Summer Internship Project

“MUTUAL FUND”

Submitted in partial fulfillment of PGDM program

2015-17

Submitted by

Diwakar Arya

23/090

Corporate Mentor Faculty Mentor

Mr. R.K Arora Dr. Divya Jindal

CEO, Smart Equity Broker’s Pvt. Ltd. Associate Professor

Apeejay School of Management

New Delhi

June 2016

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CERTIFICATE

This is to certify that the project work done on “MUTUAL FUND” Submitted to Apeejay

School of Management, Dwarka by Diwakar Arya in partial fulfillment of the

requirement for the award of PG Diploma in Management, is to the best of my

knowledge a bona-fide work carried out by him/her under my supervision and guidance.

This work has not been submitted anywhere else for any other degree/diploma. The

original work was carried out during 4th April to 10th June in Smart Equity Brokers Pvt.

Ltd.

Date:

Seal/Stamp of the Organization Signature & Name of the Corporate Mentor

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CERTIFICATE

This is to certify that I Diwakar Arya Roll No. 23/090 have carried out my Summer internship in Smart Equity

Brokers Pvt. Ltd. in the area MUTUAL FUND. It is also certified that the work done by me is original with due

references of sources, and has not been submitted elsewhere for the award of any diploma or degree.

_____________________

Signature

Name of the Student

Date : _________________________

Countersigned by Faculty Mentor

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ACKNOWLEDGEMENT

I would like to add a few words of appreciation for the people who have been a part of this

project right from its inception. The writing of this project has been one of the significant

academic challenges I have faced and without the support, patience, and guidance of the people

involved, this task would not have been completed.

It gives me immense pleasure in presenting this project report on “MUTUAL FUND. It has been

my privilege to have a team of project guide who have assisted me from the commencement of

this project. The success of this project is a result of hard work, and determination put in by me

with the help of my project guide. I hereby take this opportunity to add a special note of thanks

for Mr. R.K Arora and Dr. Divya Jindal who undertook to act as my mentor despite her many

other academic and professional commitments. Her wisdom, knowledge, and commitment to the

highest standards inspired and motivated me. Without her insight, support, and energy, this

project wouldn't have kick-started and neither would have reached fruitfulness.

The project is dedicated to all those people, who helped me while doing this project.

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TABLE OF CONTANT

S.No. TOPIC PAGE

No.

1.

2.

3.

4.

EXCUTIVE SUMMARY

CH-1: THE AREA OF INTERNSHIP AND LEARNING OBJECTIVES

1.1:- INTRODUCTION

1.2:- STUDY ON MUTUAL FUND

1.3:- NEED OF THE STUDY

1.4:- WHY WE SELECT MUTUAL FUND

1.5:- BENEFIT OF MUTUAL FUND

1.6:- LITRETURE REVIEW OF THE MUTUAL FUND

1.7:- SCOPE OF MUTUAL FUND

1.8:- RESEARCH MATHODOLOGY

1.9:- LIMITATION OF MUTUAL FUND

CH-2: PROFILE OF THE ORGANIZATION

2.1:- COMPANY PROFILE

2.2:- OUR CLIENT

2.3:- VALUES

2.4:- MISSION

2.5:- BUSINESS OPERATION

2.6:- MARKETING STRATEGY

2.7:- COMPETITORS

2.8:- PRODUCT LINE

2.9:- ORGANIZATION STRUCTURE

2.10:- HR SYSTEM

CH-3. CH-3. JOB DESCRIPTION AND FUNCTIONAL PROFILE

3.1:- MY JOB DESCRIPTION

3.2:- TASKS ASSIGNED TO ME

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12

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13

16

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24

24

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28

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5.

6.

7.

CH-4. LEARNING EXPERIENCE AND INSIGHTS GAINED

4.1:- MUTUAL FUND MEANING

4.2:- HISTORY OF MUTUAL FUND

4.3:- TYPES OF MUTUAL FUND

4.4:- TYPES OF MUTUAL FUND SCHEMES

4.5:- MUTUAL FUND STRUCTURE

4.6:- Difference between HDFC and ICICI mutual fund in stock market.

4.7:-INVESTMENT IN DIFFERENT LIFE STAGES

4.8:- RISK HIERARCHY OF MUTUAL FUND

4.9:- MUTUAL FUND WITH SPECIFIC PURPOSES

4.10:- SETTLEMENT

4.11:- FUTURE

4.12:- LIST OF MUTUAL FUNDS OFFERED 

4.13:- MUTUAL FUND AND SEBI

4.14:- FUNCTIONS OF THE MUTUAL FUND: 

CH-5. RECOMMENDATIONS AND CONCLUSION

5.1:- SUGGESTION

5.2:- CONCLUSION

CH-6. BIBLIOGRAPHY

6.1:- BIBLIOGRAPHY

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35

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EXECUTIVE SUMMARY

A mutual fund is a scheme in which several people invest their money for a common financial

cause. The collected money invests in the capital market and the money, which they earned, is

divided based on the number of units, which they hold.

The mutual fund industry started in India in a small way with the UTI Act creating what was

effectively a small savings division within the RBI. Over a period of 25 years this grew fairly

successfully and gave investors a good return, and therefore in 1989, as the next logical step,

public sector banks and financial institutions were allowed to float mutual funds and their

success emboldened the government to allow the private sector to foray into this area.

Mutual Fund is the most suitable investment for the common man as it offers an opportunity to

invest in a diversified, professionally managed basket of securities at a relatively low cost.

The advantages of mutual fund are professional management, diversification, economies of

scale, simplicity, and liquidity.

The disadvantages of mutual fund are high costs, over-diversification, possible tax consequences,

and the inability of management to guarantee a superior return.

The biggest problems with mutual funds are their costs and fees it include Purchase fee,

Redemption fee, Exchange fee, Management fee, Account fee & Transaction Costs. There are

some loads which add to the cost of mutual fund. Load is a type of commission depending on the

type of funds.

Mutual funds are easy to buy and sell. You can either buy them directly from the fund company

or through a third party. Before investing in any funds one should consider some factor like

objective, risk, Fund Manager’s and scheme track record, Cost factor etc.

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Mutual Fund is like selecting Right Life Partner. Any wrong decision can wipe out your personal

wealth. What makes it more difficult is volatility in performance of mutual fund. Some people

select Mutual Fund only on the basis on their rankings. I would like to ask my readers, if mutual

fund rankings are 100% correct then all portals or financial advisers should suggest same set of

mutual funds to their clients or readers.

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.

 

There are many, many types of mutual funds. You can classify funds based Structure (open-

ended & close-ended), Nature (equity, debt, balanced), Investment objective (growth, income,

money market) etc.

In India, mutual fund assets are not even 10% of the bank deposits, but this trend is beginning to

change. This is forcing a large number of banks to adopt the concept of narrow banking wherein

the deposits are kept in Gilts and some other assets, which improves liquidity and reduces risk.

For the smooth conduct and regulation of the mutual fund several guidelines have been issued by

the SEBI regarding the investment, disclosure, accountability distribution of its profits to its

members and the investment companies. SEBI has issued regulation and code of conduct in

1993, which provided a basic legal framework for the functioning of the mutual fund. A code of

conduct and registration structure for mutual fund intermediaries, which were subsequently

mandated by SEBI. In addition, this year AMFI was involved in a number of developments and

enhancements to the regulatory framework.

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The most important trend in the mutual fund industry is the aggressive expansion of the foreign

owned mutual fund companies and the decline of the companies floated by nationalized banks

and smaller private sector players.

Reliance Mutual Fund, UTI Mutual Fund, ICICI Prudential Mutual Fund, HDFC Mutual Fund

and Birla Sun Life Mutual Fund are the top five mutual fund company in India.

Reliance mutual funding is considered to be most reliable mutual funds in India. People want to

invest in this institution because they know that this institution will never dissatisfy them at any

cost. You should always keep this into your mind that if particular mutual funding scheme is on

larger scale then next time, you might not get the same results so being a careful investor you

should take your major step diligently otherwise you will be unable to obtain the high returns.

Mutual Funds are pool of money collected from investors. The collected money will be invested

in the markets such as equity, debt, money market, etc. Mutual Funds are managed by

professionally qualified fund managers, the professionalism and experience of the fund manager

will help you in generating huge returns out of the investment. There are different types of

Mutual Funds in the market such as Stocks funds, Bonds funds, Money market funds, balanced

fund, Asset allocation funds, etc.

Settlement for Mutual Funds Service System is carried out by NSCCL through the depository

and bank interface. The clearing and settlement mechanism provides for settlement of funds and

mutual fund units in case of subscription and redemption orders. The transfer of funds and units

in respect of redemptions and subscriptions, respectively, is affected to the broker/Clearing

Members' settlement / pool account. Investors receive redemption amount (if units are redeemed)

and units (if units are purchased) through broker/clearing members' pool account.

Future of Mutual Funds in India is quite bright. Mutual Funds are one of the most popular forms

of investments as these funds are diversification, professional management, and liquidity. In the

year 2004, the mutual fund industry in India was worth Rs 1, 50,537 cr. The mutual fund

industry is expected to grow at a rate of 13.4% over the next 10 years.

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CHAPTER 1: THE AREA OF INTERNSHIP

AND

LEARNING OBJECTIVES

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1.1- INTRODUCTION:-

Mutual Funds are an attractive means of saving taxes and diversifying your investment portfolio.

So if you are looking to invest in mutual funds, Smart Equity & Commodity Brokers Pvt.

Ltd. offers you a host of mutual fund choices under one roof backed by in-depth information and

research to help you invest smartly.

A mutual fund is a pool of money from numerous investors who wish to save or make money

just like you. Investing in a mutual fund can be a lot easier than buying and selling individual

stocks and bonds on your own. Investors can sell their shares when they want.

In “Mutual Fund Book”, published by Investment company of U.S.., “A Mutual Fund is a

financial service organization that receives money from shareholders, invest it, earns returns on

it, attempts to make it grows and aggress to pay the share holders cash on demand for the current

value of his “investment”. The investment managers of the funds manage these savings in such a

way that the risk is minimized and steady return is ensured.

Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 define ‘Mutual Fund’

as , “a fund established in the form of a trust to raise monies through the sale of units to the

public or a section of the public under one or more schemes for investing in securities, including,

money market instrument”.

1.2:- STUDY ON MUTUAL FUND

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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 high 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 multinational companies

coming into 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.

My study gives an overview of mutual funds – definition, types, benefits, risks, limitations,

history of mutual funds in India, latest trends, global scenarios. I have analyzed a few prominent

mutual funds schemes and have given my findings.

1.3:- NEED OF THE STUDY

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.

1.4:- WHY WE SELECT MUTUAL FUND:-

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Selecting Right Mutual Fund is like selecting Right Life Partner. Any wrong decision can wipe

out your personal wealth. What makes it more difficult is volatility in performance of mutual

fund. Some people select Mutual Fund only on the basis on their rankings. I would like to ask my

readers, if mutual fund rankings are 100% correct then all portals or financial advisers should

suggest same set of mutual funds to their clients or readers.  You will find large variation in the

rankings of Mutual Funds.

Second problem is volatility in performance. A star performer fund this year might be worst

performing fund next year. It is advisable to review the investment portfolio every 6 months. In

short, undertake the exercise of selecting right mutual fund every 6 months.

Third problem with Indian investor is that they invest without evaluating the investment

objective. Reason being investment objective help to decide in which mutual fund class the

investor should invest.

Lastly, it is absolutely necessary to understand in which direction economy will move in next 12

months. I agree and understand that it is very difficult exercise but at least, you should have

reasonable idea. For example, even if you are investing in debt funds considered to “safest” then

also you have to select short term, long term, and gilt or income fund. Selection will depend on

how the interest rate movement is projected for next 12 months. If interest rates are projected to

fall as in current scenario then it is wiser to invest in long term debt fund.

In India, mutual fund assets are not even 10% of the bank deposits, but this trend is beginning to

change. This is forcing a large number of banks to adopt the concept of narrow banking wherein

the deposits are kept in Gilts and some other assets, which improves liquidity and reduces risk.

BANKS VS MUTUAL FUND

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BanksMutual Funds

ReturnsLow Better

AdministrativeHigh Low

RiskLow Moderate

Investment optionsLess More

NetworkHigh penetration Low but improving

LiquidityAt a cost Better

Quality of assetsNot transparent Transparent

Interest calculationMinimum balance between

10th & 30th of every month

Everyday

YOUR INVESTMENT ACCORDING TO THIS TABLE:-

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Instrument Tax Benefit Return Duration

EPF √ 8.50% Long Term

PPF √ 8% Long Term

NSC √ 8% Long Term

FD’s – Banks & Post

Office

√ 5.70 to 8.50% Short Term

Senior Citizen Savings

Scheme

√ 9% Long Term

Mutual Funds √ Market Linked Long Term & Short Term

ULIP √ Market Linked Long Term

NPS √ Market Linked Long Term

Direct Equity √ Market Linked Long Term

Gold √ Market Linked Short Term

Real Estate √ Market Linked Long Term

1.5:- BENEFIT OF MUTUAL FUND:-

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Professional management. Qualified professionals manage your money, but they are not alone.

They have a research team that continuously analyses the performance and prospects of

companies. They also select suitable investments to achieve the objectives of the scheme. It is a

continuous process that takes time and expertise which will add value to your investment. Fund

managers are in a better position to manage your investments and get higher returns.

Diversification. The cliché, "don't put all your eggs in one basket" really applies to the concept

of intelligent investing. Diversification lowers your risk of loss by spreading your money across

various industries and geographic regions. It is a rare occasion when all stocks decline at the

same time and in the same proportion. Sector funds spread your investment across only one

industry so they are less diversified and therefore generally more volatile.

Affordability. As a small investor, you may find that it is not possible to buy shares of larger

corporations. Mutual funds generally buy and sell securities in large volumes which allow

investors to benefit from lower trading costs. The smallest investor can get started on mutual

funds because of the minimal investment requirements. You can invest with a minimum of

Rs.500 in a Systematic Investment Plan on a regular basis.

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Tax benefits. Investments held by investors for a period of 12 months or more qualify for capital

gains and will be taxed accordingly. These investments also get the benefit of indexation.

Liquidity. With open-end funds, you can redeem all or part of your investment any time you

wish and receive the current value of the shares. Funds are more liquid than most investments in

shares, deposits and bonds. Moreover, the process is standardized, making it quick and efficient

so that you can get your cash in hand as soon as possible.

1.6:- LITRETURE REVIEW OF THE MUTUAL FUND:-

Key Differences between close and open ended schemes

S.No Feature Open end Close end

1 Capitalization Unlimited Limited

2 Any time entry Yes No

3 Any time exit Yes No

4 Tax advantages Yes No

5 Listed on exchange Generally no Yes

6 Available for a

fixed mutual fund

No Yes

Schemes according to Investment Objective:

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A scheme can also be classified as 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 / 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 risks. These schemes provide different options to the investors like dividend option, capital

appreciation, etc. and the investors may choose an option depending on their preferences. 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 Scheme:

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, Government

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 rates 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.

1.7:- SCOPE OF THE MUTUAL FUND:-

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In my project the scope is limited to some prominent mutual funds in the mutual fund industry. I

analyzed the funds depending on their schemes like equity, income, balance. But there is so

many other schemes in mutual fund industry like specialized (banking, infrastructure, pharmacy)

funds, index funds etc.

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.

1.8:- RESEARCH MATHODOLOGY:-

Data collection:

The study is based on both primary and secondary data and examines the trading mechanism in

stock market. The results are drawn mainly from secondary data collected.

Primary data: Primary data has been collected in the form of questionnaire collected from the

companies.

Secondary data: Secondary data has been collected from various sources such as:

Publications of the company

Business magazines

Journals, text books

Websites

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Annual reports

In order to gain information on current practices and problems, the area chosen for study are the

emerging and competitive companies in and around Hyderabad City.

1.9:- LIMITATION OF MUTUAL FUND:-

The time constraint was one of the major problems. 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. Mutual funds are restricted to Equity- diversified schemes only. Mutual funds are restricted to Growth plan only.

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CHAPTER 2:PROFILE OF THE ORGANIZATION

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2.1:- COMPANY PROFILE:-

Smart Equity Brokers Pvt. Ltd. & Smart Commodity Brokers Pvt. Ltd. was established on

1st May 2006 as Smart Equity Brokers Pvt. Ltd., by a young Chartered Accountant, Mr. Arun

Khera having a rich experience & exposure to capital, derivative & commodity market. The

Company acquired the membership of:

Bombay Stock Exchange [BSE] in 2006 National Stock Exchange [NSE] in 2006 National Commodity & Derivative Exchange [NCDEX] in 2003 Multi Commodity Exchange [MCX] in 2006 Derivatives Segment [NSE], Clearing Member in 2006

Smart is a full service brokerage house providing comprehensive advisory services to its clients

under one roof, enabling you to manage all your financial needs. We have expertise in advisory

services in both cash and derivatives sides of the capital markets. Smart also provides

commodity trading through its group subsidiaries, and is a member of the MCX and NCDEX.

The services are offered under total confidentiality and integrity with the sole purpose of

maximizing returns.

2.2 Our client:-Our customer base is a mix of institutional, high net worth, and retail investors. This diversified

base of customers, together with our wide gamut of services, provides us with the necessary

stability and strength to weather the volatility much better than that of the competitors and also

maintain high standards of customer service levels throughout. Smart meets the support needs of

this investor base through execution skills driven by an experienced sales team and research-

backed advice generated by a team of experienced analysts.

Smart advisory services range from investing, trading, research, financial planning and portfolio

management, which are offered, to a large number of high net worth individuals and corporate.

2.3 Our Values:-

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To be fair, empathetic and responsive in serving our customers.

To respect and reinforce our fellow employees and the power of teamwork.

To strive relentlessly to improve what we do and how we do it.

To always earn and be worthy of our customer's trust.

2.4 Mission:-To provide research-driven, unbiased investment adviser with the objective of achieving

sustainable superior investment return for our clients. To provide flawless execution support to

meet diverse client needs on a platform of professionalism and integrity.

2.5 Business Operations

Smart Equity Brokers Pvt. Ltd (Smart Equity) a financial firm based in Delhi was incorporated in

2006. The company attained membership in NSE and BSE in 2006. It operates in both the cash

and derivative market segments of BSE and NSE. Smart Equity offers comprehensive financial

service such as trading in equities and derivatives, currency futures, online trading, margin

funding, research reports, advisory service and distribution of financial products like mutual

fund, IPO and insurance among others. These services are mainly catered to retail investors,

proprietary HNI, corporate and arbitrage clients. The company through its associates, Smart

Commodity Brokers Pvt. Ltd offers commodity trading service which is a member of MCX and

NCDEX. As on Mar 31, 2011 the company operated with 130 terminals across 40 offices with

70 employees. During the same period, the company had nearly 6,500 client accounts. In FY11,

Smart Equity generated 60% revenues from the derivative market.

2.6 MARKETING STRATEGIES:

We conduct Seminars, Workshop in colleges and companies.

We use both Pull and Push Marketing Strategies.

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We do not believe in advertising much, rather in Word of Mouth.

2.7 COMPETITORS:

Angel Broking

SMC

Share khan

2.8 PRODUCT LINE:

Products and services of the company:-

Equity

Derivatives

Depositary

Commodities

Systematic trading

Internet trading

IPO -Initial Public Offerings

Mutual fund

2.9 ORGANIZTIONAL STRUCTURE

- Accounts

- Relationship Manager

- Mutual Fund

- Risk Management

- Sales Team

- Depository

2.10 HR System:This document provides additional guidelines / clarifications to employees regarding specific

areas under Code of Conduct. It is expected that each employee is aware of the various facets of

the conduct and understands its applicability in local context.

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Compliance with the law - All employees are expected to know the applicable laws with respect

to their area of operation /role. In case of any clarification / further information, please contact

the concerned HOD. Ignorance / negligence will not be acceptable.

A candidate selected must have following original documents:-

a)      Pan card

b)      Address proof

c)      Adhar card

d)      Last salary slip ( if not a fresher )

e)      Bank proof  with last salary credited

Candidate must be graduate passed.

Selected employees will be allowed 12 privilege leaves and 0. Sick leaves. & if not

availed will be reimbursed if he is in continuous employment of min 9 months and no

employee is allowed to take more than 3 leaves at a time

Salary will be credited to employee’s bank account on or before …10th. day of the

month. 

Salary slip will be mailed to employee’s mail address by …10th … of the month.

Attendance data will be picking up from biometric attendance machine. If employee is

not attending duty in office due to official work allocated elsewhere must have prior

approval by his senior by official mail, otherwise will be marked absent only.

15 minutes grace period will be allowed to attend office in morning, beyond that half day

absent will be marked.

Employees are not allowed to attend office in casual wear, except Saturdays.

If an employee resigns, she has to serve 15 days’ notice. In same fashion, if company will

ask any employee to resign, will provide 15 days grace period.

No employee is allowed to trade in future & option market or day trading in equity cash

market.

No employee is allowed to use printed stationary of the company, until and unless

authorized by management for a specific task.

Use and protection of company property – Data and documents is also company property.

Each one of us shall protect and preserve the same around us.

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Handling information, Data Protection – No sharing and passing reference of data / info

is permissible even to own family members.  

Good business practice, Conflicts of interest – In case of a potential situation which may

draw possible attention under conflict of interest either at individual or group level, the

documentation and due approval’s should be well captured for future reference.

Competitive position in the market:

As per the market, trading firms never get rating from any regulator, but according to Smart

Equity Brokers Pvt. Ltd. management they are among top Five broking firms in Delhi NCR.

Financial and profitability position:

According to Smart Equity Brokers Pvt. Ltd. management they are not supposed to disclose their

financial and profitability position to us.

Future prospects:

India has a huge potential in stock market .Indian government is also playing an important role in

increasing awareness in general public. They are provided subsidies and grants to CA firms,

broking firms, brokers to arrange seminars to increase awareness.

Smart Equity Brokers Pvt. Ltd. also arranges many seminars every year as a result of which they

have increased their number of investors and they have targeted to increase the number of clients

by double in next three years.

They organize investors meet for potential and existing investors who come up and share views

and experiences that helps in encouraging investors to invest in the stock market.

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CHAPTER 3:JOB DESCRIPTION

AND

FUNCTIONAL PROFILE

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3.1 My job description and functional profile include:

To assist senior brokers in taking calls for clients.

In many brokerage houses, stockbrokers work in a research team which concentrates on

select sector and stocks. Finance, banking, information technology, metals, oil and gas,

aviation, pharmaceuticals are the sectors in which stockbrokers generally show a lot of

interest.

To be alert and have qualities such as presence of mind, stamina and dedication to satisfy

his clients with good service.

To see the market movement and try to draw conclusions from them. Tips and

suggestions given to clients need to be backed by strong fundamental as well as technical

research, and I received training in the field of stock research from my mentor.

Trainee stock brokers initially work as assistant portfolio managers and aid wealth

managers in preparing client portfolios by taking into consideration their risk profiles.

Trainee stockbrokers learn how to manage client portfolios by exiting from under

performing stocks and adding cheap stocks, to give maximum returns to their clients.

Face to face client interaction is also one of the most vital parts of the job. It is only after

meeting clients that the brokers would be able to choose investment options and stocks

for them.

3.2 Tasks assigned to me:

 P/E Ratio, P/B Ratio.

I have opened 5 Demat account.

How to invest your money in stock market and how to make more profit.

To do the telecalling and take appointments

To collect the data of the doctors.

To convince the clients for the account opening.

To convince the clients for the attending the seminar related to stock markets.

What is buy-back

To tell the client about the company.

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To tell the client about the advantages of opening a Demat account with Smart Equity.

History of gold Last 100 Years.

 I went to many places (such as- vikaspuri, janakpuri, tilak nagar, kirti nagar, Nehru

subhas palace, moti nagar) for give the invitation of property dealer, C.A, and jewelers’.

To convince the client to open Demat account at Smart Equity.

By means of presentation explaining them how to trade online.

To take signatures of the client on the KYC (know your customer) form.

To collect the documents required to open a Demat account.

To fill up the KYC form for the customer.

To install the software in the client`s computer.

To make the client trade.

To submit the weekly report of myself.

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CHAPTER 4:LEARNING EXPERIENCE

AND

INSIGHTS GAINED

MUTUAL FUND

30

4.1 MEANING:

A Mutual Fund is kinds of trust that pools the savings of a number of investors, investors who

share a common financial goal. The money thus collected is then invested in capital market

instruments such as shares, debentures and other securities. The income earned through these

investments and the capital appreciation realized is shared by its unit holders in proportion to the

number of units owned by them. Thus a Mutual Fund is the most suitable investment for the

common man as it offers an opportunity to invest in a diversified, professionally managed basket

of securities at a relatively low cost.

4.2 History of Mutual Fund 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’s

Second Phase –1987-93(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 Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank

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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.

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

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Government of India and does not come under the purview of the Mutual Fund Regulation

The second is the UTI Mutual Fund, 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 Regulations, and

with recent mergers taking place among different private sector funds, the mutual fund industry

has entered its current phase of consolidation and growth.

A graph indicates the growth of assets over the years.

33

4.3TYPES OF MUTUAL FUND:-

34

1.

Open-Ended - This scheme allows investors to buy or sell units at any point in time. This does

not have a fixed maturity date.

1. Debt/ Income - In a debt/income scheme, a major part of the investable fund are channelized

towards debentures, government securities, and other debt instruments. Although capital

appreciation is low (compared to the equity mutual funds), this is a relatively low risk-low return

investment avenue which is ideal for investors seeing a steady income.

2. Money Market/ Liquid - This is ideal for investors looking to utilize their surplus funds in

short term instruments while awaiting better options. These schemes invest in short-term debt

instruments and seek to provide reasonable returns for the investors.

3. Equity/ Growth - Equities are a popular mutual fund category amongst retail investors.

Although it could be a high-risk investment in the short term, investors can expect capital

appreciation in the long run. If you are at your prime earning stage and looking for long-term

35

benefits, growth schemes could be an ideal investment.

3.i. Index Scheme - Index schemes is a widely popular concept in the west. These follow a

passive investment strategy where your investments replicate the movements of benchmark

indices like Nifty, Sensex, etc.

3. ii. Sectoral Scheme - Sectoral funds are invested in a specific sector like infrastructure, IT,

pharmaceuticals, etc. or segments of the capital market like large caps, mid caps, etc. This

scheme provides a relatively high risk-high return opportunity within the equity space.

3.iii. Tax Saving - As the name suggests, this scheme offers tax benefits to its investors. The

funds are invested in equities thereby offering long-term growth opportunities. Tax saving

mutual funds (called Equity Linked Savings Schemes) has a 3-year lock-in period.

4. Balanced - This scheme allows investors to enjoy growth and income at regular intervals.

Funds are invested in both equities and fixed income securities; the proportion is pre-determined

and disclosed in the scheme related offer document. These are ideal for the cautiously aggressive

investors.

II. Closed-Ended - In India, this type of scheme has a stipulated maturity period and investors

can invest only during the initial launch period known as the NFO (New Fund Offer) period.

1. Capital Protection - The primary objective of this scheme is to safeguard the principal

amount while trying to deliver reasonable returns. These invest in high-quality fixed income

securities with marginal exposure to equities and mature along with the maturity period of the

scheme.

2. Fixed Maturity Plans (FMPs) - FMPs, as the name suggests, are mutual fund schemes with a

defined maturity period. These schemes normally comprise of debt instruments which mature in

line with the maturity of the scheme, thereby earning through the interest component (also called

coupons) of the securities in the portfolio. FMPs are normally passively managed, i.e. there is no

36

active trading of debt instruments in the portfolio. The expenses which are charged to the scheme

are hence, generally lower than actively managed schemes.

III. Interval - Operating as a combination of open and closed ended schemes, it allows investors

to trade units at pre-defined intervals.

4.4 TYPES OF MUTUAL FUNDS SCHEMES:

4.4.1 ON THE BASIS OF STRUCTURE:

a) Open - Ended Schemes:

An open-end fund is one that is available for subscription throughout 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, where you can

buy and sell the mutual fund unit at any time.

b) Close - Ended Schemes:

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. First, the Investors can

transact (buy or sell) the units of the scheme on the stock exchanges where they are listed.

Second, some close-ended schemes provide an additional option of selling the units directly

to the Mutual Fund through periodic repurchase at the schemes NAV. SEBI Regulations

ensure that at least one of the two exit routes is provided to the investor.

c) Interval Schemes:

Interval Schemes are that scheme, 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.

4.4.2 ON THE BASIS OF NATURE:

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a) Equity fund:

These funds invest a maximum part of their Principal amount into equities holdings. The

structure of the fund may vary different for different schemes and the fund manager’s

outlook on different stocks. Equity investments are meant for a longer term, thus Equity

funds rank high on the risk-return matrix.

b) Debt funds:

The objective of these Funds is to invest in debt papers. Government authorities, private

companies, banks and financial institutions are some of the major issuers of debt papers.

By investing in debt instruments, these funds ensure low risk and provide stable income

to the investors.

c) Balance fund:

They are a mix of both equity and debt funds. They invest in both equities and fixed income

securities, which are in line with pre-defined investment objective of the scheme. These

schemes aim to provide investors with the best of both the Funds. Equity part provides

growth and the debt part provides stability in returns.

4.4.3 ON THE BASIS OF INVESTMENT OBJECTIVE:

a) Growth Schemes: 

These Schemes are also known as equity schemes. The aim of these schemes is to

provide capital appreciation over medium to long term. These schemes normally invest

a major part of their fund in equities and are willing to bear short-term decline in value

for possible future appreciation

b) Income Schemes:

These are also known as debt schemes. The aim of these schemes is to provide regular

and steady income to investors. These schemes generally invest in fixed income

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securities such as bonds and corporate debentures. Capital appreciation in such schemes

may be limited

c) Money Market Schemes:

These Schemes aim to provide easy liquidity, preservation of capital and moderate

income. These schemes generally invest in safer, short-term instruments, such as

treasury bills, certificates of deposit, commercial paper and inter-bank call money.

4.4.4 Types of Funds taken for analysis:

a) Large Cap Funds:

These are those types of Funds which invest their money in large Blue chip Companies,

having with a market capitalization of more than Rs 1000 crores.

Investing in large cap is a low risk-return preposition because such funds are widely

research and information available.

One of the advantage of large cap funds are that they are less volatile than mid cap and

small cap funds because investors are investing in this types of fund for a long term

prospective and help to keep these fund away from the volatility of the markets.

Top Performer under this category:

1) HDFC Top 200: It’s Compounded Annualized Returns of last 5 years is

24.5%.

2) Reliance Large Cap Fund: It’s Compounded Annualized Returns of last 5

years is 22.6%.

3) Franklin India Blue Chip: It’s Compounded Annualized Returns of last 5

years is 20.7%.

4) Kotak 30: It’s Compounded Annualized Returns of last 5 years is 19%.

5) DSPML Top 100 Equity: It’s Returns of last year is 18.4%.

b) Mid Cap Funds:

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This types of Funds invest their money in mid sizes companies. Companies having

market Capitalization between the Rs 500crores to Rs 1000 crores are come under the

mid cap companies. Mid Cap Funds are very volatile and tends to fall if the market is

fall in bad times. But this gives good return in short term.

Top Performer under this category:

1) IDFC Premier equity fund: It’s Compounded Annualized Returns of last 5

years is 29.2%.

2) Sundaram select mind cap fund (G): It’s Compounded Annualized Returns

of last 5 years is 24.8%.

3) Reliance Growth: It’s Compounded Annualized Returns of last 5 years is

23%.

4) Birla Sun life mid cap fund: It’s Compounded Annualized Returns of last 5

years is 21.9%.

5) L&T mid cap fund: It’s Compounded Annualized Returns of last 5 years is

17%.

c) Small Cap Funds:

These types of Funds are investing their money in Small size companies. Companies

having market capitalization up to Rs 500 cr. comes under the categories of Small Cap

companies. Small Cap Funds are more volatile than Mid Cap & Large Cap Funds. Its

Risk-Return Matrix are very high.

Top performer under this category:

1) L&T Small cap fund:

2) JP Morgan India smaller companies fund(G)

3) HSBC Small cap fund

4) Sundaram select small cap fund (G):

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d) Sector Funds:

These types of Funds are investing their money in particular sector of the economy.

Such as infrastructure, Banking, Retail, FMCG, ect. These Funds are more volatile than

Diversified funds having stocks of many sectors. These Funds are high risk -reward

category. These types of Funds are only for the short term investors, who are able to

take high risk ability.

Top Performer funds under this category:

1) Reliance Diversified Power sector fund (G): It’s Compounded Annualized

Returns of last 5 years is 27.8%.

2) Reliance Banking fund (G): It’s Compounded Annualized Returns of last 5

years is 25.7%.

3) Reliance Pharma (G): It’s Compounded Annualized Returns of last 5 years

is 25.4%.

4) ICICI Prudential infrastructure fund (G): It’s Compounded Annualized

Returns of last 5 years is 20.5%.

5) UTI Banking sector fund (G): It’s Compounded Annualized Returns of last

5 years is 20.4%.

e) Diversified funds:

These are a kind of funds which invest there most of there money in different sectors

like FMCG, Infrastructure, Pharma, ect. This helps to Diversified there Risk into various

sectors. If one sector is going down then other sector may compensate the loss. These

types of funds give consistent return without much volatility in long term.

Top Performer Funds under this category:

1) IDFC Premium Equity fund-planA (G): It’s Compounded Annualized

Returns of last 5 years is 26.9%.

2) Reliance regular saving fund-Equity growth: It’s Compounded Annualized

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Returns of last 5 years is 26% return.

3) HDFC Top 200- Growth: It’s Compounded Annualized Returns of last 5

years is 21.5%.

4) HDFC Equity fund (G): It’s Compounded Annualized Returns of last 5 years

is 21.3%.

5) Birla sun life frontline Equity fund: It’s Compounded Annualized Returns

of last 5 years is 21.2%.

4.5 MUTUAL FUND STRUCTURE:

The structure consists of:

Sponsor:

Sponsor is the person who acting alone or in combination with another body corporate

establishes a mutual fund. Sponsor must contribute at least 40% of the net worth of the

Investment Managed and meet the eligibility criteria prescribed under the Securities and

Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor is not

responsible or liable for any loss or shortfall resulting from the operation of the Schemes

beyond the initial contribution made by it towards setting up of the Mutual Fund.

Trust:

The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian

42

Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian

Registration Act, 1908

Trustee:

Trustee is usually a company (corporate body) or a Board of Trustees (body of

individuals). The main responsibility of the Trustee is to safeguard the interest of the

unit holders and inter alia ensure that the AMC functions in the interest of investors and

in accordance with the Securities and Exchange Board of India (Mutual Funds)

Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of the

respective Schemes. At least 2/3rd directors of the Trustee are independent directors

who are not associated with the Sponsor in any manner

Asset Management Company:

The Trustee as the Investment Manager of the Mutual Fund appoints the AMC. The

AMC is required to be approved by the Securities and Exchange Board of India (SEBI)

to act as an asset management company of the Mutual Fund. At least 50% of the

directors of the AMC are independent directors who are not associated with the Sponsor

in any manner. The AMC must have a net worth of at least 10 core at all times.

Registrar or Transfer agent:

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent

to the Mutual Fund. The Registrar processes the application form; redemption requests

and dispatches account statements to the unit holders. The Registrar and Transfer agent

also handles communications with investors and updates investor records.

4.6 INVESTMENT IN DIFFERENT LIFE STAGES

Now, we have seen the basic of mutual fund, we should know how to invest in a mutual

fund. What should expect from a mutual fund you depends on what stage of life are:-

43

The life cycle of an individual is classified as:

Each life stage is associated with specific goals and objectives which one need to plan

for the income level of an investor for the saving for potential and the time horizon and

the risk appetite depend on his/her life cycle.

When we talk of life cycle there are three wealth cycle stages associated:

1. Accumulation Stage– The investor is earning and has limited need to investment

income.

2. Transition Stage- When financial goals are approaching, investors fill the income but

also have to draw their earnings.

3. Reaping Stage- It is also known as Distribution Stage, where investors need the

income for the investment and cannot invest further.

4.7 Difference between HDFC and ICICI Mutual fund in stock Market.

HDFC BANK With 4.2% share of India's total non-food credit disbursements in FY12,

HDFC Bank is the second largest private sector bank in the country (after ICICI Bank)

in terms of asset size. The bank has tripled its share from 1.2% of total non-food credit

44

in FY02 to 4.2% in FY12. Retail assets constituted 51.3% of advances in FY12. Its

group companies, HDFC Standard Life (insurance), HDFC AMC (mutual funds) and

HDFC Securities (equities) add scalability to the bank's offerings.

ICICI BANK Despite being the second largest bank in the country after SBI in terms

of asset size, ICICI Bank lost its share of the banking sector's advances from 10.2% in

FY07 to 8% in FY12. At the end of March 2012, the bank had assets of over Rs 4.8

trillion and a franchise of over 9,000 ATMs and 2,750 branches spread across the

country. Retail assets constituted 34% of advances in FY12 as against 65% in FY07.

The bank is focusing on loan origination in the large corporate, SME and agrie segments

and on non-fund based products and services. Besides the bank itself being the market

leader across retail loan portfolios, its subsidiaries ICICI Life Insurance, ICICI General

Insurance and ICICI AMC are leaders in their respective businesses.

STOCK PRICE CHART: HDFC BANK VS. ICICI BANK

4.8 Risk Hierarchy of Mutual Fund:-

45

NSE 50 Index (Nifty) to name a few. These schemes invest in securities comprising the index

and also in the same weight age. NAVs of index fund schemes rise or fall in accordance with the

rise or fall in the index that they are replicating, though not exactly by the same percentage due

to factors known as "tracking error" in technical terms. Necessary disclosures in this regard are

made in the offer document of the mutual fund scheme.

Income Or Debt-oriented Scheme: Income funds, as the name suggests, provide regular and

steady income to investors. Such schemes generally invest in fixed income securities such as

bonds, corporate debentures, government securities and money market instruments. They are less

risky as compared to equity schemes. These funds are not affected by fluctuations in the equity

markets. However, the chances of capital appreciation are limited in such funds. The NAVs are

affected due to changes in interest rates in the country. If the interest rates plummet, the NAVs of

the schemes are likely to increase in the short run and vice versa.

Balanced Fund: Balanced funds give both growth and regular income as these schemes invest in

equities and fixed income securities in the proportion indicated in their offer documents. These

are appropriate for investors looking for moderate growth. These funds are also affected due to

46

fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be

less volatile as compared to pure equity funds.

Money Market Or Liquid Fund: Money Market or Liquid Funds are also 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 and others. Returns on these

schemes fluctuate lesser than other schemes. They are appropriate for individual investors who

wish to park their surplus funds only for a short-term period.

Gilt Fund: Gilt funds invest exclusively in government securities and they have no default risk.

The Net Asset Value (NAV) of these mutual fund schemes tend to fluctuate with changes in

interest rates and other economic factors as is the case with income schemes or debt-oriented

mutual fund schemes.

4.9 MUTUAL FUND WITH SPECIFIC PURPOSES

 

1. Property Fund is a retail fund established for the specific purpose of seeking benefits from freehold or leasehold of a property. It gives the investing public an alternative access to property investment and an opportunity to earn stable income mainly from leasehold. A property fund is prohibited to seek any benefit other than rental fees and its investment units must be distributed to the investing public fairly and thoroughly.  

 

2. Infrastructure Fund is a vehicle for raising capital for an infrastructure project developed by a public or private developer. This helps to curb budgetary burdens and public debts as well as offer a financing alternative for business sectors. An infrastructure fund gains returns from the infrastructure project in which it invests and pays dividends to investors.  

 The approval criteria include types of investible projects, investment in green field projects, ability to raise fund through investment units and loans, and investor protection.. 

47

3. Thai Trust Fund is a mutual fund established to facilitate investment made by foreigners by alleviating the constraints on foreign shareholding limit on the Stock Exchange of Thailand (SET).

4.10 SETTLEMENT:The settlement for Mutual Funds Service System is carried out by NSCCL through the

depository and bank interface. The clearing and settlement mechanism provides for settlement of

funds and mutual fund units in case of subscription and redemption orders. The transfer of funds

and units in respect of redemptions and subscriptions, respectively, is affected to the

broker/Clearing Members' settlement / pool account. Investors receive redemption amount (if

units are redeemed) and units (if units are purchased) through broker/clearing members' pool

account.

All requests for subscription and redemption are settled on individual basis and only to the extent

of the funds/units paid in by participants/clients on the settlement day. Receipt and transfer of

funds and units for subscription are done on a T+1 day basis. . Receipt and transfer of mutual

fund units for redemption is done on T day and is conducted for units in dematerialized form

only. The transfer of funds for redemption is carried out on a T+1, T+2 and T+3 basis depending

upon the category of funds.

The settlement cycles are in accordance with the settlement schedules issued by NSCCL from

time to time.

NSCCL is only a facilitator and not a counter party for the subscription and redemption of units.

Subscription of units

Participants have to open a separate clearing bank account for the purpose of settlement of funds

for subscription.

The depository pool accounts of the Participants in the cash segment are used for the purpose of

settlement of subscription units.

Funds pay-in confirmation files are downloaded to participants on the T day for units subscribed.

Participants have to provide funds in their settlement accounts by 8.30 a.m. on the T+1 day.

Participants have to upload payment confirmation files on the T+1 day by 9.30 a.m. identifying

transactions for which payments have been received and transactions for which payments have

48

not been received. Wherever the funds collected from the bank account fall short of the amount

indicated in the details provided by the participant, the details are considered defective and are

not further processed. In such cases, the funds collected, if any, are returned to the designated

bank account of the participant.

A client-wise receivable obligation report (DLVR) is downloaded to participants on T+1 day for

units allotted under subscription.

A Demat Final Receipt Statement (DFRS) is downloaded to Participants after the release of

payout of subscription units to their respective pool accounts on the T+1 day.

4.11 FUTURES

The Future of Mutual Funds In India suggests that the industry has got huge scopes of

development in the times to come.

The Future of Mutual Funds In India is quite bright. Mutual Funds are one of the most popular

forms of investments as these funds are diversification, professional management, and liquidity.

In the year 2004, the mutual fund industry in India was worth Rs 1,50,537 crores. The mutual

fund industry is expected to grow at a rate of 13.4% over the next 10 years.

QUARTERLY AVERAGE AUM OF MUTUAL FUND:-

49

TOP 10 AMCs BY AVERAGE AUM (RS BN)

Future of Mutual Funds In India-Facts on growth

Important aspects related to the future of mutual funds in India are -

50

The growth rate was 100 % in 6 previous years.

The saving rate in India is 23 %.

There is a huge scope in the future for the expansion of the mutual funds industry.

A number of foreign based assets management companies are venturing into Indian markets.

The Securities Exchange Board of India has allowed the introduction of commodity mutual

funds.

The emphasis is being given on the effective corporate governance of Mutual Funds.

The Mutual funds in India has the scope of penetrating into the rural and semi urban areas.

Financial planners are introduced into the market, which would provide the people with better

financial planning.

Futures contract is a firm legal commitment between a buyer & seller in which they agree to

exchange something at a specified price at the end of a designated period of time. The buyer

agrees to take delivery of something and the seller agrees to make delivery.

4.12 LIST OF MUTUAL FUNDS OFFERED 

Birla Sun life Mutual fund Deutsche Mutual fund DSP Blackrock Mutual fund FORTIS Mutual fund Franklin Templeton Mutual fund HDFC Mutual fund HSBC Mutual fund ICICI Prudential Mutual fund IDBI Principle Mutual fund IDFC Mutual fund ING Vysya Mutual fund JM Mutual fund Kotak Mahindra Mutual fund L&T Mutual fund LIC Mutual fund Reliance Mutual fund SBI Mutual fund Tata Mutual fund

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4.13 MUTUAL FUNDS AND SEBI

For the smooth conduct and regulation of the mutual fund several guidelines have been issued by

the SEBI regarding the investment, disclosure, accountability distribution of its profits to its

members and the investment companies. SEBI has issued regulation and code of conduct in

1993, which provided a basic legal framework for the functioning of the mutual fund. The

Mutual Fund regulation act 1996 has provided a sound floating and considerable leeway to fund

management.

4.14 FUNCTIONS OF THE MUTUAL FUND: 

The basic function of mutual fund companies is buying and selling securities on behalf of its unit holders,

It enables small investors to hold a share in a large and diversified portfolio of assets, which reduces the risks of investment.

The savings so mobilized are pooled in a large, diversified and sound portfolio of equity, bonds, securities etc.

Investors in the mutual funds are given the share in its total funds, which is evidenced by the unit certificates.

Mutual funds assure professional management, which helps in earning higher rate of return.

It helps the small investors who do not have adequate time and knowledge, expertise, experience and resources for directly accessing profitable avenues in capital and money markets.

52

CHAPTER- 5RECOMMENDATIONS AND CONCLUSION

53

5.1 RECOMMENDATIONS AND CONCLUSION:-

In India most of the people are income middle level they cannot invest heavy amount. So

mutual fund is right investment for such people.

The mutual fund company should concentrate on cash rich companies like the Trusts,

cash rich private companies, etc to generate, more funds for the investment.

A through market research is to be done by the Mutual Fund companies before they

launch any schemes. They should understand the need of the customers (i.e., investment

plan and the purpose) and Taylor accordingly.

It is important to select the fund carefully. The most important factor while selecting a

fund is the suitability. A fund may be best available in the market if it doesn’t match the

requirement, skip the fund. The performance of the mutual fund over a long time horizon

should be taken into consideration.

The company should come up in the future with some more schemes in such a way that

should give returns, safe and liquidity so that the investors should get better confidence &

believe it.

In the share market lot of fluctuations will be present so in mutual fund they have average

better returns, so that the investors will be safe.

In the present scenario customer needs good returns and the investment should be safe,

liquidity. These three terms should be present.

The most vital problem spotted is of ignorance. Investors should be made aware of the

benefit. Nobody will invest until and unless he is fully convinced. Investors should be

made to realize that ignorance is no longer bliss and what they are losing by not

investing.

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5.2 CONCLUSION

Investment goals vary from person to person. While somebody wants security, others

might give more weight age to returns alone. With objectives defining any range, it is

obvious that the products required will vary as well.

The mutual fund industry is still in its infancy stage as compared to the developed

markets in US, where the banking industry and the mutual fund industry rival each other

as investment vehicles but in India to reach that stage will require lot of efforts on the

part of the fund houses.

Investor education has been one of the issues. The investor did not focus upon the issues

such as, why a person wanted to invest or whether a particular product suited him or not.

While educating the customer might not have been on the cards earlier, the things are

beginning to change now.

Mutual funds assume greater importance in a scenario of increasing inflation. With

inflation hovering around 5 % to 6 %, poised for greater heights, investing in avenues,

which just offer breakeven returns, exposes the investment portfolio to inflation risk.

Investment in equity either directly or through the mutual fund route provides an

effective hedge mechanism against such a potent threat. So, investing in mutual funds is a

better option for investors depending upon their objective and requirements.

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CHAPTER-6BIBLIOGRAPHY

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6.1 BIBLIOGRAPHY

1. https://www.equitymaster.com/research-it/compare/compare_comp.asp? symbol=HDBK-ICBK&value=HDFC-BANK-ICICI-BANK

2. http://www.indiastudychannel.com/projects/666-A-STUDY-ON- MUTUAL-FUNDS-IN-INDIA.aspx

3. http://www.moneycontrol.com/news/mf-experts/ learnfundamentalsmutual-funds_718340.html

4. http://www.franklintempletonindia.com/en_IN/investor/investor- education/fund-basics/getting-started

5. http://timesofindia.indiatimes.com/articles/Different-Types-and-Kinds-of- Mutual-Funds/articleshowhsbc/22624820.cms?gclid=CjwKEAjw7qi7BRCvsr3N58GvsTkSJAA3UzLvhwKHx_P7FTthO3SBbOIY3eTZBQ3bOtqYJ9bblnraOBoCRevw_wcB

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