A

PROJECT REPORT
ON
COMPARISON OF
VARIOUS MUTUAL FUND

Submitted By:-

AMIT YADAV
ARMY INSTITUTE OF MANAGEMENT AND TECHNOLOGY
 ACKNOWLEDGEMENT

I take immense pleasure in completing this project and submitting this final project report.
The whole summer internship period with SBI MUTUAL FUND has been full of learning
and sense of contribution towards the organization. I would like to thank SBI MUTUAL FUND
for giving us an opportunity of learning and contributing through this project. I also take this
opportunity to thank all those people that made this experience a memorable one.
A successful project can never be prepared by the single efforts of the person to whom
project is assigned, but it also demand the help and guardianship of some conversant person who
helped the undersigned actively or passively in the completion of successful project.

In this context as a student of ARMY INSTITUTE OF MANAGEMENT AND

TECHNOLOGY,GREATER NOIDA I would first of all like to express my gratitude to MISS.
SHIVANI AGGARWAL for assigning me such a worthwhile topic “COMPARISON OF
VARIOUS MUTUAL FUNDS ” to work upon in SBI MUTUAL FUND.
During the actual project work Miss. Shivani aggarwal ( Relationship Manager) has been a
source of inspiration through his constant guidance, personal interest, encouragement and help. I
convey my sincere thanks to him. In spite of his busy schedule he always found time to guide me
through the project. I am also grateful to him for reposing confidence in my abilities and giving
me the freedom to work on my project.
The project couldn’t have been complete without timely and vital help of other office staff.
Special thank to Mr.Dilawar, Mr. Vijay Singh, Ms. Sonal Chopra, Ms. Sweta for their invaluable
guidance, keen interest, cooperation, inspiration and of course moral support through out my
project session.

INDEX
Content Pg no.

1. Executive Summary 4
2. Company Profile 5
3. Introduction
Mutual Funds 18
Advantage of MF 19
Performance of Mf in India 21
Types of MF 24
AMFI 29
Drawbacks 33
How to Compare MFs 34
4. Analysis 39
5. Project Findings and Recommendations 55
6. Bibliography 58
7. Questionnaire 59
 EXECUTIVE SUMMARY

The project titled “MUTUAL FUND-AWARENESS AND SCOPE” is being carried out
for KARVY STOCK BROKING LTD.
The evaluation of financial planning has been increased through decades, which is best seen in
customer rise. Now a day’s investment of saving has assumed great importance.

According to the study of the markets, it is being observed that markets are doing well in Mutual
fund. In near future a proper financial planning is required to invest money in all type of
financial product because there is good potential in market to invest.

In this project the great emphasis is given to the investor’s mind in respect to investment in
Mutual Fund .The needs and wants of the client is taken into consideration.

I hope KARVY, Pune will recognize this as well as take more references from this project report.
The main objective of this project is to know the Awareness of Mutual Fund among investors,
investing pattern of people of different financial background and also scope of mutual fund in
future.

IT sector has been given more emphasis for the study of the project because it is the only sector
where all type of Age group, Income class and different level of people are represented. After
analyzing the feedback the conclusion has been made that the Indian financial market is having
lots of potential customer the only thing is to give a proper guidance to the prospective
customers.

INTODUCTION TO
MUTUAL FUNDS
 Mutual Funds
A mutual fund is simply 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 pooled money into specific securities (usually
stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the
mutual fund and become a shareholder of the fund.

Mutual funds are one of the best investments ever created because they are very cost efficient
and very easy to invest in (you don't have to figure out which stocks or bonds to buy). 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.

A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such as
shares, debentures and other securities. The income earned through these investments and the
capital appreciation realized are shared by its unit holders in proportion to the number of units
owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost. The flow chart below describes broadly the working of a mutual fund:
Mutual Fund Operation Flow Chart
MUTUAL FUND ADVANTAGE
Mutual Fund Investing vs. Stock Investing
It seems strange to compare mutual funds to stocks since mutual funds are primarily composed
of stocks, but it is important to distinguish the two because there are some notable advantages to
using mutual funds.

Get Focused
Investing in individual stocks can be fun because each company has a unique story. However, it
is important for people to focus on making money. Investing isn't a game. Your financial future
depends on where you put you hard earned dollars and it shouldn't be taken lightly.

Diversification
There is no greater advantage to using mutual funds than diversification. Do you honestly
believe wealthy investors purchase just a couple of stocks? Of course not! If they are not using
mutual funds (many do), than they are purchasing a large number of stocks. Smart investors
diversify because it greatly reduces risk without sacrificing returns.

Professional Management
By purchasing mutual funds, you are essentially hiring a professional manager at an especially
inexpensive price. It would be a bit cocky to think that you know more than mutual fund
manager. These managers have been around the industry for a long time and have the academic
credentials to back it up. Saying you could outperform a mutual fund manager is similar to a
football fan sitting on their couch saying "I could have made that catch" -possible, but not likely.
Even if some of us are better at picking stocks than a professional and their support staff, most of
us would not want to spend the amount of time it takes to watch, research and trade the market
on a daily basis.

Efficiency
By pooling investors' monies together, mutual fund companies can take advantage of economies
of scale. With large sums of money to invest, they often trade commission-free and have personal
contacts at the brokerage firms.

Ease of Use
Can you imagine keeping track of a portfolio consisting of hundreds of stocks? The bookkeeping
duties involved with stocks are much more complicated than owning a mutual fund. If you are
doing your own taxes, or are short on time, this can be a big deal.

Liquidity
If you find yourself in need of money in a short amount of time, mutual funds are highly liquid.
Simply put in your order during the day and when the market closes a check will be sent to you
or you can have it wired to a bank account. Stocks can be much more difficult depending on
what kinds of stocks you are invested in. CD's offer no liquidity (not without a hefty fee) and
bonds can be difficult, too. Some mutual funds also carry check writing privileges, which means
you can actually write checks from the account, similar to your checking account at the bank.

Cost
Mutual funds are excellent for the new investors because you can invest small amounts of money
and you can invest at regular intervals with no trading costs. Stock investing, however, carries
high transaction fees making it difficult for the small investor to make money. If an investor
wanted to put in $100 a month into stocks and the broker charged $15 per transaction, their
investment is automatically down 15 percent every time they invest. That is not a good way to
start off!
Wealthy stock investors get special treatment from brokers and wealthy bank account holders get
special treatment from the banks, but mutual funds are non-discriminatory. It doesn't matter
whether you have $50 or $500,000, you are getting the exact same manager, the same account
access and the same investment.

Risk
In general, mutual funds carry much lower risk than stocks. This is primarily due to
diversification (as mentioned above). Certain mutual funds can be riskier than individual stocks,
but you have to go out of your way to find them.
With stocks, one worry is that the company you are investing in goes bankrupt. With mutual
funds, that chance is next to nil. Since mutual funds typically hold anywhere from 25-5000
companies, all of the companies that it holds would have to go bankrupt.
I won't argue that you shouldn't ever invest in individual stocks, but I do hope you see the
advantages of using mutual funds and make the right choice for the money that you really care
about.

Mutual Funds Industry in India

The origin of mutual fund industry in India is with the introduction of the concept of mutual fund
by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987
when non-UTI players entered the industry.

In the past decade, Indian mutual fund industry had seen dramatic improvements, both quality
wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the
Assets Under Management (AUM) was Rs. 67bn. The private sector entry to the fund family
rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it reached the height of 1,540 bn.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than
the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian
banking industry.
The main reason of its poor growth is that the mutual fund industry in India is new in the
country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it
is the prime responsibility of all mutual fund companies, to market the product correctly abreast
of selling.
The mutual fund industry can be broadly put into four phases according to the development of
the sector. Each phase is briefly described as under.

First Phase - 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the
Reserve Bank of India and functioned under the Regulatory and administrative control of the
Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development
Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The
first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700
crores of assets under management.

Second Phase - 1987-1993 (Entry of Public Sector Funds)

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Can bank Mutual
Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov
89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in
1990. The end of 1993 marked Rs.47, 004 as assets under management.

Third Phase - 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in
which the first Mutual Fund Regulations came into being, under which all mutual funds, except
UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual
Fund) Regulations 1996.The number of mutual fund houses went on increasing, with many
foreign mutual funds setting up funds in India and also the industry has witnessed several
mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total
assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under
management was way ahead of other mutual funds.

Fourth Phase - since February 2003

This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the
Specified Undertaking of the Unit Trust of India with AUM of Rs.29, 835 crores (as on January
2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and
under the rules framed by Government of India and does not come under the purview of the
Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered
with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the
erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of AUM and with the
setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with
recent mergers taking place among different private sector funds, the mutual fund industry has
entered its current phase of consolidation and growth. As at the end of March 2006, there were
29 funds.
 Types of Mutual Funds Schemes in India
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.
TYPES OF MUTUAL FUND SCHEMES

• By Structure
○ Open - Ended Schemes
○ Close - Ended Schemes
○ Interval Schemes

• By Investment Objective
○ Growth Schemes
○ Income Schemes
○ Balanced Schemes
○ Money Market Schemes

• Other Schemes
○ Tax Saving Schemes
○ Special Schemes
 Index Schemes
  Sector Specific Schemes

TYPES OF MUTUAL FUNDS

Mutual Funds have specific investment objectives such as growth of capital, safety of
principal current income or tax exempt income, one can select one fund or any number of
different funds to help one meets ones specific goals. In general mutual fund fall under 3 general
categories: -

➢ Equity fund invest in shares of common stocks.

➢ Fixed income funds invest in government or corporate securities, which offer fixed rate
of returns.
➢ Balanced fund invest in a combination of both stocks and bonds

OPEN ENDED SCHEMES:-

Open-ended schemes do not have a fixed maturity period. Investors can buy or sell units at
NAV- related prices from and to the mutual fund on any business day. These schemes have
unlimited capitalization, open-ended schemes do not have a fixed maturity, there is no cap on the
amount you can buy from the fund and the unit capital keep growing. These funds are not
generally listed on any exchange.
Open-ended schemes are preferred for their liquidity. Such funds can issue and redeem
units any time during the life of schemes. Hence unit capital of open-ended funds can fluctuate
on a daily basis. The advantages of open-ended schemes are: -

1. Any time exit option

2. Any time enter option.
CLOSED ENDED SCHEMES:-

Close-ended schemes have fixed maturity periods. Investors can buy into these funds
during the period when these funds are open in the initial issue. After that such scheme cannot
issue new units except in case of bonus or right issue. However after the initial issue you can buy
or sell units

of the schemes on the stock exchange where they are listed. The market price of the unit could
vary from the NAV of the schemes due to demand and supply factor

AGGRESSIVE GROWTH FUNDS :-

These funds seek to provide maximum growth of capital with secondary emphasis on
dividend or interest income. They invest in common stocks with a high potential for rapid growth
and capital appreciation.
Aggressive growth funds are suitable for those investors who can afford to assume the risk
of potential loss in value of their investment in the hope of achieving substantial and rapid gains.
They are not suitable for investors who must conserve their principal or who must maximize
their current income.

GROWTH FUNDS:-

Like aggressive growth funds, growth fund generally invests in stocks for growth rather
than income. They are considered more conservative in their approach because they usually
invest in established companies to achieve long-term growth. Growth fund provides low current
income but the investor principal is more stable then it would be in an aggressive growth fund.
While the growth potential may be less over the short term, many growth funds have superior
long-term performance records.
 These funds are suitable for growth oriented investors but not investors who are unable to
assume risk or who are dependent on maximizing current income from there investments.

GROWTH AND INCOME FUNDS:-

Growth and income funds seek long-term growth of capital as well as current income. The
investments strategies use to reach these goals vary among funds.
Growth and income funds have low to moderate stability of principal and moderate
potential for current income and growth. They are suitable for investors who can assume some
risk to achieve growth of capital but want to maintain a moderate level of current income.

FIXED INCOME FUNDS:-

The goal of fixed income fund is to provide high current income consistent with the level
of capital. Growth of capital is of secondary importance.
Fixed income funds offer a higher level of current income than money market funds, but a
lower stability of principal. Fixed income funds are suitable for investors who want to maximize
current income and who can assume a degree of capital risk in order to do so.

EQUITY FUNDS:-

Funds that invest in stocks represent the largest category of mutual fund. Generally the
investment objective of this class of fund is long-term capital growth with some income. There
are however many type of equity funds.

BALANCED FUNDS:-
 The Balanced funds aims to provide both growth and income. These funds invest in both
shares and fixed income securities in the proportion indicated in their offer documents. It is an
idea for investors who are looking for the combinations of income and moderate growth.

MONEY MARKET FUNDS/ LIQUID FUNDS:-

For the cautious investors these funds provide a very high stability of principal while
seeking a moderate to high current income. They invest in highly liquid; virtually risk free, short-
term debt securities of agencies of the Indian government, banks and corporation and treasury
bills. Because of their short-term investments, money market mutual funds are able to keep a
virtually constant unit price; only the yield fluctuates.
Money market funds are suitable for those investors who want high stability of principal and
current income with immediate liquidity.

SPECIALITY / SECTOR FUNDS:-

These funds invest in securities of a specific industry or sector of the economy such as
health care, technology, leisure, utilities or precious metals. The funds enable investor to
diversify holding among many companies within an industry, a more conservative approach than
investing directly in one particular company.
Sector funds offer a opportunity for sharp capital gains in cases where the fund’s industry is
“in favor” but also entail the risk of capital losses when the industry is out of favor. While sectors
funds restrict holdings to a particular industry, other specialty funds such as index funds gives
investors a broadly diversified portfolio and attempt to mirror the performance of various market
averages.
 Association of Mutual Funds in India (AMFI)

With the increase in mutual fund players in India, a need for mutual fund association in India
was generated to function as a non-profit organisation. Association of Mutual Funds in India
(AMFI) was incorporated on 22nd August, 1995.

AMFI is an apex body of all Asset Management Companies (AMC) which has been registered
with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members.
It functions under the supervision and guidelines of its Board of Directors.

Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a
professional and healthy market with ethical lines enhancing and maintaining standards. It
follows the principle of both protecting and promoting the interests of mutual funds as well as
their unit holders.

The objectives of Association of Mutual Funds in India

The Association of Mutual Funds of India has certain defined objectives, which juxtaposes the
guidelines of its Board of Directors. The objectives are as follows:
• This mutual fund association of India maintains high professional and ethical standards in
all areas of operation of the industry.

• It also recommends and promotes the top class business practices and code of conduct
which is followed by members and related people engaged in the activities of mutual
fund and asset management. The agencies who are by any means connected or involved
in the field of capital markets and financial services also involved in this code of conduct
of the association.

• AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund
industry.

• Association of Mutual Fund of India do represent the Government of India, the Reserve
Bank of India and other related bodies on matters relating to the Mutual Fund Industry.

• It develops a team of well-qualified and trained Agent distributors. It implements a

programme of training and certification for all intermediaries and other engaged in the
mutual fund industry.

• AMFI undertakes all India awareness programme for investors in order to promote proper
understanding of the concept and working of mutual funds.

• At last but not the least association of mutual fund of India also disseminate information’s
on Mutual Fund Industry and undertakes studies and research either directly or in
association with other bodies.
 The sponsorers of Association of Mutual Funds in India

Bank Sponsored
• SBI Fund Management Ltd.
• BOB Asset Management Co. Ltd.
• Canbank Investment Management Services Ltd.
• UTI Asset Management Company Pvt. Ltd.
Institutions

• GIC Asset Management Co. Ltd.

• Jeevan Bima Sahayog Asset Management Co. Ltd.
Private Sector

Indian:-

• BenchMark Asset Management Co. Pvt. Ltd.

• Cholamandalam Asset Management Co. Ltd.
• Credit Capital Asset Management Co. Ltd.
• Escorts Asset Management Ltd.
• JM Financial Mutual Fund
• Kotak Mahindra Asset Management Co. Ltd.
• Reliance Capital Asset Management Ltd.
• Sahara Asset Management Co. Pvt. Ltd
• Sundaram Asset Management Company Ltd.
 • Tata Asset Management Private Ltd.
Predominantly India Joint Ventures:-

• Birla Sun Life Asset Management Co. Ltd.

• DSP Merrill Lynch Fund Managers Limited
• HDFC Asset Management Company Ltd.

Predominantly Foreign Joint Ventures:-

• ABN AMRO Asset Management (I) Ltd.

• Alliance Capital Asset Management (India) Pvt. Ltd.
• Deutsche Asset Management (India) Pvt. Ltd.
• Fidelity Fund Management Private Limited
• Franklin Templeton Asset Mgmt. (India) Pvt. Ltd.
• HSBC Asset Management (India) Private Ltd.
• ING Investment Management (India) Pvt. Ltd.
• Morgan Stanley Investment Management Pvt. Ltd.
• Principal Asset Management Co. Pvt. Ltd.
• Prudential ICICI Asset Management Co. Ltd.
• Standard Chartered Asset Mgmt Co. Pvt. Ltd.
 Drawbacks of Mutual Funds
Mutual funds have their drawbacks and may not be for everyone:
• No Guarantees: No investment is risk free. If the entire stock market declines in value,
the value of mutual fund shares will go down as well, no matter how balanced the
portfolio. Investors encounter fewer risks when they invest in mutual funds than when
they buy and sell stocks on their own. However, anyone who invests through a mutual
fund runs the risk of losing money.

• Fees and commissions: All funds charge administrative fees to cover their day-to-day
expenses. Some funds also charge sales commissions or "loads" to compensate brokers,
financial consultants, or financial planners. Even if you don't use a broker or other
financial adviser, you will pay a sales commission if you buy shares in a Load Fund.

• Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20
to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales,
you will pay taxes on the income you receive, even if you reinvest the money you made.

• Management risk: When you invest in a mutual fund, you depend on the fund's manager
to make the right decisions regarding the fund's portfolio. If the manager does not
perform as well as you had hoped, you might not make as much money on your
investment as you expected. Of course, if you invest in Index Funds, you forego
management risk, because these funds do not employ managers.

How to compare mutual funds

Choosing a mutual fund seems to have become a very complex affair lately. There are no dearth
of funds in the market and they all clamor for attention. The most crucial factor in determining
which one is better than the rest is to look at returns. Returns are the easiest to measure and
compare across funds.
At the most trivial level, the return that a fund gives over a given period is just the percentage
difference between the starting Net Asset Value (price of unit of a fund) and the ending Net Asset
Value.
Returns by themselves don't serve much purpose. The purpose of calculating returns is to make a
comparison. Either between different funds or time periods. And, you must be careful not to
make a mistake here. Or else, you could end up investing in the wrong funds.

➢ Invest in various funds, not one

Absolute returns
Absolute returns measure how much a fund has gained over a certain period. So you look at the
NAV on one day and look at it, say, six months or one year or two years later. The percentage
difference will tell you the return over this time frame.
But when using this parameter to compare one fund with another, make sure that you compare
the right fund. To use the age-old analogy, don't compare apples with oranges.

So if you are looking at the returns of a diversified equity fund (one that invests in different
companies of various sectors), compare it with other diversified equity funds. Don't compare it
with a sector fund which invests only in companies of a particular sector.
Don't even compare it with a balanced fund (one that invests in equity and fixed return
instruments).

➢ Why has my fund not declared a dividend?

Benchmark returns
This will give you a standard by which to make the comparison. It basically indicates what the
fund has earned as against what it should have earned.

A fund's benchmark is an index that is chosen by a fund company to serve as a standard for its
returns. The market watchdog, the Securities and Exchange Board of India, has made it
mandatory for funds to declare a benchmark index.

In effect, the fund is saying that the benchmark's returns are its target and a fund should be
deemed to have done well if it manages to beat the benchmark.

Let's say the fund is a diversified equity fund that has benchmarked itself against the Sensex. So
the returns of this fund will be compared vis-a-viz the Sensex.

Now if the markets are doing fabulously well and the Sensex keeps climbing upwards steadily,
then anything less than fabulous returns from the fund would actually be a disappointment.

If the Sensex rises by 10% over two months and the fund's NAV rises by 12%, it is said to have
outperformed its benchmark. If the NAV rose by just 8%, it is said to have underperformed the
benchmark.

But if the Sensex drops by 10% over a period of two months and during that time, the fund's
NAV drops by only 6%, then the fund is said to have outperformed the benchmark.

A fund's returns compared to its benchmark are called its benchmark returns.

At the current high point in the stock market, almost every equity fund has done extremely well
but many of them have negative benchmark returns, indicating that their performance is just a
side-effect of the markets' rise rather than some brilliant work by the fund manager.
➢ The best mutual fund scheme for you

Time period

The most important thing while measuring or comparing returns is to choose an appropriate time
period.

The time period over which returns should be compared and evaluated has to be the same over
which that fund type is meant to be invested in.
If you are comparing equity funds then you must use three to five year returns. But this is not the
case of every other fund.
For instance, cash funds are known as ultra short-term bond funds or liquid funds that invest in
fixed return instruments of very short maturities. Their main aim is to preserve the principal and
earn a modest return. So the money you invest will eventually be returned to you with a little
something added.
Investors invest in these funds for a very short time frame of around a few months. So it is alright
to compare these funds on the basis of their six month returns.

Market conditions

It is also important to see whether a fund's return history is long enough for it to have seen all
kinds of market conditions.

For example, at this point of time, there are equity funds that were launched one to two years ago
and have done very well. However, such funds have never seen a sustained declining market

(bear market). So it is a little misleading to look at their rate of return since launch and compare
that to other funds that have had to face bad markets.
If a fund has proved its mettle in a bear market and has not dipped as much as its benchmark,
then the fund manager deserves a pat on the back.

➢ Why you should watch over your mutual fund

Final checklist
Here are some quick pointers when comparing funds.
- Compare funds that are similar. For instance, compare Alliance Equity with Franklin India
Prima. Both are diversified equity funds. Similarly, compare UTI Auto with J M Auto, both
being auto sector funds or Birla Midcap with Magnum Midcap, both being funds that invest in
mid-cap companies. Don't compare the performance of Alliance Equity with UTI Auto or even
Alliance Equity with Birla Midcap.
- When returns are compared, make sure that the time period is identical. Or else, you may be
looking at the one-year returns for one fund and the three-year returns for another. For instance,
if you were told that the return of HDFC Equity was 59.72% and that of Franklin India Prima
was 61.74%, it would be misleading.
Because the return stated of HDFC Equity is a one year return while that of Franklin India Prima
is the three-year return.
A good comparison would be:
Returns Franklin India HDFC
Prima Equity
1 year 81.13% 59.72%
3 year 61.74% 47.52%
5 year 39.58% 27.04%
- Compare a fund with it's own stated benchmark, not another. For instance, Fidelity Equity,
Escorts Growth and BoB Growth are all diversified equity funds with different benchmarks.

Fidelity Equity - BSE 200

Escorts Growth - S&P CNX Nifty
BoB Growth – Sensex
While there are other factors that have to be considered when investing in a mutual fund, returns
is the most important. So make sure you do your homework right on this count.

1. BIRLA ADVANTAGE FUND

AMC : Birla Sun Life Asset Management Co. Ltd.

Fund Category : Equity Diversified

Launch Date : February 1995

Benchmark : Sensex

NAV Returns (percentage)

1 year 3 year 5 year

Birla Advantage 36.30 34.8 39.46

Sensex 50.08 32.74 33.24

16000 140

14000 120

12000
100

10000
80
SENSEX
8000
FUND NAV
60
6000

40
4000

2000 20

0 0

1/04 0/0
4
0/04 0/0
5
0/05 8/0
6
1/06 1/06
1/3 6/3 11/3 4 / 3 9/3 2/2 7/3 12/3
2. DSP MERRILL LYNCH EQUITY

AMC : DSP Merrill Lynch Fund Managers Ltd.

Fund Category : Equity Diversified

Launch Date : April 1997

Benchmark : S&P CNX Nifty

NAV Returns (percentage)

1 year 3 year 5 year

DSPML Equity 49.23 43.17 48.53

S&P CNX Nifty 42.47 28.33 30.20

 4500 50

4000 45

40
3500
35
3000
30
2500
NIFTY
25
FUND NAV
2000
20
1500
15
1000
10

500 5

0 0
4

/05

6
1/0

1/0

0/0

1/0

0/0

1/0

1/0

0/0
1
1/3

5/3

9/3

1/3

9/3

1/3

5/3
5/3

9/3

3. FRANLIN INDIA PRIMA

AMC : Franklin Templeton Asset Management (India) Private

Ltd.

Fund Category : Equity Diversified

Launch Date : Novemeber 1993

Benchmark : S&P CNX 500

NAV Returns (percentage)

 1 year 3 year 5 year

Franklin India 22.25 40.34 59.28

Prima

S&P CNX 500 35.56 29.16 36.35

3500 250

3000
200

2500

150
2000
S&P CNX 500
FUND NAV
1500
100

1000

50
500

0 0
04

05

06
4
/0

/0

/0

/0

/0

/0
/

/
31

31

31

31

31
31

30

30
30
1/

9/

1/

5/

1/

5/
5/

9/

9/
4. HDFC EQUITY

AMC :HDFC Asset Management Co. Ltd

Fund Category : Equity Diversified

Launch Date : December 1994

Benchmark : S&P CNX 500

NAV Returns (percentage)

1 year 3 year 5 year

HDFC Equity 40.89 40.67 50.52

S&P CNX 500 35.56 29.16 36.35

4000

3500

3000

2500

FUND NAV
2000
S&P 500 PRICE

1500

1000

500

/04 /04 /04 /05 /05 /05 /06 /06 /06

1/3
1
5/3
1 /9 30 /1 31 5/3
1 /9 30 1/ 3 1
5/3
1 /9 30
5. JM EQUTY FUND

AMC : J. M. Financial Asset Management Private Ltd .

Fund Category : Equity Diversified

Launch Date : December 1994

Benchmark : Sensex

NAV Returns (percentage)

1 year 3 year 5 year

JM Equity 44.74 36.75 42.47

Sensex 50.08 32.74 33.24

16000 45

14000 40

35
12000

30
10000
25
SENSEX
8000
FUND NAV
20
6000
15

4000
10

2000 5

0 0
4

6
5

6
1/0

1/0

0/0

1/0

1/0

0/0
1/0

0/0

1/0
1/3

5/3

1/3

5/3
9/3

5/3

9/3

1/3

9/3
6. KOTAK 30

AMC : Kotak Mahindra Asset Management Co. Ltd.

Fund Category : Equity Diversified

Launch Date : December 1998

Benchmark : S&P CNX Nifty

NAV Returns (percentage)

1 year 3 year 5 year

Kotak 30 44.08 41.31 45.47

S&P CNX Nifty 42.47 28.33 30.20

 4500 80

4000 70

3500
60

3000
50
2500
NIFTY
40
FUND NAV
2000
30
1500

20
1000

500 10

0 0
4

6
4

/06
1/0

0/0

1/0

1/0

0/0
1/0

0/0

1/0

1
1/3

5/3

9/3

1/3

5/3

1/3

9/3
9/3

5/3

7. LIC MUTUAL FUND GROWTH

AMC : Jeevan Bima Sahayog Asset Management Co. Ltd

Fund Category : Equity Diversified

Launch Date : August 1994

Benchmark : Sensex

NAV Returns (percentage)

1 year 3 year 5 year

LICMF Growth 26.15 28.09 39.44

Sensex 50.08 32.74 33.24
 16000 12

14000
10

12000

8
10000

SENSEX
8000 6
FUND NAV

6000
4

4000

2
2000

0 0
4

/05

6
1/0

1/0

0/0

1/0

0/0

1/0

1/0

0/0
1
1/3

5/3

9/3

1/3

9/3

1/3

5/3
5/3

9/3

8.
PRUDENTIAL ICICI GROWTH

AMC : Prudential ICICI Asset Management Co. Ltd.

Fund Category : Equity Diversified

Launch Date : June 1998

Benchmark : S&P CNX Nifty

NAV Returns (percentage)

1 year 3 year 5 year

Pru ICICI Growth 42.89 33.57 38.31

S&P CNX Nifty 42.47 28.33 30.20

 4500 100

4000 90

80
3500
70
3000
60
2500
NIFTY
50
FUND NAV
2000
40
1500
30
1000
20

500 10

0 0
4

6
4

6
1/0

1/0

0/0

1/0

1/0

0/0

1/0

1/0

0/0
1/3

5/3

9/3

1/3

5/3

9/3

1/3

5/3

9/3
9. SUNDARAM BNP PARIBAS GROWTH

AMC : Sundaram Asset Management Co. Ltd.

Fund Category : Equity Diversified

Launch Date : March 1997

Benchmark : S&P CNX 500

NAV Returns (percentage)

1 year 3 year 5 year

Sundaram 42.95 37.34 33.24

Growth

S&P CNX 500 35.56 29.16 36.35

 3500 80

3000 70

60
2500

50
2000
S&P 500
40
FUND NAV
1500
30

1000
20

500 10

0 0
04

05

6
4
/0

/0

/0

/0

/0

/0

/0
/

1/
31

30

31

30

31

31
31

30
3
1/

5/

9/

1/

9/

1/

5/

9/
5/

10.
TATA PURE EQUITY

AMC : Tata Asset Management Ltd.

Fund Category : Equity Diversified

Launch Date : May 1998

Benchmark : Sensex

NAV Returns (percentage)

1 year 3 year 5 year

Tata Pure Equity 41.58 39.30 45.55

Sensex 50.08 32.74 33.24

 16000 70

14000 60

12000
50

10000
40
SENSEX
8000
FUND NAV
30

6000

20
4000

10
2000

0 0
4

5
/04

/04

6
1/0

1/0

1/0

0/0

1/0

1/0

0/0
1

0
1/3

1/3

5/3

9/3

1/3
5/3

9/3

5/3

9/3

FUND RANKING ON THE BASIS OF 3 YEARLY RETURNS

RANK SCHEMES PERCENTAGE RETURN*

1 DSPML EQUITY 43.17

2 KOTAK 30 41.31

3 HDFC EQUITY 40.67

4 FRANKLIN INDIA PRIMA 40.34

5 TATA PURE EQUITY 39.30

6 SUNDARAM GROWTH 37.34

7 JM EQUITY 36.75

8 BIRLA ADVANTAGE 34.83

9 PRU ICICI GROWTH 33.57

10 LICMF GROWTH 28.09

* Calculated
FUND RANKING ON TE BASIS OF 5 YEARLY RETURNS

RANK SCHEME PERCENTAGE RETURN

1 FRANKLIN INDIA PRIMA 59.28

2 HDFC EQUITY 50.52

3 DSPML EQUITY 48.53

4 TATA PURE EQUITY 45.55

5 KOTAK 30 45.47

6 SUNDARAM GROWTH 43.72

7 JM EQUITY 42.47

8 BIRLA ADVANTAGE 39.46

9 LICMF GROWTH 39.44

10 PRU ICICI GROWTH 38.31

ANALYSIS
PROBLEM STATEMENT:-

Due to the falling Rate of Interest on Bank deposits, it is obvious that Investment in
Mutual Fund will grow in year to come. However lack of Awareness of Mutual Fund is a
hindering factor in expected growth of Mutual Fund Business. Under noted problems are
envisaged in this area:

• Difficult in convincing people for investment.

• Difficult to change mind of the investor according to age and

Profession.

• Difficult to make an approach to investors.

• Difficult to take an appointment with professional people.

• Difficult to get the documents required for formalities from investors

• Difficult to overcome an impassionate person who wants return in less time.

• Difficult to follow up the people whose names are being stored in a data.
 • Difficult to remove the fear of risk from the minds of investors.

OBJECTIVE OF STUDY:-

In view of the problem cited above, the study aims at analyzing the following major issues:

• To know the awareness of MUTUAL FUND among people.

• To know the different Asset management companies involve in MUTUAL FUND.

• To know the different aspects of MUTUAL FUND according to different age, profession
etc.

• To see the interest of people in investing in MUTUAL FUNDS.

• To know the future of MUTUAL FUNDS in India.

• To know the different attitudes of people regarding risk, rate of return, period of investment
etc.

• To study the diversification of mutual fund.

METHODOLOGY OF STUDY:

Research can be defined as a systemized effort to gain new knowledge. A research is

carried out by different methodologies which have their own pros and cons. Research
methodology is a way to solve research in study and solving research problems along with logic
behind them are defined through research methodology. Thus while talking about research
methodologies we are not only talking of research methods but also consider the logic behind the
methods. We are in context of our research studies and explain why it is being used a particular
method or technique and why the others are not used. So that research result is capable of being
evaluated either by researcher himself or by others.
RESEARCH METHODOLOGY:

Research has its special significance in solving various operational and planning problem of
business and industry. Research methodology is a way to systematically analyze the research
problem.

ASSUMPTIONS:

1. It has been assumed that sample of hundred represents the whole population
2. The information given by the customer is unbiased

LITERATURE SURVEY:

The project is based on pure findings of facts

Development of Working Hypothesis: The hypothesis could be developed by discussing with

the consulting department heads and guides about this exploratory research and reach to the
conclusion that the data is to be collected by personal interaction with the clients, asking them
about their investment planning and their need for financial advisory service from KARVY Stock
Broking Ltd.
First of all are they aware of tax and investment planning or not and then analyzing the findings
to reach to the objectives of research.

COLLECTION OF DATA:
This research is solely based on primary research done by means of questionnaires targeted
to respondents who primarily belong to the business and service sector. The sample size is 100.
 a. Sampling Methods: A sample is the representative of the populations which will predict
the behaviors of the whole universe
b. The sampling size put under 2 categories: Probability Sampling and Non Probability
Sampling.

EXECUTION OF PROJECT

It is very essential in the research process to know the accuracy of the finding’s which depends
on how systematically the study has been carried out so that it can make sense.
We have executed the project after prior discussion with our guide and structured in the
following steps:
a. Preparation of a questionnaire
b. The focal point of the designing the questionnaire was to comprehend the current
investment scenario
c. This questionnaire was primarily aimed to respondents who belong to the service and
business class people
d. The questionnaires were discussed through personal interface with the respondents

LIMITATIONS OF STREAMLINING RESULTS:

Every work has its own limitations. Limitations are extent to which the process should not
exceed. The following limitations for the project are:
1. Duration of project was not enough to make our conclusion on such a vast subject. Time
constraints has also become a major limitation
2. The sample size taken for drawing the conclusion was not sizeable
3. Investor ignorance was faced during discussions with respondents

Q1. Do you invest regularly?

 YES 89
NO 11
TOTAL 100

Percentage of people making any

investment

11%

YES
NO

89%

It has been observed that approximately 90% of the correspondents invest in some or the
other financial instrument. Though the percentage of choice of investment may vary due to
different factors such as age, education, risk etc.

Q2. Do you invest using-

a. Scientific Tools b. By Intuition

Scientific Tools 47
By Intuition 53
Total 100
It has been observed that there is no major difference between the percentage of people
who invest using scientific tools and those whose who believe in their intuition but it is seen
that the younger generation is more leaning towards usage of scientific tools than their
peers.

Methods of investment

47%
scientific tools
by intution
53%

Q3. What are you preferred investment priorities?

a. Insurance

YES 77
NO 23
TOTAL 100
A major chunk who have been interviewed it has been observed that almost 80% have
some kind of insurance policy. It has also been observed that though LIC is a public sector
undertaking, people of all ages have more faith in it as compared to other private sector
companies.

b. Bank (Fixed deposit)

YES 49
NO 41
TOTAL 100
There is no major difference between the number of people who prefer keeping their
money in fixed deposit and who don’t opt for it. There is however a growing concern about
the falling interest rate in banks on fixed deposit.

c. Bonds & Debentures

YES 34
NO 66
TOTAL 100
It has been observed that only 34% they have invested in Bonds and Debentures AS
compared to those who have not. This may be due to less knowledge about it or the time of
re-demption.

d. Equities & Share Market

YES 45
NO 55
TOTAL 100
By the chart we observe that the percentage of people investing in equity and share market
is not much but there is a going interest among people especially the younger generation to
invest so as to make quick bucks with the market boom.

e. PPF

YES 43
NO 57
TOTAL 100
Out of the total people asked 57% said they invest in PPF and 43% said they don’t, but it
has been observed that from the people who said they invest the major chunk are people
from service sector.

f. NSC

YES 45
NO 55
TOTAL 100
Out of all the people questioned 45% said YES and 55% said NO. People who have said
that YES a major percentage are either business man or working people who want a fix
rate of return and security.

g. Post Office Savings

YES 31
NO 69
TOTAL 100

Out of the total correspondent only 31% they invest in post office savings. This could be
due to falling interest rate and better return by other tools.

h. Real Estate
 YES 42
NO 58
TOTAL 100

The correspondent who said YES are 42% and who said NO is 58% but this will change as
people are more comfortable in real estate and with falling interest rate people try to find
new avenue of investments.
i. Gold

YES 41
NO 59
TOTAL 100

Gold

41%
YES
NO
59%

Out of the total correspondent questioned 41% say they prefer to invest in gold while 59%
say they don’t.

j. Others
 YES 39
NO 61
TOTAL 100

Of all the correspondents asked only 39% said they have other options to invest other than
the conventional options.

Q4. What percentage of your income do you invest?

Below 10% 30
10%-30% 57
30%-50% 10
 Above 50% 3

About 60% of people said that they invest between 10%-60% of their total income in some
or other types of financial tools. A major chunk of people belonging to this segment are
from IT sector who are young, large disposable income and have a little knowledge about
investment and are willing to take risk.

percentage of income invested

60

50

40

30 Series1
20

10

0
Below 10% 10%-30% 30%-50% Above 50%
Q5. Are you aware about mutual funds?

YES 88
NO 12
TOTAL 100

Only 12% of correspondent said they don’t know any thing about mutual fund and 88%
said they know about mutual funds but what we found that they have just a primary or
very negligible knowledge about mutual funds and not really aware of the concept called
MUTUAL FUND.

Q6. What is your perception about mutual funds?

SAFE 15%
RISKY 25%
OTHERS 60%
TOTAL 100%
The percentage of person who say that mutual fund is safe is 5%, an those who say it is
risky is 25% but a major percentage of corresponds opt as other which is about 60%. These
are people who say that mutual funds are high risk and high gain or even people who have
no opinion.
Q7. Have you ever invested in mutual fund?

YES 41
NO 59
TOTAL 100
Out of the total correspondents asked about 41% have said that they had invested in
mutual funds before while 59% said NO. Out of the total people who have said yes a
majority of them are young, having disposable income and willingness to take risk.
Q8. Do you know different type of mutual scheme present in the market?

YES 36
NO 64
TOTAL 100

Out of total corresponds only 36% said that they know about various mutual schemes as
this number is very small it explains that people still don’t know about various schemes in
the market. It also shows that even those who have bought mutual funds are still ignorant
about the different schemes.
Q9. How you choose a mutual fund?

BRAND NAME 35
HIGH NAV 26
HIGH RETURNS 15
ADVERTISING 12
OTHERS 12
TOTAL 100
It has been observed that brand name does matter when people are choosing a mutual fund
as 35% said brand name. The next is NAV at about 26%. These two factors play a major
role during selection of mutual funds.
 PROJECT FINDINGS
&
RECOMMENDATIONS

PROJECT FINDINGS:
 • There is great opportunity for Mutual Fund companies as there is a is a rise in number of
people who want to invest in share market but don’t have time and knowledge to do so,
also these people want to take less risk .

• With booming market and falling interest rate of bank deposits, people see mutual funds
as an attractive financial tool which provide a high return rate at lower risk as compared
to equity market.

• Young people these days are particularly more interested in mutual funds because they
see mutual fund as safe bet. Also these people have large disposable incomes and risk
taking capability too.

• The bad part is people are still ignorant about mutual funds and different schemes about
mutual funds, hence it is very necessary to educate them about mutual funds

• Advertising can also play a major part as it has been seen that people buy mutual fund
looking at the brand name.

RECOMMENDATIONS:

• India is passing through a tremendous growth phase with an average growth rate of 7-8%
per annum. With this growth phase there is growth in each and every sector, hence there
is rush to by shares and equities. It is also a very good time for mutual fund companies
but it is advisable for them and their brokers that they don’t just sell mutual funds but sell
the right kind of scheme which is comfortable to a person nature of taking risk and need,

• There is a general ignorance and questions about, what are mutual funds? What are
different schemes of mutual funds? How to invest in a mutual? And many more. This
 thing should be handled by mutual fund companies and their brokers to provide
knowledge to their clients.

• It has been seen that there is a major increase in the percentage of young investors who
have large amount of disposable income with them and want to invest, these type of
prospective clients should be tapped at an early stage.

• Small towns, villages are still untapped and can also acts as an business area of very huge
potential.

• Now even co-operative society can invest up to 10% of their capital in mutual funds
which open the door to new and very important client base.
 BIBLIOGRAPHY

➢ www.njindiainvest.com

➢ www.moneycontrol.com
➢ www.amfiindia.com

➢ www.karvy.com
➢ MUTUAL FUND
PRODUCT AND SERVICES---- TAXMAN
➢ AMFI COURSE BOOK
 Questionnaire

1. Are you a regular investor?

a. Yes b. No

2. Do you invest using –

a. Scientific Tools b. By Intuition

3. What are your preferred investment priorities?

Name of Investment
Insurance
Bank
Bonds & Debentures
Equities & Share Market
PPF (Public Provident Fund)
NSC (National Saving Schemes)
Post Office Saving Schemes
Real Estate
Gold
Others
4. What percentage of your income do you invest?
a. Below 10%
b. 10% - 30%
c. 30% - 50%
d. Above 50%

5. Are you aware about Mutual Funds?

a. Yes b. No

6. What is your perception about Mutual Funds?

a. Safe
b. Risky
c. Others

7. Have you invested in some Mutual Funds?

a. Yes b. No

8. Do you know different type of Mutual Fund scheme present in the market?
a. Yes b. No

9. How do you select and choose Mutual Funds?

a. Brand Name b. High NAV
c. High Dividends d. Advertisement
e. Others

Demographics
1. NAME: _____________________________________________

2. AGE: SEX: M / F

3. MARTIAL STATUS:

4. PROFESSION:

5. ANNUAL INCOME:
a. Less than Rs. 1, 00,000/-
b. 1, 00,000 - 1, 50,000/-
c. 1, 50,000 - 2, 50,000/-
d. 2, 50,000 - 5, 00,000/-
e. Above 5,00,000/-

6. Contact Number:

7. Email ID : ___________________________________________