SYNOPSIS

on
“PROBLEMS AND PROSPECTS OF MUTUAL FUNDS IN INDIA
WITH REFERENCE TO NJ INDIA INVEST PRIVATE LTD”

Submitted in partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

OF

BANGALORE UNIVERSITY

By

SHASHIKUMAR CV

Reg. No: 16OTCMD017

Under the guidance of

Internal Guide: External Guide:

DR.GANESH KUMAR C SHIVANNA GOWDA
ASSISTANT PROFESSOR SENIOR HR EXECUTIVE
IIPM BANGALORE NJ INDIA INVEST PVT LTD
 TITLE OF THE STUDY

“PROBLEMS AND PROSPECTS OF MUTUAL FUNDS IN INDIA WITH

REFERENCE TO NJ INDIA INVEST PRIVATE LTD”

1. INTRODUCTION
Saving is the surplus of income over expenditure and when such savings are invested to generate
more money, it is called investment. Livestock, land and precious metals are some of the
traditional investment options. During 19th century, revolution in investment took place through
the banking system as it provide many investment options like Fixed deposits (FDs), government
bonds, Public Provident Fund (PPF) to its investors. With the development of capital market,
investment in stocks became a good option for generating higher returns. However, greater risk
and lack of knowledge about the movement of stock prices were also associated with them.
Therefore, mutual funds emerged as an ultra modern method of investment to lessen the risk at
low cost with experts’ knowledge.

According to Association of Mutual Funds in India (AMFI), a Mutual Fund is a trust that pools
the savings of a number of investors who share a common financial goal and invest it in capital
market instruments such as shares, debentures and other securities. The income earned and
capital appreciation thus realised are shared by its unit holders in proportion to the number of
units owned by them. Thus, it offers to common man an opportunity to invest in a diversified,
professionally managed basket of securities at a relatively low cost.

In India, Mutual Fund industry started in 1963 with the formation of Unit Trust of India (UTI). It
was the first phase (1964–1987) of Indian mutual fund industry during which UTI enjoyed a
complete monopoly. In the second phase (1987–1993), Government of India allowed public
sector banks and financial institutions to set up mutual funds. Third phase (1993–2003) started
with the entry of private sector and foreign funds. The fourth phase (since February 2003 till
date), is the age of consolidation and growth. As on 31 March 2012, there are 44 mutual fund
companies with 1309 schemes and the average asset under management as Rs 66,47,920 million
with a wide variety such as Open-Ended, Close-Ended, Interval, Growth, Income, Balanced,
Equity Linked Savings Scheme (ELSS) and so on that caters to the investors’ needs, risk
tolerance and return expectations.

2. REVIEW OF LITERATURE

During early years, the rate of return was the only measure of performance. Markowitz (1952)
& Tobin (1958) suggested risk measure in terms of variability of returns [73], [102]. Treynor
(1965), Sharpe (1966) and Jensen (1968) compared the returns of professionally managed
portfolios to that of some standard benchmark [103], [95], [58]. Cumby & Glen (1990) and
Lahbitant (1995) found funds underperforming their benchmark [29], [65].

Murthi et. al. (1997) proposed problems associated with traditional performance measures as
identifying the appropriate benchmark, not accounting for the transactions cost and introduced
Data Envelopment Analysis (DEA) as a performance measure in terms of efficiency [75]. In
India, Chander (2000) found the funds outperform while Singh & Singla (2000) found that
funds underperform their benchmark [18], [99]. Gupta (2001) found mixed results [48].
Galagedera & Silvapulle (2002) found that funds were efficient in long term [41]. In 2004,
Gupta & Gupta and Rao et al. found funds outperforming their benchmark [49], [89]. Lin and
Chen (2008) found the number of efficient funds higher in the year 2003 than 2001 and 2002
[69]. Soongswang & Sanohdontree (2011) found varied outcomes [100].

Some authors enhanced a new vein of research seeking to analyse the relationship between
funds’ performance and their attributes as discussed below [66], [55], [42], [30].

3. NEED FOR THE STUDY

Mutual funds are able to take advantage of their buying and selling volume to reduce transaction
costs for investors. When you buy a mutual fund, you are able to diversify without the numerous
commission charges. Imagine if you had to buy each of the 10-20 stocks needed for diversification
The main purpose of doing this project was to know about mutual fund and itsfunctioning. This
helps to know in details about mutual fund industry right from itsinception stage, growth and
future prospects.It also helps in understanding different schemes of mutual funds. My study
depends upon prominent funds in India and their schemes like equity, income, balance as well as
the returns associated with those schemes.The project study was done to ascertain the asset
allocation, entry load, exit load,associated with the mutual funds. Ultimately this would help in
understanding the benefits of mutual funds to investors.

4. STATEMENT OF THE PROBLEM

Monetary Funds benefited a lot from the mutual funds.Earlier investers used to invest directly in
the stock market and many times suffered from loss due to wrong speculation .statement of the
problem mutual funds are the avenues for common investors to reap the benefits of share market
performance

5.OBJECTIVES
On the basis of rationale of the study and literature review, objectives of present study are-

 To study the performance of mutual funds in India.

 To study the performance of mutual funds with respect to different performance

attributes.

 To develop a framework for performance measure of mutual funds in India.

 To study the behaviour of Indian individual investors towards the investment of their
savings.

 To study the perception of Indian individual investors towards the investment in mutual
funds.

6.SCOPE OF THE STUDY

Scope of Mutual Funds. Scope of Mutual Funds has grown enormously over the years. ... By
investing in these funds they were able to diversify their investment in common stocks,
 preferred stocks, bonds and other financial securities. At the same time they also enjoyed the
advantage of liquidity.

T h e s t u d y w i l l a i m a t u n d e r s t a n d i n g a n d a n a l yz i n g t h e t yp e s M u t u a l F u n d
a n d o t h e r investment options
 I will analyze the funds depending on their schemes like equity, income, balance

 Subject matter is related to the investor’s approach towards mutual funds and
other investment options in Indian market
 The research will be conduct in the geographical area of 1 cities- Bangalore (Karnataka)

7. RESEARCH METHODOLOGY

 STEPS OF RESEARCH DESIGN:

 Define the information needed:-

T h i s f i r s t s t e p s t a t e s t h a t w h a t i s t h e information that is actually required.
Information in this case we require isthat what is the approach of investors while
investing their money in mutualfunds and other investment options, e.g. what do they
consider while decidingas to invest in which of the two i.e. Mutual funds or other investment
options.Also, it studies the extent to which the investors are aware of the various coststhat one
bears while making any investment. So, the information sought and information
generated is only possible after defining the information needed
.
 Design the research: -
A research design is a framework or blueprint for conducting the research project. It details the
procedures necessary for obtaining the information needed to solve research problems. In this
project,the research design is explorative in nature.

 Specify the scaling procedures: -

Scaling involves creating a continuumon which measured objects are located. Both nominal and
interval scales have been used for this purpose.

 Construct and pretest a questionnaire: -

A questionnaire is aformalized set of questions for obtaining information from
respondents.Where as pretesting refers to the testing of the questionnaire on a smallsample of
respondents in order to identify and eliminate potential problems.
 TYPE OF RESEARCH
This research is based on descriptive study of research

SOURCES OF DATA
This study will be conducted on both the primary and secondary data, primary data
which is collected directly in contact of company , and secondary data will be
collected from various web portals, newspapers etc.

It refers to those data that was already being corrected by and analyzed by someone
else. This data is collected from

 Journal Reports
 Magazines.
 Newspapers and books
 Website
SAMPLING
 Sampling Type
 Sampling Frame
 Sampling Unit
 Sample Size

TOOLS FOR DATA COLLECTION

 Charts; intraday and historical

 Quotes;delayed
 Quotes;real time
 Time and Sales
 Historical Pricing
 PLAN OF ANALYSIS

Morningstar: They may be best known for their "star rating" system, which is on a
scale of one to five stars, that helps investors choose mutual funds. Morningstar
also offers tools, such as software for professionals, and research information
available to all levels of mutual fund investors online.

LIMITATIONS OF THE STUDY

Since investors have their money spread across different assets the high returns earned
does not make much of a difference. Thus, when we talk about diversification as one of the key
benefits of MF, over-diversification could be one of the major disadvantages/limitation to
investing in mutual funds

 The study will conduct only for 1 months

 Sample size taken is small
 The study only conducts in 1 geographical area Bangalore
 Respondent bias and sampling error

Signature of the Student Signature of the Guide