INTRODUCTION

Investors have variety of options for investments. Some of them are providing fixed rate of
returns are some of them provide variable rate of returns. Many had investments with UTI,
Company fixed deposits, and Bank fixed deposits that were offering high returns that now they
are starting falling after globalization and liberalization.

There are some investors who are active. They are the ones who act promptly and make
educated, informed decisions about market. They done their own research and understand the
factors which may have effect on their investments in future. On the other hand some investors
who are apprehensive and will take action only when they can see tangible merits on the
change.

As every individual is different, their objectives behind investments also differ from person to
person. Their objectives can for fixed return, capital appreciation, tax planning or current
income. The investment decision will mainly depend upon the objective of investor. He or she
needs to design their portfolio according to their risk and return profile. The individual should
start by specifying investment goals. Once these goals are established, the individual should be
aware of the mechanics of investing and the environment in which investment decision are
made. The individual should start by specifying investment goals, as per that they select the
type of investment and portfolio

Ones individual has decided about the type of investment then he or she needs to decide
portfolio in that category. There are various ways of maintaining portfolio of individual.
 Chapter: 1
INTRODUCTION OF MUTUAL FUND

There are a lot of investment avenues available today in the financial market for an investor with an
investable surplus. He can invest in Bank Deposits, Corporate Debentures, and Bonds where there is low
risk but low return. He may invest in Stock of companies where the risk is high and the returns are also
proportionately high. The recent trends in the Stock Market have shown that an average retail investor
always lost with periodic bearish tends. People began opting for portfolio managers with expertise in
stock markets who would invest on their behalf. Thus we had wealth management services provided by
many institutions. However they proved too costly for a small investor. These investors have found a
good shelter with the mutual funds.

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 the
members. 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.
The objective sought to be achieved by Mutual Fund is to provide an opportunity for
lower income groups to acquire without much difficulty financial assets. They cater mainly to
the needs of the individual investor whose means are small and to manage investors portfolio in a
manner that provides a regular income, growth, safety, liquidity and diversification opportunities
DEFINITION:

“Mutual funds are collective savings and investment vehicles where savings of small (or
sometimes big) investors are pooled together to invest for their mutual benefit and returns
distributed proportionately”.

“A mutual fund is an investment that pools your money with the money of an unlimited number
of other investors. In return, you and the other investors each own shares of the fund. The fund's
assets are invested according to an investment objective into the fund's portfolio of investments.
Aggressive growth funds seek long-term capital growth by investing primarily in stocks of fast-
growing smaller companies or market segments. Aggressive growth funds are also called capital
appreciation funds”.
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 derivatives
market which is considered very volatile.

RETURN RISK MATRIX

HIGHIER RISK HIGHER RISK
MODERATE RETURNS HIGHIER RETURNS

Venture
Equity
Capital

Bank FD Mutual
Funds
Postal
Savings
LOWER RISK LOWER RISK
LOWER RETURNS HIGIER RETURNS
HISTORY OF MUTUAL FUNDS IN INDIA:
The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank. The history of mutual funds
in India can be broadly divided into four distinct phases

FIRST PHASE – 1964-87:

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up
by the Reserve Bank of India and functioned under the Regulatory and administrative control of
the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial
Development Bank of India (IDBI) took over the regulatory and administrative control in place
of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had
Rs.6,700 crores of assets under management.

SECOND PHASE – 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS):

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India
(GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed
by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank
Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in December
1990.
At the end of 1993, the mutual fund industry had assets under management of Rs.47,004
crores.

THIRD PHASE – 1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS):

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in
which the first Mutual Fund Regulations came into being, under which all mutual funds, except
UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July 1993.
 The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI
(Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and acquisitions. As
at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.
The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of
other mutual funds.
FOURTH PHASE – SINCE FEBRUARY 2003:
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India
with assets under management of Rs.29,835 crores as at the end of January 2003, representing
broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified
Undertaking of Unit Trust of India, functioning under an administrator and under the rules
framed by Government of India and does not come under the purview of the Mutual Fund
Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of
the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under
management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector funds, the
mutual fund industry has entered its current phase of consolidation and growth. As at the end of
September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421
schemes.
The graph indicates the growth of assets under management over the years.

GROWTH IN ASSETS UNDER MANAGEMENT

(Source: www.amfiindia.com)
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.
 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:

The mutual funds capital gains taxation depends on the type of mutual fund scheme and the
investment tenure. On the basis of investment tenure, there are two types of capital gains tax –
Short Term Capital Gains Tax (STCG) and Long Term Capital Gains Tax (LTCG).

Short Term Capital Long Term Capital

Type of Scheme Particulars Gains Tax Gains Tax
Equity oriented Holding Period Up to 12 months More than 12 months
schemes Tax Rate 15% 10%*
Holding Period Up to 36 months More than 36 months
Non-equity oriented Income Tax Slab Rate of
schemes Tax Rate Investor 20% after indexation
8. Choice of Schemes:
Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.

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.

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.
 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.

TYPES OF MUTUAL
FUNDS

BY INVESTMENT
BY STRUCTURE BY NATURE OTHER SCHEMES
OBJECTIVE

Open - Ended Tax Saving

Equity Fund Growth Schemes
Schemes Schemes

Close - Ended
Debt Funds Income Schemes Index Schemes
Schemes

Sector Specific
Interval Schemes Balanced Funds Balanced Schemes
Schemes

Money Market
Schemes
A). BY STRUCTURE
B). 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.
C). 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.
  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.
D). 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.
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.
 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.
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 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.
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.
SEBI REGULATIONS:
 As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual
funds to protect the interest of the investors.

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

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

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

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

 SEBI Regulations require that at least two thirds of the directors of trustee company or board
of trustees must be independent i.e. they should not be associated with the sponsors.

 Also, 50% of the directors of AMC must be independent. All mutual funds are required to be
registered with SEBI before they launch any scheme.

 Further SEBI Regualtions, inter-alia, stipulate that MFs cannot gurarnatee returns in any
scheme and that each scheme is subject to 20 : 25 condition [I.e minimum 20 investors per
scheme and one investor can hold more than 25% stake in the corpus in that one scheme].

 Also SEBI has permitted MFs to launch schemes overseas subject various restrictions and
also to launch schemes linked to Real Estate, Options and Futures, Commodities, etc.
ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI):

With the increase in mutual fund players in India, a need for mutual fund association in
India was generated to function as a non-profit organisation. Association of Mutual Funds in
India (AMFI) was incorporated on 22nd August, 1995.
AMFI is an apex body of all Asset Management Companies (AMC) which has been
registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its
members. It functions under the supervision and guidelines of its Board of Directors.
Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to
a professional and healthy market with ethical lines enhancing and maintaining standards. It
follows the principle of both protecting and promoting the interests of mutual funds as well as
their unit holders.

The Objectives of Association of Mutual Funds in India:

The Association of Mutual Funds of India works with 30 registered AMCs of the
country. It has certain defined objectives which juxtaposes the guidelines of its Board of
Directors. The objectives are as follows:
 This mutual fund association of India maintains high professional and ethical standards in
all areas of operation of the industry.
 It also recommends and promotes the top class business practices and code of conduct
which is followed by members and related people engaged in the activities of mutual
fund and asset management. The agencies who are by any means connected or involved
in the field of capital markets and financial services also involved in this code of conduct
of the association.
 AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund
industry.
 Association of Mutual Fund of India do represent the Government of India, the Reserve
Bank of India and other related bodies on matters relating to the Mutual Fund Industry.
 It develops a team of well qualified and trained Agent distributors. It implements a
programme of training and certification for all intermediaries and other engaged in the
mutual fund industry.
 AMFI undertakes all India awareness programme for investors in order to promote proper
understanding of the concept and working of mutual funds.
 At last but not the least association of mutual fund of India also disseminate informations
on Mutual Fund Industry and undertakes studies and research either directly or in
association with other bodies.
 AMFI Publications:AMFI publish mainly two types of bulletin. One is on the
monthly basis and the other is quarterly. These publications are of great support for the
investors to get intimation of the knowhow of their parked money.
 FACTORS IMPACTING THE INDUSTRY
Political Factors:
a) Government Regulation: SEBI regulates the industry and every decision taken by them impact the
industry very quickly.
b) Stable constituency: The mutual fund industry can take long term decision if the government is stable
c) Fiscal policy: tax structure plays a very important role in the growth of the industry .If the tax
structure will be high than there will be less savings and investment. We have seen the interest rate
reducing continuously which boost the industry to sell products which are better than the FDs, PF, NSC
and KVPs.

Economic factors:
d) Market performance: The last five years witnessed a sharp rise in the markets. The mutual fund
industry basically works parallel with the markets. Suppose, if the markets always be on downside, then
the investors will not be so comfortable to invest. This will reduce the market size drastically. e) Global
Standards: As the industry will grow better, India being a global economy, the MF industry has to match
to the global mature MF markets. They have to give due emphasis on product innovation, cost reduction
and penetration.
f) Inflation: price rise affects interest rate and reduces the chances of investment. Social factors:
g) Consumer behaviour: this is very unpredictable and based on sentiments gets changed very
frequently, which sometimes makes selling of products difficult.
h) Income: The rich people are in bigger cities, so the mutual fund industry is much more concentrated
there. Technological factors: This is the era of information technology and due to net banking, online
transaction, online RTGS, clearing system helps the industry a lot.
Kotak Small cap

Mutual Fund Kotak Mahindra Mutual Fund

Setup Date Jun-23-1998
Incorporation Date Aug-05-1994
Sponsor Kotak Mahindra Bank Limited
Trustee Kotak Mahindra Trustee Co. Ltd.
Chairman Mr. Uday Kotak
CEO / MD Mr. Nilesh Shah
CIO Ms. Lakshmi Iyer (D) / Mr. Harsha Upadhyaya
(E)
Compliance Officer Ms. Jolly Bhatt
Investor Service Officer Ms. Sushma Mata
Assets Managed Rs. 161209.06 crore (Jun-30-2019)

Holding
Stock Invested in Sector % of Total
Holdings
Aavas Financiers Ltd. Housing finance 1.12%
Alkyl Amines Chemicals Ltd. Chemicals - organic 0.53%
Amber Enterprises India Ltd. Air conditioner 1.67%
Amulya Leasing and Finance Ltd. Nbfc 1.55%
Apar Industries Ltd. Power equipment 0.53%
APL Apollo Tubes Ltd. Steel products 2.44%
Arvind Fashions Ltd. Industrial equipment 0.45%
Arvind Ltd. Fabrics and garments 0.25%
Au Small Finance Bank Ltd. Banks 2.66%
Bharat Earth Movers Ltd. Industrial equipment 1.04%
Blue Star Ltd. Air conditioner 2.19%
Cadila Healthcare Ltd. Pharmaceuticals 0.88%
Century Plyboards India Ltd. Plywood boards 1.55%
Coromandel International Ltd. Fertilisers-phosphatic 1.42%
Dixon Technologies (India) Ltd. Consumer elctronics 2.42%
Finolex Cables Ltd. Cables - electricals 1.10%
Galaxy Surfactants Ltd. Chemicals - speciality 3.26%
Great Eastern Shipping Co. Ltd. Shipping 0.91%
Hawkins Cookers Ltd. Consumer products 2.03%
Heritage Foods (india) Ltd. Consumer food 2.00%
Hindustan Oil Exploration Co. Ltd. Oil exploration 1.57%
 ICICI Bank Ltd. Banks 2.08%
Indusind Bank Ltd. Banks 1.29%
Ipca Laboratories Ltd. Pharmaceuticals 0.39%
J.K. Cement Ltd. Cement 3.13%
JMC Projects (India) Ltd. Construction civil 3.33%
Kajaria Ceramics Ltd. Sanitary ware 1.46%
Kewal Kiran Clothing Ltd. Fabrics and garments 1.27%
Laurus Labs Ltd. Pharmaceuticals 1.35%
Lux Industries Ltd. Fabrics and garments 2.20%
Mahindra & Mahindra Financial Services Ltd. Nbfc 1.11%
Mahindra Lifespace Developers Ltd. Residential/commercial/sez project 2.08%
Motherson Sumi Systems Ltd. Auto ancillaries 0.52%
MRF Ltd. Tyres & allied 0.67%
Navneet Publications (india) Ltd. Printing and publishing 0.56%
Nilkamal Ltd. Plastic products 1.87%
Persistent Systems Ltd. Computers - software 1.35%
Pi Industries Ltd. Pesticides and agrochemicals 2.66%
Prataap Snacks Ltd. Consumer food 2.42%
Ratnamani Metals & Tubes Ltd. Steel products 2.91%
RBL Bank Ltd. Banks 1.14%
Sandhar Technologies Ltd. Auto ancillaries 0.82%
Schaeffler India Ltd. Bearings 1.41%
Security and Intelligence Services (India) Ltd. Diversified commercial services 1.83%
Sheela Foam Ltd. Houseware 3.45%
Shoppers Stop Limited Retailing 1.36%
Shriram City Union Finance Ltd. Nbfc 1.14%
Simran Wind Project Private Ltd. Power 3.89%
Solar Industries India Ltd. Explosives 2.97%
The Ramco Cements Ltd. Cement 2.30%
Thermax Ltd. Industrial equipment 1.50%
Torrent Pharmaceuticals Ltd. Pharmaceuticals 0.93%
V-Guard Industries Ltd. Industrial electronics 2.05%
Vardhman Textiles Ltd. Spinning-cotton/blended 1.09%
Varroc Engineering Pvt Ltd. Auto ancillaries 1.65%
VST Tillers Tractors Ltd. Tractors 1.39%
WPIL Ltd. Compressors / pumps 1.69%
- Atul Ltd. Chemicals - speciality 2.21%
- Carborundum Universal Ltd. Abrasives 0.09%
- Sundaram Finance Limited Nbfc 0.53%
- Supreme Industries Ltd. Plastic products 1.73%
Axis Bluechip Fund - Growth

Holding
Stock Invested in Sector % of Total
Holdings
HDFC Bank Ltd. Banks 9.54%
Bajaj Finance Ltd. Nbfc 9.11%
Kotak Mahindra Bank Ltd. Banks 8.93%
Tata Consultancy Services Ltd. Computers - software 7.70%
ICICI Bank Ltd. Banks 5.79%
Housing Development Finance Corporation Housing finance 4.70%
Ltd.
Avenue Supermarts Ltd. Retailing 4.21%
Larsen & Toubro Ltd. Engineering, designing, construction 3.88%
Infosys Ltd. Computers - software 3.76%
Titan Company Ltd. Gems, jewellery and watches 3.45%
Bajaj Finserv Ltd Nbfc 3.14%
Nestle India Ltd. Consumer food 3.10%
Asian Paints (india) Ltd. Paints 2.48%
Hindustan Unilever Ltd. Diversified 2.47%
Bandhan Bank Ltd. Banks 2.35%
Reliance Industries Ltd. Refineries/marketing 2.23%
Nifty 50 : Futures Near Diversified 1.97%
Maruti Suzuki India Ltd. Passenger/utility vehicles 1.66%
Pidilite Industries Ltd. Chemicals - speciality 1.55%
Divis Laboratories Ltd. Pharmaceuticals 1.53%
Ultratech Cement Ltd. Cement 1.09%
Bharti Airtel Ltd. Telecom - services 0.75%
Gruh Finance Ltd. Housing finance 0.64%
Shree Cement Ltd. Cement 0.62%
RETURNS

Period Invested for kotak Axis bluechip

1 Year -12.93% 2.41%
2 Year -3.79% 12.11%
3 Year 3.39% 13.29%
5 Year 12.10% 12.11%
Since Inception 13.51% 11.88%

30.00%
25.00%
20.00%
15.00%
Axis Title

10.00%
5.00%
0.00%
-5.00%
-10.00%
-15.00%
1 Year 2 Year 3 Year 5 Year
Axis bluechip 2.41% 12.11% 13.29% 12.11%
kotak -12.93% -3.79% 3.39% 12.10%
Axis blue chip fund vs Kotak small cap

beta 0.88 0.66

Standard deviation 12.45 16.54
Sharpe ratio 0.55 -0.13
Treynor’s ratio 0.08 -0.03
Jenslons ratio 3.83 2.01

Axis bluechip vs kotak small cap

18
16
14
12
Axis Title

10
8
6
4
2
0
-2
Standard
beta Sharpe ratio Treynor’s ratio Jenslons ratio
deviation
Axis bluechip fund 0.88 12.45 0.55 0.08 3.83
Kotak small cap 0.66 16.54 -0.13 -0.03 2.01