Final Sbi

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, shortterm 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 1 year 3 year 5 year

Franklin India Prima 81.13% 61.74% 39.58%

HDFC Equity 59.72% 47.52% 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)

Birla Advantage

1 year

3 year

5 year

36.30

34.8

39.46

Sensex

50.08

32.74

33.24

16000

140

14000

120

12000

100

10000 80 8000 60 6000 40

4000

20

2000 0 /04

1 1/3

0 4

0/0 6/3

/04

1

0 1/3

5 0/0 3 / 4

/05

0 9/3

6

8/0 2/2

/06

1 7/3

/06

1

1 2/3

SENSEX FUND NAV

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 25 2000

NIFTY FUND NAV

20 1500

15

1000

10

6 0/0 9/3

6 1/0 5/3

1/0 6 1/3

0/0 5 9/3

/05 5/3 1

1/0 1/3

0/0 9/3

5/3 1/0

1/3

5

0 4

0 4

5

1/0 4

500

3. FRANLIN INDIA PRIMA

AMC

: Franklin Templeton Asset Management Ltd.

Fund Category

: Equity Diversified

Launch Date

: Novemeber 1993

Benchmark : S&P CNX 500

NAV Returns (percentage)

(India) Private

1 year Franklin Prima

India 22.25

S&P CNX 500

35.56

3 year

5 year

40.34

59.28

29.16

36.35

3500

250

3000 200 2500 150

2000

S&P CNX 500 FUND NAV

1500

100

1000 50 500

06 9/ 30 /

31 /0 6 5/

31 /0 6 1/

05 9/ 30 /

31 /0 5 5/

31 /0 5 1/

9/ 30 /0 4

04

0 5/ 31 /

1/

31 /0 4

0

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 S&P 500 PRICE

2000 1500 1000 500 0 /04

1 1/3

/04

1 5/3

4

/0 /9 30

5

/0 /1 31

/05

1 5/3

5

/0 /9 30

/06 1 3 1/

/06

1 5/3

6

/0 /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 8000 20 6000

15

4000

10

6 0/0 9/3

6 5/3 1/0

6 1/0 1/3

5 0/0 9/3

5 1/0 5/3

1/3 1/0

0/0 9/3

5/3 1/0

1/3 1/0

5

0 4

0 4

5

4

2000

SENSEX FUND NAV

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 40 2000 30

1500

20

1000

10

500

6 0/0 9/3

/06 5/3 1

1/0 6 1/3

9/3 0/0 5

5 1/0 5/3

5 1/0 1/3

4 0/0 9/3

1/0 4

0

5/3

1/3

1/0

4

0

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)

LICMF Growth

1 year

3 year

5 year

26.15

28.09

39.44

NIFTY FUND NAV

Sensex

50.08

32.74

33.24

16000

12

14000

10

12000 8

10000 8000

6

6000

SENSEX FUND NAV

4

4000 2

2000

6 0/0 9/3

6 1/0 5/3

1/0 6 1/3

0/0 5 9/3

/05 5/3 1

5 1/0 1/3

4 9/3

0/0

4

0 5/3 1/0

1/3

1/0

4

0

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

50 2000

40

1500

30

1000

20

500

10

6 0/0 9/3

1/0 6 5/3

6 1/0 1/3

5 0/0 9/3

1/0 5 5/3

5 1/0 1/3

4 0/0 9/3

1/0 4

0

5/3

1/3

1/0 4

0

NIFTY FUND NAV

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 Growth

42.95

37.34

33.24

S&P CNX 500

35.56

29.16

36.35

3500

80

3000

70 60

2500

50 2000 40 1500

S&P 500 FUND NAV

30 1000

20

500

10

6 /0 9/ 30

/0 6 5/

31

6 31 /0 1/

5 30 /0 9/

05 5/ 3

1/

/0 5 31 1/

9/

5/

30

31 /

/0 4 31 1/

/0 4

0 04

0

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 FUND NAV

8000 30

6000 20

4000

10

2000

6 0/0 9/3

6 1/0 5/3

6 1/3 1/0

5 9/3

0/0

5 1/0 5/3

5 1/0 1/3

/04 9/3 0

/04

0

5/3 1

1/3

1/0

4

0

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 NO TOTAL

89 11 100

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 usinga. Scientific Tools

Scientific Tools By Intuition Total

b. By Intuition

47 53 100

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 NO TOTAL

77 23 100

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 NO TOTAL

49 41 100

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 NO TOTAL

34 66 100

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 NO TOTAL

45 55 100

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 NO TOTAL

43 57 100

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 NO TOTAL

45 55 100

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 NO TOTAL

31 69 100

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 NO TOTAL

42 58 100

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 NO TOTAL

41 59 100 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 NO TOTAL

39 61 100

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% 10%-30% 30%-50%

30 57 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 NO TOTAL

88 12 100

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 RISKY OTHERS TOTAL

15% 25% 60% 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 NO TOTAL

41 59 100

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 NO TOTAL

36 64 100

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 HIGH NAV HIGH RETURNS ADVERTISING OTHERS TOTAL

35 26 15 12 12 100

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 :

___________________________________________