“a Study on Investors Decision for Investment in Mutual Fund and Equity”

8/11/2019 a Study on Investors Decision for Investment in Mutual Fund and Equity

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Research Project Report

ON

A STUDY ON INVESTORS DECISION FOR INVESTMENT INMUTUAL FUND AND EQUITY

Submitted For the Partial Fulfillment towards the Award of the Degree in

Master of Business Administration of Uttar Pradesh Technical University.

Submitted by:

Mr.Dilip kumar

Roll no-1213370038

Batch: 2012-2014

Under the supervision of Mr. Imran Ali

Department of MBANoida Institute of Engineering and Technology (NIET) 19,

Knowledge Park-II, Institutional Area, Gr.Noida Gautam Budh

Nagar (U.P), India-201306,


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CERTIFICATE BY THE HEAD OF THE

DEPARTMENT


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DECLARATION

I, Dilip Kumar, Do here by declare that my Study entitled A Study on

Investors Decision for Investment in Mutual Fund and Equityhas been

accomplished. This project was carried out under Asst.Prof. Imran Ali. I have

submitted this report in partial fulfillment of the requirements for the award of

Master of Business Administration degree of UTTAR PRADESH

TECHNICAL UNIVERSITY during the academic year 2012-2014, and not for

the award of any degree of another university or institute.


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ACKNOWLEDGEMENTS

I feel Pleasure in expressing my profound sense of gratitude and indebtedness to

Mr. Imran Ali who in spite of busy schedule has Co-operated with me

continuously and indeed his valuable contribution and guidance have been

certainly indispensable for my progect Work.

I hope that I can build upon the experience and knowledge that I have gained

and make a valuable contribution towards this industry. I express my heart- left

gratitude to my HOD Dr. Dileep Singh, all embracing help; valuable

suggestions and encouragement have enabled me to complete this task which

would not have been a success without them.


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CONTENT

Si.No TOPIC Pg.No

1 Tital,Name of Student, Roll No,Under guidance of1-1

2 Certificate by the Head of the Department & Guide.(To beprovided by the department)

2-2

3 Declaration 3-3

4 Acknowledgements 4-4

5 Contents(Chapter no, title of chapter,Page no. 5-5

6 List of The Graph 6-6

7 Introduction of the topic,(Objective of the Study,Need andScope,Limitation of Study.)

7-46

8 Review of literature(History, Organization Structure)

47-899 Theoretical base of Project title, and Research Methodology 90-105

10 Analysis & Interpretation 106-111

11 Conclusions- Findings,Suggestions,Future Scope 112-118

12 Bibliography / Reference ( Books referred, Websight) 119-121


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LIST OF GRAPH

Si.No. Graph No. Title of Graph Pg.No

1 1 Age of the respondents 106

2 2 Investment Amount 107

3 3 Reason of Investment 108

4 4 Investment Tenor inEquity

109

5 5 Investment tenor in

mutual fund

110

6 6 Return in mutualfund

111


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INTRODUCTION OF TOPIC

Behavioral Finance has become important area in the present day of

financial studies. Investor of the present time is more aware and

sophisticated as for as the knowledge is concerned. He responds rationally

to the new products and always tries to gather as much as information is

possible. In other words, investors decisions in the market fully reflect the

effects of any information revealed.

Equity or the Stock exchange of any country is the economic indicators of that

economy. It reflects the direction of the economy and its efficiency. Stock

invest is not only the area of interest of big investor but now a days it has

also become the area of small investors too. Small investors invest more

funds and expects handsome return from the market can say more than

the safe banking return and it is obvious that if some is taking risk expect

more return in comparison to safe investment. Now there is one more option

to invest in stock exchange or equity even though you are not having handsome

amount by the way of Mutual Fund. In Mutual Fund investment an investor

gets the benefits of expert advice and consultancy in the form of Fund

Manager of the mutual fund company.

When a Person wants to invest his money into Financial Market the First thing

comes to his minds that how much Return (Return on Investment) I will

get and what is the Risk (profit/loss) associated with it. As we Know that the

Phrase about Risk & Return that High Risk High ReturnLu Zheng (1999),

in his study, examined the fund selection ability of Mutual Fund investors.


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He found that the investors choose funds based on the fund-specific

information. The decision regarding the fund is always based on short-

term future performance. Sayama (1998) has revealed in his study that

awareness among people was very poor, agents were playing very important

role in spreading the awareness about the mutual fund.Open-ended schemes

were much preferred then; age and income are the two important determinants

in the selection of fund/scheme; and brand image and return are their

prime considerations. Raja (1997a and 1997b; and 1998), has surveyed a

number of investors and found that there is a segmentation among investors

based on their characteristics, investment size and the relationship between

stage in life cycle and their investment pattern. Malhotra et al (1997) has

concluded that the preoccupation of MF investors with using performance

evaluation as the selection criterion is misguided because of the volatility of

returns, and it is difficult to determine the reason, which may be due to superior

management or just good luck.

Sujit et al (1996) the study revealed that the salaried and self-employedwere the major investors in MFs, primarily due to tax concessions.

UTI and SBI were popular in that part during the time the survey was done and

other funds had not proved to be a big performer then. Gupta (1993) conducted

a study based on the survey of household investor. The study is conducted with

the objective of to provide data on investor preferences on Mutual Funds andother financial assets. Goetzman (1993) and Grubber (1996), in their

study, reveals the fact that active fund investors select the fund by using

their selection ability only. Ippolito (1992) in his study concluded that

the fund is selected by investors on the basis of its past performance.He also

found that generally the


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money flows into the fund that gives positive return in comparison to

those funds having negative return during a particular period of time. The

findings of Ferris and Chance (1987) are consistent with the findings of

Malhotra and Robert (1997).

A mutual fund is pool money, collected from investors, and is invested

according to certain investment options. A mutual fund is a trust that pools the

savings of a number of investors who share a common financial goal. A mutual

fund is created when investors put their money together. It is therefore a pool of

the investors founds. 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 realized is shared

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

The most important characteristics of a fund are that the contributors and the

beneficiaries of the fund are the same class of people, namely the investors; the

term mutual fund means the investors contribute to the pool, and also benefit

from the pool. There are no other claimants to the funds. The pool of funds held

mutually by investors in the mutual fund.

A mutual funds business is to invest the funds thus collected according to the

wishes of the investors who created the pool. Usually, the investors appoint


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professional investment managers, to manage their funds. The same objective is

achieved when professional investment managers create a product and offer it

for investment to the investor. This product represents a share in the pool, and

pre states investment objectives. 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.

Investors in the mutual fund industry today have a choice of 39 mutual funds,

offering nearly 500 products. Though the categories of product offer can be

classified under about a dozen generic heads, competition in the industry has led

to innovative alterations to standard products. The most important benefit of

product choice is that it enables investors to choose options that suit their return

requirements and risk appetite. Investors can combine the options to arrive at

their own mutual fund portfolios that fit with their financial planning objectives.

A Mutual Fund is an ideal investment vehicle where a number of investors

come together to pool their money with common investment goal. Each Mutual

Fund with different type of schemes is managed by respective Asset

Management Company (AMC). An investor can invest his money in one or

more schemes of Mutual Fund according to his choice and becomes the unit

holder of the scheme. The invested money in a particular scheme of a Mutual

Fund is then invested by fund manager in different types of suitable stock and


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securities, bonds and money market instruments. Each Mutual Fund is managed

by qualified professional man, who use this money to create a portfolio which

includes stock and shares, bonds, gilt, money-market instruments or

combination of all. Thus Mutual Fund will diversify your portfolio over a

variety of investment vehicles. Mutual Fund offers an investor to invest even a

small amount of money.

Mutual Fund Industry in its true spirit rooted in a free market and oriented

towards competitive functioning with the dedicated goal of service to the

investors can be said to have settled in India only in 1993. However the industry

took its roots much earlier with the setting up of the Unit Trust In India (UTI) in

1964 by the Government of India. During the last 36 years, UTI has grown to be

a dominant player in the industry with assets of over Rs.72,333.43 Crores as of

March 31, 2000. The UTI is governed by a special legislation, the Unit Trust of

India Act, 1963. In 1987 public sector banks and insurance companies were

permitted to set up mutual funds and accordingly since 1987, 6 public sector

banks have set up mutual funds. Also the two Insurance companies LIC and

GIC established mutual funds. Securities Exchange Board of India (SEBI)

formulated the Mutual Fund (Regulation) 1993, which for the first time

established a comprehensive regulatory framework for the mutual fund industry.


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Since then several mutual funds have been set up by the private and joint

sectors.

Mutual Funds- The Year Ahead:

A after a difficult year for equity markets & equity funds alike, all the eyes are

now on year 2007. Last year saw one of the lowest net flows ever into equity

schemes, with debt schemes being the major gainers on account of continued

decline in the interest rates.

Hopes are high that the performance of equity schemes should be better this

year, as the market history indicates such trends. It is only twice in the last 100

years that markets have remained under that controls of bears for three

consecutive years. Therefore, chances are those both domestic & international

markets will rebound sharply, which would result in much better performanceby equity funds. Thus, if one is looking at investing in equity funds, INDEX

FUND is the best choice. Though some sectoral funds have been able to give

decent returns but overall they havent lived up to the expectation of the market.

Every year one or the other sectors strongly outperform the market, but it would

still be a better choice to go in for DIVERSIFIED FUNDS, that have features of

dynamic plan.

The MF industry is expecting tax break, which were withdrawn in the last

budget, to be restored. And that is expecting to bring a section of investors

back to the markets. Merger V& Acquisitions developments, which started in

2002, are likely to continue. In the few weeks time we will know the winner

for ALLIANCE. Another important development in the current year is going to


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be a big- bang entry of MFs in DERIVATIVAES market followed by their

investments in FOREIGN markets,

International History Of Muitual Lfunds:

When three Boston securities executive pooled their money together in 1924 to

create the first mutual fund, they had no idea how popular mutual funds would

become. The idea of pooling money together for investing purposes started in

Europe in the mid 188s. The e first pooled fund in the U.S. was created in 1893

for the faculty and staff of Harvard University. On March 21 st, 1924 the first

official mutual fund was born. It was called Massachusetts Investors Trust.

After one year, the Masschusetts Investors Trust grew $5000 in assets in 1924

to $ 392, 000 in assets (with around 200 shareholders). In contrast, there are

over 10,000 mutual funds in the U.S. today totaling around $7 trillion (with

approximately 83 million individual investors) according to the Investment

Company institute.

With renewed confidence in the stock market, mutual funds began to blossom.

By the end of the 1960 s there were around 270 funds with $ 48 billion in assets.

In 1976, john C. Bogle opened the first the first the first retail index fund called

the First Index Investment Trust. It is now called the Vanguard 500 Index

Fund and in November 2000 it became the largest mutual fund growth was

Individual Retirement Account (IRA) provision made in 1981, allowing

individuals (including those already in corporate pension plans) to contribute

$2,000 a year. Mutual funds are now popular known for ease of use, liquidity

and unique diversification capabilities.


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History of the Indian Mutual Fund Industry:

The mutual fund industry in India started in 1963 with the formation of Unit

Trust of India, at the initiative of the government of India and Reserve Bank.

The history of mutual funds in India can be broadly divided into four distinct

phases.

First Phase: - 1964- 1987:

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It

was set up by the Reserve Bank of India and functioned under the regulatory

and administrative control of the Reserve Bank of India. In1978 UTI was de-

linkde form the RBI and the industrial Development Bank of India (IDBI) took

over the regulatory and administrative control in place of RBI. The first scheme

launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had RS. 6700

crores of assets under management.

Second Phase: 19887-1993 (Entry of public Sector Funds):

1987 marked the entry of non-UTI, public sector, mutual funds set by public

sector banks and life Insurance corporation of India (LIC) and General

Insurance Corporation of India (GIC). SBI Mutual funds was the first non-UTI

Mutual fund established in June 1987 followed by Can ban Mutual fund (Dec

87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund

(Nov 89). Bank of India (June 90), Bank of Baroda.

Mutual Fund (Oct 92), LIC established its Mutual Fund in June 1989 while GIC

had set up its mutual fund in December 1990. At the end of 1993, the mutual

fund industry had assets under management of RS, 47,004 crores.


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Third Phase- 1993-2003 (Entry of Private Sector Funds):

With the entry of private sector funds in 1993, a new era stared in the Indian

mutual fund industry, giving the Indian investors a wider choice of fund

families. Also, 1993 was the year in which the first Mutual Fund Regulations

came into being, under which all mutual funds. Except UTI were to be

registered and governed. The erstwhile Kothari pioneer (now merged with

Franklin Templeton) was the private sector mutual registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more

comprehensive and revised Mutual Fund Regulations in1996. The Industry now

functions under the SEBI (Mutual fund) Regulation 1996.

The number of mutual fund houses went on increasing, with many foreign

mutual funds setting up funds in India and also the industry have witnessed

several Mergers and acquisitions. As at the end of January 2003, there were 33

mutual funds, with total assets of Rs 1, 21,805 crores. The Unit Trust of India

with Rs 44,541 crores of assets management were way ahead of other mutual

funds.


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Fourth Phase: 1996:

Regulary Structures of Mutual Funds in India:

The structure of mutual fund in India is governed by the SEBI Regulations.

1996. These regulations make it mandatory for mutual funds to have a three-tier

Structure SPONSER- TRUSTEE- ASSET MANAGEMENT COMPANY

(AMC). The sponsor is the promoters of the mutual fund and appoints the AMC

for managing the investment portfolio. The AMC is the business face of the

mutual fund. As its manages all the affairs of the mutual fund. The mutual fund

and the AMC have to be registered with SEBI.

Mutual Funds Can Be Structured In The Following Ways:

Company form in which investors hold shares of the mutual fund. In this

structure management of the fund in the4 hands of on elected board. Which in

turn appoints investment managers to manage the fund? Trust from, in which

the investors are held by the trust, on behalf of the investors. The appoints

investment managers and monitors their functioning in the interest of the

investors.

The company form of organization is very popular in the United States. In India

mutual funds are organized as trusts. The trust is created by the sponsors who is

actually the entity interested in creating the mutual fund business. The trust is

either managed by a Board of trustees or by a trustee company. Formed for this

purpose. The investors funds arte held by the trust.


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Though the trust is the mutual fund, the AMC is its operational face. The AMC

is the first functionary to be appointed, and is involved in the appointment of all

the other functionaries. The AMC structures the mutual fund products, markets

them and mobilizes the funds and services the investors. It seeks the services of

the functionaries in carrying out these functions. All the functionaries are

required to the trustees, who lay down the ground rules and monitor them,

working.


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TYPES OF MUTUAL FUNDS

1) General Classification of Mutual Funds

2) Open- end Funds/Closed-end Funds

Open-end Funds:

Funds that can sell and purchase units at nay point in time are classified as

Open-end Funds. The fund size (corpus) of an open-end fund is variable (keeps

changing) because of continuous selling (to investors) and repurchases (from

the investors) by the fund. An open-end fund is not repurchasing, when an

investor wants to sell his units. The NAV of an open-end fund is calculated

every day.

Closedend Funds:

Funds that can sell a fixed number of units only during the New Fund (NFO)

period are known as Closed- end Funds. The corpus of a closed end Funds.

The corpus of end Fund remains unchanged at all times. After the closure of the

offer, buying and redemption of units by the investors directly form the Funds is

not allowed. However, to protect the interests of the investors, SEBL provides

investors with two avenues to liquidate their positions.

1. Closed- end Funds are listed on the stock exchanges where investors can

buy/sell units for/ to each other/ the trading is generally done at a discount to


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the NAV of the scheme. The NAV of a closed end fund is computed on a

weekly basis (updated every Thursday).

2. Closed-end Funds may also offer buy-back of units to the unit holders. In

this case, the corpus of the Fund and its outstanding units do get changed.

Load Funds/ No-Load Funds:

Load Funds:

Mutual Funds incur various expenses on marketing, distribution, advertising,

portfolio churning, fund managers salary etc; many funds recover these

expenses from the investors in the form of load. These funds are known as Load

Funds. A load fund may impose following types of loads on the investors.

Entry Load:

deducted from the investors contribution amount to the fund.Also known as

front-end load, it refers to the load charged to an investor at the time of his entry

into a scheme. Entry load

Exit Load:

Also known as Back-end load, these charges re imposed on an investor when he

redeems his units (exits from the scheme). Exit load is deducted from the

redemption proceeds to an outgoing investor.

Deferred Load-Deferred load is charged to the scheme over a period of

time.


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Contingent Deferred Sales Charge (CDSC)-:

Some schemes, the percentage of exit load reduces as the investor stays longer

with the fund. This type of load is known as Contingent Deferred Sales Charge.

No-load Funds:

All those funds that do not charge any of the above mentioned loads are known

as No-load Funds.

Tax- exempt Funds/ Non- Tax exempt Funds

Tax- exempts Funds

Funds that invest in securities free tax are known as Tax-exempt Funds. All

open- end equity oriented funds are exempt from distribution tax (tax for

distributing income to investors). Long term capital gains and dividend income

in the hands of investors are tax free.

Non- Tax-exempt Funds

Funds that invest in taxable securities are known as Non-Tax-exempt Funds. In

India, all funds, except open-end equity oriented funds are liable to pay tax on

distribution income.

Profits arising out of sale of units by an investor within 12 months of purchase

are3 categorized as short-term capital gains, which are taxable. Sale of units of

an equity oriented fund is subject to Securities Transaction Tax (STT). STT is

deducted from the redemption proceeds to an investor.


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Advantages Of Mutual Fund:

S.NO. Advantage Particulars

1. Professional

Management

Fund manager undergoes through various research

works and has better investment management skills

which ensure higher returns to the investor than what

he can manage on his own.

2. Less Risk Investors acquire a diversified portfolio of securities

even with a small investment in a Mutual Fund. The

risk in a diversified portfolio is lesser than investing

merely 2 or 3 securities.

3. Low Transaction

costs

Due to the economies of scale (benefits of larger

volumes), mutual funds pay lesser transaction costs.

These benefits are passed on to the investors.

4. Liquidity An investor may not be able to sell some of the shares

held by him very easily and quickly, whereas units of

a mutual fund are far more liquid.

5. Choice of Schemes Mutual funds provide investors with various schemes

with different investment objectives. Investors have

the option of investing in a scheme having a

correlation between its investment objectives and their

own financial goals. These schemes further have

different plans/options.


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6. Transparency Funds provide investors with updated information

pertaining to the markets and the schemes. All

material facts are disclosed to investors as required by

the regulator.

7. Flexibility Investors also benefit form the convenience and

flexibility offered by Mutual Funds. Investors can

switch their holding from a debt scheme to an equity

scheme and vice-versa. Option of systematic (at

regular intervals) Investment and withdrawal is also

offered to the investors in most open-end schemes.

8. Safety Mutual Fund industry is part of a well- regulated

investment environment where the interests of the

investors are protected by the regulator. All funds are

registered with SEBI and complete transparency is

forced.


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Conversely in the case of open- ended NFOs, funds are required to meet all the

sales, marketing and distribution expenses from the entry load. They are not

permitted to charge any initial issue expenses. The rules governing entry/exit

loads state that taken together, the two cannot account for more the 6% of the

net asset value (NAV). Charging an entry load for the entire 6% upfront would

adversely affect the funds performance in the initial period. Hence AMCs

choose to have rater rational entry loads ion the range of 2.25%-2.20%. Like

initial issue expenses, entry loads also eat the investors returns, since the

investor has that much less money working for him.

For example, Say an invests Rs 5,000 in an open- ended fund that charge s an

entry load of 2.50%. Effectively, only Rs 4,875 is invested in the fund. If is not

difficult to understand why AMCs have a newfound liking for close-ended

funds. With the provision for charging 6% of amount mobilized towards initial

issue expenses, AMCs are better equipped to compensate toe distributors and

agents, who in turn help the fund houses in accumulating more assets. Higher

assets translate into higher revenues for the AMCs of courses; close-ended

funds do offer advantages as well. For example, the fund manager can make

investments from a long-term perspective and investors are given the

opportunity to invest for a pre-defined investment horizon. However investors

would do well to factor in the costs involved.


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Recurring expenses-:

Investors also have to contend with recurring expenses, which are charged

annually to the fund. These expenses are revealed in the form of an expense

ratio that is declared twice a year. Recurring expenses (as is the case with

amortized issue expenses) are silent in nature since they dont necessarily

attract the investors attention. The reason being that the funds NAV is

declared after the recurring expenses have been accounted for.

The Securities and Exchange Board of India (SEBI) has laid out guidelines

defining the manner in which recurring expenses can be charged: the same is a

factor of the funds average weekly assets (however most AMCs choose to

compute it as a percentage.

The expense ratio:-

Average daily net assets %Limit

First Rs 1,000m 2.50%

Next Rs 3,000m 2.50%

Next Rs 3,000m 2.00%

On balance assets 1.75%


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As can be seen form the table above, the grid for recurring expenses has been

structured in a manner to ensure that the expenses charged to the fund reduce

with an increase in the asset size. The recurring expenses include marketing and

selling expenses (including agents commission), brokerage and transaction

cost, custodian fees and fund management expenses (paid to the AMC), among

other expenses. A typical list of recurring expenses for an equity fund would

look like the following:

Recurring expenses for an equity fund-:

Expenses % Of average daily net assets

Fund Management 1.25%

Marketing & Selling 0.50%

Custodian Fees 0.25%

Investor Communication 0.20%

Registrar Fees 0.15%


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Sahara Mutual Fund

Sahara mutual Fund was set up on july 18, 1996 with Sahara India Financial

Corporation Ltd. As the sponseor. Sahara Asset Management Company Private

Limited incorpated on August 31, 1995 Works as the AMC fo Sahara Mutual

Fund. The paid-up capital of The AMC stands at Rs.25.8 crore.

State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to

launch offshore fund, the India Magnum Fund with a corpus of Rs. 225 er.

Approximately, Today it is the largest Bank sponsored Mutual Fund in India.

They have already launched 35 Schemes out of which 15 have already yielded

handsome returns to investors. State Bank of India mutual Fund has more than

Rs, 5,500 Crores as AUM., Now it has an investor base of over 8 Lakhs spread

over 18 schemes.

Tata Mutual Fund

Tata Mutual Fund (*TMF) is a Trust under the India Trust Act, 1882. The

sponsor for Tata Mutual Fund is Tata Sons Ltd., and Tata Investment

Corporation Ltd. The investment manager is Tata Asset Management Limited is

one of the fastest in the country with more than Rs, 7,703 crores (as on April30,

2005) of AUM.

Will be inclined to invest until and in


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Kotak Mahindra Mutual Fund:

Korak Mahindra Asset Management Company (KMAMC) is a subsidiary of

KMBl. It is presently having more than 1,99,818 investors in it various

schemes. KMAMC started its operations in December 1998. Kotak Mahindra

Mutual Fund offers schemes fcatering to investor s with varying risk- return

profiles. It was the first company to launch dedicated gilt scheme investing only

in government securities.

Unit Trust of India Mutual Fund:

UTI Asset Management Company private Limited, established in jan 14, 2003

manages the UTI Mutual Fund with the support of UTI Trustee Company

Private Limited. UTI Asset Management Company presently manages a corpus

of over Rs.20000 Crore. The sponsors of UTI Mutual Fund are Bank of Baroda

(BOB). Punjab National Bank (PNB), State Bank of India (SBI) , and Life

Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund areLiquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity

Funds and Balance Funds.

Reliance Mutual Fund

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act,

1882. The sponsor of RMF is Reliance Capital Limited and Reliance CapitalTurstee Co. Limited is the Trustee. It was registered on june 30 1995 as

Reliance Capital Mutual Fund which was changed on March 11, 2004 Reliance

Mutual Fund was formed for launching of various schemes under which units

are issued to the Public with a view to contribute to the capital market and to

provide investor the opportunities to make investments in diversified securities.

Quiz question:


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(1)What percentage of household savings is in mutual funds?

Answer: per cent. Thats a pittance. Which is why mutual fund houses are

trying new ways to not only entice investor, but also entice investor, but alsonew way to add value and woo you, the customer?

There are old scheme, new schemes, old schemes masquerading as new ones,

innovative schemes, and value- added schemestheres no telling when this

flood will end. And thats not a bad thing at all. This is one case where more is

definitely merrier, because it simply enforces the fact that the customer is king.

But enough of such clichs, and on to look at those fund houses that lead the

rest in sheer innovative schemes, and value-added schemestheres no telling

when this flood will end. And thats not a bad thing at all. This is one case

where is definitely merrier, because it simply enforces the fact that the customer

is king.

But enough of such clichs, and on to look at those fund houses that lead the

rest in sheer innovativeness. These MFs have done a lot to add value to your

investing experience, whether in the form of unique schemes or innovative

management or sheer professionalism.

Leading our list of five is a fund that most people thought was a loser. Looks

are not always what they seem. The MF was actually just sticking to its high

ethical ground. This fund houses belief that its way would triumph put it on the

top of the heap. Now, on to the list.


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Top 5 mutual funds companies in India:

1. Quantum Mutual Fund?

Rule1:keep launching new schemes. Size matters and bigger is better.

Rule 2: Woo distributors to increase collections and to overtake competition.

Rule3: Bargain about commission with the distributor but dont worry about it

too much: at the end of the day, it is the customer who pays.Shocked? You may

well be, but these are the rules almost every mutual fund follows religiously.

And thats where Quantum MF part company with the crowd.

Mutual funds should be bought, not sold, says Dayal, director, Quantum MF.

And thats the foundation of the allow-new Quantum. Launched in February

2006, the fund house has deliberately chosen to avoid distributing its schemes

through distributors, a first in this industry. The only way you can buy Quantum

schemes is to download the forms from the company site or by asking them to

courier the forms to you.

Avoiding distributors in peak markets could prove costly. Because they can sell

schemes aggressively and help the fund mop up huge collections. Which is

possibly why Quantum Long Term Equity fund collected just? Rs 11 crore.

Not that they are complaining, Well be very happy after five years when well

be able to demonstrate the cost saving move obviously, says Dayal.

Incidentally, the fund is also among the very few open-ended equity schemes to

levy high exit loads on early withdrawals, yes, Quantum seeks to set an example

of how mutual funds should be approached, but this means that it will take it

several years before it can accomplish its mission. Well keep you posted.


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2- Benchmark Mutual Fund

Not many funds have launched index funds in India, and those that did

generally made a low-key entrance into that space. And then comes benchmark

MF inn 2001, which made no bones about the fact that it was going to launch

only index funds.

To be precise, it planned to launch only ETFs (exchange- traded funds) - close

cousins of index funds. The difference is that ETFs are listed on the stock

exchanges and you can buy and sell units throughout the day and not just at the

end of the days price like an index fund or any other open-ended mutual fund.

Highlights of Benchmarks portfolio include innovative schemes like its

Arbitrage Fund, Split Capital Fund and Liquid BeEs.

Benchmark is also the countrys first and only fund with solely passively

managed schemes. The MF does not believe in active management: rather, itbelieves that indexing and quantitative fund management is the way to go.

Set up by Rajan Mehta and Sanjiv Shah, the funds philosophy is to remain

invested in the index and let it do its own thing. Says Mehta: Over the last three

years, the gap of out-performance by actively managed funds over the indices is

reducing. It does not mean that fund managers have run out of ideas, but there

are some structural changes like better corporate disclosures and the increasing

number of informed and professional investors in the market.


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Equity Fund:-

Aggressive Growth Funds:-

In Aggressive Growth Funds, Funds, fund managers aspire for maximum capital

appreciation and invest in less researched shares of speculative nature. Because

of these speculative investments Aggressive Growth Funds become move

volatile and thus, are prone to higher risk than other equity funds.

Growth Funds:-

Growth Funds also invest for capital appreciation (with time horizon of 3 to 5

years) but they are different from aggressive Growth Funds in the sense that

they invest in companies that are expected to out perform the market in the

future. Without entirely adopting speculative strategies, Growth Funds invest in

those companies that ate expected to post above average earnings in the future.

Specialty Funds:-

Specialty Funds have stated criteria for investments and their portfolio

comprised of only those companies that met their criteria. Criteria for some

specialty funds could be to invest/not to invest in particular regions/ companies.

Specialty funds are concentrated and thus, are comparatively riskier than

diversified funds. There are following types of specialty funds.


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Sector Funds:-

Equity funds that invest in a particular sector/ industry of the market are known

as Sector Funds. The exposure of these funds is limited to a particular sector

(say Information Technology, Auto, Banking, Pharmaceuticals of Fast Moving

Consumer Goods) which is why they are more risky than equity funds that

invest in multiple sectors.

I. Foreign Securities Funds:

Foreign securities funds achieve international diversification and hence they are

less risky than sector funds. However, foreign securities funds are exposed to

foreign exchange rate risk and country risk.

Mid-Cap or Small-Cap Funds:

Funds that invest in companies having lower market capitalization than large

capitalization companies are called Med-Cap or Small-Cap funds. Market

capitalization of mid-Cap companies is less than that of big, blue chip

companies (less than Rs.2500 crores but more than Rs.500 crores ) and Small-

Cap companies have market capitalization of les than Rs.500 crores Market

Capitalization of a company can be calculated by multiplying the market price

of the companys share by the total number of its outstanding shares in the

market. The shares of Mid-Cap or Small-Cap Companies are not as liquid ads of

Large-Cap Companies which gives rise to volatility in share prices of these

companies and consequently, investment gets risky.


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Option Income Funds:

While not yet available in India. Option Income Funds write options on large

fraction of their portfolio. Proper use of options can help to reduce volatility,

which is otherwise considered as a risky instrument. These funds invest in big,

high dividend yielding companies, and then sell options against their stock

positions, which generate stable income for investors.

Diversified Equity Funds-

Except for a small portion of investment in liquid money market, diversified

equity funds invest mainly in equities without any concentration on a particular

sector (s) these funds arte well diversified and reduce sector-specific or

company-specific risk. However like all other funds diversified equity funds too

are exposed to equity market risk .One prominent type of diversified equityfund in India is Equity Linked Saving Scheme (ELSS). As per the mandate, a

minimum of 90% of investments by ELSS should be in equities at all times.

ELSS investors are eligible to claim deduction from taxable income (up to Rs

1lakh) at the time of filing the income tax return. ELSS usually has a lock-in

period and in case of any redemption by the investor before the expiry of the

lock-in period makes him liable to pay income tax on such income(s) for whichhe may have received any tax exemption(s) in the past.


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Equity Index Funds-

Equity Index Funds have the objective to match the performance of a specific

stock market index. The portfolio of these funds comprises of the same

companies that form the index and is substituted in the same proportion as the

index. Equity index funds that follow broad indices (like S&P CNX Nifty

Sensex) are less risky than equity index funds that follow narrow sect oral

indices (like BSEBANKEX or CNX Bank Index etc.) Narrow indices are less

diversified and therefore, are more risky.

Value Funds:-

Value Funds invest in those companies that have sound fundamentals and

whose share prices are currently under-valued. The portfolio of these funds

comprises of shares that are trading at a low Price to Earning Ratio (Market

Price per Share/Earning per Share) and a low Market to Book Value

(Fundamental Value) Ratio. Value Funds may select companies from

diversified sectors and are exposed to lower risk level as compared to growth

funds or specialty funds. Value stocks are generally from cyclical industries

(such as cement, steel, sugar etc.) which make them volatile in the short-term.

Therefore, it is advisable to invest in Value funds with a long- term time

horizon as risk in the long term to a large extent, is reduced.


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Equity Income or Dividend Yield Funds-

The objective of Equity Income or Dividend Yield Equity Funds is to generate

high recurring income and steady capital appreciation for investors by investing

in those companies which issue high dividends (such as power of Utility

companies whose share price fluctuate comparatively lesser than other

companies share price). Equity Income or Dividend Yield Equity Funds are

generally exposed to the lowest risk level as compared to other equity funds.

Debt/Income Funds-

Funds that invest in medium to long- term debt instruments issued by private

companies, banks, financial institutions, governments and other entities

belonging to various sectors (like infrastructure companies etc. ) are known as

Debt/ Income Funds. Debt funds are low risk profile funds that seek to generate

fixed current income (and not capital appreciation) to investors. In order to

ensure regular income to investors Debt (or income) funds distribute largefraction of their surplus to investors. Although debt securities are generally less

risky than equities, they are subject to credit risk (Risk of default) by the issuer

at the time of interest or principal payment. To minimize the risk of default,

debt funds usually invest in securities from issuers who are rated by credit

rating agencies and are considered to be of Investment Grade. Debt funds that

target high returns are more risky. Based on different investment objectives,

there can be following types of debt funds:


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Diversified Debt Funds:-

Debt funds that invest in all securities issued by entities belonging to all sectors

of the market are known as diversified debt funds. The best feature of

diversified debt funds is that investments arte properly diversified into all

sectors which result in risk reduction. Any loss incurred. On account of default

by a debt issuer, is shared by all investors which further reduces risk for an

individual investor.

Focused Debt Funds:-

Unlike diversified debt funds, focused debt funds are narrow focus funds that

arte confined to investment in selective debt securities, issued by companies of

a specific sector or industry or origin. Some examples of focused debt funds are

sector, specialized and offshore debt funds, funds that invest only in Tax free

Infrastructure or Municipal Bonds. Because of their narrow orientation focused

debt funds are more risky as compared to diversified debt funds, although not

yet available in India; these funds are conceivable and may be offered to

investors very soon.

High Yield Debt funds:-

As we now understand that risk of default is present in all debt funds, and

therefore, debt funds generally try to minimize the risk of default by investing in

securities issued by only those borrowers who are considered to be of

investment gradeBut, high Yield Debt Funds adopt a different strategy and

prefer securities issued by those issuers who are considered to be of

investment grade. The motive behind adopting this sort of risky strategy is to

earn higher interest returns form these issuers. These funds are more volatile


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and bear higher default risk, although they may earn at times higher returns for

investors.

Assured Return Funds:-

Although it is not necessary that a fund will meet its objectives or provide

assured returns to investors, but there can be funds that come with a lock in

period and offer assurance of annual returns to investors during the lock-in

period. Any shortfall in returns in suffered by the sponsors or the Asset

Management Companies (AMCs). These funds are generally debt funds and

provide investors with low-risk investment opportunity. However, the security

of investments depends upon the net worth of the guarantor (whose name inn

specified in advance on the offer document). To safeguard the interests of

investors, SEBI permits only those funds to offer assured return schemes whose

sponsors have adequate net-worth to guarantee returns in the future. In the past,

UTI had offered assured return schemes (i.e. Monthly Income Plans of UTI)

that assured specified returns to investors in the future. UTI was not able to

fulfill its promises and faced large shortfalls in returns. Eventually, government

had to intervene and took over UTIs payment obligation on itself. Currently, no

AMC in India offers assured return scheme to investors, though possible.

Gilt Funds:-

Also known as Government securities in India, Gilt Funds invest in government

papers (named dated securities) having medium to long term maturity period.

Issued by the Government of India, these investments have little credit risk (risk

of default) and provide safety of principal to the investors. However, like all

debt funds, gilt funds too are exposed to interest risk, Interest rates and prices of

debt securities are inversely related and any change in the interest results in a

change in the NAV of debt/gilt funds in an opposite direction.


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Money Market/Liquid Funds:-

Money market / liquid funds invest in short- term (maturing within one year)

interest bearing debt instruments. These securities are highly liquid and provide

safety of investment, thus making money market/liquid funds the safest

investment option when compared with other mutual fund types. However, even

money market / liquid funds are exposed to the interest rate risk. The typical

investment option for liquid funds includes Treasury Bills (issued by

governments), Commercial papers (issued by companies) and Certificates of

Deposit (issued by banks).

Hybrid Funds-:

As the name suggests, hybrid funds are those funds whose portfolio includes a

blend of equities, debts and money market securities. Hybrid funds have an

equal proportion debt and equity in their portfolio. There are following types of

hybrid funds in India.

I. Balanced Funds-

The portfolio of balanced funds include assets like debt securities, convertible

securities, and equity and preference shares help in a relatively equal proportion,

the objectives of balanced funds are to reward investors with a regular income,

moderate capital appreciation and at the same time minimizing the risk of

capital erosion. Balanced funds are appropriate for conservative investors

having a long term investment horizon.


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2. Growth- and- Income Funds

That combine features of funds are known as Growth-and-Income Funds. These

funds invest in companies having potential for capital appreciation and those

known for insuring high dividends. The level of risks involved in these funds in

lower than growth funds and higher than income funds.

3. Asset Allocation Funds:-

Mutual may invest in financial assets like equity, debt money market or non-

financial (physical) assets like real estate, commodities etc. Asset allocation

funds adopt a variable asset allocation strategy that allows fund managers to

switch over from one asset class to another at nay time depending upon their

outlook for specific markets, in other words, fund managers may switch over to

equity if they expect equity market to provide good returns and switch over to

debt if they expect debt market to provide better returns. It should be noted that

switching over from one asset class to another is a decision taken by the fund

manager on the basis of his own judgment and understanding of specific

markets, and therefore, the success of these funds depends upon the skill of a

fund manager in anticipating market trends.

4. Commodity Funds:-

Those funds that focus on investing in different commodities (like metals, food

grains, crude oil etc.0 or commodity companies or commodity futures contracts

are termed as Commodity Funds. A commodity fund that invests in a single

commodity or a group of commodities is a specialized commodity fund and a


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commodity fund that invests in all available commodities is a diversified

commodity fund and a bears less risk than a specialized commodity fund.

Precious Metals Fund and Gold Funds (that invest in gold, gold futures or

shares of gold mines) are common examples of commodity funds.

5. Real Estate Funds:-

Funds that invest directly in real estate or lend to real estate developers or invest

in shares/ securitized assets of housing finance company are known as

Specialized Real Estate Funds. The objective of the funds may be to generate

regular income for investors or capital appreciation

6. Exchange Traded Funds (ETF):-

Exchange Traded Funds provide investor with combined benefits of a closed-

end and an open-end mutual fund. Exchange Traded Funds follow stock market

indices and are traded on stock exchanges like a single stock at index linkedprices. The biggest advantage offered by these funds is that they offer

diversification flexibility of holding a single share (tradable at index linked

prices) at the same time. Recently introduced in India, these funds are quite

popular abroad

8. Fund of Funds

Mutual funds that do not invest in financial or physical assets, but do invest in

other mutual fund schemes offered by different AMCs, are known as Funds of

Funds, of Funds maintain a portfolio comprising of units of other mutual fund

schemes, just like conventional mutual funds maintain a portfolio comprising of

equity/debt/ money market instrument or non financial assets. Fund of Funds


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provide investors with an added advantage of diversifying into different mutual

fund scheme with even a small amount of investment, which further helps in

diversification of risks. However, the expenses of Fund of Funds are quite high

on account of compounding expenses of investments into Different mutual fund

schemes.


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OBJECTIVE OF THE STUDY

The mutual fund industry is fast gaining popularity in todays unpredictablescenario. It is emerging as one of the most locative investment option. The

objective of the project is to gain detailed insight into this industry.

To know the objective behind investment.

To know the factor is taking into consideration, while investing in mutual

fund or equity fund.

To know the source of awareness.

To know about the giving priority to investment.

How people are giving to invest in mutual fund or equity fund.

To know about the past performance of marketing in mutual funds and

equity fund.

To know individual choose investment option on the basis of market growth.

How much people aware about the performance of mutual fund or equity

fund.

How much people are interested to invest in mutual fund or equity fund.

Invest decision for mutual fund& equity.


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NEED AND SCOPE

The scope of the study consists of analysis of mutual fund in Noida. The work

was conducted at Ashlar Securities Pvt. Ltd..The other focus was paid to

get the response of working individual by approaching the various companies

visited were ICICI prudential. Kotak Mahindra bank, Reliance Money etc.


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LIMITATION OF STUDY

The study has undertaken with full dedication and under guidance of

experienced personal yet certain limitation was perceived in spite of all the best

efforts against it/ which are.

Time was one of the major constraints in the survey, so only 75 samples

were surveyed during the research and assumed to represent the whole class.

The survey sample in only from a small geographic region, a few localities

in Noida. These may result in the sample not being a true representation of

the entire market for Tele services. The behavior of consumers in the other

metros may differ significantly from that of non-metro semi- urban and rural

consumers.

The process of collection of data through questionnaire method is time

consuming and tough job.

The sample size is too small to analyze the market coverage of various

brands offered by various companies.

Since the results have been drawn on the basis of the information provided

by the respondents, biasness during chance of responses might be there.

Some employees were reluctant & hesitant to give their views.

As some respondents (technical persons) were not able to fill the

questionnaire due to the time constraints the information collected from them

verbally, which might have affected the result to some extent.


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REVIEW OF LITERATURE

If investing is a new activity for you, confusion may be ruling your day. There

are stocks and bonds and options and futures and tons of alphabet soup titles

such as NASDAQ and NYSE and OTIS to learn about. In all the confusion you

may wonder why you should consider mutual funds. This article is intended to

give you a brief introduction to, and ten reasons to invest in, mutual funds.

Mutual funds come from a company that raises money from selling its shares. It

then invests this pooled money in a diversified selection of securities. The

portfolio of securities is professionally managed and is called a mutual fund.

When you invest in the mutual fund you own a share of the fund's portfolio of

securities. The manager of the mutual fund will issue and re-buy shares of the

portfolio at a price that mirrors the current value of the fund when the

transaction is affected.

So Why Should People Invest in Mutual Funds?

1. Professional Management:-

An investor who lacks the time or knowledge to manage their own investments

can turn to the mutual fund and let a professional handle all the securities,

analysis, and questions of when to buy or sell for them. This works so well that

better than 95 million people invest in mutual funds, making them the largest

financial intermediary in the United States. The investors in mutual funds may

be newcomers to investing or they may be experienced investors. What they all

have in common is that they have decided to turn over the time consuming work

of investment management to professionals. (Gitman, L.,and Joehnk, M., 2003)
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2. Ease of Selection:-

Not all mutual funds are managed equally. You can choose from many

hundreds of funds, (well actually even thousands of funds).You can get

information at the click of a mouse or the rustle of a page in magazines such as

"Money". Your credit union will have information for you and your local library

will also have magazines and guides you can check. Do a little homework so

you know how well the fund you are considering has performed over the past

several years. The thing you want to determine is your risk tolerance, how much

money you want, and how soon you want to retire. Communicate these goals to

your fund manager and they will tailor your investment for you.

3. Begin Small:-

Young people just starting out, or a middle aged single parent starting over after

a divorce or other major life event may not have a lot of money to invest in the

beginning. This is where mutual funds can really shine for you. Many mutual

funds will allow you to begin with under a thousand dollars and some will even

let you start with as little as $50. A program at Bank of America for instance

lets you start a "keep the change" savings account where every time you use

your debit card they round up the change to the next dollar and put it in either a

regular savings account or a money market savings account.You can start the

account for $25. And you are on your way to investing in a simple painless way.

You can't get any smaller than that. The way it works is the pooling effect,

which means hundreds or perhaps thousands of times those twenty five dollars,

which makes a pretty nifty investment because mutual fund investors pool their

money with one common goal - to make more.
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3. Lower Your Risk:-

In every business there is a mantra for success. In realestate it is location,

location, location; in acting it is presence,presence, presence; in investments it is

diversify, diversifydiversify. My grandmother used to say "don't put all your

eggs in one basket". What she meant was lower the risk of breaking all those

eggsif you trip and drop them coming up the steps. You carry some of them and

let the other kids carry some of them. It's like that with your nest egg too.

Mutual funds diversify your portfolio by investing in a number of securities and

so spread the risk out into more baskets.

4. Lower Your Risk

In every business there is a mantra for success. In realestate it is location,

location, location; in acting it is presence,presence, presence; in investments it isdiversify, diversifydiversify. My grandmother used to say "don't put all your

eggs in one basket". What she meant was lower the risk of breaking all those

eggsif you trip and drop them coming up the steps. You carry some of them and

let the other kids carry some of them. It's like that with your nest egg too.

Mutual funds diversify your portfolio by investing in a number of securities and

so spread the risk out into more baskets.


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5. Increase the Opportunities:-

Investment in a mutual fund really means you are a part owner in apooled

diversification, managed by professionals and able to takeadvantage of

investments through this alliance that you could neverafford on your own.

Gitman, L and Joehnk, M., (2003) give an examplethat shows two pages in a

portfolio where we see a partial list ofsecurity holdings from a 21 page

portfolio. In the two pages shown wesee 24 industrial companies in six different

industry segments and 34information technology companies spread over three

industry segments.Clearly no single investor could cover this much

diversification. This is only two pages out of twenty one and yetevery investor

who ownsshares in this particular mutual fund is in fact a part owner of

thewidely diversified portfolio.

7. Liquid Assets:-

In the world of finance, liquid assets means something you can sellquickly and

easily. Mutual funds can be bought or sold on any day themarket is doing

business. The money can be in your hands in a matter ofa few days. When my

husband needed medical care that insurance did notcover, I called our fund

manager who sold shares the following businessday and sent us a check which

we received within about five days.


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8. Convenient:-

Because the bookkeeping, investment analysis, and other day to daychores,are

done by the managers of the fund, it frees up the investors timeandrelieves them

of worry and stress. You own just one investmentinstead of a batch of them but

you still get the benefits of all thatdiversification plus a range of services offered

by the fund.

7. Convenient:-

Because the bookkeeping, investment analysis, and other day to daychores,are

done by the managers of the fund, it frees up the investors timeandrelieves them

of worry and stress. You own just one investmentinstead of a batch of them but

you still get the benefits of all thatdiversification plus a range of services offered

by the fund.

8. Transparent disclosures:-

You do not want to stick money in a portfolio and thennever really

notknowwhat is happening. The beauty of the mutual fund is that you will

getfrequently updated information on the value of the investment.

Theprospectus will be mailed to you on a regular basis and this willdisclosespecific investments made by the fund. The information willalso break down the

percentage of investments in each industrysegmentand class of assets and will

detail the fund management's strategyand long term goals. In the Prospectus you

will find importantinformation in the sections on expenses, investment

objectives,long-term total returns and management biographies.


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9. Choices:-

Mutual Funds investors have many thousands of options to choose from. Iknow

many people who will not invest in some financially secure fundsdue to thecompanies represented in the fund. Animal rights activistswill not invest in

funds that include pharmaceutical research anddevelopment divisions that use

animals in their work. Some environmentalactivists will not invest in funds that

include chemical companies orother industrial segments. You can make choices

based on those groundsas well as the financial stability of the fund itself and

yourparticular financial plan.

10. Regulated for your protection:-

A mutual fund is not one big company run by a single manager or group

ofmanagers that can contrive to take your money and run. When you investin a

mutual fund, you own shares of the fund, and that gives you certainvoting

rights. The functions of the fund are separated between two ormore companies.The fund itself is organized as a corporation or a trustand is owned by the

investors. The firm that runs it is separate. Themanagement company creates the

funds, the investment advisors overseethe portfolio and buy and sell stocks and

bonds, the distributor sellsfund shares to you and me as investors in the

portfolio, the custodiansafeguards the assets of the fund (this is usually done by

a bank), andthe transfer agent keeps a record of purchase andredemptioncommunications and other shareholder records for investors. In

otherwords a mutual fund's investment and business decisions are made by

different entities for the protection of the shareholder. The fund also has a board

of directors to ride herd on all the activity and they are voted on by you and the

other investors. If you do not like the way the fund is being managed talk with

your vote.


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When considering investment opportunities, the first challenge that almost

every investor faces is aplethora of options.From stocks, bonds, shares, money

market securities, to the right combination of two or more of these, however,

every option presents its own set of challenges and benefits.

So why should investors consider mutual funds over others to achieve their

investmentgoals?

Mutual funds allow investors to pool in their money for a diversified selection

of securities, managed by a professional fund manager. It offers an array of

innovative products like fund of funds, exchange-traded funds, Fixed Maturity

Plans, Sectoral Funds and many more.

Whether the objective is financial gains or convenience,mutual funds offer

many benefits to its investors.

A mutual fund that invests in a mix of stocks and bonds to take advantage of

both thegrowth potential stocks provide and the income stream bonds typically

provide and to reduce risk. Alsocalled a hybrid fund.

Best Inflation:-

Mutual Funds help investors generate better inflation-adjusted returns, without

spending a lot of time and energy on it.While most people consider letting their

savings 'grow' in a bank, they don't consider that inflation may be nibbling away

itsvalue.

Suppose you have Rs. 100 as savings in your bank today. These can buy about

10 bottles of water. Your bank offers 5% interest per annum, so by next year

you will have Rs. 105 in your bank.

However, inflation that year rose by 10%. Therefore, one bottle of water costs
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Rs. 11. By the end of the year, with Rs. 105, you will not be able to afford 10

bottles of water anymore.

Mutual Funds provide an ideal investment option to place your savings for along-term inflation adjusted growth, so that the purchasing power of your hard

earned money does not plummet over the years.

A mutual fund is nothing more than a collection of stocks and/or bonds. You

can think of a mutual fund as a company that brings together a group of people

and invests their money in stocks, bonds, and other securities. Each investor

owns shares, which represent a portion of the holdings of the fund.

You can make money from a mutual fund in three ways:

(1) Income is earned from dividends on stocks and interest on bonds. A fundpays out nearly all of the income it receives over the year to fund owners in the

form of a distribution.

(2) If the fund sells securities that have increased in price, the fund has acapital

gain. Most funds also pass on these gains to investors in a distribution.

(3) If fund holdings increase in price but are not sold by the fund manager, the

fund's shares increase in price. You can then sell your mutual fund shares for a

profit.

Funds will also usually give you a choice either to receive a check for

distributions or to reinvest the earnings and get more shares.
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Advantages of Mutual Funds:-

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 portfolios. A mutual

fund is a relatively inexpensive way for a small investor to get a full-time

manager to make and monitor investments. (For more reading see Active

Management: Is It Working For You?)

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. In other words, the more

stocks and bonds you own, the less any one of them can hurt you (think about

Enron). Large mutual funds typically own hundreds of different stocks in many

different industries. It wouldn't be possible for an investor to build this kind of a

portfolio with a small amount of money.

Economies of Scale:- Because a mutual fund buys and sells large amounts of

securities at a time, its transaction costs are lower than what an individual would

pay for securities transactions.
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Dilution:- It's possible to have too much diversification. 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.Dilution is

also the result of a successful fund getting too big. When money pours into

funds that have had strong success, the manager often has trouble finding a

good investment for all the new money.

Taxes- When a fund manager sells a security, a capital-gains tax is triggered.

Investors who are concerned about the impact of taxes need to keep those

concerns in mind when investing in mutual funds. Taxes can be mitigated by

investing in tax-sensitive funds or by holding non-tax sensitive mutual fund in a

tax-deferred account, such as a 401(k) or IRA. (Learn about one type of tax-

deferred fund in
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account. For your convenience,banks have started providing all these

services in a single unified account.

Get The Basics Right:In order to make profits, you need to have a sound

understanding of all the concepts of the market. Prepare yourself well to

tackle the risks in the market. Conduct a thorough research on the profile,

earnings, annual reports, and news of the company in which you are willing

to make an investment.Take a careful look at the stock charts before

investing. If you do not have the time to monitor your stocks yourself, then

an agent will be in a better position to help you with regular updates on the

stock market and the companys progress.

Determine How Much You Can Invest:

Once you've decided upon investing in a particular company, you need to

determine how much can you invest in buying the shares. Therefore, you

need to think twice and then make a decision. Also, you need to be ready

with a back-up plan so that you do not run into losses.

Develop A Strategy:

Whether you are looking for short or long term gains, if you want to make

high-growth investments, youll need to have strategic goals designed in

order to deal in the market smartly. It is recommended that you buy shares in

established companies and hold onto them for long so as to maximizeprofits.


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Equity & Derivatives:-

Ashlar is the member of NSE and BSE in Capital Market & Derivative Segment

providing their clients first class service. Our success in this business is driven

by our keen understanding of the business and ability to provide clients with

solutions appropriate to fit their needs. We Ashlar are the most competitive

company in the field of Stock Equities and Derivatives.

We are a full service brokers that are committed in providing outstandingservice while offering, the investor an array of investment products to meet their

needs. Our advisors team comprises of expert, skilful, determined, energetic and

passionate people who have extensive experience in the field of Capital Market.

Our stockbrokers provide the clients the advice and support they need to

manage their investments.

Ashlar help the future investors to trade a broad market by making one trading

decision rather than making many decisions involved with investing in

numerous individual stocks . The overwhelming response of our clients has

encouraged us to set new benchmarks in the industry by providing better quality

services.

Ashlar have an on-going relationship with institutional and other clients which

includes identifying clients investment requirements, identifying suitable

relevant investment opportunities, keeping clients informed of company and

market developments, maintaining a constant flow of information to our clients;

and transacting buy and sell orders effectively and professionally.


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Expert Managers:-

Backed by a dedicated research team, investors are provided with the services of

an experienced fund manager who handles the financial decisions based on the

performance and prospects available in the market to achieve the objectives of

the mutual fund scheme.

Convenience:-

Mutual funds are an ideal investment option when you are looking at

convenience and timesaving opportunity. With low investment amount

alternatives, the ability to buy or sell them on any business day and a multitude

of choices based on an individual's goal and investment need, investors are free

to pursue their course of life while their investments earn for them.

Low Cost:-

Probably the biggest advantage for any investor is the low cost of investment

that mutual funds offer, as compared to investing directly in capital markets.

Most stock options require significant capital, which may not be possible for

young investors who are just starting out.

Mutual funds, on the other hand, are relatively less expensive. The benefit of

scale in brokerage and fees translates to lower costs for investors. One can start

with as low as Rs. 500 and get the advantage of long term equity investment.


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Diversification:-

Going by the adage, 'Do not put all your eggs in one basket', mutual funds help

mitigate risks to a large extent by distributing your investment across a diverse

range of assets. Mutual funds offer a great investment opportunity to investors

who have a limited investment capital.

Liquidity:-

Investors have the advantage of getting their money back promptly, in case of

open-ended schemes based on the Net Asset Value (NAV) at that time. In case

your investment is close-ended, it can be traded in the stock exchange, as

offered by some schemes.

Higher Return Potential:-

Based on medium or long-term investment, mutual funds have the potential to

generate a higher return, as you can invest on a diverse range of sectors and

industries.

Safety &Transparency:

Fund managers provide regular information about the current value of the

investment, along with
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The market also includes the debt market which is controlled by wholesale

dealers, primary dealers and banks. The equity indexes are allied to countries

beyond the border as common calamities affect markets. E.g. Indian and

Bangladesh stock markets are affected by monsoons.

The equity market is also affected through trade integration policy. The country

has advanced both in foreign institutional investment (FII) and trade integration

since 1995. This is a very attractive field for making profit for medium and long

term investors, short-term swing and position traders and very intra day traders.

The Indian market has 22 stock exchanges. The larger companies are enlisted

with BSE and NSE. The smaller and medium companies are listed with OTCEI

(Over The counter Exchange of India). The functions of the Equity Market in

India are supervised by SEBI (Securities Exchange Board of India).

History of Indian Equity Market The history of the Indian equity market goes

back to the 18th century when securities of the East India Company weretraded. Till the end of the 19th century, the trading of securities was

unorganized and the main trading centers were Calcutta (now Kolkata) and

Bombay (now Mumbai).

Trade activities prospered with an increase in share price in India with Bombay


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becoming the main source of cotton supply during the American Civil War

(1860-61). In 1865, there was drop in share prices. The stockbroker association

established the Native Shares and Stock Brokers Association in 1875 to

organize their activities. In 1927, the BSE recognized this association, under the

Bombay Securities Contracts Control Act, 1925.

The Indian Equity Market was not well organized or developed before

independence. After independence, new issues were supervised. The timing,

floatation costs, pricing, interest rates were strictly controlled by the Controller

of Capital Issue (CII). For four and half decades, companies were demoralized

and not motivated from going public due to the rigid rules of the Government.

In the 1950s, there was uncontrollable speculation and the market was known as

'Satta Bazaar'. Speculators aimed at companies like Tata Steel, Kohinoor Mills,

Century Textiles, Bombay Dyeing and National Rayon. The Securities

Contracts (Regulation) Act, 1956 was enacted by the Government of India.

Financial institutions and state financial corporation were developed through an

established network.

In the 60s, the market was bearish due to massive wars and drought. Forward

trading transactions and 'Contracts for Clearing' or 'badla' were banned by the

Government. With financial institutions such as LIC, GIC, some revival in the

markets could be seen. Then in 1964, UTI, the first mutual fund

Documents

“a Study on Investors Decision for Investment in Mutual Fund and Equity”