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investors for the purpose of investing in securities such as stocks, bonds, money market
A mutual fund is just the connecting bridge or a financial intermediary that allows a group of
investors to pool their money together with a predetermined investment objective. The
mutual fund will have a fund manager who is responsible for investing the gathered money
into specific securities (stocks or bonds). When you invest in a mutual fund, you are buying
units or portions of the mutual fund and thus on investing becomes a shareholder or unit
Mutual funds are considered as one of the best available investments as compare to others
they are very cost efficient and also easy to invest in, thus by pooling money together in a
mutual fund, investors can purchase stocks or bonds with much lower trading costs than if
they tried to do it on their own. But the biggest advantage to mutual funds is diversification,
The mutual fund is structured around a fairly simple concept, the mitigation of risk through
the spreading of investments across multiple entities, which is achieved by the pooling of a
number of small investments into a large bucket. Yet, it has been the subject of perhaps the
most elaborate and prolonged regulatory effort in the history of the country. The mutual fund
industry has grown to gigantic proportions in countries like the USA, in India it is still in the phase of infancy.
The origin of the Indian mutual fund industry can be traced back to 2064 when the Indian
Government, with a view to augment small savings within the country and to channelize
these savings to the capital markets, set up the Unit Trust of India (UTI). The UTI was setup
under a specific statute, the Unit Trust of India Act, 2063. The Unit Trust of India launched
its first open-ended equity scheme called Unit 64 in the year 2064, which turned out to be one
of the most popular mutual fund schemes in the country. In 2087, the government permitted
other public sector banks and insurance companies to promote mutual fund schemes.
Pursuant to this relaxation, six public sector banks and two insurance companies’ viz. Life
Insurance Corporation of India and General Insurance Corporation of India launched mutual
Securities Exchange Board of India, better known as SEBI, formulated the Mutual Fund (Regulation) 2093,
which for the first time established a comprehensive regulatory framework for the mutual fund industry. This
proved to be a boon for the mutual fund industry and since then several mutual funds have been set up by the
private sector as well as the joint sector. Kothari Pioneer Mutual fund became the first from the private sector to
establish a mutual fund in association with a foreign fund. Since then several private sector companies have
established their own funds in the country, making mutual fund industry one of the most followed sector by
critics and investors alike. The share of private sector mutual funds too has gone up rapidly.
1.2 NEED FOR THE STUDY
1. The mutual funds are dynamic financial intuitions which play a crucial role in the economy
2. The activities of mutual funds have both short and .long term impact on the savings in the
3. Mutual funds, trust, assist the process of financial deepening & intermediation.
4. To banking at the same time they also compete with banks and other financial intuitions.
5. India is one of the few countries to day maintain a study growth rate is domestic savings.
1. To show the wide range of investment options available in Mutual Funds by explaining
2. To help an investor to make a right choice of investment, while considering the inherent
risk factors.
5. To find out the various problems faced by Indian mutual funds and possible solutions.
1.4 SCOPE OF THE STUDY
1. The study is limited to the analysis made for a Growth scheme offered by the asset
management company.
2. Each scheme is calculated their risk and return using different performance
measurement theories
3. The study analyze the performance of company based on that valid suggestion will be
Research Methodology is the systematic, theoretical analysis of the methods applied to a field
of study. It comprises the theoretical analysis of the body of methods and principles
Secondary Data
The secondary data collected from the different sites, broachers, newspapers, company offer
documents, different books and through suggestions from the project guide and from the
comparison to the entire market or a benchmark. Beta is used in the Capital Asset
Pricing Model(CAPM), which calculates the expected return of an asset based on its
beta and expected market returns. Beta is also known as the beta coefficient.
Alpha: “Alpha" (the Greek letter α) is a term used in investing to describe a strategy's
ability to beat the market, or it's "edge." Alpha is thus also often referred to as “excess
return” or “abnormal rate of return,” which refers to the idea that markets are efficient,
and so there is no way to systematically earn returns that exceed the broad market as a
whole. Alpha is often used in conjunction with beta (the Greek letter β), which
measures the broad market's overall volatility or risk, known as systematic market risk.
calculates the strength of the relationship between the relative movements of the two
variables.
metric for determining how much excess return was generated for each unit of risk
taken on by a portfolio. Excess return in this sense refers to the return earned above the
return that could have been earned in a risk-free investment. Although there is no true
risk-free investment, treasury bills are often used to represent the risk-free return in the
Treynor ratio.
Sharpe’s Ratio: The Sharpe ratio was developed by Nobel laureate William F. Sharpe,
and is used to help investors understand the return of an investment compared to its
risk. The ratio is the average return earned in excess of the risk-free rate per unit of
1. The study is conducted in short period, due to which the study may not be detailed inall
aspects.
2. The study is limited only to the analysis of different schemes and its suitability to
3. The study is based on secondary data available from monthly fact sheets, web sites;
offer documents, magazines and newspapers etc., as primary data was not accessible.
6. The data collected for this study is not proper because some mutual funds are not
7. The study is not exempt from limitations of Sharpe Treynor and Jenson measure.