riya mutual fund final

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    DISSERTATION REPORT

    A STUDY OF INVESTMENT PREFERENCE IN MUTUAL FUNDS

    SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF

    MASTERS OF BUSINESS ADMINSITRATION (MBA)

    GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY

    PROJECT GUIDE: SUBMITTED

    BY:

    MS. NEETU BALI KAMRA GURLEEN

    KAUR

    En!"#$n%

    N!. &'&*+*

    (MBA,&*-,&)

    MANAGEMENT EDUCATION AND RESEARCH INSTITUTE

    GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY

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    CERTIFICATE

    This is to certify that the project entitled A STUDY OF INVESTMENT PREFERENCE IN

    MUTUAL FUNDS prepared byG0"$$n K0 has been completed under my guidance

    and I am satised with the work carried out by her.

    The project was successfully carried out by G0"$$n K0 in partial fulllment of

    M1%$1 !2 B013n$11 A4#3n31%%3!n 2!# G00 G!53n4 S3n/6 In471%6

    Un38$13%9.

    ..

    M1 N$$%0 B"3 K#

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    DECLARATION

    I hereby declare that the project titled A S%049 !2 In8$1%#$n% P$2$$n$ 3n M0%0"

    F0n41is an original piece of research work carried out by me under the guidance and

    supervision of M1 N$$%0 B"3 K#. The information has been collected from genuine

    & authentic source. The work has been submitted in partial fulllment of the requirement

    of !"T#$ % '("I)#"" !*I)I"T$!TI%) +'!,.

    PLACE: NE; DELHI

    SIGNATURE:

    DATE: GURLEEN KAUR

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    ACKNO;LEDGEMENT

    -ith profound sense of gratitude and regard I e/press my sincere thanks to my guide

    and mentor M1 N$$%0 B"3 K# for h#$ valuable guidance and the condence he

    instilled in me that helped me in the successful completion of this dissertation report.

    -ithout his help this project would have been a distant a0air.

    1#$ thorough understanding of the subject and professional guidance was indeed of

    immense help to me.

    I am also greatly thankful to the faculty members of our institute who co2operated with

    me and gave me their valuable time. Acknowledgement

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    G0"$$n K0

    R!"" n! < &'&*+*

    MBA

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    TABLE OF CONTENTS

    CHAPTER E=$0%38$ S0##9 34235

    CHAPTER , In%!40%3!n

    1istory of utual und

    Types of utual und "chemes in India

    $isk actors of utual und

    -orking of utual und

    $egulatory structure of utual und in India

    %bjective of the $esearch

    $esearch ethodology36278

    CHAPTER * L3%$%0$ R$83$> 79

    CHAPTER ' An"9131 n4 3n%$7$%%3!n !2 4% 7:2;6

    CHAPTER C!n"013!n

    indings

    $ecommendations

    ;

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    A mutual fund is a scheme in which several people invest their money for a common financial cause.

    The collected money invests in the capital market and the money, which they earned, is divided based

    on the numb

    er of units, which they hold. The mutual fund industry started in India in a small way with the UTI Act

    creating what was effectively a small savings division within the RBI. ver a period of !" years thisgrew fairly successfully and gave investors a good return, and therefore in #$%$, as the ne&t logical

    step, public sector banks and financial institutions were allowed to float mutual funds and their success

    emboldened the government to allow the private sector to foray into this area. The advantages of

    mutual fund are professional management, diversification, and economies of scale, simplicity, and

    li'uidity. The disadvantages of mutual fund are high costs, over(diversification, possible ta&

    conse'uences, and the inability of management to guarantee a superior return. The biggest problems

    with mutual funds are their costs and fees it include )urchase fee, Redemption fee, *&change fee,

    +anagement fee, Account fee Transaction -osts. There are some loads which add to the cost of

    mutual fund. oad is a type of commission depending on the type of funds. +utual funds are easy to

    buy and sell. /ou can either buy them directly from the fund company or through a third party. Before

    investing in any funds one should consider some factor like ob0ective, risk, 1und +anager2s and

    scheme track record, -ost factor etc. There are many, many types of mutual funds. /ou can classify

    funds based 3tructure 4open(ended close(ended5, 6ature 4e'uity, debt, balanced5, Investment

    ob0ective 4growth, income, money market5 etc. A code of conduct and registration structure for mutual

    fund intermediaries, which were subse'uently mandated by 3*BI. In addition, this year A+1I was

    involved in a number of developments and enhancements to the regulatory framework.

    The most important trend in the mutual fund industry is the aggressive e&pansion of the foreign owned

    mutual fund companies and the decline of the companies floated by nationali7ed banks and smaller

    private sector players. Reliance +utual 1und, UTI +utual 1und, I-I-I )rudential +utual 1und, 891-

    +utual 1und and Birla 3un ife +utual 1und are the top five mutual fund company in India. Reliance

    mutual funding is considered to be most reliable mutual funds in India. )eople want to invest in this

    institution because they know that this institution will never dissatisfy the mat any cost. /ou should

    always keep this into your mind that if particular mutual funding scheme is on larger scale then ne&t

    time, you might not get the same results so being a careful investor you should take your ma0or step

    diligently otherwise you will be unable to obtain the higher turns.

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    CHAPTER 2

    INTRODUCTION OF MUTUAL FUND

    There are a lot of investment avenues available today in the financial market for an investor with an

    investable surplus. 8e can invest in Bank 9eposits, -orporate 9ebentures, and Bonds where there is

    low risk but low return. 8e may invest in 3tock of companies where the risk is high and the returns are

    also proportionately high. The recent trends in the 3tock +arket have shown that an average retail

    investor always lost with periodic bearish tends. )eople began opting for portfolio managers with

    e&pertise in stock markets who would invest on their behalf. Thus we had wealth management services

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    provided by many institutions. 8owever they proved too costly for a small investor. These investors

    have found a good shelter with the mutual funds.

    CONCEPT OF MUTUAL FUND:

    A mutual fund is a common pool of money into which investors place their contributions that are to be

    invested in accordance with a stated ob0ective. The ownership of the fund is thus 0oint or :mutual;< the

    fund belongs to all investors. A single investor2s ownership of the fund is in the same proportion as the

    amount of the contribution made by him or her bears to the total amount of the fund. +utual 1unds are

    trusts, which accept savings from investors and invest the same in diversified financial instruments in

    terms of ob0ectives set out in the trusts deed with the view to reduce the risk and ma&imi7e the income

    and capital appreciation for distribution for the members. A +utual 1und is a corporation and the fund

    manager2s interest is to professionally manage the funds provided by the investors and provide a return

    on them after deducting reasonable management fees. The ob0ective sought to be achieved by +utual

    1und is to provide an opportunity for lower income groups to ac'uire without much difficulty financial

    assets. They cater mainly to the needs of the individual investor whose means are small and to manage

    investors portfolio in a manner that provides a regular income, growth, safety, li'uidity and

    diversification opportunities.

    DEFINITION::+utual funds are collective savings and investment vehicles where savings of small

    4or sometimes big5 investors are pooled together to invest for their mutual benefit and returns

    distributed proportionately;. :A mutual fund is an investment that pools your money with the money of

    an unlimited number of other investors. In return, you and the other investors each own shares of the

    fund. The funds assets are invested according to an investment ob0ective into the funds portfolio of

    investments. Aggressive growth funds seek long(term capital growth by investing primarily in stocks of

    fast(growing smaller companies or market segments. Aggressive growth funds are also called capital

    appreciation funds;.

    Why Select Mutul Fu!"#

    The risk return trade(off indicates that if investor is willing to take higher risk then correspondingly he

    can e&pect higher returns and vice versa if he pertains to lower risk instruments, which would be

    satisfied by lower returns. 1or e&ample, if an investors opt for bank 19, which provide moderate return

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    with minimal risk. But as he moves ahead to invest in capital protected funds and the profit(bonds that

    give out more return which is slightly higher as compared to the bank deposits but the risk involved

    also increases in the same proportion. Thus investors choose mutual funds as their primary means of

    investing, as +utual funds pr

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