CHAPTER-I

INTRODUCTION

INTRODUCTION

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A mutual fund is a form of collective investment. It is a pool of money collected from
various investors which is invested according to the stated investment objective. The
fund manager is the person who invests the money in different types of securities
according to the predetermined objectives. The portfolio of a mutual fund is decided
taking into consideration this investment objective. Mutual fund investors are like
shareholders and they own the fund. The income earned through these investments
and the capital appreciation realized by the scheme is shared by its unit holders in
proportion to the number of units owned by them. The value of the investments can
go up or down, changing the value of the investors holding. Mutual funds are one of
the best investments ever created because they are very cost efficient and very easy to
invest in.

Figure 1.1: Diagram of Mutual Fund

The investment in securities through mutual funds is spread across wide range of
industries and sectors and thus the risk is reduced. Diversification reduces the risk
because all stocks may not move in the same direction at the same time. Various fund
houses issue units to the investors in accordance with the quantum of money invested
by them. Investors of mutual funds are known as unit holders.

In India a mutual fund is required to be registered with Securities Exchange Board

of India [SEBI] which regulates the securities market.

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ADVANTAGES OF MUTUAL FUNDS:
 LIQUIDITY – Just like an individual stock, a mutual fund allows you to
request that your shares be converted into cash at any time.
 SIMPLICITY – Minimum investment is small.
 ECONOMICS OF SCALE – Because a mutual fund buys and sell large
amounts of securities at a time, its transaction cost are lower than what an
individual would pay for securities transactions.
DISADVANTAGES:
DILUTION –Its possible to have too much diversification. Because funds have small
holdings in so many different companies, high returns from a few investments often
don’t make much difference on the overall return.

TAXES – When making decisions about your money, funds managers don’t consider
your personal tax situation.

DIFFERENT TYPES OF FUNDS:

At the fundamental level, there are three varieties of mutual funds:

 Equity funds (stocks)
 Fixed-income funds (bonds)
 Money market funds

NEED OF THE STUDY

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 The main purpose of doing this project was to know about mutual fund and
it’s functioning.

 Thus help to know in detail about mutual fund industry right from its
inception, growth and future prospects.

 It also helps in understanding different schemes of mutual funds.

 The project was chosen to learn more about mutual funds and risk and return
associated with mutual funds.
 The project studies were done and estimate future projections affecting
investments.
 Ultimately, this would help in understanding the benefits of a mutual fund, the
awareness of mutual fund among various existing and potential investors.

SCOPE OF THE STUDY

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 This project totally based on the mutual funds
 This is useful to investors those who are interested to invest their ideal resources
in the mutual funds
 A mutual fund belongs to those who have contributed to that fund and thus, the
ownership of the fund lies in the hands of the investors.
 The pool of the funds collected is invested in a portfolio of marketable securities.
 This analysis is based on the mutual funds with respect to different banks share
brokers asset management company,

OBJECTIVES OF THE STUDY

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 To know about the origin of Mutual Fund Industry in India.
 To know about the historical phases and types of Mutual Funds.
 To study how individuals are taking financial planning seriously.
 To study the performance of the top six Mutual Funds.
 To have an insight of the portfolio composition and classify the portfolio in
lieu of sect oral weight age.
 To compare the sectorial allocation of two diversified equity schemes.

METHODOLOGY OF THE STUDY

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 My research project has a specified framework for collecting the data in an effective
manner. Such framework is called “RESEARCH DESIGN”. The research process which
was followed by me consisted following steps.

A. Problem:
The problem at hand was to study and measure the awareness level of people regarding
mutual funds in the city.

B. Developing the research plan:

The development of Research Plan has the following Steps:

DATA SOURCES:
Two types of data were taken into consideration i.e. Secondary data & primary data. My
major emphasis was on gathering the primary data. The secondary data has been used to
make things more clear.
 Primary Data:
Direct collection of data from the source of information, technology including personal
interviewing, survey etc.
 Secondary Data:
Indirect collection of data from sources containing past or recent past information like
Bank’s Brochures, Annual publications, Books, Fact sheets of mutual funds, Newspaper &
Magazines etc.
C. Analyze the information:

The next step is to extract the pertinent findings from the collected data. I have tabulated the
collected data & developed frequency distributions. Thus the whole data was grouped
aspect wise and was presented in tabular form. Thus, frequencies & percentages were
prepared to render impact of the study.

LIMITATIONS OF THE STUDY

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 In some cases volatility and risk adjusted performance may not give appropriate
results.
 The Information gathered from investors may not be appropriate.
 This study is completely based on information given by asset management
companies,
 The trust performance of the mutual fund is not necessarily an indicator of future
performance of schemes.
 Some respondents were reluctant to divulge personal information which can
affect the validity of all responses.
 The mutual fund will have a fund manager that trades the fund's investments
in accordance with the fund's investment objective

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 CHAPTER-II

INDUSTRY PROFILE

&

COMPANY PROFILE

2.1 INDUSTRY PROFILE

Mutual Funds Industry in India:

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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 a 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 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 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
intellectual with the concept t. Hence, it is the prime responsibility of all mutual fund
companies, to market the product correctly abreast of selling.

The second largest category of mutual funds is the ones floated by

Nationalize Banks. Canara bank Asset Management floated by Canara Bank and SBI
Funds Management floated by State Bank of India are the largest of it. GIC AMC
floated by General Insurance Corporation and Jeevan Bema Sahayog AMC floated by
LIC are some of the other prominent ones. The aggregate corpus of funds managed by
this category of AMCs is about 150bn.

The third largest category of mutual fund is the ones floated by the private
sector and by foreign Asset Management Company. The largest of these are
Prudential ICICI AMC and Birla Sun life AMC. The aggregate corpus of asset
managed by this category of AMCs is in excess of Rs. 250bn.

HISTORY OF MUTUAL FUNDS

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 The mutual fund industry in India started in 1963 with the formation of Unit
Trust of India, at the initiative of the Government of India and Reserve Bank the. The
history of mutual funds in India can be broadly divided into four distinct phases:

First Phase – 1964-87 

Unit Trust of India (UTI) was established on 196` 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) 

1987 marked the entry of non- UTI, public sector mutual funds set up by
public sector banks and Life Insurance Corporation of India (LIC) and General
Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI
Mutual Fund established in June 1987 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 established its
mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At
the end of 1993, the mutual fund industry had assets under management of
Rs.47,004crores.

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

  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.

  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.

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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 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

              In February 2003, following the repeal of the Unit Trust of India Act 1963
UTI was bifurcated into two separate entities. One is the Specified Undertaking of the
Unit Trust of India with assets under management of Rs.29, 835crores as at the end of
January 2003, representing broadly, the assets of US 64 scheme, assured return and
certain other schemes. 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,
000crores of assets under management 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 September, 2004, there
were 29 funds, which manage assets of Rs.153108crores under 421 schemes. 

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Growth of Mutual Funds:

Growth of Mutual Funds has been gradual and it took really long years to
evolve the modern day mutual funds. Mutual Funds emerged for the first time in
Netherlands in the 18th century. Then it got introduced to Switzerland, then Scotland
and then to United States in the 19th century.
The very idea of mutual funds came from the urge to deliver a form
of Diversified Investment Solution. Over the years the idea developed and people
received more and more choices of Diversified Investment Portfolio through the
mutual funds. When in 1924, Massachusetts Investors Trust first introduced mutual
funds in U.S; they found it difficult to gain the trust of the investors. It was very
natural that the people took time to adapt to a new investment idea. There emerged
some confusion regarding the Taxation of Investment Income from mutual funds as
there was no Regulation or legislation.
Laws started to came in existence from 1940s. The result was not immediate.
The Mutual Fund Concept achieved warm reception only in the middle of 1950s. By
the end of fifties and in first half of 1960s mutual fund investment triggered up
tremendously.

Monetary Fund’s benefited a lot from the mutual funds. Earlier investors was
used to invest directly in the stock market and many times suffered from loss due to
wrong Speculation. But, with the mutual funds which were handled by efficient Fund
Managers, Investment was lowered by a great extent. The diversified investment
structure of mutual funds also diversified risk and this contributed tremendously in the
Growth of Mutual funds. Over the years not only the new types of mutual funds
emerged, the way, in which mutual funds were sold also changed. But, the Growth of
Mutual Funds has not stopped. It is continuing to evolve to a better future, where
investors will get newer opportunities.

Future scenario:

The asset base will continue to grow at an annual rate of about 30 to 35% over the
next few years as investor shifts their assets from banks and other traditional avenues.
Some of the older public and private sector players will either shop or be taken over.

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 Out of ten public sector players five will out close down or merge with
stronger players in three to four years. In the private sector this trend has already
stated with two mergers and one take over. Here too some of them will down their
shutters in the near future to come.

But this does not mean there is no room for other players. The market will
witness a flurry of new players entering the arena. There will be a large number of
offers from various asset management companies in the time to come. Some big
names like fidelity principal old mutual etc., are looking at Indian market seriously.
One important reason for it is that most major players already have presence here and
hence these big names would hardly like to get left behind.

The mutual fund industry is awaiting the introduction of derivatives in india as

this would unable to hedge its risk and this in turn would be reflected in its net asset
value (NAV). SEBI is working out the norms for enabling the existing mutual fund
schemes to trade in derivatives. Importantly many market players have called on the
regulator to initiated the process immediately, that the mutual funds can implement
the changes that are required to trade in derivatives.

What is mutual fund?

A mutual fund is a company that in a diversified portfolio of securities. People

who buy shares of a mutual fund are its owners or shareholders. Their investments
provide the money for mutual fund to buy securities such as stocks and bonds. A
mutual fund can make money from its securities in two ways. A security can pay
dividends or interest to the fund or security can rise in value.

Why investment and Mutual Fund

Mutual funds makes saving and investing sample, affordable. The advantage
of mutual funds includes professional management, diversification, variety, liquidity,
variance, convenience and ease of record keeping as well as strict government
regulation an full discloser.

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Professional management

Even under the best of market options it takes an asset, experienced investor to
choose investment correctly and a further commitment of time to continually monitor
those investments.

Which mutual funds experienced professional manage a portfolio of securities

for you full time and decide which securities to buy and sell based on extensive
research.

Diversification

Successful investors know that diversifying their investments’ can help reduce
the adverse impact of a single investment. Mutual fund introduce diversification to
your investment portfolio automatically by holding a wide variety of securities.
Moreover since you pool your assets with those of other investors a mutual fund
allows you to obtain a more diversified portfolio than you would probably be able to
comfortably manage on your own and at a fraction of the cost.

Variety

With in the broad categories of stock, bond, and money market funds you can
choose among variety of investment approach. Today there are about 8200 mutual
funds available in the U.S with goals and styles to fit most objectives and
circumstances.

Low costs

Mutual funds usually hold dozens or even hundreds of securities like stocks
and bonds. The primary way you pay for this service is through a fee that is based on
the total value of your account. Because the fund industry consists of hundred of
competition firms and thousands of funds are the actual level for fees can vary. But
for most investors mutual funds provide professional management and diversification
at a fraction of the cost of making such investments independently.

But this law obviously cannot help you pick the fund that is right for you or
prevent a fund form losing money. You can still lose money by investing in mutual

15
funds. A mutual fund is not guaranteed or insured by the FDIC or SIPC even if funds
shares are purchased through a bank.

Protection investors

Not only are mutual funds subject to compliance with their self imposed
restrictions and limitations they are also highly regulated by the federal government
through the U.S securities and exchange commission (SEC). As part of this
government regulation all funds must meet certain operating standards observe strict
antifraud rules and disclose complete information to current and potential investors.

Convenience

You can purchase or sell fund shares directly from a fund or through a broker
financial planner, bank or insurance agent, by email, over the telephone, and
increasingly by personnel computer. You can also arrange for automatic reinvestment
or periodic distribution of the dividends of capital gains paid by the fund. Funds may
offer a wide a variety of other services computer access to fund and account
information.

Liquidity

It is the ability to readily access your money in an investment. Mutual fund

shares are liquid investments that can be sold on any business day. Mutual funds are
requires by law to buy or redeem share each business day. The price per share at
which you can redeem shares is known as funds met asset value (NAV). NAV is
current market value of all the funds assets, minus liabilities, divided by total number
of outstanding shares.

Investment philosophy

Equity:

Our investment philosophy revolves around the concept of growth at a

reasonable price whereby we invest in growth oriented stocks which are available at
attractive relative valuations.

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We use combinations of the top down and bottom up approaches to investment. We
invest with a medium term view with an investment horizon of at least 18 months.
Risk control is an important element of our strategy.

 Top down approaches for sector allocation

 Bottom up approach for stock selection
We identify and invest in business that has a sustainable competitive advantage. We
invest with a medium view within, investment horizon of At least 18months. Risk
control is an important element of our strategy.

We believe in pro active fund management fund to outperform bench mark

indices. In determining our investment yours, we employee a multi stage filtering
process. At the first level filter, we look at liquidity at the second level filter, we look
at management quality. The third level is the competitive position of the company.
The final level is the share price valuation.

Debt

There are three main types of debt funds and the investment philosophy for
each differs due to different investment objectives and type of investors.

Liquid Fund (Magnum Insta cash Fund)

The investment philosophy of this scheme is to invest in short term money market
debt instruments like T-bills, commercial paper, debentures, certificate of deposits, etc
to provide a higher than average rate of return.

In doing three types of risks are actively managed. Liquidity Risk, credit risk
and interest rate Risk.

Liquidity Risk

A mix is maintained between low yield highly liquid instruments and high

Yield but illiquid instruments. This is to ensure that the saleable instruments can be

sold in times of redemptions but at the same time the fund maintains higher than

average returns.

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Credit Risk

Credit risk refers to the “creditworthiness” of the bond issuer and its expected

Ability to pay interest and to repay its debt. If a bond issuer is unable to repay

principal or Interest on time, the bond is said to be in default. A decline in an issuer’s

credit rating, or credit worthiness, can cause a bond’s price to decline. Bond funds

holding the bond could then experience a decline in their net asset value.

Interest Rate Risk

Think of the relationship between bond prices and interest rates as opposite ends of a
seesaw. When interest rates fall, a bond’s value usually rises. When interest rates rise,
a bond’s value usually falls. The longer a bond’s maturity, the more its price tends to
fluctuate as market interest rates change. However, while longer-term bonds tend to
fluctuate in value more than shorter-term bonds, they also tend to have higher yields
to compensate for this risk. Unlike bond, a bond mutual fund does not have a fixed
maturity. It does, however, have an average portfolio maturity the average of all the
maturity dates of the bonds in the fund’s portfolio. In general, the longer a fund’s
average portfolio maturity, the more sensitive the fund’s share price will be to
changes in interest rates and the more the fund’s shares will fluctuate in value.

Income Fund (Magnum Income Fund)

The income fund invests in all types of debt instruments. The investment
philosophy can be broadly defines as consisting of active duration and interest rate
management to give optimal returns. The fund in divided main between Government
Securities and Corporate Bonds with some residual investments in money market
instruments Management of this fund involves taking interest rate views based on
various

macro and micro factors like state of the economy, monetary policies of RBI , and

liquidity in the banking system, credit growth, global interest rates, etc.

Micro management consists of sector allocation, maturity profile, credit

reviews, yield curve analysis and trading based on spread movements etc. investments

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in corporate bonds are done after extensive credit appraisal since the investments are

in long-term debentures. Investments are done only up to AA rated category.

Instruments/companies are not considered.

Stock or equity funds

Stock or equity funds invest in common stocks which represent an ownership

share (or equity) in corporations. Stock funds may invest in primarily U.S. securities
(domestic or U.S. funds), in both U.S. and foreign securities (global or world
funds) ,or primarily foreign securities (international funds). They may focus on a
specific industry or sector. A stock fund may be sub classified along two dimensions:
(1) market capitalization and (2) investment style (i.e., growth vs. blend/core vs.
value). The two dimensions are often displayed in a grid known as a "style
box"Market capitalization ("cap") indicates the size of the companies in which a fund
invests, based on the value of the company's stock. Each company's market
capitalization equals the number of shares outstanding times the market price of the
stock. Market capitalizations are typically divided into the following categories:

 Micro cap
 Small cap
 Mid cap
 Large cap

Stock funds are also sub classified according to their investment style: growth, value
Or blend (crore). Growth funds seek to invest in stocks of fast-growing companies.
Value funds seek to invest in stocks that appear cheaply priced. Blend funds are not
biased toward either growth or value.

Hybrid funds

Hybrid funds invest in both bonds and stocks or in convertible securities. Balanced
funds, asset allocation funds, target date or target risk funds and lifecycle or lifestyle
funds are all types of hybrid funds. Hybrid funds may be structured as funds of funds,
meaning that they invest by buying shares in other mutual funds that invest

19
insecurities. Most fund of funds invest in affiliated funds (meaning mutual funds
managed by the same fund sponsor), although some invest in unaffiliated funds
(meaning those managed by other fund sponsors) or in a combination of the two. At
the end of 2018, hybrid funds accounted for 7% of the assets in all U.S. mutual funds.

Stock Funds

Stock funds invest primarily in stocks. A share of stock represents a unit of

ownership in a company. If a company is successful, shareholders can profit in two
ways: the stock may increase in value, or the company can pass its profits to
shareholders in the form of dividends. If a company fails, a shareholder can lose the
entire value of his or her shares; however, a shareholder is not liable for the debts of
the company.

When you buy shares of a stock mutual fund, you essentially become a part
owner of each of the securities in your fund’s portfolio. Stock investments have
historically been a great source for increasing individual wealth, even though the
stocks of the most successful companies may experience periodic declines in value.
Over time, stocks historically have performed better than other investment in
securities, such as bonds and money market instruments. Of course, there is no
guarantee that is no guarantee that this historical trend will be true in the future.
That’s why stock funds are best used as long-term investments.

Stock Market Returns

The upswings and downturns of the stock market affect stock fund returns. Despite a
history of outperforming other types of securities, stocks sometimes lose money.
Sometimes these losses can be substantial and last for long periods. The average
annual return on stocks from 1926 to 2005 is about 104 percent.

Bond Funds:

Bond funds invest primarily in securities known as bonds. A bond is a type of

security that resembles a loan. When a bond is purchased, money is lent to the
company, municipality, or government agency that issued the bond. In exchange for
the use of this money, the issuer promises to repay the amount loaned (the principal;

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also known as the face value of the bond) on a specific maturity date in addition, the
issuer typically promises to make periodic interest payments over the life of the loan.

A bond fund share represents ownership in a pool of bonds and other

securities comprising the fund’s portfolio. Although there have been past
exceptions ,bond funds tend to be less volatile than stock funds and often produce
regular income for these reasons, investors often use bond funds to diversify, provide
a stream of income, or investment for in intermediate-term goals. Like stock funds,
bond funds have risks.

Money market funds

A money market fund invests in a pool of short term, interest bearing

securities. A money market instrument is a short term IOU issued by the U.s
government, US Corporations and state and local government. Money market
instrument have maturity Dates of less than 13months. These instruments are
relatively stable because of their Short maturities and high quality.

Money market fund risks

The short term nature of money market investments makes money market
funds less volatile than any other type of fund. Money market funds seek to maintain
a $1 – per- share price to preserve your investment principle while generating
dividend income.

Gift fund

It invests in the gilt edged government securities which is predominantly a

Wholesale market. It allows retail investors to participate in this market. The gilt fund
Aims to maximize returns by active interest rate management with zero credit risk. To
maximize the “risk adjusted returns” for the investors based on their risk tolerance

 Manage the schemes on portfolio basis.

 Active management of interest rate risk
 Credit risk management of interest rate risk.
 Continuous monitoring

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Mutual Fund Investment:

Mutual Funds Investment has become a subject of great importance in the

present context, especially when all the investors are keen to diversify their
investment to maintain a balance between Investment Return and Investment Risk.
Mutual Funds Investment not only provides the customers with their much desired
diversified investment portfolio, but also offers the benefit of high liquidity. Investors
are free to sell their mutual fund shares any time to get the back the amount that was
invested in the mutual funds. It is another issue that any time sell of mutual fund
shares may result in poor rate of return.

For gaining the Diversified Investment Solution and the liquidity advantage,

any person needs to invest in Mutual Funds. But, before investing their hard
earned money one needs to carry out sincere research on the performance of those
mutual funds, he is considering to invest in.

The things that one needs to consider before deciding on any particular mutual
fund are the following:

 Performance of the Fund and the Rate of Returns:

It is perhaps needless to say that one requires to be well informed about the
Fund Performance before investing. Excellent Performance not only means
high Rate of Return, it also needs the consistency. The funds which have been
proved of being able to generate satisfactory rate of return consistently over a
period can be considered for investing.

 Investment Psychology of the Mutual Fund:

Before taking final investment decision one needs to know about

the Investment Psychology of the mutual fund. The investment psychology of the
fund has to match with the Financial Objective of the customer. A track record of
excellent performance and high rate of returns cannot be the only yard stick to
judge whether that fund is suitable for the particular investor or not.

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Risk Adjustment:

It is also very important to check that how the funds adjusted with risk over
the years

 Fund Management:
Management of funds is the ultimate thing and it in many ways depend on
the efficiency of the Fund Managers who actually allocates asset by making
Speculation based on the market research and market analysis.

 Mutual Fund Fees:

Investors should be well prepared about the fees and charges associated with
Mutual Funds. There are Loaded Funds and No Load Funds. Loaded Funds
are those mutual funds which involve Sales Charges and other fees and No
Load Funds are those which carry no charge.

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Figure 2.1: Mutual Funds Diagram

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 2.2 COMPANY PROFILE
Company profile of SBI:
SBI Mutual Fund was incorporated in 1987 with its corporate head office located in
Mumbai, India. SBIFMPL is a joint venture between the State Bank of India, an
Indian public sector bank, and Amundi, a European asset management company.

A shareholder agreement in this regard has been entered on 13th April 2011 ,between
SBI and AMUNDI Asset Management.

Accordingly, SBI currently holds 63% stake in SBIFMPL and the 37% stake is held
by AMUNDI Asset management through a wholly owned subsidiary, Amundi India
holding.

SBI and AMUNDI Asset management shall jointly develop the company as an asset
management company of international repute by adopting global best practices and
maintaining international standards.

Type: Private Company

Industry: Mutual Fund

Founded: 1987

Headquarters: Mumbai, India

Area served: India

Key people: Mr. Vinay and Mr. Tonse (CEO and managing director)

Company profile of HDFC:

HDFC Asset management (HDFC AMC) is the investment manager to HDFC Mutual
fund (HDFC MF) the largest mutual fund in India with total AUM of Rs.343938 Cr.
as of March 31 2019.The company is a subsidiary of Housing Development Finance
Corporation Limited.

HDFC carried out an initial public offering, and became a publicly listed in 2018.Our
principal shareholders are HDFC and SLI which own 52.7% and 21.2% stake,

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respectively. HDFC asset management company”(HDFC AMC)”is the investment
manager to the schemes of HDFC mutual fund.(HDFC MF).

Company profile of ICICI:

ICICI Mutual fund is the second largest asset management company in India. ICICI
mutual fund was established in 1993.

The AMC is a joint venture between ICICI bank in India and prudential plc, one of
the UK’s largest players in the financial services sectors with its corporate office in
Bandr-Kurla Complex, Mumbai, India. The AMC has witnessed substantial growth in
scale; From two locations and six employees and the inception of the joint venture in
1998, to a current strength of more than 1000 employees with around 120 locations
with an investor base of more than 1.9 million investors.

Type: Public

Industry: Mutual funds

Founded: 1993

Headquarters: Mumbai, India

Key people: Mr .Nimesh Shah (MD and CEO)

Company profile of Reliance:

Reliance mutual fund is now renamed as NIPPON India Mutual Fund. The new name
came after NIPPON life insurance of Japan completed the acquisition of 75% of stake
in reliance Nippon life asset management from Reliance Capital.

Fund: Nippon Mutual Fund

Founded: 30-06-1995

Sponsor’s: NIPPON Life Insurance Company

Key Person: Mr. Sandeep Sikha (MDN CEO)

Asset work: Rs. 207288 Cr

26
Company profile of Aditya Birla Sun Life;

Aditya Birla Sun Life Asset management company limited(ABSLAMC),the

investment managers of Aditya Birla Sun Life mutual fund ,is a joint venture between
the Aditya Birla group and the sun life financial services Inc .of Canada .The joint
venture brings together the Aditya Birla Group’s experience in the Indian market and
the Sun Life’s global experience .established in 1994,Aditya Birla Sun Life mutual
fund has emerged as one of India’s leading flagships of mutual funds business
managing assets of a large investors base.

Type: Private

Industry: Financial services

Founded: 1994 in India

Headquarters: Mumbai, India

Area served: 26 countries

Key people: A. Balasubramanian(CEO)

27
 CHAPTER-III

THEORATICAL FRAMEWORK

28
 THEORITICAL FRAME WORK:

A mutual fund is a professionally managed type of collective investment

scheme that pools money from many investors and invests typically in
investment securities. The mutual fund will have a fund manager that trades the fund's
investments in accordance with the fund's investment objective. In the U.S., a fund
registered with the Securities and Exchange Commission (SEC) under both SEC
and Internal Revenue Service (IRS) rules must distribute nearly all of its net income
and net realized gains from the sale of securities to its investors at least annually.
Most funds are overseen by a board of directors or trustees  which is charged with
ensuring the fund is managed appropriately by its investment adviser and other
service organizations and vendors, all in the best interests of the fund's investors.

Since 1940 in the U.S., with the passage of the Investment Company Act of
1940 and the Investment Advisers Act of 1940, there have been three basic types of
registered investment companies or mutual funds: open-end funds, unit investment
trusts (UITs); and closed-end funds. Other types of funds that have gained in
popularity are exchange traded funds (ETFs) and hedge funds, discussed below.
Similar types of funds also operate in Canada, however, in the rest of the
world, mutual fund is used as a generic term for various types of collective investment
vehicles, such as unit trusts, open-ended investment companies (OEICs), unitized
insurance funds, undertakings for collective investments in transferable securities
(UCITS) and SICAVs 

The mutual fund industry in India started in 1963 with the formation of unit
trust of India, at the initiative of the government of India and reserve bank. 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 is shared by its unit
holders in proportion to the number of units owned by them.

29
Process of Mutual Funds:

Mutual fund is a mechanism for pooling the investment, made by the

investors, in stock market, securities, shares and debentures as disclosed in offer
document and issuing units to the investors. Units are issued to the investors in
accordance with quantum of money invested by them. Investors of Mutual funds are
known as Unit Holders.

Figure 3.1:Diagram of unit holders

The mutual fund will have a fund manager that trades the fund's investments in

accordance with the fund's investment objective. In the U.S., a fund registered with
the Securities and Exchange Commission (SEC) under both SEC and Internal
Revenue Service (IRS) rules must distribute nearly all of its net income and net
realized gains from the sale of securities to its investors at least annually

As investments are spread across a wide cross-section of industries and

sectors, the risk are reduced. Diversification reduces the risk because all stocks may
not move in the same direction in the same proportion at the same time.

The profits or losses are shared by investors in proportion to their investments.

The Mutual funds normally come out with a number of schemes with different
investment objectives which are launched from time to time. A mutual fund is

30
required to be registered with Securities and Exchanges Board of India (SEBI) which
regulates securities markets before it can collect funds from the public.

There are many types of mutual funds, including aggressive growth fund, asset
allocation fund, balanced fund, blend fund, bond fund, capital appreciation fund,
clone fund, closed fund, crossover fund, equity fund, fund of funds, global fund,
growth fund, growth and income fund, hedge fund, income fund, index fund,
international fund, money market fund, municipal bond fund, prime rate fund,
regional fund, sector fund, specialty fund, stock fund, and tax-free bond fund.The
mutual fund will have a fund manager that trades the fund's investments in accordance
with the fund's investment objective. In the U.S., a fund registered with the Securities
and Exchange Commission (SEC) under both SEC and Internal Revenue
Service (IRS) rules must distribute nearly all of its net income and net realized gains
from the sale of securities to its investors at least annually.

31
 STRUCTURE OF THE MUTUAL FUNDS:

Structure of Indian Mutual Funds

Sponsor Establishes MF as a
company trust registers MF
with SEBI
Managed by a
board of
trustees Mutual fund Hold unit holders fund in
Measures compliance to
SEBI enter into
Agreement with SEBI

Float ,MF funds manages

fund as per
Asset Management SEBIguidelines&AMC
Company agreement

custodian Provides necessary

custodian services

Bankers Provide banking services

Provide registrars
Register transfer services and act as a
agents transfer agents

Figure 3.2 Structure of the Mutual funds

32
 MAJOR MUTUAL FUND COMPANIES IN INDIA
 ABN AMRO Mutual Fund  
 Birla Sun Life Mutual Fund
 Bank of Baroda Mutual Fund (BOB)    
 Housing Development Finance Corporation Limited Mutual Fund (HDFC)  
 Hong Kong and Shanghai Banking Corporation Mutual Fund (HSBC)
 Prudential Industrial Credit And Investment Corporation of India Mutual Fund
(ICICI)  
 Sahara Mutual Fund  
 State Bank of India Mutual Fund (SBI)    
 Tata Mutual Fund

ABN AMRO Mutual Fund :

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO
Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset
Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank a G
is the custodian of ABN AMRO Mutual Fund.

Birla Sun Life Mutual Fund :

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun
Life Financial. Sun Life Financial is a global organization evolved in 1871 and is
being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda
apart from India. Birla Sun Life Mutual Fund follows a conservative long-term
approach to investment. Recently it crossed AUM of Rs. 10,000crores.

Bank of Baroda:
Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30,
1992 under the sponsorship of Bank of Baroda. BOB Asset Management Company
Limited is the AMC of BOB Mutual Fund and was incorporated on November 5,
1992. Deutsche Bank AG is the custodian.

33
Housing Development Finance Corporation Limited Mutual Fund
(HDFC):

HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namely
Housing Development Finance Corporation Limited and Standard Life Investments
Limited.

Hong Kong and Shanghai Banking Corporation Mutual Fund (HSBC):

HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and
Capital Markets (India) Private Limited as the sponsor. Board of Trustees, HSBC
Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.

ING VYSYA Mutual Fund:

ING VYSYA Mutual Fund was setup on February 11, 1999 with the same
named Trustee Company. It is a joint venture of VYSYA and ING. The AMC, ING
Investment Management (India) Pvt. Ltd. was incorporated on April 6, 1998.

Prudential ICICI Mutual Fund:

The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one
of the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund
was setup on 13th of October, 1993 with two sponsors, Prudential Plc. and ICICI Ltd.
The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is
Prudential ICICI Asset Management Company Limited incorporated on 22nd of June,
1993.

Sahara Mutual Fund:

Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial
Corporation Ltd. as the sponsor. Sahara Asset Management Company Private Limited
incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The
paid-up capital of the AMC stands at Rs.25.8crores.

34
State Bank of India Mutual Fund:

State Bank of India Mutual Fund is the first bank sponsored Mutual Fund to
launch offshore fund, the India Magnum Fund with a corpus of Rs.225crores
approximately. Today it is the largest bank sponsored Mutual Fund in India. They
have already launched 35 Schemes out of which 15 have already yielded handsome
returns to investors.

Tata Mutual Fund :

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The
sponsors for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation
Ltd. The investment manager is Tata Asset Management Limited and its Tata Trustee
Company Pvt. Limited. Tata Asset Management Limited is one of the fastest in the
country with more than Rs.7, 703crores (as on April 30, 2005) of AUM.

Reliance Mutual Fund:

Reliance mutual fund has decided to introduce Weekly Dividend Payout Option under
Dividend Option of both Retail Plan and Institutional Plan in Reliance Money Manager
Fund and change the dividend reinvestment day in Weekly Dividend Reinvestment
Option from Friday to Tuesday with effect from 2 May 2018.

Mutual Fund Structure:

SEBI
SPONSOR
TRUSTEE

AMC
OPERATIONS
FUND MANAGER
MKT. / SALES

MKT. SALES MUTUAL FUND

SCHEMES
DISTRIBUTOR

INVESTOR

35
Types of mutual funds:

The various schemes offered by mutual funds would be classified under different
subheads

By objective:

The primary objective of these types of schemes is to preserve capital and capital
appreciation. As per the needs of the investor, schemes are formulated to suit them.

By lock-in period:

The schemes that come under this category are Close-ended and Open-ended
schemes.

Close ended schemes-

Have specific lock in periods and normally tax saving schemes and fixed maturity
plans are examples.

By investment pattern:

Across the available spectrum of securities, broadly Equity and Debt oriented.

Unit Link Investment Plan:

The unique feature of this scheme is that it covers risk, up to the extent of
investment.

Types of mutual fund:

BY
INVESTMENT
BY NATURE OBJECTIVE OTHER SCHEMES

Growth
Open-ended Tax Schemes
Schemes Income Schemes

Balanced Schemes
Close-ended Special Schemes
Schemes Money Schemes
36
 Mutual Fund industry today, with about 34 players and more than five
hundred schemes, is one of the most preferred investment avenues in India. However,
with a plethora of schemes to choose from, the retail investor faces problems in
Selecting funds Factors such as investment strategy and management style are
qualitative, but the, funds record is an important indicator too.Though past
performance alone cannot be indicative of future. Performance, it is, frankly, the only
quantitative way to judge how good a fund is at present. Therefore, there is a need to
correctly assess the past performance of different mutual funds.

Word wide good mutual fund companies are known by their Asset
management companies, and this fame is directly linked to their superior stock
selection skill. For mutual funds to grow, Asset management companies must be held
accountable for their selection. Of stocks.In other words, there must be some
performance indicator that will reveal the quality of stock selection of various Asset
companies.

Return alone should not be considered as the basis of measurement of the

performance of a mutual fund scheme, it should also include the risk taken by the
fund manager because different funds will have different levels of risk attached to
them. Risk associated with a fund, in general, can be defined as variability or
fluctuations in the returns generated by it. The Higher the fluctuations in the returns
of a fund during a given period, higher will be the risk associated with it. These
fluctuations in the returns generated by a fund are resultant of two guiding forces.
First, general market fluctuations, which affect all the securities present in the market,
called market risk or Systematic risk. And second, fluctuations due to specific
securities present in the portfolio of the fund, called unsystematic risk.

The total risk of a given fund is sum of these two and is measured in terms of
standard deviation of returns of the fund.

Systematic risk, on the other hand, is measured in terms of Beta, which

represents fluctuations in the Net Asset Value of the fund vis-a-vis market higher will
be its beta. Beta is calculated by relating the returns on a mutual fund with the returns
in the market. While unsystematic risk can be diversified through investments in a
number of instruments, systematic risk cannot. By using the risk return relationship,

37
we try to assess the competitive strength of the mutual funds vis-a-vis one another in a
better way.

In order to determine the risk-adjusted returns of investment portfolios, several

eminent authors have worked since 1960 to develop composite performance indices to
evaluate a portfolio by comparing alternative portfolios within a particular risk class.

Net Asset Value (NAV):

The net asset value of the fund is the cumulative market value of the assets fund
net of its liabilities. In other words, if the fund is dissolved or liquidated, by selling off
all the assets in the fund, this is the amount that the shareholders would collectively
own. This gives rise to the concept of net asset value per unit, which is the value,
represented by the ownership of one unit in the fund. However, most people refer
loosely to the NAV per unit as NAV ignoring the “per unit”. We also abide by the
same convention.

Concept:

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.

38
ORGANIZATION OF A MUTUAL FUND :

There are many entities involved and the diagram below illustrates the
organizational set up of a mutual fund:

Figure 3.4: Organisation of a Mutual fund

Indian mutual funds are governed by two different structures. The Unit Trust of India
follows one defined by the UTI Act, 1963, and its subsequent amendments. All other
mutual funds follow the Securities and Exchange Board of India's (Mutual Funds)
Regulations, 1996, which are more rigorous from the viewpoint of disclosure and
accountability. Despite the differences, all mutual funds comprise four constituents --
sponsors, trustees, asset management companies (AMC’s) and custodians

Characteristics:

 A mutual fund actually belongs to the investors who have pooled their funds.
The ownership of the mutual fund is in the hands of the investors.

 A mutual fund is managed by investment professionals and other services

providers, who earn fee for their services, form the fund.

39
  The pool of fund invested in a portfolio of marketable investments. The value
of the portfolio is updated every day.

 The investor’s shares in the fund are denominated by “units”.

 The investment portfolio of the mutual fund is created according to the stated
investment objectives of the fund.

Advantages of Mutual Funds:

The advantages of investing in a Mutual Fund are:

 Flexibility

 Choice of schemes

 Tax benefits

 Well regulated

 Professional Management

 Diversification

 Convenient Administration

 Return Potential

Types of Mutual Fund Schemes:

Wide variety of Mutual Fund Schemes exists to cater to the needs of reaching
their financial goals. The table below gives an overview into the existing types of
schemes in the Industry.

By Structure:

 Open - Ended Schemes

 Close – Ended Schemes

 Interval Schemes

40
By Investment Objective

 Growth Schemes

 Income Scheme

 Balanced Schemes

Other Schemes:

 Tax Saving Schemes

 Special Schemes

No matter what type of investor you are, there is bound to be a mutual fund that
fits your style. According to the last count there are more than 10,000 mutual funds in
North American; that means there are more mutual funds than stocks. It’s important to
understand that each mutual fund has different risks and rewards. In general, the
higher the potential return, the higher the risk of loss. Although some funds are less
risky than others, all funds have some level of risk – it’s never possible to diversify
away all risk. This is a fact for all investments.

Each fund has a predetermined investment objective that tailors the fund’s assets,
regions of investments and investment strategies. At the fundamental level, there are
three varieties of mutual funds:

 Equity funds (stocks)

 Fixed – income funds (bonds)

 Money market funds

All mutual funds are variations of these three asset classes. For example,
while equity funds that invest in fast-growing companies are known as growth funds,
equity funds that invest only in companies of the same sector or region are known as
specialty funds. Let’s go over the many different flavours of funds. We’ll start with
the safest and then work through to the more risky.

41
MONEY MARKET FUNDS:

The money market consists of short-term debt instruments, mostly Treasury

bills. This is a safe place to part your money. You won’t get great returns, but you
won’t have to worry about losing your principal. A typical return is twice the amount
you would earn in a regular checking/savings account and a little less than the average
certificate of deposit (CD).

MUTUAL FUNDS:

Costs are the biggest problem with mutual funds. These costs ear into your
return, and they are the main reason why the majority of funds end up with sub-par
performance.

What’s even more disturbing is the way the fund industry hides costs through
a layer of financial complexity and jargon. Some critics of the industry say that
mutual fund companies get away with the fees they charge only because the average
investor does not understand what he/she is paying for.

Fees can be broken down into two categories:

 Ongoing yearly fees to keep you invested in the fund.

 Transaction fees paid when you buy or sell shares in a fund (loads).

NET ASSET VALUE (NAV):

Net Asset Value is the market value of the assets of the scheme minus its
liabilities. The unit per NAV is the net asset value of the scheme divided by the
number of units outstanding on the Valuation Date.

Sale Price:

Is the price you pay when you invest in a scheme it is also called Offer Price.
It may include a sales load.

Repurchase Price:

Is the price at which a close-ended scheme repurchases its units and it may
include a back-end load. This is also called Bid Price.

42
REDEMPTION PRICE:

Is the price at which open-ended schemes repurchase their units and close-
ended schemes redeem on their maturity? Such prices are NAV related.

Sales Load:

Is a charge collected by a scheme when it sells the units? Also called, ‘Front-
end’ load. Schemes that do not charge a load are called ‘No Load’ schemes.

Mutual Funds:

Buying and Selling

You can buy some mutual funds (no-load) by contacting the fund companies
directly. Other funds are sold through brokers, banks, financial planners, or insurance
agents. If you buy through a third party there is a good chance they’ll hit you with a
sales charge (load).

That being said, more and more funds can be purchased through no-
transaction fee programs that offer funds of many companies. Sometimes referred to
as a “fund supermarket,” this service lets you consolidate your holdings and record
keeping, and it still allows you to buy funds without sales charges from many
different companies. Selling a fund is as easy as purchasing one. All mutual funds
will redeem (buy back) your shares on any business day. In the United States,
companies must send you the payment within seven days.

Mutual Funds: Conclusion

A mutual fund brings together a group of people and invests their money in
stocks, bonds, and other securities.

 The advantages of mutual funds are professional management,

diversification, and economics of scale, simplicity and liquidity.

 The disadvantages of mutual funds are high costs, over-diversification,

possible tax consequences, and the inability of management to guarantee a
superior return.

43
  There are many, many types of mutual funds. You can classify funds
based on asset class, investing strategy, region, etc.

 Mutual funds have lots of costs.

 Costs can be broken down into ongoing fees (represented by the expense
ratio) and transaction fees (loads).

 The biggest problems with mutual funds are their costs and fees.

 Mutual funds are easy to buy and sell. You can either buy them directly
from the fund company or through a third party.

Advantages of Mutual Funds:

The advantages of investing in a Mutual Fund are

1. Diversification:

The best mutual funds design their portfolios so individual investments will
react differently to the same economic conditions. For example, economic
conditions like a rise in interest rates may cause certain securities in a
diversified portfolio to decrease in value. Other securities in the portfolio will
respond to the same economic conditions by increasing in value. When a
portfolio is balanced in this way, the value of the overall portfolio should
gradually increase over time, even if some securities lose value.

2. Professional Management:

Most mutual funds pay top flight professionals to manage their investments.
These managers decide what securities the fund will buy and sell.

3. Regulatory Oversight:

Mutual funds are subject to many government regulations that protect

investors from fraud.

4. Liquidity:

44
 It is easy to get your money out of a mutual fund. Write a check, make a call,
and you've got the cash.

5. Convenience:

You can usually buy mutual fund shares by mail, phone or over the Internet.

6. Low Cost:

Mutual fund expenses are often no more than 1.5 percent of your investment.
Expenses for Index Funds are less than that, because index funds are not
actively managed. Instead, they automatically buy stock in companies that are
listed on a specific index.

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.

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

45
you expected. Of course, if you invest in Index Funds, you forego management risk,
because these funds do not employ managers.

CHAPTER-IV

DATA ANALYSIS AND INTERPRATATION

46
DATA ANALYSIS AND INTERPRETATION

Five Major Mutual Fund Companies In India:

 State bank of India (SBI)

 Housing development finance corporation limited (HDFC)
 Industrial credit and investment corporation of India (ICICI)
 Reliance
 Birla sun life (BSL)

STATE BANK OF INDIA (SBI):

Investment Objective :- To provide the investor long-term capital appreciation by

investing in high growth companies along with the liquidity of an open-ended scheme
through investments primarily in equities and the balance in debt and money market
instruments.

MARCH-2021:

Fund Managers: Ms Sohini Andanis

Total Experience: 23 years

Experience in managing this fund: 11 years

Benchmark: BSE 100 Index

47
 SECTORAL ALLOCATION OF STATE BANK OF INDIA (SBI) EQUITY FUND
FROM1stAPRIL, 2021 TO 31stMARCH, 2022

 PARTICULAR APRIL MAY JUNE JULY AUGEST SEPTEMBER OCTOBER NOVEMBER

S 2021 2021 2021 2021 2021 2021 2021 2021

Textiles 0.00   - 0 0.0 0.0 0.00 0.00 0.00

Telecom 6.38   - 6.10 5.8 5.9 3.29 2.12 2.18

Services 1.27 0.00 0.00 0.0 0.0 0.00 0.00 0.00

Pharmaceuticals 8.28 8.18 7.40 6.1 6.0 6.55 5.85 7.80

Metals 7.90 7.44 8.47 9.2 9.6 11.20 10.80 7.18

Media & 1.86 2.12 0.00 0.0 0.0 0.00 0.00 0.00
Entertainment

IT 2.11 1.70 1.85 2.7 2.7 4.55 4.84 3.59

Industrial 8.79 7.65 7.01 6.1 4.3 4.13 4.17 4.34

Manufacturing

Financial 7.29 6.30 8.76 11.3 12.2 18.74 19.66 22.20

Services

Fertilizers & 6.30 6.47 5.91 3.2 3.2 2.94 2.71 2.63
Pesticides

Energy 13.50 12.75 20.31 21.3 20.0 19.75 18.29 18.49

Consumer Goods 8.94 15.90 15.61 18.0 17.6 15.05 14.27 12.40

Construction 5.84 7.78 7.55 6.3 5.8 4.24 3.24 3.12

Cement & 9.37 2.36 0.00 0.0 2.1 2.02 2.13 2.05
Cement Products

Auto Mobiles 1.43 1.51 3.44 3.6 3.6 3.22 3.56 4.00

48
PARTI PARTICULARS DEC JAN FEBRUARY MARCH TOTAL AVERAGE

2021 2022 2022 2022

Textiles 1.83 2.09 2.04 1.90 7.86 0.714

Telecom 2.37 2.13 2.06 2.18 40.5 3.681

Services 0.00 0.00 2.21 2.17 5.64 1.88

Pharmaceuticals 7.33 3.96 3.83 3.95 75.22 6.268

Metals 6.72 5.31 0.00 5.05 88.87 7.405

Media & 0.00 0.00 5.05 0.00 9.03 3.01

Entertainment

IT 6.66 7.09 0.00 9.24 47.03 4.275

Industrial 4.60 4.34 9.48 4.01 68.91 5.742

Manufacturing

Financial Services 26.41 25.61 26.44 22.82 207.73 18.310

Fertilizers & 1.21 0.00 0.00 0.00 34.57 3.841

Pesticides

Energy 18.85 20.69 20.50 21.76 226.19 18.849

Consumer Goods 12.20 8.81 10.20 8.56 155.54 12.961

Construction 4.13 3.30 3.59 3.01 57.9 4.825

Cement & Cement 0.00 0.00 0.00 0.00 20.03 3.338

Products

Auto Mobiles 6.33 7.05 7.47 7.11 48.72 4.06

49
 Table 4.1 Allocation of SBI Fund

PIE CHART TO SHOW THE AVERAGE OF SBI EQUITYFUND

FOR THE LAST ONE YEAR:

Figure 4.1: SBI Equity fund

50
BAR CHART TO SHOW THE AVERAGE OF SBI EQUITY FUND
FOR THE LAST ONE YEAR:

50 47.59
Chart Title
45

40

35

30

25

20 18.84
17.31
15

10
6.26
5 3.84 4.27

0
s er il al
s e s
an
k w O c ar her
B Po uti ftw t
e o O
ac S
a rm
Ph

Graph 4.1: SBI Equity funds

51
BAR CHART TO SHOW THE NET ASSET VALUE OF SBI
EQUITY FUND FOR LAST SIX MONTHS:

Graph

45
Chart Title39.77
40
36.52
35

30

25 24.03

20

15

10

0
APRIL SEP- MARCH
TEMBER

Graph 4.2: NAV of SBI Equity fund

52
Data Interpretation:

The investment in Mutual Fund companies is somehow risky but there were some
trust worthy companies existing in India. STATE BANK OF INDIA (SBI) is one the
company that comes under this category.The investment in Energy sector is having
very high percentage i.e., 18.849 for the last year compared to other sectors because
this particular sector is having the demand that can yield good returns. The investment
in this sector is regular in every month. So the investment in this sector is yielding the
better performance to other sectors.

The lowest percentage sector in this Mutual Fund company is Textiles i.e., 0.7

HOUSING DEVELOPMENT FINANCE CORPORATION

LIMITED (HDFC):

Investment Objective: To generate long-term capital growth from an actively

Managed portfolio of equity related securities.

MARCH-2021

NAV NAV/UNIT

Growth Option 449.47

Dividend Option 11.87

 Past performance may or may not be sustained in the future.

 Performance of the Dividend Option for the investor would be net of

Distribution Tax as applicable.

 Returns less than 1 year period are absolute. Returns equal to or greater than
1year are compounded annualized (CAGR).

 S&P CNX 500 due to an overall sharp rise in the stock prices.

53
  SOURCE: CRISIL Fund Analyzer.

 Risk-free rate assumed to be 5.00% (364-day Treasury bill yield on

(31-03-11).

SECTORAL ALLOCATION OF HOUSING DEVELOPMENT

FINANCE CORPORATION LIMITED (HDFC) EQUITY FUND
FROM 1stAPRIL, 2021 TO 31stMARCH, 2022

  PARTICULARS APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER

2021 2021 2021 2021 2021 2021 2021 2021

Banks 20.78 19.34 18.90 18.01 18.45 21.23 20.04 19.17

Industrial Consumer Goods 6.13 6.00 6.07 4.24 4.95 4.14 3.57 3.52

Petroleum Products 4.09 1.62 0.72  -  -  -  - 1.37

Pharmaceuticals 11.29 12.01 13.23 12.78 13.14 15.65 15.69 13.23

Construction Project 3.39 5.29 5.06 4.62 4.55 4.02 4.64 5.45

Power 1.20   -   - 1.99 1.90 1.77 2.88 1.01

Transport 1.54 1.83 2.06 2.13 2.30 2.33 2.69 2.54

Gas   -   -   -  -   -   -   - 2.02

Ferrous Metals 0.87 0.55 0.47 0.49 0.48 0.56 0.63 0.59

Auto 4.89 3.99 0.85   4.21 4.68 3.34 3.39

Finance 8.42 9.40 10.35 9.96 8.54 7.11 5.88 6.23

54
Consumer Non 11.01 10.23 11.57 12.53 11.42 9.53 10.22 10.20

Durables

Oil 0.55 3.09 4.07 4.96 4.89 5.65 6.20 7.18

Media & Entertainment 6.93 8.27 7.20 7.62 8.01 8.35 8.22 8.09

Telecom   - 3.26 3.11 3.40 4.36 1.52  -  -

Software 6.99 6.89 7.33 6.02 4.45 1.98 4.94 5.17

Construction  -  -  -  - 0.64 1.06 1.12 1.07

Chemicals 0.36 0.38 0.41 0.40 0.45 0.45 0.44 0.55

Pesticides 3.22 1.97 0.85 0.40  -  -  -  -

Textiles-Systems 0.44 0.38 0.32 0.30 0.42 0.36 0.31 0.28

Textiles-Products 0.47 0.56 0.46 0.44 0.41 0.49 0.43 0.40

Engineering  -  -  -  -  -  -  -  -

Hard Ware 1.55 1.50 2.00 1.89 2.26 2.31 2.61 2.53

Auto Ancillary 2.37 2.22 2.01 2.55 2.67 3.69 4.25 4.15

PARTICULARS DECEMBER JANUARY FEBRUARY MARCH TOTAL AVERAGE

2021 2022 2022 2022

Banks 18.67 21.02 21.21 20.76 237.57 19.797

Industrial Consumer 3.55 3.48 3.20 3.48 52.33 4.360

Goods

Petroleum Products 2.14 1.50 1.90 1.68 15.02 1.877

Pharmaceuticals 12.21 10.42 10.22 10.88 150.75 12.562

55
Construction Project 6.32 5.63 5.48 5.45 59.9 4.991

Power 1.09   1.95 1.92 15.71 1.745

Transport 2.76 2.45 2.05 1.96 26.64 2.22

Gas 1.91 2.48 2.55 2.52 11.48 2.296

Ferrous Metals 0.59 2.34 2.22 2.31 12.1 1.008

Auto 3.33 2.92 2.29 2.84 36.73 3.339

Finance 5.69 5.31 4.59 4.93 86.41 7.200

Consumer Non Durables 10.18 11.28 12.62 13.55 134.34 11.195

Oil 7.20 6.66 7.12 6.74 64.31 5.359

Media & Entertainment 7.86 6.93 6.12 6.05 89.65 7.470

Telecom -  - - - 15.65 3.13

Software 5.67 4.10 4.11 4.01 61.65 5.137

Construction 1.10 1.22 1.10 1.26 8.57 1.071

Chemicals 0.61 0.62 1.17 1.29 7.12 0.593

Pesticides - - - - 6.44 1.61

Textiles-Systems 0.31 0.31 0.27 0.28 3.98 0.331

Textiles-Products 0.40 0.39 0.35 0.36 5.17 0.43

Engineering - - - 0.03 0.03 0.03

Hardware 2.48 2.20 1.91 2.19 25.43 2.119

Auto Ancillary 4.39 4.50 3.83 3.48 40.11 3.342

Table 4.2: Allocation of HDFC Equity fund

56
PIE CHART TO SHOW THE AVERAGE OF HDFC EQUITY
FUND FOR THE LAST ONE YEAR:

Graph 4.3: HDFC Equity fund

57
BAR CHART TO SHOW THE AVERAGE OF HDFCEQUITY
FUND FOR THE LAST ONE YEAR:

70

60 58.56

50

40

30
19.79
20
12.56
10 5.35 5.13
1.74
0
ks er il ls e rs
n w O a ar e
B
a
P o
utic ftw O
th
e So
ac
arm
Ph

Graph 4.4 Average of HDFC Equity fund

58
BAR CHART TO SHOW THE NET ASSET VALUE OFHDFC
EQUITY FUND FOR THE LAST ONE YEAR:

250 236.272
211.823
200

150 127.097

100

50

0
APRIL SEP- MARCH
TEMBER

Graph 4.5: NAV of HDFC Equity fund

Data Interpretation:

The investment in Mutual Fund companies is somehow risky but there were
some trust worthy companies existing in India. HOUSING DEVELOPMENT
FINANCE CORPORATION LIMITED (HDFC) is one the company that comes
under this category. The investment in Banks sector is having very high percentage
i.e., 19.797 for the last year compared to other sectors because this particular sector is
having the demand that can yield good returns. The investment in this sector is regular

59
in every month. So the investment in this sector is yielding the better performance to
other sectors.

The lowest percentage sector in this Mutual Fund company is Chemicals i.e.,
0.03

INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF

INDIA (ICICI):

MARCH-2021

Fund Manager’s Objective: - The fund equity exposure stands at ~90% during the
month. The fund booked profits in select counters in software, banks & oil while
increasing its exposure in select counters in capital goods & non-ferrous metals.

Fund Manager: Lalit Kumar (Managing this fund since Dec, 2020 & overall 17 yrs of
equity market experience)

Indicative Investment Horizon: 3 yrs and more

Inception date : 31-03-2017

Average AUM : 896 crores

NAV (As on 31-Mar-21)

Growth option: Rs.17.52

Dividend option: Rs.12.63

Institutional Growth Option: Rs.15.64

Expense Ratio:

Retail option: 2.18%

Institutional option: 1.22%

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 SECTORAL ALLOCATON OF INDUSTRIAL CREDIT AND
INVESTMENT CORPORATION OF INDIA (ICICI) EQUITY
FUND FROM 1st APRIL, 2021 TO MARCH 31st, 2022

PARTICULARS APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER

2021 2021 2021 2021 2021 2021 2021 2021

Banks 9.24 10.76 10.89 11.27 17.46 15.43 13.86 17.40

ConsumerNon 4.28 3.37 3.63 2.62 3.15 5.94 2.09 5.32

Durables

Auto 1.08 0.99 1.08   2.05 4.38 3.17 3.02

Oil 5.42 6.63 6.26 4.30 4.83 6.97 5.26 7.42

 - - - - -   - - -

Ferrous Metals

Pharmaceuticals 2.23 1.68 1.97 6.00 4.00 2.43 2.76 1.78

Finance 1.46 1.50 1.67 1.71 1.34 1.78 7.70 8.95

Non Ferrous Metals 1.49 1.84 1.85 3.67 3.72 5.04 4.21 4.44

61
Industrial Consumer 2.88 3.07 3.98 6.26 3.13 7.42 2.24 4.35
Goods

Telecom Services 6.57 5.26 5.87 6.90 5.80 5.33 5.43 6.20

Power 5.72 4.32 4.23 4.46 6.89 5.40 2.99 6.36

Diversified 4.18 5.49 6.67 4.81 6.57 5.50 6.13 4.18

Materials - - - - - - - -

Petroleum Products 12.27 13.21 12.13 11.12 7.61 8.67 12.88 8.37

Software 7.14 7.28 9.09 7.18 10.11 12.17 12.63 12.88

Construction  - - - - - - - -

Cement 0.98 0.93 1.06 1.20 1.13 1.10 2.54  -

Gas 2.46 2.33 2.32  - - - - -

Transport - - - - 1.52 1.50 1.53

Table 4.3: ICICI Equity fund

62
PIE CHART TO SHOW THE AVERAGE OF ICICI

PRUDENTIAL EQUITY FUND FOR THE LAST ONE YEAR:

Graph 4.6: ICICI Equity fund

63
BAR CHART TO SHOW THE AVERAGE OF ICICI
PRUDENTIAL EQUITY FUND FOR THE LAST ON YEAR:

60
49.87
50

40

30

20
13.01
10.56
10 5.22 5.77
3.15
0
ks er il ls e rs
n w O a ar e
Ba Po uti c ftw O
th
ce So
a
arm
Ph

Graph 4.7: Average of ICICI Equity fund

64
BAR CHART TO SHOW THE NET ASSET VALUEOF
ICICIPRUDENTIAL EQUITY FUND FOR THE LAST SIX
MONTHS:

140
125.02
120 116.39

100
82.25
80
60
40
20
0
APRIL SEP- MARCH
TEMBER
Graph 4.8: NAV of ICICI Equity fund

Data Interpretation:

The investment in Mutual Fund companies is somehow risky but there were
some trust worthy companies existing in India the demand that can yield good returns.
The investment in this sector is regular in every month. So the investment in this
sector is yielding the better performance to other sectors.

65
 CHAPTER-V
FINDINGS, SUGGESTIONS
&
CONCLUSION

66
 5.1FINDINGS.

 Majority of the Investors are from salaried class.

 Most of the people have been investing their money in the share market

belongs to Rs.400000 and above income group.

 Mostly investors prefer monitoring their investment on monthly basis.

 Most of the people invest up to 6% of their annual income in mutual

funds.

 Most of the people between the age group of 25– 35 invest their money in

share market

 Mutual Fund industry gives good returns compared to the banks.

 All the mutual funds have yielded good results i.e., have incurred profits.

 Mutual funds can minimize risk of incurring loss but cannot eliminate risk

completely.

67
 5.2 SUGGESTIONS

 The most vital problem spotted is ignorance. Investors should be made aware
of the benefits. Nobody will invest until and unless he is fully convinced.
 Investors should be made to realize that ignorance is no longer bliss and what
they are losing by not investing.
 Mutual Fund Company needs to give the training of the Individual
Financial Advisors about the Fund/Scheme and its objective, because
they are the main source to influence the investors.
 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, this type of prospective clients should be tapped at an early stage.
 Before making any investment Financial Advisors should first enquire about
the risk tolerance of the investors/customers.
 Their need and time (how long they want to invest). By considering these
three things they can take the customers into consideration.

68
 5.3 CONCLUSION

Running a successful Mutual Fund requires a complete understanding of

the peculiarities of the Indian Stock Market and also the psyche of small investors.
This study has made an attempt to understand the financial behavior of Mutual Fund
Investors in connection with the preferences of the brand (AMC), products, channels,
etc. I observed that many of the people have fear in mutual funds.
They need the knowledge of mutual funds and its related terms. Many people
do not invest in mutual funds due to the lack of awareness although they have money
to invest. As the awareness and income is growing, the numbers of mutual fund
investors are also growing.
“Brand” plays a very important role in investment. People invest in those
companies where they have faith or they are well – known. There are many AMC’s in
Hyderabad but only some perform well because of brand awareness.

Those which are not performing well have good return but they lack brand
image. Reliance, SBIMF, UTI, ICICI Prudential, etc are performing very well with
regard to mutual funds because of brand image. Their asset management is larger than
those companies which are not performing well like principle, sunderam, etc.

Distribution channels are also important for investment in mutual funds.

Financial Advisors are the most preferred channels for investment in mutual funds.
They can change investor’s mind from one investment option to the other.

Many investors directly invest their money through AMC because they do not
have to pay entry load. Only those people invest directly who know about mutual
funds and its operations.

69
 BIBLIOGRAPHY
BOOKS:

 K. Aswathappa, Financial Management, Himalaya publishers, 2008

Fourth edition.
 R.K. Gupta, Financial Analysis, Himalaya Publishers, 2008, seventh
edition.
 John C. Bogle, Securities Analysis Market, Himalaya publishers, 2006,
second edition.
 Lee Gremillion, Mutual Funds industry hand book, Himalaya
Publishers, 2006.
 Preeti Singh, Investment Management, Himalaya Publishers.
 Sundar Sankaran, Indian Mutual Funds, Himalaya Publishers, 2007,
second edition.

www.moneycontrol.com

www.onlineresearchonline.com

Www. mutualfundsindia.com

Association of mutual funds in India

- D.C ANJARIA
Financial management theory and practice 

- - L.M.PRASAD

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