PROJECT REPORT ON

SPECIALIZATION

A STUDY ON INVESTORS’ PERCEPTIONS TOWARDS MUTUAL

FUNDS

SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF

THE DEGREE OF
MASTER OF MANAGEMENT STUDIES
UNIVERSITY OF MUMBAI

SUBMITTED BY MR. HRISHIKESH PILANKAR

ROLL NO. 2022166
2022-2024
UNDER THE GUIDANCE OF DR. ARATI KALE

LALA LAJPATRAI INSTITUTE OF MANAGEMENT

MAHALAXMI, MUMBAI – 400 034
 DECLARATION

I hereby declare that this project report submitted by me to the partial

fulfillment of the requirement for the award of MASTER OF
MANAGEMENT STUDIES (MMS) of the University of Mumbai is a
bonafide work undertaken by me and it has not been submitted to any other
University or institution for the award of any other degree or diploma
certificate or published any time before.

Name: Hrishikesh Pilankar

Roll No. 2022166 Signature of the student

 CERTIFICATE

This is to certify that the “A study on Investors’ perceptions towards

Mutual Funds”, has been successfully completed by Mr. Hrishikesh
Sudhakar Pilankar during the MMS II, SEM IV in partial fulfillment of the
Master’s degree in Management Studies recognized by the University of
Mumbai for the academic year 2021 – 2023. This project work is original
and has not been submitted earlier for the award of any degree, diploma or
associateship of any other University / Institution.

Date: 31/3/2024

DR. Arati Kale DR. H.J. BHASIN

PROJECT GUIDE DIRECTOR
 ACKNOWLEDGEMENT

This project has been a great learning experience for me. I take this
opportunity to thank Dr. Arati Kale, my internal project guide whose
valuable guidance & suggestions made this project possible. I am extremely
thankful to her for her support. She has encouraged me and channelized my
enthusiasm effectively.

I express my heart-felt gratitude towards my parents Mr Sudhakar Pilankar

& Mrs Sneha Pilankar, siblings and all those friends who have willingly and
with utmost commitment helped me during the course of my project work.

I also express my profound gratitude to Dr. H.J. Bhasin, Director of Lala

Lajpatrai Institute of Management and Dr. Neetu Singhwal the HOD of
Finance for giving me the opportunity to work on the projects and broaden
my knowledge and experience.

I would like to thank all the professors and the staff of Lala Lajpatrai
Institute especially the library staff who were very helpful in providing
books and articles I needed for my project.

Last but not the least, I am thankful to all those who indirectly extended their
co- operation and invaluable support to me.
 TABLE OF CONTENT

SR NAME OF THE TOPIC PAGE NO.

NO.
1 INTRODUCTION 1
Objective of study 2
Scope of study 4
Limitation of study 4
2 LITERATURE REVIEW 5
3 RESEARCH METHODOLOGY 6
3.1 Primary Research 6
3.2 Secondary Research 6
3.2.1 Mutual funds 7
3.2.2 Types of Mutual funds 10
3.2.3 Based on Asset class 28
3.2.4 Based on Structure 29
3.2.5 Based on Investment 30
3.2.6 Based on Risk 32
3.2.7 Special class Mutual Funds 47
3.3 Hypothesis 59
3.4 Questionnaire 60
4 CLASSIFICATION AND TABULATION OF DATA 61
5 ANALYSIS AND INTERPRETATION OF DATA 61
6 FINDINGS 76
7 CONCLUSION AND RECOMMENDATION 78
8 BIBLIOGRAPHY 79
 INVESTORS PREFERENCE TOWARDS MUTUAL FUNDS

1 . INTRODUCTION

OBJECTIVE

Mutual fund is a company that collects money from various investors and invests their
money in various securities such as Equity, Bonds, Money Market, Short-term debt and
other securities.
Holding of various securities together is known as portfolio. Portfolio is the basket of
various securities. Mutual funds have both merits and demerits as compared to direct
investing in single securities. The profit or income of gains from the investment is then
distributed to the investors according to their share of investment and this is calculated by
„Net Asset Value‟. Now let us understand what means „Net Asset Value‟. How equity
shares has its traded price, like that only Mutual Funds has its Net Asset Value or NAV.
The NAV is the combination of market value of Equity, Bonds and other securities. That
is held by a fund on any particular day (as reduced by permitted expenses and charges).
NAV per unit represents the market value of all the units in a mutual funds scheme on a
particular day, net of all expenses and liabilities and income accrued, divided by the
outstanding number of units in the scheme.
Mutual funds are conceived as an institution for providing, diversification of investments
for the small investors in capital market. As small investors do not have time, knowledge,
experience about the capital market, they have to depend on the intermediary which do
the investments and give benefits to its customers. Investors have many advantages like
diversified portfolio, reduction in risk, expertise professional management, and liquidity
and tax benefits. Mutual funds is suitable for the one who lack large investment or for the
one who neither have tendency nor have the time for market research, then too wanted to
grow their wealth. The money collected from various investors is then invested by the
professional fund managers in line with scheme’s stated objective. In return, fund
manager charge the small fees which

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 is deducted from the investment the investment. The fees which are charged by the
mutual fund house are regulated and subject to certain limit which is specified by the
securities and exchange board of India (SEBI).
From its inception the growth of the mutual fund is very slow and took certainly lengthy
years to adapt the present-day mutual funds. Mutual budget emerged for the first time in
Netherlands in the 18th century after which was given introduced to Switzerland.
Scotland and then America in the nineteenth century. The main motive behind the mutual
fund investments is to deliver a shape of various funding answer. Over time the concept
advanced and the people acquired increasingly picks of different funding portfolio via the
mutual finances in India, the mutual fund concept emerged in 1960. The credit is going to
UTI for introducing the primary mutual fund in India. Monetary finances benefited plenty
from the mutual finances. Earlier traders used to make investments at once in the stock
marketplace and many times suffered loss due to incorrect hypothesis. But with the
approaching up of the mutual funds, which were treated with the aid of efficient fund
managers, the investment dangers have been lowered by using a wonderful extent.
India is the highest saving rate globally. This makes necessary for the Indian investors to
look beyond the traditional banks FDs and gold and towards the Mutual Funds. Due to the
lack of awareness made the Mutual Funds as a less preferred investment avenue. Mutual
funds offer multiple choices of product for the investor to invest in the financial spectrum.
The investment goals vary from person to person, some investment goals are post-
retirement expense, child’s education and marriage, house purchase, etc. The Indian
mutual funds industry offers plenty of schemes and all the needs of investors.
Mutual fund offers an excellent path for the retail investors and gets benefit from the
uptrend of the capital markets. Investing in mutual funds is beneficial but finding the right
mutual fund is challenging. Therefore investor should do proper market research and take
into consideration the risk-return trade-off and time horizon or consult with professional
investment advisor. To get the maximum benefit from investing then the investor should
diversify its investment into equity, bonds and gold. Investors of all categories can invest
in markets by their own but mutual fund is better choice because it gives all the benefits in
one basket.

 To study the investors preference towards mutual funds.

 To study the investors awareness towards mutual funds.
 To study the pattern of investor behavior within the available investment options
and to test awareness among the investor about various fund houses.
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  To enhance the knowledge about this topic.
 To study the level of satisfaction of investors towards mutual funds.
 To study the factor influencing the investors in selecting mutual fund schemes.
 To find out overall criterion of investors regarding investment
 To study the growth of mutual fund industry in India.
 To study whether mutual fund is suitable for small investors.
 To study on which basis investors select mutual funds.

SCOPE

The scope has grown quite over the years. In the first age of mutual funds, when the
investment management organizations started to provide mutual funds, picks have been
few. Despite the fact that investors invested their money in mutual funds as these funds
provided them diverse funding option for the first time. By means of investing in these
funds they were capable of diversify their investment in common shares, preferred stocks,
bonds and different financial securities. At the same time additionally they loved the gain
of liquidity. With mutual funds, they got the scope of easy access to their invested fund on
requirement.
However, in todays world, scope of mutual funds has end up so extensive, that investors
take long time to determine the mutual fund scheme, they may be going to put money
into. Several investment management companies have emerged over the years who
provide numerous types of mutual funds, each type carrying precise characteristics and
exceptional beneficial capabilities.

LIMITATIONS

 A detailed research was undertaken for the purpose of project. But the detailed
research has its own limitations related to selection of sample size of sample unit.
 Some of the date which is gathered through mutual fund holder may not be
reliable. Time limit was also a limitation while conduction the study. So, the study
does not give information of whole market.
 The study also reduce the comparison as it was done only in one city i.e. Mumbai.
 Analysis id done limited due to the availability of data.

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  It becomes very difficult to evaluate the accuracy of secondary data before using
secondary data.
 Desired information may be out-of-date or may be unavailable.

2. LITERATURE REVIEW

Ippolito (1992) says that funds/scheme selection process done by investors is based on
the past performance of the funds and money flows into winning funds more rapidly than
they flow out of losing funds.

Goeztman (1997) says that there is evidence that investor psychology affect
fund/schemes election and switching.

Madhusudhan V Jambodekar (1996) conducted a study to assess the awareness among

investors about Mutual Funds, to identify the information sources influencing the buying
decision and the factor influencing the choice of investors about particular fund. The
study reveals among other things the Income Schemes and Open-ended Schemes are more
preferred fund than the Growth Schemes and Close-ended Schemes during the prevalent
market condition.Also it gets to know that Investors look for safety of Principal, Liquidity
and Capital appreciation in the order of importance; Newspapers and Magazines are the
first source of information through which investors get to know about Mutual Funds
schemes and investor service is a major differentiating factor in the selection factor of
Mutual Funds Schemes.

Kavitha Ranganathan (2006) has examined the related aspects of the fund selection
behavior of individual investors towards Mutual Funds, in the city of Mumbai.

Bodla B. S., Bishoni Sunita (2008) has reveal in their study that the Mutual Fund
investors in india at present have as many as 609 schemes with various features such as
dividend, growth, cumulative interest income, monthly income plans, sectoral plans,
equity linked plans, etc.
Though both open-ended and close-ended schemes have registered excellent growth in
fund mobilization, but currently the former category of schemes is more popular among
the investors.Portfolio-wise analysis has brought that the income schemes have an edge
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over growth schemes in terms of assets under management. Moreover UTI‟s share in total
assets under management has come down to 11.8 % in 2006 from 82.5% in 1998.
Sarish and Ajay Jain (2012) concluded that for the purpose of investment or saving, the
investor are having various options to invest money in equity, debts, bonds, bank deposits,
mutual funds. A common investor, who invests their saving into the different assets and
not in mutual funds are not aware about it.

D. Rajasekar (2013) The study was conducted with the sample size of 150 respondents
by using the statistical tools like percentage analysis, chi square, weighted average, with
an objective to know about the perception of investors on their profile, income, saving
pattern, investment patterns and their personality criteria.

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 3. RESEARCH METHODOLOGY

3.1 PRIMARY DATA

Primary data are first-hand source data. It is collected by a researcher through personal
interview or through structured questionnaire. The data we get from primary data is
unbiased. I have collected Primary data through structured questionnaire.
TARGET POPULATION – SALARIED, BUSINESSMEN AND INDIVIDUALS
SOURCE – STRUCTURED QUESTIONNAIRE
SAMPLE SIZE – APPROX 75
SAMPLING METHOD – RANDOM SAMPLING

SECONDARY DATA

Secondary data is second hand data. This data is usually collected from second source
i.e. Internet, Magazines, Newspaper, TV, websites, etc. This data gives us exposure to
various information about the topic. The secondary data from my project is also collected
from these sources.

3.2 SECONDARY DATA

MUTUAL FUND CONCEPT

A mutual fund is a platform that pools the savings of a number of buyers who share a
common monetary purpose. The money hence gathered then invested in capital market
instruments including equities, debentures and different securities. The earnings earned
via these funding and the capital appreciation found out (after deducting the prices and
income of mutual fund managers) is shared by means of its unit holders in proportion to
the number of units owned by way of them. Hence a mutual fund strives to satisfy the
funding needs of the commonplace man by way of supplying him or her possibility to
spend money on a diversified, professionally controlled basket of securities at a notably
low cost. The small saving of all of the buyers are prepare to growth the buying power
and lease a professional manager to make investments and screen the money. Everybody
with a surplus of a little few thousand rupees can invest in mutual funds.

HISTORY OF MUTUAL FUNDS IN INDIA

The mutual fund industry in India began in 1963 with the formation of unit trust of India,
on the initiative of the authorities of Government of India and Reserve Bank. The history
of Mutual Funds in India is divided into 4 different phase.

FIRST PHASE 1963-1987

Unit trust of India (UTI) becomes hooked up on 1963 by means of an act of parliament. It
became set up via the Reserve Bank of India and functioned underneath the regulatory
and administrative control of the reserve Bank of India in 1978. UTI changed into de-
related from the RBI and the Industrial Development Bank of India (IDBI) took over the
regulatory and administrative manipulate in place of RBI. The primary scheme launched
by UTI was unit scheme 1964. On the give up of 1988 UTI had Rs. 6,700 crores of assets
below management.

SECOND PHASE 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS)

1987 was the entry of non-UTI, public sector mutual funds was setup by public sector
banks and Life Insurance Corporation of India (LIC) and General insurance Corporation
of India (GIC).
SBI Mutual Fund was the primary non-UTI mutual fund installed in June 1987
accompanied 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 Dec 1990. Onthe end of 1993, the mutual fund industry had assets
underneath management of Rs. 47,004 Crores.

THIRD PHASE 1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS)

The 1993 SEBI (Mutual fund) policies have been established through a more
comprehensive and revised Mutual fund policies in 1996. The enterprise now functions
under the SEBI (Mutual fund) rules 1996. The quantity of Mutual fund houses went on
increasing, with much foreign mutual price range putting in finances in India and
additionally the industry has witnessed numerous mergers and acquisitions. As at the end
of Jan 2003, there have been 33 mutual funds with overall property of Rs. 1,21,805
crores. The UTI with Rs. 44,541 crores of assets under management was way in advance
of different mutual price range.

FOURTH PHASE SINCE FEB 2003

In Feb 2003, following the repeal of the Unit Trust of India act 1963, UTI turned into
bifurcated into separate entities. One is the specified undertaking of the UTI with assets
under management of Rs. 29,835 crores as on the stop of Jan 2003, representing broadly,
the asset 64 schemes, assured go back and certain different schemes. The specified
projects of UTI, functioning underneath an administrator and beneath the regulations
framed by way of government of India and does no longer come underneath the preview
of the mutual fund policies.
The second is the UTI Mutual fund ltd, sponsored by using SBI, PNB, BOB and LIC. It is
registered with SEBI and functions underneath the mutual fund regulations. With the
bifurcation of the cist while UTI which had in March 2000 more than Rs. 76,000 crores of
assets beneath control and with the setting up of a UTI Mutual fund, conforming to the
SEBI Mutual fund policies and with latest mergers taking place among special non-
public sector funds, the annual mutual fund industry has entered into its modern segment
of consolidation and boom. As on the stop of Sept 2004, there were 29 finances, which
manage assets of Rs. 1,53,108 crores under 421 schemes.
ASSOCIATION OF MUTUAL FUND IN INDIA (AMFI):

With the growth in Mutual fund players in India, a want for mutual fund Association in
India became generated to function as a non-income corporation. Association of mutual
fund India (AMFI) becomes incorporated on 22 august, 1995. AMFI is an apex frame of
all asset management companies (AMC) which has been registered with SEBI. Till date
all the AMCs are which have released mutual fund schemes are its participants. It
capabilities below the supervision and suggestions of its board of directors. AMFI has
brought down the Indian mutual fund enterprise to professional and healthful marketplace
with ethical strains improving and keeping standards. It follows the principle of both
protecting and selling the interests of mutual budget as well as their unit holders.

HOW MUTUAL FUND CAN ENHANCE YOUR PORTFOLIO?

For example, amongst equity funds, there are diverse equity funds, large-cap price range,
mid- cap funds, and small-cap funds because it involves market cap classification. Then
there are aggressive funds, which awareness on beating marketplace returns with the aid
of an extensive margin, and balanced funds that are hybrid in shape because of a massive
allocation to fixed income securities or bonds. There are also area-oriented budget, which
focus on companies from a selected quarter like banking, pharmaceutical, or technology,
among others. There are thematic funds as properly. Meanwhile, ELSS (Equity Linked
Savings Schemes) are diverse price range with a lock-in duration of 3 years and provide
tax benefits. At the fixed earnings side, there are budget, which invest in government
bonds, company bonds, or both.
Further, there are period-oriented price range like short, medium, or lengthy-term and
dynamic bond funds.
Significance of mutual fund is not restrained to simply sufficient desire; while offering a
full-size array of alternatives, equity mutual fund also spread throughout their assets
across diverse sectors and industries. If there are various funds, it also spreads its
belongings throughout market capitalizations. Aside from this, equity funds can invest
some element of their assets in bonds as well. This spreading out of assets is the basic
idea underlying diversification. Portfolio diversification can be accomplished via
purchasing single security as well. However with a restricted corpus to invest, there are
best such a lot of shares and bonds that an investor should purchase. Extra so, there can be
a few bonds which can be out of reach of investors as the price ticket length of a single
purchase is very high. In the meantime, mutual funds offer immediate diversification.

Risk mitigation and management is a key

Systematic (or market) and unsystematic risk can cause investors to lose cash in monetary
markets. The fear of dropping their capital is what makes numerous investors hesitant to
invest in markets. Although the systematic threat, i.e. the chance inherent in markets
cannot be accomplished away, mutual budget try and mitigate the unsystematic chance by
way of using portfolio diversification and professional management. Managing threat and
reducing it to a foremost degree is one of the principal responsibilities of the fund
supervisor and their team of analysts. Diversification is useful in this because as soon as
an investor‟s cash is unfold throughout several sectors, industries, and market caps, the
risk spreads out as well. If one sector or enterprise declines in price, other sectors, and
industries can assist counter the decline or as a minimum soften the blow.

STRUCTURE OF MUTUAL FUNDS:

India has a legal framework within which mutual fund should be constituted. In India
open and close-end funds operate beneath the same regulatory structure i.e. as unit trusts.
A Mutual fund in India is permitted to issue open-end and close-end schemes below a not
unusual legal structure. The shape that is required to be followed by means of any mutual
fund in India is laid down under SEBI (Mutual fund) guidelines, 1996

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THE FUND SPONSER:
Sponsor is described underneath SEBI guidelines as any individual who, appearing
alone or in combination of some other company frame establishes a Mutual fund. The
sponsor of the fund is corresponding to the promoter of an organization as he receives the
fund registered with SEBI. The sponsor forms a trust and appoints a board of trustees.
Asset management are are appointed by the Sponsor. As in line with the SEBI guidelines,
for person to qualify as a sponsor, he have to contribute as a minimum 40% of the internet
worth of the Asset Management Company and possesses a sound financial track
document over 5 years previous to registration.
MUTUAL FUND AS TRUSTS:
A mutual fund in India is constituted in the shape of public trust with act, 1882. The fund
sponsor acts as a settler of the trust, contributing to its preliminary capital and appoints a
trustee to hold the assets of the Trust for the advantage of the unit-holders, who are the
beneficiaries of the Trust. The Trust then invites the traders to make contributions of their
cash in common pool, by scribing to "units" issued by using diverse schemes established
by using the Trusts as evidence It must be understood that the fund need to be only a
"pass through" vehicle. Under the Indian Trusts act, the trust of the fund has no
independent legal potential itself, as an alternative it is the trustee or the trustees who have
the legal potential and therefore all acts when it comes to the trusts are taken on its behalf
through the trustees. In legal parlance the traders or the unit- holders are the beneficial
proprietors of the funding held by way of the trusts, even as these investments are held in
the name of the trustees on a everyday foundation. Mutual fund can invite any range of
traders as useful proprietors in their funding schemes in their useful interest within the
fund.
TRUSTEES:
A trust is created through a document referred to as the Trust Deed that is executed
through the fund sponsor in favor of the trustees. The Trust-the Mutual fund- perhaps
controlled by a Board of Trustees - a frame of individuals of Trust Company. Most of the
fund in India is managed by means of forums of trustees. While the Boards of
Trustees are governed via the Indian Trust Act, wherein the trusts are a corporate body,
it might additionally require conforming to the organizations act, 1956.

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THE ASSET MANAGEMENT COMPANIES:

The role of an Asset Management Companies (AMC) is to behave as the funding

supervisor of the trust under the board supervision and the steering of the Trustees. The
AMC is requires to be authorized and registered with SEBI as an AMC. The AMC of a
mutual fund must have a net worth of as a minimum Rs. 10 Crores at all times. Directors
of the AMC, each independent and non-independent, should be professional expertise in
financial services and have to be people of high morale status, a situation additionally
applicable to different key employees of the AMC. The AMC can't act as a trustee of
every other mutual fund. Except its function as a fund supervisor, it could adopt detailed
activities along with advisory services and monetary consulting, furnished these activities
are run independent of each other and the AMC's resources (inclusive of personnel,
system and many others.) are property segregated by the activity. The AMC should
continually act within the interest of the unit-holders and reports to the trustees with
appreciate to its activities

CUSTODIAN AND DEPOSITORIES:

Mutual fund is in the business of purchasing and promoting of securities in massive

volumes. Dealing with those securities in phrases of physical delivery and eventual
safekeeping is a specialized activity. The custodian is appointed by using the board of
trustees for safekeeping of securities or taking part in any clearance system thru
authorized depository corporations on behalf of the mutual fund and it need to fulfill its
duties according with its agreement with the mutual fund. The custodian has to be an
entity independent of the sponsors and is required to be registered with SEBI. With the
advent of the idea of dematerialization of stocks the dematerialized stocks are stored with
the depository participant while the custodian holds the physical securities. Hence,
deliveries of a fund's securities are given or received by a custodian or a depository
player, at the guidance of the AMC, despite the fact that beneath the overall route and
responsibilities of the trustees.

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TRANSFER AGENT:

Transfer Agents are liable for issuing and redeeming units of the mutual fund and offer
other associated offerings which include preparation of transfer documents and updating
investor information. A fund might also pick out to perform its activity in- house and fee
the scheme for the service at a competitive marketplace price. Wherein an outside transfer
agent is used, the fund investor will find the agent to be an essential interface to deal with,
for the reason that all oft he investor offerings that a fund presents are going to be
dependent on the transfer agent.

HOW TO INVEST IN MUTUAL FUND

STEP ONE – IDENTIFY YOUR INVESTMENT NEEDS

Your monetary goals might also vary based on your age, lifestyle, monetary
independence, family commitments, level of profits and prices among many other
elements. Therefore step one is to evaluate your desires. Begin with the aid of asking
yourself these questions
1. What are my investment objectives and needs?
2. How much risk I am able to take?
3. What are my cash flow requirements?

By doing this exercise, you may recognize what you want out of your investment and may
set the inspiration for a sound mutual funding strategy.

STEP TWO – CHOOSE THE RIGHT MUTUAL FUND

As soon as you have clear strategy in mind, now you should select which mutual fund and
scheme you want to invest in. The offer document of the scheme tells you its objective
and gives supplementary info like the track record of different schemes controlled with
the aid of the same fund manager.

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STEP THREE - CHOOSE THE IDEAL MIX OF THE SCHEME
Investing in just one mutual fund scheme won't meet all of your investment needs. You
may consider making an investment in a mixture of schemes that satisfy your desires.
Investor may decide on the basis of growth and threat ranges which may be labeled as
follows:

 Moderate Plan
 Aggressive Plan
 Defensive Plan
 Factors consider in this may be:
 Income Schemes
 Growth Schemes
 Balanced Schemes
 Money Market Schemes

STEP FOUR- INVEST REGULARLY

For maximum people, the method that works nice is to invest hard and fast amounts at
precise quantity periods, say each month. By means of making an investment a set sum
every month, you get fewer units while the charge is excessive and extra units while the
rate is low. As a result bringing down your average cost per unit. That is known as rupee
cost averaging and is a disciplined investment approach observed with the aid of investors
everywhere in the global. With many open-ended schemes supplying systematic
investment plans, this ordinary investing habit is made easy for you.

STEP FIVE- KEEP YOUR TAXES IN MIND

As consistent with the current tax legal guidelines, dividend/earnings allotted made by
using mutual funds is exempt from profits tax inside the fingers of investor. However, in
case, of debt schemes dividend/profits distribution is subject to dividend distribution tax.
Further there are other benefits available for investment in mutual funds under the
provisions of the winning tax laws.

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STEP SIX- START EARLY
Its miles perfect to start making an investment early and stick with a regular funding plan.
In case you begin now, you will make more than if you wait 7 invest later. The energy of
compounding helps you to earn income on earnings and your cash multiples at
compounded charge of return.

STEP SEVEN- FINAL STEP

All you need to do now is to get in contact with a mutual fund or your adviser and start
investing. Reap the rewards within the 12 months to come. Mutual fund are appropriate
for each type of investor whether beginning a career or retiring; conservative or risk
taking, growth orientated or earnings seeking.

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 FEATURES OF MUTUAL FUNDS

PORTFOLIO DIVERSIFICATION/ RISK DIVERSIFICATION

Most mutual funds invest in 50 to 100 various investments based on market capitalization,
sectors and many other demographics. *most effective on an extraordinary occasion do all
shares decline at the identical time and within the equal proportion. Hence, mutual fund
offers a diverse funding portfolio despite a small quantity of investment that might in any
other case require massive capital. In spite of large capital, it's far extremely hard and
time-eating to buy and manage a huge range of investments individually. While making
an investment in few stocks or debentures at once is viable, the threat of potential loss is
all on the investor. However, Mutual Funds lessen the hazard of loss as the portfolio is
largely diversified and the purchases are sponsored through studies and experience of the
fund house. Moreover, the loss is also shared with different investors inside the same
fund. This diversification of threat is one of the key blessings of a collective funding tool
like mutual funds.
* Only Sector funds invest throughout one industry making them less various and there
fore greater unstable.

PROFESSIONAL MANAGEMENT
Mutual fund schemes are managed by certified an experienced expert who works towards
the fund's defined goal. These financial specialists are accompanied by a specialized
investment research team. The experts and their teams diligently and judiciously observe
companies, their merchandise and overall performance. After thorough evaluation, the
satisfactory funding alternative maximum aptly appropriate to achieve the scheme's
objective is selected. This continuous process adds value to your investment and enables
achieve higher returns.

AFFORDABILITY
A mutual fund invests typically buy and promote diverse asset classes in large volumes
permitting traders to advantage from lower buying and selling expenses. Investors can get
exposure to such portfolios with an investment as modest as Rs. 500/-* in mutual funds
thru a systematic investment plan. Such portfolio would otherwise be extraordinarily

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expensive to purchase and hold for an investor making an investment without delay in
inventory market.

LIQUIDITY
With open ended funds, investors can redeem (en cash) all or part of their investments at
winning net asset value, at any factor of time. Mutual funds are extra liquid than most
investments in stocks, deposits, and bonds. Further, a standardized system allows short
and efficient redemption permitting investors to get cash in hand as quickly as feasible.
For closed ended schemes, investors can redeem their investments at prevailing Net Asset
Value, situation to go out load at particular periods, if furnished within the scheme. In
certain schemes, in which lock in period is stated, investor can't redeem his investment
until that duration.

TRANSPARENCY
Mutual funds are transparent form of investment. Investors get hold of targeted
information and timely updates approximately the nature of investments made, fund
manager's funding method behind the investments, the precise amount invested in every
sort of security, etc. Moreover, the performance of a mutual fund is reviewed by
numerous publications and rating organizations, making it easy for investors to evaluate
one fund to any other.

RUPEE-COST AVERAGING
Rupee cost averaging or sip presents the investor a disciplined technique of making an
investment specific amount at regular periods irrespective of the unit charge of the
investment. Therefore, the cash invested fetches more units when the fee is low and lesser
while the price is excessive. Hence, allowing you to reap a lower average value in
line with unit through the time. The approach facilitates smoothen out market ups and
downs ultimately, at the same time as decreasing the chance of making an investment in
risky markets.

REGULATIONS
All mutual funds in India are required to register themselves with Securities Exchange
Board of India (SEBI). With investor interest on the helm, SEBI has laid down strict

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policies to protect buyers against possible threats. It is even mandatory for mutual fund
distributors to register with Association of Mutual Funds in India (AMFI) and obey the
norms laid by the Securities and Exchange Board of India (SEBI) and AMFI for the
distributors.

CHOICE OF INVESTMENT
Mutual funds are the only product category that caters to every one‟s wishes. You may
always discover a mutual fund that suits a time horizon – long, medium, or short; and
your risk-taking capacity – low, medium, high. All this irrelevant of how much you
invest, be it a totally small funding or a huge lump sum. Your adviser will assist select the
proper fund/s for you preserving in thoughts your profile.

MINIMIZING COST
Mutual finances assist traders to gain from economies of scale as mutual funds pool cash
from big quantity people with common interest and invest their money inside the
applicable asset class/classes. This allows the investors share the price of management of
their cash.

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 BENEFITS OF MUTUAL FUNDS

SMART INVESTMENT
While you put money into an investment tool which invests in a single specific sector
there's a threat of dropping money in a single cross. If the industry wherein you've got
invested fails, then you possibly lose all your cash. But, this isn't the case with mutual
fund investments. While you put money into a mutual fund the associated risk is
especially low as most of the mutual fund schemes spread the funding in a couple of
property and sectors for lowering the risk. As a result, if anyone of the sectors faces a loss
then the gains from the alternative sectors will compensate the quantity that you have lost.
This risk mitigation benefit makes mutual fund investments a smart investment choice as
compared to different investments.

LOW-COST INVESTMENT
This is a totally interesting feature of mutual funds. For the reason that mutual fund get
cash from multiple investors, the asset managed services furnished via the company come
at a comparatively low fee or charge due to the fact the quantity is equally divided among
all of the investors.

PROFESSIONALY MANAGED
Making an investment in mutual funds is simple. Those funds are professionally managed
by way of professional and experienced fund managers who have widespread experience
in dealing with funds. Hence, even beginners who don't have any understanding
approximately the marketplace can invest in such funds with the help of expert managers.
A whole group of specialists will deal with your funding, layout your portfolio, strategies
on your behalf, and could guide you through every step of investment.

MULTIPLE INVESTMENT OPTIONS

Buyers get a variety of investment alternatives even as making an investment in a mutual
fund. As an instance, in case you want to acquire returns in a short time frame, you have
to preferably put money into short-time period price range but if you have a few further
costs to meet, investing in long-term period funds could be perfect to serve your purpose.

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Mutual fund also provides the choice of getting a normal earnings glide at some stage in
the tenure within the form of dividend payout facility. In case your investment objective is
to grow your capital during the funding tenure you may select the boom alternative and
for incomes a everyday earnings you have to move for the dividend facility.

LUMPSUM INVESTMENT OR IN INSTALLMENTS

Mutual fund investments offer funding alternatives for people who do not have a big
amount of money to make investments at a pass. Suppose you are very younger or just do
not have enough cash to invest in mutual fund in one shot, in both the cases you can
nonetheless put money into mutual funds through choosing the SIP investment
alternative. A SIP is a Systematic Investment plan which allows the buyers to invest in
mutual funds in installments (EMIs). Contrarily, when you have a massive sum of money
you can invest a lump sum quantity.

DIVERSIFICATION OF RISK
Though mutual fund investments are issue to market risks, the benefit is that the
associated risk can be assorted. It is completely up to the risk appetite of the investor to
determine how a whole lot threat he/she is prepared to take. At the same time as a high-
threat fund has a tendency to provide higher returns, the chances of loss in these are
equally excessive. So, in case you aren't willing to take a massive risk you have got the
choice to pick out low or medium-risk. A medium-risk fund tends to stability the risk and
gives out a medium return and a low-risk fund has lower risks and gives the bottom
returns.

EASY LIQUIDITY OPTION

While making investments in mutual funds, an investor receives alternatives for liquidity
as well. Being an investor you may have the power to pick out among regular funds and
tax-saving funds which can be specific from every other in terms of liquidity. Even as in a
regular plan you can liquidate your profits some months after making the investment, in a
tax-saver fund, the principal, in addition to the dividend, can be withdrawn only after the
finishing touch of a 3-year lock-in length.

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EASE OF PURCHASE AND REDEEMPTION
The units of a mutual fund scheme can be without difficulty bought and redeemed on the
pertinent NAV costs on all of the working days. Except for the mutual funds which are
locked for a particular time period, like ELSS, the units of the open-ended mutual funds
may be purchased or redeemed on any of the business days until specific in any other case
with the aid oft he fund house. Considering the fact that there is no restriction at the
liquidation of the units, the subscribers have easy access to their invested cash.

FLEXIBILTY OF SWITCHING FUNDS

Mutual fund comes with an alternative of fund switching. This indicates the investors can
switch among schemes or among funds to avail higher phrases and/or better returns from
their investment. But, in most of the cases, the fund switching option is to be had most
effective between schemes of the identical fund and no longer among the budget offered
by a particular organization.

TAX-SAVING ADVANTAGES
A mutual fund investment also gives tax-saving benefits to investors. In case you invest
your money in mutual fund such as equity-linked savings schemes (ELSS) then you will
be eligible to get tax-deduction advantages under section 80C of the Income Tax Act,
1961. As per the norms of Income Tax Act, a mutual fund investor is allowed to have tax
deduction benefits up to the quantity of Rs. 15000. Hence, when you spend money on
such tax-saving schemes you may get the advantage of not paying income tax for the
amount of money which you have invested within the mutual fund scheme. On this way,
such investments will convey down your taxable income.

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 DISADVANTAGES OF MUTUAL FUNDS

NO INSURANCE
Mutual funds, even though regulated by way of the authorities, are not insured against
losses. The Federal Deposit Insurance Corporation (FDIC) most effective insures against
sure losses at banks, credit unions, savings and loans, no longer mutual funds. Which
means that despite the risk-reducing diversification advantage supplied by mutual funds,
losses can arise, and its miles possible (although extremely not going) that you can even
lose your complete investment.

FEES AND EXPENSES

Most of the mutual funds charges management and operating fees that pay for the fund's
control costs (normally round 1. 0% to at least 1.5% in keeping with year for actively
managed funds). Further, some mutual funds rate high income commissions, 12b-1 fees,
and redemption prices. And a few funds buy and trade shares so regularly that the
transaction charges upload up appreciably. A number of those costs are charged on an
ongoing foundation, not like stock investments, for which a commission is paid handiest
when you purchase and promote.

POOR PERFORMANCE
Returns on a mutual fund are not guaranteed. In reality, on common, around 75% of all
mutual funds fail to overcome the predominant marketplace indexes, like the S&P 500,
and a developing wide variety of critics now question whether or no longer professional
money managers have better stock-choosing abilities than the average investor.

LOSS OF CONTROL
The managers of mutual funds make all the choices about which securities to buy and sell
and while to do so. This could make it hard for you when trying to manage your portfolio.
As an example, the tax results of a decision by the manager to buy or promote an asset at
a positive time won't be top-rated for you. You furthermore might have to remember the
fact that you are trusting a person else with your cash while you spending money on a
mutual fund.

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TRADING LIMITATIONS
Even though mutual funds are incredibly liquid in trendy, most mutual funds (referred to
as open-ended funds) can't be bought or sold in the middle of the buying and selling day.
You can only purchase and promote them on the end of the day, once they've calculated
the present day value of their holdings.

SIZE
A few mutual funds are too big to discover enough properly investments. This is
especially true of funds that concentrate on small agencies, given that there is strict rules
about how much of a single agency a fund may own. If a mutual fund has $5 billion to
make investments and is only capable of make investments a median of $50 million in
each, then it wishes to locate as a minimum one hundred such groups to invest in; as a end
result, the fund is probably pressured to decrease its requirements while choosing
organizations to invest in.

INEFFICIENCY OF CASH RESERVE

Mutual funds commonly keep huge cash reserves as safety in opposition to a large variety
of simultaneous withdrawals. Although this presents traders with liquidity, it way that a
number oft he fund's money is invested in cash in place of assets, which has a tendency to
decrease the investor's potential return.

TOO MANY CHOICES

There are over 10,000 mutual funds in operation, and these funds vary significantly in
step with funding goal, size, method, and style. Mutual funds are available for surely each
investment strategy (e.g. Price, boom), every quarter (e.g. Biotech, internet), and each us
of any place or location of the world. So even the process of choosing a fund may be
tedious.

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 HOW RISKY YOUR MUTUAL FUNDS IS:

Investors always decide a fund by way of the returns it provides, never by means of the
risk it took. In any historic analysis of a mutual fund the returns is remembered but the
risk is forgotten quickly. So a fund manager might also have used very high-risk strategies
(which are bounded to fail disastrously ultimately), hoping that his wins might be
remembered (as they regularly are), but the threat he took will soon be forgotten.

WHAT IS RISK?

Risk may be defined as the capability for harm. However while anybody analyzing
mutual funds uses this term, what is sincerely being mentioned is volatility. Volatility is
not anything however the fluctuation of the Net Asset Value (rate of a unit of a fund). The
higher the volatility, the more the fluctuation of NAV. Commonly, past volatility is taken
as an indicator of future risk and for the mission of comparing mutual fund.

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 FOLLOWING ARE SOME RISK TO CONSIDER WHEN
INVESTING IN MUTUALFUNDS.

CALL RISK:
The likelihood that falling Interest rates will cause a bond issuer to redeem or call its high
yielding bond earlier than the bond‟s maturity date.

CREDIT RISK:
The chance that a bond issuer will fail to repay interest and principal amount in a timely
manner.Also known as default risk.

CURRENCY RISK:
The possibility that returns could be decreased for people investing in overseas securities
due to rise within the price of the U. S. Dollar towards foreign currencies. Also known as
Exchange Rate Risk.

INCOME RISK:
The likelihood that a Fixed-Income fund‟s dividends will go down as a result of falling
overall Interest Rates.

INDUSTRY RISK:
The possibility that the group of stock in a single industry will go down in charge due to
improvement in that industry.

INFLATION RISK:
The possibility that will increase within the cost of living will reduce or eliminate a
fund‟s actua linflation adjusted returns.

INTEREST RATE RISK:

The possibility that a fund will decline in value due to a boom in interest rates.

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MANAGER RISK:
The opportunity that an actively managed mutual fund‟s investment consultant will fail to
execute the fund‟s investment strategy successfully ensuing within the failure of stated
goals.

MARKET RISK:
Sometimes prices and yields of all securities upward push and fall. Broad outside
influences affecting the market in general cause this. This is real, might also it is huge
business enterprise orsmaller mid-sized businesses. This is called Market risk.

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 HOW RISK IS MEASURED

There are two ways in which you can decide how risky a fund is:

STANDARD DEVIATION
Standard Deviation is a measure of how an actual performance of a fund over a time
period deviates from the average performance. “Due to the fact that Standard Deviation is
a degree of risk, a low Standard Deviation is good”.

SHARPE RATIO
This ratio looks at both, returns and risk, and can provide a single measure that is
proportional to the risk adjusted returns. “Considering that Sharpe ratio is a degree of risk-
adjusted returns, a excessive Sharpe ratio is good”.

COMPARISON BETWEEN VARIOUS WAYS OF INVESTMENT

SCHEMES RETURN CONVINIENCE SAFETY VOLAITLITY LIQUIDITY

EQUITY HIGH MODERATE LOW HIGH HIGH

FI BONDS MODERATE HIGH HIGH MODERATE MODERATE

CORPORATE MODERATE LOW MODERATE MODERATE LOW

DEBENTURES

COMPANY MODERATE MODERATE LOW LOW LOW

DEPOSITES

BANK LOW HIGH HIGH LOW LOW

DEPOSITES

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 PPF MODERATE HIGH HIGH LOW MODERATE

LIFE LOW MODERATE HIGH LOW LOW

INSURANCE

GOLD MODERATE LOW HIGH MODERATE MODERATE

REAL HIGH HIGH MODERATE HIGH LOW

ESTATE

MUTUAL HIGH HIGH HIGH MODERATE HIGH

FUNDS

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 3.2.3 BASED ON ASSET CLASS:

 EQUITY FUNDS
Equity funds frequently spend money on stocks and for this reason move with the aid of
the call of stock fund as well. They invest the money pooled in from diverse investors
from numerous backgrounds into shares/stocks of different agencies. The profits and
losses related to these funds rely totally on how the invested stocks carry out (price- hikes
or price-drops) in the stock market. Additionally, equity funds have the potential to
generate significant returns over a period.
Subsequently, the chance associated with those funds also has a tendency to be relatively
higher.

 DEBT FUNDS
Debt funds invest basically in fixed-income securities including bonds, securities and
treasury bills. They spend money on various fixed income instruments including Fixed
Maturity Plans (FMPs), Gilt Funds, Liquid Funds, Short-term plans, long-term bonds and
monthly income plans, among others. Since the investments come with a fixed interest
rates and maturity date, it is able to be a superb alternative for passive traders seeking out
ordinary income (interest and capital appreciation) with minimum risks.

 MONEY MARKET FUNDS

Investors trade stocks within the stock market. Within the identical way, investors
additionally invest within the money market, additionally known as capital market or cash
market. The authorities runs it in association with banks, financial institutions and other
agencies through issuing money market securities like bonds, t-bills, dated securities and
certificate of deposits, amongst others. The fund manager invests your money and pay out
regular dividends in return. Choosing a short-term plan (not more than 13 months) can
decrease the risk of investment extensively on such funds.

As the name suggests itself, a hybrid fund (balanced funds) is an optimum mix of bonds
and shares, thereby bridging the gap among equity funds and debt funds. The ratio can

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either be variable or constant. In short, it takes the first-rate of two mutual funds by
distributing, say, 60%of belongings in shares and the rest in bonds or vice versa. Hybrid
funds are suitable for investors looking to take more risks for „debt plus returns‟ gain in
preference to sticking todecrease however steady income schemes.

3.2.4 BASED ON STRUCTURE:

 OPEN-ENDED FUNDS
Open-ended funds not have any specific constraint which includes a particular period or
the number of units which can be traded. These funds allow investors to trade funds at
their suitability and exit while required at the triumphing NAV (Net Asset Value). This is
the only reason why the unit capital always adjustments with new entries and exits. An
open-ended fund also can decide to stop taking in new investors in the event that they do
no longer need to (or cannot managed significant funds).

 CLOSE-ENDED FUNDS
In closed-ended funds, the unit capital which is going to be investing is pre-defined.
Which means the fund organization cannot sell extra than the pre-agreed number of units.
Some funds also include a New Fund Offer (NFO) period; in which there may be a
deadline to shop for units. NFOs come with pre-defined maturity tenure with fund
managers open to any fund size.
Therefore, SEBI has mandated that traders receive the choice to both repurchase
alternative and list the funds on stock exchanges to exit the schemes.

 INTERVAL FUNDS
Interval funds have tendencies of each open-ended and closed-ended fund. These funds
are open for buy or redemption only at some point of unique intervals (decided via the
fund house) and closed the rest of the time. Also, no transactions can be accredited for as
a minimum two years. These funds are appropriate for buyers looking to store a lump sum
amount for a long-term monetary aim, say, in 3-12 months.

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 3.2.5 BASED ON INVESTMENT

 GROWTH FUNDS
Growth funds usually allocate a considerable element in shares and growth sectors,
appropriate for investors (by and large millennial) who have a surplus of idle money to be
dispensed in riskier plans (albeit with probably high returns) or are positive approximately
the scheme.

 INCOME FUNDS
Income funds belong to the family of debt mutual funds that distribute their money in a
combination of bonds, certificate of deposits and securities amongst others. Whelmed by
skilled fund managers who hold the portfolio in tandem with the price fluctuations
without compromising at the portfolio‟s creditworthiness, income funds have historically
gained investors higher returns than deposits. Income Funds are best suited for risk-averse
investors with a 2-3 years viewpoint.

 LIQUID FUNDS
Like income funds, liquid funds also belong to the family of debt fund as they invest in
debt instruments and money market with a tenure of as much as 91 days. The maximum
sum allowed to invest in Income Fund is Rs 10 lakh. A highlighting characteristic that
differentiates liquid funds from different debt funds is the manner the Net Asset Value is
calculated. The NAV of liquid funds is calculated for 12 months (such as Sundays) at the
same time as for others, only business days are considered.

 TAX- SAVING FUNDS

ELSS or Equity Linked Saving Scheme, over time, have climbed up the ranks amongst all
classes of investors. Not only do they offer the advantage of wealth maximization while
permitting you to store on taxes, however in addition they come with the lowest lock-in
period of simplest three years. Making an investment predominantly in Equity (and
related products), they are acknowledged to generate non-taxed returns within the variety

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14-16%. These funds are satisfactory-perfect for salaried investors with a long- time
period investment horizon.
 AGGRESSIVE GROWTH FUNDS
Barely at the riskier face while selecting wherein to spend money on, the aggressive
increase is fund designed to make steep monetary gains. Even though prone to market
volatility, you could decide at the fund as according to the beta (the tool to gauge the
fund‟s movement in comparison with the market). Instance, if the market suggests a beta
of 1, a competitive growth fund will mirror a higher beta, say, 1.10 or above.

 CAPITAL PROTECTION FUNDS

If shielding the principal is the priority, Capital Protection Funds serves the cause even as
earning notably smaller returns (12% at fine). The fund supervisor invests a portion of the
money in bonds or certificate of deposits and the rest closer to equities. Although the
probability of incurring any loss is quite low, it is advised to live invested for as a
minimum three years (closed-ended) to shield your money, and also the returns are
taxable.

 FIXED MATURITY FUNDS

Many investors select to make investments in the direction of the FY ends to take gain of
triple indexation, thereby bringing down tax burden. If uncomfortable with the debt
market traits and related risks, Fixed Maturity Plans (FMP) – which put money into
bonds, securities, money market and so on. – present a outstanding opportunity. As a
close-ended plan, FMP functions on a set maturity period that may range from one month
to 5 years (like FDs). The fund manager guarantees that the money is allocated to an
investment with the equal tenure, to achieve accrual interest at the time of FMP maturity.

 PENSION FUNDS
Putting away a portion of your income in a designated pension fund to accrue over a
protracted duration to secure you and your familys financial destiny after retiring from
regular employment can take care of maximum contingencies (like a clinical emergency
or children‟s wedding). Relying solely on financial savings to get thru your golden years
isn't always encouraged as savings (no matter how huge) get used up. EPF is an example;

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however there are numerous rewarding schemes supplied by way of banks, insurance
corporations and so forth.

3.2.6 BASED ON RISK

 VERY LOW-RISK FUNDS

Liquid funds and extremely-short-term funds (one month to 12 months) are acknowledged
for its low risk, and understandably their returns are also low (6% at nice). Investors pick
out this to fulfill their quick-term economic goals and to preserve their cash secure
through these funds.
 LOW-RISK FUNDS
Inside the event of rupee depreciation or surprising countrywide disaster, investors are
unsure about investing in riskier budget. In such cases, fund managers propose placing
cash in both one and a combination of liquid, extremely short-term or arbitrage funds.
Returns could be 6-8%, but the investors are loose to switch when valuations become
more stable.

 MEDIUM- RISK FUNDS

Right here, the risk factor is of medium level as the fund supervisor invests a portion in
debt and the relaxation in equity funds. The NAV isn't that unstable, and the average
returns can be 9- 12%.

 HIGH-RISK FUNDS
Appropriate for investors with risk taker and aiming for massive returns in the form of
interest and dividends, high-risk mutual funds need active management of fund. Regular
performance opinions are mandatory as they're vulnerable to market volatility. You could
count on 15% returns, though most of high-risk funds generally provide up to
20% returns.

3.2.7 SPECIALIZED MUTUAL FUNDS

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  SECTOR FUNDS
Sector fund make investments totally in one particular area, theme-based mutual funds.
As these funds make investments in specific sectors only with just a few shares, the risk
component is high. Investors are cautioned to hold track of the numerous sector-related
trends. Sector price range additionally supplies incredible returns. A few regions of
banking, IT and pharmacy have witnessed massive and constant boom in the recent past
and are anticipated to be promising in future as properly.

 INDEX FUNDS
Desirable best for passive investors, index funds put money in an index. A fund manager
does no longer manage it. An index fund identifies shares and their corresponding ratio
within the market index and placed the cash in comparable percentage in similar stocks.
Even though they cannot outdo the marketplace (that's the motive why they're no longer
popular in India), they play it safe with the aid of mimicking the index overall
performance.

 FUNDS OF FUNDS
A diverse mutual fund investment portfolio offers a slew of benefits, and „funds of fund‟
also referred to as multi-manager mutual funds are made to make the most this to the tilt –
with the aid of setting their money in diverse fund categories. In quick, shopping for one
fund that invests in many funds rather than making an investment in several achieves
diversification while maintaining the cost down on the identical time.

 EMERGING MARKET FUNDS

To put money into growing markets is considered a volatile wager, and it has passed
through negative returns too. India, in itself, is a dynamic and rising marketplace wherein
buyers earn high returns from the domestic stock marketplace. Like any markets, they
may be additionally vulnerable to market fluctuations. Additionally, from a longer-term
angle, emerging economies are anticipated to contribute to most of the people of world
growth within the following a long time.

 INTERNATIONAL/FOREIGN FUNDS

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Favored by means of investors looking to unfold their investment to different countries,
overseas mutual funds can get investors excellent returns even when the Indian stock
markets perform properly. An investor can appoint a hybrid technique (say, 60% in
domestic equities and the relaxation in foreign funds) or a feeder technique (getting local
funds to place them in foreign shares) or a theme-based allocation (e. G., gold mining).

 GLOBAL FUNDS
Apart from the equal lexical which means, global funds are pretty unique from
International funds. At the same time as a global fund mainly invests in markets global, it
also includes investment in your home country. The international funds pay attention
totally on foreign markets. Various and universal in technique, global funds can be quite
unstable to owing to specific rules, market and foreign money variations, although it does
work as a smash in opposition to inflation and long-term returns were traditionally
excessive.

 REAL ESTATE FUNDS

No matter the real estate increase in India, many investors is still hesitant to invest in such
projects due to it‟s a couple of risks. Real estate fund may be an ideal alternative because
the investor can be an indirect participant via placing their money in established real
estate groups/trusts as opposed to projects. A protracted-time period investment negates
risks and legal hassles while it comes to buying a property as well as offer liquidity to
some extent.

 COMMODITY- FOCUSED STOCK FUND

These funds are best for investors with enough risk-appetite and seeking to diversify their
portfolio. Commodity-focused inventory funds give a chance to dabble in multiple and
numerous trades. Returns, however, won't be periodic and are either primarily based at
the performance of the stock business enterprise or the commodity itself. Gold is the only
commodity in which mutual funds can make investments directly in India. The rest
purchase fund units or stocks from commodity groups.

 MARKET NEUTRAL FUNDS

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For investors seeking safety from unfavorable market tendencies while maintaining good
returns, market-neutral funds meet the cause (like a hedge fund). With higher risk-
adaptability, these funds provide excessive returns wherein even small buyers can outstrip
the market without stretching the portfolio limits.

 INVERSE/LEVERAGED FUNDS
Even as an ordinary index fund actions in tandem with the benchmark index, the returns
of an inverse index fund shift inside the opposite route. It's far not anything however
selling your shares while the stock goes down, only to repurchase them at an even lesser
cost (to hold until the price is going up again).

 ASSET ALLOCATION FUNDS

Combining debt, equity and even gold in a most suitable ratio, this is a significantly
flexible fund. Primarily based on a pre-set system or fund manager‟s inferences based
totally at the current market trends, asset allocation fund can regulate the equity-debt
distribution. It's far nearly like hybrid fund however requires awesome knowledge in
deciding on and allocation oft he bonds and stocks from the fund manager.

 GILT FUND
Gilt funds are type of debt funds that make investments often in government securities.
These funds have no threat of non-payment of interest or principal amount but get
affected by interest charge movements as the government borrowing normally takes place
to be for a longer duration.

 EXCHANGE-TRADED FUND
It belongs to the index fund family and is offered and bought on exchanges. Exchange-
traded funds have unlocked a brand new world of funding possibilities, enabling investors
to gain great exposure to stock markets abroad in addition to specialized sectors. An ETF
is sort of a mutual fund that can be traded in actual-time at a price which can upward price
or fall regularly in a day.

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BASED ON ASSETS EQUITY MUTUAL FUNDS
Equity mutual Funds make investments as a minimum 65% of their property in equity
shares of several corporations in appropriate proportions. The asset allocation might be
consistent with the investment objective. The asset allocation can be made purely in
stocks of large-cap, mid-cap, or small-cap groups, relying in the marketplace situations.
The style of investing may be value- orientated or growth-oriented. After allocating a
substantial element closer to the equity segment and the rest in debt or an allocation
between domestic and global equity. That is to attend to sudden redemption requests in
addition to bring down the risk stage to a point. The fund manager makes buying or
selling decisions to take gain of the changing market movements and obtain maximum
returns.

WHO SHOULD INVEST IN EQUITY FUNDS

Your decision to spend money on equity fund ought to be in sync along with your risk
profile, investment horizon, and objectives. Usually, when you have a long-term goal
(say, 5 years or greater), then it's far better to invest money in equity fund. It will also
give the fund the time it needed to combat with market fluctuation.

PERFORMANCE OF EQUITY IN INDIA

Among all classes of mutual funds, equity fund usually deliver the highest returns. On
common, equity funds have generated returns inside the range of 10% to 12%. The
returns vary depending on the market fluctuations and overall economic situations. To
earn returns consistent with your expectancy, you want to pick out your equity fund
cautiously. For that, you need to strictly comply with the stock markets and possess

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knowledge of the quantitative and qualitative elements. Clear tax assists with the aid of
handpicking the top-acting investment portfolios for you, which suits your financial goals.

TAXATION OF EQUITY
Short-term capital gains are taxable at 15%. The Union Budget 18-19 bought back the
taxable on Long-term gains at 10% if the sums exceed Rs. 10 Lakh a year.

ADVANTAGES

1. CAPITAL APPRECIATION- Equity funds are regarded to provide higher

returns compared to different funds, consisting of debt funds. They could help an
investor generate massive wealth in the long run.
2. TAX BENEFIT- ELSS funds provide to its investors tax advantages to the track
of ₹1,50,000underneath section 80c of the Income Tax Act.
3. SMALL SYSTEMATIC PAYMENTS - Systematic investment plan (SIP) lets
in investors to deposit a small sum of money at regular intervals. Useful for those
who do not need to make investments of their money at one pass. Facilitates
traders reap the benefit of averaging.
4. LIQUIDITY- Most Equity funds (besides ELSS) are liquid in nature that means
investors can withdraw their money each time they chose to do so.

DISADVANTAGES

1. NOT FOR SHORT TERM- Equity fund can‟t be an investment alternative for
short term.Because the returns are volatile in nature for short period.
2. HIGHER RISK- Equity funds entail higher risk compared to debt funds and
aren't appropriate for those investors who want a lower risk for his or her
investment.
3. LOCK IN- ELSS funds have a lock in period for 3 years, therefore it less liquid

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in nature.

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 TOP EQUITY MUTUAL FUNDS

3-YEARS 5-YEARS
FUNDS NAME RETURNS RETURNS

MIRAE ASSET LARGECAP FUND 12.51 % 12.08%

AXIS BLUECHIP FUND 16.51% 9.67%

ICICI PRUDENTIAL BLUECHIP FUND 7.05% 6.24%

DEBT MUTUAL FUNDS

A debt mutual fund (additionally called as a fixed-income fund) invests a size able part of
your money in fixed-income securities like government securities, debentures, corporate
bonds and different money-market instruments.

WHO SHOULD INVEST IN DEBT FUNDS

The one who is risk-averse. Debt fund returns are predictable; in the experience you
recognize the interest income and the maturity value in advance. This makes them safer
avenues for conservative investors.
The underlying debt securities have a maximum maturity of 10 years. Debt funds are
higher suitable to the financial goals that need an assured sum of money like
compensation of a mortgage, shopping for a car or money for the holiday. These desires
are short to medium-term in nature.

TYPES OF DEBT FUNDS

 Dynamic funds Income funds
 Short-term and ultra-short-term funds
 Liquid funds
 Gilt funds
 Credit Opportunity funds

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  Fixed Maturity Plans
TAXATION OF DEBT FUNDS
A capital gain made during a period of less than 3 years is known as a Short-term Capital
Gain (STCG). A capital gain made more than a period of 3 years is known as Long-term
Capital Gains (LTCG). Here, the tax is as per the income slab, STCG is taxable at 30%
where as LTCG is taxable at 20%.

ADVANTAGES

LOW RISK- With the proportionately high incorporation of debt-associated investment

alternatives, debt mutual funds are much less risky in comparison to all other forms of
mutual funds. Debt mutual funds may be taken into consideration as an investment for an
investor with a motive of short-time period wealth building, in addition to, for someone
with a perspective a building a large corpus in long-term.
LIQUIDITY- Debt mutual fund schemes, specially liquid funds, have a excessive degree
of liquidity and investors can „cash out‟ their investment a ways extra speedy than most
of the other similar investment alternatives.
FLEXIBILITY- Cash that‟s been invested in a debt fund scheme can often be transferred
to anequity scheme or any other scheme of the investor‟s deciding on. Other investments
do not provide this level of flexibility.

DISADVANTAGES

LOW RETURNS- Investors attracted with the profitable returns of stocks and equity-
related assets may get disillusioned with the fee of go back inferred of the debt mutual
funds. As 60% to 70% of the fund's corpus is invested in debt schemes, following
which, the overall return of the fund decreases notably.

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 1-YEAR 3-YEAR 5-YEAR
FUNDS NAME RETURN RETURN RETURN

NIPPON INDIAN GILT SECURITIES 13.83% 8.61% 9.97%

FUND

SBI MAGNUM MEDIUM 11.98% 8.91% 9.55%

DURATION FUND

KOTAK CREDIT RISK FUND 10.28% 8.15% 9.39%

MONEY MARKET FUNDS

Money market funds are type of mutual funds that buyers usually use for notably low-
risk holdings in a portfolio. These funds generally invest in short-term debt instruments,
and they payout income in the form of a dividend.

WHO SHOULD INVEST IN MONEY MARKET FUNDS

Money market funds have a maturity period of just 1 year, so it is suitable for the investor
with short-term horizon. It is consider as one of the safest investment, so it suitable for the
one who wants to play safe or have less risk appétit. Money market deals with bulk orders
so it is suitable for the big corporation and retailers rather than individuals.

TYPES OF MONEY MARKET INSTRUMENTS

 Treasury Bills
 Commercial Papers
 Certificate of Deposits
 Banker’s Acceptance Call Money
 Repurchase Agreement

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ADVANTAGES

Safety and High rate of return

The number one advantage of money market funds over other short-term investment
alternatives is that they may be distinctly safer than, say, shares or equity investments.
Further, money market investments have a decent rate of return throughout investment,
which is another benefit.
Liquid investment
Money market funds are liquid investments which provide regular dividends along with
easy access to the principal amount of investment. The liquidity of the market allows
buyers to take benefit of the growing rate of return within the short term and selectan
appropriate money market fund accordingly.
Yield
Money Market funds pay a yield based totally on the holdings of the underlying fund. The
yield is automatically reinvested into the fund through buy of additional shares within
thefund. This yield makes money market funds an attractive opportunity to the mattress.

DISADVANTAGES

May weaken Purchasing power

If inflation rises plenty quicker than your return in the money market account, you're
losing purchasing power.
Expenses may accumulate
Small annual charges can acquire and eat away at your profit, particularly while you‟re
only earning 2 or 3 percentage in the account. As a end result, it‟s even extra difficult to
your money to hold up with inflation.
Investment objective
In case you‟re making an investment long term for a retirement fund, you wouldn‟t want
money market fund. Usually, these budget whip out returns best slightly higher than the
inflation charge. It‟s better to apply money market funds as temporary parking spaces for
predicted cash outlay.

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 1-YEAR 3-YEAR 5-YEAR
FUNDS NAME RETURNS RETURNS RETURNS

L&T MONEY 8.0% 7.6% 8.3%

MARKET FUND

ADITYA BIRLA 7.9% 7.6% 8.2%

SUNLIFE MONEY
MANAGER FUND

KOTAK MONEY 7.7% 7.4% 8.1%

MARKET FUND

HYBRID MUTUAL FUNDS

Hybrid mutual funds invest across distinct asset classes, aiming to minimize risk and set
up capital appreciation. A well-managed hybrid mutual fund scheme (of any type) goals
to generate income in the short term and capital appreciation in the long term - through a
properly-planned distribution of the investment corpus throughout different asset classes.
For long-term capital appreciation, the scheme will spend money on equity stock of
organizations, and for short-term income generation, the scheme will invest in debt units
and government bonds.

WHO SHOULD INVEST IN HYBRID FUNDS

Hybrid funds are taken into consideration a safer bet than Equity funds. Those provide
better returns than proper debt budget and are famous amongst conservative investors.
The presence of equity components in the portfolio offers the ability to earn higher
returns. At the same time, the debt thing of the fund affords a cushion in opposition to
excessive market fluctuations. In this way, you receive strong returns rather than a total
burnout that may take place in case of pure equity funds.

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TYPES OF MUTUAL FUNDS

Equity oriented hybrid funds – In this fund, the fund manager invest more in Equity
funds i.e. more than 65% and the rest in Debt funds.
Debt oriented hybrid funds – In this fund, the fund manager invest more in Debt funds
i.e. more than 65% and rest in Equity funds.
Monthly Income Plans - Those are hybrid funds that invest predominantly in debt
contraptions.A Monthly Income Plan (MIP) would commonly have 15-20% exposure to
equities. This would permit it to generate better returns than ordinary debt funds.
Arbitrage funds – In this funds, a manager tries to maximize its return by buying shares
in one market at lower price and selling it at another market for higher price.

ADVANTAGES

Reduced risk - Considered one of the largest advantages of balanced budget is they
reduce your Investment risk through balancing your exposure towards debt and equity.
Best for first time equity investor - Balanced funds may be a great investment
instruments for first-time equity investors, who do not have plenty information about
making an investment in equity market and are usually risk averse.
Stable and consistent returns – As equity funds returns are highly volatile but balanced
funds have mostly stable and consistent return over a long time.

DISADVANTAGES
They are not risk-less – As in hybrid fund 50-60% is invested in equi
ty funds so it is exposure to risk.
Returns are lower than equity funds - Even as balance funds can be more secure option
to invest in stock market, the safety comes at a price. Most of the balanced funds
commonly below-perform equity mutual funds specifically in the course of bull market as
a part of their fund still remains allocated to debt funds.
 1-YEAR 3-YEAR 5-YEAR
FUNDS NAME RETURNS RETURNS RETURNS

ICICI PRUDENT MIP 9.6% 8.5% 8.3%

SBI EQUITY HYBRID 13.6% 10.6% 8.3%

FUND

KOTAK DEBT HYBRID 11.4% 6.7% 7.3%

FUND

BASED ON STRUTURE

OPEN-ENDED MUTUAL FUNDS

A mutual fund is floated inside the market thru a new fund offer. In case of open-ended
fund, an investor should purchase or promote units of an open-ended mutual fund at any
time after the closure of NFO. The NFO is usually open for a maximum period of 30
days. Investment in those funds may be made via Systematic Investment Plans (SIPs) and
Systematic Withdrawal Plans(SWPs).

ADVANTAGES

Liquidity - Open-ended funds provide high liquidity as they permit investors to redeem
the fund units at any time they need. The fund units are redeemed on the fund‟s Net Asset
Value (NAV) of the day on which units are redeemed.
Availability of track record - Unlike close-ended fund, the performance track record of
an open-ended fund spanning throughout various market cycles is available. This allows
investors to take a well-knowledgeable choice.
Systematic plans - Open-ended funds permit investors to make use of systematic plans
each for the investment and withdrawal purpose. An investor can't employ SIPs, SWPs
and STPs with close-ended funds.

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DISADVANTAGES

 Unlike to close-ended funds, open-ended funds are prone to massive inflows and
outflows. A sudden outflow can pressure a mutual fund supervisor to sell holdings at
rock-bottom prices, causing a loss to all unit holders within the fund.
 Open-ended funds carry a significant amount of market risk. The NAV of an open-
ended fund fluctuates every day because of stock market volatility. For this reason,
one have to cautiously invest in open-ended funds.
 The liquidity offered by way of open-ended fund can also be a drawback.
Considering the fact that there may be no lock-in in case of open-ended fund,
investors can be tempted through greed to invest extra money in bull markets and by
using may redeem units in unstable conditions owing to fear.
 Open-ended fund also have exit loads. These are charges levied upon you if you exit
the fund within certain predefined time intervals, commonly up to 1 yr.

1-YEAR 3-YEAR 5-YEAR

FUNDS NAME RETURNS RETURNS RETURNS

KOTAK STANDARD 8% 8.7% 8.4%

MULTI CAP FUND

ICICI PRUDENT 3% 7.1% 6%

BLUECHIP FUND
SBI BLUECHIP FUND 6.2% 6.3% 6%

CLOSE-ENDED MUTUAL FUNDS

The fund managers commonly spend money on theme-based funds like contra funds with
a view to restrict their spread. Because of the lock-in period, the fund managers don‟t fear
approximately unexpected redemption requests, as a result giving them better flexibility
to manipulate the funds. Investors are allowed to invest (or buy) simplest on the time of
NFO. They ought to keep directly to the fund until the NFO term is up (typically among 3

Page | 47
to 5 years). As there is not available of information about fund before the NFO, it's
sensible for the investor to do thorough studies on the portfolio spread. They are able to
earn regular dividends if the fund portfolio performs nicely.

ADVANTAGES

Stable Asset base- In closed-ended funds, the investors of the funds are allowed to
redeem the units of the fund on prescribed date i. e. on the maturity of the fund. This
hence permits the creation of a stable base of assets.
Underlying allocation - Closed-ended funds have the flexibility to restrict their
investment Spread to around 20-30 shares in the portfolio. This improves the chance of
better returns from these portfolio bets of closed-ended fund.
Distribution - The earnings are allotted to the shareholders by way of the investment
funds at regular intervals. This is typically done monthly or quarterly and is implemented
in two approaches: Income is brought to the shareholders because the fund collects net
interests or dividends. Once realized, the capital gains are exceeded to the shareholders.
Leverage - Closed-end funds can properly use leverage to increase the performance of the
investment with the aid of producing greater gains or earnings. Whenever the funds use
leverage,the NAV turns into more risky than the alternative funds, which do not use
leverage.
Lower expense ratio – Close-end fund have limited number of shares, therefore it have
less expense ratio as compared to other investment.

DISADVANTAGES

Pricing risk - Like other instruments in the market, supply and demand affect the rate of
a closed-end fund. Closed-end fund change fund trade at its Net Asset Value. Frequently,
buyers price them at a discount or premium. In doing so, their share prices stay volatile
for the maximum element.
Market risk - The market has come to be greater unstable than ever in the last few years.
This is due to the uncertain economic situations, investors‟ insecurities and global
security anxieties. Investors have to think about that each one those would possibly reason
a market decline in the value of the CEF.

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Interest risk - While interest rate rises, the prices of bonds and preferred securities
commonly move down – and vice versa. Bonds with longer maturities react even greater
extensively to these fluctuations. If the closed-end fund has a substantial amount of bonds
in its portfolio, thisrisk can have an effect on it notably.
Credit risk - Credit risk refers back to the provider‟s ability to pay the instruments
principal and interest as they end up due. For fixed-income closed-end funds, this risk is
also present in it. Thebonds in the portfolio fail to pay on time, it will have an effect on
the fund. Other than disrupting the regular distribution, the NAV and price ought to
suffer.
1-YEAR 3-YEAR 5-YEAR
FUNDS NAME RETURNS RETURNS RETURNS

SBI SMALL CAP FUND 8.33% 11.28% 17.07%

MIRAE-ASSET EMERGING 18.27% 14.40% 17.53%

BLUECHIP
FUND

KOTAK EMERGING 11.35% 8.38% 12.89%

EQUITY SCHEME
International risk - International stocks and bonds carry extra risks. Elements like
foreign corporation risk, market threat, forex threat, and correlation risk are all too real.
These risks are even greater in emerging markets and economies. The securities are
greater volatile than US shares due to the fact they face extra pressure in the market.
Leverage risk - While fund managers borrow on behalf of the fund, there can be a
leveraged risk. When the loan interest rate catches up with the dividend price, it lessens
the amount dedicated to the investors. On top of this, the rate of the shares of a leveraged
fund can come to be very unstable. This would lead to an inconsistent distribution of wild
market share prices

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INTERVAL MUTUAL FUNDS
Interval funds can invest in equity or debt or in both. The units of those funds may be
bought and/or redeemed only for the duration of precise time intervals. The fund house
declares these intervals in which the buyers can sell/buy units. They are similar to closed-
ended funds where you cannot buy/redeem units regularly.

WHO SHOULD INVEST IN INTERVAL FUNDS

An interval fund is good for investors who have short-time financial goals and who're
inclined to take low to moderate level of risk. Due to the fact that interval funds are not
listed on stock exchange, their property is in the form of forestry tracts, commercial
assets, business loans, and personal property. Investors who're willing to get exposure to
such unconventional assets can spend money on these funds.

ADVANTAGES
 The return on close-ended funds are much higher than that of open-ended funds

 Interval funds grant retail investors with access to institutional-grade alternative

investments with comparatively low minimums.
 Funds are relatively stable and market reactive because investments are not tied to
equities

DISADVANTAGES
 As compared to open-ended funds, close –ended funds are illiquid

 As the yields are higher likewise its fees are also higher as compared to open-ended
funds.
 There is each a transparent and conflict-of-interest because the portfolio manager is
permitted to spend money on different funds of the fund sponsor.
 The repurchase is carried on a pro rata basis, consequently there is no guarantee for
redeeming all of the shares for the duration of a redemption window

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BASED ON INVESTMENT

GROWTH MUTUAL FUNDS

A growth fund is a diversified portfolio of stocks that has capital appreciation as its
primary intention, with very little dividend payouts. The portfolio especially includes
businesses with above-average growth that reinvest their earnings into expansion,
acquisitions, and/or research and development (R&D).

WHO SHOULD INVEST IN GROWTH FUNDS

Growth funds consist of high-risk. So, invest only if you are an aggressive risk taker. For
this reason, it has capacity to deliver high returns. If you are close to your retirement age,
it'd be prudent to no longer invest in it. This fund is for long-term. Therefore, opt for these
only if you are risk tolerant and are inclined to make investments for at the least 5 to 10
years.

ADVANTAGES

Potential for high returns - This fund attracts numerous investors due to its its capital-
appreciation capacity. Professional money managers spend a considerable amount of
effort inidentifying and selecting out those shares.
Tax-efficiency - Growth funds attract to long-term capital gains tax or LTCG tax of
10%, if the incomes is above 1 lakh and held more than a year. Nevertheless, they are
more tax-efficient than that of price stock mutual funds.
Expert money management - A team of certified experts, who identifies growth stocks
for the investors, manages a growth fund. The buying and promoting decisions pertaining
to the stocks are taken by the manager. Which leaves your role to limited to that of a
passive investor.

DISADVANTAGE

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High market risk – If there is a decline in the growth fund then you are exposed to risk
of losing the entire investment
Possible value depreciation - These funds are also liable to decline in price and are of a
highly volatile nature. The value of the shares can fall or rise as according to the market
demand
No dividends – Growth funds do not deliver regular money in the form of dividends,
interests, bonus, etc.

3-YEAR 5-YEAR
FUNDS NAME RETURNS RETURNS

AXIS BLUECHIP FUND 20.23% 12.06%

ICICI PRUDENT LONG TERM BOND 9.72% 9.79%

FUND

DPS EQUITY & BOND FUND 12.03% 11.12%

INCOME MUTUAL FUNDS

HOW INCOME MUTUAL FUNDS WORK

The fund manager of an Income fund endeavors to supply good returns regardless of the
interest charge regime. This means that income funds try to provide returns whether or not
the interest rates are growing or falling. This is completed via active management of the
investment portfolio. The two extensive techniques observed via fund managers are:
Producing interest income – which is executed while the fund holds the debt units till
maturity

Earning gains – that's achieved by way of selling the debt devices within the market if
their price increases
Commonly, these funds pick debt units with better protection (or instruments with a
higher quality rating) and a lower interest rate risk.

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WHO SHOULD INVEST IN INCOME FUNDS

By way of the distinctive feature of its definition, an Income fund is best-suited for an
investor with moderate risk tolerance and an investment objective of earning regular
returns. These are a very good option for conservative investors looking to discover
mutual funds in a low-risk zone.

ADVANTAGES

 Better returns than FDs: Income funds usually generate returns higher than fixed
deposits in the long term. They aim to achieve this through taking advantage of
interest rate volatility. But, Income funds do carry interest rate risk and credit risk on
other side FDs deliver negligible or zero threat.
 Highly liquidity: Not like a few fixed deposits, income budget do now not have any
lock-in period and allow investors to any time withdraw their investment. But exit
loads can be imposed for redemptions in these funds from 1-3 years.
 Tax efficient: Income funds are tax efficient than fixed deposits, specifically for
those buyers who fall in the Income tax brackets of 30%. Long-term capital gains
(maintaining period over 3 years) on debt funds are taxed at 20% with indexation in
contrast to interes ton fixed deposits that's taxed as according to the investor‟s
earnings tax slab.

1-YEAR 3-YEAR 5-YEAR

FUNDS NAME RETURN RETURN RETURN
SBI REGULAR SAVING 7.24 8.55 9.98
BANK
ADITYA BIRLA SUNLIFE 6.98 8.43 9.54
TREASURY OPTIMIZER
FUND
FRANKLIN INDIA INCOME 8.06 8.25 9.09
BUILDERFUND

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 LIQUID MUTUAL FUNDS

A liquid fund is a mutual fund scheme that invests in money market securities with a low
maturity period of 91 days or much less. These funds provide a safe and secure alternative
for parking surplus budget or to set aside an emergency fund amount

TAXATION OF LIQUID FUNDS

Returns from liquid funds are taxed based on the holding period of invested capital:
• In case you withdraw the amount earlier than three years of investment, STCG tax as per
the income tax slab of the investor. As an instance, if an investor gains ₹30,000, thru
investment in liquid fund, ₹30,000 are brought to income tax slab of the investor
and taxed hence.
• If an investor withdraws the investment together with capital gains put up three years of
investment, long term capital gains tax of 20% is levied, with the advantage of
indexation.

ADVANTAGES

Fixed returns - Since liquid fund invest in debt instruments that provide constant interest
rate, the returns from investment in those are constant. As the securities mature, an
investor gets back the principal amount coupled with the constant interest that the units
offer.
High liquidity - Owing to short time period maturities of the underlying invested units,
liquid funds are fairly liquid. It is easy to redeem the invested capital as in line with
his/her comfort.There's no lock-in period on investment in liquid funds.
No exit load - A plus point to excessive liquidity that the fund offers is that there's no
relevant exit load while you withdraw the invested capital after 7 days of investment.

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Low risk - The investment portfolio of liquid funds consist of short time period money
market instruments. The best maturity of any invested security is 3 months, which
efficiently protects the portfolio from interest rate changes.

DISADVANTAGES

 Liquid funds have credit risk a lot lower as the duration of invested bonds are short.
But after IL&FS crisis maximum liquid funds gave poor returns for few months.
 Returns can be a bit lower. Inside the bond space, you can‟t eat your cake and have
it too.You cannot get higher returns, if you reduce credit risk.

1-YEAR 3-YEAR 5-YEAR

FUNDS NAME RETURNS RETURNS RETURNS

ADITYA BIRLA 6.70% 6.99% 7.43%

SUNLIFE
LIQUIDFUND
AXIS LIQUID FUND 6.61% 6.98% 7.39%

NIPPON INDIA LIQUID FUND 6.69% 7.00% 7.42%

TAX SAVING MUTUAL FUNDS

HOW TAX SAVING MUTUAL FUNDS WORK

When an investor invests money in a mutual fund, the invested capital is brought to the
pool. The portfolio corpus of the fund is then invested in the equity market in this type of
balanced way that even though one investment incurs losses, the other investment
manages to mitigate the loss.

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ELSS schemes generally tend to include a lock-in duration of 3 years, which means that
that the investment can't be withdrawn for till the end of the maturity period. If the
investment is made insystematic monthly installments (SIP) then the lock-in period for
every installment is 3 years. On the subject of redemption of the units of the fund, the
buyers can redeem only the unlocked units at the current NAV price. The NAV or the net
asset value of the units is the amount that an investor gets for each unit upon redemption.
But, a good way to make withdrawals, you'll need to know the variety of units below the
scheme and submit a claim form to the mutual fund provider. They will credit the amount
in your account as quickly as it's far processed.

ADVANTAGES
 Tax saving investments traditionally has long lock-in time but ELSS have only 3
years lock-in period.
 ELSS have SIP so because of it the investor do not have to invest the total amount at
the end of the year.
 You can diversify your portfolio by investing more than one ELSS funds and if one
fund is underperforming you can switch to other fund.
 The tax benefit of ELSS makes it different from other Equity funds. You can claim
deduction under 80C by investing in this funds

DISADVANTAGES
 ELSS is equity linked investment, so no one can stop its exposure to risk , so it is not
suitable for conservative.
 The money which you get after maturity i.e after 3 years will be taxable as long term
capital gains

3-YEAR 5-YEAR
FUNDS NAME RETURNS RETURNS

AXIS LONG TERM EQUITY 18.85% 12.04%

ADITYA BIRLA SL TAX 13.70% 10.54%

Page | 56
 RELIEF 96
DSP TAX SAVER 13.57% 11.60%

CAPITAL PROTECTION FUNDS

HOW CAPITAL PROTECTION FUNDS WORK

The accrued sources from investors are then allotted to equities and debt instruments.
Around 80-90% of assets are invested in debt, and then the remaining allocated to
equities. The amount invested in debt securities ensures that the principal amount of the
investor is recovered at maturity. At the same time as the amount invested in equities
generate returns for the investor which is commonly better than the ones from Bank Fixed
Deposits

WHO SHOULD INVEST IN CAPITAL PROTECTION FUNDS

If you need to grow your investment, taking the least amount of risk, invest your cash in
capital protection funds. People who follow a conservative investment stance, coupled
with low-threatappetite must go for those budgets. They assist in capital appreciation in
the long run together with a good sense of investment security.

CHARACTERISTICS

Close-ended scheme - Subscription to capital protection funds can be done only

throughout the NFO period given that they‟re close ended. The invested amount stays
locked-in until the maturity duration. Fund managers can efficaciously park the pooled
quantity in securities that offer long term returns. Close-ended nature of those budgets
prevents frequent cash outflow from the fund. But, its units are traded within the
secondary market through the unit holders.

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Lock-in period - Capital Protection Funds are available for three exclusive maturity
durations viz. 1-yr, 3-yr and 5 year. Once subscribed, investor can handiest redeem their
funding after the maturity duration is over and not earlier than that. This is why; these
funds are appropriate for people who can lock-of their money for the required investment
horizons and don‟t want the invested amount for that period.

Taxation policy – Taxation policy of these funds is same as debt funds. If the investment
is for 3- 5 years then it is short-term capital gains and if it is more than 5 year then it is
long-term capital gains and it is taxable at 20 %.

FIXED MATURITY PLANS

Fixed maturity plans are close-ended debt funds, which mean investments, can be made at
some stage in the time of a new fund offer. It comes with a fixed maturity period and
invests throughout debt securities together with excessive rated securities and corporate
bonds. As it is classified as non-equity funds, its investment is done in debt funds and
money market.

FEATURES OF FMP

Fixed Tenure – The maturity period of FMP is fixed and if you‟re going to invest
through NFO then you have to wait till maturity period. The maturity period is mostly
more than 3 years.
Close-ended scheme – FMP invest through NFO, so it comes under Close-ended funds,
and its maturity period is fixed.
Potentially low credit risk – Most of the FMP is invested in qualify debt securities, so
there is low chance of credit risk.
Indexation benefits on Returns - A majority of new FMPs function a maturity period of
3 years or greater. This guarantees that long term capital gains taxation regulations which
include indexation benefits are relevant to capital gains from those non-equity
investments. Indexation provides investors the benefit of factoring in inflation, which
reduces usual tax liability on gains.

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Page | 59
PENSION FUNDS
Pension funds are investment pools that pay for employees' retirements. Funds are paid
for by using either employees, employers, or both. Corporations and all stages of
government offer pensions. Companies reduce pension fund threat with the aid of relying
on fixed income strategies.

WHY SHOULD INVEST IN PENSION FUND

This fund is a government notified pension plan presenting tax advantages under section
80C upto an investment of Rs. 1.5 lakh (issue to a lock-in duration of 5 years or until
retirement age, whichever is in advance) with a target amount of Rs. 10,000/- or above by
the time the investor Reaches the age of 60 years. The fund can make investments up to
40% in equities and the balance in fixed incomes with an intention to assist investors
construct a retirement corpus and earn a constant income post retirement using convenient
withdrawal options.

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BASED ON RISK

LOW-RISK MUTUAL FUNDS

Mutual Funds with minimal risk elements involved are called low-risk mutual funds.
These funds come with better returns assurance as they predominantly put money into
government bonds of infrastructure, real property, and so on. The low risk investment
portfolio of these funds make sure that both they fit or stay ahead of inflation. As those
funds have a major portion of total assets allocated into debt units, the investment horizon
is particularly low.

WHO SHOULD INVEST IN THESE FUNDS

 New investors who are not familiar with market fluctuations and what precautions
should be taken
 If you are a risk-averse, then you should choose these funds as they give more
returns than the FDs
 Investors who want a better return in short period then this is suitable, as its maturity
period is 91 days to 1year.

ADVANTAGES
 Low –risk mutual fund is also known as ideal monetary reserves for capital
appreciation through timely liquid investment
 These funds have low risk and higher chance of getting returns is because it invest in
government bonds and securities.
 Investor can easily liquidate its investment for urgent requirement.
 It maturity period is also low which starts from 91 days to 1 year.

DISADVANTAGES
 Returns from this funds are very low
 It is secure investment but not a risk-free investment.

Page | 61
 3-YEAR 5-YEAR
FUNDS NAME RETURNS RETURNS

AXIS LIQUID FUND 6.98% 7.39%

INDIABULLS SHORT TERM FUND 7.11% 8.54%

FRNAKLIN INDIA LIQUID FUND 7.07% 7.49%

MEDIUM RISK MUTUAL FUNDS

The open-ended mutual funds making an investment in debt and money market units,
with the Macaulay duration of the portfolio among 3 to 4 years are called medium risk
funds. These funds are suitable for the one who wants stable income investment option.

WHO SHOULD INVEST IN THESE FUNDS

These mutual funds are designed essentially for risk-conscious investors looking for risk-
free returns or returns at minimal threat. These mutual funds function the proper
instrument for investors with a medium to long-term investment horizon. Investing in the
first-rate acting mutual funds for moderate risk can help investors create a strong
portfolio. Investors looking to diversify their portfolio also can invest in moderate risk
mutual funds and decrease the exposure to equity-oriented mutual funds. Investors who
aren't prepared for devastating or large losses can stick to moderate mutual funds.

TAXATION
Moderate risk mutual funds are similar to debt funds in phrases of tax liability. The
relevant tax rate for earning from mutual funds depends at the holding period of the
investment. If the funds have been held for a period of much less than 3 years, a short-
term capital gain tax as per the investor‟s earnings tax slab can be relevant. On the other
hand, if the conserving period is greater than 36 months, long term capital gains of 20%
with indexation may be levied.

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FEATURES
Risk – As compared to low risk funds these funds are more risky. As debt funds are risk-
free but there funds are not, it has market risk, credit risk, and liquidity risk and so on.
Returns – Returns from these funds are high compared to low risk. As some of it part is
invested in debts so it has fixed income but the remaining portion which is invested in
equity are risky.
Investment horizon – This investment is for the duration of 3-5 years.

3-YEAR 5-YEAR
FUNDS NAME RETURNS RETURNS

SBI MAGNUM MEDIUM DURATION 9.41% 9.99%

FUND

KOTAK MEDIUM TERM FUND 7.75% 9.11%

IDFC BOND MEDIUM TERM FUND 8.08% 8.53%

HIGH-RISK MUTUAL FUNDS

High-risk mutual funds confer with funds which have superb potential and the capability
to provide excessive returns. But, these funds are very volatile in nature and include
excessive risks. When you're taking this type of high-risk mutual fund, you will be
required to actively and thoroughly evaluation the performance of these funds on
occasion. This may assist you be awareof how your fund is doing in the market.

WHO SHOULD INVEST IN THESE MUTUAL FUNDS

 High-risk funds are meant for individuals who've a comparable risk appetite and an
long investment horizon. In case you‟re planning to retire quickly, it's far higher to
choose tremendously more secure investment avenues consisting of conservative
hybrid mutual funds or long duration debt funds.

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  An investor should have patient when it comes to capital profits from high risk
mutual funds. Considering the fact that these funds are quite sensitive to market
fluctuations, one desires to be calm during turbulent economic conditions and wait
for the storm to pass by. Ultimately, the underlying organizations have a high threat
of delivering big returns.

TAXATION
High risk mutual funds invest in equity and equity-oriented securities and acquire the
corresponding tax remedy. If the funds are held for a period of much less than 12 months,
a short-term capital benefit tax of 15% is levied. But, if the funds are held for a period of
more than 12 months, a long-time period capital gain tax of 10% is applicable if the
profits are extra than Rs 1 lakh

3-YEAR 5-YEAR
FUNDS NAME RETURNS RETURNS

SBI SMALL CAP FUND 11.65% 18.73%

KOTAK EMERGING EQUITY FUND 7.49% 13.68%

AXIS MIDCAP FUND 14.31% 13.21%

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 3.5 QUESTIONNAIRE

1. Are your employed or self-employed? (Employed or Self-employed)

2. Your annual Income? (1-3 lakhs/1-5 lakhs/5-10 lakhs /10 lakhs and above)

3. How much part of your income you invest? (5-20%/21-40%/41-60%/ 61-80%)

4. In which investment do you invest? (Real Estates/ shares or debentures/ Mutual

funds/ FDs/PPF/Gold/LIC Policy)

5. Do you invest in Mutual Funds? ( Yes or No)

6. Which type of scheme do you prefer most? (Equity/Debt/Balanced/Sector specific)

7. Tick the most preferred basis that you consider are important while investing into
MutualFunds. (Safety/Liquidity/Tax benefit/Reliability/High return/Low risk)

8. Which of the following source of information influenced you to invest in mutual

Funds? (Friend‟s advice/Newspaper or Magazines/Sales Representative/TV or
Internet)

9. How long are you planning to stay invested? (Long term >3years/ Medium term 1-3
years/ Short term <1 year)

10. Which among the following principles do you consider while selecting mutual
Fund? (Enquiring the fund manager/Finding about its past performance/Identifying
your own objectives)

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11. Please indicate/rate whether growth prospects as a factor influenced your
investments in Mutual Funds. (Very
insignificant/Insignificant/Neutral/Significant/Very significant)

12. Which mode of investment will you prefer? (One time Investment/ SIP)

13. Please specify the level of agreement whether Mutual Funds RE useful for small
investors? (Strongly Agree/Agree/Neutral/Disagree/Strongly Disagree)

14. Do you think that Mutual Funds having balanced portfolio give better returns?
(StronglyAgree/Agree/Neutral/Disagree/Strongly Disagree)

15. What has been your experience with returns expected from investment in Mutual
Funds? (Very High/High/Neither High nor Low/Low/Very Low)

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 3. ANALYSIS AND INTERPRETATION OF DATA

CLASSIFICATION AND TABULATION OF DATA

Q. 1] Are you employed or self-employed?

OCCUPATION NO. OF NO. OF

RESPONDANTS (%) RESPONDANTS (%)

EMPLOYED 55 73.3%
SELF EMPLOYED 20 26.7%

OCCUPATION

26.7%

DATA INTERPRETATION

 73% of respondent are employed i.e. they work in any company or organization.

 27% of respondent are self employed i.e. they have their own business.

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Q. 2] Your annual income?

ANNUAL INCOME NO.OF NO. OF

RESPONDENTS RESPONDENTS (%)

1LAKH – 3 LAKHS 24 32%

3LAKHS – 5LAKHS 26 34.7%
5 LAKHS – 21 28%
10
LAKHS
10 LAKHS AND 4 5.3%
ABOVE

ANNUAL INCOME
5.3%
1 - 3 LAKHS
32%
28% 3 - 5 LAKHS

5 - 10 LAKHS
34.7%
10 LAKHS AND ABOVE

 Most of the respondents are from Lower income group i.e. income from 1 lakh to 3
lakhs. Total 32% are from this group and total no. of respondents is 24.
 Majority of the respondents are from lower middle income group i.e. from 3 to 5
lakhs. Total 34.7% are from these group and total no. of respondents is 26
 Here comes the higher middle income group which has income from 5- 10 lakhs and
total no. of respondents are 21.
 This group has least no. of respondent i.e. 5.3% and total 4 respondents. This is the
higher income group with income 10 lakhs and above.

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Q. 3] How much part of your income you invest?

% OF INCOME TO INVEST NO. OF NO. OF

RESPONDENTS RESPONDENTS

5% - 20% 42 56%

21% - 40% 26 34.7%

41% - 60% 7 9.3%

61% - 80% 0 0

 Majority of the respondents invest 5% to 20%of their income and remaining used
for saving and for expenses.
 26 respondents invest 21% to 40 % of their income and remaining used for savings
and expenses
 Around 7 respondents invest 41% to 60% of their income in various investments.
None of the respondent invests 61% to 80% of their income.

Q.4] In which investment do you invest?

DIFFERENT TYPE OF NO. OF NO. OF

INVESTMENTS RESPONDENTS RESPONDENTS (%)

REAL ESTATE 12 16%

SHARES/DEBENTURES 26 34.7%

MUTUALFUNDS 65 86.7%

FIXED DEPOSITS 13 17.3%

PPF 7 9.3%

GOLD 13 17.3%

LIC POLICY 35 46.7%

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 0 10 20 30 40 50 60 70

NO. OF RESPONDANTS

 Most of the respondents invest in Mutual Funds, LIC Policy and Shares/Debentures
for extra income as this investments are famous.
 Respondents also invested their money in Real estate for their future safety. They
have also invest in fixed deposit, PPF and Gold which gives less return as compared
to above investments but these investments are more safer than the above. So
respondents have invested in both type of investment or only one type of investment

Q.5] Do you invest in Mutual funds?

RESPONSE NO. OF NO. OF

RESPONDENTS RESPONDENTS (%)

YES 65 86.7%

NO 10 13.3%

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 INVESTMENT IN MUTUAL FUNDS

13%

YES

NO

 Majority of respondents invest in Mutual Funds i.e. 86.7% which is 65 respondents.

 Remaining respondents do not invest in Mutual Funds because they may be not
aware of it or they think its riskier or any other reasons.

Q.6] Which type of scheme do you prefer most?

SCHEMES NO. OF NO. OF

RESSPONDENTS RESPONDENTS

EQUITY 21 32.3%

DEBT 9 13.8%

BALANCED 29 44.6%

SECTOR SPECIFIC 6 9.2%

SCHEMES

NO OF
RESPONENTS

Page | 71
 EQUITY DEBT BALANCED SECTOR SPECIFIC

 Majority of the respondents prefer balanced fund scheme, as this give exposure to
both equity and debt fund, so there will be high returns and also safety.
 21 respondents i.e. 32.3% of the respondents prefer Equity schemes as this give high
returns and are risk taker.
 9 respondents prefer Debt funds as for safety, tax benefit, etc. and 6 respondents
prefer Sector specific schemes for higher returns.

Q. 7] Tick the most preferred basis that you consider are important
while investing into mutual funds.

BASIS NO. OF NO. OF

RESPONDENTS RESPONDENTS (%)

SAFETY 33 50.8%
LIQUIDITY 13 20%
TAX BENEFIT 29 44.6%
RELIABILITY 7 10.8%
HIGH RETURN 45 69.2%
LOW RISK 17 26.2%

SAFETY 33
LIQUIDIYT 13

TAX 29
BENEFIT
RELIABILITY 7

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 HIGH 45
RETURNS
LOW RISK 17

0 10 20 30 40 50

NO. OF
RESPONDENTS
 A high return is most preferred basis by respondents while selecting mutual funds.
Also safety and tax benefit is also preferred by respondents as investors always look
for safetywhile investing and also if they get tax benefit their expenses will reduce.
 Low risk is preferred basis by 17 respondents as most of the investors are risk
averse. Liquidity and Reliability is also preferred by 13 and 7 respondents while
selecting mutual funds.

Q.8] Which of the following source of information influenced you to

invest in Mutual Funds?

SOURCE OF NO. OF NO. OF

INFROMATION RESPONDENTS RESPONDENTS (%)

FRIEND‟S ADVICE 17 26.2%

NEWSPAPER/JOURNALS 27 41.5%

SALES 14 21.5%
REPRESENTATIVE

TV/INTERNET 10 10.8%

SOURCE OF INFROMATION

NO. OF RESPONDENTS
27

17
14
10

Page | 73
 FRIEND'S ADVICE NEWSPAPER/JOURNAL SALES TV/INTERNET
REPRESENTATIVE
 Most respondents get information about Mutual Funds from Newspaper/Journals i.e.
around 45.5% of the respondent get information from it.
 17 respondents get information about it through Friend‟s advice and 14 and 10
respondents get information of it through Sales representative and TV/Internet.

Q.9] How long are you planning to stay invested?

DURATION OF NO. OF NO. OF

INVESTMENT RESPONDENTS RESPONDENTS (%)

SHORT TERM < 1 6 9.2%

YEAR

MEDIUM TERM 1-3 16 24.6%

YEARS

LONG TERM > 3 43 66.2%

YEARS

 Majority of the respondents invest their money for long term i.e. more tha3 years, as
this help in growth of the income and it is suitable for equity funds, sector funds, etc.
 24.6 % of respondent invest their money for medium term as they can‟t wait more
than 3years or there are various investment for medium term.
 6 respondent invest their money for short term, so they may be invested their money
in governments or debt funds and they have liquidity also.

Page | 74
Q.10] Which among the following principles do you consider while
selecting mutual funds?

PRINCIPLES NO. OF NO. OF

RESPONDENTS RESPONDENTS (%)

ENQUIRING ABOUT IT TO 61 95.3%

FUND MANAGER

FINDING ABOUT ITS 18 28.1%

PAST PERFORMANCE

IDENTIFYING YOUR OWN 5 7.8%

OBJEVTIVES

PRINCIPLES WHILE SELECTING

MUTUAL
FUNDS
ENQUIRING ABOUT THE FUND MANAGER 61

FINDING ABOUT ITS PAST PERFORMANCE 18

IDENTIFYING YOUR OWN OBJECTIVES 5

 Majority of the respondents enquire to their fund manager before investing as the
fund manager has more knowledge than that of investors. Around 61 respondents
enquire to their fund manager.

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  18 respondents of this survey find past performance of the fund while investing to
check whether it has growth or not.
 And around 5 respondents invest by identifying their own objectives. In this
question the respondent can choose more than 1 option so there are many respondent
who have choose2 or 3 options.

Q.11] Please indicate/rate whether growth prospects as a factor

influenced your investments in Mutual Funds.

RESPONSE NO. OF RESPONDANTS

VERY SIGNIFICANT 3

SIGNIFICANT 36

NEUTRAL 21

INSIGNIFICANT 2

VERY INSGNIFICANT 3

36

10
3 2 3
5
VERY SIGNIFICANT NEUTRAL INSIGNIFICANT VERY
SIGNIFICNAT INSIGNIFICANT

 Around 36 respondents feel that growth factor is significant while selecting mutual
funds and 3 respondents feel that it very significant while selecting mutual funds
 21 respondents says that growth factor is neither significant nor insignificant while
selecting mutual funds

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 2 respondents feel that growth factor is insignificant and 3 respondent feel it‟s very
significant while investing mutual funds. They feel there is no relation between this
two.

Page | 77
Q.12] Which mode of investment will you prefer?

MODE OF INVESTMENT NO. OF NO. OF

RESPONDENTS RESPONDENTS (%)

ONE TIME INVESTMENT 13 20%

SYSTEMATIC 52 80%
INVESTMENT PLAN (SIP)

MODE OF INVESTMENT

20%
ONE TIME INVESTMENT

SYSTEMATIC INVESTMENT
PLAN

80%

 Around 52 respondents invest through Systematic Investment Plan (SIP) they think
that investing amount in various part at particular time period and this is useful for
small investors.
 13 respondents invest through one time investment they think that investing money
one time is better that investing it at particular time period.

Page | 78
Q.13] Please specify the level of agreement whether mutual funds are
useful for small investors?

RESPONSE NO. OF NO. OF

RESPONDENTS RESPONDENTS (%)

STRONGLY AGREE 5 7.7%

AGREE 31 47.7%

NEUTRAL 27 41.5%

DISAGREE 2 3.1%

STRONGLY DISAGREE 0 0

40
31
27
30
20

10 5
2 0
0
STRONGLY AGREE NEUTRAL DISAGREE STRAONGLY
AGREE DISAGREE
NO. OF RESPONDENTS

 31 respondents agree and 5 respondents strongly agree that a mutual fund is useful
for small investors as they get diversification of portfolio with small amount of
money.
 21 respondents neither agree nor disagree that mutual fund is useful for small
investors.
 2 respondent disagree that mutual fund is useful for small investors. Maybe they
think that it only useful for larger investors.

Page | 79
Q.14] Do you think that mutual funds having balanced portfolio give
better returns?

RESPONSE NO. OF NO. OF

RESPONDENTS RESPONDENTS (%)

STRONGLY AGREE 1 1.54%

AGREE 37 56.9%

NEUTRAL 25 38.5%

DISAGREE 1 1.53%

STRONGLY DISAGREE 1 1.53%

40 37

35
25
30

25

20
1 1 1
15

STRANGLY AGREE NEUTRAL DISAGREE STRONGLY

AGREE DISAGREE
NO. OF RESPONDENTS

 37 respondents agree and 1 respondent strongly agree that balanced portfolio gives
betterreturns as balanced portfolio have both equity funds and debts funds, equity
funds give higher return whereas debt helps in minimizing the risk.
 25 respondents neither agrees nor disagrees that balanced portfolio gives better
return because maybe they have not invested in it or they don‟t have knowledge
about it.

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  1 respondent disagree and 1 respondent disagree that balanced portfolio does not
give better return is because maybe they didn‟t get that much return than they
expected.

Q.15] What has been your experience with returns expected from
investment in Mutual Funds?

RESPONSE NO. OF NO. OF

RESPONDENTS RESPONDENTS (%)

VERY HIGH 0 -

HIGH 34 52.3%

NEITHER HIGH NOR 31 47.7%

LOW

LOW 0 -

VERY LOW 0 -

VERY HIGH
0%
HIGH

47.7% NEITHER HIGH NOR

52.3%
LOW

LOW

VERY LOW

 Around 34 respondents experience high returns expected from mutual funds. And 31
respondents neither experience high or low returns their returns may be neutral.
 None of the respondent experience very high, low and very low returns.

Page | 81
 4. FINDINGS

 From the survey we found that 27% of the respondents are self and remaining are
employed. And most of the respondent‟s annual income is from 5-10 lakhs so most
of the respondents are from middle income group.
 Most of respondents only invest 5% to 20% of their income in investment and
remaining keep for savings and expenses. This tell us even today people fear to
invest more amount of their income in investment due to risk attach with it and their
family responsibilities. And the investors who invest more amount of their income
are the one who don‟t have family responsibilities.
 People are aware about mutual funds and their benefits as around 86% of respondent
invest their money in mutual funds. After mutual funds most of the respondents
invest in LIC Policy and shares and debentures. They know the benefit of mutual
funds that with the small amount also they can diversify their portfolio which helps
in reducing risk earning high returns. Also people put their money LIC to secure
their life and other belongings. Through this we get to know that people are aware
about Mutual funds and have at least basic knowledge about it.
 Among total respondents i.e. 75, 10 respondents don‟t invest in mutual funds while
other 65 invest. This also tells us that most of the people aware about it. And rest
who do not invest maybe don‟t have any knowledge and this 10 respondents have
annual income from 1-3 lakhs so they may be thinking that mutual funds need more
amount of money to invest.
 Most of the respondents prefer balanced scheme as this invest in equity and debt
both, so it gives higher return due to equity funds and minimize risk due to debt
funds. As before investing most of the people prefer the fund with safety, high
returns and tax benefit.
 Newspapers and journal and friends advice are the main source through which
people get to know about mutual funds. And also most of the people invest for long
duration this tells us that they look for stability of fund and ear higher returns by
minimizing risk. As people who are investing in short term are the one who want to
invest in debt funds. As we get to know that duration is also consider before
investing.

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 As majority of the people invest through SIP mode so even if they don‟t have
enough money at moment then also they can make investment. And also people take
help of their fund manager to invest rather than investing in any fund.
 Majority of the respondents accept that growth factor is important while selecting
the mutual funds. And also majority has accepted that it is suitable for small
investors also. So mutual funds is for all kind of investors.
 Majority of respondents have experienced high returns through mutual funds, so
mutual fund is good option to invest even with a small amount to earn higher profit.
 From all this finding we can say that there is relation in selecting mutual funds on
the basis of risk, returns, growth, time period, etc.

Page | 83
 5. CONCLUSION AND RECOMMENDATION

CONCLUSION
This study was conducted to know about investor‟s preference towards mutual funds and
we get know that most investors prefer mutual funds in order to have high returns at low
level of risk, safety liquidity. The world of investment is changing so accordingly
investor‟s pattern is also changing. Investors have their own risk appetite and believe in
market before entering in this volatile market. In this volatile market mutual funds play
major role of giving diversified portfolio with low amount money and low risk. In
demographic market we get to know that only 5% to 20% of their annual income is
invested. This study helps us to understand the attitude and behavior of the investor based
on their preferences. In this study we can conclude that people are cautious before
investing in any scheme or fund, as they take all knowledge from the manager before
investing. Mutual fund industry which has enormous growth, if controlled with better
management and strict regulations, the resources can be allocated better in emerging
market economy. Also in order to have more number of investors, mutual fund should
bring awareness program about the benefits and its features of investing mutual funds,
and safety security provided by the mutual funds companies in this changing market
condition.

RECOMMENDATIONS
 Before investing investors should compare performances of various mutual fund
schemes offer by various mutual fund companies.
 Before investing investor should take the advice of professional fund manager as he
have more knowledge about various schemes.
 Investors of mutual funds should always be aware about various sectors like
infrastructure, power, pharmaceutical; etc. They should have knowledge about the
market or the schemes in which they have invested or going to invest.
 Investors should be aware not only updates of the schemes but also the latest
regulations and guidelines of SEBI.
 6. BIBLIOGRAPHY

https://www.moneycontrol.com/mutualfundindia/

https://www.mutualfundssahihai.com/en

https://cleartax.in/s/mutual-funds

https://www.mutualfundindia.com/

https://www.thebalance.com/ 2466564

https://www.bankbazaar.com/mutual-fund/.html

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PROJECT REPORT ON SPECIALIZATION TITLE OF THE PROJECT A STUDY ON

INVESTORS’PERCEPTIONS TOWARDS MUTUAL FUNDS SUBMITTED IN
PARTIAL FULFILLMENT FOR THE AWARD OF THE DEGREE OF MASTER OF
MANAGEMENT STUDIES UNIVERSITY OF MUMBAI Submitted by Mr. HRISHIKESH
SUDHAKAR PILANKAR ROLL NO. 2022166 Batch: 2022-2024 Under The Guidance of
Dr. AARTI KALE / LALA LAJPATRAI INSTIT

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