1.

1 INTRODUCTION:

The Indian financial system based on four basic components like Financial Market,
Financial Institutions, Financial Service, Financial Instruments. All are play important role for
smooth activities for the transfer of the funds and allocation of the funds. The main aim of the
Indian financial system is that providing the efficiently services to the capital market. The Indian
capital market has been increasing tremendously during the second generation reforms. The first
generation reforms started in 1991 the concept of LPG. (Liberalization, privatization,
Globalization)

Then after 1997 second generation reforms was started, still the it’s going on, its include
reforms of industrial investment, reforms of fiscal policy, reforms of ex- imp policy, reforms of
public sector, reforms of financial sector, reforms of foreign investment through the institutional
investors, reforms banking sectors. The economic development model adopted by India in the
post independence era has been characterized by mixed economy with the public sector playing a
dominating role and the activities in private industrial sector control measures emaciated form
time to time. The last two decades have been a phenomenal expansion in the geographical
coverage and the financial spread of our financial system.

The spared of the banking system has been a major factor in promoting financial
intermediation in the economy and in the growth of financial savings with progressive
liberalization of economic policies, there has been a rapid growth of capital market, money
market and financial services industry including merchant banking, leasing and venture capital,
leasing, hire purchasing. Consistent with the growth of financial sector and second generation
reforms its need to fruition of the financial sector. Its also need to providing the efficient service
to the investor mostly if the investors are supply small amount, in that point of view the mutual
fund play vital for better service to the small investors. The main vision for the analysis for this

study is to scrutinize the performance of five star rated mutual funds, given the weight of
risk, return, and assets under management, net assets value, book value and price earnings ratio.

1
1.2 WHAT IS A MUTUAL FUND

Mutual fund is the pool of the money, based on the trust who invests the savings of a
number of investors who shares a common financial goal, like the capital appreciation and
dividend earning. The money thus collect is then invested in capital market instruments such as
shares, debenture, and foreign market. Investors invest money and get the units as per the unit
value which we called as NAV (net assets value). Mutual fund is the most suitable investment
for the common man as it offers an opportunity to invest in diversified portfolio management,
good research team, professionally managed Indian stock as well as the foreign market, the main
aim of the fund manager is to taking the scrip that have under value and future will rising, then
fund manager sell out the stock. Fund manager concentration on risk – return trade off, where
minimize the risk and maximize the return through diversification of the portfolio. The most
common features of the mutual fund unit are low cost. The below I mention the how the
transactions will done or working with mutual fund

1.3 GROWTH OF MUTUAL FUND INDUSTRY:

The history of mutual funds dates support to 19th century when it was introduced in
Europe, in particular, Great Britain. Robert Fleming set up in 1868 the first investment trust
called Foreign and colonial investment trust which promised to manage the finances of the
moneyed classes of Scotland by scattering the investment over a number of different stocks. This
investment trust and other investment trusts which were afterward set up in Britain and the U.S.,
resembled today’s close – ended mutual funds. The first mutual fund in the U.S., Massachusetts
investor’s trust, was set up in March 1924. This was the open – ended mutual fund.

The stock market crash in 1929, the Great Depression, and the outbreak of the Second
World War slackened the pace of growth of the mutual fund industry. Innovations in products
and services increased the popularity of mutual funds in the 1950s and 1960s.

2
 The first international stock mutual fund was introduced in the US in 1940. In 1976, the
first tax – exempt municipal bond funds emerged and in 1979, the first money market mutual
funds

Were created. The latest additions are the international bond fund in 1986 arm funds in
1990. This industry witnessed substantial growth in the eighties and nineties when there was a
significant increase in the number of mutual funds, schemes, assets, and shareholders. In the US
the mutual fund industry registered s ten – fold growth the eighties. Since 1996, mutual fund
assets have exceeds bank deposits. The mutual fund industry and the banking industry virtually
rival each other in size.

A Mutual fund is type of Investment Company that gathers assets form investors and
collectively invests in stocks, bonds, or money market instruments. The investment company
concepts date to Europe in the late 1700s, according to K. Geert Rouwenhost in the Origins
Mutual Funds, when “a Dutch Merchant and Broker Invited subscriptions from investor with
limited means.” The materialization of “investment Pooling“ in England in the 1800s brought the
concept closer to U.S. shores. The enactment of two British Laws, the Joint Stock Companies
Acts of 1862 and 1867, permitted investors to share in the profits of an investment enterprise,
and limited investor liability to the amount of investment capital devoted to the enterprise.

May be more outstandingly, the British fund model established a direct link with U.S.
Securities markets, serving finance the development of the post – Civil War U.S. economy. The
Scottish American Investment Trust, Formed on February1, 1873 by fund pioneer Robert
Fleming, invested in the economic potential of the United States, Chiefly through American
railroad bonds. Many other trusts followed that not only targeted investment in America, but led
to the introduction of the fund investing concept on U.S. shores in the late 1800 and early 1900s.

Nov. 1925. All these funds were open – ended having redemption feature. Similarly, they
had almost all the features of a good modern Mutual Funds – like sound investment policies and
restrictions, open end ness, self – liquidating features, a publicized portfolio, simple capital
structure, excellent and professional fund management and diversification etc…….and hence
they are the honored grand – parents of today’s funds. Prior to these

3
 funds all the initial investment companies were closed – ended companies. Therefore, it
can be said that although the basic concept of diversification and professional fund management,
were picked by U.S.A. from England Investment Companies “The Mutual Fund is an American
Creation.”

Because of their exclusive feature, open – ended Mutual Funds rapidly became very
popular. By 1929, there were 19 open – ended Mutual Funds in USA with total assets of $ 140
millions. But the 1929 Stock Market crash followed by great depression of 1930 ravaged the
U.S. Financial Market as well as the Mutual Fund Industry. This necessitated stricter regulation
for mutual funds and for Financial Sectors. Hence, to protect the interest of the common
investors, U.S. Government passed various Acts, such a Securities Act 1933, Securities
Exchange Act 1934 and the Investment Companies Act 1940. A committee called the National
Committee of Investment Company (Now, Investment Company Institute), was also formed to
co – operate with the Federal Regulatory Agency and to keep informed of trends in Mutual Fund
Legislation.

As a result of these measure, the Mutual Fund Industry began to develop speedily and the
total net assets of the Mutual Funds Industry increased form $ 448 million in 1940 to $ 2.5
billion in 1950. The number of shareholder’s accounts increased from 296000, to more than one
Million during 1940 – 1951. “As a result of renewed interest in Mutual Fund Industry they grew
at 18% annual compound rate reaching peak of their rapid growth curve in the late 1960s.

4
1.4 MUTUAL FUND & CAPITAL MARKET

Indian institute of capital market (IICM) aims is to educate and develop

professionals for the securities industry in India and other developing countries, other
objectives like to function on a centre for creating investors awareness through research
& turning and to provide specialized consultancy related to the securities industry.

Capital market play vital role for the growth of Mutual fund in India, capital
market divided into the two parts one is the primary market and another is secondary
market, primary market concern with issue management, as per the mutual fund concern
the primary called as the NFO New Fund Offer, all the AMC (Assets Management
Company) are issuing all the funds all the way through the NFO, Every NFO came with
particularly investment objectives, style of investment and allocation of the funds all that
thing depend on the fund manager style of investment. The other portion of the capital
market is secondary market, as we have a discussion with reference with mutual fund
secondary market means when the market bull stage the investors sole the units. Opposite
when the bear stage the investor buy or some of the investor time wait for sale.

1.5 ROLE OF SEBI

A index fund scheme’ means a mutual fund scheme that invests in securities in
the same proportion as an index of securities;” A mutual fund may lend and borrow
securities in accordance with the framework relating to short selling and securities
lending and borrowing specified by the Board.”A mutual fund may enter into short
selling transactions on a recognized stock exchange, subject to the framework relating to
short selling and securities lending and borrowing specified by the Board.” “Provided
that in case of an index

5
 \fund scheme, the investment and advisory fees shall not exceed three fourths of
one percent (0.75%) of the weekly average net assets.“

“Provided further that in case of an index fund scheme, the total expenses of the
scheme including the investment and advisory fees shall not exceed one and one half
percent (1.5%) of the weekly average net assets.” Every mutual fund shall buy and sell
securities on the basis of deliveries and shall in all cases of purchases, take delivery of
relevant securities and in all cases of sale, deliver the securities: Provided that a mutual
fund may engage in short selling of securities in accordance with the framework relating
to short selling and securities lending and borrowing specified by the Board: Provided
further that a mutual fund may enter into derivatives transactions in a recognized stock
exchange, subject to the framework specified by the Board.”

1.6 WORLDWIDE ROLE OF MUTUAL FUND

2007 26.20 croers

2006 21.82 croers

2005 17.77 croers

6
1.7 NEED OF 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.

1.8 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. But there
is so many other schemes in mutual fund industry like specialized
(banking,insrastructure,pharmacy) Funds, index funds etc.

My stydy is minly concentrated on equity schemes, the returns, in income schemes the
rating o CRISIL, ICRA and other credit rating agencies.

7
1.9 OBJECTIVES OF STUDY

 To find the Net assets of the Indian Mutual Fund Industry(UTI)

 To analyze the Percentage of Net assets of the Indian Mutual Fund
Industry(UTI)
 To find the Net Assets of the Indian Mutual Fund
 To analyze the Year wise Resource Mobilisation by Mutual Funds
 To find the Net Assets of Mutual Fund Industry(phase-III)
 To analyze the Year-wise Resource Mobilisation by MF
 Net Assets of Mutual Fund Industry

1.10 RESEARCH METHODOLOGY

Research Methodology is the systematic, theoretical analysis of the

methodsapplied to a field of study. It comprises the theoretical analysis of the body Of
methods and principles associated with a branch of knowledge. 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

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PRIMARY

The data, which has being collected for the first time and it is the original data.

SECONDARY

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

1.9 LIMITATIONS

 The time constraint was one of the major problems.

 The study is limited to the different schemes available under the mutual
funds selected.
 The study is limited to selected mutual fund schemes.

9
2.1 CONCEPT OF MUTUAL FUND

As defined by the Association of Mutual Funds in India (AMFI), an apex

body of all registered asset management companies, “Mutual Fund is a trust that
pools the savings of a number of investors who share a common financial goal.
Anybody with an investible surplus of as little as a few thousand rupees can invest
in mutual fund units according to their stated investment objective and strategy.”
According to Securities and Exchange Board of India (SEBI) Regulations 1996,
“Mutual Fund means a fund established in the form of a trust to raise monies
through the sale of its units to the public or a section of the public under one or
more schemes for investing in securities, including money market instruments.”
As defined by the mutual Fund Book of Investment Company Institute of the
U.S., “A mutual fund is a financial service organization that receives money from
shareholders, invests it, earns returns on it, attempts to make it grow and agrees to
pay the shareholder for the current value of his investment.”

Mutual fund is a special type of institution that acts as an investment

conduit. It is a professionally managed investment organization that pools the
money of many individual investors having similar investment objectives. The
money thus collected is invested by the fund manager in different types of
securities as shares, debentures, money market instruments and so on, depending
upon the objective of the scheme. Income earned and capital appreciations thus
realized by the schemes are shared by its unit holders in proportion to the number
of units owned by them. Therefore, mutual fund is an investment institution,
which assembles the savings of individuals and institutions and conduit these
savings in corporate securities. Thus it endows the individual investors, with an
opportunity to invest in a diversified, professionally managed portfolio at a
relatively low cost.

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 Mutual funds mobilize savings, particularly from the small and household sectors,
for investment in capital and money market. Basically, these institutions
professionally manage the funds of individuals and institutions that may not have
such high degree of expertise and sufficient time to deal with the complexities of
different investment avenues, legal provisions associated and impulse and
vicissitude of financial markets. Figure 2.1 depicts it’s working.

Figure 2.1: Mutual Fund operation flow chart

Source: AMFI- Concept of Mutual Funds

(http://www.amfiindia.com/showhtml.aspx?page=mfconcept)

2.1.1 BENEFITS

Mutual funds have been endowed with many advantages over other forms
and avenues of investment. Especially, investors having limited resources in terms
of capital and ability to carry out detailed research and market monitoring, reward
many benefits from these. Major advantages are listed below:

i. Professional Management

One of the most important benefits of the mutual fund investment is the
availability of highly professional management services. Mutual funds are
managed by professionally experienced and highly skilled managers, backed by a
dedicated investment research team with sound knowledge of the market and
wide experience in investment. Making investment is not a full time assignment
for investors. So they cannot have a professional attitude towards it. The
professional fund managers, who supervise the fund’s portfolio, take desirable
decisions as which securities to be bought and sold and decisions for the timing of
such buy and sell. They have extensive research facilities at their disposal to
investigate and constantly supervise the fund. The performance of mutual fund
schemes depends on the quality of fund managers employed.

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ii. Diversification

Mutual Funds invest in a number of companies across a broad cross

section of industries and sectors. This diversification reduces the risk because
rarely do all stocks decline at the same time and in the same proportion. In this
way, investors hold a diversified portfolio even with a small amount of
investment that would otherwise requires a big amount of capital.

iii. Convenient Administration

Mutual Funds save time and make investing easy and convenient as
investing in a Mutual Fund scheme reduces paperwork and helps to avoid many
problems such as bad deliveries, delayed payments and unnecessary follow up
with brokers and companies.

iv. Return Potential

Over a medium to long term, mutual funds have the potential to provide a
high return as they invest in a diversified basket of selected securities.

v. Low Costs

Mutual Funds are a relatively less expensive mode of investment as

compared to directly investing in the capital markets because of the benefits of
scale in brokerage, custodial and other fees.

vi. Liquidity

Liquidity is a distinct advantage of mutual funds over other investment

options as there is always a market for its units. For open-ended schemes,
investors can always approach the fund for repurchase and get their money back

12
 promptly at Net Asset Value (NAV) related prices. With close-ended schemes,
they can sell their units on a stock exchange at the prevailing market price or avail
the facility of repurchase through Mutual Funds at NAV related prices which
some close-ended and interval schemes offer to the investors periodically.

vii. Transparency

Investors get regular information on the value of their investment in

addition to disclosure on the specific investments made by the scheme, the
proportion invested in each class of assets and the fund manager’s investment
strategy and outlook.

viii. Flexibility

Through features such as Systematic Investment Plans (SIP), Systematic

Withdrawal Plans (SWP) and dividend reinvestment plans, one can systematically
invest or withdraw funds according to his requirements and expediency.

ix. Choice of Schemes

Mutual Funds offer a variety of schemes to suit investors’ varying needs

over a lifetime. Given the plethora of options at hand, investors can select
schemes on the basis of their investment objectives as growth of capital, safety of
principal, current income or tax-exempt income and risk spectrum.

x. Well Regulated

All Mutual Funds are registered with SEBI and they function within the
provisions of strict regulations designed to protect the interests of investors. Also,
their operations are monitored regularly by SEBI.

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 xi. Switching

Many mutual funds allow investors to switch from one fund to another.
For example, if investor’s objective changes from capital gains to income, they
can switch from growth to income funds and vice versa.

xii. Attract Foreign Capital

The functioning of mutual funds is not limited to domestic sphere only. In

addition to attracting domestic savings, some funds offer their units abroad and
attract foreign capital.

xiii. Advantages to Industrial Concern

Through mutual funds, needy industrial concerns avail a relatively bigger

lot of capital. Therefore, it reduces their burden for raising finance directly from
individual savers.

2.2 ORGANIZATION STRUCTURE OF MUTUAL FUNDS

Mutual funds have organization structure as per there Security Exchange

Board of India guideline; Security Exchange Board of India specified authority
and responsibility of Trustee and East Management Companies. The objectives
are to controlling, to promoted, to regulate, to protect the investor’s right and
efficient trading of units. Operation of Mutual fund start with investors saves their
money on mutual fund, than Mutual Fund manager handling the funds and
strategic investment on scrip. As per the objectives of particular scheme manager
selected scraps. Unit value will become high when fund manager investment
policy generates the return on capital market.

14
 Unit return depends on fund return and efficient capital market. Also
affects international capital market, liquidity and at last economic policy. Below
the graph indicates how the process was going on to investors to earn returns.
Mutual fund manager having high responsibility inside of return and how to
minimize the risk. When fund provided high return with high risk, investors
attract to invest more funds for same scheme.

OPERATION OF MUTUAL FUND

R
V
N
I
C
S
T
E
F
D
N
UU
S
E
O
Y
T
I
N
R
G
N
A
M R
E

15
 The fund organization as per the SEBI formation and necessary formation
is needed for sooth activities of the companies and achieved the desire objectives.
Transfer agent and custodian play role for Mutual dematerialization of the fund
and unit holders hold the account statement, but custody of the unit is on
particular Asset Management Company. Custodian holds all the fund units on
dematerialization form. Sponsor had decided the responsibility of custodian when
investor to purchase the fund and to sell the unit. Application forms, transaction
slip and other requests received by transfer agent, middle men between investors
and Assts Management Companies.

2.3 ORIGIN OF MUTUAL FUND IN INDIA

The history of mutual funds dates backs to 19th century when it was
introduced in Europe, in particular, Great Britain. Robert Fleming set up in 1968
the first investment trust called Foreign and Colonial Investment Trust which
promised to manage the finances of the moneyed classes of Scotland by spreading
the investment over a number of different stocks. This investment trust and other
investments trusts which were subsequently set up in Britain and the US,
resembled today’s close – ended mutual funds. The first mutual in the U.S.,
Massachustsettes investor’s Trust, was set up in March 1924. This was the open –
ended mutual fund.

16
 The stock market crash in 1929, the Great Depression, and the outbreak of
the Second World War slackened the pace of mutual fund industry, innovations in
products and services increased the popularity of mutual funds in the 1990s and
1960s. The first international stock mutual fund was introduced in the U.S. in
1940. In 1976, the first tax – exempt municipal bond funds emerged and in 1979,
the first money market mutual funds were created. The latest additions are the
international bond fund in 1986 and arm funds in 1990. This industry witnessed
substantial growth in the eighties and nineties when there was a significant
increase in the number of mutual funds, schemes, assets, and shareholders. In the
US, the mutual fund industry registered a ten – fold growth the eighties. Since
1996, mutual fund assets have exceeded bank deposits. The mutual fund industry
and the banking industry virtually rival each other in size.

17
2.3 GROWTH OF MUTUAL FUNDS IN INDIA

By the year 1970, the industry had 361 Funds with combined total assets
of 47.6 billion dollars in 10.7 million shareholder’s account. However, from 1970
and on wards rising interest rates, stock market stagnation, inflation and investors
some other reservations about the profitability of Mutual Funds, Adversely
affected the growth of mutual funds. Hence Mutual Funds realized the need to
introduce new types of Mutual Funds, which were in tune with changing
requirements and interests of the investors. The 1970’s saw a new kind of fund
innovation; Funds with no sales commissions called “ no load “ funds. The largest
and most successful no load family of funds is the Vanguard Funds, created by
John Boggle in 1977.

In the series of new product, the First Money Market Mutual Fund
(MMMF) e.g. The Reserve Fund” was started in November 1971. This new
concept signaled a dramatic change in Mutual Fund Industry.

Most importantly, it attracted new small and individual investors to

mutual fund concept and sparked a surge of creativity in the industry.

2.4 TYPES OF MUTUAL FUNDS

Wide variety of Mutual Fund Schemes exists to cater to the needs such as
financial position, risk tolerance and return expectations etc. The table below
gives an overview into the existing types of schemes in the Industry.

By Structure Open Ended Funds Close Ended Funds Interval Funds

By Investment Objectives Growth Funds Income Funds Balanced Funds

Money Market Funds

Other Schemes Tax Saving Fund Special Funds Index Funds sector
specific funds

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2.5 ROLE OF AMFI

(Association Mutual Fund in India)

The Association of Mutual Funds in India (AMFI) is dedicated to

developing the Indian Mutual Fund Industry on professional, healthy and
ethical lines and to enhance and maintain standards in all areas with a
view to protecting and promoting the interests of mutual funds and their
unit holders.

AMFI working group on Best Practices for sales and marketing of Mutual
Funds under the Chairmanship of Shri B. G. Daga, Former Executive Director of
Unit Trust of India with Shri Vivek Reddy of Pioneer ITI, Shri Alok Vajpeyi of
DSP Merrill Lynch, Shri Nikhil Khattau of Sun F & C and Shri Chandrashekhar
Sathe, Formerly of Kotak Mahindra Mutual Fund has suggested formulation of
guidelines and code of conduct for intermediaries and this work has been ably
done by a sub-group consisting of Shri B. G. Daga and Shri Vivek Reddy.

Name of the Asset Management Website

19
Company
AEGON Asset Management Company N/A
Pvt. Ltd.
AIG Global Asset Management Company www.aiginvestments.co.in
(India) Pvt. Ltd.
Axis Asset Management Company Ltd. www.axismf.com
Baroda Pioneer Asset Management www.barodapioneer.in
Company Limited
Benchmark Asset Management Company www.benchmarkfunds.com
Pvt. Ltd.
Bharti AXA Investment Managers Private www.bhartiaxa-im.com
Limited
Birla Sun Life Asset Management www.birlasunlife.com
Company Limited
Canada Robe co Asset Management www.canaraobeco.com
Company Limited
DBS Cholamandalam Asset Management www.dbscholamutualund.com
Ltd.
Deutsche Asset Management (India) Pvt. www.dws-india.com
Ltd.
DSP Black Rock Investment Managers www.dspblackrock.com
Private Limited
Edelweiss Asset Management Limited www.edelweissmf.com
Escorts Asset Management Limited www.escortsmutual.com
FIL Fund Management Private Limited Fidelity.co.in
Fortis Investment Management (India) www.fortisinvestments.in
Pvt. Ltd.

Franklin Templeton Asset Management www.franklintempletonindia.com

(India) Private Limited
Goldman Sachs Asset Management www.gsam.in
(India) Private Limited
HDFC Asset Management Company www.hdfcfund.com
Limited
HSBC Asset Management (India) Private www.assetmanagement.hsbc.com/in
Ltd.
ICICI Prudential Asset Mgmt.Company www.icicipruamc.com
Limited

20
 IDFC Asset Management Company www.idfcmf.com
Private Limited
ING Investment Management (India) Pvt. www.ingim.co.in
Ltd.
JM Financial Asset Management Private www.JMFinancialmf.com
Limited
JPMorgan Asset Management India Pvt. www.jpmorganmf.com
Ltd.
Kotak Mahindra Asset Management www.kotakmutual.com
Company Limited(KMAMCL)
LIC Mutual Fund Asset Management www.licmutual.com
Company Limited
Mirae Asset Global Investments (India) www.miraeassetmf.co.in
Pvt. Ltd.
Morgan Stanley Investment Management www.morganstanley.com/indiamf
Pvt. Ltd.

2.6 TAX PLANNING AND MUTUAL FUND

Investors in India opt for the tax-saving mutual fund schemes for the
simple reason that it helps them to save money. The tax-saving mutual funds or
the equity-linked savings schemes (ELSS) receive certain tax exemptions under
Section 88 of the Income Tax Act. That is one of the reasons why the investors in
India add the tax-saving mutual fund schemes to their portfolio. The tax-saving
mutual fund schemes are one of the important types of mutual funds in India that
investors can option for. There are several companies in India that offer – tax –
saving mutual fund schemes in the country.

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2.7 GUIDELINE OF MUTUAL FUND

SEBI Regulation Act 1996

Establishment of a Mutual Fund:

In India mutual fund play the role as investment with trust, some of the
formalities laid down by the SEBI to be establishment for setting up a mutual
fund. As the part of trustee sponsor the mutual fund, under the Indian Trust Act,
1882, under the trustee company are represented by a board of directors. Board of
Directors is appoints the AMC and custodians. The board of trustees made
relevant agreement with AMC and custodian. The launch of each scheme involves
inviting the public to invest in it, through an offer documents.

Depending on the particular objective of scheme, it may open for further

sale and repurchase of units, again in accordance with the particular of the
scheme, the scheme may be wound up after the particular time period.

1. The sponsor has to register the mutual fund with SEBI

2. To be eligible to be a sponsor, the body corporate should have a sound track

record and a general reputation of fairness and integrity in all his business
transactions.

 Means of Sound Track Records

 The body corporate being in the financial services business for at least
five years
 Having a positive net worth in the five years immediately preceding the
application of registration.

22
  Net worth in the immediately preceding year more than its contribution
to the capital of the AMC.
 Earning a profit in the three out of the five preceding years, including the
fifth year.

3. The sponsor should hold at least 40% of the net worth of the AMC.

4. A party which is not eligible to be a sponsor shall not hold 40% or more of the
net worth of the AMC.

5. The sponsor has to appoint the trustees, the AMC and the custodian.

6. The trust deed and the appointment of the trustees have to be approved by
SEBI.

7. An AMC or its officers or employees can not be appointed as trustees of the

mutual fund.

8. At least two thirds of the business should be independent of the sponsor.

9. Only an independent trustee can be appointed as a trustee of more than one

mutual fund, such appointment can be made only with the prior approval of the
fund of which the person is already acting as a trustees.

LAUNCHING OF A SCHEMES Before its launch, a scheme has to be

approved by the trustees and a copy of its offer documents filed with the SEBI.

1. Every application form for units of a scheme is to be accompanies by a

memorandum containing key information about the scheme.

2. The offer document needs to contain adequate information to enable the

investors to make informed investments decisions.

23
3. All advertisements for a scheme have to be submitted to SEBI within seven
days from the issue date.

4. The advertisements for a scheme have to disclose its investment objective.

5. The offer documents and advertisements should not contain any misleading
information or any incorrect statement or opinion.

6. The initial offering period for any mutual fund schemes should not exceed 45
days, the only exception being the equity linked saving schemes.

7. No advertisements can contain information whose accuracy is dependent on

assumption.

8. An advertisement cannot carry a comparison between two schemes unless the

schemes are comparable and all the relevant information about the schemes is
given.

9. All advertisements need to carry the name of the sponsor, the trustees, the
AMC of the fund.

10. All advertisements need to disclose the risk factors.

11. All advertisements shall clarify that investment in mutual funds is subject to
market risk and the achievement of the fund’s objectives cannot be assured.

12. When a scheme is open for subscription, no advertisement can be issued

stating that the scheme has been subscribed or over subscription.

24
3.1. INDIAN SCENARIO

The Indian scenario of the Mutual Fund industry encapsulates the development
and growth of Fund industry in the Indian financial market highlighting the different
phases which the industry has gone through as well as the profile of the AMCs that
constitute the Indian Mutual Fund Industry.

The concept of Mutual Fund is not really new to India. Investment companies and
investment trusts carrying the objectives of doing the business of investing, reinvesting or
trading in securities or holding securities were started in India on the lines of their
American counterparts. These companies were mainly of the close-ended type and started

25
 the business of investing public money or shareholders’ money in corporate securities.
Some of the companies were Nagarjuna Investment Trust Ltd, First Growth Fund of India
Ltd. HIFCO-Growth Fund Ltd etc. These companies confined their activities to regions
and their contribution was less known as Mutual Fund companies.

Mutual Fund as it is now dawned over India when the Unit Trust of India was set
up under the UTI Act of 1963, with the objective of attracting the small investors and
introducing them to market investments. The history of Mutual Funds in India begins
only since 2013, when UTI launched its first scheme. The industry has since witnessed
the entry of public sector and private sector Mutual Funds, the establishment of a
regulatory authority (SEBI), the promulgation of the Mutual Fund Regulations in 1993
and in 1996 and other regulatory measures for the healthy growth of the industry and
investor protection.

The growth of the Mutual Fund industry in India was very slow till the end of the
1980s primarily due to governmental control and over-regulations of the financial
services industry. Severe entry barriers restricted the growth of the industry in terms of
number of players, mobilisation of savings and creation of assets. Until 1987 the Fund
Industry in India had a monolithic structure, solely controlled by UTI, which changed
with the establishment of Mutual Funds by public sector banks and financial institutions
and finally by the entry of private players in the field in 1993.

Today there are six types of players operating in the Indian market: UTI, public
sector banks, public sector financial institutions, private sector, joint ventures-
predominantly Indian and joint ventures -predominantly foreign.

3A.1. PHASES OF DEVELOPMENT

The Mutual Funds Industry has witnessed four interrelated stages of development
in terms of the entry of players and other major developments in this field.

Phase I - July 1995 to - November 2000

Phase II - November 2000 to - October 2006

26
 Phase III - October 2006 to - December 2009

Phase IV - December 2009 onwards

3A.1.1 PHASE 1-: 1996-2000- MONOPOLY OF UTI

This period was dominated by UTI which prepared the ground for the future
Mutual Funds industry. Operationally, UTI was set up by the RBI, but was later delinked
from the RBI. The first and still one of the largest schemes, launched by UTI was Unit
Scheme 1995. 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-
ended scheme in the country.

Due to the immense popularity of US- 64, UTI launched a reinvestment plan in
1997-98. Another popular scheme, Unit Linked Insurance Plan (ULIP) was launched.
The first decade of UTI’s operations was the formative period. By the end of, UTI had six
lakh unit holders. The unit capital totalled Rs.152 crores and investible funds.

The second decade of operations was one of consolidation and expansion. In this
period UTI was delinked from RBI and open-ended growth funds were introduced. Six
new schemes were launched. By the end of, the investible funds crossed Rs.1000 cores
and the number of unit holders reached 17 lakhs.

New schemes like Children’s Gift Growth Fund (1999) and Mastershare (2000)
were launched. Mastershare could be termed as the first diversified equity investment
scheme in India. The first Indian offshore Fund- India Fund, was launched in August
1999. By the end of June 2000, investible funds totalled over Rs.65.40 crores while the
number of unit holders reached 29.79 lakhs. During the period in Phase I, UTI had grown
large as evidenced by the Table 3.1 and it is graphically presented in Chart 1.

27
 TABLE 3.1

NET ASSETS OF THE INDIAN MUTUAL FUND INDUSTRY – UTI (RS.IN CRORES)

Year on Year Compound annual

Year Net Assets
Growth Rate (%) growth rate(%)1
1996
1997 24.67
1998 25.94 5.15 26.78%
1999 33.86 30.53
2000 48.70 43.83

28
 65.40 34.29

Source: AMFI YearBook-2000, p 32.

1 Compounded Average Growth Rate = {(y1/yo) 1/t-1}*100, where y1=end-year value,

yo=base year value, t = difference of years between the end year and base year

INTERPRETATION

It Concerned the 2000 higher value of Rs.65.40 crore, at the same time 1996 Was earned
lower value of Rs.24.67crore.

The about table so Net asset and year of growth rate for the 2000 was maximum earned
the net profit this year. And the maximum growth rate earned the year was 1999.

The net assets of Indian Mutual Fund industry registered a compounded annual growth
rate of 26.78 percent in its first phase of development.

INTERPRETATION

It concerned the 1999 higher value of Rs.43.83 crore, at the same time 1997 was earned
Lower value of Rs.5.15 crore.

The year on year percentage growth of the net assets over the period in the Phase I is
graphically presented in Chart 3.2

CHART 3.1

NET ASSETS OF THE INDIAN MUTUAL FUND INDUSTRY – UTI

29
 Net asset

2000 65.4

1999 48.7

Net asset
1998 33.86

1997 25.94

1996 24.67

0 10 20 30 40 50 60 70
0

Year

Net Assets

CHART 3.2

PERCENTAGE OF NET ASSETS OF THE INDIAN MUTUAL FUND INDUSTRY – UTI

30
 50

45 43.83

40

35 34.29

30.53
30

25
Series 3

20

15

10

5.15
5

0
1996 1997 1998 1999 2000

year

3A.1.2 PHASE 2: 2000-2006 (ENTRY OF PUBLIC SECTOR FUNDS)

31
 This period was marked by the entry of non-UTI public sector Mutual Funds into the
market, which brought in a degree of competition. With the opening up of the economy, many
public sector financial institutions established Mutual Funds in India. However, the Mutual
Funds industry remained the exclusive domain of the public sector in this period.

The first non-UTI Mutual Fund was launched by the State Bank of India. SBI entered the
Mutual Fund business, by setting up a trust named SBI Capital Market Ltd. on June 29, 2000,
launching its maiden scheme – Magnum Regular Income Scheme. This was followed by the Can
bank Mutual Fund scheme (Can stock and Can share in December, 2000) LIC mutual Fund
(Dhanaraksha–02, and Dhanavridhi– 02 in June 2002) and Indian Bank Mutual Fund scheme
(Saran Pushpin, and Ind.Ratna in January 2003).

The entry of public sector Mutual Funds created waves in the market and attracted small
investors. With the entry of three more Mutual Funds in the market, namely, the Bank of India
Mutual Fund (2003) PNB Mutual Fund (2003) and GIC Mutual Fund (2004) the Fund industry
expanded nearly ten times in terms of Assets Under Management (AUM) between 2000 and
2006, as seen in the following table.

The second phase of development in the Indian Mutual Fund is characterised by the end
of monopoly enjoyed by UTI. With the entry of the public sector banks and institutions, the asset
holding pattern underwent a noticeable change. The percentage of the share of UTI in the net
assets of Mutual Funds steadily declined(Table 3.2) and others gained at the expense of UTI. By
2006, share of UTI was pulled down to 81.66 percent while share of others reached 18.34
percent.

TABLE 3.2

NET ASSETS OF THE INDIAN MUTUAL FUND INDUSTRY –2000-2006

32
 (RS. IN CORES)

Year Net asset Total Yearon Compound

Year Growth annual
Rate (%) growth
Rate (%)

UTI UTI% Others Others%

2000 4563.68 100.00 0.00 4563.68

2001 6738.81 98.08 132.00 1.92 6870.81 50.55
2002 11834.65 87.95 1621.00 12.05 13455.70 95.84
2003 17650.92 92.26 1480.00 7.74 19130.90 42.18 47.9%
2004 21376.48 92.29 1784.99 7.71 23161.50 21.07
2005 31805.69 83.76 6167.78 16.24 37973.50 63.95
2006 38976.81 81.66 8756.69 18.34 47733.50 25.70
Source: AMFI Year Book-2000.

Indian Mutual Funds in its second phase of development achieved a compounded

growth rate of 47.9 percent in net assets. It is graphically given in chart 3.3.

INTERPRETATION

It concerned the 2006 higher value of Rs.47733.50 crore, at the same time 2000 was
earned lower value of Rs.4563.68 crore.

CHART 3.3

NET ASSETS OF INDIAN M.F 2000-2006

33
 50000 47733.5

45000

40000 37973.47

35000

30000

25000 23161.47

19130.92
20000

15000 13455.65

10000
6870.81
4563.68
5000

0
2000 2001 2002 2003 2004 2005 2006

year

3.3 YEAR WISE RESOURCE MOBILISATION BY MUTUAL FUNDS:

During this second phase, significant developments to strengthen the regulatory

framework of the Mutual Fund industry in India took place. Before 2002, there were no
34
regulatory guidelines for the Mutual Funds in India. The first such guidelines were issued by RBI
in October 2002, but they were applicable only to the Mutual Funds floated by banks.
Comprehensive guidelines were issued by the Government of India in June 2003. These covered
all Mutual Funds and made registration with SEBI mandatory.

They also set norms for registration, management, investment objectives, disclosure,
pricing and valuation of securities, among other things. These guidelines were revised and the
Securities and Exchange Board of India (Mutual Funds) Regulations, 2006, came into effect on
20 January 2006. Rules for the formation, administration and management of Mutual Funds in
India were clearly laid down. The Regulations made the formation of AMCs and the listing of
close-ended schemes compulsory with a view to protecting investors’ rights. Disclosure norms
were also tightened.

Another significant development during this period was the opening up of the Mutual
Funds market to the private sector.

The changes in the asset holding pattern followed the changing pattern of resource
mobilisation by Mutual Funds. Share of UTI in the total mobilisation also steadily declined till
2003-2004, then again started rising from 04-05 onwards. See Table 3.3.

TABLE 3.3

35
 YEAR WISE RESOURCE MOBILISATION BY MUTUAL FUNDS (RS.CRORES)

UTI
Year on Year Compound
Pulic Sector Total l of all
Year Growth Growth Rate
MF MF
Rate(%) (%)

Rs. % to Rs. % to Rs. % to

Total Total Total

2000-01 1763 87.23 258 12.77 2021 100

2001-02 3483 92.05 301 7.95 3784 100 87.23
2002-03 5504 82.05 1204 17.95 6708 100 77.27 45.2%
2003-04 3182 51.75 2967 48.25 6149 100 -8.33
2004-05 8686 77.1 2580 22.9 11266 100 83.22
2005-06 11051 84.82 1978 15.18 13029 100 15.65
Source: Sadhak H,2003,p177)

However, the industry as a whole achieved a substantial growth in resource mobilisation

sby registering a compounded annual growth rate of 45.2 percent.

INTERPRETATION

It concerned the 2005-06 higher value of Rs.13,029 crore, at the same time 2000-01 was
earned lower value of Rs.2021 crore.

The trend in mobilisation of resources is presented in Chart 3.4

CHART 3.4

36
 YEARWISE TOTAL RESOURCE MOBILISATION BY MUTUAL FUNDS

14000
13029

12000
11266
period

10000

8000

6708 3A.1.3
Series 3
6149
PHASE
6000
3:

3784
4000

2021
2000

0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

EMERGENCE OF PRIVATE SECTOR FUNDS- (2006-09)

A new era in the Mutual Fund industry began with the permission granted for the entry of
private sector funds in 2006, giving the Indian investors a broader choice of “Fund families” and
increasing competition for the existing public sector Funds. Quite significantly, foreign fund
management companies were also allowed to operate Mutual Funds, most of them coming to

37
India through their joint ventures with Indian promoters. These private sector Funds have
brought in with them the latest product innovations, investment management techniques and
investor servicing technology that make the Indian Mutual Fund industry today a vibrant and
growing financial intermediary.

The first private sector Mutual Fund to launch a scheme was the Madrasbased Kothari
Pioneer Mutual Fund. It launched the open-ended ‘Prima Fund’ in November 2006.

During the year 2006-07, four others also entered the fray – ICICI Mutual Fund, 20th
Century Mutual Fund, Morgan-Stanley Mutual Fund, and Taurus Mutual Fund, launching their
schemes. These five Mutual Funds launched seven schemes and mobilised an amount of
Rs.1559.6 crores during 2006-07, the first year of operation itself.

During the year 2007-08, six more players entered the market- Apple Mutual Fund, JM
Mutual Fund, Shriram Mutual Fund, CRB Mutual Fund, Alliance Mutual Fund, and Birla Mutual
Fund and together they moblised Rs.1326.8 crores.

With the entry of private players, the Indian Mutual Fund industry became full fledged
and the assets under management by the end of 2009, reached Rs.74315.31 cores.

Table 3.4 portrays the pattern of growth in terms of net assets during the third phase of
development of the Fund industry.

TABLE 3.4

NET ASSETS OF INDIAN MUTUAL FUNDS INDUSTRY (PHASE III 2006-2009)

(RS.IN CRORES)

38
 Year UTI Others Year on Compound
Year Growth
Rs. % to Rs. % to Rs. % Growth Rate
Total Total to Rate(%)

Total

2006 38976.81 81.66 8756.69 18.34 47733.5 100

2007 51708.88 82.83 10721.17 17.17 62430.1 100 30.79 16(%)

2008 59618.64 81.71 13348.53 18.29 72967.2 100 16.88

2009 61528.39 82.79 12786.92 17.21 74315.3 100 1.85

Source: AMFI Web site and AMFI Updates-various issues

INTERPRETATION

It concerned the 2009 higher value of Rs.74315.3 crore, at the same time 2006 was
earned lower value of Rs.47733.5 crore.

Table 3.4is presented graphically in chart 3.5

CHART 3.5

NET ASSETS OF INDIAN MUTUAL FUNDS INDUSTRY (PHASE III 2006-2009)

39
 80000

74315.3
72967.2

70000

62430.1

60000

50000
47733.5

40000
Column1

30000

20000

10000

0
2006 2007 2008 2009

period

CHART 3.5 NET ASSETS OF INDIAN MUTUAL FUNDS INDUSTRY (PHASE III
2006-09)

40
 UTI continued to remain the dominant player in the market, inspite of the entry of private
sector and they could also halt the declining trend in the share of net asset experienced until
2005. Throughout the period in the third phase, the share of UTI remained at above 80 percent of
the total net assets. However, the compound growth rate of net assets in the industry in this phase
declined to 16 percent from the 47.9 percent during the second phase.

In terms of mobilisation of funds the first three years of phase III worked well, though the
initial collections by the private sector was slow. However, year 2008-09 was a disappointing
one for the industry. The total mobilisation by all Mutual Funds, including UTI fell drastically to
Rs.10097 cores. Table 3.5 depicts the position of mobilisation during this period.

TABLE 3.5:- YEAR-WISE RESOURCE MOBILIZATION BY MF 2006-09 (RS.IN

CRORES)

In 2008-09, the total mobilization registered an negative growth of -52.59 percent

Over the previous year. The share of public sector fell from Rs.2143 crores in the previous year
to ameagre Rs. 296 crores and further to Rs. 151 crores in 2009-10. Private sector also presented
a poor show by falling from 2084 crores in 2007-08 to a dismal low of Rs. 346 crores in 2009-10.

TABLE 3.5

YEAR-WISE RESOURCE MOBILIZATION BY MF 2006-09 (RS.IN CRORES)

41
 Year UTI Public Private Total of all Year on Year
Sector Sector MF Growth Rate
Rs. % Rs. % to Rs. % Rs. % (%)
to to to Computer
Total Growth%
Total Total Total -3.3%

2006-07 9288 83.20 416 3.73 1459 13.07 11163 100

2007-08 9500 69.21 2143 15.61 2084 15.18 13727 100 22.97
2008-09 5900 90.66 296 4.55 312 4.79 6508 100 -52.59
2009-10 9600 95.08 151 1.50 346 3.43 10097 100 55.15
Source: AMFI Web site and AMFI Updates-various issue

INTERPRETATION

It concerned the 2007-08 higher value of Rs.13,727 crore, at the same time 2008-09 was
earned lower value of Rs. 6508 crore.

Pattern of development in mobilization of resources in phase III is graphically presented in Chart 3.6

CHART 3.6

42
 PATTERN OF RESOURCE MOBILIZATION 2006-09

10097
346
2009-10
151
9600

6508
312
2008-09
296
5900
mf
privatr
PUBLIC
13727
UTI
2084
2007-08
2143
9500

11163
1459
2006-07
416
9288

0 2000 4000 6000 8000 10000 12000 14000 16000

years

3A. 1.4 PHASE 4- 2009 ONWARDS (SEBI REGULATION FOR MFS)

43
 The emergence of competition following the free entry of private sector funds exposed
Several structural weaknesses in the Indian financial sector. The initial euphoria attending the
reforms evaporated as various symptoms of market failure came to the fore. There had been
many loose links in the reform process and with capital market operations adversely affected by
the lack of supervisory skills and incomplete regulations, the Mutual Fund industry naturally
suffered too.

Reading the danger singals, SEBI initiated a number of measures from 2008 onwards to
streamile the operations of Mutual Funds which culminated in a major and comprehensive
revision of the Mutual Fund Regulations and issued the revised SEBI (Mutual Fund) Regulations
in 2009.

As part of these measures, SEBI issued standard offer documents and memoranda
containing key information. The guidelines issued by RBI for Money Markets Funds were
incorpoprated in the SEBI Regulations.

3A.1.4.1 NET ASSETS OF FUND INDUSTRY: GROWTH PATTERN DURING 2010-17

Amidst intermittent favourable and unfavourable forces, the assets and resources
mobilised grew substantially during this period. Table 3.6 presents the pattern of growth in net
assets during this phase.

TABLE 3.6

NET ASSETS OF MUTUAL FUND INDUSTRY 2010-2017 (RS.IN CRORES)

Year UTI Non – UTI private Total of all MF Year

44
 PublicSector Sector On
year
Rs. % Rs. % Rs. % of Rs. % of
of of Total Total Growth
Total Total Rate
(%)
2010-11 57554 78.77 7344 10.05 8172 11.18 73070 100
2011-12 53320 70.78 8292 11.01 13720 18.21 75332 100 3.1
2012-13 76547 67.74 11412 10.10 25046 22.16 113005 100 50.01
2013-14 58017 64.05 6840 7.55 25730 28.40 90587 100 -19.84
2014-15 51434 51.13 8204 8.16 40956 40.71 100594 100 11.05
2015-16 13516 17.01 10426 13.12 55522 69.87 79464 100 -21.01
2016-17 34624 24.8 104992 75.2 139616 100 75.69
Source: Compiled from:

INTERPRETATION:- (CHART 3.7)

It concerned the 2010-11 higher UTI value of Rs.78.77, at the same time 2015-16 was
earned Lower value of Rs .17.01.

It concerned the 2016-17 higher non UTI value of Rs. 24.8 at the same time 2013-14 was
earned lower value of Rs. 7.55.

It concerned the 2016-17 higher value Rs. 75.2. at the same time 2010-11 was earned
lower value of Rs. 11.18.

INTERPRETATION:- (CHART-3.8)

It concerned the 2010-11 higher value of Rs. 73070 at the same time 2016-17 was earned

Lower value of Rs. 139616.

INTERPRETATION:- (CHART-3.9)

It concerned the 2016-17 higher value Rs. 75.69 at the same time 2015-16 was

lower value of Rs. -21.01.

45
 CHART 3.7

ASSET - HOLDING PATTERN 2010-17

120

100
11.18
18.21
22.16
28.4
10.05
80 40.71
11.01
10.1
7.55
69.87
75.2 Series 3
60
Series 2
8.16 Series 1

40 78.77
70.78 67.74
64.05
51.13
13.12
20

24.8
17.01
0
0
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Net Assets (Percentages)

UTI Non UTI Public Sector Private Sector

The growth in net assets during the period from 2010-2017 is presented graphically in chart 3.8

46
 CHART 3.8

PATTERN OF GROWTH IN NET ASSETS DURING 2010-2017

160000

139616
140000

120000
113005

100594
100000
90587

79464
80000 75332
73070

60000

40000

20000

0
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

year

Year on year growth rate is presented in the following chart -3.9

47
 CHART 3.9

PERCENTAGE GROWTH YEAR ON YEAR – IN MF INDUSTRY

100

80 75.69

60

50.01

40

Series 3

20
11.05

3.1
0
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

-20
-19.84 -21.01

-40

year

MUTUAL FUNDS IN INDIA: PRESENT SCENARIO AT A GLANCE

48
 The following Table recapitulates the profile of the AMCs as on 31st March 2006.

Name of Name and Sponsor Trustee Custodia Assets Pattern of

MF & Address n Under Holding
Date of Of AMC Manage
Setting Up ment
(Rs.
Cross)
1 ABN ABN AMRO ABN AMRO ABN AMRO Deutsch 2769 JV
AMRO 15- Asset BANK. Trustee e Bank (Predominant.
April-2005 Managemen (India) Pvt. Foreign.)
t India Ltd. , Ltd.
Mum bai-21
2 BENCHMA Benchmark Niche Benchmark City 982 Domestic
RK MF 12 Asset Mgt. Financial Trustee Bank
JUNE 2001 Co.Pvt.Ltd., Services Pvt. Co.Pvt.Ltd. ICICI
Mumbai-20 Ltd Bank
Ltd.
3 BIRLA Birla Sun life Birla Global Birla Sun life JP 50:50
SUNLIFE Asset Mgt. Finance Ltd. Trustee Co. Morgan 15019
24 Dec. Ltd. Ltd. Chase
1994 Mumbai-93 Bank

4 BOB MF BOB Asset Bank of 191 100% Domestic

30, Oct Managemen Baroda Deutsch
1992 t Co. Ltd. e Bank
Mumbai –23
5 CANBANK Can bank Canara Bank HDFC 2223 100% Domestic
MF 15 Dec Investment Bank
1987 Managemen Ltd.
t Services Deutsch
Ltd. e Bank
Mumbai .38

6 CHOLAMA Cholamanda HDFC 2007 100%

NDAL AM lam Cholamanda Cholamanda Bank Domestic
MF 30 Apr Cazenovia – lam lam – Ltd.
1994 Asset Investment Cazenovia

49
 Managemen & Finance Trustee
t Co. Ltd Co. Ltd Company
Chennai –01 Ltd
7 DEUTSCHE Deutsche Deutsche Deutsche JP 2535 JV(predominantl
MF 28 Oct Asset Asset Mgt. Trustee Morgan y foreign)
2002 managemen (Asia) Ltd. Services Chase
t (Deem). (India) Pvt. Bank
(India) Pct. Ltd.
Ltd Mumbai
–01
8 DSP Merrill DSP Merrill City 10795 60:40
DSP DSP Merrill Lynch L:td. Lynch Bank
MERRIL Lynch Merrill Trustee Co.
LYNCH 16 Investment Lynch Pvt. Ltd.
Dec 1996 Managers Investment
Ltd. Mumbai Mgrs. L.P
–21
9 ESCORTS Escort Asset Escorts Escorts HDFC 164 100% Domestic
MF 15 Mgt.Ltd. Finance Ltd. Investment Bank
April 1996 New Delhi- Trust Ltd. Ltd.
21
10 FIDELITY Fidelity Fund Fidelity Fidelity JP 3663 JV
MF 17 Feb Mgt. Pvt. Internationa Trustee Morgan (predo.foreign)
2005 Ltd. l Investment Company Chase
Mumbai21 Advisors Pvt. Ltd. Bank,
Mumbai

11 FRANKLIN Templeton Templeton Franklin City 17827 25:75

TEMPLETO Asset Mgt. Internationa Templeton Bank.
N 19 Feb (India) Pvt. l Inc. Trustee
1996 Ltd. Mumbai Services Pvt.
–21 Ltd.

12 HDFC MF HDFC Asset Housing HDFC HDFC 21550

30 June Mgt. Co. Ltd Dep’t. Trustee Co. Bank 100% Domestic
2000 Mumbai-20 Finance Ltd. Ltd.
Corn. Ltd.

13 HSBC MF HSBC Asset HSBC Board of JP 9221 JV(predo.

27 May Mgt. (India) Securities Trustee Morgan- foreign)
2002 Pvt. Ltd. &Capital HSBC Chase
Mumbai –01 markets Mutual Bank

50
 (India) Pvt. Fund. Mr.
Ltd. M.P Gawain
as Chairman

14 ING VYSYA ING ING Group Board of Standar Dom: Foreign

MF 11 Feb Investment trustees d 1961 25:75
1999 Mgt. India with A Deal Chartere
(P) Ltd. as Chairman d Bank
Mumbai-36
15 JM JM Capital JM Financial JM Trustee HDFC 2596 100% Domestic
FINANCIAL Mgt. Ltd. and Co. Ltd. Bank
MF 15 Mumbai-21 Investment Ltd.
Sept 1994 Consultancy
Services Ltd.

16 KOTAK Kodak Kodak Kodak Deutsch 9941 100% Domestic

MAHINDR Mahindra Mahindra Mahindra e Bank
A 23 June Asset Mgt. Finance Ltd. Trustee Co. Ltd.
1998 Co. Ltd. Ltd.
Mumbai –21
17 LIC MF 19 Jevons Bema LIC of India Board of Stock 5229 100% Domestic
June 1989 Sabayon Trustees Holding
AMC Ltd with N.C Corpora
Mumbai –20 Sharma as tion of
Chairman India
Ltd.

18 MORGAN Morgan Board of 2892 Domestic:

STANLEY 5 Stanley Morgan Trustees Stock Foreig. 25:75
Nov. 1994 Deanwitter Stanley with Dr. Holding
Investment Deanwitter Abed Husain Corpora
Mgt. Pvt. & Company as Chairman tion of
Ltd. India
Mumbai – Ltd.
01
19 PRINCIPAL Principal Principal City 6489 Domestic:Foreig
25 Nov PNB Asset financial Principal Bank 35:65
1994 Mgt. Pvt. Services Inc. Trustee Co.
Ltd. Bombay Pvt. Ltd.
–20

20 PRUDENTI Prudential Prudential Prudential HDFC Domestic:Foreig

AL ICICI 25 ICICI Asset Plc. ICICI Ltd. ICICI Trust Bank 23502 55:45
Aug 1993 Mgt. Co. Ltd. Ltd.

51
 Ltd.
Mumbai –
38

21 QUANTU Quantum Quantum Quantum The 11 100%Domestic

M Asset Advisors Trustee Honking
MUTUAL Mgt.Co. Pvt.Ltd. CO.Pvt.Ltd. &Shang
FUND Pvt.Ltd. hai
2,Dec.200 Mumbai,21. Banking
5 Corpora
tion Ltd.

22 RELIANCE Reliance Reliance Reliance Deutsch 24670 100% Domestic

MF 30 Capital Asset Capital Ltd. Capital e Bank
June 1995 Mgt Ltd. Trustee Co. Ltd.
Mumbai –21 Ltd.

Source: AMFI website

FINDINGS

52
 The net assets of the Indian mutual fund industry-UTI in 2000 was a
higher value of Rs.65.40 crore, at the same time 1996 earned lower value
of Rs.24.67crore.
 The net assets of the Indian mutual fund industry-UTI that 1999 have
higher value of Rs.43.83 crore, at the same time 1997 earned Lower value
of Rs.5.15 crore.
 The net assets of the Indian mutual fund industry found that 2006 have
higher value of Rs.47733.50 crore, where are in 2000 showed lower value
of Rs.4563.68 crore.
 The year wise resource mobilization by mutual funds in 2005-06 was a
higher value of Rs.13,029 crore, where are in 2000-01 showed lower
value of Rs.2021 crore.
 The net assets of Indian mutual funds industry in 2009 have higher value
of Rs.74315.3 crore, at the same time 2006 was earned lower value of
Rs.47733.5 crore.
 The year wise resource mobilization by MF in 2007-08 was a higher
value of Rs.13,727Crore, where are in 2008-09 showed lower value of
Rs.6508 crore.
 The net assets of mutual fund industry in 2010-11 UTI was a higher
percentage of 78.77%, Where are in 2015-16 showed Lower percentage
of 17.01%.
 The net assets of mutual fund industry in 2016-17 non UTI was a higher
percentage of 24.8% Where are in 2013-14 showed lower percentage of
7.55%.
 The net assets of mutual fund industry in 2016-17 private sector was a
higher percentage of 75.2% Where are in 2010-11 showed lower
percentage of 11.18%.

53
 The net assets of mutual fund industry in 2010-11 Total of all MF was a
higher value of Rs. 73070 Where are in 2016-17 was earned Lower
value of Rs.139616.
 The net assets of mutual fund industry in 2016-17 was a higher
percentage of 75.69% Where are in 2015-16 showed lower percentage
of -21.01%.

54
SUGGESSIONS

Suggestions can be divided into two parts

(a) For Mutual Fund Companies

(b) Mutual Fund Investors

AMFI should conduct adequate awareness programs about the usefulness of

Following suggestions can be incorporated by the Mutual Fund Companies.

 Investment in mutual funds and provide information to public regarding

differensst new schemes. AMFI should frequently conduct short term courses for

investor education. Even college students should be made aware of investment

in mutual fund schemes.

 The 97% of respondents were ready to invest in SIP (systematic investment plan).

This shows the popularity of SIP Scheme. The mutual fund companies should

publicize SIP and encourage investors to invest more in SIP as it will help in

compulsory savings.

 Government should see that Mutual Fund companies follow corporate

governance regulations. All mutual fund investors want transparency. Strict

regulations should be enforced by SEBI with regard to Corporate Governance.

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  Appropriate measures should be taken by the government, AMFI and SEBI to

weed out the discouraging factors and help to provide a conducive climate for

growth of mutual fund in the country. AMCs have to ensure more professional

outlook for better results.

 Besides relying on brokers, friends, media, newspapers, professional advisors,

mutual fund investors should be encouraged to use other sources of information

such as financial journals, internet and brochures of mutual funds. Mutual Fund

Companies should take this aspect into consideration.

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SUGGESTIONS FOR MUTUAL FUNDS INVESTORS

 Financial goals vary, based on Investors age, lifestyle, financial independence,

family commitment and level of Income and expenses among many other factors.

 Mutual Investors should choose the right Mutual Fund Scheme which suits

their requirements.

 It is suggested that the investors should not consider only one or two factors for

investing in mutual fund but they should consider other factors such as higher

return, degree of transparency, efficient service, fund management and

Reputation of mutual fund in selection of mutual funds.

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CONCLUSION

The People save in Mutual Funds for different purposes i.e. children education,

children marriage, house construction, retirement planning and tax planning. It

was found that main purpose of savings in Mutual Fund by the respondents was

for children education (56.33%) followed by Retirement Planning

(48.33%).Tax planning was given the third priority by the respondents. People

engaged in Business gave the first preference to children education (68.7%)

followed by professionals (58.8%) and then salaried class (53.7%).

In case of the relationship between monthly income and purpose of savings, a

unique trend has emerged. As the income increases, priority is given to tax

planning. Majority of the respondents gave the first preference to children

education followed by retirement planning.

Savings A/c, Mutual Funds and Insurance are the popular tools of investment

by the respondents of Surat, Ahmedabad and Vadodara cities of Gujarat state.

Out of total respondents 71% respondents gave preference to invest in Mutual

Funds, 69% respondents gave preference to invest in saving A/c, and 65.3%

respondents gave the preference to Insurance.

Preference for Mutual Funds schemes based on structure given by respondents

of Surat, Ahmedabad and Vadodara shows that most of respondents (76%)

prefer to invest their money in open ended schemes of Mutual Funds.\

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BIBLIOGRAPHY

REFERENCE BOOKS:

1) Chandra Prasanna, "The Investment Game ” Tata Mcé Graw Hill Publishing, New Delhi.

2) Dave, S. A. ,”Mutual Funds: Growth and Development” The Journal of the Indian Institute of
Bankers, Jan March, 1992.

3) Desai Vasant , “Indian Financial System” Himalaya Publishing House, New Delhi.

4) Fisher Donald E. and Jordan Ronald 1, “Security Analysis and Portfolio Management” Prntice
Hall of India, Pvt. Ltd. Sixth Edition, New Delhi.

5) Pathak Bharati V., “Indian Financial System” Pearson Education Publishing, New Delhi.

6) Ramola K.S., “Mutual Fund and the Indian Capital Market’ Yojana, Vol. 36, No.11, June 30,
1992. .

7) Vyas,B.A.”Mutual FundsBoon to the Common Investors” Fortune India, July 16, 1990.

8) www amhindiacom

9) www.cic.com

10) www.indiainfoline.com

1 l) www.mutualfundindia.com 12) www.rbi.com

13) www.sebi.com

14) www.mone controlcom

15) www. .rudentialchanneleom

16) www.icraindia.com

l7) www.camsonlime.com

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