Introduction of Mutual Funds

INTRODUCTION OF MUTUAL FUNDS:
Right from its existence, Banks, whether nationalize or corporate, always dominated
others, in case of public investments or retail investments. But in past few years due to various
reasons like continuously falling of interest rates, various scams etc. investors will have to look
for various other investments avenues that will give them better returns with minimization of
risks. Here Mutual Funds Industry has very important role to play in providing alternate
investment avenue to entire gamut of investors in scientific and professional manner.
Indian Mutual Fund Industry has been definitely maturing over the period. In four decades of its
Existence in India Mutual Funds have gone through various structural changes and gained
prominent position in Financial Industry. Because of easy of investments, professional
management and diversification more and more investors are gaining confidence in Mutual
Funds. Even government policies like abolishment of long term capital benefit taxes added
advantage to growth of mutual funds.
NEED FOR THE STUDY:
The main purpose of doing this project was to know about mutual fund and its
functioning. This helps to know in detail 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.
SCOPE OF THE STUDY:
The project enables us to know that performance of mutual funds is reflected in its net asset
value (NAV). Hence, it is not that investor should invest in those units which have highest NAV,
but they should also consider what are the risk and returns associated with the NAV. Also, the
investor must consider impact on dividend payout on the NAV. As far as accounting of mutual
fund is consider, SEBI lays down various guidelines and provisions in which manner the AMC’s
are required to maintain their accounts, what should be the accounting effect send soon.
OBJECTIVE OF THE STUDY:
The objective of the study is to analyze, the detail the growth pattern of mutual fund industry in
India and to evaluate performance of different schemes floated by most preferred mutual funds in
public fund in public and private sector.
The main objectives of this study are:
• To study about the mutual funds in India
• To study the various mutual funds schemes in India
• To study about the risk factor involved in the mutual funds and How to analyze it ?
• To study the performance indices that can be used for mutual fund comparison
• To compare mutual funds of selected five companies based on their return

of Review literature
Evolution of the mutual fund industry
The flow chart below describes broadly the working of mutual fund.
The end of the second millennium marks 36 years of existence of mutual funds in this country.
The ride through these 36 years has not been smooth. UTI commenced its operations from July
1964. The impetus for establishing a formal institution came from the desire to increase the
propensity of the middle and lower groups to save and to invest. UTI came into existence during
a period marked by great political and economic uncertainty in India. With war on the borders
and economic turmoil that depressed the financial market, entrepreneurs were hesitant to enter
capital market. The already existing companies found it difficult to raise fresh capital, as
investors did not respond adequately to new issue. Earnest efforts were required to channelize
savings of the community into productive uses in order to speed up the process of industrial
growth.
The then finance minister , T.T. Krishnamacharya set up the idea of a unit trust that would be
”open to any person or institution to purchase the units offered by the trust. However, this
institution we see it, is intended to cater to the needs of individual investors, and even among
them as far as possible, to those whose means are small.”
His ideas took the form of the unit trust of India, an intermediary that would help fulfill
the twin objectives of mobilizing retail savings and investing those savings in the capital market
and passing on the benefits so accrued to the small investors.
SOURCES AND METHODS OF DATA COLLECTION AND ANALYSIS:
Research based on secondary data:- collection and analysis uses Internet, Key Information
Memorandums, Fact Sheets of Mutual Funds, Company’s Brochures and Periodicals. Primary
Data: Collection and analysis through the administration during face to face and telephonic
interviews with the clients of the company especially the HNIs or by sending it to them through
the internet.
Secondary Data:
• References given by Relationship Manager
• Visiting various websites database is maintained
.• On the basis of collected data target clients are approached.
• Through Just dial websites
Use of mathematical and statistical tools:- Financial risk analysis:
Calculating total risk associated with each mutual fund scheme(10 schemes) using standard
deviation of the returns of the schemes for a period of 36 months (12quarters) from its mean and
using sharp ratio, beta coefficient (systematic risk) of each mutual fund scheme when compared
with the risk of market portfolio(i.e., the benchmark index) and using trey nor ratio, so as to
determine the actual risk associated with each of the schemes. Return analysis: Returns of the
mutual fund schemes(5 schemes) for a period of 36 months (12qtrs) have been analyzed for
calculating alpha values which shows the returns of the schemes when the market returns are
zero.
Descriptive analysis: Descriptive analysis of the returns, asset under management of various
mutual fund schemes of the different mutual funds using tables and graphs.

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INTRODUCTION OF MUTUAL FUNDS:

SCOPE OF THE STUDY:

The main objectives of this study are:

• To study about the mutual funds in India

• To study the various mutual funds schemes in India

• To compare mutual funds of selected five companies based on their return

Evolution of the mutual fund industry

• References given by Relationship Manager

• Visiting various websites database is maintained

.• On the basis of collected data target clients are approached.

• Through Just dial websites

Use of mathematical and statistical tools:- Financial risk analysis:

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