A project report on mutual fund a safer investment

“Mutual fund a safer investment

INDEX

PART I

1. Executive Summary
2. Introduction to Mutual Fund
3. Industrial background.
4. Company Profile

PART II

5. Research Design / Methodology.
a. Project Idea
b. Objectives
c. Duration of the Project
d. Need for study
e. Research Methodology
f. Proposed outcome
g. Benefits/ Limitations of Mutual Fund

6. Recommendation
7. Conclusion
8. Bibliography.

Babasbapatilfreepptmba.com Page 1


Executive Summary

Mutual Fund investment is the fastest growing investment industry in

the present scenario and it needs to be properly supported with educating

the investor community which is not aware of Mutual Fund as it is of

other forms of investment patterns like those of Fixed Deposits, Savings

Accounts, Postal Deposits, Recurring Deposits, Insurance plans, Stocks

etc.

The strength of ViVi securities lies in the qualitative manpower. Indian

Mutual Fund investment is picking up fast, which has already happened in

countries like US, U.K, France etc., the recent trends have shown that

private ltd companies are doing far better as compared to Government PSU’s

in India which was not the case few years earlier and this implies that people

are more attracted towards Mutual Funds investment as compared to other

form of the investments.



Research Design

Organization:

ViVi Securities, Belgaum

Nature of Business:

Shares and Stock Broking services.

Topic of the study:

“Mutual fund a safer investment”

Need for the Study:

 Association of mutual fund in India

 Asset Management company

Objectives of the study:

 Organisation study.
 To understand the concept of Mutual fund, its working and various types of
mutual fund.
 To study the performance of various schemes.
 To compare the performance of four mid cap funds.
 To study the risk involved in MFs



Research Methodology:

Study of mutual fund market

 Collection of data:

 Secondary data: data Fact sheets of SBI, Kotak, Tata and Sundaram Mutual
Funds collected through various web-sites, Magazines, Journals and newspaper

 Analysis of data

 Preparation of project report

Scope of the project
The scope of the project is limited to analysis of mid cap mutual funds.

Proposed Outcome:

 Avoids hassle free investments

 Avoids time consumption for research



Introduction to Mutual Fund

A mutual Fund is a common pool of money into which investors place their

contributions that are to be invested in accordance with a stated objective.

The ownership of the fund is thus joint or “mutual”; the fund belongs to all

investors. Investor bears in the same proportion as the amount of the

contribution make a single investor’s ownership of the fund to the total

amount of the fund.

A mutual fund uses the money collected from investors to buy those assets,

which are specifically permitted by its stated investment objective. Thus an

equity fund would buy mainly equity assets — ordinary shares, preference

shares, warrants, etc. A bond fund would mainly buy debt instruments such

as debentures, bonds or government securities. It is these assets, which are

owned by the investors in the same proportion as their contribution bears to

the total contributions of all investors put together.

When an investor subscribes to a mutual fund, he or she buys a part of the

assets or the pool of funds that are outstanding at that time. It is no different

from buying “shares” of a joint stock company, in which case the purchase

makes the investor a part owner of the company and its assets.



TYPES OF MUTUAL FUNDS

Mutual funds can be classified in different ways according to their
investment objectives, their constitution, as follows:

 Equity Fund
 Debt / Income Funds
 Balanced Funds
 Liquid / Money Market Funds
 Closed Ended funds
 Open Ended Funds
 Load Funds
 No Load Funds



CLASSIFICATION BASED ON INVESTMENT OBJECTIVE:

Funds can be classified according to their investment objectives on 4 main
categories as they best reflect the risk and returns associated with investing
in mutual funds.

1. EQUITY FUNDS:

Equity funds invest a major portion of their corpus in equity shares issued by companies,

acquired directly in initial public offerings or through the secondary market. Equity funds

would be exposed to the equity price fluctuation risk at the market level, at the industry

or sector level and at the company-specific level. Equity funds, Net Asset Values

fluctuate with all these price movements these price movements are caused by all kinds

of external repayment as in case of debt instruments. Hence, Equity Funds are generally

considered at the higher end of the risk spectrum among all funds available in the market.

On the other hand, unlike debt instruments that offer fixed amounts of repayments

equities can appreciate in value in line with the issuer’s earnings potential, and so offer

the greatest potential for growth in capital.

Equity Funds adopt different investment strategies resulting in different levels of risk.

Hence, they are generally separated into different types in terms of their investment

styles. Below are some of the major types of equity funds, arranged in order of higher to

lower risk level

a. Aggressive Growth Funds

b. Growth Funds



c. Specialty Funds

1. Sector Funds

2. Offshore Funds

3. Small-Cap Equity Funds

4. Option Income funds

All AMC’s have floated this type of funds. Prominent examples include JM Equity Fund,

Morgan Stanley Growth Fund, Mastergain 92, Birla Advantage Fund, Sun F&C Value

Fund, Kothari Pioneer Prima fund etc.

2. DEBT/INCOME FUNDS:

Debt Funds invest in debt instruments issued not only by governments, but also by

private companies, banks and financial institutions and other entities such as

infrastructure companies/utilities. By investing in debt, these funds target low risk and

stable income for the investor as their key objectives. However, as compared to the

money market funds, they do have a higher price fluctuation risk, since they invest in

longer-term securities. Similarly, as compared to Gilt Funds, general debt funds do have a

higher risk of default by their borrowers.

1. Debt funds are largely considered as Income Funds as they do not target capital

appreciation, look for high current income, and therefore distribute a substantial part of

their surplus to investors. Income funds that target returns substantially above market

levels can face more risks. Different investment objectives set by the fund managers

would result in different risk profiles.



3. BALANCED FUNDS:

These are funds that invest both in equity shares and income bearing instruments.

Then idea is to reduce the volatility of the fund while providing some upside for capital

appreciation. There is some flexibility in changing the asset composition between equity

and debt and the fund managers exploit this to buy the best asset class at each time.

Prominent balanced funds include JM Balanced Fund, Alliance 95, Tata Twin Option

Balanced and GIC balanced funds. Govt. has announced special concessions for funds

with more that 50% of the assets invested in equity. So for next three years the dividend

will be taxed neither in the hands of the investor nor in the hands of the funds.

4. LIQUID / MONEY MARKET FUNDS:

Often considered to be at the order of risk level, Money Market Funds invest in securities
of a short-term nature, which generally means securities of less than one-year maturity.
The typical, short term, interest bearing instruments these funds invest in include
Treasure Bills issued by Governments, Certificates of Deposit issued by banks and
Commercial Paper issued by companies. In India, Money Market Mutual Funds also
invests in the inter bank call money market.
The major strengths of money market funds are the liquidity and safety of principal that
the investors can normally expect from short-term investments. These funds invest in
highly liquid money market instruments. They have emerged as an alternative for savings
and short term fixed deposit accounts. Regulations for managing liquid funds are more
flexible than those for managing money market funds. Hence they are more popular than
the latter. Eg. Birla Cash Plus, Prudential Liquid Fund, Templeton India Liquid fund, UTI
fund, UTI Money Market Funds, JM Liquid fund.



CLASSIFICATION BASED ON CONSTITUTION OBJECTIVE:

1. OPEN END-CLOSED END FUNDS:

An open-end fund is one that has units available for sale and repurchase at all time. An
investor can buy or redeem units from the fund itself at a price based on the Net Asset
Value (NAV) per unit. NAV per unit is obtained by dividing the amount of the market
value of the fund’s assets (plus accrued income minus the fund’s liabilities) by the
number of units outstanding. The number of units outstanding goes up or down every
time the fund issued new units outstanding. The number of units outstanding goes up or
down every time the fund issued new units or repurchases existing units. In other words,
the ‘unit capital’ of an open-end mutual fund is not fixed but variable. The fund size and
its total investment amount go up if more new subscriptions come in from new investors
than redemptions by existing investors; the fund shrinks when redemptions of units
exceed fresh subscriptions.

Note that an open-end fund is not obliged to keep selling/issuing new units at all times,
and many successful funds stop issuing further subscriptions from new investors after
they reach a certain size and think they cannot manage a larger fund without adversely
affecting profitability. On the other hand, an open-end fund rarely denies to its investors
the facility to redeem existing units, subject to certain obvious conditions. For example,
redemption is only possible after the investor’s cheque for initial subscription has cleared,
or until after any “look-in period” specified by the fund is over, or only after the specified
redemption period for collection of funds.

Unlike an open-end fund, the ‘unit capital’ of a closed-end fund is fixed, as it makes a
one-time sale of a fixed number of units. Later on, unlike open-end funds, closed-end
funds do not allow investors to buy or redeem units directly from the funds. However, to
provide the much closed-end funds get themselves listed on a stock exchange. Trading
through a stock exchange enables investors to buy or sell units of a closed-end mutual


fund from each other, through a stockbroker, in the same fashion as buying or selling
shares of a company. The fund’s units may be traded at a discount or premium to NAV
based on investor’s perceptions about the fund’s future performance and other market
factors affecting the demand for or supply of the fund’s units.

2. LOAD AND NO-LOAD FUNDS:

Marketing of a new mutual fund scheme involves initial expenses. These expenses may
be recovered from the investors in different ways at different time. Three usual ways in
which a fund’s sales expenses may be recovered from the investors are:
I. At the time of investor’s entry into the fund/scheme, by deducting a specific amount
from his initial contribution, or
2. By charging the fund/scheme with a fixed amount each year, during the stated number
of years, or
3. At the time of the investor’s exit from the fund/scheme, by deducting a specified
amount from the redemption proceeds payable to the investor.
These charges made by the fund managers to the investors to cover distribution expenses
are often called a “front-end or entry-load”. This is the first case above. The load amount
charged to the scheme over a period of time is called a “deferred load”. This is the third
case above. Some funds may also charge different amount of loads to the investors,
depending upon how many years the investor has stayed with the fund; the longer the
investor stays with the fund, less the amount of “exit load” he is charged. This is called
“contingent deferred sales charge”.
Note that the front-end load amount is deducted from the initial contribution/purchase
amount paid by the incoming investor, thus reducing his initial investment amount.
Similarly exit loads would reduce the redemption proceeds paid out to the outgoing
investor. If the sales charge is made on a deferred basis directly to the scheme, the
amount of the load may not be apparent to the investor, as the scheme’s NAV would
reflect the net amount after the deferred load.



Funds that charge front-end, back-end or deferred loads are called load funds. Funds that
make no such charges or loads for sales expenses are called no-load funds.
In India, SEBI has defined a “load’ as the one-time fee payable by the investor to allow
the fund to meet initial issue expenses including brokers’/agents/distributors’
commissions, advertising and marketing expenses. SEBI definition of a load fund would
include all funds that charge a front-end load, which is in line with the internationally
used definition. However, SE would consider a fund to be “a no-load” fund, if an AMC
absorbs these initial marketing expenses and does not charge the fund-a situation that is
somewhat special to India and not widely prevalent elsewhere. Internationally, a fund,
even when it does not make a front-end load, would still be considered a load fund, if it
charges an exit load or a deferred sales load.



Industrial Background

Concept of Mutual Fund:
Mutual Fund is an American Concept and the terms “Investments Trust”, Investment
Company”, “Mutual Fund”, “Money Fund” etc. are being used interchangeably in
American Literature. Investment Company as defined in the US Investment company Act
1940 is any issuer that is or holds out as being engaged primarily or proposes to engage
primarily in the business of investing, reinvesting or trading in securities, is engaged or
proposes to the business of issuing face amount of certificates of the installment type or
has been engaged in such business and has any such certificates outstanding; is engaged
or proposes to engage in the business of investing, reinvesting, owning, holding or
trading in securities and bounds or proposes to acquire investment securities having a
value exceeding 40% of the value of such issuer’s total assets(exclusive of government of
securities and a cash items) on an unconsidered basis.

The profits or losses are shared by the investors in proportion to their
investments. The mutual fund normally comes out with number of schemes
with different objectives which are launched from time to time. A Mutual



fund is required to be registered with Securities and Exchange Board of
India (SEBI) which regulates securities markets before it can collect funds
from the public.

As the countries first and foremost mutual fund, Unit Trust of India has
played significant supportive role in this process. As a pioneering garner
larger household savings. It responded innovatively to the needs of
investment and income goals of different strata of society. Under one roof
there are schemes for every one in the family, from the newborn child to old
and retired individuals. The Unit Trust has lunched schemes to cater to
varying notions of savers. Thus, there are saving schemes for those who
prefer safe and steadily rising returns. There are also high growth schemes
for those who can wait and are prepared to take some risk with UTI

With a view to providing a wider choice to small investors, the Government
amended Banking Regulation Act to permit commercial banks to launch
mutual fund India. Considering the fact that the household sector has a
dominant share in the aggregate net savings of the economy, banks in their
quest for mobilizing the community savings into productive avenues have
found in mutual funds a lucrative opportunity.



COMPANY PROFILE

 FOUNDATION OF VENTURA

Founded in 1994 by Chartered Accountants Sajid Malik and Hemant Majethia.
They are the first generation entrepreneurs and are the principal promoters of Ventura. A
dedicated and efficient team of senior managers assists Mr. Majethia the CEO of the
company.

ABOUT VENTURA

Ventura is one of the leading Commodity and Financial Futures Brokers with a
strong and established market reputation spanning over 12 years.

Ventura Securities Ltd., is a leading stock broking organization promoted and
managed by professionals having exceptional knowledge of Capital Market. We
recognize in our operating philosophy that the key to our business is service, which will
result in total satisfaction to our clients.

Ventura is a full-service domestic brokerage house providing value-based advisory
services to Institutions (Foreign and Domestic), High Net Worth and Retail Investors
with its core area of operations being stock-broking. We have considerable strength and
domain knowledge in the booming derivatives market.

Ventura has achieved a reputation for innovative and unbiased research along
with excellent technical analysis and execution capabilities. Not only has Ventura
provided value-added services to the gamut of India-based funds, it has also developed
the advice-driven business of high net worth and corporate clients.

PHILOSOPHY

To propel corporate growth we have clear focus to service our clients with
undivided attention hence, we do not carry on any proprietary trading or investment.

Vision
To create an all India network of brokers’ relationship and build the distribution
strength of Ventura.



TRACK RECORD

In a short time span we have achieved substantial success in its core business
activity. We owe our success to our unique business building strategy plan, components
of which are:

 A differentiated positioning
 Selective geographic spread
 Flexible and lean operating structure
 High quality people

Why ventura

Our services are offered under total confidentiality and integrity with the sole
purpose of maximizing returns for our clients

We operate on an alert and well-defined system in risk management and settlement
mechanism. Such as EXPERTISE

 Current news and views, analysis, trends during market hours, Daily newsletter
and its implications on events affecting the economy and stock markets, Long-
term investment avenues, trading strategy on Index and specific companies and
Risk averse investment through derivative product mix.

 Live market commentary through - “Pointer”- customised on line chat room
mainly to cater to upcountry outlets, a pioneering effort and a runaway successful
product.
 Derivatives - Trading strategies in Future and Options; straddle calls to minimize
risks and maximize returns.
 On-line trading and Depository services, to cater our retail clients, are on the anvil
and should commence shortly.
 Research - An integrated system of research approach is to constantly look out for
value in the market place based on intrinsic worth of the Company / Industry with
necessary skills to analyse markets indices and stocks from a technical
perspective to feed our army of retails clients.
 Networking: Regular touch with Institutional Investors (Foreign and Domestic) to
gauge, understand and interpret markets sentiments. This we see as a value
addition for our outstation clients who are very far away from the fulcrum of
action.

Products and services
We aim to add value and provide our clients with an unrivalled and specialised
service which reflects the expertise and efficiency of our dedicated support teams.



Expertise and innovation

We put our clients' needs first and extend a highly personalised service through dedicated
dealers. Our combination of service, technology, flexibility and experience makes our
back-office second-to-none.

Information and research

No broking house is complete without the ability to provide detailed, relevant and timely
information and research. Our research department produces reports covering all of the
major exchanges and products.

Offerings

 Daily pointer
 Sms facility
 Client preview site
 Demat services
 Wider networking
 Weekly report and product notes
 Internet online trading

About ViVi Securities, Belgaum Branch



The Belgaum branch was started on 21st June 2004 with the capital of Rs 5
lakh. And the average volumes 2.5 to 3 crores and it has around 700
customers at present and its advertisement is mainly word of mouth.

Objectives

 Good services
 Proper guidance to investor
 Maximize its returns

This branch offers trading in

 NSE

 BSE

 Derivatives

 Mutual fund

 Commodity exchange

 Demat services



MUTUAL FUND STRUCTURE

The structure of mutual fund consists of

Sponsor

Sponsor is the person who acting alone or in combination with another body
corporate establishes a mutual fund. Sponsor must contribute at least 40% of
the net worth of the Investment Managed and meet the eligibility criteria
prescribed under the Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996.The Sponsor is not responsible or liable for any loss or
shortfall resulting from the operation of the Schemes beyond the initial
contribution made by it towards setting up of the Mutual Fund.



Trust

The Mutual Fund is constituted as a trust in accordance with the provisions
of the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered
under the Indian Registration Act, 1908.

Trustee

Trustee is usually a company (corporate body) or a Board of Trustees (body
of individuals). The main responsibility of the Trustee is to safeguard the
interest of the unit holders and ensure that the AMC functions in the interest
of investors and in accordance with the Securities and Exchange Board of
India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed
and the Offer Documents of the respective Schemes.

Asset Management Company (AMC)

The Trustee as the Investment Manager of the Mutual Fund appoints the
AMC. The AMC is required to be approved by the Securities and Exchange
Board of India (SEBI) to act as an asset management company of the Mutual
Fund. Atleast 50% of the directors of the AMC are independent directors
who are not associated with the Sponsor in any manner. The AMC must
have a net worth of atleast 10 crore at all times.

Registrar and Transfer Agent

The AMC if so authorized by the Trust Deed appoints the Registrar and
Transfer Agent to the Mutual Fund. The Registrar processes the application
form; redemption requests and dispatches account statements to the unit
holders. The Registrar and Transfer agent also handles communications with
investors and updates investor records.



Benefits of Mutual Fund investment

Professional Management
Mutual Funds provide the services of experienced and skilled professionals, backed by a
dedicated investment research team that analyses the performance and prospects of
companies and selects suitable investments to achieve the objectives of the scheme.

Diversification
Mutual Funds invest in a number of companies across a broad cross-section of industries
and sectors. This diversification reduces the risk because seldom do all stocks decline at
the same time and in the same proportion. You achieve this diversification through a
Mutual Fund with far less money than you can do on your own.

Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such
as bad deliveries, delayed payments and follow up with brokers and companies. Mutual
Funds save your time and make investing easy and convenient.

Return Potential
Over a medium to long-term, Mutual Funds have the potential to provide a higher return
as they invest in a diversified basket of selected securities.

Low Costs
Mutual Funds are a relatively less expensive way to invest compared to directly investing
in the capital markets because the benefits of scale in brokerage, custodial and other fees
translate into lower costs for investors.

DEMERITS OF INVESTMENTS IN MUTUAL FUNDS

No control over the costs:

Since investors do not directly monitor the funds operations they cannot control the costs
effectively. Regulators therefore usually limit the expenses of mutual funds.

No tailor-made portfolios:

Mutual fund portfolios are created and marketed by AMC’s, into which investors invest.
They cannot create tailor made portfolios.

Managing a portfolio of funds:

As the number of mutual funds increases, in order to tailor a portfolio for him, an investor
may be holding a portfolio of funds, with the costs of monitoring them and using them,
being incurred by him.



Benefits of investing in Mutual Funds:
1. Qualified and experienced professionals manage Mutual Funds.
Generally, investors, by themselves, may have reasonable capability,
but to assess a financial instrument a professional analytical approach
is required in addition to access to research and information and time
and methodology to make sound investment decisions and keep
monitoring them.
2. Since Mutual Funds make investments in a number of stocks, the
resultant diversification reduces risk. They provide the small investors
with an opportunity to invest in a larger basket of securities.
3. The investor is spared the time and effort of tracking investments,
collecting income, etc. from various issuers, etc.
4. It is possible to invest in small amounts as and when the investor has
surplus funds to invest.
5. Mutual Funds are registered with SEBI. SEBI monitors the activities
of Mutual Funds.
6. In case of open-ended funds, the investment is very liquid as it can be
redeemed at any time with the fund unlike direct investment in
stocks/bonds.

Risks involved in investing in Mutual Funds:


Mutual Funds do not provide assured returns. Their returns are linked to their
performance. They invest in shares, debentures and deposits. All these investments
involve an element of risk. The unit value may vary depending upon the performance of
the company and companies may default in payment of interest/principal on their
debentures/bonds/deposits. Besides this, the government may come up with new
regulation which may affect a particular industry or class of industries. All these factors
influence the performance of Mutual Funds.

Market Risk
Sometimes prices and yields of all securities rise and fall. Broad outside influences
affecting the market in general lead to this. This is true, may it be big corporations or
smaller mid-sized companies. This is known as Market Risk. A Systematic Investment
Plan (“SIP”) that works on the concept of Rupee Cost Averaging (“RCA”) might help
mitigate this risk.

Political/Government Policy Risk

Changes in government policy and political decision can change the investment
environment. They can create a favorable environment for investment or vice versa

Inflation Risk
Inflation is the loss of purchasing power over time. A lot of times people make
conservative investment decisions to protect their capital but end up with a sum of money
that can buy less than what the principal could at the time of the investment. This
happens when inflation grows faster than the return on your investment. A well-
diversified portfolio with some investment in equities might help mitigate this risk.

Interest Rate Risk
In a free market economy interest rates are difficult if not impossible to predict. Changes
in interest rates affect the prices of bonds as well as equities. If interest rates rise the
prices of bonds fall and vice versa. Equity might be negatively affected as well in a rising
interest rate environment. A well-diversified portfolio might help mitigate this risk.

Liquidity Risk


Liquidity risk arises when it becomes difficult to sell the securities that one has
purchased. Liquidity Risk can be partly mitigated by diversification, staggering of
maturities as well as internal risk controls that lean towards purchase of liquid securities.

Credit Risk
The debt servicing ability (may it be interest payments or repayment of principal) of a
company through its cash flows determines the Credit Risk faced by you. This credit risk
is measured by independent rating agencies like CRISIL who rate companies and their
paper. A ‘AAA’ rating is considered the safest whereas a ‘D’ rating is considered poor
credit quality. A well-diversified portfolio might help mitigate this risk.

The different plans that Mutual Funds offer:
Growth Plan
A growth plan is a plan under a scheme wherein the returns from investments are
reinvested and very few income distributions, if any, are made. The investor thus only
realises capital appreciation on the investment. This plan appeals to investors in the high
income bracket. Under the dividend plan, income is distributed from time to time. This
plan is ideal to those investors requiring regular income.

Automatic Investment Plan
Under the Automatic Investment Plan (AIP) also called Systematic Investment Plan
(SIP), the investor is given the option for investing in a specified frequency of months in
a specified scheme of the Mutual Fund for a constant sum of investment. AIP allows the
investors to plan their savings through a structured regular monthly savings program.

Entry/Exit Load:
A Load is a charge, which the AMC may collect on entry and/or exit from a fund. A load
is levied to cover the up-front cost incurred by the AMC for selling the fund. It also
covers one time processing costs. Some funds do not charge any entry or exit load. These
funds are referred to as 'No Load Fund'. Funds usually charge an entry load ranging
between 1.00% and 2.00%. Exit loads vary between 0.25% and 2.00%.



ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI) :

With the increase in mutual fund players in India, a need for mutual fund
association in India was generated to function as a non-profit organization. Association of
Mutual Funds in India (AMFI) was incorporated on 22nd August, 1995.
AMFI is an apex body of all Asset Management Companies (AMC) which has
been registered with SEBI. Till date all the AMCs are that have launched mutual fund
schemes are its members. It functions under the supervision and guidelines of its Board
of Directors.
Association of Mutual Funds India has brought down the Indian Mutual Fund
Industry to a professional and healthy market with ethical lines enhancing and
maintaining standards. It follows the principle of both protecting and promoting the
interests of mutual funds as well as their unit holders.

The objectives of Association of Mutual Funds in India :
The Association of Mutual Funds of India works with 30 registered AMCs of the
country. It has certain defined objectives which juxtaposes the guidelines of its Board of
Directors. The objectives are as follows:

• This mutual fund association of India maintains high professional and ethical
standards in all areas of operation of the industry.

• It also recommends and promotes the top class business practices and code of
conduct which is followed by members and related people engaged in the
activities of mutual fund and asset management. The agencies who are by any
means connected or involved in the field of capital markets and financial services
also involved in this code of conduct of the association.
• AMFI interacts with SEBI and works according to SEBI’s guidelines in the
mutual fund industry.
• Association of Mutual Fund of India does represent the Government of India, the
Reserve Bank of India and other related bodies on matters relating to the Mutual
Fund Industry.



• It develops a team of well qualified and trained Agent distributors. It implements
a programme of training and certification for all intermediaries and other engaged
in the mutual fund industry.
• AMFI undertakes all India awareness programme for investors in order to
promote proper understanding of the concept and working of mutual funds.
• At last but not the least association of mutual fund of India also disseminate
information’s on Mutual Fund Industry and undertakes studies and research either
directly or in association with other bodies.

Name of the Asset Management Company:

Name of the Asset
Website
Management Company
ABN AMRO Asset http://www.assetmanagement.abnamro.co.in/



Management (India) Ltd.
Benchmark Asset
http://www.benchmarkfunds.com/
Management Co. Pvt. Ltd.
Birla Sun Life Asset
http://www.birlasunlife.com/
Management Co. Ltd.
BOB Asset Management Co.
http://www.bobmf.com/
Ltd.
Canbank Investment
http://www.canbankmutual.com/
Management Services Ltd.
DBS Cholamandalam Asset
http://www.dbscholamutualfund.com/
Management Ltd.
Deutsche Asset Management
http://www.dws-india.com/
(India) Pvt. Ltd.
DSP Merrill Lynch Fund
http://www.dspmlmutualfund.com/
Managers Ltd.
Escorts Asset Management
http://www.escortsmutual.com/
Ltd.
Fidelity Fund Management
fidelity.co.in
Pvt.Ltd.
Franklin Templeton Asset
http://www.franklintempletonindia.com/
Management (India) Pvt. Ltd.
HDFC Asset Management Co.
http://www.hdfcfund.com/
Ltd.
HSBC Asset Management
http://www.hsbcinvestments.co.in/
(India) Pvt. Ltd.
ING Investment Management
http://www.ingvysyamf.com/
(India) Pvt. Ltd.
JM Financial Asset
http://www.jmfinancialmf.com/
Management Pvt. Ltd.

Jeevan Bima Sahayog Asset
http://www.licmutual.com/
Management Co. Ltd.
Kotak Mahindra Asset
http://www.kotakmutual.com/
Management Co. Ltd.
Lotus India Asset http://www.lotusindiaamc.com/


Morgan Stanley Investment
http://www.msgfindia.com/
Management Pvt. Ltd.
Principal Pnb Asset
http://www.principalindia.com/
Prudential ICICI Asset
http://www.pruicici.com/
Management Co. Ltd.
Quantum Asset Management
http://www.quantumamc.com/
Co. Pvt. Ltd.
Reliance Capital Asset
http://www.reliancemutual.com/
Management Ltd.
Sahara Asset Management Co.
http://www.saharamutual.com/
Pvt. Ltd.
SBI Funds Management Pvt.
http://www.sbimf.com/
Ltd.
Standard Chartered Asset
http://www.standardcharteredmf.com/
Sundaram BNP Paribas Asset
http://www.sundarambnpparibas.in/
Management Co. Ltd.
Tata Asset Management Ltd. http://www.tatamutualfund.com/
Taurus Asset Management Co.
http://www.taurusmutualfund.com/
Ltd.
UTI Asset Management Co.
http://www.utimf.com/
Pvt. Ltd.

Mutual Fund Globally

 The money market mutual fund segment has a total corpus of $ 1.48 trillion in the
U.S. against a corpus of $ 100 million in India.

 Out of the top 10 mutual funds worldwide, eight are bank- sponsored. Only
Fidelity and Capital are non-bank mutual funds in this group.



 In the U.S. the total number of schemes is higher than that of the listed companies
while in India we have just 277 schemes

 Internationally, mutual funds are allowed to go short. In India fund managers do
not have such leeway.

 In the U.S. about 9.7 million households will manage their assets on-line by the
year 2003, such a facility is not yet of avail in India.

 On- line trading is a great idea to reduce management expenses from the current 2
% of total assets to about 0.75 % of the total assets.

Changes Taken Place

 Lower Costs: As per SEBI regulations, bond funds can charge a maximum of
2.25% and equity funds can charge 2.5% as administrative fees. Therefore if the
administrative costs are low, the benefits are passed down and hence Mutual
Funds are able to attract mire investors and increase their asset base.

 Better Advice: Mutual funds could provide better advice to their investors
through the Net rather than through the traditional investment routes. Direct
dealing with the fund could help the investor with their financial planning.

 New investors would prefer online: Mutual funds can target investors who are
young individuals and who are Net savvy, since servicing them would be easier
on the Net.

Future of Mutual Fund

Mutual Funds sponsored by various public sector financial institutions have made
considerable dent particularly in the sphere of resource mobilization during the short
period of their existence. This they have been able to achieve through launching of
several scheme offering triple benefits of income, liquidity and growth. However, they
have so far confined their area of operations to urban areas leaving vast savings
potentiality in rural hinterlands untapped. By beneficences of rural a5reas and introducing



them about the benefits of the schemes, mutual funds can raise burgeoning amount of
resources, which can be gainfully employed for the national development.
All this is possible only when the people have full confidence that their investments in
mutual funds will remain safe. To inspire such confidence it is necessary that the
Government should enact a comprehensive legislation on the pattern of the UTI Act
govern the operations of all the mutual funds.

The asset base will continue to grow at an annual rate of about 30 to 35 % over the next
few years as investor’s shift their assets from banks and other traditional avenues. Some
of the older public and private sector players will either close shop or be taken over.

Out of ten public sector players five will sell out, close down or merge with stronger
players in three to four years. In the private sector this trend has already started with two
mergers and one takeover. Here too some of them will down their shutters in the near
future to come.

But this does not mean there is no room for other players. The market will witness a
flurry of new players entering the arena. There will be a large number of offers from
various asset management companies in the time to come. Some big names like Fidelity,
Principal, Old Mutual etc. are looking at Indian market seriously. One important reason
for it is that most major players already have presence here and hence these big names
would hardly like to get left behind.

The mutual fund industry is awaiting the introduction of derivatives in India as this would
enable it to hedge its risk and this in turn would be reflected in its Net Asset Value
(NAV).

SEBI is working out the norms for enabling the existing mutual fund schemes to trade in
derivatives. Importantly, many market players have called on the Regulator to initiate the
process immediately, so that the mutual funds can implement the changes that are
required to trade in Derivatives.

COMPARISON OF MUTUAL FUND WITH OTHER INVESTMENT

Mutual Funds with Sharers:
In case of investing in shares you’ll have to spend the time to study and learn the market,
also you should learn to buy individual stocks, because you maximize your gains by
investing in the leading stocks in the leading groups in the markets. If you don’t want to
spend the time, delegate it to a good diversified domestic stock fund. The mutual fund



company has an investment manager for each scheme that decides upon where to invest,
how to invests and when to invest. He will take care of your investment.

Mutual Funds with Fixed Deposit:
In case of the fixed deposit the money, which you have invested, will lock in for certain
period until the fixed deposit matures. That is before the lock in period you can’t remove
your money. The returns on the fixed deposit are only the interest prescribed on it. Where
as in the mutual fund investment there is exit option for every scheme by which you can
exit at any time. Due to which your money will not be locked. In the mutual fund
investment the returns are through the dividend and also the growth appreciation.

Mutual funds are now also competing with commercial banks in the race for retail
investor’s savings and corporate float money. The power shift towards mutual funds has
become obvious. . The basic fact lies that banks cannot be ignored and they will not close
down completely. Their role as intermediaries cannot be ignored. It is just that Mutual
Funds are going to change the way banks do business in the future.

Banks v/s Mutual Funds

BANKS MUTUAL FUNDS
Returns Low Better
Administrative exp. High Low
Risk Low Moderate
Investment options Less More
Network High penetration Low but improving
Liquidity At a cost Better



Quality of assets Not transparent Transparent
Interest calculation Minimum balance between 10th Everyday
& 30th. Of every month
Guarantee Maximum Rs.1 lakh on deposits None

INVESTORS SEVEN RULES
Here are seven rules that go a long way in helping you meet your investment
objectives.

Know your risk profile:
Your investments should reflect your risk taking capacity. Equity funds
might lure when the market is rising and your neighbor is making money,
but if you are not cut out for the risk that accompanies it don’t bite the bait.
So, check if the funds objective matches yours. Invest only after you have
found your match. If you are racked by uncertainty, seek exper4t advice
from a qualified financial advisor.

Identify your investment horizon:
Invest in an equity fund only if you are willing to stay on for at least two
years. For income and gilt funds, have a one-year perspective at least.
Anything less than one year, the only option among mutual funds is liquid
funds.

Read the offer document carefully:
The offer document contains essential details pertaining to the fund,
including the summary information (type of scheme, the name of the Asset
Management Company and price of units among other things), investment
objectives and investment procedure, financial information and risk factors.

Go through the fund fact sheet:



Fund fact sheets give you valuable information of how the fund has
performed in the past. You can check the funds portfolio, its diversification
levels and its performance in the past. The more fact sheets you examine, the
better.

Diversify across fund houses:
If you are routing a substantial sum through mutual funds, you should
diversify across fund houses. That way, you spread your risk.

Do not chase incentives:
Don’t get lured by investment incentives. Some financial intermediaries give
upfront incentives, in the form of a percentage of your initial investment, to
invest in a particular fund. Don’t buy it. Your focus should be to find a fund
that matches your investment needs and risk profile, and is a performer.

Track your investments:
One easy way to keep track of your fund is to keep track of the intelligent
investor rankings of mutual funds, which are complied on a quarterly basis.
These rankings allow you to take note of your funds performance and risk
profile and compare it across various time periods as well as across its peer
set,

Net Asset Value (NAV)
The net asset value of the fund is the cumulative market value of the assets fund net of its
liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the
assets in the fund, this is the amount that the shareholders would collectively own. This
gives rise to the concept of net asset value per unit, which is the value, represented by the
ownership of one unit in the fund. It is calculated simply by dividing the net asset value
of the fund by the number of units.



Calculation of NAV
The most important part of the calculation is the valuation of the assets owned by the
fund. Once it is calculated, the NAV is simply the net value of assets divided by the
number of units outstanding. The detailed methodology for the calculation of the asset
value is given below.
NAV= (Market valueof the scheme’s investment) + Other Assets (Including accrued
interest) + Unamortized issue expenses (only in case of schemes launched on load basis)
– All Liabilities except All Asset and liabilities are valued at the current prices

Details on the above items
For liquid shares/debentures, valuation is done on the basis of the last or closing market
price on the principal exchange where the security is traded

For illiquid and unlisted and/or thinly traded shares/debentures, the value has to be
estimated. For shares, this could be the book value per share or an estimated market price
if suitable benchmarks are available. For debentures and bonds, value is estimated on the
basis of yields of comparable liquid securities after adjusting for illiquidity. The value of
fixed interest bearing securities moves in a direction opposite to interest rate changes
Valuation of debentures and bonds is a big problem since most of them are unlisted and
thinly traded. This gives considerable leeway to the AMCs on valuation and some of the
AMCs are believed to take advantage of this and adopt flexible valuation policies
depending on the situation.

Interest is payable on debentures/bonds on a periodic basis say every 6 months. But, with
every passing day, interest is said to be accrued, at the daily interest rate, which is
calculated by dividing the periodic interest payment with the number of days in each
period. Thus, accrued interest on a particular day is equal to the daily interest rate
multiplied by the number of days since the last interest payment date. Usually, dividends
are proposed at the time of the Annual General meeting and become due on the record
date.

Mutual Fund Weightage to various sectors in March'07
investment trend by various fund houses over the last 6 months
Sector Investment (Rs. cr) Weightage
Engineering 14,169.39 14.2%
Banking/Finance 12,710.10 12.7%
Information Technology 11,838.24 11.9%
Oil & Gas 7,706.11 7.7%
Automotive 6,731.96 6.7%
Cement 5,822.06 5.8%



Telecom 5,683.10 5.7%
Pharmaceuticals 5,533.54 5.5%
Manufacturing 5,322.88 5.3%
Metals & Mining 4,976.70 5.0%
Media 3,183.53 3.2%
Chemicals 3,131.07 3.1%
Conglomerates 2,603.40 2.6%
Miscellaneous 1,990.53 2.0%
Services 1,834.24 1.8%
Utilities 1,772.22 1.8%
Consumer Non-Durables 1,771.20 1.8%
Food & Beverage 1,467.79 1.5%
Tobacco 1,420.23 1.4%
Consumer Durables 177.89 0.2%
TOTAL 99,846.19 100.0%

Systematic Investment Plan - A plan for future…

1 � Investment - The basics
We can define investment as the process of “Sacrificing something now for the prospect
of gaining something later”. The definition implies that there are three dimensions of an
investment-time, today’s sacrifice and prospective gain. Investment is a three-step
process.



Identifying ones
Step 1
financial goals

Select of asset
Step 2
classes

Regular savings
Step 3
plan

For example,
If Mr. X’s monthly consumption expenditure is Rs 20,000 today and he wants to maintain
the same standard of living when he retires. What sum he will require if he is 30-year-
old now? Assuming five percent inflation he would need Rs 78,400 a month when he
retires at 58. Now to earn this amount every month from investment that earn 5 percent a
year, he would need to have saved Rs 1.88 Crore when he retires.
If he can put aside 20,000 a month he can just invest them in bonds that earn 5 percent
and reach the target in most non-volatile manner. At the other extreme, he could invest
just Rs 4166 every month in equities. Assuming 15 per cent returns this should generate
the desired Rs 1.8 Crore. Actually real strategy should be to take a middle path between
these two extremes and allocate some portion of portfolio to both based on your own
financial situation and risk taking ability.
Taking a cue from the above example systematic investment plan is the one, which
helps in achieving financial goal of an individual.

1 � What is a Systematic Investment Plan?
Systematic Investment Plan (SIP) is a disciplined way of investing, where
you invest fixed amounts at a regular frequency. You often decide to start
saving and investing regularly, but get caught up in your day-to-day
activities and forget investments. SIP, the time-tested investment approach
helps bring in the much-needed discipline, and has shown good results the
world over.

1 � Benefits of SIP



0 � Rupee cost averaging
1 � Power of compounding
2 � Makes Investment a habit
3 � Low Cost (No entry load)
2 � Rupee Cost Averaging

X and Y who are on a trip to a riverbank decide to test their swimming
skills. X dives deep into the water, kicks his legs, splashes the water, stroke
hard, shows all his skill to move faster than the current of the water. Y
decides just to remain afloat and allow the stream to take him along with it.
In the end, to your surprise you find that Y has covered more distance than
X.
The same applies to equity market also; most of us try to time the market
perfectly. But, this is difficult at best given the volatility of the stock
markets. Unfortunately, it is impossible to consistently predict the markets
and even experienced investment professionals find it hazardous to do so.
Nevertheless, there is a proven investment strategy that can help you offset
the volatility of the markets and turn it into an advantage. This strategy is
called Rupee Cost Averaging. Below is the example to explain how it works
nder systematic investment plan:



Simply put, Rupee Cost Averaging is a disciplined investment practice that takes the
guesswork out of "timing" the markets. The essence of this strategy is that more units are

Month Amount Fluctuating Rising Market Falling
Invested (Rs) Market Market
Price Units Price Units Price Units
1 2,000.00 12.00 166.67 12.00 166.67 12.00 166.67
2 2,000.00 15.00 133.33 14.00 142.86 10.00 200.00
3 2,000.00 9.00 222.22 16.00 125.00 8.00 250.00
4 2,000.00 15.00 133.33 18.00 111.11 6.00 333.33
Total 8,000.00 51.00 655.56 60.00 545.64 36.00 950.00
Average Rs. 12.20(i.e. Rs. 8000/ 655.55 Rs. 14.66(i.e. Rs 8.42(i.e.Rs.
cost per units) Rs. 8000/ 8000/950.00 units)
unit 545.63 units)
purchased automatically when prices are low and fewer units when prices are high. Over
time, this result in the average cost per unit - the money you pay - being lower than the
average price per unit

1 � Power of compounding

Inflation can steadily erode the value of your income. However, long-term investing can
provide returns that outpace inflation-through the power of compounding.
Year after year, any money that you invest may earn interest, dividends, or capital gains.
When you reinvest those earnings, they help generate additional earnings; those
additional earnings help generate more earnings, and so on. This is called compounding.

Let us take an example, two friends, X, and Y are 20 years old. X decides that he wants
to start investing his money early to build himself a secure future and decides to save Rs.
5,000 monthly (i.e. Rs. 60,000 per annum) at the age of 20. Y feels that he is young and
wants to enjoy his money for
the time being. Y wakes up late and decides to invest at the age of 35 years and decides to
save Rs. 10,000 per month (i.e. Rs. 1,20,000 per annum). At the age of 60 years when
they want to retire, using an interest rate of 7% per annum, X who had invested Rs. 5,000
monthly for 25 years has Rs. 1.15 cr. and Y who had invested Rs. 10,000 monthly for the
same amount of time has Rs. 57 lacs. Please refer to the illustrations below for a better
understanding.

X (7%) :



Y (7%) :

The key therefore lies in starting earlier, and giving your investments a
longer time to row. Money starts multiplying, more towards the end as
explained by above example

1 � Does SIP work…?

Given below are some examples of how a SIP has worked in select Mutual
Funds schemes:
Templeton Schemes HDFC Schemes
Blue-chip Fund Prima Growth Fund Equity Top
Fund Fund 200
Monthly 1000 1000 1000 1000 1000
Investment
Nos of Investment 86 123 89 110 91
months
Total Investment 86000 123000 89000 110000 91000
Value of Investment 337410 549558 249501 518895 267978
Return on 37.69% 27.45% 27.23% 33% 29%
Investment



COMPARISON BY NATURE OF INVESTMENTS

The table below compares the investment options with respect to Return, Safety,
Volatility, Liquidity, and Convenience.

Investment Return Safety Volatility Liquidity Convenience
Options
Equity High Low High High or Moderate
Low
F1 Bonds Moderate High Moderate Moderate High
Corporate Moderate Moderate Moderate Low Low
Debentures
Company Moderate Low Low Low Moderate
Fixed
Deposits
Bank Low High Low High High
Deposits
PPF Moderate High Low Moderate High
Life Low High Low Low Moderate
Insurance
Real estate High Moderate High Low Low
Mutual High High Moderate High High
Funds



Magnum Mid Cap Fund (SBI Mutual Fund)

Open Ended Equity Fund
Date of Inception: 17/03/2005
Corpus (Assets Under Management): Rs.343.64Cr
Options: Growth and Dividend

Top 10 holdings: Maharashtra Seamless Limited 6.00%
India Cements Limited 5.48%
Infotech Enterprises Limited 5.09%
Thermax Limited 4.89%
Nagarjuna Construction Company Limited 4.84%
Skf India Limited 4.67%
IVRCL Infrastructure & Projects Limited 4.60%
Opto Circuit Limited 4.55%
Crompton Greaves Limited 4.27%
Hotel Leela Venture Limited 3.77%



Asset Allocation:

Asse t Allocation

cash others
10% 0%

Equity
90%

Equity cash others

Performance Report:
Period Return
1 month -12.84%
3 months 6.15%
6 months 27.52%
1yr 48.1%
3yr NA
5yr NA
S.Inception 47.89%



NAV Analysis:
Date NAV
15/6/2006 14.12
16/6/2006 14.89
19/6/2006 15.41
20/6/2006 15.64
21/6/2006 16.11
22/6/2006 16.44
23/6/2006 16.46
26/6/2006 15.79
27/6/2006 15.55
28/6/2006 15.44
29/6/2006 15.47
30/6/2006 16.01

17
16.5
16
15.5
15
NAV

14.5
14
13.5
13
12.5
15/6
16/6

20/6
21/6
22/6

26/6
27/6
28/6
19/6

23/6

29/6
30/6

Date



Tata Mid Cap Fund:

Top 10 holdings: Dishman Pharmaceu & Chem Ltd. 4.31%
Greaves Limited 4.06%
Lakshmi Machine Works Limited 4.04%
Voltas Limited 3.87%
Indian Hotels Co. Limited 3.85%
Nagarjuna Construction Limited 3.12%
Ccl Products India Limited 2.84%
Tamilnadu Newspreint & Paper Ltd. 2.81%
EIH Limited 2.63%
Hinduja Tmt Limited 2.50%

Asset Allocation:



Asset Allocation

Cash Others
4% 0%

Equity
96%

Equity Cash Others

Performance Report:
Period Return
1yr 12.8%
3yr NA
5yr NA
S.Inception 12.42%

NAV Analysis:



Date NAV
15/6/2006 10.072
16/6/2006 10.624
19/6/2006 10.862
20/6/2006 10.935
21/6/2006 11.202
22/6/2006 11.366
23/6/2006 11.262
26/6/2006 10.863
27/6/2006 10.844
28/6/2006 10.787
29/6/2006 10.864
30/6/2006 11.253

11.5

11

10.5
NAV

10

9.5

9
16/6
19/6

22/6

28/6
15/6

20/6
21/6

23/6
26/6
27/6

29/6
30/6

Date



Sundaram Select Mid Cap Fund:


Top 10 holdings: Ansal Properties & Industries Limited 4.67%
Unitech Limited 4.10%
Emami Limited 3.71%
Madras Cements Limited 3.61%
Balrampur Chini Mills Limited 3.08%
Jaiprakash Associates Limited 2.96%
Lakshmi Machine Works Limited 2.81%
Bajaj Hindustan Limited 2.80%
Kalpataru Power Transmission Ltd. 2.58%
Kirloskar Oil Engines Ltd. 2.20%

Asset Allocation:

Asset Allocation
Debt
0%
Others
cash
0%
34%

Equity
66%

Equity cash Debt Others



Performance Report:
Period Return
1yr 76.6%
3yr 75.9%
5yr NA
S.Inception 76.33%

NAV Analysis:

Date NAV
15/6/2006 66.507
16/6/2006 68.388
19/6/2006 69.852
20/6/2006 70.455
21/6/2006 72.081
22/6/2006 73.7
23/6/2006 73.947
26/6/2006 72.454
27/6/2006 71.846
28/6/2006 71.696
29/6/2006 72.01
30/6/2006 74.075



76

74

72

70
NAV

68

66

64

62
15/6

19/6
20/6

22/6
23/6

27/6
28/6
16/6

21/6

26/6

29/6
30/6
Date

Kotak Mid Cap Fund:


Top 10 holdings: Deccan Chronicle Holdings 4.73%
JSW Steel 4.62%
Jindal Steel & Power 3.94%
Tata Metaliks 3.71%
Madras Cements 3.35%
Television Eighteen 3.09%



Mahaveer Spg. Mills 2.97%
Areva T & D 2.89%
Taj GVK Hotels & Resorts 2.80%
Bharat Earth Movers 2.78%

Asset Allocation:

Asset Allocation

0%
cash
8%
0%

Equity
92%

Equity cash

Performance Report:
Period Return
1yr 34.9%
3yr NA
5yr NA
S.Inception 34.48%

NAV Analysis:



Date NAV
15/6/2006 13.696
16/6/2006 14.293
19/6/2006 14.681
20/6/2006 14.672
21/6/2006 15.006
22/6/2006 15.33
23/6/2006 15.346
26/6/2006 14.88
27/6/2006 14.732
28/6/2006 14.565
29/6/2006 14.617
30/6/2006 15.102

15.5

15

14.5
NAV

14

13.5

13

12.5
15/6
16/6
19/6
20/6
21/6
22/6

26/6
27/6
28/6

30/6
23/6

29/6

Date

Comparison table of equity diversified midcap mutual funds
SBI TATA KOTAK SUNDARAM



Corpus Rs.343.64Cr Rs.249.42Cr Rs.344.11Cr Rs.991.45Cr

Asset Allocation Eq: 90% Eq:96% Eq: 92% Eq: 66%
Cash:10% Cash:4% Cash: 8% Cash: 34%

Returns 1yr : 48.1% 1yr: 12.8% 1yr : 34.9% 1yr: 76.6%

S.I: 47.89% S.I.:12.42% S.I. :34.48% S.I.:76.33%

NAV as on
15/6/06 14.12 10.072 13.696 66.507
30/6/06 16.01 11.253 15.102 74.075
Change (%) 15.8688 11.15228 14.96504 73.409
Minimum Invt. Rs.5000 Rs.5000 Rs.5000 Rs.5000
Load: Entry 2.25% 2.25% 2.25% 2.25%
Exit Nil Nil Nil Nil

By looking into the table we can say that Sundaram select mid cap mutual fund is
performing extremely well in the market. It has large corpus. And it has wide
diversification in investment. By investing nearly one third (34%) in cash market it is
actively gaining the opportunity of cash market. Its diversified investment resulted in
good returns to the investors and increase in the NAV.

By comparing these four equity diversified mid cap fund’s performance we can say
that the fund’s performance and its NAV depends on the following factors-
 Its portfolio in which it has invested
 The asset allocation of the fund
 The sectors to which it has targeted
 The bench mark of stock market index which it has taken as base

The common objective of all mid cap funds, with slight difference in
words, is to provide investors with opportunities for long term growth in capital along
with the liquidity of an open ended scheme by investing predominantly in a well-
diversified basket of equity stocks of companies whose market capitalization is
between Rs. 200 crores to Rs. 2000 crores and in debt and money market instruments.



Out of above Sundaram Select Mid Cap is performing very well in the
market since inception. It is ranked number one in returns by money control. Even
we can say that Sundarm Select Mid Cap fund has started earlier than other three but
it has a very selective and diversified portfolio and its corpus is also huge compare
to other three. It has also sustained its growth from inception.
The reason for difference in NAV of each fund is its portfolio, asset
allocation, selection of sectors, and proportion of investment in the selected sector,
different options, and different objective of the schemes etc.
So while investing in any existing mutual fund’s scheme it is better to
look at its portfolio and also the performance, but the present performance may not be
assured in future.

Rate of Return =Price Change +Dividend Received*100

Purchase Price

The general equation used to calculate the compounded value after N years is
given below:

A=P (1+I) to the power n

P = principal

I = Interest rate

N= number of years



Suggestions

 Transparency, Flexibility and Ease of understanding, these core benefits of
Mutual Funds need to be effectively communicated to the customers.

 Though being riskier in nature mutual funds returns, sizable amount of returns
to the investors, this will play a role of enlightening new investors in the pool.

 The Mutual Fund Industry must convince the general public about the latest
development (i.e. tax exemptions on dividends & returns in Mutual Funds by
the finance ministry.) This would largely help to get clients.

 People generally want a reasonable return on their investment. Majority of the
investors try to see that their investments are secure. In case of equity mutual
funds both in the growth and dividend plans have been realizing more than
15%-20% returns on a year-to-year basis. This has uplifted the mutual fund
Industry in the country. This will largely attract people to invest in Mutual
Funds.

 In the current scenario the bank are returning in the area of 4.5%to 8% returns/
annum, which are taxable. On the other hand tax-free returns of minimum two
digits in equity mutual funds are need of the day, to beat inflation in our
economy.



 By creating active awareness regarding the progress of Mutual Fund, the
Industry in India has seen tremendous growth in the last three years. This should
be further proceeded more aggressively.

Conclusions:
As per the study Mutual Fund has good future. It is gaining importance in the
minds of consumers. Common people are taking more interest in Mutual Funds along
with other conventional investment options. But the service providers like “ViVi
Securities” need to more educate the customers. Midcap funds are more promising. So
the companies need to promote these funds more in order to benefit the investor and gain
their confidence.



BIBLIOGRAPHY

 Introduction to Mutual Fund By AMFI
 Brochures
 Journals

Web Sites:
 www.amfiindia.com
 www.Ventura1.com
 www.moneycontrol.com


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