Mutual Fund

Chapter – 1.
EXECUTIVE SUMMARY
In few years Mutual Fund has emerged as a tool for ensuring one‟s financial well-being.
Mutual Funds have not only contributed to the India growth story. But, have also helped
families tap into the success of Indian Industry. As information and awareness is rising more
and more people are enjoying the benefits of investing in mutual funds. Many individuals own
mutual funds today. Indeed, the mutual fund industry which reached $3.64 trillion in assets by
2017, comprises the bulk of many investors financial assets, whether for retirement or taxable
savings purposes .To a large extent, mutual funds are the investment vehicle for the majority of
households in the India.
A mutual fund is a scheme in which several people invest their money for a common financial
cause. The collected money invests in the capital market and the money market, which they
earned, is divided based on the number of units, which they hold.
There are many types of mutual funds. You can classify funds Structure Based (open-ended &
close-ended), Nature Based (equity, debt, balanced), Based on Investment Objective (growth,
income, money market), etc.
I have told about the basics of mutual funds, defining terms and discussing the mechanics
about how funds work. I had also reviewed the types of mutual funds, structure of mutual funds
and their current scenario. The overall objective of my study on this project is to know which
company provides better investment opportunities and make the investors to be able to take
better decisions.
This Project gave me a great learning experience and at the same time it gave me enough scope
to implement my analytical ability. The analysis and advice presented in this Project Report is
based on the investment practices of the investors and preferences of the investors for
investment in Mutual Funds. This Report will help to know about the investors Preferences in
Mutual Fund means which type of Product they prefer, Which Option (Growth or Dividend)
they prefer or Which Investment Strategy they follow (Systematic Investment Plan or One time
lump sum plan).
The project gives an insight about Mutual Fund and its various aspects. One can have a brief
knowledge about Mutual Fund and its basics through the Project.
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1.2 INTRODUCTION OF TOPIC
Earn – Save – Spend, this is the cycle of money that we live by every month, if not every day,
of our lives. By now, we all know the importance of savings. Perhaps, you have even realized
the significance of investing. If not, here‟s a quick primer - when you save, your money sits
idle. When you invest, your money multiplies.
Your investment choice can obviously, significantly impact the rate at which your money
compounds. While there are enough opinions on what you should be doing with your money,
because of my project, mutual funds should definitely be a part of your wealth building
portfolio.
As we are management student, we should know about investment banking or options available
in market. Today this type of investments gives higher returns as compare to other investment
options. If you have long-term financial goals, equity mutual funds can be one of the best
vehicles to achieve them.
A mutual fund is an investment that pools your money with the money of an unlimited number
of other investors. In return, you and the other investors each own shares of the fund.
The money collected in mutual funds is invested by professional fund managers in line with the
scheme‟s stated objective. Mutual fund offers multiple product choices for investment across
the financial spectrum. Mutual fund offers an excellent avenue for retail investors to participate
and get a benefit from the uptrend‟s in capital markets. Before investing in mutual fund
analysis of funds should be made and research on the scheme should be done with the
benchmark index, performance and by evaluation of ratios.
Further, in order to reap maximum benefit from mutual fund investments, it is important for
investors to diversify across different categories of funds such as equity, debt and balanced
funds. While investors of all categories can invest in securities market on their own, a mutual
fund is a better choice for the only reason that all benefits come in a package.
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1.3 OBJECTIVES OF THE STUDY:
1) To identify the various aspects of mutual fund industry.

2) To know the best investment plans and schemes available in mutual fund.
3) To get a brief idea about the benefits available from Mutual Fund investments.
4) To identify the level of risk involved while investing in mutual fund.
5) To discuss about equity large capital and hybrid equity schemes.
6) To discuss about the market trends of Mutual Fund investment.
1.4 SCOPE OF THE STUDY:
1) The growth rate was 100% in 6 (six) previous years.

2) The saving rate in India is 23%. So, there is a huge scope in the future for the expansion
of the mutual funds industry.
3) A number of foreign based assets management companies are venturing into Indian
markets.
4) The Securities Exchange Board of India (SEBI) has allowed the introduction of
commodity mutual funds.
5) The Mutual funds in India has the scope of penetrating into the rural and semi urban
areas.
6) Financial Planners are introduced into the market, which would provide the people with
better financial planning.
1.5 LIMITATIONS OF THE STUDY:
1) Time constraints: due to shortage or less availability of time it may be possible that all
the related and concerned aspects may not be covered in the project.
2) Analysis done is limited to the availability of data.
3) It is not possible to get complete knowledge about Mutual Fund in short period of two
months.
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Chapter - 2
COMPANY PROFILE:
Insynch Wealth Management LLP.
Insynch Wealth Management LLP a company where likeminded people joined hands together
with existing man power resources in the year 2010.
The core strength of the company is the manpower which is highly experienced with an
average of at least15 years of experience to serve the clients in the field of investments. They
have dedicated dealers to cater to the stock broking needs of clients and a strong back office
team for the post broking and mutual funds' investments. Insynch‟s strength is their colleagues
and they are proud that having one of the lowest employee turnover. With a strong clientele
and long term relations with the clients Insynch has grown leaps and bounds. They are pleased
that insynch is not restricted by the geography for client investments and hence have clients in
Mumbai which is a financial hub of the country and also a reach in kokan and some remote
places in that area.
With changing times Insynch has also changed. We have upgraded our software to match up
with the changing time and technology. We are now on most advanced and paperless platform
to invest in mutual funds. While we are upgrading we are also taking care to cater to the not so
technology savvy clients there will be a human interface. This will also be available to all
clients if they choose to use human interface as an option.
At Insynch they are always dedicated to give clients a service which can surpass their
expectations. While we are proud of the service we offer we also understand the prime
importance of the confidentiality of financial data of all our clients. We ensure that all the data
remains secured with us.
At Insynch they believe in long term wealth creation. They do not suggest any speculative or
churning activity in investments.
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By virtue of the above we Insynch have a strong relationship bond with close to about 2400
client families and friends. Insynch have an active client base of around 2,000 as on today.
Growth through innovation and stable investment policies is the Insynch‟s credo.
Partners:
Rashmin Deshpande:-
Rashmin Sir is a science graduate and post graduate in Business administration with Marketing
and Finance specialization has been in the line of finance since 2001.Rashmin has worked with
leading broking firms in the field of Equities, Derivatives, Mutual funds and life insurance
prior to becoming an entrepreneur.
He has been managing portfolios of SME‟s and HNI‟s which include top executives of lot of
companies over these years.
Ajit Godbole:-
Ajit Godbole sir joined business of Equity Broking in 2000, which was started by his father in
1982. Nidhi Investments was the leading franchisee of Sajag Securities Pvt Ltd, having its
office in Rasta Peth. He diversified firm‟s business by starting Derivatives & Commodities
trading with affiliation of MF Global Sify Securities India Pvt. Ltd, Mumbai. He also became
financial consultant of HDFC Standard Life Insurance Company & stared doing life insurance
business as well. After successful completion of 6 years, Nidhi Investments taken over one of
Franchisee of Sajag working at Kasba Peth in 2006. In 2007, Nidhi Investment started office at
Pashan. Prior to Nidhi Investments, Ajit also worked with Anand Rathi Securities Ltd, Mumbai
as Dealing Head of Deccan Gymkhana Branch, Pune. He was also heading Demat Cell at
Anand Rathi. Ajit Godbole has done Masters in Commerce from Pune University. He advises
Retails & HNI clients on Equity Portfolio & Equity Derivative Strategies.
Ninad Parundekar:-
After completion of education from commerce stream, Ninad started stock broking with sub-
broker ship of SAJAG SECURITIES PVT LTD. in 2002 under the guidance of his father who
has been investor in capital markets since 1980. After working in Kalyani Nagar for more than
3 years, Ninad with help of his father, has expanded broking activity to konkan region of
Maharashtra. Today, they are one of the leading Investment advisory in Konkan region which
includes Mahad, Mangaon, and Dapoli, etc. Ninad has been advising on Portfolio‟s and other
financial products to HNI‟s as well as retail clients.
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Insynch’s Work In Mutual Funds: -
We are empanelled with all the funds for distribution services from 2005. We provide all
services related to Mutual funds right from incidental investment advice till the execution of
investments. Be it, Equity, Debt, Short term parking of Funds. We also provide Portfolio
Advisory to our clients.
Three Aspects Of Insynch Wealth Management LLP -
Honest Working
Quality Assurance
Trusted Service
Name of Firm: Insynch Wealth Management LLP.

Year of Establishment: 2005
Address of Company: Manas Building, 112, Rasta Peth, Pune 411011.
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Chapter - 3
REVIEW OF LITERATURE
INTRODUCTION OF MUTUAL FUND:
A mutual fund is a pool of money managed by a professional Fund Manager. It is a trust that
collects money from a number of investors who share a common investment objective and
invests the same in equities, bonds, money market instruments and/or other securities.
And the income / gains generated from this collective investment is distributed proportionately
amongst the investors after deducting applicable expenses and levies, by calculating a scheme‟s
“Net Asset Value” or NAV. Simply put, the money pooled in by a large number of investors is
what makes up a Mutual Fund.
Before we understand what is mutual fund, it‟s very important to know the area in which
mutual funds works, the basic understanding of stocks and bonds.
Stocks: Stocks represent shares of ownership in a public company. Examples of public

companies include Reliance, MRF, TATA and Infosys, etc. Stocks are considered to be the
most common owned investment traded in the market.
Bonds: Bonds are basically the money which you lend to the government or a company, and in
return you can receive interest on your invested amount, which is back over predetermined
amounts of time. Bonds are considered to be the most common lending investment traded on
the market. There are many other types of investments other than stocks and bonds (including
annuities, real estate and precious metals), but the majority of mutual funds invest in stocks
and/or bonds.
Next, let us understand what is “Net Asset Value” or NAV. Just like an equity share has a
traded price, a mutual fund unit has Net Asset Value per Unit. The NAV is the combined
market value of the shares, bonds and securities held by a fund on any particular day (as
reduced by permitted expenses and charges).
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NAV per Unit represents the market value of all the Units in a mutual fund scheme on a given
day, net of all expenses and liabilities plus income accrued, divided by the outstanding number
of Units in the scheme.
Mutual funds are ideal for investors who either lack large sums for investment, or for those
who neither have the inclination nor the time to research the market, yet want to grow their
wealth. The money collected in mutual funds is invested by professional fund managers in line
with the scheme‟s stated objective. In return, the fund house charges a small fee which is
deducted from the investment. The fees charged by mutual funds are regulated and are subject
to certain limits specified by the Securities and Exchange Board of India (SEBI).
India has one of the highest savings rate globally. This penchant for wealth creation makes it
necessary for Indian investors to look beyond the traditionally favored bank FDs and gold
towards mutual funds. However, lack of awareness has made mutual funds a less preferred
investment avenue. Mutual fund offers multiple product choices for investment across the
financial spectrum. As investment goals vary post-retirement expenses, money for children‟s
education or marriage, house purchase, etc. The products required to achieve these goals vary
too. The Indian mutual fund industry offers a plethora of schemes and caters to all types of
investor needs. Mutual funds offer an excellent avenue for retail investors to participate and
benefit from the uptrend‟s in capital markets.
While investing in mutual funds can be beneficial but selecting the right fund can be
challenging. Hence, investors should do proper due diligence of the fund and take into
consideration the risk-return trade-off and time horizon or consult a professional investment
advisor.
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HISTORY OF MUTUAL FUND
The Mutual fund industry in India started in 1963 with the formation of UTI (united trust of
India), at the initiative of government of India. Over the period of years this grew fairly
successfully and gave investors a good return and therefore in 1989, as the next logical step,
public sector banks and financial institutions were allowed to float mutual funds and their
success emboldened the government to allow the private sector to foray into this area.
The history of Mutual Funds in India can be broadly divided into Four Phases:
First Phase (1964– 1987):
Unit Trust of India was established 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 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.6700 crores of assets under management.
Second Phase(1987-1993) (Entry of public sector funds):

1987 Marketed 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 Canara bank Mutual fund (Dec 1987), Punjab national bank mutual fund (August 1989),
India bank mutual fund (Nov 1989), Bank of India (June 1990), bank of Baroda mutual fund
(Oct 1992), LIC established its mutual fund in Nov 1989 while GIC had set up its mutual fund
in December 1990, At the end of 1993, the mutual fund industry had asset under management
of Rs.47,004 crores.
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Third Phase(1993-2003) (Entry of private sector funds):
With the entry of private sector funds in 1993, an era started in the Indian mutual fund industry,
giving the Indian investors a wider choice of fund families, Also. 1993 was the year in which
the first mutual fund regulations came into being, under which all mutual funds, except UTI
were to be registered and governed, the Kothari pioneer (now merged with Franklin
Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI
(mutual funds) registrations were substituted by a more comprehensive and revised mutual
funds regulations in 1996. The number of mutual funds houses went on increasing, with many
foreign mutual funds setting up funds in India and also the industry has witnessed several
mergers and acquisition. As at of Jan 2003, there were 33 mutual funds with total assets of
Rs.1,21,805 crores. The UTI with Rs.44,541 crores of assets under management was way
ahead of other mutual funds.
Fourth Phase (2003-2005):

This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the
Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as on January
2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator
and under the rules framed by Government of India and does not come under the purview of
the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of
the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of AUM 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 growth And consolidation. At the end of September 2004, there
were 29 funds, which manage assets of Rs.1,53,108 crores under 421 schemes.
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Mutual Fund Assets Under Management (MF AUM) Growth:
1) In March 1998, the MF AUM was 68, 984 crores.
2) In March 2000, the MF AUM was 93, 717 crores and the percentage growth was 26%.
6) In March 2004, the MF AUM was 1, 37, 626 crores and the percentage growth was
45%.
7) In September 2004, the MF AUM was 1, 51, 141 crores and the percentage growth was
9% in 6 (six) month‟s time.
8) In December 2004, the MF AUM was 1,94,320 crores.
9) 49,300 crores and the percentage growth was 1% in 2 (two) months time.
The graph indicates the growth of assets over the years:
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MUTUAL FUND IN INDIA:
The first introduction of a mutual fund in India occurred in 1963, when the Government of
India launched UNIT TRUST OF INDIA (UTI) until 1987; UTI enjoyed a monopoly in the
Indian Mutual Fund market. Then a host of other government controlled Indian Financial
companies came up with their own funds, these included STATE BANK OF INDIA,
CANARA BANK, AND PUNJAB NATIONAL BANK.
This market was made open to private players in 1993, as a result of the historic constitutional
amendments brought forward by the then Congress-led Government under the regime of
Liberalization, Privatization and Globalization.
Kothari Pioneer was the first private sector mutual fund company in India which has now
merged with Franklin Templeton. Just after ten years with private sector player‟s penetration,
the total assets rose up to Rs.1218.05 bn. Mutual Funds are an under tapped market in India.
Despite being available in the market for over two decades now with Assets under
Management equaling Rs.78,171,152 Lakhs (as of 28th February 2010) less than 10% of Indian
households have invested in mutual funds.
A recent report on Mutual Fund Investments in India published by research and analytics firm
BOSTON ANALYTICS suggests investors are holding back their money into mutual funds
due to their perceived high risk and a lack of information on how mutual funds work. There are
43 Mutual funds recently in India.
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Future Prospect of Mutual Funds in India:
The Future of Mutual Funds in India suggests that the industry has got huge scopes of
development in the times to come.
The Future of Mutual Funds in India is quite bright. Mutual Funds are one the most popular
forms of investments as these funds are diversification, professional management, and
liquidity. In the year 2007, the mutual fund industry in India was worth Rs. 1,69,537 Crores.
The mutual fund industry expected to grow at a rate of 13.4% over the year 2017.
Major Mutual Fund Providers in India:

1. ICICI Prudential Mutual Fund
2. HDFC Mutual Fund
3. Reliance Mutual Fund
4. Aditya Birla Sun Life Mutual Fund
5. SBI Mutual Fund
6. UTI Mutual Fund
7. Kotak Mahindra Mutual Fund
8. Franklin Templeton Mutual Fund
9. DSP Blackrock Mutual Fund
10. Axis Mutual Fund
11. IDFC Mutual Fund
12. L&T Mutual Fund
13. Tata Mutual Fund
14. Sundaram Mutual Fund
15. DHFL Pramerica Mutual Fund
16. LIC Mutual Fund
17. JM Financial Mutual Fund
18. Baroda Pioneer Mutual Fund
19. Motilal Oswal Mutual Fund
20. Indiabulls Mutual Fund
21. HSBC Mutual Fund
22. Mirae Asset Mutual Fund
23. IDBI Mutual Fund
24. Edelweiss Mutual Fund
25. BOI AXA Mutual Fund
26. IIFL Mutual Fund
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WORKING OF MUTUAL FUND:
A Mutual Fund is an investment tool that allows small investors access to a well-diversified
portfolio of equities, bonds and other securities. Each shareholder participates in the gain or
loss of the fund. Mutual Fund is a great convenience for those who need to invest their money
for future requirements. A team of professionals manages the money and the investors can
enjoy the fruits of this expertise without getting involved in the mundane tasks.
One should never invest in Mutual Funds, but should invest through them.
To elaborate, we invest in various investment avenues based on our requirements, e.g. for
capital growth - we invest in equity shares, for safety of capital and regular income - we buy
fixed income products. The concern for most investors is how to know which instruments are
best for them? One may not have enough abilities, time or interest to conduct the research. To
manage investments, one can outsource certain tasks one is unable to do. Anyone can
outsource „managing one‟s investments‟ to a professional firm – the Mutual Fund company.
Mutual Funds offer various avenues to fulfill different objectives, which investors can choose
from based on one‟s unique situation and objective.
When an investor subscribes for the units of a mutual fund, he becomes part owner of the
assets of the fund in the same proportion as his contribution amount put up with the corpus (the
total amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or
a unit holder.
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Any change in the value of the investments made into capital market instruments (such as
shares, debentures, etc.) is reflected in the Net Asset Value (NAV) of the scheme. NAV is
defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a
scheme is calculated by dividing the market value of scheme's assets by the total number of
units issued to the investors. Mutual Fund companies manage all administrative activities
including paperwork. They also facilitate accounting and reporting the progress of the
investment portfolios through a combination of Net Asset Values (NAVs) and the account
statements. Units are issued and can be redeemed as needed. The fund‟s Net Asset value
(NAV) is determined each day.
Total value of the fund

NAV =
No. of shares currently issued and outstanding
Mutual funds are set up to buy many stocks. Beyond that, investors can diversify even more by
purchasing different kinds of stocks which helps to spreading out investors‟ money across
different types of investments and hence, reduces risk tremendously up to certain extent.
Investments in securities are spread across a wide cross-section of industries and sectors and
thus the risk is reduced. Mutual fund issues units to the investors in accordance with quantum
of money invested by them. Investors of mutual funds are known as unit holders.
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SEBI REGULATIONS:
1) As far as mutual funds are concerned, SEBI (Stock Exchange Board Of India) formulates
policies and regulates the mutual funds to protect the interest of the investors.
2) SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds
sponsored by private sector entities were allowed to enter the capital market.
3) The regulations were fully revised in 1996 and have been amended thereafter from time to
time.
4) SEBI has also issued guidelines to the mutual funds from time to time to protect the
interests of investors.
5) All mutual funds whether promoted by public sector or private sector entities including
those promoted by foreign entities are governed by the same set of Regulations. The risks
associated with the schemes launched by the mutual funds sponsored by these entities are
of similar type. There is no distinction in regulatory requirements for these mutual funds
and all are subject to monitoring and inspections by SEBI.
6) SEBI Regulations require that at least two thirds of the directors of trustee company or
board of trustees must be independent i.e. they should not be associated with the sponsors.
7) Also, 50% of the directors of AMC must be independent. All mutual funds are required to
be registered with SEBI before they launch any scheme.
8) Further SEBI Regulations, inter-alia, stipulate that MF‟s cannot guarantee returns in any
scheme and that each scheme is subject to 20:25 condition [i.e. minimum 20 investors per
scheme and one investor can hold more than 25% stake in the corpus in that one scheme].
9) Also, SEBI has permitted MF‟s to launch schemes overseas subject various restrictions
and also to launch schemes linked to Real Estate, Options and Futures, Commodities, etc.
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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.
With the increase in mutual fund players in India, a need for mutual fund association in India
was generated to function as a non-profit organization. Association of Mutual Funds in India,
(AMFI) was incorporated on 22nd August, 1995. AMFI is an apex body of all Asset
Management Companies (AMC) which has been registered with SEBI. Till date all the
AMCs are that have launched mutual fund schemes are its members. It functions under the
supervision and guidelines of its Board of Directors.
Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a
professional and healthy market with ethical lines enhancing and maintaining standards. It
follows the principle of both protecting and promoting the interests of mutual funds as well as
their unit holders.
The Objectives of Association of Mutual Funds in India:

The Association of Mutual Funds of India works with 30 registered AMCs of the country. It
has certain defined objectives which juxtapose the guidelines of its Board of Directors, the
objectives are as follows:
1) This mutual fund association of India maintains high professional and ethical
standards in all areas of operation of the industry.
2) It also recommends and promotes the top class business practices and code of conduct
which is followed by members and related people engaged in the activities of mutual
fund and asset management. The agencies that are by any means connected or
involved in the field of capital markets and financial services also involved in this
code or conduct of the association.
3) AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual
fund industry.
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4) Association of Mutual Fund of India does represent the Government of India, The
Reserve Bank of India and other related bodies on manners relating to the Mutual
Fund Industry.
5) It develops a team or well qualified and trained Agent distributors. It implements a

programme of training and certification for all intermediaries and other engaged in the
mutual fund industry.
6) AMFI undertakes all India awareness programme for investors in order to promote
proper understanding of the concept and working of mutual funds.
7) At last but not the least association of mutual fund of India also disseminate
information‟s on Mutual Fund Industry and undertakes studies and research either
directly or in association with other bodies.
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INVESTMENT STRATEGIES:
1. Systematic Investment Plan (SIP):

We will see how the power of compounding could benefit us. In SIP, every small amounts
invested regularly can grow substantially. SIP gives a clear picture of how an early and
regular investment can help the investor in wealth creation. Due to its unlimited advantages
SIP could be redefined as “a methodology of fund investing regularly to benefit regularly
from the stock market volatility. In the later sections we will see how returns generated from
some of the SIPs have outperformed their benchmark. But before moving on to that lets have
a look at some of the top performing SIPs and their return for 1 year, under this a fixed sum is
invested each month on a fixed date of a month. Payment is made through post-dated cheque
or direct debit facilities. The investor gets fewer units when the NAV is high and more units
when the NAV is low.
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2. Systematic Transfer Plan (STP):
Under this an investor invests in liquid fund and chosen option of STP (Systematic Transfer
Plan) gives instructions to transfer a fixed sum with an, at a fixed interval, to a scheme of the
same mutual fund. At that time investor enjoys dual return from liquid fund and from the
scheme where money transferred.
3. Systematic Withdrawal Plan (SWP):

Investors who need a regular stream of income have to choose between the dividend option
and a systematic withdrawal plan that allows them to redeem units periodically. SWP implies
capital gains for the investor. After applying for SWP investor‟s return on the investments
should be automatically transferred to the bank account (monthly/weekly as selected). SWP is
a very good option for retired persons or the persons which are closed to retirement.
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TYPES OF MUTUAL FUND SCHEMES IN INDIA:
Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position,
risk tolerance and return expectations etc. Thus mutual funds has Variety of flavors, being a
collection of many stocks, an investors can go for picking a mutual fund might be easy. There
are over hundreds of mutual fund schemes to choose from. It is easier to think of mutual
funds in categories, mentioned below.
BY NATURE BY INVESTMENT
BY STRUCTURE OTHER SCHEMES
OBJECTIVE
Open-Ended Growth Tax-Saving

Equity Funds
Schemes Schemes Schemes
Close-Ended Income Index

Debt Funds
Schemes Schemes Schemes
Sector
Interval Balanced Balanced
Specific
Schemes Funds Schemes
Schemes
Money Market
Schemes
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A) BY STRUCTURE:
1. Open - Ended Schemes:

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

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15
years. The fund is open for subscription only during a specified period. Investors can
invest in the scheme at the time of the initial public issue and thereafter they can
buy or sell the units of the schemes on the stock exchanges: where they are listed. In
order to provide an exit route to the investors, some close-ended funds give an option of
selling back the units to the Mutual Fund through periodic repurchase at NAV related
prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the
investor.
3. Interval Schemes:
Interval Schemes are that scheme, which combines the features of open-ended and close-
ended schemes. The units may be traded on the stock exchange or may be open for sale or
redemption during pre-determined intervals at NAV related prices.
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B) BY NATURE:
1. Equity Fund:
An equity fund is a mutual fund scheme that invests predominantly in equity stocks.
In the Indian context, as per current SEBI Mutual Fund Regulations, an equity mutual fund
scheme must invest at least 65% of the scheme‟s assets in equities and equity related
instruments.
Equity mutual funds are principally categorized according to company size, the investment style
of the holdings in the portfolio and geography.
These funds invest the maximum part of their corpus into equities holdings. The structure of the
fund may vary different for different schemes and the fund manager‟s outlook on different
stocks. The Equity Funds are sub-classified depending upon their investment objective, as
follows:
• Diversified Equity Funds
• Small Capital Funds
• Mid-Capital Funds
• Large Capital Funds
• Multi Capital Funds
• Sector Specific Funds
• Tax Savings Funds (ELSS)
Equity investments are meant for a longer time horizon, thus equity funds rank high on the risk-
return matrix.
2. Debt Funds:
Debt funds invest only in debt instruments such as corporate bonds, government securities and
money market instruments either completely avoiding any investments in the stock markets as in
income funds or gilt funds or having a small exposure to equities as in monthly income plans or
children's plan. Hence they are safer than equity funds. At the same time the expected returns
from debt funds would be lower. Such investments are advisable for the risk-averse investor and
as a part of the investment portfolio for other investors.
The objective of these Funds is to invest in debt papers, government authorities, private
companies, banks and financial institutions are some of the major issuers of debt papers. By
investing in debt instruments, these funds ensure low risk and provide stable income to the
investors.
23
Debt funds are further classified as:
• Gift Funds:
Invest their corpus in securities issued by Government, popularly known as Government of India
debt papers. These Funds carry zero Default risk but are associated with Interest Rate risk.
These schemes are safer as they invest in papers backed by Government.
• Income Funds:
Invest a major portion into various debt instruments such as bonds, corporate debentures and
Government securities.
• Short Term Plans (STPs):

STP meant for investment horizon for three to six months. These funds primarily invest in short
term papers like Certificate of Deposits (CDs) and Commercial Papers (CPs). Some portion of
the corpus is also invested in corporate debentures.
• Liquid Funds:
Also known as Money Market Schemes, These funds provides easy liquidity and preservation of
capital, These schemes invest in short-term instruments like Treasury Bills, inter-bank call
money market, CPs and CDs. These funds are meant for short-term cash management of
corporate houses and are meant for an investment horizon of 1 day to 3 months. These schemes
rank low on risk-return matrix and are considered to be the safest amongst all categories of
mutual funds.
3. Balanced Funds:
As the name suggest they are a mix of both equity and debt funds. They invest in both equities
and fixed income securities, which are in line with pre-defined investment objective of the
scheme. These schemes aim to provide investors with the best of both the worlds. Equity part
provides growth and the debt part provides stability in returns.
Further the mutual funds can be broadly classified on the basis of investment parameter viz; each
category of funds is backed by an investment philosophy, which is pre-defined in the objectives
of the fund. The investor can align his own investment needs with the funds objective and invest
accordingly. These funds invest in a mix of equities and debt, giving the investor the best of both
worlds. Balanced funds gain from a healthy dose of equities but the debt portion fortifies them
against any downturn. Balanced funds are suitable for a medium-term horizon and are ideal for
investor who is looking for a mixture of safety, income and modest capital appreciation.
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C) BY INVESTMENT OBJECTIVE:
1. Growth Schemes:
Growth Schemes are also known as equity schemes. The aim of these schemes is to provide
capital appreciation over medium to long term. These schemes normally invest a major part of
their fund in equities and are willing to bear short-term decline in value for possible future
appreciation.
2. Income Schemes:
Income Schemes are also known as debt schemes. The aim of these schemes is to provide
regular and steady income to investors. These schemes generally invest in fixed income
securities such as bonds and corporate debentures. Capital appreciation in such schemes may
be limited.
3. Balanced Schemes:
A balanced fund combines equity stock component, a bond component and sometimes a money
market component in a single portfolio. Generally, these hybrid funds stick to a relatively fixed
mix of stocks and bonds that reflects either a moderate, or higher equity, component, or
conservative, or higher fixed-income, component orientation. Balanced Schemes aim to
provide both growth and income by periodically distributing a part of the income and capital
gains they can. These schemes invest in both shares and fixed income securities, in the
proportion indicated in their offer documents (normally 50:50).
4. Money Market Schemes:
Money Market Schemes aim to provide easy liquidity, preservation of capital and moderate
income. These schemes generally invest in safer, short-term instruments, such as treasury bills,
certificates of deposit, commercial paper and inter-bank call money.
25
D) OTHER SCHEMES:
1. Tax Saving Schemes:
Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to
time. Under Section 80c of the Income Tax Act, contributions made to any Equity Linked
Savings Scheme (ELSS) are eligible for rebate.
2. Index Schemes:
Index schemes attempt to replicate the performance of a particular index such as the BSE
Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks that
constitute the index. The percentage of each stock to the total holding will be identical to the
stocks index weightage. And hence, the returns from such schemes would be more or less
equivalent to those of the Index.
3. Sector Specific Schemes:

These are the funds/schemes which invest in the securities of only those sectors or industries as
specified in the offer documents, e.g., Pharmaceuticals, Software, Fast Moving Consumer
Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the
performance of the respective sectors/industries. While these funds may give higher returns,
they are more risky compared to diversified funds. Investors need to keep a watch on the
performance of those sectors/industries and must exit at an appropriate time.
26
HOW TO CHOOSE A MUTUAL FUND ?
Some of the basic tools which an investor may ignore but a mutual fund advisor will
always look while choosing between funds are as follow:
1. Rupee cost averaging:

The investors going for Systematic Investment Plans (SIP) and Systematic Transfer Plans
(STP) may enjoy the benefits of RCA (Rupee Cost Averaging). Rupee cost averaging allows an
investor to bring down the average cost of buying a scheme by making a fixed investment
periodically, like Rs.5,000 a month and nowadays even as low as Rs.500 or Rs.100. In this
case, the investor is always at a profit, even if the market falls. In case if the NAV of fund falls,
the investors can get more number of units and vice-versa. This results in the average cost per
unit for the investor being lower than the average price per unit over time.
2. Rebalancing:
Rebalancing involves booking profit in the fund class that has gone up and investing in the
asset class that is down. Trigger and switching are tools that can be used to rebalance a
portfolio. Trigger facilities allow automatic redemption or switch if a specified event occurs.
The trigger could be the value of the investment, the net asset value of the scheme, level of
capital appreciation, level of the market indices or even a date.
27
The funds redeemed can be switched to other specified schemes within the same fund house.
Some fund houses allow such switches without charging an entry load.
To use the trigger and switch facility, the investor needs to specify the event, the amount or the
number of units to be redeemed and the scheme into which the switch has to be made. This
ensures that the investor books some profits and maintains the asset allocation in the portfolio.
3. Diversification:
It is good idea to spread your investment among mutual fund. That invests in different type of
securities. Each offers different advantage and disadvantages.
So, diversification involves investing the amount into different options. Diversifying can keep
you from putting all your eggs in one basket. It may increase your return over a long period of
time. In case of mutual funds, the investor may enjoy it afterwards also through dividend
transfer option. Under this, the dividend is reinvested not into the same scheme but into another
scheme of the investor's choice.
4. Tax efficiency:
Tax factor acts as the “x-factor” for mutual funds. Tax efficiency affects the final decision of
any investor before investing. The investors gain through either dividends or capital
appreciation but if they haven‟t considered the tax factor then they may end loosing.
Debt funds have to pay a dividend distribution tax of 28 per cent (including surcharge and
education cess) on dividends paid out.
5. Just have a look at age:

Young investors time to wait out for the short-term ups and downs in stock markets, they might
be able to receive high returns over the long term.
On other side, people who are closer to retirement may be more interested in protecting their
money from possible drops in prices. Since, they will need to use it soon.
6. Risk Bearing Capacity:

While investing or choosing funds, be sure to consider how much risk you are comfortable
with. If you are to the retirement corner you may want a portfolio with a very little risk.
All the tools discussed over here are used by all the advisors and have helped investors in
reducing risk, simplicity and affordability. Even then an investor needs to examine costs, tax
implications and minimum applicable investment amounts before committing to a service.
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HOW DO INVESTORS CHOOSE BETWEEN FUNDS ?
When the market is flooded with mutual funds, it‟s a very tough job for the investors to choose
the best fund for them. Whenever an investor thinks of investing in mutual funds, he must look
at the investment objective of the fund. Then the investors sort out the funds whose investment
objective matches with that of the investor‟s. Now the tough task for investors start, they may
carry on the further process themselves or can go for advisors. Of course the investors can save
their money by going the direct route i.e. through the AMCs directly but it will only save 1-
1.75% (Expenses for the distributor) but could cost the investors in terms of returns if the
investor is not an expert. So it is always advisable to go for MF advisors. The mf advisors‟
thoughts go beyond just investment objectives and rate of return.
To measure the fund’s performance, the comparisons are usually done with:
1. With a market index.
2. Funds from the same peer group.
3. Other similar products in which investors invest their funds.
Financial planning for investors (reference to mutual funds):
Investors are required to go for financial planning before making investments in any mutual
fund. The objective of financial planning is to ensure that the right amount of money is
available at the right time to the investor to be able to meet his financial goals. It is more than
mere tax planning.
Key Information Memorandum (KIM):
A key information memorandum, popularly known as KIM, is attached along with the mutual
fund form. Many times we see that line should be written on every mutual fund document.
i.e., “Mutual Fund investments are subject to market risks, read all scheme related documents
carefully”. Thus, to know everything about scheme, every investor gets to read it.
Its contents are:
1 Name of the fund.
2. Investment objective.
3. Asset allocation pattern of the scheme.
4. Risk profile of the scheme.
5. Plans& options.
6. Minimum application amount/ no. of units.
7. Benchmark index .
8. Dividend policy.
9. Expenses of the scheme: load structure, recurring expenses.
10. Performance of the scheme (scheme return v/s. benchmark return).
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CONCEPT OF BENCHMARKING FOR PERFORMANCE
EVALUATION:
Every fund sets its benchmark according to its investment objective. The fund‟s performance is
measured in comparison with the benchmark. If the fund generates a greater return than the
benchmark then it is said that the fund has outperformed benchmark, if it is equal to benchmark
then the correlation between them is exactly 1. And if in case the return is lower than the
benchmark, then the fund is said to be underperformed.
Some of the benchmarks are:

1. Equity funds: Market indices such as S&P CNX nifty, BSE100, BSE200, BSE-PSU, BSE
500 index, BSE index, and other sectorial indices.
2. Debt funds: Interest Rates on Alternative Investments as Benchmarks, I - Bex Total Return
Index, JPM T-Bill Index Post-Tax Returns on Bank Deposits versus Debt Funds.
3. Liquid funds: Short Term Government Instruments‟ Interest Rates as Benchmarks, JPM T-
Bill Index.
Measuring and Evaluating Mutual Funds Performance:

Every investor investing in the mutual funds is driven by the motto of either wealth creation or
wealth increment or both. Therefore it‟s very necessary to continuously evaluate the funds‟
performance with the help of factsheets and newsletters, websites, newspapers and professional
advisors like mutual fund services. If the investors ignore the evaluation of funds‟ performance
then he can lose hold of it any time.
Performance Measures:
Equity funds: The performance of equity funds can be measured on the basis of: NAV
Growth, Total Return; Total Return with Reinvestment at NAV, Annualized Returns and
Distributions, Computing Total Return (Per Share Income and Expenses, Per Share Capital
Changes, Ratios, Shares Outstanding), the Expense Ratio, Portfolio Turnover Rate, Fund Size,
Transaction Costs, Cash Flow, Leverage.
Debt fund: Likewise the performance of debt funds can be measured on the basis of Peer
Group Comparisons, The Income Ratio, Industry Exposures and Concentrations, NPAs, besides
NAV Growth, Total Return and Expense Ratio.
Liquid funds: The performance of the highly volatile liquid funds can be measured on the
basis of: Fund Yield, besides NAV Growth, Total Return and Expense Ratio.
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Definitions of Key Terms:
1) Net Asset Value (NAV) -A Fund‟s net asset value or NAV equals the current market
value of a fund‟s holdings minus the fund‟s liabilities (sometimes referred as “net
assets”). It is usually expressed as a per-share amount, computed by diving net assets by
the number of fund shares outstanding. Funds must compute their net asset value
according to their prospectus which is typically at the end of each day the New York
Stock Exchange is open, though some funds compute their NAV more than a once
daily.
2) Sale Price -Sale price is the price you pay when you invest in a scheme, also called
Offer Price. It may include a sales load.
3) Repurchase Price -It is the price at which a close-ended scheme repurchases its units
and it may include a back-end load. This is also called Bid Price.
4) Redemption Price -It is the price at which open-ended schemes repurchase their units
and close-ended schemes redeem their units on maturity. Such prices are NAV related.
5) Sales Load -It is a charge collected by a scheme when it sells the units. Also, called as
'Front-end' load. Schemes that do not charge a load are called 'No Load' schemes.
6) Repurchase or 'Back-end' Load -It is a charge collected by a scheme when it buys

back the units from the unit holders.
7) Total Expense Ratio -The expenses ratio allows investors to compare expenses across
funds. The expense ratio equals the 12b-1 fee plus the other fund expenses divided by
average daily net assets. The expenses ratio sometimes referred to as the “total expense
ratio” or TER.
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PORTFOLIO ANALYSIS TOOLS:
With the increasing number of mutual fund schemes, it becomes very difficult for an investor
to choose the type of funds for investment. By using some of the portfolio analysis tools, he
can become more equipped to make a well informed choice. There are many financial tools to
analyze mutual funds. Each has their unique strengths and limitations as well. Therefore, one
needs to use a combination of these tools to make a thorough analysis of the funds.
The present market has become very volatile and buoyant, so it is getting difficult for the
investors to take right investing decision. So, the easiest available option for investors is to
choose the best performing funds in terms of “returns” which have yielded maximum returns.
But if we look deeply to it, we can find that the returns are important but it is also important to
look at the „quality‟ of the returns. „Quality‟ determines how much risk a fund is taking to
generate those returns. One can make a judgment on the quality of a fund from various ratios
such as standard deviation, Sharpe ratio, beta, R-squared, alpha,sortino, portfolio turnover
ratio, total expenses ratio, yield to maturity ratio, etc.
So before going into details, let’s have a look at these ratios:
1. Sortino:
The Sortino ratio is a variation of the Sharpe ratio that differentiates harmful volatility from
total overall volatility by using the asset's standard deviation of negative asset returns,
called downside deviation. The sortino ratio takes the asset's return and subtracts the risk-free
rate, and then divides that amount by the asset's downside deviation.
The sortino ratio is a useful way for investors, analysts and portfolio managers to evaluate an
investment's return for a given level of bad risk.
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Since this ratio uses the downside deviation as its risk measure, it addresses the problem of
using total risk, or standard deviation, as upside volatility is beneficial to investors.
A ratio such as the Sharpe ratio punishes the investment for good risk, which provides positive
returns for investors. However, determining which ratio to use depends on whether the investor
wants to focus on standard deviation or downside deviation.
Computation:
< R > - Rf
Sortino Ratio =
σd
Where,
< R > = Expected return
Rf = The risk free rate of return
σd = Standard deviation of negative asset returns
2. Alpha Analysis:
Alpha is a measure of an investment's performance on a risk-adjusted basis. It takes the
volatility (price risk) of a security or fund portfolio and compares its risk-adjusted performance
to a benchmark index. The excess return of the investment relative to the return of the
benchmark index is its "alpha."
Simply stated, alpha is often considered to represent the value that a portfolio manager adds or
subtracts from a fund portfolio's return. A positive alpha of 1.0 means the fund has
outperformed its benchmark index by 1%. Correspondingly, a similar negative alpha would
indicate an underperformance of 1%.
For investors, the more positive an alpha is, the better it is.
Computation:
α = Rp – [ Rf + (Rm – Rf) β ]
Where,
Rp = Realized return of portfolio
Rm = Market return
Rf = Risk free rate
3. Standard Deviation:
In simple terms standard deviation is one of the commonly used statistical parameter to
measure risk, which determines the volatility of a fund. Deviation is defined as any variation
from a mean value (upward & downward). Since the markets are volatile, the returns fluctuate
every day. High standard deviation of a fund implies high volatility and a low standard
deviation implies low volatility.
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Computation:
SD = Square Root of V (Variance)
Sum of squared difference between each monthly return and its mean
Variance =
Number of monthly return data – 1
4. Beta Analysis:
Beta is used to measure the risk. It basically indicates the level of volatility associated with the
fund as compared to the market. In case of funds, beta would indicate the volatility against the
benchmark index. It is used as a short term decision making tool. A beta that is greater than 1
means that the fund is more volatile than the benchmark index, while a beta of less than 1
means that the fund is more volatile than the benchmark index. A fund with a beta very close to
1 means the fund‟s performance closely matches the index or benchmark.
The success of beta is heavily dependent on the correlation between correlation between a fund
and its benchmark. Thus, if the fund‟s portfolio doesn‟t have a relevant benchmark index then a
beta would be grossly inappropriate. For example if we are considering a banking fund, we
should look at the beta against a bank index.
Computation:
Standard Deviation of Fund

Beta = R-Square
Standard Deviation of Benchmark
5. R-Squared (R2):
R squared is the square of „R‟ (i.e.; coefficient of correlation). It describes the level of
association between the fun‟s market volatility and market risk. The value of R- squared ranges
from0 to1. A high R- squared (more than 0.80) indicates that beta can be used as a reliable
measure to analyze the performance of a fund. Beta should be ignored when the r-squared is
low as it indicates that the fund performance is affected by factors other than the markets.
Computation:
R-Squared = Square Of Correlation
Covariance between index and portfolio

Correlation = SD of Index
Standard Deviation of Portfolio
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6. Sharpe Ratio:
Sharpe ratio is a risk to reward ratio, which helps in comparing the returns given by a fund with
the risk that the fund has taken. A fund with a higher Sharpe ratio means that these returns have
been generated taking lesser risk. In other words, the fund is less volatile and yet generating
good returns. Thus, given similar returns, the fund with a higher Sharpe ratio offers a better
avenue for investing. The ratio is calculated as:
Computation:
Average return Risk free rate

Sharpe ratio =
Portfolio standard deviation
7. Portfolio Turnover Ratio:

Portfolio turnover is a measure of a fund's trading activity and is calculated by dividing the
lesser of purchases or sales (excluding securities with maturities of less than one year) by the
average monthly net assets of the fund. Turnover is simply a measure of the percentage of
portfolio value that has been transacted, not an indication of the percentage of a fund's holdings
that have been changed. Portfolio turnover is the purchase and sale of securities in a fund's
portfolio. A ratio of 100%, then, means the fund has bought and sold all its positions within the
last year. Turnover is important when investing in any mutual fund, since the amount of
turnover affects the fees and costs within the mutual fund.
8. Total Expenses Ratio:

A measure of the total costs associated with managing and operating an investment fund such
as a mutual fund. These costs consist primarily of management fees and additional expenses
such as trading fees, legal fees, auditor fees and other operational expenses. The total cost of
the fund is divided by the fund's total assets to arrive at a percentage amount, which represents
the TER.
Computation:
Total fund Costs

Total Expense Ratio =
Total fund Asset
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9. Yield To Maturity:
The yield to maturity formula is used to calculate the yield on a bond based on its current price
on the market. The yield to maturity formula looks at the effective yield of a bond based on
compounding as opposed to the simple yield which is found using the dividend yield formula.
Computation:
P
C+ F
N
YTM =
P
F+
2
10. Modified Duration:

It is based on the concept that security prices and interest rates are inversely related.
It expresses the measurable change in the value of security in response to a change in interest
rates. Modified duration follows the concept that interest rates and bond prices move in
opposite directions. This formula is used to determine the effect that a 100-basis-point (1%)
change in interest rates will have on the price of a bond.
Computation:
Macauley Duration
MD =
YTM
1+
n
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DISTRIBUTION CHANNELS:
Mutual funds possess a very strong distribution channel so that the ultimate customer doesn‟t face
any difficulty in the final procurement. The various parties involved in distribution of mutual
funds are:
1. Direct marketing by the AMCs:
The forms could be obtained from the AMCs directly. The investors can approach to the AMCs
for the forms. Some of the top AMCs of India are;
Reliance, TATA, Birla Sunlife, SBI magnum, Kotak Mahindra, HDFC, Sundaram, ICICI, Mirae
Assets, Canara Robeco, Lotus India, LIC, UTI etc. whereas foreign AMCs include: Standard
Chartered, Franklin Templeton, JP Morgan, HSBC, DSP Blackrock, etc.
2. Broker/ sub broker arrangements:

The AMCs can simultaneously go for broker/sub-broker to popularize their funds. AMCs can
enjoy the advantage of large network of these brokers and sub brokers.eg: SBI being the top
financial intermediary of India has the greatest network. So the AMCs dealing through SBI has
access to most of the investors.
For running a broker ship, distributorship and wealth management company they have to clear the
exam of NISM Certification (National Institute of Securities Markets). Every distributor has to
follow the rules and regulations of NISM time to time, they can‟t avoid it.
3. Individual agents, Banks, NBFC:

Investors can procure the funds through individual agents, independent brokers, banks and several
non- banking financial corporations too, whichever he finds convenient for him.
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ADVANTAGES OF INVESTING THROUGH MUTUAL FUNDS:
If mutual funds are emerging as the favorite investment vehicle, it is because of the many
advantages they have over other forms and the avenues of investing, particularly for the investor
who has limited resources available in terms of capital and the ability to carry out detailed
research and market monitoring. The following are the major advantages offered by mutual funds
to all investors:
1. Portfolio Diversification:
Each investor in the fund is a part owner of all the fund's assets, thus enabling him to hold a
diversified investment portfolio even with a small amount of investment that would otherwise
require big capital.
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2. Professional Management:
A team of professional fund managers manages them with in-depth research inputs from investment
analysts. Even if an investor has a big amount of capital available to him, he benefits from the
professional management skills brought in by the fund in the management of the investor's
portfolio. The investment management skills, along with the needed research into available
investment options, ensure a much better return than what an investor can manage on his own.
Few investors have the skill and resources of their own to succeed in today‟s fast moving, global
and sophisticated markets.
3. Reduction/Diversification of Risk:
When an investor invests directly, all the risk of potential loss is his own, whether he places a
deposit with a company or a bank, or he buys share or debenture on his own or in any other
from. While investing in the pool of funds with investors, the potential losses are also shared
with other investors. The risk reduction is one of the most important benefits of a collective
investment vehicle like the mutual fund.
4. Reduction of Transaction Costs:

What is true of risk as also true of the transaction costs. The investor bears all the costs or
investing such as brokerage or custody of securities. When going through a fund, he has the
benefit of economics of scale; the funds pay lesser costs because of larger volumes, a benefit
passed on to its investors.
5. Liquidity:
Often, investors hold shares or bonds they cannot directly, easily and quickly sell. When they
invest in the units or a fund, they can generally cash their investments any time, by selling their
units to the fund if open-ended, or selling them in the market if the fund is close-end.
Liquidity of investment is clearly a big benefit.
6. Convenience and Flexibility:

Mutual fund management companies offer many investor services that a direct market investor
cannot get. Investors can easily transfer their holding from one scheme to the other; get updated
market information and so on.
39
7. Tax Benefits: Any income distributed after March 31st 2016 will be subject to tax in the
assessment of all Unit holders. However, as a measure of concession to Unit holders of open-
ended equity - oriented funds, income distributions for the year ending March 31st 2017 will not
be taxed.
8. Authority to access corporate information:

Being institutions with good bargaining power in markets, mutual funds have access to crucial
corporate information, which individual investors cannot access.
9. Choice of Schemes:
Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
10. Well Regulated:

All Mutual Funds are registered with SEBI and they function within the provisions of strict
regulations designed to protect the interests of investors. The operations of Mutual Funds are
regularly monitored by SEBI.
11. Transparency:
You get regular information on the value of your investment in addition to disclosure on the
specific investments made by your scheme, the proportion invested in each class of assets and the
fund manager's investment strategy and outlook.
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DISADVANTAGES OF INVESTING THROUGH MUTUAL FUNDS:
1. No Control Over Costs:

An investor in a mutual fund has no control of the overall costs of investing. The investor pays
investment management fees as long as he remains with the fund, albeit in return for the
professional management and research. Fees are payable even if the value of his investments is
declining. A mutual fund investor also pays fund distribution costs, which he would not incur in
direct investing. However, this shortcoming only means that there is a cost to obtain the mutual
fund services.
2. No Tailor-Made Portfolio:
Investors who invest on their own can build their own portfolios of shares and bonds and other
securities, Investing through fund means he delegates this decision to the fund managers, The
very-high-net-worth individuals or large corporate investors may find this to be a constraint in
achieving their objectives. However, most mutual fund managers help investors overcome this
constraint by offering families of funds - a large number of different schemes - within their own
management company. An investor can choose from different investment plans and constructs a
portfolio to his choices.
3. Managing a Portfolio of Funds:
Availability of a large number of funds can actually mean too much choice for the
investor. He may again need advice on how to select a fund to achieve his objectives,
quite similar to the situation when he has individual shares or bonds to select.
4. The Wisdom of Professional Management:
That's right, this is not an advantage. The average mutual fund manager is no better at picking
stocks than the average non-professional, but charges fees.
5. No Control:
Unlike picking your own individual stocks, a mutual fund puts you in the passenger seat of
somebody else's car.
6. Dilution: Mutual funds generally have such small holdings of so many different
stocks that insanely great performance by a fund's top holdings still doesn't make much of a
difference in a mutual fund's total performance.
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Documentation Required While Investing In Mutual Fund:
After knowing the view of the customer with regards to Mutual Fund Investment and the
following details with respect to MF investment:
 Mode of Investment (Lump Sum / SIP).
 Risk bearing capacity (Low / Moderate / High).
 Investment Channel (Direct / Broker / Sub-Broker).
 Types of fund (Debt / Equity / Liquid Fund).
 Capacity of the customer to invest.
 Period of Investment (Short / Long term).
The client chooses and confirms with either of the above given plan and view of the investment.
After that we initiate with the process of administrative part wherein we complete the initial
process by filling up the following three forms which are mandatory for everyone while
investing in Mutual Fund:
1) CKYC Form (Central Know Your Client): KYC registration is being centralized
through KYC Registration Agencies (KRAs) registered with SEBI. With this each
investor has to undergo KYC process only once while investing in the securities market
and the details would be shared with other intermediaries by the KRAs for the every
transaction in future.
2) Common Application Form (Particular Fund House): If you invest in a fund house for
the first time, you need to fill the common application form to open your account. The
common application form that captures your basic details such as address and bank
account details, investment details, investment options and all.
3) SIP / STP / SWP / DTP Form:

(SIP- Systematic Investment Plan, STP- Systematic transfer Plan, SWP- Systematic
withdrawal Plan, DTP- Dividend transfer Plan)
This form is need to be fill up by the investor after an common application form for the
declaration of the method chosen by investor for the systematic investment.
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4) NACH / OTM Form (NACH- National Automated Clearing House / OTM- One
Time Mandate):
To invest in mutual fund through SIP, earlier, one had to fill the ECS form. Currently this is
being replaced with NACH. Nach is an instruction given to bank by investor to make payment to
specific institution on monthly or yearly basis as per instructions is given to them. It includes
payment towards mutual fund SIP‟S. Once you filled up the OTM form, in SIP‟s fixed amount
should be automatically debited from the investors account every month.
LIST OF DOCUMENTS NEEDED:
Mandatory Documents:
1. Photocopies 2.
2. PAN.
3. KYC (Know Your Client).
4. One Cancelled cheque and One cheque mentioning the name of selected scheme on it.
5. Proof of identity (any 1 of the following):
 Photo PAN Card
 Driving License
 Aadhar Card
 Passport copy
 Voter ID
 Bank photo passbook.
6. Proof of Address (any 1 of the following):
 Latest electricity
 Telephone bill
 Rent agreement.
 Passport
 Latest bank passbook
 Voter Id
 Aadhar card
 Driving License.
43
Chapter - 4
RESEARCH METHODOLOGY
Research is of a great importance to find out the nature, extent and cause of the research issue
under study. Research methodology is the processes in which various steps are generally adopted
by a research are outlined.
This report is based on primary as well secondary data, however primary data collection was
given more importance since it is overhearing factor in attitude studies. One of the most
important users of research methodology is that it helps in identifying the problem, collecting,
analyzing the required information data and providing an alternative solution to the problem .It
also helps in collecting the vital information that is required by the top management to assist
them for the better decision making both day to day decision and critical ones.
This study aims to delineate the methodology, employed to undertaken this study. Research is a
common parlance, which refers to a search for knowledge.
The data which I have collected for making this project is combination of both primary and
secondary data.
Data sources:
1. Primary Data:
Research is totally based on primary data. Secondary data can be used only for the reference.
Research has been done by primary data collection, and primary data has been collected by
interacting with various employees and clients of the Insynch, by the formal and informal talks.
Refer page no. 43 - 48 for the primary data collected.
2. Secondary Data:
The secondary data has been collected through various journals and websites. Data is also
collected from the insynch‟s own software named “InvestWell”. All the data related to Alpha,
Beta, Standard Deviations, Sharpe Ratio, NAV, All Benchmarks, etc regarding schemes are
collected from “InvestWell” software. This software helped me to know the performances of the
schemes particularly.
44
Duration of Study:
The study was carried out for a period of two months, from 7th July 2017 to 18th September 2017.
Sampling:
Sampling procedure:
The sample was selected of them who are the customers/visitors of Insynch Wealth Management
LLP, irrespective of them being investors or not or availing the services or not. It was also
collected through personal visits to persons, by formal and informal talks. The data has been
analyzed by using mathematical/Statistical tool.
Sample design:
Sampling design deals with the methods of selecting items to be observed for the given study. It
is the strategies specifying which approach will be used for gathering and analyzing the data.
The method of sampling used for the study is non-probability sampling which is also known as
convenient sampling. In this type of sampling, items for the sample are selected deliberately by
the researchers of the enquiry purposively choose the particular units of the universe for
constituting a sample which is representative of the whole.
In this study, data has been presented with the help of bar graphs, pie charts, line graphs, tables,
diagrams, etc.
45
Chapter – 5
DATA ANALYSIS AND INTERPRETATION
CASE STUDY:
1. Equity Large Capital Scheme:
1) Name of Client: Mr. Madhav Deshmukh

2) Age: 25
3) Any Liabilities: No
4) Marital Status: Un-Married
5) Income: 40,000 /- month
6) Type of Investment: SIP
7) Investment Horizon: Long-Term
8) Risk Bearing Capacity: high
9) Investment Amount: 5,000 /- month
10) Other views: To invest in large capital companies
On the basis of above data i suggested client to invest in Equity Large Capital Scheme.
Because of the following reasons;
 The equity large capital need investment horizon of minimum 6 – 7 years and above,
there customer also have Long-Term investment plan.
 These schemes are less volatile as compare to the market, this suits the client requirement
of having equity exposure with relatively lower volatility.
 The companies in which this scheme is investing are well developed and stable in the
market also have a very high liquidity for bulk buying and selling if required.
So, keeping in mind the customer requirements and the benefits of equity large capital
schemes, i have suggested the client to invest in the above mentioned scheme.
46
2. Balanced/Hybrid Equity Oriented Scheme:
1) Name of Client: Mr. Ratan Kothari

2) Age: 57 (close to retirement)
4) Marital Status: Married
5) Income: Limited
6) Type of Investment: Lump Sum
7) Investment Horizon: Medium to long-Term
8) Risk Bearing Capacity: Medium
9) Investment Amount: 6,00,000 Rs.
10) Other views: To invest in balanced fund having more equity exposure
On the basis of above data i suggested client to invest in Hybrid Equity Oriented Scheme.
 The equity hybrid scheme need investment horizon of 5years and above, there customer
also have Medium to Long-Term investment plan.
 These schemes are less volatile as compare to the market, there client also wants the
scheme which slightly lower in risk compared to 100% equity risk.
 This scheme invests in both equity market and debt fund, it shows schemes having a
diversified investment in different sectors.
 Here client is close to the retirement and needs return on investment in the medium to
long period of time, with a slightly lower in risk compared to 100% equity risk.
So, keeping in mind the customer requirements and the benefits of hybrid equity
47
3. Equity Small Capital Scheme:
1) Name of Client: Mr. Prashant Kadam

2) Age: 26
4) Marital Status: Un-Married
5) Income: 32,000 /- Month
6) Type of Investment: SIP (Systematic Investment Plan)
8) Risk Bearing Capacity: Very High
10) Other views: Investment in companies having small capital
On the basis of above data i have suggested client to invest in Equity Small Capital Scheme.
 The equity small capital scheme need investment horizon of minimum 9 years and above,
 These schemes are more volatile as compare to the market, there client also wants the
scheme which has high risk but provides more return.
 The companies in which this scheme is investing are mid-sized and extremely vulnerable
to business fluctuations in the market.
 Here client has more patience to wait for long term and definitely while investing in
small capital companies we need a patience to handle ups and downs of market
behaviour.
So, keeping in mind the customer requirements and the benefits of equity small capital schemes,
i have suggested the client to invest in the above mentioned scheme.
48
4. Equity Multi Capital Scheme:
1) Name of Client: Mr. Gyanendra Chaudhary

2) Age: 31
3) Any Liabilities: Yes
5) Type of Investment: SIP (Systematic investment Plan)
7) Risk Bearing Capacity: Medium
10) Other views: To invest in multiple companies
On the basis of above data i have suggested client to invest in Equity Multi Capital Scheme.
 The equity multi capital scheme need investment horizon of minimum 7 years and above,
 These schemes are not as volatile as compare to the market, there client also wants the
scheme which has moderate risk but provides more return by diversifying the investment
in multiple companies.
 In this type of mutual fund scheme all the sizes (small cap, mid cap, large cap) are
covered, this can help customers having moderate risk bearing capacity.
So, keeping in mind the customer requirements and the benefits of equity multi capital schemes,
i have suggested the client to invest in the above mentioned scheme.
49
5. Balanced/Hybrid Debt Oriented Scheme:
1) Name of Client: Mr. Nirdesh Pachoriya

2) Age: 41
5) Income: 60,000
6) Type of Investment: SIP (Systematic investment Plan)
7) Investment Horizon: Short to Medium-Term
8) Risk Bearing Capacity: medium
On the basis of above data i suggested client to invest in Hybrid Debt Oriented Scheme.
Because of the following reasons:
 The debt hybrid scheme need investment horizon of minimum 4-5 years (short term),
there customer also have Short-Term investment plan.
 This scheme should invest funds in the government bonds, private bonds, government
fd‟s, debentures, etc. which are the very secured and safest investment source in market
as on today. So, for the client having a low risk bearing capacity it is better to suggest
this scheme.
scheme which has medium risk bearing capacity.
 This scheme invests in both equity market and debt fund, but there investment should be
done more in debt fund than the equity, automatically it reduces risk of the client while
investing in such a scheme.
 Here client needs return on investment in the short period of time, with a moderate risk.
 And if we see current market scenario which is all time high, it is more profitable for the
short term investors.
So, keeping in mind the customer requirements and the benefits of hybrid debt schemes, i have
suggested the client to invest in the above mentioned scheme.
50
6. Balanced/Hybrid Equity Savings Scheme:
1) Name of Client: Mr. Samir Mishra
2) Age: 39
5) Income: No
6) Type of Investment: Lump Sum
7) Investment Horizon: Short-Term to Mid-Term
8) Risk Bearing Capacity: Moderate
On the basis of above data i suggested client to invest in Hybrid Monthly Income Scheme.
 The hybrid monthly income scheme need investment horizon of minimum 3 years and
above, here customer also having Short-Term to Mid-Term investment plan.
 If investment kept for more than 1 year then income is fully tax free, which is not the
case in bank FD‟s.
 If it kept for less than 1 year, then the gains from investment are taxed at the rate (15%)
which is much lesser than normal tax rate.
scheme which has moderate risk bearing capacity.
 This scheme composes of 35% debt, 35% arbitrage and 30% equity. Hence it has little
equity exposure, which makes it moderately risk free.
 This scheme invests in both equity market and debt fund, but there investment should be
done more in debt and arbitrage fund than the equity, automatically it reduces risk of the
client while investing in such a scheme.
So, keeping in mind the customer requirements and the benefits of hybrid equity savings
51
Chapter – 6
CONFIRMATION OF PROPOSAL:
Out of the six clients, two clients have decided to invest in mutual fund scheme which we have
proposed to them and following are the options where clients have invested.
 Mr. Madhav Deshmukh: Equity Large Capital Scheme.

 Mr. Ratan Kothari: Hybrid Equity Oriented Scheme.
A. Equity Large Capital Schemes -
1. Mirae Assets- India Opportunities Fund.
2. SBI- Bluechip Fund.
3. Aditya Birla SL – Frontline Equity Fund.
4. Reliance Top 200 fund.
5. ICICI Focus Bluechip Fund.
B.Balanced (Hybrid) Equity Oriented Schemes -
1. Reliance – Regular Savings Balanced Fund (G)
2. L & T India Prudence Fund.
3. HDFC Balance Fund.
4. ICICI Prudential Balanced Plan Fund.
5. Aditya Birla SL- Balanced 95 Fund.
For both the above schemes i.e., Equity Large Capital Scheme and Hybrid Equity Scheme, we
have selected top five fund house schemes. Henceforth we have to finalize the best scheme by
making a comparison of the schemes provided by different fund houses.
The basic details of the schemes provided by different fund houses, their comparison and data
analysis of the same have been given in detail below in the project.
52
Analysis and Comparison of the Top 5 schemes:
A. Equity Large Capital Schemes:

1. Mirae Assets - India Opportunities Fund:
Objective: The scheme aims to maximize long term capital appreciation by finding investment
opportunities resulting from Indian economic growth and its structural shifts through investing in
equity and equity related securities.
Scheme Objective: Equity- Large Cap
Scheme Type: Open-Ended
Benchmark: S & P BSE
Launch Date: Apr 04, 2008
Corpus (Cr.): 4292.00
Current Nav: 45.7060 (13-9-2017)
Fund Manager: Harshad Borawake
Composition (%) = Other: - 0.58 Debt: 2.13 Equity: 98.45
Composition%
Other
Debt
Equity
53
2. SBI Bluechip Fund:
Objective: The scheme would invest in stocks of companies whose market capitalization is
atleast equal to or more than the least market capitalized stock of BSE 100 Index.
Scheme Objective: Equity: Large Cap

Benchmark: S & P BSE Normally
Fund Manager: Sohini Andani
Launch Date: 14 Feb, 2006
Current Nav:37.2271 (13-09-2017)
Corpus (Cr.):15236.00
Composition (%) =Other: - 1.48 Debt: 9.90 Equity: 91.58
Composition %
Other
Debt
Equity
54
3. Aditya Birla SL – Frontline Equity Fund:
Objective: The fund seeks to achieve long-term capital appreciation and current income from a
balanced portfolio with a target allocation of 60% equity, 40% debt and money market
securities.

Benchmark: S & P BSE 200
Fund Manager: Mahesh Patil
Launch Date: 30 Aug, 2002
Current Nav: 214.4200 (13-09-2017)
Corpus (Cr.): 18788.00
Composition %
Other
Debt
Equity
55
4. Reliance Top 200 Fund:
Objective: The scheme will invest in equity or equity related instruments of companies whose
market capitalization is within the range of highest and lowest market capitalization of BSE 200
index.
Benchmark: S & P BSE 200
Fund Manager: Ashwini Kumar
Launch Date: 08 Aug, 2007
Current Nav: 30.7479 (13-09-2017)
Corpus (Cr.): 4149.00
Composition %
Other
Debt
Equity
56
5. ICICI Prudential Focused Bluechip Fund:
Objective: The fund‟s investment strategy will be to invest in 20 large cap companies from the
top 200 stocks listed on the NSE on the basis of market capitalization. In case, the total assets in
this fund crosses Rs.1000 crore then more than top 20 large companies would be added to the
portfolio.

Benchmark: Nifty 50
Fund Manager: Rajat Chandak
Launch Date: 23 May, 2008
Current Nav: 38.3300 (13-09-2017)
Corpus (Cr.):14289.00
Composition (%) = Equity: 96.21 Debt: 1.67 Other: 2.11
Composition %
Other
Debt
Equity
57
DATA ANALYSIS:
SCHEME AUM Average Return in %

Exp.
Ratings
NAME (Cr.) Ratio Since
1 Yr. 3 Yr. 5 Yr. 10 Yr. Inception
Return
Mirae – Asset
India
Opportunity 4,292 2.31 24.87 15.47 22.05 0 17.46 *****
Fund Regular
(G)
SBI - Blue Chip
Fund Regular 15,236 1.97 16.17 14.15 19.93 11.26 12.02 *****
(G)
Aditya Birla SL
- Frontline
18,788 2.14 17.66 13.13 19.62 13.38 23.29 *****
Equity Fund
Regular (G)
Reliance - TOP
200 Fund Ret 4,149 2.02 20.5 12.41 18.68 11.86 11.75 ****
(G)
ICICI Prudential
- Focused
Bluechip Equity 14,289 2.1 19 11.76 17.84 0 15.51 ****
Fund Regular
(G)
Avg Return Since Inception (%)
Mirae - Asset India Opp Fund

Reg (G)
15.51 17.46
SBI - Blue Chip Fund Reg (G)
11.75 12.02
Aditya Birla SL - Frontline Equity
23.29 Fund Reg (G)
Reliance - TOP 200 Fund Ret (G)
ICICI Pru - Focused Bluechip

Equity Fund Reg (G)
58
RATIO ANALYSIS:
SCHEME
Standard Sharpe
NAV Sortino Alpha Beta Mean
NAME Deviation Ratio
Mirae - Asset
India Opportunity 45.71 1.43 8.45 0.98 18.12 13.71 0.99
Fund Regular (G)
SBI - Blue Chip
37.23 1.26 7.27 0.88 16.4 12.38 0.96
Fund Regular (G)
Aditya Birla SL -
Frontline Equity 214.42 1.14 5.55 0.95 15.07 13.08 0.81
Fund Regular (G)
Reliance - TOP
200 Fund Regular 30.75 1.12 6.13 1.03 16.05 14.6 0.79
(G)
ICICI Prudential -
Focused Bluechip
38.33 1.12 4.41 0.96 13.96 13.19 0.72
Equity Fund
Regular (G)
59
DATA INTERPRETATIONS:
A. Equity Large Capital Schemes -
a) Sortino:
ICICI Pru -
Aditya Birla SL - Reliance - TOP Focused
Mirae - Asset India SBI - Blue Chip
Scheme Frontline Equity 200 Fund Ret Bluechip
Opp Fund Reg (G) Fund Reg (G)
Fund Reg (G) (G) Equity Fund
Reg (G)
Sortino 1.43 1.26 1.14 1.12 1.12
Sortino
1.6
1.4
1.2
Sortino values
0.8
0.6
Sortino
0.4
0.2
0
Mirae - Asset SBI - Blue Chip Aditya Birla SL - Reliance - TOP ICICI Pru -
India Opp Fund Fund Reg (G) Frontline Equity 200 Fund Ret (G) Focused Bluechip
Reg (G) Fund Reg (G) Equity Fund Reg
(G)
Schemes
Interpretations:
1. From the above values we can see that, sortino value of scheme - Mirae Asset India
Opportunity Fund is higher than other scheme which is 1.43.
2. So, Mirae Asset India Opportunity Fund is better option than other schemes as per
sortino.
60
b) Alpha:
ICICI Pru -
Reg (G)
Alpha 8.45 7.27 5.55 6.13 4.41
Alpha
9
8
7
6
Alpha values
5
4
3 Alpha
2
1
0
Mirae - Asset India SBI - Blue Chip Aditya Birla SL - Reliance - TOP 200 ICICI Pru - Focused
Opp Fund Reg (G) Fund Reg (G) Frontline Equity Fund Ret (G) Bluechip Equity
Fund Reg (G) Fund Reg (G)
Schemes
Interpretations:
1. Mirae asset is generating highest alpha as compare to index.
2. As far as last 1 year is concern, Mirae Asset has highest Alpha (8.45), followed by
SBI (7.27), Birla (5.55), Reliance (6.13) and ICICI (4.41).
3. In last year, Mirae Asset has highest Alpha against its competitors.
Also, Mirae Asset Fund is giving excess return on risk-adjusted basis.
We can say that higher the Alpha, higher Risk-adjusted performance it is.
61
c) Beta:
ICICI Pru -
Reg (G)
Beta 0.98 0.88 0.95 1.03 0.96
Beta
1.05
1
Beta values
0.95
0.9
0.85 Beta
0.8
(G)
Schemes
Interpretations:
1. In last 1yr SBI Bluechip Fund has lower Beta about 0.88 as compare to others, so it is
more volatile than the market. It shows, SBI has a systematic risk in comparison to the
market.
2. SBI Fund has low Beta in last year, it means that SBI Blue chip Fund is less volatile than
the market as a whole.
62
d) Sharpe ratio:
ICICI Pru -
Reg (G)
Sharpe
0.99 0.96 0.81 0.79 0.72
Ratio
Sharpe ratio
1.2
1
Sharpe ratio values
0.8
0.6
0.4
Sharpe ratio
0.2
0
India Opp Fund Fund Reg (G) Frontline Equity 200 Fund Ret Focused
Reg (G) Fund Reg (G) (G) Bluechip Equity
Fund Reg (G)
Schemes
Interpretations:
1. As far as last 1 yr. is concern, Mirae has highest Sharpe ratio (0.99), followed by SBI
(0.96), Birla (0.81), Reliance (0.79) and ICICI (0.72). It shows that Mirae Asset has
better risk adjusted performance.
2. In last yr., Mirae Asset has highest Sharpe Ratio against its competitors. It means that
Mirae Asset- India Opportunity Fund has a sharpe ratio value which is more Risk
Free than others. So, Mirae asset – India Opportunity Fund is better than others as per
Sharpe Ratio.
63
e) Standard deviation:
ICICI Pru -
Reg (G)
Std Dev 13.71 12.38 13.08 14.6 13.19
Stdandard Deviation
15
14.5
14
Std Dev values
13.5
13
12.5
12 Std Dev
11.5
11
(G)
Schemes
Interpretations:
1. As far as the Standard Deviation in last 1 yr. is concern, it is high in Reliance, which is 14.6
and low in SBI (12.38).
2. In last year, Reliance has high Standard Deviation about 14.6. It means that Reliance fund is
deviating more return (14.6) from the expected returns based on its historical performance.
64
Analysis and Comparison of the Top 5 Schemes:
B. BALANCED (HYBRID) EQUITY ORIENTED SCHEMES.
1. Reliance – Regular Savings Balanced Fund (G):
Objective: The scheme would invest in stocks of companies whose market capitalization is at
least equal to or more than the least market capitalized stock of BSE 100 Index.
Scheme Objective: Hybrid: Equity Oriented
Benchmark: Crisil Balanced Fund
Fund Manager: Amit Tripathi
Launch Date: 08 Jun, 2005
Current Nav: (13-09-2017)
Corpus (Cr.): 7800.00
Composition (%) =Equity: 70.81 Debt: 29.32 Other: - 0.13
Composition %
Other
Debt
Equity
65
2.L & T India Prudence Fund :
Objective: The scheme seeks to generate long-term capital appreciation from a diversified
portfolio of predominantly equity and equity related securities and to generate reasonable returns
through a portfolio of debt and money market instruments to help generating funds in the long
term to save for the cost of children`s education.
Scheme Objective: Hybrid- Equity Oriented

Benchmark: S & P BSE MID CAP
Fund Manager: Karan Desai
Launch Date: 31 Jan, 2011
Current Nav: 25.6320 (13-09-2017)
Corpus (Cr.): 5846.00
Composition (%) = Equity: 72.94 Debt: 24.47 Other: 2.60
Composition %
Other
Debt
Equity
66
3. HDFC Balance Fund:
Objective: The scheme seeks to generate capital appreciation with current income from a
combined portfolio of equity and debt instruments. Under normal circumstances the scheme
would take 60 % exposure to equity instruments while the balance would be allocated to debt
instruments.
Scheme Objective: Hybrid- Equity Oriented
Benchmark: Crisil Balanced fund
Fund Manager: Karan Desai
Launch Date: 11 Sept, 2000
Current Nav: 143.8310 (13-09-2017)
Corpus (Cr.): 13824.00
Composition (%) =Equity: 68.25 Debt: 31.24 Other: 0.51
Composition %
Other
Debt
Equity
67
4. ICICI Prudential Balanced Fund:
Objective: The scheme seeks to generate long-term capital appreciation and current income by
investing in a portfolio that is investing in equities and related securities as well as fixed income
and money market securities. The approximate allocation to equity would be in the range of 60-
80 per cent with a minimum of 51 per cent, and the approximate debt allocation is 40-49 per
cent, with a minimum of 20 per cent.
Fund Manager: Atul Patel
Launch Date: 03 Nov, 1999
Current Nav: 121.9000 (13-09-2017)
Corpus (Cr.):16394.00
Composition (%) = Equity: 67.79 Debt: 33.08 Other: - 0.86
Composition %
Other
Debt
Equity
68
5. Aditya Birla SL – Balanced 95 Fund:
Objective: The fund seeks to achieve long-term capital appreciation and current income from a
balanced portfolio with a target allocation of 60% equity, 40% debt and money market
securities.
Fund Manager: Dhaval Shah
Launch Date: 10 Feb, 1995
Current Nav: 745.1200 (13-09-2017)
Corpus (Cr.): 10148.00
Composition (%) =Equity: 73.14 Debt: 26.40 Other: 0.46
Composition %
Other
Debt
Equity
69
DATA ANALYSIS:
Avg. Return In %
SCHEME AUM Exp. Since Ratings
NAME (Cr) Ratio Inceptio
1 Yr. 2 Yr. 3 Yr. 5 Yr. 10 Yr.
n
Return
Reliance –
Regular Savings 7800 1.98 21.14 17.13 13.54 18.19 14.71 14.66 ***
Balanced Fund
L&T - India
5846 2.01 19.7 15.66 14.73 19.78 0 15.18 *****
Prudence Fund
HDFC -
13824 1.97 18.67 16.76 13.41 19.35 15.75 16.96 ****
Balanced Fund
ICICI Prudential
- Balanced 16394 2.25 16.66 16.91 13 19.34 12.46 14.91 ****
Regular Plan
Aditya Birla SL
- Balanced 95 10148 2.26 16.91 16.87 14.33 18.68 13.17 21.44 ****
Fund
Avg Return Since Inception (%)
Reliance – Reg Savings Balanced

Fund (G)
21.44 14.66
L&T - India Prudence Fund (G)
15.18
14.91 HDFC - Balanced Fund (G)
16.96
ICICI Pru - Balanced Reg Plan (G)
Aditya Birla SL - Balanced 95

Fund Reg (G)
70
RATIO ANALYSIS:
Sharpe
Scheme Name NAV Sortino Alpha Beta Mean Std Dev
Ratio
Reliance –
Regular
Savings 53.72 1.25 6.31 0.99 15.47 11.49 0.9
Balanced Fund
(G)
L&T - India
Prudence Fund 25.63 1.63 7.93 0.86 16.45 10.18 1.17
(G)
HDFC -
Balanced Fund 143.83 1.59 7.33 0.87 15.89 10.12 1.12
(G)
ICICI
Prudential -
Balanced 121.9 1.48 6.79 0.84 15.23 9.92 1.08
Regular Plan
(G)
Aditya Birla
SL - Balanced
745.12 1.46 6.89 0.9 15.63 10.47 1.06
95 Fund
Regular (G)
71
DATA INTERPRETATIONS:
A. Hybrid Equity Oriented Schemes -
a) Sortino:
ICICI
Reliance – Aditya Birla SL
L&T - India HDFC - Prudential -
Scheme Regular Savings - Balanced 95
Prudence Fund Balanced Fund Balanced
Name Balanced Fund Fund Regular
(G) (G) Regular Plan
(G) (G)
(G)
Sortino 1.25 1.63 1.59 1.48 1.46
Sortino
1.8
1.6
1.4
Sortino values
1.2
1
0.8
0.6 Sortino
0.4
0.2
0
Reliance – Reg L&T - India HDFC - Balanced ICICI Pru - Aditya Birla SL -
Savings Balanced Prudence Fund Fund (G) Balanced Reg Balanced 95 Fund
Fund (G) (G) Plan (G) Reg (G)
Schemes
Interpretations:
1. From the above values we can see that, sortino value of scheme – L & T India Prudence
Fund is higher than other schemes which is 1.63, followed by Reliance Fund (1.25),
HDFC Fund (1.59), ICICI Fund (1.48), Aditya Birla Fund (1.46).
2. So, L & T India Prudence Fund is better option than other schemes as per sortino.
72
b) Alpha:
ICICI
(G) (G)
(G)
Alpha 6.31 7.93 7.33 6.79 6.89
Alpha
9
8
7
6
Alpha values
5
4
3 Alpha
2
1
0
Savings Balanced Prudence Fund Fund (G) Balanced Reg Plan Balanced 95 Fund
Fund (G) (G) (G) Reg (G)
Schemes
Interpretations:
1. As far as last 1 yr. is concern, L & T has highest Alpha (7.93), followed by Reliance
(6.31), HDFC (7.33), ICICI (6.79) and Aditya Birla (6.89).
2. In last year L & T has highest Alpha against its competitors. It means that L&T had
excess return (7.93 %) on the investment relative to the return of the benchmark
index.
So, L & T- India Prudence Fund is better than others as per the values of Alpha
showing risk adjusted performance which is better than other schemes alpha value.
73
c) Beta:
ICICI
(G) (G)
(G)
Beta 0.99 0.86 0.87 0.84 0.90
Beta
1.05
0.95
Beta values
0.9
0.85 Beta
0.8
0.75
Savings Balanced Prudence Fund Fund (G) Balanced Reg Balanced 95 Fund
Fund (G) (G) Plan (G) Reg (G)
Schemes
Interpretations:
1. In last 1 year ICICI Prudential Balanced Fund has low Beta about 0.84 as compare to others.
2. In last 1 year all the funds are less volatile with Nifty. But, ICICI has low Beta of 0.84, it
means that investment price will be more volatile than the market.
So, ICICI fund is better option than other schemes. Because, it has systematic risk in comparison
to the market as a whole.
74
d) Sharpe ratio:
ICICI
(G) (G)
(G)
Sharpe
0.9 1.17 1.12 1.08 1.06
Ratio
Sharpe Ratio
1.4
1.2
Sharpe ratio values
1
0.8
0.6
0.4
Sharpe Ratio
0.2
0
Reliance – Reg L&T - India HDFC - ICICI Pru - Aditya Birla SL -
Savings Prudence Fund Balanced Fund Balanced Reg Balanced 95
Balanced Fund (G) (G) Plan (G) Fund Reg (G)
(G)
Schemes
Interpretations:
1. As far as last 1 year is concern, L & T has highest Sharpe ratio (1.17), followed by
Reliance (0.9), HDFC (1.12), ICICI (1.08) and Aditya Birla (1.06).
2. In last year, L & T has highest Sharpe Ratio against its competitors. It means that L
& T India Prudence Fund has a better risk-adjusted performance than other schemes.
75
e) Standard Deviation:
ICICI
(G) (G)
(G)
Std Dev 11.49 10.18 10.12 9.92 10.47
Std Dev
12
11.5
Std dev values
11
10.5
10 Std Dev
9.5
9
Savings Balanced Prudence Fund Fund (G) Balanced Reg Balanced 95
Fund (G) (G) Plan (G) Fund Reg (G)
Schemes
Interpretations:
1. As far as the standard deviation in last 1 year is concern, it is high in Reliance, which is 11.49
and low in ICICI (9.92).
2. In last year, Reliance has high standard deviation about 11.49. It means that reliance Savings
Balanced Fund is deviating high return from the expected returns, based on its historical
performance.
76
Chapter – 6.1
OBSERVATIONS
A. Equity Large Capital Schemes:
Mirae Asset India Opportunity Fund

13.71
8.45
1.43
0.98 0.99
Sortino Alpha Beta Std Dev Sharpe Ratio
Interpretations:
As we see above graph, I have chosen Mirae – Asset India Opportunity Fund Regular (G) from
all of the five Large Capital (Equity Oriented) Schemes.
Because, Mirae Asset India Opportunity Fund performs good on most parameters in ratios. i.e,
Sortino - 1.43 (Higher the value, better it is)
Alpha - 8.45 (Higher the value, better it is)
Beta - 0.98 (Lower the value, better it is)
Std Dev - 13.71 (Higher the value, better it is)
Sharpe Ratio - 0.99 (Higher the value, better it is)
As we see return since inception of Aditya Birla Sun Life is 23.29 % which is higher than Mirae
Asset India Fund‟s 17.46 %. But, Mirae Asset is satisfying in major Ratios/Parameters than any
other schemes, and the performance is also evident that the schemes with better ratios have
better performances.
So, from the above calculations it shows that Mirae Asset- India Opportunity Fund is best
the scheme for Mr. Madhav Deshmukh to invest in mutual fund.
77
B. Balanced/Hybrid (Equity Oriented) Schemes:
L & T India Prudence Fund

10.18
7.93
1.63
1.17
0.86
Sortino Alpha Beta Std Dev Sharpe Ratio
Interpretations:
As we see above graph, I have chosen L & T India Prudence Fund from all of the five
Balanced/Hybrid (Equity Oriented) Schemes.
Because, L & T India Prudence Fund performs good on most parameters in ratios i.e.,
Sortino – 1.63 (Higher the value, better it is)
Alpha – 7.93 (Higher the value, better it is)
Beta –0.86 (Lower the value, better it is)
Std Dev – 10.18 (Higher the value, better it is)
Sharpe Ratio – 1.17 (Higher the value, better it is)
As we see return since inception of HDFC Balanced Fund which is 16.96 % which is having
higher return than L & T India Prudence Fund‟s 15.18 %. But, L & T India is satisfying in major
Ratios/Parameters than all other schemes, and the performance is also evident that the schemes
with better ratios have better performances.
So, from all of the above calculations it shows that L & T India Prudence Fund is a better
scheme for Mr. Ratan Kothari to invest in mutual fund.
78
Chapter – 6.2
FINDINGS
On the overall evaluation at each and every aspect, the following findings are found.
1. sortino value of equity large capital scheme - Mirae Asset India Opportunities Fund is higher
than other schemes in it which is 1.43. So, Mirae Asset India Opportunities Fund is better
option than other schemes as per sortino.
2. Alpha value of equity large capital scheme - Mirae Asset is highest which is 8.45. so, Mirae
Asset India Opportunities Fund giving excess return on risk-adjusted basis as compare to
other schemes.
3. Beta value of equity large capital scheme - SBI Bluechip Fund is lower which is 0.88 as
compare to others, so it is more volatile than the market. It shows, SBI Bluechip Fund has a
systematic risk in comparison to the market.
4. Sharpe ratio of equity large capital scheme - Mirae Asset Fund is highest which is 0.99. It
shows, Mirae Asset India Opportunities Fund has better risk adjusted performance.
5. Standard deviation value of equity large capital scheme - Reliance Top 200 Fund is highest
which is 14.6. It means that Reliance Top 200 Fund is deviating more return from the
expected returns based on its historical performance.
6. Mirae Asset India Opportunities Fund is satisfying in major Ratios/Parameters than any other
schemes, and the performance is also evident that the schemes with better ratios have better
performances.
7. sortino value of hybrid equity scheme - L & T India Prudence Fund is higher than other
schemes which is 1.63. So, L & T India Prudence Fund is better.
79
8. Alpha value of hybrid equity scheme - L & T Fund has highest Alpha which is 7.93. It means
that L&T had excess return on the investment relative to the return of the benchmark index.
So, L & T- India Prudence Fund is better option to invest.
9. Beta value of hybrid equity scheme - ICICI Prudential Balanced Fund has lowest Beta about
0.84 as compare to others. So, ICICI Prudential Balanced Fund is better option than other
schemes. Because, it has a systematic risk on investments in comparison to the market as a
whole.
10. Sharpe ratio of hybrid equity scheme - L & T India Prudence Fund has highest Sharpe ratio
which is 1.17. There L & T India Prudence Fund has highest Sharpe Ratio against its
competitors. It means that L & T India Prudence Fund has a better risk-adjusted performance
than other schemes.
11. Standard deviation of hybrid equity scheme – Reliance Savings Balanaced Fund has highest
standard deviation about 11.49. It means that reliance Savings Balanced Fund is deviating
high return from the expected returns, based on its historical performance.
12. L & T India is satisfying in major Ratios/Parameters than all other schemes, and the
performance is also evident that the schemes with better ratios have better performances.
13. At the time of analysis of any scheme ratings and average return in % provided by the mutual
fund companies, doesn‟t matter while selecting/choosing a scheme. Everything is depends on
the analysis and calculations of alpha, beta, sortino values, etc.
80
Chapter – 7
CONCLUSION
Finally we came to the part of the project, which is very important aspect of this management
study programme.
This study creates awareness that the mutual funds are worth investment practice. The various
schemes of mutual funds provide the investors with a wide range of investment options
according to their risk bearing capacities and interest. The project analyses various factors of
mutual fund and schemes of different companies.
In India, mutual funds are playing important role. The mutual fund companies pool the savings
of small investors and invest those collected huge amount of funds in different sectors of the
economy. They are performing like intermediary between small investor and the Indian capital
market. In recent years many mutual fund companies are established. Through this, competition
is increased among the companies. To encounter the competition, different companies are
introducing different types of mutual fund schemes with attractive returns and low risk. So it is
an advantage to the investors.
The stock market has been rising for over six years now. This in turn has not only protected the
money invested in funds but has also helped these investments grow.
This has also installed greater confidence among fund investors who are investing more into the
market through the MF route than ever before.
Running a successful mutual fund requires complete understanding of the peculiarities of the
Indian stock market and also the psyche of the small investors. This study has made an attempt
to understand the financial behavior of mutual fund investors in connection with the preferences
of AMC, products, channels, etc. I observed that many people have fear of mutual fund. They
think their money will not be secure in mutual fund. They need the knowledge of mutual fund
and its related terms. Many people do not invest in mutual fund due to lack of awareness
although they have money to invest. As the awareness and income is growing, the number of
mutual fund investors is also growing.
81
Chapter - 8
BIBLIOGRAPHY:
 www.utimf.com
 www.google.com
 www.mutualfundsindia.com
 www.moneycontrol.com
 www.amfiindia.com
 www.sebi.gov.in
 Books:
1) Mutual Funds In India – By H. Sadhak.
2) Donald E Fischer, Security Analysis & Portfolio Management.
 Journal:
1) The Economic Times (News Paper).
2) “Comparative study and analysis of Mutual Funds”, ICAI.
3) Fact sheets and statements of various fund houses (InvestWell software)
82
Chapter - 9
Annexure:
Informal Questionnaire
A study of preferences of the investors before investing in mutual funds:
1. Personal Details:
a) Name:-
b) Add: -
c) Age:-
d) Phone:-
e) Qualification. Please tick (√):-
Graduation/PG Under Graduate Others
f) Occupation. Please tick (√):-
Govt. Service Pvt. Service Business Agriculture Others
g) What is your monthly family income approximately? Please tick (√).
Up to Rs. 10,001 to Rs. 15,001 to Rs. 20,001 to Rs. 30,001 and

Rs.10,000 15000 20,000 30,000 above
2. What kind of investments you have made so far? Please tick (√).
a. Saving account b. Fixed deposits c. Insurance d. Mutual Fund

e. Post Office-NSC, etc f. Shares/Debentures g. Gold/ Silver h. Real Estate
3. While investing your money, which factor will you prefer? Please tick (√).
(a) Liquidity (b) Low Risk (c) High Return (d) Trust
4. Are you aware about Mutual Funds and their operations? Please tick (√). Yes No
5. If yes, how did you know about Mutual Fund? Please tick (√).
a. Advertisement b. Peer Group c. Banks d. Financial Advisors
6. Have you ever invested in Mutual Fund? Please tick (√). Yes No
83
7. If not invested in Mutual Fund then why? Please tick (√).
Not aware of MF Higher risk Not any specific reason
8. If yes, in which Mutual Fund you have invested? Please tick (√).
a. SBIMF b. UTI c. HDFC d. Reliance e. Mirae f. Other. specify
9. When you plan to invest your money in Ssset Management Company. Which AMC will you prefer?
Assets Management Co. Tick √

a. SBIMF
b. UTI
c. Reliance
d. HDFC
e. Mirae Asset
f. ICICI
g. Other Specify -
10. Which Channel will you prefer while investing in Mutual Fund? Please tick (√).
(a) Financial Advisor (b) Bank (c) AMC
11. When you invest in Mutual Funds which mode of investment will you prefer? Please tick (√).
a. One Time Investment (LUMP SUM) b. Systematic Investment Plan (SIP)
12. When you want to invest which type of funds would you choose? Please tick (√).
a. Having only debt b. Having debt & equity c. Having Only equity
portfolio portfolio. (Both) portfolio.
13. How would you like to receive the returns every year? Please tick (√).
a. Dividend payout b. Dividend re-investment c. Growth in NAV
84
14. Instead of general Mutual Funds, would you like to invest in sectorial funds? Please tick (√).
Yes No
15. Have you been investing? Please tick (√).

Yes No
16. Why do you invest? Please tick (√).

a) Tax benefit
b) Market trend
c) Passion
d) Surplus income
e) Other (please specify)
17. What criteria do your look during investment? Please tick (√).
a) Stability of return
b) Maximum benefits
c) Low risk
d) Tax benefits
e) Other (please specify)
f) Diversification
18. When you invest in mutual fund which mode of investment will you prefer? Please tick (√).
a) One time investment
b) Monthly Systemic investment plan
c) Daily systemic investment plan
19. From where do you practice mutual fund? Please tick (√).
a) Direct from the AMCs
b) Brokers only
c) Sub-brokers
d) Other sources (please specify)
85

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Chapter – 1.

1) To identify the various aspects of mutual fund industry.

1.4 SCOPE OF THE STUDY:

1) The growth rate was 100% in 6 (six) previous years.

1.5 LIMITATIONS OF THE STUDY:

Insynch Wealth Management LLP.

Three Aspects Of Insynch Wealth Management LLP -

Name of Firm: Insynch Wealth Management LLP.

INTRODUCTION OF MUTUAL FUND:

Stocks: Stocks represent shares of ownership in a public company. Examples of public

Second Phase(1987-1993) (Entry of public sector funds):

Fourth Phase (2003-2005):

1) In March 1998, the MF AUM was 68, 984 crores.

9% in 6 (six) month‟s time.

8) In December 2004, the MF AUM was 1,94,320 crores.

The graph indicates the growth of assets over the years:

Major Mutual Fund Providers in India:

Total value of the fund

The Objectives of Association of Mutual Funds in India:

5) It develops a team or well qualified and trained Agent distributors. It implements a

1. Systematic Investment Plan (SIP):

3. Systematic Withdrawal Plan (SWP):

Open-Ended Growth Tax-Saving

Close-Ended Income Index

1. Open - Ended Schemes:

2. Close - Ended Schemes:

• Short Term Plans (STPs):

4. Money Market Schemes:

3. Sector Specific Schemes:

1. Rupee cost averaging:

5. Just have a look at age:

6. Risk Bearing Capacity:

Some of the benchmarks are:

Measuring and Evaluating Mutual Funds Performance:

6) Repurchase or 'Back-end' Load -It is a charge collected by a scheme when it buys

SD = Square Root of V (Variance)

Standard Deviation of Fund

R-Squared = Square Of Correlation

Covariance between index and portfolio

Average return Risk free rate

7. Portfolio Turnover Ratio:

8. Total Expenses Ratio:

Total fund Costs

10. Modified Duration:

2. Broker/ sub broker arrangements:

3. Individual agents, Banks, NBFC:

4. Reduction of Transaction Costs:

6. Convenience and Flexibility:

8. Authority to access corporate information:

10. Well Regulated:

1. No Control Over Costs:

3) SIP / STP / SWP / DTP Form:

LIST OF DOCUMENTS NEEDED:

DATA ANALYSIS AND INTERPRETATION

1. Equity Large Capital Scheme:

1) Name of Client: Mr. Madhav Deshmukh

1) Name of Client: Mr. Ratan Kothari

1) Name of Client: Mr. Prashant Kadam

1) Name of Client: Mr. Gyanendra Chaudhary

1) Name of Client: Mr. Nirdesh Pachoriya

 Mr. Madhav Deshmukh: Equity Large Capital Scheme.

A. Equity Large Capital Schemes -

1. Mirae Assets- India Opportunities Fund.

2. SBI- Bluechip Fund.