Reliance Mutual Fund

Bachelor of Management Studies

Semester Ⅵ

Submitted

In Partial Fulfilment of the Requirements

For the Award of Degree of

Bachelor of Management Studies

By

Prem Gautam Gaikwad

Roll No:2

Laxman Devram Sonawane College

of Commerce

Kalyan, Maharashtra 421301.

 DECLARATION

I, Prem Gautam Gaikwad the student of T.Y.B.M.S.

Semester V (2016- 2017) hereby declare that I have completed the
project on ______________.

The information submitted is true and original to the best of my

knowledge.

Prem. G. Gaikwad
Roll No:2
Laxman Devram Sonawane College of Commerce
Kalyan, Maharashtra 421301.
 CERTIFICATE

This is to certify that Mr./Ms. Prem Gautam Gaikwad,

Roll No:2 of Third Year B.M.S., Semester Ⅵ (2016- 2017)
has successfully completed the project on Mutual Fund under
the guidance of Nikita Srivastav.
 ACKNOWLEDGEMENT

 To list who all have helped me is difficult because they are so
numerous and the depth is so enormous.

 I would like to acknowledge the following as being idealistic

channels and fresh dimensions in the completion of this project.

 I take this opportunity to thank the University of Mumbai for giving

me chance to do this project.

 I would like to thank my Principal, __________for providing the

necessary facilities required for completion of this project.

 I take this opportunity to thank our Coordinator_______________,

for her moral support and guidance.

 I would also like to express my sincere gratitude towards my project

guide _____________ whose guidance and care made the project
successful.

 I would like to thank my College Library, for having provided

various reference books and magazines related to my project.

 Lastly, I would like to thank each and every person who directly or
indirectly helped me in the completion of the project especially my
Parents and Peers who supported me throughout my project.
 INDEX

Sr. No, Name of the Topic Page No.

1 Introduction
2 History of Mutual Fund
3 Objectives
4 Research Methodology

Introduction

A Mutual Fund is a trust that pools the money of several investors and manages
investments on their behalf. Legally it is like any other company you know of.
Hence, the Fund is also called a Mutual Fund company. The fund company
takes your money and like you from other new investors. This is added to the
money that’s already invested with the fund.
The Fund Collects this money from investors through various schemes. Each
scheme is differentiated by its objective of investment or in other words, a
broadly defined purpose of how the collected money is going to be invested,
based on these broad purpose’s schemes are classified into a dozen or so
categories.
When you buy into a scheme of mutual fund you are holding units of the
scheme. Buying units is like owing shares of a schemes. The total money
collected through a scheme constitute the fund’s assets.
Investing and managing the collected money is a difficult task. The fund
company delegates this to a company of professional investors, usually experts
who are known for smart stock picks. This company is the Assets Management
Company and the fund company usually delegates the job of investment
management for a fee.
The income earned through these investments and the capital appreciation
realized by the scheme is shared by its unit holders in proportion to the number
of units owned by them.

Mutual Fund Operation Flow Chart

 Mutual Fund Organization

There are many entities Involved and the diagram below illustrates the
organizational set up of a mutual fund.

Mutual fund Industry in India

The origin of mutual fund industry in India is with the introduction of the
concept of mutual fund by UTI in the year 1963. Through the growth was slow,
but it accelerated from the year 1987 when non-UTI players entered the
industry. In the Past decade, Indian mutual fund industry had seen dramatic
improvements, both quality wise as well as quantity wise. Before, the monopoly
of the market had seen an ending phase; the Assets Under Management (AUM)
was Rs.67bn. The private sector entry to the fund family raised the AUM to
Rs.470bn in March 1993 and till April 2004; it reached the height of 1540bn.
Putting the AUM of the Indian Mutual Funds Industry into comparison the total
of it is less than the deposits of SBI alone, constitute less than 11% of the total
deposits held by the Indian banking industry. The main reason of its poor
growth is that the Mutual fund industry in India is new in the country. Large
sections of Indian investors are yet to be intellectuated with the concept. Hence,
it is the prime responsibility of all mutual fund companies, to market the
product correctly abreast of selling.

History of Mutual fund

First Phase- 1964-87
Unit Trust of India (UTI) was established in 1963 by an Act of Parliament. It
was set up by the Reserve Bank of India and functioned under the Regulatory
and administrative control of the Reserve Bank of India. In 1978 UTI was de-
linked from the RBI and the Industrial Development Bank of India (IDBI) took
over the regulatory and administrative control in place of RBI. The first scheme
launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs. 6,700
crores of assets under management.

Second Phase - 1987-1993 (Entry of Public Sector Funds)

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

Third Phase - 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund
families. Also, 1993 was the year in which the first Mutual Fund Regulations
came into being, under which all mutual funds, except UTI were to be
registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July
1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more

comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign
mutual funds setting up funds in India and also the industry has witnessed
several mergers and acquisitions. As at the end of January 2003, there were 33
mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India
with Rs. 44,541 crores of assets under management was way ahead of other
mutual funds.

Fourth Phase - since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI
was bifurcated into two separate entities. One is the Specified Undertaking of
the Unit Trust of India with assets under management of Rs. 29,835 crores as at
the end of January 2003, representing broadly, the assets of US 64 scheme,
assured return and certain other schemes. The Specified Undertaking of Unit
Trust of India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund
Regulations.
The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It
is registered with SEBI and functions under the Mutual Fund Regulations. With
the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.
76,000 crores of assets under management and with the setting up of a UTI
Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with
recent mergers taking place among different private sector funds, the mutual
fund industry has entered its current phase of consolidation and growth.

Fifth Phase (Current)- Since May 2014

Taking cognisance of the lack of penetration of MFs, especially in tier II and
tier III cities, and the need for greater alignment of the interest of various
stakeholders, SEBI introduced several progressive measures in September 2012
to "re-energize" the Indian Mutual Fund industry and increase MFs’ penetration.
In due course, the measures did succeed in reversing the negative trend that had
set in after the global melt-down and improved significantly after the new
Government was formed at the centre.
Since May 2014, the Industry has witnessed steady inflows and increase in the
AUM as well as the number of investor folios (accounts).
The Industry’s AUM crossed the milestone of ₹10 Trillion (₹10 Lakh
Crore) for the first time as on 31st May 2014 and in a short span of two
years the AUM size has crossed ₹15 lakh crore in July 2016.
The overall size of the Indian MF Industry has grown from ₹ 3.26 trillion as on
31st March 2007 to ₹ 15.63 trillion as on 31st August 2016, the highest AUM
ever and a five-fold increase in a span of less than 10 years!!
In fact, the MF Industry has more doubled its AUM in the last 4 years from ₹
5.87 trillion as on 31st March, 2012 to ₹ 12.33 trillion as on 31st March,
2016 and further grown to ₹ 15.63 trillion as on 31st August 2016.
The no. of investor folios has gone up from 3.95 crore folios as on 31-03-2014
to 4.98 crore as on 31-08-2016.
On an average 3.38 lakh new folios are added every month in the last 2 years
since Jun 2014.

Objectives
1. To Study the performance of Reliance mutual fund.

2. To Study the growth of Mutual Fund Industry in India.

3. To Study the concept of Mutual Fund.

4. How effectively company is reaching their customer needs.

5. To Study the Investors perception about investing on the

Mutual Funds.

Research Methodology
Research Methodology is a way to systematically solve the research problem. It
may be understood as a science of studying how research is done scientifically.
One can also define research as a scientific and systematic search for pertinent
information on a specific topic.

Problem Statement
In this project an attempt to study and analyse the relationship between the
characteristics of mutual fund as an investment vehicle and the investment
behaviour of the investors. To study and find out the maximum information that
we can get, we need a research design or a plan in advance of data collection
and analysis for our project. Research design in fact, has a great bearing on the
reliability of the results.
A good design is often characterised by adjectives like flexibility, appropriate,
efficient and economical & so on. Generally, the design that minimizes bias and
maximizes the reliability of the data collected and analysed is considered as
good design. Similarly, a design which yields maximal information and
provides an opportunity many different aspects of a problem is considered most
appropriate and efficient design in respect of many research problems.

Research design:
Research design facilitates the smooth sailing of the various research
operations, thereby making the research as possible, yielding maximal
information with minimal expenditure of efforts.

Sampling Design
1) Type of Universe: The first step in developing any sample design is to
clearly define the set of objects, technically called the Universe, to be
studied. The Universe for this project was the Investors in the City of
Pune.

2) Sampling Unit: The sampling unit for this project was the Investors
working in the business areas, employees, students.
 3) Size of Samples: Due to the time, the sample size was restricted to 30
investors.

4) Period of study: the project study was conducted in the time period of two
months i.e., from June 1st to July 31st ,2008.

Collection of Data
The methods used for the collection of data were:
1) The Interview Technique
2) The Observation Method

DATA SOURCES
After identifying and defining the research problems and determining specific
information required solving the problem, the researcher task is to look for the
type and sources of the data, which may yield the desired results. There are two
types of data available to researcher, these are
1. Primary data
2. Secondary data

Primary Data are generated when particular problem in hand is investing by

researcher employing a mail questionnaire, telephonic surveys and personal
interview.

Secondary Data on the other hand includes that data which is collated from
some earlier research work and is applicable or usable in the study, the
researcher has presently undertaken.

COMPANY PROFILE
Reliance Mutual Fund

Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with
Average Assets Under Management (AAUM) of Rs. 1,07,749 Crores and an
investor count of over 72 Lakh folios. (AAUM and investor count as of
September 2010) AAUM Source: http://www.amfiindia.com/

Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group,
is one of the fastest growing mutual funds in the country. RMF offers
investors a well-rounded portfolio of products to meet varying investor
requirements and has presence in 159 cities across the country. Reliance
Mutual Fund constantly endeavors to launch innovative products and
customer service initiatives to increase value to investors.
Reliance Mutual Fund schemes are managed by Reliance Capital Asset
Management Limited., a subsidiary of Reliance Capital Limited, which holds
93.37% of the paid-up capital of RCAM, the balance paid up capital being
held by minority shareholders.

Reliance Capital Ltd. is one of India’s leading and fastest growing private
sector financial services companies, and ranks among the top 3 private sector
financial services and banking companies, in terms of net worth. Reliance
Capital Ltd. has interests in asset management, life and general insurance,
private equity and proprietary investments, stock broking and other financial
services.

Statutory Details:
Sponsor: Reliance Capital Limited
Trustee: Reliance Capital Trustee Co. Limited
Investment Manager: Reliance Capital Asset Management Limited Statutory
Details: The Sponsor, the Trustee and the Investment Manager are
incorporated under the Companies Act 1956. Reliance Mutual Fund (formerly
known as Reliance Capital Mutual Fund), a Trust under Indian Trust Act,
1882 and registered with SEBI vide registration number MF/022/95/1 dated
June 30, 1995.

About Reliance Money

Reliance Money is a group company of Reliance Capital, one of India’s
Leading and Fastest Growing private sector financial services companies,
ranking among the top 3 private sector financial services and banking
companies, in terms of net worth. Reliance Capital is part of the Reliance Anil
Dhirubhai Ambani Group. Reliance Money which commenced commercial
operations in April 2007 has over 300,00 customers and 4,300 outlets in more
than 3,500 locations across India. Reliance Money is a comprehensive
electronic transaction platform offering a wide range of assets classes. Its end
over is to change the way India transacts in financial markets and avails
financial services. Reliance Money is a single window, enabling you to
access, amongst others in Equities, Equity & Commodities Derivatives,
Mutual funds, IPOs and Life & General Insurance products, Offshore
Investments, Money transfer, Money Changing and Credit Cards.

Future Mutual Funds in India

By December 2004, Indian Mutual fund industry reached Rs. 1,50,537 crore.
It sis estimated that by 2010 March-end, the total assets of all scheduled
commercial banks should be Rs.40,90,000 crore. The annual composite rate of
growth is expected 13.4% during the rest of the decade. In the last 5 years we
have seen annual growth rate of 9%. According to the current growth rate, by
year 2010, Mutual fund assets will be double.

Some facts for the growth of mutual funds in India

 100% growth in the last 6 years.

 Number of foreign AMC’s are in the que to enter the Indian markets like

Fidelity Investments, US based, With over US $1 trillion assets under

management worldwide.

 Our saving rate is over 23%, highest in the world. Only Channelizing

these savings in mutual funds sector is required.

 We have approximately 29 mutual funds, which is much less than US

having more than 800. There is a big scope for expansion.

 B and C class cities are growing rapidly. Today most of the mutual

funds are concentrating on the A class cities. Soon they will find scope

in the growing cities.

 Mutual funds can penetrate rural like the Indian insurance industry with

simple and limited products.

 SEBI allowing the MF’s to launch commodity mutual funds.

TYPES OF MUTUAL FUND SCHEMES

 By structure
o Open-Ended Schemes
o Close-Ended Schemes
o Interval Schemes
 By Investments Objective
o Growth Schemes
o Income Schemes
o Balanced Schemes
o Money Market Schemes
 Other Schemes
o Tax Saving Schemes
o Special Schemes
 Index Schemes
 Sector Specific Schemes
 By Structure

 Open-Ended Schemes
An open-ended fund or scheme is one that is available for
subscription and repurchase on a continuous basis. These schemes
do not have a fixed maturity period. Investors can conveniently buy
and sell units at Net Asset Value (NAV) related prices which are
declared on a daily basis. The key feature of open-end schemes is
liquidity.

 Close-Ended Schemes
A close-ended fund or scheme has a stipulated maturity period e.g.
5-7 years. The fund is open for subscription only during a specified
period at the time of launch of the scheme. Investors can invest in
the scheme at the time of the initial public issue and thereafter they
can buy or sell the units of the scheme on the stock exchanges
where the units are 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 i.e. either repurchase
facility or through listing on stock exchanges. These mutual funds
schemes disclose NAV generally on weekly basis.

 Interval Schemes
Interval funds are a type of mutual fund, where the units can be
purchased or sold during a particular predetermined time period
only. They may invest in both debt and equity securities, but they
are mostly observed to park money in debt instruments. Interval
schemes combine the features of closed-end funds and open-ended
funds. The units may be traded on the stock exchange or may be
open for sale or redemption during pre-decided periods at NAV-
related prices.
 Equity Fund:
 These funds invest a maximum part of their corpus into
equities holdings. The structure of the fund may vary
different schemes and the fund managers outlook on different
stocks. The Equity Funds are sub-classified depending upon
their investment objective, as follows:
1. Diversified Equity Funds
2. Mid-Cap Funds
3. Sector Specific Funds
4. Tax Savings Funds (ELSS)
Equity Investment are meant for a longer time horizon,
thus Equity funds rank high on the risk-return matrix.

 Debt Funds:
The objective of these funds is to invest in debt papers.
Government authorities, private companies, banks and
financial institutions are some of the major issuers of debt
papers. By investing in debt instruments, these funds ensure
low risk and provide stable income to the investors. Debt
funds are further classified as:
1. Gilt Funds:
Invest their corpus in securities issued by government,
popularly known as Government of India debt papers.
These Funds carry zero default risk but are associated
with Interest Rate risk. These schemes are safer as they
invest in papers backed by government.

2. Income Funds:
Invest a Major portion into various debt instruments
such as bonds, corporate debentures and Government
securities.

3. MIPs:
Invest maximum of their total corpus in debt
instruments while they take minimum exposure in
equities. It gets benefit of both equity and debt market.
These schemes ranks slightly high on the risk-return
matrix when compared with other debt schemes.
4. Liquid Funds:
 Also known as Money Market Schemes, These funds
provide 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.

5. Short Term Plans(STPs):

Meant for investment horizon for three to six months.
These funds primarily invest in short term papers like
Certificate of Deposits (CDs) and Commercial Papers
(CPs). Some portion of the corpus is also invested in
corporate debentures.

 By Investment Objective

 Growth / Equity Oriented Schemes:

The aim of growth funds is to provide capital appreciation over the
medium to long- term. Such schemes normally invest a major part
of their corpus in equities. Such funds have comparatively high
risks. These schemes provide different options to the investors like
dividend option, capital appreciation, etc. and the investors may
choose an option depending on their preferences. The investors
must indicate the option in the application form. The mutual funds
also allow the investors to change the options at a later date. Growth
schemes are good for investors having a long-term outlook seeking
appreciation over a period of time.
 Income / Debt Oriented Scheme:
The aim of income funds is to provide regular and steady income to
investors. Such schemes generally invest in fixed income securities
such as bonds, corporate debentures, Government securities and
money market instruments. Such funds are less risky compared to
equity schemes. These funds are not affected because of
fluctuations in equity markets. However, opportunities of capital
appreciation are also limited in such funds. The NAVs of such
funds are affected because of change in interest rates in the country.
If the interest rates fall, NAVs of such funds are likely to increase in
the short run and vice versa. However, long term investors may not
bother about these fluctuations.

 Balanced Fund:
The aim of balanced funds is to provide both growth and regular
income as such schemes invest both in equities and fixed income
securities in the proportion indicated in their offer documents.
These are appropriate for investors looking for moderate growth.
They generally invest 40-60% in equity and debt instruments.
These funds are also affected because of fluctuations in share
prices in the stock markets. However, NAVs of such funds are
likely to be less volatile compared to pure equity funds.

 Money Market or Liquid Fund:

These funds are also income funds and their aim is to provide easy
liquidity, preservation of capital and moderate income. These
schemes invest exclusively in safer short-term instruments such as
treasury bills, certificates of deposit, commercial paper and inter-
bank call money, government securities, etc. Returns on these
schemes fluctuate much less compared to other funds. These funds
are appropriate for corporate and individual investors as a means to
park their surplus funds for short periods.
 OTHER SCHEMES:

 Tax Saving Schemes:

Tax saving schemes offer tax rebates to the investors under tax laws
prescribed from time to time. Under Sec.88 of the Income Tax Act,
contribution made to any Equity Linked Savings Schemes (ELSS)
are eligible for rebate.

 Index Schemes:
Index schemes attempt to replicate the performance of a particular
index such as the BSE Sensex or the NSE 50. The portfolio of these
schemes will consist of only those stocks that constitute the index.
The percentage of each stock to the total holding will be identical to
the stocks index weightage. And hence, the returns from such
schemes would be more or less equivalent top those of the Index.

 Sector Specific Schemes:

These are the funds/schemes, which invest in the securities of only
those sectors or industries as specified in the offer documents. e.g.
Pharmaceuticals, Software, Fast Moving Consumer Goods(FMCG),
Petroleum stocks, etc. The returns in these funds are dependent on
the performance of the respective sectors/industries. While these
funds may give higher returns, they are more risky compared to
diversified funds. Investors need to keep a watch on the
performance of those sectors/industries and must exit at an
appropriate time.
 Advantages of Mutual Funds

 Liquidity:
Unless you opt for close-ended mutual funds, it is relatively easier
to buy and exit a mutual fund scheme. You can sell your units at
any point (when the market is high). Do keep an eye on surprises
like exit load or pre-exit penalty. Remember, mutual fund
transactions happen only once a day after the fund house releases
that day’s NAV.

 Diversification:
Mutual funds have their share of risks as their performance is based
on the market movement. Hence, the fund manager always invests
in more than one asset class (equities, debts, money market
instruments, etc.) to spread the risks. It is called diversification.
This way, when one asset class doesn’t perform, the other can
compensate with higher returns to avoid the loss for investors.
 Less cost for bulk transactions:
You must have noticed how price drops with increased volume
when you buy any product. For instance, if a 100g toothpaste costs
Rs.10, you might get a 500g pack for, say, Rs.40. The same logic
applies to mutual fund units as well. If you buy multiple units at a
time, the processing fees and other commission charges will be less
compared to when you buy one unit.

 Invest in smaller denominations:

By investing in smaller denominations (SIP), you get exposure to
the entire stock (or any other asset class). This reduces the average
transactional expenses – you benefit from the market lows and
highs. Regular (monthly or quarterly) investments, as opposed to
lumpsum investments, give you the benefit of rupee cost averaging.

 Expert Management:
A mutual fund is favoured because it doesn’t require the investors
to do the research and asset allocation. A fund manager takes care
of it all and makes decisions on what to do with your investment.
He/she decides whether to invest in equities or debt. He/she also
decide on whether to hold them or not and for how long.
Your fund manager’s reputation in fund management should be an
essential criterion for you to choose a mutual fund for this reason.
The expense ratio (which cannot be more than 1.05% of the
AUM guidelines as per SEBI) includes the fee of the manager too.
 Cost-efficiency:
You have the option to pick zero-load mutual funds with fewer
expense ratios. You can check the expense ratio of different mutual
funds and choose the one that fits in your budget and financial
goals. Expense ratio is the fee for managing your fund. It is a useful
tool to assess a mutual fund’s performance.

 Quick & painless process:

You can start with one mutual fund and slowly diversify. These
days it is easier to identify and handpicked fund(s) most suitable for
you. Tracking mutual funds will not take any extra effort from your
side. The fund manager, with the help of his team, will decide
when, where and how to invest. In short, their job is to beat the
benchmark and deliver you maximum returns consistently.

 Tax-efficiency:
You can invest up to Rs 1.5 lakh in tax-saving mutual funds which
is covered under Section 80C of the Income Tax Act, 1961. Though
a 10% tax on Long-Term Capital Gains (LTCG) is applicable for
returns above Rs.1 lakh after one year, they have consistently
delivered higher returns than other tax-saving instruments like FD
in recent year.

 Suit your financial goals:

There are several types of mutual funds available in India catering
to investors from all walks of life. No matter what your income is,
you must make it a habit to set aside some amount (however small)
towards investments. It is easy to find a mutual fund that matches
your income, expenditures, investment goals and risk appetite.
 Automated payments:
It is common to forget or delay SIPs or prompt lumpsum
investments due to any given reason. You can opt for paperless
automation with your fund house or agent. Timely email and SMS
notifications help to counter this kind of negligence.

 Safety:
There is a general notion that mutual funds are not as safe as bank
products. This is a myth as fund houses are strictly under the
purview of statutory government bodies like SEBI and AMFI. One
can easily verify the credentials of the fund house and the asset
manager from SEBI. They also have an impartial grievance
redressal platform that works in the interest of investors.

 Systematic or one-time investment:

You can plan your mutual fund investment as per your budget and
convenience. For instance, starting a SIP (Systematic Investment
Plan) on a monthly or quarterly basis suit investor with less money.
On the other hand, if you have surplus amount, go for a one-time
lumpsum investment.
 Disadvantage of Mutual Funds

 Costs to manage the mutual funds:

The salary of the market analysts and fund manager comes from
the investors. Total fund management charge is one of the first
parameters to consider when choosing a mutual fund. Higher
management fees do not guarantee better fund performance.

 Lock-in periods:

Many mutual funds have long-term lock-in periods, ranging from

five to eight years. Exiting such funds before maturity can be an
expensive affair. A specific portion of the fund is always kept in
cash to pay out an investor who wants to exit the fund. This portion
cannot earn interest for investors.
 Dilution:

While diversification averages your risks of loss, it can also dilute

your profits. Hence, you should not invest in more than seven to
nine mutual funds at a time.
As you have just read above, the benefits and potential of mutual
funds can undoubtedly override the disadvantages, if you make
informed choices. However, investors may not have the time,
knowledge or patience to research and analyse different mutual
funds. Investing with Clear Tax could solve this as we have already
done the homework for you by handpicking the top-rated funds
from the best fund houses in the country.
 CONCLUSION

I would like to conclude that, it is immeasurable learning experience while

preparing the project. To state on the concluding for the mutual funds, it can
be said that Mutual funds are method for investors to diversify risk and to
benefit from professional money management.
A Mutual fund brings together a group of people and invests their money in
stocks, bonds and other securities.
The advantages of mutual are professional management, diversification,
economies of scale, simplicity and liquidity.
The disadvantages of Mutual funds are high costs, over-diversification,
possible tax consequences, and the inability of management to guarantee a
superior return.
Mutual funds have lots of costs.
Costs can be broken down into ongoing fees (represented by the expense
ratio) and transaction fees (loads). The biggest problems with mutual funds
are their costs and fees.
Mutual funds are easy to buy and sell. You can either buy them directly
from the fund company or through a third party.
It is clear that investing through Mutual Funds is far superior to Direct
Equity Investing except perhaps for the investor who has truly large
portfolio and the time, knowledge and resources required for direct
investing.