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A) Title: Client Acquisition for Mutual Funds in money plant consultancy pune.

B) Industry overview-
Tax & Investment advisory firms are the firms providing services like Wealth management as
an investment-advisory discipline which incorporates financial planning, investment
portfolio management and a number of aggregated financial services. Like all small business
owners, financial advisors seek ways to reduce taxes, maximize their clients incomes and save
for retirement. Clients who own their own businesses incur a number of expenses that are unique
to their line of work, but there are also several other measures that can take to reduce their
reportable income and hence reduce their tax through the guidance of tax advisory and financial
firms. High-net-worth individuals (HNWIs), small-business owners and families who desire the
assistance of a credentialed financial advisory specialist call upon wealth managers to
coordinate retail banking, estate planning, legal resources, tax professionals and investment
management. These firms provide services like NRI services, Income tax scrutiny, Financial
planning, Tax planning, personlised CA services, Corporate fund management.

Average Assets Under Management (AAUM) of Indian Mutual Fund Industry for the month of
July 2017 stood at 20.42 lakh crore. Assets Under Management (AUM) as on July 31, 2017
stood at at 19.97 lakh crore.
The AUM of the Indian MF Industry has grown from 3.26 trillion as on 31st March 2007 to
19.97 trillion as on 31st July, 2017, more than six-fold increase in a span of about 10 years!!
The MF Industrys AUM has grown from 5.87 trillion as on 31st March, 2012 to 19.97 trillion
as on 31st July, 2017, about three and half fold increase in a span of about 5 years !!
The Industrys AUM had crossed the milestone of 10 Trillion (10 Lakh Crore) for the first
time in May 2014 and in a short span of about three years, the AUM size has touched 20 lakh
crore last month, almost doubled.
The total number of accounts (or folios as per mutual fund parlance) as on July 31, 2017 stood at
5.94 crore (59.4 million), while the number of folios under Equity, ELSS and Balanced schemes,
wherein the maximum investment is from retail segment stood at 4.80 crore (48 million).

AUM of the mutual fund industry may cross Rs 20 trillion in 2017

The assets under management (AUM) of the mutual fund industry touched an all-time high of Rs
16.46 trillion in December, according to the data from the Association of Mutual Funds in India
(AMFI) and expects to cross Rs 20 trillion this year.
This, according to ICRABSE -0.67 %, translates into a compounded annualised growth rate of
18 per cent from Rs 3.26 trillion AUM in March 2007 and is led by the phenomenal growth in
SIPs with December alone seeing inflows of Rs 3,973 crore.

"The robust performance of the industry comes on the back of growing investor awareness and
increased investments in systematic investment plans (SIPs). Post-demonetisation, interest rates
have started declining and can have a positive bearing ..
The industry AUM had crossed Rs 10 trillion in May 2014, and it may reach the important
milestone of Rs 20 trillion in 2017, ICRA added.

Noting that the equity category saw steady inflows in the year, ICRA said fund houses saw net
inflow of Rs 10,923 crore in December into equities, of which Rs 10,103 crore were in equity

"This is the ninth straight month to witness positive inflows in equity schemes. Steady inflows
from SIPs and increasing investor awareness have contributed to this growth," ICRA added.

In the current financial year, total mobilisation in equity schemes stood at Rs 51,000 crore and is
expected that momentum will continue in the March quarter as investors may opt for tax-saving
options like equity linked savings schemes.

As per AMFI data, total mop-up via SIPs in December stood at Rs 3,973 crore. So far this year,
industry on average has added about 6.19 lakh SIP accounts every month with the average ticket
size being around Rs 3,200 per account.

December saw over 7 lakh new folios addition, taking the total folio count to 5.2 crore, which is
1.5 per cent higher than in November and 10.8 per cent than in March 2016.

During the month, 1 lakh new folios were added to the ELSS category, while equity, balanced,
and ETF together witnessed addition of over 5 lakh folios. Folio count grew across all debt
categories, and in the liquid category it doubled from the March 2016 level. However, de-growth
was seen in gold ETFs.

The proportion of equity to non-equity schemes is more evenly distributed in B15 cities
compared to T15 cities where it is skewed towards non-equity schemes due to the presence of
institutional investors.

1 . The world is rapidly responding to Indias digital revolution. The country is on the cusp of a
breakthrough backed by several initiatives which are all anchored in digital technology. Since the
demonetisation announcement on 8 November 2016, India has seen a concerted effort to move
towards a cashless economy. Events from the last few weeks of 2016 illustrate both the
challenges and tremendous opportunities for the growth of the mutual fund (MF) industry in
India. With approximately 14 lakh crore INR having recently entered through formal banking
channels, a significant new universe is now not only an integral part of the banking fold but also
potentially within the tax ambit. This will in turn encourage them to think more about investment
avenues which not only are tax efficient but can also beat inflation in the long run. As awareness
increases, MFs could become one of the first choices for both short-term and long-term
investments. While MF products are not suitable for all kinds of investors, the sector has shown
tremendous growth by exceeding 17 lakh crore INR in assets under management (AUM), with
inflows worth nearly 4 lakh crore INR in the last 2 years alone.1 The industry will see growth of
above 25% over the next financial year, up from 14% to 15% in the current year.2 Traditional
products will continue to garner demand. However, to cater to different audiences and bring
more investors into the fold, the industry will need to innovate and develop new specialised
products. For instance, SEBI is promoting the alternative investment fund (AIF) platform, which
will allow for product innovation around real estate and structured credit and eventually other
forms of products such as infrastructure investment trusts (INvITs).
Looking back at 2016, much of the growth is attributed to an increasing number of investor
accounts, steadily growing monthly investments into equity MF schemes from retail customers,
beyond top 15 (B15) city applications and a surge in inflows into exchange traded funds (ETFs).
A surprisingly sharp rise in systematic investment plans (SIPs) promoted more sustainable
growth for the industry as more people moved away from the concept of large lump sum
investments. Over the last 2 years, MFs have proved to be a low-cost, compliant and transparent
entity to channelise savings towards financial investments. With the demonetisation effect, rapid
digitisation, government incentives, regulatory initiatives, and a deliberate push for improving
investor education, the next 23 years should see the AUM reaching another great milestone. In
the immediate future, with interest rates declining, it is reasonable to predict that debt funds will
be the drivers of growth in the first half of 2017, while the effects of the Goods and Services Tax
(GST) will be felt in the second half

Budget 2017
The budget appears to be well balanced and growth oriented, with a focus on making financial
markets better regulated and introducing measures to strengthen the same. From a broader and
more holistic perspective, there are no negatives. However, there may be some missed
opportunities. Here are some of the highlights and views on how they could impact the overall
industry: There is a deliberate thrust being given to sectors such as cement, housing and
infrastructure and an impetus to the rural economy. This is a big positive as the housing sector is
not only a big employment generator but also has a large multiplier effect for the economy.
Banning cash transactions above 3 lakh INR will also facilitate digitisation and reduce
transactions in the parallel economy.34 The finance minister has also proposed a change to the
base year for calculating the indexation benefit from 1981 to 2001 in the budget. Debt MFs
qualify for long-term capital gains tax of 20% with indexation benefit if held for more than 3
years. Although this could affect the MF investor, individuals very rarely invest in debt funds for
the long term. Also, only a marginal number of individuals are likely to hold debt funds which
are pre-2001.35 Other measures to perk up the financial sector include further integration of the
commodities and securities derivatives market and a complete online process for registration of
financial market intermediaries like MFs, brokers and portfolio managers to improve ease of
doing business. With over 2,200 MF schemes being offered across various categories, in 2016,
the capital market regulator was urging MF merge certain schemes. The government had also
provided tax neutrality to the transfer of units in a consolidating plan of MF schemes. However,
there remained some ambiguity regarding the holding period. This was clarified in the proposed
Financial Bill, 2017, and will further boost the consolidation of MF schemes. The disposable
income for individuals earning between 2.55 lakh INR will increase due to the reduction in tax
to 5% from the current 10%. This will help to encourage lowerand middle-income groups to
invest in instruments such as insurance, MFs and fixed deposits.

The MF industry has grown exponentially over the last decade. However, opportunities
for further growth exist. The demonetisation exercise has disrupted the economy in general and
the financial sector in particular. Digital payments have been further encouraged on the back of
promoting a cashless economy, one of the key outcomes of demonetisation. The rural and semi-
urban population is now financially included, indicating that there is potential to create specific
products to suit their needs. Also, pension and insurance funds will see more traction and
penetration into products such as ETFs will increase. As individuals start to invest directly and
show interest in structured investments, the demand for investor education services and
investment advisory is likely to increase. Robo-advisory firms will see a fillip in growth in the
next 2 to 3 years. The overall outlook for the sector is promising. A few challenges remain, but
these can be easily overcome as the regulator continues to declare more incentives through
innovative initiatives
C) Company Overview-
Money Plant Consultancy is Maharashtras largest and the most Trusted Service provider
specializing Personalised Advisory Services for Income Tax & Financial Planning round the
year. Founded by Mr. Rishabh Parakh (Advisor) in 2005, Money Plant Consultancy is a firm
based out of Pune with operations in Thane, Vashi & Navi Mumbai. Since then, the clientele in
the Personal Finance Market segment has grown to include prestigious brands purely by
focusing on service to our clients where they need it.

1. Vision and Mission:

Our ultimate aim is to gratify our customers with clarity, precision and take on all their Tax &
Personal Finance needs by providing them with the most accurate & timely advice in the most
cost-effective way. We aim to decode the complex world of Tax & Finance with our
personalized CA services at all times

2. Services

Startup Specialist
Pre-Formation Consultancy, Proprietorship -LLP- Pvt. Ltd- Public, A2Z: Accounting-Tax-
Audit-Legal Valuation & Funding management is done by the financial firm.
NRI Services

Expert consultation for NRI Taxation, Money Transfer Rule- Repatriation, Investment
Consultancy for NRIs Tax Planning & optimization, DTAA & Tax Treaties with Countries.

Income Tax Scrutiny

Department sends out notice for scrutiny to a large number of individuals and business
establishments each year. Department sends out notice for scrutiny to a large number of
individuals and business establishments each year
Financial Planning
Which includes Portfolio Management Services Mutual Funds, Equity, Gold, FDs, Insurance,
Real Estate, Retirement Planning, Cash flow analysis, Net worth calculation, Financial Audit.
Tax Planning

Tax planning is the analysis of one's financial situation from a tax efficiency point of view so as
to plan one's finances in the most optimized manner.
Personalized CA services
Email/Phone Support/Mobile-App /Vault (web) Dedicated CA Advisor, Personal visits/Review
& Discussions, Round the year tax compliances, Back up of all the documents.
Employee Helpdesk

Support to finance/HR department/Admin, Employee friendly benefits. Help employees focus on

core areas.
Corporate Fund Management

Short Term investment Planning, liquid funds/Debt fund planning, Quick and efficient
Investment and redemption are included in this service.
Investors Empowerment Seminars

Tax & Financial Awareness Programs. Employer facilitated programs increase employee
retention. Right Financial advice at the right time at the right place.
D) Objectives

E) Research methodology
I have broken my topic into two parts which is given below:
i. Study of mutual fund.
ii. investors behavior towards mutual funds
for 1st one the type of research methodology which I am using is basic research and on the 2nd
topic I am impending the qualitative research. The research objective is to extract the knowledge
regarding mutual funds, interacting with investors and analyze their behavior. My research as a
whole will be consisting of the on field (outside office) as well as the off field (within office)
knowledge, the interactions with clients which I am doing in the IT company (Capgemini ), other
clients who belong to different firms like automobile, Teaching sector and others.

Primary Data
Secondary data
F) Literature review
A mutual fund is a common pool of money into which investors with common investment
objective place their contributions that are to be invested in accordance with the stated
investment objective of the scheme. The investment manager would invest the money collected
from the investor in to assets that are defined/permitted by the stated objective of the scheme. An
equity fund would invest equity and equity related instruments and a debt fund would invest in
bonds, debentures, gilts etc. A Mutual Fund is a trust that pools the savings of a number of
investors who share a common financial goal. 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 realised are 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 basket of securities at a relatively low cost.
The advantages of investing in a Mutual Fund are:
Professional Management
Convenient Administration
Return Potential

Mutual funds can generally be placed into one of three primary categories: equity, fixed
income or money market. Many investors will diversify their portfolio by including a mix of the

A. Equity Funds also called Stock funds (investing in publicly traded as opposed to privately
owned companies), are the most volatile of the three, with their value sometimes rising and
falling sharply over a short period.
B. Debt funds are a type of mutual fund that generate returns from their investors' money by
investing in bonds or deposits of various kinds. These terms basically mean that they lend
money and earn interest on the money they have lent example, the Government of India
issues bonds.
C. A hybrid fund is a category of mutual fund that is characterized by portfolio that is made up
of a mix of stocks and bonds, which can vary proportionally over time or remain fixed.

G) Analysis/ conclusion-

Investors invest in any of these mutual funds. Wise investors invest according to their risk
profile, future expectations and economic conditions of the nation the major three mutual funds
differ from each other in terms of their risks and returns.

i. Equity funds have high risks but their returns are high and their returns can be 20%, 25%
and above depending on the market conditions.
ii. Debt funds are less risky and can normally give returns between 8-10 %.
iii. Hybrid funds is one category which can combine the benefit of equity and debt so it
lowers the risk of the investor.

Over the past year, there has been a drastic shift in investors' attitude towards mutual funds. The
investment in lumpsum amount has been moderated while there is a good rise in SIPs(systematic
investment plan).

Mutual Funds Provided By Money Plant Consultncy

Top Rated Equity Funds Tax Saver Funds

SBI Magnum Multicap Fund Franklin India Taxshield Fund

DHFL Pramerica Large Cap Fund Birla Sun Life Tax Plan Fund

Birla Sun Life Equity Fund Reliance Tax Saver Fund

Franklin Build India Fund SBI Magnum Taxgain scheme

Franklin India Smaller Companies Fund Mirae Asset Tax Saver Fund

Relinace Top 200 Fund Axis Long Term Equity Fund

L&T India Value Fund DSP Black Rock Tax Saver Fund

L & T India Emerging Businesses Fund

Canara Robeco Emerging Equities Fund Liquid Funds

ICICI Prudential Value Discovery Fund Reliance Liquidity Fund

HDFC Small Cap Fund Birla Sun Life Cash Manager

Axis Focused 25 Fund SBI Savings Fund

Mirae Asset Emerging Bluechip Fund SBI Ultra Short Term Debt Fund

Mirae Asset India Opportunities Fund L & T Liquid Fund

Invesco India Contra Fund L & T Cash Fund

Kotak Infrastructure and Economic Reform Fund Mirae Asset Savings Fund

Kotak Select focus Fund Kotak Low Duration Fund

Sundaram Select Mid Cap Fund Kotak Treasury Advantage Fund

DSP BlackRock Liquidity Fund

DSP BlackRock Money Manager Fund

DHLF Pramerica Insta Cash Plus Fund

Axis Liquid Fund

Franklin India Ultra Short Bond Fund

Definition of Mutual Funds

A mutual fund is a common pool of money into which investors place

their contributions that are to be invested in accordance with the stated objective. A

mutual fund uses the money collected from investors to buy those assets, which are

specifically permitted by its stated investment objective.

A mutual fund is an entity that pools the money of many investorsits unit holdersto

invest in different securities. Investment may be in shares, debt securities, money market

securities or a combination of these.

A mutual fund is a trust that pools the savings of a number of investors who share a

common financial goal. Anybody with an investment decision buys units of a particular

mutual fund scheme that has a defined investment objective and strategy.

The money thus collected is then invested by the fund manager in different types of

securities. The income earned through these investments and the capital appreciation

realized by the scheme is shared by its unit holders in proportion to the number of units

owned by them.

Mutual funds are one of the best investments ever created because they are very cost

effective and very easy to invest in. By pooling money together in a mutual fund,

investors can purchase stocks or bonds with much lower trading costs than if they tried to

do it on their own.
A mutual fund is the ideal investment vehicle for todays complex and modern financial

scenario. Markets for equity shares, bonds and other fixed income instruments, real

estate, derivatives and other assets have become mature and information driven.

While the concept of individuals coming together to invest money collectively is not new,

the mutual fund in the present form is a 20 th century phenomenon.


The goal of a mutual fund is to provide an individual to make money. There are several

thousand mutual funds with different investments strategies and goals to chosen from.

Choosing one can be over whelming, even though it need not be different mutual funds

have different risks, which differ because of the funds goals fund manager, and

investment style. The fund itself will still increase in value, and in that way you may also

make money therefore the value of shares you hold in mutual fund will increase in value

when the holdings increases in value capital gains and income or dividend payments are

best reinvested for younger investors Retires often seek the income from dividend

distribution to augment their income with reinvestment of dividends and capital

distribution your money increase at an even greater rate. When you redeem your shares

what you receive is the value of the share.

Advantages of mutual funds

Mutual funds have advantages compared to direct investing in individual securities.

These include:

Ability to redeem daily at net asset value (the value of a proportional share of the

fund's assets)

Professional investment management

Ability to participate in investments that may be available only to larger investors

Government regulation

Disadvantages of mutual funds

Mutual funds have disadvantages as well, which include:


Less control over timing of recognition of gains and losses

Less predictable income

No opportunity to customize


Mutual Funds are becoming a very popular form of investment characterized by many

advantages that they share with other forms of investments and what they possess

uniquely themselves. The primary objectives of an investment proposal would fit into one

or combination of the two broad categories, i.e., Income and Capital gains. How mutual

fund is expected to be over and above an individual in achieving the two said objectives,

is what attracts investors toopt for mutual funds. Mutual fund route offers several

important advantages.
Diversification: A proven principle of sound investment is that of diversification, which

is the idea of not putting all your eggs in one basket. By investing in many companies the

mutual funds can protect themselves from unexpected drop in values of some shares. The

small investors can achieve wide diversification on his own because of many reasons,

mainly funds at his disposal. Mutual funds on the other hand, pool funds of lakhs of

investors and thus can participate in a large basket of shares of many different companies.

Majority of people consider diversification as the major strength of mutual funds.

Expertise Supervision: Making investments is not a full time assignment of investors. So

they hardly have a professional attitude towards their investment. When investors buy

mutual fund scheme, an essential benefit one acquires is expert management of the

money he puts in the fund. The professional fund managers who supervise funds

portfolio take desirable decisions viz., what scrips are to be bought, what investments are

to be sold and more appropriate decision as to timings of such buy and sell. They have

extensive research facilities at their disposal, can spend full time to investigate and can

give the fund a constant supervision. The performance of mutual fund schemes, of

course, depends on the quality of fund managers employed.

Liquidity of Investment: A distinct advantage of a mutual fund over other investments is

that there is always a market for its unit/ shares. Moreover, Securities and Exchange

Board of India (SEBI) requires the mutual funds in India have to ensure liquidity. Mutual

funds units can either be sold in the share market as SEBI has made it obligatory for

closed-ended schemes to list themselves on stock exchanges. For open-ended schemes

investors can always approach the fund for repurchase at net asset value (NAV) of the
scheme. Such repurchase price and NAV is advertised in newspaper for the convenience

of investors.

Reduced risks: Risk in investment is as to recovery of the principal amount and as to

return on it. Mutual fund investments on both fronts provide a comfortable situation for

investors. The expert supervision, diversification and liquidity of units ensured in mutual

funds reduces the risks. Investors are no longer expected to come to grief by falling prey

to misleading and motivating headline leads and tips, if they invest in mutual funds.

Safety of Investment: Besides depending on the expert supervision of fund managers,

the legislation in a country (like SEBI in India) also provides for the safety of

investments. Mutual funds have to broadly follow the laid down provisions for their

regulations, SEBI acts as a watchdog and attempts whole heatedly to safeguard investors


Tax Shelter: Depending on the scheme of mutual funds, tax shelter is also available. As

per the Union Budget-2003, income earned through dividends from mutual funds is

100% tax free at the hands of the investors.

Minimize Operating Costs: Mutual funds having large invisible funds at their disposal

avail economies of scale. The brokerage fee or trading commission may be reduced

substantially. The reduced operating costs obviously increase the income available for

investors. Investing in securities through mutual funds has many advantages like option
to reinvest dividends, strong possibility of capital appreciation, regular returns, etc.

Mutual funds are also relevant in national interest. The test of their economic efficiency

as financial intermediary lies in the extent to which they are able to mobilize additional

savings and channeling to more productive sectors of the economy.


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.

Professional Management

Instead of making decisions based on gut-feel or what one has heard from others, when

an investor buys into a mutual fund, he simply leaves his investments in the expert hands

of Professional fund managers, who invest this money on the basis of minute analysis and

astute investment strategies. With their skill and experience at work, ones money ends

up in the relevant assets.


It is a well known fact that one way of ensuring safe investments is to spread them out

over various instruments, securities, and locations and so on.

Mutual funds, by virtue of their structure, offer investors precisely this benefit of
diversification. This diversification reduces the risk because seldom do all stocks decline

at the same time and in the same proportion.

Convenient Administration

Investing in a mutual fund reduces paperwork and helps you avoid many problems such

as bad deliveries, delayed payments and follow up with brokers and companies. Mutual

fund saves your time and makes investing easy and convenient.

Return Potential

Returns in the mutual funds are generally better than any other option in any other avenue

over a reasonable period of time. People can pick their investment horizon and stay put in

the chosen fund for the duration. Though they are affected by the interest rate risk in

general, the returns generated are more as they pick securities with different duration that

have different yields and so are able to increase the overall returns from the portfolio.

Low Costs:

Mutual Funds offer a relatively less expensive way to invest when compared to other

avenues such as capital market operations. The fee in terms of brokerages, custodial fees

and other management fees are substantially lower than other options and are directly

linked to the performance of the scheme.


Investment in a mutual fund is very liquid. An investor can liquidate the investment, by

selling the units to the fund if open end, or selling them in the market if the fund is closed

end and collect funds at the end of a period specified by the mutual fund or the stock


Investors get regular information about the value of his investment in addition to

disclosure on the specific investment made by a scheme and the proportion invested in

each class of assets and the fund managers investment strategy and outlook.


Mutual fund offering multiple schemes allows investors to switch between various

schemes. This flexibility gives the investor a convenient way to change the mix of his

portfolio over time.


Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual

fund because of its large corpus allows even a small investor to take the benefit of its


Choice of Schemes

Mutual fund offers a tremendous variety of schemes. This variety is beneficial in two


It offers different types of schemes to investors with different needs and risk


It offers an opportunity to an investor to invest sums across a variety of schemes.

Well Regulated

All Mutual Funds are registered with SEBI, and SEBI acts a watchdog, so the Mutual

Funds are well regulated. Securities Exchange Board of India (SEBI) 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.


The Risk Return Trade-Off

The most important relationship to understand is the risk-return trade-off. Higher the

risk greater the returns/loss and lower the risk lesser the returns/loss.

Hence, it is up to the investor to decide how much risk he is willing to take. In order to do

this one must first be aware of the different types of risks involved with his investment


Political/ government Policy Risk

Changes in government policy and political decision especially with regard to the tax

benefits may impact the business prospects of the companies leading to an impact on the

investments made by the fund. They can create a favorable environment for investment or

vice-versa. Therefore, stable monetary and fiscal policies are crucial to sustain a

propitious investment environment.

Liquidity Risk

Liquidity risk arises when it becomes difficult to sell the securities that one has
purchased. Liquidity Risk can be partly mitigated by diversification, staggering of

maturities as well as internal risk controls that lean towards purchase of liquid securities.

Effect of Loss of Key Professionals and Inability to Adapt

An industries' key asset is often the personnel who run the business i.e.

intellectual properties of the key employees of the respective companies. Given the ever-

changing complexion of few industries and the high obsolescence levels, availability of

qualified, trained and motivated personnel is very critical for the success of industries in

few sectors. It is, therefore, necessary to attract key personnel and also to retain them to

meet the changing environment and challenges the sector offers. Failure or inability to

attract/retain such qualified key personnel may impact the prospects of the companies in

the particular sector in which the fund invests.

Exchange Risks

A number of companies generate revenues in foreign currencies and may have

investments or expenses also denominated in foreign currencies. Changes in exchange

rates may, therefore, have a positive or negative impact on companies which in turn

would have an effect on the investment of the fund.

Investment Risk

The sectoral fund schemes, investments will be predominantly in equities of select

companies in the particular sectors. Accordingly, the NAV of the schemes are linked to

the equity performance of such companies and may be more volatile than a more

diversified portfolio of equities.

Risk Tolerance

Typically, risk is defined as short-term price variability. But on a long-term basis,

risk is the possibility that ones accumulated real capital will be insufficient to meet his

financial goals. Individual tolerance for risk varies, creating a distinct "investment

personality" for each investor. Some investors can accept short-term volatility with ease,

others with near panic. So whether ones investment temperament is conservative,

moderate or aggressive, one needs to focus on how comfortable or uncomfortable he will

be as the value of his investment moves up or down.



What a promoter to a company, a sponsor is to a mutual fund. Sponsor

is defined under SEBI Regulations as any person who is acting alone or in combination

with another body corporate, establishes a mutual fund. The sponsor initiates the idea to

set up a mutual fund. It could be registered company, scheduled bank or financial


In order to run a mutual fund in India, the sponsor has to obtain a license from SEBI. For

this, a sponsor has to satisfy certain conditions, such as on capital track record (at least 5

years operation in financial services), default-free dealings and a general reputation of


Trustees are like internal regulators in a mutual fund, and their job is to protect the

interest of the unit holders. Trustees are appointed by sponsors, and can either be

individuals or corporate bodies. In order to ensure they are impartial and fair, SEBI rules

mandate that at least two third of the trustees be independent i.e. not having any

association with the sponsor.

Trustees float and market schemes and secure necessary approvals. They check if the

asset management companys investments are within defined limits and whether the

funds assets are protected. Trustees can be held accountable for financial irregularities in

the mutual fund.

Asset Management Company (AMC):

An Asset Management Company is the entity formed by the sponsor to run a mutual

fund. Its the AMC that employs fund managers and analysts, and other personnel. Its

the AMC that handles all operational matters of a mutual fund-from launching schemes

to managing them to interacting with investors. It also exercises due diligence on

investments, and submits quarterly reports to the trustees. The people in the AMC who

should matter the most to you are those who take investment decisions. There is the head

of the fund house, generally referred to as Chief Executive Officer (CEO). Under him

comes the Chief Investment Officer (CIO), who shapes the funds investment philosophy,

and fund managers, who manages its schemes. A team of analysts, who track market,

sectors and companies, assists them.

4. Custodian:

A custodian handles the investment back office of a mutual fund. Its responsibilities

include receipt and delivery of securities, collecting income-distributing dividends,

segregating assets and settlement between schemes. The sponsor of a mutual fund cannot

act as a custodian to the mutual fund. This condition, formulated in the interest of the

investors, ensure that the assets of a mutual fund are not in the hands of its sponsors.

5. Registrar:

Registrar also known as Transfer Agents handles all investor related services. This

includes issuing and redeeming units, sending fact sheets and annual reports. Some fund

houses handle such functions in house, others outsource it to registrar. Most mutual

funds, in addition to registrar, also have investor service centers of their own in some


Categories Of Mutual Fund:

Mutual funds

Dividend yield fund


Diversified Fund

Debt oriented


Select funds

Income Funds


Gilt Funds

Liquid Fund

Equity oriented fund

Thematic Funds

Mutual funds come in all shapes and sizes there are three basic types of such funds:

1. Growth Funds

2. Income Funds

3. Balanced Funds

Growth/Equity oriented scheme: -

These schemes seek to invest a majority of their funds in equities and a small portion in

money market instruments. These funds seek to provide growth of capital with secondary

emphasis on dividend. Such schemes have the potential to deliver superior returns over
the long term because the market boom and depression phases get evaded out over a

longer time span. However, because they invest in equities, these schemes are exposed to

fluctuations in value especially in the short-term.

Equity schemes are hence not suitable for investors seeking regular income or needing to

use their investments in the short-term. They are ideal for investors who have a long-term

investment horizon.

(b). Income/Debt Oriented Scheme: -

The aim of the income fund is to provide regular and steady income to investors. Such

schemes generally invest in fixed income securities such as bonds, corporate, debentures,

government securities and money market instruments. Such funds are less risky

compared to equity schemes. These funds are not affected because of fluctuation in

equity markets. However, opportunities of capital appreciations are also limited in such

funds. The NAV of such funds are affected because of change in interest rates in the

country. If the interest rates fall, NAV of such funds are likely to increase in the short run

and vice versa. However, long-term investors may not bother about these fluctuations

(c). Balanced Scheme: -

These are also known, as Hybrid Schemes. These balanced schemes aim to provide both

growth and regular income. Such schemes periodically distribute a part of their earning

and invest both in shares and fixed income securities in the proportion indicated in their

offer documents. In a rising stock market, the NAV of these schemes may not normally

keep pace, or fall equally when the market falls.

By investing in a mix of this nature, balanced schemes seek to attain the objective of

income and moderate capital appreciation and are ideal for investors with a conservative,

long-term orientation.

2.According to structure

Open-ended Scheme

An open-ended fund or scheme is one that is available for subscription and repurchase on

a continuous basis. Investors can conveniently buy and sell units at Net Asset Value

(NAV) Related prices, which are declared on a daily basis. Such schemes thus offer very

high liquidity to investors and are becoming increasingly popular in India.

These schemes have unlimited capitalization, open-ended schemes do not have a fixed

maturity i.e. there is no cap on the amount you can buy from the fund and the unit capital

can keep growing. These funds are not generally listed on any exchange.

Open-ended funds are bringing in a revival of the mutual fund industry owing to

increased liquidity, transparency and performance in the new open-ended funds promoted

by the private sector and foreign players.

Closeended Scheme

Schemes that have a stipulated maturity period e.g. 5-7 years, limited capitalization and

the units are listed on the stock exchange are called close ended scheme. The fund is

open for subscription only during a specified period at the time of launch of the scheme.
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 the units are


Interval scheme

Interval funds combine the features of open-ended and close ended-schemes. They may

be traded on the stock exchanges or may be open for sale or redemption during pre-

determined intervals at NAV based prices.

Unit investment trusts

Unit investment trusts or UITs issue shares to the public only once, when they are

created. Investors can redeem shares directly with the fund (as with an open-end fund;

they may also be able to sell their shares in the market. Unit investment trusts do not have

a professional investment manager. Their portfolio of securities is established at the

creation of the UIT and does not change. UITs generally have a limited life span,

established at creation.

Exchange-traded funds

A relatively recent innovation, the exchange-traded fund or ETF is often structured as an

open-end investment company, though ETFs may also be structured as unit investment

trusts, partnerships, investments trust, grantor trusts or bonds (as an exchange-traded

note). ETFs combine characteristics of both closed-end funds and open-end funds. Like

closed-end funds, ETFs are traded throughout the day on a stock exchange at a price

determined by the market. However, as with open-end funds, investors normally receive

a price that is close to net asset value. To keep the market price close to net asset value,

ETFs issue and redeem large blocks of their shares with institutional investors.
Investments and classification

Mutual funds may invest in many kinds of securities. The types of securities that a

particular fund may invest in are set forth in the fund's prospectus, which describes the

fund's investment objective, investment approach and permitted investments. The

investment objective describes the type of income that the fund seeks. For example, a

"capital appreciation" fund generally looks to earn most of its returns from increases

the prices of the securities it holds, rather than from dividend or interest income. The

investment approach describes the criteria that the fund manager uses to select

investments for the fund.

Money market funds

Money market funds invest in money market instruments, which are fixed income

securities with a very short time to maturity and high credit quality. Investors often use

money market funds as a substitute for bank savings accounts, though money market

funds are not government insured, unlike bank savings accounts.

Money market funds strive to maintain a $1.00 per share net asset value, meaning that

investors earn interest income from the fund but do not experience capital gains or losses.

If a fund fails to maintain that $1.00 per share because its securities have declined in

value, it is said to "break the buck". Only two money market funds have ever broken

buck: Community Banker's U.S. Government Money Market Fund in 1994 and the

Reserve Primary Fund in 2008. At the end of 2009, money market funds accounted for

30% of the assets in all U.S. mutual funds.

Bond funds

Bond funds invest in fixed income securities. Bond funds can be sub classified according

to the specific types of bonds owned (such as high-yield or junk bonds, investment-grade

corporate bonds, government bonds or municipal bonds) or by the maturity of the bonds

held (short-, intermediate- or long-term). Bond funds may invest in primarily U.S.

securities (domestic or U.S. funds), in both U.S. and foreign securities (global or world

funds), or primarily foreign securities (international funds). At the end of 2009, bond

funds accounted for 20% of the assets in all U.S. mutual funds.

Stock or equity funds

Stock or equity funds invest in common stocks. Stock funds may invest in primarily U.S.

securities (domestic or U.S. funds), in both U.S. and foreign securities (global or world

funds), or primarily foreign securities (international funds). They may focus on a specific

industry or sector. A stock fund may be sub classified along two dimensions: (1) market

capitalization and (2) investment style (i.e., growth vs. blend/core vs. value).

Market capitalization or market cap is the value of a company's stock and equals the

number of shares outstanding times the market price of the stock. Market capitalizations

are divided into the following categories:

Micro cap

Small cap

Mid cap

Large cap

While the specific definitions of each category vary with market conditions, large cap

stocks generally have market capitalizations of at least $10 billion, small cap stocks have
market capitalizations below $2 billion, and micro cap stocks have market capitalizations

below $300 million. Funds are also classified in these categories based on the market

caps of the stocks that it holds.

Stock funds are also sub-classified according to their investment style: growth, value or

blend (or core). Growth funds seek to invest in stocks of fast-growing companies. Value

funds seek to invest in stocks that appear cheaply priced. Blend funds are not biased

toward either growth or value. At the end of 2009, stock funds accounted for 45% of the

assets in all U.S. mutual funds.

Hybrid funds

Hybrid funds invest in both bonds and stocks or in convertible securities. Balanced funds,

asset allocation funds, target date or target risk funds and lifecycle or lifestyle funds are

all types of hybrid funds.

Hybrid funds may be structured as funds of funds, meaning that they invest by buying

shares in other mutual funds that invest in securities. Most fund of funds invest in

affiliated funds, although some invest in unaffiliated funds (meaning those managed by

other fund sponsors) or in a combination of the two. At the end of 2009, hybrid funds

accounted for 6% of the assets in all U.S. mutual funds.

MISHRA, ET AL., (2002) measured mutual fund performance using lower partial. In

this paper, measures of evaluating portfolio performance based on lower partial moment

are developed. Risk from the lower partial moment is measured by taking into account

only those stated in which return is below a pre-specified target rate like risk-free rate.
BELLO (2005) matched a sample of socially responsible stock mutual fund matched to

randomly select conventional fund of similar net assets to investigate differences in

characteristics of assets held, degree of portfolio diversification and variable effects of

diversification on investment performance. The studies have found that socially

responsible fund do not differ significantly from conventional funds in terms of any of

these attributes.

MICHAEL JENSEN C. (1945-1964) evaluates a risk adjustment measure of portfolio

perception that estimates how much a managers forecasting ability contributes to the

funds returns. The measure to estimate the predictive ability of 115 mutual fund

managers in the period 1945-1964 that is their ability to earn returns which are higher

than those we would expect given the level of risk of each of the portfolio. The evidence

on mutual fund indicates not only that these 115 mutual funds were on average not able

to predict security price well enough to outperform a buy-the- market and hold policy, but

also that also there is very little evidence that any individual fund was able to do

significantly better than that which we expected from mere random chance.

DONALD (1974) examined the relationship between the stated fund objectives and risk-

return attributes and concludes that on an average, the fund managers appeared to keep

their portfolios within risk and ensured superior returns, but they offset by expense and

load charges.

MEHRA K.D (2004) examined the problem of mutual fund in our country. The private

sector mutual fund have benefited the investors by providing them more option & better

service the present state of mutual fund, their performance , profitability and decline of
NAVs below issue price have been causing concern to the investors. The mutual have

failed to provide safety, liquidity and return on investment to the small investors.

SHARPE, WILLIAM F. (1966) suggested a measure for the evaluation of portfolio

performance. Drawing on results obtained in the field of portfolio analysis, economist

jack L. trey nor has suggested a new predictor of mutual fund performance, one that

differs from virtually all those used previously by incorporating the volatility of a funds

return in a simple yet meaningful manner.

CHANDEL & VERMA (2005) evaluate the performance of mutual fund on the basis of

weekly returns compared with risk free security returns & BSE index. The active

involvement in mutual fund in economic development can be seen by their dominant

presence in the money and capital market. The study predicts that portfolio managers

done fairly a good job in generating positive returns. Thus overall good performance of

sector specific fund is a good sign of development in new era in capital market. So the

future of mutual fund in India is bright because it meets investors need perfectly.

SHAHABUDDIN (2007) Study the Customer Perception towards Mutual Fund the

MF industry in India began in 1963 with the formation of UTI. The Indian mutual fund

has seen the launch of various new & innovative schemes over the last few years. Funds

worth Rs.1.4 trillion were raised through NFOas against Rs. 705.83 bln in 2006-07 MF

are now among the top 4 investment options. Out of 321 million paid workers 5.3 min

people have invested in MFS (1.65% of earning population) middle class income group

invest more in MFs as compare to higher income & low income group. Product

differentiation and quality standards of mutual fund are the key enables growth potential

of mutual fund industry is very high.

CUTHBERTSON, OSULLIVAN NIALL (NOV.2004) concluded that some of the top

ranked equity income funds show genuine stock picking skills where as such ability is

generally not found among small stock funds and all companys funds. He also found

that positive performance amongst on shore funds is due to genuine skills where as for

off shore funds, positive performance is attributable to luck.

Carlos F.Alves, Victor Mendes ( March 2005) concluded that mutual funds'

clients do have asymmetric performance reactions. Such behaviour gives the fund

manager the opportunity to optimize the funds own interests. Using a unique database

from a financial system wherein commercial interests, investment banking and portfolio

management are concentrated in the same banking group, we show that mutual funds

tend to exhibit biased portfolios, i.e., financial assets of the group's parent company

outweigh other financial asset holdings. This cannot be explained by performance, risk or

securities' characteristics, and is consistent with the hypothesis of the existence of self-

interest on mutual fund management.


MUTUAL FUND in financial sector and various financial instruments is available in

money market. Out of various options mutual fund is also one of the instruments. Since

last decade so many Indians as well as foreign companies have entered in the business of

mutual fund in the market there are so many schemes of mutual fund available to

investors & also give high return to the investors. The analysis identified three

meaningful variables: return, services & risk levels which make the mutual fund most
preferable option for investment. The study found that services of mutual fund are

excellent and due to this reason mutual funds have become very popular among the


SINGH JASPAL (2004) study the perception of small investors, who are the most

exploited lot in the Indian capital market. The study also examined, whether the claim of

mutual fund as the media for diversified portfolio of securities so as to earn better return

is justified or not by measuring the most preferred mutual fund. Result predict that

majority of investors preferred to invest in mutual fund. As regards choice of a mutual

fund for investment people are moving away from UTI and prefer to invest in private

sector mutual funds.

AVRAMOY, WERMERS (2005) evaluate the strategies that invest in no-load, open-

ended U.S. domestic equity mutual fund, incorporate predictability in:(i) manager skills,

(ii) fund risk-loading and (iii) bench mark returns. These strategies outperform their

bench marks by 2-4% per year through their ability to time industries over the business

cycle. Moreover, they choose individual funds that out perform their industry bench

marks to achieve an additional 3-6% per year. Overall, the finding and the result indicate

that industries are important in locating outperforming mutual funds, and that active

management adds much more value than documented by prior studies.

SAPAR RAO, MADAYA(2002) evaluates the perception of Indian mutual funds in a

bear market is carried out through relative performance index, risk- return analysis etc..

The data used in monthly closing NAVs. Mean monthly return and risk of the mutual

fund schemes during the period were 0.59% and 7.10% respectively, compared to similar

statistics of 0.14% and 8.75% for market portfolio. The result of performance measures

suggest that most of the mutual fund schemes expected return based on both premium for
systematic risk and total risk.


interesting choices of the investor including the reason behind investing in mutual funds

and the investors knowledge about mutual funds. Its objective was to measure the

investor sensitivity to manage the portfolio to achieve objective like tax incentive, capital

gain, time horizon of investment, risk and return expectations etc.

SHOVEN, DICKSON AND SIALM evaluate the investor holding mutual funds in

taxable accounts face a classic externality. The after-tax return of the investment depends

on the behaviour of other. In particular, redemption may force the mutual funds sell some

of its equity positions in order to pay off the liquidating investors. As a result, it may be

force to distribute taxable capital gain to its shareholder and this paper simulation show

that these externalities are important determinate of the after-tax performance of equity

mutual funds.

RANGANATHAN KAVITHA (OCT. 2004) Evaluate the salary of persons savings are

most often deposited in Mutual Funds. Because by pooling together a hedge aggregation

of individual saving and investing them, using the professional judgement of fund

manager, once spread risk, take advantage of volume buying and scientific data analysis,

expertise and so on.

PANWAR AND MADHUMATHI study the public sector sponsored, private sector

Indian sponsored and private sector foreign sponsored Mutual Fund do not differ

statistically in terms of portfolio characteristics such as net assets, common stock %,

market capitalization, holding, top 10%.

SINGHJASPAL, CHANDER SUBHASH (NOV. 2003) study the belonging to

salaried and retired categories and those in the age group of more than 60 years gave

maximum weight age to past record of the organization before deciding about

investment in mutual Funds. The analysis of option expected in Mutual Fund reveals that

the investors belonging to business category have given maximum weight age to the

option of repurchase of the units by the fund followed by easy transferability option.

SINGH AND CHANDER SUBHASH (DEC. 2004) examine the investors belonging to

salaried and professional categories and in the age group of 20-35 years prefers day-to-

day disclosure of net asset value by the funds. He also said that investors perceives

Mutual Funds to be better investment avenue than others because of the expectation of

receiving higher return than other investment instruments along with the feeling of they

being useful for small investors.


financial neutral networks must be trained to learn the data and generalize, while being

prevented from overtraining and memorizing the data. Also, due to their large number of

inputs, network pruning is important to remove redundant input nodes and speed up

training and recall. It is found that neutral network consisting of multilayer perception

models with logistic activation functions predict daily Mutual Fund returns better than the

traditional ordinary least squares and general linear regression models.

CHANDER RAMESH (DEC. 2000) concluded that open-end mutual funds have

outperformed close-end schemes in term of superior returns. The private sector sponsored

funds have, on other hand, experienced negative performance. In relation to investment

objective, income funds have outsmarted both growth and balanced funds. On the
contrary, the sampled funds have exhibited poor performance and in terms of time

weighted return.

BAGEHOT WALTER ( MARCH-APRIL 1971) examines the difference between

market gains and trading gains helps and explain why they continue trading even though

it reason that if trading based on random selection is as likely to prove profitable as not,

trading based on any information, whatever will result in performance better than neutral.

The key to the fallacy in their reasoning is the market maker, who must impose a spread

in order to survive rarely improves their performance.

IPPOLITO A. RICHARD (FEB 1989) Study the Efficiency with costly information

and study of Mutual Fund Performance ,1965-1984.If information is costly to collect and

implement ,then it is efficient for trades by informed investors to occur at prices

sufficiently different from full information prices to compensate them for the cost of

becoming informed. This notion is tested by evaluating investment performance in the

mutual fund industry over a 20 year period. The study finds evidence that is consistent

with optimal trading in efficient market. Risk adjusted return in the mutual fund industry

net of fees and expenses are comparable to returns available in index funds and portfolio

turnover and management fees are unrelated to fund performance.

WALTER HARRY SEP 1993) evaluate the perception of opened mutual fund and

Open end equity funds provide a diversified equity positions with little direct cost to

investors for liquidity .This study documents a statically significant indirect cost in the

form of a negative relation between a funds abnormal return and investor flows

.Controlling for this indirect. Cost of liquidity changes the average funds abnormal return

(net of expenses) from a statistically significant -1.6% per year.

KON J.STANLEY (JULY 1983) evaluate the Time Performance of Mutual Fund

Managers and this study proposes an empirical methodology for measuring the Market-

Timing Performance of an investment manager and provides .Evidence for a sample of

mutual funds. The results indicate that at the individual fund level there is evidence of

significant superior timing ability and performance. However, the multivariate tests were

not inconsistent with the efficient market hypothesis. That is, fund Manager as a group

have no special information of expectations on the returns of the market portfolio.

CUMBY E.ROBERT AND GLEN D. JACK (JUNE 1990) examine the performance

of mutual fund with the sample of fifteen U.S based internationally diversified mutual

funds between 1982 and 1988. Two performance measures are used, the Jensen measure

and the positive period weighting measure proposed by Grinblatt and Titman. We find no

evidence that the funds , either individually or as a whole, provide investor with

performance that surpass that of a broad, international equity index over this sample


RAJU VENKATAPATHI (SEP. 2001) evaluate the various factors of working capital

management in mutual fund and their impact on liquidity, short-term solvency and

profitability of the units. He also makes comparison between medium sized and large

sized non-banking finance companies in his study.


liquidity considerations that affect the portfolio choice of equity Mutual Fund and how

portfolio liquidity can be used as parsimonious proxy for liquidity needs. He also said

that the funds that have largest liquidity needs do not display a significantly different
performance from other funds

COMER GEORGE(JULY 2007) evaluate the Mutual Fund data providers typically

focus on the funds asset allocation strategy and provides limited information particularly

through their classification schemes, about investment styles followed by the funds. His

study focuses on equity and fixed income investing styles of these funds.

History of Mutual funds:

Mutual funds have come a long way in the Indian capital market, since 1964. The years

and with each passing month, there is an increasing amount of choice for investors. The

development of the Indian capital market too has helped this. It has made investors

realize that in many cases, it makes more sense to go through a mutual fund rather than

invest directly into different avenues.

However, it has been a tough time for the industry over the last decade as there have been

several hiccups on the way. A fall in the equity markets compounded matters as equity

funds as a class of investment went out of the publics gaze. The comeback has been slow

but steady. Now with the equity markets in full bloom, the equity oriented funds are

merry while the debt funds are down in the dumps.

There are still several issues that the mutual fund industry faces and which have cast

doubt as to whether the small investor is losing out at the cost of the bigger players.

Accepting applications after the cut-off time is one such issue, which has hit the

headlines in recent times; while solutions to this are being implemented it will require
some cleaning up in the industry for investors to regain confidence.

Before that however, we will take a small step back into history and trace the evolution of

the mutual fund industry in the country. The Indian mutual fund industry is as old as four

decades, but its growth and awareness reached the present levels only during the last five

years. Increased focus of the private sector on new distribution channels and hightech

servicing has contributed immensely towards this. The mutual fund industry in India

started in 1963 with the formation of Unit Trust of India (UTI), at the initiative of the

Government of India and Reserve Bank of India (RBI).

Mutual funds first became popular in the United States in the 1920s. The first funds were

of the closed-end type with shares that trade on an exchange. The first open-end mutual

fund, the Massachusetts Investors Trust was established on March 21, 1924. It is now

part of the MFS family of funds. This was the first fund with redeemable shares.

However, closed-end funds remained more popular than open-end funds throughout the

1920s. By 1929, open-end funds accounted for only 5% of the industry's $27 billion in

total assets.

After the stock market crash of 1929, Congress passed a series of acts regulating the

securities markets in general and mutual funds in particular. The Securities Act of 1933

requires that all investments sold to the public, including mutual funds, be registered with

the Securities and Exchange Commission (SEC) and that they provide prospective

investors with a prospectus that discloses essential facts about the investment. The

Securities and Exchange Act of 1934 requires that issuers of securities, including mutual
funds, report regularly to their investors; this act also created the Securities and Exchange


which is the principal regulator of mutual funds. The Revenue Act of 1936 established

guidelines for the taxation of mutual funds, while the Investment Company Act of 1940

governs their structure.

When confidence in the stock market returned in the 1950s, the mutual fund industry

began to grow again. By 1970, there were approximately 360 funds with $48 billion in

assets. The introduction of money market funds in the high interest rate environment of

the late 1970s boosted industry growth dramatically. The first retail index fund, First

Index Investment Trust, was formed in 1976 by The Vanguard Group, headed by John

Bogle; it is now called the Vanguard 500 Index Fund and is one of the world's largest

mutual funds, with more than $100 billion in assets as of January 31, 2011.

Fund industry growth continued into the 1980s and 1990s, as a result of three factors: a

bull market for both stocks and bonds, new product introductions (including tax-exempt

bond, sector, international and target date funds) and wider distribution of fund shares. [8]

Among the new distribution channels were retirement plans. Mutual funds are now the

preferred investment option in certain types of fast-growing retirement plans, specifically

in 401(k) and other defined contribution plans and in individual retirement accounts

(IRAs), all of which surged in popularity in the 1980s. Total mutual fund assets fell in

2008 as a result of the credit crisis of 2008.

At the end of December 2009, there were 7,691 mutual funds in the United States with

combined assets of $11.121 trillion, according to the Investment Company Institute (ICI),

a national trade association of investment companies in the United States. The ICI reports
that worldwide mutual fund assets were $22.964 trillion on the same date.

The mutual funds in India can be broadly divided into four distinct


First Phase (1964-87)

Second Phase (1987-93)

Third Phase (1993-2003)

Fourth Phase (since 2003)

First Phase (1964-1987)

In 1963, an Act of Parliament established Unit Trust of India. Operationally Unit Trust of

India was set up by the Reserve Bank of India to serve as an investment vehicle for small

investors. In 1964, Unit Trust of India was delinked from RBI and launched its first

scheme-the unit64 scheme. At the end of 1988, UTI had Rs. 6700 crores of assets under


Second phase (1987-1993)

(Entry of Public Sector Funds)

1987 marked the entry of non-UTI, public sector mutual funds set up by the public sector

banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation

of India (GIC). State Bank of India (SBI) mutual fund was the first non-UTI mutual fund

established in June 1987. From four players in 1985 the number increased to eight in

LIC established its mutual funds in 1989 while GIC had set up its mutual fund in 1990.

At the end of 1993, the mutual fund industry had assets under management of Rs.4700


Third Phase (1993-2003)

(Entry of Private Sector Funds)

A new era in mutual fund industry began with the permission granted for the entry of

private sector funds in1993, giving the Indian investors a broader choice of funds and

increasing competition for the existing public sector funds. Kothari Pioneer was the first

private sector fund set up in July 1993. Also, 1993 was the year in which the first mutual

fund Regulation came into being, under which all mutual funds, except UTI were to be

registered and governed. The 1993 SEBI (Mutual Fund) Regulations were substituted by

a more comprehensive and revised mutual fund Regulations in 1996.At the end of 2003,

there were 33 mutual funds with total assets of Rs.121805 crores. The UTI with Rs.44545

crores of assets under management was ahead of other mutual funds.

Fourth Phase (since February 2003)

In February 2003, following the repeal of the UTI Act 1963, UTI was revamped and

divided into two entities: UTI-I and UTI-II.

UTI-I or Specified Undertaking of the UTI, having Government guarantee, consists of all

assured return schemes.

The UTI-II which was having Rs.76000 crores of assets under management in March

2000, with its division into two entities has increased its assets enormously.

At the end of September 2004, there were 29 funds, which manage assets of

Rs.153108 crores under 421 schemes



Bajaj capital is a financial service company engaged in the business of merchant banking,

Resources mobilization, investment advisory services, buying and selling of money

market investment and corporate client. Bajaj co. is a Securities and Exchange Board of

India approved merchant banker/ investment advisor and OTC Exchange Of India.

Bajaj capital became the first company to set up investment centers all over India for

this purpose. Bajaj capital has over 100 offices in almost all important India cities and has

a team of around 1500 employees nationwide.

Investment advisory:

Bajaj capital is serving 700000 retail investors all over India including 12000

NRI besides 3000 institutional

Bajaj capital has a Wealth Management Group exclusively to High Net

worth Individuals who seek special attention.

Bajaj capital is widely regarded as one of Indias largest distributors of mutual fund. We

distribute over 2000 schemes of all leading and selected mutual fund.


Religare, a Ranbaxy promoter group company, is one of Indias largest and fastest

growing integrated financial services institutions. The company offers a large and diverse

bouquet of services ranging from equities, commodities, insurance broking, to wealth

advisory, portfolio management services, personal finance services, Investment banking

and institutional broking services. The services are broadly clubbed across three key

business verticals- Retail, Wealth management and the Institutional spectrum.

Religare Enterprises Limited is the holding company for all its businesses, structured and

being operated through various subsidiaries.

Religares retail network spreads across the length and breadth of the country with its

presence through more than 900 locations across more than 300 cities and towns. Having

spread itself fairly well across the country and with the promise of not resting on its

laurels, it has also aggressively started eyeing global geographies.

Recently, Religare has also partnered with AEGON, one of the largest insurance and

pension companies globally, to offer Life Insurance and Mutual Fund products in India.

The venture shall combine the international expertise of AEGON with the distribution

strength of Religare.


India Info line limited. Is listed on both the leading Stock Exchange In India and also a

member of both the exchange. It is engaged in the business of equities broking, wealth

advisory services and portfolio management services. It offers broking services in the

cash and derivative segment of the NSE as well as cash segment of the BSE. It is

registered with NSDL as well as CDSL as a depository participant, providing a one step

solution for client trading in the equities market.

A SEBI authorized portfolio manager; it offers portfolio management services to clients.

These services are offered to client as different schemes, which are based on differing

investment strategies made to reflect the varied risk returns preferences to client.

The company is based in Mumbai, India. India info line distribution co, ltd. Operates as a

subsidiary of India Info line ltd.


Sharkhan, one of India leading brokerage house, is the retail arm of SSKI. With over 510

share shops in 170 cities, Indias premier online trading portal , our

customers enjoy multi-channel access to the stock markets .Sharekhan related services

include trade execution on BSE,NSE .Derivatives, commodities ,depository services,

online trading and investment advice. Trading is available in NSE and BSE, along with website, sharekhan has around 510 offices (share shops) in 710 cities

around the country

Sharekhan has one of the best state of art web protalk providing fundamental and

statistical information across equity, mutual fund and IPOs. You can surf across 5500

companies for in depth information detail about more than 1500 mutual fund schemes

and IPO data. You can also access other market related details such as board meeting,

result announcement, FII transactions, buying/selling by mutual funds much more.


To know the relationship between mutual fund and net asset value of mutual

funds related with schemes.

To evaluate the perception of mutual funds schemes in the framework of risk and


To find out the satisfaction level of mutual fund investors.


Research Design: Descriptive Research

Research Instrument: Structured, un-disguised

Sample Method: Non-Probability Sampling

Sample Size: 50

Sampling Design: Convenience Sampling

Sources of Data

Primary Data: Structured Questionnaire

Secondary Data: Reference from distributors.

The whole study is based upon primary and secondary data. Therefore, information has

been collected from interacting with different investors and from various magazines,

journals, websites, and bulletins.


Primary Data: Primary data are generated when a particular problem and hand is

investigated by the researcher employing mail questionnaire, telephone survey, personal

interviews, observations, and experiments.


We used non-probability type of sampling.

In non-probability sampling, the chance of any particular unit in the population being

selected is unknown. Since randomness is not involved in the selection process, an

estimate of the sampling error cannot be made. But this does not mean that the findings

obtained from non-probability sampling are of questionable value. If properly conducted

their findings can be as accurate as those obtained from probability sampling.

Convenience Sampling

As the name implies, a convenience sample is one chosen purely for expedience (e.g.,

items are selected because they are easy or cheap to find and measure. While few analysts

would find credibility in conclusions from such extreme cases, the

In appropriateness of using convenience sampling to estimate universe values is not

widely recognized. The major problem with this (and other non-probability method) is

that one is unable to draw objective inference about a rigorously defined universe. In

practice, it is often found that the response given by "convenient" items in a universe

differ significantly from the responses given by universe items that are less accessible. As

a result, unless one is dealing with a known highly homogeneous universe (virtually all

items responding alike), convenience sampling should not be used to estimate universe


Sample Size

The sample size taken in the project work is 50. The area selected is Yamuna nagar and

its surrounding area. Convenience sampling method was used in this study because of the

constraints like cost and time.