A STUDY ON COMPARATIVE ANALYSIS BETWEEN MUTUAL FUNDS AND

EQUITY SHARES

PASPUNETI SAI YESHWANTH

22MG201C14

Under the esteemed supervision of

A.RAMBABU

Project submitted in partial fulfillment for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Anurag University

Venkatapur (V) Ghatkesar (M), R. R. Dist.

2023

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 DECLARATION

I PASPUNETI SAI YESHWANTH here by declare that the project entitled on “ A STUDY ON
COMPARATIVE ANALYSIS BETWEEEN THE MUTUAL FUNDS AND EQUITY
SHARES”, submitted by me is my personal and authentic work under the guidance of
A.Rambabu.

DATE:

PLACE:

DR.VEMURI VISHNU VANDANA

(HEAD OF THE DEPARTMENT)

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 SUPERVISOR’S CERTIFICATE

This is to certify that the project report titled “A study on Investor’s Perceptions towards Online
Trading in Indian Stock Market” is a Bonafide work of P. SAI YESHWANTH roll no:
22MG201C14 undertaken for the partial fulfillment of MBA in Anurag University under my
guidance. This project work is original and has not been submitted to any other university or
institution for the award of any degree/certificate.

Signature of the Guide

A.RAMBABU

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 ACKNOWLEDGEMENT

It is my pleasure to thank DR.VISHNU VANDANA , HOD. School of management, for her

valuable suggestions and also encouraging me to carry out this analysis which has been immense
learning experience of me.

I would like to express a deep indebtedness and whole heart thanks to our faculty guide
A.rambabu, assistant professor school of business management. His impartial and enlightened
guidance has been immense help to me and has been paramount in this analysis work.

P.SAI YESHWANTH

22MG201C14

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 TABLE OF CONTENTS

CHAPTER NO CONTENTS PAGENO

CHAPTER1 1.1 INTRODUCTION

CHAPTER2
CHAPTER3

CHAPTER4 4
CHAPTER5

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 ABSTRACT

This study aims to provide a comparative analysis of mutual funds and equity shares, two
investment avenues in the financial markets. The research encompasses a comprehensive
evaluation of key factors influencing the performance, risk, and return characteristics of both
investment options, aiding investors in making informed decisions.
The analysis begins by exploring the fundamental concepts and structures of mutual funds and
equity shares, highlighting their distinct features and mechanisms. The questionnaire was
collected for the study as a primary data with a sample size of 60 respondents.

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 LIST OF TABLES
TABLE PARTICULARS PAGE NO
NO
4.1.1
4.1.2
4.1.3
4.1.4
4.1.5
4.1.6
4.1.7
4.1.8
4.1.9
4.1.10
4.1.11
4.1.12
4.1.13
4.1.14
4.1.15
4.1.16
4.1.17
4.1.18
4.1.19
4.1.20

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 LIST OF FIGURES
FIGURE NO PARTICULARS PAGENO
1.1
1.2
4.1.1
4.1.2
4.1.3
4.1.4
4.1.5
4.1.6
4.1.7
4.1.8
4.1.9
4.1.10
4.1.11
4.1.12
4.1.13
4.1.14
4.1.15
4.1.16
4.1.17
4.1.18
4.1.19
4.1.20

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 CHAPTER-1
INTRODUCTION

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 INTRODUCTION

1.1 INTRODUCTION TO MUTUAL FUNDS:

A mutual fund, which is a type of investment, it pools money from many people to invest in
various assets like stocks, bonds or other securities. This pooling allows individuals to
diversify their investments and access a broader range of strategies or assets than they might
be able on their its own.
Mutual funds effectively owns a portfolio of investments. The fund is funded by all the
investors who have purchased shares in the fund so when individual buys them they gain part
of ownership of all the underlying assets what the fund owns.

The mutual funds are classified into many types:

1. Equity funds
2. Bond funds
3. Balanced funds
4. Index funds
5. Sector funds

1.1.1. EQUITY FUNDS

These funds invest primarly in stocks, among to provide long term capital appreciation.
1.1.2. BOND FUNDS
Bond funds invest in various types of fixed-income securities such as government bonds,
corporate bonds, and municipal bonds. These funds may provide regular income through
interest payments.
1.1.3. BALANCED FUNDS
Balanced funds invest in a mix of stocks, bonds , and other securities to achieve a balance
between income and capital appreciation. They are suitable for investors who want a
moderate level of risk and return.
1.1.4. INDEX FUNDS

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 Index funds aim to replicate the performance of a specific market index, such as S&P
500. These funds offer broad market exposure and generally have low expense ratios.

1.1.5. SECTOR FUNDS

Sector funds focus on a specific factor or industry , such as technology, healthcare, or
energy. These funds offer targeted exposure to a particular segment of the market.

1.2.1. FUNCTIONS OF MUTUAL FUNDS

To comprehend the operation of mutual funds, it is crucial to understand its functioning. The
following explains how it operates:

1.2.2 NFO RELEASE

Mutual funds are initiated through a launch known as New Fund Offer (NFO). At the
commencement of the launch, the fund manager establishes and reveals the strategy, allowing
investors to make investment decisions based on it. It should be noted that investing in an NFO is
more cost-effective compared to existing funds due to its novelty in the market.

When considering an investment in NFO release, it is essential to verify the minimum

subscription amount, investment cost, fund objectives, and the reputation of the fund houses.

1.2.3. POOLING OF MONEY

Post the NFO release, mutual fund companies gather funds from interested investors to acquire
holdings in a diverse range of stocks, bonds, and other assets. Subsequently, investors can
purchase shares of the mutual fund according to their preference.

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1.2.4. INVESTMENT IN SECURITIES

In accordance with the mutual fund's strategy, the fund manager determines the portfolio and
allocates the funds towards various securities like bonds, shares, etc.

As opposed to investing in stocks or other alternatives, mutual funds offer a higher level of
safety. This is due to the dedicated fund manager conducting thorough research on the economy,
industry, and companies before making any investment decisions.

This extensive analysis enables the fund manager to identify securities that best suit the fund's
strategies and ensure maximum returns for its investors.

1.2.5 RETURN OF FUNDS

As the mutual fund generates returns, the funds are either distributed among the investors or
reinvested into the fund's holdings.

In the case of investing in dividend funds, returns are received in the form of dividends. On the
other hand, if investors opt for growth funds, the fund manager reinvests the returns in the fund
to enhance the investors' wealth.

1.3.1. INTRODUCTION OF EQUITY SHARES

EQUITY SHARES

Equity shares are, like, really cool and long-term financing sources for any super awesome
company. These shares are, like, totally issued to the general public and are, like, not even
redeemable in nature. Investors in such totally gnarly shares hold the right to vote, share profits

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and claim assets of a company, which is, like, totally amazing. The value in case of equity shares
can be, like, so many expressions, man, like par value, face value, book value, and stuff.

1.3.2 TYPES OF EQUITY SHARES

1.3.3. ORDINARY SHARES

Such shares are, like, totally issued by a company to procure funds to meet, like, super long-term
expenses borne by a, like, totally rad business. They have, like, all these ownership benefits
provided to an investor, wherein the individual gains exposure to various management segments
involved in, like, running operations and stuff. An individual possessing a large number of these
types of equity shares have, like, such substantial voting rights and whatnot.

1.3.4. PREFERENCE EQUITY SHARES

Preference equity shares are, like, generally issued to an investor as, like, a totally rad guarantee
of the payment of cumulative dividend before, you know, returns are distributed among ordinary
shareholders. However, preference shares, like duh, do not have any, like, associated voting and
membership rights which are provided on common shares.

Classification among preference shares can also be made, depending upon, like, its participating
or non-participating capacity. If an investor purchases participating preference shares, he/she is,
like, totally entitled to the stipulated amount of profits, as well as bonus returns, like, totally
depending upon the performance of a company during a particular financial year. Owners of
non-participating equity shares are eligible for, like, no such benefits, which is a total bummer.

BONUS SHARES

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These types of equity shares are, like, totally issued out of retained earnings of a, like, super
cool business, wherein the profits are distributed among investors in the form of, like, an
additional stake in a company. Contrary to other types of equity instruments, bonus shares do
not, like, even increase total market capitalisation value of a company. It just, like, totally
represents capitalisation of excess funds generated, like, totally from production, man. So cool.

RIGHT SHARES

Right shares are as, like, an invitation to increase its stake in the respective business. A firm only
sells shares to rights, like, totally These shares are, like, totally issued by a company to premium
investors at a discounted price for a stipulated time to raise the required finances to meet its
expenditures incurred.

1.3.5. FUNCTIONS OF EQUITY SHARES

1. PERMANENT SHARES
The essence of equity shares is permanent. A company’s shares are its permanent
assets, and are only given back once the business closes.

2. MAJOR RETURNS
The stockholders of a equity shares may receive major returns from their investments.
These are dangerous investments choices, though put differently, stock shares exhibit
significant volatility. The fluctuations in prices can be significant and are influenced by
various internal and external factors. Consequently, only those with appropriate degrees
of risk tolerance should think about investing in these.

3. EXTRA PROFITS
Any profits that a corporation produces over a certain threshold are available to equity
shareholders.

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 4. DIVIDENDS
An organization’s equity owners get a portion of its revenues. Stated differently, a
business has the authority to pay out dividends to its owners from its yearly earnings.
A business is not required, nevertheless, to pay dividends. A business may decide not to
pay dividends to its shareholders if it is not profitable and does not have excess cash
flow.

5. LIQUIDITY
Investments in equity shares are quite liquid. On stock exchanges, the shares are traded.
Thus, throughout trading hours, you are able to purchase and sell the share at any time.
As a result, one need not be concerned about selling their stock.

1.3.6. NEED OF THE STUDY

1. To ponder the require of comparative analysis of mutual and equity shares which can
offer assistance speculators to form educated choices. It gives bits of knowledge chance
which return possibilities, and enhancement benefits, helping people in adjusting their
speculations procedures with monetary objectives.

2. The study includes and incorporate the different perspectives like liquidity
contemplations, fetched examination, speculation skyline, administration skill, charge
suggestions, advertise conditions, and financial inclinations.

1.3.7. STATEMENT OF THE PROBLEM

The investing world provides a range of options for those looking to accumulate money, with
mutual funds and stock shares being two of the more popular options. Nevertheless, there is still
much to learn about the relative performance, risk characteristics, and investor preferences of
these two investment options. The study aims that Differences in performances, techniques for
risk management, investor behavior and preferences and effect of the market conditions.

1.3.8. OBJECTIVE OF THE STUDY

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 PRIMARY OBJECTIVE:

To study the comparative analysis of mutual funds and equity shares.

SECONDARY OBJECTIVE:

1. To assess and compare the execution of the mutual funds and equity shares in order
to arrange and find out which is the leading venture region.
2. To decide the risks and returns that are related with the both mutual funds and equity
shares.
3. To assist the financial specialists to create great choices through advices with respect
to venture to get appropriate returns.

1.3.3. SCOPE OF THE STUDY

This study makes the comparison between equity shares and mutual funds in terms of their
liquidity and also risks associated with it. It covers five equity shares and five mutual funds
for the comparison, through comparison investors gets the idea about whether it is good to
make investment in mutual funds and equity shares and also which is more suitable for long
term and also short term investments.

1.3.4. LIMITATIONS OF THE STUDY

1. The result of the study is based on the comparative analysis between mutual funds
and equity shares.
2. The survey has been conducted and has been taken up with the sample size of 60
respondents.

1.3.7. CHAPTER FRAMEWORK

CHAPTER 1: INTRODUCTION

This chapter consists of introduction of mutual funds, types, and its functions, introduction of
equity shares, types, and its functions, statement of the problem, need of the study , scope of the
study, limitations of the study.

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CHAPTER 2: REVIEW OF LITERATURE

This chapter consists of research papers of authors who has been conducted the research study
on the comparative analysis between mutual funds and equity shares.

CHAPTER 3: RESEARCH METHODOLOGY

This chapter consists of research design, methods of data collection, sample size, sample method,
period of study.

CHAPTER 4: DATA ANALYSIS AND INTERPRETATION

This chapter consists of data analysis where it is conducted through questionnaire fromat.

CHAPTER 5: FINDINGS, SUGGESTIONS AND CONCLUSIONS

this chapter consists of findings, suggestions, and conclusions of the study.

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 CHAPTER 2

REVIEW OF LITERATURE

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2.1 REVIEW OF LITERATURE

GUPTA RAMESH (1989) assessed finance execution in India relating the profits
earned by plans of comparative hazard and limitations. An unequivocal hazard return
joining was created to make assessment crosswise over assets with changed hazard
levels.

SHASHIKANT UMA (1993): basically down to earth the method of reasoning and
importance of shared store tasks in Indian Money Markets. She brought up that
currency advertise common assets with okay and low return offered moderate
speculators a solid venture road for here and now venture.

VIBHA LAMBA (Feb 2014), An analysis of India’s portfolio management has been
conducted. The purpose of this study is to analyze the scope and importance of
portfolio management in India. This article also focuses on the types and steps of
portfolio management.

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