Mutual Funds

Introduction

With passing time Indian mutual fund industry experiencing tremendous growth
which was / is cooked by infrastructural development in India and supported by high
saving and increasing foreign participation. During the period increasing income and
awareness boosted risk taking ability of common investors and mutual fund became
the most preferred and safest investment option among all class. After liberalization
and globalization of Indian economy, market witness huge crowd towards the option
of investing in mutual funds but investment in a particular funds needs a lot of
specification like- investor’s objectives, cost, availability of funds, risk & return
factors etc. and thus invite fundamental study for better future and growth.

India has emerged as safe economy in the global market despite having big problems
like political uncertainty, corruption, inefficiency of infrastructure and good
governance. Despite of all problems and financial uncertainty the financial
markets of India has grown to high levels, in the uncertain global market Indian
markets were able to keep the faith of its investors and attract foreign investors.
The capital markets acts as an mean of stabilising the economic growth and
strengthening the industrial performance. Among the various investment
avenues floated in the market Mutual Funds appear to give minimum risk and
maximum returns to the investors. They mobilise funds from savings market to
deploy the same in the capital market. The concept of MF was coined for
channelizing savings of small investors, the idea was to collect funds from these
investors and invest in capital market instruments such as shares, debentures and other
securities. Mutual Fund invests in more exotic instrument to like future, forward,
swaps etc. Investors having small amounts cannot diversify their investments which
increases their risk., whereas MF helps such investors .The funds from such investors
will be collected and invested by specialists in various capital market instruments
which will help the investor in reducing the risk born by him/her.The income earned
through these investments and the capital appreciation realised are shared by its
unit holders in proportion to the number of units owned by them. Today mutual fund
is positioned as instrument that is safe and promises active returns, Mutual Funds
are supposed to be the retail investors best bet

Financial institutions, Banks and other Agencies setup of financial intermediaries is

required to mobilize the savings of the society, and investing rationally for economic
development. In Right Horizons country, India firstly Unit Trust of India was set-up
by the Central Govt. under the UTI Act, 1963 with an objective of mobilizing savings
of middle and lower income groups and providing those opportunities to acquire
property in the form of Equity shares. As growth of UTI took place during the period
when the economy was under a control regime and securities markets were irrelevant
to industrial growth as the financial intuitions were the major purveyors of long-term
finance.

Scope of Study

Mutual Funds has become so wide, that people sometimes take long time to decide
the mutual fund type, they are going to invest in. Several Investment Management
Companies have emerged over the years who offer various types of Mutual Funds,
each type carrying unique characteristics and different beneficial features.

The study attempts to find out the awareness of people about such a growing financial
asset and provide recommendations / suggestions which can be used for knowing the
preferences of investors

Objectives of the study

1) To understand various types of Mutual Fund Schemes.

2) To know about the extent of awareness about mutual funds with reference
to age, income and education.

3) To know the purpose of investment in mutual fund and other investment

options.
4) To know the preferences for investment in mutual funds and other
investment avenues.

5) To identify the most popular Mutual Fund schemes among investors.

Need of the the study

1) Select a fund that is right for Right Horizons portfolio and thus achieve right
diversification: While investors understand importance of diversification they often
pile onto recent performers. It often happens that funds following a similar process
tend to outperform at the same time. Like growth funds tend to do well in rising
markets. Many investors end up buying funds having more or less same set of stocks
in their portfolio. This works against diversification. We recommend that one must
diversify across funds with different process and have portfolio as different as
possible to achieve benefit of diversification. Knowing underlying stocks in portfolio
helps do this

2) Reduce risk by knowing the reasons of past out performance: Yes past
performance is important after all it says something about the fund manager’s track
record. However, it is important to understand the reasons for the past performance.
Random luck could have contributed to out performance rather than any particular
attribute. Hence we check rolling performance rather than point to point performance
to remove dumb luck in short term. Also taking higher risk could have led to higher
returns which maybe undesirable. By studying portfolio we try to see if a particular
fund, say a large cap fund, has beaten the benchmark by investing into riskier small
cap stocks. Market Cap is one measure of risk.

RESEARCH METHODOLOGY:

Secondary data was collected from Youtube, thesis reports, seminars and conference
papers, articles, websites, unpublished data, published books, jRight Horizonsnals,
and newspapers etc.

REVIEW OF LITERATURE
The study considered 152 mutual funds with annual data from 1953-1958. Using their
own benchmark, the authors found that mutual funds earned an (unweighted) average
annual return of 12.4 per cent, while their composite benchmark earned a return of
12.6 per cent.

The Wharton study on the performance of mutual funds was followed by Treynor,
(1965) when he devised a satisfactory way to measure the performance of a fund with
the help of the characteristics line and the portfolio possibility line. The characteristic
line contains information about expected rate of return and risk. The slope of the line
measures volatility. The purpose of the portfolio possibility line is to relate the
expected return of a portfolio containing the fund to the portfolio owner’s risk
preferences. He found that relative quantitative performance rankings could be read
directly from the characteristic line despite market fluctuations and different risk
policies.

Klemosky (1973)10 analysed investment performance of mutual funds based on

quarterly returns for 40 funds during the period 1966-1971. The analysis identifies
bias in Sharpe, Treynor and Jensen measures, which could be removed by using mean
absolute deviation and semi-standard deviation as risk surrogates. The resultant
performance measure was claimed to be a better risk adjusted performance measure
than composite measures derived from the capital asset pricing models.

Guy (1978)16 summarized general behaviour of forty-seven investment trusts by

grouping them into equal-and-value weighted portfolios with monthly price and
investment returns for the period 1960-70. By using traditional performance measures
developed by Jensen (1968), Treynor (1965) and Sharpe (1966), he found that the
results were significantly different from zero. The absence of superior performance
validated market efficiency hypothesis. It also investigated two additional
performance measures, viz., empirical estimates of security market line and the
zero-beta form of capital asset pricing model, and obtained some significant measures
of performance.

Chapter 2

Company Overview

1. Right Horizons was founded by Mr. Anil Rego in 2003 as a Wealth Management
firm
2. The company has over 13 years of market presence for wealth advisory & Financial
Planning services

3. It caters to the needs of more than 900 customers & proud to retain 90% of the first
year customers even till date.

4. Over Rs 800 Cr. Assets under management , 6 branches, 75+ employees

5. Expertise in Financial Planning and specialized service to HNIs

6. Extensive Media coverage. Regular contributors to Finance Magazines /news

papers on investor educative topics.

7. Highly Technology driven with own CRM and IT systems since inception &
currently heading towards paperless office

8. RH Research services has a global reach with the entities like Bloomberg, Capital
IQ , Researchbytes.com and FactSet using the research reports

Right Horizons Organizational Structure

Certification & Licenses

1. SEBI compliant Portfolio Management (PMS) Licensee

2. SEBI certified Investment Advisory Licensee

3. Insurance Broking Licensee from IRDA for Life & General Insurance

4. ISO certified with strong Right Horizons brand in the market.

5. All employees are AMFI and IRDA certified

Right Horizons expertise & investment Strategy

1. Right Horizons approach is contrarian & do not encourage age short term trading

2. Right Horizons Financial Planning is done by a team of qualified analysts &

researchers

3. Security of the customer’s data & investments is the prime focus and the ad
visor-agreement supports it

4. The Client’s risk level is assessed before any investment suggestions.

5. Right Horizons recommendations are unbiased

6. Right Horizons customer awareness by publishing an article per day in finance

magazines

Our Vision & Mission

To become one of the top 5 Wealth Management Companies in India and to achieve
this by:

Guiding our customers in achieving their dreams by planning for each of their needs
& goals

Helping customers achieve the best risk adjusted return

Providing delightful customer service and with integrity

By working with Vendors as partners

By creating an environment of learning and growth for our employees

And, Contributing our might to society

Our quality policy

Achieving financial goals of customers with TRUST

1. Transparency and Integrity : Integrity and transparency are important values for
us, and are recognized among fundamental principles in our Code of Ethics

2. Robust technology :

3. Unbiased advice

4. Service

5. Timely delivery

Service offering of Right Horizons to families

1. Business planning Corporate Advisory Services :

2. Portfolio advisory

3. Consulting

4. Advise on model portfolio Monitoring & tracking Diversification Tax Position

5. Real Estate

6. Individual Real estate Consulting & Advisory to Real Estate Funds

7. Individual’s Financial Planning

8. Corpus fund Planning

9. Fund management Investment planning Tax planning

10. Need based planning Planning based on investor life cycle & Comprehensive
planning

11. Fund management Investment planning Tax planning

Financial Planning(End To End)

1. Customized financial planning

2. Cash Flow Analysis

3. Need Based Planning

4. Analysis of existing to proposed investments

5. Monitoring of the investments Thru Analyst Team

6. Online Access

7. Regular update on investments, Markets etc

8. Unbiased suggestion on products

9. Assistance thru Auditor on Tax Filing , giving Capital Gain report

10. Profit booking and Product update as per risk level

Financial Planning Process

1. Tracking

 Tracking by Analyst

 Profit Booking/Exits

 New Opportunities

 Taxation/Capital Gains

2. Quarterly Meeting

 Update on Market

 Portfolio Review

 Action Item

3. Reports

 Customer Portal
 Weekly Report

 Monthly Report

4. Execution of Plan

 KYC norms

 Form Submission / Account setup

 Online access

5. Financial Planning Request

 By Email

 Social media

 Help desk/Phone/Reference

6. Explain Services

 Services detailing

 Explain Process

 Explain Fee Structure

7. Analysis

 Need Mapping
 Cash Flows
 Detailed Report

8. Data Gathering

 Filling of Questionnaire

Services offered in Right Horizons

1. Financial Planning (FP)

2. Cash Flow Sharing

3. Weekly market report

4. Customized Reporting Frequency

5. Paid Tax Filing through Right Horizons Auditor

6. Event based portfolio monitoring

7. Regular Portfolio monitoring

8. Online access to view portfolio

9. Support on documentation & Follow-up with Vendors

10. Frequency of Portfolio review with WM

11. Yearly Report / review with Senior members

12. Capital Gain Report

Scope of work

1. Real Estate Advisory

 Restructuring and cleaning up real estate portfolio through legal legal structure

 Planning of future investment in a efficient way

2. Compliance, Legal & Taxation

 Helping on Compliance issue

 Wealth Tax

 Succession Planning

3. Advisory & Execution of investments

 Advisory and execution of Future investments through tax efficient way

 Tracking of investment & advising on exit points

Chapter 3
THEORETICAL FRAMEWORK

Meaning of Mutual Fund

A mutual fund is an investment vehicle that is made up of a pool of funds collected

from many investors for the purpose of investing in securities such as stocks,
bonds, money market instruments and similar assets. Mutual funds are operated by
money managers who invest the fund's capital and attempt to produce capital gains
and income for the fund's investors.

Mutual funds are trusts or corporations, which pool funds and reduce risk by
diversification of investment. Mutual funds are financial intermediaries, which bring a
wide variety of securities within the reach of the most modest investors. A mutual
fund is an indirect investment made by the public by pooling in resources comprising
of equal units investible in stock, bonds and debt instruments, the earnings of which
are distributed amongst the fund owners.

Analyzing the given definitions, It can therefore be best defined by its functions,
which include

1. It pools resources

2. It is allocated in units.

3. The collective investment is indistinguishable.

4. It spreads risk in diversified yielding investments.

5. It wedges inflation for the small investors.

6. It refunds the principal on risk sharing basis.

7. It distributes the yield prorata to the Investors.

To get the surplus funds from investors, the fund adopts a simple technique - each
fund is divided into a small fraction called “units” of equal value. Each investor is
allocated units of proportion to the size of his investment. Thus, every investor,
whether big or small will have a stake in the fund and can enjoy the wide portfolio of
the investment held by the fund. Hence, mutual funds enable millions of small and
large investors to participate in and derive the benefit of the capital market growth. It
has emerged as a popular vehicle of creation of wealth due to his return, lower cost
and diversified risk.

How Mutual fund works?

Genesis Of Mutual Funds

It is said that Egyptians and Phoenicians sold their shares in vessels and caravans with
a view to spreading risk attached with risky ventures. Thus, the origin of the concept
of mutual funds dates back to the very dawn of commercial history. However, the real
credit of introducing the modem concept of mutual fund goes to the foreign colonial
government trust of London established in 1868. Therefore, a large number of
close-ended mutual funds were formed in the U.S.A in 1930’s followed by many
countries in Europe, the Far East and Latin America. In most of the countries, both
open and close-ended types of mutual funds were popular.

Investment trust companies set up on the West European model following

recommendations of central banking enquiry committee in the 1930’s were the
forerunners of Indian mutual funds.

In 1954, the committee on finance for the private sector, recommended mobilization
of savings of middle class investors through unit trusts. Stock markets in India
suffered a major set back in 1962 following Chinese aggression. To augment
resources for industrial growth, and to stabilize the stock markets, Unit Trust of India
(UTI) act was passed in 1963 and UTI became functional as the first mutual fond in
India in July 1964.

Evolution of Mutual Funds in India

From its humble beginning in 1963 with Unit Trust of India (UTI), the Indian Mutual
Indian fund industry has come a long way since then

1. Phase One: 1964-1987 (Establishment of UTI)

The mutual fund industry witnessed its launch with the formation of UTI in 1963.
UTI was set up by Reserve Bank of India (RBI) by an Act of Parliament. The first
mutual fund scheme launched by UTI was an open-ended balanced fund called Unit
Scheme 1964 (US `64). UTI launched more schemes in the 70s and 80s to cater to the
needs of different investors. UTI remained very popular among the investors for more
than two decades, registering Assets Under Management (AUM) of 6700 crores at the
end 1988.

2. Phase Two: 1987-1993 (Entry of Public Sector Funds)

With the entry of public sector mutual funds set up by public sector banks, Life
Insurance Corporation of India (LIC) and General Insurance Corporation of India
(GIC) in 1987, the monopoly of UTI came to an end. SBI Mutual Fund was the first
‘non-UTI’ mutual fund established (June 1987). Soon others followed - Can bank
Mutual Fund (December 1987), Punjab National Bank Mutual Fund (August 1989),
Indian Bank Mutual Fund (November 1989), LIC (June 1989), Bank of India (June
1990), GIC (December 1990) and Bank of Baroda Mutual Fund (October 1992). At
the end of 1993, AUM of the sector was Rs47,004 crores.

This phase holds immense importance in the history of mutual funds as it also brought
the industry under a formal regulatory framework through The Securities and
Exchange Board of India (SEBI). It was established in 1988 and given statutory
powers in 1992 through SEBI Act, 1992 to function as an autonomous body to protect
investor interest, promote development of mutual funds and enforce legislative
measures.

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

The impact of economic liberalization initiatives introduced in 1991 to expand trade

and offer customers more choices cascaded to the mutual fund industry as well. The
year 1993 marked the entry of private sector funds to bring transparency in the
operations, introduce innovative products and provide superior customer services.
The erstwhile Kothari Pioneer (now merged with Franklin Templeton MF) was the
first private sector mutual registered in July 1993. About 11 private companies, along
with many foreign sponsors set up their shops by the end of 1994-95.

In 1993, SEBI also announced its first set of regulations for all mutual funds (except
UTI). However, these were revised and replaced in 1996 with a comprehensive set of
regulations, namely SEBI (Mutual Fund) Regulations, 1996 which are currently
applicable.

In 1995, Association of Mutual Funds in India (AMFI) was incorporated with an aim
to act as a chief governing body of all Asset Management Companies (AMC), and
promote ethical and professional code of conduct in the mutual fund sector.
In 1999, the Union Budget announced exemption of all mutual fund dividends from
income tax in the hands of investors.

The industry also went through several mergers and acquisitions during this phase. As
at the end of January 2003, there were 33 MFs with total AUM of Rs 1,21,805 crores,
out of which UTI alone had AUM of Rs 44,541 crores.
Phase Four: February 2003-till date

In February 2003, after the revocation of the Unit Trust of India Act 1963, UTI was
split into two separate entities, namely, Specified Undertaking of the Unit Trust of
India (SUUTI) and UTI Mutual Fund which functions under the SEBI regulations.
With this bifurcation and several mergers taking place among different private sector
funds, the mutual industry forayed into its fourth phase of consolidation.

The securities market of India, on the footsteps of the rest of the world, tumbled
owing to the global economic crisis in 2009. Around the same time, SEBI abolished
the entry load to stem investor confidence and reduce charges from the overall fee
structure of funds. However, the growth of the industry remained dismissal between
2010 and 2013.

In 2012, in order to bring a fresh breath of air in the industry, increase investor
confidence and help it recover, SEBI announced a series of‘re-energising’ measures
such as:

* Increase in penetration of mutual fund products and energising distribution network.

* Improve reach of mutual fund products in smaller cities/ towns (beyond top 15
cities).

* Alignment of interest of investors, distributors and AMCs.

* Investor protection on the issues of mis-selling and churning.

* Strengthening regulatory framework for mutual funds.

* Rajiv Gandhi Equity Savings Scheme (RGESS).

In 2012, SEBI also mandated mutual funds to differentiate between direct and
distributed plans. The mandate came into effect from January 2013. Direct mutual
fund plans were introduced to help well-informed and market-savvy investors buy
directly from mutual funds and save intermediary commission or cost of distribution.
The direct plans have a lower expense ratio and higher NAV, due to which investors
earn better returns. Direct plans have made significant progress, with overall 42% of
industry AUM being in Direct Plans as of July 2017 (bulk of this is in Debt and
Liquid funds owing to higher institutional participation).

The positive impact of these measures was also seen when industry’s AUM crossed
Rs10 trillion for the first time in May 2014 and registered a fivefold jump in AUM in
2016 since 2007.

The Present

While mutual fund investment still accounts for only 3.4% of total investments by
individual investors in India and AUM:GDP ratio is a mere 7%, it is also an indication
of the tremendous untapped potential.

In January 2017, the mutual fund assets clocked the highest growth in 7 years to
accumulate a total corpus of around Rs 17 trillion. As of May 2017, AUM of the
industry stands at Rs 19.04 lakh crore, there are 57.2 million accounts (folios) in total
and 44 fund houses are operational in the market. As of July 2017, the asset base has
already crossed Rs 20 trillion. For FY2016-17, direct plans have outperformed regular
plans. Direct plans have given at least 1% additional returns (per annum) on an
average to equity mutual fund investors.

The technology is further enhancing the growth of mutual funds in the form of
paperless transactions (for example, e-KYC, BSE Star MF, NSE NMFII, digital
wallets), online distribution platforms (for example, IFAXpress and iFAST Financial)
and robo-advisors (for example, MoneyFront, ArthaYantra, Scripbox, FundsIndia
etc).

The next revolutionary step in the Indian mutual fund industry will be the sale of
mutual funds through e-commerce enterprises. In 2016, SEBI has submitted its
recommendation on allowing online marketplaces such as Amazon, Flipkart and
Paytm to offer mutual funds on their platforms.

Distribution of Mutual Funds in India

 UTI Private Sector Bank sponsored Institutions

4%
4%

38% 54%

Types of Mutual Funds

1. Based on Asset class

 Equity Funds

These funds invest in stocks. These funds aim to grow faster than money market or
fixed income funds, so there is usually a higher risk that you could lose money. You
can choose from different types of equity funds including those that specialize in
growth stocks (which don’t usually pay dividends), income funds (which hold stocks
that pay large dividends), value stocks, large-cap stocks, mid-cap stocks, small-cap
stocks, or combinations of these.

 Debt Funds

A debt fund is an investment pool, such as a mutual fund or exchange-traded fund, in

which core holdings are fixed income investments. A debt fund may invest in
short-term or long-term bonds, securitized products, money market instruments
or floating rate debt. The fee ratios on debt funds are usually lower, on average,
than equity funds because the overall management costs are lower.
 Money Market Fund

These funds invest in short-term fixed income securities such as government bonds,
treasury bills, bankers’ acceptances, commercial paper and certificates of deposit.
They are generally a safer investment, but with a lower potential return then other
types of mutual funds.

 Hybrid Fund

A hybrid fund is an investment fund that is characterized by diversification among

two or more asset classes. These funds typically invest in a mix of stocks and bonds.
They may also be known as asset allocation funds.

2. Based on Structure

 Open ended funds

An open-end fund is a type of mutual fund that does not have restrictions on the
amount of shares the fund can issue. The majority of mutual funds are open-end,
providing investors with a useful and convenient investing vehicle.

 Closed ended Funds

A closed-end fund is organized as a publicly traded investment company by the

Securities and Exchange Commission (SEC). Like a mutual fund, a closed-end fund is
a pooled investment fund with a manager overseeing the portfolio; it raises a fixed
amount of capital through an initial public offering (IPO). The fund is then structured,
listed and traded like a stock on a stock exchange.

 Interval Funds

An interval fund is a non-traditional type of closed-end mutual fund that periodically

offers to buy back a percentage of outstanding shares from shareholders. Shareholders
are not required to sell their shares back to the fund.
3. Specialized Mutual Funds

 Sector Funds

A sector fund is a fund that invests solely in businesses that operate in a particular
industry or sector of the economy. Sector funds are commonly structured as mutual
funds or exchange-traded funds (ETFs).

 Index Funds

An index fund is a type of mutual fund with a portfolio constructed to match or track
the components of a market index, such as the Standard & Poor's 500 Index (S&P
500). An index mutual fund is said to provide broad market exposure, low operating
expenses and low portfolio turnover. These funds adhere to specific rules or standards
(e.g. efficient tax management or reducing tracking errors) that stay in place no matter
the state of the markets.

 Emerging Market Fund

An emerging market fund is a fund that invests the majority of its assets in securities
from countries classified as emerging. These countries are in an emerging growth
phase and offer high potential return with higher risks than developed market
countries.

 International Fund

An international fund is a fund that can invest in companies located anywhere outside
of its investors' country of residence. International funds differ from global funds,
which can invest in companies from any country in the world. International funds may
also be referred to as foreign funds.

 Global Fund
A global fund is a fund that invests in companies located anywhere in the world
including the investor’s own country. A global fund seeks to identify the best
investments from a global universe of securities. Global funds may also be passively
managed. A global fund can be focused on a single asset class or allocated to multiple
asset classes.

 Real Estate Fund

A Real Estate Fund is a Sector Fund which predominantly invests in securities which
are provided by companies which invest in real estate projects. In essence, it is
a fund which provides capital and investment which can be used by the real estate
company to develop properties.

Types Of Mutual Fund Schemes

There are different MF schemes to cater to the needs of investors whatever the age,
financial position, risk tolerance and return expectations. Whether as the foundation
of the investor’s investment program or as a supplement, Mutual fund schemes can
help him meet his financial goals. The funds are classified on the basis of structure,
objective, and other benefits.

1. By Structure

 Close Ended Schemes

Schemes that have a stipulated maturity period (ranging from 2 to 15 years) are called
close-ended schemes. You can invest directly in the scheme at the time of the initial
issue and thereafter you can buy or sell the units of the scheme on the stock exchanges
where they are listed. The market price at stock exchange could vary from the
scheme’s NAV on account of demand and supply situation, unit holder’s expectations
and other market factors. One of the characteristics of the close-ended schemes is that
they are generally traded at a discount to NAV; but closer to maturity the discount
narrows.

 Open-Ended Schemes
These schemes do not have a fixed maturity period. One deals directly with the
mutual fond for his investments and redemptions. The key feature is liquidity. One
can conveniently buy and sell your units at net asset value (NAV) related prices.

 Interval Schemes

These schemes combine the features of open-ended and close-ended schemes. They
may be traded on the stock exchange or may be open for sale or redemption during
pre-determined intervals at NAV related prices.

2. Investment Objective:

 Growth Schemes

They Aim to provide capital appreciation over the medium to long term. These
schemes normally invest a majority of their funds in equities and are willing to bear
short-term decline in value for possible future appreciation.

 Income Schemes

They Aim to provide regular and steady income to investors. These schemes generally
invest in fixed income securities such as bonds and corporate debenture. Capital
appreciation in such schemes is limited.

 Balanced Schemes

They Aim to provide both growth and income by periodically distributing a part of the
income and capital gains they earn. They invest in both shares and fixed income
securities in the proportion indicated in their offer document. In a rising stock market,
the NAV of these schemes may not normally keep place, or fall equally when the
market falls.
 Money Market Schemes

They Aim to provide easy liquidity, preservation of capital and moderate income.
These schemes generally invest in safer, short-term instruments such as treasury bills,
certificates of deposit, commercial paper and inter-bank call money. Returns on these
schemes fluctuate depending upon the interest rates prevailing in the Market.

3. Other Schemes

 Tax Saving Schemes

These schemes offer tax rebates to the investors under tax laws as
prescribed from time to time. This is made possible because the government
offers tax incentives for investment in specified avenues. For example,
equity linked savings schemes (ELSS) and pension Schemes.

 Special Schemes

This category includes index schemes that attempt to replicate the performance of a
particular index such as the BSE Sensex or the NSE 50, or Industry specific schemes
(which invest in specific industries) or sectoral schemes (which invest exclusively in
segments such as “A” group shares or initial public offerings).

Index fund Schemes are ideal for investors who are satisfied with a return
approximately equal to that of an index.

Sectoral fund Schemes are ideal for investors who have already decided to invest in a
particular sector or segment