Mutual Funds - Project Report

BHAVESH M.
POPAT
A
PROJECT REPORT
ON
“A STUDY ON MUTUAL
FUNDS”
Submitted by:
BHAVESH M. POPAT
SUMMER 2017
A project report submitted in partial

Fulfillment of the requirements for the degree of
Masters of Business Administration of
Sikkim Manipal University
INDIA
Reg. number - 1502001904 Page 1

BHAVESH M. POPAT
STUDENT DECLARATION
I hereby declare that this project entitled:
“A STUDY ON MUTUAL FUNDS”
Submitted in partial fulfillment of the requirements for the degree of Masters of
business Administration to SMU, India, is my original work and not submitted
for the award for any other degree, diploma, fellowship, or any other similar
title or prizes.
Place: AHMEDABAD BHAVESH M. POPAT
Date: 25/10/2017 (Signature)

BHAVESH M. POPAT
CERTIFICATE
This is to certify that a project entitled “MUTUAL FUNDS IN INDIA” is a
record of project work done by BHAVESH M. POPAT bearing Registration
No: 1502001904, student of final year MBA, Sikkim Manipal University. This
project has not been previously formed a basis for the award of any degree.
This project represents an independent work on the part of the candidate under
my guidance.
Place: AHMEDABAD
Date: 25/10/2017
Signature of the student
Signature of the Guide

BHAVESH M. POPAT
TABLE OF CONTENTS
S. PAGE
NO PARTICULARS NO.
1 INTRODUCTION 5-9
2 RESEARCH METHODOLOGY 10-22
3 ANALYSIS & INTERPRETATION OF DATA 23-67
4 PERFORMANCE COMPARISON OF LEADING MUTUAL
FUNDS 68-85
5 OBJECTIVES, NEED FOR THE STUDY & CONCLUSION 86-90
6 BIBLIOGRAPHY 91-92

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Introduction

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INTRODUCTION
A mutual fund is a professionally managed type of collective investment

scheme that pools money from many investors and invests it in stocks, bonds,
short-term money market instruments and other securities. Mutual funds have a
fund manager who invests the money on behalf of the investors by buying /
selling stocks, bonds etc. Currently, the worldwide value of all mutual funds
totals more than $US 26 trillion.
There are various investment avenues available to an investor such as real

estate, bank deposits, post office deposits, shares, debentures, bonds etc. A
mutual fund is one more type of Investment Avenue available to investors.
There are many reasons why investors prefer mutual funds. Buying shares
directly from the market is one way of investing. But this requires spending
time to find out the performance of the company whose share is being

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purchased, understanding the future business prospects of the company, finding

out the track record of the promoters and the dividend, bonus issue history of
the company etc. An informed investor needs to do research before investing.
However, many investors find it cumbersome and time consuming to pore over
so much of information, get access to so much of details before investing in the
shares. Investors therefore prefer the mutual fund route. They invest in a mutual
fund scheme which in turn takes the responsibility of investing in stocks and
shares after due analysis and research.
The investor need not bother with researching hundreds of stocks. It leaves it to
the mutual fund and it‟s professional fund management team. Another reason
why investors prefer mutual funds is because mutual funds offer diversification.
An investor‟s money is invested by the mutual fund in a variety of shares, bonds
and other securities thus diversifying the investor‟s portfolio across different
companies and sectors.
This diversification helps in reducing the overall risk of the portfolio. It is also
less expensive to invest in a mutual fund since the minimum investment amount
in mutual fund units is fairly low (Rs. 500 or so). With Rs. 500 an investor may
be able to buy only a few stocks and not get the desired diversification. These
are some of the reasons why mutual funds have gained in popularity over the
years.
Indians have been traditionally savers and invested money in traditional savings
instruments such as bank deposits. Against this background, if we look at
approximately Rs. 7 lakh crores which Indian Mutual Funds are managing, then

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it is no mean an achievement. A country traditionally putting money in safe,

risk-free investments like Bank FDs, Post Office and Life Insurance, has started
to invest in stocks, bonds and shares – thanks to the mutual fund industry.
However, there is still a lot to be done. The Rs. 7 Lakh crores stated above,
includes investments by the corporate sector as well. Going by various reports,
not more than 5% of household savings are channelized into the markets, either
directly or through the mutual fund route. Not all parts of the country are
contributing equally into the mutual fund corpus. 8 cities account for over 60%
of the total assets under management in mutual funds.
These are issues which need to be addressed jointly by all concerned with the
mutual fund industry. Market dynamics are making industry players to look at
smaller cities to increase penetration. Competition is ensuring that costs
incurred in managing the funds are kept low and fund houses are trying to give
more value for money by increasing operational efficiencies and cutting
expenses. As of today there are around 40 Mutual Funds in the country.
Together they offer around 1051 schemes to the investor. Many more mutual
funds are expected to enter India in the next few years.
All these developments will lead to far more participation by the retail investor
and ample of job opportunities for young Indians in the mutual fund industry.
This module is designed to meet the requirements of both the investor as well as
the industry professionals, mainly those proposing to enter the mutual fund
industry and therefore require a foundation in the subject.

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Investors need to understand the nuances of mutual funds, the workings of

various schemes before they invest, since their money is being invested in risky
assets like stocks/ bonds (bonds also carry risk). The language of the module is
kept simple and the explanation is peppered with „concept clarifiers‟ and
examples.

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RESEARCH
Methodology

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Research Methodology
MEANING OF RESEARCH:-
Research as “the manipulation of things, concepts of symbols for the purpose of
generalizing to extend, correct or verify knowledge, whether that knowledge
aids in construction of theory or in the practice of an art.”
The Research Methodology followed for further work can be primarily

classified into two stages namely Exploratory and Descriptive. The stepwise
details of the research are as follows:
Stage - I
Exploratory Study: Since we always lack a clear idea of the problems one will
meet during the study, carrying out an exploratory study is particularly useful. It
helped develop my concepts more clearly, establish priorities and in improve
the final research design.
Exploratory study will be carried out by conducting:

Secondary data analysis which included studying the various websites related to
mutual funds in India (as mentioned in the project) and also going through the
various articles published in different sources (magazines, books, internet,
newspapers).
Stage – II
Descriptive Study: After carrying out initial Exploratory studies to bring clarity
on the subject under study, Descriptive study will be carried out to know the
current performance of mutual funds in India.

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The knowledge of leading mutual funds is needed to document the process and
suggest improvements in the current system to make it more effective. The tools
used to carry out Descriptive study included both monitoring and Interrogation.

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EXECUTIVE SUMMARY
India's private mutual funds were born out of chaos. The 1992 Harshad Mehta
scam had shaken small investors. Those scarred by the stock markets were
investing in either Unit Trust of India's US 64 scheme or assured-return
schemes of mutual funds promoted by public sector banks.
US 64, a balanced fund, was giving 18% annual dividend and bank-promoted
mutual funds were promising to treble (return 15% a year) money in eight years.
Daily disclosure of unit value, called net asset value (NAV), was unheard of; in
fact, NAVs were rarely disclosed, neither were portfolios of the schemes.
The Securities and Exchange Board of India (Sebi) had just come into being and
was trying to grapple with the kerfuffle caused by the securities scam. Amid all
this, in 1993, it allowed private mutual funds to set up shop in the country.
That year, seven private fund managers were given permission to start business.
The first was Kothari Pioneer Mutual Fund, which launched two schemes-
Kothari Pioneer Prima, an open-ended mid- and small-cap fund, and Kothari
Pioneer Bluechip, a close-ended large-cap fund-in November. Others who
followed were 20th Century Mutual Fund, ICICI Mutual Fund, Taurus Mutual
Fund and Morgan Stanley Mutual Fund.
Many of these were a result of tie-ups between Indian and foreign entities. Their
new and dynamic fund management practices, and the evolving Sebi regulations
over the last two decades, have made mutual funds as investor-friendly a
product as any.

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The Indian mutual fund industry is passing through a transformation. On one

side it has seen a number of regulatory developments while on the other the
overall economy is just recovering from the global crisis of 2008. The
regulatory changes have been made keeping in mind the best interests of the
investors.
However, like all changes these changes will take time to be adapted by
industry, intermediaries and the investing public at large. The industry is
looking forward to early resolution of certain inter-regulatory issues requiring
Government / Court intervention. Market participants are waiting to see how the
industry adapts to these changes, while trying to maintain its pace of growth.
Mutual funds are restructuring their business models to provide for increased
efficiencies and investor satisfaction.
The industry also faces a number of issues which are characterized by lack of
investor awareness, low penetration levels, high dependence on corporate sector
and spiraling cost of operations. The Growth rate of the industry therefore needs
to be seen from this perspective.
Though, it is commendable to note, that, Assets Under Management have

managed to record a compounded growth of 28% over 2006-2010, however, the
AUM of Equity Funds and Balanced Funds where retail investors invest have
only grown by 20% in the same period. The net sales of Equity/Balanced funds
in 2009-10 have been one of the lowest in recent years.

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India has vast growth potential backed by a resilient economy, commensurate

with an accelerated GDP growth rate of 7.4%, high rate of household savings
and investments.

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LITERATURE REVIEW
Literature means writings and a body of literature refers to all the published
writings in a particular style on a particular subject.
In research, a body of literature is a collection of published information and data

relevant to a research question.
The research question. Often referred to as the research problem, the research
question provides the context for the research study and reveals what the
researcher is trying to answer.
The paper must answer clearly, "What is the problem?" and "Why do I care?"
At the same time, stating the problem precisely limits the scope of the research
project by focusing on certain elements. It lets you show why those variables
are important.
The statement of the problem is the first part of the paper to be read after the
title and abstract. It's like a lead on a newspaper story. It hooks the reader and
gives context to what follows.
The literature review. A review of the literature is an essential part of your

academic research project. The review is a careful examination of a body of
literature pointing toward the answer to your research question.
Literature reviewed typically includes scholarly journals, scholarly books,

authoritative databases and primary sources. Sometimes it includes newspapers,

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magazines, other books, films, and audio and video tapes, and other secondary
sources.
Primary sources are the origin of information under study, fundamental

documents relating to a particular subject or idea. Often they are first hand
accounts written by a witness or researcher at the time of an event or discovery.
These may be accessible as physical publications, as publications in electronic
databases, or on the Internet.
Secondary sources are documents or recordings that relate to or discuss

information originally presented elsewhere. These, too, may be accessible as
physical objects or electronically in databases or on the Internet.
All good research and writing is guided by a review of the relevant literature.
Your literature review will be the mechanism by which your research is viewed
as a cumulative process. That makes it an integral component of the scientific
process.
More about the research question »

Why do it? The purpose of the literature review remains the same regardless of
the research method you use. It tests your research question against what
already is known about your subject.
Through the literature review you will discover whether your research question
already has been answered by someone else. If it has, you must change or
modify your question.

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Considering your question. If you find that your research question has not been
answered satisfactorily by someone else, then search for these answers:
What is known about my subject?
What is the chronology of the development of knowledge about my subject?
Are there any gaps in knowledge of my subject? Which openings for research
have been identified by other researchers? How do I intend to bridge the gaps?
Is there a consensus on relevant issues? Or is there significant debate on issues?

What are the various positions?
What is the most fruitful direction I can see for my research as a result of my
literature review? What directions are indicated by the work of other
researchers? Remember that nothing is completely black or white. Only you can
determine what is satisfactory, relevant, significant or important in the context
of your own research.
Mutual Funds have become a widely popular and effective way for investors to
participate in financial markets in an easy, low-cost fashion, while muting risk
characteristics by spreading the investment across different types of securities,
also known as diversification. It can play a central role in an individual's
investment strategy.
They offer the potential for capital growth and income through investment
performance, dividends and distributions under the guidance of a portfolio
manager who makes investment decisions on behalf of mutual fund unit

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holders. Over the past decade, mutual funds have increasingly become the
investor‟s vehicle of choice for long-term investment. It becomes pertinent to
study the performance of the mutual fund. The relation between risk-return
determines the performance of a mutual fund scheme.
As risk is commensurate with return, therefore, providing maximum return on

the investment made within the acceptable associated risk level helps in
segregating the better performers from the laggards. Many asset management
companies are working in India, so it is necessary to study the performance of it
which may be useful for the investors to select the right mutual fund.
LITERATURE REVIEWS:
Sapar & Narayan(2003) examines the performance of Indian mutual funds in a
bear market through relative performance index, risk-return analysis, Treynor's
ratio, Sharp's ratio, Sharp's measure, Jensen's measure, and Fama's measure with
a sample of 269 open ended schemes (out of total schemes of 433). The results
of performance measures suggest that most of the mutual fund schemes in the
sample of 58 were able to satisfy investor's expectations by giving excess
returns over expected returns based on both premium for systematic risk and
total risk.
Rao D. N (2006) studied the financial performance of select open-ended equity

mutual fund schemes for the period 1st April 2005 - 31st March 2006 pertaining
to the two dominant investment styles and tested the hypothesis whether the
differences in performance are statistically significant. The analysis indicated
that growth plans have generated higher returns than that of dividend plans but

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at a higher risk studied classified the 419 open-ended equity mutual fund
schemes into six distinct investment styles.
Agrawal Deepak & Patidar Deepak (2009) studied the empirically testing on
the basis of fund manager performance and analyzing data at the fund-manager
and fund-investor levels. The study revealed that the performance is affected by
the saving and investment habits of the people and at the second side the
confidence and loyalty of the fund Manager and rewards- affects the
performance of the MF industry in India.
Mehta Sushilkumar (2010) analyze the performance of mutual fund schemes

of SBI and UTI and found out that SBI schemes have performed better then the
UTI in the year 2007-2008. Selvam et.al (2011) studied the risk and return
relationship of Indian mutual fund schemes. The study found out that out of
thirty five sample schemes, eleven showed significant t–values and all other
twenty four sample schemes did not prove significant relationship between the
risk and return. According to t-alpha values, majority (thirty two) of the sample
schemes' returns were not significantly different from their market returns and
very few number of sample schemes' returns were significantly different from
their market returns during the study period.
Sharpe (1966), was among the earliest to use the CAPM to assess mutual funds
performance. He assumed that expected return E(R.). of a fund and its risk (0.)
are linearly related. This can be explained with the help of the following
equation.

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Mc Donald (1974) studied the performance of 123 funds using monthly data for
the period 1960-69. His study was based on a CAPM model four measures
monthly mean excess return; reward-ta-volatility Ratio, Jensen's alpha and
reward to variability ratio were calculated. He concluded that the average fund
performance was not significantly different from the market and given fees and
expenses they were slightly better.
Mains (1977) carried out Jensen's study for 70 of the funds over the same
period. He carried out the study with annual and monthly returns. While annual
data gave an average alpha of minus 62 basis points the monthly data gave a
positive nine basis points. Mains argued that monthly data was more efficient.
These studies show that fund managers do out perform a passive benchmark
index portfolio while several studies also devote to the market timing ability of
funds but these are excluded as they are not the objective in their study.
Importantly these studies also show that performance assessment is dependent
upon the time period, the type of funds studied and more importantly the index
for comparison. Increasingly the single factor CAPM came under criticism.
A study was conducted by Grinblatt and Titman (1989) to examine the

superior stock selection abilities of mutual fund managers through which
researcher generated abnormal returns. For this purpose a sample of 274 funds
was taken from 1974 to1984. Study applied Jensen Measure and compared the
abnormal returns of active and passive investment strategies both with and
without transaction costs, fees, and expenses. The results showed that the actual
returns of these funds do not exhibit abnormal performance indicating that
investors cannot take advantage of the superior abilities of these portfolio
managers by purchasing shares in the mutual funds.

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According to Teri (2007) mutual fund is a professional investment company

which managed collection of stocks, bonds, or other securities owned by a
group of investor. Each mutual fund had a fund manager who purchased and
sold the fund‟s investment according to the fund goals. Fund managers were
responsible to analyze the economic conditions, industry trends, government
regulations and the impact on stocks before selecting the securities for
investment. Mutual funds provided investment facility to the small investors
who cannot afford to invest the large sums of money Teri (2007).
Miller and Nicholas conducted a research to examine the risk- return

relationships in the presence of nonstattionarity in order to obtain more precise
estimates of alpha and beta. For this purpose of study applied partition
regression and a partition selection rule for estimating the traditional CAPM.
Studies applied these procedures to price appreciation data for the market and
28 mutual funds.

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ANALYSIS &
INTERPRETATION
OF DATA
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Mutual funds concepts
MUTUAL FUNDS: STRUCTURE IN INDIA

For anybody to become well aware about mutual funds, it is imperative for him
or her to know the structure of a mutual fund. How does a mutual fund come
into being? Who are the important people in a mutual fund? What are their
roles? etc. We will start our understanding by looking at the mutual fund
structure in brief.
Mutual Funds in India follow a 3-tier structure. There is a Sponsor (the First
tier), who thinks of starting a mutual fund. The Sponsor approaches the
Securities & Exchange Board of India (SEBI), which is the market regulator
and also the regulator for mutual funds.
Not everyone can start a mutual fund. SEBI checks whether the person is of
integrity, whether he has enough experience in the financial sector, his Net
worth etc. Once SEBI is convinced, the sponsor creates a Public Trust (the
Second tier) as per the Indian Trusts Act, 1882. Trusts have no legal identity in
India and cannot enter into contracts, hence the Trustees are the people
authorized to act on behalf of the Trust.

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Contracts are entered into in the name of the Trustees. Once the Trust is created,
it is registered with SEBI after which this trust is known as the mutual fund.
It is important to understand the difference between the Sponsor and the Trust.
They are two separate entities. Sponsor is not the Trust; i.e. Sponsor is not the
Mutual Fund. It is the Trust which is the Mutual Fund. The Trustees role is not
to manage the money. Their job is only to see, whether the money is being
managed as per stated objectives. Trustees may be seen as the internal
regulators of a mutual fund.
WHO MANAGES INVESTOR’S MONEY?

This is the role of the Asset Management Company (the Third tier). Trustees
appoint the Asset Management Company (AMC), to manage investor‟s money.
The AMC in return charges a fee for the services provided and this fee is borne
by the investors as it is deducted from the money collected from them. The
AMC‟s Board of Directors must have at least 50% of Directors who are
independent directors.
The AMC has to be approved by SEBI. The AMC functions under the
supervision of it‟s Board of Directors, and also under the direction of the
Trustees and SEBI. It is the AMC, which in the name of the Trust, floats new
schemes and manage these schemes by buying and selling securities. In order to
do this the AMC needs to follow all rules and regulations prescribed by SEBI
and as per the Investment Management Agreement it signs with the Trustees.

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If any fund manager, analyst intends to buy/ sell some securities, the permission
of the Compliance Officer is a must. A compliance Officer is one of the most
important persons in the AMC. Whenever the fund intends to launch a new
scheme, the AMC has to submit a Draft Offer Document to SEBI. This draft
offer document, after getting SEBI approval becomes the offer document of the
scheme. The Offer Document (OD) is a legal document and investors rely upon
the information provided in the OD for investing in the mutual fund scheme.
The Compliance Officer has to sign the Due Diligence Certificate in the OD.
This certificate says that all the information provided inside the OD is true and
correct. This ensures that there is accountability and somebody is responsible
for the OD. In case there is no compliance officer, then senior executives like
CEO, Chairman of the AMC has to sign the due diligence certificate. The
certificate ensures that the AMC takes responsibility of the OD and its contents.
WHO IS A CUSTODIAN?
A custodian‟s role is safe keeping of physical securities and also keeping a tab
on the corporate actions like rights, bonus and dividends declared by the
companies in which the fund has invested. The Custodian is appointed by the
Board of Trustees. The custodian also participates in a clearing and settlement
system through approved depository companies on behalf of mutual funds, in
case of dematerialized securities.
In India today, securities (and units of mutual funds) are no longer held in
physical form but mostly in dematerialized form with the Depositories. The
holdings are held in the Depository through Depository Participants (DPs). Only
the physical securities are held by the Custodian.

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The deliveries and receipt of units of a mutual fund are done by the custodian or
a depository participant at the instruction of the AMC and under the overall
direction and responsibility of the Trustees. Regulations provide that the
Sponsor and the Custodian must be separate entities.
WHAT IS THE ROLE OF THE AMC?

The role of the AMC is to manage investor‟s money on a day to day basis. Thus
it is imperative that people with the highest integrity are involved with this
activity. The AMC cannot deal with a single broker beyond a certain limit of
transactions.
The AMC cannot act as a Trustee for some other Mutual Fund. The
responsibility of preparing the OD lies with the AMC. Appointments of
intermediaries like independent financial advisors (IFAs), national and regional
distributors, banks, etc. is also done by the AMC. Finally, it is the AMC which
is responsible for the acts of its employees and service providers.
As can be seen, it is the AMC that does all the operations. All activities by the
AMC are done under the name of the Trust, i.e. the mutual fund. The AMC
charges a fee for providing its services. SEBI has prescribed limits for this. This
fee is borne by the investor as the fee is charged to the scheme, in fact, the fee is
charged as a percentage of the scheme‟s net assets. An important point to note
here is that this fee is included in the overall expenses permitted by SEBI.
WHAT ARE THE INVESTOR’S RIGHTS & OBLIGATIONS?

Some of the Rights and Obligations of investors are:-

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¨ Investors are mutual, beneficial and proportional owners of the scheme‟s

assets. The investments are held by the trust in fiduciary capacity (The fiduciary
duty is a legal relationship of confidence or trust between two or more parties).
¨ In case of dividend declaration, investors have a right to receive the dividend

within 30 days of declaration.
¨ On redemption request by investors, the AMC must dispatch the redemption

proceeds within 10 working days of the request. In case the AMC fails to do so,
it has to pay an interest @ 15%. This rate may change from time to time subject
to regulations.
¨ In case the investor fails to claim the redemption proceeds immediately, then
the applicable NAV depends upon when the investor claims the redemption
proceeds.
¨ Investors can obtain relevant information from the trustees and inspect
documents like trust deed, investment management agreement, annual reports,
offer documents, etc. They must receive audited annual reports within 6 months
from the financial year end.
¨ Investors can wind up a scheme or even terminate the AMC if unit holders
representing 75% of scheme‟s assets pass a resolution to that respect.
¨ Investors have a right to be informed about changes in the fundamental

attributes of a scheme. Fundamental attributes include type of scheme,
investment objectives and policies and terms of issue.

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¨ Lastly, investors can approach the investor relations officer for grievance
redressal. In case the investor does not get appropriate solution, he can approach
the investor grievance cell of SEBI. The investor can also sue the trustees.

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ADVANTAGES OF MUTUAL FUNDS
Professional expertise: Investing requires skill. It requires a constant study of

the dynamics of the markets and of the various industries and companies within
it. Anybody who has surplus capital to be parked as investments is an investor,
but to be a successful investor, you need to have someone managing your
money professionally.
Just as people who have money but not have the requisite skills to run a
company (and hence must be content as shareholders) hand over the running of
the operations to a qualified CEO, similarly, investors who lack investing skills
need to find a qualified fund manager.
Mutual funds help investors by providing them with a qualified fund manager.
Increasingly, in India, fund managers are acquiring global certifications like
CFA and MBA which help them be at the cutting edge of the knowledge in the
investing world.

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Diversification: There is an old saying: Don't put all your eggs in one basket.
There is a mathematical and financial basis to this. If you invest most of your
savings in a single security (typically happens if you have ESOPs (employees
stock options) from your company, or one investment becomes very large in
your portfolio due to tremendous gains) or a single type of security (like real
estate or equity become disproportionately large due to large gains in the same),
you are exposed to any risk that attaches to those investments.
In order to reduce this risk, you need to invest in different types of securities
such that they do not move in a similar fashion. Typically, when equity markets
perform, debt markets do not yield good returns. Note the scenario of low yields
on debt securities over the last three years while equities yielded handsome
returns. Similarly, you need to invest in real estate, or gold, or international
securities for you to provide the best diversification.
If you want to do this on your own, it will take you immense amounts of money
and research to do this. However, if you buy mutual funds -- and you can buy
mutual funds of amounts as low as Rs 500 a month! -- you can diversify across
asset classes at very low cost. Within the various asset classes also, mutual
funds hold hundreds of different securities (a diversified equity mutual fund, for
example, would typically have around hundred different shares).
Low cost of asset management: Since mutual funds collect money from
millions of investors, they achieve economies of scale. The cost of running a
mutual fund is divided between a larger pool of money and hence mutual funds
are able to offer you a lower cost alternative of managing your funds.

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Equity funds in India typically charge you around 2.25% of your initial money
and around 1.5% to 2% of your money invested every year as charges. Investing
in debt funds costs even less. If you had to invest smaller sums of money on
your own, you would have to invest significantly more for the professional
benefits and diversification.
Liquidity: Mutual funds are typically very liquid investments. Unless they have
a pre-specified lock-in, your money will be available to you anytime you want.
Typically funds take a couple of days for returning your money to you. Since
they are very well integrated with the banking system, most funds can send
money directly to your banking account.
Ease of process: If you have a bank account and a PAN card, you are ready to
invest in a mutual fund: it is as simple as that! You need to fill in the application
form, attach your PAN (typically for transactions of greater than Rs 50,000) and
sign your cheque and you investment in a fund is made.
In top 8-10 cities, mutual funds have many distributors and collection points,
which make it easy for them to collect and you to send your application to.
Well regulated: India mutual funds are regulated by the Securities and
Exchange Board of India, which helps provide comfort to the investors. Sebi
forces transparency on the mutual funds, which helps the investor make an
informed choice. Sebi requires the mutual funds to disclose their portfolios at
least six monthly, which helps you keep track whether the fund is investing in
line with its objectives or not.

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Disadvantages of mutual funds
1. Subject to market risk

Mutual fund investments are subject to market risk involved. This caution
(warning) can be checked with the offer document where it is clearly mentioned
as follows:
"Mutual Fund investments are subject to market risks. Please read the offer
document carefully before investing."
2. No guarantee of returns
Mutual funds do not give any guarantee of the returns for the investments made
in its various schemes.
3. Diversification of portfolio doesn't maximize returns

Mutual fund helps to diversify the portfolio. However, though the
diversification of portfolio helps in minimization of risk, these do not results in
maximization of returns to the investors.
4. Selecting right financial securities is not easy

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It's difficult task for a mutual fund manager to select appropriate and suitable
financial securities for investment to generate higher returns.
5. Cost management not proportional to performance

Mutual fund managers are one of the highest-paid executives in the finance
domain. Furthermore, the fee paid to the Asset Management Company (AMC)
is no way related to the performance of these funds.
6. Unethical practices may creep in

Mutual fund managers may follow unethical (corrupt) practices to boost the
performance of the various fund-related schemes.
7. 12b-1 fees
Hidden fees are popularly known as '12b-1 fees'. It is basically a sum of annual
distribution fees or marketing fees. The 12b-1 fee derives its name from a
section in the Investment Company Act of 1940, United States.
12b-1 fees are disclosed in the mutual fund prospectus and can also be found on
the official website of such issuer organization.

BHAVESH M. POPAT
Phases of mutual funds industry

First Phase - 1964-1987
Unit Trust of India (UTI) was established in 1963 by an Act of Parliament. It
was set up by the Reserve Bank of India and functioned under the Regulatory
and administrative control of the Reserve Bank of India. In 1978 UTI was de-
linked from the RBI and the Industrial Development Bank of India (IDBI) took
over the regulatory and administrative control in place of RBI. The first scheme
launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs. 6,700
crores of assets under management.
Second Phase - 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non-UTI, public sector mutual funds set up by public
sector banks and Life Insurance Corporation of India (LIC) and General
Insurance Corporation of India (GIC). SBI Mutual Fund was the first non-UTI
Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec
87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund
(Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in
December 1990. At the end of 1993, the mutual fund industry had assets under
management of Rs. 47,004 crores.
Third Phase - 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund
families. Also, 1993 was the year in which the first Mutual Fund Regulations
came into being, under which all mutual funds, except UTI were to be

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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, sponsored by SBI, PNB, BOB and LIC. It
is registered with SEBI and functions under the Mutual Fund Regulations. With

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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.

BHAVESH M. POPAT
Major Mutual Fund Companies in India

ABN AMRO Mutual Fund
ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO
Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO
Asset Management (India) Ltd. was incorporated on November 4, 2003.
Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund.
Birla Sun Life Mutual Fund
Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun
Life Financial. Sun Life Financial is a golbal organisation evolved in 1871 and
is being represented in Canada, the US, the Philippines, Japan, Indonesia and
Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative
long-term approach to investment. Recently it crossed AUM of Rs. 10,000
crores.
Bank of Baroda Mutual Fund (BOB Mutual Fund)

BHAVESH M. POPAT
Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30,
1992 under the sponsorship of Bank of Baroda. BOB Asset Management
Company Limited is the AMC of BOB Mutual Fund and was incorporated on
November 5, 1992. Deutsche Bank AG is the custodian.
HDFC Mutual Fund
HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namely
Housing Development Finance Corporation Limited and Standard Life
Investments Limited.
HSBC Mutual Fund
HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and
Capital Markets (India) Private Limited as the sponsor. Board of Trustees,
HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.

BHAVESH M. POPAT
ING Vysya Mutual Fund
ING Vysya Mutual Fund was setup on February 11, 1999 with the same named
Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING
Investment Management (India) Pvt. Ltd. was incorporated on April 6, 1998.
Prudential ICICI Mutual Fund
The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one
of the largest life insurance companies in the US of A. Prudential ICICI Mutual
Fund was setup on 13th of October, 1993 with two sponsors, Prudential Plc. and
ICICI Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the
AMC is Prudential ICICI Asset Management Company Limited incorporated on
22nd of June, 1993.
State Bank of India Mutual Fund
State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to
launch offshore fund, the India Magnum Fund with a corpus of Rs. 225 cr.

BHAVESH M. POPAT
approximately. Today it is the largest Bank sponsored Mutual Fund in India.

They have already launched 35 Schemes out of which 15 have already yielded
handsome returns to investors. State Bank of India Mutual Fund has more than
Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread
over 18 schemes.
Tata Mutual Fund
Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The
sponsors for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment
Corporation Ltd. The investment manager is Tata Asset Management Limited
and its Tata Trustee Company Pvt. Limited.
Kotak Mahindra Mutual Fund
Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of

KMBL. It is presently having more than 1,99,818 investors in its various
schemes. KMAMC started its operations in December 1998. Kotak Mahindra
Mutual Fund offers schemes catering to investors with varying risk - return
profiles. It was the first company to launch dedicated gilt scheme investing only
in government securities.
BHAVESH M. POPAT
Unit Trust of India Mutual Fund
UTI Asset Management Company Private Limited, established in Jan 14, 2003,
manages the UTI Mutual Fund with the support of UTI Trustee Company
Private Limited. UTI Asset Management Company presently manages a corpus
of over Rs.20000 Crore. The sponsors of UTI Mutual Fund are Bank of Baroda
(BOB), Punjab National Bank (PNB), State Bank of India (SBI), and Life
Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund are
Liquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity
Funds and Balance Funds.
Reliance Mutual Fund
Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act,
1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital
Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as
Reliance Capital Mutual Fund which was changed on March 11, 2004. Reliance
Mutual Fund was formed for launching of various schemes under which units
are issued to the Public with a view to contribute to the capital market and to
provide investors the opportunities to make investments in diversified securities.

BHAVESH M. POPAT
LIC Mutual Fund
Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989.
It contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund
was constituted as a Trust in accordance with the provisions of the Indian Trust
Act, 1882. . The Company started its business on 29th April 1994. The Trustees
of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management
Company Ltd as the Investment Managers for LIC Mutual Fund.

BHAVESH M. POPAT
GROWTH OF MUTUAL FUND INDUSTRY IN INDIA

The Indian mutual fund industry is one of the fastest growing sectors in the
Indian capital and financial markets. The mutual fund industry in India has seen
dramatic improvements in quantity as well as quality of product and service
offerings in recent years. The concept of mutual funds was introduced in India
with the formation of Unit Trust of India in 1963.
The first scheme launched by UTI was the now infamous Unit Scheme 64 in
1964. UTI continued to be the sole mutual fund until 1987, when some public
sector banks and Life Insurance Corporation of India and General Insurance
Corporation of India set up mutual funds. It was only in 1993 that private
players were allowed to open shops in the country.
Today, 32 mutual funds collectively manage Rs 6713575.19 cr under hundreds

of schemes. The industry has steadily grown over the decade. For example,
before the public sector mutual funds entry, UTI was managing around Rs 6,700
crore on its own. Public sector mutual funds also helped accelerate the growth
of Assets Under Management.
UTI and its public sector counterparts were managing around Rs 47,000 crore
when Kothari Pioneer, the first private sector mutual fund, set up shop in 1993.
Before the US 64 fiasco, there were 33 mutual funds with total assets of Rs 1,
21,805 crore as on January 2003. The UTI was way ahead of other mutual funds
with Rs 44,541 crore assets under management. The industry overall has
performed well over the years. Of course, there were a few funds houses, which
disappointed investors.

BHAVESH M. POPAT
However, overall performance has been good. However, lack of awareness still
impedes the growth of the mutual fund industry. Unlike developed countries,
most of the household savings still go to bank deposits in India. In the year
2004, the mutual fund industry in India was worth Rs 1,50,537 crores. The
mutual fund industry is expected to grow at a rate of 13.4% over the next 10
years.
Mutual funds assets under management grew by 96% between the end of 1997
and June 2003 and as a result it rose from 8% of GDP to 15%. The industry has
grown in size and manages total assets of more than $30351 million. Of the
various sectors, the private sector accounts for nearly 91% of the resources
mobilized showing their overwhelming dominance in the market. Individuals
constitute 98.04% of the total number of investors and contribute US $12062
million, which is 55.16% of the net assets under management.

BHAVESH M. POPAT
FUTURE AND GROWTH OF MUTUAL FUNDS IN

INDIA- KEY FINDINGS
According to report of Businessmaps of India, Important aspects related to the
future of mutual funds in India are -
 The growth rate was 100 % in 6 previous years.
 The saving rate in India is 23 %.
 There is a huge scope in the future for the expansion of the mutual funds
industry.
 A number of foreign based assets management companies are venturing
into Indian markets.
 The Securities Exchange Board of India has allowed the introduction of
commodity mutual funds.
 The emphasis is being given on the effective corporate governance of
Mutual Funds.
 The Mutual funds in India has the scope of penetrating into the rural and
semi urban areas.
 Financial planners are introduced into the market, which would provide
the people with better financial planning.
According to RNCOS research report titled “Current and Future outlook of

Mutual Fund Industry”, key finding are –
 The Indian mutual funds retail market, growing at a Compounded Annual
Growth Rate (CAGR) of about 30%, is forecasted to reach US$ 300
Billion by 2015.
 Income and growth schemes made up for majority of Assets Under
Management (AUM) in the country.

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 At about 84% (as on March 31, 2008), private sector Asset Management
Companies account for majority of mutual fund sales in India.
 Individual investors make up for 96.86% of the total number of investor
accounts and contribute 36.9% of the net assets under management.
Based on KPMG report titled “Indian Mutual Fund Industry – The Future in a
Dynamic Environment Outlook for 2016” key results are-
 KPMG in India is of the view that the industry AUM is likely to continue
to grow in the range of 15 to 25 percent from the period 2010 to 2016
based on the pace of economic growth. In the event of a quick economic
revival and positive reinforcement of growth drivers identified, KPMG in
India is of the view that the Indian mutual fund industry may grow at the
rate of 22 to 25 percent in the period from 2010 to 2016, resulting in
AUM of INR 16,000 to 18,000 billion in 2016.
 In the event of a relatively slower economic revival resulting in the
identified growth drivers not reaching their full potential, KPMG in India
is of the view that the Indian mutual fund industry may grow in the range
of 15 to 18 percent in the period from 2010 to 2016, resulting in AUM of
INR 15,000 to 17,000 billion in 2016.
 Industry profitability may reduce further as revenues shrink and operating
costs escalate. Product innovation is expected to be limited. Market
deepening and widening is expected with the objective of increased retail
penetration and participation in mutual funds. The regulatory and
compliance framework for mutual funds is likely to get aligned with the
other frameworks across the financial services sector.

BHAVESH M. POPAT
OPPORTUNITIES OF MUTUAL FUND INDUSTRY

In any industry, innovation and improvements happen when the rules are
changed. Large-scale environmental changes such as those that have taken place
in the last three years must lead to innovation and evolution.
 Newer leaner operating structures will have to evolve which will entail
the use of technology that helps an AMC (Asset Management Company)
reach the retail end user with solutions that enable transactions via
platforms such as mobile or online platforms. This will not only give
greater direct access but will also help AMCs to better understand
investor behaviour and create the appropriate environment and products
to move towards long and healthy relationships with the investors.
 As the industry evolves, outsourcing an increasing number of functions to
reduce the head-count and increase efficiency might be the norm. All
aspects of operating costs must be examined for efficiencies.
 A rational look at schemes of an AMC by their management teams is
needed to better understand the mix, the cost and the benefits – to the
investors as well as to the AMCs.
 Agile product design, re-positioning of ETFs (Exchange Traded Funds)
and SIPs (Systematic Investment Plans)
 Better communication of scheme returns on a relative basis to investors is
required. The alpha achieved is insufficiently communicated or
understood.
 The new AIF (Alternative Investment Fund) guidelines will create
opportunities to broaden the revenue base without commensurate cost
increases.

BHAVESH M. POPAT
 The asset management industries in the US and in Japan have had their
“401 k” (a type of retirement savings account in the US) moments. In the
late 70s market regulators in the US permitted pension funds (later 401K)
to invest a portion of their funds (at the discretion of the individual) into
mutual fund schemes. This saw a huge upsurge in the AUM of the
industry as a whole. Similarly the Japanese asset management industry
went on a growth surge around the turn of the century when the pension
and retirement funds were permitted to be invested in the asset
management schemes. The EPF (Employee Pension Fund) in India is a
huge pool of long-term investible funds. These are expected to yield high
returns. If the right mechanism were to be created to channelise even a
small proportion of the funds to be invested in the Indian mutual fund
schemes (specific schemes can be selected if required), it will provide a
boost to the industry, apart from maintaining the more important
objective of having the funds managed by a regulated sector and by
persons with a track record.
 Imagine the change if 20% of the 3,00,000 crore INR were permitted to
be invested in the Indian capital markets via the asset management
industry. It will be the industry‟s „401K‟ moment. A similar impact
could be generated by introducing the concept of individual retirement
accounts (IRAs). Some of the investment products available are in the
nature of retirement benefit plans (EPF, PPF and now NPS (National
Pension Fund) as well as certain insurance products).
 Avenues such as EPF are available to only a certain section of the
population. To encourage people to save for the post retirement period
IRAs can be offered. The investments into such schemes could be self-
directed, flexible and in specific circumstances tax deductible. The fund

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so created could be available tax free (EEE) at the age of retirement. Such
a concept exists in the mature western markets such as the US and
contributes to about 20% of the assets under management!
 The recently announced Rajiv Gandhi Equity Savings Scheme is another
opportunity for the mutual fund industry. We believe that given the low
financial awareness of such new or first time investors in the far flung
regions, it is imperative that these investors are channelised into the
markets via mutual funds rather than directly investing into equities
themselves!
 Advisory services to off-shore funds should be explored further as an area
of revenue diversification. More could be done in this direction.

BHAVESH M. POPAT
MUTUAL FUND- EMERGING CHALLENGES
GROWTH VERSUS GOVERNANCE – A RIGHT MIX

The Indian Mutual Fund industry has held its ground in the center of hard times
in capital market. As number of players in the market increases, competition
may force fund houses to comply not only with the laid down regulations and
concentrate more on growth but efforts in creating excellence in governance as
well. In this challenging environment, the debate of growth versus governance
is surely set to assume greater significance.
ADMINISTRATION AND DISTRIBUTION

No discussion on mutual funds can be complete without touching upon the
aspect of distribution. A lot has been spoken about the need to increase
penetration of mutual funds in Tier II and Tier III cities. Rural participation in
mutual funds continues to be poor. Such poor penetration has much to do with
lack of investor awareness, inefficiencies in fund transfer mechanisms, presence
of safer substitutes and cost of establishing presence in smaller areas. Fund
houses cannot fight this battle single handedly. They need adequate support in
terms of banking infrastructure, distribution services and technological solutions
to ensure a sustainable cost-benefit model of growth.

BHAVESH M. POPAT
INVESTOR EDUCATION- A DRIVING FORCE ON FINANCIAL

PLANNING
The efforts taken by the industry and AMFI towards investor education are
definitely showing results. The media is also making a fair share of its
contribution. Today, we have news channels, running dedicated shows for
mutual funds, wherein fundamentals of investing in mutual funds are explained
and queries of investors are answered by experts. However, the fact remains that
in our country mutual funds are sold rather than bought and this trend has been
observed uniformly across all classes of investors and for all kinds of products.
This is where professional help is required. The economic boom in our country
has led to the emergence of a very strong Small and Medium Enterprise (SME)
sector.
THE TECHNOLOGICAL BACKBONE

Fund houses have introduced interesting technological innovations such as
transacting through the internet, net asset value updates on mobile phones, unit
balance alerts via SMS messages, transacting through ATM cards etc. However,
these innovations currently cater to the already pampered urban class of
investors. The internet revolution in our country is yet to penetrate to the grass
root levels. The per capita usage of internet in our country is still very low
compared not only to the developed countries but also as compared to our
developing peers. Mobile telephony comparatively has grown exponentially.
Herein lies another important challenge for the industry. It is very important to
strike the right balance while choosing to invest in technological advancements.
DIMINISHING TALENT POOL

BHAVESH M. POPAT
Print media these days has dedicated space to capture resource movements
between companies, especially in the financial services sector. The acute
shortage of talented resources is slowly but surely showing its impact. The pool
of talented people is diminishing and staff costs are soaring. The key challenge
is to find a permanent solution to tide over this acute shortage. One possible
solution could be for the industry through AMFI to tie up with universities and
colleges to offer programmes dedicated to the financial services industry in
general and the mutual fund industry in particular, which would cover various
critical aspects of the financial services industry ranging from fund
management, research, analysis, treasury, operations and accounting.

BHAVESH M. POPAT
TYPES OF MUTUAL FUNDS

MUTUAL FUND PRODUCTS AND FEATURES – EQUITY FUNDS
A variety of schemes are offered by mutual funds. It is critical for investors to
know the features of these products, before money is invested in them. Let us
first understand what Open Ended and Close Ended funds are.
WHAT ARE OPEN ENDED AND CLOSE ENDED FUNDS?

Equity Funds (or any Mutual Fund scheme for that matter) can either be open
ended or close ended. An open ended scheme allows the investor to enter and
exit at his convenience, anytime (except under certain conditions) whereas a
close ended scheme restricts the freedom of entry and exit. Whenever a new
fund is launched by an AMC, it is known as New Fund Offer (NFO). Units are
offered to investors at the par value of Rs. 10/ unit. In case of open ended
schemes, investors can buy the units even after the NFO period is over.
Thus, when the fund sells units, the investor buys the units from the fund and
when the investor wishes to redeem the units, the fund repurchases the units
from the investor. This can be done even after the NFO has closed. The buy /
sell of units takes place at the Net Asset Value (NAV) declared by the fund. The
freedom to invest after the NFO period is over is not there in close ended
schemes. Investors have to invest only during the NFO period; i.e. as long as the
NFO is on or the scheme is open for subscription. Once the NFO closes, new
investors cannot enter, nor can existing investors exit, till the term of the
scheme comes to an end.

BHAVESH M. POPAT
However, in order to provide entry and exit option, close ended mutual funds
list their schemes on stock exchanges. This provides an opportunity for
investors to buy and sell the units from each other. This is just like buying /
selling shares on the stock exchange. This is done through a stock broker. The
outstanding units of the fund does not increase in this case since the fund is
itself not selling any units. Sometimes, close ended funds also offer „buy-back
of fund shares / units”, thus offering another avenue for investors to exit the
fund. Therefore, regulations drafted in India permit investors in close ended
funds to exit even before the term is over.
WHAT ARE EQUITY FUNDS?

Salient Features
These are by far the most widely known category of funds though they account
for broadly 40% of the industry‟s assets, while the remaining 60% is
contributed by debt oriented funds. Equity funds essentially invest the investor‟s
money in equity shares of companies. Fund managers try and identify
companies with good future prospects and invest in the shares of such
companies. They generally are considered as having the highest levels of risks
(equity share prices can fluctuate a lot), and hence, they also offer the
probability of maximum returns.
However, High Risk, High Return should not be understood as “If I take high
risk I will get high returns”. Nobody is guaranteeing higher returns if one takes
high risk by investing in equity funds, hence it must be understood that “If I
take high risk, I may get high returns or I may also incur losses”. This concept
of Higher the Risk, Higher the Returns must be clearly understood before

BHAVESH M. POPAT
investing in Equity Funds, as it is one of the important characteristic s of Equity

fund investing.
WHAT IS AN INDEX FUND?

Equity Schemes come in many variants and thus can be segregated according to
their risk levels. At the lowest end of the equity funds risk – return matrix come
the index funds while at the highest end come the sectoral schemes or specialty
schemes. These schemes are the riskiest amongst all types‟ schemes as well.
However, since equities as an asset class are risky, there is no guaranteeing
returns for any type of fund.
Index Funds invest in stocks comprising indices, such as the Nifty 50, which is
a broad based index comprising 50 stocks. There can be funds on other indices
which have a large number of stocks such as the CNX Midcap 100 or S&P
CNX 500. Here the investment is spread across a large number of stocks. In
India today we find many index funds based on the Nifty 50 index, which
comprises large, liquid and blue chip 50 stocks.
The objective of a typical Index Fund states – „This Fund will invest in stocks
comprising the Nifty and in the same proportion as in the index‟. The fund
manager will not indulge in research and stock selection, but passively invest in
the Nifty 50 scrips only, i.e. 50 stocks which form part of Nifty 50, in
proportion to their market capitalisation. Due to this, index funds are known as
passively managed funds. Such passive approach also translates into lower costs
as well as returns which closely tracks the benchmark index return (i.e. Nifty 50
for an index fund based on Nifty 50). Index funds never attempt to beat the

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index returns, their objective is always to mirror the index returns as closely as
possible.
The difference between the returns generated by the benchmark index and the
Index Fund is known as tracking error. By definition, Tracking Error is the
variance between the daily returns of the underlying index and the NAV of the
scheme over any given period.
WHAT ARE DIVERSIFIED LARGE CAP FUNDS?

Another category of equity funds is the diversified large cap funds. These are
funds which restrict their stock selection to the large cap stocks – typically the
top 100 or 200 stocks with highest market capitalization and liquidity. It is
generally perceived that large cap stocks are those which have sound
businesses, strong management, globally competitive products and are quick to
respond to market dynamics.
Therefore, diversified large cap funds are considered as stable and safe.
However, since equities as an asset class are risky, there is no guaranteeing
returns for any type of fund. These funds are actively managed funds unlike the
index funds which are passively managed, In an actively managed fund the fund
manager pores over data and information, researches the company, the
economy, analyses market trends, 18 takes into account government policies on
different sectors and then selects the stock to invest. This is called as active
management.
A point to be noted here is that anything other than an index funds are actively
managed funds and they generally have higher expenses as compared to index

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funds. In this case, the fund manager has the choice to invest in stocks beyond
the index. Thus, active decision making comes in. Any scheme which is
involved in active decision making is incurring higher expenses and may also be
assuming higher risks. This is mainly because as the stock selection universe
increases from index stocks to large caps to midcaps and finally to small caps,
the risk levels associated with each category increases above the previous
category.
The logical conclusion from this is that actively managed funds should also
deliver higher returns than the index, as investors must be compensated for
higher risks. But this is not always so. Studies have shown that a majority of
actively managed funds are unable to beat the index returns on a consistent
basis year after year. Secondly, there is no guaranteeing which actively
managed fund will beat the index in a given year. Index funds therefore have
grown exponentially in some countries due to the inconsistency of returns of
actively managed funds.
WHAT ARE MIDCAP FUNDS?

After largecap funds come the midcap funds, which invest in stocks belonging
to the mid cap segment of the market. Many of these midcaps are said to be the
„emerging bluechips‟ or „tomorrow‟s largecaps‟. There can be actively managed
or passively managed mid cap funds. There are indices such as the CNX
Midcap index which tracks the midcap segment of the markets and there are
some passively managed index funds investing in the CNX Midcap companies.
WHAT ARE SECTORAL FUNDS?

BHAVESH M. POPAT
Funds that invest in stocks from a single sector or related sectors are called
Sectoral funds. Examples of such funds are IT Funds, Pharma Funds,
Infrastructure Funds, etc. Regulations do not permit funds to invest over 10% of
their Net Asset Value in a single company. This is to ensure that schemes are
diversified enough and investors are not subjected to undue risk. This regulation
is relaxed for sectoral funds and index funds.
There are many other types of schemes available in our country, and there are
still many products and variants that have yet to enter our markets. While it is
beyond the scope of this curriculum to discuss all types in detail, 19there is one
emerging type of scheme, namely Exchange Traded Funds or ETFs, which is
discussed in detail in the next section.
OTHER EQUITY SCHEMES :

Arbitrage Funds
These invest simultaneously in the cash and the derivatives market and take
advantage of the price differential of a stock and derivatives by taking opposite
positions in the two markets (for e.g. stock and stock futures).
Multicap Funds
These funds can, theoretically, have a smallcap portfolio today and a largecap
portfolio tomorrow. The fund manager has total freedom to invest in any stock
from any sector.
Quant Funds
A typical description of this type of scheme is that „The system is the fund
manager‟, i.e. there are some predefined conditions based upon rigorous

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backtesting entered into the system and as and when the system throws „buy‟
and „sell‟ calls, the scheme enters, and/ or exits those stocks.
P/ E Ratio Fund
A fund which invests in stocks based upon their P/E ratios. Thus when a stock is
trading at a historically low P/E multiple, the fund will buy the stock, and when
the P/E ratio is at the upper end of the band, the scheme will sell.
International Equities Fund

This is a type of fund which invests in stocks of companies outside India. This
can be a Fund of Fund, whereby, we invest in one fund, which acts as a „feeder‟
fund for some other fund(s), i.e invests in other mutual funds, or it can be a fund
which directly invests in overseas equities. These may be further designed as
„International Commodities Securities Fund‟ or „World Real Estate and Bank
Fund‟ etc.
Growth Schemes
Growth schemes invest in those stocks of those companies whose profits are
expected to grow at a higher than average rate. For example, telecom sector is a
growth sector because many people in India still do not own a phone – so as
they buy more and more cell phones, the profits of telecom companies will
increase. Similarly, infrastructure; we do not have well connected roads all over
the country, neither do we have best of ports or airports. For our country to
move forward, this infrastructure has to be of world class. Hence companies in
these sectors may potentially grow at a relatively faster pace. Growth schemes
will invest in stocks of such companies.

BHAVESH M. POPAT
ELSS
Equity Linked Savings Schemes (ELSS) are equity schemes, where investors
get tax benefit upto Rs. 1 Lakh under section 80C of the Income Tax Act. These
are open ended schemes but have a lock in period of 3 years. These schemes
serve the dual purpose of equity investing as well as tax planning for the
investor; however it must be noted that investors cannot, under any
circumstances, get their money back before 3 years are over from the date of
investment.
Fund of Funds
These are funds which do not directly invest in stocks and shares but invest in
units of other mutual funds which they feel will perform well and give high
returns. In fact such funds are relying on the judgment of other fund managers.

BHAVESH M. POPAT
Net asset value

Net asset value (NAV) represents a fund's per share market value. This is the
price at which investors buy ("bid price") fund shares from a fund company and
sell them ("redemption price") to a fund company. It is derived by dividing the
total value of all the cash and securities in a fund's portfolio, less any liabilities,
by the number of shares outstanding. An NAV computation is undertaken once
at the end of each trading day based on the closing market prices of the
portfolio's securities.
For example, if a fund has assets of $50 million and liabilities of $10 million, it
would have a NAV of $40 million.
This number is important to investors, because it is from NAV that the price per
unit of a fund is calculated. By dividing the NAV of a fund by the number of
outstanding units, you are left with the price per unit. In our example, if the fund
had 4 million shares outstanding, the price-per-share value would be $40
million divided by 4 million, which equals $10.
This pricing system for the trading of shares in a mutual fund differs
significantly from that of common stock issued by a company listed on a stock
exchange. In this instance, a company issues a finite number of shares through
an initial public offering (IPO), and possibly subsequent additional offerings,
which then trade in the secondary market. In this market, stock prices are set by
market forces of supply and demand. The pricing system for stocks is based
solely on market sentiment.

BHAVESH M. POPAT
Because mutual funds distribute virtually all their income and realized capital
gains to fund shareholders, a mutual fund's NAV is relatively unimportant in
gauging a fund's performance, which is best judged by its total return.

BHAVESH M. POPAT
The Association of Mutual Funds in India

(AMFI)
The Association of Mutual Funds in India (AMFI) is dedicated to developing
the Indian Mutual Fund Industry on professional, healthy and ethical lines and
to enhance and maintain standards in all areas with a view to protecting and
promoting the interests of mutual funds and their unit holders.
AMFI working group on Best Practices for sales and marketing of Mutual
Funds under the Chairmanship of Shri B. G. Daga, Former Executive Director
of Unit Trust of India with Shri Vivek Reddy of Pioneer ITI, Shri Alok Vajpeyi
of DSP Merrill Lynch, Shri Nikhil Khattau of Sun F & C and Shri
Chandrashekhar Sathe, Formerly of Kotak Mahindra Mutual Fund has
suggested formulation of guidelines and code of conduct for intermediaries and
this work has been ably done by a sub-group consisting of Shri B. G. Daga and
Shri Vivek Reddy.
The Association of Mutual Funds in India (AMFI) is dedicated to developing

the Indian Mutual Fund Industry on professional, healthy and ethical lines and
to enhance and maintain standards in all areas with a view to protecting and
promoting the interests of mutual funds and their unit holders.
AMFI, the association of SEBI registered mutual funds in India of all the
registered Asset Management Companies, was incorporated on August 22,
1995, as a non-profit organisation. As of now, all the 46 Asset Management
Companies that are registered with SEBI, are its members.

BHAVESH M. POPAT
Objectives
 To define and maintain high professional and ethical standards in all
areas of operation of mutual fund industry.
 To recommend and promote best business practices and code of conduct
to be followed by members and others engaged in the activities of mutual
fund and asset management including agencies connected or involved in
the field of capital markets and financial services.
 To interact with the Securities and Exchange Board of India (SEBI) and
to represent to SEBI on all matters concerning the mutual fund industry.
 To represent to the Government, Reserve Bank of India and other bodies
on all matters relating to the Mutual Fund Industry.
 To develop a cadre of well trained Agent distributors and to implement a
programme of training and certification for all intermediaries and others
engaged in the industry.
 To undertake nationwide investor awareness programme so as to promote
proper understanding of the concept and working of mutual funds.
 To disseminate information on Mutual Fund Industry and to undertake
studies and research directly and/or in association with other bodies.
 To take regulate conduct of distributors including disciplinary actions
(cancellation of ARN) for violations of Code of Conduct.
 To protect the interest of investors/unit holders

BHAVESH M. POPAT
SCOPE OF MUTUAL FUNDS

Scope of Mutual Funds has grown enormously over the years. In the first age of
mutual funds, when the investment management companies started to offer
mutual funds, choices were few.
Even though people invested their money in mutual funds as these funds offered
them diversified investment option for the first time. By investing in these funds
they were able to diversify their investment in common stocks, preferred stocks,
bonds and other financial securities. At the same time they also enjoyed the
advantage of liquidity. With Mutual Funds, they got the scope of easy access to
their invested funds on requirement.
But, in todays world, Scope of Mutual Funds has become so wide, that people
sometimes take long time to decide the mutual fund type, they are going to
invest in. Several Investment Management Companies have emerged over the
years who offer various types of Mutual Funds, each type carrying unique
characteristics and different beneficial features.

BHAVESH M. POPAT
Top Ranked Mutual Funds in 2016

Large Cap
 Birla Sun Life Top 100 (G)
 Canara Robeco Large Cap+ (G)
 ICICI Pru Top 100 Fund (G)
 UTI India Lifestyle Fund(G)
Small & Mid Cap

 Birla Sun life MNC fund (G)
 Franklin (I) Smaller Cos (G)
 Mirae Emerging blue-chip fund (G)
Diversified Equity
 Birla SL India Genext (G)
 Icici Pru Dynamic Plan (G)
 Tata Ethical Fund (G)
 UTI MNC Fund (G)

BHAVESH M. POPAT
Performance comparison
of leading mutual funds

BHAVESH M. POPAT
Birla sun life mutual fund
Birla Sun Life Asset Management Company Ltd. (BSLAMC), the investment
managers of Birla Sun Life Mutual Fund, is a joint venture between the Aditya
Birla Group and the Sun Life Financial Services Inc. of Canada. The joint
venture brings together the Aditya Birla Group's experience in the Indian
market and Sun Life's global experience.
Established in 1994, Birla Sun Life Mutual fund has emerged as one of India's
leading flagships of Mutual Funds business managing assets of a large investor
base. Our solutions offer a range of investment options, including diversified
and sector specific equity schemes, fund of fund schemes, hybrid and monthly
income funds, a wide range of debt and treasury products and offshore funds.
Birla Sun Life Asset Management Company has one of the largest team of
research analysts in the industry, dedicated to tracking down the best companies
to invest in. BSLAMC strives to provide transparent, ethical and research-based
investments and wealth management services.

BHAVESH M. POPAT
Heritage
The Aditya Birla Group
The Aditya Birla Group is one of India's largest business houses. Global in
vision, rooted in Indian values, the Group is driven by a performance ethic
pegged on value creation for its multiple stakeholders. The Group operates in
26 countries – India, UK, Germany, Hungary, Brazil, Italy, France,
Luxembourg, Switzerland, Australia, USA, Canada, Egypt, China, Thailand,
Laos, Indonesia, Philippines, UAE, Singapore, Myanmar, Bangladesh, Vietnam,
Malaysia, Bahrain and Korea. A US $29 billion corporation in the League of
Fortune 500, the Aditya Birla Group is anchored by an extraordinary work force
of 130,000 employees, belonging to 40 different nationalities. Over 60 per cent
of its revenues flow from its operations across the world.
The Aditya Birla Group is a dominant player in all its areas of operations viz;
Aluminium, Copper, Cement, Viscose Staple Fibre, Carbon Black, Viscose
Filament Yarn, Fertilisers, Insulators, Sponge Iron, Chemicals, Branded
Apparels, Insurance, Mutual Funds, Software and Telecom. The Group has
strategic joint ventures with global majors such as Sun Life (Canada), AT&T
(USA), the Tata Group and NGK Insulators (Japan), and has ventured into the
BPO sector with the acquisition of TransWorks, a leading ITES/BPO company.
Summary of Schemes
No of schemes: 1010
Corpus under management : Rs. 85086.1235 crs.
Fund of Funds (16) | Interval Income Funds (70) | Liquid Funds (15) | ETFs (2) |
Equity Funds (95) | Global Funds (13) | Monthly Income Plans (24) | Income
Funds (33) | Gilt Funds (34) | Short Term Income Funds (9) | Balanced Funds

BHAVESH M. POPAT
(20) | Ultra Short Term Funds (34) | Arbitrage Funds (7) | Fixed Maturity Plans
(619) | Floating Rate Income Funds (19)
Incorporation Date : 05-Sep-1994

Total Assets Managed (Cr.) : 17,389.64
Trustee/s : V Arunchalam
Chairman : Mr.Kumar Mangalam Birla
CEO / MD : A Balasubramanian
CIO : N/A
President : N/A
Director/s : Bobby Parikh
Compliance Officer/s : Rajiv Joshi
Investor Service Officer/s : Molly Kapoor
Fund Manager/s : Mr. Lokesh Mallya
Top 5 Funds

BHAVESH M. POPAT
SBI MUTUAL FUND

SBI Mutual Fund is India‟s largest bank sponsored mutual fund and has an
enviable track record in judicious investments and consistent wealth creation.
The fund traces its lineage to SBI - India‟s largest banking enterprise. The
institution has grown immensely since its inception and today it is India's largest
bank, patronised by over 80% of the top corporate houses of the country.
SBI Mutual Fund is a joint venture between the State Bank of India and Société
Générale Asset Management, one of the world‟s leading fund management
companies that manages over US$ 500 Billion worldwide.
In twenty years of operation, the fund has launched 38 schemes and

successfully redeemed fifteen of them. In the process it has rewarded it's
investors handsomely with consistent returns.
A total of over 5.8 million investors have reposed their faith in the wealth
generation expertise of the Mutual Fund.
Schemes of the Mutual fund have consistently outperformed benchmark indices

and have emerged as the preferred investment for millions of investors and
HNI‟s.
Today, the fund manages over Rs. 42,100 crores of assets and has a diverse
profile of investors actively parking their investments across 38 active schemes.

BHAVESH M. POPAT
The fund serves this vast family of investors by reaching out to them through
network of over 130 points of acceptance, 29 investor service centers, 59
investor service desks and 6 Investor Service Points.
SBI Mutual is the first bank-sponsored fund to launch an offshore fund –

Resurgent India Opportunities Fund.
Growth through innovation and stable investment policies is the SBI MF credo.
Sponsor: State Bank of India
Trustee: SBI Mutual Fund Trustee Company Private Limited
Investment Manager: SBI Funds Management Private Limited Statutory
Details: SBI Mutual Fund (SBIMF); constituted as a Trust with SBIMFTCPL as
the Trustee under the provisions of Indian Trusts Act, 1882, and registered with
SEBI.
Summary of Schemes
No of schemes: 453
Arbitrage Funds (4) | Balanced Funds (13) | Equity Funds (74) | ETFs (2) | Fixed
Maturity Plans (228) | Floating Rate Income Funds (22) | Fund of Funds (4) |
Gilt Funds (17) | Income Funds (12) | Interval Income Funds (8) | Liquid Funds
(18) | Monthly Income Plans (20) | Short Term Income Funds (14) | Ultra Short
Term Funds (17)
Top 5 Funds

BHAVESH M. POPAT

BHAVESH M. POPAT
HDFC MUTUAL FUND
HDFC Asset Management Company Ltd (AMC) was incorporated under the
Companies Act, 1956, on December 10, 1999, and was approved to act as an
Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter
dated July 3, 2000.
The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T.
Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai - 400 020.
In terms of the Investment Management Agreement, the Trustee has appointed

the HDFC Asset Management Company Limited to manage the Mutual Fund.
The paid up capital of the AMC is Rs. 25.161 crore.
Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund,
following a review of its overall strategy, had decided to divest its Asset
Management business in India. The AMC had entered into an agreement with
ZIC to acquire the said business, subject to necessary regulatory approvals.
On obtaining the regulatory approvals, the following Schemes of Zurich India

Mutual Fund have migrated to HDFC Mutual Fund.

BHAVESH M. POPAT
The AMC is managing 28 open-ended schemes of the Mutual Fund

The AMC is also managing 7 closed ended Schemes of the Mutual Fund
The AMC is also providing portfolio management / advisory services and such
activities are not in conflict with the activities of the Mutual Fund. The AMC
has renewed its registration from SEBI vide Registration No. - PM /
INP000000506 dated December 21, 2009 to act as a Portfolio Manager under
the SEBI (Portfolio Managers) Regulations, 1993.
Sponsor: Housing Development Finance Corporation Limited; Standard Life

Investments Limited
Trustee: HDFC Trustee Company Limited Investment Manager: HDFC Asset
Management Company Limited Statutory Details: HDFC Mutual Fund, a trust
set up under the provisions of the Indian Trusts Act, 1882.
Summary of Schemes
No of schemes: 890
Fund of Funds (2) | Interval Income Funds (42) | Liquid Funds (23) | ETFs (1) |
Equity Funds (54) | Monthly Income Plans (20) | Income Funds (16) | Gilt
Funds (8) | Short Term Income Funds (13) | Balanced Funds (29) | Ultra Short
Term Funds (12) | Arbitrage Funds (10) | Fixed Maturity Plans (643) | Floating
Rate Income Funds (17)
Top 5 Funds

BHAVESH M. POPAT

BHAVESH M. POPAT
ICICI PRUDENTIAL MUTUAL FUND
ICICI Prudential Asset Management Company enjoys the strong parentage of

Prudential plc, one of UK's largest players in the insurance & fund management
sectors and ICICI Bank, a well-known and trusted name in financial services in
India.
ICICI Prudential Asset Management Company, in a span of just over eight

years, has forged a position of pre-eminence in the Indian Mutual Fund industry
as one of the largest asset management companies in the country with average
assets under management of Rs. 69,754.78 Crore (as of September 30, 2010).
The Company manages a comprehensive range of schemes to meet the varying
investment needs of its investors spread across 230 cities in the country.
Sponsor: Prudential Plc and ICICI Bank Ltd

Trustee: ICICI Prudential Trust Ltd.
Investment Manager: ICICI Prudential Asset Management Company Limited
Statutory Details: ICICI Prudential Mutual Fund, a trust set up under the

BHAVESH M. POPAT
provisions of the Indian Trusts Act, 1882. The Fund is registered with SEBI
vide Registration No.MF/003/93/6 dated October 13, 1993 as ICICI Mutual
Fund and has obtained approval from SEBI for change in name to Prudential
ICICI Mutual Fund vide SEBI‟s letter dated April 16, 1998.
The change of name of the Mutual Fund to ICICI Prudential Mutual Fund was
approved by SEBI vide Letter No. IMD/PM/90170/07 dated 2nd April 2007.
Summary of Schemes
No of schemes : 1167
Fund of Funds (23) | Interval Income Funds (135) | Liquid Funds (43) | ETFs (4)
| Equity Funds (88) | Global Funds (8) | Monthly Income Plans (28) | Income
Funds (85) | Gilt Funds (20) | Short Term Income Funds (26) | Balanced Funds
(172) | Ultra Short Term Funds (30) | Arbitrage Funds (26) | Fixed Maturity
Plans (436) | Floating Rate Income Funds (43)
Top 5 Funds

BHAVESH M. POPAT
UTI MUTUAL FUND
January 14, 2003 is when UTI Mutual Fund started to pave its path following
the vision of UTI Asset Management Co. Ltd. (UTIAMC), which was appointed
by UTI Trustee Co, Pvt. Ltd. for managing the schemes of UTI Mutual Fund
and the schemes transferred/migrated from the erstwhile Unit Trust of India.
Since February 3, 2004, UTIAMC is also a registered portfolio manager under

the SEBI (Portfolio Managers) Regulations, 1993 for undertaking portfolio
management services. UTIAMC also acts as the manager and marketer to
offshore funds through its 100 % subsidiary, UTI International Limited,
registered in Guernsey, Channel Islands.
UTIAMC presently manages a corpus of over Rs. 67,61,772.28 lakhs as on 30th

September 2010 (source: www.amfiindia.com). UTI Mutual Fund has a track
record of managing a variety of schemes catering to the needs of every class of
citizens. It has a nationwide network consisting 146 UTI Financial Centres
(UFCs) and UTI International offices in London, Dubai and Bahrain.

BHAVESH M. POPAT
UTIAMC has a well-qualified, professional fund management team, which has

been fully empowered to manage funds with greater efficiency and
accountability in the sole interest of the unit holders. The fund managers are
ably supported by a strong in-house securities research department. To ensure
investors‟ interests, a risk management department is also in operation.
UTI Asset Management Co. Ltd. (UTIAMC) is a company incorporated under

The Companies Act, 1956.
UTIAMC was appointed as the Asset Management Company of the UTI Mutual
Fund in terms of the Investment Management Agreement executed between
UTI Trustee Co. Ltd. and UTIAMC on December 9, 2002. UTIAMC was
registered by SEBI to act as the asset management company for UTI Mutual
Fund vides its letter of January 14, 2003.
The paid up capital of UTIAMC has been subscribed equally by four sponsors:
State Bank of India, Life Insurance Corporation of India, Bank of Baroda and
Punjab National Bank. UTIAMC, apart from managing the schemes of UTI
Mutual Fund, also manages the schemes transferred/migrated from the erstwhile
Unit Trust of India, in accordance with the provisions of the Investment
Management Agreement, the Trust Deed, the SEBI (Mutual Funds) Regulations
and the objectives of the schemes.
UTIAMC has also entered into a service agreement with the Administrator of
the Specified Undertaking of the Unit Trust of India (SUUTI) to provide them
with back office support for business processes.

BHAVESH M. POPAT
Sponsor: a. State Bank of India, b. Punjab National Bank, c. Bank of Baroda, d.

Life Insurance Corporation
Trustee: UTI Trustee Company Pvt. Ltd
Investment Manager: UTI Asset Management Company Ltd Statutory Details:
UTI Mutual Fund, a Trust under the Indian Trust Act, 1882 registered with
SEBI under registration number MF/048/03/01 dated January 14, 2003.
Summary of Schemes
No of schemes : 676
Arbitrage Funds (4) | Balanced Funds (23) | Equity Funds (95) | ETFs (1) | Fixed
Maturity Plans (375) | Floating Rate Income Funds (11) | Gilt Funds (14) |
Income Funds (12) | Interval Income Funds (83) | Liquid Funds (20) | Monthly
Income Plans (11) | Short Term Income Funds (8) | Ultra Short Term Funds (19)
Top 5 Funds

BHAVESH M. POPAT
PERFORMANCE COMPARISON OF LEADING

SCHEMES OF ABOVE MENTIONED MUTUAL FUNDS
I have taken Five leading Mutual funds to compare their performance. As I have
already incorporated five major schemes of each company in above mentioend
paragraphs so I chose one scheme fom each compnay and compared its
performance on various sclaes and using various methods.
Schemes chosen by me for the comparison are as follows:

 Birla SL New Millennium-Direct (G)
 SBI IT Fund - Direct (G)
 HDFC Income Fund - Direct (G)
 ICICI Pru Technology - Direct (G)
 UTI Services Industries -Direct (G)
Scheme Birla SL New SBI IT Fund HDFC ICICI Pru UTI Services
Millennium- - Direct (G) Income Technolog Industries -
Direct (G) Fund - y - Direct Direct (G)
Direct (G) (G)
Fund Class Sector - Sector - Debt Long Sector - Diversified

Technology Technology Term Technology Equity
Fund Type Open-Ended Open-Ended Open-Ended Open- Open-Ended
Ended
Ranking Not Ranked Not Ranked Not Ranked Not Not Ranked
Ranked
Scheme Asset 0.51 3.44 113.55 3.78 0.28

Rs in cr Dec-31-2016 Dec-31-2016 Dec-31-2016 Dec-31- Dec-31-2016
2016
Inception Date Jan 01, 2013 Jan 01, 2013 Jan 01, 2013 Jan 01, Jan 01, 2013
2013
Last Dividend N.A. N.A. N.A. N.A. N.A.
Rs/Units
Benchmark BSE Teck BSE Info BSE Teck
Tech Sector
Minimum Investment Rs.5000 Rs.2000 Rs.5000 Rs.5000 Rs.5000

BHAVESH M. POPAT
Rs
AMC/Fund Birla Sun SBI Funds HDFC Asset ICICI UTI Asset Mgmt
Family Life Asset Managemen Managemen Prudential Company Pvt.
Managemen t Private t Co. Ltd. Asset Ltd.
t Company Limited Mgmt.Co.
Ltd. Ltd
AMC Asset 84,998.26 64,560.66 108,990.06 97,190.92 74,351.24
Rs in cr Dec-31-2016 Dec-31-2016 Dec-31-2016 Dec-31- Dec-31-2016
2016
Performance Return
s as on Jan 23, 16
* Returns over 1 year
are Annualised
3 Months 13.7% 15.7% 2.1% 18.6% 12.6%

6 Months 28.9% 31.9% 3.6% 45.6% 19.9%
1 Year 44.1% 46.8% 3.0% 54.3% 18.7%
2 Years - - - - -
3 Years - - - - -
5 Years - - - - -
Portfolio
Top 5 holdings Infosys, Infosys, 8.32 Infosys, Infosys, TCS,

TCS, HCL TCS, HCL Government Mindtree, HDFC Bank,
Tech, Bharti Tech, Tech Securities, Persistent, ICICI Bank, HCL
Airtel, Tech Mahindra, 8.28 Tech Tech
Mahindra Mindtree Government Mahindra,
Securities, Oracle Fin
9.2 Serv
Government
Securities,
8.9 Union
Bank of
India, 7.16
Government
Securities
Weightage to 75.48% 82.99% 30.76% 71.24% 43.8%
top 5 holdings
Top 3 Sectors Technology, Technology N.A. Technology Technology,
Telecom, Banking/Finance
Media , Services
Weightage to 97.81% 94.24% - 90.45% 86.23%
top 3 sectors
Management & Fees
Fund Manager Kunal Anup Shobhit Mrinal Arun Khurana

Sangoi Upadhyay Mehrotra Singh
Entry Load 0% 0% 0% 0% 0%
Exit Load 1.00% 1.00% 0.50% 1.00% 1.00%
Load comment Exit Load of Exit Load Exit Load Exit Load Exit Load 1% if
1% if 1% if units 1% if units 1% if units redeemed within

BHAVESH M. POPAT
redeemed are are are 1 Year from the

within 365 redeemed / redeemed / redeemed / date of allotment.
Days from switched-out switched-out switched-
the date of within 1 year within 6 out for a
allotment. from the months from period of
date of the date of up to 1
allotment. allotment. year from
the date of
allotment.
Now we will see the performance of these schemes in graphical presentation.

For this graph, I chose the period as 1 year and took hypothtical investment of
Rs.10,000/-

BHAVESH M. POPAT
OBJECTIVEs,
Need for the study &
CONCLUSION

BHAVESH M. POPAT
OBJECTIVES
1. To study about the Mutual Funds in India
2. To study the various Mutual Funds schemes in India
3. To study about the risk factors involved in the Mutual Funds and How to
analyze it?
4. To study the performance indices that can be used for mutual fund
comparison.
5. To compare mutual funds of selected companies

BHAVESH M. POPAT
Need for the study

Against this backdrop, the present study has been taken up with a broad aim of
appraising the overall growth performance of the Mutual Fund Industry in India
especially after the „open up‟ of the industry.
Many studies were taken up to evaluate the performance of Mutual Fund

Industry in India. However, there were very few studies which attempted and
examined the relative performance of the public and private mutual funds in
terms of resource mobilization, investment behaviour and general efficiency.
The present study attempts to pursue the research on these lines and also
attempts to elicit the opinions of the investors in various funds before
submitting the suggestions.

BHAVESH M. POPAT
Conclusion
The future looks bright for the industry in India going by a recent study
conducted by the Associated Chamber of Commerce and Industry of India
(Assocham) and the AMFI. The report predicts that the mutual fund industry is
expected to jump sharply from its present share of 6 per cent in GDP to 40
percent in the next 10 years, provided the country‟s growth rate consistently
exceeds at the rate of 6 per cent per annum.
The report says that by 2019, the size of the mutual fund industry is estimated to
go up to over Rs. 1,95,000 crore. It suggests that India is going to follow the
pattern seen in the developed markets such as the US where the size of the
industry is 70 per cent of the GDP. The worldwide size of the industry is about
37 per cent of the GDP.
While addressing a one-day national seminar on “Investment opportunities in

mutual funds” organized by the Federation of Andhra Pradesh Chamber of
Commerce and Industry (FAPCCI), Hyderabad, the Executive Director, SEBI,
said that the industry has been growing at a rate of 10 per cent to 15 per cent per
annum on an average, and the growth rate could be accelerated in view of the
positive economic conditions.
Mutual funds segment as an investment avenue is playing a significant role in

the changing economic scenario of Indian capital and financial markets. Though
the penetration of mutual funds is limited to urban areas and not reached to rural
and retail investors, it had grown significantly in terms of the asset base and
helping to fuel the growth of the economy.

BHAVESH M. POPAT
For any country, savings play a vital role in investment. India‟s gross domestic
savings are very high, unlike other developed nations. But these savings are not
effectively diverted to mutual funds.

BHAVESH M. POPAT
BIBLiOGRAPHY

BHAVESH M. POPAT
Bibliography
 www.reserchersworld.com
 www.nseindia.com
 www.wiki.com
 www.amfiindia.com
 http://businesstoday.intoday.in/
 www.wikipedia.org
 http://www.valueresearchonline.com/
 www.pwc.co.in
 http://www.indiainfoline.com/
 www.moneycontrol.com
 www.sbimf.com
 www.birlasunlife.com
 www.licmf.com
 www.hdfcfund.com
 www.icicipruamc.com
 www.utimf.com

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BHAVESH M.

A project report submitted in partial

Reg. number - 1502001904 Page 1

Place: AHMEDABAD BHAVESH M. POPAT

Date: 25/10/2017 (Signature)

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Signature of the student

Signature of the Guide

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A mutual fund is a professionally managed type of collective investment

There are various investment avenues available to an investor such as real

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purchased, understanding the future business prospects of the company, finding

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it is no mean an achievement. A country traditionally putting money in safe,

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Investors need to understand the nuances of mutual funds, the workings of

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The Research Methodology followed for further work can be primarily

Exploratory study will be carried out by conducting:

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The Indian mutual fund industry is passing through a transformation. On one

Though, it is commendable to note, that, Assets Under Management have

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India has vast growth potential backed by a resilient economy, commensurate

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In research, a body of literature is a collection of published information and data

The literature review. A review of the literature is an essential part of your

Literature reviewed typically includes scholarly journals, scholarly books,

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Primary sources are the origin of information under study, fundamental

Secondary sources are documents or recordings that relate to or discuss

More about the research question »

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What is the chronology of the development of knowledge about my subject?

Is there a consensus on relevant issues? Or is there significant debate on issues?

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As risk is commensurate with return, therefore, providing maximum return on

Rao D. N (2006) studied the financial performance of select open-ended equity

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Mehta Sushilkumar (2010) analyze the performance of mutual fund schemes

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A study was conducted by Grinblatt and Titman (1989) to examine the

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According to Teri (2007) mutual fund is a professional investment company

Miller and Nicholas conducted a research to examine the risk- return

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Mutual funds concepts

MUTUAL FUNDS: STRUCTURE IN INDIA

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WHO MANAGES INVESTOR’S MONEY?

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WHAT IS THE ROLE OF THE AMC?

WHAT ARE THE INVESTOR’S RIGHTS & OBLIGATIONS?

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¨ Investors are mutual, beneficial and proportional owners of the scheme‟s

¨ In case of dividend declaration, investors have a right to receive the dividend