summer training in

PROJECT REPORT
ON
MUTUAL FUNDS INVESTMENTS
SUBMITTED TO BUNDELKHAND UNIVERSITY JHANSI
In partial fulfillment of the requirements for the award of degree of

BACHELOR OF COMMERCE (HON’S)

Submitted by
HRITHIK KAROSIYA
(Roll no. :- 211141132055)
UNDER THE GUIDENCE OF
Dr. PRIYANKA AGRAWAL

INSTITUTE OF BANKING, ECONOMICSAND FINANCE (IEF)

BUNDELKHAND UNIVERSITY, JHANSI UP-284001
Session:- 2023 -2024

1
 CERTIFICATE

This is to certify that the project report entitled “ Mutual Funds Investments” in
Money Yatra Associates LLP is a bonafide work done by HRITHIK KAROSIYA of
Bachelor of commerce (Hon’s) under my guidance and submitted to the Under –
Graduation Institute of Banking, Economics and finance, Bundelkhand University
Jhansi in partial fulfillment of the requirement for the award of Bachelor of
commerce(Hon’s) during the period 2023 – 2024

Project Guide Signature:

(Dr. PRIYANKA AGARWAL)

DATE:- PLACE:- Jhansi

2
 DECLARATION

I hereby declare that this submission-is our own work and that, to the
best of our knowledge and belief, it contains no material previously
published or written by another neither person for material which to a
substantial extent has been accepted for the award of any other degree
of the university or other institute of higher learning, except where due
to acknowledgment has been made in the text.

Signature of student
(Hrithik Karosiya)
Roll No. : 211141132055
Bachelor of commerce (Hon’s)
Institute of Banking, Economics and
finance [IEF]
Date:-

3
 ACKNOWLEDGEMENT

It is a pleasure to convey my heartiest regards to Professor Dr. C.B.

Singh, Head of Department, Institute of Banking, Economics and
Finance, under- Graduation B.com(Hon’s) , Bundelkhand University
Jhansi for their support in completing my project work.

My sincere and grateful thanks to Dr. PRIYANKA AGARWAL Institute

of Banking, Economics and Finance , Bundelkhand University Jhansi
and my guide for his valuable time and support in preparation of my
project work.

I would also like to thank Money Yatra Associates LLP for

giving me this Opportunity to under go a project study program in
their esteemed Organization. I am also thankful to Mr. VIVEK JAIN,
Director at Money Yatra Associates LLP, for his patient and valuable
guidance in accomplishing the study.

HRITHIK KAROSIYA

(211141132055)

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 CONTENTS

S.R. NO. CHAPTERS PAGE NO.

1. INTRODUCTION
3

2. HOW TO INVEST IN MUTUAL FUND

• OBJECTIVE 18

• STEPS OF INVEST IN MUTUAL FUND

• ONLINE INVEST IN MUTUAL FUND

• OFFLINE INVEST IN MUTUAL FUND

3. HOW TO DO MUTUAL FUND WORK 24

4. TO INVEST IN SIP & LUMSUM

• How Does SIP work 29
• TYPES OF SIP
• BENEFIT OF SIP
• How is lump sum different from SIP

5. COMPANY PROFILE 40

6. CONCLUSION 47

BIBLIOGRAPHY

2
 CHAPTER - I

INTRODUCTION

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 MUTUAL FUNDS
A mutual fund is a company that pools money from many investors and invests
the money in securities such as stocks, bonds, and short-term debt. The combined
holdings of the mutual fund are known as its portfolio. Investors buy shares in
mutual funds. Each share represents an investor’s part ownership in the fund and
the income it generates.

Features & Benefits of Mutual Funds

Now that we know what mutual funds are and how they work along with their
types, let us look at the advantages of investing in mutual funds.

1. Diversification: The saying ‘do not put all your eggs in one basket’ perfectly fits
mutual funds as spreading investment across multiple securities and asset
categories lowers risk. For example, compared to direct equity investing, where
your funds are deployed in individual company stocks, equity mutual funds
invest in a basket of stocks across sectors, thereby reducing risk.

2. Professional management: Mutual funds are managed by full-time,

professional fund managers who have the expertise, experience, and resources
to actively buy, sell, and manage investments. A fund manager continuously
monitors investments and rebalances the portfolio accordingly to meet the
scheme’s objectives.

3. Transparency: Every mutual fund has a Scheme Information Document readily

available on the fund house’s website that can give you all the details about its
holdings, fund manager, etc. In addition, the portfolio investment value (NAV) is
published daily on the AMC site, and AMFI site for investors to track the
portfolio of the mutual fund.

4. Liquidity: You can redeem your investments on any business/working day at the
NAV of the day of your redemption. So, depending on the type of mutual fund

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 you have invested in, you will receive your invested funds in your bank account
in 1-3 days.
However, close-ended funds allow redemption only at the time of the maturity
of the mutual fund. Similarly, ELSS mutual funds have a lock-in period of three
years.

5. Tax Savings: Investment of up to Rs. 1,50,000 in ELSS mutual funds qualifies for
tax benefit under section 80C of the Income Tax Act, 1961. Mutual fund
investments, when held for a longer term, are tax-efficient.

6. Choice: There are many options to invest in mutual funds to meet your different
needs. To name a few- Liquid funds, are for investors looking to benefit from
the safety of debt and low-interest rate risk, flexi-cap funds if you are looking
for stock diversification, and solution-oriented mutual funds if you are looking
to invest for a particular goal like retirement or children’s education, etc.

7. Cost-effective: Mutual funds are a low-cost investment vehicle. The pooled

investments from several investors in a mutual fund enable the fund to invest in
a basket of stocks and debt securities which otherwise may be out of reach for
the ordinary investor or require a higher investment amount. Thus, these
pooled investments provide advantages of economies of scale. In return, lower
costs to investors, such as brokerage, etc., are addressed in the minor form of
fund expenses. This is why investing in direct mutual funds through ET Money
makes sense because that helps you decrease the cost further.

8. Returns: Mutual fund returns are not assured by mutual funds and are subject
to market risks. But over the long term, equity mutual funds have the potential
to deliver double-digit returns annually. Debt funds can also offer higher returns
as compared to bank deposits. You can also calculate your potential returns,
using a mutual fund calculator.

9. Well Regulated: In India, the mutual fund industry is regulated by the capital
market regulator Securities and Exchange Board of India (SEBI). Therefore,
mutual funds must follow stringent rules and regulations, ensuring investor
protection, risk mitigation, liquidity, and fair valuation.

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 Disadvantages of Mutual Funds:-

Now, let us have a look at the cons of investing in mutual funds.

1. Exit Load: Mutual funds generally levy an exit load (fee) for redeeming
investments within a specified period, for example, one year from the date of
investment. This is done to refrain the investor from exiting the scheme too
early, as it impacts both the fund’s performance and the investor’s goal
achievement. When investing directly in stocks, say, you do not face any exit
load and in comparison, this may seem like an added expense. However, this
has been introduced in the investors’ interest.

2. High cost: SEBI has defined the maximum limit of expense ratios that mutual
fund houses can charge and they depend on the mutual fund’s size. As the size
grows, the expense tends to come down. The maximum expense ratio that is
chargeable for an equity-oriented mutual fund is 2.25%. And you have to bear
this charge irrespective of the performance of the fund. When compared to
another mode of investment, say, direct stocks, you may find the expense ratio
to be higher than the brokerage you pay. But then it is being paid for the
convenience and expertise, so, it is a balance that you need to achieve.

3. Over-diversification: In the quest to diversify your investments, you may invest

in mutual funds, which invest in a vast number of stocks, leading to over-
diversification. Not all the stocks of a portfolio would deliver high returns all the
time. You may end up investing in two mutual funds holding similar portfolios
which may then lead to over-diversification. It is advisable to study the mutual
fund portfolio before you invest.

4. Risk: Investments in mutual funds are subject to market risk. The risk of losses
faced by all types of securities in the financial markets cannot be reduced by
diversification. Market risks may occur due to many macro and microeconomic
factors. For example, equity mutual funds are subject to volatility risk owing to
fluctuations in the stock market whereas debt mutual funds are subject to
interest rate risk which is caused by fluctuations in the interest rates and so on.

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Constituents of mutual funds:-

All mutual funds comprise of five constituents

1. Sponsor
2. Trustees
3. Asset Management Company
4. Custodian and depositories
5. Registrar and transfer agents

History of Mutual Funds in India:-

A strong financial market with broad participation is essential for a developed

economy. With this broad objective India’s first mutual fund was establishment in
1963, namely, Unit Trust of India (UTI), at the initiative of the Government of India
and Reserve Bank of India ‘with a view to encouraging saving and investment and
participation in the income, profits and gains accruing to the Corporation from
the acquisition, holding, management and disposal of securities.

In the last few years the MF Industry has grown significantly. The history of Mutual
Funds in India can be broadly divided into five distinct phases as follows:

1ST PHASE – 1964-1987

The Mutual Fund industry in India started in 1963 with formation of UTI in 1963 by
an Act of Parliament and functioned under the Regulatory and administrative

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control of the Reserve Bank of India (RBI). In 1978, UTI was de-linked from the RBI
and the Industrial Development Bank of India (IDBI) took over the regulator and
administrative control in place of RBI. Unit Scheme 1964 (US ’64) was the first
scheme launched by UTI. At the end of 1988, UTI had 6,700crores of Assets Under
Management (AUM).

2nd PHASE – 1987-1993 - ENTRY OF PUBLIC SECTOR MUTUAL

FUNDS
The year 1987 marked the entry of 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. 1987), Punjab
National Bank Mutual Fund (Ag. 1989), Indian Bank Mutual Fund (Nov 1989), Bank
of India (Jun 1990), Bank of Baroda Mutual Fund (Oct. 1992). 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 MF industry had assets under management of 47004crores.

3rd PHASE – 1993-2003 – ENTRY OF PRIVATE SECTOR MUTUAL

FUNDS
The Indian securities market gained greater importance with the establishment of
SEBI in April 1992 to protect the interests of the invertors in securities market and
to promote the development of, and to regulate, the securities market.

In the year 1993, the first set of SEBI Mutual Fund Regulations came into being for
all mutual funds, except UTI. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton MF) was the first private sector MF registered in July 1993.
With the entry of private sector funds in 1993, a new era began in the Indian MF
industry, giving the Indian investors a wider choice of MF products. The initial SEBI
MF Regulations were revised and replaced in 1996 with a comprehensive set of

8
regulations, viz., SEBI (Mutual Fund) Regulations, 1996 which is currently
applicable.

The number of MFs increased over the years, with many foreign sponsors setting
up mutual funds in India. Also the MF industry witnessed several mergers and
acquisitions during this phase. As at the end of January 2003, there were 33 MFs
with total AUM of 1,21,805 crores, out of which UTI alone had AUM of
44,54crores.

4th PHASE – SINCE FEBRUARY 2003 – APRIL2014

In February 2003, following the repeal of the Unit Trust of India Act 1963, UTI was
bifurcated into two separate entities, viz., the Specified Undertaking of the Unit
Trust of India (SUUTI) and UTI Mutual Fund which functions under the SEBI MF
Regulations. With the bifurcation of the erstwhile UTI and several mergers taking
place among different private sector funds, the MF industry entered its fourth
phase of consolidation.

Following the global melt-down in the year 2009, securities markets all over the
world had tanked and so was the case in India. Most investors, who had entered
the capital market during the peak, had lost money and their faith in MF products
was shaken greatly. The abolition of Entry Load by SEBI, coupled with the after-
effects of the global financial crisis, deepened the adverse impact on the Indian MF
Industry, which struggled to recover and remodel itself for over two years, in an
attempt to maintain its economic viability which is evident from the sluggish
growth in MF Industry AUM between 2010 to 2013.

5th PHASE (CURRENT PHASE) – SINCE MAY 2014

Taking cognizance of the lack of penetration of MFs, especially in tier II and tier III
cities, and the need for greater alignment of the interest of various stakeholders,

9
SEBI introduced several progressive measures in September 2012 to “re-energize”
the Indian Mutual Fund industry and increase MFs, penetration.

In due course, the measures did succeed in reversing the negative trend that had
set in after the global melt-down and improved significantly after the new
Government was formed at the Center.

Since May 2014, the Industry has witnessed steady inflows and increase in the AUM
as well as the number of investor folios (accounts).

• The Industry’s AUM crossed the milestone of 10 Trillion (10 Lakh Crore) for
the first time as on 31st May 2014 and in a short span of about three years
the AUM size had increased more than two folds and crossed 20 trillion (20
Lakh Crore) for the first time in August 2017. The AUM size crossed 30 trillion
(30 Lakh Crore) for the first time in November 2020.
• The overall size of the Indian MF Industry has grown from 8.25 trillion as on
31 st March 2014 to 53.40 trillion as on 31 st March 2024, more than 6 fold
increase in a span of 10 years.

• The MF Industry’s AUM has grown from 23.80 trillion as on March 31, 2019
to 53.40 trillion as on March 31, 2024, more than 2 fold increase in a span of
5 years.

• The no. of investor folios has gone up from 8.25 crore folios as on 31 –Mar-
2019 to 17.79 crore as on 31 –Mar-2024, more than 2 fold increase in a span
of 5 years.

• On an average 15.90 lakh new folios are added every month in the last 5
years since March 2019.

The growth in the size of the industry has been possible due to the twin effects of
the regulatory measures taken by SEBI in re-energizing the MF Industry in
September 2012 and the support from mutual fund distributors in expanding the
retail base.

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MF Distributors have been providing the much needed last mile connect with
investors, particularly in smaller towns and this is not limited to just enabling
investors to invest in appropriate schemes, but also in helping investors stay on
course through bouts of market volatility and thus experience the benefit of
investing in mutual funds.

MF distributors have also had a mojor role in popularizing Systematic Investment

Plans (SIP) over the years. In April 2016, the no. of SIP accounts has crossed 1
crore mark and as on 31 st March 2024 the total no. of SIP Accounts are 8.40
crore.

Types of Mutual Funds in India:-

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SCHEME CLASSIFICATION BY ORGANIZATION STRUCTURE

• Open-ended schemes are perpetual, and open for subscription and repurchase
on a continuous basis on all business days at the current NAV.

• Close-ended schemes have a fixed maturity date. The units are issued at the
time of the initial offer and redeemed only on maturity. The units of close-ended
schemes are mandatorily listed to provide exit route before maturity and can be
sold/traded on the stock exchanges.

• Interval schemes allow purchase and redemption during specified transaction

periods (intervals). The transaction period has to be for a minimum of 2 days and

12
there should be at least a 15-day gap between two transaction periods. The units
of interval schemes are also mandatorily listed on the stock exchanges.

SCHEME CLASSIFICATION BY PORTFOLIO MANAGEMENT

Active Funds

In an Active Fund, the Fund Manager is ‘Active’ in deciding whether to Buy, Hold,
or Sell the underlying securities and in stock selection. Active funds adopt
different strategies and styles to create and manage the portfolio.

• The investment strategy and style are described upfront in the Scheme
Information document (offer document)
• Active funds expect to generate better returns (alpha) than the benchmark
index.
• The risk and return in the fund will depend upon the strategy adopted.
• Active funds implement strategies to ‘select’ the stocks for the portfolio.

Passive Funds

Passive Funds hold a portfolio that replicates a stated Index or Benchmark e.g. –

• Index Funds
• Exchange Traded Funds (ETFs)
In a Passive Fund, the fund manager has a passive role, as the stock selection /
Buy, Hold, Sell decision is driven by the Benchmark Index and the fund manager /
dealer merely needs to replicate the same with minimal tracking error.

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ACTIVE V/S PASSIVE FUNDS

Active Fund –
• Rely on professional fund managers who manage investments.
• Aim to outperform Benchmark Index
• Suited for investors who wish to take advantage of fund managers' alpha
generation potential.
Passive Funds –
• Investment holdings mirror and closely track a benchmark index, e.g., Index
Funds or Exchange Traded Funds (ETFs)
• Suited for investors who want to allocate exactly as per market index.
• Lower Expense ratio hence lower costs to investors and better liquidity

CLASSIFICATION BY INVESTMENT OBJECTIVES

Mutual funds offer products that cater to the different investment objectives of
the investors such as –

a. Capital Appreciation (Growth)

b. Capital Preservation
c. Regular Income
d. Liquidity
e. Tax-Saving
Mutual funds also offer investment plans, such as Growth and Dividend options,
to help tailor the investment to the investors’ needs.

GROWTH FUNDS
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 • Growth Funds are schemes that are designed to provide capital
appreciation.
• Primarily invest in growth oriented assets, such as equity
• Investment in growth-oriented funds require a medium to long-term
investment horizon.
• Historically, Equity as an asset class has outperformed most other kind of
investments held over the long term. However, returns from Growth funds
tend to be volatile over the short-term since the prices of the underlying
equity shares may change.
• Hence investors must be able to take volatility in the returns in the short-
term.

INCOME FUNDS

• The objective of Income Funds is to provide regular and steady income to

investors.
• Income funds invest in fixed income securities such as Corporate Bonds,
Debentures and Government securities.
• The fund’s return is from the interest income earned on these investments
as well as capital gains from any change in the value of the securities.
• The fund will distribute the income provided the portfolio generates the
required returns. There is no guarantee of income.
• The returns will depend upon the tenor and credit quality of the securities
held.

LIQUID / OVERNIGHT /MONEY MARKET MUTUAL FUNDS

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 • Liquid Schemes, Overnight Funds and Money market mutual fund are
investment options for investors seeking liquidity and principal protection,
with commensurate returns.
– The funds invest in money market instruments* with maturities not
exceeding 91 days.
– The return from the funds will depend upon the short-term interest rate
prevalent in the market.
• These are ideal for investors who wish to park their surplus funds for short
periods.
– Investors who use these funds for longer holding periods may be
sacrificing better returns possible from products suitable for a longer
holding period.

* Money Market Instruments includes commercial papers, commercial bills,

treasury bills, Government securities having an unexpired maturity up to
one year, call or notice money, certificate of deposit, usance bills, and any
other like instruments as specified by the Reserve Bank of India from time
to time.

CLASSIFICATION BY INVESTMENT PORTFOLIO

• Mutual fund products can be classified based on their underlying portfolio

composition
– The first level of categorization will be on the basis of the asset class the
fund invests in, such as equity / debt / money market instruments or gold.
– The second level of categorization is on the basis of strategies and styles
used to create the portfolio, such as, Income fund, Dynamic Bond Fund,
Infrastructure fund, Large-cap/Mid-cap/Small-cap Equity fund, Value fund,
etc.
– The portfolio composition flows out of the investment objectives of the
scheme.

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 CHAPTER - II

HOW TO INVEST IN MUTUAL FUNDS

17
OBJECTIVES :

The study that is taken covers the following objectives-

Primary Objective
To know how the schemes are performing in the two quarters and the Return and
Ranking of the schemes changing in short span of time and which is schemes
more consistent.

Secondary Objectives
To understand the reasons for ranking in number one for particular schemes,
To examine in terms of return, rank and quartile.
To find out which should consider for investing whether to return or ranking and
consistency.
To analysis the best performing schemes across Indian mutual fund industry.

MUTAUAL FUNDS INVESTMENT

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Mutual Funds work the same way and are professionally managed investment
vehicles that pool money from Investors. Mutual Fund Investments may seem
scary at first, especially for newbies. However, there is no going back once you are
well-versed in How to Buy Mutual Funds. In this blog, we have covered all the nitty-
gritty of Mutual Funds.

A few primary steps to start investing in Mutual Funds Online: open an account,
learn how to pick Mutual Funds, understand how Mutual Funds work, and start
investing!

How to Invest in Mutual Funds - 5 Easy Steps

Anyone person who is wondering how to start investing in mutual funds can follow
these 5 easy steps for investing in mutual funds-

• Step 1: Start with risk profiling, i.e., to understand your risk tolerance and
capacity. Knowing the amount of risk one can take before investing in mutual
funds is essential.

• Step 2: After completing the risk profiling, the next step is asset allocation,
where you must divide your money between various asset classes. Asset
allocation should include a mix of equity and debt instruments to balance the
risk factors.

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 • Step 3: The third step is the identification of funds that invest in each asset
class. Then, you can check for past performance or investment objectivesfor
comparing mutual funds.

• Step 4: Select and decide the mutual fund scheme you will invest in. You can
then start the application either online or offline.

• Step 5: Diversifying your investments and regular follow-ups are essential to

ensure better results and higher profit.

How to Invest in Mutual Funds Online?

It is essential to understand how to open mutual fund account through online

mode. Investing in Mutual Funds Online can be pretty simple and can be made in
one of two ways-

1) By Creating an Account on an Official Website (AMC Website)

Every Asset Management Company has an official website where you can find
multiple Mutual Funds in each category to invest. You have to follow the
instructions provided on the official site of the fund house, fill in all the required
information, and submit it.

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The KYC process can also be completed online (e-KYC), for which only the Aadhar
Number and PAN are needed. The information provided by you is verified at the
backend, and you can start investing upon successful verification.

• Through an App

Asset Management Companies allow investors to invest in Mutual Funds through

mobile applications quickly and hassle-free. The AMCs have mobile applications,
and third-party mutual fund aggregators provide a platform to invest in Mutual
Funds.

The app enables the investor to invest in Mutual Fund Schemes, view account
statements, buy or sell units and check other relevant details about their portfolio.
Moreover, investors can invest in various funds offered by different fund houses.

You can also wish to invest offline with the AMCs, as most continue to provide this
feature.

How to Invest in Direct Mutual Funds Offline?

If you have any reservations about investing online and prefer the traditional route,
you can go with the Offline Method. The Offline Method is where you must
physically fill and submit a Mutual Fund Form.

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The first way is to visit the nearest office of the Asset Management Company whose
fund you have selected.

Once you reach the centre, you will be asked to complete your KYC (Know Your
Customer) process if you are not KYC compliant. The KYC document can be
procured at the AMC branch.

You would also have to carry a few other documents for in-person verification
purposes; these include:

• Self-attested copy of PAN

• Self-attested copy of address proof. For address proof, you can use either of
these documents- passport copy, latest telephone bill (landline or mobile),
latest electricity bill, latest bank passbook, bank account statement,
latest Demat account statement, driving license, rent agreement, or ration
card.

• You also need to submit something known as a Common application form or

SIP form. If you decide on the SIP route, you will also need to fill out a NACH
Mandate (National Automated Clearing House), which will give the asset
management company permission to auto-deduct the SIP amount from your
linked bank account from the starting date of SIP.

• Once you submit the requisite forms and documents, you must also submit
a cheque or demand draft in the name of the AMC of the desired investment
amount.

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 • Once the transaction is initiated, you will be allotted the folio number for the
investments made and an account statement.

You can expect a similar process at the local RTA office as well. However, please
note that Offline Methods to buy Direct Mutual Funds require you to physically visit
the branch and fill out forms for any action you would like to take with your
investments, such as redeeming fund units, stepping up the SIP amount, etc.

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 CHAPTER - III

HOW TO DO MUTUAL FUNDS WORK

24
How Do Mutual Funds Work?

An Asset Management Company (AMC) pools investments from various individuals

with common investment objectives. This collective amount is then invested as per
the fund's investment objective. For example, it could be invested in securities like
stocks, bonds, money market instruments, commodities such as precious metals,
and other similar assets.

Financial experts manage these funds called fund managers, who align with the
specified investment objective of the fund and invest in creating growth or
appreciation of the amount for investors.

The AMCs charge an expense ratio which is nothing but the annual maintenance
fee to manage the investments of individuals. The investors earn money with
regular dividends/interest in capital gains. Furthermore, one can reinvest the
capital gains through a growth option or make a steady income with the dividend
option. In simple words, mutual funds are the diversification of the investment.

Costs of Investing in Mutual Funds

Here are some of the costs that may be incurred while investing in mutual funds-

• Expense Ratio

25
The expense ratio is the percentage of average assets under management that go
towards such expenses that Asset Management Companies (AMCs) incur. For
example, AMCs incur administrative expenses, fund management, distribution,
etc., to run their businesses.

• One-Time Charge/Transaction Charge

A nominal amount may have to be paid by investors as transaction fees. For

investments below Rs.10,000, no transaction fee is levied. This may change
depending on the AMC.

• Exit Load

• Exit load is charged when an investor withdraws money quickly. It is set

as a percentage of the scheme's prevailing Net Asset Value (NAV). STT

When an investor decides to sell mutual fund units, a Securities Transaction Tax
(STT) is levied.

• STT for Different Schemes

o For close-ended schemes and ETFs: 0.001% of the traded value

o Open-ended equity-oriented schemes: 0.25% of the traded value

o Debt Mutual Fund units: No STT

• Stamp Duty

26
 • Stamp duty is applicable on the issuance and transfer of Mutual Funds

irrespective of whether units are held in Demat or physical mode. Stamp

Duty is a direct tax levied by the government. Stamp Duty in various cases

o Purchases, fresh instalments in existing SIPs and STPs, Switch-in, and

Dividend reinvestment transactions: 0.005%.

o Transfer of units from one Demat to another plus the off-market transfers:
0.015%.

Points to Keep in Mind Before Investing in Mutual Funds

Your next step in investing in Mutual Funds is to choose the appropriate fund once
your account is set up and you are fully aware of all the costs involved.

Here are some considerations you should make when selecting a Mutual Fund.

• Goal of Investing

This becomes the foundation of your investment; defining your investment goals
can help you select the proper fund accordingly.

Whether buying a new house, car, wedding child’s education, retirement, or any
other, deciding the goal of the investment is a must. In a nutshell, one should have
a bigger picture of how much wealth one wishes to accumulate and for what
duration.

• Choose the Right Fund for Yourself!

27
Do your homework well, as the market is brimming with options, and choosing the
best fit for you might be tricky. Evaluate the fund you select with your investment
objective, risk appetite, your affordability.

You can also get help from a financial advisor if you face difficulties choosing the
right one.

• Consider the Risk Factors

One important thing to remember comes with a particular set of risks. Schemes
with high returns often come with higher stakes. You can go with equity schemes
if you have a high-risk appetite and your investment objective is to accomplish high
returns.

On the other hand, if you don’t want an investment with high risk and moderate
returns that can fulfil your investment objective, you can go for debt schemes.

• Keep Your KYC Documents Updated

One cannot invest in a Mutual Fund if one is not compliant with Know Your
Customer (KYC). Therefore, investors must comply with KYC guidelines to invest in
Mutual Funds. You need your PAN card and valid address proof to become KYC
compliant.

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 CHAPTER - IV

TO INVEST IN SIP & LUMSUM

29
SIP - Systematic Investment Plan

Systematic Investment Plan or SIP is a method of investing in mutual funds

wherein an investor chooses a mutual fund scheme and invests the fixed amount
of his choice at fixed intervals.

SIP investment plan is about investing a small amount over time rather than
investing one-time huge amount resulting in a higher return.

How Does SIP work?

Once you apply for one or more SIP plans, the amount is automatically debited
from your bank account and invested in the mutual funds you have purchased at
the predetermined time interval.

At the end of the day, you will be allocated the units of mutual funds depending
on the NAV of the mutual fund.

With every investment in an SIP plan in India, the additional units are added to
your account depending on the market rate. With every investment, the amount
being reinvested is larger and so is the return on those investments.

It is at the discretion of the investor to receive the returns at the end of the SIP’s
tenure or at a periodic interval.

Let us understand with an example

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Suppose you want to invest in a mutual fund and you have set aside a sum of 1
Lakh Rupees to invest in the same. Now there are two ways in which you can
make this investment.

Either you can make a one time payment of Rs 1 Lakh in the mutual fund, also
known as lump sum investment. Or you can choose to invest via Systematic
Investment Plan or SIP.

You need to start an SIP of a set amount. Say Rs 500. Then Rs 500 will be
deducted from your account and auto credited to the mutual fund you want to
invest in, at a certain fixed date every month. This will continue till the time
period.

When to Invest in SIP?

SIP investments can be started anytime ensuring minimum risk with the correct
suitable scheme plan for the investor.

It is very important for the investor to choose the scheme which suits his long-
term goals well. Hence, there is no suitable time frame within which an investor
should start a SIP investment plan, the sooner the better.

Types of SIP

Understanding the different types of SIP will help you choose the right scheme as
per your goals.

Here are the types of Systematic Investment Plans available-

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 • Top-up SIP

The Top-up SIP allows you to increase your investment amount periodically giving
you the flexibility to invest higher when you have a higher income or available
amount to be invested.

This also helps in making the most out of the investments by investing in the best
and high-performing funds at regular intervals.

• Flexible SIP

As the name suggests, Flexible SIP plan carries flexibility of the amount you want
to invest. An investor can increase or decrease the amount to be invested as per
his own cash flow needs or preferences.

• Perpetual SIP

A perpetual SIP Plan allows you to carry on the investments without an end to the
mandate date.

Generally, an SIP carries an end date after 1 Year, 3 Years or 5 years of

investment. The investor can hence withdraw the amount invested whenever he
wishes or as per his financial goals.

Benefits of Investing in SIP

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There are several benefits of investing in SIP over Lumpsum. Some of them are
listed below

• Makes You a Disciplined Investor

SIP can be the best investment option for you if you do not possess superior
financial knowledge about the way the market moves.

You do not have to spend your time analysing the market movements or the right
time to invest in.

With SIP since the money gets auto-deducted from your account and goes to
your mutual funds, you can sit back and relax. Further, unlike lump sum
investments, it ensures that you are working actively towards making your
investments grow because of the periodicity.

• Rupee Cost Averaging Factor

With SIP comes the advantage of rupee cost averaging.

With SIP since your investment amount is constant, for a longer period of time,
with rupee cost averaging you can take advantage of market volatility. The fixed
amount you invest by means of an SIP averages out the value of each unit.

So you can buy more units when the market is low and buy fewer units when the
markets are high, lowering down your average cost per unit.

• Power Of Compounding

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SIP is a disciplined way of investing and ensures you constantly strive to make
your investments grow.

The automation makes sure your investment grows as opposed to lump sum
where you may forget to invest sometime. The small amount you invest daily
grows up to a large corpus due as a sum of your contribution and the returns
compounded over the years.

Let’s see the projected returns using Groww SIP Calculator, to see how much your
money grows in 20 years if you contribute 1000 Rs a month, assuming average
returns of 10%. The total amount grows to Rs 7,18,259 due to the compounding
effect.

As discussed before, with an SIP you can relax about your investments. Just by
submitting an application form you can initiate an auto debit or submit post-
dated cheques to start the SIP.

According to how much you want your final amount to be, you can select the
appropriate amount to start an SIP with.

Lump Sum

What is lump sum?

The phrase ‘lump sum’ primarily means a large sum of money. In financial terms,
in regards to the investment of a substantial sum of money at one go instead of
breaking it down into multiple installments.

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What are lump sum investments and lump sum payments?

Lump sum investment involves the investment of the entire money available to an
investor. For instance, if someone desires to invest the whole amount present
with him in mutual funds or similar investment instruments, then it will be termed
as lump sum investment.

Similarly, lump sum payment is just the same but in terms of payment. As the
name implies, it does not involve any instalments or breakage of the whole
amount.

How is lump sum different from SIP?

SIP or Systemic Investment Plans are completely the reverses of lump sum
investments. The following points will help in assessing the differences between
lump sum and SIP.

• Mode of investment

Primarily there are two modes or ways to invest money in a mutual fund- via
systematic investing plan (SIP) or via Lumpsum . In the case of SIP, the investment
is done in installments. The whole amount is not invested at once as they follow a
systematic way of investments which involves monthly deposits of a fixed sum by
the investor.

On the other hand, lump sum investment comprises a large sum of money
invested at a single point. This does not take into account any breakage of the
available amount or instalments.

• Potential investors

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SIPs are quite safe as an investment instrument. Therefore, it is best mainly for
the beginners, who have not yet studied the market or are not fully aware of the
same.

In contrast, a lump sum investment is usually preferable for the bigger players.
They have been in the field for a longer time and have gained enough experience
in the market. Therefore, they can also handle the risks involved with investing a
large amount.

• Time period of investment

SIP offers various schemes of investment to investors. Therefore, the time period
of those schemes is also different. They can be both open-ended and close ended
or even hybrid.

However, in the case of lump sum payment, the amount is locked in for a
particular period of time. Since there is no need for installments, the amount is
paid or deposited only once and is hence, fixed.

Which will give better returns – lumpsum or SIP?

The answer to this question is dependent on several factors. Due to the fact that
both the investment plans are different in every aspect, it is only natural that their
benefits will also differ accordingly.

Moreover, investments are completely market-oriented. The market forces

decide the benefits to be obtained from the investment. When the money market
is growing, you can expect a higher return from a lump sum investment. However,

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during a falling trend, you are likely to incur better returns if you have had
invested in SIP.

There cannot be a direct comparison of the returns as the amount and schemes
of investment differ from one another. Additionally, the objective of these
investments is also different. Hence, it would be unfeasible to compare both the
platforms, since each plan has its own benefits to offer.

Advantages of Lump sum investment over SIP

Both the investment plans differ greatly in terms of investment approach as well
as the risk appetite.

However, lump sum investment has an upper hand when it comes to certain
advantages over SIP. The following points showcase the benefits of investing
through the former.

• Simplicity

Lumpsum investments are more convenient as compared to SIPs because in the

former case, you invest once and watch your investment grow, whereas in the
latter case, you will be required to make timely payments.

Moreover, it creates a psychological cycle of repeated checking for profits in case

you have invested through SIP. However, you can sit back after investing in
lumpsum.

• Minimum charges

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As the lump sum investments are made for one time, therefore, they incur rare
minimum charges as compared to periodical investments. These have lower
transaction costs as well as lower maintenance costs.

On the other hand, the SIPs have exit load along with taxation liabilities, which is
absent in lump sum investments. Hence, one can experience the privilege of
investing a large amount at one go.

• Appreciation of capital

As already mentioned, lumpsum investments are meant for a longer duration,

they have enough time to grow in the market. Simply put, the wealth involved in
the lumpsum investment gets appreciated in the long run.

Additionally, the lump sum investment also has the time to adjust to the market
changes too. As a result, it will be capable enough to significantly grow.

Factors to consider before investing in lump sum investment

Lump sum investments take large amounts at once; hence most investors often
find it difficult to let go of the amount. Nevertheless, it becomes easier when you
have considered certain factors beforehand for easy steering.

Patience

Patience is the key to handling any situation. This is what remarkably

distinguishes the investors from the traditional traders. Investing and then waiting
for money to grow over a period of time requires patience and perseverance.

The temptation to exit from the scheme is quite high, but only patience will help
you sail through the downtrend of the market condition.

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Market valuation

Attaining a perfect market valuation is an arduous task overall; yet you can get
hold of the same if you look into the past records closely. Before investing, you
can look out for the P/E ratio of various market indices.

A closer look at the past three to four quarters will give you a clear idea about the
current market scenario.

Potential returns

The prime aim of lump sum investment returns. Hence, it becomes vital to assess
the returns beforehand, so that you get an overview of the scheme you are opting
for. It is important to know the features of your investment plans and also
understand the relevant returns that your scheme is enabled to provide you.

Liquidity expectations

The lump sum investment should also be able to meet your liquidity
requirements. However, there should not be any considerable loss in amount. A
lesser loss implies a better investment plan.

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 CHAPTER - V

COMPANY PROFILE

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Asset Under Management

The concept of Asset Under Management (AUM full form) of Mutual Funds is
similar to market capitalization while directly trading in the stock markets – both
reflect the potential returns generated against the resources of the investors.

What is Asset Under Management (AUM)

Asset Under Management is the total cumulative investment sum of a particular

Mutual Fund. It represents the overall market value that the fund holds,
combining the value of an asset and capital.

AUM is directly handled by fund houses; fund managers supervise the

performance of these assets and make investment decisions to help investors
enjoy substantial capital appreciation. AUM can be considered as a performance
gradient and size parameter of a fund house.

The exact value of Asset Under Management includes bank deposits, Mutual
Funds, and cash reserves for a particular. So, higher AUMs indicate better
investment inflow, quality, and management experience on behalf of a fund
house. Their fees are also often calculated as a percentage of the total Asset
Under Management.

AUM usually fluctuates on a daily manner, showing the inflow and outflow of
resources from the organisations that fund houses invest in. Usually, the funds
that carry more assets are more liquid in nature.

Now that you know the AUM meaning, understand its impact on mutual funds.

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Importance of AUM in Mutual Funds

Assets under management are important because-

• Showcases the Size of a Fund

The AUM provides a clear glimpse of the size and scale of a mutual fund. Higher
AUM signifies that the mutual fund has a firm position and is likely to get more
investors.

• Impacts Mutual Fund’s Overall Performance

The AUM can have a direct impact on the fund’s performance. If a fund is a large
AUM, it might be challenging for it to generate high returns. This can happen
because finding the right investment opportunities that help in earning more
gains without hampering the market can be tough.

On the contrary, a smaller fund may be having higher flexibility to benefit from
other investment opportunities and yield more returns.

• Affects Mutual Fund Fees

A mutual fund’s AUM can have a large impact on the fees that an investor usually
pays to invest in the mutual fund. For example, some larger funds might have a

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very high minimum investment. This may limit their access to a large chunk of
investors.

Impact of High AUM on Mutual Funds

Mutual Funds Assets Under Management hold significant weightage to affect

their performance in the financial market. It primarily depends on the fund
houses; these organisations prefer asset-rich companies as they are more
favoured amongst customers.

Studies comprising 361 different equity funds in 2012 showed that almost 170
funds had an AUM of less than Rs. 100 Crore, from which only 68% had an AUM
of less than Rs. 50 Crore. However, it was observed that the total investment
reached Rs. 530 Crore in 2008 to Rs. 3841 Crore in 2012. It showed the potential
of the tremendous growth of Assets Under Management for different
organisations.

A substantial asset fund can allow an asset manager to react against changing
market opportunities, like exiting or entering into a particular investment when
an opportunity arrives. Investors also often look at AUM in mutual funds to tally
its performance and returns.

Let’s take a look at the importance of asset retention for Mutual Funds with
respect to various investment options.

• Equity Funds

Ideally, equity funds should offer a good return and outperform the benchmark
index through market highs and lows. Equity funds depend less on AUM and more
on the asset manager’s skill to boost its returns.

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 • Debt Funds

Total asset is one of the most crucial factors of debt funds. Debt funds with more
capital can spread their expenses across a larger group of investors, which will
decrease the fixed fund expenses for every individual and increase the returns.

• Small-cap Funds

Small-cap funds usually do not depend on Asset Under Management by a

significant margin. These are only affected when the assets grow beyond a
significant point – namely when fund houses become major shareholders of a
particular company.

Small-cap funds often avoid calculating AUM and invest in SIPs instead of larger
investments.

• Large-cap Funds

The returns earned from large-cap funds primarily depend on the yields provided
by the market. It usually does not depend on the Asset Under Management.
There are several cases where companies of a smaller asset class have gathered
significantly more revenues, despite the shareholders acquiring significantly fewer
stocks of those institutions when compared to companies with more assets.

It should be noted that a high value of assets under management does not always
mean higher returns generated by the respective Mutual Funds. The performance
of Mutual Funds depends upon the dexterity of the concerned portfolio manager
and his ability to gain market advantage through calculated predictions and smart
investment choices.

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Since the NAV of Mutual Funds having a low AUM is relatively lower, investors can
make huge capital gains by investing in such schemes.

AUM and Expense Ratio

The total amount deducted from the returns of Mutual Funds is used to regulate
smooth working operations and ensure proper administration and management
of the same. These overheads are known as the expense ratio incurred, specific to
each Mutual Fund.

The expense ratio of a specific fund depends on the size of the AUM, as a higher
value of assets requires more time and effort for optimal management.

Thus, AUM has a direct relation with the expense ratio levied by Mutual Funds,
implying higher charges incurred while investing in Mutual Funds of a relatively
larger size. However, the SEBI regulations stipulate that the expense ratio of a
Mutual Funds has to be strictly less than its AUM.

List of Top Asset Management Companies in India 2024

Here is a list of some of the top AMC companies in India-

S.No. AMC Assets Managed (as on 31-Mar-2024)

1. SBI Mutual Fund ₹ 919,519.99 crore

2. ICICI Prudential Mutual Fund ₹ 716,867.52 crores

3. HDFC Mutual Fund ₹ 614,665.43 crores

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 4. Nippon India Mutual Fund ₹ 438,276.85 crores

5. Kotak Mahindra Mutual Fund ₹ 381,239.57 crores

6. Aditya Birla Sun Life Mutual Fund ₹ 315,777.58 crores

7. UTI Mutual Fund ₹ 286,593.27 crores

8. Axis Mutual Fund ₹ 266,826.23 crores

9. DSP Mutual Fund ₹ 138,986.33 crores

10. Bandhan Mutual Fund ₹ 134,908.07 crores

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 CHAPTER - VI

CONCLUSION & BIBLIOGRAPHY

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Conclusion:-

Despite the abundance of investment options available, mutual Funds

remain one of the best and most practical ways to invest your money.

One of the main advantages is that your money will be professionally

managed by fund managers who have done extensive market research.
Not to mention, one of the key advantages of investing in Mutual Funds
is the diversification of your portfolio.

➢ Mutual funds have emerged as the best in terms of variety,

flexibility , diversification, liquidity as well as tax benefits, so it is a
best investment vehicle.
➢ Mutual funds have the capability to provide solutions to most
investors, financial needs.
➢ My study is expected to see the performance evaluation
framework for mutual funds in India.

There is a lot of opportunity in the mutual fund industry, the Money

Yatra Associat Ltd. Create more awareness among the public and give
more advertisements in the print and digital media.

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 BIBLIOGRAPHY

❖ BOOKS
❖ GOOGLE
❖ YOUTUBE
❖ MAGAZINE

❖ WEBSITES
➢ https://grow.in
➢ https://www.stock.com
➢ https://www.indiainfoline.com
➢ https://www.etmoney.com

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