A Presentation on

EVALUATION OF MUTUAL FUNDS

By:
Sanchit Gupta
Roll No. 53
MBA (IB)
Department of Commerce
University of Delhi
Objectives:

To know about types of mutual funds, their benefits and disadvantages in detail.

To know about the investing preferences of the people.

To know about the awareness of mutual funds among people.

To compare the perference of mutual funds among people.

Executive Summary:
Top Asset Management Companies in India:
Literature Review:

A paper examined the performance of equity and bond mutual funds that invested primarily in the
emerging markets. With this research they found that on an average the U.S. stock market
outperformed emerging equity markets but the emerging market bonds outperformed U.S. bonds.
These were evident by their lower return and higher risk.

One more paper evaluated whether or not the selected mutual funds were able to outperform the
market on the average over the studied time period. The study revealed that there were positive
signals of information asymmetry in the market with mutual fund managers having superior
information about the returns of stocks as a whole. Therefore, they concluded that for assessing the
true performance of a particular mutual fund, a longer time horizon is better.
HISTORY OF MUTUAL FUNDS:

This came into existence in 1963 with the establishment of Unit Trust of India, a joint effort by the
Government of India and the Reserve Bank of India.

The next two decades from 1986 to 1993 can be termed as the period of public sector funds with
entry of new public sector players into the mutual fund industry namely, Life Insurance Corporation of
India and General Insurance Corporation of India.

The year of 1993 marked the beginning of a new era in the Indian mutual fund industry with the entry
of private players like Morgan Stanley, J.P Morgan, and Capital International. This was the first time
when the mutual fund regulations came into existence.

SEBI (Security Exchange Board of India) was established under which all the mutual funds in India
were required to be registered. SEBI was set up as a governing body to protect the interest of investor.
HISTORY OF MUTUAL FUNDS:

By the end of 2008, the number of players in the industry grew enormously with 46 fund houses
functioning in the country.

With the rise of the mutual fund industry, establishing a mutual fund association became a
prerequisite. This is when AMFI (Association of Mutual Funds India) was set up in 1995 as a non-
profit organization.

The market has graduated from offering plain vanilla and equity debt products to an array of
diverse products such as gold funds, exchange traded funds
(ETF’s), and capital protection oriented funds and even thematic funds.
PRODUCT PROFILE:
Types of
Mutual Funds

According to
According to According to
Investment
Structure other objective
Objective

Open Ended Tax Saving

Growth funds Balanced Funds
Funds Schemes

Industry
Close Ended Money Market
Income Funds Specific
Funds Funds
Schemes

Sectorial
Interval Funds
Schemes

Index Schemes
PRODUCT PROFILE:
Advantages Disadvantages

• Professional Management • Misleading Advertisements

• Potential Return • Relatively higher risk

• Low Cost • Costs like operating fees are

associated
• Diversification

• Liquidity

• Transparency

• Flexibility

• Affordability
 RESEARCH METHODOLOGY:

TYPES OF DATA:
Primary Data: Direct collection of data by personal interviewing and survey.
Secondary Data: Indirect collection of data from sources containing past and recent information like mutual
fund brochures, Annual publications, Books, Journals, Newspapers, Company manuals etc.

RESEARCH INSTRUMENTS:
A close ended questionnaire was conducted for my survey. Questionnaire consisting of a set of questions made
to be filled by various respondents.

SAMPLING PLAN:
Sampling Unit: Delhi
Sample size: The sample consists of 66 respondents.
 RESEARCH METHODOLOGY:

LIMITATIONS

1. Sample size was limited to 66 because of limited time which is small to represent the whole population.

2. The research was limited to Delhi city only and if the same research would have been carried in another
city, the results may vary.

3. Sometimes the respondents because of their business didn’t able to concentrate while filling up the
questions. However the researcher tried their level best to overcome the limitation by explaining the
importance of research.

4. The study has a limitation of not being undertaken over an extended period of time market ups & downs
which have a significant influence over investor perception.
 RESEARCH FINDINGS:

1. More than 55% of the respondents still prefer the traditional way of investing their money i.e. in
Fixed Deposits and Saving Accounts even though they offer low return.

2. Mutual Funds are the third most preferred way of investing the money among the respondents.

3. Majority of the respondents i.e. 2/3rd of the responded that they would prefer “Low Risk” over
“High Return” when it comes to investing their money.

4. Of those who didn’t invest in mutual funds, more than 51% said that they were not aware about
mutual funds.

5. Of those who did invest in mutual funds, majority i.e. 38% said that they were only aware of the
particular schemes in which they have invested.

6. Majority of people who invested in mutual funds came to know about it through Television
advertisements and Financial advisors.
 RESEARCH FINDINGS:

7. ICICI and HDFC were the most popular mutual funds in which the respondents invested.

8. Regular income and Better return and safety were the most attractive features for the people
who invested in mutual funds.

9. Most people (34.8%) preferred SBI to invest in, if they had to invest in a mutual fund at the
present moment.

10. 50% of the respondents would purchase mutual funds from the Financial Advisors and
Distributors.

11. Around 63% of the respondents would like to receive returns in the form of Dividend Payouts at
the year end.

12. There is an association between the gender, profession, preference of the investment tools of
the respondents and the investment in mutual funds.
 CONCLUSIONS:

1. Mutual funds now represent perhaps most appropriate investment opportunity for most
investors. As financial markets become more sophisticated and complex, investors need a
financial intermediary who provides the required knowledge and professional expertise on
successful investing.
2. In Mutual Fund industry, advisors are the backbone and they advise as per the objective of client.

3. Equity and Balanced Mutual Funds are made for the clients who want to invest for longer period.

4. People who want to invest for shorter period like less than 2-3 years; they should invest under
Debt Mutual Funds, because risk is lesser as compared with 100% Equity Mutual Funds.
 CONCLUSIONS:

5. People who invest in mutual funds are looking to generate a stream of regular income and hence
preferred Dividend Payout over Growth in NAV when it comes to receiving their returns.

6. Most of the people who have not invested in mutual funds were not aware about it.
Therefore, there is a huge potential for the companies to exploit this opportunity and reach the
uninformed groups.

7. The people who have invested in mutual funds were themselves not fully aware about other
funds in the market. Therefore, companies need to educate the people about their funds and its
benefits for them to invest in it.

8. Many people, who have not invested in mutual funds, associated mutual funds with high risk.
Thank You