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This project has been made possible through direct and indirect support of many people from whom I wish to express my gratitude. I thank Guru Gobind Singh Indraprasth University for giving me the opportunity to work on a valuable project. I owe my sincere and whole hearted thanks to Ms. Ratika for constantly guiding me and handling various types of hurdles with implicit patience throughout my project

Thank you Neha sharma

Overview of industry
Mutual Funds in India

Mutual funds can be defined as the money-managing systems that are introduced to professionally invest money collected from the public. The Asset Management Companies (AMCs) manage different types of mutual fund schemes. The AMCs are supported by various financial institutions or companies. Investment in mutual funds in India means pooling money in bonds, short-term money market, financial institutions, stocks and securities and dishing out returns as dividends. The aforementioned factors are the main manage the mutual funds. They are also referred to as portfolio managers. The mutual funds in India are

regulated by the Securities Exchange Board of India.

A Brief History Of The Mutual Fund Mutual funds really captured the public's attention in the 1980s and '90s when mutual fund investment hit record highs and investors saw incredible returns. However, the idea of pooling assets for investment purposes has been around for a long time. Here we look at the evolution of this investment vehicle, from its beginnings in the Netherlands in the 18th century to its present status as a growing, international industry with fund

holdings accounting for trillions of dollars in the United States alone.

In the Beginning Historians are uncertain of the origins of investment funds; some cite the closed-end investment companies launched in the Netherlands in 1822 by King William I as the first mutual funds, while others point to a Dutch merchant named Adriaan van Ketwich whose investment trust created in 1774 may have given the king the idea. Ketwich probably theorized that diversification

would increase the appeal of investments to smaller investors with minimal capital. The name of Ketwich's fund, Eendragt Maakt Magt, translates to "unity creates strength". The next wave of near-mutual funds included an investment trust launched in Switzerland in 1849, followed by similar vehicles created in Scotland in the 1880s.

The idea of pooling resources and spreading risk using closed-end investments soon took root in Great Britain and France, making its way to the United States in the 1890s. The

Boston Personal Property Trust, formed in 1893, was the first closed-end fund in the U.S. The Arrival of the Modern Fund The creation of the Massachusetts Investors' Trust in Boston, Massachusetts, heralded the arrival of the modern mutual fund in 1924. The fund went public in 1928, eventually spawning the mutual fund firm known today as MFS Investment Management. State Street Investors' Trust was the custodian of the Massachusetts Investors' Trust. Later, State Street Investors started its own fund in 1924

with Richard Paine, Richard Saltonstall and Paul Cabot at the helm.

Chapter-1 Industry profile Overview of industry



This stock exchange, Mumbai, popularly known as BSE was established in 1875 as The Native share and stock brokers association, as a voluntary non- profit making association. It has an evolved over the years into its present status as

the premiere stock exchange in the country. It may be noted that the stock exchanges the oldest one in Asia, even older than the Tokyo Stock Exchange, which was founded in 1878. The exchange, while providing an efficient and transparent market for trading in securities, upholds the interests of the investors and ensures redressed of their grievances, whether against the companies or its own member brokers. It also strives to educate and enlighten the investors by making available necessary informative inputs and conducting investor education programmes.

A governing board comprising of 9 elected directors, 2 SEBI nominees, 7 public representatives and an executive director is the apex body, which decides the policies and regulates the affairs of the exchange.

The Executive director as the chief executive officer is responsible for the day today administration of the exchange. The average daily turnover of the exchange during the year 200001(April-March) was Rs 3984.19 crores

and average number of daily trades 5.69 Lakhs. However the average daily turn over of the exchange during the year 2001-02 has declined to Rs. 1244.10 crores and number of average daily trades during the period to 5.17 Lakhs. The average daily turn over of the exchange during the year 2002-03 has declined and number of average daily trades during the period is also decreased. The Ban on all deferral products like BLESS AND ALBM in the Indian capital markets by SEBI with effect from July

2,2001, abolition of account period settlements, introduction of compulsory rolling settlements in all scripts traded on the exchanges with effect from Dec 31,2001, etc., have adversely impacted the liquidity and consequently there is a considerable decline in the daily turn over at the exchange. The average daily turn over of the exchange present scenario is 110363(laces) and number of average daily trades 1057(laces).


In order to enable the market participants, analysts etc., to track the various ups and downs in the Indian stock market, the Exchange has introduced in 1986 an equity stock index called BSE-SENSEX that subsequently became the barometer of the moments of the share prices in the Indian Stock market. It is a Market capitalization weighted index of 30 component stocks representing a sample of large, well-established and leading companies. The base year of Sensex is 1978-79. The Sensex is widely reported in both domestic and

international markets through print as well as electronic media. Sensex is calculated using a market capitalization weighted method. As per this methodology, the level of the index reflects the total market value of all 30component stocks from different industries related to particular base period. The total market value of a company is determined by multiplying the price of its stock by the number of shares outstanding. Statisticians call an index of a set of combined variables (such as price and number of shares) a composite Index. An Indexed number is used to represent the results of this

calculation in order to make the value easier to work with and track over a time. It is much easier to graph a chart based on Indexed values than one based on actual values world over majority of the well-known Indices are constructed using Market capitalization weighted method.

In practice, the daily calculation of SENSEX is done by dividing the aggregate market value of the 30 companies in the Index by a number called the Index Divisor. The Divisor is the only link to the original base period value of the SENSEX. The Divisor keeps

the Index comparable over a period or time and if the reference point for the entire Index maintenance adjustments. SENSEX is widely used to describe the mood in the Indian Stock markets. Base year average is changed as per the formula new base year average = old base year average*(new market value/old market value).


The NSE was incorporated in Now 1992 with an equity capital of Rs 25 crores. The International securities consultancy

(ISC) of Hong Kong has helped in setting up NSE. ISE has prepared the detailed business plans and installation of hardware and software systems. The promotions for NSE were financial institutions, insurances companies, banks and SEBI capital market ltd, Infrastructure leasing and financial services ltd and stock holding corporation ltd. It has been set up to strengthen the move towards professionalisation of the capital market as well as provide nation wide securities trading facilities to investors.NSE is not an exchange in the traditional sense where brokers

own and manage the exchange. A two tier administrative set up involving a company board and a governing aboard of the exchange is envisaged. NSE is a national market for shares PSU bonds, debentures and government securities since infrastructure and trading facilities are provided. NSE-NIFTY: The NSE on April 22, 1996 launched a new equity Index. The NSE-50. The new index, which replaces the existing NSE100 index, is expected to serve as an appropriate Index for the new segment of futures and options.

Nifty means National Index for Fifty Stocks. The NSE-50 comprises 50 companies that represent 20 broad Industry groups with an aggregate market capitalization of around Rs. 1,70,000 crs. All companies included in the Index have a market capitalization in excess of Rs 500 crs each and should have traded for 85% of trading days at an impact cost of less than 1.5%. The base period for the index is the close of prices on Nov 3, 1995, which makes one year of completion of operation of NSEs capital market

segment. The base value of the Index has been set at 1000.

NSE-MIDCAP INDEX: The NSE madcap Index or the Junior Nifty comprises 50 stocks that represents 21 aboard Industry groups and will provide proper representation of the madcap segment of the Indian capital Market. All stocks in the index should have market capitalization of greater than Rs.200 crores and should have traded 85% of the trading days at an impact cost of less 2.5%.

The base period for the index is Nov 4, 1996, which signifies two years for completion of operations of the capital market segment of the operations. The base value of the Index has been set at 1000. Average daily turn over of the present scenario 258212 (Laces) and number of averages daily trades 2160(Laces).

At present, there are 24 stock exchanges recognized under the securities contract (regulation) Act, 1956. They are

NAMES OF THE STOCK EXCHANGS Bombay stock exchange, Ahmedabad share and stock brokers association, Calcutta stock exchange association Ltd, Delhi stock exchange association Ltd, Madras stock exchange association Ltd, Indore stock brokers association Ltd, Banglore stock exchange, Hyderabad stock exchange, Cochin stock exchange, Pune stock exchange,

U.P.stock exchange, Ludhiana stock exchange, Jaipur stock exchange Ltd, Gauhati stock exchange Ltd, Manglore stock exchange, Maghad stock exchange Ltd, Patna, Bhuvaneshwar stock exchange association Ltd, Over the counter exchange of India, Bombay, Saurastra kuth stock exchange Ltd, Vsdodard stock exchange Ltd, Coimbatore stock exchange Ltd,

The Meerut stock exchange, National stock exchange, Integrated stock exchange

Regulation and Expansion By 1929, there were 19 open-ended mutual funds competing with nearly 700 closed-end funds. With the stock market crash of 1929, the dynamic began to change as highly-leveraged closed-end funds were wiped out and small open-end funds managed to survive.

Government regulators also began to take notice of the fledgling mutual fund industry. The creation of the Securities and Exchange Commission (SEC), the passage of the Securities Act of 1933 and the enactment of the Securities Exchange Act of 1934 put in place safeguards to protect investors: mutual funds were required to register with the SEC and to provide disclosure in the form of a prospectus. The Investment Company Act of 1940 put in place additional regulations that required more disclosures and sought to minimize conflicts of interest. (For further reading, see Policing The

Securities Market: An Overview Of The SEC.)

The mutual fund industry continued to expand. At the beginning of the 1950s, the number of open-end funds topped 100. In 1954, the financial markets overcame their 1929 peak, and the mutual fund industry began to grow in earnest, adding some 50 new funds over the course of the decade. Hundreds of new funds were launched throughout the 1960s until the bear market of 1969 cooled the public appetite for mutual funds. Money

flowed out of mutual funds as quickly as investors could redeem their shares, but the industry's growth later resumed.

Recent Developments In 1971, William Fouse and John Mc Quown of Wells Fargo Bank established the first index fund, a concept that John Bogle would use as a foundation on which to build The Vanguard Group, a mutual fund powerhouse renowned for low-cost index funds. The 1970s also saw the rise of the no-load fund. This new way of doing business had an

enormous impact on the way mutual funds were sold and would make a major contribution to the industry's success.

With the 1980s and '90s came bull market mania and previously obscure fund managers became superstars; Max Heine, Michael Price and Peter Lynch, the mutual fund industry's top gunslingers, became household names and money poured into the retail investment industry at a stunning pace. More recently, the burst of the tech bubble and a spate of scandals involving big names in the industry took

much of the shine off of the industry's reputation. Shady dealings at major fund companies demonstrated that mutual funds aren't always benign investments managed by folks who have their shareholders' best interests in mind.

Types of Mutual Funds

Mutual funds have different structure and aims, which in turn enable us to classify them into various major categories. These categories are: Closed-end mutual funds Open end funds Equity mutual funds Mid cap funds Large cap funds Growth funds Balanced funds Exchange Traded Funds (ETFs) Load mutual funds and No-Load mutual funds Value funds International mutual funds Money market funds Sector mutual funds

Fund of funds (FoF) Index funds Regional mutual funds

Benefits of Mutual Funds

Mutual funds are preferred for their cost-effectiveness and easy investment process. By investing all the money in a mutual fund, investors can buy stocks or bonds at lower trading charges. This is indeed one of the main benefits, which is not available otherwise. You don't need to see which stock or bond would be better to buy. Another advantage is diversification. Diversification stands for diffusing money across various different categories of investments. There is every possibility that when one investment is down, the other can be up. In simple terms, this is helpful in reducing risks. Transparency, flexibility, professional investment management, variety and liquidity are some of the other

benefits of the mutual funds, which are not found in case of other investments to such an extent.

Risk versus Reward

Volatility in the market activity can be referred to as the risk in the mutual fund investment. The sudden upward and downward sentiments of the markets and individual issues can be attributed to several key factors. These factors comprise:

Inflation Interest rate changes General economic scenario is the cause of worry amongst the investors. Most of the investors fear that the value of the stock they have invested will fall considerably. However, it is here one can notice its reward angle. It is this element of volatility that can also bring them substantial long-term return in comparison to a savings account.

List of Mutual Fund Companies in India

Some of the popular firms that deal in mutual funds in India are: Reliance Mutual Funds HDFC ABN Amro AIG Bank of Baroda Canara Bank Birla Sun Life DSP Merrill Lynch DBS Chola Mandalam AMC Escorts Mutual Deutsche Bank ING HSBC ICICI Prudential LIC JP Morgan Kotak Mahindra Lotus India JM Financial

Morgan Stanley State Bank of India (SBI) Sahara Mutual Funds Sundaram BNP Paribas Taurus Mutual Funds Tata UTI Standard Chartered Best Mutual Funds in India Before knowing about the arguably best mutual funds in India, it is important to know the factors that actually decide their fate in the market. In order to get an actual ideal of the best performing mutual funds in the market, one needs to track its current Net Asset Value or NAV. NAV stands for

the latest market value of the holdings of a fund that brings down the fund's liabilities, which are generally indicated in terms of per share amount. On a daily basis, most of the funds' NAV is decided. This is determined after the trade closes on certain financial exchanges. The net asset value of the mutual funds is ascertained at the end of the trading day. An increase in NAV signifies rise in the holdings of the shareholder. The Fund Firm will then do the transaction on the shares along with the sales fees. While open-ended net asset value of the mutual funds is issued daily, the close-ended NAV of the mutual fund is released on a weekly basis. You can calculate net asset value of

the mutual fund easily. Track the latest market value of the net assets of the fund and then subtract that by the number of outstanding shares. Top mutual funds in India Here are some of the top mutual funds in India that are listed below : Reliance Mutual Fund The DSP ML Tiger Fund SBI Magnum Contra Fund HDFC Equity Fund Prudential ICICI Dynamic Fund SBI Mutual Fund

Mutual fund share classes

Morning Star is a generally accepted authority on divides most stocks into classes or types. The use eight type designations: Distressed, Hard Asset, Cyclical, Speculative Growth, Aggressive Growth, Classic Growth, Slow Growth and High Yield. Each designation defines a broad category of investment characteristics. Stocks are assigned to a type based on objective financial criteria and MorningStar's proprietary algorithm, so stocks of the same type have similar economic fundamentals. Every stock has individual idiosyncrasies, but in general, when evaluating investments, many of the same concerns and evaluation methods will apply across the stocks in one type. By establishing stock types one has an easy way to narrow down the stock universe to those best filling specific investment needs. Stock Types also help you quickly determine the diversification level of portfolios. For instance, you might discover that most of your holdings are categorized as Speculative Growth. If you want to lessen

the portfolio's risk, you could invest in other types of stocks. Morning Star's classes/types are: Distressed These companies are having serious operating problems. This could mean declining cash flow, negative earnings, high debt, or some combination of these. Such "turnaround" stocks tend to be highly risky but also harbor some intriguing investments. Hard Asset These companies' main businesses revolve around the ownership or exploitation of hard assets like real estate, metals, timber, etc. Such companies typically sport a low correlation with the overall stock market and investors have traditionally looked to them for inflation hedges. Cyclical Cyclical companies core businesses can be expected to fluctuate in line with the overall economy. In a booming

economy such companies will look excellent; in a recession, their growth stalls, and they might even lose money. Speculative Growth Don't expect consistency from speculative growth-companies. At best their profits are spotty. At worst they lose money. In fact, many companies never make it beyond speculative growth, going instead to bankruptcy court. That's why they're speculative. But current profitability isn't what makes speculative-growth companies interesting. It's future profits. Hopefully, a speculative-growth company will eventually blossom into a world-class company. Aggressive Growth Aggressive-growth companies show a bit more maturity than their speculative-growth counterparts: They post rapid growth in profits, not just in sales-a sign of more staying power. At this point, it's time to make some money. Classic Growth

These firms are in their prime and have little left to prove. The best classic growers have blossomed into money machines, churning out steady growth, high returns on capital, positive free cash flows, and rising dividends. The catch is, their growth is nowhere near that of the aggressive-growth group. Slow Growth and High Yield The growth of these companies is a fading memory. Having run out of attractive investment opportunities, most of them pay out the bulk of their earnings in dividends expect - high payout ratios - rather than plow the profits back into their businesses Mutual fund prospectus The prospectus is a legal document that includes information about the mutual fund. In this document you will find information about the terms of the offer, the issuer, and its objectives. In the aftermath of the 1929 stock market crash the federal government in the Securities Act of 1933 required security

companies to publish a prospectus. At first glance a prospectus may seem overwhelming. The information in the prospectus is usually lengthy, packed with tables and graphs, and written in technical and legal language. This document is provided to help you make an informed investment decision before you invest in a mutual fund. To gain the essential information you need, pay close attention the following key sections: Investment Objective A short statement of the fund's investment objectives. Some funds intend to achieve short-term growth while others might focus on long-term stability. Investment Strategy Exactly how the fund plans to accomplish the objectives. This section describes the types of assets that the fund purchases. Fees and Expenses

Although mutual funds aim to make money for their investors, their ultimate goal, just like any other business, is to make money for themselves. In order to do so, funds charge their shareholders a variety of fees and expenses, all of which must be documented in the prospectus. A table at the front of every prospectus contains a breakdown of the different fees and expenses, along with a hypothetical projection of how the fees would impact a $10,000 investment over a 10-year period. This enables you to compare fees and expenses across mutual funds. Account Information This section contains very basic information about how to buy and sell shares and other account-related information. In addition to telling you how to get your money into the fund, the prospectus will also tell you how to take it out of the fund. The prospectus will inform you which redemption methods are available to you.

Risks The level of risk that the fund takes and the risks that are associated with the specific investments made by the fund are one of the most important sections in the prospectus. Performance Information about the fund's performance over the last 10 years is included. Investors should be aware that past performance is not necessarily an indicator of future results. As important is how well the fund has traditionally performed compared to an index, such as the S&P 500. A fund's performance is also related to the fund's volatility, dividend payments, and turnover. Management The names the managers and some additional information about their experience and qualifications is reported. It can be helpful to know whether or not they have managed other funds in the past and their success or

failure in order to get a sense of their past strategies and results. Statement of Additional Information Mutual funds split their prospectuses into two parts -- the "prospectus" (described above) and the Statement of Additional Information (SAI). In 1983, the Securities and Exchange Commission required mutual funds to supply much more detailed information about the fund. These are included in the SAI. For legal purposes it is assumed that you have read it. If you don't receive the SAI with the prospectus, you should request one. It provides great detail about the fund's board of directors, any limitations on the fund's investments, and the fees and expenses that are mentioned in the prospectus Mutual fund annual report Every year mutual funds send each investor an Annual Report. The Annual Report includes a list of the fund's financial statements, a list of the fund's securities, and explanations from the

fund's management as to why the fund performed as it did for the previous year.

Types of Mutual Funds Mutual funds have different structure and aims, which in turn enable us to classify them into various major categories. These categories are: Closed-end mutual funds Open end funds Equity mutual funds Mid cap funds Large cap funds

Growth funds Balanced funds Exchange Traded Funds (ETFs) Load mutual funds and NoLoad mutual funds Value funds International mutual funds Money market funds Sector mutual funds Fund of funds (FoF) Index funds Regional mutual funds

Most funds have a particular strategy they focus on, when

investing. For instance, some invest only in Blue Chip companies that are more established and are relatively low risk. On the other hand, some focus on high-risk startup companies that have the potential for double and triple digit growth. Finding a mutual fund that fits your investment criteria and style is important.

Types of mutual funds are:

Value stocks

Stocks from firms with relative low Price to Earning (P/E) Ratio, usually pay good dividends. The investor is looking for income rather than capital gains. Growth stock Stocks from firms with higher low Price to Earning (P/E) Ratio, usually pay small dividends. The investor is looking for capital gains rather than income. Based on company size, large, mid, and small cap Stocks from firms with various asset levels such as over $2 Billion

for large; in between $2 and $1 Billion for mid and below $1 Billion for small. Income stock The investor is looking for income which usually come from dividends or interest. These stocks are from firms which pay relative high dividends. This fund may include bonds which pay high dividends. This fund is much like the value stock fund, but accepts a little more risk and is not limited to stocks. Index funds

The securities in this fund are the same as in an Index fund such as the Dow Jones Average or Standard and Poor's. The number and ratios or securities are maintained by the fund manager to mimic the Index fund it is following. Enhanced index This is an index fund which has been modified by either adding value or reducing volatility through selective stock-picking. Stock market sector

The securities in this fund are chosen from a particular marked sector such as Aerospace, retail, utilities, etc. Defensive stock The securities in this fund are chosen from a stock which usually is not impacted by economic down turns. International Stocks from international firms. Real estate Stocks from firms involved in real estate such as builder, supplier,

architects and engineers, financial lenders, etc. Socially responsible This fund would invest according to non-economic guidelines. Funds may make investments based on such issues as environmental responsibility, human rights, or religious views. For example, socially responsible funds may take a proactive stance by selectively investing in environmentallyfriendly companies or firms with good employee relations. Therefore the fund would avoid securities from firms who profit

from alcohol, tobacco, gambling, pornography etc. Balanced funds The investor may wish to balance his risk between various sectors such as asset size, income or growth. Therefore the fund is a balance between various attributes desired. Tax efficient Aims to minimize tax bills, such as keeping turnover levels low or shying away from companies that provide dividends, which are regular payouts in cash or stock

that are taxable in the year that they are received. These funds still shoot for solid returns; they just want less of them showing up on the tax returns. Convertible These are Bonds or Preferred stock which may be converted into common stock. Junk bond Bonds which pay higher that market interest, but carry higher risk for failure and are rated below AAA. Mutual funds of mutual funds

This funds that specializes in buying shares in other mutual funds rather than individual securities. Closed end This fund has a fixed number of shares. The value of the shares fluctuates with the market, but fund manager has less influence because the price of the underlining owned securities has greater influence. Exchange traded funds (ETFs) Baskets of securities (stocks or bonds) that track highly recognized

indexes. Similar to mutual funds, except that they trade the same way that a stock trades, on a stock exchange Closed-end funds A closed-end mutual fund has a set number of shares issued to the public through an initial public offering. Open-end funds Open end funds are operated by a mutual fund house which raises money from shareholders and invests in a group of assets

Large cap funds Large cap funds are those mutual funds, which seek capital appreciation by investing primarily in stocks of large blue chip companies

Mid-cap funds Mid cap funds are those mutual funds, which invest in small / medium sized companies. As there is no standard definition classifying companies

Equity funds

Equity mutual funds are also known as stock mutual funds. Equity mutual funds invest pooled amounts of money in the stocks of public companies.

Balanced funds Balanced fund is also known as hybrid fund. It is a type of mutual fund that buys a combination of common stock, preferred stock, bonds, and short-term bonds

Growth funds

Growth funds are those mutual funds that aim to achieve capital appreciation by investing in growth stocks.

No load funds Mutual funds can be classified into two types - Load mutual funds and No-Load mutual funds.

Exchange traded funds Exchange Traded Funds (ETFs) represent a basket of securities that is traded on an exchange,

similar to a stock. Hence, unlike conventional mutual funds

Value funds Value funds are those mutual funds that tend to focus on safety rather than growth, and often choose investments providing dividends as well as capital appreciation.

Money market funds A money market fund is a mutual fund that invests solely in money market instruments. Money

market instruments are forms of debt that mature in less than one year and are very liquid.

International mutual funds International mutual funds are those funds that invest in nondomestic securities markets throughout the world.

Regional mutual funds Regional mutual fund is a mutual fund that confines itself to investments in securities from a

specified geographical area, usually, the fund's local region.

Sector funds Sector mutual funds are those mutual funds that restrict their investments to a particular segment or sector of the economy.

Index funds An index fund is a a mutual fund or exchange-traded fund) that aims to replicate the movements of an index of a specific financial market.

Fund of funds A fund of funds (FoF) is an investment fund that holds a portfolio of other investment funds rather than investing directly in shares, bonds or other securities.

CHAPTER 2 2.1 NEED FOR THE STUDY The main purpose of doing this project was to know about mutual fund and its functioning. This helps to know in details about mutual fund industry right from its inception stage, growth and future prospects. It also helps in understanding different schemes of mutual funds. Because my study depends upon prominent funds in India and their schemes like equity, income, balance as well as the returns associated with those schemes.

The project study was done to ascertain the asset allocation, entry load, exit load, associated with the mutual funds. Ultimately this would help in understanding the benefits of mutual funds to investors.

2.2 OBJECTIVE To give a brief idea about the benefits available from Mutual Fund investment To give an idea of the types of schemes available. To discuss about the market trends of Mutual Fund investment. To study some of the mutual fund schemes and analyse them Observe the fund management process of mutual funds Explore the recent developments in the mutual funds in India

To give an idea about the regulations of mutual funds

2.3 SCOPE OF THE STUDY In my project the scope is limited to some prominent mutual funds in the mutual fund industry. I analyzed the funds depending on their schemes like equity, income, balance , type. the project reflects the working of the industry and also the best performing mutual funds presently.

METHODOLOGY To achieve the objective of studying the stock market data has been collected. Research methodology carried for this study can be two types 1. Primary 2. Secondary

PRIMARY: The data, which has being collected for the first time and it is the original data. In this project the primary data has been taken through a questionnaire.

SECONDARY: The secondary information is mostly taken from websites, books, journals, etc.

Chapter-4 Analysis and findings Four sequential steps will enable investor to decide effectively. 1. Divide the spectrum of Mutual Funds depending on major asset classes invested in. Presently there are only two. Equity Funds investing in stocks. Debt Funds investing in interest paying securities issued by government, semi-government bodies, public sector units and corporates. 2. a) Categorizing equities

Diversified invest in large capitalized stocks belonging to multiple sectors. Sectorial Invest in specific sectors like technology, FMCG, Pharma, etc. b) Categorized Debt. Gilt Invest only in government securities, long maturity securities with average of 9 to 13 years, very sensitive to interest rate movement. Medium Term Debt (Income Funds) Invest in corporate debt, government securities and PSU bonds. Average maturity is 5 to 7 years.

Short Term Debt Average maturity is 1 year. Interest rate sensitivity is very low with steady returns. Liquid Invest in money market, other short term paper, and cash. Highly liquid. Average maturity is three months.

3. Review Categories Diversified equity has done very well while sectorial categories have fared poorly in Indian market. Index Funds have delivered much less compared to actively managed Funds.

Gilt and Income Funds have performed very well during the last three years. They perform best in a falling interest environment. Since interest rates are now much lower, short term Funds are preferable. 4. Specific scheme selection Rankings are based on criteria including past performance, risk and resilience in unfavorable conditions, stability and investment style of Fund management, cost and service levels. Some recommended schemes are: Diversified equity Zurich Equity, Franklin India Bluechip, Sundaram

Growth. These Funds show good resilience giving positive results. Gilt Funds DSP Merrill Lynch, Tata GSF, HDFC Gilt have done well. Income Fund HDFC, Alliance, Escorts and Zurich are top performers Short Term Funds Pru ICICI, Franklin Templeton are recommended

Within debt class, presently more is allocated towards short term Funds, because of low prevailing interest rates. However if interest rates go up investor can allocate more to income Funds or gilt Funds.