds of schemes to cater to the need of diverse
investors. In the industry, the words ‘fund’ and ‘scheme’ are used inter-changeably. Various
categories of schemes are called “funds”. In order to ensure consistency with what is
experienced in the market, this workbook goes by the industry practice. However, wherever a
difference is required to be drawn, the scheme offering entity is referred to as “mutual fund”
or “the fund”.
The money that is raised from investors, ultimately benefits governments, companies and other
entities, directly or indirectly, to raise money for investing in various projects or paying for
various expenses.
The projects that are facilitated through such financing, offer employment to people; the
income they earn helps the employees buy goods and services offered by other companies,
thus supporting projects of these goods and services companies. Thus, overall economic
development is promoted.
As a large investor, the mutual funds can keep a check on the operations of the investee
company, and their corporate governance and ethical standards.
The mutual fund industry itself, offers livelihood to a large number of employees of mutual
funds, distributors, registrars and various other service providers.
Mutual funds can also act as a market stabilizer, in countering large inflows or outflows from
foreign investors. Mutual funds are therefore viewed as a key participant in the capital market
of any economy.
Why are there different kinds of Mutual Fund Schemes?
Mutual funds seek to mobilize money from all possible investors. Various investors have
different investment preferences and needs. In order to accommodate these preferences,
mutual funds mobilize different pools of money. Each such pool of money is called a mutual
fund scheme.
Every scheme has a pre-announced investment objective. Investors invest in a mutual fund
scheme whose investment objective reflects their own needs and preference.

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How do Mutual Fund Schemes Operate?
Mutual fund schemes announce their investment objective and seek investments from the
investor. Depending on how the scheme is structured, it may be open to accept money from
investors, either during a limited period only, or at any time.
The investment that an investor makes in a scheme is translated into a certain number of ‘Units’
in the scheme. Thus, an investor in a scheme is issued units of the scheme.
Typically, every unit has a face value of Rs. 10. (However, older schemes in the market may
have a different face value). The face value is relevant from an accounting perspective. The
number of units issued by a scheme multiplied by its face value (Rs. 10) is the capital of the
scheme – its Unit Capital.
The scheme earns interest income or dividend income on the investments it holds. Further,
when it purchases and sells investments, it earns capital gains or incurs capital losses. These
are called realized capital gains or realized capital losses as the case may be.
Investments owned by the scheme may be quoted in the market at higher than the cost paid.
Such gains in values on securities held are called valuation gains. Similarly, there can be
valuation losses when securities are quoted in the market at a price below the cost at which the
scheme acquired them.
Advantages of Mutual Funds for Investors
 Professional Management
Mutual funds offer investors the opportunity to earn an income or build their wealth through
professional management of their investible funds. There are several aspects to such
professional management viz. investing in line with the investment objective, investing based
on adequate research, and ensuring that prudent investment processes are followed.
Investing in the securities markets will require the investor to open and manage multiple
accounts and relationships such as broking account, demat account and others. Mutual fund
investment simplifies the process of investing and holding securities.
 Affordable Portfolio Diversification
Investing in the units of a scheme provide investors the exposure to a range of securities held
in the investment portfolio of the scheme in proportion to their holding in the scheme. Thus,
even a small investment of Rs. 500 in a mutual fund scheme can give investors proportionate
ownership in a diversified investment portfolio.
An investor ensures that “all the eggs are not in the same basket”. Consequently, the investor
is less likely to lose money on all the investments at the same time. Thus, diversification helps
reduce the risk in investment. In order to achieve the same level of diversification as a mutual
fund scheme, investors will need to set apart several lakhs of rupees. Instead, they can achieve
the diversification through an investment of less than thousand rupees in a mutual fund scheme.

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 Economies of Scale
Pooling of large sum of money from many investors makes it possible for the mutual fund to
engage professional managers for managing investments. Individual investors with small
amounts to invest cannot, by themselves, afford to engage such professional management.
Large investment corpus leads to various other economies of scale. For instance, costs related
to investment research and office space gets spread across investors. Further, the higher
transaction volume makes it possible to negotiate better terms with brokers, bankers and other
service providers.
 Liquidity
At times, investors in financial markets are stuck with a security for which they can’t find a
buyer – worse, at times they can’t find the company they invested in! Such investments, whose
value the investor cannot easily realize in the market, are technically called illiquid investments
and may result in losses for the investor.
Investors in a mutual fund scheme can recover the current value of the money invested, from
the mutual fund itself. Depending on the structure of the mutual fund scheme, this would be
possible, either at any time, or during specific intervals, or only on closure of the scheme.
Schemes, where the money can be recovered from the mutual fund only on closure of the
scheme, are compulsorily listed on a stock exchange. In such schemes, the investor can sell the
units through the stock exchange platform to recover the prevailing value of the investment.
 Tax Deferral
Mutual funds are not liable to pay tax on the income they earn. If the same income were to be
earned by the investor directly, then tax may have to be paid in the same financial year.
Mutual funds offer options, whereby the investor can let the money grow in the scheme for
several years. By selecting such options, it is possible for the investor to defer the tax liability.
This helps investors to legally build their wealth faster than would have been the case, if they
were to pay tax on the income each year.
Limitations of a Mutual Fund
 Lack of portfolio customization
Some brokerages offer Portfolio Management Schemes (PMS) to large investors. In a PMS,
the investor has better control over what securities are bought and sold on his behalf. The
investor can get a customised portfolio in case of PMS.
On the other hand, a unit-holder in a mutual fund is just one of several thousand investors in a
scheme.
 Choice overload
Over 2000 mutual fund schemes offered by 47 mutual funds – and multiple options within
those schemes – make it difficult for investors to choose between them. Greater dissemination

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of scheme information through various media channels and availability of professional advisors
in the market helps investors to handle this overload.
 No control over costs
All the investor's money is pooled together in a scheme. Costs incurred for managing the
scheme are shared by all the Unit-holders in proportion to their holding of Units in the scheme.
Therefore, an individual investor has no control over the costs in a scheme.
Types of Mutual Funds
Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position,
risk tolerance and return expectations etc. thus mutual funds has Variety of flavours, Being a
collection of many stocks, an investors can go for picking a mutual fund might be easy. There
are over hundreds of mutual funds scheme to choose from. It is easier to think of mutual funds
in categories, mentioned below.
A). BY STRUCTURE
1. Open - Ended Schemes:
An open-end fund is one that is available for subscription all through the year. These do not
have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value
("NAV") related prices. The key feature of open-end schemes is liquidity.
2. Close - Ended Schemes:
A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years.
The fund is open for subscription only during a specified period. Investors can invest in the
scheme at the time of the initial public issue and thereafter they can buy or sell the units of the

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scheme on the stock exchanges where they are listed. In order to provide an exit route to the
investors, some close-ended funds give an option of selling back the units to the Mutual Fund
through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one
of the two exit routes is provided to the investor.
3. Interval Schemes:
Interval Schemes are that scheme, which combines the features of open-ended and close ended
schemes. The units may be traded on the stock exchange or may be open for sale or redemption
during pre-determined intervals at NAV related prices.
B). BY NATURE
1. Equity Fund:
These funds invest a maximum part of their corpus into equities holdings. The structure of the
fund may vary different for different schemes and the fund manager’s outlook on different
stocks. The Equity Funds are sub-classified depending upon their investment objective, as
follows:
• Diversified Equity Funds
• Mid-Cap Funds
• Sector Specific Funds
• Tax Savings Funds (ELSS)
Equity investments are meant for a longer time horizon, thus Equity funds rank high on the
risk-return matrix.
2. Debt Funds:
The objective of these Funds is to invest in debt papers. Government authorities, private
companies, banks and financial institutions are some of the major issuers of debt papers. By
investing in debt instruments, these funds ensure low risk and provide stable income to the
investors. Debt funds are further classified as:
• Gilt Funds: Invest their corpus in securities issued by Government, popularly known as
Government of India debt papers. These Funds carry zero Default risk but are associated with
Interest Rate risk. These schemes are safer as they invest in papers backed by Government.
• Income Funds: Invest a major portion into various debt instruments such as bonds, corporate
debentures and Government securities.
• MIPs: Invests maximum of their total corpus in debt instruments while they take minimum
exposure in equities. It gets benefit of both equity and debt market. These scheme ranks slightly
high on the risk-return matrix when compared with other debt schemes.

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• Short Term Plans (STPs): Meant for investment horizon for three to six months. These funds
primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial Papers
(CPs). Some portion of the corpus is also invested in corporate debentures.
• Liquid Funds: Also known as Money Market Schemes, These funds provides easy liquidity
and preservation of capital. These schemes invest in short-term instruments like Treasury Bills,
inter-bank call money market, CPs and CDs. These funds are meant for short-term cash
management of corporate houses and are meant for an investment horizon of 1day to 3 months.
These schemes rank low on risk-return matrix and are considered to be the safest amongst all
categories of mutual funds.
3. Balanced Funds:
As the name suggest they, are a mix of both equity and debt funds. They invest in both equities
and fixed income securities, which are in line with pre-defined investment objective of the
scheme. These schemes aim to provide investors with the best of both the worlds. Equity part
provides growth and the debt part provides stability in returns.
Further the mutual funds can be broadly classified on the basis of investment parameter viz,
Each category of funds is backed by an investment philosophy, which is pre-defined in the
objectives of the fund. The investor can align his own investment needs with the funds
objective and invest accordingly.
C). BY INVESTMENT OBJECTIVE:
Growth Schemes:
Growth Schemes are also known as equity schemes. The aim of these schemes is to provide
capital appreciation over medium to long term. These schemes normally invest a major part of
their fund in equities and are willing to bear short-term decline in value for possible future
appreciation.
Income Schemes:
Income Schemes are also known as debt schemes. The aim of these schemes is to provide
regular and steady income to investors. These schemes generally invest in fixed income
securities such as bonds and corporate debentures. Capital appreciation in such schemes may
be limited.
Balanced Schemes:
Balanced Schemes aim to provide both growth and income by periodically distributing a part
of the income and capital gains they earn. These schemes invest in both shares and fixed income
securities, in the proportion indicated in their offer documents (normally 50:50).
Money Market Schemes:
Money Market Schemes aim to provide easy liquidity, preservation of capital and moderate
income. These schemes generally invest in safer, short-term instruments, such as treasury bills,
certificates of deposit, commercial paper and inter-bank call money.

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Load Funds:
A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or
sell units in the fund, a commission will be payable. Typically entry and exit loads range from
1% to 2%. It could be worth paying the load, if the fund has a good performance history.
No-Load Funds:
A No-Load Fund is one that does not charge a commission for entry or exit. That is, no
commission is payable on purchase or sale of units in the fund. The advantage of a no load
fund is that the entire corpus is put to work.
D). OTHER SCHEMES
Tax Saving Schemes:
Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to
time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings
Scheme (ELSS) are eligible for rebate.
Index Schemes:
Index schemes attempt to replicate the performance of a particular index such as the BSE
Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks that
constitute the index. The percentage of each stock to the total holding will be identical to the
stocks index weightage. And hence, the returns from such schemes would be more or less
equivalent to those of the Index.
Sector Specific Schemes:
These are the funds/schemes which invest in the securities of only those sectors or industries
as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer
Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the
performance of the respective sectors/industries. While these funds may give higher returns,
they are more risky compared to diversified funds. Investors need to keep a watch on the
performance of those sectors/industries and must exit at an appropriate time.
Legal Structure of Mutual Funds in India
SEBI (Mutual Fund) Regulations, 1996 as amended till date define “mutual fund” as “a fund
established in the form of a trust to raise monies through the sale of units to the public or a
section of the public under one or more schemes for investing in securities including money
market instruments or gold or gold-related instruments or real estate assets.”
Key features of a mutual fund that flows from the definition above are:
• It is established as a trust

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• It raises money through sale of units to the public or a section of the public
• The units are sold under one or more schemes
• The schemes invest in securities (including money market instruments) or gold or gold-
related instruments or real estate assets.
SEBI has stipulated the legal structure under which mutual funds in India need to be
constituted. The structure, which has inherent checks and balances to protect the interests of
the investors, can be briefly described as follows:
• Mutual funds are constituted as Trusts. Therefore, they are governed by the Indian Trusts
Act, 1882
• The mutual fund trust is created by one or more Sponsors, who are the main persons behind
the mutual fund business.
• Every trust has beneficiaries. The beneficiaries, in the case of a mutual fund trust, are the
investors who invest in various schemes of the mutual fund.
• The operations of the mutual fund trust are governed by a Trust Deed, which is executed
between the sponsors and the trustees. SEBI has laid down various clauses that need to be
part of the Trust Deed.
• The Trust acts through its trustees. Therefore, the role of protecting the interests of the
beneficiaries (investors) is that of the Trustees. The first trustees are named in the Trust
Deed, which also prescribes the procedure for change in Trustees.
• In order to perform the trusteeship role, either individuals may be appointed as trustees or a
Trustee company may be appointed. When individuals are appointed trustees, they are
jointly referred to as ‘Board of Trustees’. A trustee company functions through its Board of
Directors.
• Day to day management of the schemes is handled by an Asset Management Company
(AMC). The AMC is appointed by the sponsor or the Trustees.
• The trustees execute an investment management agreement with the AMC, setting out its
responsibilities.
• Although the AMC manages the schemes, custody of the assets of the scheme (securities,
gold, gold related instruments & real estate assets) is with a Custodian, who is appointed by
the Trustees.

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Key Constituents of a Mutual Fund
Sponsors
The application to SEBI for registration of a mutual fund is made by the sponsor/s. Thereafter,
the sponsor invests in the capital of the AMC.
Since sponsors are the main people behind the mutual fund operation, eligibility criteria has
been specified as follows:
• The sponsor should have a sound track record and reputation of fairness and integrity in all
business transactions. The requirements are:
o Sponsor should be carrying on business in financial services for not less than 5 years
o Sponsor should have positive net worth (share capital plus reserves minus accumulated
losses) in all the immediately preceding 5 years
o Net worth in the immediately preceding year should be more than the amount that the
sponsor contributes to the capital of the AMC
o The sponsor should have earned profits, after providing for depreciation and interest
and tax, in three of the previous five years, including the latest year.
• The sponsor should be a fit and proper person for this kind of operation.
• The sponsor needs to contribute a minimum 40 percent of the net worth of the AMC. Further,
anyone who holds 40 percent or more of the net worth of share-holding in the AMC is
considered to be a sponsor, and should therefore fulfil the eligibility criteria mentioned above.
• Sponsors have to contribute a minimum of Rs.1,00,000 as initial contribution to the corpus
of the mutual fund.
In the example of SBI Mutual Fund cited above, the sponsor is State Bank of India, an Indian
public sector bank. Sponsorship may be institutional (LIC Nomura Mutual Fund), entirely
foreign (like Franklin Templeton Mutual Fund and Goldman Sachs Mutual Fund),
predominantly foreign joint venture (like JP Morgan Mutual Fund & HSBC Mutual Fund) or
predominantly Indian joint venture (like Birla Sun Life Mutual Fund & ICICI Prudential
Mutual Fund).
Trustee
The trustees have a critical role in ensuring that the mutual fund complies with all the
regulations, and protects the interests of the unit-holders.
The SEBI Regulations stipulate that:
• Every trustee has to be a person of ability, integrity and standing
• A person who is guilty of moral turpitude cannot be appointed trustee
• A person convicted of any economic offence or violation of any securities laws cannot be
appointed as trustee

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• No AMC and no director (including independent director), officer, employee of an AMC
shall be eligible to be appointed as a trustee of a mutual fund
• No person who is appointed as a trustee of a mutual fund shall be eligible to be appointed
as trustee of any other mutual fund.
Prior approval of SEBI needs to be taken, before a person is appointed as Trustee.
The sponsor will have to appoint at least 4 trustees. If a trustee company has been appointed,
then that company would need to have at least 4 directors on the Board. Further, at least
two-thirds of the trustees / directors on the Board of the trustee company would need to be
independent trustees i.e. not associated with the sponsor in any way.
SEBI expects Trustees to perform a key role in ensuring legal compliances and protecting
the interest of investors. Accordingly, various General Due Diligence and Special Due
Diligence responsibilities have been assigned to them. The rights and responsibilities
include the following:
• Enter into an Investment Management Agreement with the AMC that will define the
functioning of the AMC in making and managing the mutual fund’s investments.
• The trustees have the right to seek any information they require from the AMC to facilitate
meeting their responsibilities as trustees.
• The trustees shall ensure before the launch of any scheme that all the key personnel and
associates such as fund managers, compliance officer, R&T agent, auditors and others have
been appointed and all systems are in place.
• The trustees shall periodically review the service contracts entered into for custody
arrangements, transfer agency and others and ensure they are in the interest of the
unitholders and that all service providers are registered with SEBI.
• They shall ensure that all transactions entered into by the AMC are in compliance with the
regulations and the scheme’s objectives and intent.
• The trustees shall ensure that the interests of the unitholders are not compromised in any of
the AMC’s dealings with brokers, other associates and even unitholders of other schemes.
• If the trustees believe that the conduct of the business of the mutual fund is contrary to the
provisions of the regulations, then they must take corrective action and inform SEBI of the
same.
• The trustees shall not permit a change in the fundamental attributes of the scheme, the trust
or fees and expenses or any other change that will affect the interests of the unit holders
unless a written communication is sent to each unitholder, a notice is given in the newspaper
with national circulation and the unitholders are given the option to exit at NAV without
paying an exit load.
• Trustees have to file details of their securities dealings on a quarterly basis with the mutual
fund

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• On a quarterly basis the trustees shall review the transactions of the mutual fund with the
AMC and its associates. They shall also review the net worth of the AMC on a quarterly
basis and ensure that any shortfall is made up.
• The trustees shall periodically review the investor complaints received and their redressal
by the AMC.
• They shall ensure that the trust property is properly protected, held and administered.
• The trustees shall obtain and consider the reports of the auditors and compliance officers in
their periodic meetings and take action as required.
• Make half-yearly reports to SEBI
The strict provisions go a long way in promoting the independence of the role of trusteeship in
a mutual fund.
Asset Management Company (AMC)
Day to day operations of asset management is handled by the AMC. The sponsor or, the
trustees if so authorized by the trust deed, shall appoint the AMC with the approval of SEBI.
As per SEBI regulations:
• The directors of the asset management company need to be persons having adequate
professional experience in finance and financial services related field
• The directors as well as key personnel of the AMC should not have been found guilty of
moral turpitude or convicted of any economic offence or violation of any securities laws
• Key personnel of the AMC should not have worked for any asset management company or
mutual fund or any intermediary during the period when its registration was suspended or
cancelled at any time by SEBI.
Prior approval of the trustees is required, before a person is appointed as director on the board
of the AMC.
Further, at least 50 per cent of the directors should be independent directors i.e. not associate
of or associated with the sponsor or any of its subsidiaries or the trustees.
The AMC needs to have a minimum net worth of Rs. 50 crore.
A change in the controlling interest of the AMC can be made only with the prior approval of
the trustees and SEBI. A written communication about the change in the controlling interest
of the AMC is sent to each unit holder and an advertisement is given in one English daily
newspaper having nationwide circulation and in a newspaper published in the language of the
region where the Head Office of the mutual fund is situated. The unit holders are given the
option to exit at NAV without paying an exit load.
The AMC is responsible for conducting the activities of the mutual fund. It therefore arranges
for the requisite offices and infrastructure, engages employees, provides for the requisite

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software, handles advertising and sales promotion, and interacts with regulators and various
service providers.
The AMC has to take all reasonable steps and exercise due diligence to ensure that the
investment of funds pertaining to any scheme is not contrary to the provisions of the SEBI
regulations and the trust deed. Further, it has to exercise due diligence and care in all its
investment decisions.
The appointment of an AMC can be terminated by a majority of the trustees, or by 75 per cent
of the Unit-holders. However, any change in the AMC is subject to prior approval of SEBI
and the Unit-holders.
Operations of AMCs are headed by a Managing Director, Executive Director or Chief
Executive Officer. Some of the other business-heads are:
Chief Investment Officer (CIO), who is responsible for overall investments of the fund.
Fund managers assist the CIO. As per SEBI regulations, every scheme requires a fund
manager, though the same fund manager may manage multiple schemes.
Securities Analysts support the fund managers through their research inputs. As will be
discussed in Chapter8, these analysts come from two streams—Fundamental Analysis and
Technical Analysis. Some mutual funds also have an economist to analyse the economy.
Securities Dealers help in putting the transactions through the market. The mutual fund
schemes’ sale and purchase of investments are executed by the dealers in the secondary
market.
Chief Marketing Officer (CMO), who is responsible for mobilizing money under the various
schemes. Direct Sales Team (who generally focus on large investors), Channel Managers
(who manage the distributors) and Advertising & Sales Promotion Team support the CMO.
Chief Operations Officer (COO) handles all operational issues.
Compliance Officer needs to ensure all the legal compliances. In Offer Documents of new
issues, he signs a due-diligence certificate to the effect that all regulations have been
complied with, and that all the intermediaries mentioned in the offer document have the
requisite statutory registrations and approvals.
In order to ensure independence, the Compliance Officer reports directly to the head of the
AMC. Further, he works closely with the Trustees on various compliance and regulatory issues.
AMCs are required to invest seed capital of 1percent of the amount raised subject to a
maximum of Rs.50 lakh in all the growth option of the mutual fund schemes through the
lifetime of the scheme.

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Other Service Providers
Custodian
The custodian has custody of the assets of the fund. As part of this role, the custodian needs
to accept and give delivery of securities for the purchase and sale transactions of the various
schemes of the fund. Thus, the custodian settles all the transactions on behalf of the mutual
fund schemes.
All custodians need to register with SEBI. The Custodian is appointed by the trustees. A
custodial agreement is entered into between the trustees and the custodian.
The SEBI regulations provide that if the sponsor or its associates control 50 per cent or more
of the shares of a custodian, or if 50 per cent or more of the directors of a custodian represent
the interest of the sponsor or its associates, then, unless certain specific conditions are fulfilled,
that custodian cannot be appointed for the mutual fund operation of the sponsor or its associate
or subsidiary company.
An independent custodian ensures that the securities are indeed held in the scheme for the
benefit of investors – an important control aspect.
The custodian also tracks corporate actions such as dividends, bonus and rights in companies
where the fund has invested.
RTA
The RTA maintains investor records. Their offices in various centres serve as Investor Service
Centres (ISCs), which perform a useful role in handling the documentation of investors. The
functions of the RTA includes processing of purchase and redemption transactions of the
investor and dealing with the financial transactions of receiving funds for purchases and
making payments for redemptions, updating the unit capital of the scheme to reflect these
transactions, updating the information in the individual records of the investor, called folios,
keeping the investor updated about the status of their investment account and information
related to the investment.
The appointment of RTA is done by the AMC. It is not compulsory to appoint a RTA. The
AMC can choose to handle this activity in-house. All RTAs need to register with SEBI.
Auditors
Auditors are responsible for the audit of accounts.
Accounts of the schemes need to be maintained independent of the accounts of the AMC.
The auditor appointed to audit the scheme accounts needs to be different from the auditor of
the AMC.
While the scheme auditor is appointed by the Trustees, the AMC auditor is appointed by the
AMC.

15
Fund Accountants
The fund accountant performs the role of calculating the NAV, by collecting information about
the assets and liabilities of each scheme. The AMC can either handle this activity in-house,
or engage a service provider. There is no need for a registration with SEBI to perform this
function.
Distributors
Distributors have a key role in selling suitable types of units to their clients i.e. the investors in
the schemes of mutual funds with whom they are empanelled. A distributor can be empanelled
with more than one mutual fund. Distributors can be individuals or institutions such as
distribution companies, broking companies and banks.
Collecting Bankers
The investors’ money go into the bank account of the scheme they have invested in. These
bank accounts are maintained with collection bankers who are appointed by the AMC.
Leading collection bankers make it convenient to invest in the schemes by accepting
applications of investors in most of their branches. Payment instruments against applications
handed over to branches of the AMC or the RTA need to be banked with the collecting bankers,
so that the money is available for investment by the scheme. Thus, the banks enable collection
and payment of funds for the schemes.
Through this kind of a mix of constituents and specialized service providers, most mutual funds
maintain high standards of service and safety for investors.
KYC Registration Agencies
To do away with multiple KYC formalities with various intermediaries, SEBI has mandated a
unified KYC for the securities market through KYC Registration Agencies registered with
SEBI. Any new investor, Joint holders, Power of Attorney holders, Donors and Guardian (in
case of minors) have to comply with the KYC formalities. In-Person Verification (IPV) by a
SEBI-registered intermediary is compulsory for all investors. However, the investor needs to
get IPV done by only one SEBI-registered intermediary (broker, depository, mutual fund
distributor etc.). This IPV will be valid for transactions with other SEBI registered
intermediaries too.
Payment Aggregators
Payment Aggregators such as Tech Process, Bill Desk are payment providers in the online
market place. Payment aggregators enable the users to make the payments online through their
existing bank account in a secured and a convenient manner.
Aggregators allow mutual fund houses to accept credit card and bank transfers without having
to setup a merchant account with the banks. The aggregator provides the means for facilitating
payment from the consumer via credit cards or bank transfer to the mutual fund. The mutual
fund is paid by the aggregator.

16
Mutual Fund Operation Flow Chart:-
Types of Return on Mutual Funds
Absolute Return:
Absolute return is the growth in your investment expressed in percentage terms. It can be
understood with the help of a simple example. Suppose you invested Rs 1 Lakh in a mutual
fund scheme. Three years later the value of your investment is Rs 1.4 Lakhs; you can know the
value of your investment from the account statement sent to you by the AMC or the registrar
(e.g. CAMS or Karvy). The total profit made by you is Rs 40,000. The absolute return earned
by you in percentage terms is 40%. Absolute return ignores the time over which the growth
was achieved; if your Rs 1 Lakh investment grew to Rs 1.4 Lakhs in 5 years (instead of 3), the
absolute return will still be 40%.
Annualized Return:
Annualized return, as the name suggests, measures how much your investment grew in value
on a yearly basis. An important thing to note in annualized returns is that, the effect of
compounding is included. Compounding is, very simply, profits made on profits. If you
invested Rs 1 Lakh in a mutual fund scheme and the value of your investment after 3 years is
Rs 1.4 Lakhs, then annualized returns will be 11.9%. Notice that annualized return of 11.9% is
less than the absolute return (40%) divided by the investment period (3 years); this is due to
compounding effect. If you invested Rs 1 Lakh in a mutual fund scheme and the value of your
investment after 5 years is Rs 1.4 Lakhs, then annualized returns will be 7%.
Total Return:
Total return is the actual rate of return earned from the investment and includes both capital
gains and dividends. Let us assume that, you invested Rs 1 Lakh in a mutual fund scheme at a
NAV of Rs 20. The number of units of the scheme purchased by you is 5,000 (1 Lakh divided

17
by 20). The NAV of the scheme after 1 year is Rs 22. The value of your units after 1 year will,
therefore, be Rs 1.1 Lakhs (22 X 5,000). The capital gains made by you will be Rs 10,000. Let
us also assume that, during the year, the scheme declared Rs 2 per unit as dividend. Total
dividend paid to you by the AMC would be Rs 10,000 (2 X 5,000). The total return earned by
you will be Rs 10,000 capital gains + Rs 10,000 dividends = Rs 20,000. The total return in
percentage terms will be 20%.
Trailing Return:
Trailing return is the annualized return over a certain trailing period ending today. Let us
understand this with the help of an example. Suppose the NAV of a scheme today (March 10,
2017) is Rs 100. 3 years back (i.e. March 10, 2014), the NAV of the scheme was Rs 60. The 3
year trailing return of the fund is 18.6%. Suppose the NAV of the scheme 5 years back (i.e.
March 10, 2012) was Rs 50. The 5 year trailing return of the fund is 14.9%.
The formula for trailing return (in excel) is as follows:-
= (Today’s NAV / NAV at the start of the trailing period) ^ (1/Trailing Period) – 1
The trailing period can be 1 year, 2 years, 3 years, 5 years, 10 years etc.; basically any period.
Trailing return is the most popular mutual performance measure. The returns that you see on
most mutual fund websites are actually trailing returns. If you go to our Mutual Fund Research
section, Top Performing Funds, the returns that you see are, in fact, trailing returns. Investors
should note that, trailing returns are biased by current market conditions relative to market
conditions prevailing at the start of the trailing period. Trailing returns are high in bull markets
and low in bear markets.
Point to Point Returns:
As the name suggests, point to point returns measures annualized returns between two points
of time. For example, if you are interested in how a mutual fund scheme performed during a
particular period, say 2012 to 2014, you will look at point to point returns. To calculate point
to point returns of a mutual fund scheme, you necessarily need to have a start date and end
date. You will look up the NAVs of the scheme on start and end dates, and then calculate the
annualized returns.
Annual Return:
Annual return of a mutual fund scheme is the return given by the scheme from January 1 (or
the earliest business day of the year) to December 31 (last business day of the year) of any
calendar year. For example, if the NAVs of a scheme on January 1 and December 31 are Rs
100 and 110 respectively, the annual return for that year will be 10%. Most mutual fund
research portals, including our portal, show annual returns of a scheme in the scheme details
page. Annual returns are shown on the scheme details page in moneycontrol.com and
advisorkhoj.com. In valueresearchonline.com and Morningstar.in, you will find annual returns
in the performance tabs within the scheme details page. Mutual funds are market linked
investments and the market conditions in a particular year will have a significant impact on

18
annual returns. However, comparing annual returns across years relative to benchmark or fund
category, can give you a sense of fund performance consistency.
Rolling Returns:
Rolling returns are the annualized returns of the scheme taken for a specified period (rolling
returns period) on every day/week/month and taken till the last day of the duration compared
to the scheme benchmark (e.g. Nifty, BSE – 100, BSE – 200, BSE – 500, CNX – 500, BSE –
Midcap, CNX – Midcap etc) or fund category (e.g. large cap funds, diversified equity funds,
midcap funds, balanced funds etc). Rolling returns are usually shown in a chart format. A
rolling returns chart shows the annualized returns of the scheme over the rolling returns period
on every day from the start date, compared to the benchmark or category.
Rolling returns is not widely used in India, but is widely accepted globally as the best measure
of a fund’s performance. Trailing returns have a recency bias (as explained earlier) and point
to point returns are specific to the period in consideration (and therefore, may not be relevant
for the present time). Rolling returns, on the other hand, measures the fund’s absolute and
relative performance across all timescales, without any bias. Rolling return is also the best tool
to understand, performance consistency and the fund manager’s performance.
Quartile Ranking:
Which is more important, absolute return or relative return? It differs from individual to
individual and we can debate this till the cows come home, but the reality is that, in this
competitive age, there is emphasis on relative performance, both in our work-place and also
for our kids in school. Quartile ranking is a measure of relative performance of mutual fund
scheme. Investors should note that, quartile ranking is not a measure of returns, but is actually
a rank versus against all other funds in its category.
The rankings range from “Top Quartile” to “Bottom Quartile” for different time periods.
Mutual funds with the highest per cent returns in the chosen time period are assigned to “Top
Quartile”, whereas those with the lowest returns are assigned to “Bottom Quartile”. Quartile
rankings are compiled by sorting the funds based on trailing returns over a period chosen by
the user. Funds in the top 25% are assigned the ranking of “Top Quartile”, the next 25% are
assigned a ranking of “Upper Middle Quartile”, the next 25% after that are assigned a ranking
of “Lower Middle Quartile” and the lowest 25% are assigned the ranking of “Bottom Quartile”.
While, the current quartile ranking of a mutual fund scheme is important, even more important
is the consistency of quartile ranking across several quarters.
SIP Returns :
All the returns measures that we have discussed thus far, relate to lump sum or one-time
investments. Lump sum investment returns are relatively simpler to measure because,
essentially you are measuring growth in investment value between two points of time (in the
case of total returns, dividends, if any, also need to be factored). However, systematic
investment plan (SIP) represents a series of cash-flows and so computing SIP returns is more
complicated. The financial metric used to calculate the returns from a series of cash-flows (e.g.

19
SIP, SWP, STP etc.) is known as the Internal Rate of Return (IRR). The formula of IRR is
outside the scope of this post. If cash flows are not an exact regular time intervals, then a
modification of IRR, known as XIRR (in excel), is used to measure SIP returns.
RISK AND RETURN MATRIX
WHAT IS RISK?
Risk can be defined as the potential for harm. But when anyone analysing mutual funds uses
this term, what is actually being talked about is volatility. Volatility is nothing but the
fluctuation of the Net Asset Value (price of a unit of a fund). The higher the volatility, the
greater the fluctuations of the NAV. Generally, past volatility is taken as an indicator of future
risk and for the task of evaluating mutual fund; this is an adequate (even if not ideal)
approximation.
Defining Mutual fund risk:
Mutual funds face risks based on the investments they hold. For example, a bond fund faces
interest rate risk and income risk. Bond values are inversely related to interest rates. If interest
rates go up, bond values will go down and vice versa. Bond income is also affected by the
change in interest rates. Bond yields are directly related to interest rates falling as interest rates
fall and rising as interest rise. Income risk is greater for a short-term bond fund than for a long-
term bond fund.
Mutual
Funds
Equity
Bank FD
Postal
Savings
Venture
Capital
HIGHER RISK
HIGHIER RETURNS
LOWER RISK
HIGIER RETURNS
LOWER RISK
LOWER RETURNS
HIGHIER RISK
MODERATE RETURNS

20
Similarly, a sector stock fund (which invests in a single industry, such as telecommunications)
is at risk that its price will decline due to developments in its industry. A stock fund that invests
across many industries is more sheltered from this risk defined as industry risk.
Following is a glossary of some risks to consider when investing in mutual funds:
Call Risk
The possibility that falling interest rates will cause a bond issuer to redeem or call its high
yielding bond before the bond's maturity date.
Country Risk
The possibility that political events (a war, national elections), financial problems (rising
inflation, government default), or natural disasters (an earthquake, a poor harvest) will weaken
a country's economy and cause investments in that country to decline.
Credit Risk
The possibility that a bond issuer will fail to repay interest and principal in a timely manner.
Also called default risk.
Currency Risk
The possibility that returns could be reduced for Americans investing in foreign securities
because of a rise in the value of the U.S. dollar against foreign currencies. Also called exchange
rate risk.
Income Risk
The possibility that a fixed-income fund's dividends will decline as a result of falling overall
interest rates.
Industry Risk
The possibility that a group of stocks in a single industry will decline in price due to
developments in that industry.
Inflation Risk
The possibility that increases in the cost of living will reduce or eliminate a fund's real inflation
adjusted returns.
Interest Rate Risk
The possibility that a bond fund will decline in value because of an increase in interest rates.
Manager Risk
The possibility that an actively managed mutual fund's investment adviser will fail to execute
the fund's investment strategy effectively resulting in the failure of stated objectives.

21
Market Risk
The possibility that stock fund or bond fund prices overall will decline over short or even
extended periods. Stock and bond markets tend to move in cycles, with periods when prices
rise and other periods when prices fall.
Principal Risk
The possibility that an investment will go down in value, or "lose money," from the original or
invested amount.
How Risk Is Measured
There are two ways in which you can determine how risky a fund is.
Standard Deviation
Standard Deviation is a measure of how much the actual performance of a fund over a period
of time deviates from the average performance. ―Since Standard Deviation is a measure of
risk, a low Standard Deviation is good.‖
Sharpe Ratio
This ratio looks at both, returns and risk, and delivers a single measure that is proportional to
the risk adjusted returns. ―Since Sharpe Ratio is a measure of risk-adjusted returns, a high
Sharpe Ratio is good."
THINGS TO BE SEEN WHILE INVESTING IN MUTUAL FUNDS:-
1. Don't just look at the NAV, also look at the risk:
Alliance Buy India and Alliance Equity both have 3 stars. That does mean their NAV is
identical. In fact, the NAV of Alliance Equity is 91.66 while that of Buy India is 16.05.
However, Alliance Buy India took an average risk and delivered an average return, while
Alliance Equity took an above average risk to get the above average returns. Hence their stars
are identical, despite one having a higher NAV.
2. Higher rating does not mean better returns:
A fund with more stars does not indicate a higher return when compared with the rest. All it
means is that you will get a good return without putting your money at too much risk.
Birla Equity Plan has a 4-star rating while Alliance Tax Relief '96 has a 2-star rating. However,
the fund with the 2-star rating has a higher NAV (131.96) than the one with the 4-star rating
(39.37).
3. Higher rating does not mean more risk:
Birla Advantage has an NAV of 67.09 while Franklin India Prima has an NAV of 122.92. This
does not necessarily mean that Franklin India Prima is offering a higher risk since the return is

22
higher. In fact, according to our ratings, Franklin India Prima is a 5-star fund while (risk is
below average) while Birla Advantage is a 2-star fund (risk is above average).
MUTUAL FUNDS DISTRIBUTION CHANNELS
Investors have varied investment objectives and can be classified as aggressive, moderate and
conservative, depending on their risk profile. For each of these categories, asset management
companies (AMCs) devise different types of fund schemes, and it is important for investors to
buy those that match their investment goals.
Funds are bought and sold through distribution channels, which play a significant role in
explaining to the investors the various schemes available, their investment style, costs and
expenses. There are two types of distribution channels-direct and indirect. In case of the former,
the investors buy units directly from the fund AMC, whereas indirect channels include the
involvement of agents. Let us consider these distribution channels in detail.
Direct channel
This is good for investors who do not need the advisory services of agents and are well-versed
with the fundamentals of the fund industry. The channel provides the benefit of low cost, which
significantly enhances the returns in the long run.
Indirect channel
This channel is widely prevalent in the fund industry. It involves the use of agents, who act as
intermediaries between the fund and the investor. These agents are not exclusive for mutual
funds and can deal in multiple financial instruments. They have an in-depth knowledge about
the functioning of financial instruments and are in a position to act as financial advisers. Here
are some of the players in the indirect distribution channels.
a) Independent financial advisers (IFA): These are individuals trained by AMCs for selling
their products. Some IFAs are professionally qualified CFPs (certified financial planners).
They help investors in choosing the right fund schemes and assist them in financial planning.
IFAs manage their costs through the commissions that they earn by selling funds.
b) Organized distributors: They are the backbone of the indirect distribution channel. They
have the infrastructure and resources for managing administrative paperwork, purchases and
redemptions. These distributors cater to the diverse nature of the investor community and
the vast geographic spread of the country by establishing offices in rural and semi urban
locations.
c) Banks: They use their network to sell mutual funds. Their existing customer base serves as
a captive prospective investor base for marketing funds. Banks also handle wealth
management for their clients and manage portfolios where mutual funds are one of the asset
classes. The players in the indirect channel assist investors in buying and redeeming fund
units.

23
They try to understand the risk profile of investors and suggest fund schemes that best suits
their objectives. The indirect channel should be preferred over the direct channel when
investors want to seek expert advice on the risk-return mix or need help in understanding the
features of the financial securities in which the fund invests as well as other important attributes
of mutual funds, such as benchmarking and tax treatment.
REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA:
The structure of mutual funds in India is guided by the SEBI. Regulations, 1996.These
regulations make it mandatory for mutual fund to have three structures of sponsor trustee and
asset Management Company. The sponsor of the mutual fund and appoints the trustees. The
trustees are responsible to the investors in mutual fund and appoint the AMC for managing the
investment portfolio. The AMC is the business face of the mutual fund, as it manages all the
affairs of the mutual fund. The AMC and the mutual fund have to be registered with SEBI.
MUTUAL FUNDS IN INDIA
In 1963, the day the concept of Mutual Fund took birth in India. Unit Trust of India invited
investors or rather to those who believed in savings, to park their money in UTI Mutual Fund.
For 30 years it goaled without a single second player. Though the 1988 year saw some new
mutual fund companies, but UTI remained in a monopoly position.
The performance of mutual funds in India in the initial phase was not even closer to satisfactory
level. People rarely understood, and of course investing was out of question. But yes, some 24
million shareholders were accustomed with guaranteed high returns by the beginning of
liberalization of the industry in 1992. This good record of UTI became marketing tool for new
entrants. The expectations of investors touched the sky in profitability factor. However, people
were miles away from the preparedness of risks factor after the liberalization.
The net asset value (NAV) of mutual funds in India declined when stock prices started falling
in the year 1992. Those days, the market regulations did not allow portfolio shifts into
alternative investments. There was rather no choice apart from holding the cash or to further
continue investing in shares. One more thing to be noted, since only closed-end funds were
floated in the market, the investors disinvested by selling at a loss in the secondary market.
The performance of mutual funds in India suffered qualitatively. The 1992 stock market
scandal, the losses by disinvestments and of course the lack of transparent rules in the
whereabouts rocked confidence among the investors. Partly owing to a relatively weak stock
market performance, mutual funds have not yet recovered, with funds trading at an average
discount of 1020 percent of their net asset value.
The securities and Exchange Board of India (SEBI) came out with comprehensive regulation
in 1993 which defined the structure of Mutual Fund and Asset Management Companies for the
first time.

24
The supervisory authority adopted a set of measures to create a transparent and competitive
environment in mutual funds. Some of them were like relaxing investment restrictions into the
market, introduction of open-ended funds, and paving the gateway for mutual funds to launch
pension schemes.
The measure was taken to make mutual funds the key instrument for long-term saving. The
more the variety offered, the quantitative will be investors.
Several private sectors Mutual Funds were launched in 1993 and 1994. The share of the private
players has risen rapidly since then. Currently there are 34 Mutual Fund organizations in India
managing 1,02,000 crores.
At last to mention, as long as mutual fund companies are performing with lower risks and
higher profitability within a short span of time, more and more people will be inclined to invest
until and unless they are fully educated with the dos and don’ts of mutual funds.
Mutual fund industry has seen a lot of changes in past few years with multinational companies
coming into the country, bringing in their professional expertise in managing funds worldwide.
In the past few months there has been a consolidation phase going on in the mutual fund
industry in India. Now investors have a wide range of Schemes to choose from depending on
their individual profiles.
MUTUAL FUND COMPANIES IN INDIA:
The concept of mutual funds in India dates back to the year 1963. The era between 1963 and
1987 marked the existence of only one mutual fund company in India with Rs. 67bn assets
under management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By
the end of the 80s decade, few other mutual fund companies in India took their position in
mutual fund market.
The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank
Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India
Mutual Fund.
The succeeding decade showed a new horizon in Indian mutual fund industry. By the end of
1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds started
penetrating the fund families. In the same year the first Mutual Fund Regulations came into
existence with re-registering all mutual funds except UTI. The regulations were further given
a revised shape in 1996.
Kothari Pioneer was the first private sector mutual fund company in India which has now
merged with Franklin Templeton. Just after ten years with private sector players’ penetration,
the total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund companies in India.

25
List of Mutual Fund Companies in India
 Axis Asset Management Company Ltd.
 Baroda Pioneer Asset Management Company Ltd
 Birla Sun Life Asset Management Company Ltd
 BNP Paribas Asset Management India Pvt Ltd
 BOI AXA Investment Managers Pvt Ltd
 Canara Robeco Asset Management Company Ltd
 Daiwa Asset Management (India) Pvt Ltd
 Deutsche Asset Management (India) Pvt. Ltd.
 DSP BlackRock Investment Managers Pvt. Ltd.
 Edelweiss Asset Management Ltd
 Escorts Asset Management Ltd
 FIL Fund Management Private Ltd
 Franklin Templeton Asset Management (India) Pvt Ltd.
 Goldman Sachs Asset Management (India) Pvt Ltd.
 HDFC Asset Management Company Ltd
 HSBC Asset Management (India) Pvt. Ltd.
 ICICI Prudential Asset Management Company Ltd
 IDBI Asset Management Ltd.
 IDFC Asset Management Company Ltd
 India Infoline Asset Management Co. Ltd.
 Indiabulls Asset Management Company Ltd.
 ING Investment Management (India) Pvt. Ltd.
 JM Financial Asset Management Pvt Limited
 JPMorgan Asset Management India Pvt. Ltd.
 Kotak Mahindra Asset Management Company Ltd.
 L&T Investment Management Ltd.
 LIC NOMURA Mutual Fund Asset Management Company Ltd.
 Mirae Asset Global Investments (India) Pvt. Ltd.
 Morgan Stanley Investment Management Pvt.Ltd.
 Motilal Oswal Asset Management Company Ltd.
 Peerless Funds Management Co. Ltd.
 Pine Bridge Investments Asset Management Company (India) Pvt. Ltd.
 Pramerica Asset Managers Private Ltd
 Principal PNB Asset Management Co. Pvt. Ltd.
 Quantum Asset Management Company Private Ltd.
 Reliance Capital Asset Management Ltd.
 Religare Asset Management Company Private Ltd.
 Sahara Asset Management Company Private Ltd
 SBI Funds Management Private Ltd.
 Sundaram Asset Management Company Ltd

26
 Tata Asset Management Ltd
 Taurus Asset Management Company Ltd
 Union KBC Asset Management Company Pvt Ltd
 UTI Asset Management Company Ltd
1.2 Background & Justification of the topic
Mutual fund performance is one of the most commonly studied topics in investments area in
the majority countries. This is because the availability of data and importance of mutual
funds as vehicle for investment in the stock market. Mutual funds provide many benefits to
their investors. Such benefits are as follow.
 They reduce the risk of investing in the stock market by diversification, mutual funds
provide such as record keeping, providing market updates, suggestions on investment
opportunities and so on
 They provide professional management by experts in the stock market
 Mutual funds also reduce transaction costs for investors in the sense that the only
performance that investors need to see is of the fund and not the stocks or the assets
held by the fund and can easily make decisions on that basis
 By pooling of investment funds, they allow small investors to hold a diversified
portfolio. The fund portfolio is also professionally managed and monitored by
professionals in the market who have both experience and information for profitable
security selection

27
2. COMPANY PROFILE
2.1 Introduction/Evaluation
Industry Analysis of Axis Bank
Axis Bank India, the first bank to begin operations as new private banks in 1994 after the
government of India allowed new private banks to establish. Axis Bank was jointly promoted
by the Administrator of the specified undertaking of the
 Unit Trust of India (UTI)
 Life Insurance Corporation of India (LIC)
 General insurance Corporation Ltd.
Also with associates (viz.), National Insurance Company Ltd., the Oriental Insurance
Corporation and United Insurance Company Ltd.
Evaluation
UTI was established in 1964 by an Act of Parliament; neither did the Government of India
own it nor contributes any capital. The RBI was asked to contribute one-half of its initial
capital of Rs 5 crore, and given the mandate of running the UTI in the interest of the unit-
holders. The State Bank of India and the Life Insurance Corporation contributed 15 per cent
of the capital each, and the rest was contributed by scheduled commercial banks which were
not nationalized then. This kind of structure for a unit trust is not found anywhere else in the
world. Again, unlike other unit trusts and mutual funds, the UTI was not created to earn
profits.
In the course of nearly four decades of its existence, it (the UTI) has succeeded
phenomenally in achieving its objective and has the largest share anywhere in the world of
the domestic mutual fund industry. '' The emergence of a "foreign expert" during the setting
up of the UTI makes an interesting story. The announcement by the then Finance Minister
that the Government of India was contemplating the establishment of a unit trust caught the
eye of Mr. George Woods, the then President of the World Bank. Mr. Woods took a great
deal of interest in the Indian financial system, as he was one of the principal architects of the
ICICI, in which his bank, First Boston Corporation Bank, had a sizeable shareholding. Mr.
Woods offered, through Mr. B.K. Nehru, who was India's Executive Director on the World
Bank, the services of an expert. The Centre jumped at the offer, and asked the RBI to hold
up the finalization of the unit trust
Proposals till the expert visited India. The only point Mr. Sullivan made was that the
provision to limit the ownership of units to individuals might result in unnecessarily
restricting the market for units. While making this point, he had in mind the practice in the
US, where small pension funds are an important class of customers for the unit trusts. The
Centre accepted the foreign expert's suggestion, and the necessary amendments were made
in the draft Bill. Thus, began corporate investment in the UTI, which received a boost from
the tax concession given by the government in the 1990-91 Budget. According to this
concession, the dividends received by a company from investments in other companies,

28
including the UTI, were completely exempt from corporate income tax, and provided the
dividends declared by the investing company were higher than the dividends received.
The result was a phenomenal increase in corporate investment which accounted for 57 per
cent of the total capital under US-64 scheme. Because of high liquidity the corporate sector
used the UTI to park its liquid funds. This added to the volatility of the UTI funds. The
corporate lobby which perhaps subtly opposed the establishment of the UTI in the public
sector made use of it for its own benefits later. The Government-RBI power game started
with the finalization of the UTI charter itself. The RBI draft of the UTI charter stipulated
that the Chairman will be nominated by it, and one more nominee would be on the Board of
Trustees. While finalizing the draft Bill, the Centre changed this stipulation. The Chairman
was to be nominated by the Government, albeit in Consultation with RBI. Although the
appointment was to be made in consultation with the Reserve Bank, the Government could
appoint a person of its choice as Chairman even if the Bank did not approve of him.
Later on in 2002 the UTI was renamed to Axis Bank.
Corporate Profile
Axis Bank is the third largest private sector bank in India. The Bank offers the entire spectrum
of financial services to customer segments covering Large and Mid-Corporates, MSME,
Agriculture and Retail Businesses.
With its 3,703 domestic branches (including extension counters) and 13,814 ATMs across the
country as on 31st March 2018, the network of Axis Bank spreads across 2,163 cities and
towns, enabling the Bank to reach out to a large cross-section of customers with an array of
products and services. The Bank also has ten overseas offices with branches at Singapore, Hong
Kong, Dubai (at the DIFC), Shanghai and Colombo; representative offices at Dubai, Abu
Dhabi, Dhaka and Sharjah and an overseas subsidiary at London, UK.
Axis Bank is one of the first new generation private sector banks to have begun operations in
1994. The Bank was promoted in 1993, jointly by Specified Undertaking of Unit Trust of India
(SUUTI) (then known as Unit Trust of India), Life Insurance Corporation of India (LIC),
General Insurance Corporation of India (GIC), National Insurance Company Ltd., The New
India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India
Insurance Company Ltd. The shareholding of Unit Trust of India was subsequently transferred
to SUUTI, an entity established in 2003.
With a balance sheet size of Rs. 6,01,468 crores as on 31st March 2017, Axis Bank has
achieved consistent growth and with a 5 year Compound Annual Growth Rate (CAGR) (2011-
12 to 2016-17) of 16% in Total Assets, 13% in Total Deposits, 17% in Total Advances.

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2.2 Members of the Committee
 Committee of Directors
Sr. No. Name of the Members Category
1. Shri S. Vishvanathan Chairman
2. Smt. Shikha Sharma Member
3. Shri Prasad R. Menon Member
4. Shri V. Srinivasan Member
5. Smt. Ketaki Bhagwati Member
 Audit Committee of the Board
1. Prof. Samir K. Barua Chairman
2. Shri S. Vishvanathan Member
3. Shri Rakesh Makhija Member
4. Shri B. Babu Rao Member
 Risk Management Committee
2. Dr. Sanjiv Misra Member
4. Shri Rohit Bhagat Member
5. Smt. Ketaki Bhagwati Member
 Special Committee of the Board of Directors for Monitoring of Large Value Frauds
3. Shri Rakesh Makhija Member
5. Shri Rajesh Dahiya Member

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 Customer Service Committee
1. Shri Som Mittal Chairman
3. Shri Rajiv Anand Member
 Corporate Social Responsibility Committee
1. Shri Som Mittal Chairman
 Committee of Whole-Time Directors
1. Smt. Shikha Sharma Chairman
2. Shri V.Srinivasan Member
2.3 Subsidiaries
The Bank has set up six wholly-owned subsidiaries:
 Axis Private Equity Ltd.
 Axis Trustee Services Ltd.
 Axis Asset Management Company Ltd.
 Axis Mutual Fund Trustee Ltd.
 Axis Bank UK Ltd.
 Axis Securities Ltd.
 Axis Direct
 Axis Finance Ltd.
 Axis Securities Europe Ltd.
 A.Treds Limited
 Axis Forex

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Promoters
UTI Bank Ltd. has been promoted by the largest and the best Financial Institution of the
country, UTI. The Bank was set up IN 1993 with a capital of Rs. 115 crore, with
• UTI contributing Rs. 100 crore,
• LIC - Rs. 7.5 crore
• GIC and its four subsidiaries contributing Rs. 1.5 crore each.
Axis Bank is today one of the most competitive and profitable banking franchise in India.
Which can be clearly seen by an analysis of its comprehensive portfolio of banking services
including Corporate Credit, Retail Banking, and Business Banking, Capital Markets,
Treasury and International Banking.
Capital Structure
The bank has authorixed share capital of Rs. 850 crores comprising 4250000000 equity
shares of Rs. 2/- each. As on 31st March 2017, the Bank has issued, subscribed and paid-up
equity capital of Rs. 476.67 crores, constituting of 2382831826 equity share for Rs. 2/- each.
The Bank’s shares are listed on the National Stock Exchange and the BSE Limited. The
GDRs issued by the bank are listed on the London Stock Exchange (LSE). The Bonds issued
by the Bank under the MTN programme are listed on the Singapore Stock Exchange.
Distribution Network
The Bank has a large footprint of 2904 domestic branches (including extension counters)
and 12,743 ATMs spread across the country as on 31st March 2017. The overseas operations
of the Bank are spread over nine international offices with branches at Singapore, Hong
Kong, Dubai (at the DIFC), Colombo and Shanghai; representative offices at Dhaka, Dubai,
Abu Dhabi and an overseas subsidiary at London, UK. The international offices focus on
corporate lending, trade finance, syndication, investment banking and liability businesses.

32
2.4 BUSINESS OVERVIEW
An overview of various business segments
A. RETAIL BANKING
• Axis Bank has developed a strong retail banking franchise over the years. Retail
Banking is one of the key drivers of the Bank’s growth strategy and it encompasses a wide
range of products delivered to customers through multiple channels. The Bank offers a
complete suite of products across deposits, loans, investment solutions, payments and cards
to help customers achieve their financial objectives. The Bank focuses on product
differentiation as well as a high level of customer-service to enable it to build its retail
business.
• The Bank has continued to develop its risk management capabilities in Retail business,
both from a credit and operations risk standpoint. The branch channel is effectively utilised
for growing the retail assets business, with loan and card products being offered to existing
clientele.
• The growth areas identified by the Bank are in the areas of residential mortgages and
passenger car loans. Of the total retail loans portfolio, 88.47% is in the form of secured loans
(residential mortgages and auto loans).
• The Bank offers a wide range of payment solutions to its customers in the form of debit
cards, prepaid cards and credit cards. As on 31st March 2012, the Bank has a base of
approximately 124.99 lac debit cards, placing it among the leading players in the country.
The Bank is also a dominant player in prepaid cards. Axis Bank has over 2 lakh installed
EDC machines - a highest for any bank in India.
• The Bank launched ‘Axis Bank Wealth’ in 2008-09 targeting customers who have a
total relationship value with the Bank of between Rs.30 lacs and Rs.200 lacs. The value
proposition aims at delivering a ‘One Bank’ experience to such customers and is positioned
as a complete solution involving banking, investment and asset needs.
• The Bank also distributes third party products such as mutual funds, Bank assurance
products (life and general insurance), online trading, Gold and Silver coins through its
branches.
B. INTERNATIONAL RETAIL
• International Retail Business focuses specifically on the overseas sales channel, retail
foreign exchange business, remittances and retail businesses in overseas centres such as
Hong Kong and Sri Lanka, where the Bank has a presence. The products offered in the area
of retail Forex and remittances include travel currency cards, inward and outward wire
transfers, traveller’s cheques and foreign currency notes, remittance facilities through online
portals as well as through collaboration with correspondent banks, exchange houses and
money transfer operators. The Bank continued to have a market leadership position in Travel

33
Currency Cards with 11 currency options other than INR being offered. The aggregate
spends on Travel Currency Cards have crossed USD 3 billion during the year 2012-13.
C. BUSINESS BANKING
• Business Banking leverages the Bank’s strengths – a well distributed network of
branches and a strong technology platform to offer the best in transaction banking services.
The Bank offers a range of current account products and cash management solutions across
all business segments covering corporates, institutions, central and state government
ministries and undertakings as well as small and retail customers.
• The Bank is one of the top CMS providers in the country. The Bank acts as an agency
bank for transacting government business offering services to various Central Government
Ministries / Departments and other State Governments and Union Territories.
• In order to provide solutions for business to effectively manage their funds flow, the
Bank has introduced liquidity management solution for corporate customers. Similarly, a
single window for all payment requirements was launched with several advanced features
such as setting a daily transaction limit for corporate users, setting transaction limits for
individual beneficiaries, prioritising payment methods, online stop payment and
cancellation facilities.
D. CORPORATE CREDIT
• Axis Bank has built a strong corporate banking franchise across corporate, liability and
asset businesses. Axis Bank provides customized structuring and financing solutions in a
timely and comprehensive manner to its corporate customers with a focus on building out a
high quality credit portfolio. The Bank is a market leader in Debt Capital Markets and loan
syndication business across segments, sectors and geographies. The Bank also provides full
range of Treasury and Trade Finance solutions to its corporate clients. The Bank offers
technology enabled transaction banking and cash management services to customers across
Government, financial institutions and corporate segments.
E. TREASURY
• The Bank has an integrated Treasury, covering both domestic and global markets, which
manages the Bank’s funds across geographies. The Bank’s treasury business has grown
substantially over the years, gaining market share and continuing to be among the top five
banks in terms of forex revenues. The Treasury plays an important role in the sovereign debt
markets and participates in the primary auctions held by RBI. It also actively participates in
the secondary government securities and corporate debt market. The foreign exchange and
money markets desk is an active participant in the interbank/ FI space. The Bank has been
exploring various cross-border markets to augment resources and support customer cross-
border trade. The Bank has emerged as one of the leading providers of foreign exchange
and trade finance services. It provides a gamut of products for exports and imports as well
as retail services. Its cutting edge technology provides comprehensive and timely customer
services.

34
F. INTERNATIONAL BANKING
• The international operations of the Bank form a key enabler in its strategy to partner with
the overseas growth potential of its domestic clientele, who are venturing abroad or require
non-rupee funds for domestic projects. The Bank now has a foreign network of four
branches (Singapore, Hong Kong, DIFC (Dubai) and Colombo (Sri Lanka)) and three
representative offices (Shanghai, Dubai and Abu Dhabi) with presence in six countries.
While corporate banking, trade finance, treasury and risk management solutions are the
primary offerings through the branches at Singapore, Hong Kong, DIFC (Dubai) and
Colombo, the Bank also offers retail liability products from its branches at Hong Kong and
Colombo. Further, the Bank’s Gulf Co-operation Council (GCC) initiatives in the form of
representative offices in Dubai and Abu Dhabi, and alliances with banks and exchange
houses in the Middle East provide the support for leveraging the business opportunities
emanating from the large NRI diaspora present in these countries.
G. SMALL AND MEDIUM ENTERPRISES
• The Small and Medium Enterprises (SME) segment is a thrust area of the Bank. The
business approach towards this segment, which is expected to contribute significantly to
economic growth in future, is to build relationships and nurture the entrepreneurial talent
available. The relationship based approach enables the Bank to deliver value through the
entire life cycle of SMEs. The Bank has segmented its SME business in three groups: Small
Enterprises, Medium Enterprises and Supply Chain Finance. The Bank extends working
capital, project finance as well as trade finance facilities to SMEs. The Bank has launched
‘Business Gaurav SME Awards’ in association with Dun & Bradstreet to recognize and
award achievers in the SME space.
H. INFORMATION TECHNOLOGY
• Technology is one of the key enablers for business and delivery of customized financial
solutions. The Bank continues to focus on introducing innovative banking services through
investments in scalable and robust technology platforms that delivers efficient and seamless
services across multiple channels for customer convenience and cost reduction. The Bank
has also focused on improving the governance process in IT. The Bank has launched the
Business Process Management System, a reusable system, which helps to build process
efficiencies across various areas of operations.
• The Bank has undertaken various steps in order to align itself towards RBI guidelines
on security and governance, including setting up of Board and Executive level committees
and working on IT operations and other key areas.
I. AGRICULTURE
• The Bank continues to drive and expand the flow of credit to the agricultural sector.
401 branches of the Bank have dedicated officers for providing farm loans. Products and
solutions are created specifically with simple features and offered at affordable rates to rural
customers. The Bank has also adopted a value-chain approach, wherein end-to-end solutions

35
are being provided for various stakeholders. It also offers various customized solutions to
meet the regional requirements.
J. FINANCIAL INCLUSION
• The Bank perceives financial inclusion (FI) not as a corporate social responsibility or a
regulator driven initiative but as a large business opportunity that lies untapped in the rural
and unexplored section of the urban market. Till March 2012, the Bank has opened over 4.4
million No-Frills accounts in over 7,607 villages through a network of 15 Business
Correspondents and nearly 6,000 customer service points. The Bank has a strong presence
in the Electronic Benefit Transfer (EBT) space and has covered around 6,800 villages across
19 districts and 9 states till date with over 3.7 million beneficiaries.
• In the urban space, the Bank has launched financial inclusion initiatives in Bangalore,
Chennai and Delhi targeting migrant labourers, slum dwellers and other under-banked sector
of the urban population and has opened over 3.5 lac No Frill accounts. The Bank’s financial
inclusion efforts are not merely restricted to launching of financial inclusion initiatives and
sourcing basic No Frill accounts, but to also promote the savings habits and enable the
customers to obtain customized solutions for their financial needs.
• The Bank also has a range of other customised products for this customer segment like
different variants of Axis Uday No Frills Savings Accounts, Chhota RD, Chhota FD, and
Chhota SIP. The Bank has been one of the first few banks to have tied-up with telecom
companies to offer remittance led financial inclusion services on the mobile platform.
K. HUMAN RESOURCES
• The Bank aims in creating and developing human capital to realise its vision of
nurturing a mutually beneficial relationship with its employees. Employee engagement and
learning, leadership development, enhancing productivity and building multiple
communication platforms thus occupied centre stage in the Bank’s HR objective. The Bank
continues to maintain a strong employer brand in the financial services sector especially on
the campuses of the premier business schools of the country. In a major initiative, the Bank
launched Axis Academic Interface Program (AAIP) with Institutions to offer youngsters an
understanding about the financial services industry, and creating ‘Axis Bankers’. So far, the
Bank has tied up with Manipal University, NIIT, IFBI and Guwahati University.

36
2.5 Vision and Mission of Axis Bank
Vision:
To be preferred financial solutions through insight, empowered employees and smart use of
technology.
Mission:
 Customer Centric
 Ethics
 Transparency
 Teamwork
 Ownership
UNIT:
AXIS BANK LIMITED
S-266,
Greater Kailash-II,
New Delhi- 110048
Tel: 0172- 5062917
Registered Office:
‘Trishul’, 3rd Floor, Opp. Samartheshwar Temple,
Law Garden, Ellis Bridge,
Ahmedabad – 380 006.
Tel No. : 079 – 2640 9322
Fax No. : 079 – 2640 9321
Email: p.oza@axisbank.com
Web site: www.axisbank.com
The Corporate Office:
Axis Bank Limited, Corporate Office,
Bombay Dyeing Mills Compound,
Pandurang Budhkar Marg,
Worli, Mumbai - 400 025
Tel: (022) 2425 2525

37
3. LITERATURE REVIEW
Edwin Flippo defines Recruitment and selection process as "A process of searching for
prospective employees and stimulating and encouraging them to apply for jobs in an
organization."
In simpler terms, recruitment and selection are concurrent processes and are void without each
other. They significantly differ from each other and are essential constituents of the
organization. It helps in discovering the potential and capabilities of applicants for expected or
actual organizational vacancies. It is a link between the jobs and those seeking jobs.
Jack Treynor (1965) developed a methodology for performance evaluation of a mutual fund
that is referred to as reward to volatility measure, which is defined as average excess return on
the portfolio. This is followed by Sharpe (1966) reward to variability measure, which is average
excess return on the portfolio divided by the standard deviation of the portfolio.
Sharpe (1966) developed a composite measure of performance evaluation and imported
superior performance of 11 funds out of 34 during the period 1944-63.
Michael C. Jensen (1967) conducted an empirical study of mutual funds in the period of 1954-
64 for 115 mutual funds. The results indicate that these funds are not able to predict security
prices well enough to outperform a buy the market and hold policy. The study ignored the
gross management expenses to be free. There was very little evidence that any individual fund
was able to do significantly better than which investors expected from mere random chance.
Jensen (1968) developed a classic study; an absolute measure of performance based upon the
Capital Asset Pricing Model and reported that mutual funds did not appear to achieve abnormal
performance when transaction costs were taken into account.
Carlsen (1970) evaluated the risk-adjusted performance and emphasized that the conclusions
drawn from calculations of return depend on the time period, type of fund and the choice of
benchmark. Carlsen essentially recalculated the Jensen and Shape results using annual data for
82 common stock funds over the 1948-67 periods. The results contradicted both Sharpe and
Jensen measures.
Fama (1972) developed a methodology for evaluating investment performance of managed
portfolios and suggested that the overall performance could be broken down into several
components.
John McDonald (1974) examined the relationship between the stated fund objectives and their
risks and return attributes. The study concludes that, on an average the fund managers appeared

38
to keep their portfolios within the stated risk. Some funds in the lower risk group possessed
higher risk than funds in the most risky group.
James R.F. Guy (1978) evaluated the risk-adjusted performance of UK investment trusts
through the application of Sharpe and Jensen measures. The study concludes that no trust had
exhibited superior performance compared to the London Stock Exchange Index.
Henriksson (1984) reported that mutual fund managers were not able to follow an investment
strategy that successfully times the return on the market portfolio. Again Henriksson (1984)
conclude there is strong evidence that the funds market risk exposures change in response to
the market indicated. But the fund managers were not successful in timing the market.
Grinblatt and Titman (1989) concludes that some mutual funds consistently realize abnormal
returns by systematically picking stocks that realize positive excess returns.
Richard A. Ippolito (1989) concluded that mutual funds on an aggregate offer superior returns.
But expenses and load charges offset them. This characterizes the efficient market hypothesis.
Ariff and Johnson (1990) made an important study in Singapore and found that the performance
of Singapore unit trusts spread around the market performance with approximately half of the
funds performing below the market and another half performing above the market on a risk-
adjusted basis.
Cole and IP (1993) investigated the performance of Australian equity trusts. The study found
evidence that portfolio managers were unable to earn overall positive excess risk-adjusted
returns.
Vincent A. Warther(1995) in the article entitled “aggregate mutual fund flows and security
returns” concluded that aggregate security returns are highly correlated with concurrent
unexpected cash flows into MFs but unrelated to concurrent expected flows. The study resulted
in an unexpected flow equal to 1 percent of total stock fund assets corresponds to a 5.7 percent
increase in stock price index. Fund flows are correlated with the returns of the securities held
by the funds, but not the returns of other types of securities. The study found an evidence of
positive relation between flows and subsequent returns and evidence of a negative relation
between returns & subsequent flows.
Bansal’s book (1996) “mutual fund management & working” included a descriptive study of
concept of mutual funds, Management of mutual funds, accounting & disclosure standards,
Mutual fund schemes etc.
Sadhak’s book (1997) “Mutual funds in India, Marketing strategies and investment practices”
is highly analytical & thought provoking. Much research has gone into writing of this book and
hence highly useful to researchers. An attempt is made of the first time in presenting Marketing
strategies of Mutual funds.

39
Verma’s book (1997) ‘Guide to mutual funds & Investment portfolios of Indian mutual funds
with some statistical data guidelines to the investors in selection of schemes etc.
K. Pendaraki (2001) et al. studied construction of mutual fund portfolios, developed a multi-
criteria methodology and applied it to the Greek market of equity mutual funds. The
methodology is based on the combination of discrete and continuous multi-criteria decision aid
methods for mutual fund selection and composition. UTADIS multi-criteria decision aid
method is employed in order to develop mutual fund’s performance models. Goal programming
model is employed to determine proportion of selected mutual funds in the final portfolios.
Michael K. Berkowitz and Yehuda Katouritz (2002) in their paper examined the relationship
between the fees changes by mutual funds and their performance. The work distinguished
between high & low quality funds and sheds some additional light on the growing controversy
concerning the role of independent directors as monitors of the fee setting practices written the
funds. They found that for high quality managers, there is a positive relationship between fees
& performance. In contrast for lower Quality Managers, there is a negative relationship
between fees and performance. The authors believed this reflects the incentive for poor
managers to extract shorter benefits from investors as the likelihood of survival is lower for
poor performing managers. The results were consistent with the notion that the independent
directors whose responsibility is to safeguard the interest of shareholders may not be effective
in doing so.
S.Narayan Rao (2003) et. al., evaluated performance of Indian mutual funds in a bear market
through relative performance index, risk return analysis, Treynor’s ratio, Sharpe’s ratio,
Jensen’s measure, and Fama’s measure. The study used 269 open-ended schemes (out of total
schemes of 433) for computing relative performance index. Then after excluding funds whose
returns are less than risk-free returns, 58 schemes are finally used for further analysis. The
results of performance measures suggest that most of mutual fund schemes in the sample of 58
were able to satisfy investor’s expectations by giving excess returns over expected returns
based on both premium for systematic risk and total risk.
Work by Korsten (2003) and Jones et al. (2006)
According to Korsten (2003) and Jones et al. (2006), Human Resource Management theories
emphasize on techniques of recruitment and selection and outline the benefits of interviews,
assessment and psychometric examinations as employee selection process. They further stated
that recruitment process may be internal or external or may also be conducted online. Typically,
this process is based on the levels of recruitment policies, job postings and details, advertising,
job application and interviewing process, assessment, decision making, formal selection and
training (Korsten 2003).
Jones et al. (2006) suggested that examples of recruitment policies in the healthcare, business
or industrial sector may offer insights into the processes involved in establishing recruitment
policies and defining managerial objectives.

40
Work by Alan Price (2007)
Price (2007), in his work Human Resource Management in a Business Context, formally
defines recruitment and selection as the process of retrieving and attracting able applications
for the purpose of employment. He states that the process of recruitment is not a simple
selection process, while it needs management decision making and broad planning in order to
appoint the most appropriate manpower.
Work by Hiltrop (1996)
Hiltrop (1996) was successful in demonstrating the relationship between the HRM practices,
HRM-organizational strategies as well as organizational performance. He conducted his
research on HR manager and company officials of 319 companies in Europe regarding HR
practices and policies of their respective companies and discovered that employment security,
training and development programs, recruitment and selection, teamwork, employee
participation, and lastly, personnel planning are the most essential practices (Hiltrop 1999).
Work by Jackson et al. (2009) and Bratton and Gold (1999)
As discussed by Jackson et al. (2009), Human resource management approaches in any
business organization are developed to meet corporate objectives and materialization of
strategic plans via training and development of personnel to attain the ultimate goal of
improving organizational performance as well as profits. The nature of recruitment and
selection for a company that is pursuing HRM approach is influenced by the state of the labour
market and their strength within it. Furthermore, it is necessary for such companies to monitor
how the state of labour market connects with potential recruits via the projection of an image
which will have an effect on and reinforce applicant expectations. Work of Bratton & Gold
(1999) suggest that organizations are now developing models of the kind of employees they
desire to recruit, and to recognize how far applicants correspond to their models by means of
reliable and valid techniques of selection. Nonetheless, the researchers have also seen that such
models, largely derived from competency frameworks, foster strength in companies by
generating the appropriate knowledge against which the job seekers can be assessed. However,
recruitment and selection are also the initial stages of a dialogue among applications and the
company that shapes the employment relationship (Bratton & Gold 1999).
Paramita Mukherjee & Suchismita (2008)
Bose in the paper “Does the Stock Market in India Move with Asia? A Multivariate Co-
integration Vector Auto regression Approach” if the Indian stock market moves with other
markets in Asia and the United States in an era of capital market reforms and the sustained
interest of foreign investors in that market. By using techniques of co-integration, vector auto
regression, vector error correction models, and Granger causality, the research indicated that,
though there is definite information leadership from the U. S. market to all Asian markets, the
U. S. indexes do not uniquely influence the integration of Asian markets, while Japan is found
to play a unique role in the integration of Asian markets. The U. S. market is seen not only to
influence, but also to be influenced by information from most of the major Asian markets. The
Indian stock return in recent times is definitely led by major stock index returns in the United

41
States, Japan, as well as other Asian markets, such as Hong Kong, South Korea, and Singapore.
More important, returns on the Indian market are also seen to exert considerable influence on
stock returns in major Asian markets.
Work by Taher et al. (2000)
Toward that end Taher et al. (2000) carried out a study to critique the value-added and non-
value activities in a recruitment and selection process. The strategic manpower planning of a
company, training and development programme, performance appraisal, reward system and
industrial relations, was also appropriately outlined in the study. This study was based on the
fact that efficient HR planning is an essence of organization success, which flows naturally into
employee recruitment and selection (Taher et al. 2000).

42
4. RESEARCH OBJECTIVES AND HYPOTHESIS
4.1 RESEARCH OBJECTIVES
 To study the awareness of mutual fund among investor in Delhi/NCR region
 To identify the behaviour of investors while investing in mutual fund
 To identify the prospect perception about mutual funds in Delhi/NCR region
4.2 RESEARCH HYPOTHESIS
H1: There is a significant association between Gender and Awareness of Mutual funds.
H2: There is a significant association between Income and Investment of Mutual funds.
H3: There is a significant association between Income and Investment term of Mutual
funds.
H4: There is a significant association between Mutual fund scheme and Investment term of
Mutual funds.

43
5. RESEARCH METHODOLOGY
The report is based on primary as well secondary data, however primary data collection was
given more importance since it is overhearing factor in studies. One of the most important use
of research methodology is that it helps in identifying the problem, collecting, analysing the
required information data and providing an alternative solution to the problem. It helps in
collecting the vital information that is required by the top management to assist them for the
better decision making both day to day decision and critical ones.
Data Source
Research is based on both primary as well as secondary data. But secondary data can be used
mostly for the reference. Research has been done by primary data collection, and primary data
has been collected through various reports (based on related topics), and websites.
Duration of Study
The study was carried out for a period of two months, from 01st
May to 30th
June 2018.
Sampling
The sample was not that much selected but all are the customers/visitors of different banks.
The data has been collected through a questionnaire which was send through social media, it
was also collected through informal talks with the customers with in the region of Delhi NCR.
Sample Size
The sample size of my report is limited to 74 people. Out of which only 33 people had invested
in mutual fund. Other 41 people did not have ever invested in Mutual Fund.
Sample Technique
The simple random sampling technique was used in the selection of sample elements from the
sampling frame. The advantage of random sampling is that the sample represents the target
population and eliminates sampling bias. This is suitable for data analysis for any study.
Limitations of the Research
1. All findings are based on the information provided by the respondents and may not
contain true responses.
2. In a rapidly changing industry, analysis on one day or in one segment can change very
quickly. The environmental changes are vital to be considered in order to assimilate the
findings.
3. One of the parts of the questionnaire is not interpreted by the respondents correctly and
the result of that part is not found out and hence ignored.
4. The study has time constraints as this study is done during a period of two months i.e.
May 1, 2018 to June 30, 2018.
5. The conclusion arrived at are based on a very less experience of researcher in this field.

44
6. DATA ANALYSIS AND INTEERPRETATION
Data Analysis
Part I: Analysis and graphical representation of questionnaire
Interpretation: According to this chart out of 74 responses, 51 are the male and 23 are the
female.
Interpretation: After looking this pie chart, it can be said the middle-aged group are the main
customer of the banks as they occupied almost 58.1% of this graph. The bank has a huge

45
potential in terms of the untapped market – Young and old age group people. High pay
packages to today’s employed youth and large saving with the old age people (especially in
urban areas) has made them attractive potential customers.
Interpretation: After looking this pie chart, out of 74 respondents 63.5% (47) are both
graduate or post graduate, 25.7% (19) are under graduate and 10.8% (08) are HSC.
Interpretation: After looking this pie chart, out of 74 respondents 6.2% (12) are govt.
employee, 8.1% (06) are Professionals, 36.6% (27) are private firm employees, 17.6% (13) are
self-employed, 12.2% (09) are business person and 9.5% (07) belongs to other occupation. The
highest contribution is made by private firm employee.

46
Interpretation: In the Income Group of the investors, out of 74 investors, 33.8% (25) investors
that is the maximum investors are in the annual income group of more than Rs. 5 Lac, Second
one i.e. 31.1% (23) investors are in the annual income group of more than Rs. 3Lac to Rs. 5
Lac and the minimum investors i.e. 13.5% (10) are in the annual income group of below Rs.
1Lac. The chart shows that maximum number of respondents have more than their annual
income of Rs. 3 Lac i.e. 48 respondents.
Interpretation: After seeing this bar chart, it can be analyse that the maximum number of
investor invest in saving bank and the second largest investment is made by them is in fixed
deposit, it may be a reason that both of the investment area have no risk with their investor
money that’s why they invest most in it. Mutual funds is now another better option for the
investor to invest their money on different schemes of mutual fund and have interest on that
investment. Now people start taking little bit risk with their investment and there is no sign of
negativity while investing in mutual fund. Jewellery is the main source of investment for the
people in India but now the perception of investor changes and the price of gold and silver also
matters as every person is not able to buy gold/silver with less income.

47
Interpretation: Everybody saves some proportion of the income looking at the present and
future needs. The pie chart shows that major proportion that is 48.8 % investors have annual
savings ranging below 10 % whereas 45.9% investors annual saving ranges below 25%, and
5.4% belongs to below 50%. It shows that in this crucial era to save a penny is very difficult
for each and every person.
Interpretation: Everybody saves some proportion of the income looking at the present and
future needs. The bar graph shows that investors invest only for either safety or high return as
everybody wants their money to be increased and safe. Very few people wants their money to
be invest at a risk, we can see that 12.2% agree on the factor of saving at high risk.

48
Interpretation: From the 74 responses, 79.7% means 59 respondents knows about mutual
funds and 20.3% means 15 respondents don’t know about mutual funds.
Interpretation: From the above bar chart, we can see that the main source of information about
mutual funds is bank, as from their investors can get proper information about mutual fund and
then they can made proper investment decision.

49
Interpretation: From 51 respondents who knows about mutual fund, only 48.6% invest their
savings in mutual funds and other invest in others.
Interpretation: From responses only 40 respondents provide information about why they
invest in mutual funds. From bar chart we can see that most number of investor invest only for
getting returns and some of them believe that there is low risk factor involve in investing mutual
funds.

50
Interpretation: From the respondents 23 investors who don’t invest in mutual funds because
they believe that there is high risk involve in it. And some of them are not properly aware about
that.
Interpretation: From the above bar chart we analyse that maximum number of investor invest
in Axis AMF along with other mutual funds and the second preference is for HDFC mutual
funds. People invest in other mutual fund companies other than banks mutual funds

51
Interpretation: From the above pie chart we got to know that 41% of investors invest in Equity
Balanced Funds, 25.6% in Balanced Funds and 33.3 in Debt Scheme.
Interpretation: From the above pie chart, 42.1% of investors invest their money for long term
and the rest i.e. 57.9% investor invest for short term as they can change their investment scheme
after certain period of time for getting better return.

52
Interpretation: From the responses the investors invest their money in mutual funds mostly
prefer open ended scheme as it gives option to investor to switch their investment whenever
they want.
Interpretation: From 74 responses, investor who invest in mutual funds or who don’t invest
they all have some fear of investing in mutual funds. The maximum is lack of information
about mutual fund these are mostly those who don’t invest in mutual funds. There is lack of
confidence is also shown by the investors while in different schemes.

53
Part II: Hypothesis Testing and Interpretation
H1: Gender and Awareness of Mutual funds.
H0 (Null) - There is no significant association between Gender and Awareness of Mutual
funds.
H1 (Alternate) - There is a significant association between Gender and Awareness of Mutual
funds.
Interpretation - As the significant value of Levene’s test is 0.008 which is less than 0.05 hence
we have to look the values where equal variance is assumed so according to that significant
value of T-test is 0.05361 which is greater than 0.05 hence null hypotheses is accepted. This
says there is no significant association between Gender and Awareness of Mutual funds.
Hence, our null hypothesis is accepted i.e. there is no significant association between Gender
and Awareness of Mutual funds.
H2: Income and Investment of Mutual funds.
H0 - There is no significant association between Income and Investment of Mutual funds.
H1 - There is a significant association between Income and Investment of Mutual funds.

54
Interpretation: An analysis of variance showed that there were significance difference
between Income and Investment of mutual funds. F (3, 70)*=2.957, P value is .038. As the
significance value (p value) of the anova is .038 which is less than 0.05 hence alternate
hypothesis is accepted.
At the end this table revealed that alternate hypothesis is accepted i.e. there were significance
difference between Income and Investment of mutual funds.
*F = df
H3: Income and Investment term of Mutual funds.
H0 - There is no significant association between Income and Investment term of Mutual
funds.
H1 - There is significant association between Income and Investment term of Mutual funds.
Interpretation: An analysis of variance showed that there were significance difference
between Income and Investment of mutual funds. F (3, 70)*=1.254, P value is .297. As the
significance value (p value) of the anova is .297 which is greater than 0.05 hence null
hypothesis is accepted.

55
At the end this table revealed that null hypothesis is accepted i.e. there is no significant
association between Income and Investment term of Mutual funds.
*F = df
H4: Mutual fund scheme and Investment term of Mutual funds.
H0 - There is no significant association between Mutual fund scheme and Investment term of
Mutual funds.
H1 - There is a significant association between Mutual fund scheme and Investment term of
Mutual funds.
Interpretation: An analysis of variance showed that there were significant association
between Mutual fund scheme and Investment term of Mutual funds. F (2, 71)*=58.482, P value
is .000. As the significance value (p value) of the anova is .000 which is less than 0.05 hence
alternate hypothesis is accepted.
At the end this table revealed that alternate hypothesis is accepted i.e. there is a significant
association between Mutual fund scheme and Investment term of Mutual funds.
*F = df

56
6. CONCLUSION
We can infer from the analysis that the concept of mutual fund in India is still in its growing
phase. With the growing importance of mutual fund in other areas in the country, this place
is witnessing the same rate of growth in mutual funds. Apart from these facts the following
are some other important facts which can easily be inferred from the paper.
 Huge opportunities of Mutual funds exist in the India. In short the market in this city is
a growing market
 As because many companies exist in this market, competition is cut to throat.
 Mind sets of the investors are not towards mutual funds. They still think of investing in
traditional investment alternatives. Customers are not properly educated about the
mutual funds.
 Few private sectors banks like Axis, ICICI, HDFC, UTI, ING VYSYA etc. sell mutual
funds through their branches only.
 Specialized agents of mutual funds are rarely seen. Financial advisors are not seen there
who can educate the investors. And now banks starts working as financial advisors for
their investors and approaching potential customers to invest more and more in mutual
funds.
 Posters, banners or other promotional activities are rarely seen in this market.
 Mutual fund companies do not have aggressive strategies.
 Insurance products are and can be the main competitors of mutual funds.
 Mutual fund investors are confined to the upper-middle and upper social class in this
market. Upper-lower class and lower-upper class people are still untouched.
 More than half of the respondents have wrong perception about the mutual funds. They
feel mutual funds are very risky investment alternative
 Most of the respondents are satisfied with their current return from their investment.
Most of the respondents neither do not want to take risk in investing their money in
mutual funds.

57
7. SUGGESTIONS & RECOMMENDATIONS
After a thorough study and analysis of the data and information, the following are the few
recommendations and suggestions, if implemented , would definitely benefit the financial
market in India, which is in its booming stage, in the short run and in the long run as well.
Recommendations and suggestions are normally given when there are some problems or
difficulties lying in the market. Here in this research report recommendations and
suggestions are totally based on the facts, reactions, attitudes, perceptions, and many other
things of the respondents which were received from them during research work. The
recommendation part of this research work has three parts only, which can push the mutual
fund market in India to a higher level.
Awareness:
Awareness of mutual fund products must be increased in the Delhi NCR. The awareness
can be enhanced in the following ways---
Conference or seminars on ―mutual funds‖ can be conducted on regular basis. This will
no doubt increase the awareness of mutual fund in the minds of the investors.
All the companies must join hands and work together for this.
Customer education:
As the awareness of mutual funds is still lacking in this market, companies should give
focus on ―customer education‖. For this purpose again the conference and seminars can
be the best way towards educating the customers. Again free training programme to the
agents can be fruitful.
Government intermediation:
Government must also work together with the mutual fund companies in promoting the
concept of mutual fund in India.
Mutual Fund Companies can also have a relationship with corporate, so that companies
can also have seminars and conferences on mutual funds at their office time also.
Confidence building activities:
People in this city are not confident in investing their money in mutual funds. Hence there
is a need to do something which will build the confidence in the minds of the investors.
Hence the confidence building activities must be carried out by the mutual fund
companies. Because most of the people in India think that investing in mutual funds is a
very risky affair. In the following ways the confidence can be increased in the minds of
the people in India.
 The present performance of the mutual funds is very good compared with other investment.
And the companies should cash in on this opportunity. The performance of the mutual funds
can be published widely other newspapers and magazines, journals. This will no doubt
induce the investors towards investing in mutual funds.

58
 Case study of the investors who have been benefited in investing in mutual funds can be
published in the newspapers, magazines and journals.
 As selling of financial products requires well trained people, the companies must provide
proper training to the agents and financial planners. For this training institute must be opened
in this township.
 Continuous brand building activities must be carried out by the companies. For this purpose
companies should initiate some sort of promotional activities like, ads in newspapers,
magazines, journals.
 Educational institutes must start some professional courses on mutual funds and other
finance specialized courses. This will create some sort of awareness about the mutual funds.
 Mutual fund companies must tie up with other financial institute like banks, post office for
reaching to the mass people. Because these financial institutes have tremendous reach to the
mass people in our country. As a result mutual fund companies can have easy access to the
common people. The companies must go in for this kind of strategic alliance with other
companies as well. Because strategic alliance not only benefit the companies but help in
developing the market also.
 For opening of new savings bank account, certain units of mutual funds of a company
(strategic alliance company) can be given at free of cost to the account holder. This will no
doubt make the people more familiar with the concept of mutual funds.
 On buying of one or some life insurance policies, again certain units of mutual fund can be
given at free of cost
 Again each car loan or other kind loan of a certain amount will get the loan taker certain
units of mutual funds absolutely free of cost.

59
BIBLIOGRAPHY
Bibliography:
www.google.co.in
http://www.mutualfundsindia.com
www.utimf.com
www.moneycontrol.com
www.indiafund.net
www.amfindia.com
www.moneycontrol.com
NISM Series-V Mutual Fund Distributors

60
APPENDIX
Questionnaire
1. Gender:
a) Male
b) Female
c) Other
2. Age (In Years):
a) Below 25
b) 25-35
c) 35-45
d) 45-55
e) Above 55
3. Education Qualification:
a) Post Graduation
b) Under Graduate
c) HSC
4. Occupation:
a) Government Employees
b) Professional
c) Private Firm Employee
d) Self Employed
e) Business Person
f) Others

61
5. Annual Income:
a) Less than 1,00,000
b) 100000 to 300000
c) 300000 to 500000
d) More than 500000
6. Where do you invest your savings?
a) Saving Bank
b) Fixed Deposits
c) Share Market
d) Gold/Silver
e) Real Estate
f) Mutual Funds
7. What is the percentage of saving from your annual income?
a) Below 10%
b) Below 25%
c) Below 50%
d) Below 75%
8. What are the factors do you prefer while investing?
a) Highly Return
b) Safety
c) Liquidity
d) High Risk
e) Marketability
9. Do you know about Mutual Funds? (If answer is “No” then move to question No. 11)
a) Yes
b) No

62
10. Sources of information about Mutual Funds?
a) Advertisement
b) Peer Group
c) Bank
d) Financial Advisor
e) Television
f) Internet
11. Are you an investor of Mutual Funds?
a) Yes
b) No
12. Reasons for doing investment in Mutual Funds?
a) Returns
b) Low Risk Factor
c) Credit Rating
d) Inflation
e) Company
f) Lock in Period
13. Reasons for not invested in Mutual Funds?
a) High risk
b) Not Aware
c) Not any specific reason
14. In which Asset Management Company you invested?
a) Axis AMF
b) UTI
c) HDFC
d) ICICI Prudential
e) Others

63
15. In which type of mutual funds schemes you have invested?
a) Debt Scheme
b) Equity Based Scheme
c) Balanced Funds
16. You have invested for long term or short term Mutual Funds?
a) Short Term
b) Long Term
17. Which type of scheme do you prefer?
a) Close Ended
b) Open Ended
18. Which factor prevent you to invest in Mutual Funds?
a) Returns
b) Low Risk Factor
c) Credit Rating
d) Inflation
e) Company
f) Lock in Period

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