Performance and Analysis of Mutual Funds in India

PROJECT REPORT - 2016Summer Internship Project At

Topic“A Study on Performance and Analysis of Mutual

Funds in India”Submitted by: ADITYA MAHINDRAKAR

Guided by:Mr. SHYAM SUTRAVE (Arth Chakra Advisory Services)

Supported by:Mr.RAJIV VASUDEVAN (Vice President)

Ms.D.BHAVANI SHARMA (Asst. Vice president)

1

Summer Project Certificate

This is to certify that Mr. Aditya Mahindrakar, a student of Carlton Business School has worked on a summer project titled “A Study on Performance and Analysis of Mutual Funds in India”atUTI Mutual Fund, Hyderabad after Semester – 2 in partial fulfillment of the requirement for the two year full time Under Graduate Programme. This is his original work to the best of my knowledge.

Date:

Signature

Mr.RajivVasudevan:

Ms.D.Bhavani Sharma:

2

Declaration

I hereby declare that the following project titled “A Study on Performance and Analysis of Mutual Funds in India” is an authentic work done by me. This is to declare that all the work indulged in the competition of this work such as research, data collection, analysis is a profound and honest work of mine under the guidance of Mr. ShyamSutrave (ArthChakra Advisory Services).

Date:

Place: HyderabadAditya. M

3

Acknowledgement

I would like to thank the employees of “UTI Asset Management Company Ltd.” and ArthChakra Advisory Services for giving me an opportunity to intern with them. The training at the company was held over a period of 45 days. During this period, I was guided by the experts of the mutual fund industry.

The project report and the learning process would not have been possible without their inputs and guidance at critical points of the project. They imparted to me the knowledge of mutual funds and shared with me the practical marketing techniques of mutual funds. I express my thanks to every one of them. These 45days were very important to me as it helped me in going beyond the class room and get a practical feel of how things worked.

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Table of Contents

Sr. NoTitle Page no.

1 Executive Summary of Mutual Funds 6

2 About UTI AMC Ltd. 7

3 History of Indian Mutual Fund Industry (Phases) 8

4 Objectives of Mutual Fund 10

5 Types of Mutual fund 11

6 Structure of Mutual Fund 14

7 Calculation of Risk Factors (Volatility) 15

8 Advantages & Disadvantages of Mutual Funds 16

9 Top 42 AMC’s Quarterly Average AUM (Chart) 18

10 Comparison of Schemes 20

11 Research Methodology 30

12 Sample of Questionnaire 31

13 Data Analysis & Interpretation 35

14 Conclusion 48

15 References 49

Executive Summary

5

Definition of Mutual Fund

A Mutual Fund is a trust that pools together the savings of a number of investors who share a common financial goal. A mutual fund is nothing more than a collection of stocks and/or bonds. You can think of a mutual fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund.

The money thus collected is then invested in capital market instruments such as shares, debentures and other securities.

You can make money from a mutual fund in three ways:

Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all of the income it receives over the year to fund owners in the form of a distribution.

If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to investors in a distribution.

If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for a profit.

About UTI Asset Management Co.Ltd.

6

Type PublicIndustry Mutual FundFounded 1964

Headquarters Mumbai, MaharashtraManaging Director Leo Puri

Slogan Haq, ekbehtarzindagikaWebsite www.utimf.com

History of the Indian Mutual Fund Industry

7

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.

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.

The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700crores of assets under management.

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

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation(GIC) of India.

SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987

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.

8

In 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.

Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was divided into two separate entities.

One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29, 835crores as at the end of January 2003.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations.

Objectives of Mutual Funds

9

Growth

While all funds share fundamental objectives, they vary widely in their investment focus. For example, some are categorized as "growth" funds because their main objective is to produce the largest possible returns over time, often without producing immediate income in the form of dividends. To achieve that, they invest primarily in equity stocks and other potentially high-return -- or high loss -- investments. Some are relatively conservative, investing primarily in proven companies. Others are more aggressive in search of returns, putting capital into emerging industries and new economies that offer higher risks but potentially higher rewards. Growth funds are good for young investors with long-term goals.

Income

Another common objective of mutual funds is income. Income-oriented funds are more conservative, investing in a mixture of bonds, guaranteed-interest vehicles and stocks that pay regular dividends. These funds can also provide a degree of long-term growth, but their primary purpose is to generate a reliable income for their investors. Retirement is an obvious time to buy income funds, but they have other uses. An inheritance or other financial windfall can be invested in dividend funds to provide a higher standard of living, or additional cash flow to meet specific goals. They're also a way to turn a large settlement into income if you're ever disabled.

Capital Preservation

Sometimes, all an investor really wants is a safe place to park some money while riding out a bad market. Bank accounts can serve that purpose, though they pay little interest in most cases. Money market funds are a better option. They're specialized mutual funds that act much like a savings account, but pay a better return. They're invested in especially safe instruments such as treasury bills, which are issued by and backed by the government. Your cash remains accessible on relatively short notice, and can be withdrawn or re-invested as conditions improve. Conservative bond funds are less liquid, but also useful for capital preservation.

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TYPES OF MUTUAL FUNDS IN INDIA

Types of funds according to the structure

11

Open-ended Fund: An open-ended Mutual fund is one that is available for subscription and repurchase on a continuous basis. These Funds do not have a fixed maturity period.

Close-ended Fund :A close-ended Mutual fund has a stipulatedmaturity 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.

Types of funds according to Investment ObjectiveA scheme can also be classified as growth fund, income fund, or balanced fund considering its investment objective.

Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the medium to long- term.

Such funds have comparatively high risks.

These schemes provide different options to the investors like dividend option, capital appreciation, etc.

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.

Balanced Fund

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The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents.

These are appropriate for investors looking for moderate growth.

Money Market

These 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, commercial paper and government securities, etc.

These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods.

STRUCTURE of the Mutual fund

13

Calculation of Risk factors in the mutual funds

14

When considering a fund's volatility, an investor may find it difficult to decide which fund will provide the optimal risk-reward combination. There are five main indicators of investment risk that apply to the analysis of stocks, bonds andmutual fund portfolios.

They are,

Alpha

Beta

R-Squared

Standard Deviation

Sharpe Ratio

The Bottom Line

These statistical measures are historical predictors of investment risk/volatility and are all major components of modern portfolio theory (MPT). The MPT is a standard financial and academic methodology used for assessing the performance of equity, fixed-income and mutual fund investments by comparing them to market benchmarks.

All of these risk measurements are intended to help investors determine the risk-reward parameters of their investments.

ADVANTAGES OF MUTUAL FUNDS

15

Portfolio diversification

It enables him to hold a diversified investment portfolio even with a small amount of investment like Rs. 2000/-.

Professional management:

The investment management skills, along with the needed research into available investment options, ensure a much better return as compared to what an investor can manage on his own.

Reduction/Diversification of Risks

The potential losses are also shared with other investors.

Reduction of transaction costs

The investor has the benefit of economies of scale; the funds pay lesser costs because of larger volumes and it is passed on to the investors.

Wide Choice to suit risk-return profile

Investors can choose the fund based on their risk tolerance and expected returns.

• Liquidity

Investors may be unable to sell shares directly, easily and quickly. When they invest in mutual funds, they can cash their investment any time by selling the units to the fund if it is open-ended and get the intrinsic value. Investors can sell the units in the market if it is closed-ended fund.

• Convenience and Flexibility

Investors can easily transfer their holdings from one scheme to other; get updated market information and so on. Funds also offer additional benefits like regular investment and regular withdrawal options.

• Transparency

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Fund gives regular information to its investors on the value of the investments in addition to disclosure of portfolio held by their scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook.

DISADVANTAGES OF MUTUAL FUNDS

• No control over costs

The investor pays investment management fees as long as he remains with the fund, even while the value of his investments are declining. He also pays for funds distribution charges which he would not incur in direct investments.

• No tailor-made portfolios

The very high net-worth individuals or large corporate investors may find this to be a constraint as they will not be able to build their own portfolio of shares, bonds and other securities.

• Managing a portfolio of funds

Availability of a large number of funds can actually mean too much choice for the investor. So, he may again need advice on how to select a fund to achieve his objectives.

• Delay in redemption

It takes 3-6 days for redemption of the units and the money to flow back into the investor’s account.

AMC wise Quarterly Average AUMSr. No

Mutual Fund Name

No. of schemes

QAAUM Date

QAAUM (Rs. Cr)

Prev Date

Prev QAAUM (Rs. Cr)

Inc/Dcr (Rs. Cr)

1 ICICI Prudential Mutual Fund 1155 Mar-16 175960.6 Dec-15 178492.23 -2531.67

17

2 HDFC Mutual Fund 1481 Mar-16 175266.2 Dec-15 171183.66 4082.49

3 Reliance Mutual Fund 1007 Mar-16 159095.5 Dec-15 157506.08 1589.46

4 Birla Sun Life Mutual Fund 717 Mar-16 136152.1 Dec-15 135841.05 311.06

5 SBI Mutual Fund 651 Mar-16 107114 Dec-15 100399.85 6714.196 UTI Mutual Fund 1164 Mar-16 106134.3 Dec-15 105893.6 240.68

7Franklin Templeton Mutual Fund

200 Mar-16 67840.76 Dec-15 71683.33 -3842.57

8 Kotak Mahindra Mutual Fund 406 Mar-16 58719.02 Dec-15 55094.35 3624.67

9 IDFC Mutual Fund 415 Mar-16 52038.34 Dec-15 54511.46 -2473.12

10 DSP Blackrock Mutual Fund 384 Mar-16 39915.72 Dec-15 38816.51 1099.21

11 Axis Mutual Fund 252 Mar-16 37764.52 Dec-15 34563.47 3201.05

12 Tata Mutual Fund 322 Mar-16 31545.05 Dec-15 31252.46 292.59

13 L&T Mutual Fund 240 Mar-16 25558.02 Dec-15 24661.13 896.89

14 DHFL Pramerica Mutual Fund 473 Mar-16 23825.77 Dec-15 24484.8 -659.03

15 Sundaram Mutual Fund 476 Mar-16 23571.91 Dec-15 21691.55 1880.36

16 Invesco Mutual Fund 228 Mar-16 19513.71 Dec-15 19785.94 -272.23

17 JM Financial Mutual Fund 179 Mar-16 16160.9 Dec-15 15867.77 293.13

18 LIC Mutual Fund 169 Mar-16 13068.81 Dec-15 12134.66 934.1519 Baroda Pioneer

Mutual Fund 103 Mar-16 9639.94 Dec-15 9234.56 405.38

20 CanaraRobeco Mutual Fund 142 Mar-16 8020.23 Dec-15 7493.96 526.27

21 HSBC Mutual Fund 156 Mar-16 7902.39 Dec-15 8373.89 -471.5

22 IDBI Mutual Fund 88 Mar-16 6871.01 Dec-15 7537.45 -666.44

23 JPMorgan Mutual Fund 136 Mar-16 6389.63 Dec-15 7469.49 -1079.86

24 Goldman Sachs Mutual Fund 18 Mar-16 6101.4 Dec-15 6851.79 -750.39

25 Indiabulls Mutual Fund 54 Mar-16 5289.54 Dec-15 4916.75 372.79

26 PRINCIPAL Mutual Fund 122 Mar-16 5281.06 Dec-15 5878.75 -597.69

27 BNP Paribas Mutual Fund 114 Mar-16 5097.07 Dec-15 5004.98 92.09

28 MotilalOswal Mutual Fund 31 Mar-16 4689.21 Dec-15 4548.18 141.03

29 Taurus Mutual Fund 65 Mar-16 3948.58 Dec-15 3503.34 445.24

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30 Mirae Asset Mutual Fund 45 Mar-16 3125.93 Dec-15 2791.2 334.73

31 Union KBC Mutual Fund 57 Mar-16 2872.75 Dec-15 2665.14 207.61

32 BOI AXA Mutual Fund 76 Mar-16 2385.01 Dec-15 2356.14 28.87

33 Edelweiss Mutual Fund 61 Mar-16 1658.62 Dec-15 1610.43 48.19

34 Peerless Mutual Fund 57 Mar-16 985.24 Dec-15 1024.41 -39.17

35 IL & FS Mutual Fund 6 Mar-16 922.96 Dec-15 900.29 22.67

36 Quantum Mutual Fund 15 Mar-16 660.93 Dec-15 655.32 5.61

37 PPFAS Mutual Fund 2 Mar-16 613.57 Dec-15 629.32 -15.75

38 IIFL Mutual Fund 15 Mar-16 370.59 Dec-15 309.33 61.2639 IIFCL Mutual

Fund 1 Mar-16 357.98 Dec-15 342.94 15.04

40 Escorts Mutual Fund 60 Mar-16 285.59 Dec-15 292.22 -6.63

41 Sahara Mutual Fund 68 Mar-16 99.29 Dec-15 106.87 -7.58

42 Shriram Mutual Fund 4 Mar-16 37.17 Dec-15 37.12 0.05

Comparison of schemes of UTI with the schemes of other Asset Management

Companies

UTI M.F & BIRLA SUN LIFE M.F19

Fund Category: Theme based (MNC)

Fund name Year of Inception Asset Under Management(AUM)

UTI MNC Fund July, 1998 Rs.1963 crBirla Sun Life MNC Fund April, 1994 Rs.3382 cr

Giant or Mega cap

Large cap Mid cap Small0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

24.01%

33.32%38.62%

4.05%

25.75%

9.95%

59.23%

5.00%

Market Capitalisation

UTI MNC FundBirla Sun Life MNC Fund

Expense Ratio Alpha Beta Standard deviation0

2

4

6

8

10

12

14

16

18

20

2.6

12.8

0.860000000000001

16.36

2.4

18.3

0.870000000000001

17.54

Volatility Measures

UTI MUTUAL FundBIRLA MNC Fund

20

1 Yr Return 3 Yr Return 5 Yrs Return Since Inception0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

0.63%

27.36%

19.50% 18.12%

1.77%

32.35%

22.42%

18.53%

Returns

UTI MNC

Birla MNC

UTI M.F& SBI M.F Fund Category: Pharma Sector

Fund name Year of InceptionAsset Under Management

(AUM)UTI Pharma& Healthcare fund June, 1999 Rs.311 cr

SBI Pharma fund July, 1999 Rs.997 cr

21

Giant or Mega cap Large cap Mid cap Small0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

32.50%

39.03%

24.03%

4.40%

30.64%

23.99%

36.07%

9.31%


UTI PharmaSBI Pharma


2

4

6

8

10

12

14

16

18

20

2.881.12

0.940000000000001

16.62

2.46

6.63

0.99

18.5

Volatility Measures

UTI PharmaSBI Pharma

1 Yr Return 3 Yr Return 5 Yrs Return Since Inception

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

-3.40%

21.02%16.84% 15.71%

-1.70%

28.13%24.27%

18.54%

Returns

UTI Pharma

SBI Pharma

22

UTI M.F & FRANKLIN TEMPLETON M.FFund Category: Large Cap


UTI Equity Fund May, 1992 Rs.4994 cr

Franklin India Flexi Cap Fund March, 2005 Rs.2864 cr

23

Giant or Mega cap

Large cap Mid cap Small0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%53.07%

28.30%

18.63%

0.00%

50.70%

24.15% 22.81%

2.34%


UTI EquityFranklin India Flexi Cap


2

4

6

8

10

12

14

16

18

2.34

6.66

0.950000000000001

15

2.31

10.89

0.950000000000001

15.32

Volatility Measures

UTI EquityFranklin India Flexi Cap


5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

2.68%

19.79%

13.51% 12.37%

2.36%

24.60%

14.25%

17.77%

Returns

UTI EquityFranklin India Flexi

24

UTI M.F & HDFC M.FFund Category: Mid Cap

Fund name Year of inception Asset Under Management(AUM)

UTI Mid-Cap fund April, 2004 Rs.3321 cr

HDFC Mid-Cap fund June, 2007 Rs.10997 cr

25

Giant or Mega cap Large cap Mid cap Small0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

4.30%

17.30%

59.30%

18.70%

2%

23%

63%

12%


UTI Mid-CapHDFC Mid-Cap


5

10

15

20

25

2.4

19.32

1

18.9

2.32

15.8

0.970000000000001

17.5

Volatility Measures

UTI Mid-capHDFC Mid-Cap


5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

6.23%

38.49%

21.60% 20.03%

8.69%

33.20%

20.06%16.84%

Returns

UTI Mid-CapHDFC Mid-Cap

26

UTI M.F & ICICI M.FFund Category: Liquid Plus


UTI Floating Rate fund August, 2003 Rs.4771 cr

ICICI Prudential Savings fund November, 2005 Rs.6079 cr

27

1 Yr Return 3 Yrs Return 5 yrs Return Since Inception0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

8.58% 8.97% 8.93%

7.39%8.36%

8.78% 9.04%8.13%

Returns

UTI Floating RateICICI Prud Savings

AAA21%

A1+36%

AA33%

Others10%

Credit Rating Break-Up(UTI Floating Rate Fund)

28

AAA; 14.00%

A1+; 30.00%

AA; 39.00%

Others; 17.00%

Credit Rating Break-Up (ICICI Prud Savings Fund)

29

RESEARCH METHODOLOGY

ThisReport is based on primary as well assecondary data, however primary data collection was given more important since it is overhearing factor in attitude studies.

One of the most important uses of Research Methodology is that it helps in identifying the problem, collecting, analyzing the required information or data and providing an alternative solution to the problem.

a) Research Design:Descriptive Design

b) Data Collection Method:Survey Method

c) Universe: Hyderabad

d) Sampling Method: The sample was collected through personal visits and office visits, formally and informal talks and through filling up the Questionnaire prepared. The data has been analyzed by using mathematical or statistical tools.

e) Sample Size: 70 respondents

f) Data Collection Instrument: Structured Questionnaire

g) Sample Design: Data has been presented with the help of various Pie charts.

QUESTIONNAIRE30

A study of preferences of the investors for investment in mutual funds.

1. What kind of investments you prefer most? Pl tick (√). All applicable

a. Saving account b. Fixed deposits c. Insurance d. Mutual Fund

e. Post Office-NSC, etc. f. Shares/Debentures g. Gold/ Silver h. Real Estate

i. PPF j. PF

2. While investing your money, which factor you prefer most? Any one

Liquidity Low Risk High Return Company reputation

3. Have you ever invested your money in mutual fund?

Yes No

If yes,

a) Where do you find yourself as a mutual fund investor?

Totally ignorant [ ]

Partial knowledge of mutual funds [ ]

Aware only of any specific scheme in which you invested [ ]

Fully aware [ ]

a. Advertisement b. Peer Group c. Banks d. Financial Advisors

b)How do you come to know about the Mutual fun

31

If no,

If not invested in Mutual Fund then why?

Not aware of MF Higher risk Not any specific reason

4. Which feature of the mutual funds attract you most?

Diversification Better return and safety Risk reduction

Less transaction cost Regular income Tax benefit

5. In which Mutual Fund you have invested? Please tick (√). All applicable.

a. SBI MFb. UTIc. HDFCd. Reliancee. ICICI Prudentialf. Others, specify

6. When you invest in Mutual Funds which mode of investment will you prefer?

a. One time investment b. Systematic Investment Plan (SIP)

7. Where from you purchase mutual funds?

a. After taking advice from MF distributor or advisor

b. Directly from the AMCs

c. Online Purchase

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8. Which AMC will you prefer to invest?

a. SBIMF

b. UTI

c. Reliance

d. HDFC

e. Kotak

f. ICICI g. Others, specify

9. Which type of fund are you investing in Mutual Funds?

a. Equity fundb. Liquid fundc. Balanced fundd. Sectoral funde. Debt fundf. Tax-saving fund

Mention Fund name -

10. How would you like to receive the returns every year?

a. Dividend payout b. Dividend re-investment c. Growth in NAV

11. Personal Details:

(a). Name:-

(b). Addr: - Contact No:-(c). Age:-(d) Email ID:

33

(e). Occupation. Pl tick (√)

Govt. Sec Pvt. Sec Business Agriculture Others

(g). what is your monthly family income approximately? Pl tick (√).

Up to 10000/-

10000-30000/-

30000-60000/-

60000 & above

(h) What is the percentage of savings from your total income?

<10%

10-25%

25-50%

>50%

Any Suggestions:

-----THANK U-----

34

DATA ANALYSIS &INTERPRETATION

1. Analysis according to the kind of investments

Savings a/c, PF9%

FD, Real estate18%

Insurance, gold, silver13%

Mutual Fund48%

PO-NSC5%

PPF2%

Shares, debentures6%

Kind of investments

Interpretation

Here, it is been found that 48% peopleare investing in mutual funds.

Then the second highest number of people who are investing into fixed deposits and real estate (i.e., 18%).

The least percentage is 2%, who are investing into PPF (Public Provident Fund).

35

2. Analysis according to the factors they prefer most while investing in Mutual Funds

Liquidity14%

Low risk30%High return

44%

Company reputation12%

Most preferred factors

Interpretation

Here, it is been found that most of the investors (i.e., 44%) of mutual fund prefer high returns while investing money in mutual fund.

30% of people prefer low risk as their factor while investing into mutual fund.

Liquidity is preferred by 14% of investors and the least number of people who prefer company reputation (12%).

36

3. Analysis according to the investors of Mutual Fund

YES71%

NO29%

Investors of Mutual Fund

Interpretation

From the above pie chart, we can analyse that 71% of the total data are the investors of the mutual fund and 21% have never invested in Mutual Funds.

37

4. Analysis according to the sources of Mutual Fund

Advt27%

Banks13%

Financial advisors

60%

Source of Mutual Fund

Interpretation

From the above pie chart, it’s been found that 60% of the investors of mutual fund invest their money after taking the advice from Individual Financial Advisors.

And, 13% from Banks and the rest of 27% of the investors have the information through advertisement.

38

5. Analysis according to the most attractive features of Mutual Fund

Diversification21%

Better return 26%

Risk reduction15%

Less trans-action cost

6%

Regular income13%

Tax benefit19%

Features that attract most in Mutual Fund

Interpretation

Here, it is been found that 26% of people while investing into mutual funds see for the better return and 21% of people for better diversification in their portfolio.

39

6. Analysis according to the mode of investment

One time investment

43%SIP

57%

Mode of Investment

Interpretation

It can be clearly stated from the above pie chart that, 57% of the investors like to invest in Systematic Investment Plan (SIP) as the investor feels that they are more comfortable to save through SIP than the one-time investment.

While 43% of the investors find SIP as very burdensome, and they are more reluctant to save in one-time investment.

40

7. Analysis according to the most preferred Asset Management Company (AMC)

SBI26%

UTI41%

Reliance7%

HDFC12%

Kotak2%

ICICI12%

Most preferred AMC

Interpretation

From the above pie chart, it is clearly stated that 41% of the investors prefer to invest in the UTI Mutual Fund.

The second highest numbers of people (26%) prefer SBI to invest their money.

41

8. Analysis according to the type of fund

Equity41%

Liquid9%

Balanced10%

Sectoral16%

Debt8%

Tax saving16%

Type of Fund

Interpretation

As it can be clearly stated that almost 41% of investors invest in Equity/Growth fund where 100% of money invest in stocks of different companies as per fund’s objective.

Sectoral and Tax-saving schemes are used by 32% of the investors.

While the least number of people are investing in debt and liquid schemes.

42

9. Analysis according to the mode of receiving returns every year

17%

13%

70%

Mode of receiving returns

Dividend pay-outDividend re-investmentGrowth in NAV

Interpretation

From the above pie chart we can predict that almost 70% of the investors who are investing in mutual funds like to receive the returns in the form of Growth option to get better compounding returns.

And, the rest 30% like receiving the returns in the form of dividend pay-out and re-investment.

43

10.Analysis according to the occupation

70%

8%

10%

12%

According to Occupation

Pvt sector

Govt sector

Business

Others (students,agriculture)

Interpretation

The above chart concludes that 70% of the investors of mutual fund are from the private sector because to diversify their investments in a better manner to get maximum returns.

The least number of people (8%) are from the Government sector and they want to invest in traditional investment methods like: FDs,PPF,Post office savings etc. to get fixed and guaranteed returns.

44

11. Analysis according to the monthly family income

(Rs.5000-30000)28%

(Rs.30000-60000)

23%

(Rs.60000 & above)

49%

Monthly family income (per mth)

Interpretation

Here, we can tell that the investors who earn more than Rs.60000/- per month are the major investors of the mutual fund (49%).

While 23% of the people who invest in the mutual fund fall under the income category of Rs.30000-60000/- per month.

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12.Analysis according to the percentage of savings from total income

36%

46%

16%

2%

Percentage of savings from total income

Less than 10%

10-25%

25-50%

More than 50%

Savings

Interpretation

Here, it can be clearly stated from the above chart that 46% of the investors have the savings of 10-25% from their total income and this needs to increase further by educating clients about Mutual Funds.

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13.Analysis according to the Age

below 2514%

26-3526%

36-4528%

46-5518%

56 & above14%

According to Age

Interpretation

From the above chart, we can tell that 28% of the total investors of mutual fund are of aged 36-45.

The second highest number of people who are of age 26-35 are investing in the mutual funds because they have a lot of savings at that particular age.

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CONCLUSIONMutual funds now represent perhaps most appropriate investment

opportunity for most investors. As financial markets become more sophisticated and complex, investors need a financial intermediary who provides the required knowledge and professional expertise on successful investing.

In Mutual Fund industry, advisors are the backbone and they advise as per the objective of client.

Equity and Balanced Mutual Funds are made for the clients who want to invest for longer period.

People who want to invest for shorter period like less than 2-3 years; they should invest under Debt Mutual Funds, because risk is lesser as compared with 100% Equity Mutual Funds.

People who want safer returns and high liquidity, they have the option of Liquid Plus category. This fund is alternative to Current and Savings a/c.

People who want to save on regular basis like monthly or quarterly mode they can opt for Systematic Investment Plan (SIP), which gives stable returns over a period of time.

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References

Websites1. www.valueresearchonline.com2. www.amfiindia.com3. www.moneycontrol.com/mutualfundindia4. www.arthchakra.com

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Economy & Finance

Performance and Analysis of Mutual Funds in India