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DISSERTATION REPORT

ON
MUTUAL FUNDS INDUSTRY IN INDIA

Submitted to Maharishi Dayanand University, Rohtak


In the partial fulfillment of degree of
Master of Business Administration (MBA)
(Session 2005-2007)

Under guidance of: Submitted By-


Ms Bhawna sharma YOGESH KHURANA
MBA (Final)
Reg. No: ________

____________________________________________________________
D.A.V. Institute of Management, Faridabad
ACKNOWLEDGEMENT

Concentration, dedication, hard work and application are essential but not the only factor to achieve
the desired goal. Those must be supplemented by the guidance assistance and cooperation of experts to
make it success.
I am extremely grateful to my institute for providing me the opportunity to undertake this research
project in the prestigious field.
With profound pleasure, I extend my extreme sincere sense of gratitude and indebtedness to my
faculty for extensive and valuable guidance that was always available to me ungrudgingly and
instantly, which help me complete my project without difficulty.
I express my deep and sincere gratitude to Ms Bhawna Sharma, faculty member for providing me first
hand knowledge about other related subjects.
Last but not the least I am indebted to Mr. Sharma, Director of our institute without whose sincere
gratitude this project would not have been possible.

(YOGESH KHURANA)
PREFACE

Practical exposure imbibes an integral part of management studies. One cannot rely merely upon the
theoretical knowledge. However class lectures make the functional concepts clear, but these must be
correlated with practical projects.
I consider myself lucky to get the project in India’s best bank. It was a great learning experience. It
helped me to get a practical insight into how to conduct research and to make my concepts clearer.
In this project I have tried to give comprehensive picture of details of my project. Learning is like
eating. It is not how much one eat that matters, what counts is how much you digest. Knowledge is
potential power, wisdom is real power.
Today’s economy has caused business to rethink their technology decisions. Budgets have been cut
and priorities have been reset. Companies can impact their bottom line tremendously by gathering
necessary information. This dissertation is concerned with the study mutual funds industry in India
During my tenure of dissertation I studied about mutual funds industry in India and deeply analyzed its
various aspects. This dissertation shows the very aspect undertaken in context to “MUTUAL FUNDS
INDUSTRY IN INDIA”
DECLARATION

I, Yogesh Khurana Enrolment No. 05-DAVM-124 No. Class MBA of DAVIM hereby declares that
the project entitled “Mutual fund industry in India” is an original work and the same has not been
submitted to any other institution for the award of any other Degree. The interim report was presented
to the supervisor on 12th March 2007. The feasible suggestions have been duly incorporated in
consultation with the supervisor.

Countersigned

Signature of the supervisor signature of the candidate

Forwarded by:

Director/Principal of the institute


INTRODUCTION OF THE STUDY

MUTUAL FUNDS
A mutual fund is a form of collective investment that pools money from many investors and invests
the money in stocks, bonds, short-term money market instruments, and/or other securities. In a mutual
fund, the fund manager trades the fund's underlying securities, realizing capital gains or loss, and
collects the dividend or interest income. Your search for Mutual Fund India information follows. The
investment proceeds are then passed along to the individual investors. The value of a share of the
mutual fund, known as the net asset value (NAV), is calculated daily based on the total value of the
fund divided by the number of shares purchased by investors.

Mutual funds are financial intermediaries, which collect the savings of investors and invest them in a
large and well diversified portfolio of securities such as money market instruments, corporate and
government bonds and equity shares of joint stock companies. Mutual funds can survive and thrive
only if they can live up to the hopes and trusts of their individual members .The project deals with the
structure of mutual funds industry in India and its constituents. It also classified the mutual fund
schemes and describes the major players in the industry. The project includes the analysis of
performance of 7 mutual fund companies. Which comprises of 3 private players, 3 public and UTI.The
Mutual fund companies have been selected on the basis of their AUM (ASSETS UNDER
MANGEMENT)
• COMPANIES HAVING PRIVATE OWNERSHIP
1. Birla Sun Life Mutual Fund
2. Franklin Templeton Mutual Fund
3. Prudential ICICI Mutual Fund

• COMPANIES HAVING PUBLIC OWNERSHIP


4. Canbank Mutual Fund
5. LIC Mutual Fund
6. SBI Mutual Fund
OBJECTIVES OF STUDY

 To study about various schemes of mutual funds and bancassurance pattern in India.
 To study the recent and emerging trends in Mutual Fund Market, and various banks in
phenomenon called bancassurance.
 To analyze the performance of major private and public players in Mutual Funds Industry and
increase in profitability of banks through bancassurance.
 Insurance distribution pattern in India and swot analysis of bancassurance.
RESEARCH METHODOLGY

The whole study is based upon primary data. Therefore, information has been collected from various
magazines, journals, websites, and bulletins.

RESEARCH DESIGN

Scope of study:

The scope of any study should be to cover as large a population as possible to

cover any errors. But due to time and money constraints, this study is limited to

Ambala only. The study involves an interaction with the consumers An effort was

put to cover every dealer in the city and obtain correct and relevant information

DATA COLLECTION

Collection of data is the critical point in the research process. There are two basic methods of data

collection:

• Primary method

• Secondary method

For my analysis I have selected the primary method of data collection i.e.

i. Questionnaire

ii. Interview method

iii. Telephone interview


DATA COLLECTION TECHNIQUE:

 QUESTIONNAIRES

 INTERVIEWS

SAMPLING DESIGN

Sampling unit:

 INDIVIDIUAL INVESTORS

Sampling size:

 100

Sampling techniques:

 I use many sampling techniques like

• Simple random sampling

• Stratified random sampling

• Judgment sampling
MUTUAL FUND-AN INTRODUCTION

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial
goal. The money thus collected is then invested in capital market instruments such as shares,
debentures and other securities. The income earned through these investments and the capital
appreciation realised are shared by its unit holders in proportion to the number of units owned by
them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities at a relatively low
cost. A mutual fund is simply 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 pooled money into specific securities (usually stocks or bonds).
When you invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become
a shareholder of the fund.
DEFINITION:

A mutual fund is a trust that pools the savings of a number of investors who

shares a common financial goal. The money thus collected is then invested in

capital market instruments such as shares, debentures and other securities. The

income earned through these investments and the capital appreciations realized

are shared by its unit holders in proportion to the number of units owned by them.

“…. A mutual fund is a company that brings together money from

many people and invest in a stock, bonds, or other asset the funds

owns are known as its portfolio. Each investor in the fund owns

share which represents a part of these holdings….”

- The U.S. Securities and Exchange Commission.


ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below

illustrates the organizational set up of a mutual fund:

Mutual Fund Operations Flow Chart

The flow chart below describes broadly the working of a Mutual Fund:
THE ADVANTAGES OF MUTUAL FUNDS

The advantages of investing in a Mutual Fund are:


• Professional Management
• Diversification
• Convenient Administration
• Return Potential
• Low Costs
• Liquidity
• Transparency
• Flexibility
• Choice of schemes
• Tax benefits

Professional Management - The primary advantage of funds is the professional management of your
money. Investors purchase funds because they do not have the time or the expertise to manage their
own portfolio. A mutual fund is a relatively inexpensive way for a small investor to get a full-time
manager to make and monitor investments.

Diversification - By owning shares in a mutual fund instead of owning individual stocks or bonds,
your risk is spread out. The idea behind diversification is to invest in a large number of assets so that a
loss in any particular investment is minimized by gains in others.

Economies of Scale - Because a mutual fund buys and sells large amounts of securities at a time, its
transaction costs are lower than you as an individual would pay.

Liquidity - Just like an individual stock, a mutual fund allows you to request that your shares be
converted into cash at any time.
Simplicity - Buying a mutual fund is easy! Pretty well any bank has its own line of mutual funds, and
the minimum investment is small. Affordability: With many mutual funds, you can begin buying
units with a relatively small amount of money Some mutual funds also let you buy more units on a
regular basis with even smaller installments.

Flexibility: Many mutual fund companies administer several different mutual funds and allow you to
switch between funds within their 'fund family' at little or no charge.

Performance Monitoring: The value of most mutual funds is reported daily in the financial press and
on many Internet sites, allowing you to continually monitor the performance of your investment.

DISADVANTAGES OF MUTUAL FUNDS:

Professional Management- Did you notice how we qualified the advantage of professional
management with the word "theoretically"? Many investors debate over whether or not the so-called
professionals are any better than you or I at picking stocks.

Costs - Mutual funds don't exist solely to make your life easier--all funds are in it for a profit. The
mutual fund industry is masterful at burying costs under layers of jargon.

Dilution - It's possible to have too much diversification (this is explained in our article entitled "Are
You Over-Diversified?"). Because funds have small holdings in so many different companies, high
returns from a few investments often don't make much difference on the overall return.