Abhishek Project Report

1

Declaration

I hereby declare that the project report entitled Performance of Mutual Funds submitted

to Local Head Office, SBI Mutual Fund, Udaipur after the successful completion of project.

Internship is a bonafide record of research work carried out by me under the guidance of Mr.

Vishnu Kantiwal, ISD Head of SBI Mutual Fund, Udaipur. This project is entirely an

evidence of work avoiding any duplication whatsoever of previous researches except

references made and cited in the project for the successful understanding of the topic.

Date: - Abhishek Singh Rathore

Place: - (MBA-FSM III Sem.)

2

Acknowledgment

I am grateful to Mr. Vishnu Kantiwal ISD Head of SBI Mutual funds, Udaipur, and Prof.

Anil Kothari, coordinator MBA-(FSM) under whose guidance this project was completed.

Their guidance and constant encouragement helped me to complete the study.

I am thankful to Mr. Naveen Khandelwal, Operations Head of Mutual Fund, Udaipur and

other staff for their constant support and help in providing data.

My sincere and deepest thanks to Prof. Karunesh Saxena, Director and all other faculty

members of Faculty of Management Studies, for giving me such an opportunity and valuable

time for all the guidance given in executing the project as per requirements.

I am also thankful to all my friends for their valuable suggestions given to me in the

preparation of this project report for which I will be always indebted to them.

Abhishek Singh Rathore

(MBA-FSM III Sem.)

3

Executive Summary

The topic of this project is Performance of mutual funds in India which are issued in

between year of 2007-2008. The mutual fund industry in India has seen dramatic

improvements in quantity as well as quality of product and service offerings in recent years

and hence here focus is on comparing funds of different mutual fund companies on different

performance parameters. Along with this project also touches on the trends of mutual fund

industry and returns given by selected mutual funds.

In my 45 days training duration I studied about various types of funds issued by

AMCs and customer perception with regard to mutual funds that is the schemes they prefer,

the plans they are opting and the reasons behind such selections.

In project duration I also found that most of the people are hesitant in going for new

age investments like mutual funds and prefer to avert risks by investing in less riskier

investment options like recurring deposits and so. Also people going for investment in mutual

funds are not going for high-risk portfolios and schemes but want to go for medium risk

elements. And another finding is that most of the working women do not prefer this type of

investments.

4

Table of Contents CHAPTER-1:-

INTRODUCTION

1.1 Introduction of SBI Mutual Fund.... 7

1.2 History of Mutual Fund10

1.3 Regulatory Framework.12

CHAPTER-2:-

THEORY OF MUTUAL FUNDS

2.1 Concept of Mutual Fund.... 15

2.2 Organization Structure of a Mutual Fund... 17

2.3 Types of Mutual fund schemes in India 19

2.4 Advantages of Mutual Fund... 22

2.5 Mutual Fund Industry Trend..... 23

2.6 Process to invest in Mutual fund.... 26

CHAPTER-3:-

RESEARCH METHODOLOGY

3.1 Research Methodology... 33

3.2 Research Design.. 34

3.3 Tools for Data analysis... 35

3.4 Scope of the study... 35

3.5 Limitations of the Study. 35

CHAPTER-4:-

DATA ANALYSIS & INTERPRETATION

4.1 Birla sun life Special Situation Fund.37

4.2 Birla sun life Commodities Equities Fund Global gain plan.. 38

4.3 BNP Paribas Bond Fund39

4.4 Edelweiss ELSS Fund.40

4.5 Edelweiss short term Income Fund...41

4.6 Franklin India Ultra Short Bond Fund42

5

4.7 Franklin Asian Equity Fund..43

4.8 HDFC Infrastructure Fund...44

4.9 UTI India Lifestyle Fund...45

4.10 UTI Transportation and Logistics Fund46

4.11 UTI CCP Advantage Fund..47

4.12 Kotak Emerging Equity Fund.....48

4.13 Kotak global Emerging Market Fund................................................49

4.14 Kotak Gold ETF Fund.....50

4.15 Kotak PSU Bank ETF......51

4.16 SBI Infrastructure Fund.52

4.17 DSP Black Rock Tax Saver Fund..53

4.18 BOI AXA Equity Fund....54

4.19 BOI AXA Short Term Income Fund..55

CHAPTER-5:-

5.1 Conclusion..... 57

BIBLIOGRAPHY.. 58

6

Chapter-1

Introduction: 1.1 - Introduction of SBI Mutual Fund

1.2 - History of Mutual Funds in India

1.3 - Regulatory Framework in India

7

1.1 - Introduction of SBI Mutual Fund

SBI Mutual Funds are an Indian-based mutual fund. In operation since 1987, the SBI

fund is one of Indias premier investment products. With a network of over 222 points of

acceptance throughout India, this fund has very good national coverage, and is well worth

considering as a potential investment vehicle.

1.1.1 - Corporate Profile

SBI Mutual funds Identity

With 25 years of rich experience in fund management, SBI Funds Management Pvt.

Ltd. bring forward its expertise by consistently delivering value to its investors .It has a

strong and proud lineage that traces back to the State Bank of India (SBI) - India's largest

bank. It is having a Joint Venture between SBI and AMUNDI (France), one of the world's

leading fund management companies.

With its network of over 222 points of acceptance across India, it delivers value and

nurture the trust of its vast and varied family of investors. Excellence has no substitute. And

to ensure excellence right from the first stage of product development to the post-investment

stage, they are ably guided by their philosophy of growth through innovation and their

stable investment policies. This dedication is what helps their customers achieve their

financial objectives.

SBI Mutual funds Vision

To be the most preferred and the largest fund house for all asset classes, with a

consistent track record of excellent returns and best standards in customer service, product

innovation, technology and HR practices.

8

SBI Mutual Funds Services

Mutual Funds

Investors are their priority. Their mission has been to establish Mutual Funds as a

viable investment option to the masses in the country. Working towards it, they developed

innovative, need-specific products and educated the investors about the added benefits of

investing in capital markets via Mutual Funds.

Today, it has been actively managing its investor's assets not only through its

investment expertise in domestic mutual funds, but also offshore funds and portfolio

management advisory services for institutional investors. This makes them one of the largest

investment management firms in India, managing investment mandates of over 5.4 million

investors.

Portfolio Management and Advisory Services

SBI Funds Management has emerged as one of the largest player in India advising

various financial institutions, pension funds, and local and international asset management

companies.

They have excelled by understanding their investor's requirements and terms of risk /

return expectations, based on which they suggest customized asset portfolio

recommendations. They also provide an integrated end-to-end customized asset management

solution for institutions in terms of advisory service, discretionary and non-discretionary

portfolio management services.

Offshore Funds

SBI Funds Management has been successfully managing and advising India's

dedicated offshore funds since 1988. SBI Funds Management was the 1st bank sponsored

asset management company fund to launch an offshore fund called 'SBI Resurgent India

Opportunities Fund' with an objective to provide its investors with opportunities for long-

term growth in capital, through well-researched investments in a diversified basket of stocks

of Indian Companies.

9

1.1.2 - Company Key Information

Setup date Jun-29-1987

Incorporation date Feb-07-1992

Sponsor State Bank of India

Trustee SBI Mutual Fund Trustee Company Private Limited

Chairman Mr. Pratip Chaudhri

CEO / MD Mr. Deepak Kumar Chatterjee

CIO Mr. Navneet Munot

Compliance Officer Ms. Vinaya Datar

Investor Service Officer Mr. C A Santosh

Assets Managed Rs.47184.11 crore (Jun-30-2012)

Auditors Haribhakti & Co /M/S. Chandabhoy &Jassoobhoy

Custodians Computer Age management Services Pvt. Ltd, Computeronics Financial Services Ltd,

Datamatics Financial Software Services Ltd.

Corporate Office SBI Funds Management Pvt Ltd. A joint venture between SBI and

AMUNDI 191, maker Tower E, Cuffe Parade,Mumbai - 400 005.

Toll Free No. 1800 425 5425

10

1.2- History of Mutual Funds in India

The mutual fund industry in India started in 1963 with the formation of Unit Trust of

India, at the initiative of the Government of India and Reserve Bank of India. The history of

mutual funds in India can be broadly divided into four distinct phases.

First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by

the Reserve Bank of India and functioned under the Regulatory and administrative control of

the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial

Development Bank of India (IDBI) took over the regulatory and administrative control in

place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988

UTI had Rs.6,700 Crores of assets under management.

Second Phase 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks

and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India

(GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987

followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89),

Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund

(Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund

in December 1990. At the end of 1993, the mutual fund industry had assets under

management of Rs.47, 004 Crores.

Third Phase 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund

industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year

in which the first Mutual Fund Regulations came into being, under which all mutual funds,

except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged

with Franklin Templeton) was the first private sector mutual fund registered in July 1993.The

1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and

revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI

(Mutual Fund) Regulations 1996.

11

The number of mutual fund houses went on increasing, with many foreign mutual funds

setting up funds in India and also the industry has witnessed several mergers and acquisitions.

As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805

Crores. The Unit Trust of India with Rs.44, 541 Crores of assets under management was way

ahead of other mutual funds.

Fourth Phase since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was

bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of

India with assets under management of Rs.29, 835 crores as at the end of January 2003,

representing broadly, the assets of US 64 scheme, assured return and certain other schemes.

The Specified Undertaking of Unit Trust of India, functioning under an administrator and

under the rules framed by Government of India and does not come under the purview of the

Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is

registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation

of the erstwhile UTI which had in March 2000 more than Rs.76,000 Crores of assets under

management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual

Fund.

The graph indicates the growth of assets over the years:

Source: - AMFI (Association of Mutual Funds in India)

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

ASS

ETS

UN

DER

MA

NA

GEM

ENT

IN '0

00

M

ILLI

ON

IN

R

Mar/65

Mar/87

Mar/93

Mar/00

Mar/02

Mar/04

Mar/06

Mar/08

Mar/10

Mar/12

Mar/13

Mar/14

AUM 0 46 470 1130 1006 1396 2319 5052 6140 5872 7014 8252

AUM GROWTH

12

1.3 - Regulatory Framework in India

A- Securities and Exchange Board of India (SEBI)

The Government of India constituted Securities and Exchange Board of India, by an

Act of Parliament in 1992, the apex regulator of all entities that either raise funds in the

capital markets or invest in capital market securities such as shares and debentures listed on

stock exchanges.

Mutual funds have emerged as an important institutional investor in capital market

securities. Hence they come under the purview of SEBI. SEBI requires all mutual funds to be

registered with them. It issues guidelines for all mutual fund operations including where they

can invest, what investment limits and restrictions must be complied with, how they should

account for income and expenses, how they should make disclosures of information to the

investors and generally act in the interest of investor protection. To protect the interest of the

investors, SEBI formulates policies and regulates the mutual funds.

MF either promoted by public or by private sector entities including one promoted by

foreign entities are 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.

B- Association of Mutual Funds in India (AMFI)

With the increase in mutual fund players in India, a need for mutual fund association

in India was generated to function as a non-profit organization. Association of Mutual Funds

in India (AMFI) was incorporated on 22nd August, 1995.

AMFI is an apex body of all Asset Management Companies (AMC) which has been

registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are

its member. It functions under the supervision and guidelines of its Board of Directors.

13

Association of mutual fund industry has brought down the mutual fund industry to a

professional and healthy market with ethical line enhancing and maintaining standards. It

follows the principle of both protecting and promoting the interests of mutual funds as well

as their unit holders.

The objectives of Association of Mutual Funds in India

The Association of Mutual Funds of India works with 30 registered AMCs of the

country. It has certain defined objectives which juxtaposes the guidelines of its Board of

Directors. The objectives are as follows:

This mutual fund association of India maintains high professional and ethical

standards in all areas of operation of the industry.

It also recommends and promotes the top class business practices and code of conduct

which is followed by members and related people engaged in the activities of mutual

fund and asset management. The agencies who are by any means connected or

involved in the field of capital markets and financial services also involved in this

code of conduct of the association.

AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual

fund industry.

Associations of Mutual Fund of India do represent the Government of India, the

Reserve Bank of India and other related bodies on matters relating to the Mutual Fund

Industry.

It develops a team of well qualified and trained Agent distributors. It implements a

program of training and certification for all intermediaries and other engaged in the

mutual fund industry.

AMFI undertakes all India awareness program for investors in order to promote

proper understanding of the concept and working of mutual funds.

At last but not the least association of mutual fund of India also disseminate

information on Mutual Fund Industry and undertakes studies and research either

directly or in association with other bodies.

14

Chapter-2 Theoretical Framework: 2.1 - Concept of Mutual Funds

2.2 - Organization Structure of a Mutual Fund

2.3 - Types of Mutual Fund Schemes in India

2.4 - Advantage of Mutual Fund

2.5 - Mutual Fund Industry Trend

2.6 - Invest in Mutual Funds

15

2.1 - Concept of Mutual Funds

Mutual funds are institutions that collect money from several sources - individuals or

institutions by issuing 'units', invest them on their behalf with predetermined investment

objectives and manage the same all for a fee. They invest the money across a range of

financial instruments falling into two broad categories equity and debt. Individual people

and institutions no doubt, can and do invest in equity and debt instruments by themselves but

this requires time and skill on both of which there are constraints.

Mutual funds emerged as professional financial intermediaries bridging the time and

skill constraint. They have a team of skilled people who identify the right stocks and debt

instruments and construct a portfolio that promises to deliver the best possible 'constrained'

returns at the minimum possible cost. In effect, it involves outsourcing the management of

money. More explicitly, the benefits of investing in equities and debt instruments are

supposedly much better if done through mutual funds.

This is because of the following reasons: Firstly, fund managers are more skilled.

They are trained to identify the best investment options and to assess the portfolio on a

continual basis. Secondly, they are able to invest in a diversified portfolio consisting of 15-20

different stocks or bonds or a combination of them. For an individual such diversification

reduces the risk but can demand a lot of effort and cost. Each purchase or sale invites a cost

in terms of brokerage or transactional charges such as demat account fees in India. The need

to possibly sell 'poor' stocks/bonds and buy 'good' stocks/bonds demands constant tracking of

news and performance of each company they have invested in.

Mutual funds are able to maintain and track a diversified portfolio on a constant basis

with lesser costs. This is because of the pecuniary economies that they enjoy when it comes

to trading and other transaction costs. Thirdly, funds also provide good liquidity. An investor

can sell her/his mutual fund investments and receive payment on the same day with minimal

transaction costs as compared to dealing with individual securities, this totals to superior

portfolio returns with minimal cost and better liquidity.

16

In India one can gain additional benefit by investing through mutual funds tax

savings. Investment in certain types of funds such as Equity Linked Tax Savings Schemes

(ELSS) allows for certain amount of income tax benefits.

This can be represented with the following flow chart:

Source: - AMFI (Association of Mutual Funds in India)

17

2.2 -Organization Structure of a Mutual Fund

There are many entities involved and the diagram below illustrates the

organizational set up of a mutual fund :-

The important terms of the figure are explained as follows:

Fund Sponsor:

A sponsor is any person who, acting alone or in combination with another body

corporate, establishes a MF. The sponsor of a fund is similar to the promoter of a company.

In accordance with SEBI Regulations, the sponsor forms a trust and appoints a Board of

Trustees, and also generally appoints an AMC as fund manager. In addition, the sponsor also

appoints a custodian to hold the fund assets. The sponsor must contribute at least 40% of the

net worth of the AMC and possess a sound financial track record over five years prior to

registration.

Trustees:

The MF or trust can either be managed by the Board of Trustees, which is a body of

individuals, or by a Trust Company, which is a corporate body. Most of the funds in India are

managed by Board of Trustees. The trustee being the primary guardian of the unit holders

funds and assets has to be a person of high repute and integrity. The trustees, however, do not

directly manage the portfolio securities. The portfolio is managed by the AMC as per the

defined objectives, accordance with Trust Deed and SEBI (Mutual Funds) Regulations.

18

Asset Management Company (AMC):

The AMC, which is appointed by the sponsor or the trustees and approved by SEBI,

acts like the investment manager of the trust. The AMC functions under the supervision of its

own Board of Directors, and also under the direction of the trustees and SEBI. AMC, in the

name of the trust, floats and manages the different investment schemes as per the SEBI

Regulations and as per the Investment Management Agreement signed with the Trustees.

Others:

Apart from these, the Mutual Fund has some other fund constituents, such as

custodians and depositories, banks, transfer agents and distributors.

The custodian is appointed for safe keeping of securities and participating in the

clearing system through approved depository. The bankers handle the financial dealings of

the fund. Transfer agents are responsible for issue and redemption of units of Mutual Fund.

19

2.3 Types of Mutual Fund Schemes in India

A mutual fund, say, SBI Mutual Fund, can have several 'funds' [called 'schemes' in

India) under its management. These different funds can be categorized by structure,

investment objective and others. It would be well illustrated by the following flow chart:

Source: - Association of Mutual Funds in India (AMFI)

20

An 'Open ended' fund is available for purchase or redemption on continuous basis at the

day's closing Net Asset Value (NAV). This gives liquidity to investments.

A 'Close ended' fund is open for investment only during the Initial Public Offer (IPO) after

which the investment is locked in until the maturity date which could be between 3-7yrs. The

investor can, however, sell or buy the shares of the funds on the stock exchange where the

shares are listed.

Interval funds combine the characteristics of both 'open end' and close end funds. They

can be bought or redeemed by the investor at predetermined times, say once in six or twelve

months.

'Growth' oriented funds aim at providing capital appreciation. They tend to invest primarily

in equities.

'Income' funds aim at providing regular income to investors. They generally invest a major

portion of their assets in fixed income earning instruments such as government securities,

corporate bonds and money market instruments. Their returns are determined by fluctuations

in interest rates.

'Balanced fund' tries to provide both capital appreciation and regular income. They invest in

both equities and fixed income securities. They specify the maximum equity exposure in the

prospectus and is normally 60 percent; of late other types of balanced funds such as "Asset

Allocation funds and 'Arbitrage funds' have also emerged. Asset allocation funds, such as the

Franklin Templeton (FT) PIE ratio funds, allocate funds to equity or debt depending on the

dynamic situation. They tend to increase exposure to equity during a market downturn and

move out during market peaks. The FT PIE ratio fund uses the market PIE ratio to determine

the degree of equity exposure.

Arbitrage funds are funds that try to capitalize on the arbitrage opportunities that arise out

of pricing mismatch of stocks in the equity and derivative (futures and options) segments of

the stock market (Value Research Inc.). They invest predominantly in equities 'Money

Marker. Funds invest only in short term debt such as call money, treasury bills and

commercial paper. In the case of these funds the Net Asset Value is simply the interest

21

accrued on these investments on a daily basis. Their NAV does not fall below the initial

investment value, unlike bond funds which are marked to market.

Tax saving funds give an investor tax benefits under section 80 C of the Income Tax Act.

Such funds also termed as Equity Linked Saving Schemes (ELSS), have a lock in period of

three years. By investing in such funds a person can avail of a maximum of rupees one

hundred thousand in tax deductions. ELSSs are normally diversified equity funds.

Index funds invest in securities of a particular index such as the Bombay Stock Exchange

(BSE) sensex in the same proposition. They provide returns which are close to that of the

benchmark index with similar risks as well. It is a passive investment approach with lower

costs.

Sector specific funds focus their investments on specific sectors which the fund manager

feels would do well. For instance, Franklin FMCG fund invests only in shares of companies

that produce fast moving consumer goods.

Exchange Traded Fund's (ETF) are relatively a new concept in India. Such funds are

essentially index funds that are listed and traded on the stock markets. There are also

commodities ETFs such as Reliance hold ETF.

22

2.4 - Advantage of Mutual Fund

Diversification - It can help an investor diversify their portfolio with a minimum investment.

Spreading investments across a range of securities can help to reduce risk. A stock mutual

fund, for example, invests in many stocks. This minimizes the risk attributed to a

concentrated position. If a few securities in the mutual fund lose value or become worthless,

the loss may be offset by other securities that appreciate in value. Further diversification can

be achieved by investing in multiple funds which invest in different sectors.

Professional Management - Mutual funds are managed and supervised by investment

professional. These managers decide what securities the fund will buy and sell. This

eliminates the investor of the difficult task of trying to time the market.

Well regulated - Mutual funds are subject to many government regulations that protect

investors from fraud.

Liquidity - It's easy to get money out of a mutual fund.

Convenience - We can buy mutual fund shares by mail, phone, or over the Internet.

Low cost - Mutual fund expenses are often no more than 1.5 percent of our investment.

Expenses for Index Funds are less than that, because index funds are not actively managed.

Instead, they automatically buy stock in companies that are listed on a specific index

Transparency - Mutual fund offer document provides all the information about the fund and

the scheme. This document is also called as the prospectus or the fund offer document, and is

very detailed and contains most of the relevant information that an investor would need.

Choice of schemes - There are different schemes which an investor can choose from

according to his investment goals and risk appetite.

Tax benefits - An investor can get a tax benefit in schemes like ELSS (equity linked saving

scheme)

23

2.5 - Mutual Fund Industry Trend

Growth of Mutual Fund Industry

The mutual fund industry in India started in 1963 with the formation of Unit Trust of

India, at the initiative of the Government of India and Reserve Bank. Unit Trust of India

(UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank

of India and functioned under the Regulatory and administrative control of the Reserve

Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development

Bank of India (IDBI) took over the regulatory and administrative control place of RBI. The

first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,

700 crores of assets under management.

The year 1987 marked the entry of non- UTI, public sector mutual funds set up by

public sector banks and Life Insurance Corporation of India (LIC) and General Insurance

Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund

established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National

Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90),

Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while

GIC had set up its mutual fund in December 1990.At the end of 1993, the mutual fund

industry had assets under management of Rs.47,004 crores. With the entry of private sector

funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian

investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual

Fund Regulations came into being, under which all mutual funds, except UTI were to be

registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin

Templeton) was the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more

comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions

under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went

on increasing, with many foreign mutual funds setting up funds in India and also the

industry has witnessed several mergers and acquisitions. As at the end of January 2003,

there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India

with Rs.44, 541 crores of assets under management was way ahead of other mutual funds.

24

Indian mutual fund industry has grown at a Compounded Annual Growth Rate

(CAGR) of 15 per cent from FY07 to FY13, the growth performance in the recent years

have been rather subdued. However, Assets under Management (AUM) as a per cent of

GDP for India is about 5 to 6 per cent, significantly lower than some other emerging

economies, for example, 40 percent for Brazil and around 33 per cent for South Africa.

This indicates significant headroom for growth. However, the industry growth will

continue to be characterized by external factors such as volatility and performance of the

capital markets, and macro-economic drivers such as GDP growth, inflation and interest

rates.

The Indian mutual fund industry has shown relatively slow growth in the period FY

10-13 growing at a CAGR of approximately 3.2 per cent. Average (AUM) stood at INR

8,140 billion as of September 2013. However, AUM increased to INR 8,800 billion as of

December 2013. Lackluster stock market performance, rising inflation and anticipation of a

rise in interest rates has led to a tapering of growth in the Indian mutual fund industry in the

recent years.

In comparison to global markets, Indias AUM penetration as a per cent of GDP is

between 5-6 per cent while it is around 77 per cent for the U.S., 40 per cent for Brazil and

31 per cent for South Africa. Despite the relatively low penetration of mutual funds in

India, the market is highly concentrated. Though, there are44 AMCs operating in the sector,

approximately 80 per cent of the AUM is concentrated with 8 of the leading players in the

market. There have been recent instances of consolidation in the market and market

concentration is expected to remain in the near-term.

25

Trends in Mutual Fund Industry

A. Number of Schemes under Mutual Funds

Year Debt Income Balanced ETFs Overseas Total

2010-11 679 376 32 28 16 1131

2011-12 872 352 30 35 20 1309

2012-13 857 347 32 37 21 1294

2013-14 1178 363 30 40 27 1638

No. of Scheme of MFs

1800

1600 1638

1400 1309

1200 1294

1000 1131

800

600

400

200

0

2010-11 2011-12 2012-13 2013-14

Source: SEBI

The total number of schemes under MFs has increased during the period 2010-14 and it

increased very steeply between 2012-13 to 2013-14. The growth rate of number of schemes

in debt is greater than income, balanced, ETFs and overseas.

26

B. Allocation of assets in India by company wise.

ICICI 118,056 JPMorgan 14,544 Indiabulls 1,424

Reliance 112,914 LIC NOMURA 9,489 Mirae Asset 937

Birla Sun 98,556 HSBC 8,275 Motilal Oswal 758

UTI 79,441 Baroda 8,176 Pinebridge 636

SBI 69,213 JM Financial 6,957 ING 557

Franklin 50,987 IDBI 6,742 PPFAS 443

IDFC 43,694 Canara 6,482 Quantum 414

Kotak 35,521 Goldman Sachs 6,179 Escorts 264

DSP block 33,113 PRINCIPAL 4,848 Edelweiss 212

TATA 23,022 Taurus 4,083 IIFL 210

Dautsche 20,878 BNP Paribas 3,661 Shriram 26

AXIS 20,268 Union KBC 3,531 Sahara 2

L&T 19,894 Peerless 3,509

Total - 986,054 Sundram 17,673 BOI AXA 2,378 Religare 16,142 Pramerica 1,909

HDFC 13%

ICICI 12%

Reliance 11%

Birla Sun 10%

UTI 8%

SBI 7%

Franklin 5%

IDFC 4%

Kotak 4%

DSP block 3%

TATA 2%

Dautsche 2%

AXIS 2%

L&T 2%

Sundram 2%

Religare 2%

JPMorgan 1%

LIC NOMURA 1%

HSBC 1%

Baroda 1%

JM Financial

1%

IDBI 1%

Canara 1%

Goldman Sachs

1%

PRINCIPAL 0%

Taurus 0%

BNP Paribas

0%

Union KBC 0%

Peerless 0%

BOI AXA 0% Pramerica

0% Indiabulls

0%

Mirae Asset 0%

Motilal Oswal 0%

Pinebridge 0%

ING 0%

PPFAS 0%

Quantum 0%

Escorts 0%

Edelweiss 0% IIFL

0% Shriram

0% Sahara

0%

AuM in india by company wise allocation of may, 2014

27

C. Assets under Management Diversification for 2013-2014 by Investment

Options.

56%

0%

20%

2%

16%

1%

3%

1%

1%

0%

Assets under management diversification for 2013-2014 year

Income infra debt equity balanced liquid gilt equity-elss gold-etf other etf FoF

28

2.6 - Invest in Mutual Funds

How to Invest in Mutual Funds?

An investor is investing his money in mutual fund by follow the following steps:

Step One - Identify Investors investment needs

Your financial goals will vary, based on your age, lifestyle, financial independence,

family commitments, level of income and expenses among many other factors. Therefore, the

first step is to assess your needs. Begin by asking yourself these questions:

1. Investment objectives and needs

Probable Answers: I need regular income or need to buy a home or finance a wedding or

educate my children or a combination of all these needs.

2. Calculation of risk

Probable Answers: I can only take a minimum amount of risk or I am willing to accept the

fact that my investment value may fluctuate or that there may be a short term loss in order to

achieve a long term potential gain.

3. Cash flow for Mutual Fund

Probable Answers: I need a regular cash flow or I need a lump sum amount to meet a specific

need after a certain period or I dont require a current cash flow but I want to build my assets

for the future. By going through such an exercise, you will know what you want out of your

investment and can set the foundation for a sound Mutual Fund Investment strategy.

Step Two - Choose the right Mutual Fund

Once you have a clear strategy in mind, you now have to choose which Mutual Fund

and scheme you want to invest in. The offer document of the scheme tells you its objectives

and provides supplementary details like the track record of other schemes managed by the

same Fund Manager. Some factors to evaluate before choosing a particular Mutual Fund are:

29

The track record of performance over the last few years in relation to the appropriate

yardstick and similar funds in the same category.

How well the Mutual Fund is organized to provide efficient, prompt and personalized

service.

Degree of transparency as reflected in frequency and quality of their communications.

Step Three - Select the ideal mix of Schemes

Investing in just one Mutual Fund scheme may not meet all your investment needs. You may

consider investing in a combination of schemes to achieve your specific goals.

The following charts could prove useful in selecting a combination of schemes that satisfy

your needs.

30

Step Four - Invest regularly

For most of us, the approach that works best is to invest a fixed amount at specific intervals,

say every month. By investing a fixed sum each month, you get fewer units when the price is

high and more units when the price is low, thus bringing down your average cost per unit.

This is called rupee cost averaging and is a disciplined investment strategy followed by

investors all over the world. With many open-ended schemes offering systematic investment

plans, this regular investing habit is made easy for you.

31

Step Five - Keep investors taxes in mind

As per the current tax laws, Dividend/Income Distribution made by mutual funds is exempt

from Income Tax in the hands of investor. However, in case of debt schemes

Dividend/Income Distribution is subject to Dividend Distribution Tax. Further, there are

other benefits available for investment in Mutual Funds under the provisions of the prevailing

tax laws. You may therefore consult your tax advisor or Chartered Accountant for specific

advice to achieve maximum tax efficiency by investing in mutual funds.

Step Six - Start early

It is desirable to start investing early and stick to a regular investment plan. If you start now,

you will make more than if you wait and invest later. The power of compounding lets you

earn income on income and your money multiplies at a compounded rate of return.

Step Seven - The final step

All you need to do now is to get in touch with a Mutual Fund or your advisor and start

investing. Reap the rewards in the years to come. Mutual Funds are suitable for every kind of

investor whether starting a career or retiring, conservative or risk taking, growth oriented or

income seeking.

32

Chapter- 3

Methodology

3.1 Research Methodology

3.2 Research Design

3.3 Tools for Data analysis

3.4 Scope of the study

3.5 Limitations of the Study

33

3.1 Research Methodology

Research is the process of systematic and in-depth study or search for any particular

topic, subject or area of investigation, backed by data collection. Complication, presentation

and interpretation of relevant details or data. It is a careful search or inquiry into any subject

matter, which is an endeavour to discover or find out valuable facts that would be useful for

further application or utilization.

Research methodology is the systematic problem analysis, model building and fact

finding for the purpose of improved decision making. It is the collection summary and

analysis of data regarding goods and services it helps in deciding the nature and tend demand.

Research may involve a scientific study or experimentation and result in discovery or

invention, which would aid either scientific development or decision making.

Title of Research

PERFORMANCE OF MUTUAL FUNDS

Objectives of Research

a) To know the value of mutual funds in India and their major aspects.

b) To know the various fund offered by the mutual funds in India.

c) To identify the level of risk involved in investing in various equity diversified

mutual fund schemes.

d) To know various regulatory firm of mutual funds in India.

e) To know the organizational structure of a mutual funds.

f) To know the best mutual funds investment plan like Systematic investment plan.

g) To know the steps of how to invest in mutual fund by investor

34

3.2 Research Design

The research design refers to the overall strategy that you choose to integrate the

different components of the study in a coherent and logical way, thereby, ensuring you will

effectively address the research problem; it constitutes the blueprint for the collection,

measurement, and analysis of data.

A method and system a statical analysis based on past history to facilitate the

investment process. Respective fund using a principal factor such as cumulative growth and

stability. For tracking investment, upper and lower control limits are defined according to

standard deviation of average total return over predetermine period of time to improve

chances of the investors achieving a profit as well as a near optimum performance. This

research methodology helps us to give information about the opportunities of mutual funds

investment. It will help to study the market of mutual funds better. All mutual fund

companies and their return on investment.

Sample Size

19 Mutual Funds of different companies.

Sampling Method

Random Sampling

Method of data collection

There are many methods of data collection which can be used according to nature and

type of research. I will use following data for the research purpose. My research only based

on secondary data.

Secondary data

Articles

Factsheet

Management generals

Annual report

35

Research papers

Internet

Companies product voucher

News papers

3.3 Tools and techniques for data Analysis

1. Return on investment

a. Point-to-point or absolute return:

b. Total return:

c. Compound Annual Growth Rate (CAGR):

2. Graph

3. Chart

3.4 Scope of the Study

a. Scope of the study is to understand the various mutual fund product and services

offered by AMCs to the individual customers and to find out the returns given by

funds and the customer expectations

b. The study was done by taking 10 to 15 mutual fund companies and their products.

c. In this project data has been taken from 2007 to 2008.

3.5 Limitations of the study

a. Time constraints: - Due to shortage or less availability of time it may be possible

that all the related and concerned aspect may not be covered in the project.

b. Analysis done is limited to the availability of data.

36

Chapter- 4

Data Analysis and Interpretation

4.1 Birla sun life Special Situation Fund

4.2 Birla sun life Commodities Equities Fund Global gain plan

4.3 BNP Paribas Bond Fund

4.4 Edelweiss ELSS Fund

4.5 Edelweiss short term Income Fund

4.6 Franklin India Ultra Short Bond Fund

4.7 Franklin Asian Equity Fund

4.8 HDFC Infrastructure Fund

4.9 UTI India Lifestyle Fund

4.10 UTI Transportation and Logistics Fund

4.11 UTI CCP Advantage Fund

4.12 Kotak Emerging Equity Fund

4.13 Kotak global Emerging Market Fund

4.14 Kotak Gold ETF Fund

4.15 Kotak PSU Bank ETF

4.16 SBI Infrastructure Fund

4.17 DSP Black Rock Tax Saver Fund

4.18 BOI AXA Equity Fund

4.19 BOI AXA Short Term Income Fund

37

Data Analysis & Interpretation

4.1 Birla Sun Life Special Situation Fund

Scheme Details

Fund Type Open-Ended

Investment Plan Growth

Launch date Jan 01, 2008

Benchmark S&P BSE 200

Asset Size (Rs cr) 133.85 (Jun-30-2014)

Minimum Investment Rs.5000

Last Dividend N.A

Bonus N.A.

Fund Manager Anil Shah

Notes N.A

Load Details

Entry Load N.A

Exit Load 1.00%

Load Comments Exit Load of 1% if redeemed within 365 Days from the date of

allotment.

Quarterly Average AUM: 146.30 Crores (as on 30st June 2014)

Interpretation: -

1. From inception this fund has given 52.2% return 2. From the last one year this fund has given 65% return.

38

4.2 Birla Sun Life Commodities Equities Fund Global Gain Plan

Scheme Details



Launch date Sep 9, 2008

Benchmark N.A



Last Dividend N.A.

Bonus N.A.

Fund Manager Vineet Maloo

Notes Birla Sun Life Commodity Equities Fund - Global Precious Metals

Plan and irla Sun Life Commodity Equities Fund-Global Multi

Commodity Plan has been merged with Birla Sun Life Commodity

Equities Fund-Global Agri Plan w.e.f. July 19, 2013

Load Details

Entry Load N.A

Exit Load 1.00%

Load Comments Exit Load of 1% if redeemed within 365 Days from the date of

allotment.

Quarterly Average AUM: 13.77 Crores (as on 30th June 2014)

Interpretation: -

1. From inception this fund has given 50% return 2. From the last one year this fund has given 10.6% return.

39

4.3 BNP Paribas Bond Fund

Scheme Details



Launch date Sept 29, 2008

Benchmark CRISIL Composite Bond Fund

Asset Size (Rs cr) 195 Crores (Jun-30-2014)


Last Dividend N.A.

Bonus N.A.

Fund Manager Puneet Pal

Notes Fortis Mutual Fund have been acquired by BNP Paribas Asset

Management, Accordingly, all existing schemes of Fortis Mutual

Fund has been renamed with BNP Paribas with effect from October

19, 2010.

Load Details

Entry Load N.A

Exit Load 1.00%

Load Comments Exit load 1% if redeemed / switched out upto 1 year from the date of

subscription.


Interpretation: -

1. From inception this fund has given 7.89% return 2. From the last one year this fund has given 8.4% return.

40

4.4 Edelweiss ELSS Fund Scheme Details



Launch date Dec 26, 2008

Benchmark CNX 500



Last Dividend N.A.

Bonus N.A.

Fund Manager Paul Parampreet / Dhilip Krishna

Notes N.A

Load Details

Entry Load N.A

Exit Load 0.00%

Load Comments N.A.


Interpretation: -

1. From inception this fund has given 213% return 2. From the last one year this fund has given 42% return.

41

4.5 Edelweiss Short Term Income Fund

Scheme Details



Launch date Sep 23, 2008

Benchmark CRISIL Short Term Bond Fund



Last Dividend N.A.

Bonus N.A.

Fund Manager Bhavesh D. Jain

Notes Open for Fresh Investments.

Load Details

Entry Load N.A

Exit Load 0.50%

Load Comments Exit load of 0.50% if the units are redeemed / switched-out within 2

months from the date of allotment.


Interpretation: -

1. From inception this fund has given 6.90% return

2. From the last one year this fund has given 8.49% return.

42

4.6 Franklin India Ultra Short Bond Fund

Scheme Details




Benchmark CRISIL Liquid Fund

Asset Size (Rs cr) 3,213.26 (Jun-30-2014)


Last Dividend N.A.

Bonus N.A.

Fund Manager Sachin Desai / Pallab Roy

Notes Open for Subscription

Load Details

Entry Load N.A

Exit Load 0.00%

Load Comments N.A.


Interpretation: -



43

4.7 Franklin Asian Equity Fund

Scheme Details



Launch date Nov 19, 2007

Benchmark N.A



Last Dividend N.A.

Bonus N.A.

Fund Manager Roshi Jain / Murali Yerram

Notes N.A

Load Details

Entry Load N.A

Exit Load 1.00%

Load Comments Exit Load 1% if units are redeemed / switched-out within 1 year from

the date of allotment.


Interpretation: -


44

4.8 HDFC Infrastructure Fund

Scheme Details




Benchmark CNX 500



Last Dividend N.A.

Fund Manager Prashant Jain / Srinivas Rao Ravuri

Load Details

Entry Load N.A

Exit Load 1.00%




Interpretation: -



45

4.9 UTI India Lifestyle Fund

Scheme Details



Launch date Jul 30, 2007

Benchmark CNX 500



Last Dividend N.A.

Bonus N.A.

Fund Manager Lalit Nambiar

Notes UTI India Lifestyle Fund a close ended equity scheme has been

converted into open ended equity oriented scheme with effect from

July 16, 2010.

Load Details

Entry Load N.A

Exit Load 1.00%


Interpretation: -


46

4.10 UTI Transportation and Logistics Fund

Scheme Details



Launch date Apr 11, 2008

Benchmark N.A



Last Dividend N.A.

Bonus N.A.

Fund Manager Anoop Bhaskar / Daylynn Pinto

Load Details

Entry Load N.A

Exit Load 1.00%

Load Comments Exit Load 1% if redeemed within 1 Year from the date of allotment.


Interpretation: -

1. From inception this fund has given 29.73 % return 2. From the last one year this fund has given 144.85 % return

47

4.11 UTI CCP Advantage Fund

Scheme Details




Benchmark CRISIL Balance Fund



Last Dividend N.A.

Bonus N.A.

Fund Manager Kaushik Basu.

Notes Earlier call UTI Childrens Career Bond Plan

Load Details

Entry Load N.A

Exit Load 4.00%

Load Comments Exit Load of 4% if exited < 1 years, 3% if exited >=1 years & < 3

years, 1% if exited >=3 years & < 5 years.

Quarterly Average AUM: 90 Crores (as on 30th June 2014)

Interpretation: -


48

4.12 Kotak Emerging Equity Scheme

Scheme Details



Launch date Feb 12, 2007

Benchmark S&P BSE MIDCAP



Last Dividend N.A.

Bonus N.A.

Fund Manager Pankaj Tibrewal

Load Details

Entry Load N.A

Exit Load 1.00%

Load Comments Exit Load of 1% if redeemed within 2 year from the date of allotment.


Interpretation: -


49

4.13 Kotak Global Emerging Market Fund

Scheme Details

Fund Type Close-Ended



Benchmark N.A



Last Dividend N.A.

Bonus N.A.

Fund Manager Deepak Gupta / Abhishek Bisen

Load Details

Entry Load N.A

Exit Load 1.00%

Load Comments Exit Load of 1% if redeemed within 1 year from the date of allotment.


Interpretation: -

1. From inception this fund has given 10.76 % return 2. From the last one year this fund has given 6.49 % return.

50

4.14 Kotak Gold ETF Fund

Scheme Details


Investment Plan Dividend

Launch date Jun 20, 2007

Benchmark Price of Gold



Last Dividend N.A.

Bonus N.A.

Fund Manager Abhishek Bisen

Load Details

Entry Load N.A

Exit Load 0.00%


Interpretation: -

1. From inception this fund has given 9.52% return 2. From the last one year this fund has given -12.61% returns.

51

4.15 Kotak PSU Bank ETF

Scheme Details


Investment Plan Dividend

Launch date Nov 08, 2007

Benchmark CNX PSU Bank



Last Dividend Rs.20.00 (Feb-25-2013)

Bonus N.A.

Fund Manager Deepak Gupta

Load Details

Entry Load N.A

Exit Load 0.00%


Interpretation: -


52

4.16 SBI Infrastructure Fund

Scheme Details



Launch date May 11, 2007

Benchmark CNX Infra



Last Dividend N.A.

Bonus N.A.

Fund Manager Ajit Dange

Load Details

Entry Load N.A

Exit Load 1.00%




Interpretation: -

1. From inception this fund has given 5.3 % return 2. From the last one year this fund has given 61.4 % return.

53

4.17 DSP Black Rock Tax Saver Fund

Scheme Details




Benchmark CNX 500



Last Dividend N.A.

Bonus N.A.

Fund Manager Apoorva Shah

Notes N.A

Load Details

Entry Load N.A

Exit Load 0.00%

Load Comments N.A.


Interpretation: -

1. From inception this fund has given 16.25 % return

2. From the last one year this fund has given 58.28 % return.

54

4.18 BOI AXA Equity Fund

Scheme Details




Benchmark CNX NIFTY



Last Dividend N.A.

Bonus N.A.

Fund Manager Saurabh Kataria

Notes Bank of India have acquired 51% stake in the joint venture from

Bharti Ventures and AXA Investment Managers Asia Holdings

w.e.f. May 23, 2012. Hence the name of the schemes will be pre

fixed with BOI AXA in place of Bhati AXA.

Load Details

Entry Load N.A

Exit Load 1.00%


Interpretation: -

1. From inception this fund has given 12.66% return 2. From the last one year this fund has given 44.53% return

55

4.19 BOI AXA Short Term Income Fund

Scheme Details




Benchmark CRISIL Short Term Bond Fund



Last Dividend N.A.

Bonus N.A.

Fund Manager Alok Singh

Load Details

Entry Load N.A

Exit Load 0.50%

Load Comments Exit load 0.5% if redeemed within 45 days from the date of allotment.


Interpretation: -



56

Chapter- 4 Conclusion

57

4.1 Conclusion

During the six years of study period, the Indian Mutual Fund Industry (IMFI) had

shown a good progress in terms of number of private sector Indian mutual funds, number of

schemes launched, funds mobilized and assets under management. There had been a good

number of schemes been launched particularly in close-end type with income objective. And

also I found so many facts and figures as follows:-

1. Investors agreed that, investing in mutual funds were less risky compared to shares.

2. At present, the Indian Mutual Fund Industry is one among the top 15 nations in terms of

AUM and is expected to grow to $500-600 billion by 2015

3. The industry continues to be dominated by the top players as 54% of the total AUM is

held by the top 5 fund houses.

4. Even though the mutual funds are growing steadily, only 5% of the households are

investing in mutual funds, hence there is a long way to go.

5. Top 5 best performing funds which are issued in between year of 2007-2008 on last

year performance.

Funds name Last year returns in %

UTI Transportation and Logistics Fund 144.85

HDFC Infrastructure Fund 99.86

Kotak Emerging Equity Scheme 97.24

BIRLA SUN LIFE special situation Fund 65

SBI Infrastructure Fund 61.4

6. Top 5 best performing funds which are issued in between year of 2007-2008 on performance from since inception.

Funds name Returns since inception in

%

Edelweiss ELSS fund 213

Birla Sun Life Special Situation Fund 52.2

Birla sun life commodities equities fund global gain plan 50

UTI Transportation and Logistics Fund 29.73

Kotak Emerging Equity Scheme 17.98

58

Bibliography

Research papers

A. Prof Gauri Prabhu, Dr N.M. Vechalekar Perception of Indian Investor towards

investment in mutual funds with special reference to MIP Funds, IOSR Journal of

Economics and Finance (IOSR-JEF) e-ISSN: 2321-5933, p-ISSN: 2321-5925 PP 66-

74

B. Dr. Binod Kumar Singh, A study on investors attitude towards mutual funds as an

investment option, ISSN 2249-5908 Issue2, Vol. 2 (March-2012)

C. Sarish, A Study of Opportunities and Challenges for Mutual Fund in India : Vision

2020, VSRD-IJBMR, Vol. 2 (4), 2012, 167-178

Websites

1. www.moneycontrol.com

2. www.economictimes.indiatimes.com

3. www.profit.ndtv.com

4. www.valueresearchonline.com

5. www.amfiindia.com

6. www.sebi.gov.in

Scheme DetailsLoad DetailsScheme DetailsLoad DetailsScheme DetailsLoad DetailsScheme DetailsLoad DetailsScheme DetailsLoad DetailsScheme DetailsLoad DetailsScheme DetailsLoad DetailsScheme DetailsLoad DetailsScheme DetailsLoad DetailsScheme DetailsLoad DetailsScheme DetailsLoad DetailsScheme DetailsLoad Details4.13 Kotak Global Emerging Market FundScheme DetailsLoad Details

4.14 Kotak Gold ETF FundScheme DetailsLoad DetailsScheme DetailsLoad DetailsScheme DetailsLoad DetailsScheme DetailsLoad DetailsScheme DetailsLoad DetailsScheme DetailsLoad Details

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