Mutual Funds in Icici 2017

DEPARTMENT OF MANAGEMENT STUDIES
NOBLE INSTITUTE OF SCIENCE & TECHNOLOGY

(Affiliated to Andhra University, Visakhapatnam)
(Approved by AICTE New Delhi)
(2016-2018)
DECLARATION
I hereby declare that this project work entitled “A Study On

Performance of Mutual Funds in ICICI, Visakhapatnam”, submitted by me
to the department of management studies Noble Institute of Science and
Technology, Vishakhapatnam in partial fulfillment for the award of Degree of
MBA is entirely based on my own study and findings is being submitted for the
first time and it has not been submitted to any other university or institution for
any degree or diploma.
MASTER OF BUSINESS ADMINISTRATION

Submitted By
JEESHITHA SAKALA
Regd.No:
1
ACKNOWLEDGEMENT
Apart from the efforts of me, the success of this project depends largely
on the encouragement and guidelines of many others. I take this opportunity to
express my gratitude to the concerned that have been instrumental in the
successful completion of this project.
I extended my gratitude to my project guide Mr. K.
SATYANARAYANA, for his consistent encouragement, benevolent criticism,
inseparable suggestions which were the main reasons to bring the work to
present shape.
I wish to convey my sincere regards to our beloved Principal Mr.
A.VENKATESWAR RAO for his inspiration, timely help in the official
clearances and valuable suggestions throughout my course.
I am also thankful to our Head of the DepartmentSmt.G.V.S SAILAJA
MBA, M.Phil. (Ph.D.) and all other faculty members who helped me directly and
indirectly for the successful completion of my project work.
I express my profound thanks to, Management departmentof ICICI
MUTUAL FUNDS, Vishakhapatnam, for giving an opportunity to help me
complete my project, for giving me valuable advice and guidance and sparing
valuable time in clarifying various doubts raised by me.
I am very much privileged to be as a Student Trainee in
Vishakhapatnam Edelweiss during my project period and glad to be a part of
the office during the project period and I thank all the department officials for
treating me so well in spite of their seniority.
Finally, I would like to express my deep sense of gratitude to my
beloved parents and my family members for their love and blessings to
complete the project successfully.
(S JEESHITHA)
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INDEX
CHAPTER CONTENTS PAGE NUMBER

NUMBER
I INTRODUCTION 05
NEED FOR THE STUDY 06
OBJECTIVES OF THE STUDY 06
METHODOLOGY 07
LIMITATIONS OF THE STUDY 08
II INDUSTRY PROFILE 11-34
III THEORETICAL FRAMEWORK 35-64
IV DATA ANALYSIS AND INTERPRETATION 65-82
V SUMMARY AND SUGGESTIONS 84-91
SUMMARY 84
FINDINGS 85-86
SUGGESTIONS 86-89
 ANNEXURE 90
 BIBLIOGRAPHY 91
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CHAPTER-I
INTRODUCTION
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INTRODUCTION
Mutual Funds are a topic which is of enormous interest not only to researchers all
over the world, but also to investors. Mutual funds as a medium-to-long term
investment option are preferred as a suitable investment option by investors.
However, with several markets entrants the question is the choice of mutual fund.
The study focuses on this problem of mutual fuse lection by investors. Though the
investment objectives define investor’s preference among fund types (balanced,
growth, dividend etc.) the choice of fund based on a sponsor's reputation remains to
be probed. Indian mutual fund industry has two distinct types of sponsors, public
sector and private sector. The numbers of funds floated by public sector sponsors
are minimal compared to private sector players.
Mutual Funds help to reduce risk through
diversification and professional management. The experience and expertise of
Mutual Fund managers in selecting fundamentally sound securities and timing their
purchases and sales help them to build a diversified portfolio that minimizes risk and
maximizes returns. Investment is important for accelerating the economic
development in a country. Therefore, it must be encouraged. Different investment
avenues are available to investors.
Mutual funds also offer good investment opportunities
to the investors. Like all investments, they also carry certain risks. The investors
should compare the risks and expected yields after adjustment of tax on various
instruments while taking investment decisions. The investors may seek advice from
experts or consultants including agents and distributors of mutual funds schemes
while making Investment decisions. Securities Exchange Board of India got regulatory
powers in 1992. Mutual funds in India were governed under the SEBI regulations,
1996. It is the regulator of all funds, except offshore funds. SEBI has provided a three
tier system for managing the affairs of mutual funds.
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NEED FOR THE STUDY
1. Mutual funds are dynamic financial intuitions which play crucial role in an
economy by mobilizing savings and investing them in the capital market.
2. The activities of mutual funds have both short and long term impact on the savings
in the capital market and the national economy.
3. Mutual funds, trust, assist the process of financial deepening & intermediation.
4. To banking at the same time they also compete with banks and other financial
intuitions.
5. India is one of the few countries to day maintain a study growth rate is domestic
savings.
OBJECTIVES
1. To show the wide range of investment options available in MF’s by explaining

various schemes offered by different AMC’s.
2. To help an investor to make a right choice of investment, while considering the
inherent risk factors.
3. To understand the recent trends in the MF world.
4. To understand the risk and return of the various schemes.
5. To find out the various problems faced by Indian mutual funds and possible
solutions.
SCOPE THE STUDY
1. The study is limited to the analysis made for a Growth scheme offered by four
AMC’s.
2. Each scheme is calculated their risk and return using different performance
measurement theories.
3. Because of the reason for such performance is immediately analyzed in the
issue.
4. Graphs are used to reflect the portfolio risk and return.
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METHODOLOGY & TOOLS
This study is basically depends on
1. Primary Data
2. Secondary Data
Primary data: The primary data collected from the different companies through
enquiry.
Secondary data:
The secondary data collected from the different sites, broachers, newspapers,
company offer documents, different books and through suggestions from the project
guide and from the faculty members of our college.
TOOLS USED IN THIS PROJECT

The following parameters were considered for analysis:
 Beta
 Alpha
 Correlation coefficient
 Treynor’s Ratio
 Sharpe’s Ratio
ADVANTAGES OF THE MUTUAL FUNDS

1. The investors risk is reduced to the minimum.
2. The fund’s managers maximize the income of the funds.
3. To achieve a similar degree of diversification, an individual investor as to
spend considerable and money.
4. In a mutual fund, it is possible to reinvest the dividend and capital gains.
5. Selection of shares debentures etc. and timing is made available to investors. .
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LIMITATIONS OF THE STUDY:
1. The study is conducted in short period, due to which the study may
not be detailed in all aspects.
2. The study is limited only to the analysis of different schemes and its
suitability to different investors according to their risk-taking ability.
3. The study is based on secondary data available from monthly fact
sheets, web sites; offer documents, magazines and newspapers etc., as
primary data was not accessible.
4. The study is limited by the detailed study of various schemes.
5. The NAV’S are not uniform.
6. The data collected for this study is not proper because some mutual
funds are not disclosing the correct information.
7. The study is not exempt from limitations of Sharpe Treynor and Jenson
measure.
8. Unique risk is completely ignored in all the measure.
9. Inaccessibility to certain information and data relating to the project of
an account of being confidential.
10. The time was a big constraint. The time period of 60 days limited in
which it is difficulty to draw conclusion.
11. The study has been restricted to Visakhapatnam only owing to time
and cost constraints.
12. The project is only dependent on secondary sources for data.
Therefore reliability on these may affect the conclusions arrived at to
some extent.
13. The present study is only limited to select schemes of choice.
14. Last but not least my inexperience that have put some areas
uncovered eve
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CHAPTERIZATION
Chapter 1 :
Introduction, Need for the study, Objectives of the

study, Methodology of the study, Limitations of the
study and Chapterization.
Chapter 2 :
It deals profile of Company Profile And Industry

Profile.
Chapter 3 :
It deals with the Theoretical Frame Work of the Study.
Chapter 4 :
It deals with Data Analysis and Interpretation.
Chapter 5 :
It deals with Summary, Findings and Suggestions.
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CHAPTER-II
INDUSTRY PROFILE
&
COMPANY PROFILE
10
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
objective then is to attract the small investors and introduce them to market
investments. Since then, the history of mutual funds in India can be broadly divided
into four distinct phases.
First Phase – 1964-87:
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. In 1978 UTI was de-linked from
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.6,700 crores of assets
under management. The mutual Funds Industry in India not only started with UTI, but
still count UTI as its largest Player with the largest corpus of investible funds among
all Mutual Funds currently opening in India.
For the period of 1987-88

Table No: 1 Source: Secondary Data
Amount Mobilized Assets Under Management (

(Rs. Crores) Rs.Crores)
UTI 2,175 6,700
Total 2,175 6,700
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Second Phase – 1987-1993 (Entry of Public Sector Funds):
1987 marked the entry of non- UTI, public sector mutual funds set up by
public sector banks and Life Insurance Corporation of India (LIC) and General
Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI
Mutual Fund established in June 1987 followed by Mutual Fund (Dec 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of
India (Jun 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.
From 1987to 1992-93, the fund industry expanded nearly seven times in terms of
Assets under Management, as seen in the following figures:
For the period of 1992-93

Table No: 2 Secondary Data
Amount Mobilized Assets Under Management (
(Rs.Crores) Rs.Crores)
UTI 11,057 38,247
Public Sector 1,964 8,757
Total 13,021 47,004
Third Phase – 1993-2003 (Entry of Private Sector Funds):
With the entry of private sector funds in 1993, a new era started 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 first private sector
mutual fund registered in July 1993.The 1993 SEBI (Mutual Fund) Regulations were
substituted by a more comprehensive and revised Mutual Fund Regulations in 1996.
The industry now functions under the SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign
mutual funds setting up funds in India and also the industry has witnessed several
mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds
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with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores
of assets under management was way ahead of other mutual funds.
Fourth Phase – since February 2003:
In February 2003, following the repeal of the Unit Trust of India Act 1963
UTI was bifurcated into two separate entities. One is the Specified Undertaking of the
Unit Trust of India with assets under management of Rs.29,835 crores as at the end of
January 2003, representing broadly, the assets of US 64 scheme, assured return and
certain other schemes. The Specified Undertaking of Unit Trust of India, functioning
under an administrator and under the rules framed by Government of India and does
not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and
LIC. It is registered with SEBI and functions under the Mutual Fund Regulations.
With the bifurcation of the erstwhile UTI which had in March 2000 more than
Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual
Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers
taking place among different private sector funds, the mutual fund industry has
entered its current phase of consolidation and growth. As at the end of October 31,
2003, there were 31 funds, which manage assets of Rs.126726 crores under 386
schemes. The graph indicates the growth of assets over the years
A] Mutual Funds Industry Unit holding Pattern
From the data collected from the mutual funds, the following has been observed:-
i) As on March 31, 2003 there are a total number of 1.6 Crore investors
accounts (it is likely that there may be more than one folio of an investor
which might have been counted more than once and actual number of
investors would be less) holding units of Rs. 79,601 Crore. Out of this total
number of investors accounts, 1.56 Crore are individual investors accounts,
accounting for 97.42% of the total number of investors accounts and
contribute Rs.32691Crore which is 41.07% of the total net assets.
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ii) Corporate and institutions who form only 2.04% of the total number of
investors accounts in the mutual funds industry, contribute a sizeable amount
of Rs.45,470 Crore which is 57.12% of the total net assets in the mutual funds
industry.
iii) The NRIs/OCBs and FIIs constitute a very small percentage of investors
accounts (0.54%) and contribute Rs.1440.18crore (1.81%) of net assets.
The details of unit holding pattern are given in the following table:
UNIT HOLDING PATTERN OF MUTUAL FUNDS INDUSTRY
Category No. Of % To Total NAV(Rs.Crore) %To Total

Investors A/C Investors A/C NAV
Individuals 15,557,506 97.42 32,691.12 41.07
NRIs/OCBs 84,311 0.53 878.51 1.10
FIIs 2,058 0.01 561.67 0.71
Corporate/
Institutions/Othe
rs 324,979 2.04 45,469.53 57.12
TOTAL 15,968,854 100.00 79,600.83 100.00
B] Unit holding Pattern – Private/Public Sector Mutual Funds:

From the analysis of data on unit holding pattern of Private Sector Mutual Funds and
Public Sector Mutual Funds, the following observations are made:-
1. Out of a total of 1.6 Crore investors accounts in the mutual funds industry, (it
is likely that there may be more than one folio of an investor which might
have been counted more than once and therefore actual number of investors
may be less) 42.93 lakh investors accounts i.e. 27% of the total investors
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accounts are in private sector mutual funds whereas the 1.17 Crore investors
accounts ie.73% are with the public sector mutual funds which includes UTI
Mutual Fund. However, the private sector mutual funds manage 71.2% of the
net assets whereas the public sector mutual funds own only 28.8% of the
assets.
2. UTI Mutual Fund has 97. 12 lakh investors’ accounts which is 60.82% of the
total investor’s accounts in the mutual funds industry.
Details of unit holding pattern of private sector and public sector mutual funds are:
UNIT HOLDING PATTERN OF PRIVATE SECTOR MFS
Category No. Of Investors % To Total NAV(Rs.Cr %To Total

A/C Investors A/C ore) NAV
Individuals 4001841 93.23 17956.48 31.68
NRIs/OCBs 38416 0.89 723.02 1.28
FIIs 1317 0.03 528.51 0.93
Corporate/
Institutions/
Others 250972 5.85 37465.91 66.11
TOTAL 4292546 100.00 56673.92 100.00
UNIT HOLDING PATTERN OF PUBLIC SECTOR MFS (INCLUDING UTI MF )
Category NO. Of % To Total NAV(Rs.Cr %To Total

Investors A/C Investors A/C ore) NAV
Individuals 11,555,665 98.97 14734.64 64.27
NRIs/OCBs 45895 0.39 155.49 0.68
FIIs 741 0.01 33.16 0.14
Corporate/
Institutions/
Others 74007 0.63 8003.62 34.91
TOTAL 11676308 100.00 22926.91 100.00
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RECENT TRENDS IN MUTUAL FUND INDUSTRY:
The most important trend in the mutual fund industry is the aggressive
expansion of the foreign owned mutual fund companies and the decline of the
companies floated by nationalized banks and smaller private sector players.
Many nationalized banks got into the mutual fund business in the early
nineties and got off to a good start due to the stock market boom prevailing then.
These banks did not really understand the mutual fund business and they just viewed
it as another kind of banking activity. Few hired specialized staff and generally chose
to transfer staff from the parent organizations.
The performance of most of the schemes floated by these funds was not good.
Some schemes had offered guaranteed returns and their parent organizations had to
bail out these AMCs by paying large amounts of money as the difference between the
guaranteed and actual returns.
The service levels were also very bad. Most of these AMCs have not been
able to retain staff, float new schemes etc. and it is doubtful whether, barring a few
exceptions, they have serious plans of continuing the activity in a major way.
The experience of some of the AMCs floated by private sector Indian

companies was also very similar. They quickly realized that the AMC business is a
business, which makes money in the long term and requires deep-pocketed support in
the intermediate years. Some have sold out to foreign owned companies, some have
merged with others and there is general restructuring going on.
The foreign owned companies have deep pockets and have come in here with
the expectation of a long haul. They can be credited with introducing many new
practices such as new product innovation, sharp improvement in service standards and
disclosure, usage of technology, broker education and support etc. In fact, they have
forced the industry to upgrade itself and service levels of organizations like UTI have
improved dramatically in the last few years in response to the competition provided
by these.
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National Stock Exchange (NSE)
With the liberalization of the Indian economy, it was found inevitable to lift the
Indian stock market trading system on par with the international standards. On the
basis of the recommendations of high powered Pherwani Committee, the National
Stock Exchange was incorporated in 1992 by Industrial Development Bank of India,
Industrial Credit and Investment Corporation of India, Industrial Finance Corporation
of India, all Insurance Corporations, selected commercial banks and others.
Trading at NSE can be classified under two broad categories:
(a) Wholesale debt market and
(b) Capital market.
Wholesale debt market operations are similar to money market operations -

institutions and corporate bodies enter into high value transactions in financial
instruments such as government securities, treasury bills, public sector unit bonds,
commercial paper, certificate of deposit, etc.
There are two kinds of players in NSE:
(a) trading members and
(b) participants.
Recognized members of NSE are called trading members who trade on behalf of
themselves and their clients. Participants include trading members and large players
like banks who take direct settlement responsibility.
Trading at NSE takes place through a fully automated screen-based trading

mechanism which adopts the principle of an order-driven market. Trading members
can stay at their offices and execute the trading, since they are linked through a
communication network. The prices at which the buyer and seller are willing to
transact will appear on the screen. When the prices match the transaction will be
completed and a confirmation slip will be printed at the office of the trading member.
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NSE has several advantages over the traditional trading exchanges. They are as
follows:
 NSE brings an integrated stock market trading network across the nation.
 Investors can trade at the same price from anywhere in the country since inter-
market operations are streamlined coupled with the countrywide access to the
securities.
 Delays in communication, late payments and the malpractice’s prevailing in

the traditional trading mechanism can be done away with greater operational
efficiency and informational transparency in the stock market operations, with
the support of total computerized network.
Unless stock markets provide professionalized service, small investors and foreign
investors will not be interested in capital market operations. And capital market being
one of the major source of long-term finance for industrial projects, India cannot
afford to damage the capital market path. In this regard NSE gains vital importance in
the Indian capital market system.
Preamble
Often, in the economic literature we find the terms ‘development’ and ‘growth’ are
used interchangeably. However, there is a difference. Economic growth refers to the
sustained increase in per capita or total income, while the term economic development
implies sustained structural change, including all the complex effects of economic
growth. In other words, growth is associated with free enterprise, whereas
development requires some sort of control and regulation of the forces affecting
development. Thus, economic development is a process and growth is a phenomenon.
Economic planning is very critical for a nation, especially a developing country like
India to take the country in the path of economic development to attain economic
growth.
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Why Economic Planning for India?
One of the major objective of planning in India is to increase the rate of economic
development, implying that increasing the rate of capital formation by raising the
levels of income, saving and investment. However, increasing the rate of capital
formation in India is beset with a number of difficulties. People are poverty ridden.
Their capacity to save is extremely low due to low levels of income and high
propensity to consume. Therefore, the rate of investment is low which leads to capital
deficiency and low productivity. Low productivity means low income and the vicious
circle continues. Thus, to break this vicious economic circle, planning is inevitable for
India.
The market mechanism works imperfectly in developing nations due to the ignorance
and unfamiliarity with it. Therefore, to improve and strengthen market mechanism
planning is very vital. In India, a large portion of the economy is non-monetized; the
product, factors of production, money and capital markets is not organized properly.
Thus the prevailing price mechanism fails to bring about adjustments between
aggregate demand and supply of goods and services. Thus, to improve the economy,
market imperfections has to be removed; available resources has to be mobilized and
utilized efficiently; and structural rigidities has to be overcome. These can be attained
only through planning.
In India, capital is scarce; and unemployment and disguised unemployment is

prevalent. Thus, where capital was being scarce and labor being abundant, providing
useful employment opportunities to an increasing labor force is a difficult exercise.
Only a centralized planning model can solve this macro problem of India.
Further, in a country like India where agricultural dependence is very high, one
cannot ignore this segment in the process of economic development. Therefore, an
economic development model has to consider a balanced approach to link both
agriculture and industry and lead for a paralleled growth. Not to mention, both
agriculture and industry cannot develop without adequate infrastructural facilities
which only the state can provide and this is possible only through a well carved out
planning strategy. The government’s role in providing infrastructure is unavoidable
due to the fact that the role of private sector in infrastructural development of India is
19
very minimal since these infrastructure projects are considered as unprofitable by the
private sector.
Further, India is a clear case of income disparity. Thus, it is the duty of the state to
reduce the prevailing income inequalities. This is possible only through planning.
Planning History of India
The development of planning in India began prior to the first Five Year Plan of
independent India, long before independence even. The idea of central directions of
resources to overcome persistent poverty gradually, because one of the main policies
advocated by nationalists early in the century. The Congress Party worked out a
program for economic advancement during the 1920’s, and 1930’s and by the 1938
they formed a National Planning Committee under the chairmanship of future Prime
Minister Nehru. The Committee had little time to do anything but prepare programs
and reports before the Second World War which put an end to it. But it was already
more than an academic exercise remote from administration. Provisional government
had been elected in 1938, and the Congress Party leaders held positions of
responsibility. After the war, the Interim government of the pre-independence years
appointed an Advisory Planning Board. The Board produced a number of somewhat
disconnected Plans itself. But, more important in the long run, it recommended the
appointment of a Planning Commission.
The Planning Commission did not start work properly until 1950. During the first
three years of independent India, the state and economy scarcely had a stable structure
at all, while millions of refugees crossed the newly established borders of India and
Pakistan, and while ex-princely states (over 500 of them) were being merged into
India or Pakistan. The Planning Commission as it now exists, was not set up until the
new India had adopted its Constitution in January 1950.
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Objectives of Indian Planning
The Planning Commission was set up the following Directive principles :
 To make an assessment of the material, capital and human resources of the

country, including technical personnel, and investigate the possibilities of
augmenting such of these resources as are found to be deficient in relation to
the nation’s requirement.
 To formulate a plan for the most effective and balanced use of the country’s
resources.
 Having determined the priorities, to define the stages in which the plan should
be carried out, and propose the allocation of resources for the completion of
each stage.
 To indicate the factors which are tending to retard economic development, and
determine the conditions which, in view of the current social and political
situation, should be established for the successful execution of the Plan.
 To determine the nature of the machinery this will be necessary for securing
the successful implementation of each stage of Plan in all its aspects.
 To appraise from time to time the progress achieved in the execution of each
stage of the Plan and recommend the adjustments of policy and measures that
such appraisals may show to be necessary.
 To make such interim or auxiliary recommendations as appear to it to be

appropriate either for facilitating the discharge of the duties assigned to it or
on a consideration of the prevailing economic conditions, current policies,
measures and development programs; or on an examination of such specific
problems as may be referred to it for advice by Central or State Governments.
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COMPANY PROFILE
22
ICICI PrudentialAsset Management Company Ltd.
ICICI Prudential Asset Management Company Ltd. is the second largest asset
management company (AMC) in the country (as per average assets under
management as on September 30, 2015) focused on bridging the gap between savings
& investments and creating long term wealth for investors through a range of simple
and relevant investment solutions. (Data source: AMFI)
The AMC is a joint venture between ICICI Bank, a well-known and trusted name in
financial services in India and Prudential Plc., one of UK’s largest players in the
financial services sectors. Throughout these years of the joint venture, the company
has forged a position of pre-eminence in the Indian Mutual Fund industry.
The AMC manages significant Assets under Management (AUM) in the mutual fund
segment. The AMC also caters to Portfolio Management Services for investors,
spread across the country, along with International Advisory Mandates for clients
across international markets in asset classes like Debt, Equity and Real Estate.
The AMC has witnessed substantial growth in scale; from 2 locations and 6
employees at the inception of the joint venture in 1998, to a current strength of more
than 1000 employees with a reach across around 120 locations reaching out to an
investor base of around 3 million investors. The company’s growth momentum has
been exponential and it has always focused on increasing accessibility for its
investors.
Driven by an entirely investor centric approach, the organization today is a suitable

mix of investment expertise, resource bandwidth and process orientation. The AMC
endeavors to simplify its investor’s journey to meet their financial goals, and give a
good investor experience through innovation, consistency and sustained risk adjusted
performance.
ICICI Prudential Mutual Fund (the Fund) offers a wide range of retail and corporate
investment solutions across different asset classes like Equity, Fixed Income and
Gold.
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The Fund House has continuously aimed to provide investors with financial solutions
to aid them in achieving their lifecycle objectives. It has constantly been on the
forefront of innovation and has introduced products aligned to meet customer needs
leading to a well-diversified portfolio of around 57 mutual fund products. The success
of the endeavors is evident in the mutual fund investor base that has witnessed
significant growth from 210 to over 2 Million currently.
ICICI Prudential Mutual Fund gained from managing funds as per its investment
objectives and was able to deliver superior risk adjusted returns. The consistent long
term performance was achieved on the strength of fundamentals, process driven
investment approach with enough flexibility for the fund managers to manage their
funds in their unique style and insight.
The fund house over the last 18 years has garnered trust of its investors and has
emerged as the leading and preferred investment solution provider in India. The fund
house has always aimed to fulfill its fiduciary responsibility of managing investor's
wealth with prudence and due diligence.
Prudential plc. is an international financial services group with significant operations

in Asia, the US and the UK. They serve more than 24 million insurance customers
and have £496 billion of assets under management. Understanding and responding to
customers' needs is at the heart of their business. It is something they have been doing
for over 166 years. They generate sustainable value for shareholders through a
relentless focus on meeting their customers’ savings, income and protection needs and
a disciplined approach to investing in the most profitable growth opportunities.
The Group is structured around four main business units:
Prudential Corporation Asia (PCA)

Prudential is a leading life insurer that spans 12 markets in Asia, covering Cambodia,
China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines,
Singapore, Taiwan, Thailand and Vietnam. With more than 350,000 agents across the
region, Prudential has a robust multi-channel distribution platform providing a
comprehensive range of savings, investment and protection products.
East spring Investments manages investments across Asia on behalf of a wide range
24
of retail and institutional investors, with about half the assets sourced from life and
pension products sold by Prudential plc. They are one of the region’s largest asset
managers with operations in 10 markets plus offices in North America, the UAE, the
UK and Luxembourg. They have £77.3 billion in assets under management (as at 31
December 2014), managing funds across a range of asset classes including equities
and fixed income.
Jackson National Life Insurance Company
Jackson is one of the largest life insurance companies in the US, leader in designing
innovative retirement solutions, including variable, fixed and fixed index annuities.
They provide carefully tailored retirement products aimed at the 78 million ‘baby
boomers’ in the United States, drawing on 50 years of accumulated experience. The
company has had a long and successful record of providing advisers with the
products, tools and support to design effective retirement solutions for their clients.
Prudential UK & Europe (PUE)
Prudential UK is a leading life and pensions provider to approximately 7 million

customers in the United Kingdom. Their expertise in areas such as longevity, risk
management and multi-asset investment, together with their financial strength and
highly respected brand, means that the business is strongly positioned to continue
pursuing a value-driven strategy built around their core strengths in with-profits and
annuities.
M&G
M&G is Prudential's UK and European fund management business managing assets in

excess of £257.3 bn (as at 30 September 2014) in equities, multi-asset, fixed income,
real estate and cash for clients across Europe and Asia. Investing client’s money for
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over 80 years, they have grown to be one of Europe's largest retail and institutional
fund managers by developing enduring expertise in active investment.
Products
Insurance Solutions for Individuals
ICICI Prudential Life Insurance offers a range of innovative, customer-centric

products that meet the needs of customers at every life stage. Its products can be
enhanced with up to 4 riders, to create a customized solution for each policyholder.
Savings & Wealth Creation Solutions
ICICI Pru Life Stage Wealth II is a unit linked insurance plan that offers multiple
choices to decide how your savings would be invested based on your risk appetite.
UIN - 105L118V02
ICICI Pru LifeTime Premier is a comprehensive savings plan that offers you a
choice of portfolio strategies for your savings and at the same time secures you
against uncertainties of life. UIN - 105L112V02
ICICI Pru Pinnacle Super is a unit linked insurance plan that gives you the
advantage of varying exposure to equities with downside protection, so that your
investments are protected in financially volatile times. UIN - 105L121V03
ICICI Pru Elite Life is a unit linked insurance plan that offers you multiple choices
on how to invest your savings along with an insurance cover. IN - 105L125V02
ICICI Pru Elite Wealth is a unit linked insurance plan that offers you the greatest
value for your hard earned savings. Also, you get rewarded with Loyalty Additions
from the sixth year onwards to maximize the return on your investments. UIN -
105L126V02
ICICI Pru I Assure Single Premium a conventional non-participating single

premium product that provides you Guaranteed Maturity Benefit and also offers a life
cover to take care of your loved ones in your absence.UIN - 105N123V01
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ICICI Pru Guaranteed Savings Insurance Plan is a limited pay endowment product
that allows you to enjoy the benefits of a long term savings plan ensuring that you and
your family are free of any financial worries. UIN - 105N114V02
ICICI Pru Future Secure is a participating endowment life insurance plan that helps
you save for specific goals in the future, while providing protection for your family
from financial distress in case of your untimely demise. Thus the dual benefit of
savings and protection it helps you ensure a secure future for your loved ones. UIN -
105N117V01
ICICI Pru Whole Life provides you with a unique double advantage of savings and
protection that not only allows you to meet your goals but also seeks to ensure that
your dear ones will continue to live their lives in comfort without financial worries in
case of unforeseen eventuality. UIN - 105N116V01
ICICI Pru Save 'n' Protect is plan for those who want to accumulate funds on a
regular basis while enjoying insurance protection. UIN - 105N004V02
ICICI Pru Cash back is a single policy that combines the triple benefit of
protection, savings & periodic liquidity. UIN - 105N005V02
Protection Solutions
ICICI Pru I Care is a term insurance plan that you can buy online at your
convenience at their home in a simple manner. UIN - 105N122V01
ICICI Pru Pure Protect is a flexible and affordable term product, with which you
can ensure your life and provide total security for your family in case of an
unfortunate event. UIN - 105N084V01
ICICI Pru LifeGuard is a protection plan, which offers life cover at low cost. It is
available in 2 options –level term assurance with return of premium & single
premium. UIN - 105N006V02
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Child Plans
ICICI Pru SmartKid Regular Premium is an endowment regular premium life

insurance plan which comes with a unique Payer Waiver Benefit (PWB). This benefit
ensures that in case of death of the parent, the company pays all future premiums on
behalf of the parent. This means that the child gets money at important stages of
his/her student life and education never suffers due to lack of funds.UIN No -
105N014V02
ICICI Pru SmartKid Premier is a ULIP plan which ensures your child’s education
continues even if you are not around. In this Plan you need to invest premiums
regularly over a period of time and the returns that you get will depend on the
performance of the underlying fund performance. UIN - 105L120V01
Retirement Solutions
ICICI Pru Immediate Annuity is a single premium annuity product that guarantees
income for life at the time of retirement. It offers the benefit of 5 pay out options. UIN
- 105N009V06
Health Solutions
ICICI Pru Hospital Care II is a family floater plan covering your spouse and
children. This fixed benefit hospitalisation and surgical plan complements your
existing coverage by offering payouts over and above any health plan you have, thus
availing best possible medical treatment, without having to bother about the cost of
the treatment or quality of care. UIN - 105N108V01
ICICI Pru Crisis Cover is a product that will provide long-term coverage against 35
critical illnesses, total and permanent disability, and death. UIN - 105N072V01
ICICI Pru Health Saver is a whole of life comprehensive health insurance policy
which provides a hospitalisation cover for you and your family and reimburses all
other medical expenses not covered in the hospitalisation benefit by building a health
fund for you and your family. UIN - 105L087V01
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Group Insurance Solutions
ICICI Prudential also offers Group Insurance Solutions for companies seeking to
enhance benefits to their employees.
Group Gratuity Plan: ICICI Prudential Life's group gratuity plan helps employers
fund their statutory gratuity obligation in a scientific manner and also avail of tax
benefits as applicable to approved gratuity funds.
Group Leave encashment Plan: ICICI Prudential Life’s Group offers a market
linked and traditional leave encashment plan designed to aid the employer to build a
fund to meet their future leave encashment liability. The contributions made will be
invested as per the chosen investment plans and will be available for payment of the
benefit when it falls due. Additionally, the product also provides for term cover for all
the employees covered under the policy. UIN - 105L079V01
Group Term Insurance Plan: ICICI Prudential Life's flexible group term is a one-
year renewable life insurance policy that enables you to provide every member of
your team with an affordable life cover.
Group Term in lieu of EDLI Scheme: ICICI Prudential's Group Insurance Scheme
in lieu of EDLI has been certified by the Employee Provident Fund Organization
(EPFO) as a superior product that provides greater insurance benefits than the cover
offered by EPFO.
Credit Assure With Credit Assure, we offer an innovative and affordable term life
insurance plan that covers loans against the unfortunate event of death, with complete
convenience in application. The scheme is simple and hassle-free. In other words,
peace of mind guaranteed.
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Flexible Rider Options
ICICI Prudential Life offers flexible riders, which can be added to the basic policy at
a marginal cost, depending on the specific needs of the customer.
Accident & disability benefit: If death occurs as the result of an accident during the
term of the policy, the beneficiary receives an additional amount equal to the rider
sum assured under the policy. If an accident results in total and permanent disability,
10% of rider sum assured will be paid each year, from the end of the 1st year after the
disability date for the remainder of the base policy term or 10 years, whichever is
lesser.
Critical illness benefit: Critical Illness Benefit Rider provides protection against 9
critical illnesses to the policyholder when attached to the basic plan.
Income Benefit Rider: In case of death of the life assured during the term of the
policy, 10% of the rider sum assured is paid annually to the beneficiary, on each
policy anniversary till maturity of the rider. Income Benefit rider is available with
SmartKid Child Plans. Premiums paid under this rider are eligible for tax benefits
under Section 80C.
Waiver of Premium Rider (WOP): On total and permanent disability due to an

accident, all future premiums for both the base policy and rider(s) will be waived till
the end of the term of the rider or death of the life assured, if earlier.
Waiver of Premium Rider on Critical Illness Rider: This rider waives all your
future premiums of your base policy on occurrence of specified 20 Critical Illnesses.
This ensures that your policy benefits continue as planned.
30
Management
Mr.Nimesh Shah- Managing Director & CEO

Mr. B Ramakrishna - Executive Vice President
Mr. Raghav Iyengar - Executive Vice President & Head – Retail & Institutional
Business
Mr. Hemant Agarwal - Head - Operations
Mr. Rahul Rai - Head – Real Estate Business ICICI Prudential Asset Management
Company Limited
Fund Management
Mr. S. Naren - Chief Investment Officer

Mr. Rahul Goswami - Chief Investment Officer– Fixed Income
Board of Directors: Asset Management Company
Ms. Chanda Kochhar - Chairperson

Mr. Barry Stowe
Mr. Suresh Kumar
Mr. Vijay Thacker
Mr. N.S. Kannan
Mr. C. R. Muralidharan
Mr. M. K. Sharma
Mr. Nimesh Shah
Awards:
 ICICI Bank has been adjudged winner at the Express IT Innovation Award
under the Large Enterprise category.
 ICICI Bank wins awards under the categories of 'Most Innovative Bank' and
'Most Innovative use of Multi-Channel Infrastructure' at the Indian Bank's
Association's BANCON Innovation Awards 2013.
31
 ICICI Bank won the Asian Banking & Finance Retail Banking Award 2013
for the Online Banking Initiative of the Year
 ICICI Bank won an award under the Social Media category at the
InformationWeek EDGE Award
 Ms. Chanda Kochhar, MD and CEO has been awarded as the Best CEO -
Private Sector category at the Forbes India Leadership Awards 2013
 ICICI Prudential Life Insurance has been pronounced winner in the 2nd
Excellence Awards and Recognition for Shared Services, 2012. We won the
award in the category - Shared Services in India - Insurance Domain.
 These awards have been instituted by All India Management Association
(AIMA) & Delhi Management Association (DMA), in collaboration with
 R-value Consulting as knowledge partners, to honor,recognize & promote
transformative strategies for shared services.
 Ms Chanda Kochhar, Managing Director & CEO was awarded the "CNBC
Asia India Business Leader Of The Year Award". She also received the
"CNBC Asia's CSR Award 2011"
 For the third year in a row ICICI Bank has won The Asset Triple A Country
Awards for Best Domestic Bank in India
 ICICI Bank won the Most Admired Knowledge Enterprises (MAKE) India
2009 Award. ICICI Bank won the first place in "Maximizing Enterprise
Intellectual Capital" category, October 28, 2009
 Ms Chanda Kochhar, MD and CEO was awarded with the Indian Business
Women Leadership Award at NDTV Profit Business Leadership Awards ,
October 26, 2009.
 ICICI Bank received two awards in CNBC Awaaz Consumer Awards; one for
the most preferred auto loan and the other for most preferred credit Card, on
September 30, 2009
 Ms Chanda Kochhar, Managing Director & CEO ranked in the top 20 of the
World's 100 Most Powerful Women list compiled by Forbes, August 2009
 Financial Express at its FE India's Best Banks Awards, honoured Mr. K.V.
Kamath, Chairman with the Lifetime Achievement Award , July 25, 2009
 ICICI Bank won Asset Triple A Investment Awards for the Best Derivative
House, India. In addition ICICI Bank were Highly commended , Local
Currency Structured product, India for 1.5 year ADR GDR linked Range
32
Accrual Note., July 2009
 ICICI bank won in three categories at World finance Banking awards on June
16, 2009
o Best NRI Services bank
o Excellence in Private Banking, APAC Region
o Excellence in Remittance Business, APAC Region
 ICICI Bank Mobile Banking was adjudged "Best Bank Award for Initiatives
in Mobile Payments and Banking" by IDRBT, on May 18, 2009 in Hyderabad.
 ICICI Bank's b2 branch free banking was adjudged "Best E-Banking Project
Implementation Award 2008" by The Asian Banker, on May 11, 2009 at the
China World Hotel in Beijing.
ICICI Foundation for Inclusive Growth (ICICI Foundation) was founded by the ICICI
Group in early 2008 to give focus to its efforts to promote inclusive growth amongst
low-income Indian households.
Vision
Our vision is a world free of poverty in which every individual has the freedom and
power to create and sustain a just society in which to live.
Mission
Our mission is to create and support strong independent organisations which work
towards empowering the poor to participate in and benefit from the Indian growth
process.
As a key partner in India's economic growth for more than five decades, the ICICI
Group endeavours to promote growth in all sectors of the nation ’s economy. To give
focus to its efforts to promote inclusive growth amongst low-income Indian
households, the ICICI Group founded ICICI Foundation for Inclusive Growth in
January 2010.
The foundations of ICICI Group’s approach towards human and social development
were established with the Social Initiatives Group (SIG), a non-profit resource group
within ICICI Bank, in 2000.
ICICI Foundation for Inclusive Growth (ICICI Foundation) has been set up as a
public charitable trust registered at Chennai vide registration of the Trust Deed with
33
the Sub-Registrar’s Office at Chennai on January 04, 2010.
The application for registration of the Foundation under section 12AA of the Income
tax Act, 1961 (“the Act”) was filed on February 7, 2008 and the application under
section 80G of the Act was filed on February 14, 2008. Subsequently, ICICI
Foundation was registered as a “PUBLIC CHARITABLE TRUST” under Section
12AA of the Act with effect from February 7, 2008. Further, ICICI Foundation
received approval under Section 80G(5)(vi) of the Act on March 19, 2008. This
approval is valid in respect of donation received by ICICI Foundation from February
14, 2008 to March 31, 2009. Accordingly, ICICI Bank and Group Companies will be
eligible to get a deduction under section 80G on donations made during this period.
MITRA is an affiliate of CSO Partners that is focused on addressing the challenge of

human resources for civil society organisations (CSOs). In partnership with CSO
Partners and MITRA, ICICI Foundation proposes to launch an ICICI Fellows
Programme. An amount of Rs.55.00 million has been disbursed to MITRA for
developing and launching the programme over the period 2009-2010.
CARE (Disaster Management Unit)
A grant of Rs.5.00 million has been given to CARE in India to enable it to prepare for
any future disasters that may strike and respond immediately with the required relief
efforts.
Rang De (Micro Enterprise Development)
Rang De, an affiliate of CSO Partners, has partnered with ICICI Venture to roll out
funds for micro enterprise development in rural and semi-urban locations. The amount
of Rs.25.00 million that has been disbursed to them will support micro enterprises to
the extent of Rs.15.00 million and the balance amount of Rs.10.00 million will go
towards meeting their expenses to build the platform.
34
CHAPTER-III
LITERATURE REVIEW
35
CONCEPT OF MUTUAL FUNDS
Like most developed and developing countries the mutual fund culture has been
catching on in India. There are various reasons for this. Mutual funds make it easy
and less costly for investors to satisfy their need for capital growth, income and/or
income preservation. And in addition to this a mutual fund brings the benefits of
diversification and money management to the individual investor, providing an
opportunity for financial success that was once available only to a select few.
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned
through these investments and the capital appreciations realized are shared by its unit
holders in proportion to the number of units owned by them. Thus a Mutual Fund is
the most suitable investment for the common man as it offers an opportunity to invest
in a diversified, -professionally managed basket of securities at a relatively low cost.
The flow chart below describes broadly the working of a mutual fund:
Mutual Fund Operation Flow Chart
36
BENEFITS OF MUTUAL FUNDS
Investing in mutual has various benefits which makes it an ideal investment avenue.
Following are some of the primary benefits.
Professional investment management

One of the primary benefits of mutual funds is that an investor has access to
professional management. A good investment manager is certainly worth the fees you
will pay. Good mutual fund managers with an excellent research team can do a better
job of monitoring the companies they have chosen to invest in than you can, unless
you have time to spend on researching the companies you select for your portfolio.
That is because Mutual funds hire full-time, high-level investment professionals.
Funds can afford to do so as they manage large pools of money. The managers have
real-time access to crucial market information and are able to execute trades on the
largest and most cost-effective scale. When you buy a mutual fund, the primary asset
you are buying is the manager, who will be controlling which assets are chosen to
meet the funds' stated investment objectives.
Diversification
A crucial element in investing is asset allocation. It plays a very big part in the
success of any portfolio. However, small investors do not have enough money to
properly allocate their assets. By pooling your funds with others, you can quickly
benefit from greater diversification. Mutual funds invest in a broad range of securities.
This limits investment risk by reducing the effect of a possible decline in the value of
any one security. Mutual fund unit-holders can benefit from diversification techniques
usually available only to investors wealthy enough to buy significant positions in a
wide variety of securities.
Low Cost
A mutual fund lets you participate in a diversified portfolio for as little as Rs.5,000,
and sometimes less. And with a no-load fund, you pay little or no sales charges to
own them.
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Convenience and Flexibility
Investing in mutual funds has its own convenience. While you own just one security
rather than many, you still enjoy the benefits of a diversified portfolio and a wide
range of services. Fund managers decide what securities to trade, collect the interest
payments and see that your dividends on portfolio securities are received and your
rights exercised. It also uses the services of a high quality custodian and registrar.
Another big advantage is that you can move your funds easily from one fund to
another within a mutual fund family. This allows you to easily rebalance your
portfolio to respond to significant fund management or economic changes.
Liquidity
In open-ended schemes, you can get your money back promptly at net asset value
related prices from the mutual fund itself.
Transparency
Regulations for mutual funds have made the industry very transparent. You can track
the investments that have been made on you behalf and the specific investments made
by the mutual fund scheme to see where your money is going. In addition to this, you
get regular information on the value of your investment.
Variety
There is no shortage of variety when investing in mutual funds. You can find a mutual
fund that matches just about any investing strategy you select. There are funds that
focus on blue-chip stocks, technology stocks, bonds or a mix of stocks and bonds. The
greatest challenge can be sorting through the variety and picking the best for you.
38
TYPES OF MUTUAL FUNDS
Getting a handle on what's under the hood helps you become a better investor and put
together a more successful portfolio. To do this one must know the different types of
funds that cater to investor needs, whatever the age, financial position, risk tolerance
and return expectations. The mutual fund schemes can be classified according to both
their investment objective (like income, growth, tax saving) as well as the number of
units (if these are unlimited then the fund is an open-ended one while if there are
limited units then the fund is close-ended).
This section provides descriptions of the characteristics -- such as investment
objective and potential for volatility of your investment -- of various categories of
funds. The type of securities purchased by each fund organizes these descriptions:
equities, fixed-income, money market instruments, or some combination of these.
Open-Ended Schemes
Open-ended schemes do not have a fixed maturity period. Investors can buy or sell
units at NAV-related prices from and to the mutual fund on any business day. These
schemes have unlimited capitalization, open-ended schemes do not have a fixed
maturity, there is no cap on the amount you can buy from the fund and the unit capital
can keep growing. These funds are not generally listed on any exchange.
Open-ended schemes are preferred for their liquidity. Such funds can issue and
redeem units any time during the life of a scheme. Hence, unit capital of open-ended
funds can fluctuate on a daily basis. The advantages of open-ended funds over close-
ended are as follows:
Any time exit option. The issuing company directly takes the responsibility of
providing an entry and an exit. This provides ready liquidity to the investors and
avoids reliance on transfer deeds, signature verifications and bad deliveries. Any time
entry option, an open-ended fund allows one to enter the fund at any time and even to
invest at regular intervals.
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Close-Ended Schemes
Close-ended schemes have fixed maturity periods. Investors can buy into these funds
during the period when these funds are open in the initial issue. After that such
scheme cannot issue new units except in case of bonus or rights issue? However, after
the initial issue, you can buy or sell units of the scheme on the stock exchanges where
they are listed. The market price of the units could vary from the NAV of the scheme
due to demand and supply factors, investors’ expectations and other market factors
Classification According To Investment Objectives
Mutual funds can be further classified based on their specific investment objective
such as growth of capital, safety of principal, current income or tax-exempt income.
In general mutual funds fall into three general categories:
1] Equity Funds are those that invest in shares or equity of companies.
2] Fixed-Income Funds invest in government or corporate securities that offer fixed
rates of return are
3] While funds that invest in a combination of both stocks and bonds are called
Balanced Funds.
Growth Funds
Growth funds primarily look for growth of capital with secondary emphasis on
dividend. Such funds invest in shares with a potential for growth and capital
appreciation. They invest in well-established companies where the company itself and
the industry in which it operates are thought to have good long-term growth potential,
and hence growth funds provide low current income. Growth funds generally incur
higher risks than income funds in an effort to secure more pronounced growth.
Some growth funds concentrate on one or more industry sectors and also invest in a
broad range of industries. Growth funds are suitable for investors who can afford to
assume the risk of potential loss in value of their investment in the hope of achieving
substantial and rapid gains. They are not suitable for investors who must conserve
their principal or who must maximize current income.
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Growth and Income Funds
Growth and income funds seek long-term growth of capital as well as current income.
The investment strategies used to reach these goals vary among funds. Some invest in
a dual portfolio consisting of growth stocks and income stocks, or a combination of
growth stocks, stocks paying high dividends, preferred stocks, convertible securities
or fixed-income securities such as corporate bonds and money market instruments.
Others may invest in growth stocks and earn current income by selling covered call
options on their portfolio stocks.
Growth and income funds have low to moderate stability of principal and moderate
potential for current income and growth. They are suitable for investors who can
assume some risk to achieve growth of capital but who also want to maintain a
moderate level of current income.
Fixed-Income Funds
Fixed income funds primarily look to provide current income consistent with the
preservation of capital. These funds invest in corporate bonds or government-backed
mortgage securities that have a fixed rate of return. Within the fixed-income category,
funds vary greatly in their stability of principal and in their dividend yields. High-
yield funds, which seek to maximize yield by investing in lower-rated bonds of longer
maturities, entail less stability of principal than fixed-income funds that invest in
higher-rated but lower-yielding securities.
Some fixed-income funds seek to minimize risk by investing exclusively in securities
whose timely payment of interest and principal is backed by the full faith and credit of
the Indian Government. Fixed-income funds are suitable for investors who want to
maximize current income and who can assume a degree of capital risk in order to do
so.
Balanced
The Balanced fund aims to provide both growth and income. These funds invest in
both shares and fixed income securities in the proportion indicated in their offer
41
documents. Ideal for investors who are looking for a combination of income and
moderate growth.
Money Market Funds/Liquid Funds
For the cautious investor, these funds provide a very high stability of principal while
seeking a moderate to high current income. They invest in highly liquid, virtually
risk-free, short-term debt securities of agencies of the Indian Government, banks and
corporations and Treasury Bills. Because of their short-term investments, money
market mutual funds are able to keep a virtually constant unit price; only the yield
fluctuates.
Therefore, they are an attractive alternative to bank accounts. With yields that are
generally competitive with - and usually higher than -- yields on bank savings
account, they offer several advantages. Money can be withdrawn any time without
penalty. Although not insured, money market funds invest only in highly liquid, short-
term, top-rated money market instruments. Money market funds are suitable for
investors who want high stability of principal and current income with immediate
liquidity.
Specialty/Sector Funds
These funds invest in securities of a specific industry or sector of the economy such as
health care, technology, leisure, utilities or precious metals. The funds enable
investors to diversify holdings among many companies within an industry, a more
conservative approach than investing directly in one particular company.
Sector funds offer the opportunity for sharp capital gains in cases where the fund's
industry is "in favor" but also entail the risk of capital losses when the industry is out
of favor. While sector funds restrict holdings to a particular industry, other specialty
funds such as index funds give investors a broadly diversified portfolio and attempt to
mirror the performance of various market averages.
Index funds generally buy shares in all the companies composing the BSE Sensex or
NSE Nifty or other broad stock market indices. They are not suitable for investors
who must conserve their principal or maximize current income.
42
RISK Vs. REWARD
Having understood the basics of mutual funds the next step is to build a
successful investment portfolio. Before you can begin to build a portfolio, one should
understand some other elements of mutual fund investing and how they can affect the
potential value of your investments over the years. The first thing that has to be kept
in mind is that when you invest in mutual funds, there is no guarantee that you will
end up with more money when you withdraw your investment than what you started
out with. That is the potential of loss is always there. The loss of value in your
investment is what is considered risk in investing. Even so, the opportunity for
investment growth that is possible through investments in mutual funds far exceeds
that concern for most investors. Here’s why At the cornerstone of investing is the
basic principal that the greater the risk you take, the greater the potential reward. Or
stated in another way, you get what you pay for and you get paid a higher return only
when you're willing to accept more volatility.
Risk then, refers to the volatility -- the up and down activity in the markets and
individual issues that occurs constantly over time. This volatility can be caused by a
number of factors -- interest rate changes, inflation or general economic conditions. It
is this variability, uncertainty and potential for loss, that causes investors to worry.
We all fear the possibility that a stock we invest in will fall substantially. But it is this
very volatility that is the exact reason that you can expect to earn a higher long-term
return from these investments than from a savings account.
Different types of mutual funds have different levels of volatility or potential price
change, and those with the greater chance of losing value are also the funds that can
produce the greater returns for you over time. So risk has two sides: it causes the
value of your investments to fluctuate, but it is precisely the reason you can expect to
earn higher returns. You might find it helpful to remember that all financial
investments will fluctuate. There are very few perfectly safe havens and those simply
don't pay enough to beat inflation over the long run.
43
TYPES OF RISKS
All investments involve some form of risk. Consider these common types of risk and
evaluate them against potential rewards when you select an investment.
Market Risk
At times the prices or yields of all the securities in a particular market rise or fall due
to broad outside influences. When this happens, the stock prices of both an
outstanding, highly profitable company and a fledgling corporation may be affected.
This change in price is due to "market risk". Also known as systematic risk.
Inflation Risk
Sometimes referred to as "loss of purchasing power." Whenever inflation rises
forward faster than the earnings on your investment, you run the risk that you'll
actually be able to buy less, not more. Inflation risk also occurs when prices rise faster
than your returns.
Credit Risk
44
In short, how stable is the company or entity to which you lend your money when you
invest? How certain are you that it will be able to pay the interest you are promised, or
repay your principal when the investment matures?
Interest Rate Risk
Changing interest rates affect both equities and bonds in many ways. Investors are
reminded that "predicting" which way rates will go is rarely successful. A diversified
portfolio can help in offsetting these changes.
Exchange risk
A number of companies generate revenues in foreign currencies and may have

investments or expenses also denominated in foreign currencies. Changes in exchange
rates may, therefore, have a positive or negative impact on companies which in turn
would have an effect on the investment of the fund.
Investment Risks
The sectorial fund schemes, investments will be predominantly in equities of select

companies in the particular sectors. Accordingly, the NAV of the schemes are linked
to the equity performance of such companies and may be more volatile than a more
diversified portfolio of equities.
Call Risks
Call risk is associated with bonds have and embedded call option in them. This option
gives the issuer the right to call back the bonds prior to maturity. Then investor
however is exposed to some risks here. The price of the callable bond many not rise
much above the price at which the issuer may call the bond.
Changes in the Government Policy
45
Changes in Government policy especially in regard to the tax benefits may impact the
business prospects of the companies leading to an impact on the investments made by
the fund. Effect of loss of key professionals and inability to adapt business to the rapid
technological change.
An industries' key asset is often the personnel who run the business i.e.
intellectual properties of the key employees of the respective companies. Given the
ever-changing complexion of few industries and the high obsolescence levels,
availability of qualified, trained and motivated personnel is very critical for the
success of industries in few sectors. It is, therefore, necessary to attract key personnel
and also to retain them to meet the changing environment and challenges the sector
offers. Failure or inability to attract/retain such qualified key personnel may impact
the prospects of the companies in the particular sec
Investment cycle in Mutual Funds
46
Types of mutual funds
History of the Indian Mutual Fund Industry:
47
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 – 1964-87(UTI MONOPOLY)
An Act of Parliament established Unit Trust of India (UTI) on 1963. It was set up by
the Reserve Bank of India and functioned under the Regulatory and administrative
control of the Reserve Bank of India. In 1978 UTI was de-linked from 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.6, 700 crores of assets under
management.
Second Phase – 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund
established in June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of
India (Jun 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 cores.
Third Phase – 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started 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 first private sector
mutual fund registered in July 1993.
48
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign I am
dear mutual funds setting up funds in India and also the industry has 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.
Fourth Phase – since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit
Trust of India with assets under management of Rs.29, 835 crores as at the end of
January 2003, representing broadly, the assets of US 64 scheme, assured return and
certain other schemes. The Specified Undertaking of Unit Trust of India, functioning
under an administrator and under the rules framed by Government of India and does
not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores
of assets under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking
place among different private sector funds, the mutual fund industry has entered its
current phase of consolidation and growth. As at the end of June 30, 2003, there were
31 funds, which manage assets of Rs.104762 crores under 376 schemes.
GROWTH IN ASSETS UNDER MANAGEMENT
49
India is at the first stage of a revolution that has already peaked in the U.S. The U.S.
boasts of an Asset base that is much higher than its bank deposits. In India, mutual
fund assets are not even 10% of the bank deposits, but this trend is beginning to
change. Recent figures indicate that in the first quarter of the current fiscal year.
The formation and operations of mutual funds in India is solely guided by SEBI
(Mutual Fund) Regulations, 1993, which came into force on 20 January 1993. The
regulations have since been replaced by the Securities and Exchange Board of India
(Mutual Funds) Regulations, 1996, through a notification on 9 December 1996.
A mutual fund comprises four separate entities, namely sponsor, mutual fund trust,
AMC and custodian. They are of course assisted by other independent administrative
entities like banks, registrars and transfer agents. We may discuss in brief the
formation of different entities, their functions and obligations.
The sponsor for a mutual fund can by any person who, acting alone or in combination
with another body corporate establishes the mutual fund and gets it registered with
SEBI. The sponsor is required to contribute at least 40 per cent of the minimum net
worth (Rs 10 crore) of the asset management company. The sponsor must have a
sound track record and general reputation of fairness and integrity in all his business
transactions.
As per SEBI Regulation, 1996, a mutual fund is to be formed by the sponsor and
registered with SEBI. A mutual fund shall be constituted in the form of a trust and the
instrument of trust shall be in the form of a deed, duly registered under the provisions
of the Indian Registration Act, 1908, executed by the sponsor in favor of trustees
named in such an instrument.
The board of trustees manages the mutual fund and the sponsor executes the trust
deeds in favor of the trustees. The mutual fund raises money through sale of units
under one or more schemes for investing in securities in accordance with SEBI
guidelines. It is the job of the mutual fund trustees to see that the schemes floated and
managed by the AMC appointed by the trustees, are in accordance with the trust
50
deeds and SEBI guidelines. It is also the responsibilities of the trustees to control the
capital property of mutual funds schemes.
The trustees have the right to obtain relevant information from the AMC, as
well as a quarterly report on its activities. They can also dismiss the AMC under
specific condition as per SEBI regulations.
At least half the trustees should be independent persons. The AMC or its
employees cannot act as a trustee. No person who is appointed as a trustee of a mutual
fund can be appointed as a trustee of any other mutual fund unless he is an
independent trustee and prior permission is obtained from the mutual fund in which
he is a trustee.
The trustees are required to submit half-yearly reports to SEBI on the

activities of the mutual fund. The trustees appoint a custodian and supervise their
activities. The trustees can be removed only with prior approval of SEBI.
As per SEBI guidelines, an asset management company is appointed by the

trustees to float the schemes for the mutual fund and manage the funds raised by
selling units under a scheme. The AMC must act as per SEBI guidelines, trust deeds
and management agreement between trustee & the AMC.
The Importance of Accounting Knowledge

Mutual funds in India are required to follow the accounting policies laid down in
SEBI (Mutual Fund) Regulations, 1996 and the amendments in 1998. This section of
the workbook summarizes the important Regulations, and periodical budgets.
Net Asset Value (NAV)
A mutual fund is a common investment vehicle where the assets of the fund belong
directly to the investors. The fund does not account for investors' subscriptions as
liabilities or deposits but as Unit Capital. On the other hand, the investments made on
behalf of the investors are reflected on the assets side and are the main constituents of
the balance sheet. There are, however, liabilities of a strictly short-term nature that
may be part of the balance sheet. The fund's Net Assets are therefore defined as the
51
assets minus the liabilities. As there are many investors in a fund, it is common
practice for mutual funds to compute the share of each investor on the basis of the
value of Net Assets Per Share/Unit, commonly known as the Net Asset Value (NAV).
The following are the regulatory requirements and accounting definitions lay down by
SEBI.
NAV = Net Assets of the scheme / Number of Units Outstanding, i.e. Market value
of investments + Receivables + Other Accrued Income + Other Assets
Accrued Expenses-Other Payables-Other Liabilities
=
No. Of Units Outstanding as at the NAV date
A fund's NAV is affected by four sets of factors:

-- Purchase and sale of investment securities
-- Valuation of all investment securities held
-- Other assets and liabilities, and
-- Units sold or redeemed
Pricing of Units:
Although NAV per share defines the value of the investor's holding in the
fund, the fund may not repurchase the investor's units at the same price as NAV.
However, SEBI requires that the fund must ensure that repurchase price is not lower
than 93% of NAV (95% in the case of a closed end fund). On the other side, a fund
may sell new units at a price that is different from the NAV, but the sale price cannot
be higher than 107% of NAV. Also, the difference the repurchase price and the sale
price of the unit is not permitted to exceed 7% of the sale price.
Fees and Expenses:
An AMC may incur many expenses specifically for given schemes, and other
common expenses. In any case, all expenses should be clearly Unidentified and
allocated to the individual schemes. The AMC may charge the scheme with
52
investment management and advisory feesthat are fully disclosed in the offer
document subject to the following limits:
@ 1.25% of the first Rs. 100 crore of weekly average net assets outstanding in the
accounting year, and @ 1% of weekly average net assets in excess of Rs. 100 crore.
For no load schemes, the AMC may charge an additional management fee up to 1%
of weekly average net assets outstanding in the accounting year.
Investment management and advisory fees are subject to the overall ceiling for
expenses.
A. Initial expensesof launching schemes (not to exceed 6% of initial resources raised
under the scheme); and
B. Recurring expensesincluding:
i. Marketing and selling expenses including agents' commission
ii. Brokerage and transaction costs
iii. Registrar services for transfer of units sold or redeemed
v. Fees and expenses of trustees
v. Audit fees
vi. Custodian fees
vii. Costs related to investor communication
viii. Costs of fund transfers from location to location
ix. Costs of providing account statements and dividend / redemption
cheques and warrants
x. Insurance premium paid by the fund
xi. Winding up costs for terminating a fund or a scheme
xii. Other costs as approved by SEBI
The total expenses charged by the AMC to a scheme, excluding issue or redemption
expenses but including investment management and advisory fees are subject to the
following limits:
 On the first Rs. 100 Crores of average weekly net assets-2.5%
53
 On the next Rs. 300 Crores of average weekly net assets -2.0%
 On the balance of average weekly net assets-1.75%
 For bond funds, the above percentages are required to be lower by 0.25%
Initial Issue Expenses:
When a scheme is first launched, the AMC will incur significant expenses,
whose benefit will accrue over many years. All expenses cannot, therefore, be
charged to a scheme in the first year itself. SEBI permits "amortization" of initial
expenses as follows:
For a closed-end scheme floated on a 'load' basis, the initial issue expenses shall be
amortized on a weekly basis over the period of scheme. For example, a 5-year (i.e.
260 week) closed-end scheme with initial issue expenses of Rs. 5 lakhs must charge
Rs.1923 (5 lakhs / 260 weeks) every week to the fund. It cannot charge the entire
amount of Rs. 5 lakhs at the time of issue.
For an open-end scheme floated on a 'load' basis, initial issue expenses may be
amortized over a period not exceeding five years. For example, if an open-end scheme
has initial issue expenses of Rs. 10 lakhs, it need not charge this entire amount to the
fund in the year of issue. Instead, it may charge Rs. 2 lakhs (10 lakhs / 5 years) per
year to the fund, thereby spreading the charge of initial issue expenses over a
maximum of 5 years. Issue expenses incurred during the life of an open-end scheme
cannot be amortized.
 Unauthorized portion of initial issue expenses shall be included for NAV

calculation, considered as "other asset". The investment advisory fee cannot be
claimed on this asset. Hence, they have to be excluded while determining the
chargeable investment management / advisory fees. While calculating the maximum
amount of chargeable expenses, the un amortized portion of the initial issue expenses
will not be included as part of the average weekly net assets figure.
54
Accounting Policies:
Investments are required to be marked to market using market prices. Any unrealized
appreciation cannot be distributed, and provision must be made for the same.
Dividend received by the fund on a share should be recognized, not on the date of
declaration, but on the date the share is quoted on ex-dividend basis. For example, if a
fund owns shares on which dividend is declared on April 5, and the shares are quoted
on ex-dividend basis on April 20, the dividend income will be included by the fund
for distribution/NAV computation only April 20.
In determining gain or loss on sale of investments, the average cost method must be
followed to determine the cost of purchase. This will be applied by security.
Purchase / sale of investments should be recognized on the trade date and not
settlement date
Bonus / rights shares should be recognized only when the original shares are traded
on the stock exchange on an ex-bonus /ex-rights basis
Income receivable on investments, which is accrued, but not received for 12 months
beyond due date, should be provided for, and no further accrual should be made for
such investment
An investment shall be regarded as non-performing if it has provided no returns
through dividend/interest for more than 2years at the end of the accounting year
Investments owned by mutual funds are marked to market. Therefore, the value of
investments appreciates or depreciates based on market fluctuations, which is
reflected in the balance sheet. However, this change in value constitutes unrealized
gain/loss. When any investments are actually sold, the proportion of the unrealized
gain / loss that pertains to such investments becomes realized gain/loss. Therefore, at
any given time, the NAV includes realized and unrealized gain/loss on investments.
While SEBI prohibits the distribution of unrealized appreciation on investments,
realized gain in available for distribution.
An open-end scheme sells and repurchases units on the basis of NAV. SEBI
therefore prescribes the use of an equalization account, to ensure that creation /
redemption of units does not change the percentage of income distributed. This
involves the following steps:
55
- Computation of distributable reserves:
- Income + Realized Gain on Investments- Expenses-Unrealized Losses (unrealized
gains are excluded)
- If distributable reserves are positive, the following percentage is computed:

Distributable Reserve / Units Outstanding
- The above percentage is multiplied with the number of new units sold, and the
equalization account is credited by this amount, if units are sold above par; if the units
are sold below par, the equalization account is debited by this amount. The same
percentage is multiplies with the number of units repurchased, and the equalization
account is debited by this amount if the units are repurchased above par; if the units
are repurchased below par, the equalization account is credited.
- The net balance in the equalization account is transferred to the profit and loss
account. It is only an adjustment to the distributable surplus and does not affect the
net income for the period.
VALUATION
Mutual funds value their investments on a 'mark-to-market' basis with reference to the
date on which they are valued i.e., the valuation date.
Valuation of Traded Securities:
Where a security is traded on a stock exchange, it is valued at the last quoted closing
price on the stock exchange where it is "principally traded".
If a security is not traded on any stock exchange on a particular valuation day, the
value at which it was traded on the selected/other stock exchange on the
Earliest previous day may be used, provided such date is not more than 60 days prior
to the valuation date.
Valuation of traded securities, once the market price is obtained as above, is quite
simple. The fund will multiply its current holding in number of shares or bonds by the
applicable market price to get the "mark to market" value.
56
Valuation of Non-traded Securities:
When a security is not traded on any stock exchange for 60 days prior to the
valuation date, it must be treated as non-traded' scrip.
Non-traded securities shall be valued 'in good faith' by the AMC on the basis of
appropriate valuation methods, which shall be periodically reviewed by the trustees
and reported by the auditors as fair and reasonable. The following principles are to be
applied for the valuation of non-traded securities:
Equity instruments: are to be valued on the basis of capitalization of earnings solely
or in combination with its balance sheet Net Asset Value. For this purpose,
capitalization rate will be determined by reference to the price or earning rations of
comparable traded securities with an appropriate discount for lower liquidity to be
used.
Debit Instruments:
Debit instruments are to be valued on a yield to maturity basis, the capitalization

factor being determined for comparable traded securities with an appropriate discount
for lower liquidity.
 Call money, bills Purchased: under rediscounting and short term deposits with
banksare to be valued at cost + accrual: other money market instruments at yield at
which they are currently traded; non-traded instruments (not traded for 7 days) will be
valued at cost plus interest accrued till the beginning of the valuation day plus the
difference between redemption value and cost, spread uniformly over the remaining
maturity of the instruments
Government Securities:are to be valued at yield to maturity based on prevailing

market rate
Convertible debentures and bonds:non-convertible component is to be

valued as a debt instrument, and convertible as any equity instrument. If after
57
Conversion, the resultant equity instrument would be traded pari passu with an
existing instrument, which is traded, the value of the latter instrument can be adopted
after an appropriate discount for the non-tradability of the instrument.
RISK INVOLVED IN MUTUAL FUNDS INDUSTRY:
Mutual funds are not free from risk. It is so because basically the mutual funds also
invest their funds in stock markets on shares, which are volatile in nature and are not
risk free, the following risk are inherent in their dealing.
INHERENT RISK FACTORS:

1) Market Risks:
In general there are certain risks associated with the every kind of investment on
shares. They are called market risks. These market risks can be reduced, but cannot be
completely eliminated even by a good investment.
2) Scheme Risks
There are certain risks inherent in the scheme itself. It all depends upon the nature of
the scheme. For instance, in a pure growth scheme, risks are greater
3) Investment Risks
Whether the mutual fund makes money in shares or loses depends upon the
investment expertise of the Asset Management Company. If the investment advice
goes wrong, the fund has to suffer a lot.
4) Business Risks
The corpus of a mutual fund might have been invested in a company’s shares. If the
business of that company suffers any set back, it cannot declare any dividend. It may
even go to the extent of winding up its business.
5) Political Risks
Successive Governments bring with them fancy new economic ideologies and
policies. It is often said that many economic decisions are politically motivated.
PARAMETERS DESCRIPTION
58
The following parameters were considered for analysis:
 Beta
 Alpha
 Correlation coefficient
 Treynor’s Ratio
 Sharpe’s Ratio
 Jensen’s Ratio
Beta
Beta is a measure of volatility, or systematic risk, of a security or portfolio in
comparison to the market as a whole. Beta measures a stock's volatility, the degree to
which a stock price fluctuates in relation to the overall market. Investment analysts
use the Greek letter beta, ß. It is calculated using regression analysis. A beta of 1
indicates that the security's price will move with the market. A beta greater than 1
indicates that the security's price will be more volatile than the market, and a beta less
than 1 means that it will be less volatile than the market.
While standard deviation determines the volatility of a fund according to the disparity
of its returns over a period of time, beta, another useful statistical measure, determines
the volatility, or risk, of a fund in comparison to that of its index.
Investors expecting the market to be bullish may choose funds exhibiting high betas,
which increase investors' chances of beating the market. If an investor expects the
market to be bearish in the near future, the funds that have betas less than 1 are a good
choice because they would be expected to decline less in value than the index. For
example, if a fund had a beta of 0.5 and the S&P 500 declined 6%, the fund would be
expected to decline only 3%. Be aware of the fact that beta by itself is limited and can
be skewed due to factors of other than the market risk affecting the fund's volatility.
Here is a basic guide to various betas:
59
 Negative beta - A beta less than 0 is possible but highly unlikely. People used
to think that gold and gold stocks should have negative betas because they tended to
do better when the stock market declined, but this hasn't been true overall.
 Beta = 0 - Basically this is cash (assuming no inflation).
 Beta between 0 and 1 - Low-volatility investments, such as utilities, are

usually in this range
 Beta = 1 - This is the same as an index, such as the S&P 500 or some other
index fund.
 Beta greater than 1 - This denotes anything more volatile than the broad-
based index, like a sector fund.
 Beta greater than 100 - This is impossible because the stock would be
expected go to zero on any decline in the stock market. The beta never gets higher
than two to three.
The beta value for an index itself is taken as one. Equity funds can have beta values,
which can be above one, less than one or equal to one. By multiplying the beta value
of a fund with the expected percentage movement of an index, the expected
movement in the fund can be determined. Thus if a fund has a beta of 1.2 and the
market is expected to move up by ten per cent, the fund should move by 12 per cent
Similarly if the market loses ten per cent, the fund should lose 12 per cent.
This shows that a fund with a beta of more than one will rise more than the market
and also fall more than market. Clearly, if you'd like to beat the market on the upside,
it is best to invest in a high-beta fund. But you must keep in mind that such a fund will
also fall more than the market on the way down. So, over an entire cycle, returns may
not be much higher than the market.
Similarly, a low-beta fund will rise less than the market on the way up and lose less
on the way down. When safety of investment is important, a fund with a beta of less
60
than one is a better option. Such a fund may not gain much more than the market on
the upside; it will protect returns better when market falls.
Alpha
A measure of risk, used for mutual funds with regards to their relation and the market.
A positive alpha is the extra return awarded to the investor for taking a risk, instead of
accepting the market return
The formula for alpha is:

Alpha = [ (sum of y) - ((b)(sum of x)) ] / n
n =number of observations (36 mos.)

b = beta of the fund
x = rate of return for the market
y = rate of return for the fund
Alpha measures how much if any of this extra risk helped the fund outperform its
corresponding benchmark. Using beta, alpha's computation compares the fund's
performance to that of the benchmark's risk-adjusted returns and establishes if the
fund's returns outperformed the market's, given the same amount of risk.
For example, if a fund has an alpha of 1, it means that the fund outperformed the
benchmark by 1%. Negative alphas are bad in that they indicate that the fund under
performed for the amount of extra, fund-specific risk that the fund's investors
undertook.
61
Standard Deviation
Standard deviation is probably used more than any other

measure to describe the risk of a security (or portfolio of securities). If you read an
academic study on investment performance, chances are that standard deviation will
be used to gauge risk. It's not just a financial tool, though. Standard deviation is one of
the most commonly used statistical tools in the sciences and social sciences. It
provides a precise measure of the amount of variation in any group of numbers--the
returns of a mutual fund.
Measure of the dispersion of a set of data from its mean. The more spread apart the
data is, the higher the deviation. Standard deviation is applied to the annual rate of
return of an investment to measure the investment's volatility (risk).
A volatile stock would have a high standard deviation. In mutual funds, the standard
deviation tells us how much the return on the fund is deviating from the expected
normal returns. Standard deviation is a statistical measure of the range of a fund's
performance. When a fund has a high standard deviation, its range of performance has
been very wide, indicating that there is a greater potential for volatility.
Technically speaking, standard deviation provides a quantification of the variance of

the returns of the security, not its risk. After all, a fund with a high standard deviation
of returns is not necessarily "riskier" than one with a low-standard deviation of
returns.
Correlation
Correlation is a useful tool for determining if relationships exist between securities. A

correlation coefficient is the result of a mathematical comparison of how closely
related two variables are.
The relationship between two variables is said to be highly correlated if a movement
in one variable results or takes place at the same time as a similar movement in
another variable. A useful feature of correlation analysis is the potential to predict the
movement in one security when another security moves. Sometimes, there are
securities that lead other securities. In other words a change in price in one results in
a later change in price of the other. A high negative correlation means that when a
62
securities price changes, the other security or indicator or otherwise financial vehicle,
will often move in the opposite direction.
Correlation analysis is a measure of the degree to which a change in the independent

variable will result in a change in the dependent variable. A low correlation
coefficient (e.g., ±0.1) suggests that the relationship between the two variables is
weak or non-existent. A high correlation coefficient (e.g., ±0.80) indicates that the
dependent variable will most likely change when the Independent variable changes.
Correlation can also be used for a study between an indicator and a stock or index to
help determine the predictive abilities of changes in the indicator. Correlation is not
static. In other words, the correlation between two things in the markets does change
over time and so a careful understanding that what has happened in the past may not
predict what will happen in the future should be part of any basis in trading financial
instruments in the market.
PORTFOLIO MEASUREMENT METHODS:
We are interested in discovering if the management of a mutual fund is performing

well; that is, has management done better through its selective buying and selling of
securities than would have been achieved through merely “buying the market” ––
picking a large number of securities randomly and holding them throughout the
period?
The most popular ways of measuring management’s performance are
1. Sharpe’s Performance Measure
2. Treynor’s Performance Measure
3. Jensen’s Performance Measure
SHARPE’S RATIO
Sharpe’s is the summary measure of portfolio performance which properly adjusts
performance for risk. It measures the risk premiums of the portfolio relative to the
total amount of risk in the portfolio.
The Sharpe’s index is given by:
63
Sharpe’s Index = (Average return on portfolio – Risk less rate of interest)
(Deviation of returns on portfolio)
Graphically the index measures the slope of the line emanating from the risk less rate
outward to the portfolio in question. Thus, the Sharpe Index summarizes the risk and
return of a portfolio in a single measure that categorizes the performance of the fund
on a risk-adjusted basis. The larger the value of Sharpe Index the better the portfolio
has performed.
TREYNOR’S RATIO
Treynor’s ratio measures the risk premium of the portfolio, where risk premium
equals the difference between the return of the portfolio and the risk less rate. The risk
premium is related to the amount of systematic risk assumed in the portfolio.
Graphically; the index measures the slope of the line emanating outward from risk
less rate to the portfolio under consideration.
Treynor’s ratio is given as
(Average return of portfolio –Risk less rate of interest)
Treynor Index = -------------------------------------------------------
Beta coefficient of portfolio
Jensen’s Performance Measure (Michael)

It refers the actual return earned in portfolio and return expected out of portfolio given
its level of risk.
CAPM – is used to calculate the expected return. The difference between the
expected return and act retain can be said the return earned out of the mandatory of
systematic risk.
This excess return refers the manager’s predictive ability and managerial
skills.CAPM
rp = rf + (rm – rf)
Differential return is calculated as follows:

p = rp - rp
p =positive ––>Superior returns
p=Negative ––> Unskilled management (worse portfolio)
p= 0 ––> Neutral performance.Higher alpha represents superior performance
of a fund and vice versa.
64
CHAPTER-IV
DATA ANALYSES AND INTERPRETATION
65
For analysis Net Asset Value (NAV) of the Four AMC’S
for the period of 1st December 2016 to 22nd January 2017
Axis LIC HSBC ICIC

Market banking Nomura Brazil Prudential
Date Level ( Debt fund- Balanced - Fund- income
NIFTY) Growth Growth Growth fund-
growth
22/01/2017 7376.65 1361.26 73.93 3.61 44.94
21/01/2017 7357.00 1360.93 73.04 3.60 45.01

7381.8
20/01/2017 1360.61 73.07 3.74 44.84
19/01/2017 7420.35 1360.51 74.02 3.77 44.75
18/01/2017 7561.65 1360.21 73.33 3.83 44.72
15/01/2017 7467.4 1359.44 74.55 3.89 44.74

7557.9
14/01/2017 1359.32 76.08 3.85 44.92
13/01/2017 7587.2 1359.09 76.46 3.86 45.05
12/01/2017 7527.45 1358.79 76.91 3.91 45.10
11/01/2017 7611.65 1358.57 77.47 3.97 45.13

7673.35
08/01/2017 1357.84 77.98 4.04 45.09
07/01/2017 7788.05 1357.50 77.48 4.06 45.07
06/01/2017 7828.4 1357.23 79.26 4.07 45.04

7924.55
05/01/2017 1356.91 79.50 4.17 45.03
04/01/2017 7938.45 1356.59 79.34 4.33 45.01
01/01/2017 7897.8 1355.73 80.44 4.28 44.98
31/12/2016 7938.6 1355.38 79.96 4.16 44.93

7929.2
30/12/2016 1354.98 79.80 4.16 44.95
29/12/2016 7863.2 1354.62 79.98 4.38 44.92
28/12/2016 7888.75 1354.33 79.97 4.51 44.97
23/12/2016 7830.45 1352.93 79.65 4.38 44.96
66
22/12/2016 7829.4 1352.73 79.55 4.48 44.90
21/12/2016 7745.65 1352.44 79.15 4.52 44.87
18/12/2016 7828.9 1351.66 79.33 4.53 44.96

7783.05
17/12/2016 1351.28 78.79 4.68 45.09
16/12/2016 7725.25 1350.93 79.15 4.82 45.06
15/12/2016 7659.15 1350.64 78.47 4.58 44.94
14/12/2016 7558.2 1350.47 78.28 4.71 44.92

7699.6
11/12/2016 1349.96 78.08 4.70 45.02
10/12/2016 7643.3 1350.08 78.04 4.79 44.98
09/12/2016 7695.5 1349.88 78.68 4.53 44.99
08/12/2016 7738.5 1349.80 78.34 4.54 45.00

7816.55
07/12/2016 1349.73 79.28 3.61 45.11
04/12/2016 7817.6 1349.10 79.88 3.60 45.08
03/12/2016 7902.3 1348.88 79.90 3.74 45.24
02/12/2016 7976.7 1348.49 80.53 3.77 45.15

7958.15
01/12/2016 1348.17 81.00 3.83 45.18
Average 7722.38 1354.51 78.07 4.16 44.91
67
Calculations of Risk of Axis banking Debt fund-Growth
For the period of 1st December 2016 to 22nd January 2017
Axis banking returns
Market Level Debt fund-
Growth
Date ( NIFTY) returns
7376.65 1361.26
22/01/2017
21/01/2017 7357.00 -19.65 1360.93 -0.33
20/01/2017 7381.8 24.8 1360.61 -0.32
7420.35 38.55 1360.51 -0.1

19/01/2017
7561.65 141.3 1360.21 -0.3
18/01/2017
15/01/2017 7467.4 -94.25 1359.44 -0.77
14/01/2017 7557.9 90.5 1359.32 -0.12
7587.2 29.3 1359.09 -0.23

13/01/2017
12/01/2017 7527.45 -59.75 1358.79 -0.3
11/01/2017 7611.65 84.2 1358.57 -0.22
08/01/2017 7673.35 61.7 1357.84 -0.73
7788.05 114.7 1357.5 -0.34

07/01/2017
06/01/2017 7828.4 40.35 1357.23 -0.27
05/01/2017 7924.55 96.15 1356.91 -0.32
04/01/2017 7938.45 13.9 1356.59 -0.32
7897.8 -40.65 1355.73 -0.86

01/01/2017
31/12/2016 7938.6 40.8 1355.38 -0.35
30/12/2016 7929.2 -9.4 1354.98 -0.4
29/12/2016 7863.2 -66 1354.62 -0.36
7888.75 25.55 1354.33 -0.29

28/12/2016
23/12/2016 7830.45 -58.3 1352.93 -1.4
22/12/2016 7829.4 -1.05 1352.73 -0.2
68
21/12/2016 7745.65 -83.75 1352.44 -0.29
18/12/2016 7828.9 83.25 1351.66 -0.78
17/12/2016 7783.05 -45.85 1351.28 -0.38
7725.25 -57.8 1350.93 -0.35

16/12/2016
15/12/2016 7659.15 -66.1 1350.64 -0.29
14/12/2016 7558.2 -100.95 1350.47 -0.17
11/12/2016 7699.6 141.4 1349.96 -0.51
7643.3 -56.3 1350.08 0.12

10/12/2016
09/12/2016 7695.5 52.2 1349.88 -0.2
08/12/2016 7738.5 43 1349.8 -0.08
07/12/2016 7816.55 78.05 1349.73 -0.07
7817.6 1.05 1349.1 -0.63

04/12/2016
03/12/2016 7902.3 84.7 1348.88 -0.22
02/12/2016 7976.7 74.4 1348.49 -0.39
01/12/2016 7958.15 -18.55 1348.17 -0.32
15.74 0.36
Average
Stranded Deviation (SD) 1.48 0.11
Beta 0.62
69
Graphical Presentation of Axis banking Debt fund-Growth For the
month of January 2017
Return
0.2
0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35
-0.2
-0.4
-0.6
Return
-0.8
-1
-1.2
-1.4
-1.6
Interpretation:
Axis banking Debt fund-Growth has been analyzed and it is found that there is a
positive growth. However on the basis of the Avg returns of Axis banking Debt fund-
Growth there is a growth 0.36 as against the index Avg of 14.74 the beta being less
than 1 the stock is not highly volatile.
70
Calculations of Risk of LIC Nomura Balanced -Growth

returns LIC Nomura Returns
Market Level
Date Balanced -
( NIFTY)
Growth
22/01/2017 7376.65 73.93
21/01/2017 7357.00 -19.65 73.04 -0.89
7381.8 24.8 0.03

20/01/2017 73.07
19/01/2017 7420.35 38.55 74.02 0.95
18/01/2017 7561.65 141.3 73.33 -0.69
15/01/2017 7467.4 -94.25 74.55 1.22
7557.9 90.5 1.53

14/01/2017 76.08
13/01/2017 7587.2 29.3 76.46 0.38
12/01/2017 7527.45 -59.75 76.91 0.45
11/01/2017 7611.65 84.2 77.47 0.56
7673.35 61.7 0.51

08/01/2017 77.98
07/01/2017 7788.05 114.7 77.48 -0.5
06/01/2017 7828.4 40.35 79.26 1.78
05/01/2017 7924.55 96.15 79.50 0.24
7938.45 13.9 -0.16

04/01/2017 79.34
01/01/2017 7897.8 -40.65 80.44 1.1
31/12/2016 7938.6 40.8 79.96 -0.48
30/12/2016 7929.2 -9.4 79.80 -0.16
7863.2 -66 0.18

29/12/2016 79.98
28/12/2016 7888.75 25.55 79.97 -0.01
23/12/2016 7830.45 -58.3 79.65 -0.32
22/12/2016 7829.4 -1.05 79.55 -0.1
71
21/12/2016 7745.65 -83.75 79.15 -0.4
18/12/2016 7828.9 83.25 79.33 0.18
17/12/2016 7783.05 -45.85 78.79 -0.54
7725.25 -57.8 0.36

16/12/2016 79.15
15/12/2016 7659.15 -66.1 78.47 -0.68
14/12/2016 7558.2 -100.95 78.28 -0.19
11/12/2016 7699.6 141.4 78.08 -0.2
7643.3 -56.3 -0.04

10/12/2016 78.04
09/12/2016 7695.5 52.2 78.68 0.64
08/12/2016 7738.5 43 78.34 -0.34
07/12/2016 7816.55 78.05 79.28 0.94
7817.6 1.05 0.6

04/12/2016 79.88
03/12/2016 7902.3 84.7 79.90 0.02
02/12/2016 7976.7 74.4 80.53 0.63
01/12/2016 7958.15 -18.55 81.00 0.47
16.15 0.19
Average
Beta 0.42
72
Graphical Presentation of LIC Nomura Balanced -Growth For the month
of January 17
returns
2
1.5
0.5
returns
0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37
-0.5
-1
-1.5
Interpretation:
LIC Nomura Balanced –Growth have been analyzed and it is found that there is a
negative growth. However on the basis of the avg returns of LIC Nomura Balanced –
Growth there is a negative growth 0.14as against the index avg of negative 0.19 the
beta being less than 1 the stock is not highly volatile.
73
Calculations of Risk of HSBC Brazil Fund-Growth
Market Level Return HSBC Brazil Return

Date
( NIFTY) Fund-Growth
22/01/2017 7376.65 3.61
21/01/2017 7357.00 -19.65 3.6 -0.01
7381.8 24.8 3.74 0.14

20/01/2017
19/01/2017 7420.35 38.55 3.77 0.03
18/01/2017 7561.65 141.3 3.83 0.06
7467.4 -94.25 3.89 0.06

15/01/2017
7557.9 90.5 3.85 -0.04
14/01/2017
13/01/2017 7587.2 29.3 3.86 0.01
12/01/2017 7527.45 -59.75 3.91 0.05
7611.65 84.2 3.97 0.06

11/01/2017
08/01/2017 7673.35 61.7 4.04 0.07
07/01/2017 7788.05 114.7 4.06 0.02
06/01/2017 7828.4 40.35 4.07 0.01
7924.55 96.15 4.17 0.1

05/01/2017
04/01/2017 7938.45 13.9 4.33 0.16
01/01/2017 7897.8 -40.65 4.28 -0.05
31/12/2016 7938.6 40.8 4.16 -0.12
7929.2 -9.4 4.16 0

30/12/2016
29/12/2016 7863.2 -66 4.38 0.22
28/12/2016 7888.75 25.55 4.51 0.13
23/12/2016 7830.45 -58.3 4.38 -0.13
74
22/12/2016 7829.4 -1.05 4.48 0.1
21/12/2016 7745.65 -83.75 4.52 0.04
18/12/2016 7828.9 83.25 4.53 0.01
7783.05 -45.85 4.68 0.15

17/12/2016
16/12/2016 7725.25 -57.8 4.82 0.14
15/12/2016 7659.15 -66.1 4.58 -0.24
14/12/2016 7558.2 -100.95 4.71 0.13
7699.6 141.4 4.7 -0.01

11/12/2016
10/12/2016 7643.3 -56.3 4.79 0.09
09/12/2016 7695.5 52.2 4.53 -0.26
08/12/2016 7738.5 43 4.54 0.01
7816.55 78.05 3.61 -0.93

07/12/2016
04/12/2016 7817.6 1.05 3.6 -0.01
03/12/2016 7902.3 84.7 3.74 0.14
02/12/2016 7976.7 74.4 3.77 0.03
7958.15 -18.55 3.83 0.06

01/12/2016
Average 16.15 0.006
Beta 0.12
75
Graphical Presentation of HSBC Brazil Fund-Growth
For the month of January 17
Return
0.4
0.2
0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35
-0.2
Return
-0.4
-0.6
-0.8
-1
Interpretation:
HSBC Brazil Fund-Growth have been analyzed and it is found that there is a
positive growth. However on the basis of the avg returns of HSBC Brazil Fund-
Growth there is a negative growth 0.02 as against the index avg of negative 0.02 the
beta being less than 0.12 the stock is not highly volatile.
76
Calculations of ICIC Prudential income fund-growth

Return Return
ICIC
Market Level Prudential
Date
( NIFTY) income fund-
growth
22/01/2017 7376.65 44.94
21/01/2017 7357.00 -19.65 45.01 0.07
20/01/2017 7381.8 24.8 44.84 -0.17
7420.35 38.55 -0.09

19/01/2017 44.75
18/01/2017 7561.65 141.3 44.72 -0.03
15/01/2017 7467.4 -94.25 44.74 0.02
7557.9 90.5 0.18

14/01/2017 44.92
13/01/2017 7587.2 29.3 45.05 0.13
12/01/2017 7527.45 -59.75 45.10 0.05
11/01/2017 7611.65 84.2 45.13 0.03
7673.35 61.7 -0.04

08/01/2017 45.09
07/01/2017 7788.05 114.7 45.07 -0.02
06/01/2017 7828.4 40.35 45.04 -0.03
05/01/2017 7924.55 96.15 45.03 -0.01
7938.45 13.9 -0.02

04/01/2017 45.01
01/01/2017 7897.8 -40.65 44.98 -0.03
31/12/2016 7938.6 40.8 44.93 -0.05
30/12/2016 7929.2 -9.4 44.95 0.02
7863.2 -66 -0.03

29/12/2016 44.92
28/12/2016 7888.75 25.55 44.97 0.05
77
23/12/2016 7830.45 -58.3 44.96 -0.01
22/12/2016 7829.4 -1.05 44.90 -0.06
21/12/2016 7745.65 -83.75 44.87 -0.03
7828.9 83.25 0.09

18/12/2016 44.96
17/12/2016 7783.05 -45.85 45.09 0.13
16/12/2016 7725.25 -57.8 45.06 -0.03
15/12/2016 7659.15 -66.1 44.94 -0.12
7558.2 -100.95 -0.02

14/12/2016 44.92
11/12/2016 7699.6 141.4 45.02 0.1
10/12/2016 7643.3 -56.3 44.98 -0.04
09/12/2016 7695.5 52.2 44.99 0.01
7738.5 43 0.01
08/12/2016 45.00
07/12/2016 7816.55 78.05 45.11 0.11
04/12/2016 7817.6 1.05 45.08 -0.03
03/12/2016 7902.3 84.7 45.24 0.16
7976.7 74.4 -0.09

02/12/2016 45.15
01/12/2016 7958.15 -18.55 45.18 0.03
Average 16.15 0.006
Beta 0.08
78
Graphical presentation of ICIC Prudential income fund-growth)For the month
of January
Return
0.2
0.15
0.1
0.05
0 Return
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39
-0.05
-0.1
-0.15
-0.2
Interpretation:
ICIC Prudential income fund-growth has been analyzed and it is found that there is a
negative growth. However on the basis of the avg returns of ICIC Prudential income
fund-growth there is a negative growth 0.02 as against the index avg of negative 0.02
the beta being less than 0.08 the stock is not highly volatile.
79
Comparative Study of the performance of the Selected AMC’s
Sharp index and Treynor index are calculated
For the month of January 17
Sharp's Treynor
Return Risk(std Beta
Name of the Fund Rf (Rm- (Rm-
(Rm) dev.) (β)
Rf)/σ Rf)/β
Axis banking Debt fund- 0.36 0.1 0.62 0.06

3.00 0.48
Growth
LIC Nomura Balanced –

0.19 0.04 0.47 0.06 3.25 0.27
Growth
HSBC Brazil Fund-

0.006 0.02 0.12 0.06 -2.7 -0.45
Growth
ICIC Prudential income

0.006 0.002 0.08 0.06 -2.7 -0.67
fund-growth
80
The graphical representation of Sharp Index:
Sharpe's Index
0.00
-0.05
-0.10
-0.15
-0.20
-0.25
-0.30
Name of the Fund
Interpretation:
 From the above table and graph we can know that LIC Nomura Balanced -
Growth and Axis banking Debt fund-Growth are giving good returns and
they are in first position,
 And the second position is Axis banking Debt fund-Growth
81
The graphical representation of TREYNER Index:
Trenyor's Ratio
0.00
-0.10
-0.20
-0.30
-0.40
-0.50
-0.60
-0.70
-0.80
Name of the Fund
Interpretation:
 From the above table and graph we can know LIC Nomura Balanced -
Growth is performing well and it is in first position
 And the second position is Axis banking Debt fund-Growth
 The general trend in the reduction of the market price for various mutual
funds studied is not encouraging the stock market index has also been
falling continuously because of general economic slowdown however the
funds are ranked considering sharp and trenyors in the order of
performances
82
CHAPTER-V
 FINDINGS
 SUGGESSIONS
 CONCLUSIONS
 ANNEXURE
 BIBLIOGRAPHY
83
SUMMARY
Investors are confronted with the problem of choosing the best

investment opportunities in the financial market in order to earn higher
return for their investments. The complexities of financial market can be
dealt with certain intuitions with sound technical back ground. A small
investor cannot afford to invest sizeable amount to maintain their position in
fact with market conditions.
A mutual fund foresees market conditions and invests substantial
funds collected from the pool of investors. 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
A mutual fund is an entity that pools the money of many investors ~
its unit-holders –to invest in different securities. Investments may be in
shares, debt securities, money market securities or a combination of these.
Those securities are professionally managed on behalf of the unit-holders,
and each investor holds a pro-rata share of the portfolio i.e. entitled to any
profits when the securities are sold, but subject to any losses in value as we
Unit Trust of India was the first mutual fund set up in India in the
year 1963. In early1990s, Government allowed public sector banks and
institutions to set up mutual funds. As far as mutual funds are concerned,
SEBI formulates policies and regulates the mutual funds to protect the
interest of the investors. SEBI notified regulations for the mutual funds in
1993. SEBI has also issued guidelines to the mutual funds from time to time
to protect the interests of investors. The Asset Management Companies are
required to follow the accounting policies and standards specified in the
Ninth Schedule of the Regulations, as per regulation 50(3) of SEBI (Mutual
Funds) Regulation, 1996.
84
FINDINGS
 SHARPE’S: As per Sharpe performance measure, a high Sharpe ratio is

preferable as it indicates a superior risk adjusted performance of a fund.
 From the above table LIC Nomura Balanced -Growth and Axis banking
Debt fund-Growth show a better risk-adjusted performance out of top4
AMC’S.
 TREYNOR’S: As per TREYNOR’S ratio the Treynor’s reward to volatility -

having high positive index is favorable.
 Therefore, as per this ratio also LIC Nomura Balanced -Growth is

preferable.
 The designing of the portfolio plays the very crucial role in yielding
the good returns and thus the fund manager plays the vital role
 • The above interpretation the returns of annual mean of 10 funds.

UTI fund having the high returns and also Reliance Fund & Tata
Fund having the good returns in the Annual Mean
 • In the IDBC & Kotak Funds having negative returns when

compared to the other funds. So, UTI Fundhas good annual return.
 • In the study the calculation of risk for 10 Funds shows that Axis
Fund having the More Risk in their Returns
 • Kotak, IDBC & Baroda Fund also having the more Risk in the
Returns
 • Sundaram, UTI & Reliance Funds are low risk of their returns when
compared to the other Funds. UTI Fund is better at low risk return
85
 • in the study the risk adjusted returns in 10 Funds the UTI Fund is
high risk adjusted return when compared to the Reliance & Sundaram
Funds
 • In the Risk Adjusted Returns Kotak & IDBC Funds showing

negative on its returns having low risk adjusted returns. So, UTI Fund
is highly in risk adjusted returns when compared to the other funds
 • In the following data HSBC, UTI & Reliance Funds is good at the
Risk Adjustable Return when compared to the other Funds
 • HSBC Fund performance is good in Annual Return, Risk Adjustable

Return when compared to other funds
SUGGESTIONS TO MUTUAL FUNDS ICICI:
 Financial goals & Time frame
 (Are you investing for retirement? A child’s education? Or for current

income? )
 Risk Taking Capacity
 Identify funds that fall into your Buy List
 Obtain and read the offer
 Documents match your objectives
 In terms of equity share and bond weightings, downside risk
 protection, tax benefits offered, dividend payout policy, sector focus
 Performance of various funds with similar objectives for at least 3-5 years
 Think hard about investing in sector funds For relatively aggressive investors
86
 Close touch with developments in sector, review portfolio regularly – Look for
`load' costs
 Management fees, annual expenses of the fund and sales loads
 Look for size and credentials
 Asset size less than Rs. 25 Crores
 Diversify, but not too much
 Invest regularly, choose the S-I-P
 MF- an integral part of your savings and wealth building plans.
Recommendations and Suggestions to AMCS:
1)Brand building:
Brand building is an exercise, which every business enterprise will have. Brand is the
soul of an institution; it survives on it, lives with it and cherishes it. Example: LIC
Nomura Balanced -Growth has a brand, every bank, insurance companies; mutual
fund companies have got their own brands.
2)Strength full Strategies:
Every AMC should try to turn into a more modern, a more vibrant, a more
transparent and regulatory compliance institution. It is with this in mind, every
institution should try to come up with verity of different type of products to fill
different investment objectives
3) Marketing tools for total quality achievement:
a) Large Network.
b) Effective Man power
c) Distribution across the Market
d) Customer relations(Building better relationships)

87
e) Value added service
f) Better transparency level
g) Building brand name as a disciplined player.
4) Innovation:
MF industry can be classified merely into three categories like equity, debt
and balanced. And there is also complex in nature. Fund managers are not able to
reach niche market. The products are should be innovative that can meet niche
market. Here MF should follow the FMCG industry innovative strategy.
The Ground rules of Mutual Fund Investing
Assess yourself
1) Try to understand where the money is going
2) Don't rush in picking funds, think first
3) Invest. Don’t speculate
4) Don’t put all the eggs in one basket
5) Be regular
6) Do your homework
7) Find the right funds
8) Keep track of your investments
9) Know when to sell your mutual funds
88
CONCLUSIONS
 From the study analysis conducted it is clear that in EQUITY

FUNDS Axis banking Debt fund-Growth is performing very
well.
 Investing in the LIC Nomura Balanced -Growth will leads to

profits.
 By seeing the overall performance Axis banking Debt fund-

Growth is performing very well.
 The prospective investors are needed to be made aware of the

investment in mutual funds.
 The Industry should keep consistency and transparency in its

management and investors objectives.
 There is 100% growth of mutual fund as foreign AMCS are in

queue to enter the Indian markets.
 Mutual funds can also portrait in to rural areas.
89
ANNEXURE
ICICI Prudential Asset Management Company Ltd. is a leading asset

management company (AMC) in the country focused on bridging the gap
between savings & investments and creating long term wealth for investors
through a range of simple and relevant investment solutions.
The AMC is a joint venture between ICICI Bank, a well-known and trusted
name in financial services in India and Prudential Plc, one of UK’s largest
players in the financial services sectors. Throughout these years of the joint
venture, the company has forged a position of pre-eminence in the Indian
Mutual Fund industry.
The AMC manages significant Assets under Management (AUM) in the

mutual fund segment. The AMC also caters to Portfolio Management Services
for investors, spread across the country, along with International Advisory
Mandates for clients across international markets in asset classes like Debt,
Equity and Real Estate.
The AMC has witnessed substantial growth in scale; from 2 locations and 6
employees at the inception of the joint venture in 1998, to a current strength of
1476 employees with a reach across over 215 locations reaching out to an
investor base of more than 2.5 million investors (As on March 31, 2017). The
company’s growth momentum has been exponential and it has always
focused on increasing accessibility for its investors.
Driven by an entirely investor centric approach, the organization today is a

suitable mix of investment expertise, resource bandwidth and process
orientation. The AMC endeavors to simplify its investor’s journey to meet their
financial goals, and give a good investor experience through innovation,
consistency and sustained risk adjusted performance.
90
BIBILIOGRAPHY
I. TEXT BOOKS
Donald E Fischer Security Analysis Portfolio Management
Ronald J Jordan
H.Sadhak Mutual Fund in India
II. WEB SITES
www.amfiindia.com
www.icici.com
www.bseindia.com
www.nseinda.com
www.bluechipinda.co.in
III. MAGAZINES
Business India
Business World
IV. NEWS PAPERS
Economic Times
Business Standard.
91
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DEPARTMENT OF MANAGEMENT STUDIES

NOBLE INSTITUTE OF SCIENCE & TECHNOLOGY

I hereby declare that this project work entitled “A Study On

MASTER OF BUSINESS ADMINISTRATION

CHAPTER CONTENTS PAGE NUMBER

NEED FOR THE STUDY 06

OBJECTIVES OF THE STUDY 06

LIMITATIONS OF THE STUDY 08

II INDUSTRY PROFILE 11-34

III THEORETICAL FRAMEWORK 35-64

IV DATA ANALYSIS AND INTERPRETATION 65-82

V SUMMARY AND SUGGESTIONS 84-91

1. To show the wide range of investment options available in MF’s by explaining

SCOPE THE STUDY

This study is basically depends on

TOOLS USED IN THIS PROJECT

ADVANTAGES OF THE MUTUAL FUNDS

Introduction, Need for the study, Objectives of the

It deals profile of Company Profile And Industry

It deals with the Theoretical Frame Work of the Study.

It deals with Data Analysis and Interpretation.

It deals with Summary, Findings and Suggestions.

First Phase – 1964-87:

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

For the period of 1987-88

Amount Mobilized Assets Under Management (

For the period of 1992-93

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

Fourth Phase – since February 2003:

A] Mutual Funds Industry Unit holding Pattern

Table No: 3 Secondary Data

UNIT HOLDING PATTERN OF MUTUAL FUNDS INDUSTRY

Category No. Of % To Total NAV(Rs.Crore) %To Total

Individuals 15,557,506 97.42 32,691.12 41.07

NRIs/OCBs 84,311 0.53 878.51 1.10

FIIs 2,058 0.01 561.67 0.71

TOTAL 15,968,854 100.00 79,600.83 100.00

B] Unit holding Pattern – Private/Public Sector Mutual Funds:

Table No: 4 Secondary Data

UNIT HOLDING PATTERN OF PRIVATE SECTOR MFS

Category No. Of Investors % To Total NAV(Rs.Cr %To Total

Individuals 4001841 93.23 17956.48 31.68

NRIs/OCBs 38416 0.89 723.02 1.28

FIIs 1317 0.03 528.51 0.93

TOTAL 4292546 100.00 56673.92 100.00

Table No: 5 Secondary Data

UNIT HOLDING PATTERN OF PUBLIC SECTOR MFS (INCLUDING UTI MF )

Category NO. Of % To Total NAV(Rs.Cr %To Total

Individuals 11,555,665 98.97 14734.64 64.27

NRIs/OCBs 45895 0.39 155.49 0.68

FIIs 741 0.01 33.16 0.14

TOTAL 11676308 100.00 22926.91 100.00

The experience of some of the AMCs floated by private sector Indian

Trading at NSE can be classified under two broad categories:

(a) Wholesale debt market and

(b) Capital market.

Wholesale debt market operations are similar to money market operations -

There are two kinds of players in NSE:

(a) trading members and

Trading at NSE takes place through a fully automated screen-based trading

 Delays in communication, late payments and the malpractice’s prevailing in

In India, capital is scarce; and unemployment and disguised unemployment is

Planning History of India