DR.

SHAKUNTALA MISRA NATIONAL REHABILITATION

UNIVERSITY LUCKNOW
FACULTY OF LAW

RECOGNITION
FOR TOPIC:
Mutual Fund
A PROJECT REPORT on
Investment Banking
Submitted by
JAI SINGH
B.COMLLB.2018-19/08
ACADEMIC SESSION : 2022-23
Roll No: 184140032
SEMESTER:- 9
UNDER THE GUIDANCE OF
Mr. Sageer Ahmed sir.

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 ACKNOWLEDGEMENT
I would like to express my special thanks of gratitude to my teacher – Mr.
Sageer Ahmed Sir, who gave me the golden opportunity to do this
wonderful topic Mutual Fund, which also helped me in doing a lot of
Research and I came to know about so many new things I am really thankful
to him.

Jai Singh

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Content
Introduction

Types of mutual fund

1) Equity mutual fund

 Types of equity funds
(a) Based on market capitalization
(b) Sector based equity funds

2) Debt mutual fund

 Types of debt mutual funds
(a) Dynamic bond fund
(b) Liquid fund
(c) Income fund
(d) Sort term and ultra sort term debt fund
(e) Gilt funds
(f) Credit opportunities fund
(g) Fixed maturity plans

Types of mutual fund based on investment banking

I. Growth oriented scheme

II. Income oriented scheme
III. Balanced fund
IV. Liquid fund

Advantages of investing in mutual funds

Ways to invest in mutual fund

How to invest in mutual funds through scripbox

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 Introduction
Mutual Fund
Mutual fund is a financial instrument that pools money from different investors. The pooled money is
then invested in securities like stocks of listed companies, government bonds, corporate bonds,
and money market instruments.

As an investor, you don’t directly own the company’s stocks that mutual funds purchases. However, you
share the profit or loss equally with the other investors of the pool. This is how the word “mutual” is
associated with a mutual fund.

You get the advantage of the expertise of the fund manager and regulatory safety of the Securities
Exchange and Board of India (SEBI). The professional fund manager ensures a maximum return to
investors.

How Do Mutual Funds Work?

Mutual fund investment is simple. You invest in a fund consisting of several assets. Thus, you need not
risk putting all eggs in one basket.

Additionally, the headache of tracking market movements is not there. The mutual fund house takes
care of the research, fund management, and market tracking. This makes the mutual fund a highly
popular investment option for all types of investors.

A mutual fund is managed by the Asset Management Company (AMC). Mutual fund investment starts
with the pooling of money from several investors.

The pooled money is invested in a meticulously built portfolio of different asset classes like equity, debt,
money market instruments, and other funds. Hence, you have the advantage of diversification, the time
tested market mantra.

Additionally, your money is invested in instruments like Government bonds, that you wouldn’t be able
to afford individually.

The best part about mutual funds is that a team of experts along with the fund manager picks all
the investments to build a portfolio. The investments are made according to the defined objective of
the mutual fund.

Expert and professional fund management help you outperform the returns of traditional investment
vehicles like a bank savings account and fixed deposits.

As an investor, you are allotted units for your contribution to the pooled fund.

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The portfolio value depends on the price movements of the underlying assets. The portfolio value is net
assets divided by the number of outstanding units which is called the Net Asset Value (NAV)

The gains are reflected in higher NAV and lower NAV indicates a loss in portfolio value.

Types of Mutual Funds Based on Asset Class

Investors should pick mutual funds based on their financial objectives and risk appetite. Proper mutual
fund selection helps you meet your life goals in the defined time period.

Mutual fund type depends on the defined objective and the underlying asset. The are categories of
mutual funds are:

1. Equity Mutual Funds

Equity mutual funds invest the pooled money majorly in stocks of different companies.
Hence, equity mutual funds have an inherent higher market risk. Factors like earnings, revenue
forecasts, management changes, and company & economic policy impact price movements and the
returns. Returns from equity funds have high fluctuations. Hence, you should invest, if you have a fair
understanding of the asset class risks associated with equity.

Types of Equity Funds

Equity fund can be further categorised depending on market capitalisation and sectors.

 Based on Market Capitalisation

 Large-cap Equity Funds – Invest in shares of large-cap companies that are well-
established with a track record of performing consistently over a longer time period.
These companies have sound fundamentals and are least affected by business cycles.

 Mid-cap Equity funds – Invest in shares of mid-cap companies. Mid-sized companies

have relatively lower stability in terms of performance. But have the potential to grow
more than the large-cap companies.

 Small-cap Funds – Invest in shares of small-cap companies. Small-cap companies have

the highest potential to grow or fail. Thus, small-cap funds have a high-risk exposure but
also offer an opportunity to generate the highest returns.

 Multi-cap funds – Invest in a defined proportion across all market caps. Based on cues
and trend analysis, the fund manager allocates aggressively to capitalize on the
volatility.

Sector Based Equity Funds: Sector-based equity funds invest in stocks of a specific sector. For example,
sectors like FMCG, technology, and pharma. Sector funds are prone to business cycle risk and sector
getting out of focus.

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2. Debt Mutual Funds
A debt mutual fund invests a major portion of the pooled corpus in debt instruments like government
securities, corporate bonds, debentures, and money-market instruments. The bond issuers “borrow”
from investors by giving an assurance of steady and regular interest income. Thus, debt funds are less
risky compared to equity funds. The debt fund manager ensures that the fund is invested in the highest-
rated securities. The best credit rating signifies the creditworthiness of the issuer in terms of regular
interest payments and principal repayment.

Who Should Invest in Debt Funds?

Debt funds have less volatility and range bound returns as compared to equity funds. Thus, debt funds
are safer for conservative investors who are looking to grow wealth with minimal risk.

In fact, the interest income and maturity amount are known beforehand. Thus, debt funds are best for
short-term (3 to 12 months) and medium-term (3 to 5 years) investment horizon.

Type of Debt Funds

Following are the debt funds available in India:

 Dynamic Bond Funds: Dynamic bond fund investment basket comprises of both shorter and
longer maturities. The debt fund manager aggressively tweaks the portfolio composition based
on changing interest rate regime. This aggressiveness makes the debt fund dynamic, hence the
name.

 Liquid Funds: The short maturity of the underlying securities (not more than 91 days) makes the
liquid funds almost risk-free. It is better than parking funds in saving bank accounts as it gives
better returns with much-needed liquidity. You can redeem liquid funds almost instantly. If you
are short-term investors then debt funds like liquid funds could be better as you get returns in
the range of 6.5 to 8%. Liquid funds are an effective tool to meet emergency fund needs.

 Income Funds: Fund managers invest majorly in securities with longer maturities to have more
stability and regular interest income flow. Most of the income funds have an average maturity
of 5 to 6 years.

 Short-Term and Ultra Short-Term Debt Funds: There is another category in the maturity range of
1 to 3 years. The fund manager takes a call on interest rate regime and invests in securities with
maturity of the said range. This is suitable for those investors who are risk-averse and looking
for interest rate movement safety.

 Gilt Funds: Gilt funds invest only in high-rated government securities. Since the government
rarely defaults, it has zero risks. You can park your money in this instrument to have assured
returns in longer maturity range.

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  Credit Opportunities Funds: Credit Opportunities Funds are a relatively riskier instrument that
focuses more on higher returns by holding low-rated bonds or taking a call on credit risks. The
fund manager of credit opportunity funds relies more on interest rate volatility to earn higher
returns.

 Fixed Maturity Plans: These closed-ended debt funds invest in fixed income securities like
government bonds and corporate bonds. You invest only during the initial offer period and your
money remains locked-in for a fixed tenure, which could be months or years.

Types of Mutual Funds based on Investment Objectives

Since mutual funds are all about the mutuality of common goals, mutual fund schemes are also
categorized based on the objectives of investors.

Here are some popular types of mutual funds based on investor objectives:

1. Growth Oriented Scheme

As the name suggests the primary goal of this type of mutual fund is to ensure wealth creation in the
medium and long-term.

Aligned with the objective, the fund manager allocates the corpus predominantly (over 65%) in equities.
With a focus on higher returns, the manager aggressively shuffles the portfolio to reap the benefits of
market movements.

2. Income Oriented Scheme

The objective of the regular income could be achieved only when the underlying assets assure a steady
return.

To meet the objective, fund manager of income funds allocate a major portion of the corpus in fixed
income securities such as government securities, bonds, corporate debentures, and money market
instruments.

Lesser risks and assured return makes it safe for regular income as dividends. However, these products
have very limited potential for wealth creation in the defined period.

3. Balanced Fund

The name comes from the asset allocation as the fund is allocated in both equities and debt instruments
in defined proportions. The objective of the balanced fund is to have reasonable growth and regular
income with the lowest possible risk.

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Fund managers of these funds normally allocated approx 60% in equities and rest on debt instruments.
NAV of balanced funds is less volatile as compared to equity funds.

The balanced objective is suitable for those who want to have advantages of market movements and
the safety of the debt market.

4. Liquid Fund
The objective of these schemes is to ensure liquidity, capital protection, and reasonable income in the
short-term.

Most of the pooled fund is invested in short-term safe instruments like government securities, treasury
bills, certificates of deposit, commercial paper, and inter-bank call money.

Since there isn’t much volatility, these funds are suitable for investors who want to park money for
short-term and earn better returns compared to savings bank accounts.

Advantages of Investing in Mutual Funds

There are over 8000 mutual funds in different categories to meet the objectives of all types of investors.
The right mix of growth, income, and safety makes mutual funds suitable for everyone.

Below are the advantages of investing in mutual funds:

1. Expert Money Management

Your pooled money is managed by a team of experts. So, you have the advantage of expert guidance in
creating wealth. The fund manager does meticulous research in deciding equities, sectors, allocation,
and of course the buy and sell.

2. Low Cost
If you calculate the benefits of expertise, diversity, and other options of return, then mutual funds are
definitely a very cost-effective instrument of investment.

There is a regulatory cap of 2.5% on the expense ratio.

3. SIP Option
Systematic Investment Plan gives you the flexibility to invest at an agreed interval which could be
weekly, monthly, quarterly. You can start investing in mutual funds with an amount as low as Rs. 500.

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4. Switch Funds
If you are not happy with the performance of a particular mutual fund scheme, then some mutual funds
do offer you an option to switch funds. However, you need to be very cautious while opting to switch.

5. Diversification
Mutual funds offer you the benefit of diversification in such asset class which otherwise isn’t possible for
an individual investor. You reap the dividend of maximum exposure with minimum risk.

6. Ease of Investing and Redemption

Now, it is pretty easy to buy, sell, and redeem fund units at NAV. Just place the redemption request and
you will get your money in the desired bank account within a few days.

7. Tax Benefit
Under the ELSS, tax-saving mutual fund you have the double benefit of tax saving and wealth creation.
Under Section 80C of the Income Tax Act, you can have a deduction of a maximum of Rs. 1,50,000 a
year.

8. Lock-in Period
Close-ended mutual funds have a lock-in period, meaning as an investor you are not allowed to redeem
the fund before a certain period.

You get benefits in terms of long-term capital gain tax.

Ways to Invest in Mutual Funds

Thanks to the fast adoption of internet technology, now your MF units are just a few clicks away.
Depending on your resources, you have several options to start investing in mutual funds.

1. Direct Investment
You can visit the branch of the concerned mutual fund company and deposit the duly filled form.
Alternately, you can download the form and fill it carefully.

You should read the document carefully before handing over the cheque.

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2. Online Mutual Fund Investment Platform
For investing online, all you need is your mobile phone and internet connection. There are several
platforms that help you in choosing the right mutual fund based on defined objectives, risk appetite, and
other factors.

Scripbox is an online investment platform that helps you save your time and energy. The step-by-step
process from selection to payment and redemption makes it simple for even a beginner to start
investing without any assistance.

All you need is your PAN Card details, Identity details, and an active bank account to link with the mutual
fund house.

3. Using a Demat Account

Your existing Demat account and bank account can be used for investing and transacting in the mutual
fund. Your stockbroker needs to be a registered mutual fund distributor providing the facility.

For investing, you need to log-in to your Demat account and look for the option to invest in the mutual
fund.

In the next step, you need to choose the fund in which you want to invest. Then you need to complete
the investment by transferring the amount online.

4. Through Karvy and CAMS

You can invest online and offline in funds through registrars like Karvy and CAMS.

In Online Method – You need to visit the website of CAMS or Karvy, create an account, provide folio
number, select the scheme and make payment.

In Offline Method – You can invest by visiting the local office and complete the application form, hand
over the canceled cheque and the copy of KYC documents.

5. Mutual Fund Agents

Investing through agents is a time consuming and costly method that should be avoided. You can call an
agent to help you choose and fill the requisite form. Nowadays, agents come with digital devices to help
you fill form digitally and activate your account instantly.

However, you should make sure that the agent is genuine. Some agents may charge a commission for
services.

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How to Invest in Mutual Funds Through Scripbox
Mutual fund investment through Scripbox is a quick, paperless and hassle-free experience. Following are
the steps to invest;

Step 1 – Visit Scripbox and Get Started

Click the box “Let’s Get Started” on the Scripbox home page. The page will scroll down to show you
different objectives.

Mutual fund schemes fulfill most of the financial objectives. You can pick the objective that aligns with
your financial needs.

For example, we have taken “Start a SIP” to invest in the best equity and debt mutual funds.

Step 2 – Create a Plan

Here you will be prompted to create a plan for investing in the mutual funds.

Provide investment amount and number of years to create a plan. The hypothetical example shows a SIP
of Rs. 8000 and 10 years as the stay invested period.

Click on “Create a plan” to proceed.

Step 3 – Choose Between “Long Term Wealth” and “Short Term Money”

Scripbox gives you two options to build wealth. You have the option to pick one of them.

Long Term Wealth – The plan invests in risky equity and is for aggressive investors.

Short Term Money – The plan invests in safe debt & money market instruments and is for risk-averse
investors.

The example has selected the “Long Term Wealth” option. Where you will get plan details indicating
the best mutual funds and the expected returns.

Click on “Continue” to proceed with fund investment.

Step 4 – Account Creation and Login

Create an account for investing through Scripbox. You will need an email ID and password for creating
an account.

The account can also be created using your Facebook or Google account.

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Step 5 – Plan Confirmation

When you log-in you will get the plan as shown below.

Click on “See Recommended Funds” to proceed with mutual fund investment. Next, you will the list of
algorithmically selected best mutual funds and investment amount.

You can either go with the selection or can change the funds and the amount. For that, you need to click
“I Want to change funds/amount”.

Click the tab “Next” to proceed with payment.

Step 6 – Bank Details and Money Transfer

You need to provide Bank account and PAN details necessary for investment. The account will be used
for investment and crediting the redemption amount by the mutual fund houses directly into your
specified bank account.

Conclusion
A mutual fund is a powerful investment option that has the potential to generate long-term
wealth for investors. Mutual funds have schemes for all types of life goals, right from creating a
pool of wealth to retirement. You have schemes for risk-averse and conservative investors.

The option has benefits of diversification, low cost, flexibility to invest in smaller amounts and
professional fund management.

Combined with online investment platform you have a great tool that makes mutual funds
investing a quick and hassle-free experience.

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Bibliography
1. www.amfiindia.com
2. https://www.google.com/search?q=mutual+fund+topics+for+assignment&oq=&aqs=chrome.1.
35i39i362l6j46i39i199i362i465j46i39i362i613.2060294j0j7&sourceid=chrome&ie=UTF-8
3. www.scripbox.com
4. www.pgimindiamf.com

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