MINI PROJECT REPORT-2

ON
“EMERGING CHALLENGES IN MUTUAL FUND INDUSTRY
IN INDIA”

Submitted in partial fulfillment of the requirements for the

Two Year Full Time Master of Business Administration

(Affiliated To A.P.J. Abdul Kalam Technical University, Lucknow)

(SESSION -2022- 2024)

By: Under the Guidance of

Student Name: Chetan Sharma Mrs. Chitra Jha
Roll No. 2201920700099
Batch :( 2022-2024)
M.B.A 2nd semester

GL BAJAJ INSTITUTE OF TECHNOLOGY AND MANAGEMENT,

GREATER NOIDA
SESSION – 2022-2024

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 GL BAJAJ INSTITUTE OF TECHNOLOGY AND MANAGEMENT,
GREATER NOIDA

Session: 2022-24

CERTIFICATE OF ORIGINALITY

I hereby declare that this Mini Project-2 Report is my own work and that, to the best of my
knowledge and belief, it reproduces no material previously published or written that has been
accepted for the award of any other degree or diploma, except where due acknowledgement has
been made in the text.

(Chetan Sharma)
Roll No. 2201920700099
Date:

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 GL BAJAJ INSTITUTE OF TECHNOLOGY AND MANAGEMENT,
GREATER NOIDA
Session: 2022-24

CERTIFICATE

This is to certify that Mr. Chetan Sharma MBA (2022-24 Batch) a student of Institute of
Technology and Science has undertaken the Mini Project-2 on "Mutual Fund Industry In
India"

The project has been carried out by the student in partial fulfillment of the requirements for the
award of MBA, under my guidance and supervision.

I am satisfied with the work of Mr. Chetan Sharma.

Date:
Academic Mentor’s Name: Mrs. Chitra Jha

(Signature)

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 ACKNOWLEDGEMENT

I Chetan Sharma, MBA Student in GL Bajaj institute of technology and management,

Greater Noida is highly grateful to all those who guided me in this project.
Presentation inspiration and motivation have always played a key role in the success of any venture.
I express my sincere thanks to Mrs. Chitra Jha to encourage me to the highest peak and to
provide me the opportunity to prepare the project. I am immensely obliged to my friends for
their elevating inspiration, encouraging guidance and kind supervision in the completion project.

I feel to acknowledge my indebtedness and deep sense of gratitude to my guide Mrs. Chitra Jha
whose valuable guidance and kind supervision given to me throughout the course which shaped
the present work as its show.

Last but not the least; my parents are also an important inspiration for me.

So with due regards, I express my gratitude’s to them.

Chetan Sharma
Roll No. 2201920700099
MBA 2nd SEM.

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 Structure of Report

INTRODUCTION 7

INDUSTRY GROWTH RATE 9

MAJOR PLAYER OF 11
MUTUAL FUND

MARKET STRUCTURE 13

REGULATIONS 14

INDUSTRY INDICATORS 16

INDUSTRY DRIVER 18

SWOT ANALYSIS 20

PESTLE ANALYSIS 22

EMERGING CHALLENGES 24

IMPACT OF TECHNOLOGY 30

BIBLOGRAPHY 31

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Overview on Mutual Fund Industry in India

Introduction

A mutual fund is a type of financial vehicle made up of a pool of money collected from many

investors to invest in securities like stocks, bonds, money market instruments, and other assets.

Mutual funds are operated by professional money managers, who allocate the fund's assets and

attempt to produce capital gains or income for the fund's investors. A mutual fund's portfolio is

structured and maintained to match the investment objectives stated in its prospectus.

Mutual funds give small or individual investors access to professionally managed portfolios of

equities, bonds, and other securities. Each shareholder, therefore, participates proportionally in

the gains or losses of the fund. Mutual funds invest in a vast number of securities, and

performance is usually tracked as the change in the total market cap of the fund—derived by the

aggregating performance of the underlying investments.

● A mutual fund is a type of investment vehicle consisting of a portfolio of stocks, bonds,

or other securities.

● Mutual funds give small or individual investors access to diversified, professionally

managed portfolios at a low price.

● Mutual funds are divided into several kinds of categories, representing the kinds of

securities they invest in, their investment objectives, and the type of returns they seek.

● Mutual funds charge annual fees (called expense ratios) and, in some cases, commissions,

which can affect their overall returns.

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 ● The overwhelming majority of money in employer-sponsored retirement plans goes into

mutual funds.

Industry Growth Rate

The India Mutual Fund Industry stands at 24.55 trillion INR as of May 31st, 2020. The India has

grown four fold in a decade (2010 - 2020) and aims at fourfold growth by 2025. Equity

continued to be the major contributor with 42.1% share while debt oriented schemes accounted

for 28.8% and Liquid/money market accounted for 23.3% in September 2019.

Digital penetration, government targeting smart cities and increased data speeds are also

facilitating the drift of asset share towards smaller cities and towns. Increased retail contribution

through SIPs shows the power of digital penetration in India.

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As new retail investors are coming up, Systematic investment plan have a steady uptrend despite

market volatility. Total SIP accounts have increased from 10 Million in April 2016 to 27.3

Million June 2019. SIPs taken by investors with a long-term investing horizon give better returns

and reducing negative returns significantly. There are almost 32 Million SIP accounts as of May

2020 through which investors regularly invest in Indian Mutual Fund Schemes. The SIP

installment amount could be as small as ₹500 per month. SIP has been gaining popularity among

Indian MF investors, as it helps in Rupee Cost Averaging and also in investing in a disciplined

manner without worrying about market volatility and timing the market.

The total number of folios as on May 31, 2020 stood at 91 Million, and the maximum investment

is from retail segment stood at INR 80.3 Million.

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SWOT Analysis of Mutual Fund Industry in India

Strengths

1. Large number of potential customers are base.

2. Government support by way of tax concession for MF investors

3. Volatility of bank interest rate.

4. Better scope for accessing market information

5. Offer liquidity to the investors at any time.

6. Offers variety of products to the investors.

7. The size of the market is large.

WEAKNESS

1. Poor participation of retail investors

2. Lack of focus

3. Under performance

4. Poor service conditions

5. Distribution network is confines only to metro cities

OPPORTUNITIES

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1. Huge untapped market in semi-urban and rural areas.

2. High level of savings habit among the people

3. Liberalized business environment.

4. Using online mode of trading systems.

5. Investment opportunities abound in the international market.

THREATS

1. Increasing competition among the players.

2. High level of volatility in the stock market.

3. Possibility of more stringent regulations by SEBI, RBI, AMFI, etc.

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Major Players for Mutual Fund in India

ICICI Prudential Mutual Fund

With the AUM size of approximately ₹ 3 lakh crore, ICICI Prudential Asset Management

Company Ltd. is the largest asset management company (AMC) in the country. It is a joint

venture between ICICI Bank in India and Prudential Plc, in UK. It was started in 1993.

Ms. Chanda Kochhar is the Chairperson of this AMC.

Apart from mutual funds, the AMC also caters to Portfolio Management Services (PMS) and

Real Estate for investors.

HDFC Mutual Fund

HDFC Mutual Fund is at the 2nd number by the size of AUM. With fund size of nearly ₹ 3 lakh

crore, it is one of the largest mutual fund companies or AMC in the country.

HDFC Asset Management Company (AMC) was incorporated in 1999. It was approved to act as

AMC for HDFC Mutual Fund in 2000. Milind Barve is the Managing Director of HDFC Mutual

Fund.

Aditya Birla Sun Life Mutual Fund

Formerly known as Birla Sun Life Asset Management Company, this fund house is the

3rd largest in terms of the AUM size.

Presently it is known as Aditya Birla Sun Life (ABSL) Asset Management Company Ltd. It is a

joint venture between the Aditya Birla Group in India and Sun Life Financial Inc of Canada. It

was set up as a joint venture in 1994.

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Reliance Mutual Fund

With Assets under Management of approximately ₹ 2.5 lakh crore, Reliance Mutual Fund is one

of India’s leading mutual fund companies.

A part of Reliance Anil Dhirubhai Ambani (ADA) Group, Reliance Mutual Fund is one of the

fastest growing AMCs in India.

Reliance Capital Limited (RCL) is the sponsor and Reliance Capital Trustee Co. Limited is the

trustee of Reliance Mutual Fund (RMF). It was registered on June 30, 1995. Reliance Mutual

Fund was originally Reliance Capital Mutual Fund and changed its name in 2004.

SBI Mutual Fund

SBI Funds Management Pvt Limited is a joint venture between the State Bank of India (SBI) and

financial services company Amundi, a European Asset Management company in France. It was

launched in 1987.

Ms. Anuradha Rao is the Managing Director and CEO.

In 2013, SBI Fund Guru, an investor education initiative was launched.

L&T Mutual Fund

L&T Investment Management Limited is the Asset Management Company (AMC) for all L&T

Mutual Fund schemes. L&T Finance Holdings Limited (LTFH), a listed company, is the sponsor

for the AMC. It started its operations in 2010.

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Kotak Mahindra Mutual Fund

Kotak Mahindra Mutual Fund is a part of the Kotak Group established in 1985 by Mr. Uday

Kotak. Kotak Mahindra Asset Management Company (KMAMC) is the asset manager for Kotak

Mahindra Mutual Fund (KMMF). KMAMC started its operations in 1998.

The Market Structure of Mutual Fund

Sponsor

a. The Sponsor must have profit in 3 of the last 5 years including immediately preceding year.

b. The Sponsor must have a minimum of 5 years of experience in financial services.

c. The net worth of the Sponsor must be positive for all the preceding five years.

d. Out of the total net worth of the AMC, 40% must be participated by the Sponsor.

Trust And Trustees

Trust and trustees make up the second layer of the structure of mutual funds. Trustees are also

known as the protectors of the fund and are employed by the fund sponsor. As the name

suggests, they have a very important role in maintaining the trust of the investors and to oversee

the growth of the fund. SEBI mandates the trustees to provide a report on the fund and the

functioning of the AMC on a half-yearly basis. Trustees can be created either in the form of

Board of Trustees or a Trust Company. The Trustees supervise the entire functioning of the

AMC and regulate the operations of the mutual fund schemes.

Asset Management Company

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An AMC is the third working layer in the structure of mutual funds. An AMC floats various

schemes of mutual fund in the market, pursuant to the needs of the investors and the nature of the

market. They create mutual funds along with the trustee and the sponsor and then oversee its

development. While creating the scheme, they take help of bankers, brokers, RTAs auditors etc.

and enter into an agreement with them. An AMC is a company formed under Companies Act and

needs to be registered under SEBI. Similar to the Trustees, an AMC also needs to ensure that

there is no conflict of interest amongst them, the sponsor and the trustees.

Other Participants In The Structure Of Mutual Funds

Custodian

A Custodian is an entity, which is responsible for the safekeeping of the securities. Custodians

are registered with SEBI and are responsible for the transfer and delivery of units and securities.

Custodians also enable investors in updating their holdings at a particular point of time and help

them in keeping track of their investments. Along with the primary job of safekeeping,

custodians are also in charge of the collection of corporate benefits such as bonus issue, interest,

dividends etc.

Registrar And Transfer Agents

RTAs are an important link between fund managers and investors. They cater to the fund

managers by updating them with the investor details and to investors by delivering the benefits

of the fund to them. RTAs are SEBI registered entities who process the applications of mutual

funds, help with investor KYC, manage and deliver periodical statements of investments, update

records of investors and process investor requests. Link-in time, Karvy etc. are some of the

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famous RTAs in India and they provide the requisite operational support to the AMC in mutual

fund activities.

Regulations of Mutual fund industry in India

Mutual funds are regulated primarily by Securities and Exchange Board of India (SEBI). In

1996, SEBI formulated the Mutual Fund Regulation. SEBI is also the apex regulator of capital

markets and its intermediaries. Issuance and trading of capital market instruments also comes

under the purview of SEBI. Along with SEBI, mutual funds are regulated by RBI, Companies

Act, Stock exchange, Indian Trust Act and Ministry of Finance.

● Primarily, mutual funds are regulated by the Securities and Exchange Board of India

(SEBI).

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 ● A mutual fund should have the approval of RBI in order to provide a guaranteed returns

scheme.

● The Ministry of Finance acts as a supervisor of RBI and SEBI and appellate authority

under SEBI regulations.

● The Association of Mutual Funds in India (AMFI) has been made to develop this Mutual

Fund Industry of India on professional and ethical lines and to enhance and maintain

standards in all areas with a view to protect and promote the interests of mutual funds and

their unitholders.

Industry Indicators

1. Sharpe ratio

This ratio shows the return per unit of the total risk taken by a scheme.

A higher value is good as it means that returns are commensurate with risk.

2. Total risk (Standard deviation)

Computed based on how much a fund’s returns veers from its average return and, thus represents

the fund’s total risk.

Lower the risk, the better it is.

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3. Exit load

The amount deducted by a fund when you redeem your investment before a stipulated period.

A lower exit load is better because it is is deducted from your corpus. However, a higher exit

load may not necessarily be bad, as it deters investors from prematurely redeeming their

investment.

4. Total expense ratio

Total expenses charged by a scheme in a year.

The lower the expense ratio, the better it is because expense ratio brings down your annual

returns.

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Industry Drivers

A. ‘Savings’ oriented culture

India is a country of savers. Our household savings rate stands at around 20% of the GDP, which

translates to about Rs.30 lakh crore.

The latest trends show that investors are moving away from physical assets such as gold and real

estate to financial assets. A few years ago, 60% of the investments were in physical assets and

only 40% in financial assets, this has changed to 50-50 now.

While the shift of 10% looks small, it translates to Rs.3 lakh crore moving into financial sector.

B. Composition of the savings pie

Banks still constitute major portion of household savings with 45% share. However, this share

has reduced substantially by 14% over the last few years. Many people are increasingly investing

their money in financial assets such as mutual funds and insurance. To put this change in

perspective, a few years ago, mutual fund investments equalled 7% of the bank deposits. Now,

they stand at 19% of the bank deposits.

C. Increasing allocation to equity

In FY 2013-14, the mutual fund industry was largely a debt industry with debt AUM of Rs.4

lakh crore of the total industry AUM of Rs.6 lakh crore. This has undergone a sea of change in

the last four years. For instance, the industry’s debt AUM was Rs.8 lakh crore while the equity

AUM grew to Rs.9.20 lakh crore in the FY 2017-18,. I believe that this will increase profitability

for the industry.

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D. Growing retail participation

The last few years saw increasing participation of retail investors through SIP route. While the

industry received Rs.3,100 crore through SIP two years ago on a monthly basis, we are now

receiving close to Rs.7,500 crore a month through SIPs, largely into equity funds from retail

investors. In addition, the longevity of SIP accounts have increased over the years. Currently,

over 55% of SIPs are active for five years.

E. Broad based growth

In October 2012, SEBI introduced B15 cities to encourage mutual fund penetration. This has led

to geographical diversification of industry’s assets. Currently, B15 assets are growing faster than

T15.

Globally, mutual funds account for 62% of GDP. However, in India, the number is just 11%. In

addition, the mutual fund industry constitutes just 5% of the total market capitalisation. This

shows tremendous growth potential for the industry.

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PESTLE ANALYSIS

Political Factor

The impact of non-economic variables on to the performance of mutual funds has been studied

through careful and investigative study of international events. Though, the political uncertainty

could be due to multiple reasons, but the major events such as recession, Euro crisis etc. has been

considered primarily. The events selected and considered for study are selected on the basis of

highlights of the first page of the newspaper. Macro-economic variables do affect the stock

market and mutual funds. Along with macro-economic factors, one of the critical factors that an

investor needs to carefully consider while investing or trading in equity and mutual funds market

is, the “Political Environment or Political stability”. Political events, especially, results of

elections and formation of Government do affect market sentiments to quite a considerable

extent. Generally, market sentiments reflect in following trends or responses, while elections are

on, results are declared and new Government is formed.

Economic Factor

This leads to a sudden increase in the number of construction projects and a subsequent increase

in demand for materials like steel, cement, etc. Hence, the stock prices of companies

manufacturing these materials increases.

If the mutual has invested in these sectors, then it will experience a boost in performance. On the

other hand, if a policy change impacts a sector or industry negatively, then the stocks of

companies in the sector and those associated with it drop in value and cause a negative ripple

effect on the mutual fund scheme.

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Social Factor

● Companies that establish a good culture are normally successful also in the Mutual Fund.

Many customers are of the view that the India cultivates standard business ethics. Also

the culture of a particular country influences the motive for Mutual Fund.

● Apart from the traditional media, the digital and social media are also great sources of

motivation/inspiration for the customers. The on-line Mutual Fund market accounts for

around 27Millons new SIPs.

Legal Factor

SEBI regulates securities markets in India. SEBI lays down the regulations which direct other

market related entities. For example, SEBI regulations provide broad guidelines on limits to the

kind of investments which are possible in mutual fund schemes, to ensure a minimum level of

portfolio diversification.

Technological Factor

Towards a paperless experience

Gone are the days when Mutual Fund investors needed to wade through mountains of paperwork

to get started with their investments, or for that matter to execute future transactions on

investments already made. Technology has now become a ubiquitous aspect of each and every

element of Mutual Fund operations – be it transaction processing, fund management, customer

service or distribution.

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Ease of transactions

The overall ease with which a first time investor can get started with Mutual Funds has seen a

significant uptrend in the past five years. For instance, the “e-KYC” process now allows non-

KYC compliant investors to cross the first hurdle of KYC compliance by logging on to the KYC

Registration Agency Website and using their Aadhar Card number, followed by a simple OTP

based verification and subsequent document upload process.

Environmental Factor

Global economy has fundamentally changed the environment of Mutual Fund Industry . A

complete positive business atmosphere is essential for the Indian Mutual industry to grow. Every

Mutual Fund , with respect to its SWOT analysis, must focus on the key area of operation. The

thrust area may be the mode of operation, employee retention and the scrutiny of business

practices of various players in the industry. The style of management or leadership is essential as

it plays a vital role in managing the Mutual Fund Industry.

Mutual Fund- Emerging Challenges

1. Lack of financial education and awareness

Financial literacy is one of the most fundamental factors impeding the growth of penetration

of any financial products in the smaller cities and towns. Investors need to be made aware of

their financial goals and the means to achieve the same. AMFI and SEBI along with the Industry

are making efforts for investor awareness campaign. Fund houses are also mandated by

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regulation to invest 2 bps from scheme expenses towards, investor education and awareness

campaigns but India has a long way to go.

2. Limited Distribution network

The second critical issue for fund houses to distribute their products in smaller cities is the

availability of quality distribution infrastructure. Fund houses need infrastructure like branches,

adequate number of relationship managers and sales service staff in these locations to be able to

increase their sales volume coming from these geographies.

3. Distribution cost

Cost of establishing a distribution network in B-15 cities is quite high. It is the cost per

transaction or the low sales volume that makes the pursuit economically unviable or at the least

challenging. Although, additional TER can be levied to extend of inflows from these cities (up

to 30 bps); entering these markets have a long gestation period and requires a capital investment

for distributors.

4. Cultural bias towards physical assets

As of FY19, 46 per cent of total individual wealth in India is invested in physical assets (gold

and real estate). Although, in the past few decades, the investors have increasingly relied on

financial assets to invest their savings; the contribution of MFs in the asset portfolio is very low.

Insurance products constitute 17 per cent of the individual savings in financial assets, whereas

the share of mutual funds is much lower at 3.2 per cent.

5. The Issue of Fluctuating Returns

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In spite of being a diversified investment solution, mutual funds investment in no way

guarantees any return. If the market prices of major shares and bonds fall, then the value of

mutual fund shares are sure to go.

6. Simplified operational processes

While the mutual fund industry has made significant strides in standardising processes, but few

challenges still remain: such as a simplified KYC to make onboarding hassle-free; making

Aadhar inter-changeable with PAN; and allowing investments on the basis of ‘Bank KYC’

Impact of Technology On Mutual Funds

Artificial Intelligence has been into the mainstream news, as it is always making headlines, every

time it’s something new and remarkable. Stephen Hawking’s warning on the Artificial

Intelligence cannot be ignored, whereas there are still people and government who can’t stop

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working on Artificial Intelligence. AI has already created its space in the industry, with its

applicability into many aspects. It has helped company to reduce inaccuracy and increase

efficiency. It is already used in ECM (Enterprise Content Management) by mutual fund

companies. AI does the job of processing large data, arranging, classifying, checking for error,

and thus reducing the redundancy and duplication of data.

Computers is known for analyzing and processing huge amount of data within fraction of

seconds, combined with intelligence, smart analyzing and interpretation of data could help fund

managers to do the historical analysis of the stocks.

With greater intelligence AI is utilized for making security analysis and arriving at an optimum

portfolio with risk-reward ratio. It can also be used to customize the needs of the investors and

suggest the best possible investment options. Here Robo-Advisors are being developed, which

can work based on certain algorithms to understand individual customers, its needs, risk

parameters, etc. and then can process the data to suggest right products for the investors. Since it

will be automated, chances of inaccuracy are minimized.

With next generation technology, entire investment process is now paperless, efficient and easy

to invest. It has helped the fund houses to increase its efficiency in distribution channel, it is now

possible to reach places, which was earlier difficult to reach. With e-commerce platforms, mutual

funds would be under the reach of vast majority of the investors.

Technology is transforming the asset management companies, it is now being reorganized and

more centralized than before. Mobile, social media, cloud computing, Blockchain mechanism,

big-data, analytics and Fin Tech is now redefining the future of asset management. Since AI has

the potential to enhance the efficiency of the information processing, thus reduces the

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asymmetries, application of AI. AI may process large information for the investor and can come

up with most probable recommendations, which may be helpful for the investor in taking

investment decision. It can reduce the overall trading cost for the investors, can suggest most

appropriate trading strategies for the investors according to the changing scenarios. AI can be

used to target specific customer segment and come up with better recommendation. AI can also

,be used for risk management, by making more appropriate and accurate estimation of risks. AI

is used for better anticipating and detection of frauds, suspicious transactions, risk of cyber-

attacks, hence leading to better risk management.

Effect of Covid-19 in the Indian Mutual Fund Industry

The start of 2020 appears to be a double whammy for mutual funds. First, there is the COVID-19

pandemic, and then there is a sudden drop in international crude oil prices. Panic in global

markets ensued these events. A series of measures were taken by the Indian capital market

regulator SEBI and the mutual fund industry body AMFI to protect and safeguard the investors

and the mutual fund industry. Understanding market trends, particularly during periods of crisis,

is a necessary trait for academic researchers, capital market enthusiasts, distributors, and those

seeking a career in the asset management industry.

Mutual Funds Experience Outflows: The scary fall in the stock markets has resulted in investor

panic who ran to make MF redemptions. The net outflows are to a tune of Rs. 2.13 lakh crore in

March 2020. Much of the damage was because of outflows in the debt segment that saw the

highest outflows ever seen in the Indian Debt MF segment in a financial year. Equity investment

base managed by MFs got cut by a quarter. With this, the total AUM by all the 44 AMCs fell

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from Rs. 27.23 lakh crores at the end of February 2020 to Rs. 22.26 lakh crores by the end of

March 2020.

The study concluded that COVID-19 has largely impacted the large-cap schemes rather than

mid and small-cap schemes. Further, funds i.e. DSP Midcap fund, Axis Small-Cap, and Kotak

Small-Cap funds had shown the positive impact of the crisis on the Net

Asset Values (NAVs) of the funds.

Since the outbreak of COVID-19 in India, the global contagious disease caused by coronavirus

in January 2020, the stock markets have experienced an extensive crisis with severe dampening

effects in the entire global scenario. This has affected the Indian Mutual Fund Industry as well.

Due to the lockdown announced by the Indian Government, the economy has got slower and will

continue to remain slow over the next few months. For most businesses, the slowdown can be in

the form of supply disruptions, fall in consumption demand, and stress on the banking and

financial sectors.

The equity markets have seen an unprecedented sell off across the board in the last few months.

This sell off has been occasioned by the rapid spread of the pandemic in several countries and

therefore, some disruption was expected to happen in the major global economies. Such

disruptions affect economic growth, output, aggregate demand and supply, employment and a

host of other key macro-economic variables. The adverse impact on these variables results in

lower income for households, unemployment, and also lower earnings for companies. It is this

chain of factors that caused the selloff thereby magnifying the probability of a global economic

slowdown.

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Several factors also highlight that the Indian Mutual fund sector is not at all worthy for

investment in the present Post COVID 19 scenario:

(i) New Fund Offers (NFOs):

NFOs by mutual fund houses have been dwindling since the outbreak of COVID-19 largely due

to the nationwide lockdown and its impact on overall investor sentiment. The number of NFOs

was 11 in January, 6 in February, and it further dropped to just one in March and nil in April.

(ii) AUM of Indian Mutual Fund Industry

The total AUM of the Indian mutual fund industry declined by 9.82% between December 2019

and April 2020 due to COVID-19 effect. The AUM of open-ended mutual funds decreased by

9.97% during the same period. Moreover, assets in equity-oriented mutual funds declined by

3.5% between December 2019 and April 2020 due to COVID-19 effect. That apart, assets in

equity-oriented mutual funds recorded a continuous decline from February 2020 to April 2020.

However, it is noticed that assets in debt-oriented mutual funds and liquid funds increased by

2.2% and 0.8% respectively between December 2019 and April 2020 due to COVID-19 effect.

Growth of AUM in the Pre-COVID and Post-COVID 19 scenario (Rs. in crores)

(Source: website of AMFI)

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(iii) Mutual Fund Returns:

As per statistical data on Mutual Fund returns obtained from Mutual Fund Insight report 2020, it

has been observed that amongst debt funds, mid-duration, short-duration, ultra short-duration and

credit risk funds performed better in the pre-COVID period. Surprisingly, long-duration debt

funds and dynamic bond funds performed better in the post-COVID period.

Post-COVID returns of all equity funds except pharmaceutical funds were negative in 3-month

and 1-year. Amongst equity funds, large-cap funds, international funds, pharmaceutical funds

and technology sector funds generated positive returns in the post-COVID period in 3-year. 5-

year and 10-year post-COVID returns of all equity funds were positive barring infrastructure

funds which generated negative returns in the 5-year period.

Thus, the market fall was like a financial cyclone that waved away the faith and stability despite

miscellaneous liquidity measures taken by the Government of India. The markets were worried

on account of lack of clarity in near future. This led to massive fluctuations in the markets, which

in turn affected the Indian Mutual fund sector. Again, with the sudden shut down of six debt

funds of Franklin Templeton, the investors’ fear grew up with increased lack of confidence about

the way forward.

However, this tough realism of drastic phase will again be overcome with boom in near future as

soon as this pandemic moves out with invention of coronavirus vaccines with reduction in

number of affected and deaths along with the implementation of several innovative government

policies.

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 BIBLIOGRAPHY

 BOOKS

o “Investment Analysis and Portfolio Management” by Prasana Chandra

o Indian financial system by H R Machiraju

o Security Analysis and Portfolio Management by Donald E. Fischer

and Ronald J. Jordan sixth edition

o Marketing Management by Philip Kotler 12th edition

o Market Research by Paul N. Hague

o Research Methodology by Ranjit Kumar

o Research Methodology by Dr. CR Kothari

 NEWS PAPERS

o Economic Times

o Business Standard

o Financial Express

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