Mutual Fund Industry in India

A mutual fund is a trust or a pool of investments by investors who share a

common financial goal. This pool is invested in several financial instruments such
as shares, debt instruments, bonds etc. by the company managing that trust. This
company is called an Asset Management Company. Returns so generated are
later distributed among the members of the pool in the ratio of their investments.
The AMC invests its money in a manner that while the returns are maximized, the
risks are kept to a minimum level. In India, it is mandatory for every Asset
Management Firm to be registered with the Securities and Exchange Board of
India (SEBI), a body that regulates all securities instruments. The first company
that dealt in mutual funds was the Unit Trust of India. It was set up in 1963 as a
joint venture of the Reserve Bank of India and the Government of India. The
objective of the UTI was to guide small and uninformed investors who wanted to
buy shares and other financial products in larger firms. The UTI was a monopoly
in those days. One of its mutual fund products that ran for several years was the
Unit Scheme 1964.The mutual fund industry in India has undergone at least 4
phases. Let us now look at each phase in brief:
Mutual Funds History: Phase Of Inception (1964-87) :
The first phase was marked by the setting up of the UTI. Though it was a
collaboration between the RBI and the Indian Government, the latter was soon
delinked from the day-to-day operations of the Unit Trust of India. In this phase,
the company was the sole operator in the Indian mutual fund industry. In 1971,
the UTI launched the Unit Linked Insurance Plan or the ULIP. From that year until
1986, UTI introduced several plans and played a very big role in introducing the
concept of mutual funds in India. When UTI was set up several years ago, the
idea was to not just introduce the concept of mutual funds in India; an associated
idea was to set up a corpus for nation-building as well. Therefore, to encourage
the small Indian investor, the government built in several income-tax rebates in
the UTI schemes. Not surprisingly, the investible corpus of UTI swelled from 600
crores in 1984 to 6,700 crores in 1988. Clearly, the time had come for the Indian
mutual industry to move into the next phase.

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Mutual Funds History: Entry of Public Sector (1987-1993) : By the end of 1988, the
mutual fund industry had acquired its own identity. From 1987, many public
sector banks had begun lobbying the government for starting their own mutual
fund arms. In November 1987, the first non-UTI Asset Management Fund was set
up by the State Bank of India. This AMC was quickly followed by the creation of
other AMCs by banks like Canara Bank, Indian Bank, Life Insurance Corporation,
General Insurance Corporation, and Punjab National Bank. This opening up of
the mutual fund industry delivered the desired results. In 1993, the cumulative
corpus of all the AMCs went up to a whopping Rs. 44,000 crores. Observers of
this industry say that in the second phase, not only the base of the industry
increased but also it encouraged investors to spend a higher percentage of their
savings in mutual funds. It was evident that the mutual fund industry in India was
poised for higher growth.

Mutual Fund History: Entry Private Sector Phase (1993-1996) : In the period 1991-
1996, the Government of India had realized the importance of the liberalization of
the Indian economy. Financial sector reforms were the need of the hour. India
needed private sector participation for the rebuilding of the economy. Keeping
this in mind, the government opened up the mutual fund industry for the private
players as well. The foreign players welcomed this move and entered the Indian
market in significant numbers. In this period, 11 private players –in collaboration
with foreign entities- launched their Asset Management Funds.

Some of the top AMCs in the private sector were:

• ICICI Prudential AMC- This Company is a joint venture between ICICI Bank of
India and Prudential Plc of UK. It manages a corpus of INR 2, 93,000 crores and
has an inventory of more than 1400 schemes.

• HDFC Mutual Fund- Launched in the 1990s, the HDFC Mutual Fund manages
more than 900 different kinds of funds.

• Kotak Mutual Fund- This AMC has an asset base of more than Rs. 1,19,000
crores. It is a joint venture of Kotak Financial Services and the Mahindra Group.

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SEBI Interventions and Growth, and AMFI

As the mutual fund industry grew further in the 1990s, the AMCs and the
government felt that it was time for regulation and some control. Investors had to
be protected as well as a level playing ground had also to be laid down. A few
years ago, the Indian industry had suffered a lot because of bank scams and
there was a real threat that investors might lose their monies yet again.

Consequently, the government introduced the SEBI Regulation Act in 1996 which
laid down a set of fair and transparent rules for all the stakeholders. In 1999, the
Indian government declared that all mutual fund dividends would be exempt from
income tax. The idea behind this decision was to spur further growth in the
mutual fund industry.

Meanwhile, the mutual fund industry also realized the importance of self-
regulation. As a result, it set up an industry body- the Association of Mutual
Funds of India (AMFI). One of the goals of this body is investor education.

Mutual Funds History: Phase Of Consolidation (February 2003 – April 2014) :

In February 2003, the Unit Trust of India was split into two separate entities,
following the repeal of the original UTI Act of 1963. The two separated entities
were the UTI Mutual Fund (which is under the SEBI regulations for MFs) and the
Specified Undertaking of the Unit Trust of India (SUUTI). Following this
bifurcation of the former UTI and occurrence numerous mergers among different
private sector entities, the mutual fund industry took a step towards the phase of
consolidation.

After the global economic recession of 2009, the financial markets across the
globe were at an all-time low and Indian market was no exception to it. Majority of
investors who had put in their money during the peak time of the market had
suffered great losses. This severely shook the faith of investors in the MF
products. The Indian Mutual Fund industry struggled to recover from these
hardships and remodel itself over the next two years. The situation toughened up
more with SEBI abolishing the entry load and the lasting repercussions of the

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global economic crisis. This scenario is evident from the sluggish rise in the
overall AUM of the Indian MF industry.

Mutual Funds History: Phase of Steady Development And Growth (Since May 2014):
Recognizing the lack of penetration of mutual funds in India, especially in the tier
II and tier III cities, SEBI launched numerous progressive measures in September
2012. The idea behind these measures was to bring more transparency and
security for the interest of the stakeholders. This was SEBI’s idea to ‘re-energize’
the Indian MF Industry and boost the overall penetration of mutual funds in India.

The measures bore fruit in the due course by countering the negative trend that
was set because of the global financial crisis. The situation improved
considerably after the new government took charge at the centre.

Since May ’14, the Indian MF industry has experienced a consistent inflow and
rise in the overall AUM as well as the total number of investor accounts
(portfolio).

Currently, all the Asset Management Companies in India manage a combined

worth of around Rs. 23,00,000 crore of assets. Though this number looks
attractive, we still have to go a long way in order to match the west.

It is estimated that Indians save approximately Rs. 20-30 lakh crore annually. The
Indian mutual fund industry can grow immensely if Indians started parking a
higher percentage of their savings in MFs. Observers say that Indians have
begun shifting a part of their savings from physical assets like gold and land to
financial instruments like bonds and silver. However, the AMFI and the
government need to encourage Indians even more for investments in mutual
funds.

Investor Servicing: The Mutual Fund Industry in India has outsourced the work of
servicing investors, to Registrar and Transfer Agents (RTAs). These RTAs are
Karvy and CAMS, with CAMS covering almost 65% of asset servicing. The only
exception is Franklin Templeton Mutual Fund services, which has its own RTA

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set up on an in-house basis. These RTAs have investor service centres which
offer a wide range of services such as KYC fulfilment formalities, financial
transaction acceptance and processing, nomination registration, non-financial
changes, statement of accounts, transmission of units, etc.

Technology for Customer Engagement

AMCs have implemented various technological measures in order to enhance
customer engagement from various sectors of the society. Two programmes that
have been introduced by AMCs are the Investor Awareness Programme (IAP)
and District Adoption Programme (DAP). These programmes improve awareness
in locations with limited penetration of mutual funds, regarding the assets and
their benefits.

Other technologies that are being used by AMCs are internet applications, mobile
applications and social media. These companies have improved their online
interface for ease of access and use. They are also using mobile apps to enable
investors to track their investments and to monitor their transacting portfolios.
WhatsApp, Facebook and other social media platforms are being used in order to
enhance user experience and integrate various services. Social media platforms
have been recognized as an effective channel to leverage technology that would
assist in investment and mobile applications to engage more customers from
different segments.

HNIs are the key target segment for AMCS and therefore several custom-made
programmes are being initiated by them in order to enhance their engagement.
There are various mass outreach programmes that are held by AMCs in order to
enable growth in the mutual fund industry and to ensure maturity of the individual
customer investments.

Changes to Mutual Fund Industry – SEBI Initiatives

SEBI has dictated various initiatives and directives in order to regulate the mutual
fund industry and to protect investor interests. These can be classified into three
segments –

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 1. Protecting investor interests – SEBI has introduced various
directives to protect investor interests. These are as follows:
o Promote transparency by introducing higher disclosures by an
Asset Management Company (AMC).
o Prevent mis-selling by making changes to the commission
structure.
o Merging me-too schemes and not giving approval to NFO
issuances that are in non-compliance to this rule.
o Introducing “risk meter” infographics in all mutual fund product
brochures in a comprehensive and easily understandable format.
2. Increasing reach and lowering costs – SEBI offers the following
solutions for increasing reach and lowering costs:
o Launching the MF Utility Portal that would enable investors to trade
through a Common Account Number.
o Areas other than T15 will have differentiated TER for encouraging
the sale of direct plans.
o Issuing consolidated account statements.

3. Safeguarding the health of mutual fund industry – In order to

safeguard the health of the Indian Mutual Fund Industry, the following
regulations are laid down by SEBI:
o Making it mandatory for AMCs to have a capital base of Rs. 500
Million by the year 2017, from its current value of Rs. 100 Million.
o Proposing the analysis of compensation details for assessing fixed
costs of AMCs.
o Conducting stress tests on a regular basis.

About the organisation

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DSP Group is a 152-year-old Indian financial firm. DSP group currently led by
Mr. Hemendra Kothari was founded in 1860’s. The founders of the groups are
also the founders of the Bombay Stock Exchange. The group has been
Instrumental in the transformation of India’s capital market. It has been
pioneering institution in different parts of the capital market like stock broking,
investment banking, wealth management and asset management. Over the last
15 decades it has stood the test of time, primarily because of its principles built
round integrity, transparency and trust. It has also partnered with various
international firms of repute in the journey of 15 decades. DSP Mutual Fund
today is one of the largest investment management firms in India. It has been in
existence for more than 2 decades.
Is manages money for more than 24 lakh Indian investors as well as many global
investors. Over its existence over more than 2 decades, it has been fortunate to
partner with some of the finest global investment management firms, primarily
Merrill Lynch and BlackRock. DSP had partnership with Merrill Lynch till 2008
and then with BlackRock till 2018. Today DSP Mutual Fund is independent Indian
Asset Management Company with a pure focus of only doing asset management.
We have no other line of business and that means it allows us to vary sharply
focus on investment management and creating value for our investors. Over time
DSP have designed a wide variety of products across active and passive
strategies. DSP have fund across equities and fixed income, which offer you
domestic investment opportunities as well as global diversification through
international funds. What has really worked for us is experience across market
cycles and keeping the principles of investors results first.

DSP always tries to keep long term orientation, a very scientific approach to
managing money, built around fundamental principle and processes. DSP
recognizes their responsibility of managing hard earned money. It’s very
important to demonstrate conviction in terms of offering the range of products we
give to you. You will be glad to know that every colleague in DSP invests his or
her money in the schemes that we ask you to invest and this is our reinforcement
of the conviction in our entire product range. We are also extremely focused on
ensuing that our investors get a great experience that is how we talk to you, how

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we convey our risk and returns and at the same time how we use technology to
make investing experience simple and easy for you. We use technology very
effectively to ensure that not only are you able to invest with simplicity and
convenience and speed and responsibility. It’s very important to educate our
investors in a very simple way that is the benefits of investing and the risk of
investing and that is our primary differentiating focus to ensure that investors
learn about both the sides of the coin. We also leverage our advisory task force,
our large advisory base to ensure that our messaging of responsible investing
reaches our investors in very effective way.

In the business of Asset Management, the best asset is people, we are blessed
to have a diverse group of people in our teams. What really binds them together
is the common purpose of doing good for investors. We realise that our work is
going to have a great impact on the lives of our consumers and our investors and
that spirit of doing good for our investors is the common thread which excites us
to come to give our best.

The philosophy which drives and excites us is #InvestForGood. When we say

Invest for Good it is not about investing for good results and outcomes but
investing for really long periods of time at the same time keeping long term focus
orientation and focus and ensuring what we do is right for you.

2.1 Introduction to the study

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The mutual fund industry has been in India for a long time. This came into
existence in 1963 with the establishment of Unit Trust of India, a joint effort by the
Government of India and the Reserve Bank of India. The year of 1993 marked
the beginning of a new era in the Indian mutual fund industry with the entry of
private players like Morgan Stanley, J.P Morgan, and Capital International. SEBI
(Security Exchange Board of India) was established under which all the mutual
funds in India were required to be registered. SEBI was set up as a governing
body to protect the interest of investor. By the end of 2008, the number of players
in the industry grew enormously with 46 fund houses functioning in the country.
With the rise of the mutual fund industry, establishing a mutual fund association
became a prerequisite. This is when AMFI (Association of Mutual Funds India)
was set up in 1995 as a non-profit organization. Today AMFI ensures mutual
funds function in a professional and healthy manner thereby protecting the
interest of the mutual funds as well as its investors.

Mutual funds are considered as one of the best available investment options as
compare to others alternatives. They are very cost efficient and also easy to
invest in. The biggest advantage of mutual funds is they provide diversification,
by reducing risk & maximizing returns. India is ranked one of the fastest growing
economies in the world. Despite this huge progression in the industry, there still
lies huge potential and room for growth. India has a saving rate of more than 35%
of GDP, with 80% of the population who save. These savings could be channel
zed in the mutual funds sector as it offers a wide investment option.

Further tapping rural markets in India will benefit mutual fund companies from
the growth in agriculture and allied sectors. With subsequent easing of
regulations, it is estimated that the mutual fund industry will grow at a rate of 30%
- 35% in the next 3 to 5 years and reach US 300 billion by 2015.

As it can be noted, there is huge growth and potential in the mutual fund industry.
The development of this sector so far has been commendable and with the above
positive factors we are looking at a more evolved industry.

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Many retail investors tend to equate mutual funds with equity mutual funds.
However, did you know that it is Debt mutual funds which account for nearly two-
thirds of the industry AUM as per AMFI.
DEBT FUND:
Buying a debt instrument is similar to giving a loan to the issuing entity. A debt
fund invests in fixed-interest generating securities like corporate bonds,
government securities, treasury bills, commercial paper and other money market
instruments. The basic reason behind investing in debt fund is to earn interest
income and capital appreciation. The issuer pre-decides the interest rate you will
earn as well as maturity period. That’s why they are called ‘fixed-income’
securities because you know what you’re going to get out of them.

Debt funds invest in different securities, based on their credit ratings. A security’s

credit rating signifies whether the issuer will default in disbursing the returns they
promised. The fund manager of a debt fund ensures that he invests in high credit
quality instruments. A higher credit rating means that the entity is more likely to
pay interest on the debt security regularly as well as pay back the principal
amount upon maturity.

This is why debt fund which invest in higher-rated securities will be less volatile,
compared to low-rated securities. Additionally, the maturity also depends on the
investment strategy of the fund manager and the overall interest rate regime in
the economy. A falling interest rate regime encourages the manager to invest in
long-term securities. Conversely, a rising interest rate regime encourages him to
invest in short-term securities. 

Debt funds try to optimize returns by diversifying across different types of

securities. This allows debt funds to earn decent returns, but there is no
guarantee of returns. However, debt fund returns often falls in a predictable
range. This makes them safer avenues for conservative investors. They are also
suitable for people with both short-term and medium-term investment horizons.
Short-term ranges from 3 months to 1 years, while medium term ranges from 3
years to 5 years.

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a. Short-term debt funds

For a short-term investor, debt funds like liquid funds may be an ideal investment,
compared to keeping your money in a saving bank account. Liquid funds offer
higher returns in the range of 7%-9% along with similar kind of liquidity for
meeting emergency requirements.

b. Medium-term debt funds

For a medium-term investor, debt funds like dynamic bond funds can be ideal to
ride the interest rate volatility. Compared to 5-year bank FD, these bond funds
offer higher returns. If you want to earn regular income from your investments,
then Monthly Income Plans may be a good option. Debt mutual funds can be
classified according to the type of fixed-income instruments that they hold:
1. Liquid funds:
Liquid funds aim at providing a high degree of liquidity and safety of capital to the
investor. For this reason, the fund manager invests in high-credit quality debt
instruments. The allocated proportions are as per the fund’s investment mandate.
He/she ensures that average maturity of the portfolio is up to 3 months.

This reduces the sensitivity of fund returns to interest rate changes. The fund
value does not experience severe fluctuations. In addition to this, the maturity of
the underlying securities is matched to the portfolio maturity. It helps to deliver
higher returns.

Liquid funds are an efficient way to park surplus funds. These are low-risk havens
which provide higher returns than a savings bank account. Liquid funds try to
emulate the liquidity aspect of a savings bank account. These funds don’t have
exit loads. It gives you the freedom to withdraw funds as per your convenience.

2. Ultra-Short-term Funds:

Ultra-short-term funds can be likened to be close cousins of liquid funds. These

are fund classes that offer more liquidity than other funds with long investment
horizons. According to the rules set by the Securities and Exchange Board of
India (SEBI) for liquid funds, it has been decided that such funds can only invest

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in securities that mature up to 91 days. However, these rules do not apply to
ultra-short

These bonds can, therefore, invest in securities that mature both before or after
the 91-day period. Typically, the investment horizon for these ultra-short-term
funds ranges from a week to about 18 months. So, if you have extra funds that
you wish to park for 1-9 months and earn some dividends from, then this
investment vehicle can be the one you are looking for.

3. Short-term Income Funds:

Short-term bond funds make investments in securities that have a maturity period
between a year to three years and offer high liquidity. Apart from commercial
papers and certificates of deposits these also invest in government securities and
medium and long-term instruments. Any entity or fund house can issue short-
term debt (bonds) including government, corporations for investment and
companies rated below investment grade. These are also available in dividend
and growth options.
Due to the longer maturity of short-term income funds (compared to liquid and
ultra-short-term funds), they have more credit risk or risk of default and also more
interest rate risk. As a result, if interest rates in the market go down, the returns of
short-term funds will increase and can even be in double digits. There is
commensurate risk if interest rates go up. These funds are most suited for
investors with a 1-3-year investment horizon.
4.Corporate Bond Fund:
Any company can issue a corporate bond, also called as Non-Convertible
Debentures (NCDs). Any organization or firm requires capital for daily operations
as well as future expansion. There are two ways for a company to raise money –
debt or equity investment. Debt is the safer option as it doesn’t affect the
shareholders directly. So most companies prefer to go for debt. Bank loans can
be quite expensive, so bonds or debentures give companies economical
alternative to raise funds.

Corporate bond securities, basically, form the underlying portfolios of credit

opportunities debt funds. When you buy one, the company is actually borrowing
money from you. The firm will repay the principal to you after the maturity period

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you agreed on. In the meantime, you will receive the interest (fixed income) to
your account – known as coupon. Coupon payments in India are generally made
twice a year.

5. Gilt Fund:

When the Government of India requires funds (or loans), it approaches the
Reserve Bank of India (RBI). Apart from being the apex bank, RBI also acts as
banker to the government. So, the RBI lends money to the government after
taking it from other entities like insurance companies and banks.

In return for the loan, the RBI issues government securities having a specific
tenure, which the fund manager of a gilt fund subscribes. Upon maturity, this gilt
fund returns the government securities and receives money in return. For an
investor, gilt funds can be an ideal blend of low risk and reasonable returns.
However, the returns are highly dependent on the movement of interest rates.
So, a falling interest rate regime would be the best time to invest in gilt funds.

6. Overnight Fund:

Overnight funds are a good option if you don't want to take any risk- be it interest
rate risk or credit risk. Overnight funds are a new category of debt funds
introduced by SEBI in the re-categorisation process last year. These schemes
investment in overnight securities with maturity of one day.

2.2 Scope and Importance

Scope

 The debt Schemes were categorized and selected on evaluating their

performance and Relative risk. The scope of the project is mainly
concentrated on the debt schemes.
 This study is to understand the crucial role of mutual fund in the market.
 It will cover the theoretical frame work of debt

 To analyse the performance of debt

Importance

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  Mutual Fund industry is a rapidly growing sector in Indian Financial
Market.
 Mutual fund investment is quite popular among small and household
investors, who mobilize their savings for investment in the capital market.
 India has a majority of middle-class families who want to yield the
maximum returns on their investment by taking the less risk.
 In banks and post offices investment is safe but due to lower interest rates
it is less attractive while in mutual funds through professional and sound
fund management, it reduces the risk and yield the high rate of return on
the investment.
 The need of present study of mutual funds cater to reduce the past
research gap and also to update the performance of mutual funds in the
current scenario.

2.3 Brief Literature Review

 Rao D. N (2006)
Studied the financial performance of select open-ended equity mutual fund
schemes for the period 1st April 2005 - 31st March 2006 pertaining to the two
dominant investment styles and tested the hypothesis whether the differences in
performance are statistically significant. The analysis indicated that growth plans
have generated higher returns than that of dividend plans but at a higher risk
studied classified the 419 open-ended equity mutual fund schemes into six
distinct investment styles.

 Agrawal Deepak & Patidar

Deepak (2009) studied the empirically testing on the basis of fund manager
performance and analysing data at the fund-manager and fund-investor levels.
The objective of the study is to provide an overview of mutual fund activity in
emerging markets, to describe their size, asset allocation, to analyse the Indian
Mutual Fund Industry pricing mechanism with empirical studies on its valuation,
to analyse data at both the fund-manager and fund-investor levels. The study
revealed that the performance is affected saving and investment habits of the

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people at the second side the confidence and loyalty of the fund Manager and
rewards affects the performance of the MF industry in India.

2.4 Conceptual Framework

The securities and exchange board of India regulations 1993 defines a mutual
fund as” a fund established in the form of a trust by a sponsor, to raise money
through the sale of units to the public, under one or more schemes, for investing
in securities in accordance with these regulations”.
A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is then invested in
capital market instruments such as shares, debentures and other securities. The
income earned through these investments and the capital appreciation realized is
shared by its unit holders in proportion to the number of units owned by them.
Thus a Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed basket of
securities at a relatively low cost. Though still at a nascent stage, Indian Mutual
Fund industry offers a large number of schemes and serves broadly all types of
investors. The range of products includes equity funds, debt, liquid, gilt and

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balanced funds. There are also funds meant exclusively for young and old, small
and large investors. Moreover, the setup of a legal structure, which has enough
teeth to safeguard Investors interest, ensures that the investors are not cheated
out of their hard-earned money.
2.5 Objective of the study
 To analyse which fund is suitable for an investor according to their
investment horizon.
 To analyse which debt schemes are performing well.
 To compare the risk and return associated with the debt scheme of DSP
Mutual Fund
 To know which factor they are considering while investing in DSP Mutual
Fund

2.6 Methodology of the study:

2.6.1 Research Design

Research is the systematic design, collection, analysis and reporting of data and
finding relevant solution to a specific situation or problem. Research is thus an
original contribution to the existing stock of knowledge making for its
advancement. The purpose of research is to discover answers to the questions
through the application of scientific procedures.

2.6.2 Tool for Data Collection

The Data collected is of the Primary & Secondary type:

 Primary Data: Primary data was collected by administering questionnaire.
It is systematic collection of information directly from the Mutual Fund
Investors. The basic purpose of collecting primary data is to know the
preferred Debt Schemes of Mutual funds
 Secondary data: Secondary data are collected from Companies website,
financial journals, recent Fact sheet of mutual fund relating to Debt funds

2.6.3 Sample size, sample design and sampling methods

Sample size: 16

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Population: 29

Sampling Methods: The sampling method is convenience sampling and sampling

technique is non probability sampling.
2.6.4 Tools for Data Analysis

I used Excel and Google form to do the survey for analysis of the funds I used
DSPs return sheet to get the data and then use Excel to compute the data and
compare the bench mark.

2.7 Limitation of the study

 The opinions of the respondents are not always free and frank.
 The respondents may not have given relevant information.
 Certain policies of the bank may not have been revealed as it is
confidential in nature.
 The data collection was strictly confined to secondary sources. Primary
data was associated with only the survey conducted on the investors.
 Selection of schemes for study is very difficult because lot of Varieties in
debt Schemes
 To get an insight in the process of risk and return and deployment of funds
by fund manager is difficult.
 The project is unable to analyse each and every debt scheme of mutual
funds to create awareness about risk and return. The risk and return of
mutual fund debt schemes can change according to the market conditions.
 Sample size is also very limited.

Literature Review
1. Dr. K. Veeraiah and Dr. A. Kishore Kumar (Jan 2014), conducted a
research on Comparative Performance Analysis of Select Indian Mutual
Fund Schemes. This study analyses the performance of Indian owned

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 mutual funds and compares their performance. The performance of these
funds was analysed using a five year NAVs and portfolio allocation.
Findings of the study reveals that, mutual funds out perform naïve
investment. Mutual funds as a medium-to-long term investment option are
preferred as a suitable investment option by investors.
2. Dr. Yogesh Kumar Mehta (Feb 2012), has studied Emerging Scenario of
Mutual Funds in India: An Analytical Study of Tax Funds. The present
study is based on selected equity funds of public sector and private sector
mutual fund. Corporate and Institutions who form only 1.16% of the total
number of investors accounts in the MFs industry, contribute a sizeable
amount of Rs. 2,87,108.01 crore which is 56.55% of the total net assets in
the MF industry. It is also found that MFs did not prefer debt segment.
3. Dr Surender Kumar Gupta and Dr. Sandeep Bansal (Jul 2012), have done
a Comparative Study on Debt Scheme of Mutual Fund of Reliance and
Birla Sunlife. This study provides an overview of the performance of debt
scheme of mutual fund of Reliance, and Birla Sunlife with the help of
Sharpe Index after calculating Net Asset Values and Standard Deviation.
This study reveals that returns on Debt Schemes are close to Benchmark
return (Crisil Composite Debt Fund Index: 4.34%) and Risk-Free Return:
6% (average adjusted for last five year).
4. Prof. V. Vanaja and Dr. R. Karrupasamy (2013), have done a Study on the
Performance of select Private Sector Balanced Category Mutual Fund
Schemes in India. This study of performance evaluation would help the
investors to choose the best schemes available and will also help the
AUM’s in better portfolio construction and can rectify the problems of
underperforming schemes. The objective of the study is to evaluate the
performance of select Private sector balanced schemes on the basis of
returns and comparison with their bench marks and also to appraise the
performance of different category of funds using risk adjusted measures
as suggested by Sharpe, Treynor and Jensen.
5. E. Priyadarshini and Dr. A. Chandra Babu (2011), have done Prediction of
The Net Asset Values of Indian Mutual Funds Using Auto- Regressive
Integrated Moving Average (Arima). In this paper, some of the mutual

18
 funds in India had been modeled using Box-Jenkins autoregressive
integrated moving average (ARIMA) methodology. Validity of the models
was tested using standard statistical techniques and the future NAV values
of the mutual funds have been forecasted
6. Dr. Ranjit Singh, Dr. Anurag Singh and Dr. H. Ramananda Singh (August
2011), have done research on Positioning of Mutual Funds among Small
Town and Sub-Urban Investors. In the recent past the significant
proportion of the investment of the urban investor is being attracted by the
mutual funds. This has led to the saturation of the market in the urban
areas. In order to increase their investor base, the mutual fund companies
are exploring the opportunities in the small towns and sub-urban areas.
But marketing the mutual funds in these areas requires the positioning of
the products in the minds of the investors in a different way. The product
has to be acceptable to the investors, it should be affordable to the
investors, it should be made available to them and at the same time the
investors should be aware of it. The present paper deals with all these
issues. It measures the degree of influence on acceptability, affordability,
availability and awareness among the small town and sub-urban investors
on their investment decisions.
7. Prof. Kalpesh P Prajapati and Prof. Mahesh K Patel (Jul 2012), have done
a Comparative Study On Performance Evaluation of Mutual Fund
Schemes Of Indian Companies. In this paper the performance evaluation
of Indian mutual funds is carried out through relative performance index,
risk-return analysis, Treynor's ratio, Sharp's ratio, Sharp's measure,
Jensen's measure, and Fama's measure. The data used is daily closing
NAVs. The source of data is website of Association of Mutual Funds in
India (AMFI). The study period is 1st January 2007 to 31st December,
2011. The results of performance measures suggest that most of the
mutual fund have given positive return during 2007 to 2011.
8. Dhimen Jani and Dr. Rajeev Jain (Dec 2013), have studied Role of Mutual
Funds in Indian Financial System as a Key Resource Mobiliser. This paper
attempts to identify, the relationship between AUM mobilized by mutual
fund companies and GDP growth of the India. To find out correlation

19
 coefficient Kendall’s tau b and spearman’s rho correlation ship was
applied, the data range was selected from 1998-99 to 2009-10.
9. Jafri Arshad Hasan, (2013), has studied The Performance Evaluation of
Indian Mutual Fund Industry past, Present and Future. This article will
discuss the past performance of the Indian mutual fund industry and the
pace of growth it achieved after being succumbed to regulatory changes
by SEBI, international factors and its non-performance that affected the
industry and its sentiments. It will also analyse the future implications of
the current changes that are being implemented by the regulator.
10. Dr. S. Vasantha, Uma Maheswari and K. Subashini, (Sep 2013),
Evaluating the Performance of some selected open-ended equity
diversified Mutual fund in Indian mutual fund Industry. The main objective
of this research paper is to evaluate the performance of selective open-
ended equity diversified Mutual fund in the Indian equity market. For the
purpose of conducting this study HDFC top 200 fund(g). Reliance top
200(g). ICICI Prudential top 200(g). Canara Robecos equity diversified
fund(g). Birla Sun Life frontline equity (g) mutual funds have been studied
over the period of 60 months data which is from January 2008 to
December 2012.The analysis has been made on the basis of Sharpe ratio,
Treynor ratio and Jenson.

AGE No. of respondents Percentage

20-35years 3 19%
36-45 years 5 31%
46-55 years 5 31%
56 years and above 3 19%
Total 16 100%

20
 Age

19% 19% 20-35years

36-45 years
46-55 years
56 years and above

31% 31%

INTERPRETATION:

As we can see most of the clients fall under the age category of 36-45 years
which is 31% of the total respondent, 46-55 Years which is again 31% of the total
respondents followed by 20-35 Years which is 19% of the total respondents
followed by 56 years and above which is again 19% of the total respondents.

Financial Goal No. of respondents Percentage

Retirement planning 3 19%
Wealth accumulation 9 56%
Wealth preservation 4 25%
Total 16 100%

21
 What is your primary Financial Goal?

19%
25% Retirement planning
Wealth accumulation
Wealth preservation

56%

INTERPRETATION:

As we can see most of the primary financial goal is wealth accumulation which is

56% of the total respondents followed by wealth preservation which is 25% of the

Total respondents followed by retirement planning which is 19% of the total

Respondents.

What is the time frame for you to achieve your financial goal? No. of Respodents Percentage
0-5 years 4 25%
10 years or longer 3 19%
5-10 years 9 56%
Total 16 100%

22
 What is the time frame for you to achieve your financial
goals?

0-5 years
25% 10 years or longer
5-10 years

56%
19%

INTERPRETATION:

As we can see that 56% of the investors that is 9 out of 16 respondents time
frame to achieve financial goal is 5-10 Years followed by 25% that is 4
respondents will try to achieve their financial goal in 0-5 Years followed by 19%
that is 3 respondents will take 10 years or more than 10 years to achieve their
financial goal.

Which category have you invested in? No. of Respondents Percentage

Both Equity and Debt 4 25%
Debt 12 75%
Total 16 100%

23
 Which category have you invested in?

25% Both Equity and Debt

Debt

75%

INTERPRETATION:

As we can see that 12 out of 16 respondents that is 75% investors invest in only
debt and 25% investors invest in both equity and debt.

Which scheme have you used in Debt category? No. of Respondents

Liquidity 8
Corporate bond fund 2
Short-term-fund 1
Ultra-short-term fund 10
Savings fund 8
Overnight 5
G-sec fund 5
Banking and PSU fund 5
Total 44

24
 Which scheme have you used in Debt category?
Banking and PSU fund 5

G-sec fund 5

Overnight 5

Savings fund 8

Ultra short term fund 10

Short term fund 1

Corporate bond fund 2

Liquidity 8
0 2 4 6 8 10 12

INTERPRETATION:

The above chart shows that most f the clients invest in Ultra-short-term fund
followed by liquidity fund and savings fund followed by banking and PSU, G-sec
fund and overnight fund followed by corporate bond fund and followed by Short-
term fund. From the above data analysis it can be inferred that Ultra-short-term
fund is suitable for the investors according to their investment horizon.

What are the factors which they consider while investing in DSP MF? No. of respondents percentage
Company Reputation 2 13%
High return 6 38%
Liquidity 4 25%
Low risk 4 25%
Total 16 100%

25
 What are the factors which they consider while investing
in DSP mutual fund?

Company Reputation
13% High return
25% Liquidity
Low risk

38%
25%

INTERPRETATION:

The above chart shows that the DSP employees are selling their product on the
basis of Liquidity, low risk, high return and company reputation so in case of
mutual fund they will invest more in debt fund which involve less risk. The mind-
set through which they are selling the fund is hypothetical as such type of
combination will not exist in real world. From the above data analysis it can be
inferred that liquidity is the main reason for investor to invest in debt category.

Which of the following best describe your financial goal? N. of Respondents Percentage
Generating a high amount of current income 8 50%
Generating some current income and growing assets over an extended time frame 2 13%
Growing assets substantially over an extended time frame 3 19%
Preserving principal and earning a moderate amount of current income 3 19%
Total 16 100%

26
 Which of the following best describes your financial goals?

Generating a high amount of

current income
19% Generating some current income
and growing assets over an
extended time frame
Growing assets substantially over
50% an extended time frame
19% Preserving principal and earning a
moderate amount of current income

13%

INTERPRETATION:

The above chart shows that almost 50% of the investor invest in debt fund to
generate a high amount of current income, followed by 19% invest to generate
some current income and growing assets over an extended time frame and
preserving principal and earning moderate amount of current income, followed by
12% invest for growing assets substantially over an extended time frame.

With the income generated from your portfolio, you plan to: No. of Respondents Percentage
Maintain for reserves 4 25%
Reinvest in different product 5 31%
Save for contingent liability 2 13%
Use for capital expenditure 5 31%
Total 16 100%

27
 With the income generated from your portfolio, you plan
to:

Maintain for reserves

25% Reinvest in different product
31% Save for contingent liability
Use for capital expenditure

13%
31%

INTERPRETATION:

As we can see that 31% of the investors plan to re-invest in different product and
use it for capital expenditure, followed by 25% investors plan to Maintain for
reserves, followed by 13% investors plan to save for contingent liability with the
income they have generated from their portfolio.

You have just received a large amount of money. How would you invest it? NO. of Respondents Percentage
Invest in something that offered high current income plus capital appreciation with moderately high risk 4 25%
Invest in something that offered high current income with a moderate risk 7 44%
Invest in something that offered moderate current income and was very conservative 4 25%
Invest in something that offered substantial capital appreciation with high risk 1 6%
Total 16 100%

28
 You have just received a large amount of money. How
would you invest it?
Invest in something that offered
high current income plus capital
appreciation with moderately high
risk
6% Invest in something that offered
25% high current income with a
moderate risk
25% Invest in something that offered
moderate current income and was
very conservative
Invest in something that offered
substantial capital appreciation
with high risk

44%

INTERPRETATION:

The above chart shows that 44% of the investors would invest in something that
offered high current income with moderate risk, followed by 25% investors wold
like to invest in something that offered high current income plus capital
appreciation with moderately high risk and moderate current income who is very
conservative, followed by 6% investors would invest in something that offered
substantial capital appreciation with high risk.

Which of the following statement would best describe your reaction if the value of your portfolio were to suddenly decline by 15%? No. of Respondents Percentage
Although I invest for long-term growth, even a temporary decline would concern me 4 25%
Because I invest for long-term growth, I would accept temporary fluctuations due to market influences 1 6%
I would be very concerned because I cannot accept fluctuations in the value of my portfolio 8 50%
If the amount of income I receive was unaffected, it would not bother me 3 19%
Total 16 100%

29
 Which of the following statements would best describe
your reaction if the value of your portfolio were to
suddenly decline by 15%? Although I invest for long-term
growth, even a temporary decline
would concern me
Because I invest for long-term
growth, I would accept temporary
fluctuations due to market
influences
19%
25% I would be very concerned because I
cannot accept fluctuations in the
value of my portfolio
If the amount of income I receive
6% was unaffected, it would not bother
me
50%

INTERPRETATION:

As we can see that 50% of the investors would be very concerned as they cannot
accept fluctuation in the value of the portfolio, followed by 25% investors would
mind as they have invested it for long-term, followed by 19% investors would not
mind if the amount of the income they receive is unaffected, followed by 6%
investors would not mind as they have invested for the long-term.

Which of the following investments would you feel most comfortable owning? No. of Respondents Percentage
Certificates of deposit 10 63%
Government securities 5 31%
Blue-chip stocks 1 6%
Total 16 100%

30
 Which of the following investments would you feel most
comfortable owning?

6% Blue-chip stocks
Certificates of deposit
31%
Government securities

63%

INTERPRETATION:

As we can see that 63% of the investors would like to own Certificate of deposit
as it is an save option for the investors, followed by 31% investors would like to
own government securities, followed by 6% would like to own blue-chip Stocks.

How optimistic are you about the long-term prospects for the economy? No. of Respondents Percentage
pessimistic 5 31%
Unsure 6 38%
Very optimistic 5 31%
Total 16 100%

31
 How optimistic are you about the long-term prospects for
the economy?

pessimistic
Unsure
31% 31%
Very optimistic

38%

INTERPRETATION:

The above chart shows that 38% of the investors are unsure about the long-term
prospects of the economy followed by 31% of the investors are very optimistic
and Pessimistic about the long-term prospects of the economy.

Performance of DSP Debt fund compared to its Benchmark:

Liquidity Fund:

Bench Mark means the basis on which the Mutual Fund Scheme is compared
with. For example, the scheme DSP Liquid Fund is compared with the Crisil
Liquid fund index. We say that a fund is doing well when the alpha of the fund is
high. Alpha is the measure which shows that weather the fund is beating the
bench mark. If the alpha is negative then it shows that the bench mark is

32
performing better than the schemes and if alpha is positive it shows that the
scheme is performing better than the bench mark which is the optimum case. It
can be said with the following Illustrations

1 Day 3 Days 7 Days 14 Days 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years
DSP Liquidity Fund - Dir - Growth 7.48% 7.23% 7.16% 7.15% 7.06% 7.31% 7.40% 7.61% 7.20% 7.74%
CRISIL Liquid Fund Index 7.48% 7.38% 7.81% 7.83% 7.34% 7.39% 7.50% 7.74% 7.18% 7.66%
Relative Performance (0.01%) (0.15%) (0.65%) (0.68%) (0.28%) (0.08%) (0.10%) (0.12%) 0.02% 0.09%

The figures highlighted in red shows that the fund has failed to beat the bench
mark. The figures in blue shows that how the fund is beating the bench mark. The
Graph below shows from what point of time after investment the fund will start
beating the bench mark.

Liquid Fund
8.00%
7.80%
7.60%
7.40%
7.20%
7.00%
6.80%
6.60%
1 Day 3 Days 7 Days 14 Days 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years

DSP Liquidity Fund - Dir - Growth CRISIL Liquid Fund Index

The above graph shows that the fund is beating the bench mark after three years.
This also states that the when a person is looking into investment into Mutual
Fund they should think long term rather than short term because Debt will give
high return after a period of time.

Savings Fund:

Bench Mark means the basis on which the Mutual Fund Scheme is compared
with. For example, the scheme DSP Savings Fund is compared with the Crisil
Liquid fund index. We say that a fund is doing well when the alpha of the fund is
high. Alpha is the measure which shows that weather the fund is beating the
bench mark. If the alpha is negative then it shows that the bench mark is
performing better than the schemes and if alpha is positive it shows that the

33
scheme is performing better than the bench mark which is the optimum case. It
can be said with the following Illustrations

1 Day 3 Days 7 Days 14 Days 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years
DSP Savings Fund - Dir - Growth 8.74% 9.02% 13.34% 11.47% 7.95% 8.59% 8.37% 8.54% 6.98% 7.31%
CRISIL Liquid Fund Index 7.48% 7.24% 7.81% 7.83% 7.34% 7.39% 7.50% 7.74% 7.18% 7.66%
Relative Performance 1.26% 1.79% 5.53% 3.64% 0.62% 1.20% 0.87% 0.80% (0.20%) (0.34%)

The figures highlighted in red shows that the fund has failed to beat the bench
mark. The figures in blue shows that how the fund is beating the bench mark. The
Graph below shows from what point of time after investment the fund will start
beating the bench mark.

savings Fund
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
1 Day 3 Days 7 Days 14 Days 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years

DSP Savings Fund - Dir - Growth CRISIL Liquid Fund Index

The above graph shows that the fund is beating the bench mark after 1 Days.
This also states that the when a person is looking into investment into Mutual
Fund they should think short term rather than long term.

Short term Fund:

Bench Mark means the basis on which the Mutual Fund Scheme is compared
with. For example, the scheme DSP Short-term Fund is compared with the Crisil
Short-term bond fund index. We say that a fund is doing well when the alpha of
the fund is high. Alpha is the measure which shows that weather the fund is
beating the bench mark. If the alpha is negative then it shows that the bench
mark is performing better than the schemes and if alpha is positive it shows that

34
the scheme is performing better than the bench mark which is the optimum case.
It can be said with the following Illustrations

1 Day 3 Days 7 Days 14 Days 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years
DSP Short Term Fund - Dir - Growth 14.11% 16.48% 18.04% 16.11% 10.29% 9.17% 9.49% 8.90% 7.59% 8.45%
CRISIL Short Term Bond Fund Index (0.01%) 13.22% 15.04% 12.34% 8.75% 9.17% 9.58% 8.71% 7.48% 8.18%
Relative Performance 14.12% 3.25% 3.00% 3.77% 1.53% 0.01% (0.09%) 0.19% 0.12% 0.27%

The figures highlighted in red shows that the fund has failed to beat the bench
mark. The figures in blue shows that how the fund is beating the bench mark. The
Graph below shows from what point of time after investment the fund will start
beating the bench mark.

Short-term Fund
20.00%

15.00%

10.00%

5.00%

0.00%
1 Day 3 Days 7 Days 14 Days 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years
(5.00%)

DSP Short Term Fund - Dir - Growth CRISIL Short Term Bond Fund Index

The above graph shows that the fund is beating the bench mark after 1 Days.
This also states that when a person is looking into investment into Mutual Fund
they should think short term rather than long term.

Ultra-short-term fund:

Bench Mark means the basis on which the Mutual Fund Scheme is compared
with. For example, the scheme DSP Ultra-short-term Fund is compared with the
Crisil Liquid fund index. We say that a fund is doing well when the alpha of the
fund is high. Alpha is the measure which shows that weather the fund is beating
the bench mark. If the alpha is negative then it shows that the bench mark is
performing better than the schemes and if alpha is positive it shows that the

35
scheme is performing better than the bench mark which is the optimum case. It
can be said with the following Illustrations

1 Day 3 Days 7 Days 14 Days 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years
DSP Ultra Short Fund - Dir - Growth 7.51% 7.97% 10.04% 9.24% 7.57% 8.13% 6.17% 6.42% 6.98% 7.62%
CRISIL Liquid Fund Index 7.48% 7.24% 7.81% 7.83% 7.34% 7.39% 7.50% 7.74% 7.18% 7.66%
Relative Performance 0.03% 0.73% 2.23% 1.42% 0.23% 0.75% (1.33%) (1.31%) (0.21%) (0.04%)

The figures highlighted in red shows that the fund has failed to beat the bench
mark. The figures in blue shows that how the fund is beating the bench mark. The
Graph below shows from what point of time after investment the fund will start
beating the bench mark.

Ultra-short-term fund
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
1 Day 3 Days 7 Days 14 Days 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years

DSP Ultra Short Fund - Dir - Growth CRISIL Liquid Fund Index

The above graph shows that the fund is beating the bench mark after 1 Days and
after 3 months it’s declining. This also states that when a person is looking into
investment into Mutual Fund they should think short term rather than long term.

Banking and PSU fund:

Bench Mark means the basis on which the Mutual Fund Scheme is compared
with. For example, the scheme DSP Banking and PSU Fund is compared with
the Crisil Short-term bond fund index. We say that a fund is doing well when the
alpha of the fund is high. Alpha is the measure which shows that weather the
fund is beating the bench mark. If the alpha is negative then it shows that the
bench mark is performing better than the schemes and if alpha is positive it

36
shows that the scheme is performing better than the bench mark which is the
optimum case. It can be said with the following Illustrations

1 Day 3 Days 7 Days 14 Days 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years
DSP Banking & PSU Debt Fund - Dir - Growth (0.68%) 15.93% 17.97% 17.39% 10.19% 9.13% 9.99% 9.07% 7.74% 8.47%
CRISIL Short Term Bond Fund Index (0.01%) 13.22% 15.04% 12.34% 8.75% 9.17% 9.58% 8.71% 7.48% 8.18%
Relative Performance (0.67%) 2.71% 2.93% 5.06% 1.43% (0.03%) 0.41% 0.36% 0.26% 0.29%

The figures highlighted in red shows that the fund has failed to beat the bench
mark. The figures in blue shows that how the fund is beating the bench mark. The
Graph below shows from what point of time after investment the fund will start
beating the bench mark.

Banking and PSU debt fund

20.00%

15.00%

10.00%

5.00%

0.00%
1 Day 3 Days 7 Days 14 Days 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years
(5.00%)

DSP Banking & PSU Debt Fund - Dir - Growth CRISIL Short Term Bond Fund Index

The above graph shows that the fund is beating the bench mark after 3 Days.
This also states that when a person is looking into investment into Mutual Fund
they should think long term rather than short term.

10Y G-sec Fund:

Bench Mark means the basis on which the Mutual Fund Scheme is compared
with. For example, the scheme DSP 10Y G-sec Fund is compared with the Crisil
10 Yr Gilt index. We say that a fund is doing well when the alpha of the fund is
high. Alpha is the measure which shows that weather the fund is beating the
bench mark. If the alpha is negative then it shows that the bench mark is
performing better than the schemes and if alpha is positive it shows that the

37
scheme is performing better than the bench mark which is the optimum case. It
can be said with the following Illustrations

1 Day 3 Days 7 Days 14 Days 1 Month 3 Months 6 Months 1 Year 3 Years

DSP 10Y G-Sec Fund - Dir - Growth 111.99% 55.65% 47.53% 26.58% 24.15% 12.38% 11.20% 10.26% 7.37%
CRISIL 10 Yr Gilt Index -- -- -- 0.96% 17.48% 8.62% 9.48% 9.49% 5.90%
Relative Performance -- -- -- 25.63% 6.66% 3.76% 1.72% 0.78% 1.47%

The figures highlighted in red shows that the fund has failed to beat the bench
mark. The figures in blue shows that how the fund is beating the bench mark. The
Graph below shows from what point of time after investment the fund will start
beating the bench mark.

10Y G-sec fund

120.00%

100.00%

80.00%

60.00%
40.00%

20.00%

0.00%
1 Day 3 Days 7 Days 14 Days 1 Month 3 Months 6 Months 1 Year 3 Years

DSP 10Y G-Sec Fund - Dir - Growth CRISIL 10 Yr Gilt Index

The above graph shows that the fund is beating the bench mark after 14 Days.
This also states that when a person is looking into investment into Mutual Fund
they should think long term rather than short term.

Corporate Bond Fund:

Bench Mark means the basis on which the Mutual Fund Scheme is compared
with. For example, the scheme DSP Corporate bond Fund is compared with the
Crisil composite bond fund index. We say that a fund is doing well when the
alpha of the fund is high. Alpha is the measure which shows that weather the
fund is beating the bench mark. If the alpha is negative then it shows that the
bench mark is performing better than the schemes and if alpha is positive it

38
shows that the scheme is performing better than the bench mark which is the
optimum case. It can be said with the following Illustrations

1 Day 3 Days 7 Days 14 Days 1 Month 3 Months 6 Months

DSP Corporate Bond Fund - Dir - Growth 4.38% 17.02% 17.82% 17.30% 9.52% 10.80% 11.79%
CRISIL Composite Bond Fund Index 45.76% 28.85% 26.86% 18.98% 18.45% 11.62% 10.89%
Relative Performance (41.38%) (11.83%) (9.05%) (1.69%) (8.93%) (0.82%) 0.90%

The figures highlighted in red shows that the fund has failed to beat the bench
mark. The figures in blue shows that how the fund is beating the bench mark. The
Graph below shows from what point of time after investment the fund will start
beating the bench mark.

Corporate bond fund

50.00%
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
1 Day 3 Days 7 Days 14 Days 1 Month 3 Months 6 Months

DSP Corporate Bond Fund - Dir - Growth CRISIL Composite Bond Fund Index

The above graph shows that the fund is beating the bench mark after 6 months.
This also states that when a person is looking into investment into Mutual Fund
they should think long term rather than short term.

Findings:
 Mutual fund is known to only 30% of the total population and out of
which only 10% have invested in mutual fund. So there is big scope for
mutual fund industry to grow.
 Negative perception on mutual funds require to be tackled through
appropriate investor education measures.

39
 Redemption and purchase facilities have been made easy for the
investors
 Investors are very conscious in investing their savings. They prefer
safer funds compared to risky ones.
 Offer documents should be simplified so as to make them
understandable to laymen. Investors should be freed from the
voluminous and laborious process of reading bulky offer documents.
 There is lot of competition within the AMCs, so this will lead to lower
costs which would in turn improve returns.

Suggestions:
 Create awareness about Mutual Fund
 There must be a regulation on mutual fund agents with no professional
skills and knowledge.
 Investors must be educated regarding the fund and its objectives
before they make investment.

40
 Since the term ‘market risks’ is not clearly defined. The funds should
spend more time communicating what comes under the concept of market
risk.
 It is better to focus on the existing schemes than launching new
schemes, as launching new schemes gives a shift of assets from
existing funds to a newly launched fund.

Conclusion:
Giving so many options on hand, finding the right scheme can sometimes
seem a bit difficult. Its not just about going with the fund that gives the
highest returns but also about managing risk finding funds that suit
investor’s risk appetite and investment needs. The Indian mutual fund
industry has witnessed a structural transformation during the past few

41
years. Therefore, it becomes important to examine the performance of the
industry in the changed environment. Most important trend in the mutual
fund industry is the aggressive expansion of the foreign owned mutual
fund companies and the decline in the companies floated by nationalized
banks and small private sector payers. Mutual Fund as an investment
avenue and as an asset class gained immense popularity among the
financially savvy Indian investors in the last decade due to variety of
factors like objective based on investment, professional management,
strict regulatory control and investors protection, transparency and
discloser norms, tax efficiency, investment convenience, liquidity etc. given
the mushrooms Indian mutual fund industries and the increasing number
of asset management companies and various investment schemes and
products, this sector is regarded as the perfect substitute for direct
investment in capital market and considered as surrogate investments in
equity and debts. Today this sector is witnessing lot of innovative changes
and growth and the growth will continue in the years to come. India has
increasingly been emerging in the global scenario as an economic super
power to reckon with. India is the fourth largest growing economy in the
world and large number of Indian brands and companies are emerging in
the foreign market. Given such rapid economic growth, sustainable
corporate earnings growth and higher GDP growth rate, average Indian
households income is steadily raising and there is more purchasing power
in the hands of the people. in such economic scenario mutual funds are
expected to play a vital role in the Indian investment scenario as a risk
based long term wealth creating asset class as well as liquid investment
avenue.

ANNEXURE
1. What is your age?
 20-35 Years
 36-45 Years
 46-55 Years

42
 56 years and above
2. What is your primary financial goal?
 Wealth preservation
 Retirement Planning
 Wealth accumulation
3. What is the time frame for you to achieve your financial goal?
 0-5 Years
 5-10 Years
 10 Years and longer
4. Which category have you invested in?
 Debt
 Both Equity and Debt
5. Which mutual fund scheme have you invested in debt category?
 Liquidity fund
 Savings fund
 Banking and PSU fund
 G-sec fund
 Overnight fund
 Corporate bond fund
 Short-term fund
 Ultra-short-term fund
6. What are the factor which you consider while investing in DSP mutual
fund?
 Liquidity
 Low risk
 High return
 Company reputation
7. Which of the following best describes your financial goals?
 Preserving principal and earning a moderate amount of current income
 Generating a high amount of current income
 Generating some current income and growing assets over an extended
time frame
 Growing assets substantially over an extended time frame

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8. With the income generated from your portfolio, you plan to:
 Reinvest in different products
 Maintain for Reserves
 Use for capital expenditure
 Use for Contingent liability
9. You have just received a large amount of money. How would you invest
it?
 Invest in something that offered moderate current income and was very
conservative
 Invest in something that offered high current income with moderate risk
 Invest in something that offered high capital income with moderately
high risk
 Invest in something that offered substantial capital appreciation with
high risk
10. Which of the following statements would best describe your reaction if
the value of your portfolio were to suddenly decline by 15%?
 I would be very concerned because I cannot accept fluctuations in the
value of my portfolio
 If the amount of income I receive was unaffected, it would not have
bother me
 Although I invest for long-term growth, even a temporary decline
would concern me
 Because I invest for long-term growth, I would accept temporary
fluctuations due to market influences
11. Which of the following investments you would feel comfortable
owning?
 Certificate of Deposit
 Government Securities
 Blue chip Stocks
12. How optimistic are you about the long-term prospects of the economy?
 Very optimistic
 Pessimistic
 Unsure

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Webliography:
 www.moneycontrol.com
 www.dspim.com

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