Mutual Funds Complete Project Report

A Summer Training Project Report
On
“PERFORMANCE
COMPARISON OF
DIFFERENT MUTUAL
FUNDS”
An Internship Report submitted in the partial fulfillment of the

requirement for the degree of
MASTER OF BUSINESS ADMINISTRATION

(2009-2011)
UNDER THE GUIDANCE OF: -

SUBMITTED BY: -
Rohit Pal Singh
Kavita Singh
(Co-ordinator)
097609
DAYALBAGH EDUCATIONAL INSTITUTE, FACULTY
OF SOCIAL SCIENCE, AGRA.
ACKNOWLEDGEMENT
With limitless humility, I would like to praise and thank God, the Supreme and the merciful,
who blessed me with all the favorable circumstances to go through this project.
I am highly grateful to my project coordinator, Mr. Rohit Pal Singh for all his guidance and
support during the course of this training. I am indebted to all the staff members of ICICI
Prudential who were always ready to help me.
I wish to express my profound gratitude to Dr. K.Santi Swarup, Deptt. Of Management,

Faculty of Social Sciences for his learned guidance, constant encouragement and valuable
suggestions.
I am highly obliged to my parents, brother and sister. I am also indebted to my venerable

relatives and friends whose love and affection has played a vital role during the course of this
training.
-Kavita Singh
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CONTENTS
ACKNOWLEDGEMENT............................................................................................2
OBJECTIVES OF THE STUDY....................................................................................4
COMPANY’S PROFILE..............................................................................................5
INTRODUCTION......................................................................................................8
MUTUAL FUND INDUSTRY......................................................................................8
HISTORY OF MUTUAL FUND INDUSTRY................................................................10
WHAT IS A MUTUAL FUND?..................................................................................14
MUTUAL FUNDS STRUCTURE...............................................................................16
TYPES OF MUTUAL FUNDS...................................................................................26
BENEFITS OF INVESTING THROUGH A MUTUAL FUND..........................................34
DISADVANTAGES OF MUTUAL FUND....................................................................35
PERFORMANCE MEASURES OF MUTUAL FUNDS...................................................36
PERFORMANCE COMPARISON OF MUTUAL FUNDS OF FIVE COMPANIES..............40
CALCULATION OF RISK FREE RATE OF RETURN...................................................42
Birla Sun Life Mutual Fund...................................................................................43
Kotak Mahindra Mutual Fund...............................................................................48
Escorts Mutual Fund............................................................................................53
ICICI Prudential Mutual Fund................................................................................58
Reliance Mutual Fund..........................................................................................63
DATA ANALYSIS AND INTERPRETATION...............................................................74
CROSS TABULATION............................................................................................86
RESULTS AND FINDINGS......................................................................................91
SUGGESTIONS......................................................................................................92
CONCLUSIONS.....................................................................................................93
REFERENCES........................................................................................................94
APPENDIX.............................................................................................................95
APPENDIX
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OBJECTIVES OF THE STUDY
The objectives of the study is to analyses, in detail the growth pattern of mutual fund
industry in India and to evaluate performance of different schemes floated by most preferred
mutual funds in public fund in public and private sector.
The main objectives of this project are:-
 To study about the Mutual Funds in India
 To study the various Mutual Funds schemes in India.
 To study about the risk factors involved in the Mutual Funds and How to analyze it?
 To study the performance indices that can be used for mutual fund comparison.
 To compare mutual funds of selected five companies on the basis of their return and
Sharpe Index.
 To study the people in which age and income group prefer mutual funds over other
investment options.
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COMPANY’S PROFILE
ICICI Prudential Asset Management Company enjoys the strong parentage of Prudential plc,
one of UK's largest players in the insurance & fund management sectors and ICICI Bank, a
well-known and trusted name in financial services in India.
ICICI Prudential Asset Management Company, in a span of just over eight years, has forged
a position of pre-eminence in the Indian Mutual Fund industry as one of the largest asset
management companies in the country with average assets under management of Rs.
83,069.89 Crore (as of April 30, 2010).
The Company manages a comprehensive range of schemes to meet the varying investment
needs of its investors spread across 230 cities in the country.
At inception – May 1998 As on April 30, 2010

Average Assets Under Management Rs. 160 Crores Rs. 83069.89 Crores
Number of Funds Managed 2 40
Sponsors
Securities and Exchange Board of India, vide its letter no. MFD/PM/567/02 dated June 4,
2002, has accorded its approval in recognizing ICICI Bank Ltd. as a co-sponsor consequent
to the merger of ICICI Ltd. with ICICI Bank Ltd.
ICICI Bank is India's second-largest bank with total assets of Rs. 3,997.95 billion (US$ 100
billion) at March 31, 2008 and profit after tax of Rs. 41.58 billion for the year ended March
31, 2008. ICICI Bank is second amongst all the companies listed on the Indian stock
exchanges in terms of free float market capitalization Free float holding excludes all
promoter holdings, strategic investments and cross holdings among public sector entities.
The Bank has a network of about 1,308 branches and 3,950 ATMs in India and presence in
18 countries. ICICI Bank offers a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery channels and through its
5
specialised subsidiaries and affiliates in the areas of investment banking, life and non-life
insurance, venture capital and asset management.
The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in
Unites States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International
Finance Centre and representative offices in United Arab Emirates, China, South Africa,
Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches
in Belgium and Germany.
ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National
Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on
the New York Stock Exchange (NYSE). (Source: Overview at www.icicibank.com).
Headquartered in London, Prudential plc and its affiliated companies together constitute one
of the world's leading financial services groups. Prudential provides insurance and financial
services in a number of markets around the world, including in Asia, the US, the UK, Europe
and the Middle East.
Founded in 1848, the company has £249 billion in funds under management (as of 31
December 2008) and more than 21 million customers worldwide. Prudential has been writing
life insurance in the United Kingdom for 160 years and has had the largest long-term fund in
the United Kingdom, for over a century. In the United Kingdom, Prudential is a leading
retirement savings and income solutions and life assurance provider. M&G is Prudential's
fund management business in the United Kingdom and Europe, with almost £140 billion in
funds under management (as of 31 December 2008).
In the United States, Jackson National Life, which we acquired in 1986, is one of the largest
life insurance companies providing retirement savings and income solutions. In Asia,
Prudential is the leading Europe-based life insurer in terms of market coverage and number
of top three ranking positions. It is also one of the largest and most successful fund managers
in Asia with more top five market rankings than any other regional player.
Today, Prudential has life insurance and fund management operations spanning 13 diverse
markets in Asia. Prudential plc is incorporated and with its principal place of business in the
United Kingdom. It is not affiliated in any manner with Prudential Financial, Inc., a company
whose principal place of business is in the United States.
VALUES AT ICICI PRUDENTIAL

Every member of the ICICI Prudential team is committed to 5 core values:
• Integrity
• Customer First
• Boundaryless
• Ownership
• Passion.
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MANAGEMENT TEAM
• Mr. Nimesh Shah
Managing Director and Chief Executive Officer
• Mr. Kalyan Prasath
Head - Information Technology
• Mr. Hemant Agarwal
Head – Operations
• Mr. Nimesh Shah
Managing Director and Chief Executive Officer
• Mr. Nilesh Shah
Deputy Managing Director
• Ms. Shashi Singh
Head- Channel Strategy
• Mr. Ashish Kakkar
Head - Human Resources
• Mr. B. Ramakrishna
Chief Financial Officer
• Mr. Krishna Prasad Tumuluri
Head – International Business
FUND MANAGERS
• Mr. S. Naren
• Mr. Chaitanya Pandey
BOARD OF DIRECTORS
Asset Management Company
• Ms. Chanda Kocchar – Chairperson
• Mr. Dileep Choksi
• Mr. Barry Stowe
• Mr. N S Kannan
• Dr. ( Mrs.) Swati A. Piramal
• Mr. Nimesh Shah
• Mr. Vikram B. Trivedi
• Mr. Nilesh Shah
• Mr. Vijay Thacker
INTRODUCTION
7
MUTUAL FUND INDUSTRY
The mutual fund industry in India is one of the emerging industries in India. Today, the
Indian mutual fund industry has 40 players. The number of public sector players has reduced
from 11 to 5. The public sector has gradually receded into the background, passing on a large
chunk of market share to private sector players.
The Association of Mutual Funds in India (AMFI) is the industry body set up to facilitate the
growth of the Indian mutual fund industry. It plays a pro-active role in identifying steps that
need to be taken to protect investors and promote the mutual fund sector.
It is noteworthy that AMFI is not a Self-Regulatory Organisation (SRO) and its

recommendations are not binding on the industry participants. By its very nature, AMFI has
an advisor’s or a counsellor’s role in the mutual fund industry. Its recommendations become
mandatory if and only if the Securities and Exchange Board of India (SEBI) incorporates
them into the regulatory framework it stipulates for mutual funds.
The Indian mutual fund industry follows a 3-tier structure as shown below:
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1. Sponsors
They are the individuals who think of starting a mutual fund. The Sponsor approaches SEBI,
the market regulator and also the regulator for mutual funds. Not everyone can start a mutual
fund. SEBI will grant a permission to start a mutual fund only to a person of integrity, with
significant experience in the financial sector and a certain minimum net worth. These are just
some of the factors that come into play.
2. Trust
Once SEBI is satisfied with the credentials and eligibility of the proposed Sponsors, the
Sponsors then establish a Trust under the Indian Trust Act 1882. Trusts have no legal identity
in India and thus cannot enter into contracts. Hence the Trustees are the individuals
authorized to act on behalf of the Trust. Contracts are entered into in the name of the
Trustees. Once the Trust is created, it is registered with SEBI, after which point, this Trust is
known as the mutual fund.
3. Asset Management Company (AMC)
The Trustees appoint the AMC, which is established as a legal entity, to manage the
investor’s (unit holder’s) money. In return for this money management on behalf of the
mutual fund, the AMC is paid a fee for the services provided. This fee is to be borne by
the investors and is deducted from the money collected from them.
The AMC has to be approved by SEBI and it functions under the supervision of its Board of
Directors, and also under the direction of the Trustees and the regulatory framework
established by SEBI. It is the AMC, which in the name of the Trust, that floats new schemes
and manages these schemes by buying and selling securities.
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HISTORY OF MUTUAL FUND INDUSTRY
The mutual fund industry started in 1963 with the formation of the Unit Trust of India which
was the initiative of the Government of India and the Reserve Bank of India.
The history of mutual funds in India can be broadly classified into four distinct phases : -
First Phase : 1964 – 1987
An Act of Parliament established Unit Trust of India(UTI) on 1963. It was set up by the
Reserve Bank of India and functioned under the Regulatory and administrative control of the
RBI. In 1978, UTI was delinked from RBI and the 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. 6700 crores of AUM.
Second Phase : 1987 – 1993 (Entry of Public Sector Funds)
In 1987, it was the entry of non-UTI, public sector mutual funds setup by public sector banks
and the 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.
Mobilization as
Amount Assets Under % of gross
1992-93
Mobilized Management Domestic
Savings
UTI 11,057 38,247 5.2%
Public
1,964 8,757 0.9%
Sector
Total 13,021 47,004 6.1%
Third Phase : 1993 – 2003 (Entry of Private Sector Funds)
With the entry of the private sector funds in 1993, a new era started in the Indian Mutual
Fund Industry, giving the investors a wider choice of fund families. Also, 1993 was the year
10
in which 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 industry now functions under SEBI Regulations, 1996. At the end of January 2003, there
were 33 mutual funds with total assets of Rs. 1,21,805 crores. The UTI with Rs. 44,541
crores of AUM 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, 835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and certain other schemes.
Growth in Assets under Management
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.
The Assets under Management(AUM) have grown at a rapid pace over the past few years at a
CAGR of 35% for the past few years at a CAGR of 35 percent for the five- year period from
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31 March, 2005 to 31 March, 2009. Over the 10-year period from 1999 to 2009
encompassing varied economic cycles, the industry grew at 22% CAGR.
This growth was despite two falls in the AUM the first being after year 2001 due to dotcom
bubble burst and the second in 2008, consequent to the global economic crisis.
AUM Base and Growth Relative To the Global Industry
India has been amongst the fastest growing markets for mutual funds since 2004 in the five-
year period from 2004 to 2008 (as of December) the Indian mutual fund industry grew at 29
percent CAGR as against the global average of 4 percent . Over this period, the mutual fund
industry in mature markets like the US and France grew at 4 percent, while some of the
emerging markets viz. China and Brazil exceeded the growth witnessed in the Indian market.
AUM to GDP Ratio
The ratio of AUM to India’s GDP , gradually increased from 6 percentin 2005 to 11 percent
in 2009. Despite this however, this continues to be significantly lower than the ratio in
developed countries, where the AUM accounts for 20-70 percent of the GDP.
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WHAT IS AN INVESTMENT?
In finance, the purchase of a financial product or other item of value with an expectation of
favorable future returns. In general terms, investment means the use money in the hope of
making more money.
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INVESTMENT AVENUES
13
Fixed Return Options Variable Return Options
1. Post Office 1. Mutual Funds

2. Public Provident Fund 2. Shares and Stock Markets
3. Bank Fixed Deposits 3. Gold & Silver
4. Government Securities or Gilts 4. Property
5. RBI Taxable Bonds 5. Foreign Exchange
6. Insurance
7. Company Debentures
8. Company Fixed Deposits
9. Infrastructure Bonds
WHAT IS A MUTUAL FUND?
A mutual fund is a legal vehicle that enables a collective group of individuals to:
i. Pool their surplus funds and collectively invest in instruments / assets for a
common investment objective.
ii. Optimize the knowledge and experience of a fund manager, a capacity that
individually they may not have.
iii. Benefit from the economies of scale which size enables and is not available on an
individual basis. Investing in a mutual fund is like an investment made by a
collective.
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14
An individual as a single investor is likely to have lesser amount of money at disposal than
say, a group of friends put together. Now, let’s assume that this group of individuals is a
novice in investing and so the group turns over the pooled funds to an expert to make their
money work for them. This is what a professional Asset Management Company does for
mutual funds. The AMC invests the investors’ money on their behalf into various assets
towards a common investment objective.
Hence, technically speaking, a mutual fund is an investment vehicle which pools investors’
money and invests the same for and on behalf of investors, into stocks, bonds, money market
instruments and other assets. The money is received by the AMC with a promise that it will
be invested in a particular manner by a professional manager (commonly known as fund
15
managers). The fund managers are expected to honor this promise. The SEBI and the Board
of Trustees ensure that this actually happens.
When an investor subscribes for the units of a mutual fund, he becomes part owner of the
assets of the fund in the same proportion as his contribution amount put up with the corpus
(the total amount of the fund). Mutual Fund investor is also known as a mutual fund
shareholder or a unit holder.
Any change in the value of the investments made into capital market instruments (such as
shares, debentures etc.) is reflected in the Net Asset Value (NAV) of the scheme. NAV is
defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a
scheme is calculated by dividing the market value of scheme's assets by the total number of
units issued to the investors.
For example:
A. If the market value of the assets of a fund is Rs. 100,000
B. The total number of units issued to the investors is equal to 10,000.
C. Then the NAV of this scheme = (A)/(B), i.e. 100,000/10,000 or 10.00
D. Now if an investor 'X' owns 5 units of this scheme
E. Then his total contribution to the fund is Rs. 50 (i.e. Number of units held multiplied
by the NAV of the scheme).
MUTUAL FUNDS STRUCTURE

The SEBI (Mutual Funds) Regulations 1993 define a mutual fund (MF) as a fund established
in the form of a trust by a sponsor to raise monies by the Trustees through the sale of units to
the public under one or more schemes for investing in securities in accordance with these
regulations.
16
These regulations have since been replaced by the SEBI (Mutual Funds) Regulations, 1996.
The structure indicated by the new regulations is indicated as under. A mutual fund
comprises four separate entities, namely sponsor, mutual fund trust, AMC and custodian. The
sponsor establishes the mutual fund and gets it registered with SEBI.
The mutual fund needs to be constituted in the form of a trust and the instrument of the trust
should be in the form of a deed registered under the provisions of the Indian Registration Act,
1908.
The Custodian maintains the custody of the securities in which the scheme invests. It also
keeps a tab on corporate actions such as rights, bonus and dividends declared by the
companies in which the fund has invested. The Custodian is appointed by the Board of
Trustees. The Custodian also participates in a clearing and settlement system through
approved depository companies on behalf of mutual funds, in case of dematerialized
securities.
The sponsor is required to contribute at least 40% of the minimum net worth (Rs. 10 crore)
of the asset management company. The board of trustees manages the MF and the sponsor
17
executes the trust deeds in favour of the trustees. It is the job of the MF trustees to see that
schemes floated and managed by the AMC appointed by the trustees are in accordance with
the trust deed and SEBI guidelines
TYPES OF RETURN
There are three ways, where the total returns provided by mutual funds can be enjoyed by
investors:
1. Income is earned from dividends on stocks and interest on bonds. A fund pays out
nearly all income it receives over the year to fund owners in the form of a distribution.
2. If the fund sells securities that have increased in price, the fund has a capital gain.
Most funds also pass on these gains to investors in a distribution.
3. If fund holdings increase in price but are not sold by the fund manager, the fund's
shares increase in price. You can then sell your mutual fund shares for a profit. Funds
will also usually give you a choice either to receive a check for distributions or to
reinvest the earnings and get more shares.
INDICATORS OF INVESTMENT RISK
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There are five main indicators of investment risk that apply to the analysis of stocks, bonds
and mutual fund portfolios. They are alpha, beta, r-squared, standard deviation and the
Sharpe ratio. These statistical measures are historical predictors of investment risk/volatility
and are all major components of modern portfolio theory (MPT).
The MPT is a standard financial and academic methodology used for assessing the
performance of equity, fixed-income and mutual fund investments by comparing them to
market benchmarks.
All of these risk measurements are intended to help investors determine

the risk-reward parameters of their investments. In this article, we'll give
a brief explanation of each of these commonly used indicators.
UNDERSTANDING AND MANAGING RISK
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All investments whether in shares, debentures or deposits involve risk: share value may go
down depending upon the performance of the company, the industry, state of capital markets
and the economy; generally, however, longer the term, lesser the risk; companies may default
in payment of interest/principal on their debentures/bonds/deposits; the rate of interest on an
investment may fall short of the rate of inflation reducing the purchasing power.
While risk cannot be eliminated, skillful management can minimize risk. Mutual Funds help
to reduce risk through diversification and professional management. The experience and
expertise of Mutual Fund managers in selecting fundamentally sound securities and timing
their purchases and sales help them to build a diversified portfolio that minimize risk and
maximizes returns.
The risk return trade-off indicates that if investor is willing to take higher risk then
correspondingly he can expect higher returns and vice versa if he pertains to lower risk
instruments, which would be satisfied by lower returns. For example, if an investors opt for
bank FD, which provide moderate return with minimal risk. But as he moves ahead to invest
in capital protected funds and the profit-bonds that give out more return which is slightly
higher as compared to the bank deposits but the risk involved also increases in the same
proportion.
Thus investors choose mutual funds as their primary means of investing, as Mutual funds
provide professional management, diversification, convenience and liquidity. That doesn’t
mean mutual fund investments risk free. This is because the money that is pooled in are not
invested only in debts funds which are less riskier but are also invested in the stock markets
which involves a higher risk but can expect higher returns.
RISKS ASSOCIATED WITH MUTUAL FUNDS
20
At the cornerstone of investing is the basic principle that the greater the risk you take, the
greater the potential reward. Remember that the value of all financial investments will
fluctuate.
Individual tolerance for risk varies, creating a distinct "investment personality" for each
investor. Some investors can accept short-term volatility with ease, others with near panic. So
whether you consider your investment temperament to be conservative, moderate or
aggressive, you need to focus on how comfortable or uncomfortable you will be as the value
of your investment moves up or down.
• Managing Risks
Mutual funds offer incredible flexibility in managing investment risk. Diversification and
Automatic Investing (SIP) are two key techniques you can use to reduce your investment risk
considerably and reach your long-term financial goals.
• Diversification
When you invest in one mutual fund, you instantly spread your risk over a number of
different companies. You can also diversify over several different kinds of securities by
investing in different mutual funds, further reducing your potential risk.
Diversification is a basic risk management tool that you will want to use throughout your
lifetime as you rebalance your portfolio to meet your changing needs and goals. Investors,
who are willing to maintain a mix of equity shares, bonds and money market securities have a
greater chance of earning significantly higher returns over time than those who invest in only
the most conservative investments.
Additionally, a diversified approach to investing -- combining the growth potential of equities

with the higher income of bonds and the stability of money markets -- helps moderate your
risk and enhance your potential return.
• Systematic Investment Plan (SIP)
The Unitholders of the Scheme can benefit by investing specific Rupee amounts periodically,
for a continuous period. Mutual fund SIP allows the investors to invest a fixed amount of
Rupees every month or quarter for purchasing additional units of the Scheme at NAV based
prices.
21
Here is an illustration using hypothetical figures indicating how the SIP can work for
investors:
Suppose an investor would like to invest Rs.1,000 under the Systematic Investment Plan on a
quarterly basis.
Amount Invested (Rs.) Purchase Price (Rs.) No. of Units

Purchased
Initial 1000 10 100
Investment
1 1000 8.20 121.95
2 1000 7.40 135.14
3 1000 6.10 163.93
4 1000 5.40 185.19
5 1000 6.00 166.67
6 1000 8.20 121.95
7 1000 9.25 108.11
8 1000 10.00 100.00
9 1000 11.25 88.89
10 1000 13.40 74.63
11 1000 14.40 69.44
TOTAL 12,000 - 1,435.90
Average unit cost Rs 12,000/1,435.9 = Rs 8.36
Average unit price 109.6/12 = Rs 9.13
Unit price at beginning of next quarter Rs 14.90
Market value of investment 1435.9 * 14.90= Rs 21,395/-
The investor liquidates his units and gets back Rs 21,395/-
Using the SIP strategy the investor can reduce his average cost per unit. The investor gets the
advantage of getting more units when the market is turned down.
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TYPES OF RISKS
All investments involve some form of risk. Even an insured bank account is subject to the
possibility that inflation will rise faster than your earnings, leaving you with less real
purchasing power than when you started (Rs. 1000 gets you less than it got your father when
he was your age).
Consider these common types of risk and evaluate them against potential rewards when you
select an investment.
• Market Risk
At times the prices or yields of all the securities in a particular market rise or fall due to broad
outside influences. When this happens, the stock prices of both an outstanding, highly
profitable company and a fledgling corporation may be affected. This change in price is due
to "market risk".
• Inflation Risk
Sometimes referred to as "loss of purchasing power." Whenever inflation sprints forward

faster than the earnings on your investment, you run the risk that you'll actually be able to
buy less, not more. Inflation risk also occurs when prices rise faster than your returns.
• Credit Risk
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In short, how stable is the company or entity to which you lend your money when you invest?
How certain are you that it will be able to pay the interest you are promised, or repay your
principal when the investment matures?
• Interest Rate Risk
Changing interest rates affect both equities and bonds in many ways. Investors are reminded
that "predicting" which way rates will go is rarely successful. A diversified portfolio can help
in offseting these changes.
• Exchange Risk
A number of companies generate revenues in foreign currencies and may have investments or
expenses also denominated in foreign currencies. Changes in exchange rates may, therefore,
have a positive or negative impact on companies which in turn would have an effect on the
investment of the fund.
• Investment Risk
The sectoral fund schemes, investments will be predominantly in equities of select companies
in the particular sectors. Accordingly, the NAV of the schemes are linked to the equity
performance of such companies and may be more volatile than a more diversified portfolio of
equities.
• Changes in Government Policy
Changes in Government policy especially in regard to the tax benefits may impact the
business prospects of the companies leading to an impact on the investments made by the
fund.
REGULATORY AUTHORITIES
To protect the interest of the investors, SEBI formulates policies and regulates the mutual
funds. It notified regulations in 1993 (fully revised in 1996) and issues guidelines from time
24
to time. MF either promoted by public or by private sector entities including one promoted by
foreign entities is governed by these Regulations. SEBI approved Asset Management
Company (AMC) manages the funds by making investments in various types of securities.
Custodian, registered with SEBI, holds the securities of various schemes of the fund in its
custody.
According to SEBI Regulations, two thirds of the directors of Trustee Company or board of
trustees must be independent. The Association of Mutual Funds in India (AMFI) reassures
the investors in units of mutual funds that the mutual funds function within the strict
regulatory framework. Its objective is to increase public awareness of the mutual fund
industry. AMFI also is engaged in upgrading professional standards and in promoting best
industry practices in diverse areas such as valuation, disclosure, transparency etc.
MUTUAL FUNDS IN INDIA
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1) ABN AMRO Mutual Fund
2) Benchmark Mutual Fund
3) Birla Sun Life Mutual Fund
4) Bharti AXA Mutual Fund
5) BOB Mutual Fund
6) Canara Robero Mutual Fund
7) DBS Chola Mutual Fund
8) Deutsche Mutual Fund
9) DSP BlackRock Mutual Fund
10)Escorts Mutual Fund
11)Fidelity Mutual Fund
12)Fortis ( ABN ) Mutual Fund
13)Franklin Templeton Mutual Fund
14)HDFC Mutual Fund
15)HSBC Mutual Fund
16)ING Vysya Mutual Fund
17)JM Financial Mutual Fund
18)Kotak Mahindra Mutual Fund
19)LIC Mutual Fund
20)Principal Mutual Fund
21)ICICI Prudential Mutual Fund
22)Reliance Mutual Fund
23)Sahara Mutual Fund
24)SBI Mutual Fund
25)Standard Chartered Mutual Fund
26)Sundaram Mutual Fund
26
27)Tata Mutual Fund
28)Taurus Mutual Fund
29)UTI Mutual Fund
TYPES OF MUTUAL FUNDS
There are wide variety of Mutual Fund schemes that cater to investor needs, whatever the
age, financial position, risk tolerance and return expectations. The mutual fund schemes can
be classified according to both their investment objective (like income, growth, tax saving) as
well as the number of units (if these are unlimited then the fund is an open-ended one while if
there are limited units then the fund is close-ended).
Open-ended schemes
These funds are sold at the NAV based prices, generally calculated on every business day.
These schemes have unlimited capitalization, open-ended schemes do not have a fixed
27
maturity - i.e. there is no cap on the amount you can buy from the fund and the unit capital
can keep growing. These funds are not generally listed on any exchange.
Open-ended funds are bringing in a revival of the mutual fund industry owing to increased
liquidity, transparency and performance in the new open-ended funds promoted by the
private sector and foreign players. Open-ended funds score over close-ended ones on several
counts. Some of these are listed below:
a) Any time exit option : The issuing company directly takes the responsibility of providing
an entry and an exit. This provides ready liquidity to the investors and avoids reliance on
transfer deeds, signature verifications and bad deliveries.
b) Tax advantage : Though Budget 2004 proposals envisage a tax rate of 20.91%(Corporate
investors) and 13.06875% (Non-Corporate investors) on dividend distribution made by the
Debt funds, the funds continue to remain attractive investment vehicles. In equity plans there
is no distribution tax.
c) Any time entry option : An open-ended fund allows one to enter the fund at any time and
even to invest at regular intervals (a systematic investment plan).
The open ended funds offered by ICICI Prudential Mutual Fund are
• Liquid Plan Income Plan
• Gilt-Treasury
• Gilt-Investment
• Balanced Fund
• Growth Fund
• Tax Plan
• FMCG Fund
• Technology Fund
• Monthly Income Plan
• Child Care Plan
• Power and Short Term Plan
Close ended schemes
28
Schemes that have a stipulated maturity period, limited capitalization and the units are listed
on the stock exchange are called close-ended schemes.
These schemes have historically seen a lot of subscription. This popularity is estimated to be
on account of firstly, public sector MFs having floated a lot of close-ended income schemes
with guaranteed returns and secondly easy liquidity on account of listing on the stock
exchanges.
The closed-ended fund managed by ICICI Prudential Mutual Fund is ICICI Premier.
Classification according to investment objectives
Objectives
Mutual funds have specific investment objectives such as growth of capital, safety of
principal, current income or tax-exempt income. In general mutual funds fall into three
general categories:
• Equity Funds invest in shares or equity of companies.
• Fixed-Income funds invest in government or corporate securities that offer fixed rates
of return.
• Balanced Funds invest in a combination of both stocks and bonds.
i) Growth Funds
These funds seek to provide growth of capital with secondary emphasis on dividend. They
invest in shares with a potential for growth and capital appreciation. Because they invest in
well-established companies where the company itself and the industry in which it operates
are thought to have good long-term growth potential, growth funds provide low current
income. Growth funds generally incur higher risks than income funds in an effort to secure
more pronounced growth.
These funds may invest in a broad range of industries or concentrate on one or more industry
sectors. Growth funds are suitable for 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
current income.
ii) Growth and Income Funds
29
Growth and income funds seek long-term growth of capital as well as current income. The
investment strategies used to reach these goals vary among funds. Some invest in a dual
portfolio consisting of growth stocks and income stocks, or a combination of growth stocks,
stocks paying high dividends, preferred stocks, convertible securities or fixed-income
securities such as corporate bonds and money market instruments. Others may invest in
growth stocks and earn current income by selling covered call options on their portfolio
stocks. 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 who also want to maintain a moderate level of
current income.
iii) Fixed-Income Funds
The goal of fixed income funds is to provide current income consistent with the preservation
of capital. These funds invest in corporate bonds or government-backed mortgage securities
that have a fixed rate of return. Within the fixed-income category, funds vary greatly in their
stability of principal and in their dividend yields. High-yield funds, which seek to maximize
yield by investing in lower-rated bonds of longer maturities, entail less stability of principal
than fixed-income funds that invest in higher-rated but lower-yielding securities.
30
Hig
Low Risk h
Some fixed-income funds seek to minimize risk by investing exclusively in securities whose
timely payment of interest and principal is backed by the full faith and credit of the Indian
Government. 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.
iv) Balanced Fund
The Balanced fund 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. Ideal
for investors who are looking for a combination of income and moderate growth.
v) Money Market Funds/Liquid Funds
For the cautious investor, these funds provide a very high stability of principal while seeking
a moderate to high current income. They invest in highly liquid, virtually risk-free, short-term
debt securities of agencies of the Indian Government, banks and corporations 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.
Therefore, they are an attractive alternative to bank accounts. With yields that are generally
competitive with - and usually higher than -- yields on bank savings account, they offer
several advantages. Money can be withdrawn any time without penalty. Although not
insured, money market funds invest only in highly liquid, short-term, top-rated money market
instruments.
Money market funds are suitable for investors who want high stability of principal and
current income with immediate liquidity.
vi) Specialty/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 investors to diversify
31
holdings among many companies within an industry, a more conservative approach than
investing directly in one particular company.
Sector funds offer the 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
sector funds restrict holdings to a particular industry, other specialty funds such as index
funds give investors a broadly diversified portfolio and attempt to mirror the performance of
various market averages.
Index funds generally buy shares in all the companies composing the BSE Sensex or NSE
Nifty or other broad stock market indices. They are not suitable for investors who must
conserve their principal or maximize current income.
A summary is presented in the table below of the various funds and their investment
objectives.
32
33
Comparison with Other Investment Avenues
Investment
Liquidity Safety
Avenues
Fixed Deposits Low Low
Moderate
Equity shares Low
to high 34
Co.Debenture Low Moder

Investment
Liquidity Safety
Avenues
Fixed Deposits Low Low
Moderate
Equity shares Low
to high
Co.Debenture Low Moder
Co. Deposit Low Moder
Life Insurance Low High
Mutual Funds
35
High Moder
(Open ended)
Comparison between FD, Bonds and Mutual Fund – Features
Characteristics FD's Bonds Mutual Funds
Accessibility Low Low High
Tenor Fixed(medium) Fixed(Long) No Lock-in
Min. Investment Rs.1000 Rs.5000 Rs.5000
Tax Benefits None 80L, 88 Dividend Tax-Free
Liquidity Low Very Low Very High
Convenience Medium Tedious Very High
Transparency None None Very High
Funds differ in terms of their risk profile
Equity Funds High Level of Return, but has a high level of risk too
Debt Funds Returns comparatively less risky than equity funds
Liquid and Money Market Provide stable but low level of return
Funds
36
BENEFITS OF INVESTING THROUGH A MUTUAL FUND
A mutual fund is an entity that pools the money of many investors -- its unit-holders -- to
invest in different securities. Investments may be in shares, debt securities, money market
securities or a combination of these. Those securities are professionally managed on behalf of
the unit-holders, and each investor holds a pro-rata share of the portfolio i.e. entitled to any
profits when the securities are sold, but subject to any losses in value as well.
i) Professional investment management
Mutual funds hire full-time, high-level investment professionals. Funds can afford to do so as
they manage large pools of money. The managers have real-time access to crucial market
information and are able to execute trades on the largest and most cost-effective scale.
ii) Diversification
Mutual funds invest in a broad range of securities. This limits investment risk by reducing the
effect of a possible decline in the value of any one security. Mutual fund unit-holders can
benefit from diversification techniques usually available only to investors wealthy enough to
buy significant positions in a wide variety of securities.
iii) Low Cost
A mutual fund let's you participate in a diversified portfolio for as little as Rs.5,000/-, and
sometimes less. And with a no-load fund, you pay little or no sales charges to own them.
iv) Convenience and Flexibility
You own just one security rather than many, yet enjoy the benefits of a diversified portfolio
and a wide range of services. Fund managers decide what securities to trade, collect the
interest payments and see that your dividends on portfolio securities are received and your
rights exercised. It also uses the services of a high quality custodian and registrar in order to
make sure that your convenience remains at the top of our mind.
v) Personal Service
One call puts you in touch with a specialist who can provide you with information you can
use to make your own investment choices. They will provide you personal assistance in
buying and selling your fund units, provide fund information and answer questions about
your account status.
37
vi)Liquidity
In open-ended schemes, you can get your money back promptly at net asset value related
prices from the mutual fund itself.
vii) Transparency
You get regular information on the value of your investment in addition to disclosure on the
specific investments made by the mutual fund scheme.
DISADVANTAGES OF MUTUAL FUND
1. Costs Control Not in the Hands of an Investor: Investor has to pay investment
management fees and fund distribution costs as a percentage of the value of his
investments, irrespective of the performance of the fund.
2. No Customized Portfolios: The portfolio of securities in which a fund invests is a

decision taken by the fund manager. Investors have no right to interfere in the
decision making process of a fund manager, which some investors find as a constraint
in achieving their financial objectives.
3. Difficulty in Selecting a Suitable Fund Scheme: Many investors find it difficult to
select one option from the plethora of funds/schemes/plans available.
PERFORMANCE MEASURES OF MUTUAL FUNDS

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
38
different funds will have different levels of risk attached to them. Risk associated with a fund,
in a 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 NAV of the fund vis-à-vis market. The more
responsive the NAV of a mutual fund is to the changes in the 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, we try to assess the competitive
strength of the mutual funds vis-à-vis one another in a better way.
In order to determine the risk-adjusted returns of investment portfolios, several eminent

authors have worked since 1960s to develop composite performance indices to evaluate a
portfolio by comparing alternative portfolios within a particular risk class. The most
important and widely used measures of performance are:
Ø The Treynor Measure
Ø The Sharpe Measure
Ø Jenson Model
Ø Fama Model
The Treynor Measure
Developed by Jack Treynor, this performance measure evaluates funds on the basis of
Treynor's Index. This Index is a ratio of return generated by the fund over and above risk free
rate of return (generally taken to be the return on securities backed by the government, as
39
there is no credit risk associated), during a given period and systematic risk associated with it
(beta). Symbolically, it can be represented as:
Treynor's Index (Ti) = (Ri - Rf)/Bi.
Where, Ri represents return on fund, Rf is risk free rate of return and Bi is beta of the fund.
All risk-averse investors would like to maximize this value. While a high and positive
Treynor's Index shows a superior risk-adjusted performance of a fund, a low and negative
Treynor's Index is an indication of unfavorable performance.
The Sharpe Measure
In this model, performance of a fund is evaluated on the basis of Sharpe Ratio, which is a
ratio of returns generated by the fund over and above risk free rate of return and the total risk
associated with it. According to Sharpe, it is the total risk of the fund that the investors are
concerned about. So, the model evaluates funds on the basis of reward per unit of total risk.
Symbolically, it can be written as:
Sharpe Index (Si) = (Ri - Rf)/Si
Where, Si is standard deviation of the fund.
While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund,
a low and negative Sharpe Ratio is an indication of unfavorable performance.
Comparison of Sharpe and Treynor
Sharpe and Treynor measures are similar in a way, since they both divide the risk premium
by a numerical risk measure. The total risk is appropriate when we are evaluating the risk
return relationship for well-diversified portfolios. On the other hand, the systematic risk is the
relevant measure of risk when we are evaluating less than fully diversified portfolios or
individual stocks. For a well-diversified portfolio the total risk is equal to systematic risk.
Rankings based on total risk (Sharpe measure) and systematic risk (Treynor measure) should
be identical for a well-diversified portfolio, as the total risk is reduced to systematic risk.
Therefore, a poorly diversified fund that ranks higher on Treynor measure, compared with
another fund that is highly diversified, will rank lower on Sharpe Measure.
Jenson Model
40
Jenson's model proposes another risk adjusted performance measure. This measure was
developed by Michael Jenson and is sometimes referred to as the Differential Return Method.
This measure involves evaluation of the returns that the fund has generated vs. the returns
actually expected out of the fund given the level of its systematic risk. The surplus between
the two returns is called Alpha, which measures the performance of a fund compared with the
actual returns over the period. Required return of a fund at a given level of risk (Bi) can be
calculated as: Ri = Rf + Bi (Rm - Rf)
Where, Rm is average market return during the given period. After calculating it, alpha can
be obtained by subtracting required return from the actual return of the fund.
Higher alpha represents superior performance of the fund and vice versa. Limitation of this
model is that it considers only systematic risk not the entire risk associated with the fund and
an ordinary investor can not mitigate unsystematic risk, as his knowledge of market is
primitive.
Fama Model
The Eugene Fama model is an extension of Jenson model. This model compares the
performance, measured in terms of returns, of a fund with the required return commensurate
with the total risk associated with it. The difference between these two is taken as a measure
of the performance of the fund and is called net selectivity.
The net selectivity represents the stock selection skill of the fund manager, as it is the excess
return over and above the return required to compensate for the total risk taken by the fund
manager. Higher value of which indicates that fund manager has earned returns well above
the return commensurate with the level of risk taken by him.
Required return can be calculated as: Ri = Rf + Si/Sm*(Rm - Rf)
Where, Sm is standard deviation of market returns. The net selectivity is then calculated by
subtracting this required return from the actual return of the fund.
Among the above performance measures, two models namely, Treynor measure and Jenson
model use systematic risk based on the premise that the unsystematic risk is diversifiable.
These models are suitable for large investors like institutional investors with high risk taking
capacities as they do not face paucity of funds and can invest in a number of options to dilute
some risks. For them, a portfolio can be spread across a number of stocks and sectors.
41
However, Sharpe measure and Fama model that consider the entire risk associated with fund
are suitable for small investors, as the ordinary investor lacks the necessary skill and
resources to diversified. Moreover, the selection of the fund on the basis of superior stock
selection ability of the fund manager will also help in safeguarding the money invested to a
great extent.
PERFORMANCE COMPARISON OF MUTUAL FUNDS OF

FIVE COMPANIES
RESEARCH METHODOLOGY
Research is an organized enquiry designed and carried out to provide information for solving
a problem.
Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically.
42
DATA COLLECTION
The task of data collection begins after a research problem has been defined. While
deciding about the method of data collection to be used for the study, the researcher should
keep in mind two types of data viz, primary and secondary.
NAV and corresponding returns of 5 Mutual Funds Schemes:
In this study, we have selected the 5 mutual fund companies. Following is the NAV and
corresponding return of last 1 year starting from 1st April, 2009 to 31st March, 2010. The
funds are chosen randomly from the available means.
Primary data may be described as those data that have been observed and recorded by the
researchers for the first time to their knowledge. Primary data can be classified into two
types:
• Data classified by their nature.

• Data classified according to function.
Primary data can be collected through several methods. Some of the

important ones are:
i. Observation method
ii. Interview method
Secondary data are collected from various websites as well as books, newspapers, research
papers.
TECHNIQUES USED IN THIS STUDY
In this study, we have used various statistics tools like descriptive statistics, percentage,
indices available, etc. for analyzing, interpreting and comparison of different mutual fund
schemes. The Sharpe Index Model is also used to analyze the performance evaluation and
ranking for the difference mutual funds schemes in India.
43
SCOPE OF THE STUDY:
The 5 most preferred public and private sector mutual funds schemes have been taken for the
study. These public and private mutual funds schemes were studies during the period of 1st
April, 2009 to 31st March, 2010.
LIMITATIONS OF THE STUDY:
Due to shortage of time and money, we selected only 5 mutual funds schemes which include
public and private mutual funds. The data was collected for analysis from 1 April, 2009 to 1
April, 2010. My study is based on the limited 5 mutual funds schemes only which affect the
results of the study.
CALCULATION OF RISK FREE RATE OF RETURN

For Calculating Risk free rate of returns the average monthly yields on 91-day government of
India treasury bills.
• Here, 91-DAY GOVERNMENT OF INDIA TREASURY BILLS are used as a risk-

free asset, and they pay a fixed rate of interest and have exceptionally
low default risk.
• The risk-free asset has zero variance in returns (hence is risk-free); it is also
uncorrelated with any other asset (by definition: since its variance is zero).
44
• As a result, when it is combined with any other asset, or portfolio of assets, the
change in return and also in risk is linear.
Source:- www.rbi.com
Month Yield
Apr-09 3.81
May- 3.25
09
Jun-09 3.34
Jul-09 3.22
Aug- 3.34
09
Sep- 3.33
09
Oct-09 3.23
Nov- 3.27
09
Dec- 3.54
09
Jan-10 3.85
Feb- 4.11
10
Mar- 4.33
10
Yields on 91-Day Government of India Treasury
Therefore, the average yield = 3.55% is the risk free rate of return
45
Birla Sun Life Mutual Fund
Birla Sun Life Asset Management Company Limited, the investment manager of Birla
Sunlife Mutual Fund, is a joint venture between the Aditya Birla Group and Sun Life
Financial Services, leading international financial services organization.
Established in 1994, Birla Sunlife AMC provides investors a range of 18 investment options,
which include diversified and sector specific equity schemes, a wide range of debt and
treasury products, and two offshore funds.
Both the sponsors have equal stakes in the AMC. In recognition to its high quality investment
products, Birla Sun Life Asset Management Company became India's first asset management
company to be awarded the coveted ISO 9001:2000 certification by DNV Netherlands.
No. of schemes 71
No. of schemes including 219
options
Gilt Fund 16
Equity Schemes 64
Debt Schemes 106
Short term debt Schemes 17
Equity & Debt 10
Money Market 0
Corpus Under Management: Rs.49983.17 Crs. as on Feb 28, 2009
Key Personnel: Mr. Donald Stewart (Chairman), A Balasubramanian (CEO), Ashok

Suvarna (COO), Abhay Palnitkar (CFO), Sanjay Singal (CMO), Bhavdeep Bhatt (Head
Products).
46
For Performance Comparison we take three Mutual Fund Schemes of
Company:
 Birla Sun Life Equity Fund (Growth)
 Birla Sun Life Income Fund (Growth)
 Birla Sun Life Tax Plan (Growth)
The Monthly NAV & Returns of above three Mutual Fund Schemes as Follows:-
1. Birla Sun Life Equity Fund (Growth)
Month Net Assets Value Monthly Return
Apr-09 123.90 - 183.76 48.3132
May- 183.76 - 195.43 6.3507

09
Jun-09 195.43 - 194.66 -0.394
Jul-09 194.66 - 216.34 11.1374
Aug- 216.34 - 216.34 0

09
Sep- 216.34 - 231.95 7.2155

09
Oct-09 231.95 - 223.08 -3.8241
Nov- 223.08 - 239.77 7.4816

09
Dec- 239.77 - 252.08 5.1341

09
Jan-10 252.08 - 241.77 -4.09
Feb- 241.77 - 237.14 -1.915

10
Mar- 237.14 - 252.91 6.6501

10
AVERAGE RETURN 6.84%
47
Calculation of Sharpe Index:
Sharpe Index = Portfolio average return - Risk free rate of return

Standard Deviation
Rp −R f
S t=
σp
6.84 % − 3.55 %
St =
2. Birla Sun Life Income Fund (Growth) 13 .39
S t = 0.235
Apr-09 32.0807 - 31.9038 -0.5514
May-09 31.9038 - 32.3045 1.2560
Jun-09 32.3045 - 33.0633 2.3489
Jul-09 33.0633 - 32.8129 -0.7573
Aug-09 32.8129 - 33.0589 0.7497
Sep-09 33.0589 - 33.3736 0.9519
Oct-09 33.3736 - 33.9135 1.6177
Nov-09 33.9135 - 33.7813 -0.3898
Dec-09 33.7813 - 33.8415 0.1782
Jan-10 33.8415 - 33.7849 -0.1673
Feb-10 33.7849 - 33.7849 0.0000
Mar-10 33.7849 - 33.9643 0.5310
AVERAGE RETURN
0.4806 %
48

Standard Deviation
Rp −R f
S t=
σp
0.48 % − 3.55 %
St =
0.942
S t = −3.259
3. Birla Sun Life Tax Plan (Growth)
Apr-09 7.13 - 8.65 21.3184
May-09 8.65 - 10.66 23.2370
Jun-09 10.66 - 10.28 -3.5647
Jul-09 10.28 - 11.44 11.2840
Aug-09 11.44 - 11.44 0.0000
Sep-09 11.44 - 12.19 6.5559
Oct-09 12.19 - 11.42 -6.3167
Nov-09 11.42 - 12.24 7.1804
Dec-09 12.24 - 12.87 5.1471
49
Jan-10 12.87 - 12.15 -5.5944
Feb-10 12.15 - 12.09 -0.4938
Mar-10 12.09 - 12.85 6.2862
AVERAGE RETURN 5.4199 %

Standard Deviation
Rp −R f
S t=
σp
5.4199 % − 3.55 %
St =
9.60
S t = 0.1947
Interpretation of the Funds Performance
Particular Average Sharpe Rank

Return Index
Ratio
Birla Sun Life Equity Fund- 6.8383 0.235 I
Growth %
50
Birla Sun Life Income Fund 0.4806 -3.259 III
-Growth %
Birla Sun Life Tax Plan (Growth) 5.4199 0.1947 II
%
Average Return
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
BirlaSun Life Equity Birla Sun Life Income BirlaSun Life Tax Plan
Fund-Growth Fund -Growth (Growth)
Kotak Mahindra Mutual Fund
The fund is promoted by Kotak Mahindra Bank, one of India's leading financial institutions
that offer financial solutions ranging from commercial banking, stock broking, life insurance
and investment banking. Kotak Mahindra Asset Management Company Limited, a wholly
owned subsidiary of Kotak Mahindra Bank, is the asset manager for Kotak Mahindra mutual
fund.
The company is headed by Uday Kotak of Kotak Bank as chairman and the fund
management function is headed by Sandesh Kirkire, chief executive officer. Kotak
Mahindra mutual fund launched its schemes in December 1998 and today manages assets of
51
4, 34,504 investors in various schemes. Kotak Mahindra mutual fund was the first fund house
in the country to launch a dedicated gilt scheme investing only in government securities.
No. of schemes 50
No. of schemes including options 119
Equity Schemes 22
Debt Schemes 74
Equity & Debt 1
Money Market 0
Gilt Fund 7
Corpus Under Management: Rs.36776.2375 Crs. as on May 31, 2010
Key Personnel: Uday S Kotak (Chairman), Sandesh Kirkire (CEO), Alroy Lobo (Chief
Strategist & Global Head Equities Asset Mgmt), V R Narasimhan (CCO), R. Krishnan
(COO, Sandeep Kamath (Compliance), R. Chandrasekaran (IRO)
Company:
 Kotak Equity-FOF-Growth
52
 Kotak Income Plus-(Growth)
 Kotak Tax Saver-Scheme-Growth
1. Kotak Equity-FOF-Growth
Apr-09 18.755 - 20.77 10.7438
May-09 20.77 - 27.76 33.6543
Jun-09 27.76 - 27.516 -0.8790
Jul-09 27.516 - 30.134 9.5145
Aug-09 30.134 - 30.134 0.0000
Sep-09 30.134 - 32.362 7.3936
Oct-09 32.362 - 31.2190 -3.5319
Nov-09 31.2190 - 33.2560 6.5249
Dec-09 33.2560 - 34.354 3.3017
Jan-10 34.354 - 33.1050 -3.6357
Feb-10 33.1050 - 32.9910 -0.3444
Mar-10 32.9910 - 34.8960 5.7743
AVERAGE RETURN
5.7097%

Standard Deviation
Rp −R f
S t=
σp
5.709 % − 3.55 %
St = 53
10 .06
S t = 0.2144
2. Kotak Income Plus-Growth
Apr-09 12.8357 - 13.1026 2.0794
May-09 13.1026 - 13.736 4.8342
Jun-09 13.736 - 13.6629 -0.5249
Jul-09 13.736 - 14.0937 3.1455
Aug-09 14.0937 - 14.0937 0.0000
Sep-09 14.0937 - 14.1651 0.5066
Oct-09 14.1651 - 14.2771 0.7907
Nov-09 14.2771 - 14.5153 1.6684
Dec-09 14.5153 - 14.6471 0.9080
Jan-10 14.6471 - 14.5702 -0.5250
Feb-10 14.5702 - 14.5597 -0.0721
Mar-10 14.5597 - 14.8148 1.7521

Standard Deviation
Rp −R f
S t=
σp
1.2136 % − 3.55 %
St =
1.59
54
S t = −1.4634
3. Kotak Tax Saver Scheme-Growth
Apr-09 9.122 - 9.98 9.4058
May-09 9.98 - 13.789 38.1663
Jun-09 13.789 - 13.447 -2.4802
Jul-09 13.447 - 14.894 10.7608
Aug-09 14.894 - 14.894 0.0000
Sep-09 14.894 - 15.918 6.8753
Oct-09 15.918 - 14.9270 -6.2257
Nov-09 14.9270 - 16.06 7.5903
Dec-09 16.06 - 16.675 3.8294
Jan-10 16.675 - 15.85 -4.9475
Feb-10 15.85 - 15.8110 -0.2461
Mar-10 15.8110 - 17.1080 8.2031

(in %age)
55

Standard Deviation
Rp −R f
S t=
σp
5.911 % − 3.55 %
St =
11 .66
S t = 0.1637
Particular Average Sharp Index Rank

Return Ratio
Kotak Equity-FOF- 5.7097 % 0.2144 I
Growth
Kotak Income Plus- 1.2136 % - 1.4634 III
(Growth)
Kotak Tax Saver- 5.9110 % 0.1637 II
Scheme-Growth
56
Escorts Mutual Fund
Escorts Mutual Fund is promoted by the business conglomerate Escorts group. Escorts Asset
Management Limited acts as the AMC to the mutual fund. Escorts Mutual Fund usually
offers open ended schemes and the fund category is Equity- balanced fund.
The fund is a member of the Escort Group of Companies, which deals with a number of high
growth industries like construction and material handling equipment, farm machinery, two
wheelers, auto ancillary products and financial Services.
No. of schemes 13
Equity Schemes 13
Debt Schemes 7
Equity & Debt 4
Money Market 0
Gilt Fund 2
57
Key Personnel: Rajan Nanda (Chairman & MD), Lalit K Khanna (CEO & Compliance),
Sanjay Arora (CIO), Mohini Sharma (IRO).
Fund Managers: Mr. Jagveer Singh Fauzdar , Mr. Sanjeev Sharma.
For Performance Comparison we take three Mutual Fund
Schemes of Company
 Escorts Growth Plan (Growth)
 Escorts Income Plan (Growth)
 Escorts Tax Plan (Growth)
1. Escorts Growth Plan (Growth)

Apr-09 34.8155 - 36.6330 5.2204
May-09 36.6330 - 56.9001 55.3247
Jun-09 56.9001 - 55.5782 -2.3232
Jul-09 55.5782 - 60.7149 9.2423
Aug-09 60.7149 - 60.7149 0.0000
Sep-09 60.7149 - 63.0134 3.7857
Oct-09 63.0134 - 60.7351 -3.6156
Nov-09 60.7351 - 64.4480 6.1133
Dec-09 64.4480 - 68.3673 6.0813
58
Jan-10 68.3673 - 65.7441 -3.8369
Feb-10 65.7441 - 64.8682 -1.3323
Mar-10 64.8682 - 70.1250 8.1038

Standard Deviation
Rp −R f
S t=
σp
6.897 % − 3.55 %
St =
15 .252
2. Escorts Income Plan (Growth)
S t = 0.210
Apr-09 27.1535 - 28.2081 3.8838
May-09 28.2081 - 27.8613 -1.2294
Jun-09 27.8613 - 28.1730 1.1188
Jul-09 28.1730 - 28.1160 -0.2023
Aug-09 28.1160 - 28.1160 0.0000
Sep-09 28.1160 - 28.3370 0.7860
Oct-09 28.3370 - 28.4620 0.4411
Nov-09 28.4620 - 28.9679 1.7775
Dec-09 28.9679 - 28.9170 -0.1757
Jan-10 28.9170 - 29.0567 0.4831
Feb-10 29.0567 - 29.0088 -0.1649
59
Mar-10 29.0088 - 29.2065 0.6815

Standard Deviation
Rp −R f
S t=
σp
0.6167 − 3.55 %
St =
1.28
S t = −2.289
3. Escorts Income Plan (Growth)

Apr-09 25.9839 - 27.2905 5.0285
May-09 27.2905 - 37.1072 35.9711
Jun-09 37.1072 - 38.6629 4.1924
Jul-09 38.6629 - 40.8944 5.7717
60
Aug-09 40.8944 - 40.8944 0.0000
Sep-09 40.8944 - 42.8570 4.7992
Oct-09 42.8570 - 41.6245 -2.8758
Nov-09 41.6245 - 44.1556 6.0808
Dec-09 44.1556 - 45.8891 3.9259
Jan-10 45.8891 - 44.3687 -3.3132
Feb-10 44.3687 - 42.6067 -3.9713
Mar-10 42.6067 - 45.3606 6.4635

Standard Deviation
Rp −R f
S t=
σp
5.1727 − 3.55 %
St =
10 .449
S t = 0.155
61

Return Ratio
Escorts Growth Plan 6.8970 % 0.210 I
(Growth)
Escorts Income Plan 0.6167 % -2.289 III
(Growth)
Escorts Tax Plan 5.1727 % 0.155 II
(Growth)
ICICI Prudential Mutual Fund
Prudential ICICI Mutual Fund is the largest private sector mutual fund in India with assets of
over Rs.34,119 crore under management as of Aug 2006.
The asset management company, Prudential ICICI Asset Management Company Limited, is a
joint venture between Prudential Plc, Europe's leading insurance company and ICICI Bank,
India's premier financial institution. Prudential Plc holds 55 per cent of the asset management
company and the balance by ICICI Bank.
62
No. of schemes 98
Equity Schemes 59
Debt Schemes 213
Equity & Debt 4
Money Market 0
Gilt Fund 7
Key Personnel: Ms. Chanda Kochhar (Chairman), Nimesh Shah (CEO & CIO), Supriya
Sapre (Compliance), Kamaljeet Saini (IRO)
For Performance Comparison we take three Mutual Fund
Schemes of Company
 ICICI Prudential Growth Plan-(Growth Option)
 ICICI Prudential Income Plan- (Growth Option)
 ICICI Prudential Tax Plan-(Growth Option)
63
1. ICICI Prudential Growth Plan-(Growth Option)
Apr-09 72.94 - 79.73 9.3090
May-09 79.73 - 99.72 25.0721
Jun-09 99.72 - 98.41 -1.3137
Jul-09 98.41 - 107.67 9.4096
Aug-09 107.67 - 107.67 0.0000
Sep-09 107.67 - 116.39 8.0988
Oct-09 116.39- 111.17 -4.4849
Nov-09 111.17 - 118.36 6.4676
Dec-09 118.36 - 123.01 3.9287
Jan-10 123.01 - 116.67 -5.1541
Feb-10 116.67 - 116.96 0.2486
Mar-10 116.96 - 125.02 6.8912

Standard Deviation
Rp −R f
S t=
σp
4.8727 % − 3.55 %
St =
8.189
2. ICICI Prudential Income Plan- (Growth S t = 0.1615
Option)
64
Apr-09 27.7341 - 29.4577 6.2147
May-09 29.4577 - 29.0718 -1.3100
Jun-09 29.0718 - 29.4018 1.1351
Jul-09 29.4018 - 29.2732 -0.4374
Aug-09 29.2732 - 29.2732 0.0000
Sep-09 29.2732 - 29.3743 0.3454
Oct-09 29.3743 - 29.5396 0.5627
Nov-09 29.5396 - 30.0600 1.7617
Dec-09 30.0600 - 29.8737 -0.6198
Jan-10 29.8737 - 29.9950 0.4060
Feb-10 29.9950 - 29.7610 -0.7801
Mar-10 29.7610 - 29.9240 0.5477

Standard Deviation
Rp −R f
S t=
σp
0.6522 % − 3.55 %
St =
1.9472
S t = −1.488
65
3. ICICI Prudential Tax Plan- (Growth Option)
Apr-09 56.88 - 63.84 12.2363
May-09 63.84 - 85.02 33.1767
Jun-09 85.02 - 85.95 1.0939
Jul-09 85.95 - 100.63 17.0797
Aug-09 100.63 - 100.63 0.0000
Sep-09 100.63 - 107.97 7.2940
Oct-09 107.97 - 106.29 -1.5560
Nov-09 106.29 - 113.55 6.8304
Dec-09 113.55 - 121.69 7.1686
Jan-10 121.69 - 118.88 -2.3091
Feb-10 118.88 - 120.47 1.3375
Mar-10 120.47 - 127.34 5.7027
66
Standard Deviation
Rp −R f
S t=
σp
7.3379 % − 3.55 %
St =
9.9567
S t = 0.3804
Particular Average Sharpe Rank

Return Index Ratio
ICICI Prudential Growth Plan- 4.8724 % 0.1615 II
(Growth Option)
ICICI Prudential Income Plan- 0.6522 % -1.488 III
(Growth Option)
ICICI Prudential Tax Plan- 7.3379 % 0.3804 I
(Growth Option)
67
Reliance Mutual Fund
Reliance mutual fund, promoted by the Anil Dhirubhai Ambani (ADAG) group, is one of
the fastest growing mutual funds in India having doubled its assets over the last one year. In
March, 2006, the Reliance mutual fund emerged as the largest private sector fund house in
the country, overtaking Prudential ICICI which has been holding that position for many
years.
The sponsor of the fund is Reliance Capital Limited, the financial services arm of ADAG.
Reliance Capital Asset Management Limited, a wholly owned subsidiary of Reliance Capital
Limited, acts as the AMC to the fund. Directors of the company include Amitabh
Jhunjhunwala, a senior executive of ADAG.
No. of schemes 57
Equity Schemes 60
Debt Schemes 100
Equity & Debt 2
Money Market 0
Gilt Fund 6
68
Key Personnel: Sundeep Sikka (CEO), Madhusudan Kela (Hd-Equity), Rajesh

Derhgawen (Head HRD), Himanshu Vyapak (Sales & Dist), Milind Nesarikar (IRO).
Company:
 Reliance Equity Fund-Growth Plan-(Growth Option)

 Reliance Income Fund-Retail Plan - Growth Plan (Growth Option)
 Reliance Tax Saver (ELSS) Fund-Growth Plan- (Growth Option)
1. Reliance Equity Fund-Growth Plan-(Growth Option)
Apr-09 9.2882 - 10.0227 7.9079
May-09 10.0227 - 13.0391 30.0957
Jun-09 13.0391 - 12.9842 -0.4210
Jul-09 12.9842 - 14.0367 8.1060
Aug-09 14.0367 - 14.0367 0.0000
Sep-09 14.0367 - 14.9553 6.5443
Oct-09 14.9553 - 14.0006 -6.3837
Nov-09 14.0006- 14.7205 5.1419
69
Dec-09 14.7205 - 15.1637 3.0108
Jan-10 15.1637 - 14.5187 -4.2536
Feb-10 14.5187 - 14.4188 -0.6881
Mar-10 14.4188 - 14.8268 2.8296
AVERAGE RETURN 4.3241

Standard Deviation
Rp −R f
S t=
σp
4.3241 % − 3.55 %
St =
9.3198
2. Reliance Income Fund (Growth
S t = 0.0831
Option)
Apr-09 29.0575 - 30.4693 4.8586
May-09 30.4693 - 29.9680 -1.6453
Jun-09 29.9680 - 30.0525 0.2820
Jul-09 30.0525 - 29.9510 -0.3377
Aug-09 29.9510 - 29.9510 0.0000
Sep-09 29.9510 - 30.0241 0.2434
Oct-09 30.0241 - 30.2366 0.7084
70
Nov-09 30.2366 - 30.6048 1.2177
Dec-09 30.6048 - 30.5788 -0.0850
Jan-10 30.5788 - 30.7195 0.4601
Feb-10 30.7195 - 30.6491 -0.2292
Mar-10 30.7195 - 30.8515 0.6604

Standard Deviation
Rp −R f
S t=
σp
0.5111 % − 3.55 %
St =
1.54
S t = −1.9719
3. Reliance Tax Saver (ELSS) Fund (Growth Option)
71
Apr-09 9.714 - 10.7404 10.5662
May-09 10.7404 - 14.0519 30.8322
Jun-09 14.0519 - 14.1409 0.6334
Jul-09 14.1409 - 15.4560 9.3000
Aug-09 15.4560 - 15.4560 0.0000
Sep-09 15.4560 - 16.5706 7.2114
Oct-09 16.5706 - 15.9138 -3.9636
Nov-09 15.9138 - 16.9834 6.7212
Dec-09 16.9834 - 18.2047 7.1911
Jan-10 18.2047 - 17.6641 -2.9696
Feb-10 17.6641 - 17.6091 -0.3114
Mar-10 17.6091 - 18.7234 6.3280

(in %age)
Sharpe Index= Portfolio average return - Risk free rate of return

Standard Deviation
Rp −R f
S t=
σp
5.9616 % − 3.55 %
St =
9.22
S t = 0.2613
72
Return Ratio
Reliance Equity Fund- 4.3241 % 0.0831 II
Growth Plan-(Growth
Option)
Reliance Income Fund- 0.5111 % -1.9719 III
Retail Plan - Growth Plan -
Growth
Reliance Tax Saver 5.9666 % 0.2613 I
(ELSS) Fund-Growth Plan-
(Growth Option)
Analysis of Equity Funds of 5 Companies

1. On the basis of Sharpe’s Index
Fund Sharp
e
Index
Birla Sun Equity Fund 0.235
Kotak Growth 0.214

Plan 4
73
Escorts Growth 0.21
Plan
Reliance Growth Plan 0.083

1
ICICI Pru Growth Plan 0.161

5
On the basis of Sharpe’s index it is seen that Birla Sunlife Mutual

Fund’s risk adjusted performance is best than the rest.
2. On the basis of Return
Fund Return

%
Kotak Growth 5.71

Plan
%
74
Escorts Growth 6.90
Plan
%

%

%
Where as on the basis of return, it is seen that Birla Sunlife Mutual

Fund and Escorts both are doing almost equally good.
Analysis of Income Funds of 5 Companies

Fund Sharp
e
Index
Birla Sun Income Fund -3.259
Kotak Income -
Plan 1.463
75
4
Escorts Income -2.289

Plan
Reliance Income Plan -

1.971
9
ICICI Pru Income Plan -1.488
The income funds of Kotak are doing better than others by the risk-
adjusted performance measure.
Fund Return
Birla Sun Income Fund 0.48%
Kotak Income 1.21%

Plan
76
Escorts Income 0.62%
Plan
Reliance Income Plan 0.65%
ICICI Pru Income Plan 0.51%
On the basis of return it is seen that Kotak Income Plan’s risk

adjusted performance is best than the rest.
Analysis of Tax Saver Plans of 5 Companies

Fund Sharp
e
Index
Birla Sun Life Tax Plan 0.194

7
77
Kotak Tax Saver 0.163
Scheme 7
Escorts Tax 0.155

Plan
Reliance Tax Saver Plan 0.261

3
ICICI Pru Tax 0.380

Plan 4
On the basis of Sharpe’s index it is seen that ICICI Prudentail’s risk

adjusted performance is best than the rest.
Fund Return

%
Kotak Growth 5.71

Plan
%
78
Escorts Growth 6.90
Plan
%

%

%
On the basis of return it is seen that Reliance Mutual Fund’s risk

adjusted performance is best than the rest. But, ICICI Prudential is
also doing good.
79
DATA ANALYSIS AND
INTERPRETATION
80
Research Methodology
a) Research Design: Descriptive Design
b) Data Collection Method: Survey Method
c) Universe: Agra
d) Sampling Method: Non probability convenience sampling method
e) Sample Size: 100 respondents
f) Sampling Unit: Businessmen, Government Servant, Retired Individuals
g) Data Source: Primary data
h) Data Collection Instrument: Structured Questionnaire
81
1) Do you invest your saving in mutual fund?
Investment Number Of Respondents

Yes 68
No 32
Total 100
Investment Willingness
We observe that 68% of all the respondents invest in mutual fund. We have got 32%
of our total respondents who do not invest in any mutual fund at all.
82
Information Number Of Respondents
Yes 56
No 24
Not Much 20
Total 100
2) Do you have complete information about mutual fund?
Awareness Level
We observe that 56% of all the respondents have complete information of mutual
funds. We have got 24% of our total respondents who do not have complete information of
mutual fund at all and 20% of our total respondents have some information of mutual fund.
3) Are you an investor, who is interested in getting good deduction from tax?
83
Information Number Of Respondents
Yes 89
No 11
Total 100
Interested in Tax Deduction
We observe that 89% of all the respondents are interested in getting good deduction
from tax. We have got 11% of our total respondents who are not interested in getting good
deduction from tax at all.
4) Do you know mutual fund is a good instrument of tax saving?
84
Awareness for Tax saving
Number Of
Investment
Respondents
Yes 76
No 24
Total 100
We observe that 76% of all the respondents knows mutual fund is a good instrument
of tax saving. We have got 24% of our total respondents who are mutual fund is a good
instrument of tax saving.
85
5) Among which of the following income group you fall?
Income Group
Income group Number Of Respondents

Upto 1,00,000 25
1,00,001-2,00,000 60
2,00,001-3,00,000 10
3,00,001 & more 5
TOTAL 100
We observe that 25% of all the respondents fall under income group of less than
1,00,000. We have got 60% of our total respondents fall under income group of 1,00,001-
2,00,000 and 10% of our respondents fall under income group of 2,00,001-3,00,000 while
5% of our respondents fall under income group of 3,00,000 & more.
6) Which are the investments you hold at present?

86
Investment Number Of Respondents
Equity market 20
Mutual fund 54
Govt. bond 0
Real estate 9
Bank FD 48
Post office 26
Insurance 45
Investment Holding
We observed that many respondents invest in more than one instrument of saving.
The people are not channelizing all of their savings in just one Investment Avenue.
87
7) What is the Basic purpose of your investments?
Number Of
Investment purpose
Respondents
High return 20
Tax benefit 18
Saving 45
Wealth creation 10
Risk diversification 7
Total 100
Purpose for Investment
We observe that 20% of all the respondents Invest for the purpose of high return, 18%
Invest for the purpose of tax benefit, 45% Invest for the purpose of saving, 10% Invest for the
purpose of wealth creation , 7% Invest for the purpose of risk diversification.
88
Investment Returns Number Of Respondents
Less than 5% 3
5%-10% 65
10-15% 20
15%-20% 7
Greater than 20% 5
Total 100
8) What returns do you receive at present from all your investments?
Returns from Investment
We observe that 3% of all the respondents get less than 5%, 65% of all the respondents get
between 5%-10%, 20% of all the respondents get between 10%-15%, 7% of all the
respondents get between 15%-20% and 5% of all the respondents get more than 20%.
89
9) Which types of funds would you like to prefer for your investment in mutual fund?
Fund Preference
Number Of
Investment preference
Respondents
Equity fund 65
Debt fund 11
Balanced fund 24
Total 100
We observe that 65% of all the respondents prefer investment in equity fund, 11% of
all the respondents prefer investment in Debt fund, and remaining 24% of all the respondents
prefer investment in balanced fund.
90
10) Give your preference for tax saving plan of ICICI PRUDENTIAL ?
ICICI Tax saving Plan
Investment Preference for

Number Of Respondents
ICICI
Most preferred 12
Favorably preferred 16
Preferred 44
Least preferred 11
Not preferred 17
Total 100
We have observed that a large number of investors prefer ICICI tax plan.
91
CROSS TABULATION
92
NOTE: - The cross tabulation is done to analyze that how many investors in
various classes and age groups prefer Mutual Funds over other investment
options.
Age Wise Break up of “Service-Pvt” Class Respondents
Service Class 20-30 30-40 40-50 50-60 >60 Total
Equity Market 5 6 1 0 0 12
Mutual Funds 12 8 2 0 0 22
Govt. Bonds 0 0 0 0 0 0
Real Estate 0 1 0 0 0 1
Bank Fixed 3 1 0 0 0 4
Deposits
Post Office 0 1 0 0 0 1
Life Insurance 4 1 1 0 0 6
Total 25 20 5 0 0 50
14
12
10
8
20-30
6
4 30-40
2 40-50
0
50-60
>60
It is observed that people in the age group of 20-30 years are more open to mutual funds
holding and equity market. The share of mutual fund holding decreases as the age increases.
93
It is observed that people above the age of 40 prefer Life Insurance policies and Government
Securities over Equity and Mutual Funds.
Age wise break up of “Service - Govt” Class respondents
Professional 20-30 30-40 40-50 50-60 >60 Total
Govt. Bonds 0 0 0 0 0 0
Deposits
Total 3 8 8 1 0 20
94
6
5
4
3 20-30
2 30-40
1 40-50
0
50-60
>60
We observe that people in the age category of 30-40 and 40-50 years have a certain
preference for Equity holdings, Mutual Fund, Real Estate. However these people are very
conscious for the assured return and security.
Age Wise Break up of “Business” Class Respondents
Business Class 20-30 30-40 40-50 50-60 >60 Total
Govt. Bonds 0 0 0 0 0 0
Deposits
Total 3 17 1 1 0 22
95
7
6
5
4
20-30
3
2 30-40
1 40-50
0
50-60
>60
We observe that maximum classification of investment is made in 30-40 age group investors.
Also they are holding a diversified portfolio which includes PPF, Postal Schemes, Fixed
Deposit, as well as Equity Schemes (Mutual fund, Stock Market).
Age group 20-30 holds investments in Equity Market, Bank FD, and some also hold their
Money in Real Estate. Business class people focuses more on high return with moderate
security of return so majority of their investment is made in Mutual Investment.
Age wise break up of “Retired” Class respondents
Retired Class 20-30 30-40 40-50 50-60 >60 Total
96
Govt. Bonds 0 0 0 0 0 0
Deposits
Total 0 0 0 4 4 8
3.5
3
2.5
2
20-30
1.5
1 30-40
0.5 40-50
0
50-60
>60
It is observed in this category mostly consisting of retired people the preference for mutual
fund holding is low. However, Bank Fixed Deposits, Post Schemes, Life Insurance have the
greatest preference amongst people in this category.
97
RESULTS AND FINDINGS
We observe that 68% of all the respondents invest in mutual fund. We have got 32% of our
total respondents who do not invest in any mutual fund at all.
We observe that 56% of all the respondents have complete information of mutual fund. We
have got 24% of our total respondents who do not have complete information of mutual fund
at all and 20% of our total respondents have some information of mutual fund.
We observe that 89% of all the respondents are interested in getting good deduction from tax.
We have got 11% of our total respondents who are not interested in getting good deduction
from tax at all.
We observe that 76% of all the respondents knows mutual fund is a good instrument of tax
saving. We have got 24% of our total respondents who are mutual fund is a good instrument
of tax saving.
We observe that our respondents invest in more than one instrument of saving.
We observe that 20% of all the respondents Invest for the purpose of high return, 18% Invest
for the purpose of tax benefit, 45% Invest for the purpose of saving, 10% Invest for the
purpose of wealth creation ,7% Invest for the purpose of risk diversification.
We observe that 3% of all the respondents get less than 5%, 65% of all the respondents get
between 5%-10%, 20% of all the respondents get between 10%-15%, 7% of all the
respondents get between 15%-20% and 5% of all the respondents get more than 20%.
We observe that 65% of all the respondents prefer investment in equity fund, 11% of all the
respondents prefer investment in Debt fund, and remaining 24% of all the respondents prefer
investment in Balanced fund.
We have observed that most of the investors prefer to save in ICICI tax plan.
98
SUGGESTIONS
There is need to build awareness of the new funds among the investors with constantly being
in contact with them.
Some of investors have asked for periodical market report about stock market so that they can
get the knowledge properly.
AMC’s should go for increasing more awareness about different facilities of investment such
as SIP& STP among investors.
ICICI must try to locate hard working distributors who are providing good business in their
respective geographical area.
Investors are never going to accept the entry load during NFO. So such type of activity
should be avoided as much as possible.
The company should advertise their tax saving plan more so that they can gain more
customers.
99
CONCLUSIONS
The mutual fund investors prefer more of the equity fund as they want more return on their
money. They avoid going in the debt fund because they can get same amount of return on
their banks that is also without taking any risk.
Usually people preferred to invest in mutual fund during NFO rather than seeing the
performance of mutual fund scheme. Sometimes due to lack of detailed awareness about
mutual fund schemes the investors seek advice of distributors.
Investors feel that the AMC should go for more promotional activities & should try to come
up with new innovative schemes which can easily be understood by the investors.
Even after seeing the market crash in May 2006 people still thinks that mutual fund is much
reliable way to invest in stock market. So investors are not going for redemption during crash
& were ready to wait. In fact during the crash time many people were ready to invest in
mutual fund.
People will not accept the entry load if the company would any such type loads during NFO
because during NFO the investors were not sure whether the given scheme can really give
them better return or not.
100
REFERENCES
I. Value research
II. Economic times Newspaper
III. www.icicipruamc.com
IV. www.reliancemutual.com
V. Indian Mutual Fund Industry –The Future in a Dynamic Environment – A report by KPMG.
VI. www.nseindia.com
VII.www.bseindia.com
VIII.www.rbi.org.in
IX. www.kotakmutual.com
X. www.escortsmutual.com
XI. www.mutualfund.birlasunlife.com
XII.www.sebigov.in
XIII.Gupta,Gitanjali and Panwar, Sudha, Investment Performance of Mutual Funds, April 2009.
101
APPENDIX
QUESTIONNAIRE
PART A
1. Name: Mrs/Ms/Mr _______________________________________
2. Age
(a) Between 20 – 30 years
(b) Between 30 – 40 years
102
(c) Between 40 – 50 Years
(d) Between 50 – 60 Years
(e) More than 60 Years
3. Contact Nos. / e-mail: _______________________________
4. Profession: _______________________________________
PART - B
1) Do you invest your saving in mutual fund?
a) Yes
b) No
2) Do you have complete information about mutual fund?
a) Yes
b) No
c) Not Much
3) Are you an investor, who is interested in getting good deduction from tax?
a) Yes
b) No
4) Do you know mutual fund is a good instrument of tax saving?
a) Yes
b) No
5) Among which of the following income group you fall?
103
a) Upto 1,00,000
b) 1,00,001-2,00,000
c) 2,00,001-3,00,000
d) 3,00,001 & more
6) Which are the investments you hold at present?
a) Equity market
b) Mutual fund
c) Govt. bond
d) Real estate
e) Bank FD
f) Post office
g) Insurance
7) What is the Basic purpose of your investments?
a) High return
b) Tax benefit
c) Saving
d) Wealth creation
e) Risk diversification
8) What returns do you receive at present from all your investments?
a) Less than 5%
b) 5%-10%
c) 10-15%
d) 15%-20%
e) Greater than 20%
9) Which types of funds would you like to prefer for your investment in mutual fund?
a) Equity fund
104
b) Debt fund
c) Balanced fund
10) Give your preference for tax saving plan of ICICI PRUDENTIAL?
a) Most preferred
b) Favorably preferred
c) Preferred
d) Least preferred
e) Not preferred
11) Rank the following investment options according to your preference.
a) Equity market
b) Mutual fund
c) Govt. bond
d) Real estate
e) Bank FD
f) Post office
g) Insurance
105

Mutual Funds Complete Project Report

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Mutual Funds Complete Project Report

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A Summer Training Project Report

An Internship Report submitted in the partial fulfillment of the

MASTER OF BUSINESS ADMINISTRATION

UNDER THE GUIDANCE OF: -

I wish to express my profound gratitude to Dr. K.Santi Swarup, Deptt. Of Management,

I am highly obliged to my parents, brother and sister. I am also indebted to my venerable

The main objectives of this project are:-

 To study about the Mutual Funds in India

 To study the various Mutual Funds schemes in India.

At inception – May 1998 As on April 30, 2010

VALUES AT ICICI PRUDENTIAL

It is noteworthy that AMFI is not a Self-Regulatory Organisation (SRO) and its

3. Asset Management Company (AMC)

First Phase : 1964 – 1987

Second Phase : 1987 – 1993 (Entry of Public Sector Funds)

UTI 11,057 38,247 5.2%

Total 13,021 47,004 6.1%

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

Fourth Phase – Since February 2003

Growth in Assets under Management

AUM Base and Growth Relative To the Global Industry

AUM to GDP Ratio

There are three fundamentals of investment : -

1. Post Office 1. Mutual Funds

WHAT IS A MUTUAL FUND?

A. If the market value of the assets of a fund is Rs. 100,000

B. The total number of units issued to the investors is equal to 10,000.

C. Then the NAV of this scheme = (A)/(B), i.e. 100,000/10,000 or 10.00

D. Now if an investor 'X' owns 5 units of this scheme

MUTUAL FUNDS STRUCTURE

INDICATORS OF INVESTMENT RISK

All of these risk measurements are intended to help investors determine

UNDERSTANDING AND MANAGING RISK

RISKS ASSOCIATED WITH MUTUAL FUNDS

Additionally, a diversified approach to investing -- combining the growth potential of equities

• Systematic Investment Plan (SIP)

Amount Invested (Rs.) Purchase Price (Rs.) No. of Units

Sometimes referred to as "loss of purchasing power." Whenever inflation sprints forward

• Interest Rate Risk

• Changes in Government Policy

MUTUAL FUNDS IN INDIA

2) Benchmark Mutual Fund

3) Birla Sun Life Mutual Fund

4) Bharti AXA Mutual Fund

5) BOB Mutual Fund

6) Canara Robero Mutual Fund

7) DBS Chola Mutual Fund

8) Deutsche Mutual Fund

9) DSP BlackRock Mutual Fund

10)Escorts Mutual Fund

11)Fidelity Mutual Fund

12)Fortis ( ABN ) Mutual Fund

13)Franklin Templeton Mutual Fund

14)HDFC Mutual Fund

15)HSBC Mutual Fund

16)ING Vysya Mutual Fund

17)JM Financial Mutual Fund

18)Kotak Mahindra Mutual Fund

19)LIC Mutual Fund

20)Principal Mutual Fund

21)ICICI Prudential Mutual Fund

22)Reliance Mutual Fund

23)Sahara Mutual Fund

24)SBI Mutual Fund