Institute of Management Education: (Affiliated To Chaudhary Charan Singh University, Meerut)

INSTITUTE OF MANAGEMENT EDUCATION
(Affiliated to Chaudhary Charan Singh University, Meerut)
PROJECT REPORT ON
“Mutual Funds‖
SUBMITTED BY
CHANDERSHEKHAR
B.B.A
169389029
UNDER THE GUIDANCE OF
Institute Guide: Organization Guide:

Mr. Amit Sharma
MR. Rahul Kaushik Mr. Akshay Saxena
Institute of Management Education | Mutual Funds 1

CERTIFICATE:
This is to certify that “Chandershekhar” a student of Bachelor of Business Administration, Batch (2016-19)
of IME-INSTITUTE OF MANAGEMENT EDUCATION, Roll No. 169389029 has undertaken the
Summer Internship Project under my guidance for the Project Title “MUTUAL FUNDS MARKET”.
This Project Report is prepared in partial fulfilment for the B.B.A. course in management.
To the best of my knowledge, this research work is original and no part of this report has been submitted
by the student earlier to any other institution / university.
Date: …………………… Faculty Mentor’s Name: …………
(Signature)

DECLARATION
I Chandershekhar student of IME-INSTITUTE OF MANAGEMENT EDUCATION IV

semester student of Institute of Management Education, hereby declare that the project
entitled ―Mutual Funds‖ in Sharekhan Ltd., is submitted by me to Chaudhary Charan
Singh University, Meerut in partial fulfilment for the requirements for the award of the
degree of ― Bachelor of Business Administration (BBA). This project report is a work
prepared by me under the guidance of MR. Rahul Kaushik.
Place: Chandershekhar
Date: Bachelor of Business

Administration 6th Semester

ACKNOWLEDGEMENT
It is my privilege to have accomplished this study under the guidance of MR. Rahul
Kaushik my faculty and guide, for taking keen interest full involvement, dynamic motivation
and valuable guidance extended to me throughout the project.
I express my sincerest gratitude and thanks to honourable Mr. Akshay Saxena and Mr.
Amit Sharma for whose kindness I had the precious opportunity of attaining Training at
Sharekhan Ltd., under this brilliant untiring guidance I could complete the Project being
undertaken on ―Mutual Funds‖ successfully in time. His meticulous attention and valuable
suggestions have helped me in simplifying the problem in the work.
I would also like to thank the overwhelming support of all the people who gave me
an opportunity to learn and gain knowledge about the various aspects of the industry.
I am indebted to all staff members of Sharekhan Ltd. for their valuable support and
cooperation during the entire tenure of this project.
Not to forget, all the faculties of Institute of Management Education, who have kept
my spirits surging and helped me in delivering my best and made me reach up to this
platform.

INDEX
PAGE
SRNO. TOPICS NO
1 Industry Profile 7-16
2 Introduction Of Mutual Fund 17-22

3 Why Select Mutual Fund? 22-24
4 Advantages & Disadvantages Of Mutual Funds 25-28
5 Types Of Mutual Funds Schemes In India 29-35
6 Selection Parameters For Mutual Fund 35-37

8 Mutual Fund Distribution Channels 37
9 Marketing Strategies for Mutual Funds 38-40
10 Working Of Mutual Funds 40
11 Mutual Funds In India 41
12 Mutual Fund Companies In India 42-49
13 Mutual funds and traditional investment comparison 49-51

14 Research Methodology 52-53
15 Conclusion 54
15 Data Analysis & Interpretation 57-59
16 Findings 59-63
17 Mutual Funds SWOT Analysis 64-67
18 Bibliography 68
ExecutiveSummary
The Summer Internship Project at ― Sharekhan Ltd. has given an exposure into the
investment scenario in India. The project while working at ― Sharekhan Ltd. includes
advisory services i.e. educating the existing and potential investors about stock market as an
alternative source to investment. This involves catering to the queries of the investors about
the concept of stock market, the various options that an investor can invest his money into,
funds management of investors.
Analysing the investor’s behaviour includes understanding the concerns a person has
towards Stock Market, his stages in life and wealth cycle, the effect of the investments made
by the peer groups, effect of the profession he/she is in, education qualification, importance
of tax benefits, the most preferred saving tool etc. and this all is analysed with the help of a
schedule prepared.
Understanding the significance of Mutual Funds market, types of instruments present

in the Indian Stock Market such as Futures, Options and Forwards. The various techniques
used to identify the trend of the market and analysing the scrip before investing.
Through the systematic investment plan invest a specific amount for a continuous
period, at regular intervals. By doing this, the investor get the advantage of rupee cost
averaging which means that by investing the same amount at regular intervals, the average
cost per unit remains lower than the average market price.

Industry Profile
Financial services
Financial services are the economic services provided by the finance industry, which
encompasses a broad range of organizations that manage money, including credit unions,
banks, credit card companies, insurance companies, consumer finance companies, stock
brokerages, investment funds and some government sponsored enterprises.
History of Indian Stock Market

The Indian broking industry is one of the oldest trading industries that have been
around even before the establishment of BSE in 1875. BSE is the oldest stock market in
India. The history of India stock trading starts with 318 persons taking membership in Native
share and Stock Brokers Association, which we know by the name Bombay Stock Exchange
or BSE in short. In 1965, BSE got permanent recognition from the Government of India. BSE
and NSE represent themselves as synonyms of India stock market. The history of India stock
market is almost the same as the history of BSE
The regulations and reforms been laid down in the equity market has resulted in rapid
growth and development. .Basically the growth in the equity market is largely due to the
effective intermediaries. The broking houses not only act as an intermediate link for the
equity market but also for the commodity market, the foreign currency exchange market and
many more. The broking houses have also made an impact on foreign investors to invest in
India to certain extent. In the last decade, the Indian brokerage industry has undergone a
dramatic transformation. Large and fixed commissions have been replaced by wafer thin
margins, with competition driving down the brokerage fees, in some cases to a few basis
points. There have also been major changes in the way the business is conducted. The scope
of services have enhanced from being equity products to a wide range of financial services.
Financial Products
The survey also revealed that in the past couple of years, apart from trading, the firms
have started various investment value services. The sustained growth of the economy in past
couple of years has resulted in broking firms offering many diversified services related to
IPO‘s, mutual funds, company research etc.
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However, the core trading activity is still the predominant form of business, forming
90% of the firms in the sample. 67% firms are engaged in offering IPO related services. The
broking industry seems to have capitalized on the growth of the mutual fund industry, which
pegged at 40% in 2006. More than 50% of the sample broking houses deal in mutual fund
investment services. The average growth in assets under management in last two years is
almost 48% company research services. Additionally, a host of other value added services
such as fundamental and technical analysis, investment banking, arbitrage etc are offered by
the firms at different levels.
Capital Market
Capital market is a market for securities (debt or equity), where business enterprises
(companies) and governments can raise long-term funds. Capital market may be classified as
primary markets and secondary markets. In primary market new stock or bond issues are sold
to investor via a mechanism known as underwriting. In secondary markets, existing securities
are sold and brought among investors or traders, usually on a security exchange, over the
counter or elsewhere. The capital market includes e stock market (equity securities) and Bond
market (debt).
Primary and Secondary Capital Markets

A company cannot easily attract investors to invest in their securities if the investors
cannot subsequently trade these securities at will. In other words, securities cannot have a
good primary market unless it is ensured of an active secondary market.
Primary Market
Securities generally have two stages in their lifespan. The first stage is when the
company initially issues the security directly from its treasury at a predetermined offering
price. Primary market is the market for issue of new securities. It therefore essentially consist
of the companies issuing securities, the public subscribing to these securities, the regulatory
agencies like SEBI and the Government, and the intermediaries such as brokers, merchant
bankers and banks who underwrite the issues and help in collecting subscription money from
the public. It is referred to as Initial Public offer (IPO). Investment dealers frequently buy
initial offering on the primary market and the securities on the secondary market.

Secondary Market
The second stage is when an investor or dealer makes the shares, bought from a
company treasury, available for sale to other investors on the secondary market. Secondary
market is the market for trading in existing securities, after they have been created in the
primary market. It essentially consists of the public who are buyers and sellers of securities,
brokers, mutual funds, and most importantly, the stock exchanges where the trading takes
place, such as the BSE (Bombay Stock Exchange) or NSE (National Stock Exchange).
Indian Stock Exchange
Stock Market
A stock market or equity market is a public entity (a loose network of economic
transaction, not a physical facility or discrete entity) for the trading of company stock (shares)
and Mutual Funds at an agreed price; these are securities listed on a stock exchange as well as
those only traded privately.
Stock exchange
A stock exchange provides services for stock brokers and traders to trade stocks,
bonds and other securities. Stock exchanges also provide facilities for issue and redemption
of securities and other financial instruments and capital events including the payment of
income and dividends. Securities traded on stock exchange include shares issued by
companies, unit trusts, Mutual Funds, pooled investment products and bonds.
Equity/Share
Total equity capital of a company is divided into equal units of small denominations,
each called a share. For example, in a company the total equity capital of Rs. 2,00,00,000 is
divided into 20,00,000 units of Rs 10 each. Each such unit of Rs. 10 is called a share. Thus,
the company then is said to have 20, 00,000 equity share of Rs 10 each. The holders of such
shares are members of the company and have voting rights. There are now stock markets in
virtually every developed and most developing economy, with the world‘s biggest being in
the United States, UK, Germany, France, India and Japan.

Market participants
Market participants include individual retail investors, institutional investors such as
mutual funds, banks, insurance companies and hedge funds, and also publically traded
corporations trading in their own shares.
Trading
Participants in the stock market range from small individual stock investors to large
hedge fund traders, who can be based anywhere.
Listing
Listing means admission of securities of an issuer to trading privileges on a stock
exchange through a formal agreement. The prime objective of admission to dealing on the
Exchange is to provide liquidity and marketability to securities.
Securities
A Security gives the holder an ownership interest in the assets of a company. For
example, when a company issues security in the form of stock, they give the purchaser an
interest in the company‘s assets in exchange for money. There are a number of reasons why a
company issues securities: meeting a short – term cash crunch or obtaining money for an
expansion are just two.
WHAT IS SEBI AND WHAT IS ITS ROLE?

In 1988 the Securities and Exchange Board of India (SEBI) was established by the
Government of India through an executive resolution, and was subsequently upgraded as a
fully autonomous body (a statutory Board) in the year 1992 with the passing of the Securities
and Exchange Board of India Act (SEBI Act) on 30th January 1992. In place of Government
Control, a statutory and autonomous regulatory board with defined responsibilities, to cover
both development & regulation of the market, and independent powers have been set up.
Paradoxically this is a positive outcome of the Securities Scam of 1990-91.

OBJECTIVES OF SEBI
The promulgation of the SEBI ordinance in the parliament gave status to SEBI
in 1992. According to the preamble of the SEBI, the three main objectives are:
To protect the interests of the investors in securities
To promote the development of securities market
To regulate the securities market
FUNCTIONS OF SEBI
The main functions entrusted with SEBI are:
Regulating the business in stock exchange and any other securities market
Registering and regulating the working of stock brokers, share transfer agents,
bankers to the issue, trustees of trust deed, registrars to an issue, merchant bankers,
underwriters, portfolio managers, investment advisers and such other intermediaries
who may be associated with securities market in any manner.
Registering and regulating the working of collective investment schemes including
mutual funds
Promoting and regulating self-regulatory organizations
Prohibiting fraudulent and unfair trade practices in the securities market
Promoting investors education and training of intermediaries in securities market
Prohibiting insiders trading in securities
Regulating substantial acquisition of shares and takeover of companies
Calling for information, undertaking inspection, conducting enquiries and audits of
the stock exchanges, intermediaries and self-regulatory organizations in the securities
market.
Since its inception SEBI has been working targeting the securities and is attending to the
fulfillment of its objectives with commendable zeal and dexterity. The improvements in the
securities markets like capitalization requirements, margining, establishment of clearing
corporations etc. reduced the risk of credit and also reduced the market.

SEBI has introduced the comprehensive regulatory measures, prescribed registration
norms, the eligibility criteria, the code of obligations and the code of conduct for different
intermediaries like, bankers to issue, merchant bankers, brokers and sub-brokers, registrars,
portfolio managers, credit rating agencies, underwriters and others. It has framed bye-laws,
risk identification and risk management systems for Clearing houses of stock exchanges,
surveillance system etc. which has made dealing in securities both safe and transparent to the
end investor.
Another significant event is the approval of trading in stock indices (like S&P CNX Nifty
& Sensex) in 2000. A market Index is a convenient and effective product because of the
following reasons:
It acts as a barometer for market behavior;
It is used to benchmark portfolio performance;
It is used in derivative instruments like index futures and index options;
It can be used for passive fund management as in case of Index Funds.
Two broad approaches of SEBI is to integrate the securities market at the national level,
and also to diversify the trading products, so that there is an increase in number of traders
including banks, financial institutions, insurance companies, mutual funds, primary dealers
etc. to transact through the Exchanges. In this context the introduction of Mutual Funds
trading through Indian Stock Exchanges permitted by SEBI in 2000 AD is a real landmark.
SEBI appointed the L. C. Gupta Committee in 1998 to recommend the regulatory

framework for Mutual Funds trading and suggest bye-laws for Regulation and Control of
Trading and Settlement of Mutual Funds Contracts. The Board of SEBI in its meeting held on
May 11, 1998 accepted the recommendations of the committee and approved the phased
introduction of Mutual Funds trading in India beginning with Stock Index Futures. The Board
also approved the "Suggestive Bye-laws" as recommended by the Dr LC Gupta Committee
for Regulation and Control of Trading and Settlement of Mutual Funds Contracts. SEBI then
appointed the J. R. Verma Committee to recommend Risk Containment Measures (RCM) in
the Indian Stock Index Futures Market. The report was submitted in November1998.

However the Securities Contracts (Regulation) Act, 1956 (SCRA) required amendment to
include "Mutual Funds" in the definition of securities to enable SEBI to introduce trading in
Mutual Funds. The necessary amendment was then carried out by the Government in 1999.
The Securities Laws (Amendment) Bill, 1999 was introduced. In December 1999 the new
framework was approved. Mutual Funds have been accorded the status of `Securities'. The
ban imposed on trading in Mutual Funds in 1969 under a notification issued by the Central
Government was revoked. Thereafter SEBI formulated the necessary regulations/bye-laws
and intimated the Stock Exchanges in the year 2000. The derivative trading started in India at
NSE in 2000 and BSE started trading in the year 2001.
Bombay Stock Exchange (BSE)

Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage,
now spanning three centuries in its 133 years of existence. What is now popularly known as
BSE was established as "The Native Share & Stock Brokers' Association" in 1875. BSE is the
first stock exchange in the country which obtained permanent recognition (in 1956) from the
Government of India under the Securities Contracts (Regulation) Act 1956. BSE's pivotal and
pre-eminent role in the development of the Indian capital market is widely recognized. It
migrated from the open outcry system to an online screen-based order driven trading system
in 1995. Earlier an Association of Persons (AOP), BSE is now a corporatized and
demutualised entity incorporated under the provisions of the Companies Act, 1956, pursuant
to the BSE (Corporatization and Demutualization) Scheme, 2005 notified by the Securities
and Exchange Board of India (SEBI). With demutualization, BSE has two of world's best
exchanges, Deutsche Börse and Singapore Exchange, as its strategic partners.
Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector
by providing it with an efficient access to resources. There is perhaps no major corporate in
India which has not sourced BSE's services in raising resources from the capital market.
Today, BSE is the world's number 1 exchange in terms of the number of listed companies and
the world's 5th in transaction numbers. The market capitalization as on December 31, 2007
stood at USD 1.79 trillion. An investor can choose from more than 4,700 listed companies,
which for easy reference, are classified into A, B, S, T and Z groups.
The BSE Index, SENSEX, is India's first stock market index that enjoys an iconic
stature, and is tracked worldwide. It is an index of 30 stocks representing 12 major sectors.

The SENSEX is constructed on a 'free-float' methodology, and is sensitive to market
sentiments and market realities. Apart from the SENSEX, BSE offers 21 indices, including
12 sect oral indices.
BSE has entered into an index cooperation agreement with Deutsche Börse. This agreement
has made SENSEX and other BSE indices available to investors in Europe and America.
Moreover, Barclays Global Investors (BGI), the global leader in ETFs through its iSharesÂ
brand, has created the 'iSharesÂ BSE SENSEX India Tracker' which tracks the SENSEX.
The ETF enables investors in Hong Kong to take an exposure to the Indian equity market.
The first Exchange Traded Fund (ETF) on SENSEX, called "SPICE" is listed on BSE. It
brings to the investors a trading tool that can be easily used for the purposes of investment,
trading, hedging and arbitrage. SPICE allows small investors to take a long-term view of the
market.
BSE provides an efficient and transparent market for trading in equity, debt
instruments and Mutual Funds. It has a nation-wide reach with a presence in more than 359
cities and towns of India. BSE has always been at par with the international standards. The
systems and processes are designed to safeguard market integrity and enhance transparency in
operations.
BSE is the first exchange in India and the second in the world to obtain an ISO
9001:2000 certification. It is also the first exchange in the country and second in the world to
receive Information Security Management System Standard BS 7799-2-2002 certification for
its BSE On-line Trading System (BOLT). BSE continues to innovate. In recent times, it has
become the first national level stock exchange to launch its website in Gujarati and Hindi to
reach out to a larger number of investors. It has successfully launched a reporting platform
for corporate bonds in India christened the ICDM or Indian Corporate Debt Market and a
unique ticker-cum-screen aptly named 'BSE Broadcast' which enables information
dissemination to the common man on the street. In 2006, BSE launched the Directors
Database and ICERS (Indian Corporate Electronic Reporting System) to facilitate
information flow and increase transparency in the Indian capital market.
While the Directors Database provides a single-point access to information on the
boards of directors of listed companies, the ICERS facilitates the corporate in sharing with
BSE their corporate announcements. BSE also has a wide range of services to empower
investors and facilitate smooth transactions: Investor Services: The Department of Investor
Services redresses grievances of investors.
BSE was the first exchange in the country to provide an amount of Rs.1 million
towards the investor protection fund; it is an amount higher than that of any exchange in the
country. BSE launched a nationwide investor awareness programme- 'Safe Investing in the
Stock Market' under which 264 programmes were held in more than 200 cities. The BSE On-
line Trading (BOLT): BSE On-line Trading (BOLT) facilitates on-line screen based trading in
securities. BOLT is currently operating in 25,000 Trader Workstations located across over 359
cities in India. BSEWEBX.com: In February 2001, BSE introduced the world's first
centralized exchange-based Internet trading system, BSEWEBX.com. This initiative enables
investors anywhere in the world to trade on the BSE platform.
Surveillance: BSE's On-Line Surveillance System (BOSS) monitors on a real-time

basis the price movements, volume positions and members' positions and real-time
measurement of default risk, market reconstruction and generation of cross market alerts.
BSE Training Institute: BTI imparts capital market training and certification, in collaboration
with reputed management institutes and universities.
It offers over 40 courses on various aspects of the capital market and financial sector.
More than 20,000 people have attended the BTI programmes Awards The World Council of
Corporate Governance has awarded the Golden Peacock Global CSR Award for BSE's
initiatives in Corporate Social Responsibility (CSR). The Annual Reports and Accounts of
BSE for the year ended March 31, 2006 and March 31 2007 have been awarded the ICAI
awards for excellence in financial reporting. The Human Resource Management at BSE has
won the Asia - Pacific HRM awards for its efforts in employer branding through talent
management at work, health management at work and excellence in HR through technology
Drawing from its rich past and its equally robust performance in the recent times, BSE will
continue to remain an icon in the Indian capital

National Stock Exchange (NSE)
The National Stock Exchange of India is a stock Exchange that is located in Mumbai,
Maharashtra. The National Stock Exchange basically function in three market sections, that
is, (CM) the Capital Market Section); F&Q (The Future and Options Market Sections) and
WDM (Wholesale Debt Market Segment). It is important place where the trading of shares,
debt etc takes place.
It was in year 1992 that the National stock Exchange was for the first time
incorporated in India. It was not regarded as a stock exchange at once. Rather, the national
Stock exchange was incorporated as a tax paying company and had got the recognition of a
stock exchange only in year 1993 the recognition was given under the provisions of the
Securities Contracts (Regulation) Act, 1956.
The National Stock exchange is highly active in the field of market capitalization and
thus aiming it the ninth largest stock exchange in the said field. Similarly, the trading of the
stock exchange in equities and Mutual Funds is so high that it has resulted in high turnovers
and thus making it the largest stock exchange in India.
It is the stock exchange wherein there is the facility of electronic exchange offering
investors. This facility is available in almost types of equitable transactions such as equities,
debentures, etc. it is also the largest stock exchange if calculated in the terms of traded
values.
Origin and History of the National Stock Exchange

The National Stock exchange was incorporated for the first time in November, 1992.
The national stock exchange was not incorporated as the national stock exchange; rather, it
had got the recognition of the recognized stock exchange in April, 1993. The National stock
Exchange has increased its trading facilities in June 1994 when the WDM (Wholesale Debt
Market Segment) was gone live. It is basically one of the three market segments in which the
national stock Exchange works. In the same year, 1994 November, the Capital Market (CM)
segment of the stock exchange goes live through VSAT.

INTRODUCTION OF MUTUAL FUND
The first introduction of a mutual fund in India occurred in 1963, when the Government of India
launched Unit Trust of India (UTI). Until 1987, UTI enjoyed a monopoly in the Indian mutual fund
market. Then a host of other government-controlled Indian financial companies came up with their
own funds. These included State Bank of India, Canara Bank, and Punjab National Bank. This
market was made open to private players in 1993, as a result of the historic constitutional
amendments brought forward by the then Congress-led government under the existing regime of
Liberalization, Privatization and Globalization (LPG). The first private sector fund to operate in
India was Kothari Pioneer, which later merged with Franklin Templeton.
CONCEPT OF MUTUAL FUND:

A mutual fund is a common pool of money into which investors place their contributions that are to
be invested in accordance with a stated objective. The ownership of the fund is thus joint or
“mutual”; the fund belongs to all investors. A single investor’s ownership of the fund is in the same
proportion as the amount of the contribution made by him or her bears to the total amount of the
fund.
Mutual Funds are trusts, which accept savings from investors and invest the same in diversified
financial instruments in terms of objectives set out in the trusts deed with the view to reduce the risk
and maximize the income and capital appreciation for distribution for theembers. A Mutual Fund is a
corporation and the fund manager’s interest is to professionally manage the funds provided by the
investors and provide a return on them after deducting reasonable management fees.
DEFINITION:
“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”.
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An Introduction to the Basics of Mutual Funds
What Every Investor Should Know About Mutual Funds
If you're new to investing, you might be wary of buying individual stocks. Mutual funds offer
an alternative way to build your portfolio. But just what are they?
Mutual funds offer a way for a group of investors to effectively pool their money so they can
invest in a wider variety of investment vehicles and take advantage of professional money
management through the purchase of one mutual fund share. When you buy a mutual fund
share, you're investing in stocks, bonds and other securities that are held within the fund.
The mutual fund then passes along the profits (and losses) of those investments to its
shareholders. So if a mutual fund does well, you benefit. But, they're not risk-free. Read on
to learn more about how mutual funds work.
What Makes Mutual Funds Good Investment Options
Mutual funds are one of the most highly utilized investment options among average
investors and financial professionals alike. But why is investing in a mutual fund a good
idea? While some mutual funds are objectively better investment than others (and even
others that serve very specific investment needs), what mutual funds
grant investors access to is perhaps the most important benefit.
Mutual funds give investors the ability to diversify across a wide variety of investments that
they otherwise may not carry in their portfolio as individual securities. Since mutual funds
invest in a diverse range of securities and investment options, one mutual fund share
actually represents proportionate ownership in each and every investment in the mutual
fund's portfolio. Of most interest to investors is that each share also proportionately
represents the profits of those investments as mutual funds are required to pass along
profits to their investors by way of mutual fund distributions, which come in several forms.
In a mutual fund, the value of your shares goes up and down as the value of the stocks and
bonds in the fund rise and fall. For the average investor to have the same exposure to
those investment options and potential profits on their own would be extremely costly both
in terms of the actual investment dollars and in terms of time.
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Additionally, investing in a mutual fund is generally a cost-effective way to gain access to

professional money management. Were you to try and invest in individual securities
and actively manage them the way a mutual fund's manager does, it could very easily
become a full-time job. In order to make wise investment decisions when you buy individual
stocks and bonds yourself, at the very least you'd have to have the knowledge to do
extensive research on various types of businesses in general (automobile, construction,
medical) and on specific companies (GE, IBM, Microsoft).
This is work that most of us are not interested in, do not have the time for, and, most
importantly, are probably not as qualified to do. By purchasing shares of a mutual fund,
you're also purchasing the money management and investment skills of the fund manager
whose job it is to invest and reinvest the mutual fund's capital based on the fund's
established goals.
Mutual Fund Fees Cover Administrative Costs
Mutual funds can offer streamlined investing but they're not free. There are certain fees you
have to be aware of when investing in mutual funds.
Each investor is charged a percentage of his or her investment to help cover all the costs of
running the mutual fund, including having a professional fund manager as well as
researching, buying, and selling stocks. But again, investors can benefit from their
collective investments.
Mutual fund fees are spread out over all of the investors, so the costs to each individual
investor is still much less than it would have been if he or she had purchased the stocks
directly and paid a broker or financial advisor to manage the investments.
Though many mutual fund options are indeed cost-effective, there are many types of
mutual fund fees, from front-load fees to constant-load fees, so it is always best to be
aware of the type of fee and how it is calculated before investing in a mutual fund.
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History of Indian Mutual funds
The history of the Indian mutual fund industry can be traced to the
formation of UTI in 1963. This was a joint initiative of the Government of
India and RBI. It held monopoly for nearly 30 years. Since 1987, non-UTI
mutual funds entered the scenario. These consisted of LIC, GIC and public-
sector bank backed Indian mutual funds. SBI Mutual fund was the first of
this kind. 1993 saw the entry of private sector players on the Indian
Mutual Funds scene. Mutual fund regulations were revised in 1996 to
accommodate changing market needs
With the Sensex on a scorching bull rally, many investors prefer to trade on
stocks themselves. Mutual funds are more balanced since they diversify
over a large number of stocks and sectors. In the rally of 2000, it was
noticed that mutual funds did better than the stocks mainly due to prudent
fund management based on the virtues of diversification .
Different Indian mutual funds allow investors various solutions ranging

from retirement planning and buying a house to planning for child's
education or marriage. Tax-wise stocks and mutual funds work similarly
since long-term capital gains from both stocks and equity oriented mutual
funds are tax-free.
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Other Types of Mutual Funds: Index Funds
Today, not all funds are managed by a financial manager. Index funds use a computer
program to buy all of the stock in a particular index, such as the Russell 3000 or the S&P
500, regardless of how they're performing. They don't have to do research or try to time the
movement in the market to buy or sell at the "right" time. Index fund fees, therefore, are
generally much lower than the fees for managed funds, and, therefore, the return on
investment is higher.
Choose Wisely
When choosing mutual funds for your portfolio, do your homework. Review each fund's
fees and individual asset allocation to make sure you're choosing a fund that fits your
investment goals and risk tolerance. Also, consider a fund's performance. While past
history doesn't guarantee future results, it's also wide to look at how much a fund has
gained or lost in the past.
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Why Select Mutual Fund?
The risk return trade-off indicates that if investor is willing to take higher risk then correspondingly
he can expect higher returns and vise versa if he pertains to lower risk instruments, which would be
satisfied by lower returns. For example, if an investors opt for bank FD, which provide moderate
return with minimal risk. But as he moves ahead to invest in capital protected funds and the profit-
bonds that give out more return which is slightly higher as compared to the bank deposits but the
risk involved also increases in the same proportion.
Thus investors choose mutual funds as their primary means of investing, as Mutual funds provide
professional management, diversification, convenience and liquidity. That doesn’t mean mutual
fund investments risk free.
This is because the money that is pooled in are not invested only in debts funds which are less
riskier but are also invested in the stock markets which involves a higher risk but can expect higher
returns. Hedge fund involves a very high risk since it is mostly traded in the Mutual Funds market
which is considered very volatile.
RETURN RISK MATRIX

HIGHIER RISK HIGHER RISK
MODERATE RETURNS HIGHIER RETURNS
Venture
Capital Equity
Bank FD Mutual
Funds
Postal
Savings
LOWER RISK LOWER RISK
LOWER RETURNS HIGIER RETURNS
22
The graph indicates the growth of assets under management over the years.
GROWTH IN ASSETS UNDER MANAGEMENT
(Source: www.amfiindia.com)
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ADVANTAGES OF MUTUAL FUNDS:
If mutual funds are emerging as the favorite investment vehicle, it is because of the many advantages
they have over other forms and the avenues of investing, particularly for the investor who has
limited resources available in terms of capital and the ability to carry out detailed research and
market monitoring. The following are the major advantages offered by mutual funds to all investors:
1. Portfolio Diversification:
Each investor in the fund is a part owner of all the fund’s assets, thus enabling him to hold a
diversified investment portfolio even with a small amount of investment that would otherwise
require big capital.
2. Professional Management:
Even if an investor has a big amount of capital available to him, he benefits from the professional
management skills brought in by the fund in the management of the investor’s portfolio. The
investment management skills, along with the needed research into available investment options,
ensure a much better return than what an investor can manage on his own. Few investors have the
skill and resources of their own to succeed in today’s fast moving, global and sophisticated markets.
3. Reduction/Diversification Of Risk:
When an investor invests directly, all the risk of potential loss is his own, whether he places a deposit
with a company or a bank, or he buys a share or debenture on his own or in any other from. While
investing in the pool of funds with investors, the potential losses are also shared with other investors.
The risk reduction is one of the most important benefits of a collective investment vehicle like the
mutual fund.
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4. Reduction Of Transaction Costs:
What is true of risk as also true of the transaction costs. The investor bears all the costs of investing
such as brokerage or custody of securities. When going through a fund, he has the benefit of
economies of scale; the funds pay lesser costs because of larger volumes, a benefit passed on to its
investors.
5. Liquidity:
Often, investors hold shares or bonds they cannot directly, easily and quickly sell. When they invest
in the units of a fund, they can generally cash their investments any time, by selling their units to the
fund if open-ended, or selling them in the market if the fund is close-end. Liquidity of investment is
clearly a big benefit.
6. Convenience And Flexibility:

Mutual fund management companies offer many investor services that a direct market investor
cannot get. Investors can easily transfer their holding from one scheme to the other; get updated
market information and so on.
7. 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.
8. Choice of Schemes:
Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
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9. 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.
10.Transparency:
You get regular information on the value of your investment in addition to disclosure on the specific
investments made by your scheme, the proportion invested in each class of assets and the fund
manager's investment strategy and outlook.
DISADVANTAGES OF INVESTING THROUGH MUTUAL

FUNDS:
1. No Control Over Costs:
An investor in a mutual fund has no control of the overall costs of investing. The investor pays
investment management fees as long as he remains with the fund, albeit in return for the professional
management and research. Fees are payable even if the value of his investments is declining. A
mutual fund investor also pays fund distribution costs, which he would not incur in direct investing.
However, this shortcoming only means that there is a cost to obtain the mutual fund services.
2. No Tailor-Made Portfolio:
Investors who invest on their own can build their own portfolios of shares and bonds and other
securities. Investing through fund means he delegates this decision to the fund managers. The very-
high-net-worth individuals or large corporate investors may find this to be a constraint in achieving
their objectives. However, most mutual fund managers help investors overcome this constraint by
offering families of funds- a large number of different schemes- within their own management
company. An investor can choose from different investment plans and constructs a portfolio to his
choice.
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3. Managing A Portfolio Of Funds:
Availability of a large number of funds can actually mean too much choice for the investor. He may
again need advice on how to select a fund to achieve his objectives, quite similar to the situation
when he has individual shares or bonds to select.
4. The Wisdom Of Professional Management:

That's right, this is not an advantage. The average mutual fund manager is no better at picking stocks
than the average nonprofessional, but charges fees.
5. No Control:
Unlike picking your own individual stocks, a mutual fund puts you in the passenger seat of
somebody else's car
6. Dilution:
Mutual funds generally have such small holdings of so many different stocks that insanely great
performance by a fund's top holdings still doesn't make much of a difference in a mutual fund's total
performance.
7. Buried Costs:
Many mutual funds specialize in burying their costs and in hiring salesmen who do not make those
costs clear to their clients.
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TYPES OF MUTUAL FUNDS SCHEMES IN INDIA
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.
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A). BY STRUCTURE
1. Open - Ended Schemes:

An open-end fund is one that is available for subscription all through the year. These do not have a
fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related
prices. The key feature of open-end schemes is liquidity.
2. Close - Ended Schemes:

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The
fund is open for subscription only during a specified period. Investors can invest in the scheme at the
time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock
exchanges where they are listed. In order to provide an exit route to the investors, some close-ended
funds give an option of selling back the units to the Mutual Fund through periodic repurchase at
NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to
the investor.
3. Interval Schemes:
Interval Schemes are that scheme, which combines the features of open-ended and close-ended
schemes. The units may be traded on the stock exchange or may be open for sale or redemption
during pre-determined intervals at NAV related prices.
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B). BY NATURE
1. Equity Fund:
These funds invest a maximum part of their corpus into equities holdings. The structure of the fund
may vary different for different schemes and the fund manager’s outlook on different stocks. The
Equity Funds are sub-classified depending upon their investment objective, as follows:
· Diversified Equity Funds
· Mid-Cap Funds
· Sector Specific Funds
· Tax Savings Funds (ELSS)
Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk-
return matrix.
2. Debt Funds:
The objective of these Funds is to invest in debt papers. Government authorities, private companies,
banks and financial institutions are some of the major issuers of debt papers. By investing in debt
instruments, these funds ensure low risk and provide stable income to the investors. Debt funds are
further classified as:
· Gilt Funds: Invest their corpus in securities issued by Government, popularly known as
Government of India debt papers. These Funds carry zero Default risk but are associated
with Interest Rate risk. These schemes are safer as they invest in papers backed by
Government.
· Income Funds: Invest a major portion into various debt instruments such as bonds,
corporate debentures and Government securities.
· MIPs: Invests maximum of their total corpus in debt instruments while they take
minimum exposure in equities. It gets benefit of both equity and debt market. These
scheme ranks slightly high on the risk-return matrix when compared with other debt
schemes.
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· Short Term Plans (STPs): Meant for investment horizon for three to six months. These
funds primarily invest in short term papers like Certificate of Deposits (CDs) and
Commercial Papers (CPs). Some portion of the corpus is also invested in corporate
debentures.
· Liquid Funds: Also known as Money Market Schemes, These funds provides easy
liquidity and preservation of capital. These schemes invest in short-term instruments like
Treasury Bills, inter-bank call money market, CPs and CDs. These funds are meant for
short-term cash management of corporate houses and are meant for an investment
horizon of 1day to 3 months. These schemes rank low on risk-return matrix and are
considered to be the safest amongst all categories of mutual funds.
3. Balanced Funds:
As the name suggest they, are a mix of both equity and debt funds. They invest in both equities and
fixed income securities, which are in line with pre-defined investment objective of the scheme.
These schemes aim to provide investors with the best of both the worlds. Equity part provides
growth and the debt part provides stability in returns.
Further the mutual funds can be broadly classified on the basis of investment parameter viz,
Each category of funds is backed by an investment philosophy, which is pre-defined in the objectives
of the fund. The investor can align his own investment needs with the funds objective and invest
accordingly.
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C). BY INVESTMENT OBJECTIVE:
Growth Schemes:
Growth Schemes are also known as equity schemes. The aim of these schemes is to provide capital
appreciation over medium to long term. These schemes normally invest a major part of their fund in
equities and are willing to bear short-term decline in value for possible future appreciation.
Income Schemes:
Income Schemes are also known as debt schemes. The aim of these schemes is to provide regular
and steady income to investors. These schemes generally invest in fixed income securities such as
bonds and corporate debentures. Capital appreciation in such schemes may be limited.
Balanced Schemes:
Balanced Schemes aim to provide both growth and income by periodically distributing a part of the
income and capital gains they earn. These schemes invest in both shares and fixed income securities,
in the proportion indicated in their offer documents (normally 50:50).
Money Market Schemes:

Money Market Schemes aim to provide easy liquidity, preservation of capital and moderate income.
These schemes generally invest in safer, short-term instruments, such as treasury bills, certificates of
deposit, commercial paper and inter-bank call money.
Load Funds:
A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell
units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%.
It could be worth paying the load, if the fund has a good performance history.
No-Load Funds:
A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission
is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire
corpus is put to work.
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OTHER SCHEMES
Tax Saving Schemes:
Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to time.
Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings Scheme
(ELSS) are eligible for rebate.
Index Schemes:
Index schemes attempt to replicate the performance of a particular index such as the BSE Sensex or
the NSE 50. The portfolio of these schemes will consist of only those stocks that constitute the
index. The percentage of each stock to the total holding will be identical to the stocks index
weightage. And hence, the returns from such schemes would be more or less equivalent to those of
the Index.
Sector Specific Schemes:

These are the funds/schemes which invest in the securities of only those sectors or industries as
specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods
(FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the
respective sectors/industries. While these funds may give higher returns, they are more risky
compared to diversified funds. Investors need to keep a watch on the performance of those
sectors/industries and must exit at an appropriate time.
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NET ASSET VALUE (NAV):
Since each owner is a part owner of a mutual fund, it is necessary to establish the value of his part.
In other words, each share or unit that an investor holds needs to be assigned a value. Since the units
held by investor evidence the ownership of the fund’s assets, the value of the total assets of the fund
when divided by the total number of units issued by the mutual fund gives us the value of one unit.
This is generally called the Net Asset Value (NAV) of one unit or one share. The value of an
investor’s part ownership is thus determined by the NAV of the number of units held.
Calculation of NAV:
Let us see an example. If the value of a fund’s assets stands at Rs. 100 and it has 10 investors who
have bought 10 units each, the total numbers of units issued are 100, and the value of one unit is Rs.
10.00 (1000/100). If a single investor in fact owns 3 units, the value of his ownership of the fund will
be Rs. 30.00(1000/100*3). Note that the value of the fund’s investments will keep fluctuating with
the market-price movements, causing the Net Asset Value also to fluctuate. For example, if the value
of our fund’s asset increased from Rs. 1000 to 1200, the value of our investors holding of 3 units will
now be (1200/100*3) Rs. 36. The investment value can go up or down, depending on the markets
value of the fund’s assets.
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SELECTION PARAMETERS FOR MUTUAL FUND
Your objective:
The first point to note before investing in a fund is to find out whether your objective matches with
the scheme. It is necessary, as any conflict would directly affect your prospective returns. Similarly,
you should pick schemes that meet your specific needs. Examples: pension plans, children’s plans,
sector-specific schemes, etc.
Your risk capacity and capability:

This dictates the choice of schemes. Those with no risk tolerance should go for debt schemes, as
they are relatively safer. Aggressive investors can go for equity investments. Investors that are even
more aggressive can try schemes that invest in specific industry or sectors.
Fund Manager’s and scheme track record:

Since you are giving your hard earned money to someone to manage it, it is imperative that he
manages it well. It is also essential that the fund house you choose has excellent track record. It also
should be professional and maintain high transparency in operations. Look at the performance of the
scheme against relevant market benchmarks and its competitors. Look at the performance of a longer
period, as it will give you how the scheme fared in different market conditions.
Cost factor:
Though the AMC fee is regulated, you should look at the expense ratio of the fund before investing.
This is because the money is deducted from your investments. A higher entry load or exit load also
will eat into your returns. A higher expense ratio can be justified only by superlative returns. It is
very crucial in a debt fund, as it will devour a few percentages from your modest returns.
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Also, Morningstar rates mutual funds. Each year end, many financial publications list the year's best
performing mutual funds. Naturally, very eager investors will rush out to purchase shares of last
year's top performers. That's a big mistake. Remember, changing market conditions make it rare that
last year's top performer repeats that ranking for the current year. Mutual fund investors would be
well advised to consider the fund prospectus, the fund manager, and the current market conditions.
Never rely on last year's top performers.
Types of Returns on Mutual Fund:

There are three ways, where the total returns provided by mutual funds can be enjoyed by investors:
· Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly
all income it receives over the year to fund owners in the form of a distribution.
· If the fund sells securities that have increased in price, the fund has a capital gain. Most
funds also pass on these gains to investors in a distribution.
If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in
price. You can then sell your mutual fund shares for a profit. Funds will also usually give you a
choice either to receive a check for distributions or to reinvest the earnings and get more shares.
36
MUTUAL FUNDS DISTRIBUTION CHANNELS
Investors have varied investment objectives and can be classified as aggressive, moderate and
conservative, depending on their risk profile. For each of these categories, asset management
companies (AMCs) devise different types of fund schemes, and it is important for investors to
buy those that match their investment goals.
Funds are bought and sold through distribution channels, which play a significant role in explaining
to the investors the various schemes available, their investment style, costs and expenses. There are
two types of distribution channels-direct and indirect. In case of the former, the investors buy units
directly from the fund AMC, whereas indirect channels include the involvement of agents. Let us
consider these distribution channels in detail.
Direct channel
This is good for investors who do not need the advisory services of agents and are well-versed with
the fundamentals of the fund industry. The channel provides the benefit of low cost, which
significantly enhances the returns in the long run.
Indirect channel
This channel is widely prevalent in the fund industry. It involves the use of agents, who act as
intermediaries between the fund and the investor. These agents are not exclusive for mutual funds
and can deal in multiple financial instruments. They have an in-depth knowledge about the
functioning of financial instruments and are in a position to act as financial advisers. Here are some
of the players in the indirect distribution channels.
a) Independent financial advisers (IFA): These are individuals trained by AMCs for selling their
products. Some IFAs are professionally qualified CFPs (certified financial planners). They help
investors in choosing the right fund schemes and assist them in financial planning. IFAs manage
their costs through the commissions that they earn by selling funds.
b) Organized distributors: They are the backbone of the indirect distribution channel. They have
the infrastructure and resources for managing administrative paperwork, purchases and
redemptions. These distributors cater to the diverse nature of the investor community and the
vast geographic spread of the country by establishing offices in rural and semi urban locations.
c) Banks: They use their network to sell mutual funds. Their existing customer base serves as a
captive prospective investor base for marketing funds. Banks also handle wealth management for
their clients and manage portfolios where mutual funds are one of the asset classes. The players
in the indirect channel assist investors in buying and redeeming fund units.
They try to understand the risk profile of investors and suggest fund schemes that best suits their
objectives. The indirect channel should be preferred over the direct channel when investors want to
seek expert advice on the risk-return mix or need help in understanding the features of the financial
securities in which the fund invests as well as other important attributes of mutual funds, such as
benchmarking and tax treatment.
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Marketing Strategies for Mutual Funds
Business Accounts
· The most common sales and marketing strategies for mutual funds is to sign-up companies as a
preferred option for their retirement plans. This provides a simple way to sign-up numerous
accounts with one master contract. To market to these firms, sales people target human resource
professionals. Marketing occurs through traditional business-to-business marketing techniques
including conferences, niche advertising and professional organizations. For business accounts,
fund representatives will stress ease of use and compatibility with the company's present
systems.
Consumer Marketing
· Consumer marketing of mutual funds is similar to the way other financial products are sold.
Marketers emphasize safety, reliability and performance. In addition, they may provide
information on their diversity of choices, ease of use and low costs. Marketers try to access all
segments of the population. They use broad marketing platforms such as television, newspapers
and the internet. Marketers especially focus on financially oriented media such as CNBC
television and Business week magazine.
Performance
· Mutual funds must be very careful about how they market their performance, as this is heavily
regulated. Mutual funds must market their short, medium and long-term average returns to give the
prospective investor a good idea of the actual performance. For example, most funds did very well
during the housing boom. However, if the bear market that followed is included, performance looks
much more average. Funds may also have had different managers with different performance
records working on the same funds, making it hard to judge them.
Marketing Fees
· Mutual funds must be very clear about their fees and report them in all of their marketing
materials. The main types of fees include the sales fee (load) and the management fee. The load
is an upfront charge that a mutual fund charges as soon as the investment is made. The
management fee is a percentage of assets each year, usually 1 to 2 percent.
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WORKING OF MUTUAL FUNDS
The mutual fund collects money directly or through brokers from investors. The money is invested
in various instruments depending on the objective of the scheme. The income generated by selling
securities or capital appreciation of these securities is passed on to the investors in proportion to their
investment in the scheme. The investments are divided into units and the value of the units will be
reflected in Net Asset Value or NAV of the unit. NAV is the market value of 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. Mutual fund companies provide daily net asset value of their
schemes to their investors. NAV is important, as it will determine the price at which you buy or
redeem the units of a scheme. Depending on the load structure of the scheme, you have to pay entry
or exit load.
39
STRUCTURE OF A MUTUAL FUND:
India has a legal framework within which Mutual Fund have to be constituted. In India open and
close-end funds operate under the same regulatory structure i.e. as unit Trusts. A Mutual Fund in
India is allowed to issue open-end and close-end schemes under a common legal structure. The
structure that is required to be followed by any Mutual Fund in India is laid down under SEBI
(Mutual Fund) Regulations, 1996.
The Fund Sponsor:

Sponsor is defined under SEBI regulations as any person who, acting alone or in combination of
another corporate body establishes a Mutual Fund. The sponsor of the fund is akin to the promoter of
a company as he gets the fund registered with SEBI. The sponsor forms a trust and appoints a Board
of Trustees. The sponsor also appoints the Asset Management Company as fund managers. The
sponsor either directly or acting through the trustees will also appoint a custodian to hold funds
assets. All these are made in accordance with the regulation and guidelines of SEBI.
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As per the SEBI regulations, for the person to qualify as a sponsor, he must contribute at least 40%
of the net worth of the Asset Management Company and possesses a sound financial track record
over 5 years prior to registration.
Mutual Funds as Trusts:

A Mutual Fund in India is constituted in the form of Public trust Act, 1882. The Fund sponsor acts as
a settlor of the Trust, contributing to its initial capital and appoints a trustee to hold the assets of the
trust for the benefit of the unit-holders, who are the beneficiaries of the trust. The fund then invites
investors to contribute their money in common pool, by scribing to “units” issued by various
schemes established by the Trusts as evidence of their beneficial interest in the fund.
It should be understood that the fund should be just a “pass through” vehicle. Under the Indian
Trusts Act, the trust of the fund has no independent legal capacity itself, rather it is the Trustee or the
Trustees who have the legal capacity and therefore all acts in relation to the trusts are taken on its
behalf by the Trustees. In legal parlance the investors or the unit-holders are the beneficial owners of
the investment held by the Trusts, even as these investments are held in the name of the Trustees on a
day-to-day basis. Being public trusts, Mutual Fund can invite any number of investors as beneficial
owners in their investment schemes.
Trustees:
A Trust is created through a document called the Trust Deed that is executed by the fund sponsor in
favour of the trustees. The Trust- the Mutual Fund – may be managed by a board of trustees- a body
of individuals, or a trust company- a corporate body. Most of the funds in India are managed by
Boards of Trustees. While the boards of trustees are governed by the Indian Trusts Act, where the
trusts are a corporate body, it would also require to comply with the Companies Act, 1956. The
Board or the Trust company as an independent body, acts as a protector of the of the unit-holders
interests. The Trustees do not directly manage the portfolio of securities. For this specialist function,
the appoint an Asset Management Company. They ensure that the Fund is managed by ht AMC as
per the defined objectives and in accordance with the trusts deeds and SEBI regulations.
41
The Asset Management Companies:
The role of an Asset Management Company (AMC) is to act as the investment manager of the Trust
under the board supervision and the guidance of the Trustees. The AMC is required to be approved
and registered with SEBI as an AMC. The AMC of a Mutual Fund must have a net worth of at least
Rs. 10 Crores at all times. Directors of the AMC, both independent and non-independent, should
have adequate professional expertise in financial services and should be individuals of high morale
standing, a condition also applicable to other key personnel of the AMC. The AMC cannot act as a
Trustee of any other Mutual Fund. Besides its role as a fund manager, it may undertake specified
activities such as advisory services and financial consulting, provided these activities are run
independent of one another and the AMC’s resources (such as personnel, systems etc.) are properly
segregated by the activity. The AMC must always act in the interest of the unit-holders and reports
to the trustees with respect to its activities.
Custodian and Depositories:

Mutual Fund is in the business of buying and selling of securities in large volumes. Handling these
securities in terms of physical delivery and eventual safekeeping is a specialized activity. The
custodian is appointed by the Board of Trustees for safekeeping of securities or participating in any
clearance system through approved depository companies on behalf of the Mutual Fund and it must
fulfill its responsibilities in accordance with its agreement with the Mutual Fund. The custodian
should be an entity independent of the sponsors and is required to be registered with SEBI. With the
introduction of the concept of dematerialization of shares the dematerialized shares are kept with the
Depository participant while the custodian holds the physical securities. Thus, deliveries of a fund’s
securities are given or received by a custodian or a depository participant, at the instructions of the
AMC, although under the overall direction and responsibilities of the Trustees.
Bankers:
A Fund’s activities involve dealing in money on a continuous basis primarily with respect to buying
and selling units, paying for investment made, receiving the proceeds from sale of the investments
and discharging its obligations towards operating expenses. Thus the Fund’s banker
42
plays an important role to determine quality of service that the fund gives in timely delivery of
remittances etc.
Transfer Agents:
Transfer agents are responsible for issuing and redeeming units of the Mutual Fund and provide
other related services such as preparation of transfer documents and updating investor records. A
fund may choose to carry out its activity in-house and charge the scheme for the service at a
competitive market rate. Where an outside Transfer agent is used, the fund investor will find the
agent to be an important interface to deal with, since all of the investor services that a fund provides
are going to be dependent on the transfer agent.
REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA:

The structure of mutual funds in India is guided by the SEBI. Regulations, 1996.These regulations
make it mandatory for mutual fund to have three structures of sponsor trustee and asset Management
Company. The sponsor of the mutual fund and appoints the trustees. The trustees are responsible to
the investors in mutual fund and appoint the AMC for managing the investment portfolio. The AMC
is the business face of the mutual fund, as it manages all the affairs of the mutual fund. The AMC
and the mutual fund have to be registered with SEBI.
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MUTUAL FUNDS IN INDIA
In 1963, the day the concept of Mutual Fund took birth in India. Unit Trust of India invited investors
or rather to those who believed in savings, to park their money in UTI Mutual Fund.
For 30 years it goaled without a single second player. Though the 1988 year saw some new mutual
fund companies, but UTI remained in a monopoly position.
The performance of mutual funds in India in the initial phase was not even closer to satisfactory
level. People rarely understood, and of course investing was out of question. But yes, some 24
million shareholders were accustomed with guaranteed high returns by the beginning of
liberalization of the industry in 1992. This good record of UTI became marketing tool for new
entrants. The expectations of investors touched the sky in profitability factor. However, people were
miles away from the preparedness of risks factor after the liberalization.
The net asset value (NAV) of mutual funds in India declined when stock prices started falling in the
year 1992. Those days, the market regulations did not allow portfolio shifts into alternative
investments. There was rather no choice apart from holding the cash or to further continue investing
in shares. One more thing to be noted, since only closed-end funds were floated in the market, the
investors disinvested by selling at a loss in the secondary market.
The performance of mutual funds in India suffered qualitatively. The 1992 stock market scandal, the
losses by disinvestments and of course the lack of transparent rules in the whereabouts rocked
confidence among the investors. Partly owing to a relatively weak stock market performance, mutual
funds have not yet recovered, with funds trading at an average discount of 1020 percent of their net
asset value.
The securities and Exchange Board of India (SEBI) came out with comprehensive regulation in
1993 which defined the structure of Mutual Fund and Asset Management Companies for the first
time.
The supervisory authority adopted a set of measures to create a transparent and competitive
environment in mutual funds. Some of them were like relaxing investment
44
restrictions into the market, introduction of open-ended funds, and paving the gateway for mutual
funds to launch pension schemes.
The measure was taken to make mutual funds the key instrument for long-term saving.
The more the variety offered, the quantitative will be investors.
Several private sectors Mutual Funds were launched in 1993 and 1994. The share of the private
players has risen rapidly since then. Currently there are 34 Mutual Fund organizations in India
managing 1,02,000 crores.
At last to mention, as long as mutual fund companies are performing with lower risks and higher
profitability within a short span of time, more and more people will be inclined to invest until and
unless they are fully educated with the dos and don’ts of mutual funds.
Mutual fund industry has seen a lot of changes in past few years with multinational companies
coming into the country, bringing in their professional expertise in managing funds worldwide. In
the past few months there has been a consolidation phase going on in the mutual fund industry in
India. Now investors have a wide range of Schemes to choose from depending on their individual
profiles.
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MUTUAL FUND COMPANIES IN INDIA:
The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987
marked the existance of only one mutual fund company in India with Rs. 67bn assets under
management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By the end of the
80s decade, few other mutual fund companies in India took their position in mutual fund market.
The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank Mutual Fund,
Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund.
The succeeding decade showed a new horizon in Indian mutual fund industry. By the end of 1993,
the total AUM of the industry was Rs. 470.04 bn. The private sector funds started penetrating the
fund families. In the same year the first Mutual Fund Regulations came into existance with re-
registering all mutual funds except UTI. The regulations were further given a revised shape in 1996.
Kothari Pioneer was the first private sector mutual fund company in India which has now merged
with Franklin Templeton. Just after ten years with private sector players penetration, the
total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund companies in India.
46
Major Mutual Fund Companies in India
ABN AMRO Mutual Fund Reliance Mutual Fund

 Birla Sun Life Mutual Fund Standard Chartered Mutual Fund
 Bank of Baroda Mutual Fund Franklin Templeton India Mutual
Fund
 HDFC Mutual Fund Morgan Stanley Mutual Fund India
 HSBC Mutual Fund Escorts Mutual Fund
 ING Vysya Mutual Fund Alliance Capital Mutual Fund
 Prudential ICICI Mutual Fund Benchmark Mutual Fund
 State Bank of India Mutual Fund Canbank Mutual Fund
 Tata Mutual Fund Chola Mutual Fund
 Unit Trust of India Mutual Fund LIC Mutual Fund
47
Mutual Fund and Traditional
Investment comparison

When it comes to saving or investing money, most Indians prefer

traditional options such as fixed deposits (FDs), Public Provident Fund
(PPF) or gold.
These avenues are well-known for capital preservation and stable

returns. However, mutual funds are a good alternative for short-term
as well as long-term returns. Let’s see how:
 Mutual funds vs. Fixed deposits
Fixed Deposits Debt mutual funds
2 reasons for investing in FDs: Debt mutual funds offer similar

1) Capital preservation benefits to investors
2) Good returns
Constant returns Returns can vary but they help to

beat inflation
Less liquid: you cannot exit an Highly liquid. You can exit a debt
FD any time you wish fund any time you wish
Capital preservation and regular returns: two of the biggest reasons

why people put their money in FDs. Debt mutual funds offer similar
benefits to the investor.
For instance, they are considered relatively safe investments. And

while the returns can vary, they can help beat inflation. In addition,
mutual funds are more liquid compared to FDs. You can exit a fund
any time you want to. FDs don’t provide you that facility.
48
Mutual funds vs Public Provident Fund
As the year draws to a close, many investors start looking for tax-
saving investment options like PPF. Equity Linked Saving schemes
(ELSS) offer the same benefit to investors. Under Section 80C of the
Income Tax act, you can claim a maximum deduction of up to Rs 1.5
lakh
Public Provident Fund ELSS mutual funds
Minimum lock in period is 15 ELSS has a 3 year lock in period

years
Offers low-risk steady returns Returns linked to equity market:

So market exposure is higher but
possible to earn higher returns
Minimum investment: Rs 500 Minimum investment: Rs 500

per year
Maximum investment: Rs 1.5 Maximum investment: No limit

lakh
Mutual funds vs Gold

The allure of gold has captivated Indians for centuries. Every family
buys and invests in the yellow metal in the form of jewellery and gold
coins. However, gold Exchange Traded Funds (ETFs) are a good
alternative to physical gold.
Gold Gold ETFs
Pricing is not uniform. It varies Pricing and transaction of gold

from one jeweller to another ETFs are completely transparent
Making charges (20-30%) form Brokerage charges (around 0.5%)

a significant expense and expense ratio (1%) are much
lower
Safety issues: loss or theft of No danger of theft since they are

physical gold is possible traded in demat form
Tough to liquidate physical gold Easy to sell gold ETFs when

for cash in short time required
Conclusion
While most Indians still prefer the traditional investment avenues, the
scenario is slowly changing. Over the past few years, the mutual fund
industry has gained traction in the country.
The reason is simple: there are a variety of mutual funds in the

market that can help you reach your financial goals.
50
FUTURE PROSPECT OF MUTUAL FUNDS IN INDIA
Financial experts believe that the future of Mutual Funds in India will be very bright. It has been
estimated that by March-end of 2010, the mutual fund industry of India will reach Rs 40,90,000
crore, taking into account the total assets of the Indian commercial banks. In the coming 10 years
the annual composite growth rate is expected to go up by 13.4%.
· 100% growth in the last 6 years.

· Number of foreign AMC's are in the queue to enter the Indian markets like Fidelity
Investments, US based, with over US$1trillion assets under management
worldwide.
· Our saving rate is over 23%, highest in the world. Only channelizing these savings
in mutual funds sector is required.
· We have approximately 29 mutual funds which is much less than US having more
than 800. There is a big scope for expansion.
· 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are
concentrating on the 'A' class cities. Soon they will find scope in the growing cities.
· Mutual fund can penetrate rurals like the Indian insurance industry with simple and
limited products.
· SEBI allowing the MF's to launch commodity mutual funds.
· Emphasis on better corporate governance.
· Trying to curb the late trading practices.
· Introduction of Financial Planners who can provide need based advice.
51
Looking at the past developments and combining it with the current trends it can be concluded
that the future of Mutual Funds in India has lot of positive things to offer to its investors.
RESEARCH METHODOLOGY
This Report is based on primary as well as secondary data, however primary data collection was
given more important since it is overhearing factor in attitude studies.
One of the most important users of Research Methodology is that it helps in identifying the
problem, collecting, analyzing the required information or data and providing an alternative
solution to the problem. It also helps in collecting the vital information that is required by the Top
Management to assist them for the better decision making both day to day decisions and critical
ones.
a) Research Design: Descriptive Design
b) Data Collection Method: Survey Method
c) Universe: Kolkata
d) Sampling Method: The sample was collected through personal visits, formally
and informal talks and through filling up the Questionnaire prepared. The data has
been analyzed by using mathematical or statistical tools.
e) Sample Size: 100 respondents
52
f) Sampling Unit: Businessmen, Government Servant, Retired Individuals
g) Data Source: Primary data
h) Data Collection Instrument: Structured Questionnaire
i) Sample Design: Data has been presented with the help of Bar Graph, Pie Chart,
and Line Graph etc.
j) Duration Of The Study: The study was carried out for a period of two months, from
18 Oct to 30th Nov ‘12.
th
53
Mutual Funds: Conclusion
Let's recap what we've learned in this mutual fund tutorial:
 A mutual fund brings together a large group of people and invests their
aggregated money in stocks, bonds, and other securities.
 The advantages of mutual funds are professional
management, diversification, economies of scale, and wide range of offerings.
 The disadvantages of mutuals are high costs, over-diversification, possible tax
consequences, liquidity concerns, and the inability of management to
guarantee a superior return.
 There are many, many types of mutual funds. You can classify funds based on
asset class, investing strategy, region, etc.
 Mutual funds have expenses that can be broken down generally into ongoing
fees (represented by the expense ratio) and transaction fees (loads).
 Some funds carry no broker fee, known as no-load mutual funds.
 One of the biggest problems with mutual funds are their costs and fees.
 Mutual funds are easy to buy and sell. You can either buy them directly from
the fund company or through a third party.
 Comparing fund returns across a number of metrics is important, such as over
time, compared to its benchmark, and compared to other funds in its peer
group.
54
Sample Questionnaire
Name: ................... Age: …………….. Mob. ……………
Ques.1 What is your Qualification?
(a) Under-graduation (b) Graduation (c) Post Graduation (d) Others
Ques.2 What is your Occupation?
(a) Government (b) Private (c) Business (d) Others
Ques.3 What is your monthly family income?
(a) <=10000 (b) 10001-20000 (c) 20001-30000 (d) >30000
Ques.4 Do you have any idea about Mutual Fund?
(a) Yes (b) No
Ques.5 From where you came to know about Mutual Fund?
(a) Advertisement (b) Peer Group (c) Banks (d) Financial Advisors
Ques.6 Where you will prefer to invest?
(a) Savings (b) FD (c) Insurance (d) Mutual Fund (e)PO (f) Shares (g) Gold (h) Real Estate
Ques.7 Which is your preference while investing?
(a) Low Return (b) High Risk (c) Liquidity (d) Trust
Ques.8 Which Mutual Fund Company you will prefer to invest?
(a) Reliance (b) SBI (c) UTI (d) HDFC (e) Others
Ques.9 Which mode of investment will you prefer?
(a) Long Term (b) Short Term
Ques.10 Objective of investment?
(a) Preservation (b) Current Income (c) Conservative Growth (d) Aggressive Growth
55
Data Analysis & Interpretation
1. Analyzing to according to Age
Interpretation - Here, it is been found that most of the investors i.e,35% of the investors who invest in
Mutual Fund lies in between the age group of 36-40, they are more reluctant as well as experienced in this field of
Mutual Fund.
Then the Second highest age group lies in between the age group of 41-45 (22%), they are also aware of the
benefits in investing in mutual fund.
The least interested group is the Youth Generations.
2. Analyzing according to Qualifiaction
56
Interpretation - Out of my survey of 100 people, 71% of the investors are Graduates and Post Graduates
and 16.67% are Under Graduates and Others, around 12.5%, which may include persons who have passed their
10th standard or 12th standard invests in Mutual Funds.
3. Analyzing according to Occupation
Interpretation - Here it is amazed to see that around 46% of the investment is been invested by the
persons working in Private sectors, according to them investing in Mutual Funds is more safer as well as
more gainer.
Then we find that the businessmen of around 25%gives more preference in investing in mutual funds,
they think that investing in mutual fund is better than investing in shares as well as Post office.
Next we see that the persons working in Government sectors of around 24% only invests in
Mutual Fund.
4. Analyzing according to Monthly Family Income
57
Interpretation - Here , we find that investors of around 43% with the monthly income of Rs.
>30000 are the most likely to invest in Mutual fund , than any other income group.
5. Analyzing data according to factors seen before investing
Interpretation - As it can be clearly Stated from the above Diagram that investors before investing,
the main criteria that they used to give more Preference is Low Risk. According to them, if a scheme is
low risk, it may or may not give a very good return , but still 56% of the investors choose low risk as the
option while investing in Mutual Funds.
58
Then we see that 27% of the investors take High return as one of their most important criteria.
According to them, if there is no high return then we should opt for Post office and not mutual fund.
11% of the investors take trust as one of their important factors
Only 4% of the Investors think liquidity as their most preferable options.
6. Analyzing data according to mode of investment
Interpretation - It can be clearly stated from the above Figure that 82% of the investors like to invest
in SIP, as the investor feels that they are more comfortable to save via SIP than the Long term.
While 18% of the investors find SIP as very burdensome, and they are more reluctant to save in Long
term investment.
7. Analyzing data according to objective of investment
59
Interpretation - Here we see that 36% of the investor’s objectives are to preserve the principal
amount, so that it can be used as a savings for the future period.
While 22% investors invest to get derive their current income through investing in Mutual Funds.
While 15% and 17% of the investors invest to get a conservative as well as aggressive growth.
8. Analyzing data according to awarness about Mutual Fund
Interpretation -. From The total lot of 100 people, 96 people are actually aware of the fact of Mutual
fund and are regular investors of Mutual Funds.
4 People were there who have just heard the name or rather are just aware of the fact of existence of the
word called Mutual Fund, but doesn’t know anything else about Mutual Funds.
60
9. Analyzing data according to from where they came to know about
Mutual Fund.
Interpretation - Here from the Line Graph it can be clearly stated that around 46% of the
investors came to know the benefits of Mutual Fund from Financial Advisors. According to the
suggestions given by the financial advisors, people use to choose Mutual Funds Scheme.
Then Secondly,24% and 21% of the people used to know from Advertisement and Peer group
respectively.
Lastly 9% of the investors do invests after being intimated by the Banks about the benefits of
Mutual Funds.
10.Analyzing data according to investors choice of investing in different

Mutual Fund Companies.
61
Interpretation - From this above Pie Chart it can be clearly stated that 45% , 17%of the people like to
invest in large cap companies where return is comparatively less but risk is low thus they invest in
Reliance, SBI respectively.
15%, 10% of the people like to invest in Mutual Fund Companies like HDFC, UTI, etc. where risk is slightly
higher than the above two mentioned companies as well as return is also slightly high
13% of the investors like to invest in the Small Cap’s and Mid Cap’s companies.
FINDINGS
Through this Project the results that was derived are-
People who lie under the age group of 36-40 have more experience and are more interested in
investing in Mutual Funds.
There was a lot of lack of awareness or ignorance, that’s why out of 200 people, 120 people have
invested in Mutual Fund and 80 people is unaware of investing in Mutual Funds.
Generally, People employed in Private sectors and Businessman are more likely to invest in
Mutual Funds, than other people working in other professions.
Generally investors whose monthly income is above Rs. 20001-30000 are more likely to invest
their income in Mutual Fund, to preserve their savings of at least more than 20%.
People generally like to save their savings in Mutual Fund, Fixed Deposits and Savings Account.
Many people came to know about Mutual Fund from Financial Advisors, Advertisement as well
as from their Peer group , and they generally invest in the Mutual Fund by taking advices from
their Legal Advisors.
Investors generally like to invest in Large Cap Companies like Reliance, SBI, etc. to minimize
their risk.
The most popular medium of investing in Mutual Fund is through SIP and moreover people like
to invest in Equity Fund though it is a risky game.
The main Objective of most of the Investors is to preserve their Income.
62
Mutual Fund SWOT Analysis
Picking a mutual fund can be a difficult choice. One helpful tool in

making this decision is the SWOT Analysis. This is an analysis which
focuses on the Strengths, Weaknesses, Opportunities and Threats of
a particular mutual fund. Many companies make the SWOT analysis
simple for potential customers by providing the information in their
annual reports. Once these aspects have been identified, the various
mutual funds may be measured against one another to determine
the best choice for each individual's unique circumstances.
History
The exact origins of the SWOT analysis are unknown, but it appears
to have originated in businesses in the 1950s and 1960s. It is
possible that the acronym was developed by one specific business
person or professor, or it may have simply evolved within several
different organizations around the same time. Whatever its origin is,
the SWOT analysis
appears to have become more widely used, as well as more tightly
defined sometimes.
Considerations
The information provided by a SWOT analysis can be extremely

helpful to an investor who is choosing a mutual fund. An
organization's strengths and weaknesses are key factors to consider
when deciding whether to invest your money with them. A mutual
fund's strengths are defined as internal factors on which the
organization might rely to add value to their products and services.
The most critical strength for a mutual fund is its performance.
Weaknesses are also internal factors, which may detract from the
value of an organization's products and services. These might
include poor management, low cash flow and redemption rates or
unusually high fees. Risk may be a weakness for some investors
looking for a smaller beta or standard deviation. All of this
information would be extremely helpful when choosing a mutual
fund.
63
Mutual Fund SWOT Analysis
A SWOT analysis can help keep your nest egg in the right place.
Mutual funds are among the financial products that benefit from
conducting a SWOT analysis. By reviewing their strengths,
weaknesses, opportunities and threats, an individual investor can
be better informed on where to invest their money, and be
positioned to shift gears along with the market.
Strengths
The most critical strength for a mutual fund is its performance. If a
fund is outperforming the market, and particularly if it is at the top
of its benchmark, that is a big selling point. If the fund is part of a
well-established company with a track record of success and a
family of high-performing products, that brand name and
historical record may also be a strength. A best-in-class research
department or methodology that has a track record of picking
winners is a huge asset as well.
64
Different financial metrics may be key depending on your

investment style and the fund involved: dividend yield may be the
key for one investor, total return over a
10-year period for another.
Weaknesses
One weakness to look at are your fund’s fees. A high expense
ratio is a weakness even if it pays for an active management
currently beating the market with its returns. Even in good times,
expenses are a drag on investor return, and they will be more
difficult to accept if the performance declines. Size can be a
weakness as well, since bigger isn’t always better. As a small-cap
fund gets bigger, for example, it will have a hard time finding
growth opportunities for all of its assets and may have to close or
expand outside of its stated objective. Risk may be a weakness for
some investors looking for a smaller beta or standard deviation.
Opportunities
It's not enough to look at the current numbers when evaluating
prospective mutual funds. You also need to look at the overall
market and consider whether the fund is best positioned to take
advantage of trends. A lagging fund may offer the best
opportunity for growth if the combination of a management
change and economic trends prove beneficial. A change in the
government regulatory environment not only affects different
industries, but the funds that concentrate in those sectors as well.
Threats
To some extent, many funds move along with general economic
news. Some types of funds do better in a recession while others
track well in boom times -- those funds are particularly threatened
by a sudden change in the unemployment rate that undermines
consumer confidence or a stimulus plan that gets people spending
again. In addition, if a fund is dependent on a superstar manager,
make sure you have a plan in place if that manager suddenly
decides to leave.
65
Benefits Of SWOT Analysis of mutual funds
Reviewing the detailed SWOT analysis of a mutual fund or a group of

mutual funds and other investment instruments is very beneficial.
The SWOT analysis lays out all of the factors that might influence
the organization in a way that the investor can compare and
contrast the various instruments and weigh the pros and cons of
each. One weakness that is shared by all mutual funds is the fact
that they have no guaranteed return. Because of this, a mutual fund
might lose out to bonds, Treasury bills and other guaranteed
investment options due to the nature of the mutual fund.
Expert Insights
Many major financial players use the SWOT analysis to highlight the
strengths of their own mutual funds as opposed to others. The
strengths of a mutual fund might include such aspects as its
positioning within the industry, rates of growth, expense ratios,
return on investment and the fund's ability to attract and keep
clients. An organization with a relatively large pool of experienced
managers is another possible strength.
External Factors
Sometimes, a SWOT analysis will help the investor determine that a

mutual fund is not the right choice for him at all. For example, the
investor might determine that certain threats that arose out of the
SWOT analysis are too great. Threats are external factors that can
include new competitors and changing laws. Tightening laws and
regulations can have a negative effect on a mutual fund by closing
loopholes of which the funds may have previously taken advantage.
Hedge funds are another threat that has arrived on the market in
recent years. These types of funds are a threat to mutual funds in
that they have a history of bringing markets down, causing damage
to nonguaranteed investments including mutual funds.
66
Bibliography
nseindia.com
bseindia.com
sebi.gov.in
Ashutosh Vashishtha and Satish Kumar “Development of Financial

Mutual Funds Market in India- A Case Study”
Dr. Premalata Shenbagaraman “Do Futures and Options trading

increase stock market volatility?”
Golaka C Nath “Behaviour of Stock Market Volatility after Mutual Funds”
O.P. Gupta “Effect Of Introduction Of Index Futures On Stock Market

Volatility:The Indian Evidence”
Rajendra P. Chitale “Use of Mutual Funds by India’s Institutional

Investors:Issues and Impediments”
Sandeep Srivastava “Informational Content Of Trading Volume And

Open Interest – An Empirical Study Of Stock Option Market In India”
Ajay Shah and Susan Thomas “The evolution of the securities markets in
India in the 1990s”
Snehal Bandivadekar and Saurabh Ghosh “Mutual Funds in Indian Stock

Markets”
Sumon Bhaumik and Suchismita Bose “Impact of Mutual Funds on

Emerging Capital Markets: A Note on Expiration Day Effects in India”
Susan Thomas and Ajay Shah “Mutual Funds in India: The state of the art”

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INSTITUTE OF MANAGEMENT EDUCATION

(Affiliated to Chaudhary Charan Singh University, Meerut)

UNDER THE GUIDANCE OF

Institute Guide: Organization Guide:

Institute of Management Education | Mutual Funds 1

Date: …………………… Faculty Mentor’s Name: …………

Institute of Management Education | Mutual Funds 2

I Chandershekhar student of IME-INSTITUTE OF MANAGEMENT EDUCATION IV

Date: Bachelor of Business

Institute of Management Education | Mutual Funds 3

Institute of Management Education | Mutual Funds 4

2 Introduction Of Mutual Fund 17-22

5 Types Of Mutual Funds Schemes In India 29-35

6 Selection Parameters For Mutual Fund 35-37

9 Marketing Strategies for Mutual Funds 38-40

10 Working Of Mutual Funds 40

11 Mutual Funds In India 41

12 Mutual Fund Companies In India 42-49

13 Mutual funds and traditional investment comparison 49-51

17 Mutual Funds SWOT Analysis 64-67

Understanding the significance of Mutual Funds market, types of instruments present

Institute of Management Education | Mutual Funds 5

History of Indian Stock Market

Primary and Secondary Capital Markets

Institute of Management Education | Mutual Funds 7

Indian Stock Exchange

Institute of Management Education | Mutual Funds 8

WHAT IS SEBI AND WHAT IS ITS ROLE?

Institute of Management Education | Mutual Funds 9

Institute of Management Education | Mutual Funds 10

SEBI appointed the L. C. Gupta Committee in 1998 to recommend the regulatory

Institute of Management Education | Mutual Funds 11

Bombay Stock Exchange (BSE)

Institute of Management Education | Mutual Funds 12

Surveillance: BSE's On-Line Surveillance System (BOSS) monitors on a real-time

Institute of Management Education | Mutual Funds 14

Origin and History of the National Stock Exchange

Institute of Management Education | Mutual Funds 15

CONCEPT OF MUTUAL FUND:

What Makes Mutual Funds Good Investment Options

Additionally, investing in a mutual fund is generally a cost-effective way to gain access to

Mutual Fund Fees Cover Administrative Costs

Different Indian mutual funds allow investors various solutions ranging

RETURN RISK MATRIX

GROWTH IN ASSETS UNDER MANAGEMENT

6. Convenience And Flexibility:

DISADVANTAGES OF INVESTING THROUGH MUTUAL

4. The Wisdom Of Professional Management:

1. Open - Ended Schemes:

2. Close - Ended Schemes:

Money Market Schemes:

Sector Specific Schemes:

Your risk capacity and capability:

Fund Manager’s and scheme track record:

Types of Returns on Mutual Fund:

The Fund Sponsor:

Mutual Funds as Trusts:

Custodian and Depositories:

REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA:

ABN AMRO Mutual Fund Reliance Mutual Fund

 Unit Trust of India Mutual Fund LIC Mutual Fund

When it comes to saving or investing money, most Indians prefer