Introduction On A Study On Investment Avenues in Mutual Funds"

INVESTMENT AVENUES IN MUTUAL FUNDS
INTRODUCTION ON
A STUDY ON INVESTMENT AVENUES IN
MUTUAL FUNDS”.
In today’s market people invest money to gain good returns. So when they
take decision to invest, they mostly look out for Investment Company
where they can get more income.
Investment instruments can be classified into close-ended and open-ended

investment companies. In Close-ended Mutual Fund, the corpus of the fund
and its duration are prefixed and once the period is over and/or target is
reached, the door is closed for investors. These units are publicly traded
through stock exchange and generally, there is no repurchase facility by the
fund. The main objective of this fund is capital appreciation. In Open-
ended Mutual Funds the size of the fund and/or the period of the fund is not
predetermined, the investors are free to buy and sell any number of units at
any point of time. These units are not publicly traded but the fund is ready
to repurchase them resell them at any time. The main objective of this fund
is income generation.
If we talk about the investment options today, in India we have many

investment companies like UTI, LIC etc, who have their own special ways
of servicing the customers. The investors also feel that they are worth to be
the part of that company. These days, people mainly look for minimizing
tax. So normally they look out for some investments which can help them
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OXFORD COLLEGE OF BUSINESS MANAGEMENT
in doing so. When it comes to this point of view, people mainly look out
for mutual fund.
Mutual fund is a pool of funds which is divided into units of equal value
and sold to investing public and the funds so collected are utilized for
collective investments in various capitals and money market instrument.
The project “Investment Options for Investors in Mutual Funds” was

undertaken with reference to Kotak Mahindra Asset Management Co Ltd
(KMAMCL). This is one of the leading players in the Mutual Fund market
with different schemes.
THEORETICAL BACKGROUND OF THE STUDY
MUTUAL FUND
Mutual Funds have been growing at an unprecedented pace throughout the

world. In India, the Mutual Fund Industry started with the establishment of
UTI in 1964. The private sector Mutual Fund entered the Scene in early
1990 s and introduced better service standards and wider product choices.
The Indian Mutual Fund industry has not performed up to the mark in
gaining investor confidence. The assets have been garnered based on
performance rather than confidence of investor.
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CONCEPT AND ORIGIN OF MUTUAL FUND
Persons investing must ensure a clear understanding of the investment

environment; Investing means committing of money for the purchase of
assets, based on a careful analysis of risks and rewards anticipated over a

period of time. Depending upon the characteristics of individuals there
exists a broad spectrum of purposes for Investors seeking monetary returns.
Investors have a wide variety of opportunity to commit funds to various
types of saving plans involving bonds, preferred stocks and common stocks
and other types of portfolio are available.
In contrast to the large investors who can engage experienced investment

Advisors in the selection and supervision of their funds, the small
investors, by their nature and other limitations cannot construct and
successfully manage investment Portfolio. They lack the proper technical
knowledge of the capital market and the share market transactions and
consequently may suffer heavy losses.
The basic principles of investment trusts are diversifying the securities

purchased for the trust and provide expert management. It reduces the risk
of capital depreciations and poor dividends. At the same time the investors
are given the benefit of expert management through trained experienced
and specialized personnel, which are the ordinary investors usually lacks.
There are two main types of investment companies. The first group is
variously called Management investment trust or a closed end companies
in U.S.A And Japan. The second is the unit trust type and by far the more
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important one. These are referred to as open end investment companies or

as mutual funds as they are usually called. These may be either fixed or
flexible.
MEANING OF MUTUAL FUNDS

Mutual fund is a pool of funds which is divided into units of equal value
and sold to investing public and the funds so collected are utilized for
collective investment in various capital and money market instrument
DEFINITIONS
The SEBI (MF) Regulations, 1993 defines mutual fund as “A fund
established in the form of a trust by a sponsor to raise money 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.”
CHARACTERISTICS OF MUTUAL FUND

1. A mutual fund actually belongs to the investors who have pooled their
funds. The ownership of the Mutual Fund lies in the hands of the
investors.
2. A Mutual Fund is managed by investment professionals and other
service providers, who earn a fee for their services.
3. The pool of funds is invested in a portfolio of marketable securities. The
value of the portfolio is updated every day.
4. The investor’s share in the fund is denominated by units. The unit value
depends upon the value of the portfolio held by the fund. Hence the
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value changes almost every day and it is called Net Asset Value or
NAV.
5. The investment portfolio of the Mutual fund is invested according to the
stated Investment objectives of the fund.
MEANING OF INVESTMENT
The use of money for the purpose of making more money, to gain income,
increase capital or both.
DEFINITION OF INVESTMENT
Physical investment is the current product set aside during a given period
to be used for future production.
STRUCTURE OF THE INDIAN MUTUAL FUND

Structure wise Mutual fund Industry can be classified in to three categories:
UNIT TRUST OF INDIA

The Indian Mutual Fund industry is dominated by the Unit Trust of India,
which has a total corpus of Rs.51,100 crores collected from over 20 million
investors. The UTI has many funds/ schemes in all categories i.e. Equity,
Balanced, Debt, Money Market etc. With some being open ended and some
being close-ended. The Unit scheme 1964 commonly referred to as US 64,
which is a balanced fund, is the biggest scheme with a corpus of about
10,000 crores.
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PUBLIC SECTOR MUTUAL FUNDS

The second largest category of mutual funds is the ones floated by
nationalized Banks. Canbank asset management floated by Canara Bank
and SBI Funds Management floated by State Bank of India are the largest
of these. GIC AMC floated by General Insurance Corporation and Jeevan
Bima Sahayog AMC floated by the LIC are some of the other prominent
ones. The aggregate corpus of the funds managed by this category of
AMC’s is around Rs. 8,300 crores.
PRIVATE SECTOR MUTUAL FUND

The third largest category of mutual funds is the ones floated by the Private
Sector Domestic Mutual funds and the Private Sector Foreign Mutual
Funds.
The largest of these in Private Sector Domestic Mutual funds are

Cholamandalam Asset Management Co.Ltd., J.M Capital Management Co.
Ltd., Escort Asset Management Ltd., Birla Sun Life Asset Management
Pvt.Ltd., and in Private Sector Foreign Mutual Funds these are Alliance
Capital Asset Management Pvt.Ltd., Prudential ICICI Management Co.
Ltd., Sun F&C Asset Management Pvt.Ltd., and Zurich Asset Management
Co. Pvt.Ltd. The aggregate corpus of the assets managed by this category
of AMC’s is about Rs. 42,200 crores.
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CONSTITUENTS OF MUTUAL FUND
There are many entities involved and the diagram below illustrates the
Constitution of a mutual fund:
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ORGANIZATION OF A MUTUAL FUND

All mutual funds comprise four constituents – Sponsors, Trustees, Asset
Management Company (AMC) and Custodians.
SPONSORS:
The sponsors initiate the idea to set up a mutual fund. It could be a
registered company, scheduled bank or financial institution. A sponsor has
to satisfy certain conditions, such as capital, record (at least five years’
operation in financial services), and de-fault free dealings and general
reputation of fairness. The sponsors appoint the Trustee, AMC and
Custodian. Once the AMC is formed, the sponsor is just a stakeholder.
TRUST/ BOARD OF TRUSTEES:

Trustees hold a fiduciary responsibility towards unit holders by protecting
their interests. Trustees float and market schemes, and secure necessary
approvals. They ensure if the AMC’s investments are within well-defined
limits, whether the fund’s assets are protected, and also ensure that unit
holders get their due returns. They also review any due diligence by the
AMC. For major decisions concerning the fund, they have to take the unit
holders consent. They submit reports every six months to SEBI; investors
get an annual report. Trustees are paid annually out of the fund’s assets –
0.5 percent of the weekly net asset value.
FUND MANAGERS/ AMC:

The Fund Managers/Asset Management Company manages money of the
investors. An AMC takes decisions, compensates investors through
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dividends, maintains proper accounting and information for pricing of

units, calculates the NAV, and provides information on listed schemes. It
also exercises due diligence on investments, and submits quarterly reports
to the trustees. A fund’s AMC can neither act for any other fund nor
undertake any business other than asset management. Its net worth should
not fall below Rs. 10 crores. And, its fee should not exceed 1.25 percent if
collections are below Rs. 100 crores and 1 percent if collections are above
Rs. 100 crores. SEBI can pull up an AMC if it deviates from its prescribed
role.
CUSTODIAN:
Often an independent organization, it takes custody of securities and other
assets of mutual fund. Its responsibilities include receipt and delivery of
securities, collecting income-distributing dividends, safekeeping of the
units and segregating assets and settlements between schemes. Their
charges range between 0.15-0.2 percent of the net value of the holding.
Custodians can service more than one fund.
ADVANTAGES OF MUTUAL FUNDS

If mutual funds are emerging as the favorite investment vehicle, it is
because of the many advantages they have over other forms and avenues of
investing, particularly for the investor who has limited resources available
in terms of capital and ability to carry out detailed research and market
monitoring. The following are the major advantages offered by mutual
funds to all investors:
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1. PORTFOLIO DIVERSIFICATION
Mutual Funds normally invest in a well-diversified portfolio or securities.
Each investor in a fund is a part owner of all of the fund’s assets. This
enables him to hold a diversified investment portfolio even with a small
amount of investment that would otherwise require big capital.
2. PROFESSIONAL MANAGEMENT
Even if an investor has a big amount of capital available to him, he benefits
from the professional management skills brought in the management of the
investor’s portfolio. The investment management skills, along with the
needed research into available investment options, ensure a much better
return than what an investor can manage on his own. Few investors have
the skills and resources of their own to succeed in today’s fast moving,
global and sophisticated markets.
3. REDUCTION/DIVERSIFICATION OF RISK
An investor in a mutual fund acquires a diversified portfolio, no matter
how small his investment. Diversification reduces the risk of loss, as
compared to investing directly in one or two shares or debentures or other
instruments. When an investor invests directly, all in the pool of funds with
other investors, any loss on one or two securities is also shared with other
investors. This risk reduction is one of the most important benefits of a
collective investment vehicle like the mutual fund.
4. REDUCTION OF TRANSACTION COST

What is true of risk is also true of the transaction costs. A direct investor
bears all the costs of investing such as brokerage or custody of securities.
When going through a fund, he has the benefit of economies of scale; the
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funds pay lesser costs because of larger volumes, a benefit passed on to its
investors.
5. LIQUIDITY
Often, investors hold shares or bonds that they cannot directly, easily and
quickly sell. Investment in a mutual fund, on the other hand, is more liquid.
An investor can liquidate the investment, by selling the units to the fund if
open-ended or selling them in the market if the fund is close-ended, and
collect funds at the end of a period specified by the mutual fund or the
stock market.
6. CONVENIENCE AND FLEXIBILITY

Mutual Fund management companies offer many investor services that a
direct market investor cannot get. Investors can easily transfer their
holdings from one scheme to the other; get updated market information,
and so on.
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RISK FACTORS ASSOCIATED WITH MUTUAL FUNDS
1. Mutual funds & securities investments are subject to market risks and
there is no assurance or guarantee that the objectives of the Scheme will
be achieved.
2. Past performance of the Sponsor or that of existing Schemes of the Fund
does not indicate the future performance of the Schemes.
3. As with any securities investment, the NAV of the Units issued under
the scheme can go up or down depending on the factors and forces
affecting the capital and money market.
4 .Tax laws may change, affecting the return on investment in Units.
CLASSIFICATION OF MUTUAL FUNDS
TYPES OF MUTUAL FUND SCHEMES:
A mutual fund scheme may be a close-ended scheme or an open-ended

scheme. The key differences between the close-end and the open-ended
scheme are as follows:
 The subscription to close-ended scheme is kept open only for a limited

period (usually one month to three months), whereas an open-ended
scheme accepts funds from investors by offering its units or shares on a
continuing basis.
 A close-ended scheme does not allow investors to withdraw funds as

and when they like, where as an open-ended scheme permits investors
to withdraw funds on continuing basis under a repurchase arrangement.
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 A close-ended scheme has a fixed maturity period (usually five to

fifteen years) whereas an open-ended scheme has no maturity period.
 The close end schemes are listed on the secondary market, whereas the
open end scheme is ordinarily not listed.
There are different types of mutual fund schemes:
1. Equity funds
2. Debt fund/ income funds
3. Balanced funds
4. Monthly income plants
5. Sectoral funds
6. Money market schemes
7. Index funds
8. Floaters funds
1. Equity funds:
Equity funds, as the name suggests have an investment portfolio which is
weighed in favor of equity. The equity holding may even be 100%. Equity
securities represent ownership capital. There exists no certainness with
regards to the returns resulting thereof, both in terms of dividends and
capital gains. Hence equity instruments by nature are volatile and prone to
price fluctuations on a daily basis due to both macro and micro factors.
Trading volumes, settlements periods and transfer procedures may restrict
the liquidity of these investments.
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Equity fund is also known as growth fund. The aim of equity fund is to
provide capital appreciation over the medium to long term. Such funds
have comparatively high risks. These schemes provide different options to
the investors like dividend option; capital appreciation etc and the investors
may choose an option depending on their preferences. Growth schemes are
good for the investors having a long-term outlook seeking appreciation
over a period of time.
The equity funds may be of two types:

 Aggressive and
 Conservative
Aggressive is that type of equity fund in which investors have a higher risk
involved. These can be the shares of the companies who are not the blue
chip companies (generally mid cap companies) and their returns are also
very high. These are the shares of the companies that are not listed in the
top form. They offer very high returns subject to accompanying high-risk
exposure.
Conservative equity funds, on the other hand are those equity funds in
which you can expect reasonable rate of returns subject to a very moderate
amount of risk. The companies, which belong to these, are the blue chip
companies. These are less volatile when compared to the aggressive type
of equity fund.
2. Debt fund:
Debt funds are those funds in which there is 100% debt and no equity
involved. This is also called as income funds. These funds provide regular
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income to the investors. Such schemes generally invest in fixed income

securities such as bonds, corporate debentures, government securities and
money market instruments. Such funds are less risky compared to equity
schemes. These funds are not affected because of fluctuations in equity
markets. However, opportunities of capital appreciation are also limited in
such funds. The net asset values of such funds are affected because of
change in the interest rates in the country. If the interest rates fall, the
NAVs of such funds are likely to increase in the short run and vice versa.
Hence although the risk is less when compared to equity funds, the values
of these funds are influenced by interest rate risk.
The debt funds can also be differentiated as aggressive and conservative

debt funds. This differentiation is on the basis of the grading of the
securities that the fund holds. For example aggressive funds invest in debt
securities of low rated companies or institutions like local authorities. Since
the risk associated with these debt instruments is higher than those of
central government and AAA rated companies, the return is also higher in
the form of higher coupon rates.
3. Balanced fund:
Balanced fund are those funds in which there is a mixture of both equity
and debt. A balanced scheme, as the name suggests, invests its corpus
across two broad asset classes, viz. equity and debt in a more or less
balanced manner. A commonly followed allocation is as follows:
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Allocation of percentage (%) of corpus

Maximum Minimum
Equity 60% 40%
Debt 60% 40%
The objective of the balanced scheme is to combine growth and stability.

These funds are also affected because of fluctuations in the share prices in
the stock markets. However NAVs of such funds are likely to be less
volatile compared to pure equity funds. These balanced funds also have
both aggressive and conservative funds.
4. Monthly income plans:

The main objective of this plan is that it seeks to earn regular income
through investment in fixed income securities. It also seeks to provide
regular income through a portfolio of predominantly high quality fixed
income securities with a maximum exposure of 20% to equities and the rest
to the debt. Hence it involves the total debt-equity allocation mix of 20-80.
In the case of monthly income plans, the fund manager strives to earn
regular income with no assured returns in the fixed income market by
actively managing the funds portfolio on interest rate movements and
credit risks, while seeking to enhance the returns with a marginal equity
allocation.
5. Sectoral funds:
A sectoral fund invests its corpus in the equity stocks of a given sector such
as pharmaceuticals, information technology, telecommunication, and so on.
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Sectoral schemes appeal to investors interested in taking a bet on those

sectors.
Let us take for example an IT Sector fund. In this fund, the entire corpus
would be invested only in securities issued by IT companies. The portfolio
theoretically includes both debt and equity. However in practice it is
usually restricted to equity investments only. The nature of companies are
both top end market leaders and mid cap, growing companies.
6. Money market schemes:

Debt instruments, which have a maturity of less than one year at the time of
issue, are called money market instruments. These instruments are highly
liquid and have negligible risk. The major money market instruments are
treasury bills, certificate of deposit and commercial papers.
These funds are also known as liquid funds. These funds are also income
funds and their aim is to provide easy liquidity, preservation of capital and
moderate income. The investment objective of this scheme is to provide
investors with high safety, a high degree of liquidity and current income
through investment in high quality money market instruments.
These funds are appropriate for corporate and individual investors as a
means to park their surplus funds for short periods. Money market
instruments have negligible interest risk exposure as well as credit risk
exposure. The principal value of unit in a liquid scheme remains stable
thought the periodic income may vary depending on the conditions in the
money market.
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Liquid funds = money market fund + short term deposits with banks. The
rationale behind mutual funds investing in short term deposits with banks is
that they are usually able to obtain a higher interest rate due to their huge
investment size and also because they are better equipped to assess the risk
associated with the bank. The latter is especially relevant in the case of
private sector banks.
7. Index funds:
An index scheme is an equity scheme that invests its corpus in a basket of
equity stocks that comprise a given stock market index such as S & P CNX
Nifty index, with each stock being assigned a weightage equal to what is
have in the index. Thus and index fund appreciates or depreciates (subject
to tracking error) the same way as the index. The principal objective of an
index scheme is to give a return in line with the index movement.
The investment objective of the index fund aims to provide returns that,
before expenses, closely correspond to the total return of common stocks as
represented by the S&P CNX Nifty index under the ‘Nifty’ plans and the
BSE Sensex under the ‘BSE Sensex’ plans.
In this type of mutual fund the fund manager follows a passive style of
equity investing. The portfolio of the fund is dependent upon the
composition of the stock market index, which it follows. Any changes in
the index (additions or deletions of companies change in weightage) are
reflected in the portfolio. This is because index funds replicate the
portfolio of a particular index such as the BSE. Sensitive index, S&P NSE
50 index (nifty), etc. these schemes invest in the securities in the same
weightage comprising of an index. NAV’s of such schemes would rise or
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fall in accordance with the rise or fall in the index, though not exactly by
the same percentage due to some factors known as “tracking error” in
technical terms. Necessary disclosures in this regard are made in the offer
document of the mutual fund scheme. There are also exchange traded index
funds launched by the mutual funds, which are traded on the stock
exchanges.
8. Floaters fund:
The concept behind a floater fund is explained as follows:
The Face Value of a debenture is the value, which is stated on the face of
the debenture. The face value represents the money which the company
has actually borrowed from the investors and which it promises to repay at
the time of redemption of debentures.
Market value on the other hand is that value at which the debenture can be
sold or purchased in the market place.
There can be three scenarios when market value is compared with face
value, viz.
I. Market value greater than the face value i.e. at premium

II. Market value is equal to the face value i.e. at par
III. Market value lesser than the face value i.e. at discount
Let us now consider a numerical example.
Face value of a debenture (X) is Rs 1000 and the interest on that debenture
is 8% per annum, which is nothing but the coupon rate. Here the interest
amount, which you get, is Rs 80.
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RESEARCH DESIGN
STATEMENT OF THE PROBLEM
“A STUDY ON INVESTMENT AVENUES IN MUTUAL FUNDS

WITH REFERENCE TO KOTAK MAHINDRA ASSET
MANAGEMENT COMPANY LTD”.
The investment objective of Kotak Mahindra Asset Management Co is “To

gain capital appreciation from a diversified portfolio of equity and
equity related securities or government securities”. This objective is
hard to achieve for the reasons like mutual fund investments are subject to
market risk. There is no assurance or guarantee that the objective of the
scheme can be achieved and also the Net Asset Value (NAV) of the units
can go up or down depending on factors affecting the capital and money
market. This extreme volatility makes investors not to invest in the mutual
fund investments.
SCOPE OF THE STUDY

The study includes investors, financial institutions, who have invested in
Kotak Mahindra Asset Management Company’s mutual fund and also the
individuals who are interested in the investment on the mutual fund.
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OBJECTIVES OF THE STUDY

1. To track investor’s attitude, performance and behavior with respect to
financial institutions and financial products.
2. To find new and more effective ways of ensuring customer satisfaction

and to find efficient ways of communicating it.
3. To identify investment patterns of investors.
4. To conduct the study with references to Kotak Mahindra products and
the competitive scenario in which Kotak Mahindra operates.
OPERATIONAL DEFINITIONS OF CONCEPTS
NET ASSET VALUE (NAV): -

Net Asset Value (NAV) denotes the performance of particular scheme of a
mutual fund. Mutual Funds invest the money collected from the investors
in securities markets. In simple words, Net Asset Value is the market value
of the securities held by the scheme. Since market value of securities
changes every day, NAV of a scheme also varies on day-to-day basis. The
NAV per unit is market value of securities of scheme divided by the total
number of units of the scheme on any particular date.
Formula of the calculation of Net Asset Value:
Market Value of Investments

Net Asset Value = ------------------------------------------
No. of units Outstanding
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However, most people refer loosely to the NAV per unit as NAV, ignoring
the "per unit".
REVIEW OF LITERATURE
The research required primary and secondary source of data. The primary
data is obtained through structured questionnaires designed Secondary
Data’s are the one which is collected from web site of Kotak Mahindra,
investors and company records.
It also includes Albert J Fredman, how Mutual Funds Work, Eastern

Economy Edition, Prentice Hall of India Pvt. Ltd, New Delhi,
Week15/01/2004 (Regarding Mutual Fund Investment) and Financial
Chartered Analyst 01/09/2003.
RESEARCH DESIGN
A research design calls for developing the most efficient plan for gathering
the needed information. The design of research study is based on the
purpose of the study.
A research design is the specification of methods and procedures for

acquiring the information needed. Its overall and operational pattern or
framework of the project that stipulates what information is to be collected
from which source by what procedures.
TYPES OF RESEARCH
1. Exploratory Research
2. Descriptive Research
3. Casual Research
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EXPLORATORY STUDY
It is done to generate new ideas. Respondents are given sufficient freedom
to express themselves. Sometimes group of respondents is brought together
and focus group interview is held.
An exploratory study is generally based on the secondary data that are

readily available. It does not have a formal and rigid design as to change
focus or direction, depending on the availability of new ideas and

relationships among variables. This study is in nature of preliminary
investigation wherein the researcher himself is not sufficiently
knowledgeable and is, therefore unable to frame detail research questions.
DESCRIPTIVE STUDY
It is undertaken in many circumstances. When the researcher is interested
in knowledge, the characteristics of certain groups such as age, sex,
educational level, occupation or income, interested in knowing the
proportion of in a given population who have behaved in particular
manner, making the projections of certain things, or determining the
relationships between two or more variables, descriptive study may be
necessary. Descriptive data are commonly used as directed bases of
marketing decisions. These studies are well structured.
Design in such studies that must be rigid and not flexible and must focus
attention on the following.
 What the study is about and why is it made?
 What techniques of gathering data will be adopted?
 How much material will be needed?
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 Where can be the required data found?

 Processing and analyzing of data.
 Reporting the findings.
Descriptive study has been followed with the help of qualitative research
design.
QUALITATIVE RESEARCH DESIGN

If descriptive information is needed, then a quantitative study is likely to be
needed. The choice of data collection methods for this study includes
1. OBSERVATION
By watching people, observational researches gain a better understanding
of what product symbolizes to a customer, and greater insight into the bond
between people and products that is essence of brand loyalty.
2. EXPERIMENTATION
It is possible to test the relative sales appeal of many types of such
variables such as package, prices, promotional offers or copy themes-
through experiments designed to identify causes and effect.
3. SURVEYS
If researchers wish to ask consumers about their purchase preferences they
do it through survey, which are of three types
- Personal interview : through direct contact
- Telephone surveys : through telephone
- Mail surveys : through post
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The research design adopted in this study is descriptive research in order to

produce descriptive information such as awareness about various attributes
attached to Kotak. The survey has been conducted personal interview
through structured questionnaire.
CASUAL RESEARCH DESIGN
It aims to determine cause and effect relationship between variables. The

aim is to understand why things happen, and thereby to control what
happens. For example, find factors, which cause customers to buy that
particular product.
SAMPLING PLAN
SAMPLE UNIT: Investors
SAMPLE SIZE: 100
SAMPLING METHOD: Simple random sampling.
DATA COLLECTION
PRIMARY DATA: The tool for primary data collection is questionnaire.
SECONDARY DATA: The secondary data tools are books, magazines,

journals, company records, company website & internet
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LIMITATIONS OF THE STUDY

1. Some of the data gathered from the mutual fund holders may not be
reliable.
2. The study may not give the true picture of market as a whole since only
100 respondents are covered.
3. Respondents & people in general are unaware about the actual scope &
importance of mutual funds.
4. The study undertaken is not extractive research, but is undertaken to

comply with university requirements.
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COMPANY PROFILE
PROFILE OF THE ORGANISATION
Kotak Mahindra Mutual Fund (KMMF) has been established as a Trust

under the Indian Trusts Acts, 1882. the trust Deed establishing KMMF and
the Deed of Amendment have been registered under the Registration Act,
1908 by the office of the Sub-Registrar of Assurances at Mumbai. KMMF
has been registered with SEBI vide registration number MF/038/98/1 dated
23rd June 1998.
The sponsor company, Kotak Mahindra Finance Limited (KMFL), was

converted into Kotak Mahindra Bank Limited (Kotak Bank) in March 2003
BEING GRANTED A BANKING LICENSE BY THE RESERVE BANK
OF INDIA. KMFL promoted by Mr. Uday S Kotak, Mr. S.A.A.Pinto and
Kotak & Co., was incorporated on November 21, 1985, under the name
Kotak Capital Management Finance Limited. In early 1986, the promoters
were joined by Late Mr.Harish Mahindra and Mr. Anand G Mahindra and
the Company’s name was changed to Kotak Mahindra Finance Limited.
Kotak & Co is a highly respected trading company of Mumbai, with

international business. KMFL started with a capital base of Rs.30.88 lakhs.
The sponsor and its subsidiaries/associates offer wide ranging financial
services such as loans, lease and hire purchase, consumer finance,
commercial vehicles and car finance, investment banking, stock broking,
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primary market distribution of equity and debt products and life insurance.
The group has offices in over 50 Indian cities as also in Dubai, Mauritius,
London and New York. Kotak Mahindra (UK) Ltd, an ultimate subsidiary
of Kotak bank, is the first company owned from India to be registered with
the securities and futures authority in London. Kotak Mahindra Capital
Company Limited and Kotak Securities Limited are joint ventures between
Kotak Bank and Goldman Sachs, the latter being one of the largest global
investment banks. Kotak Mahindra Primus Limited and Fordredit Kotak
Mahindra Limited are joint ventures between Kotak Bank and Ford Credit
International, the global car-financing arm of Ford Motor Company. OM
Kotak Mahindra Life Insurance Company Limited is a joint venture
between Kotak Bank and Old Mutual Plc based in the UK and with large
presence in the South African insurance market. Some of the other
subsidiaries of Kotak bank are Kotak Mahindra Securities Limited, Kotak
Mahindra International Limited, Kotak Mahindra Private-Equity Trustee
Limited, Kotak Mahindra Investments Limited, Kotak Mahindra Inc, and
Kotak Forex Brokerage Limited.
The Sponsor has been a consistently profitable and dividend paying

company since inception. All group companies are professionally run
companies, employing over 1800 professionals including CAs, MBAs and
engineers.
28
PROFILE OF THE STUDY UNIT
Kotak Mahindra Asset Management Company Limited, a company

registered under the Companies Act, 1956, has been appointed to act as the
investment Manager of Kotak Mahindra Mutual Fund vide investment
Management Agreement dated 20th May, 1996, as amended up to date. It is

wholly owned subsidiary of the Sponsor, Kotak Mahindra Bank Limited.
An approval has been granted to the Company by the Division of Funds,
Investment Management Department of SEBI for undertaking Portfolio
Management Service under the SEBI (Portfolio Manager) Regulations,
1993. However the company has not begun such activity.
SCHEME DETAILS ABOUT KOTAK MAHINDRA ASSET

MANAGEMENT COMPANY
1. KOTAK 30
Objective: - The investment objective is to generate capital appreciation
from a portfolio of predominantly equity and equity related
securities with investment in, generally not more than 30
stock.
Structure: - Open Ended Equity Growth Scheme
Entry load:- 2% for purchase amounts less than Rs 50 lakhs , Nil for
purchase amounts greater than or equal to Rs 50 lakhs 2% for
29
purchase amounts less than Rs 2 crores , Nil for purchase

amounts greater than or equal to Rs 2 crores.
Exit Load:- NIL
Minimum investment:- Rs 5,000
2. KOTAK TECH
from a predominantly equity and equity related securities
issued by multinational co.
Structure: - Open Ended Equity Growth Scheme.
Entry load: - 2% for purchase amounts less than Rs 50 lakhs , Nil for
purchase amounts greater than or equal to Rs 50 lakhs.2% for
purchase amounts less than Rs 2 crores, Nil for purchase
Exit Load: - NIL
Minimum investment: - Rs 5,000
30
3. KOTAK MNC
from a portfolio of predominantly equity and equity related
securities issued by multinational companies.
Structure: - Open Ended Equity Growth Scheme
Entry load: - 2% for purchase amounts less than Rs 50 lakhs, Nil for
purchase amounts greater than or equal to Rs 50 lakhs 2%
for purchase amounts less than Rs 2 crores, Nil for purchase
Exit Load: - NIL
4. KOTAK BALANCE
Objective: - The investment objective is to achieve growth by investing in
Equity and equity related instruments, balanced with income generation by
Investing in debt and money market instruments.
Structure: - Open Ended Balanced Scheme.
Entry load: - 2% for purchase amounts less than Rs 50 lakhs, Nil for
purchase amounts greater than or equal to Rs 50 lakhs 2%
for purchase amounts less than Rs 2 crores, Nil for purchase
Exit Load: - NIL
31
5. KOTAK INCOME PLUS
Objective: - To enhance returns over a portfolio of debt instruments with a

moderate exposure in Equity & Equity related instruments
Structure: - Open Ended Income Scheme
Entry load: - NIL
Exit load: - 0.50% for redemptions within 6 months where investment

amount is Less than Rs 25 lakhs. Nil for investment amount
greater than or equal to 25 lakhs
Minimum Investment: - Rs 5,000
6. KOTAK GILT
Objective: - To generate risk free returns through investments in sovereign
Securities issued by the central government and / or a state
government and / or reverse repos in such securities
Structure: - Open Ended Dedicated Gilt Scheme
Entry Load: - NIL
Exit Load: - NIL
Minimum Investment: - Savings & investment Plan; Rs 5,000

Serial Plans; Rs 10 lakhs
32
7. KOTAK BOND
Objective: - To create a portfolio of debt and money market

instruments of different maturities so as to spread the risk across a wide
maturity Horizon & different kinds of issuers in the debt market Kotak
Bond Short Term Plan, To provide reasonable returns and high level of
liquidity by investing in debt & money market instruments of different
maturities, So as to spread the risk across different kinds of issuers in the
debt market.
Structure: - Open Ended Debt Scheme
Entry load: - NIL
Exit Load: - Deposit Plan; 0.50% for exits within 6 months of investment
else Load Wholesale Plan & Short term plan; No exit load
Wholesale Plan Annual Dividend Option: 0.75% for exit
within three months of investment, else no exit load
Wholesale plan Bonus Option; 0.25% for exits within Days of
investments Else no exit load.
Minimum Investment: - Deposit Plan Rs 5,000

Wholesale Plan: Rs 1 lakh
Short Term Plan: Rs5, 000
Institutional Plan; Rs 1 crore.
33
8. KOTAK LIQUID
Objective: - To provide reasonable returns and high level of liquidity by
Investing in debt and money market instruments of different
Maturities so as to spread the risk across different kinds of
Issuers in the debt markets
Structure: - Open Ended Debt Scheme
Entry load; - NIL
Exit load: - NIL

Minimum Investment: - Rs 5,000
Institutional plan: Rs 1 crore
Institutional Premium Plan: Rs 20 crores.
9. KOTAK FLOATER
Objective: - To reduce the interest rate risk associated with investments in
fixed rate instruments by investing predominantly in floating
rate securities, money market Instruments and using
appropriate derivatives.
Structure: Open Ended Debt Scheme.
Entry Load: - NIL

Exit Load: - NIL
Minimum Investment: Rs 5,000.
34
10. KOTAK DYNAMIC INCOME
Objective: To maximize returns through an active management of a

portfolio of debt and securities.
Structure: Open Ended Debt Scheme
Entry Load: - NIL
Exit Load: - NIL
Minimum Investment: Rs 5,000
11. KOTAK GLOBAL INDIA

Objective: To generate capital appreciation from a diversified portfolio of
predominantly equity and equity related securities issued by
globally competitive Indian Companies.
HIGHLIGHTS
 Investment in a diversified equity portfolio of Globally Competitive
Indian Companies.
 Tax advantage
 Recurring Investment Facility available during continuous offer.
 Redemption on all Working days.
35
BOARD OF DIRECTORS
The Board of Directors of the Company has, as its members, eminent

persons from Industry, Finance, Investment and other branches of business,
who bring diverse experience and expertise to the Board.
The Company's current Board of Directors is as follows:
NAME DESIGNATION
Mr. Keshub Mahindra Chairman
Mr. Anand G. Mahindra Managing Director
Deepak Shantilal Parekh Director
Nadir Burjorji Godrej Director
M. M. Murugappan Director
Bharat Narotam Doshi Executive Director
Arun Kumar Nanda Executive Director
Narayanan Vaghul Director
Dr. Ashok Sekhar Ganguly Director
R. K. Kulkarni Director
Anupam Pradip Puri Director
Arun Kanti Dasgupta Nominee of LIC
36
ORGANIZATIONAL CHART
Branch Manager
Fixed Income Division
Relationship Manger
Customer Relationship Manger
Equity Division
Assistant Manger Operations Dealer
37
FUNCTIONAL DEPARTMENTS OF THE

ORGANISATION
The entire investment management process is depicted in the following

chart
Understanding the Investor Profile
Portfolio Construction
Asset Allocation
Security Selection
Execution
Monitoring & Performance Evaluation
38
INVESTMENT MANAGEMENT PROCESS
Throughout the process, open lines of communication are maintained to

ensure that the portfolio remains structured to continually meet customer’s
needs. As investor profiles are dynamic i.e. change as an investor
progresses in his lifecycle; it becomes imperative to make suitable
adjustments to the portfolio from time to time.
39
ANALYSIS AND INTERPRETATION
TABLE #1
TO SEE IF RESPONDENT IS AN INCOME TAX ASSESSEE
Sl. No. Attributes No. of respondents Percentage

1 Yes 76 76
2 No 24 24
Total 100 100
Source: Primary Data
INTERPRETATION:
It is clear from the table that out of 100 respondents, 76% of the
respondents say that they are income tax assesses and the rest 24% say that
they are not.
This is illustrated in the following graph.
40
GRAPH #1
TO SEE IF RESPONDENT IS AN INCOME TAX ASSESSEE.
80 76
70
60
Percentage
50
40
30
24
20
10
0
Yes Attributes No
Source:- Table # 1
41
TABLE # 2
TO ACCERTAIN WHETHER RESPONDENTS INVEST FOR TAX

SAVINGS.

1 Yes 70 70
2 No 30 30
Total 100 100
INTERPRETATION:
respondents say that they invest for tax exemption and the rest 30% say
that they do not.
42
GRAPH #2
TO ACCERTAIN WHETHER RESPONDENTS INVEST FOR TAX

SAVINGS.
80
70
70
60
Percentage
50
40
30
30
20
10
0
Yes No
Attributes
Source: Table No: 2
43
TABLE # 3
INVESTMENT PREFERENCE OF RESPONDENTS

1 Fixed Deposits 33 33
2 Real Estate 21 21
3 Insurance 27 27
4 Mutual Fund 9 9
5 Gold 9 9
Total 100 100
INTERPRETATION:
respondents invest in fixed deposits, 21% invest in Real Estate, 27% in
Insurance, 9% in Mutual Fund and the rest 9% say that they invest in gold.
44
GRAPH # 3
INVESTMENT PREFERENCE OF RESPONDENTS
35 33
30
27
25
21
Percentage
20
15
10 9 9
Attributes
Source: Table No: 3
45
TABLE # 4
REASONS OF INVESTMENT PREFERENCE OF RESPONDENTS

1 Less Risk 28 28
2 Good Returns 21 21
3 Liquidity 12 12
4 Assured Returns 36 36
5 Other Reasons 3 3
Total 100 100
INTERPRETATION:
respondents prefer investment due to less risk, 21% due to good returns,
12% due to liquidity, 36% due to assured returns and the rest 3% do it due
to other reasons.
46
GRAPH # 4
REASONS OF INVESTMENT PREFERENCE OF RESPONDENTS
40
36
35
30 28
Percentage
25
21
20
15
12
10
5 3
0
Less Risk Good Liquidity Assured Other
Returns Returns Reasons
Attribute
Source: Table No: 4
47
TABLE #5
CURRENT INVESTMENT PORTFOLIO OF RESPONDENTS

1 Govt. securities and bonds 61 61
2 Mutual funds & company 18 18
Fixed Deposits
3 Equity Shares 21 21
Total 100 100
INTERPRETATION:
respondents invest in Govt. securities and bonds, 18% in Mutual funds and
company fixed deposits and the rest 21% in equity shares.
This is illustrated in the following graph:
48
GRAPH #5
CURRENT INVESTMENT PORTFOLIO OF RESPONDENTS
70
61
60
50
Percentage
40
30
21
20 18
10
0
Govt securities Mutual funds & Equity Shares
and bonds company FD’s
Attributes
Source: Table No: 5
49
TABLE # 6
PACE OF GROWTH THE INVETOR WOULD LIKE TO

ACHIEVE.

1 Steadily 61 61
2 At average rate 27 27
3 Fast 12 12
Total 100 100
INTERPRETATION:
respondents like their investment to grow steadily, 27% in an average rate
and the rest 12% in a fast rate.
50
GRAPH # 6
PACE OF GROWTH THE INVESTOR WOULD LIKE TO

ACHIEVE.
70
61
60
50
Percentage
40
30 27
20
12
10
0
Steadily At average rate Fast
Attributes
Source: Table No: 6
51
TABLE # 7
DURATION OF INVESTMENT OF RESPONDENTS

1 Up to 1 year 6 6
2 1 - 5 years 39 39
3 5 - 10 years and above 55 55
Total 100 100
INTERPRETATION:
It is clear from the table that out of 100 respondents, 6% of the respondents
go for the investment whose duration is up to 1 year, 39% for 1 to 5 years
and the rest 5-10 years and above.
52
GRAPH # 7
DURATION OF INVESTMENT OF RESPONDENTS
60
55
50
39
40
Percentage
30
20
10 6
0
Upto 1 year 1 - 5 years 5 - 10 years and
above
Attribute
Source: Table No: 7
53
TABLE # 8
PERCENTAGE OF INCOME THAT THE RESPONDENTS INVEST

1 5% 24 24
2 5% - 10% 37 37
3 More than 10% 39 39
Total 100 100
INTERPRETATION:
respondents invest 5% of their total income, 37% invests 5-10% and the
rest 39% invest more than 10%.
54
GRAPH # 8
PERCENTAGE OF INCOME THAT THE RESPONDENTS INVEST
45
40 39
37
35
30
Percentage
25 24
20
15
10
0
5% 5% - 10% More than 10%
Attribute
Source: Table No: 8
55
TABLE # 9
REASONS FOR NOT INVESTING IN MUTUAL FUNDS

1 Awareness 58 58
2 Risky 15 15
3 Returns not assured 27 27
Total 100 100
INTERPRETATION:
respondents do not invest in mutual funds because of lack of awareness,
15% as it is risky and the rest 27% as the returns are not assured.
56
GRAPH # 9
REASONS FOR NOT INVESTING IN MUTUAL FUNDS
70
60
58
50
Percentage
40
30 27
20 15
10
0
Awareness Risky Returns not
assured
Attribute
Source: Table No.9
57
TABLE # 10
REASONS FOR INVESTING IN MUTUAL FUNDS

1 Risk 30 30
2 Liquidity 21 21
3 Professional Mgmt 24 24
4 Appreciation 25 25
Total 100 100
INTERPRETATION:
respondents feel that investing in mutual funds are less risky and hence
they invest, 21% invest due to liquidity, 24% due to Professional
management and the rest 25% due to fast appreciation.
58
GRAPH # 10
REASONS FOR INVESTING IN MUTUAL FUNDS
35
30
30
24 25
25
Percentage
21
20
15
10
5
0
Attribute
Source: Table No.10
59
TABLE # 11
KIND OF MUTUAL FUND THAT THE RESPONDENTS PREFER

1 Open-ended 57 57
2 Closed-ended 43 43
Total 100 100
INTERPRETATION:
respondents prefer open-ended mutual funds and the rest 43% closed-ended
ones.
60
GRAPH # 11
KIND OF MUTUAL FUND THAT THE RESPONDENTS PREFER
60 57
50
43
40
Percentage
30
20
10
0
Open-ended Closed-ended
Attributes
Source: Table No.11
61
TABLE #12
TYPE OF SCHEME THE RESPONDENTS PREFER

1 Equity 49 49
2 Debt 42 42
3 Balance 9 9
Total 100 100
INTERPRETATION:
respondents prefer equity type of scheme, 42% prefer debit type of scheme
and the rest 9% due to balance type of scheme.
62
GRAPH # 12
TYPE OF SCHEME THE RESPONDENTS PREFER
60
50 49
42
40
Percentage
30
20
10 9
0
Equity Debit Balance
Attributes
Source: Table No.12
63
TABLE # 13
THE PREFERENCE AMONG DIFFERENT MUTUAL FUNDS

COMPANIES

1 UTI 15 15
2 Kotak 15 15
3 HDFC 30 30
4 Templeton 19 19
5 LIC 21 21
Total 100 100
INTERPRETATION:
respondents prefer UTI mutual funds, 15% prefer Kotak, 30% prefer
HDFC, 19% Templeton and the rest 21% prefer LIC.
64
GRAPH # 13
THE PREFERENCE AMONG DIFFERENT MUTUAL FUNDS

COMPANIES
35
30
30
25
Percentage
21
20 19
15 15
15
10
5
0
Attributes
Source: Table No.13
65
TABLE # 14
IMMEDIATE REACTION IN CASE OF DROP DOWN OF STOCK

MARKET
Sl. Attributes No. of respondents Percentage

No.
1 Would withdraw the 39 39
investment
2 Would wait and watch 55 55
3 Would invest more in it 6 6
Total 100 100
INTERPRETATION:
respondents would withdraw the investment, 55% would wait and watch
the show and the the rest 6% say that they would invest more.
66
GRAPH #14
IMMEDIATE REACTION IN CASE OF DROP DOWN OF STOCK

MARKET
60
55
50
39
40
Percentage
30
20
10 6
0
Would withdraw Would wait and Would invest
the investment watch more in it
Attributes
Source: Table No.14
67
TABLE # 15
TO SEE WHETHER THE RESPONDENT HAS EVER LOST

MONEY IN MUTUAL FUND

1 Yes 07 07
2 No 93 93
Total 100 100
INTERPRETATION
It is clear from the table that out of 100 respondents, 7% of the respondents
have lost money in mutual fund and the rest 93% haven’t.
68
GRAPH #15
TO SEE WHETHER THE RESPONDENT HAS EVER LOST

MONEY IN MUTUAL FUND
100
93
90
80
70
Percentage
60
50
40
30
20
10 7
0
Yes No
Attributes
Source: Table No.15
69
TABLE # 16
REASONS FOR LOOSING MONEY IN MUTUAL FUNDS

1 Not aware 37 37
2 Misguidance 24 24
3 Entry at higher 12 12
level
4 Poor portfolio 27 27
mgmt
Total 100 100
INTERPRETATION:
respondents are not aware of the reasons for losing money in mutual funds,
24% loose it because of misguidance, 12% because of entry at higher level
the rest 27% say that it is because of poor portfolio management.
70
GRAPH #16
REASONS FOR LOOSING MONEY IN MUTUAL FUNDS
40
37
35
30
27
25 24
Percentage
20
15
12
10
0
Not aware Misguidance Entry at higher Poor portfolio
level mgmt
Attributes
Source: Table No.16
71
FINDINGS
1. Majority of the respondents are income tax assesses.
2. Most of the respondents prefer to invest in Fixed Deposits and
Insurance because of less risk and assured returns.
3. People also prefer to invest in taxation funds like tax saving magnum of
SBI and Kotak contra scheme of Kotak Mahindra are the best examples
for the domestic type. An investor is entitled to get 20% rebate in
Income Tax for investments made under this fund.
4. The investment portfolio of majority of the respondents is in Company
Fixed Deposits, Mutual Funds and Equity Shares while some
respondents have their investment portfolio in government securities
and bonds.
5. Majority of the people prefer open-ended equity scheme.
72
CONCLUSION
The study of “Investment Avenues in Mutual Funds” is carried out with
reference to Mutual Funds of Kotak Mahindra Asset Management
Company Ltd. The data is collected from various sources and also through
the tools like questionnaires and relevant interactions with concerned
persons. According to my observation, The Mutual Fund Industry is
growing with unprecedented pace throughout the world. In India, though
the mutual fund industry is growing at a fast rate but investors give
preference for investment in other instruments like Company’s Fixed
Deposits, insurance etc.
The Kotak Mahindra Asset Management Company Ltd. is providing
various Good Schemes of Mutual Funds to the investors and is running
successfully in the market. The needs are identified in the form of findings
and suitable suggestions are put forth in the form of recommendations to
the concerned authorities.
73
SUGGESTIONS/ RECOMMENDATIONS
1. Proper care should be taken to give the correct guidance to the investors
so that they will invest more in Mutual Funds.
2. Promotional campaigns can be launched so that people will know more
about Mutual Funds and will tend to invest more in it.
3. Nice and attractive advertisements can be entertained so that investors
will get more attracted towards the various schemes of Kotak Mahindra
Mutual Funds.
4. Kotak Mahindra Asset Management Company Ltd. can come up with
some good, attractive and innovative schemes for its investors.
74
QUESTIONNAIRE
Sir/Madam,
I am Jazib Amin Bhat of BBM VI semester, Oxford College of

Business Management, Bangalore, affiliated to Bangalore University. As
we have to undergo for the research work as a part of the BBM
Programme, the topic of the research is Investment Avenues In Mutual
Funds for the academic purpose, I kindly request you to furnish the
information as per the questions asked in the form of the following
questionnaire, the data given by you is very much useful for my project
report preparation and would be thankful for co-operation.
Part A:
1) Name:
2) Sex:
3) Education:
4) Occupation:
5) Mobile number:
6) Email:
Part B:
Please put tick on your answers for the following questions
1. Are you an Income Tax Assessee?

Yes
No
75
2. Are you investing for tax exemption or tax savings?

Yes
No
3. What kind of investment options you prefer?

Fixed Deposit
Real Estate
Insurance
Mutual Fund
Gold
4. Why you prefer the above option?

Less Risk
Good Returns
Liquidity
Assured Returns
Other Reasons
5. Your current investment portfolio includes majority of
Govt.securities and Bonds
Mutual funds & company fixed deposits
Equity shares
6. You would like your investment to grow

Steadily
At average rate
Fast
76
7. How long have you been invested?

Up to one year
1—5 year
5—10 years
8. What percentage of your income do you invest?

Up to 5 %
5%--- 10%
More than 10%
9. Are you an investor in mutual fund?

Yes
No
10. If answer is No, why you are not investing in mutual fund?
Awareness
Risky
Returns not assured
11. If answer is yes, why do you prefer mutual fund?
Less Risky
Liquidity
Professional mgt.
Appreciation
77
12. What kind of mutual fund you prefer?

Open- ended
Close-ended
13. What type of scheme do you prefer?

Equity
Debt
Balance
14. If you are an investor of Mutual Fund, which Mutual Fund you have
preferred always?
UTI
Kotak
HDFC
Templeton
LIC
15. Imagine that, the stock market drops immediately after you invest in
Equity scheme?
I would withdraw my money
I would wait & watch
I would invest more in it.
16. Have you any time lost money by investing in MF?

Yes
No
78
17. Reason for losing?

Not aware of the details of the portfolio investment
Misguidance
Entry at higher level
Poor portfolio mgt.
18. Your views on Kotak mutual fund and its scheme?

Good
Moderate
Not aware
Thank you very much for your valuable time & co-operation.
79
BIBLIOGRAPHY
 Albert J Fredman, How Mutual Funds Work, Eastern Economy

Edition, Prentice Hall of India Pvt. Ltd., New Delhi
 Financial Markets and Services, Gordon and Natrajan,
Himalaya Publishing House.
 Week 15/01/2006(Regarding Mutual Fund Investment)
 Financial Chartered Analyst 01/09/2007.
Websites
www.google.com
www.kmac.co.in
www.sebi.com
80

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INVESTMENT AVENUES IN MUTUAL FUNDS

Investment instruments can be classified into close-ended and open-ended

If we talk about the investment options today, in India we have many

The project “Investment Options for Investors in Mutual Funds” was

THEORETICAL BACKGROUND OF THE STUDY

Mutual Funds have been growing at an unprecedented pace throughout the

CONCEPT AND ORIGIN OF MUTUAL FUND

Persons investing must ensure a clear understanding of the investment

assets, based on a careful analysis of risks and rewards anticipated over a

In contrast to the large investors who can engage experienced investment

The basic principles of investment trusts are diversifying the securities

important one. These are referred to as open end investment companies or

MEANING OF MUTUAL FUNDS

CHARACTERISTICS OF MUTUAL FUND

2. A Mutual Fund is managed by investment professionals and other

service providers, who earn a fee for their services.

3. The pool of funds is invested in a portfolio of marketable securities. The

value of the portfolio is updated every day.

5. The investment portfolio of the Mutual fund is invested according to the

stated Investment objectives of the fund.

STRUCTURE OF THE INDIAN MUTUAL FUND

UNIT TRUST OF INDIA

PUBLIC SECTOR MUTUAL FUNDS

PRIVATE SECTOR MUTUAL FUND

The largest of these in Private Sector Domestic Mutual funds are

CONSTITUENTS OF MUTUAL FUND

ORGANIZATION OF A MUTUAL FUND

TRUST/ BOARD OF TRUSTEES:

FUND MANAGERS/ AMC:

dividends, maintains proper accounting and information for pricing of

ADVANTAGES OF MUTUAL FUNDS

4. REDUCTION OF TRANSACTION COST

6. CONVENIENCE AND FLEXIBILITY

RISK FACTORS ASSOCIATED WITH MUTUAL FUNDS

CLASSIFICATION OF MUTUAL FUNDS

TYPES OF MUTUAL FUND SCHEMES:

A mutual fund scheme may be a close-ended scheme or an open-ended

 The subscription to close-ended scheme is kept open only for a limited

 A close-ended scheme does not allow investors to withdraw funds as

 A close-ended scheme has a fixed maturity period (usually five to

There are different types of mutual fund schemes:

2. Debt fund/ income funds

4. Monthly income plants

6. Money market schemes

The equity funds may be of two types:

income to the investors. Such schemes generally invest in fixed income

The debt funds can also be differentiated as aggressive and conservative

Allocation of percentage (%) of corpus

The objective of the balanced scheme is to combine growth and stability.

4. Monthly income plans:

Sectoral schemes appeal to investors interested in taking a bet on those

6. Money market schemes:

I. Market value greater than the face value i.e. at premium

“A STUDY ON INVESTMENT AVENUES IN MUTUAL FUNDS

The investment objective of Kotak Mahindra Asset Management Co is “To

SCOPE OF THE STUDY

OBJECTIVES OF THE STUDY

2. To find new and more effective ways of ensuring customer satisfaction

OPERATIONAL DEFINITIONS OF CONCEPTS

NET ASSET VALUE (NAV): -

Market Value of Investments

It also includes Albert J Fredman, how Mutual Funds Work, Eastern