A

Project Report
On
“ANALYSIS OF MUTUAL FUNDS
SCHEMES”
For
KARVY Stock Broking Ltd.

Submitted

In Partial Fulfillment of

MASTER IN BUSINESS ADMINISTRATION

BY

SRUJANA KUMARI MORTHA

MBA-I

FINANCE SPECIALIZATION

COLLEGE OF MANAGEMENT RESEARCH & ENGINEERING

PUNE – 58

(2006)
 ACKNOWLEDGEMENT

I, Srujana Kumari Mortha student of College of Management Research &

Engineering, Pune have done my summer Training Project for a period of

45 days in KARVY Stock Broking Ltd, Pune. This project is an attempt

to share my experience & learning in a short span of time with company

like KARVY. A successful project can never be prepared by single effort of

a person to whom the project is assigned but also demands help &

guardianship of some conversant person, who support actively or

passively in the completion of project. I would like to take this opportunity

to thank the Management of the company for giving me a chance to

undertake project under the kind co-operation and guidance about the

different investment options with a fantastic advisory group.I must

continue to offer my grateful thanks to Mr. Ravi Gaikwad Sr.Relationship

Manager) & Ninad Rughatate (Sr Relationship Manager) for their

information & advice about the company to my project report. I am also

thankful to my Internal Guide Prof. Shushmita Nande & Prof.

Chandrashaker D. Ranade CMRE Pune for his assistance &

encouragement, inspiration & various suggestions from starting to the

completion of the project.

I also express my gratitude in no less measure to our Director

Mr. Anshul B. Sharma, CMRE who guided me towards fulfillment of my

project report. I sincerely hope that my project work will help the company

in the long run.

SURJANA KUMARI MORTHA

 CONTENTS

Sr. No Contents

01 Executive Summary

02 Company Profile

03 Objectives & Scope

04 Introduction
05 Industry Prospects
06 AMCs in India

07 Mutual Funds in India

08 Research Methodology

09 Operations & Data Collection

10 Recommendations

11 Limitations

12 Conclusion

13 Annexure

14 Bibliography
EXECUTIVE SUMMARY
 With globalization and the growing competition in the investments opportunity

available, the investor would naturally be interested in tracking the value of his

investments, whether he invests directly in the market or indirectly through

Mutual Funds. He would have to make intelligent decisions on whether he gets

an acceptable return on his investments in the funds selected by him, or if he

needs to switch to another fund. He therefore needs to understand the basis of

appropriate preference measurement for the fund, and acquire the basic

knowledge of the different measures of evaluating the performance of the fund.

Only then would he be in a position to judge correctly whether his fund is

performing well or not, and make the right decision. The project titled “Analysis

of Mutual Fund Schemes ” is an earnest effort top help the investors in

tracking the performance of their investments in Mutual Funds and has been

carried out with the objective of giving and understanding of Mutual Fund as a

financial product, the meaning, importance, working etc. of Mutual Fund, the

current position of Mutual Fund Industry in India, the number of competitors and

other Mutual Fund position. The methodology for carrying out the project was

very simple that is through secondary data obtained through various mediums

like fact sheet of the funds, the Internet, Business magazines, Newspaper, etc.

the analysis of Principal PNB Funds has been done with respect to its various
competitors on the basis of its ranking system mentioned in the ‘Analysis and

Findings’ part, which is formulated keeping the benefits and convenience to the

investors in mind. The funds have been analyzed under various types such as

Equity Funds, Income Funds and Balanced Funds.

History has shown that investment categories that have had the greatest return

potential also have had the greatest risk potential. Likewise, investments with

conservative return are generally the least risky. The key to successful and

stress free investing, therefore is to strike a balance between the financial

objective and the ability to tolerate risk. Generally, this entails diversifying money

across a combination of low, medium and high risk investments to create an

overall balance, with the potential to meet both short and long term goals. The

basic asset classes-stocks, bonds and cash equivalents consist of broad

groupings of investments that can be divided further into more distinct and

complex classes. Generally, stocks have historically provided maximum growth

with higher risks. Bonds can provide both diversification (which helps to reduce

overall risk) & a regular income stream and cash equivalents (such as money

market funds) provide a less risky alternative to stocks and bonds while providing

some protection from the erosion caused by inflation.

COMPANY PROFILE
About KARVY
KARVY is founded by a group of Hyderabad based CHARTED ACCOUNTANTS

in 1982 as a professional service firm. In the span of 20 years KARVY has

entered into capital market activity too.

KARVY is spread over 163 cities having about 440 offices. Over 450 NSE and

BSE terminals spread across the country. Around 6000 active business

associates are being attached with KARVY across the country. It also comprises

of 3000 employees and professionals

Principal activity of KARVY

KARVY CONSULTANTS LTD.

Deals with depository participant services and IT enabled services.

KARVY COMPUTERSHARE PRIVATE LIMITED

Performs transfer agency services for corporate and Mutual fund and also
registrar for IPOs.

KARVY INVESTOR SERVICE LIMITED

Includes Merchant Banking and Corporate Finance.

KARVY SECURITIES LTD.

Is a big distributor of equity and other financial product.

 In spite of all this KARVY has its RESERCH CENTER in

Hyderabad and also member of Hyderabad stock exchange. It is also a member

of National Stock Exchange.

CORNERSTONES OF STRAREGY

Focus on retail segment.

Build a strong pan-india network managed by experienced professionals,

build presence across metros & class A/B town.

Build full-service capabilities leveraging the network-offer the entire gamut of

financial services, backed by strong transaction processing and high volume

handling capability.

Established a high degree of customer ownership and top-of-mind recall in

the local markets- ensures steady customer traffic and repeat business.

Build a trusted brand; ensure high visibility.

ACHIVEMENTS

• Largest independent distributor for financial products

• Amongst the top 5 stock brokers

• Amongst the top 3 Depository participants

• Largest network of branches and business associates

• Amongst top 10 investment Bankers.

• Ranking 1st in retail procurement in equity IPOs.

• Ranking 8th in Merchant Banking services.

MISSION OF KARVY

Their mission is to be a leading, preferred service provider to our customer, and

they aim to achieve this leadership position by building an innovative,

enterprising, and technology driven organization which will set the highest

standards of service and business ethics.

PRIVATE CLIENT GROUP

This specialized division was set up to cater to the HIGH NET WORTH

INDIVIDUAL and institutional clients keeping in mind that they require a different

kind of financial planning and management that will augment not just existing

finances but there lifestyle as well. Here they follow a hard nosed business

approach with the soft touch of dedicated customer care and personalized

attention. For this purpose they offer a comprehensive and personalized service

that encompasses planning and protection of finances, planning of business

needs and retirement needs and the host of other services, all provided on a

one-to-one basis. The research report has been widely appreciated by this

segment. The delivery and support modules have been fine tuned by giving

facility to client to access online portfolio information, constant updates on their

portfolios as well as value added advice on portfolio churning, sector switches

etc.
OBJECTIVE AND SCOPE
 OBJECTIVE:

My project Analysis of Mutual Fund Schemes & Analyzing the

Performance Factors” was conducted for the following objective:-

• To gain an understanding and knowledge of Mutual Funds as an

Investment Tool.
• To study the product profile of the company.
• To evaluate the performance of selected schemes of Mutual Fund of
different companies.
• To compare the Mutual fund schemes on different parameters such as
Annualized Returns, Standard Deviation, Sharpe Ratio, Beta, Alpha and
R-squared.
• To analyze the performance factor of the Fund based on different drivers
associated with the specific fund.

SCOPE:

The scope of the project is limited to Indian Securities Market and related to the

Funds actively performing in the market. Mainly analysis part is with the products

available with KARVY. However the project covers the overall scenario of the

security market in India with different investment options, one of them is Mutual

Fund.
INTRODUCTION
 Financial planning is the process of identifying one’s wealth
accumulation and protection goals and developing a coordinated plan to help
priorities one’s future financial decision. Financial planning should be taken as
seriously as a medical prescription, as it deals with ones financial health. It
should be seen not just as a means of achieving financial security, but as making
a vital contribution to one’s overall happiness and peace of mind.

Financial planning can be manageable or overwhelming depending

upon how one approaches it. Without guidance; it’s hard to know what one
needs and when one needs it. With right information, tools and timeline, the
choices become much easier.

Intact, too many people are investing in MUTUAL FUNDS. After all it’s
common Knowledge that investing in mutual fund is {or at least should be} better
than simply letting your cash waste in a saving account, but for most people
that’s where the understanding of funds end. It doesn’t help that mutual fund sale
people speak a strange language that, that sounding sort of English, is
interspersed with jargon like NAV, load/no-load, etc. Originally MUTUAL FUND
Swere heralded as a way for the little guy to get a piece of a market. Instead of
spending all the free time buried in the financial pages of ECONOMIC TIMES all
one has to do is buy a mutual funds and be set on his way to financial freedom.
But it’s not that easy .MUTUAL FUNDS are in excellent idea in theory but in
reality they haven’t always delivered. Not all mutual funds are created equal, and
investing in mutual fund isn’t easy as thronging one’s money at the first sales
person who solicits business.
INDUSTRY PROSPECTS
 What is a Mutual Fund…?
• A Mutual fund is a common pool of money into which investors place
their contributions that are to be invested in accordance to the stated
objective.
• The ownership of the fund is thus “mutual”, the fund belong to all
investors.
• Anybody with an invest able surplus of a few thousand rupees can invest
in mutual funds.
• These investors buy units of a particular mutual fund scheme that has a
defined investment objective and strategy.
• The money thus collected is invested by the fund manager in different
types of securities.
• These could range from shares to debentures to money market
instrument, depending upon the schemes stated objective.
• 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
• Types of mutual fund schemes may be classified on the basis of its
structure &its investment objective..
• Thus a mutual fund is the most suitable investment for the common man
as it offers an opportunity to invest in a diversified, professionally
managed basket of securities at a relatively low cost and hence the risk
factor is also decreased in some way.

The above figure shows that the investors pool their money with fund
manager who invest in number of securities which may be government bonds,
stocks, treasury bills, commercial papers, call money etc. these securities
generate returns, which may be passed on to investors in the form of dividend or
capital appreciation, depending on the investor.

E.g.:- If the value of a fund’s asset stands at Rs.1000 and it has 10

investors who

have bough 10 units each, the total number of units issued are 100, and
the value of one unit is Rs.10 (1000/100). If an single investor in fact owns 3
units, the value of his ownership of the fund will be Rs.30 (1000/10*3 units). The
value of the fund’s invested will keep fluctuating with the market pre movements
causing the Net Asset Value (NAV) also to fluctuate.
 For example, if the value of our fund’s assets increased from 1000 to
1200, the value of our investor’s holding of 3 units will now be (1200/100*3units)
Rs.36. the investment value can go up or down, depending on the market value
of the fund’s assets.

Benefits of Mutual Funds…?

If mutual funds are emerging as the favorite investment vehicle, it is

because of the many advantages they have over other forms and avenues of

investing, particularly for investor who has limited resources available in terms of

capital and ability to carry out detailed research and market monitoring. The

following are the major advantages offered by mutual funds to all investors:-

• Portfolio diversification
• Professional Management
• Reduction/Diversification of Risk
• Reduction of Transaction Costs
• Liquidity
• Convenience and Flexibility
• PORTFOLIO DIVERSIFICATION:-

Mutual Funds normally invest in a well-diversified portfolio or securities.

Each investor in a fund is a part owner of all the fund’s assets. This

enables him to hold a diversified investment portfolio even with a small

amount of investments that would otherwise require big capital.

• PROFESSIONAL MANAGEMENT:-

Even if an investor has a big amount of capital available to him, he

benefits from the professional management skills brought in by the fund in
the management of the investor’s portfolio. The investment management
skills, along with the needed research into available investment option,
ensure a much better return then what an investor can manage by his
own. Few investors have the skills and resources of their own to succeed
in today’s fast moving, global and sophisticated markets.

• REDUCTION / DIVERSIFICATION OF RISK:-

An investor in a mutual fund acquires a diversified portfolio, no

matter how small is investment. Diversification reduces the risk of loss, as
compared to investing directly in one or two shares or debentures or other
instruments. When an investor invests directly, all the risk of potential loss
in his own. A fund investor also reduces his risk in another way. While
investing in the pool of funds with other investors, any loss on one or two
securities is also shared with other investors. This risk reduction is one of
the most important benefits of a collective investment vehicle like the
mutual fund.

• REDUCTIOPN OF TRANSACTION COSTS:-

What is true of risk is also true of the transaction costs. A direct

investor bears all the costs of investing such as brokerage or custody of
securities. When going through a fund, he has the benefit of economies of
scale; the funds pay lesser costs because of larger volumes, a benefit
passed on to its investors.
• LIQUIDITY:-

Often, investors hold shares or bonds they cannot directly,

easily and quickly sell. Investment in mutual funds, on the other hand, is
more liquid. An investor can liquidate the investment, by selling the units to
the fund if open-end, or selling them in the market if the fund is close-end,
and collect funds at the end of a period specified by the mutual fund or the
stock market.

• CONVENIENCE AND FLEXIBILITY:-

Mutual Fund management companies offer many investor

services that a direct market investor cannot get. Investors can easily
transfer their holding from one scheme to the other, get updated market
information, and so on.

Limitations of Mutual Funds…?

While the benefits of investing through mutual funds far outweigh the
disadvantages, an investor and his advisor will do well to be aware of a few
shortcoming of using the mutual funds as investment vehicle.

1. NO CONTROL OVER COST:-

An investor in a mutual fund has no control over the overall cost

of investing. He pays investment management fees as long as he remains
with the fund, albeit in return for the professional management and
research. Fees are usually payable as a percentage of the value of his
investments, whether the fund value is rising or declining. A mutual fund
investor also pays fund distribution costs, which he would not incur in
direct investing. However, this shortcoming only means that there is a cost
to obtain the benefits of mutual fund services. However, this cost is often
less than the cost of investing by the investors.

1. NO TAILOR-MADE PORTFOLIO:
 Investors who invests on their own can build their own
portfolio of shares, bonds and other securities. Investing through mutual
funds means he delegates this decision to the fund managers. The very
high-net-worth individuals or large corporate investors may find this to be a
constraint in achieving their objectives. However, most mutual funds help
investors overcome this constraint by offering families of schemes-a large
number of different schemes-within the same fund. An investor can choose
from different investment plans and construct a portfolio of his choice.

1. MANAGING A PORTFOLIO OF FUNDS: -

Availability of a large number of funds can actually mean too

much choice for the investor. He may again need advice on how to select
a fund to achieve his objectives, quite similar to the situation when he has
to select individual shares or bonds to invest in.

History of Indian Mutual Funds Industry…?

The mutual fund industry in India started in 1963 with the formation of
Unit Trust of India, at the initiative of Reserve Bank and Government of India.
The objective then was to attract the small investors and introduce them to
market investments. Since then, the history of mutual funds in India can be
broadly classified into distinct phases, which are as under:
Unit Trust of India (UTI)

In 1963, UTI was established by an act of Parliament and given a

monopoly. Operationally, UTI was set up by the Reserve Bank of India, but was
later de-linked from the RBI (Reserve Bank of India). The first and still one of the
largest schemes, launched by UTI was Unit Scheme 1964. Over the years, US-
64 attracted, and probably still has, the largest number of investors in any single
investment scheme. It was also at least partially the first open-end scheme in the
country, now moving towards becoming fully open-end.

Later in 1970s and 80s, UTI started innovating and offering different
schemes to suit the needs of different classes of investors. Unit Linked Insurance
Plan (ULIP) was launched in 1971. Six new schemes were introduced between
1981 and 1984. During 1984-87, new schemes like Children’s Gift Growth fund
(1986) and Master share (1987) were launched. Master share could be termed
as the first diversified equity investment scheme in India. The first Indian Offshore
Fund, India Fund, was launched in August 1986.

The mutual fund industry in India not only started with UTI, but still counts
UTI as its largest player with the largest corpus of invest able funds among all
mutual funds currently operating in India. Until 1980s, UTI’s operations in the
stock market often determined the direction of market movements. At the end of
1988 UTI had Rs.6,700 Crores of Assets Under Management (AUM).
CLASSIFICATION OF MUTUAL FUNDS:

There are many types of mutual funds available to the investor. However,
these different types of funds can be grouped into certain classifications for better
understanding. From investor’s perspective, we would follow three basic
classifications:-

• Open end v/s close end

• Load and Noload Funds
• Tax-Exempt and Non-Tax-Exempt Fun

OPEN END V/S CLOSE END:-

An “Open-End Fund” is one that has units available for sale &
repurchases all times. An investor can buy or redeem units from the fund itself at
a price based on the Net Asset Value (NAV). NAV per unit is obtained by
dividing the amount of the market value of the fund’s assets (plus accrued
income minus the fund’s liabilities) by the number of units outstanding.
The number of units outstanding goes up or down every time the fund issues
new units or repurchases existing units. In other words, the ‘unit capital’ of an
open-end mutual fund is not fixed but variable. Whereas in “Close-End Fund” it
makes a one time of sale of fixed number of units. Later on, unlike open-end
funds do not allow investors to buy or redeem units directly from the funds. In
this, the fund units can be traded at a discount or premium to NAV based on
investor’s perception about the funds future performance and other market factor
affecting the demand for or supply of fund’s units. The number of units
 outstanding of a close-end fund does not vary on account of trading in the fund’s
units at the stock exchange.

LOAD AND NOLOAD FUNDS:-

Marketing of a new mutual fund scheme involves initial expenses. These

expenses may be recovered from the investors in different ways at different
times. Three usual ways in which fund’s sales expenses may be recovered from
the investors are:-

a. At the time of investor’s entry into the fund/scheme, by deducting a

specific amount from his initial contribution, or

b. At the time of the investor’s exit from the fund/scheme, by

deducting a specified amount from the redemption proceeds payable
to the investor.

These charges made by the fund managers to the investors to cover

distribution/sales/marketing expenses are often called ‘LOADS’. The load
charges to the investor at the time of entry into a scheme is called a “front-end or
entry load”. The load amount charged to the scheme over a period of time is
called as “deferred load”. The load that an investor pays at the time of his exit is
called a “back-end or exit load“. Funds that charge front-end, back-end or
deferred loads are called “LOAD FUNDS”. Funds that make no such charges or
loads for sales expenses are called “NO-LOAD FUNDS”.

TAX-EXEMPT AND NON-TAX-EXEMPT FUNDS:-

 When a fund invests in tax-exempt securities, it is called a Tax-Exempt
Fund. In India, after the 1999 union government budget, all of the dividend
income received from any of the Mutual Funds is tax free in the hands of
investor.However, funds other than Equity funds have to pay adistribution tax,
before distributing income to investors. In otherwords, Equity Mutual Fund
scheme are tax-exempt investment avenues, while other funds are taxable for
distributable income. When a fund invests in non-tax-exempt securities, it is
called a Non-Tax-Exempt Fund.

TYPES OF MUTUAL FUNDS:

All mutual funds would be either open or close-end, load or no-load

fund. These classifications are general. Following are the different types of
mutual funds:-

• Money Market Funds

• Gilt Funds
• Debt Fund or Income Fund
• Equity funds
• Commodity Funds
• Real Estate Funds
 80
70
Income Funds
60
Growth Funds
50
Balanced Funds
40 Money Market
30 Tax Saving Schemes
Glit Funds
20

10
0

MONEY MARKET FUNDS:-

Often considered to be at the lowest rung in the order of risk level, Money
Market funds invest in securities of short-term nature, which generally means
securities of less than one year aturity. The typical, short term, interest bearing
instruments these funds invest in include:- Treasury Bills issued by Government,
Certificate of Deposit issued by Banks and Commercial paper issued by
Companies. In India, Money Market Mutual Funds also invests in the inter bank
call money market.

GILT FUNDS:-

Gilts are Government securities with medium to long term maturities,

typically of over one year (under one-year instruments being money market
securities). In India now we have seen the emergence of Government Securities
or Gilt funds that invest in government paper called dated security. Since the
issuer is the Government/s of India/States, these funds have little risk of default
and hence offer better protection of principal.
DEBT FUND OR INCOME FUND:-

Debt fund invests in Debt instrument issued not only by governments, but
also by private companies, banks and financial institutions and other entities
such as infrastructure companies or utilities. By investing in Debt, these fund
target low risk and stable income for the investor as their key objectives. Debt
funds are largely considered as Income Funds as they do not target capital
appreciation, look for high current income, and therefore distribute a substantial
part of their surplus to investors. Income Funds that target returns substantially
above market levels can face more risks. Debt Funds includes:- Diversified Debt
Funds, Focused Debt Funds, High Yield Debt Funds, Assured Return Funds- An
Indian Variant and Fixed Term Plan Series- Another Indian Variant.

EQUITY FUNDS:-

In Equity market there is high risk and high return. Equity Funds invests a
major portion of their corpus in equity shares issued by companies, acquired
directly in Initial Public Offering (IPO) or through the secondary market. Equity
funds would be exposed to the equity price fluctuation risk at the market level, at
the industry or sector level and at the company specific level. Equity Funds
(NAV) Net Asset Value fluctuates with all these price movements. Below some
of the major types of equity funds, arranged in order of higher to lower risk level
they are:- Aggressive Growth funds, Growth Funds, Specialty Funds, Diversified
Equity Funds, Equity Index Funds, Value Funds and Equity Income Funds.

Net Asset Value (NAV)

Net Asset Value of the fund is the cumulative market value of the assets
fund net of its liabilities. In other words, if the fund is dissolved or liquidated, by
selling off all the assets in the fund, this is the amount that the shareholders
would collectively own. This gives rise to the concept of net asset value per unit,
which is the value, represented by the ownership of one unit in the fund. It is
calculated simply by dividing the net asset value of the fund by the number of
units. However, most people refer loosely to the NAV per unit as NAV, ignoring
the "per unit". We also abide by the same convention

NAV= Net assets of the scheme / Number of units outstanding

HYBRID FUNDS- QUASI EQUITY/QUASI DEBT:-

Many Mutual Funds mix different types of securities in their portfolios.

Thus, most funds, equity or debt, always have some money market securities in
their portfolios as these securities offer the much-needed liquidity. There are
funds that, however, seek to hold a relatively balanced holding of debt and equity
securities in their portfolios. Such funds are termed as Hybrid Funds as they
have a dual equity/ bond focus. Some of the funds which comes under this are: -
Balanced Funds, Growth and Income Funds and Asset Allocation Funds.

COMMODITY FUNDS:-

Commodity funds specialize in investing in different commodities directly

or through shares of commodity companies or through commodity futures
contract. Specialized funds may invest in single commodity or a commodity
group such as edible oils or grains, while diversified commodity funds will spread
their asset over many commodities.

REAL ESTATE FUNDS:-

Specialized Real Estate Funds would invest in Real Estate directly, or

may fund real estate developers, or lend to them, or buy shares of housing
finance companies or may even buy their securitized assets. The funds may
have a growth orientation or seek to give investors regular income. There has
recently been an initiative to offer such as income fund by HDFC. So these are
the different Mutual Funds which are available in Indian Securities Market. Based
on different consideration the investment is done by the Fund Managers. Each
type of Mutual Fund has its own benefits and limitations.
ORGANISATION OF A MUTUAL FUND:-

There are many entities involved for the functioning of a successful

fund to make it more effective and the diagram below illustrates the
organizational set up of a mutual fund:

MUTUAL FUND SETUP

RECENT TREND IN MUTUAL FUND INDUSTRY:-

The most important trend in mutual fund industry is aggressive expansion of

the foreign owned mutual fund companies & the decline of the companies floated
by nationalized banks and smaller private sector players.

Many nationalized banks got into the mutual fund business in the early
nineties and got off to a good start due to the stock market boom prevailing then.
These banks did not really understand Mutual Fund business and they just
viewed it as another kind of banking activity. Few hired specialized staff and
generally chose to transfer staff from the parent organizations. The performance
of most of the schemes floated by these funds was not good. Some schemes
had offered guaranteed returns and their parent organizations had to bail out
these AMCs by paying large amounts of money as the difference between the
guaranteed and actual returns. Most of these AMCs have not been able to retain
staff, float new schemes etc. and it is doubtful whether, barring a few exceptions,
they have serious plans of continuing the activity in a major way.

The experience of some of the AMCs floated by private sector Indian

companies was also very similar. They quickly realized that the AMC business is
a business, which makes money in the long term and requires deep-pocketed
support in the intermediate years. Some have sold out to foreign owned
companies, some have merged with others and there is general restructuring
going on.

The foreign owned companies have deep pockets and have come in here
with the expectation of a long haul. They can be credited with introducing many
new practices such as new product innovation, sharp improvement in service
standards and disclosure, usage of technology, broker education and support
etc. In fact, they have forced the industry to upgrade itself and service levels of
organizations like UTI have improved dramatically in the last few years in
response to the competition provided by these.

AMCs IN INDIA:
Institutions:-

GIC Asset Management Company Limited

IL & FS Asset Management Company Limited

Jeevan Bima Sahayog Asset Management Company Limited

INDIAN Private Sector:

Benchmark Asset Management Company Limited

Cholamandalam Asset Management Company Limited

Escorts Asset Management Company Limited

J.M. Capital Asset Management Company Limited

Kotak Mahindra Asset Management Company Limited

Sundaram Asset Management Company Limited

Reliance Capital Asset Management Company Limited

 Tata Asset Management Company Private Limited

JOINT VENTURE-PREDOMINANTELY INDIAN

Birla Sunlife Asset Management Company Private Limited

Credit Capital Asset Management Company Limited

DSP Merill Lynch Fund Mergers Limited

Sahara Asset Management Company Private Limited

HDFC Asset Management Company Limited

JOINT-VENTURE-PREDOMINANTLY FOREIGN

ABN AMRO Asset Management India Limited

Alliance Capital Asset Management (India) Private Limited

Deutsche Asset Management (India) Private Limited

HSBC Asset Management (India) Private Limited

ING Investment Management (India) Private Limited

Morgan Stanley Investments Management Private Limited

Principal PNB Asset Management Company Private Limited

Prudential ICICI Management Company Limited

SC Asset Management Company Private Limited

Franklin Templeton Asset Management (India) Pvt. Limited

MUTUAL FUNDS IN INDIA:
HOW TO JUDGE A MUTUAL FUND:-

The Indian mutual fund (MF) industry reached Rs. 1,50,537 crore in
December 2004. The industry witnessed a 100% growth in the last six years. By
year 2010, MF assets are expected to double. India has 29 MFs compared to
800 in the US.

In the last one year, the number of retail investors in India has increased
steadily. The big question is how to judge a MF before investing? It is important
for an investor to consider a fund's performance over several years. Different
fund managers adopt different strategies to improve performance. While one
fund manager may have played it cautious by investing in good quality stocks
over the years and given a return of 30% over a five-six year period, another one
who invested in speculative stocks may have struck gold in that year, thereby
outperforming tits counterpart by a long way. Thus it is important to look at
consistency of returns over a period of time rather than going by absolute returns
generated in the short term.

An investor should consider certain drawbacks before investing in MF.

Unlike a fixed deposit, MF does not give any guarantee on returns. If the entire
stock market declines in value, the value of MF shares will go down as well. An
investor has to shell out an entry and exit load.
 When you invest in a MF, you depend on the fund's managers to make
the right decisions regarding the fund's portfolio. If the manager does not perform
well, you might not make as much money on you investment as you expected.
The short-term focus of money managers and pressure from unit holders for
immediate performance are obstacles to long-term growth.

Most funds lack the cash reserves to pay off the massive redemptions
which will follow a market panic. Fund managers can change without notice.

RESEARCH METHODOLOGY:
 “A research is a careful investigation or enquiry, especially through search
foe new facts in any branch of knowledge. It is a systemized effort to gain more
knowledge.”

“Research Methodology is a way to systematically solve the research

problem. It includes not only the research methods, but also the logic behind
using the methods.”

The methods of research used in this project were as follows:-

Analytical Research

Applied Research

Analytical Research:-

In analytical research the researcher has to use the facts already

available, and analyze these to make the critical evaluation of the material.

In this project I have used many raw data from the various sources and
analyzed it for underlying trends.
Applied Research:-

Applied Research aims at finding a solution for an immediate problem.

Research aimed at certain conclusions (say a solution) facing a concrete social
or business problem is an example of applied research. Thus the central aim of
applied research is to find a solution for some pressing practical problem.

In this project, in the last section, by means of assumptions I have found

the feasibility of a project that the organization means to undertake.

The analysis of the trends followed by the mutual funds was Analytical
Research.

OPERATIONS & DATA

COLLECTION:
 From the secondary data available from the fact sheet, internet etc.
Analyses between three different types of funds are as follows:-

• Equity Diversified Fund

• Income Fund

• Balanced Fund

Mutual Fund companies that are selected for the analysis are as follows:-

• Principal PNB Mutual Fund

• Birla Mutual Fund

• HDFC Mutual fund
• UTI mutual fund
• Interpretation:
HDFC equity is recommended over Principal equity as this fund has a better
return as compared to other Mutual Funds.

Sharpe Ratio is in direct relation with the Risk and Return means as the risk
is increasing so as the return, as in the case of HDFC Equity, its risk is high so as
the returns of the fund.

Considering the 3-year period than HDFC equity is better than Principal
Equity, while the other two mutual funds have not completed 3 years.

RECOMMENDATION & SUGGESTIONS:

• Principal Mutual Fund has almost all the kinds of Debt Funds and those funds
are performing quite well since last year, hence it should retain its performance.

• Principal Mutual Fund should come up with fund of funds, where the fund
manager invests in the different schemes of Principal to make the portfolio of
Principal Mutual Fund a complete Mutual Fund organization.

• Most of the business for Mutual Fund Industry comes through

Distributors/Agents. During the stay in branch office in winter training an
impression was formed that advisors are not satisfied by the commission
structure. Since, advisors bring mostly retail customers and retail customers have
a major share in the total business, company should take some steps to nullify
the dissatisfaction among the advisors to reap long term results.
• As so many people don’t know about mutual fund & other financial product,
industry should do something to gain knowledge as many people do not invest
there money use to lack of knowledge &because of high risk.

• They should have customer care department.

• Industry should intimate investor about the mutual funds that which mutual fund will
give them better returns.

LIMITATIONS:

Though the report has given the insight to the various mutual fund
schemes but cannot be said fully relevant because of some limitations these
are:-

• It is difficult to get full insight of how fund managers have deployed their funds.

• There are more than 30 companies and offering various ranges of products and
analyzing all of them is again a difficult task.

• Mutual Fund industry performance is dependent on daily churning of portfolio and

Net Asset Value of each fund changes every day, thus the fund which in
comparison is doing better today may not perform well tomorrow and thus it
affects the analysis process.

• Due to the time constraint only four companies share in portfolio is taken for the
study. Remaining 26 companies are not studied or difficult to study because of
time limitation though they have considerable effect on return.
• Funds which are compared have different asset size and time period and they
may not be so relevant for comparison. In Debt oriented fund the different rating
companies have different criteria to rate their companies and hence it affects on
the analysis part of the research.

CONCLUSION:

A Mutual Fund pools the money of people with similar investment goals. The
money in turn is invested in various securities depending on the objective of the
mutual fund scheme, and the profits (losses) are shared among investors in
proportion to their investment.
 ANNEXEURE
QUESTIONAIRE:-

* NAME :

* AGE GROUP :

a)25-35 b)35-45 c)45-60 d) 60 & above

* PLACE :

1.WHAT PERCENTAGE OF INCOME DO YOU INVEST?

OVER 50% 30% TO 50%

10% TO 30% Below 10%

2.WHAT ARE THE VARIOUS INVESTMENT SCHEMES IN WHICH YOU INVEST?

Bank
 Insurance

Stock Market

Bonds and Debenture

PPF (Public provident Funds)

NSC (National saving certificate)

Post office saving schemes

Real Estate

Gold

Chit Funds

4.ARE YOU AWARE OF MUTUAL FUNDS?

Yes

No

5.WHAT IS YOUR PERCEPTION ABOUT MUTUAL FUNDS?

Safe

Risky

Others

9. HOW DO YOU LOOK MUTUAL FUND COMPANYS?

Brand Name

Good Service

High Yield

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Any Other Reason……………………………...........................................

 BIBLIOGRAPHY

Books and magazines:

• C.R.Kothari Research methodology

• AMFI MF TEST –Work book

• Indian business year book-2005