Mutual Funds in India

MAJOR MUTUAL FUNDS IN INDIA
BIPIN DUBEY DPGD/JA10/0680 SPECIALIZATION: FINANCE
WELINGKAR INSTITUTE OF MANAGEMENT DEVELOPMENT AND RESEARCH YEAR OF SUBMISSION: - NOVEMBER, 2011
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ACKNOWLEDGEMENT
With immense pleasure I would like to present this report on MAJOR MUTUAL FUND IN INDIA I would like to thank Welingkar Institute of Management for providing me the opportunity to present this project. My Special thank to Mr. Vikas Vishwakarma (Project Guide) for his valuable guidance, co-operation and for taking time out of his busy schedule to help me for completion of this project. Acknowledgement is due to my parents, family members, friends who have helped me directly or indirectly in the successful completion of the project. I would like to acknowledge my wife for her timely support whenever I required her help.
Bipin Dubey
CERTIFICATE FROM GUIDE

This is to certify that the project work titled MAJOR MUTUAL FUND IN INDIA is a bonafide work carried out by Mr. Bipin Dubey (Roll No. DPGD/JA10/0680) a candidate for the post Graduate Diploma examination of the Welingkar Institute of Management under my guidance and direction.
SIGNATURE OF GUIDE NAME : Vikas Vishwakarma DESIGNATION : Chartered Accountant
Date:
Place:
TABLE OF CONTENTS

TITLE PAGE ACKNOWLEGEMENT CERTIFICATE FROM THE GUIDE
1 2 3
A.
INTRODUCTION

Introduction to mutual fund and its various aspects Investment alternative in India Advantages of mutual funds Drawbacks from Mutual Funds History of Mutual Funds
5 7 10 12 16
B. C. D. E. F. G. H.
DETAILED STUDY OBJECTIVE AND SCOPE RESEARCH METHODOLOGY DATA ANALYSIS AND INTERPRETATION FINDING AND CONCLUSIONS SUGGESTIONS AND RECOMMENDATIONS BIBLIOGRAPHY
34 77 79 82 102 106 108
Chapter 1 Introduction
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INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS ASPECTS.

Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. This pool of money is invested in accordance with a stated objective. The joint ownership of the fund is thus Mutual, i.e. the fund belongs to all investors. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. A Mutual Fund is an investment tool that allows small investors access to a well diversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The funds Net Asset value (NAV) is determined each day. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders.
When an subscribes for the fund, he becomes assets of the fund proportion as his amount put up (the total amount Mutual Fund known as a mutual or a unit holder. Any change in investments made market as shares, reflected in the
investor units of a mutual part owner of the in the same contribution with the corpus of the fund). investor is also fund shareholder the value of the into capital instruments (such debentures etc) is Net Asset Value
(NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors.
INVESTMENT ALTERNATIVES IN INDIA: Non marketable financial assets: These are such financial assets which gives moderately high return but cannot be traded in market. Bank Deposits Post Office Schemes Company FDs PPF
Equity shares: These are shares of company and can be traded in secondary market. Investors get benefit by change in price of share and dividend given by companies. Equity shares represent ownership capital. As an equity shareholder, a person has an ownership stake in the company. This essentially means that the person has a residual interest in income and wealth of the company. These can be classified into following broad categories as per stock market: Blue chip shares Growth shares Income shares Cyclic shares Speculative shares
Bonds: Bonds are the instruments that are considered as a relatively safer investment avenues. G sec bonds GOI relief funds Govt. agency funds PSU Bonds RBI BOND Debenture of private sector co.
Money market instrument: By convention, the term "money market" refers to the market for short-term requirement and deployment of funds. Money market instruments are those instruments, which have a maturity period of less than one year. T-Bills Certificate of Deposit Commercial Paper
Mutual Funds- A mutual fund is a trust that pools together the savings of a number of investors who share a common financial goal. The fund manager invests this pool of money in securities, ranging the scheme. The different types of schemes are Balanced Funds Index Funds Sector Fund Equity Oriented Funds
Life insurance: Now-a-days life insurance is also being considered as an investment avenue. Insurance premiums represent the sacrifice and the assured sum the benefit. Under it different schemes are: Endowment assurance policy Money back policy Whole life policy Term assurance policy
Real estate: One of the most important assets in portfolio of investors is a residential house. In addition to a residential house, the more affluent investors are likely to be interested in the following types of real estate: Agricultural land Semi urban land Farm House
Precious objects: Investors can also invest in the objects which have value. These comprises of: 9
Gold Silver Precious stones Art objects
Financial Derivatives: These are such instruments which derive their value from some other underlying assets. It may be viewed as a side bet on the asset. The most important financial derivatives from the point of view of investors are: Options Futures
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ADVANTAGES OF MUTUAL FUNDS

There are numerous benefits of investing in mutual funds and one of the key reasons for its phenomenal success in the developed markets like US and UK is the range of benefits they offer, which are unmatched by most other investment avenues. We have explained the key benefits in this section. The benefits have been broadly split into universal benefits, applicable to all schemes and benefits applicable specifically to open-ended schemes. Universal Benefits Affordability: A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. depending upon the investment objective of the scheme. An investor can buy in to a portfolio of equities, which would otherwise be extremely expensive. Each unit holder thus gets an exposure to such portfolios with an investment as modest as Rs.500/-. This amount today would get you less than quarter of an Infosys share! Thus it would be affordable for an investor to build a portfolio of investments through a mutual fund rather than investing directly in the stock market. Diversification the nuclear weapon in your arsenal for your fight against Risk. It simply means that you must spread your investment across different securities (stocks, bonds, money market instruments, real estate, fixed deposits etc.) and different sectors (auto, textile, information technology etc.). This kind of a diversification may add to the stability of your returns, for example during one period of time equities might underperform but bonds and money market instruments might do well enough to offset the effect of a slump in the equity markets. Similarly the information technology sector might be faring poorly but the auto and textile sectors might do well and may protect your principal investment as well as help you meet your return objectives. Variety Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two ways: first, it offers different types of schemes to investors with different needs and risk appetites; secondly, it offers an opportunity to an investor to invest sums across a variety of schemes, both debt and equity. For example, an investor can invest his money in a Growth Fund (equity scheme) and Income Fund (debt scheme) depending on his risk appetite and thus create a balanced portfolio easily or simply just buy a Balanced Scheme. Professional Management: Qualified investment professionals who seek to maximize returns and minimize risk monitor investor's money. When you buy in to a mutual fund, you are handing your money to an investment professional that has experience in making investment decisions. It is the Fund Manager's job to (a) find the best securities for the fund, given the fund's stated investment objectives; and (b) keep track of investments and changes in market conditions and adjust the mix of the portfolio, as and when required. Tax Benefits: Any income distributed after March 31, 2002 will be subject to tax in the assessment of all Unit holders. However, as a measure of concession to Unit holders of open-ended equity11
oriented funds, income distributions for the year ending March 31, 2003, will be taxed at a concessional rate of 10.5%. In case of Individuals and Hindu Undivided Families a deduction upto Rs. 9,000 from the Total Income will be admissible in respect of income from investments specified in Section 80L, including income from Units of the Mutual Fund. Units of the schemes are not subject to Wealth-Tax and Gift-Tax. Regulations: Securities Exchange Board of India (SEBI), the mutual funds regulator has clearly defined rules, which govern mutual funds. These rules relate to the formation, administration and management of mutual funds and also prescribe disclosure and accounting requirements. Such a high level of regulation seeks to protect the interest of investors.
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DRAWBACKS FROM MUTULA FUND

Fluctuating Returns: Mutual funds are like many other investments without a guaranteed return: there is always the possibility that the value of your mutual fund will depreciate. Unlike fixed-income products, such as bonds and Treasury bills, mutual funds experience price fluctuations along with the stocks that make up the fund. When deciding on a particular fund to buy, you need to research the risks involved - just because a professional manager is looking after the fund, that doesn't mean the performance will be stellar. Another important thing to know is that mutual funds are not guaranteed by the U.S. government, so in the case of dissolution, you won't get anything back. This is especially important for investors in money market funds. Unlike a bank deposit, a mutual fund will not be insured by the Federal Deposit Insurance Corporation (FDIC). Cash, Cash and More Cash: As you know already, mutual funds pool money from thousands of investors, so everyday investors are putting money into the fund as well as withdrawing investments. To maintain liquidity and the capacity to accommodate withdrawals, funds typically have to keep a large portion of their portfolios as cash. Having ample cash is great for liquidity, but money sitting around as cash is not working for you and thus is not very advantageous. Costs: Mutual funds provide investors with professional management, but it comes at a cost. Funds will typically have a range of different fees that reduce the overall payout. In mutual funds, the fees are classified into two categories: shareholder fees and annual operating fees. The shareholder fees, in the forms of loads and redemption fees are paid directly by shareholders purchasing or selling the funds. The annual fund operating fees are charged as an annual percentage - usually ranging from 1-3%. These fees are assessed to mutual fund investors regardless of the performance of the fund. As you can imagine, in years when the fund doesn't make money, these fees only magnify losses. Misleading Advertisements: The misleading advertisements of different funds can guide investors down the wrong path. Some funds may be incorrectly labeled as growth funds, while others are classified as small cap or income funds. The Securities and Exchange Commission (SEC) requires that funds have at least 80% of assets in the particular type of investment implied in their names. How the remaining assets are invested is up to the fund manager. However, the different categories that qualify for the required 80% of the assets may be vague and wide-ranging. A fund can therefore manipulate prospective investors by using names that are attractive and misleading. Instead of labeling itself a small cap, a fund may be sold as a "growth fund". Or, the "Congo High-Tech Fund" could be sold with the title "International HighTech Fund".
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Evaluating Funds: Another disadvantage of mutual funds is the difficulty they pose for investors interested in researching and evaluating the different funds. Unlike stocks, mutual funds do not offer investors the opportunity to compare the P/E ratio, sales growth, earnings per share, etc. A mutual fund's net asset value gives investors the total value of the fund's portfolio less liabilities, but how do you know if one fund is better than another? Furthermore, advertisements, rankings and ratings issued by fund companies only describe past performance. Always note that mutual fund descriptions/advertisements always include the tagline "past results are not indicative of future returns". Be sure not to pick funds only because they have performed well in the past - yesterday's big winners may be today's big losers.
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RISK HIERARCHY OF MUTUAL FUNDS
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Snapshot of Mutual Fund Schemes

Mutual Fund Objective Type Risk Investment Portfolio Who should invest Investment horizon
Money Market
Liquidity + Moderate Income + Negligible Reservation of Capital
Treasury Bills, Those who park Certificate of their funds in Deposits, current accounts or 2 days - 3 weeks Commercial short-term bank Papers, Call deposits Money
Short-term Funds (Floating short-term)
+ Little - Liquidity Moderate Income Rate
Call Money, Commercial Interest Papers, Treasury Those with surplus 3 weeks Bills, CDs, Short- short-term funds 3 months term Government securities.
Bond Funds Regular Income (Floating Long-term) -
Predominantly Credit Risk & Debentures, Interest Rate Government Risk securities, Corporate Bonds Rate Government securities
Salaried conservative investors
&
More than 9 - 12 months
Gilt Funds
Interest Security & Income Risk
Salaried conservative investors
& 12 months & more
Long-term Capital Equity Funds High Risk Appreciation
Stocks
Aggressive investors with long 3 years plus term out look.
Index Funds
To generate returns that are NAV varies Portfolio indices Aggressive commensurate with with index like BSE, NIFTY investors. returns of performance etc respective indices Balanced ratio of Capital Market equity and debt Growth & Regular Risk and Moderate funds to ensure Income Interest Rate Aggressive higher returns at Risk lower risk
3 years plus
Balanced Funds
&
2 years plus
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HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY:The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the Industry. In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets under Management (AUM) was Rs67 billion. The private sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till April 2004; it reached the height if Rs. 1540 billion. The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under. First Phase 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management. Second Phase 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores. Third Phase 1993-2003 (Entry of Private Sector Funds) 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores.
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Fourth Phase since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. Consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.
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LANDMARKS IN INDIAN HISTORY OF MUTUAL FUND

Year
1963 1964 1986 1987 1992 1993 1994 1996 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Landmarks
UTI, Indias first mutual fund launched UTI, Launched US-64 UTI Mastershare, Indias first true mutual fund scheme launched PSU banks and insurers allowed to float mutual funds, SBI first off the block Harshad Mehta-fuelled bull market arouses middle-class interest in shares and mutual funds Private sector and foreign players allowed; Kothari Pioneer first private fund house to start operating, SEBI setup to regulate the industry Morgan Stanley is the first foreign player to launch its Mutual Fund in the Indian market. SEBIs mutual funds rules and regulations, which form the basis of most current laws, come into force. UTI master Index fund is Indias first index fund The takeover of 20th Century AMC by Zurich Mutual fund is the first acquisition in the Industry The industrys asset under management(AUM) crossed Rs.1,00,000 crore US-64 scams leads to UTI overhaul UTI bifurcated, comes under the purview of SEBI, mutual fund distributors banned from giving commissions to investors. Floating rate funds and foreign debt funds debut AMFI certification made compulsory for new agents Long term capital gains exempt from tax for equity funds. Securities transaction tax introduced The industrys AUM crosses Rs. 2,00,000 crore, section 80C introduced, which allows up to Rs. 1 lacs in equity-linked savings schemes (ELSS) for total taxable income AUM crosses Rs.3,00,000 crore in October Mutual fund launches Gold ETFs schemes Bharati Axa launches its Mutual funds
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Best performing Mutual fund in India in 2011

DSPBR (DSP Black Rock) mutual fund:DSPBR top 100 equity registered is an open ended large cap equity fund benchmarked against BSE 100 running for 7 years now. It has returned a staging 35% since launch that is no small feat for a fund whose net assets have now swelled to Rs. 2,773 /- crores. With a low-risk taking capacity and a above average return, this fund be on the top of your shopping cart in 2011. DSPBR Balanced:DSPBR balanced is a hybrid equity oriented mutual fund that is bench marked against CRISIL balanced. With a track record of 11 years and a below average risk profile, the returns have been above average around 18%. The corpus of around Rs. 790/- crores makes it easy for the fund manager to manage the fund. As of writing, the portfolio allocation between equity and debt stood at 75% and 25% approximately. Franklin India Bluechip:Franklin India Bluechip fund is a veteran of a fund. It is running for some 17 years now. Bench marked against the Sensex, the returns have been high, around 26.5% since launch. With a low risk profile and a steep orientation towards large cap stocks, this fund is a great gem to have. Its long term outlook on stocks and ability to give returns to investors without taking unnecessary risks makes it a top contender in your portfolio for 2011. Birla Sun life Frontline Equity:Bench marked against the BSE 200 this 9 year old fund has come in the time light since 2006. Birla sun life frontline equity has an allocation to both large caps and mid-caps. In fact, its allocation to mid caps has risen of late. Currently mid caps account for 20% of the portfolio while the rest is held by large caps. With a below average risk profile and a great fund manager at the helm of affairs, Birla Sun Life Frontline Equity should feature as a must have open ended diversified equity fund in your portfolio for 2011.
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HDFC:This 14 year old fund needs no introduction. Up against BSE 200, it has diversified 26% returns since launch and has always maintained a low risk profile. This should form the core part of your portfolio nearly 80% of its holding are held in large cap and the rest in mid and small caps. A long term track record and process oriented management makes it one of the best equity diversified mutual funds for every portfolio in 2011. HDFC prudence:HDFC prudence has been in existence since 1994 and with annual returns of around 22%, it has exhibited prudence in delivering returns for investors. It did falter in 2007 and 2008 but has come back strongly to show it can be relied upon. Nearly 50% of its portfolio is in large caps while the rest is in small and mid caps. As of writing, it has maintained a 75% allocation to equity and 25% in debt. A great choice in the hybrid category for year 2011. HDFC Tax Saver:Another one from the HDFC stable, this ELSS (Equity linked Saving Scheme) fund has returned a staggering 35% since its launch 15 years ago. Bench marked against S&P CNX 500, it has delivered high returns with a moderate risk profile. As of writing it has maintained 60% allocation to large cap stocks and the rest to mid and small cop. Nearly 90% of its holding is in equity. Canara Robeco Equity Tax Saver:This 17 year old ELS (Equity Linked Savings Scheme) mutual fund has delivered returns of 16% year on year. Its bench marked against BSE 100 and nearly 60% of its holding is in large cap stocks and the rest in mid cap and small cap. A small net asset of Rs.230 crores makes it easier for the fund manager to manage this fund well. With a mantra of long term investment strategy and well diversified portfolio, its hard to avoid this fund this year
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Canara Robeco Income:Like Sahara Income (No. 10 down below), Canara Robeco Income is bench marked against CRISIL Comp BFI and is 9 years old. Majority of its holdings are in debentures, GOI securities and commercial paper. Certificate of deposits and treasury bills also feature in the portfolio. The average credit rating of AAA makes it a safe parking avenue for investors. Sahara Income:As the name goes, the intent of this open ended fund is to generate regular income through investments in debt instruments. Most of its investments are in certificate of deposits and commercial paper. The average credit rating of holding AAA which makes it a safe mutual fund hence the risk profile of the fund is very low. The returns have been above average when compared to the benchmark CRISIL Comp BFI. Around for some 9 years now, Sahara Income is a must have debt oriented mutual fund in your portfolio in 2011.
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CATEGORIES OF MUTUAL FUND:
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Mutual funds can be classified as follow: Based on their structure: Open-ended funds: Investors can buy and sell the units from the fund, at any point of time. Close-ended funds: These funds raise money from investors only once. Therefore, after the offer period, fresh investments cannot be made into the fund. If the fund is listed on a stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly. Redemption of units can be made during specified intervals. Therefore, such funds have relatively low liquidity. Based on their investment objective: Equity funds: These funds invest in equities and equity related instruments. With fluctuating share prices, such funds show volatile performance, even losses. However, short term fluctuations in the market, generally smoothens out in the long term, thereby offering higher returns at relatively lower volatility. At the same time, such funds can yield great capital appreciation as, historically, equities have outperformed all asset classes in the long term. Hence, investment in equity funds should be considered for a period of at least 3-5 years. It can be further classified as:
i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked.
Their portfolio mirrors the benchmark index both in terms of composition and individual stock weightages.
ii) Equity diversified funds- 100% of the capital is invested in equities spreading
across different sectors and stocks. iii) Dividend yield funds- it is similar to the equity diversified funds except that they invest in companies offering high dividend yields. theme. e.g. -An infrastructure fund invests in power, construction, cements sectors etc.
v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector
iv) Thematic funds- Invest 100% of the assets in sectors which are related through some
fund will invest in banking stocks.

vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.
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Balanced fund: Their investment portfolio includes both debt and equity. As a result, on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. Following are balanced funds classes: i) Debt-oriented funds -Investment below 65% in equities. ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt. Debt fund: They invest only in debt instruments, and are a good option for investors averse to idea of taking risk associated with equities. Therefore, they invest exclusively in fixed-income instruments like bonds, debentures, Government of India securities; and money market instruments such as certificates of deposit (CD), commercial paper (CP) and call money. Put your money into any of these debt funds depending on your investment horizon and needs.
i) Liquid funds- These funds invest 100% in money market instruments, a large portion
being invested in call money market.

ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and
T-bills.
iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt
instruments which have variable coupon rate.

iv) Arbitrage fund- They generate income through arbitrage opportunities due to mispricing
between cash market and derivatives market. Funds are allocated to equities, derivatives and money markets. Higher proportion (around 75%) is put in money markets, in the absence of arbitrage opportunities.
v) Gilt funds LT- They invest 100% of their portfolio in long-term government
securities.
vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in
long-term debt papers.

vii)
MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities. FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that of the fund.
viii)
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INVESTMENT STRATEGIES:1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed
date of a month. Payment is made through post dated cheques or direct debit facilities. The investor gets fewer units when the NAV is high and more units when the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA) 2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund. 3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month.
RISK V/S. RETURN:
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In this balanced fund scheme segment I selected the following schemes in the selected AMCs SBI magnum Balance Fund:SBI Magnum Balance Fund has not been given any rating by CRISIL but it has been performing well. The investments of the Funds are well diversified in both Equity and Debt. The total Equity Holdings as on April 30th stands at 67.77% of the total assets. It has outperformed CRISIL Balanced Fund Index by 45.38% for the 52 weeks period. Principal Balanced Fund:Principal Balanced Fund has ranked CP3 by CRISIL, which means average in the open-ended balanced Fund category and ranks within the top 70% of the 19 schemes in this category. It has invested 67% in Equity and about 16% in Government Securities. In Equity it invested primarily in Pharmaceuticals, Construction Materials, Automobiles and banks. Franklin Templeton India Balanced Fund:Franklin Templeton India Balanced Fund invested about 70% of its assets in Equity and 75% in Debts. The recent additions to its portfolio are Reliance Industries, Asian paints and BPCL. It invests primarily in IT consulting, auto parts equipment, Banks, Tele Electrical industrial conglomerates. It invested mainly in the AAA rated Debts. Kotak Balance Fund:Kotak Balance Fund has invested close to 70% in Equity and about 30% in Debt instruments and Short Term Deposits. The Fund has a well-diversified portfolio of equity with prime investments in BHEL, Siemens EID parry, Bulrampur Chini and SBI. In the debt Instruments it has invested in Railway Bonds and 2003 maturing Government Stock.
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SBI Magnum Income Fund is performing very well right from the inception with generous payment of dividends has been assigned AAA rating by CRISIL. The Fund invests about 90% in AAA rated securities and more than 60% of its investments have a maturity ranging between 3 to 10 years. I had come with bonuses in Jan 2003 1:3 and September 2003 1:10. However, it under perform vis--vis CRISIL Comp. Bond Fund index by 0.14. Principal Income Fund has ranked CP3 by CRISIL, which means average in the open-ended debt category and ranks within the top 70% of the 21 schemes in this category. The investments have average maturity of 7.3 years with more than 50% investments having a maturity of above 7 years. It has invested close to 50% in Government Securities, above 40% in NCD/Deep Discount Bonds. Franklin Templeton India Income Fund has most of the investments in low risk AAA and sovereign securities. Above 45% of the investments are in Gilt, 25% in PSU/PFI bonds and 24% in corporate Debts. The average maturity of this scheme is at 4.87 years. The performance of the Fund is in line with CRISIL Composite Bond Fund. Kotak Liquid Fund has invested about close to 25% in corporate Debt, 10% in public sector undertakings, about 25% in money market instruments. It has also invested 40% in term deposits. The average maturity of portfolio is 2.3 years. Almost all the instruments are well rated implying they are safe instruments also their investments are highly diversified.
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STRUCTURE OF MUTUAL FUND

In developed countries like the UK and the US, the mutual funds industry is highly regulated with a view of imparting operational transparency and protecting investors interest. Since there is a clear distinction between open ended schemes and close ended schemes, usually two different types of structural and management approaches are followed. Open-ended funds (unittrusts) in the UK follow the trust approach, while close-ended schemes follow (investment trusts) follow the corporate approach. The management and operations of the two types of funds, are, therefore, guided by separate regulatory mechanisms, and the rules are laid down by separate controlling authorities. However, no such distinctions exist in India and both approaches (Trust and Corporate) have been integrated by SEBI. The formation and operations of mutual funds in India are guided solely by regulations. The figure below gives an idea of the structure of the Indian mutual mutual fund consists of four separate entities sponsor, mutual fund trust, AMC and These are, of course, assisted by other independent administrative entities, such registrars and transfer agents. the SEBI funds. A custodian. as banks,
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Establishes MF as a Trust
Sponsor Company Managed by a Board of Trustees
Holds unit holders fund Registers MF with in MF
SEBI
Mutual Fund
Ensures compliance to SEBI Enters into agreement Floats MF funds with AMC Manages funds as per SEBI guidelines and AMC agreement
Appointed by BOT Appointed by Trustees
Asset Management Company
Custodian Appointed by AMC Bankers Appointed by AMC Registrars and Transfer Agents
Provides necessary custodian services
Provide Banking Services
Provide registrar services and act as transfer agents
STRUCTURE OF THE INDIAN MUTUAL FUNDS
The sponsor for a mutual fund can be any person who, acting alone or in combination with another corporate body, establishes the mutual fund and gets it registered with SEBI. The sponsor is required to contribute at least 40% of the minimum net worth (Rs 10 crore) of the AMC. He must have a sound track record and a reputation for fairness and integrity in all his business transactions. As per the 1996 regulations, A mutual fund shall be constituted in the form of a trust and the instrument of trust shall be in the form of a deed, duly registered under the provisions of the Indian Registration Act, 1908, executed by the sponsor in favor of trustees named in such an instrument. The mutual fund is managed by the board of trustees or Trustee Company, and the sponsor executes the trust deeds in favor of the trustees. The mutual fund raises money through the sale of units under one or more schemes for investment in securities, in accordance with SEBI guidelines. The trustees must see to it that the schemes floated and managed by the AMC are in accordance with the trust deeds and SEBI guidelines. It is also their responsibility to control the capital property of the mutual fund schemes.
30
The trustees have the right to obtain relevant information from the AMC, as well as a quarterly report on its activities. They can also dismiss the AMC under certain conditions, as per SEBI regulations. At least half the trustees have the right to obtain relevant information from the AMC or its employees cannot act as trustees. The trustee of a particular mutual fund cannot be appointed as a trustee of any other mutual fund unless he is an independent trustee and obtains prior permission from the mutual fund in which he is a trustee. The trustees are required to submit half-yearly reports to SEBI on the activities of the mutual fund. They appoint a custodian, whose activities they supervise. A trustee can be removed only with the prior approval of SEBI. The trustees appoint the AMC, which must act as per the SEBI guidelines, the trust deeds, and the management agreement it has made with the trustees. The AMC should be registered with SEBI. Its net worth should be in the form of cash and all assets should be held in its name. In case it wants to carry out other fund management business, it should satisfy the capital adequacy requirement for each such business independently. The AMC cannot give or guarantee loans, and is prohibited from acquiring any assets (out of the scheme property) which would involve the assumption of unlimited liability. It is required to disclose the scheme particulars and the base calculation of the NAV. It must submit quarterly reports to the mutual fund. The director of the AMC should be a person of repute and high standing, with at least five years experience in the relevant field. The appointment of the AMC can be terminated by a decision of 75% of unit-holders or a majority of trustees. The SEBI regulations provide for the appointment of a custodian by the trustees for carrying on the activity of safekeeping of the securities or participating in the clearing system on behalf of the mutual fund. The custodian must have a sound track record and adequate relevant experience. At the time of appointment, he should not be associated with the AMC, or act as a sponsor or trustee to any mutual fund. The revised regulations of 1996 define a mutual fund as a fund established in the form of a trust to raise moneys through the sale of units to the public, or a section of the public, under one or more schemes for investment in securities, including money market instruments. Mutual funds are also allowed to diversify their activities in the following areas. Portfolio management services Management of offshore funds Providing advice to offshore funds Management of pension or provident funds Management of venture capital funds Management of money market funds Management of real estate funds
31
The regulations deal with various issues relating to launching, advertising and listing of mutual funds schemes. All the schemes to be launched by an AMC need to be approved by the trustees. Copies of the offer document of such schemes are to be filed with SEBI, and should contain adequate disclosures to enable investors to make informed decisions. Advertisements in respect of schemes should be in conformity with the prescribed advertisement code of SEBI. The listing of close-ended schemes is mandatory and they should be listed in a recognized stock exchange within six months of the closure of subscription. However, listing is not mandatory if the scheme provides for periodic repurchase facilities to all unit-holders, or provides for monthly income or caters to special classes of persons, or discloses details of repurchase in the offer document, or opens for repurchase within six months of the closure of subscription
The units of a close-ended scheme can be repurchased or reissued by an AMC. They can also be converted into an open ended scheme or may be rolled over if the majority of shareholders pass a resolution to that effect. No scheme other than unit linked schemes can be opened for subscription for more than 45 days. In the offer document, the AMC must specify the minimum subscription and the extent of over-subscription which it intends to retain. In the case of oversubscription, all those applying for up to 5000 units must be given full allotment subject to oversubscription. The AMC must refund the application money if the minimum subscription is not received, and also, the excess over-subscription within six weeks of the closure of subscription. Guaranteed returns can be provided for in a scheme only if they are fully guaranteed by the AMC or sponsor. In such cases, there should be a statement indicating the name of the person and the manner in which the guarantee to be made must be made in the offer document. The regulations provide procedure for the manner in which close-ended scheme is to be wound up. It should be would up on the redemption date, unless it is rolled over. It can be would up if 75% of the unit-holders pass a resolution in favor of winding it up, or if the trustees so require for any reason, or if SEBI so directs in the interest of the investors. The regulations of 1996 and the subsequent amendments attempted to enhance transparency and accountability, and improve the mechanism of investor protection. They contained several provisions: They demanded the provision of stringent disclosure norms in the offer document to facilitate informed decision-making by the investors. Standardisation of accounting policies, computation of NAV and valuation of assets.
32
Prudential supervision replaced the quantitative investment restrictions and the AMC was given complete freedom to structure schemes. Stringent restrictions were imposed on the launching of guaranteed return schemes. A code of ethics was introduced for AMCs Transfer agents were entrusted for higher responsibilities to ensure better management of funds.
Considering the various irregularities and sharp deterioration in the performance of many mutual funds, it was decided to fix certain responsibilities for the trustees to ensure that they remained vigilant and played a more active role. The SEBI appointed a committee under the chairmanship of P.K. Kaul to examine the issue of responsibilities of trustees. The committees report was accepted by SEBI and the following measures were decided upon, among others. The manner in which the trustees are to fulfill their responsibilities has been spelt out. They are required to meet at least once in three months. Trustees can appoint independent auditors. Several other measures, like revision of the codes of conduct, were taken to promote integrity, diligence, and fairness among the trustees as well as the AMCs. All this, together with the standardization of several provisions relating to operations, has increased the level of transparency and strengthened the mechanism of investor protection.
33
Chapter 2 The Detailed Study

34
EQUITY BALANCE FUNDS- GROWTH 21 Mutual Funds schemes performance has been taken for the purpose of analysis of this study. They are
1. Birla Sun Life Tax Relief 96 - Growth

Objective: The Scheme aims to balance income requirements with growth of capital through balanced mix of investment in equity and debt.
SCHEME PERFORMANCE (%) AS ON NOV 25, 2011

1 Month -7.70 3 Months -6.37 6 Months -10.78 1 Year -16.55 3 Years 20.71 5 Years 1.93 Since Inception 3.18
Stock
Sector
P/E
Percentage of Net Qty Assets NA NA NA NA NA NA NA NA NA NA
Value
Percentage of Change with last month NA NA NA NA NA NA NA NA NA NA
Tata Ltd.
Consultancy
Services Software and Consultancy 23.07 6.11 Services 26.31 5.66 17.46 5.22 25.48 4.88
NA NA NA NA NA NA NA NA NA NA
Housing Development HFC Finance Corporation Ltd State Bank of India HDFC Bank Ltd Reliance Industries Ltd. Larsen & Toubro Limited ITC Ltd ICICI BANK LTD. Banks Banks
Petroleum, Gas and 13.14 4.67 petrochemical products Engineering Goods FMCG Banks and Capital 22.18 3.87 30.06 3.65 18.73 3.19
Honeywell Automation India Software and Consultancy 20.57 3.14 Ltd Services Axis Bank Ltd Banks 12.67 3.09
35
Increase/Decrease in Fund Size since Sep 30, 0 2011 (Rs. in crores) Mutual Fund Birla Sun Life Mutual Fund One India Bulls Centre , Tower 1, 17th Flr 841, Senapati Bapat Marg, Elphinstone Road Mumbai Tel.-43568000 Birla Sun Life Asset Management Company Ltd. One India Bulls Centre , Tower 1, 17th Flr 841, Senapati Bapat Marg, Elphinstone Road Mumbai - 400013 Tel.- 43568000 , Computer Age Management Services Private Limited A&B, Lakshmi Bhavan 609, Anna Salai Chennai
Asset Management Company
Registrar
Type of Scheme Nature Option Inception Date Face Value (Rs/Unit) Fund Size in Rs. Cr.
Open Ended Equity Growth Oct 3, 2006 10 0 as on Oct 31, 2011
Fund Manager SIP STP SWP Expense ratio(%) Portfolio Ratio(%) Turnover
Ajay Garg .
2.43 93
Last Dividend Declared Minimum Investment (Rs) Purchase Redemptions NAV Calculation
NA 500 Daily Daily
36
Entry Load Exit Load
Amount greater than 0 then and Amount greater than 0 then Entry Load is 0%. and Amount greater than 0 then and Amount greater than 0 then Entry load is 0%. Exit Load is 0%. Exit Load is 0%. Exit Load is 0%.
2. DSP Blackrock Tax Saver Fund - Growth

Objective:Seeks to generate long term capital appreciation and current income from a portfolio constituted of equity and equity related securities as well as fixed income securities.
1 Month -7.53 3 Months -5.55 6 Months -13.64 1 Year -22.20 3 Years 23.40 5 Years NA Since Inception 7.14
Top 10 Holdings:-
37
Stock
Sector
P/E
Percentage of Net Qty Assets 126,558 678,910 324,246 145,268 224,480
Value
Percentage of Change with last month 3.20 4.79 14.82 0.73 10.21 2.14 22.50 5.92 -14.06
Infosys Technologies Ltd HDFC Bank Ltd. Reliance Industries Ltd. State Bank of India ICICI BANK LTD. Kajaria Ceramics Ltd Bharti Airtel Ltd Nestle India Ltd
Software and Consultancy 24.11 4.87 Services Banks Petroleum, Gas petrochemical products Banks Banks Glass & Ceramics Telecom Services and 25.48 4.45 13.14 3.80 17.46 3.70 18.73 2.79 12.11 2.67 20.59 2.60
36.42 33.27 28.45 27.69 20.90
1,690,500 19.96 496,693 43,817 161,098 19.46 18.62 17.98
Food & Food Processing, 45.97 2.49 Beverages
Tata Consultancy Software and Consultancy 23.07 2.40 Services Ltd. Services Custodial, Credit Rating Information Exchanges Services Of India Ltd agencies Depository, and rating 34.76 2.29
193,860
17.12
-5.21
38
3. HDFC Taxsaver - Growth

Objectives: The primary objective of the Scheme is to generate capital appreciation along with current income form a combined portfolio of equity & equity related and debt & money market instruments.
39
Equity 97.13
Debt 0.15
Cash & Equivalent 2.72
Open Ended Equity Growth Jan 2, 2001 10 0 as on Oct 31, 2011
Chirag Setalvad .
2.07 12.13
40
Last Dividend Declared Minimum Investment (Rs) Purchase Redemptions NAV Calculation Entry Load Exit Load
NA 500 Daily Daily Amount greater than 0 then and Amount greater than 0 then Entry Load is 0%. and Amount greater than 0 then and Amount greater than 0 then Entry load is 0%. Exit Load is 0%. Exit Load is 0%. Exit Load is 0%
4. Escorts Tax Plan - Growth

Objective: To generate long term capital appreciation by predominantly moving investments in a portfolio of equity and equity related securities
1 Month -12.25 3 Months -8.15 6 Months -20.79 1 Year -33.20 3 Years 7.28 5 Years -4.27 Since Inception 11.27
41
Stock
Sector
P/E
Percentage of Net Qty Assets 7,103
Value
Kalyani Investment Company NA Ltd.
17.52 8.70 8.07 6.52 6.35
0.36
Southern Petrochemicals Fertilizers, Pesticides & 8.20 Industries Corporation Ltd. Agrochemicals J Kumar Infraprojects Ltd Uflex Ltd Uttam Steel Ltd Ranbaxy Laboratories Ltd Elantas Beck India Ltd. GEI Industrial Systems Ltd. Duncans Industries Ltd. JBF Industries Ltd Construction Infrastructure and 6.18
130,000 0.34 17,175 15,000 26,225 4,000 1,000 10,000 0.27 0.26 0.20 0.20 0.18 0.15
Printing, Publishing and 4.52 Packaging Steel and Ferrous Metal Pharmaceuticals Biotechnology Chemicals &
18.62 4.91 54.82 4.82 55.32 4.40 3.59 3.36 2.99
Engineering and Capital 9.68 Goods Food & Food Processing, 0.00 Beverages Textiles 8.15
124,046 0.14 10,000 0.12
Equity 93.17
Debt 0.00
42
Open Ended Equity Growth Mar 31, 2000 10 4.16 as on Oct 31, 2011
Fund Manager SIP STP SWP Expense ratio(%) Portfolio Ratio(%) Turnover 2.50 16.38
NA 500 Daily Daily Entry Load is 0%. Entry Load is 0%. Exit Load is 0%. Exit Load is 0%.
5. Reliance Tax Saver (ELSS) Fund - Growth

Objective: The primary investment objective of this option is to generate consistent returns and appreciation of capital by investing in a mix of securities comprising of equity, equity related instruments & fixed income instruments.
43
Stock Other Equities Eicher Motors Ltd State Bank of India Bharat Forge Ltd ICICI BANK LTD. Maruti Suzuki India Ltd Siemens Ltd Aventis Pharma India Ltd. Divis Laboratories Limited Madras Cements Ltd
Sector Miscellaneous Auto & Auto Ancillaries Banks Steel and Ferrous Metal Banks Auto & Auto Ancillaries Power Transmission Pharmaceuticals Biotechnology Pharmaceuticals Biotechnology Construction materials & &
P/E NA 52.16 17.46 20.01 18.73 16.14 31.43 30.39 22.63 10.31
Percentage of Net Qty Assets 9.58 7.16 5.33 4.37 4.26 4.15 4.02 3.53 3.41 3.00 NA NA NA NA NA NA NA NA NA NA
Value NA NA NA NA NA NA NA NA NA NA
Equity 99.25
Debt 0.00
44
Open Ended Equity Growth Sep 22, 2005 10 0 as on Oct 31, 2011
Viral Belawala .
1.89 34
NA 500 Daily Daily Amount greater than 0 then and Amount greater than 0 then Entry Load is 0%. and Amount greater than 0 then and Amount greater than 0 then Entry load is 0%. and Amount greater than 0 then and Amount greater than 0 then Entry load is 0%. Exit Load is 0%. Exit Load is 0%. Exit Load is 0%.
6. Franklin India Taxshield - Growth

Objective: The fund aims to provide long term capital appreciation and current income by investing in equity and equity related securities and high quality fixed income instruments.

1 Month 3 Months 6 Months 1 Year 3 Years 5 Years Since Inception
45
-6.74
-1.38
-5.69
-9.53
28.20
8.86
26.35
Stock
Sector
P/E
Percentage of Net Qty Assets 235,750
Value
Percentage of Change with last month -1.20 -2.59 6.29 5.73 -13.99 25.00 -4.66 11.12 9.50 5.11
Infosys Technologies Software Ltd Services Bharti Airtel Ltd ICICI BANK LTD. Grasim Industries Ltd Reliance Ltd
and
Consultancy
24.11 8.15 20.59 7.50 18.73 6.10 16.99 4.02
67.78
Telecom Services Banks Construction materials and
1,595,000 62.43 545,018 135,000 381,000 615,000 50.71 33.45 33.44 30.08
Industries Petroleum, Gas petrochemical products Banks Telecom Services
13.14 4.02 25.48 3.62 44.43 3.51 39.79 3.14 19.18 2.24
HDFC Bank Ltd Idea Cellular Limited
3,100,000 29.20 510,600 650,000 207,500 26.08 18.67 18.35
Kotak Mahindra Bank Banks Ltd. Indusland Bank Ltd CRISIL Ltd. Banks
Custodial, Depository, 34.76 2.21 Exchanges and rating agencies
Equity 91.05
Debt 0.03
46
Open Ended Equity Growth Apr 10, 1999 10 831.87 as on Oct 31, 2011
Anand Radhakrishnan , Anil Prabhudas .
2.07 24.57
Last Divdend Declared Minimum Investment (Rs) Purchase Redemptions NAV Calculation Entry Load Exit Load
NA 500 Daily Daily Entry Load is 0%. Entry Load is 0%. Entry Load is 0%. Exit Load is 0%. Exit Load is 0%. Exit Load is 0%.
7. Birla Sun Life Tax Plan - Growth

Objective:The scheme aims to generate long term growth of capital and current income from a portfolio of equity and fixed income securities.

47
Stock
Sector
P/E
Percentage of Net Qty Assets NA NA NA NA NA NA NA NA NA NA
Value
Tata Ltd.
Consultancy
Services Software and Consultancy 23.07 6.11 Services 26.31 5.66 17.46 5.22 25.48 4.88
Housing Development HFC Finance Corporation Ltd State Bank of India HDFC Bank Ltd Reliance Industries Ltd. Larsen & Toubro Limited ITC Ltd ICICI BANK LTD. Banks Banks
Petroleum, Gas and 13.14 4.67 petrochemical products Engineering Goods FMCG Banks and Capital 22.18 3.87 30.06 3.65 18.73 3.19
Honeywell Automation India Software and Consultancy 20.57 3.14 Ltd Services Axis Bank Ltd Banks 12.67 3.09
Equity 97.83
Debt 0.00
48
Open Ended Equity Growth Oct 3, 2006 10 0 as on Oct 31, 2011
Ajay Garg .
2.43 93
NA 500 Daily Daily Amount greater than 0 then and Amount greater than 0 then Entry Load is 0%. and Amount greater than 0 then and Amount greater than 0 then Entry load is 0%. Exit Load is 0%. Exit Load is 0%. Exit Load is 0%.
8. Kotak Taxsaver - Growth

Objective:The objective of the Scheme is to achieve growth by investing in equity and equity related instruments, balanced with income generation by investing in debt and money market instruments.
49
1 Month -7.85
3 Months -3.59
6 Months -12.13
1 Year -21.19
3 Years 21.04
5 Years 2.56
Since Inception 7.43
Stock
Sector
P/E
Percentage of Net Assets 5.55 5.19 4.89 4.82 4.18 4.06 3.31 3.19 3.10 3.05
Qty
Value
Percentage of Change with last month -4.80 8.54 6.38 -12.80 13.98 -1.44 19.66 4.18 -9.49 -7.25
Infosys Technologies Ltd Reliance Industries Ltd. ICICI BANK LTD. HDFC Bank Ltd State Bank of India ITC Ltd Zuari Industries Ltd. Bharti Airtel Ltd Larsen & Toubro Limited Tata Consultancy Services Ltd.
Software and Consultancy Services Petroleum, Gas and petrochemical products Banks Banks Banks FMCG Fertilizers, Pesticides & Agrochemicals Telecom Services Engineering and Capital Goods Software and Consultancy Services
24.11 13.14 18.73 25.48 17.46 30.06 10.30 20.59 22.18 23.07
88,000 270,000 240,000 449,300 100,000 870,000 251,478 371,849 100,000 125,000
25.32 23.69 22.35 22.02 19.06 18.54 15.10 14.57 14.13 13.95
Equity 94.70
Debt 0.00
50
Open Ended Equity Growth Nov 21, 2005 10 456.58 as on Oct 31, 2011
Fund Manager SIP STP SWP Expense ratio(%) Portfolio Turnover Ratio(%)
Krishna Sanghvi , Pankaj Tibrewal .
2.25 62.95
9. LIC Nomura Tax Plan - Growth

Objective: The Scheme aims to provide regular flow of dividend and capital appreciation especially when the unit is held for a longer period.
51
Stock
Sector
P/E
Qty
Value
Percentage of Change with last month 7.84 13.65 8.69 4.61 7.13 6.45 -0.07 4.32 3.62 7.2
ITC Ltd Infosys Technologies Ltd Reliance Industries Ltd HDFC Bank Ltd Tata Consultancy Services Ltd. ICICI BANK LTD. State Bank of India Larsen & Toubro Limited Bharti Airtel Ltd Housing Development Finance Corporation Ltd
FMCG Software and Consultancy Services Petroleum, Gas and petrochemical products Banks Software and Consultancy Services Banks Banks Engineering and Capital Goods Telecom Services HFC
30.06 24.11 13.14 25.48 23.07 18.73 17.46 22.18 20.59 26.31
138,750 10,000 28,000 42,130 16,000 17,500 7,700 10,100 36,000 20,000
2.96 2.88 2.46 2.06 1.78 1.63 1.47 1.43 1.41 1.37
Equity 95.15
Debt 0.00
52
Open Ended Equity Growth Feb 3, 1999 10 35.49 as on Oct 31, 2011
Ei ichi Oka .
2.27 56
NA 500 Daily Daily Entry Load is 0%. Entry Load is 0%. Entry Load is 0%. Exit Load is 0%. Exit Load is 0%. Exit Load is 0%.
10. PRINCIPAL BALANCED FUND GROWTH

Objective: Aims to generate long term capital appreciation and current income by investing in a portfolio of equity, equity related securities and fixed income securities.

53
-6.14
-2.96
-12.05
-24.16
16.25
-1.86
14.13
Stock
Sector
P/E
Qty
Value
Percentage of Change with last month 8.48 6.38 7.56 13.57 -0.90 4.26 -5.57 7.63 11.05 NA
Reliance Industries Ltd ICICI BANK LTD. ITC Ltd Infosys Ltd. Lupin Ltd. Apollo Tyres Ltd Gujarat State Petronet Ltd. Tata Consultancy Services Ltd. Oracle Financial Services Software Limited Hathway Cable & Datacom Ltd
Petroleum, Gas and petrochemical products Banks FMCG Software and Consultancy Services Pharmaceuticals & Biotechnology Auto & Auto Ancillaries Petroleum, Gas and petrochemical products Software and Consultancy Services Software and Consultancy Services NA
13.14 18.73 30.06 24.11 28.94 14.34 10.42 23.07 17.87 0.00
129,342 119,502 417,926 25,525 155,122 1,082,420 607,009 48,491 25,500 452,007
11.35 11.13 8.91 7.35 7.29 6.23 6.05 5.41 5.39 5.37
Equity 91.65
Debt 0.00
54
P V K Mohan .
2.35 67
80 % as on Apr 7, 2008 500 Daily Daily Amount greater than 0 then and Amount greater than 0 then Entry Load is 0%. Exit Load is 0%. Exit Load is 0%. Exit Load is 0%.
11. CANARA ROBECO BALANCE GROWTH

Objective: Aims to provide combination of long term capital appreciation and income from a balanced portfolio of equity and fixed income securities.

1 Month -5.61 3 Months -4.44 6 Months -7.26 1 Year -12.83 3 Years NA 5 Years NA Since Inception 34.99
55
Stock
Sector
P/E
Qty
Value
HDFC Bank Ltd Bharti Airtel Ltd Reliance Industries Ltd Infosys Ltd. ITC Ltd Hindustan Unilever Ltd Housing Development Finance Corporation Ltd State Bank of India OIL INDIA LTD. Tata Consultancy Services Ltd.
Banks Telecom Services Petroleum, Gas and petrochemical products Software and Consultancy Services FMCG FMCG HFC Banks Petroleum, Gas and petrochemical products Software and Consultancy Services
25.48 20.59 13.14 24.11 30.06 35.70 26.31 17.46 9.62 23.07
Equity 92.59
Debt 0.00
56
Open Ended Equity Growth Feb 2, 2009 10 0 as on Oct 31, 2011
Soumendra Nath Lahiri .
2.33 19
NA 500 Daily Daily Entry Load is 0%. Exit Load is 0%.
12. ING BALANCED FUND GROWTH

Objective: The fund seeks to generate long term growth of capital and current income from a portfolio of equity and fixed income securities.

57
-6.79
-3.71
-8.08
-16.14
29.21
0.28
13.23
Stock
Sector
P/E
Qty
Value
Percentage of Change with last month 7.67 54.42 42.21 -13.10 3.71 41.47 6.73 -4.21 -1.27 -28.90
ITC Ltd Infosys Technologies Ltd Reliance Industries Ltd. HDFC Bank Ltd Bharti Airtel Ltd Indraprastha Gas Ltd ICICI BANK LTD. Bharat Petroleum Corporation Ltd Lupin Ltd. Housing Development Finance Corporation Ltd
FMCG Software and Consultancy Services Petroleum, Gas and petrochemical products Banks Telecom Services Utilities - Gas, Power Banks Petroleum, Gas and petrochemical products Pharmaceuticals & Biotechnology HFC
30.06 24.11 13.14 25.48 20.59 19.84 18.73 0.00 28.94 26.31
134,630 7,611 22,469 30,970 33,162 30,445 11,773 17,404 21,994 14,440
2.87 2.19 1.97 1.52 1.30 1.27 1.10 1.08 1.03 0.99
Equity 90.85
Debt 0.00
58
Anshul Mishra .
2.50 84.78
NA 500 Daily Daily Entry Load is 0%. Entry Load is 0%. Exit Load is 0%. Exit Load is 0%.
13. HDFC Long Term Advantage Fund - Growth

Objective: The fund aims to provide periodic returns and capital appreciation over a long period of time, from a judicious mix of equity and debt investments, with the aim to prevent/ minimized any capital erosion.
59
1 Month -6.62
3 Months -4.37
6 Months -11.07
1 Year -18.45
3 Years 27.93
5 Years 5.52
Since Inception 25.40
Stock Other Equities Tata Consultancy Services Ltd. Infosys Ltd. ICICI BANK LTD. Reliance Industries Ltd. Bharti Airtel Ltd State Bank of India Balkrishna Industries Ltd Carborundum Universal Ltd Dr Reddys Laboratories Ltd
Sector Miscellaneous Software and Consultancy Services Software and Consultancy Services Banks Petroleum, Gas and petrochemical products Telecom Services Banks Auto & Auto Ancillaries Industrial Products Pharmaceuticals & Biotechnology
P/E NA 23.07 24.11 18.73 13.14 20.59 17.46 8.20 23.98 27.75
Qty NA NA NA NA NA NA NA NA NA NA
Equity 97.13
Debt 0.15
60
Open Ended Equity Growth Jan 2, 2001 10 0 as on Oct 31, 2011
Chirag Setalvad .
2.07 12.13
14. SBI MAGNUM BALANCED FUND GROWTH

Objective: The fund aims to provide to its Investors growth through capital appreciation. It also plans to provide periodic income through declaration of dividends

61
Stock Cash Reliance Industries Ltd Tata Motors Ltd Sundaram Finance Ltd. ICICI BANK LTD. GOI Hindustan Unilever Ltd. Bharti Airtel Ltd Power Finance Corporation Ltd Bank of Baroda
Sector Current Assets Petroleum, Gas and petrochemical products Auto & Auto Ancillaries NBFC Banks Sovereign FMCG Telecom Services FI Banks
P/E NA 13.14 33.41 8.51 18.73 NA 35.70 20.59 7.47 6.64
Qty NA NA NA NA NA NA NA NA NA NA
Equity 73.60
Debt 19.14
62
Open Ended Equity & Debt Growth Oct 9, 1995 10 0 as on Oct 31, 2011
Dharmendra Grover , Dinesh Ahuja .
2.29 52
20 % as on Feb 3, 2004 1000 Daily Daily Entry Load is 0%. If redeemed bet. 0 Year to 1 Year; Exit load is 1%.
15. SUNDARAM BALANCED FUND GROWTH

Objective: The scheme seeks to generate capital appreciation and current income through a mix of investments in Equities and Fixed Income Securities.

63
Stock
Sector
P/E
Qty
Value
Percentage of Change with last month 0.85 8.72 7.74 14.21 0.22 4.36 14.51 11.18 7.95 20.86
Union Bank Of India Ltd Reliance Industries Ltd. Tata Consultancy Services Ltd. TVS Motor Company Lupin Ltd. Larsen & Toubro Limited Infosys Technologies Ltd Kotak Mahindra Bank Ltd. ICICI BANK LTD. Infrastructure Development Finance Co. Ltd
Banks Petroleum, Gas and petrochemical products Software and Consultancy Services Auto & Auto Ancillaries Pharmaceuticals & Biotechnology Engineering and Capital Goods Software and Consultancy Services Banks Banks FI
5.93 13.14 23.07 15.50 28.94 22.18 24.11 39.79 18.73 15.02
NA 67,951 52,841 634,377 91,195 26,076 12,806 67,994 36,697 257,887
10.05 5.96 5.90 4.36 4.29 3.69 3.69 3.48 3.42 3.42
Equity 73.60
Debt 22.22
64
Open Ended Equity & Debt Growth Jun 23, 2000 10 67 as on Oct 31, 2011
Satish Ramanathan , K Ramkumar .
2.48 314
NA 5000 Daily Daily Entry Load is 0%. If redeemed bet. 0 Months to 12 Months; Exit load is 1%.
16. UTI BALANCED FUND GROWTH

Objective: Aims to invest in portfolio of equity/equity related securities and fixed income securities (debt & money market instruments) with a view to generating regular income together with capital appreciation.
1 Month -6.17 3 Months -3.95 6 Months -8.39 1 Year -13.66 3 Years 19.59 5 Years NA Since Inception 12.92
65
Stock
Sector
P/E
Qty
Value
Shriram Transport Finance Company Ltd GOI Oil & Natural Gas Corpn Ltd ITC Ltd Mahindra & Mahindra Ltd Bharti Airtel Ltd ICICI BANK LTD. Reliance Industries Ltd Housing Development Finance Corporation Ltd Infosys Ltd.
NBFC Sovereign Petroleum, Gas and petrochemical products FMCG Auto & Auto Ancillaries Telecom Services Banks Petroleum, Gas and petrochemical products HFC Software and Consultancy Services
10.73 NA 12.29 30.06 20.25 20.59 18.73 13.14 26.31 24.11
600 500,000,000 1,331,690 1,472,720 343,537 738,498 295,868 309,198 380,291 80,597
Equity 71.34
Debt 27.87
66
Open Ended Equity & Debt Growth Jan 20, 1995 10 0 as on Oct 31, 2011
V Srivatsa, Amandeep Chopra .
2.06 53.62
13.5 % as on Jun 30, 1999 1000 Daily Daily Entry Load is 0%. If redeemed bet. 0 Year to 1 Year; Exit load is 1%.
17. TATA BALANCED FUND GROWTH

Objective:Aims to invest in equity and debt oriented securities so as to give investor balanced returns.

67
Stock
Sector
P/E
Qty
Value
Housing Development Finance Corporation Ltd Hindustan Unilever Ltd ITC Ltd. Union Bank Of India Ltd Infosys Ltd. HDFC Bank Ltd. Reliance Industries Ltd Mahindra & Mahindra Ltd. Bharti Airtel Ltd. Oil & Natural Gas Corpn Ltd
HFC FMCG FMCG Banks Software and Consultancy Services Banks Petroleum, Gas and petrochemical products Auto & Auto Ancillaries Telecom Services Petroleum, Gas and petrochemical products
26.31 35.70 30.06 5.93 24.11 25.48 13.14 20.25 20.59 12.29
Equity 74.66
Debt 23.52
68
Open Ended Equity & Debt Growth Oct 8, 1995 10 0 as on Oct 31, 2011
Murthy Nagarajan, M Venugopal .
2.33 66
12.5 % as on Sep 10, 2003 5000 Daily Daily Entry Load is 0%. If redeemed bet. 0 Days to 365 Days; Exit load is 1%.
18. BARODA PIONEER BALANCE FUND GROWTH

Objective:To generate long term capital appreciation along with stability through a well balanced portfolio of equity & debt instruments.

69
Stock
Sector
P/E
Qty
Value
State Bank of Patiala Net Receivables/(Payable) CBLO State Bank of India Larsen & Toubro Limited Bank of Baroda ICICI BANK LTD. Housing Development Finance Corporation Ltd Reliance Industries Ltd. Dr Reddys Laboratories Ltd
Banks Current Assets Current Assets Banks Engineering and Capital Goods Banks Banks HFC Petroleum, Gas and petrochemical products Pharmaceuticals & Biotechnology
NA NA NA 17.46 22.18 6.64 18.73 26.31 13.14 27.75
Equity 66.62
Debt 0.02
70
Open Ended Equity & Debt Growth Sep 12, 2003 10 0 as on Oct 31, 2011
Deepak Acharya .
2.50 51
NA 3000 Daily Daily Amount greater than 0 then and Amount greater than 0 then Entry Load is 0%. If redeemed bet. 0 Months to 12 Months; If redeemed bet. 0 Months to 12 Months; If redeemed bet. 0 Months to 12 Months; Exit load is 1%.
19. ICICI PRUDENTIAL BALANCED GROWTH

Objective:Aims to invest in equity and debt oriented securities so as to give investor balanced returns.

71
-3.19
-1.88
-2.12
-4.07
22.98
5.45
13.13
Stock Cholamandalam Investment & Finance Company Ltd Reliance Capital Ltd. Bharti Airtel Ltd Kotak Mahindra Primus CBLO Wipro Ltd Bank of Baroda Amara Raja Batteries Ltd Housing Development Finance Corporation Ltd Bajaj Auto Ltd
Sector
P/E
Qty
Value
NBFC NBFC Telecom Services NBFC Current Assets Software and Consultancy Services Banks Auto & Auto Ancillaries HFC Auto & Auto Ancillaries
13.75 28.62 20.59 NA NA 18.64 6.64 11.47 26.31 16.93
Equity 69.31
Debt 28.26
72
Open Ended Equity & Debt Growth Nov 3, 1999 10 0 as on Oct 31, 2011
Prashant Kothari , Avnish Jain .
2.29 46
NA 5000 Daily Daily Entry Load is 0%. If redeemed bet. 0 Year to 1 Year; Exit load is 1%.
20. ESCORTS BALANCED FUND - GROWTH

Objective:Seeks to generate long term capital appreciation and current income from a well diversified portfolio of equity shares and fixed income securities.

73
Stock
Sector
P/E
Qty
Value
Power Finance Corporation Ltd UTV Software Communication Ltd. Kalyani Investment Company Ltd. Uflex Ltd. Indian Bank Current Assets Tata Motors Ltd. Larsen & Toubro Ltd. Supreme Infrastructure India Ltd. Southern Petrochemicals Industries Corporation Ltd.
FI Media and Entertainment NA Printing, Publishing and Packaging Banks Current Assets Auto & Auto Ancillaries Engineering and Capital Goods Construction and Infrastructure Fertilizers, Pesticides & Agrochemicals
7.47 49.30 17.52 4.52 5.17 NA 33.41 22.18 4.42 8.20
NA 1,950 3,512 7,497 5,000 NA 5,139 600 3,000 25,000
0.30 0.19 0.18 0.13 0.11 0.10 0.10 0.08 0.06 0.06
Equity 66.62
Debt 0.02
74
Open Ended Equity & Debt Growth Sep 12, 2003 10 0 as on Oct 31, 2011
Deepak Acharya .
2.50 51
NA 3000 Daily Daily Amount greater than 0 then and Amount greater than 0 then Entry Load is 0%. If redeemed bet. 0 Months to 12 Months; If redeemed bet. 0 Months to 12 Months; If redeemed bet. 0 Months to 12 Months; Exit load is 1%.
21. JM BALANCED GROWTH
Objective: Aims to provide investors with liquidity and current income along with capital appreciation.
75
-5.76
-0.78
-5.85
-14.12
15.47
-2.34
8.01
Stock
Sector
P/E
Qty
Value
Union Bank Of India Ltd ITC Ltd Reliance Industries Ltd. CBLO Infosys Technologies Ltd Bajaj Auto Ltd Bharat Heavy Electricals Ltd Associated Cement Companies Ltd Mahindra & Mahindra Ltd Bharti Airtel Ltd
Banks FMCG Petroleum, Gas and petrochemical products Current Assets Software and Consultancy Services Auto & Auto Ancillaries Power & Control equipment Manufacturer Construction materials Auto & Auto Ancillaries Telecom Services
5.93 30.06 13.14 NA 24.11 16.93 12.63 21.51 20.25 20.59
76
Equity 66.09
Debt 26.48
Open Ended Equity & Debt Growth Apr 1, 1995 10 0 as on Oct 31, 2011
Sanjay Kumar Chhabaria .
2.50 17.31
40 % as on Dec 20, 2003 1000 Daily Daily Entry Load is 0%. If redeemed bet. 0 Days to 365 Days; Exit load is 1%.
77
Chapter 3 Objectives and Scope

78
Objectives of the study1. To find out the Preferences of the investors for Asset Management Company. 2. To know the Preferences for the portfolios. 3. To know why one has invested or not invested in SBI Mutual fund 4. To find out the most preferred channel. 5. To find out what should do to boost Mutual Fund Industry in India.
Scope of the study:A big boom has been witnessed in Mutual Fund Industry in recent times. A large number of new players have entered the market and trying to gain market share in this rapidly improving market. The research was carried on in Naini (U.P). I had been sent at one of the branch of State Bank of India Naini where I completed my Project work. I surveyed on my Project Topic, A study of Major Mutual Fund in India on the visiting customers of the SBI Allahabad Road Branch. The study will help to know the preferences of the customers, which company, portfolio, mode of investment, and option for getting return and so on they prefer. This project report may help the company to make further planning and strategy.
79
Chapter 4 Research Methodology

80
RESEARCH METHODOLOGY:This report is based on primary as well secondary data, however primary data collection was given more importance since it is overhearing factor in attitude studies. One of the most important users of research methodology is that it helps in identifying the problem, collecting, analyzing the required information data and providing an alternative solution to the problem .It also helps in collecting the vital information that is required by the top management to assist them for the better decision making both day to day decision and critical ones. Data sources: Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by interacting with various people. The secondary data has been collected through various journals and websites. Duration of Study: The study was carried out for a period of four month months, from 01 st July to 30th October 2011.
81
Sampling: Sampling procedure: The sample was selected of them who are the customers/visitors of State Bank if India, Boring Canal Road Branch, irrespective of them being investors or not or availing the services or not. It was also collected through personal visits to persons, by formal and informal talks and through filling up the questionnaire prepared. The data has been analyzed by using mathematical/Statistical tool.
Sample size:
The sample size of my project is limited to 200 people only. Out of which only 120 people had invested in Mutual Fund. Other 80 people did not have invested in Mutual Fund.
Sample design:
Data has been presented with the help of bar graph, pie charts, line graphs etc.
Limitation of Sampling Process:1. Some of the persons were not so responsive. 2. Possibility of error in data collection because many of investors may have not given actual answers of my questionnaire. 3. Sample size is limited to 200 visitors of State Bank of India, Mirzapur Road, ITI-zone Naini Branch, Uttar Pradesh out of these only 120 had invested in Mutual Fund. The sample size may not adequately represent the whole market. 4. Some respondents were reluctant to divulge personal information which can affect the validity of all responses. 5. The research is confined to a certain part of Naini.
82
Chapter 5 Data Analysis & Interpretation

83
ANALYSIS & INTERPRETATION OF THE DATA:1. (a) Age distribution of the Investors of Naini
Age Group
<= 30
31-35
36-40
41-45
46-50
>50
No. of 12 Investor
18
30
24
20
16
Interpretation:According to this chart out of 120 Mutual Fund investors of Dehradoon the most are in the age group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of 41-45yrs i.e. 20% and the least investors are in the age group of below 30 yrs.
84
(b) Educational Qualification of Investors of Naini Educational Qualification Graduate/Post Graduate Under Graduate Others Total Number of Investor 88 25 7 120
Interpretation:Out of 120 Mutual Fund investors 71% of the investors in Naini are Graduate/Post Graduate, 23% are Under Graduate and 6% are others (under HSC).
(c) Occupation of the investors of Naini

85
Occupation Government Services Private Services Business Agriculture Others
No. of Investor 30 45 35 4 6
Interpretation:In Occupation group out of 120 investors, 38% are Pvt. Employees, 29% are Businessman, 25% are Govt. Employees, 3% are in Agriculture and 5% are in others.
86
(d) Occupation of the investors of Naini Income Group (in 000s) <=10 10-15 15-20 20-30 >30 No. of Investor 5 12 28 43 32
Interpretation:In the Income Group of the investors of Dehradoon, out of 120 investors 36% investors that are maximum are in the monthly income group Rs.20,000-30,000. 27% investors are in the
87
monthly income group of more than Rs. 30,000 and the minimum investors i.e. 4% are in the monthly income group of below Rs. 10,000.
2. Investors invested in different kind of investments.

Kind of Investments
Saving A/c Fixed Deposits Insurance Mutual Fund Post Office (NSC) Shares/Debentures Gold/Silver Real Estate
No. of Respondents
70 40 38 32 12 4 3 1
Interpretation:-
88
From the above graph it can be inferred that out of 200 people, 35% people have invested in Saving A/c, 19% in Insurance, 20% in Fixed Deposits, 16% in Mutual Fund, 6% in Post Office, 2% in Shares or Debentures, 1.5% in Gold/Silver and 0.5% in Real Estate.
3. Preference of factors while investing

Factors No. of Respondents (a) Liquidity (b) Low Risk (c) High Return (d) Trust
40
60
64
36
Interpretation:Out of 200 People, 32% People prefer to invest where there is High Return, 30% prefer to invest where there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust.
89
4. Awareness about Mutual Funds and its Operations Response No. of Respondent Yes 135 No 65
Interpretation:From the above chart it is inferred that 67% People are aware of Mutual Fund and its operations and 33% are not aware of Mutual Fund and its operations.
90
5. Source of Information for Customers about Mutual Fund Source of Information Advertisement Peer Group Bank Financial Advisors No. of Respondents 18 25 30 62
Interpretation:From the above chart it can be recognised that the Financial Advisor is the most important source of information about Mutual Fund. Out of 135 Respondents, 46% know about Mutual fund Through Financial Advisor, 22% through Bank, 19% through Peer Group and 13% through Advertisement.
91
6. Investors invested in Mutual Fund Response Yes No Total No. of Respondents 120 80 200
Interpretation:Out of 200 people who were surveyed, 60% had invested in mutual fund and remaining 40% have not invested in mutual funds.
92
7. Reasons for not investing in Mutual Funds Reason Lack of Awareness Higher Risk No Specific Reason No. of Respondents 65 5 10
Interpretation:Out of 80 peoples who have not invested in mutual funds, 81% were not aware of what exactly mutual fund means. 13% of the people said they have not invested due to higher risk involved in it and remaining 6% failed to specify any specific reason for investing in mutual funds.
93
8. Investors invested in different Asset Management Company (AMU) Name of the AMC SBIMF UTI HDFC Reliance ICICI Prudential Others No. of Investors 25 30 13 34 14 4
Interpretation:Most of investor who has invested in mutual fund prefers Reliance. 28% of the investor has invested in Reliance mutual fund. 25% of the investor has invested in UTI mutual fund. 21% of the investor has invested in SBI mutual fund. 12% has invested in ICICI prudential, 11% investor has invested in HDFC and remaining 4% have invested in the other mutual funds that are available in the market.
94
9. Reason for investment in specific mutual fund
Reason for investment Associated with them Better return Agents advice
No. of Respondents 77 11 32
Interpretation:Out of 120 investors who have invested in the mutual fund, 64% of the investors have invested merely because of their association with the mutual funds firm. 27% of the investor has invested after getting advice from the agents and remaining 9% has invested because of higher returns.
95
10.
Reason for not investing in other Mutual fund other than they are investing in
Reason Not Aware Less Return Agents Advice
No. of Respondents 46 34 40
Interpretation:Out of 120 investors who have invested 39% of the investors are not aware of the different kinds of mutual funds that are available in the market. 28% of the investors have not invested in other mutual fund due to less chances of return. Remaining 33% have invested after getting the advice from the agents.
96
11 Preference of Investors for future investment in mutual fund Name of AMC SBIMF UTI HDFC Reliance ICICI Prudential Others No. of Investor 20 15 10 40 30 5
Interpretation:Out of 120 investor majority have shown their interest in the Reliance Mutual fund with 33% of the investors want to invest in Reliance, whereas 25% of investors want to invest in ICICI prudential. 17% of the investor opted for SBI, 13% want to invest in the UTI mutual fund, 8% in HDFC and remaining 4% wants to invest some other.
97
12
Channel preferred by the Investors for Mutual fund investments
Channel No. Respondent of
Financial Advisor Bank
AMC
72
18
30
Interpretation:Out of 1210 investor 60% preferred to invest through Financial Advisor, 25% prefer through AMC and remaining 15% through Bank.
98
13
Mode of Investment Preferred by the Investor One Time Investment 78 Systematic Plan (SIP) 42 Investment
Mode of Investment No. of Respondents
Interpretation:Out of 120 investor 65% have opted for one time investment and remaining 35% have opted for Systematic investment Plan (SIP).
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14
Preferred portfolios by the Investors
Portfolio Equity Debt Balanced
No. of Investors 56 20 44
Interpretation:From the above graph it can be seen that 46% preferred equity portfolio 37% preferred Balance and 17% preferred Debt portfolio.
100
15
Option for getting Return preferred by the Investors
Option No. Respondents of
Dividend payout
Dividend Reinvestment
Growth
25
10
85
Interpretation:Out of 120 investors 71% preferred Growth option, 21% preferred Dividend option and Remaining 8% preferred Reinvestment option.
101
16
Preference of Investors whether to invest in Sectoral Funds
Response Yes No
No. of Respondents 25 75
Interpretation:Out of 120 investor 75% do not prefer to invest in sectoral fund because there is maximum risk and remaining 25% of investors prefer to invest in sectoral fund.
102
Chapter 6 Findings And Conclusions

103
Findings
In Naini in the age-group of 36-40 years were more in numbers. The second most investors were in the age group of 14-45 years and the least were in the age group of below 30 years. Most of the investors were Graduate or Post Graduate and below HSC there were very few in numbers. In occupation group most of the investors were government employees, the second most investors were private employees and the least were associated with agriculture. In family income group, between Rs. 20,000-30,000 were most in number, the second most were in the Income group of more than Rs. 30,000 and the least were in the group below Rs. 10,000. Majority of the respondents had a saving account in the bank where they had invested lots of money followed by insurance in the second place with 19% of the investors investing in insurance and 20% investing in fixed deposits. Only 16% of the investors had invested in Mutual fund. Mostly respondents preferred High return while they are investing their money in any source of investment let it be mutual funds, saving account, shares, debentures, gold etc. The second most preferred low risk then liquidity and the least preferred trust. Only 67% of the respondents were aware about mutual fund and its operations and 33% were not aware of what exactly mutual fund is and how does it operates. Among 200 respondents only 60% had invested in the mutual fund and 40% did not invest in mutual fund at all.
104
Out of 80 investors who had not invested in mutual funds 81% were not aware of mutual fund, 13% told there is not any specific reason for not investing in mutual fund and 6% told there is likely to be higher risk in Mutual Fund. Most of the investors had invested in Reliance or UTI mutual fund, ICICI prudential has also good brand position among investors, SBIMF places after ICICI prudential according to the respondents. Out of 120 investors of mutual fund 64% have invested due to their association with the Brands, 27% invested because of advisors advice and 9% due to better returns.
Most of the investors did not invest in other mutual funds due to less awareness about the various mutual funds that were available in the market. Second and most focused reason for not investing in other mutual funds is they were investing as per the advice of the market agents and very few were left who did not invest in other mutual funds due to less returns. When asked for the future investment, the most preferred mutual fund for future investment was Reliance mutual funds followed by ICICI prudential at the second spot and SBI mutual fund followed after this two. 60% Investors preferred to Invest through Financial Advisors, 25% through AMC (means Direct Investment) and 15% through Bank. 65% preferred One Time Investment and 35% preferred SIP out of both type of Mode of Investment. The most preferred Portfolio was Equity, the second most was Balance (mixture of both equity and debt), and the least preferred Portfolio was Debt portfolio. Maximum Number of Investors Preferred Growth Option for returns, the second most preferred Dividend Payout and then Dividend Reinvestment. Most of the Investors did not want to invest in Sectoral Fund, only 25% wanted to invest in Sectoral Fund.
105
Conclusions
Running a successful Mutual Fund requires complete understanding of the peculiarities of the Indian Stock Market and also the awareness of the small investors. This study has made an attempt to understand the financial behavior of Mutual Fund investors in connection with the preferences of Brand (AMC), Products, and Channels etc. I observed that many of people have fear of Mutual Fund. They think their money will not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its related terms. They have to be made aware of what is mutual fund and how does it operates. What are its advantages and how it may lead to losses? Many of people do not have invested in mutual fund due to lack of awareness although they have money to invest. As the awareness and income is growing the number of mutual fund investors are also growing. Brand plays important role for the investment for this small investors. People invest in those Companies where they have faith or they are well known with them. There are many AMCs in Naini but only some are performing well due to Brand awareness. Some AMCs are not performing well although some of the schemes of them are giving good return because of not awareness about Brand. Reliance, UTI, SBIMF, ICICI Prudential etc. they are well known Brand, they are performing well and their Assets Under Management is larger than others whose Brand name are not well known like Principle, Sundaram, etc. Distribution channels are also important for the investment in mutual fund. Financial Advisors are the most preferred channel for the investment in mutual fund. They can change investors mindset from one investment option to others. Many of investors directly invest their money through AMC because they do not have to pay entry load. Only those people invest directly who know well about mutual fund and its operations and those have time.
106
Chapter 7
Suggestions And
Recommendation
107
Suggestions and Recommendations

The most vital problem spotted is of ignorance. Investors should be made aware of the benefits. Nobody will invest until and unless he is fully convinced. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing. Mutual funds offer a lot of benefit which no other single option could offer. But most of the people are not even aware of what actually a mutual fund is? They only see it as just another investment option. So the advisors should try to change their mindsets. The advisors should target for more and more young investors. Young investors as well as persons at the height of their career would like to go for advisors due to lack of expertise and time. Mutual Fund Company needs to give the training of the Individual Financial Advisors about the Fund/Scheme and its objective, because they are the main source to influence the investors. Before making any investment Financial Advisors should first enquire about the risk tolerance of the investors/customers, their need and time (how long they want to invest). By considering these three things they can take the customers into consideration. Younger people aged less than 35 will be a key new customer group into the future, so making greater efforts with younger customers who show some interest in investing should pay off. Customers with graduate level education are easier to sell to and there is a large untapped market there. To succeed however, advisors must provide sound advice and high quality. Systematic Investment Plan (SIP) is one the innovative products launched by Assets Management companies very recently in the industry. SIP is easy for monthly salaried person as it provides the facility of do the investment in EMI. Though most of the prospects and potential investors are not aware about the SIP. There is a large scope for the companies to tap the salaried persons.
108
Divide the spectrum of Mutual Funds depending on major asset classes invested in. Presently there are only two. Equity Funds investing in stocks. Debt Funds investing in interest paying securities issued by government, semigovernment bodies, public sector units and corporate.
a) Categorizing equities Diversified invest in large capitalized stocks belonging to multiple sectors. Sectoral Invest in specific sectors like technology, FMCG, Pharma, etc. b) Categorized Debt. Gilt Invest only in government securities, long maturity securities with average of 9 to 13 years, very sensitive to interest rate movement. Medium Term Debt (Income Funds) Invest in corporate debt, government securities and PSU bonds. Average maturity is 5 to 7 years. Short Term Debt Average maturity is 1 year. Interest rate sensitivity is very low with steady returns. Liquid Invest in money market, other short term paper, and cash. Highly liquid. Average maturity is three months. Review Categories Diversified equity has done very well while sectoral categories have fared poorly in Indian market. Index Funds have delivered much less compared to actively managed Funds. Gilt and Income Funds have performed very well during the last three years. They perform best in a falling interest environment. Since interest rates are now much lower, short term Funds are preferable. Specific scheme selection Rankings are based on criteria including past performance, risk and resilience in unfavorable conditions, stability and investment style of Fund management, cost and service levels. Some recommended schemes are: Diversified equity Zurich Equity, Franklin India Bluechip, Sundaram Growth. These Funds show good resilience giving positive results. Gilt Funds DSP Merrill Lynch, Tata GSF, and HDFC Gilt have done well.
109
Income Fund HDFC, Alliance, Escorts and Zurich are top performers Short Term Funds ICICI prudential, Franklin Templeton are recommended
110
BIBLIOGRAPHY:
Websites:
1)
www.indiamutualfunds.com
2) www.bseindia.com 3) www.moneycontrol.com 4) www.google.co.in 5) www.capitalmarket.com 6) www.indiainfoline.com 7) www.yahoofinance.com 8) www.afiindia.com 9) www.valueresearchonline.com
Books:Investment Management by B.K. Bhalla Portfolio and Security Analysis by Punithavathy Pandian Securities Analysis and Portfolio Management by V.A. Avadhani Mutual Funds in India by H. Sadhak
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Mutual Funds in India

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Mutual Funds in India

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MAJOR MUTUAL FUNDS IN INDIA

BIPIN DUBEY DPGD/JA10/0680 SPECIALIZATION: FINANCE

CERTIFICATE FROM GUIDE

SIGNATURE OF GUIDE NAME : Vikas Vishwakarma DESIGNATION : Chartered Accountant

TITLE PAGE ACKNOWLEGEMENT CERTIFICATE FROM THE GUIDE

34 77 79 82 102 106 108

INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS ASPECTS.

Gold Silver Precious stones Art objects

ADVANTAGES OF MUTUAL FUNDS

DRAWBACKS FROM MUTULA FUND

RISK HIERARCHY OF MUTUAL FUNDS

Snapshot of Mutual Fund Schemes

Liquidity + Moderate Income + Negligible Reservation of Capital

Short-term Funds (Floating short-term)

+ Little - Liquidity Moderate Income Rate

Bond Funds Regular Income (Floating Long-term) -

Salaried conservative investors

More than 9 - 12 months

Interest Security & Income Risk

Salaried conservative investors

& 12 months & more

Long-term Capital Equity Funds High Risk Appreciation

Aggressive investors with long 3 years plus term out look.

LANDMARKS IN INDIAN HISTORY OF MUTUAL FUND

Best performing Mutual fund in India in 2011

CATEGORIES OF MUTUAL FUND:

fund will invest in banking stocks.

being invested in call money market.

instruments which have variable coupon rate.

long-term debt papers.

RISK V/S. RETURN:

STRUCTURE OF MUTUAL FUND

Sponsor Company Managed by a Board of Trustees

Holds unit holders fund Registers MF with in MF

Appointed by BOT Appointed by Trustees

Asset Management Company

Provides necessary custodian services

Provide Banking Services

Provide registrar services and act as transfer agents

STRUCTURE OF THE INDIAN MUTUAL FUNDS

Chapter 2 The Detailed Study

1. Birla Sun Life Tax Relief 96 - Growth

SCHEME PERFORMANCE (%) AS ON NOV 25, 2011

Percentage of Net Qty Assets NA NA NA NA NA NA NA NA NA NA

Percentage of Change with last month NA NA NA NA NA NA NA NA NA NA

Asset Management Company

Open Ended Equity Growth Oct 3, 2006 10 0 as on Oct 31, 2011

NA 500 Daily Daily

Entry Load Exit Load

2. DSP Blackrock Tax Saver Fund - Growth

Percentage of Net Qty Assets 126,558 678,910 324,246 145,268 224,480

36.42 33.27 28.45 27.69 20.90

1,690,500 19.96 496,693 43,817 161,098 19.46 18.62 17.98

Food & Food Processing, 45.97 2.49 Beverages

3. HDFC Taxsaver - Growth

Cash & Equivalent 2.72

Open Ended Equity Growth Jan 2, 2001 10 0 as on Oct 31, 2011

4. Escorts Tax Plan - Growth

Percentage of Net Qty Assets 7,103

Percentage of Change with last month NA NA NA NA NA NA NA NA NA NA

Kalyani Investment Company NA Ltd.

17.52 8.70 8.07 6.52 6.35

18.62 4.91 54.82 4.82 55.32 4.40 3.59 3.36 2.99