1

Introduction
A Mutual fund is an investment vehicle that pools money from multiple
investors to invest in a diversified portfolio of securities, such as stocks, bonds,
and other assets. The fund is managed by professional fund managers, who make
decisions about which securities to buy or sell based on the fund's investment
objectives. Mutual funds are a popular choice for individual investors because
they offer a way to diversify and invest professionally without needing to manage
individual stocks or bonds. However, it’s important to research a fund’s
objectives, fees, and performance history before investing. Mutual funds can give
individual investors access to asset classes that may be difficult or expensive to
invest in directly. These funds charge management fees (expense ratio) and may
also charge front-end or back-end load fees.

A mutual fund is just the connecting bridge or a financial intermediary that

allows a group of investors to pool their money together with a predetermined
investment objective. The mutual fund will have a fund manager who is
responsible for investing the fathered money into specific securities like stocks or
bonds. When you invest in a mutual fund, you are buying units or portions of the
mutual fund and thus on investing becomes a shareholder or unit holder of the
fund. Mutual funds are considered as one of the best available investments as
compare to others they are very cost efficient and also easy to invest in, thus by
pooling money together in a mutual fund, investors can purchase stocks or bonds
with much lower trading costs than if they tried to do it on their own. But the
biggest advantage t mutual funds is diversification, by minimizing risk &
maximizing returns.

There are various investment avenues available to investors, and mutual

funds present one of the prominent options. Mutual funds offer attractive
investment opportunities but, like any financial instrument, come with their own
set of risks. It is essential for investors to evaluate both the risks and the expected
returns—taking into account the impact of taxes—before making investment
decisions. To make informed choices, investors should consider consulting with
experts, financial advisors, or agents and distributors of mutual fund schemes.
The Mutual Funds in India are handled by Fund Managers, also referred as the
 2

portfolio managers. The Securities Exchange Board of India regulates the Mutual
Funds in India. The unit value of the Mutual Funds in India is known as net asset
value per share (NAV). The NAV is calculated on the total amount of the Mutual
Funds in India, by dividing it with the number of units issued and outstanding
units on daily basis. Unlike investment in stocks, mutual funds do not invest in a
specific stock. Mutual fund investment takes place across several investment
options so that the investor gets the maximum returns. An investor himself does
not have to select the stocks for investment. Fund manager selects those stocks
with top-performing investment options that can bring the best possible returns.
This guidance can help investors navigate the complexities of different investment
options and align their portfolios with their financial goals.
 3

History of Mutual Funds in India

The first company that dealt in mutual funds was the Unit Trust of India. It
was set up in 1963 as a joint venture of the Reserve Bank of India and the
Government of India. The objective of the UTI was to guide small and uninformed
investors who wanted to buy shares and other financial products in larger firms.
The UTI was a monopoly in those days. One of its mutual fund products that ran
for several years was the Unit Scheme 1964.

Unit Trust of India was the first mutual fund set up in India in the year 1963.
In early 1990s, Government allowed public sector banks and institutions to set up
mutual funds As far as mutual funds are concerned, SEBI formulates policies and
regulates the mutual funds to protect the interest of the investors. SEBI notified
regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by
private sector entities were allowed to enter the capital market. The regulations
were fully revised in 1996 and have been amended thereafter from time to time.
SEBI has also issued guidelines to the mutual funds from time to time to protect
the interests of investors. All mutual funds whether promoted by public sector or
private sector entities including those promoted by foreign entities are governed
by the same set of Regulations. There is no distinction in regulatory requirements
for these mutual funds and all are subject to monitoring and inspections by SEBI.
The risks associated with the schemes launched by the mutual funds sponsored
by these entities are of similar type. It may be mentioned here that Unit Trust of
India (UTI) is not registered with SEBI as a mutual fund (as on January 15, 2002)
 4

Mutual fund Setup

A mutual fund is set up in the form of a trust, which has sponsor, trustees,
Asset Management Company (AMC) and custodian. The trust is established by a
sponsor or more than one sponsor who is like promoter of a company. The
trustees of the mutual fund hold its property for the benefit of the unit holders.
Asset Management Company (AMC) approved by SEBI manages the funds by
making investments in various types of securities.
Custodian, who is registered with SEBI, holds the securities of various
schemes of the fund in its custody. The trustees are vested with the general
power of superintendence and direction over AMC. They monitor the
performance and compliance of SEBI Regulations by the mutual fund. SEBI
Regulations require that at least two thirds of the directors of trustee company or
board of trustees must be independent i.e. they should not be associated with the
sponsors.
Also, 50% of the directors of AMC must be independent. All mutual funds
are required to be registered with SEBI before they launch any scheme. However,
Unit Trust of India (UTI) is not registered with SEBI (as on January 15, 2002)

Setting up a mutual fund involves multiple steps. Below is a breakdown of what

setting up a mutual fund can mean in both contexts.

1. Investing in a Mutual Fund

If you're an individual investor looking to get started with mutual funds, the
process is as follows:
 5

Steps to Invest in a Mutual Fund:

1.Determine your investment goals:

Decide what you are investing for e.g. retirement, education, wealth
accumulation, etc. This will influence your choice of fund type (e.g., growth,
income, bond, or index fund).

2.Choose Type of fund:

Mutual funds come in various types:

o Equity Funds: Invest in stocks, offering high potential returns with

higher risk.
o Bond Funds: Invest in fixed-income securities like bonds, generally
lower risk and returns.
o Balanced Funds: Mix of stocks and bonds, providing a moderate
risk/return profile.
o Index Funds: Track a specific market index (e.g., S&P 500), often with
lower fees.
o Sector Funds: Invest in specific sectors (e.g., tech, healthcare).
o International/Global Funds: Invest outside your home country or
globally.

3.Open an Account:

You’ll need to open an investment account with a brokerage or through a

financial advisor. Common options include:

o Brokerage Account
o Retirement Accounts
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4. Select the mutual fund

Research the funds that fit your investment goals. Look at:

o Expense Ratios: Lower is better, as fees reduce your returns over

time.
o Performance History: While past performance doesn't guarantee
future returns, it provides insight into how the fund has been
managed.
o Fund Manager: Consider the experience and reputation of the fund
manager.
o Risk Level: Review the fund’s volatility and how it aligns with your
risk tolerance.

5.Make an investment:

Once you’ve chosen a fund, decide how much you want to invest. Many funds
allow you to start with a relatively small amount.

6.Moniter and Adjust

Over time, track the performance of your investment and make an

adjustment as necessary to meet your evolving financial goals.

For individual investors, setting up a mutual fund typically means selecting

an appropriate fund to invest in, based on your financial goals, risk tolerance, and
investment horizon. For financial institutions, setting up a mutual fund is a
complex regulatory and legal process.
 7

Scope of Mutual Funds in India

The scope of mutual funds in India has seen wide growth over the past few
years and continues to expand. Here are some key aspects that states the scope
of mutual funds in India:

1. Growing Market Size

 The mutual fund industry in India has been growing steadily, with assets
under management (AUM) crossing ₹40 trillion as of 2024.
 The industry is expected to continue expanding as more retail investors
participate in equity and debt funds, especially with the growing awareness
of financial planning and wealth creation.


2. Investor Awareness and Participation

 There is an increasing trend of retail investors moving toward mutual funds,

driven by growing awareness about financial products, higher literacy in
financial matters, and access to digital platforms.
 SIP (Systematic Investment Plan) is one of the most popular methods of
investing in mutual funds, allowing small, regular investments and catering
to the rising middle-class population.


3. Regulatory Support

 The Securities and Exchange Board of India (SEBI) has implemented a

robust regulatory framework to protect investors and enhance
transparency. This has helped improve investor confidence.
 8

 SEBI has also introduced several initiatives like Direct Plans, which reduce
costs for investors, and transparency in fund performance disclosures,
making mutual funds more attractive.

4. Wide Range of Fund Categories

 Mutual funds in India cater to a wide range of investment needs. They

include:
o Equity Funds (growth-oriented funds invested in the stock market)
o Debt Funds (focused on fixed income and debt instruments)
o Hybrid Funds (combining equity and debt investments)
o Index Funds & ETFs (tracking the performance of market indices)
o Thematic/Sectoral Funds (targeting specific sectors like technology,
healthcare, etc.)
o International Funds (investing in foreign markets)
 These options allow investors to diversify their portfolios according to risk
appetite, investment horizon, and financial goals.


5. Technological Advancements

 The growth of digital platforms and robo-advisory services has made it

easier for investors to research, invest, and track their investments in
mutual funds.
 Investment platforms like Zerodha, Groww, ETMONEY, and Paytm Money
have simplified the process, making it more user-friendly and accessible to
a larger audience, especially the younger generation.


6. Attractive Tax Benefits

 Certain types of mutual funds, like Equity-Linked Savings Schemes (ELSS),

offer tax benefits under Section 80C of the Income Tax Act, which can be a
compelling factor for many investors.
 9

 Long-term capital gains (LTCG) from equity mutual funds are taxed at 10%
after a holding period of more than one year, which is relatively favorable
compared to other asset classes.

7. Shifting Investment Preferences

 Historically, Indian investors have preferred traditional investments like

fixed deposits, gold, and real estate. However, the younger demographic is
increasingly shifting toward mutual funds due to their potential for higher
returns.
 As financial goals change and as inflation erodes the purchasing power of
traditional savings, mutual funds are being seen as a more effective vehicle
for wealth creation.
 10

Advantages

Liquidity:

The most important advantage of investing in a Mutual Fund is that the investor
can redeem the units at any point in time. Unlike Fixed Deposits, Mutual Funds
have flexible withdrawal but factors like the pre-exit penalty and exit load should
be taken into consideration.

Diversification:

When the value of one investment is on the rise the value of another may be in
decline. As a result, the portfolio’s overall performance has a lesser chance of
being volatile. Diversification reduces the risk involved in building a portfolio
thereby further reducing the risk for an investor. As Mutual Funds consist of many
securities, investor’s interests are safeguarded if there is a downfall in other
securities so purchased.

Expert Management:
 11

The experts manage and operate mutual funds. The experts pool in money from
investors and allocates these 37 monies in different securities thereby helping the
investors incur a profit. The expert keeps a watch on timely exit and entry and
takes care of all the challenges. One only needs to invest and be least assured that
rest will be taken care of by the experts who excel in this field. This is one of the
most important advantages of mutual funds.

Accessibility:

Mutual Funds are Easy to Buy: Mutual Funds are easily accessible and you can
start investing and buy mutual funds from anywhere in the world. An asset
management companies (AMC) offers the funds and distributes through channels
like: Brokerage Firms Registrars like Karvy and CAMS AMC’S Themselves Online
Mutual Fund Investment Platforms Agents and Banks 38 This factor makes mutual
funds universally available and easily accessible. More so, you do not require a
Demat Account to invest in Mutual Funds.

Schemes for Every Financial Goals:

The best part of the Mutual Fund is the minimum amount of investment can be
Rs. 500. And the maximum can go up to whatever an investor wishes to invest.
The only point one should consider before investing in the Mutual Funds is their
income, expenses, risk-taking ability, and investment goals. Therefore, every
individual from all walks of life is free to invest in a Mutual Fund irrespective of
their income.

Safety and Transparency:

With the introduction of SEBI guidelines, all products of a Mutual Fund have been
labeled. This means that all Mutual Fund schemes will have a color-coding. This
helps an investor to ascertain the risk level of his investment, thus making the
 12

entire process of investment transparent and safe. This color-coding uses 3 colors
indicating different levels of risk : Blue indicates low risk Yellow indicates medium
risk, and Brown indicates a high risk.

Lower cost:

In a Mutual Fund, funds are collected from many investors, and then the same is
used to purchase securities. These funds are however invested in assets which
therefore helps one save on transaction and other costs as compared to a single
transaction.

Simplicity:

Mutual Fund is an investment which is considered to be easy, compare to other

available instruments in the market, and the minimum investment is small most
AMC also have automatic purchase plans whereby as little as Rs.2000, where SIP
start with just Rs.50 per month basis.

Growth-oriented investment:

Since most of the mutual funds invest in the growth-oriented equity market, the
investors get a chance to benefit from the growing Indian economy. Though
investments in equity and equity-related securities of companies are prone to
certain 21 risks, the chances of generating returns from such funds are
considerably higher.
 13

.
 14

Disadvantages

1. Cost to Manage the Mutual Fund scheme: As mentioned above, Market

Analysts or Fund Managers manage and operate the mutual funds. These
Fund Managers work for the fund houses that manage huge investments
every day. This requires a lot of efficiencies, expertise, and experience in
the subject matter.

2. Dilution: Due to dilution, it is not recommended to invest in too many

Mutual Funds at the same time. Diversification, although saves an investor
from major losses, also restricts one from making a higher profit.

3. Management Abuses: Churning, turnover, and window dressing may

happen if your manager is abusing his or her authority. This includes
unnecessary trading, excessive replacement, and selling the losers prior to
quarter-end to fix the books.

4. Tax Inefficiency: Like it or not, investors do not have a choice when it

comes to capital gains payouts in mutual funds. Due to the turnover,
redemptions, gains, and losses in security holdings throughout the year,
investors typically receive distributions from the fund that are an
uncontrollable tax event.

5. Poor Trade Execution: If you place your mutual fund trade anytime before
the cut-off time for same-day NAV, you will receive the same closing price
NAV for your buy or sell on the mutual fund. 2 For investors looking for
faster execution times, maybe because of short investment horizons, day
trading, or timing the market, mutual funds provide a weak execution
strategy.
 15

Mutual Funds Performance Evaluation

Mutual fund performance evaluation is essential for understanding how well a

fund meets its investment objectives and compares with peers and benchmarks.
In a project on mutual fund performance evaluation, here are detailed sections
you could include, along with metrics and methods commonly used:
Performance evaluation provides such information. Without it, investors and
investment managers would find it increasingly difficult to meet stakeholders’
current and future needs in a very competitive investment management industry.
In the investment management industry, performance evaluation broadly refers
to the measurement, analysis, interpretation, assessment, and presentation of
investment results.
In particular, performance evaluation provides information about the return and
risk of investment portfolios over specified periods. Selection of investment
managers is a closely related topic. Performance evaluation information helps in
understanding and controlling investments like mutual funds risk and should,
therefore, lead to improved risk management. Performance evaluation of mutual
fund is one of the preferred areas of research where a good amount of study has
been carried out.

1.Introduction to Performance Evaluation :

Purpose of Evaluation: Explain the importance of performance evaluation in
assessing mutual fund returns, risk, and overall efficiency.
Evaluation Criteria: Describe what factors will be assessed, including returns,
risk-adjusted performance, and comparison with benchmarks.
 16

2. Performance Metrics :

a) Absolute Returns :
Definition: The total return generated by the mutual fund over a specific
period (1 year, 3 years, 5 years, etc.).
Use: This metric gives a simple view of the growth of the investment but
doesn't account for risk or compare with benchmarks.

b. Annualized Returns :
Definition: Compounds the growth rate over multiple years to show an average
annual return.
Use: Useful for comparing funds with different investment horizons, providing a
more accurate reflection of long-term performance.

c. Benchmark Comparison :
Definition: Evaluating fund performance against a relevant market index (e.g.,
Nifty 50, Sensex for equity funds, CRISIL Composite Bond Fund Index for debt
funds).
Use: Indicates whether the fund manager has outperformed the market.

d. Rolling Returns :
Definition: Calculates returns for overlapping intervals (e.g., daily, weekly,
monthly) over a period to smooth out short-term market volatility.
Use: Offers a clearer view of the fund’s consistency and reliability over time,
which is essential for evaluating long-term funds.
 17

3. Risk-Adjusted Performance Metrics :

a. Sharpe Ratio :
Formula:
Explanation: This metric assesses returns per unit of risk taken. A higher Sharpe
Ratio means the fund provides better risk-adjusted returns.
Use: Helpful in comparing funds with similar objectives but different volatility
levels.
b. Alpha :
Formula:
Explanation: Alpha measures a fund manager’s ability to generate returns
above the benchmark. Positive Alpha indicates value added beyond market
movements.
Use: Useful for evaluating active funds where managers aim to outperform a
benchmark.
c. Beta :
Definition: Measures a fund’s sensitivity to market movements (market beta =
1). A beta greater than 1 means the fund is more volatile than the market, while a
beta below 1 indicates less volatility.
Use: Helps assess the fund's volatility in relation to the market and can indicate
if a fund is appropriate based on an investor's risk tolerance.
d. R-Squared :
Definition: Indicates the percentage of the fund's movements explained by the
benchmark. An R-squared near 100 implies close tracking of the benchmark.
Use: Useful to determine if the fund’s performance is genuinely due to active
management or just passive alignment with the market.
 18

e. Standard Deviation :
Definition: Measures the fund’s volatility by indicating the variation in returns
over a period.
Use: Helps assess the stability of returns, with higher standard deviation
indicating greater risk.

f. Sortino Ratio :
Formula: Similar to the Sharpe Ratio but uses downside deviation instead of
standard deviation.
Explanation: It only considers downside risk, making it a more accurate measure
for risk-averse investors.
Use: Preferred when investors are more concerned with losses rather than total
volatility.
 19

4. Fundamental Ratios for Deeper Analysis :

a. Expense Ratio :

Definition: The percentage of assets used for administrative and operational

expenses.
Use: Lower expense ratios are generally preferable, especially for passive funds,
as they directly impact returns.

b. Portfolio Turnover Ratio :

Definition: Shows how frequently the fund manager buys and sells assets within
the fund.
Use: High turnover may lead to higher transaction costs, while a low ratio may
indicate a buy-and-hold approach.

c. Information Ratio

Formula: Measures excess returns relative to the benchmark divided by the

tracking error.
Explanation: A higher information ratio implies more consistent outperformance
by the fund manager.
Use: Used to assess the skill of fund managers, especially for actively managed
funds.
 20

5. Qualitative Factors to Consider :

a. Fund Manager’s Expertise and Track Record :

Analyze the fund manager’s history, investment philosophy, and performance
across market cycles. A skilled manager can significantly influence a fund’s
performance.

b. Fund House Reputation:

Consider the fund house's stability, reputation, and governance practices.
Established fund houses may have better research resources and risk
management practices.

c. Investment Style and Strategy :

Determine if the fund is value-oriented, growth-focused, or follows a balanced
approach. Alignment with investment goals is crucial for investor satisfaction.
 21

Challenges Faced by Mutual Funds

Challenges with distribution channels distribution of the mutual fund item is

an extraordinary challenge.

1. Market Volatility :
Description: Mutual funds, especially equity funds, are exposed to market
fluctuations. Economic cycles, geopolitical issues, and global events can
significantly impact returns.
Impact: High volatility often deters retail investors, who may redeem funds in
times of panic.

2. Low Financial Literacy :

Description: Many potential investors in India lack basic financial literacy, making
it difficult for them to understand mutual fund products and benefits.
Impact: This results in low participation in mutual funds, especially in rural and
semi-urban areas.

3. Misconceptions and Lack of Trust :

Description: Many investors view mutual funds as risky and complex, often
comparing them unfavorably with fixed deposits and other traditional savings
options.
Impact: This misconception creates a barrier to adoption, particularly among
conservative investors.
 22

4. Regulatory Changes :
Description: The Securities and Exchange Board of India (SEBI) frequently updates
regulations for the mutual fund industry to protect investors.
Impact: Constant adaptation to new rules increases compliance costs for fund
houses, impacting operational efficiency and profitability.

5. High Competition :
Description: The mutual fund industry in India has a large number of players,
including established and new entrants, competing for market share.
Impact: This competition pressures fund houses to lower fees, impacting profit
margins and the ability to invest in research and technology.

6. Low SIP Penetration in Rural Areas :

Description: Although SIPs (Systematic Investment Plans) are popular in urban
areas, rural penetration remains low.
Impact: Limited access and awareness in rural India restrict growth opportunities
for mutual funds.

7. Distribution Challenges :
Description: Mutual fund distribution is still dependent on traditional channels
like banks and individual agents.
Impact: High distribution costs and limited reach in rural areas make it challenging
to expand the investor base.
 23

8. Rising Operational Costs :

Description: Expenses related to fund management, technology adoption, and
regulatory compliance are increasing.
Impact: High operational costs reduce net returns for investors and put pressure
on fund houses to optimize expenses.

9. Inconsistent Fund Performance :

Description: Not all mutual funds deliver consistent returns, with some
underperforming the benchmark or peer funds.
Impact: Inconsistent performance reduces investor confidence and can lead to
redemptions.

10. High Investor Expectations :

Description: Many investors expect high returns in a short time, failing to
appreciate the long-term nature of mutual fund investments.
Impact: Unrealistic expectations lead to dissatisfaction and premature
redemptions, impacting fund stability.

11. Investor Behavior and Biases :

Description: Investors are often influenced by emotions, engaging in herd
behavior, overconfidence, and a preference for past high performers.
Impact: Such biases cause frequent fund switching and impact investor returns
due to mistimed exits and entries.
 24

12. Taxation Policies :

Description: Changes in tax policies, such as capital gains tax on equity mutual
funds, impact investor returns.
Impact: Tax policies can discourage investments in mutual funds, especially
among those who prioritize tax-free returns.
These challenges highlight the need for innovation, investor education,
regulatory stability, and efficient fund management in India's mutual fund
industry. Addressing these issues can improve accessibility, transparency, and
performance, ultimately fostering a more robust mutual fund ecosystem.
 25

Future of Mutual Funds in INDIA

Systematic Investment Plans (SIPs) have evolved into a robust tool for
capitalizing on market opportunities, especially in today’s uncertain economic
landscape. The testament to this is the fact that in September 2024 alone, SIP
inflows reached an impressive Rs 24,509 crore, with over 66.39 lakh new SIP
accounts registered. With global markets experiencing volatility from geopolitical
tensions and changing economic policies, SIPs offer a steady approach to
investing, helping investors stay committed without trying to time the market.

India’s SIP landscape reflects this shift in investor behavior, with the
Association of Mutual Funds in India (AMFI) recording consistent and record-
breaking SIP inflows. With 98.7 million SIP accounts and monthly inflows
surpassing Rs 15,000 crore, Indian investors have shown confidence in the power
of consistent investing.

As we look ahead to 2025, here is a list of the top 5 mutual funds for SIP
that have demonstrated resilience and growth potential, catering to different
investor needs through diverse categories. Systematic Investment Plans (SIPs) are
easy to set up and manage, allowing you flexibility in terms of investment amount
and duration. By consistently investing, you tap into the power of compounding—
where your returns start earning returns, too! Plus, SIPs offer the advantage of
Rupee Cost Averaging (RCA), helping you make the most of your investments
even in volatile markets.
 26

List of mutual funds in India

 Axis Asset Management Company Ltd.

 Aditya Birla Sun Life AMC Limited
 Aditya Birla Sun Life AMC Limited
 BNP Paribas Asset Management India Private Limited
 BOI AXA Investment Managers Private Limited
 Canara Robeco Asset Management Company Limited
 DHFL Pramerica Asset Managers Private Limited
 DSP Investment Managers Private Limited 33
 Edelweiss Asset Management Limited
 Franklin Templeton Asset Management (India) Private Limited
 HDFC Asset Management Company Limited
 ICICI Prudential Asset Management Company Limited
 IDBI Asset Management Ltd.
 Kotak Mahindra Asset Management Company Limited (KMAMCL)
 LIC Mutual Fund Asset Management Limited
 27

Case Studies
Mutual Funds are financial instruments. These funds are collective
investments which gather money from different investors to invest in stocks,
short-term money market financial instruments, bonds and other securities and
distribute the proceeds as dividends. The Mutual Funds in India are handled by
Fund Managers, also referred as the portfolio managers. The Securities Exchange
Board of India regulates the Mutual Funds in India. The unit value of the Mutual
Funds in India is known as net asset value per share.
These are the entities who provide services to Mutual Funds.

SBI Mutual Fund :

SBI Mutual Fund is one of the well-recognized company in India. The
company is present in the Indian Mutual Fund industry for more than three
decades now. It was launched in the year 1987. The AMC is a Joint Venture
between SBI Bank (India's largest bank) and AMUNDI (France), one of the world's
leading fund management companies. The user base of SBI Mutual Fund is more
than 54 Lakhs. It offers schemes across various categories of funds to cater the
diverse requirements of the individuals.

HDFC Mutual Fund (AMC LTD.) :

This asset management firm is sponsored by the Housing Development
Finance Corporation Limited (HDFC Ltd.) and Standard Life Investments Ltd. The
fund house launched its first scheme in July 2001 and at the moment, offers 40
schemes .
HDFC Mutual Fund is one of the most well-known AMCs in India. It launched
its first scheme in 2000 and since then, the fund house has been showing a
promising growth. Over the years, HDFC MF has won the trust of several investors
and has placed itself amongst the top performers in India.
 28

ICICI Prudential Mutual Fund:

Launched in the year 1993, ICICI Mutual Fund is one of the biggest Asset
Management Companies in the country. The fund house offers a broad spectrum
of solutions for both corporate and retail investments. The fund house has been
maintaining a strong customer base by delivering satisfying product solutions and
innovative schemes. The AMC has witnessed substantial growth in scale, along
with an investor base of more than 1.9 million. There are various Mutual Fund
schemes offered by the AMC like equity, debt, hybrid, ELSS, liquid, etc.
Tata Mutual Fund (AMC LTD.):
Tata Mutual Fund has been operating in India for more than two decades.
Tata Mutual Fund is one of the well-reputed fund houses in India. The fund house
has been able to win the trust of millions of customers with its consistent
performances top-notch service. Tata Mutual Fund offers various categories such
as equity, debt, hybrid, liquid & ELSS, investors can invest as per their investment
needs & objectives.
Kotak Mahindra Mutual Fund (AMC LTD.):
This AMC is wholly-owned by Kotak Mahindra Bank Limited (KMBL) and
commenced its operations in December 1998. The fund house has its presence in
80 cities and offers 46 schemes in various categories.
Since its launch in the year 1998, Kotak Mutual Fund has grown into one of
the well-known AMCs in India. The company offers a variety of Mutual Fund
schemes to cater the diverse requirements of the investors. Some of the
categories of the Mutual 14 Fund includes equity, debt, hybrid, liquid, ELSS and so
on. Over 7.5 million investors are investing in Kotak MF. Investor can plan their
investments and refer to these top-performing schemes by Kotak Mutual Fund.
Aditya Birla Sun Life Mutual Fund (AMC LTD.) :
Touted as one of the 3rd largest AMCs in India in terms of domestic AAUM
(Average Assets Under Management). The firm forms a part of the Aditya Birla
Group, a Fortune 500 Indian multinational and offers 24 schemes in the debt,
equity, and hybrid categories.
 29

Birla Sun Life Mutual Fund offers solutions that can help investors achieve
their financial success. The fund house specializes in various investment
objectives like tax savings, personal savings, wealth creation, etc. They offer a
bundle of Mutual Fund schemes like equity, debt, hybrid, ELSS, Liquid Funds, etc.
The AMC is always known for its consistent performance. It holds the total AUM
of over Rs. 3,120 billion under its suite of mutual fund (excluding our domestic
FoFs), portfolio management services, Offshore and real estate offerings and 7.3
million investor folios for the quarter ending September 30, 2021. Investors
preferring to earn optimal returns can add the schemes of BSL Mutual Fund in
their portfolio.
Sundaram Mutual Fund:
Sundaram Mutual Fund offers a diverse Range of innovative financial
solutions for both retail and institutional investors. The fund house constantly
aims to bring innovative schemes in order to satisfy the diverse needs of the
customer. The AMC uses a strict risk-management policy and appropriate
research techniques to support its investment decisions.
Axis Asset Management Company Ltd.:
This AMC launched its first mutual fund in October 2009 and since then
the firm has been able to make its presence in over 90 cities in India. It manages
more than 20 lakh investor accounts and offers around 50 mutual fund schemes
in the categories of debt, equity, hybrid, ETFs (Exchange-Traded Funds), FoFs
(Fund of Funds), etc.
 30

THE DIFFERENT TYPES OF MUTUAL FUNDS SCHEMES

Schemes according to Maturity Period:

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

1. Open-ended Fund/ Scheme:

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

2. Close-ended Fund/ Scheme:

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

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.
Balanced Fund:
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. They generally invest 40-60% in equity and debt instruments.
These funds are also affected because of fluctuations in share prices in the stock
markets. However, NAVs of such funds are likely to be less volatile compared to
pure equity funds.
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4. Money Market or Liquid Fund: 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, certificates of deposit, commercial paper and inter-bank call money,
government securities, etc. Returns on these schemes fluctuate much less
compared to other funds. These funds are appropriate for corporate and
individual investors as a means to park their surplus funds for short periods.
5. Gilt Fund: These funds invest exclusively in government securities. Government
securities have no default risk. NAVs of these schemes also fluctuate due to
change in interest rates and other economic factors as is the case with income or
debt oriented schemes.
6. Index Funds: Index Funds replicate the portfolio of a particular index such as
the BSE Sensitive index, S&P NSE 50 indexes (Nifty), etc these schemes invest in
the securities in the same weight comprising of an index. NAVs of such schemes
would rise or fall in accordance with the rise or fall in the index, though not
exactly by the same percentage due to some factors known as "tracking error" in
technical terms. Necessary disclosures in this regard are made in the offer
document of the mutual fund scheme.
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INVESTMENT STRATEGIES

Systematic Investment Plan (SAP):

Under this a fixed sum is invested each month on a fixed date of a month.
Payment is made through postdated cheques or direct debit facilities. The
investor gets fewer units when the NAV is high and more units when the NAV is
low. This is called as ther benefit of Ruppe Cost Averaging (RCA)

Systematic Transfer Plan (STP):

Under this an investor invest in debt-oriented fund and give instructions to
transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual
fund.

Systematic Withdrawal Plan (SWP):

If someone wishes to withdraw from a mutual fund then he can withdraw a fixed
amount each month.
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Objectives of the study

1. Brief study on mutual fund In India.

2. Understanding the various types of Mutual Fund offered by Indian
financial Institution.
3. Benefits and drawbacks in Mutual Fund investment.
4. Risks involves in mutual fund.
5. Myths and facts about mutual funds.
6. To study origin and evaluation of mutual funds in India.
7. To review of literature, methodology and company profile of the study.
8. To study the attitude of investors towards investment in Mutual Funds.
9. To study the findings, Conclusion, suggestions and Recommendations.
10. To study the opportunities of Mutual funds in India.
11. To find the challenges of mutual funds in India
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Conclusion

Mutual funds now represent perhaps most appropriate investment

opportunity for most investors. As financial markets became more sophisticated
and complex, investors need a financial intermediary who provides the required
knowledge and professional expertise on successful investing. As the investor
always try to maximize the returns and minimize the risk. Mutual fund satisfies
these requirements by providing attractive returns with affordable risks.
Mutual funds are a popular investment avenue among investors, as
they are easy to invest in and give higher returns as compared to other traditional
asset classes such as FDs or saving bank deposits. At the same time, portfolio
diversification techniques as well as availability of the options of SIP, STP and SWP
make them a viable investment instrument. Further, you are not required to
proactively monitor your stocks, as your fund manager does the task for you. As a
result, mutual funds have become a much sought after investment avenue today
with record investments in the recent months.
Today the main task before mutual fund industry is to convert the
potential investors into the reality investors. New and more innovative schemes
should be launched from time to time so that investor’s confidence should be
maintained. All this will lead to the overall growth and development ofthe mutual
fund industry. Running a successful Mutual Fund requires complete
understanding of the peculiarities of the Indian Stock Market and also the psytche
of the small investors. This study has made an attempt to understand the financial
behavior of Mutual Fund investors in connection with the preferences of Brand
(AMC), Products, Channels etc. I observed that many of people have fear of
Mutual Fund. They think their money will not be secure in Mutual Fund. They
need the knowledge of Mutual Fund and its related terms. As the awareness and
income is growing the number of mutual fund investors are also growing.
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Distribution channels are also important for the investment in mutual

fund. Financial Advisor are the most preferred channel for the investment in
mutual fund. They can change investors’ mind from one investment option to
others. Many of investors directly invest their money through AMC because they
do not have to pay entry load. Only those people invest directly who know well
about mutual fund and its operations and those have time.
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Reference

● News Papers
● Outlook Money
● www.MONEYCONTROL.COM
● www.AMFIINDIA.COM
● www.ONLINERESEARCHONLINE.COM
● www.MUTUALFUNDSINDIA.COM