UNIVERSITY OF MUMBAI

PROJECT REPORT
ON
“THE COMPARATIVE STUDY OF MIDCAP SCHEMES OF
DIFFERENT MUTUAL FUND COMPANIES

IN PARTIAL FULFILLMENT FOR THE DEGREE OF
MASTER OF MANAGEMENT STUDIES
AS PER
UNIVERSITY OF MUMBAI
SUBMITTED BY:
NITESH N. SAVLA
MMS- FINANCE
YEAR: 2013-2015
KOHINOOR BUSINESS SCHOOL
KURLA (WEST), MUMBAI

1

UNIVERSITY OF MUMBAI
PROJECT REPORT
ON
“THE COMPARATIVE STUDY OF MIDCAP SCHEMES OF
DIFFERENT MUTUAL FUND COMPANIES

SUBMITTED BY:
NITESH N. SAVLA
MMS- FINANCE
YEAR: 2013-2015

UNDER THE GUIDE OF
PROF. MILIND DALVI

UNIVERSITY OF MUMBAI
KOHINOOR BUSINESS SCHOOL
KURLA (WEST), MUMBAI
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DECLARATION

I, NITESH N. SAVLA, student of KOHINOOR BUSINESS SCHOOL of M.M.S, hereby
declare that I have completed this project on "THE COMPARATIVE STUDY OF MIDCAP
SCHEMES OF DIFFERENT MUTUAL FUND COMPANIES” during the academic year
2013-15 AS INTERNSHIP PROJECT .The information submitted is true and original to the
best of knowledge.

Signature of student

NITESH N. SAVLA

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CERTIFICATE
I, PROF. MILIND DALVI, hereby certify that NITESH SAVLA Student of KOHINOOR
BUSINESS SCHOOL, KURLA (Mumbai) has completed the project on “THE
COMPARATIVE STUDY OF MIDCAP SCHEMES OF DIFFERENT MUTUAL FUND
COMPANIES “during the academic year 2013-15. The information submitted is true and
original to best of my knowledge.

DATE:
PLACE: Mumbai.

Signature of project guide:

(Prof. Milind Dalvi)

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ACKNOWLEDGEMENT

I would like to express the deepest gratitude and appreciation to my mentor and
faculty guide Prof. MILIND DALVI who has the attitude and substance of a
genius; he continually and convincingly conveyed the spirit of motivation and
support in regard to this project. Without his guidance and persistent help this
project on “THE COMPARATIVE STUDY OF MIDCAP SCHEMES OF
DIFFERENT MUTUAL FUND COMPANIES” Research methodology would
have been impossible.
I would like to thank my company guide Mr. Bhushan Ajani and Himanshu
Makwana (Regional Manager) whose guidance and support demonstrated, has
helped me to pursue my project at their esteemed organization. Their cooperation
has transcended my project to great levels.

I thank KOHINOOR BUSINESS SCHOOL MUMBAI and “KARVY Stock
Broking Ltd.“ for providing me this opportunity to pursue this project and thus
enhance my academic abilities. I thank my parents and friends for their

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unconditional support towards my project. Finally I thank the Almighty for his
blessings in every aspect

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INDEX
Sr no.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Title
Executive summary
Company profile
Introduction
History Of Mutual Fund
Advantages of Mutual fund
Disadvantages of mutual fund
Types of Mutual fund
Rules and Regulations
Glossary
Literature Review
Need For the study, Objective, Scope
Research Methodology
Data Analysis
Limitations
Conclusion
Recommendation
Bibliography

Page no.
7
8
15
17
21
24
26
31
34
35
36
38
39
44
45
46
47

Executive summary:A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal i.e. money. 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 appreciation realized is shared by its unit holders in proportion to
the number of units owned by them. Thus a Mutual Fund is the most suitable investment for
the common man as it offers an opportunity to invest in a diversified, professionally managed
at low cost.

7

The Main objective of research was to know the benefits available from Midcap schemes in
Mutual Fund investment and understand different types of mutual fund schemes available. To
give an idea about the regulations of mutual funds and analyze the parameters of selected
Midcap schemes and to study the risk reward parameters of selected Midcap schemes. The
CNX Midcap is the Benchmark selected by all the schemes. After analyzing the schemes and
comparing them with the bench mark, it is found that all five schemes have performed
significantly better than their benchmark The selected Midcap were Tata Midcap, Kotak
Midcap Fund, HDFC Midcap Opportunity Fund, L&T Midcap Fund, Religare Invesco
Midcap Fund .
At the end, all the 5 mid cap schemes are meant for long term ranging from 5 to 10 years.
Hence it makes more sense of targeting the youth and middle aged people. This was
characterized by the Bull Phase before the Modi government came into power. This may not
necessarily mean that short term would offer such high returns.

About company:Karvy Stock Broking Limited, one of the cornerstones of the Karvy
edifice, flows freely towards attaining diverse goals of the customer through varied services.
Creating a plethora of opportunities for the customer by opening up investment vistas backed
by research-based advisory services. Here, growth knows no limits and success recognizes no
boundaries. Helping the customer create waves in his portfolio and empowering the investor
completely is the ultimate goal.

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Provide Service




1.

Stock Broking Services
Depository Participants
Distribution of Financial Products
Advisory Services
Private Client Group

Stock Broking Service:It is an undisputed fact that the stock market is unpredictable and yet enjoys a

high success rate as a wealth management and wealth accumulation option. The difference
between unpredictability and a safety anchor in the market is provided by in-depth knowledge
of market functioning and changing trends, planning with foresight and choosing one's options
with care. This is what we provide in our Stock Broking services.
KARVY offer services that are beyond just a medium for buying and selling stocks and shares.
Instead KARVY provide services which are multi dimensional and multi-focused in their
scope. There are several advantages in utilizing our Stock Broking services, which are the
reasons why it is one of the best in the country.
KARVY offer trading on a vast platform National Stock Exchange and Bombay Stock
Exchange. More importantly, KARVY make trading safe to the maximum possible extent, by
accounting for several risk factors and planning accordingly. KARY IS assisted in this task by
our in-depth research, constant feedback and sound advisory facilities. KASRVY’s highly
skilled research team, comprising of technical analysts as well as fundamental specialists,
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secure result-oriented information on market trends, market analysis and market predictions.
This crucial information is given as a constant feedback to our customers, through daily
reports delivered thrice daily ; The Pre-session Report, where market scenario for the day is
predicted, The Mid-session Report, timed to arrive during lunch break , where the market
forecast for the rest of the day is given and The Post-session Report, the final report for the
day, where the market and the report itself is reviewed. To add to this repository of
information, Karvy publish a monthly magazine "Karvy the Finapolis", which analyzes the
latest stock market trends and takes a close look at the various investment options, and
products available in the market, while a weekly report, called "Karvy Bazaar Baatein",
keeps you more informed on the immediate trends in the stock market. In addition, KARVY’s
specific industry reports give comprehensive information on various industries. Besides this,
KARVY also offer special portfolio analysis packages that provide daily technical advice on
scrip’s for successful portfolio management and provide customized advisory services to help
you make the right financial moves that are specifically suited to your portfolio.
KARVY’s Stock Broking services are widely networked across India, with the number of our
trading terminals providing retail stock broking facilities. Our services have increasingly
offered customer oriented convenience, which we provide to a spectrum of investors, high-net
worth or otherwise, with equal dedication and competence.
But true to our spirit, this success is not our final destination, but just a platform to launch
further enhanced quality services to provide you the latest in convenient, customer-friendly
stock management.

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Over the years we have ensured that the trust of our customers is our biggest returns. Factors
such as our success in the Electronic custody business has helped build on our tradition of trust
even more. Consequentially our retail client base expanded very fast.
To empower the investor further we have made serious efforts to ensure that our research calls
are disseminated systematically to all our stock broking clients through various delivery
channels like email, chat, SMS, phone calls etc.
Our foray into commodities broking has been path breaking and we are in the process of
converting existing traders in commodities into the more organized mainstream of trading in
commodity futures, both as a trading and risk hedging mechanism.

In the future, our focus will be on the emerging businesses and to meet this objective, we have
enhanced our manpower and revitalized our knowledge base with enhances focus on Futures
and Options as well as the commodities business.
2. Depository Participants:The onset of the technology revolution in financial services
Industry saw the emergence of Karvy as an electronic custodian registered with National
Securities Depository Ltd (NSDL) and Central Securities Depository Ltd (CSDL) in
1998. Karvy set standards enabling further comfort to the investor by promoting paperless
trading across the country and emerged as the top 3 Depository Participants in the country in
terms of customer serviced.

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Offering a wide trading platform with a dual membership at both NSDL and CDSL, we are a
powerful medium for trading and settlement of dematerialized shares. We have established
live DPMs, Internet access to accounts and an easier transaction process in order to offer more
convenience to individual and corporate investors. A team of professional and the latest
technological expertise allocated exclusively to our demat division including technological
enhancements like SPEED-e, make our response time quick and our delivery impeccable. A
wide national network makes our efficiencies accessible to all.

3. Distribution of Financial Products:The paradigm shift from pure selling to knowledge based selling drives the
business today. With our wide portfolio offerings, we occupy all segments in the retail
financial services industry.
A 1600 team of highly qualified and dedicated professionals drawn from the best of academic
and professional backgrounds are committed to maintaining high levels of client service
delivery. This has propelled us to a position among the top distributors for equity and debt
issues with an estimated market share of 15% in terms of applications mobilized, besides
being established as the leading procurer in all public issues.

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To further tap the immense growth potential in the capital markets we enhanced the scope of
our retail brand, Karvy - the Finapolis, thereby providing planning and advisory services to
the mass affluent. Here we understand the customer needs and lifestyle in the context of
present earnings and provide adequate advisory services that will necessarily help in creating
wealth. Judicious planning that is customized to meet the future needs of the customer deliver
a service that is exemplary. The market-savvy and the ignorant investors, both find this service
very satisfactory. The edge that we have over competition is our portfolio of offerings and our
professional expertise. The investment planning for each customer is done with an unbiased
attitude so that the service is truly customized.
Our monthly magazine, Finapolis, provides up-dated market information on market trends,
investment options, opinions etc. Thus empowering the investor to base every financial move
on rational thought and prudent analysis and embark on the path to wealth creation.
4. Advisory Services:Under our retail brand "Karvy – the Finapolis", we deliver advisory services to a cross-section
of customers. The service is backed by a team of dedicated and expert professionals with
varied experience and background in handling investment portfolios. They are continually
engaged in designing the right investment portfolio for each customer according to individual
needs and budget considerations with a comprehensive support system that focuses on trading
customers' portfolios and providing valuable inputs, monitoring and managing the portfolio
through varied technological initiatives. This is made possible by the expertise we have gained
in the business over the years. Another venture towards being investor-friendly is the
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circulation of a monthly magazine called "Karvy - the Finapolis". Covering the latest of
market news, trends, investment schemes and research-based opinions from experts in various
financial fields.
5.

Private Client Group:-

This specialized division was set up to cater to the high net worth individuals and institutional
clients keeping in mind that they require a different kind of financial planning and
management that will augment not just existing finances but their life-style as well. Here we
follow a hard-nosed business approach with the soft touch of dedicated customer care and
personalized attention.
For this purpose we offer a comprehensive and personalized service that encompasses
planning and protection of finances, planning of business needs and retirement needs and a
host of other services, all provided on a one-to-one basis.
Our research reports have been widely appreciated by this segment. The delivery and support
modules have been fine tuned by giving our clients access to online portfolio information,
constant updates on their portfolios as well as value-added advise on portfolio churning, sector
switches etc. The investment recommendations given by our research team in the cash market
have enjoyed a high success rate.

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Introduction:A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal i.e. money. 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 appreciation realized is shared by its unit holders in
proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable
investment for the common man as it offers an opportunity to invest in a diversified,
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professionally managed basket of securities at a relatively low cost. The flow chart below
describes broadly the working of a mutual fund:

Sources:-www.amfiindia.com

The investment in securities through mutual fund is spread across wide range of industries and
sectors and thus the risk are reduced. Diversification reduce the risk because all stock may not
move in the same direction at the same time. Various fund houses issue units to investors in
accordance with the quantum of money invested by them.
Definition:-

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“Mutual funds are collective savings and investment vehicles where savings of small (or
sometimes big) investors are pooled together to invest for their mutual benefit and returns
distributed proportionately”.
“A mutual fund is an investment that pools your money with the money of an
unlimited number of other investors. In return, you and the other investors each own shares of
the fund. The fund's assets are invested according to an investment objective into the fund's
portfolio of investments. Aggressive growth funds seek long-term capital growth by investing
primarily in stocks of fast-growing smaller companies or market segments. Aggressive growth
funds are also called capital appreciation funds”.

History of Mutual Fund:India started in 1963 with the formation of Unit Trust of India, at the initiative of the
Government of India and Reserve Bank of India. The history of mutual funds in India can be
broadly divided into four distinct phases
First Phase - 1964-1987

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Unit Trust of India (UTI) was established in 1963 by an Act of Parliament. It was set up 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 (Jun 90), 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)
With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year
in which the first Mutual Fund Regulations came into being, under which all mutual funds,
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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.
The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and acquisitions.
As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805
crores. The Unit Trust of India with Rs. 44,541 crores of assets under management was way
ahead of other mutual funds.

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 Specified
Undertaking of Unit Trust of India, functioning under an administrator and under the rules
19

framed by Government of India and does not come under the purview of the Mutual Fund
Regulations.
The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is registered
with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the
erstwhile UTI which had in March 2000 more than Rs. 76,000 crores of assets under
management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector funds,
the mutual fund industry has entered its current phase of consolidation and growth.
The graph indicates the growth of assets over the years.

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(Sources:-www.amfiindia.com)

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Advantages of Mutual fund:The followings are advantages of Mutual fund:-

1. No large investment compulsory:Mutual funds allow you to make an investment, even if you have a very small
amount to invest. This advantage makes it more attractive among investors.
2.

Investing in a variety of instruments:Mutual Funds invest in a wide range of securities. This diversification reduces the risk
by limiting the effect of a possible decline in the value of any one security. You achieve this
diversification through a Mutual Fund with far less money than you can do on your own.

3.

Convenience:You can invest directly with the fund house or through your financial advisor. You get
regular information on the value of your investments and portfolios of the schemes.

4. Professional Management:Mutual fund investments are managed by experienced and skilled professionals, who
with the help of an investment research team, analyzes the performance & prospects of
companies and selects suitable investments to achieve the objective of the scheme.

5. Easy access to your money:In open-ended mutual funds, you can redeem all or part of your units any time you
wish. Some schemes do have a lock-in period where an investor cannot return the units until
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the completion of such a lock-in period. With close-ended schemes, you can sell your units on
a stock exchange at the prevailing market price or avail of the facility of repurchase through
Mutual Funds at NAV related prices which some close-ended and interval schemes offer you
on maturity of scheme or periodically, as the case maybe
6. Low cost:Mutual funds are relatively less expensively way to invest compared to direct investing
in capital markets because benefits of scale in brokerage, custodial and other fees translate in
to low cost.

7. Well regulated:All Mutual Funds are registered with SEBI and they function within the provisions of
strict regulations designed to protect the interests of investors. The operations of Mutual Funds
are regularly monitored by SEBI.

8. Tax Benefits:Any income distributed after March 31, 2002 will be subject to tax in the assessment of
all Unit holders. However, as a measure of concession to Unit holders of open-ended equity
oriented funds, income distributions for the year ending March 31, 2003, will be taxed at a
concessional rate of 10.5%.
In case of Individuals and Hindu Undivided Families a deduction upto Rs. 9,000 from
the Total Income will be admissible in respect of income from investments specified in
Section 80L, including income from Units of the Mutual Fund. Units of the schemes are not
subject to Wealth-Tax and Gift-Tax.

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Disadvantages of Mutual fund:Following are the disadvantages of Mutual fund
1. Dilution:Although diversification reduces the amount of risk involved in investing in mutual
funds, it can also be a disadvantage due to dilution. For example, if a single security held by a
mutual fund doubles in value, the mutual fund itself would not double in value because that
security is only one small part of the fund’s holdings. By holding a large number of different
investments, mutual funds tend to do neither exceptionally well nor exceptionally poorly.
2. Fees and Expenses:Most mutual funds charge management and operating fees that pay for the fund’s
management expenses. In addition, some mutual funds charge high sales commissions and
redemption fees. And some funds buy and trade shares so often that the transaction costs add
up significantly. Some of these expenses are charged on an ongoing basis, unlike stock
investments, for which a commission is paid only when you buy and sell.
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3. Lack Liquidity:How fast can you get your money if you sell a mutual fund as compared to ETFs,
stocks and closed-end funds? If you sell a mutual fund, you have access to your cash the day
after the sale. ETFs, stocks and closed-end funds require you to wait three days after you sell
the investment. I would call the “lack of liquidity” disadvantage of mutual funds a myth. You
can only find more liquidity if you invest in your
4. Trading Limitations:Although mutual funds are highly liquid in general, most mutual funds (called openended funds) cannot be bought or sold in the middle of the trading day. You can only buy and
sell them at the end of the day, after they’ve calculated the current value of their holdings.
5. Loss of Control:The managers of mutual funds make all of the decisions about which securities to buy
and sell and when to do so. This can make it difficult for you when trying to manage your
portfolio. For example, the tax consequences of a decision by the manager to buy or sell an
asset at a certain time might not be optimal for you. You also should remember that you are
trusting someone else with your money when you invest in a mutual fund.
6. Inefficiency of Cash Reserves:Mutual funds usually maintain large cash reserves as protection against a large number
of simultaneous withdrawals. Although this provides investors with liquidity, it means that
some of the fund’s money is invested in cash instead of assets, which tends to lower the
investor’s potential return.

Types of Mutual fund:25

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 flavors,
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.

By constitutional:26

1. Close-ended:A closed-end fund has a stipulated maturity period which generally ranging from 3 to 5
years. The fund is open for subscription only during a specified period. Investors can invest in
the scheme at the time of the initial public issue and thereafter they can buy or sell the units of
the scheme on the stock exchanges where they are listed. In order to provide an exit route to
the investors, some close-ended funds give an option of selling back the units to the Mutual
Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at
least one of the two exit routes is provided to the investor.
2. Open-ended: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.
3. Interval: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.

By Investment: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

27

stocks. The Equity Funds are sub-classified depending upon their investment objective, as
follows:




Diversified Equity Funds
Midcap 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 Fund: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.

Monthly Income Plans (MIPs):Invests maximum of their total corpus in debt instruments while they take
28

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.
Short Term Plans (STPs):STP Means 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. Hybrid fund: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,
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.
29

4. Money market Fund: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.

Rules and Regulations for Mutual funds
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.

SEBI REGULATIONS:

As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds

to protect the interest of the investors.
SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by
private sector entities were allowed to enter the capital market.

30

The regulations were fully revised in 1996 and have been amended thereafter from time to

time.
SEBI has also issued guidelines to the mutual funds from time to time to protect the interests

of investors.
All mutual funds whether promoted by public sector or private sector entities including those
promoted by foreign entities are governed by the same set of Regulations. The risks associated
with the schemes launched by the mutual funds sponsored by these entities are of similar type.
There is no distinction in regulatory requirements for these mutual funds and all are subject to

monitoring and inspections by SEBI.
SEBI Regulations require that at least two thirds of the directors of trustee company or board

of trustees must be independent i.e. they should not be associated with the sponsors.
Also, 50% of the directors of AMC must be independent. All mutual funds are required to be

registered with SEBI before they launch any scheme.
Further SEBI Regulations, inter-alia, stipulate that MFs cannot guarantee returns in any
scheme and that each scheme is subject to 20 : 25 condition [I.e minimum 20 investors per

scheme and one investor can hold more than 25% stake in the corpus in that one scheme.
Also SEBI has permitted MFs to launch schemes overseas subject various restrictions and also
to launch schemes linked to Real Estate, Options and Futures, Commodities, etc.

ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI):
With the increase in mutual fund players in India, a need for mutual fund association in
India was generated to function as a non-profit organization. Association of Mutual Funds in
India (AMFI) was incorporated on 22nd August, 1995. AMFI is an apex body of all Asset
Management Companies (AMC) which has been registered with SEBI. Till date all the AMCs
are that have launched mutual fund schemes are its members. It functions under the
31

supervision and guidelines of its Board of Directors. Association of Mutual Funds India has
brought down the Indian Mutual Fund Industry to a professional and healthy market with
ethical lines enhancing and maintaining standards. It follows the principle of both protecting
and promoting the interests of mutual funds as well as
their unit holders.
The Objectives of Association of Mutual Funds in India:

The Association of Mutual Funds of India works with 30 registered AMCs of thecountry. It
has certain defined objectives which juxtaposes the guidelines of its Board ofDirectors. The

objectives are as follows:
This mutual fund association of India maintains high professional and ethical standards in all

areas of operation of the industry.
It also recommends and promotes the top class business practices and code of conduct which
is followed by members and related people engaged in the activities of mutual fund and asset
management. The agencies who are by any means connected or involved in the field of capital

markets and financial services also involved in this code of conduct of the association.
AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund

industry.
Associations of Mutual Fund of India do represent the Government of India, the Reserve Bank

of India and other related bodies on matters relating to the Mutual Fund Industry.
It develops a team of well qualified and trained Agent distributors. It implements a
programmed of training and certification for all intermediaries and other engaged in the

mutual fund industry.
AMFI undertakes all India awareness programmed for investors in order to promote proper
understanding of the concept and working of mutual funds.
32

At last but not the least association of mutual fund of India also disseminate information’s on
Mutual Fund Industry and undertakes studies and research either directly or in association
with other bodies.
Glossary:Net Assets value:Net Asset Value is the market valueof the assets of the scheme minus its liabilities. The
per unit NAV is the net asset value of the scheme divided by the number of units outstanding
on the Valuation Date.
Sales Price:Sale price is the price you pay when you invest in a scheme, it also called Offer Price.
It may include a sales load.
Repurchase price:It is the price at which a close-ended scheme repurchases its units and it may include a
back-end load This is also called Bid Price.
Redemption price:It is the price at which open-ended schemes repurchase their units and close-ended
schemes redeem their units on maturity. Such prices are NAV related.
Sales Load:It is a charge collected by a scheme when it sells the units. Also called as ‘Front-End’
Load. Schemes that do not charge a load are called ‘No Load’ schemes.

Repurchase or ‘Back-end’ Load:It is a charge collected by a scheme when it buys back the units from the unit holders.

33

Literature Review
D.V.Ingle. book in “Mutual Fund in India”.
Mutual funds are very popular all over the world and they play an important role in the
financial system of many countries. Mutual funds are an ideal medium for investment by small
as well as medium investors in the stock market. The Mutual funds pools together the
investment of small and medium investor for participation in the stock market.
There are many survey done on mutual fund by many companies where they find
performance of mutual fund industry in India is growing faster and into this is private sector
after deregulation it increase drastically.

Robert S. Carlson Aggregate performance of Mutual fund
Mr. Carlson conducts a research to analyze the predictive value of past forecasting future
performance of mutual funds. The Carlson also examined the efficiency of market and
identified the factor related to the fund performance. He constructed indices for three type
Diversified common stock, Balanced Fund, Income fund and all these fund has to compared
with the market indices. In order to analyze the performance regression was used. The result
provides empirical support to the return-risk relation for the certain period and also he discuss
the capital assets pricing model (CAPM). He said that mutual fund market depends on the
selection of both time period and market proxy. Carlson said that the high level of residual risk
displayed by diversified Mutual fund. He conclude that past performance showed little
predictive value and that the performance was positively related to the availability of money
for investment purpose
34

Sources:- www.jstor.com

Need for the study:The main purpose of doing this project is to understand the Mutual Fund and it’s working.
This helps to know in details about different Assets Management companies (AMCS), and
their growth, returns and risk.
It also helps in understanding different mutual Funds like large cap, Midcap, Small cap
and ELSS etc. Because my study is based on different mid cap schemes of different AMC as
well as study their risk and return.
Finally this would help to understand the Mutual Funds and also know which Midcap
schemes are beneficial for investor point of view.
Objective:1.
2.
3.
4.

To know the benefits available from Midcap schemes in Mutual Fund investment.
To know the different types of mutual fund schemes available.
To give an idea about the regulations of mutual funds.
To analyze the parameters of selected Midcap schemes to compare the selected schemes with

the benchmark.
5. To study the risk reward parameters of selected Midcap schemes.

35

Scope:The main purpose of this study is to know about different Assets Management
Company’s (AMCs) and their different schemes and its performance. Since all Asset
Management Company come out with similar type of schemes, even market is volatile so, it
becomes crucial for the AMC to perform constantly well as to survive in the competitive
market and provide maximum capital appropriation or returns to the investors. Other than the
performance of the fund is depending upon the kind of stock chosen by the Fund manager of
the company.

36

Research Methodology:Data collection:
A major portion of the data in this study has been collected through secondary sources of data.
Collection of Secondary data sources included:


Research based online portals.
Annual report of the mutual fund companies like Tata Mutual fund, Kotak mutual fund, etc.
Other published materials like MF Magazines, Finapolis i.e. published by Karvy Stock
Broking Ltd
Sample profile:
The sample required for the study has been selected through random sampling method
from the available list of MIDCAP schemes of mutual fund available in the market.

1.
2.
3.
4.
5.

Convenient sampling of 5 MIDCAP schemes of mutual fund such as
HDFC Midcap opportunity fund
L&T Midcap fund
Tata Midcap Fund
Kotak Midcap
Religare Midcap fund.
Period:
The study covered a period 2009-2014 for comparison of Midcap schemes of different mutual
fund companies.
Data analysis:
Compound annual growth rate (CAGR):The year-over-year growth rate of an investment over a specified period of time. The
compound annual growth rate is calculated by taking the nth root of the total percentage
37

growth rate, where n is the number of years in the period being considered. The CAGR
formula is:-

Formula

CAGR = ( EV / BV)1 / n - 1

Standard Deviation:Standard deviation is a statistical measure of the range of a fund's performance. When
a fund has a high standard deviation, its range of performance has been very wide, indicating
that there is a greater potential for volatility. The Standard deviation formula is:Formula of Standard Deviation:

( x  x )
n 1
Sharp ratio:s

A ratio developed by Nobel laureate William F. Sharpe to measure risk-adjusted performance.
The Sharpe ratio is calculated by subtracting the risk-free rate - such as that of the 10-year
Indian government bond - from the rate of return for a portfolio and dividing the result by the
standard deviation of the portfolio returns. The Sharpe ratio formula is:

Formula:-

38

r prf

p

Where:

r

p

= Expected Portfolio return

r

f

= Risk free rate

p

= Portfolio Standard Deviation

Alpha:Alpha measures the difference between a fund's actual returns and its expected performance,
given its level of risk (as measured by beta). A positive alpha figure indicates the fund has
performed better than its beta would predict. In contrast, a negative alpha indicates a fund has
underperformed, given the expectations established by the fund's beta. Some investors see
alpha as a measurement of the value added or subtracted by a fund's manager. There are
limitations to alpha's ability to accurately depict a manager's added or subtracted value. In
some cases, a negative alpha can result from the expenses that are present in the fund figures
but are not present in the figures of the comparison index. Alpha is dependent on the accuracy
39

of beta: If the investor accepts beta as a conclusive definition of risk, a positive alpha would be
a conclusive indicator of good fund performance.

Formula:-

α =y-βx
Where,
y - Mean value of returns of the fund
x – Mean value of return of the index
β – Beta value of the fund

Beta:A measure of the volatility or systematic risk of a security or a portfolio in comparison to the
market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that
calculates the expected return of an asset based on its beta and expected market returns.
Formula:-

β = nΣxy - (Σx) (Σy)
nΣx^2 - (Σx)^2

Where,
40

n – Number of days
x – Return of the index
y –return of the Fund

Analysis of Five companies:Tata

Kotak

HDFC

L&T

Religare

Standard

Midcap
5.71%

3.77%

3.04%

5.22%

2.26%

deviation
CAGR

23.45%

22.74%

30.55%

25.70%

30.20%

Alpha

9.33

5.4

10.55

8.43

10.05

Beta
Sharpe

0.91
0.69

1.1
0.47

0.92
0.78

0.9
0.65

0.96
0.71

CNX
Midcap

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20%

Limitations:1. The focus was done on midcap schemes and not on large cap and small cap.
2. The primary data was not available
3. The focus was done only on 5 Midcap schemes and not all other Midcap scheme

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Conclusions:After analyzing all the schemes HDFC Midcap opportunity Fund and Relegare Invesco
Midcap schemes have performed better then all other schemes selected for the studying risk
reward parameter. The CNX Midcap is the Benchmark selected by all the schemes. After
analyzing the schemes and comparing them with the bench mark, it is found that all five
schemes have performed significantly better than their benchmark. Out of all the midcap
schemes, HDFC Midcap opportunity and Religare Midcap schemes have lower standard
deviation and their Sharpe ratio is higher as compared to all other schemes. It means these
schemes have below average risk and have delivered above average returns. This means that
the fund manager has performed better in terms of selecting and managing the portfolio. Beta
assesses the volatility of the portfolio. In the present study, Kotak midcap has the highest beta
i.e. 1.10. this indicates that Kotak Midcap schemes is more volatile than the benchmark. High
beta portfolios can be risk during uncertain times.
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Recommendation:All the 5 mid cap schemes are not meant for people who are Old aged because these schemes
are very aggressive and very risky, so that these schemes are long term ranging from 5 to 10
years then only investor get higher return. Hence it makes more sense of targeting the youth
and middle aged people. This was characterized by the Bull Phase before the Modi
government came into power. This may not necessarily mean that short term would offer such
high returns.

44

Bibliography:www.karvy.comThe company profile was taken from this website.
www.valueresearch.comThe returns and Indices Figures was provided by this we
www.amfiindia.comThe Rules and Regulation of SEBI and AMFI was taken from this web
site.
www.tatamutualfund.comTata Midcap scheme’s NAV was taken from this web site.
www.religareinvesco.comReligare Invesco Midcap scheme’s NAV was taken from this web
site.
www.kotakmutual.comKotak Midcap scheme’s NAV was taken from this web site.
www.hdfcfud.comHDFC Midcap Opportunity scheme’s NAV was taken from this web site.
www.lntmf.comL&T Midcap Scheme’s NAV was taken from this web site.
D.V.Ingle. book in “Mutual Fund in India”.
Robert S. Carlson “Aggregate performance of Mutual fund”

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