PROJECT ON INVESTMENT OPTIONS IN MUTUAL FUND

FROM INDIA INFOLINE

INTRODUCTION
A mutual fund is just a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective mutual fund have a fund manger who have responsibility for investing the gathered money into specific securities When you invest in a mutual fund, you are buying units or portions of the mutual fund and thus on investing becomes a shareholder or unit holder of the fund. Mutual funds are considered as one of the best available investments as compare to others they are very cost efficient and also easy to invest in. A mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual funds is diversification, by minimizing risk & maximizing returns

Problem Identification

The study basically made to educate the investors about Mutual Funds. Analyze the various schemes to highlight the risk and return of diversity of investment that mutual funds offer.
Thus, through the study one would understand how a common man could fruitfully and wisely investing into the right scheme according to his risk- taking abilities.

OBJECTIVES:

To show the wide range of investment options available in MFs by explaining various schemes offered by different AMCs. To help an investor to make a right choice of investment, while considering the inherent risk factors. To understand the recent trends in the MF world. To understand the risk and return of the various schemes. To find out the various problems faced by Indian mutual funds and possible solutions.

RESEARCH METHODOLOGY
This study is basically depends on
1. Primary Data 2. Secondary Data

Primary data: The primary data collected from the different companies through enquiry.

Secondary data: The secondary data collected from the different sites, broachers, news papers, company offer documents, different books and through suggestions from the project guide and from the faculty members of.

TOOLS USED IN THIS PROJECT

The following parameters were considered for analysis: Beta

Alpha
Correlation coefficient Treynors Ratio Sharpes Ratio

SCOPE OF THE STUDY

The study is limited to the analysis made for a Growth scheme offered by four AMCs.
Each scheme is calculated their risk and return using different performance measurement theories. Graphs are used to reflect the portfolio risk and return

LIMITATIONS OF THE STUDY

The study is conducted in short period, due to which the study may not be detailed in all aspects. The study is limited only to the analysis of different schemes and its suitability to different investors according to their risk-taking ability. The study is based on secondary data available from monthly fact sheets, web sites; offer documents, magazines and newspapers etc., as primary data was not accessible. The study is limited by the detailed study of various schemes.

The data collected for this study is not proper because some mutual funds are not disclosing the correct information.
The study is not exempt from limitations of Sharpe Treynor and Jenson measure. Unique risk is completely ignored in all the measure.

INHERENT RISK FACTORS:

1)

Market Risks

In general there are certain risks associated with the every kind of investment on shares. They are called market risks. These market risks can be reduced, but cannot be completely eliminated even by a good investment. 2) Scheme Risks There are certain risks inherent in the scheme itself. It all depends upon the nature of the scheme. For instance, in a pure growth scheme, risks are greater.

3) Investment Risks
Whether the mutual fund makes money in shares or loses depends upon the investment expertise of the Asset Management Company. If the investment advice goes wrong, the fund has to suffer a lot. 4) Business Risks The corpus of a mutual fund might have been invested in a companys shares. If the business of that company suffers any set back, it cannot declare any dividend. It may even go to the extent of winding up its business. 5) Political Risks Successive Governments bring with them fancy new economic ideologies and policies. It is often said that many economic decisions are politically motivated.

COMPANY PROFILE
IndiaInfoline Ltd
India Info line Limited is listed on both the leading stock exchanges in India, viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is also a member of both the exchanges. It is engaged in the businesses of Equities broking, Wealth Advisory Services and Portfolio Management Services. It offers broking services in the Cash and Derivatives segments of the NSE as well as the Cash segment of the BSE. It is registered with NSDL as well as CDSL as a depository participant, providing a one-stop solution for clients trading in the equities market. It has recently launched its Investment banking and Institutional Broking business.

BENEFITS OF MUTUAL FUNDS Like most developed and developing countries the mutual fund culture has been catching on in India. There are various reasons for this. Mutual funds make it easy and less costly for investors to satisfy their need for capital growth, income and/or income preservation. And in addition to this a mutual fund brings the benefits of diversification and money management to the individual investor, providing an opportunity for financial success that was once available only to a select few. A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, -professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund:

Data Analysis & Interpretation

For the purpose of data analysis and interpretation the following mutual funds have been chosen; SBI Magnum Equity Fund Growth Birla Sun life 95 Growth Kotak 30 Growth TATA Equity Management Fund Growth Each product has been analyzed using the following tools and the results tabulated, presented graphically and the evaluation of the same has been given under the caption 'Interpretation' below the graph.

Graphical Presentation of SBI Magnum Equity FundGrowth For the month of January 09

Interpretation: SBI Magnum Equity Fund-Growth have been analysed and it is found that there is a negative growth. How ever on the basis of the avg returns of SBI there is negative growth 0.42 as against the index avg of negative 0.36 the beta being less than 1 the stock is not highly volatile.

Graphical Presentation of Birla Sun life 95 Growth For the month of January 09

Interpretation: Birla Sun life 95 Growth have been analysed and it is found that there is a negative growth. How ever on the basis of the avg returns of Birla Sun life there is a negative growth 0.28as against the index avg of negative 0.36 the beta being less than 1 the stock is not highly volatile.

Graphical Presentation of KOTAK 30 Growth Fund For the month of January 09

Interpretation KOTAK 30 Growth Fund have been analysed and it is found that there is a negative growth. How ever on the basis of the avg returns of KOTAK there is a negative growth 0.35 as against the index avg of negative 0.36 the beta being less than 1 the stock is not highly volatile.

Graphical presentation of TATA Equity Management Fund Growth For the month of January 09
Interpretation TATA Equity Management Fund Growth have been analysed and it is found that there is a negative growth. How ever on the basis of the avg returns of TATA Equity there is a negative growth 0.42 as against the index avg of negative 0.36 the beta being less than 1 the stock is not highly volatile.

The graphical representation of Sharp Index:

Interpretation:
From the above table and graph we can know that Birla sunlife and kotak are giving good returns and they are in first position And the second position is SBI

The graphical representation of TREYNER Index:

Interpretation: From the above table and graph we can know Kotak is performing well and it is in first position And the second position is SBI The general trend in the reduction of the market price for various mutual funds studied is not encouraging the stock market index has also been falling continuously because of general economic slow down how ever the funds are ranked considering sharp and trenyors in the order of performances

FINDINGS
SHARPES: As per Sharpe performance measure, a high Sharpe ratio is preferable as it indicates a superior risk adjusted performance of a fund. From the above table Birla sunlife and kotak show a better risk-adjusted performance out of top4 AMCS. TREYNOR: As per TREYNORS ratio the Treynors reward to volatility having high positive index is favorable. Therefore, as per this ratio also Kotak MUTUAL FUND is preferable. Conclusion: From the study analysis conducted it is clear that in EQITY FUNDSBIRLA SUNLIFE MUTUAL FUND is performing very well. Investing in the Kotak MUTUAL FUND (GROWTH) will leads to profits.

Recommendations and Suggestions to Investors:

For selecting a fund consider the following: Investing Checklist Financial goals & Time frame (Are you investing for retirement? A childs education? Or for current income? ) Risk Taking Capacity Identify funds that fall into your Buy List Obtain and read the offer documents Match your objectives In terms of equity share and bond weightings, downside risk protection, tax benefits offered, dividend payout policy, sector focus Check out past performance Performance of various funds with similar objectives for at least 3-5 years Think hard about investing in sector funds For relatively aggressive investors Close touch with developments in sector, review portfolio regularly Look for `load' costs Management fees, annual expenses of the fund and sales loads Does the fund change fund managers often? Look for size and credentials Asset size less than Rs. 25 Crores Diversify, but not too much Invest regularly, choose the S-I-P MF- an integral part of your savings and wealth building plans.