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Mutual funds:
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Mutual funds:

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There are a lot of investment avenues available today in the financial market for an investor with an investable surplus. He can invest in bank deposits, corporate debentures, and Bonds where there is low risk but low return. He may invest in stock of companies where the risk is and the returns are also proportionately high. The recent trends in the stock market have shown that an average retail investor always lost with periodic bearish tends. People began opting for portfolio managers with expertise in stock markets who would invest on their behalf .thus we had wealth management services provided by many institutions. However they proved too costly for a small investor. These investors have found a good shelter with the mutual funds.
Mutual fund industry has seen a lot of changes in past few years with multinationals companies coming in to the country, bringing in their professional expertise in managing funds worldwide. In the past few months there has been a consolidation phase going on in the mutual fund industry in India. Now investors have a wide range of schemes to choose from depending on their individual profiles

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 though these investments and the capital appreciation relished 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 men 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;

Advantages of mutual funds:

 Low cost
 Professional management
 Well regulated
 Return potential
 Diversification
 Liquidity
 Flexibility
 Tax benefits
 Choice of schemes


The aim of growth is the provide capital appreciation over the medium to long term. Such schemes normally invest a majority of their corpus in equities. It has been proved that returns stocks, have outperformed most other kind of investments held over the long term. Growth Schemes are ideal for investors having a long term outlook seeking growth over a period of time


An index fund of index tracker is a collective investment scheme (usually a mutual fund or exchange-traded fund) that aims to replicate the movements of an index of a specific financial market, or a set of rules of ownership that are held constant, regardless of market conditions


The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when market falls. These are ideal for investors looking for a combination of income and moderate growth


The main purpose of doing this project was to know about mutual fund and its functioning. This helps to know in details about mutual fund industry right from its inception stage, growth and future prospects. It also helps in understanding different schemes of mutual funds. Because my study depends upon prominent funds in India and their schemes like equity, income, balance as well as the returns associated with those schemes. The project study was done to ascertain the asset allocation, entry load, exit load, associated with the mutual funds. Ultimately this would help in understanding the benefits of mutual funds to investors.


 To give a brief idea about the benefits available from mutual fund investment.
 To give an idea of the types of schemes of schemes available.
 To discuss about the market trends of mutual fund investment.
 To study some of the mutual fund schemes and analyze them.
 Observe the fund management process of mutual funds
 Explore the recent developments in the mutual funds in India.
 To give an idea about the regulations of mutual funds
 To conduct a Market study & find the fund preference and awareness of full schemes of AMC & dividend option
 To find out as to how many financial advisors are interested in doing mutual funds business.



The data, which has being collected for the first time and it is the original data. In this project the primary data has been taken from the HSE staff and guide of the project


Secondary information is mostly taken from websites, books, journals, etc

Scope of study:Mutual Funds

Scope of Mutual Funds has grown enormously over the years. In the first age of mutual funds, when the investment management companies started to offer mutual funds, choices were few. Even though people invested their money in mutual funds as these funds offered them diversified investment option for the first time. By investing in these funds they were able to diversify their investment in common stocks, preferred stocks, bonds and other financial securities. At the same time they also enjoyed the advantage of liquidity. With Mutual Funds, they got the scope of easy access to their invested funds on requirement.

But, in today’s world, Scope of Mutual Funds has become so wide, that people sometimes take long time to decide the mutual fund type, they are going to invest in. Several Investment Management Companies have emerged over the years who offer various types of Mutual Funds, each type carrying unique characteristics and different beneficial features.


 The time constraint was one of the major problems in various schemes. At time an investor can not invest all the schemes.
 To study is very limited to the different schemes available under the mutual fund schemes selected by an investor.
 Initially Lack of information source for the analysis of particular schemes.
 An investor can avoid loss though diversified plans of various investment schemes in various funds.
 Government policies may affect the trading prices of mutual fund units may decreases to down fall.
 Income oriented funds affect in interest wisely.


A mutual fund is just the connecting bridge or financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the gathered money into specific securities (stocks/bonds). When you invest in a mutual fund, you are buying units or portions of the mutual fund and thus on investing becomes a shareholders or unit holders of the fund.
Mutual funds are considered as one of the best available investment as compare to others they are very cost efficient and also easy to invest in, thus by pooling money together in a mutual fund, investors can purchases stocks of 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 and maximizing returns



An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at net asset value (NAV) related prices. The key feature of open-end schemes is liquidity.


These schemes have a pre-specified maturity period. One can invest directly in the scheme at the time of the initial issue. Depending on the structure of the scheme there are two exit options available to an investor after the initial offer period closes. Investors can transact (buy or sell) the units of the scheme on the stock exchanges where they are listed. The market prices at the stocks exchanges could vary from the net asset value (NAV) of the schemes on account of demand and supply situation, exceptions of unit holders and other market factors. Alternatively dome close-ended schemes provide an additional option of selling the units directly to the mutual fund through periodic repurchases at the schemes NAV; however one can’t buy units and can only sell units during the liquidity window. SEBI regulations ensure that at least one of the two exit routes is provided to the investor.


Interval schemes are the, which combines the features of open-ended and close-ended schemes. The units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV related prices.


The performance of a scheme is reflected in its net asset value (NAV) which is disclosed on daily basis in case of open-ended scheme and on weekly basis in case of close- ended schemes. The NAVs of mutual funds are required to be published in newspapers. The NAVs is also available on the web sites of mutual funds. All mutual funds are also required to put their NAVs on the web site of association of mutual funds in India (AMFI) the mutual funds are also required to publish their performance in the form of half- yearly results which also include their returns/yields over a period of time i.e last six months, 1year, 3years, 5years, and since inception of schemes. Investors can also look in to other details like % of expense of total assets as these have an effect on the yield and other information in the same half-yearly format. The mutual funds are also required to send annual report of abridged annual report to the unit holders at the end of the year. Various studies on mutual fund schemes including yields of different schemes are being published by the financial newspapers on a weekly basis. Apart from these, many research agencies also publish research reports on performance of mutual funds including the ranking of various schemes in terms of their performance. Investors should study these reports and keep themselves informed about the performance of various schemes of various schemes of different mutual funds investors can compare the performance of their schemes with schemes with those of other mutual funds under the same category. They can also compare the performance of equity oriented schemes with the benchmarks like BSE sensitive index, S&P, CNX, and NIFTY, etc.
On the basis of performance of the mutual of the mutual funds, the investors should decide when to enter or exit from a mutual fund scheme.


The mutual funds are required to disclose full portfolios of all of their schemes on half-yearly basis which are published in the newspapers. Some mutual funds send the portfolios to their unit holders. The scheme portfolio shows investment made in each security i.e. equity, debenture, money market instruments, government securities, etc. and their quantity market value and % to NAV. These portfolio statements also required to disclose illiquid securities in the portfolio, investment made in rated and uncrated debt securities, non-performing assets (NPAs), etc. some of the mutual funds send newsletters to the unit holders on quarterly basis which also contain portfolios of the schemes


An already mentioned, the investors must read the offer document of the mutual fund scheme very carefully. They may also look in to the past track record of performance with other schemes having similar investment objectives. Through past performance of a scheme is not an indicator of its future performance and good performance in the past may or may not be sustained in the future this is one of the important factors for making investment decision. In case of debt originated schemes, apart for looking into past returns, the investors should also see the quality of debt instruments which is reflected in their rating. A scheme with lower rate of return but having investment in better rated instruments may be safer. Similarly, in equities schemes also, investors may look for quality of portfolio. They may also seek advice of experts


Investors would find the name of contact person in the offer document of the mutual fund scheme that they may approach in case of any query, Complaints or grievances. Trustees of a mutual fund monitor the activities of the mutual fund. The names of the directors of Assets Management Company and trustees are also given in the offer documents. Investors can also approach SEBI for redressed of their complaints. On receipt of complaints, SEBI takes up the matter with the concerned mutual fund and follows up with them till the matter is resolved. Investors may send their complaints to.

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