CHAPTER – 1

INTRODUCTION

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1.1 Background
Mutual funds are financial intermediaries, which collect the savings of investors & invest
them in a large & well diversified portfolio of securities such as money market instruments,
corporate government bonds & equity shares of joint stock companies. A Mutual fund is a
pool of common funds invested by different investors, who have no contact with each other.
Mutual funds are conceived as institutions for providing small investors with avenues of
investments in the capital market. Since small investors generally do not have adequate time
knowledge, experience & resources for directly accessing the capital market, they have to
rely on an intermediary which undertakes informed investment decisions & provides
consequential benefits of professional expertise. The advantages for the investors are
reduction in risk, expert professional management, diversified portfolios, & liquidity of
investment & tax benefits. By pooling their assets through mutual funds, investors achieve
economies of scale. The interests of the investors are protected by the SEBI, Which acts as a
watchdog. Mutual funds are governed by the SEBI (Mutual funds) regulations, 1993.

From its inception the growth of mutual funds is very slow and it took really long years to
evolve the modern day mutual funds. Mutual Funds emerged for the first time in Netherlands
in the18th century and then got introduced to Switzerland, Scotland and then to United States
in the 19th century. The main motive behind mutual fund investments is to deliver a form of
diversified investment solution. Over the years the idea developed and people received more
and more choices of diversified investment portfolio through the mutual funds. In India, the
mutual fund concept emerged in 1960. The credit goes to UTI for introducing the first mutual
fund in India. Monetary Funds benefited a lot from the mutual funds. Earlier investors used to
invest directly in the stock market and many times suffered from loss due to wrong
speculation. But with the coming up of mutual funds, which were handled by efficient fund
managers, the investment risks were lowered by a great extent.

1.2 History of Mutual Fund

In 1774, a Dutch merchant invited subscriptions from investors to set up an investment trust
by the name of Eendragt Maakt Magt (translated into English, it means, Unity Creates
Strength) with the objective of providing diversification at low cost to small investors. Its
success caught on, and more investment trust were launched, with verbose and quirky names
that when translated read profitable and prudent 'or small maters grow by consent. The

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foreign and colonial Govt. trust, formed in London in 1868, promised to start the investor of
modest means the same advantages as the large capitalist… by spreading the investment over
a number of stock.
When three Boston securities executives pooled their money together in 1924 to
create the first mutual fund, they had no idea how popular mutual funds would become. The
idea of pooling money together for investing purposes started in Europe in the mid-1800s.
The first pooled fund in the U.S. was created in 1893 for the faculty and staff of Harvard
University. On March 21st, 1924 the first official mutual fund was born. It was called the
Massachusetts Investors Trust.
After one year, the Massachusetts Investors Trust grew from $50,000 in assets in
1924 to $392,000 in assets (with around 200 shareholders). In contrast, there are over 10,000
Mutual Funds in the U.S. today totaling around $7 trillion (with approximately 83 million
individual investors) according to the Investment Company Institute.

1.3 History of Mutual Funds in India

The Evolution:

The formation of Unit Trust of India marked the evolution of the Indian mutual fund
industry in the year 1963. The primary objective at that time was to attract the small investors
and it was made possible through the collective efforts of the Government of India and the
Reserve Bank of India. The history of mutual fund industry in India can be better understood
divided into following phases:

Phase I. Establishment and Growth of Unit Trust of India - 1964-87:

Unit Trust of India enjoyed complete monopoly when it was established in the year
1963 by an Act of Parliament. UTI was set up by the Reserve Bank of India and it continued
to operate under the regulatory control of the RBI until the two were de-linked in 1978 and
the entire control was transferred in the hands of Industrial Development Bank of India
(IDBI). UTI launched its first scheme in 1964, named as Unit Scheme 1964 (US-64), which
attracted the largest number of investors in any single investment scheme over the years. UTI
launched more innovative schemes in 1970s and 80s to suit the needs of different investors. It
launched ULIP in 1971, six more schemes between 1981-84, Children's Gift Growth Fund
and India Fund (India's first offshore fund) in 1986, Mastershare (India‘s first equity
diversified scheme) in 1987 and Monthly Income Schemes (offering assured returns) during
1990s. By the end of 1987, UTI's assets under management grew ten times to Rs 6700 crores.

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Phase II. Entry of Public Sector Funds - 1987-1993:

The Indian mutual fund industry witnessed a number of public sector players entering
the market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of
India became the first non-UTI mutual fund in India. SBI Mutual Fund was later followed by
Canbank Mutual fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual
Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets under management of
the industry increased seven times to Rs. 47,004 crores. However, UTI remained to be the
leader with about 80% market share.

Phase III. Emergence of Private Sector Funds - 1993-96:

The permission given to private sector funds including foreign fund management
companies (most of them entering through joint ventures with Indian promoters) to enter the
mutual fund industry in 1993, provided a wide range of choice to investors and more
competition in the industry. Private funds introduced innovative products, investment
techniques and investor-servicing technology. By 1994-95, about 11 private sector funds had
launched their schemes.

Phase IV. Growth and SEBI Regulation - 1996-2004:

The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after
the year 1996. The mobilization of funds and the number of players operating in the industry
reached new heights as investors started showing more interest in mutual funds. Investors'
interests were safeguarded by SEBI and the Government offered tax benefits to the investors
in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced by SEBI
that set uniform standards for all mutual funds in India. The Union Budget in 1999 exempted
all dividend incomes in the hands of investors from income tax. Various Investor Awareness
Programs were launched during this phase, both by SEBI and AMFI, with an objective to
educate investors and make them informed about the mutual fund industry. In February 2003,
the UTI Act was repealed and UTI was stripped of its Special legal status as a trust formed by
an Act of Parliament. The primary objective behind this was to bring all mutual fund players
on the same level.
UTI was re-organized into two parts:
1. The Specified Undertaking,
2. The UTI Mutual Fund

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Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past
schemes (like US-64, Assured Return Schemes) are being gradually wound up. However,
UTI Mutual Fund is still the largest player in the industry. In 1999, there was a significant.

Phase V. Growth and Consolidation - 2004 Onwards:

The industry has also witnessed several mergers and acquisitions recently, examples of which
are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual
Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international
mutual fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc.
There were 29 funds as at the end of March 2006. This is a continuing phase of growth of the
industry through consolidation and entry of new international and private sector players.

1.4 Mutual Fund Concept

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 equities, debentures and other securities. The income earned through these investments and
the capital appreciation realized (after deducting the expenses and profits of mutual fund
managers) is shared by its unit holders in proportion to the number of units owned by them.
Thus a Mutual Fund strives to meet the investment needs of the common man by offering
him or her opportunity to invest in a diversified, professionally managed basket of securities
at a relatively low cost. The small savings of all the investors are put together to increase the
buying power and hire a professional manager to invest and monitor the money. Anybody
with a surplus of as little as a few thousand rupees can invest in Mutual Funds.

1.5 Types of Mutual Fund schemes

Mutual funds can be done depending upon various factors and variables, such as, maturity
period, investment objectives etc... Funds schemes again can be classified into three broad
categories: equity schemes funds invest in three broad categories of assets—stocks, bonds
and cash. Depending upon the asset mix, mutual Classification of mutual, hybrid schemes,
and debt schemes. However, the following are the various types of mutual funds available to
the investors.

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 A) Schemes according to Maturity Period:

A mutual fund can be classified into close-ended or open-ended scheme depending upon its
maturity period:

 Open-ended fund/scheme:

An open-ended fund is one that is available for subscription and repurchase on a continuous
basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and
sell units at Net Asset Value (NAV) related prices which are declared daily. The key feature
of open-end scheme is liquidity

 Close-ended fund/scheme:

A closed-ended scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for
subscription only during a specified period at the time of launch of the scheme. Investors can
invest in the scheme at the time of initial public issue and thereafter they can buy or sell the
units of the scheme on the stock exchanges where the units are listed. To provide an exit
route to the investors, some close ended funds give an option of selling back the units to
mutual funds through periodic repurchase at NAV related prices. SEBI regulation stipulated
that at least one of the two exit routes is provided to the investors i.e. either repurchase
facility or through listing on stock exchanges. These mutual funds schemes disclose NAV
generally on a weekly basis.

B) Schemes according to Investment Objectives:

A scheme can also be classified as a growth scheme, income scheme, or balanced scheme
considering its investment objective. Such schemes may be open-ended or close-ended
schemes as described earlier. Such schemes may be classified mainly as follows:

 Growth or equity-oriented Scheme:

The aim of growth funds is to provide capital appreciation over the medium to long term.
Such schemes normally invest a major part of their corpus in equities. Such funds have
comparatively high risk. These schemes provide different options to the investors like a
dividend option, capital appreciation etc... And the investors may choose an option depending

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on their performance. The investors must indicate the option in the application form. The
mutual funds also allow the investors to change the options at a later date. Growth schemes
are good for investors having a long term outlook seeking appreciation over a period of time.

 Income / debt-oriented schemes:

The aim of income funds is to provide regular and steady income to investors. Such schemes
generally invest in fixed income securities such as bonds, corporate debentures, Govt.
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 NAVs of such funds
are affected because of change in interest rates in the country. If the interest fall, NAVs of
such funds are likely to increase in the short run and vice-versa. However, long term
investors may not bother about these fluctuations.

 Balanced Funds:

The aim of balanced funds is to provide both growth and regular income as such schemes
invest both in equity and fixed income securities in the proportion indicated in their offer
document. These are appropriate for the investors looking for moderate growth. They
generally invest 40% to 60% in equity and debt instruments. These funds are also affected
because of fluctuation in share prices in the stock markets. However, NAVs of such funds are
likely to be less volatile compare to pure equity funds.

 Money market or liquid funds:

These funds are income funds and their aim is to provide easy liquidity, preservation of
capital and moderate income. These schemes invest exclusively in safer short-term
instruments such as treasury bills, certificates of deposits, commercial paper and inter-bank
call money, government securities, etc. Returns on these schemes fluctuate much less
compared to other funds. These funds are appropriate for corporate and individual investors
as a means to park their surplus funds for short periods.

 Gilt funds:
These funds invest exclusively in Govt. securities. Govt. securities have no default risk.
NAVs of these schemes also fluctuate due to change in interest rates and other economic
factors as is the case with income or debt oriented schemes.

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  Index funds:

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. The NAVs of such schemes would rise or fall in accordance with the
rise or fall in the index, though not exactly by same percentage due to some factors known as
tracking error‖ in technical terms. Necessary disclosures in this regards are made in the offer
document of the mutual fund scheme. These are also exchange traded index funds launched
by the mutual funds which are traded on the stock exchange.

 ELSS:

Equity linked savings scheme (ELSS) are equity funds floated by mutual funds. This scheme
is suited for young people as they have the ability to take on higher risk. The ELSS funds
should invest more than 80 per cent of their money in equity and related instruments. It is
ideal to invest in them when the markets are down. These funds are now open all the year
round. The other way of investing in these funds could be a systematic investment, which
essentially means investing a small sum regularly (monthly or quarterly). It is a market-linked
security and therefore there will be risks accordingly.

1.6 Statement of the problem

Mutual funds are the avenues for common investors to reap the benefits of share market
performance. Investing in equity directly by investors is fraught with highest level of risk &
uncertainty Retail investors do not actively participate in share market but inflation edged
investment return demands the exploitation of the equity market as an investment avenue
Therefore there is a necessity to create awareness of the utility of investing in mutual funds
schemes to enjoy a return which will be inflation adjusted real returns Therefore this project
is taken on to assess the investors perception of mutual fund investment. This project will
evaluate the financial performance of mutual fund schemes.

1.7 How Risky Your Mutual Fund Is

Investors always judge a fund by the return it gives, never by the risk it took. In any historical
analysis of a mutual fund, the return is remembered but the risk is quickly forgotten. So a
fund manager may have used very high-risk strategies (that are bound to fail disastrously in

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the long run), hoping that his wins will be remembered (as they often are), but the risk he
took will soon be forgotten.

What Is Risk?
Risk can be defined as the potential for harm. But when anyone analyzing mutual funds uses
this term, what is actually being talked about is volatility. Volatility is nothing but the
fluctuation of the Net Asset Value (price of a unit of a fund). The higher the volatility, the
greater the fluctuations of the NAV. Generally, past volatility is taken as an indicator of
future risk and for the task of evaluating mutual fund; this is an adequate (even if not ideal)
approximation.

Defining Mutual fund risk:

Mutual funds face risks based on the investments they hold. For example, a bond fund faces
interest rate risk and income risk. Bond values are inversely related to interest rates. If
interest rates go up, bond values will go down and vice versa. Bond income is also affected
by the change in interest rates. Bond yields are directly related to interest rates falling as
interest rates fall and rising as interest rise. Income risk is greater for a short-term bond fund
than for a long-term bond fund.

Similarly, a sector stock fund (which invests in a single industry, such as

telecommunications) is at risk that its price will decline due to developments in its industry.
A stock fund that invests across many industries is more sheltered from this risk defined as
industry risk.

Following is a glossary of some risks to consider when investing in mutual funds:

 Call Risk: -

The possibility that falling interest rates will cause a bond issuer to redeem or call its high-
yielding bond before the bond's maturity date.

 Country Risk: -

The possibility that political events (a war, national elections), financial problems (rising
inflation, government default), or natural disasters (an earthquake, a poor harvest) will
weaken a country's economy and cause investments in that country to decline.

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  Credit Risk: -

The possibility that a bond issuer will fail to repay interest and principal in a timely manner.
Also called default risk.

 Currency Risk: -

The possibility that returns could be reduced for Americans investing in foreign securities
because of a rise in the value of the U.S. dollar against foreign currencies. Also called
exchange-rate risk.

 Income Risk: -

The possibility that a fixed-income fund's dividends will decline as a result of falling overall
interest rates.

 Industry Risk: -

The possibility that a group of stocks in a single industry will decline in price due to
developments in that industry.

 Inflation Risk: -

The possibility that increases in the cost of living will reduce or eliminate a fund's real
inflation-adjusted returns.

 Interest Rate Risk: -

The possibility that a bond fund will decline in value because of an increase in interest rates.

 Manager Risk: -

The possibility that an actively managed mutual fund's investment adviser will fail to execute
the fund's investment strategy effectively resulting in the failure of stated objectives.

 Market Risk: -

The possibility that stock fund or bond fund prices overall will decline over short or even
extended periods. Stock and bond markets tend to move in cycles, with periods when prices
rise and other periods when prices fall.

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  Principal Risk: -

The possibility that an investment will go down in value, or "lose money," from the original
or invested amount.

How Risk Is Measured?

There are two ways in which you can determine how risky a fund is.

 Standard Deviation: -

Standard Deviation is a measure of how much the actual performance of a fund over a period
of time deviates from the average performance. ―Since Standard Deviation is a measure of
risk, a low Standard Deviation is good

 Sharpe Ratio: -

This ratio looks at both, returns and risk, and delivers a single measure that is proportional to
the risk adjusted returns. ―Since Sharpe Ratio is a measure of risk-adjusted returns, a high
Sharpe Ratio is good."

1.8 Advantages and Disadvantage of Mutual Fund

Advantages: -
 Number of options available
 Diversification
 Professional management
 Potential of returns
 Liquidity
 Well regulated
 Transparency
 Convenient Administration
 Taxation on mutual funds
Disadvantages: -
 No control over Cost in the Hands of an Investor
 No tailor-made Portfolios
 Managing a Portfolio Funds

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1.9 Scope of Research
From the various mutual funds operated in India Three mutual funds organizations has been
identified based on convenient sampling. Selected equity funds of these organizations are
taken up for research .The financial details reflecting performance of mutual funds for the
financial year 2023-24 is considered as an academic project. It is executed during a period of
one month, conclusions arrived at are influenced by economic and business environment of
the year 2023-24.
The research is based on different investment & saving schemes so there is lots of
opportunities to choose an investment schemes which is beneficial to investor as well as the
companies in the market. Choosing a right research technique lead to better profits &
investment decisions.

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 CHAPTER - 2
LITERATURE REVIEW

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2.1 Introduction

Literature review is a description of literature relevant to a particular field or topic.

This is often written as part of a thesis proposal, or at the commencement of a thesis. A
critical literature review is critical assessment of the relevant literature. Literature covers
everything relevant that is written on a topic: books, journal articles, newspaper articles,
historical records, government reports, theses and dissertations, etc. The important word is
'relevant'. A literature review gives an overview of the field of inquiry: what has already been
said on the topic, by the key writers. It also gives an idea about the prevailing theories and
hypotheses. The review also specifies what questions are being asked, and what
methodologies and methods are appropriate and useful. A critical literature review shows
how prevailing ideas fit into the thesis and how the thesis agrees or differs from them. Human
beings are full of curiosity, and this draws them towards finding the facts. Knowing the facts
requires the researcher to understand and get in-depth knowledge of the topic. After selecting
the topic, the researcher tried to conduct a complete study of the available literature to know
the past, present scenario and to understand the future trend. Literature review also helped the
researcher to know of the deviations in the present study and if possible, to give certain
remedial measures. The objective of the study according to the researcher is to understand the
conceptual framework of Mutual fund and to have a complete knowledge of these trends in
relation to the Indian market.

The researcher to have a convenient study and better understanding of the facts have
classified literature review under the following heads:

Review of Literature relating to Mutual fund.

Conclusion and Research Gap

2.2 Literature Review

Many studies on the growth and financial performance of mutual funds have been
carried out during the past, in the developed and developing countries. Brief reviews of the
following research works reveal the wealth of contributions towards the performance
evaluation of mutual fund, market timing and stock selection abilities of fund managers.

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Sharpe (1966) introduced the measure to evaluate the mutual funds‘risk-adjusted
performance. The measure was known as reward-to-variability ratio (Currently Sharpe
Ratio). With the help of this ratio he evaluated the return of 34 open-end mutual funds in the
period 1945-1963. The results showed the capital market was extremely efficient due to
which majority of the sample had lower performance as compared to the Dow Jones Index.

Michael C. Jensen (1967) derived a risk-adjusted measure of portfolio performance

(Jensen‘s alpha) that estimates how much a manager‘s forecasting ability contributes to
fund‘s returns. As indicated by Statman (2000), the e SDAR of a fund portfolio is the excess
return of the portfolio over the return of the benchmark index, where the portfolio is
leveraged to have the benchmark index‘s standard deviation.

Martin P. and McCann B. (1998) in their book titled “The Investor’s Guide to Fidelity
Funds – Winning Strategies for Mutual Fund Investing” have very nicely guided investors
regarding issues related with mutual fund investing. They have advised that Investors should
focus on sectors of the global economy that have the greatest potential for profit to beat the
market averages. By combining this approach with the safety provided by mutual funds’
inherent diversification, mutual funds become an investment vehicle with all the advantages
of trading individual securities and none of the disadvantages. Like any other investment, it is
essential to develop a strategy for selecting which funds to buy and sell – and when. These
decisions should not be left to the emotions or to chance.

Syama sunder (1998) conducted a survey to get an insight into the MF operations of private
institutions with special reference to Kothari pioneer. The survey revealed that the awareness
about MF concept was poor during that time in small cities like Vishakhapatnam. Agent play
a vital role in spreading the MF culture; open end schemes were much preferred then; age and
income are two important determinants in the selection of fund /scheme; brand image and
return are their prime considerations.

Mary Jane Lenard , Syed H. Akhter, B Pervaiz Alamc (2003 ) in their paper titled
“Mapping Mutual Fund Investor Characteristics and Modeling Switching Behavior” have
empirically investigated investor attitudes toward mutual funds. Their model, based on
investor responses, develops an investor's "risk profile" variable. Results indicate that
regardless of whether the investors invest in non-employer plans or in both employer and

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non-employer plans, they consider their investment risk, fund performance, investment mix,
and the capital base of the fund before switching funds. The model developed in this study
can also assist in predicting investors' switching behavior . In the paper titled “How to
measure mutual fund performance: economic versus statistical relevance”

Roger Otten Dennis Bams (2004 ) have explored the added value o f introducing extra
variables such as size, book to market, momentum and a bond index to the existing mutual
fund performance models. Their search for most suitable model to measure mutual fund
performance has resulted in the conclusion that conditional models add strong economic
relevance because o f the ability to detect patterns in fund betas. This enables the investor to
monitor the dynamic behavior o f mutual fund managers.

Stephanos Papadamou and Costas Siriopoulos, (2004) in their paper titled “American
equity mutual funds in European markets: Hot hands phenomenon and style analysis”
empirically prove that the American no-load equity mutual funds that invest in European
stocks and keep their managers for more than three years, in order to investigate the
persistence o f short term performance and the related investment style. The results showed
an under performance compared to the Eurostoxx index and a hot hands phenomenon does
not persist, with some exceptions. Mutual funds that performed well in a five month
evaluation period continued to generate superior performance in the next four months.
According to style analysis a portfolio constructed by growth-large, growth-medium and
value large capitalization stocks outperformed any other investment style. However, well
diversified finds were the most meanvariance efficient, style consistent funds.

Steven Kaplan and Antoinette Scholar (2005) investigated the performance and capital
inflows o f private equity partnerships. Average fund returns (net of fees) approximately
equal the S&P 500 although substantial heterogeneity across funds exists. Returns persist
strongly across subsequent funds of a partnership. Better performing partnerships are more
likely to raise follow-on funds and larger funds. This relationship is concave, so top
performing partnerships grow proportionally less than average performers. At the industry
level, market entry and fund performance are procyclical; however, established funds are less
sensitive to cycles than new entrants. Several of these results differ markedly from those for
mutual funds.

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Gremillion L (2005) in his book “Mutual Fund Industry Handbook – A Comprehensive
Guide for Investment Professionals” has given detailed information about working of mutual
fund industry. It has also mentioned the different type of challenges faced by various
professionals connected with this industry. The book has provided a broad and
comprehensive sweep of information and knowledge, which will help everybody who has
serious interest in the industry.

Black et al. (2006) examined customer‘s choice of financial services distribution channels.
They showed that customer confidence, lifestyle factors, motivations & emotional responses
influence the customer‘s choice, while product, Channel & organizational factors such as
image and reputation are also significant.

Tyson E (2007) in his book “Mutual Funds for DUMMIES” (5th edition) has provided
practical and profitable techniques of mutual fund investing that investors can put to work
now and for many years to come. By proper selection investor can identify good schemes,
where fund managers invest in securities as per that match investors’ financial goals.
Investors can spend their time doing the activities in life that they enjoy and are best at.
Mutual Funds should improve investors’ investment returns as well as their social life. The
book helps investors how to avoid mutual fund investing pitfalls and maximizing their
chances for success. Whenever any investor wants to buy or sell a mutual fund, the decision
needs to fit his overall financial objectives and individual situation.

Debasish (2009) studied the performance of selected schemes of mutual funds based on risk
and return models and measures. The study covered the period from April 1996 to March
2005 (nine years). The study revealed that Franklin Templeton and UTI were the best
performers and Birla Sun life, HDFC and LIC mutual funds showed poor performance .

Javier Gil-Bazo and Pablo Ruiz-Verdu (2009) in their paper titled “The Relation between
Price and Performance in the Mutual Fund Industry” have highlighted Gruber (1996 ) theory
that investors buy actively managed equity mutual funds, even though on average such funds
underperform index funds. Their study reveals another puzzling fact about the market for
equity mutual funds: Funds with worse before free performance charge higher fees. This
negative relation between fees and performance is robust and can be explained as the
outcome o f strategic fee setting by mutual funds in the presence o f investors with different

17
degrees of sensitivity to performance. They found that better fund governance may bring fees
more in line with performance.

Jank S (2010) in his Discussion Paper on “Are there disadvantaged clieneles in mutual
funds?” has mentioned that mutual fund investors chase past performance, even though
performance is not persistent over time. This means that investors buy mutual funds that had
a high return in the past. On the other hand, investors are reluctant to withdraw their money
from the worst performing funds. This behavior has often been attributed to the irrationality
of mutual fund investors. Sophisticated investors rationally chase past performance, because
high past performance is a signal for managerial ability. No significant difference was found
between investor composition of the worst performing funds and those with average
performance.

Sondhi and Jain (2010), examined the market risk and investment performance of equity
mutual funds in India. The study used a sample of 36 equity fund for a period of 3 years. The
study examined whether high beta of funds have actually produced high returns over the
study period. The study also examined that open-ended or close ended categories, size of
fund and the ownership pattern significantly affect risk-adjusted investment performance of
equity fund. The results of the study confirmed with the empirical evidence produced by
Fame (1992) that high beta funds (market risks) may not necessarily produced high returns.
The study revealed that the category, size and ownership have been significantly determined
the performance of mutual funds during the study period.

Prabakaran and Jayabal (2010), evaluated the performance of mutual fund schemes. The
study conducted is on a sample of 23 schemes which were chosen basing on the priority
given by the respondents in Dharmapuri district in a survey and covers the study from April
2002 to March 2007. The study used the methodology of Sharpe and Jensen for the
performance evaluation of mutual funds. The results of the study found that 13 schemes out
of 23 schemes selected had superior performance than the benchmark portfolio in terms of
Sharpe ratio, 13 schemes had superior performance of Treynor ratio and 14 schemes had
superior performance according to Jensen measure.

Simran Saini / DR Bimal Anjum co-authoredthe Research paper: - Investor awareness and
Perception about mutual Funds, in the year 2011 Indian Mutual Fund has gained popularity in
last few years. The present study analyses the mutual fund investments in relation to

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investor’s behavior. Investors’ opinion and perception has been studied relating to various
issues like type of mutual fund scheme, main objective behind investing in mutual fund
scheme, role of financial advisors and brokers, investors’ opinion relating to factors that
attract them to invest in mutual funds, sources of information, deficiencies in the services
provided by the mutual fund managers, challenges before the Indian mutual fund industry.

The Research Paper: - A Study on Indian Mutual Funds Equity Diversified growth Schemes
and their performance evaluation was authored by Dr. D.S.Chaubey in the year 2011 Indian
Mutual Fund industry has experienced tremendous growth due to infrastructure and also
supported by high saving of funds. After liberalization and globalization of Indian economy,
market witness huge crowd towards the option of investing in mutual funds but investment in
a particular funds needs a lot of specification like- investor’s objectives, cost, availability of
funds, risk & return factors etc. and thus invite fundamental study for better future and
growth. This paper aims to know how the performance of mutual funds is assessed and
ranked after analyzing the NAV and their respective returns so as to measure investment
avenues.

Garg (2011) examined the performance of top ten mutual funds that was selected on the
basis of previous years return. The study analyzed the performance on the basis of return,
standard deviation, beta as well as Treynor, Jensen and Sharpe indexes. The study also used
Carhart’s four-factor model for analyze the performance of mutual funds. The results
revealed that Reliance Regular Saving Scheme Fund had achieved the highest final score and
Canara Robeco Infra had achieved the lowest final score in the one-year category.

Singh B K (2012) in an article “A study on investors’ attitude towards mutual funds as an

investment option” from International Journal of Research in Management has reiterated the
need for spreading the awareness about Mutual Funds among common masses. There is a
strong need to make people understand the unique features of investment in Mutual Funds.
From the existing investors point of view the benefits provided by mutual funds like return
potential and liquidity have been perceived to be most attractive by the invertors’ followed by
flexibility, transparency and affordability.

Divya K. (2012) in the article “A Comparative study on evaluation of Selected Mutual Funds
in India” from International Journal of Marketing and Technology has suggested that the

19
investment managers whose performance is below benchmark index should have a relook at
their investment strategy and asset allocation. Investing styles should be redesigned according
to up & down swings of the market to generate superior performance. To increase the
efficiency and popularity of mutual funds, the regulator should set the standard criteria of
benchmarks which will be helpful to asset management companies

Subrata Roy, April (2012) Conducted research on “A Comparative Study of Mutual

FundPerformance during Recession in India”. The objective of the study is to examine the
comparative risk-adjusted performance and also comparative market timing performance of
the companies. The sample consists of 31 open ended Gilt type of mutual fund schemes
selected from the public sector mutual fund. For the analysis of data the Treynor ratio tools
are used for measuring performance and the volatility ratio. The researcher can be observed
that the performance of the open ended giltschemes of different types of companies is not
satisfactory during the recession.

Sahil Jain, (July-Aug.2012) Conducted research on “Analysis of Equity Based Mutual Fund
inIndia”. The objective if the study is to bring out a comparison between the performance of
equitybased mutual funds of public and private sector, in India. The basic tool used is CAPM
(capital asset pricing model) and calculate the expected rate of return for a portfolio, given its
risk. The analysis is based on the risk-return relationship of mutual fund. The analysis finds
that the private sector mutual funds have outperformed the public sector.

Dr. Sarita Bhal, (July 2012) Conducted research on “A Comparative Analysis of Mutual
Fund Schemes in India”. The objective of the study to examine the performance of selected
schemes on the basis of risk and return and compare the performance of selected schemes
with benchmark index to see the schemes is outperforming and underperforming the
benchmark. The research methodology is to select random basis and monthly NAV of
different schemes have been used for this study for the period of five years. In this study the
secondary data are used and the calculation done through standard deviation, beta, alpha and
also consider the market risk. The data are measured by the Sharpe, Jenson and Treynor
ratios. For the research study the all schemes are provide the positive returns.

Badrivishal, 2013 Conducted research on “A study on Mutual Fund with Due Reference to
SBI Mutual Funds”. The objective of this project is to study about behavior of the investors
for preferring mutual funds and understand the risk and return of the various schemes and

20
also the productive avenue to invest in contrast to laxity of bank investing. Then after their
research design and also the nominal and interval scale are using for data analysis. There are
50 respondents in which investors and non-investors are there. The can be collected both
primary and secondary sources. The finding of this project is the highest number of investor
come from salaried class and their 6% invest of theirannual income in mutual fund.

Ms. Shilpi Pal, 2014 Conducted research on “A Critical Analysis of Selected Mutual Funds
in India”. The objective of the study is to study the performance of top 10 equity mutual fund
schemes in various categories and also compare the equity mutual fund. The research
methodology is collecting the structural process of conducting the research. The tools for
measuring by the standard deviation, beta, alpha, Treynor and Sharpe ratio. Return for last
one year are comparison for data analysis. The sampling has been done on the basis of
CRISIL rating. The study was found out that the midcap opportunity for invest in the mutual
fund having the better return.

Ganapathi, 2015 Conducted research on “Mutual Fund: An Empirical Study With Reference
To Coimbatore City”. The objective is to evaluate the performance of selected mutual fund
on the basis of risk-return relationship and to examine the retail investor‟s perception towards
mutual fund with reference to Coimbatore city. The methodology used for this study is to
analyze the growth and evaluate the performance of mutual fund industry in India. To
analyze the perception of retail investor towards mutual fund investment for the decided
period of time. The sample of 150 investors based on Quota sampling was used to select the
respondent around the Coimbatore city. The data collected through questionnaire and the
findings of this research that due to inability and improper management of fund manager
have given a negative differential return.

Dr. Shriprakash Soni, (April, 2015) Conducted research on “Comparative Analysis of

Mutual Fund Schemes available Kotak Mutual Fund and HDFC Mutual Fund”. The objective
of the study is to analyze and compare the performance of different mutual fund schemes and
also know the factor and those affect the mutual fund and find out the best scheme available
for investors by comparing their performance. The research are using with secondary data
and using convenience sampling and time period of study is 5 years. The tools and techniques
are used in research in standard deviation, Sharpe ratio, beta, alpha and R-square. Findings of
the study is the companies are offering similar types of schemes available for sectors and
taking amount of risk, so they provide close returns with minimum fluctuation.

21
Arthy B, (Aug. 2015) Conducted research on “A Study on Factor Affecting Investment on
Mutual Fund and Its Preference of Retail Investors”. The objective of the study is to analyze
the factor influencing investing decisions of retail investors in mutual funds and investor
perception and preference towards mutual funds. The research methodology used for this
study descriptive research design used in this study. The research instrument used in the
study is questionnaire and personal interview method. The sample size of the study s limited
to 200 investors. The samplings are using snowball sampling and random sampling. The
findings that the tax benefits, high return, price and capital appreciation is some major factors
influence on investor decision making.

Satheesh Kumar Rangasamay, Dr. Vetrivel T. Athika M, (May 2016) Conducted

Research on “A Comparative Study on Performance of Mutual Funds with Reference to
Indian Context”. The objective of the research is to comparative performance analysis of
selected mutual fund schemes in various categories and also decision making regarding in
the selected categories of mutual fund schemes. The data are taken from the NSE, BSE and
money control. The tools using in this study are simple average method and standard
deviation and ranking method. The finding of this study is to help the investor for
understanding the difference categories of mutual fund and evaluating the performance
standard.

R. Kumar Gandhi, (March 2016) Conducted research on “Performance of Selected Bank

Mutual Fund Schemes Impact in Investors Decision Making”. The objective of the research is
to analyze the performance of any mutual fund schemes in the selected banks and study the
performance with the different parameters. The sampling methods are using the convenience
sampling and the sample size taken 4 schemes from public and private bank for 1 year. The
tools for measuring by the standard deviation, beta, alpha, Treynor and Sharpe ratio. Return
for last one year are comparison for data analysis. The findings are that the Canara Robeco
equity tax saver schemes are performed very well.

22
N.Bhagyasree, (April,2016) Conducted research on “A Study on Performance of Mutual
Funds in India”. The research objective is that the mutual fund is performing safe for the
investor. The tools and techniques are used in this research are Shape ratio, Treynor ratio,
Jenson ratio, Beta, Standard deviation. The result of this study is to find out the mutual funds
were performing very safe for the investors and also supervision to allow an investor to take
the right decision.

Renuka, 2017 Conducted research on “A Comparative Study on Performance of Mutual

Funds and Its Schemes in India.” The research objective is to study about mutual fund and
also idea about regulation of mutual funds in India. The methodology is used the performance
of selected funds is evaluated using average return, standard deviation, beta and R-Square.
This study provides some insights on mutual fund performance so as to assist the common
investors in taking the rational investment decisions for allocating their resources in correct
mutual fund schemes.

Dr M.Ravichandran, (May 2017) Conducted research on “A study on performance

evaluation mutual fund schemes in India”. The objective of the research to identify the
performance of open ended equity mutual fund schemes and measure the performance and
analysis the risk and return of their performance and also evaluate the future investment
regarding open ended equity scheme. The collection of data is on systematic basis for
analysis. The data are collected from various sources from the association of mutual fund
India, BSE India etc. the tools and techniques for analysis is used in this study is Sharpe ratio,
Treynor ratio, Jensen ratio, beta and standard deviation. The finding of this study is
investigating the performance result useful for investors for taking better investment
decisions.

N.Nandhini Devi, Dr.A.Velanganni Joseph, (Sep.2017) Conducted research on

“Determinants of Mutual Fund Selection by Individual Investors in Coimbatore City”. The
objective of this study is to examine the factors that are considered important in selecting a
mutual fund and to identify the information influences the mutual fund investors. To
accomplish the objective, a questionnaire survey was designed to identify the fund selection
criteria adopted by mutual fund investors. The result of the study after analyzing the
response collected from 526 mutual fund individual investors in Coimbatore city and the
print media source has high influence on mutual fund investor's decision making.

23
Anand, September,2017 Conducted research on “A Comparative Analysis on Various
Mutual Fund Schemes of HDFC and SBI as an Investment Option for Retail Investors in
India”. The objective of the study is to compare the performance of selected mutual fund and
evaluate the risk and return using the various statistical tools like CAGR (Capitalized Annual
Growth Rate), Alpha, Beta, Standard Deviation and Sharpe ratio and parameters and also
analysis that which mutual fund scheme is provide better return. The random samplings are
using in this study and also the six mutual fund schemes are compare by the researcher
including equity, debt, balanced and sector specific funds. The findings of this study that the
mutual funds provide the professional approach towards the investment.

Rani, 2018 Conducted research on “Performance Analysis of Mutual Funds: A Study of

Balanced Schemes”. The purpose of the study is to examine the performance of selected
public and private sector mutual funds particularly for their balanced schemes during the
study period. The data analysis is basics quantitative results of selected schemes. This study
provides the overall mutual fund industry of India during a year of 2018.

Nadia, March,2018 Conducted research on “A Comparative Analysis of Mutual Fund

Schemes”. The objective is to analyze the risk and return of the selected fund schemes and
compare the same with BSE-Sensex and compare the performance with the market index
whether they are outperforming or underperforming. The research methodology consists of
primary and secondary data. The secondary data collected from various sources. The data are
measuring through standard deviation, beta, alpha and coefficient of determination. The result
of this study is to find out the 14 schemes outperformed the benchmark returns.

Anil Kumar Goyal, (June 2018) Conducted research on “A comparative study of return of
selected mutual fund schemes with nifty50”. The objective of the study is to compare average
long run mutual fund of each selected company and also compare with the nifty50 with
mutual fund. Research methodology is based on secondary data of NAVs and nifty50
collected online for the period of one year. The nifty50 price was collected from yahoo
finance. Findings for this study is the selected schemes is compared with the monthly average
of long return of benchmark nifty50 and find that SBI is better in terms of volatility and
returns.

Manisha Raj, (Oct.2018) Conducted research on “Performance of Mutual Funds in India: A

Comparative Analysis of SBI Mutual Funds and HDFC Mutual Fun.” The objective of the

24
study is to analyze and compare the performance of SBI and HDFC mutual fund with special
reference to Equity and balanced mutual fund. The study is based on the analysis of
secondary data which is collected from reviewing different research papers and articles
published by different authors. The method for study is use standard deviation, beta, alpha,
Sharpe ratio, Correlation – coefficient. The research was found that the rate of return of
HDFC is higher than the SBI.

Dr. Nidhi Sharma, (Feb2019) Conducted research on “Performance Analysis of Mutual

Funds: A Comparative Study of the Selected Hybrid Mutual Fund Schemes in India”. The
objective of the study is to measure and compare the performance of the select hybrid mutual
fund schemes in India. The selection of hybrid schemes is based on top 10 ranking given by
CRISIL and that rank based on the NAVs of the schemes. The data are used is primary data
and tools used in this study are NAV, average return, beta, R- square and standard deviation.

Anuja Magdum, (March 2019) Conducted research on “A Comparative study on Mutual

Fund Schemes of Selected AMC's in India”. The objective of this research is that to provide
better returns for the schemes promised by AMC‟s and compare the mutual fund schemes of
selected public and private sector AMC‟s in India. The data collected for the study is to
consider the 5 years and for comparison 4 AMC‟s with each other. For a risk free return fixed
deposit rate are used and the data are collected from the yahoo finance, AMFI website and
value research website. The methodology used in this research is beta and CAGR. The study
has investigated the performance of equity based MF schemes in India and the private sector
can better performed compare to the public sector.

Shivam Tripathi, Dr. Gurudutta P. Japee, (March 2020) Conducted research on

“Performance Evaluation of Selected Equity Mutual Funds in India”. The objective of the
study to know whether mutual funds give reward to changeability and unpredictability and
also identify security market return with fund return. The data are secondary data is gathered
from different sources like factsheets of different AMCs and historical NAV and yearly
return. The statistical tools Jenson's alpha, beta, standard deviation and Sharpe ratio. The
performance analysis of the selected 15 equity funds and clearly identified that the 10 funds
are performed well and 5 are not during the study. The findings of the study the volatility in
the market are changes in the performance of the various stocks.

25
Dr.K.M.Sudha, 2020 Conducted research on “Comparative Study on Selected Mutual
Fund”. The objective of the study is to comparative performance analysis fir selected mutual
funds for five years and also risks and returns of mutual funds. This study evaluates the
analysis of returns that takes place for five years and their volatility based on investment. The
sources of data are secondary data. The tools used for analysis are simple average method and
standard deviation method and simple comparative analysis method and ranking method. The
findings that is not advisable to invest equity fund category as the market undergoing
fluctuations asset components are subject to high risk.

2.3 Research Gap

The survey of literature reveals that most of the studies focused on studying mutual fund with
reference to either Indian market or foreign market. But a comprehensive study of mutual
funds covering the whole Indian context is lacking. Hence it is felt that there is an urgent
need to undertake a systematic study of various aspects of mutual funds, to understand
consumers’ perception and shopping experience in context of ongoing debate. Consequently,
given the fact that limited empirical research on mutual funds towards Indian context, this
study is empirically relevant as it provides information required by the investors. And it helps
investment-oriented marketing to develop effective strategies. The present study is aimed to
fulfill this requirement.

26
 CHAPTER – 3

RESEARCH METHODOLOGY

27
3.1 Introduction

Research methodology serves as the compass guiding scholars through the intricate
terrain of academic inquiry, providing a structured framework to navigate the complexities of
research design, data collection, analysis, and interpretation. At its core, research
methodology embodies a systematic approach that ensures the reliability, validity, and ethical
integrity of the research process. By leveraging a diverse array of methods, techniques, and
analytical tools, researchers can delve into the depths of their chosen subject matter,
uncovering insights and generating knowledge.

This comprehensive introduction aims to illuminate the key components, principles,

and applications of research methodology. By examining various research paradigms, data
collection methods, sampling techniques, and analytical approaches, scholars and
practitioners can deepen their understanding of how to design and execute rigorous research
studies. Moreover, this exploration will underscore the importance of methodological rigor in
producing credible findings and contributing to the advancement of knowledge within diverse
fields of study. Through a thorough understanding of research methodology, researchers can
navigate the intricacies of the research process with confidence, ultimately making
meaningful contributions to their disciplines.

This report is based on secondary data. All the data required for this analytical study
has been obtained mainly from secondary sources. The secondary data has been collected
through various journals & websites. Secondary data is based on information gleaned from
studies previously performed by various journals.

3.2 Objectives of the study

 To study some of the mutual fund schemes and analyse them
 Explore the recent development in the mutual funds in India.
 To give an idea about the regulations of mutual funds.
 To give a brief idea about the benefits available from Mutual Fund investment.
 To study the consumers' attitude towards mutual funds.

28
3.2 Research Hypothesis

 Null hypothesis (H0) = Equity funds perform better than debt and hybrid funds.
 Alternative hypothesis (H1) = Equity funds do not perform better than Debt and
Hybrid funds.

3.3 Research Design

Research design is the roadmap for carrying out the research activity in the project. In
the project of Investor perception of mutual fund Research part includes that investor make
among the funds selected for arriving at investment decision

 Type of Research:

The survey followed descriptive research design based on study. The survey attempts to find
out the perception of investors while investing in mutual funds.
Descriptive research design because time & cost constraints permitted the drawing of only
one sample from the population & information could be obtained from the sample only once.

 Collection of data:

Primary data: Since the study require a systematic gathering of information, survey research
(using a structured questionnaire) was selected

Secondary data: Here in this research project the secondary data is used data which are
taken from published sources of Bombay stock exchange, Money control, value research
online, National stock exchange & Mutual fund India.

3.4 Sampling design

Population definition: the population consists of total customers based in Bhubaneswar.

Convenient Sampling method

A convenience sample is made up of people who are easy to reach.

Consider the following example pollster interviews shoppers at a local mall. If the mall was
chosen because it was a convenient site from which to solicit survey participants and/or
because it was close to the pollster ‘s home or business, this would be a convenience sample.

29
Here in the research project a sample of ―10 Equity growth mutual funds‖ on the basis of
convenient sampling

Sample size:

Sample size =50

Axis equity fund

The scheme is ranked 2 in Large Cap category by Crisil (for quarter ended Mar 2014) rank
unchanged from last quarter. If you are already invested in this scheme, you may continue
to stay invested. But, do keep a check on its performance. Its fund class is under large cap.
The benchmark index is S & P CNX Nifty.

Scheme details
Fund Type Open-Ended

Investment Plan Dividend

Launch date Dec 08, 2009

Benchmark CNX NIFTY

Asset Size (Rs cr) 644.27 (Mar-31-2014)

Minimum Investment Rs.5000

Fund Manager Chandresh Nigam

Axis mid cap fund (D) Dividend

The scheme is ranked 3 in Small & Mid Cap category by Crisil (for quarter ended
Mar 2014). If you are already invested in this scheme, you may consider switching to
a better performing scheme.

Benchmark index is BSE-Midcap

30
 To achieve long term capital appreciation by investing predominantly in equity &
equity related instruments of mid-size companies. The focus of the fund would be to
invest in relatively larger companies within this category.

Scheme details

Fund Type Open-Ended

Investment Plan Dividend

Launch date Feb 14, 2011

Benchmark S&P BSE MIDCAP

Asset Size (Rs in cr) 255.45 (Mar-31-2014)

Minimum Investment Rs.5000

Fund Manager Pankaj Murarka

Axis focused 25 D (Dividend)

This scheme is not ranked by CRISIL (for quarter ended Mar 2014) since it does not
fulfill certain eligibility criteria of CRISIL. To generate long term capital appreciation
by investing in a concentrated portfolio of equity & equity related instruments of up to
25 companies

Scheme details

Fund Type Open-Ended

Investment Plan Dividend

Launch date Jun 25, 2012

Benchmark CNX NIFTY

Asset Size (Rs cr) 109.13 (Mar-31-2014)

Minimum Investment Rs.5000

Fund Manager Pankaj Murarka

31
 Axis Gold ETF

This scheme is not ranked by CRISIL (for quarter ended Mar 2014) since it does not
fulfill certain eligibility criteria of CRISIL The investment objective of the Scheme is
to generate returns that are in line with the performance of gold.

Scheme details

Fund Type Open-Ended

Investment Plan Dividend

Launch date Nov 03, 2010

Benchmark Price of Gold

Asset Size (Rs cr) 365.77 (Mar-31-2014)

Minimum Investment Rs.5000

Fund Manager Anurag Mittal

Axis focused 25 G (Growth)

This scheme is not ranked by CRISIL (for quarter ended Mar 2014) since it does not fulfill
certain eligibility criteria of CRISIL. To generate long term capital appreciation by
investing in a concentrated portfolio of equity & equity related instruments of up to 25
companies.

Scheme details
Fund Type Open-Ended

Investment Plan Growth

Launch date Jun 25, 2012

Benchmark CNX NIFTY

Asset Size (Rs. In cr) 109.13 (Mar-31-2014)

Minimum Investment Rs.5000

Fund Manager Pankaj Murarka

32
3.5 Limitation of the study
Apart from Details about mutual funds it has some limitations due to that all the
details could not be published & displayed. It has been done on the basis of secondary
sources like Journals, Websites & like resources.

Limitations of the study can be pointed out as follows:

 The limited information in the secondary survey report is a fundamental obstacle in

finding out the true consequences of investing in a mutual fund system by investors.
 The study is limited to the different schemes available under the mutual funds
selected.
 The study is limited to selected mutual fund schemes.
 The lack of information sources for the analysis part

33
 CHAPTER – 4
ANALYSIS AND
INTERPRETATION

34
4.1 Introduction
Mutual funds have long stood as pillars within the realm of investment, offering
individuals and institutions a diversified portfolio managed by professionals. In recent years,
the landscape of mutual funds has evolved, influenced by market dynamics, regulatory
changes, and shifting investor preferences. Understanding the intricacies of mutual fund
performance, behavior, and impact is crucial for investors, financial analysts, and
policymakers alike.
This study embarks on a journey to dissect the complexities of mutual funds, delving
into their structure, performance metrics, and the factors influencing their behavior. By
analyzing historical data, market trends, and regulatory frameworks, we aim to shed light on
the nuances of mutual fund dynamics and provide insightful interpretations.Through a
comprehensive analysis and interpretation of mutual funds, this study endeavors to contribute
to the understanding of these investment vehicles, empowering investors with knowledge to
make informed decisions, and guiding policymakers in fostering a robust and transparent
mutual fund ecosystem.

4.2 Data representation and interpretation

A. Equity Funds:

1. Large caps - also known as big caps are shares that trade for corporations with a
market capitalization of $10 billion or more. Large-cap stocks tend to be less
volatile during rough markets as investors fly to quality and stability and become
more risk averse.
Sl. No. Fund Fund manager Return in Return in Beta (%) Down side risk
1yr(%) 3yr (%) (%)
1. Axis bluechip Shreyash D. 20.74 15.26 0.78 70.28
fund
2. BNP Paribas Abhijeet D. 25.09 12.02 0.84 83.25
3. Nippon India Sailesh Raj 25.11 8.04 1.10 131.15
 Axis fund gave highest return in 3 year, but lowest in 1 year and its risk is also
the lowest of all.
 Nippon India gave highest return in 1 year, but lowest in 3 year, the risk is also
high.
2. Large cap and Mid cap - These mutual funds select stocks for investment from the
largest 250 stocks listed in the Indian markets (highest market capitalization). Larger

35
 stocks are expected to be less risky whereas smaller stocks may have higher potential
to grow.

Sl Fund Fund Return in Return in 3yr Beta (%) Downside

no. manager 1yr (%) (%) risk (%)
1. Invesco growth Pranav G. 23.51 10.52 0.93 86.94
2. Kotak equity Harsha U. 27.62 11.56 0.94 88.29
3. Sundaram S krishna 20.63 10.14 1.65 104.85
 Kotak gave highest return in both 1 and 3 year, with medium risk.

3. Flexi cap - A flex-cap fund allows investors to diversify their investment portfolio
across companies of different market capitalisation, mitigating risk and lowering
volatility. They are also referred to as diversified equity funds or multi-cap funds.

S.n Fund Fund 1 year 3 year Beta Downside

o manager return(%) return(%) (%) risk(%)

1. UTI flexi Ajay T. 35.13 16.77 0.97 80.63

2. DSP equity Atul B. 24.61 12.63 0.99 92.96
3. Kotak flexi Harsha U. 24.89 10.79 0.94 88.47
 UTI flexi gave highest return in both the years with lowest risk

4. Multi Cap –in Multi cap equity funds invest in companies of all sizes and across
sectors. Unlike large or mid cap funds, they can decide how money gets allocated
between big, mid- sized, and small companies. This flexibility also allows them to
make changes the portfolio as market conditions change.

Sl Fund Fund 1 year 3 year Beta Downside

no manager return(%) return( (%) risk(%)
%)
1. BNP Paribas Abhijeet D. 23.27 7.68 0.92 101.35
2. ICICI Pru Sanskaran N. 30.55 9.53 1.00 100.32
3. Invesco India Amit N. 26.38 7.96 1.03 101.65
 ICICI pru. Gave highest return in both the years, with lowest risk.

5. Mid Cap Funds - Mid Cap Mutual Funds are equity funds that invest in the mid-
sized companies of India. The companies are some of the fastest-growing companies
in India and are at a stage today's leaders were a few years back.

36
 S.n Fund Fund 1 year 3 year Beta Downsid
o manager return( return( (%) e risk
%) %)
1. DSP midcap Vinit S. 27.77 10.10 0.85 76.91
2. Nippon India Manish G. 32.72 10.91 0.96 87.95
3. Franklin India R jankirama 32.55 8.30 0.92 85.73
 Nippon India gave highest return in both the years, but the risk was high.

6. Small Cap - Small Cap equity funds invest in the smallest companies in India.
These companies are beyond the top 250 companies and are mostly unheard of in
our daily lives. While they can deliver fantastic returns, small cap companies are
incredibly volatile, and you can see losses in short to medium term.

S. Fund Fund 1 year 3 year Beta Downside

no manager return return (%) risk

1. Axis small Anupam T. 23.05 14.22 0.76 61.14

cap
2. Kotak small Pankaj T. 52.07 13.07 0.94 82.77
cap
3. Nippon India Samir R. 46.16 7.34 0.97 92.66
 Kotak small cap gave high return in 1 year but low in 3 year, risk is medium.
 Axis small cap gave highest return in 3 year but lowest in 1,with the lowest risk.

B. Debt Funds:
1. Banking and PSUs debt - Banking and PSU funds are debt funds that lend only to
banks and public sector companies. The high quality of borrowers allows these loans
mean the risk of default is very less. However, they do get affected if interest rates in
the economy go up.

Sl Fund Fund 1 year 3 year Standard

no manager return(%) return(%) deviation(%)
1. Kotak banking Deepak 7.42 8.92 2.42
& PSU A.
2. IDFC banking Anurag 8.21 9.43 2.48
& PSU M.
3. Axis banking Aditya P. 7.61 8.80 2.08
& PSU
 IDFC gave highest return in both the years.

2. Medium term debt - Medium term/duration funds are debt funds that lend to quality

37
 companies for 3 or more years. The longer tenure of loan means these funds returns
are subject to the interest rate changes that borrowing companies undergo due to
positive or negative economic cycles over time.

S. Fund Fund 1 year 3 year Standard

no manager return(%) return(%) deviation(%)

1. IDFC Bond Suyash Ch. 6.56 8.06 2.57

2. Axis Strategic Devang S. 7.65 7.79 2.60
Bond
3. L&T resurgent Shriram R. 6.31 6.95 3.32
India
 Axis gave high return in 1 year, IDFC gave high return in 3 year

3. Short Duration Debt - Short term funds are debt funds that lend to companies for a
period of 1 to 3 years. These funds mostly take exposure only in quality companies
that have proven record of repaying their loans on time as well as have sufficient cash
flows from their business operations to justify the borrowing.

S.no Fund Fund manager 1 year 3 year Standard

return(%) return(%) Deviation(%)

1. Axis short term Devang S. 7.97 8.44 1.78

2. IDFC bond Suyash Ch. 7.28 8.22 1.94
3. L&T short term Shriram R. 7.17 8.01 1.81
 Axis gave highest return in both the years.

4. Long Duration - Long Duration funds are debt funds that lend to quality companies
for 5 or more years. The tenure of loan means that investment is more or less exposed
to the entire economic cycle and hence is inherently more risky than other Debt
Funds.

Sl Fund Fund 1 year 3-year Standard

no Manager return return (%) deviation
(%) (%)
1. IDFC bond Inc. Suyash Ch. 5.82 8.88 4.13
2. SBI magnum income Dinesh A. 7.69 9.06 2.98
3. Kotak bond Abhishek B. 6.70 8.77 3.75
 SBI gave highest return in both the years.

38
 C. Hybrid Funds:

1. Aggressive Hybrid Funds - are balanced funds invest primarily in stocks with some
allocation to FD-like instruments. Spreading out of investments means these funds are
less risky than pure equity funds with almost similar returns in the long run.

S.no Fund Fund 1 year 3 year Beta Downside

Manager return(%) return(%) (%) risk(%)

1. BNP Paribas K.Lakshmanan 22.45 13.39 1.01 97.41

2. SBI Equity R.Srinivasan 18.96 11.11 1.08 119.32
3. DSP equ & Vikram C. 20.58 11.23 1.20 126.75
bond
 BNP gave highest return in both the years, with the lowest risk.

2. Conservative Hybrid - Conservative Hybrid funds invest primarily in FD-like

instruments with some allocation to stocks. These funds look to provide more returns
than bank fixed deposits without taking too much risk.

S.no Fund Fund 1 year 3 year Beta Downside

Manager return(%) return(%) (%) risk(%)
1. ICICI Pru Rajat Ch. 11.43 9.10 0.88 40.14
2. Franklin India S. 7.34 6.68 1.18 140.65
Paudwal
3. DSP Reg Sav Vinit S. 9.18 4.08 1.47 238.58
 ICICI gave highest return in both the years, with the lowest risk.

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4.3 Hypothesis Testing
 Upon analysis of different Types of Mutual Funds it can be observed that
average 1year return of equity funds always ranged above 20% with the Highest
reaching up to 52.07% in the Equity small cap fund by Kotak. It was observed
that 3-year returns were significantly lower and inconsistent with 1 year returns
of equity funds, with Flexi equity funds showing the highest 3-year returns of
16.77% in the equity fund segment.
 Debt funds had significantly lower 1years returns compared to equity funds,
with the highest returns reaching up to only 8.21% by the Banking and PSU
debt fund of IDFC. It was observed their 3 years returns were very consistent
with 1 year Returns of Debt funds but still were less than the 3 years returns of
most Equity funds.
 Upon Analysis of Hybrid funds, it was observed that Aggressive Hybrid funds
had significantly higher 1year returns than conservative Hybrid funds.
 The 1-year return of Aggressive Hybrid funds stood at par with large cap equity
funds but much lower than Mid, multi and small cap funds. However, It was
observed that 3years returns of Hybrid funds were much higher and more
consistent with their 1year returns compared to equity funds.
 Upon risk analysis it was observed that Debt carried the least degree of risk
subject to least rate of return. It was observed that beta of Hybrid funds was
above 1.0 on an average which showed higher volatility compared to the equity
funds whose beta was mostly below 1.
 Downward risk was also observed to be the highest in Hybrid funds compared
to equity funds.
 Therefore, since most Equity funds showed higher returns than other funds and
had a risk lower than Hybrid funds.
 The null hypothesis is accepted that equity funds perform better than debt and
Hybrid funds.

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 CHAPTER – 5
SUMMARY AND SUGGESTION

41
5.1 Summary
Upon findings of the research, we can say that:

 Equity funds are preferred for both high risk and moderate risk taking investors.
Well, Equity funds are also an ideal investment option for small investors. The
benefits which make equity funds suitable for small investors are: low risk, small
capital for investment and diversified portfolio.
 Debt funds carry low risk - preferable for retired class. Unlike equity mutual
funds, a debt mutual fund is not subject to market conditions. Investments are
made in securities with a fixed maturity period and a rate of interest. New
investors usually start with a low-risk appetite. Debt mutual funds serve as a great
avenue of investment for such investors. There is steady returns without the fear
of losing it all due to markets crashing.
 Hybrid funds - preferable for Young and adventurous investors who are willing to
take high risks for a high return in the long term. A balanced fund offers investors
the benefit of diversification since it combines both equity and debt. When share
prices go down, the debt component in these kinds of hybrid mutual funds ensures
stability. So these funds are able to withstand shocks during a bear phase.
Generally, debt and equity have an inverse correlation; they move in different
directions. So having a balanced fund helps you hedge your bets. One thing you
must remember is that balanced funds do not do as well when the market is on a
bull run. Another point is that when share prices rise, fund managers will have to
sell stocks in these kinds of hybrid mutual funds to maintain the required equity-
debt ratio.

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5.2 Major Findings
 Primarily, mutual funds are regulated by the Securities and Exchange Board of
India (SEBI).
 A mutual fund should have the approval of RBI in order to provide a guaranteed
returns scheme.
 The Ministry of Finance acts as a supervisor of RBI and SEBI and appellate
authority under SEBI regulations.
 The Association of Mutual Funds in India (AMFI) has been made to develop this
Mutual Fund Industry of India on professional and ethical lines and to enhance
and maintain standards in all areas with a view to protect and promote the
interests of mutual funds and their unitholders.
 It offers you professional management. Through mutual funds, investors get
access to the professional money managers who have expertise and experience in
the field of buying, selling and monitoring investments by the investors.
 It helps you in holding a wide variety of shares at a much lower price than you
really could own by yourself. If one investment in the Fund decreases in value
that does not mean that the other will also be decreased, it may increase as well.
By holding shares in the market, you can take advantage of the changing
environment in the industry. It helps in diversification.
 It gives opportunities to the small investors to take part in professional asset
management and they can have low investment minimums.
 Most of the mutual funds allow investors to deal with shares on any business day.
Many funds provide you with an automatic purchase program. It is according to
the convenience of the investors and helps them to gain the best out of the money
invested.
 The higher level of diversification since the basket of a portfolio will be aimed at
spreading the investment to offer protection against concentration risks.
 They provide regular liquidity as shareholders of open-ended funds and unit
investment trusts may sell their holdings back to the fund at regular intervals at a
price equal to the NAV of the fund’s holdings.
 Managed by professional investors who have rich experience in investment and
can understand the nerves of the market.
 Since mutual funds are regulated by a government body i.e. AMFI in India, it
offers protection and comfort to the investors before considering investment

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 opportunity.
 All mutual funds are required to report the same level of information to the
investors which makes it relatively easier for comparison in case of
diversification.
 These funds provide regular reports of their performance and are also easily
available on the internet to understand past trends as well as the strategies
implemented.

5.3 Conclusions
Mutual fund industry has developed itself very Fastly in today’s times . Mutual fund
industry in India is maturing with increase in the number of investors and increasing
geographical spread. MF in India have become major players in the equity and corporate
bond markets and are also providing crucial liquidity support to the money market.
Consequently, their influence on price movements in equity and debt markets as also
domestic liquidity conditions has increased over time.
This research was made to understand the management of mutual funds, the schemes which
Asset management companies offers and analysing them from the given data.

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Websites
https://www.moneycontrol.com/
www.icicipruamc.com
https://www.hdfcfund.com/
https://mutualfund.adityabirlacapital.com/
https://mf.nipponindiaim.com/
https://www.sbimf.com/
https://www.morningstar.com/
https://www.angelbroking.com/

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