Summer training project report

“Growth and Equity fund in Mutual Fund”

BY
Koshlesh Bhardwaj
Roll No. 20

Submitted To

RAJASTHAN TECHNICAL UNIVERSITY

In partial fulfilment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
Under the guidance of

INTERNAL GUIDE
Dr. Supriya Agrawal
(Associate Professor)

S S Jain Subodh Management Institute,

Mansarovar (2020-22)
 ACKNOWLEDGEMENT

It is my proud privilege to express my sincere gratitude to all those who helped me directly or indirectly
in completion of this project report. I am greatly thankful to Prof. (Dr.) Raju Agrawal(Director) and MS
Dr. Parul Bhargava (placement officer) Dr. Supriya Agrawal(Associate professor) for his/her support,
guidance and valuable suggestion by which this work has been completed effectively and efficiently. I also
very thankful to MR. Bhavesh Manchandia, Mr. Vinit Khedwal and all other Baroda mutual fund
relationship managers whose continuous cooperation throughout the study was fabulous .Their charismatic
attitude made this study joyful and interesting.

Koshlesh Bhardwaj
MBA 3RD Sem
 DECLERATION

I “Koshlesh Bhardwaj” student of “S S Jain Subodh Management Institution” hereby declare that this
project “Equity and Growth fund in Mutual Fund” is original task performed by me under the able guidance
of Dr. Supriya Agrawal (Associate professor) .This is after undergoing training program in partial
fulfillment of MBA degree. And I also declare that this has not been submitted by any other student.

Koshlesh Bhardwaj
MBA 3rd SEM
COMPANY CERTIFICATE
 Executive summary
I started my training from 15th July 2021 the concept of my topic is about mutual fund and equity and
growth fund. At very first day we just given classroom training there we learned about the mutual fund
from the day fifth we were in the market. In few years Mutual Fund has emerged for ensuring one of the
best return tools. Mutual Funds have not only contributed to the India growth story but have also helped
families to achieve their success of Indian Industry.
As information and awareness is rising more and more people are enjoying the benefits of investing in
mutual funds. The main reason the number of retail mutual fund investors remains small is that nine in ten
people with incomes in India do not know that mutual funds exist, but once people are aware of mutual
fund investment opportunities, the number who decide to invest in mutual funds increases to as many as
one in five people. The trick for converting a person with no knowledge of mutual funds to a new Mutual
Fund customer is to understand which of the potential investors are more likely to buy mutual funds and
to use the right things in the sales process that customers will accept as important and relevant to their
decision.
There is popular saying’’ sold only that attributes which consumer want’’. The topic of the project has
been given by project guide Ms. Parul Bhargava(Placement officer). As per our discussion the topic has
been found very important as far as in Baroda mutual fund. So being a summer trainee of Baroda mutual
fund 22 godam Jaipur branch, it was a great opportunity for me to take up this topic as a challenge, because
the result of this project or survey will be very much beneficial for me as well as company too. They will
get to know about their strength and they will know that how much of market they have captured.

I used to go out to the market for selling interaction the products of the BOB and Due to this I grab great
experience to communicate with different types of customers, which was really good experience and will
help me in my future course of life. The major part of my training is I went to business people, doctor’s
and many more. .During the selling I found some difficulties like the customers had no time or they were
too busy with their works and in most of the cases they were not available at their places.

This Project gave me a great learning experience and at the same time it gave me enough scope to
implement my analytical ability. The analysis and advice presented in this Project Report is based on
market research on the saving and investment practices of the investors and preferences of the investors
for investment in Mutual Funds. This Report will help to know about t
he investors’ Preferences in Mutual Fund means why they prefer any particular Asset Management
Company (AMC), Which type of Product they prefer, Which Option (Growth or Dividend) they prefer or
Which Investment Strategy they follow (Systematic Investment Plan or One time Plan).
This program especially designed for bankers we took part into that as a provisionary concept they used in
program was mind blowing. It was our great pleasure that we also attended training programmed in this
session we learned money market instrument and debt composition funds.

There is one thing that I have found that the peoples working at Baroda mutual fund are very much helpful
in all areas. Every time they came to me and told me that they are available at any time for us for anything,
which really boost me and motivated me towards my goal and objectives. The culture of Baroda mutual
fund is very much friendly and cool to work there. The boss or cluster head as well as Branch relationship
manager together play a vital role to boost their colleagues.
 Table of content

Topic Pg
no.

MUTUAL FUND
1. Concept
2. History
3. Mutual fund in India
4. Advantages of Mutual fund
5. Disadvantage of mutual fund
6. Benefits of mutual fund
7. Types of mutual fund schemes
8. Mutual fund structure in India
9. Flow of operation
10.Best mutual fund in India
11.Why invest in mutual fund
12.Top mutual fund in India
13.Fact for the growth of mutual fund in India
14.Role of mutual fund in stock exchange
15.Mutual fund investors
16.10 best performing mutual funds in the last 5 years

ABOUT THE COMPANY

1. Bank of Baroda
2. History
3. Mission vision and market strategy
4. Detailed study about the company
5. Types of mutual fund offered by Baroda
6. Comparison of Baroda mutual fund with company

ABOUT THE TOPIC

1. What is equity fund
2. Different categories of equity funds
3. Advantages of equity mutual fund
4. Disadvantage
5. Long term and short term equity funds
6. How do equity mutual funds work
7. Diversification with equity mutual fund
8. Why should I invest in equity mutual fund
9. Equity mutual funds vs other investment option
10.Growth fund
11.Features of growth fund
12.Types of growth funds
13.Who should in growth funds
14.Benefits of growth funds
15.Disadvantage of growth fund
16.Aggressive growth fund
17.Top 5 growth fund
 MUTUAL FUND
Concept:
A mutual fund is an investment vehicle which allows investors with similar (one could say mutual)
investment objectives, to pool their resources and thereby achieve economies of scale and diversification
in their investing.

"“mutual fund” means a fund established in the form of a trust to raise monies through the sale of units to
the public or a section of the pubic under one or more schemes for investing in securities, money market
instruments, gold or gold related instruments, real estate assets and such other assets and instruments as
may be specified by the Board from time to time.

In simple terms, a mutual fund is essentially a common pool of money in which investors put in their
contribution. This collective amount is then invested according to the investment objective of the fund.

The money could be invested in stocks, bonds, money market instruments, gold, real estate and other
similar assets. These funds are operated by money managers or fund managers, who by investing in line
with the specified investment objective attempt to create growth or appreciation of the amount for
investors.

For example, a debt fund will have its specified objective to invest in fixed income instruments or products
like bonds, government securities, debentures, etc. Similarly, an equity fund will invest in equity related
instruments which include convertible debentures, convertible preference shares, warrants carrying the
right to obtain equity shares, equity derivatives and such other instrument as may be specified by the Board
from time to time.

History:
A mutual fund is a financial intermediary that pools the savings of investors for collective investment in a
diversified portfolio of securities. A fund is “mutual” as all of its returns, minus its expenses, are shared
by the fund’s investors.

The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 defines a mutual fund as a
‘a fund established in the form of a trust to raise money through the sale of
units to the public or a section of the public under one or more schemes for investing in securities, including
money market instruments’.

According to the above definition, a mutual fund in India can raise resources through sale of units to the
public. It can be set up in the form of a Trust under the Indian Trust Act. The
definition has been further extended by allowing mutual funds to diversify their activities in the following
areas:
· Portfolio management services
· Management of offshore funds
· Providing advice to offshore funds
· Management of pension or provident funds
· Management of venture capital funds
· Management of money market funds
· Management of real estate funds
A mutual fund serves as a link between the investor and the securities market by mobilising savings from
the investors and investing them in the securities market to generate returns.
Thus, a mutual fund is akin to portfolio management services (PMS). Although, both are conceptually
same, they are different from each other. Portfolio management services are offered to high net worth
individuals; taking into account their risk profile, their investments are managed separately. In the case of
mutual funds, savings of small investors are pooled under a scheme and the returns are distributed in the
same proportion in which the investments are made by the investors/unit-holders.
Mutual fund is a collective savings scheme. Mutual funds play an important role in mobilising the savings
of small investors and channelising the same for productive ventures in the Indian economy.

The history of mutual funds, dates back to 19th century Europe, in particular, Great Britain. Robert Fleming
set up in 1868 the first investment trust called Foreign and Colonial Investment Trust which promised to
manage the finances of the moneyed classes of Scotland by spreading the investment over a number of
different stocks. This investment trust and other investment trusts which were subsequently set up in
Britain and the US, resembled today’s close-ended mutual funds. The first mutual fund in the US,
Massachusetts Investors’
Trust, was setup in March 1924. This was the first open-ended mutual fund.

The stock market crash in 1929, the Great Depression, and the outbreak of the Second World War
slackened the pace of growth of the mutual fund industry. Innovations in products
and services increased the popularity of mutual funds in the 1950s and 1960s. The first international stock
mutual fund was introduced in the US in 1940. In 1976, the first tax-exempt municipal bond funds emerged
and in 1979, the first money market mutual funds were created. The latest additions are the international
bond fund in 1986 and arm funds in 1990. This industry witnessed substantial growth in the eighties and
nineties when there was a significant increase in the number of mutual funds, schemes, assets, and
shareholders. In the US, the mutual fund industry registered a ten fold growth in the eighties (1980-89)
only, with 25% of the household sector’s investment in financial assets made through them. Fund assets
increased from less than $150 billion in 1980 to over $4 trillion by the end of 1997. Since 1996, mutual
fund assets have exceeded bank deposits. The mutual fund industry and the
banking industry virtually rival each other in size.
Benefits of investing in mutual fund
 ADVANTAGES AND DISADVENTAGE OF
MUTUAL FUND

ADVANTAGES OF MUTUAL FUND:

1. Portfolio Diversification: Mutual Funds invest in a well-diversified portfolio of
securities which enables investor to hold a diversified investment portfolio (whether the
amount of investment is big or small).
2. Professional Management: Fund manager undergoes through various research works
and has better investment management skills, which ensure higher returns to the investor
than what he can manage on his own.
3. Less Risk: Investors acquire a diversified portfolio of securities even with a small
investment in a Mutual Fund. The risk in a diversified portfolio is lesser than investing in
merely 2 or 3 securities.
4. Low Transaction Costs: Due to the economies of scale (benefits of larger volumes),
mutual funds pay lesser transaction costs. These benefits are passed on to the investors.
5. Flexibility: Investors also benefit from the convenience and flexibility offered by Mutual
Funds. Investors can switch their holdings from a debt scheme to an equity scheme and
vice-versa. Option of systematic (at regular intervals) investment and withdrawal is also
offered to the investors in most open-end schemes.
 DISADVANTAGES OF MUTUAL FUND
1. Cost control not in the Hands of an Investor: Investor has to pay investment
management fees and fund distribution costs as a percentage of the value of his investments
(as long as he holds the units) , irrespective of the performance of the fund.
2. No Customized Portfolios: The portfolio of securities in which a fund invests is a
decision taken by the fund manager. Investors have no right to interfere in the decision
making process of a fund manager, which some investors find as a constraint in achieving
their financial objectives.

3. Difficulty in Selecting a Suitable Fund Scheme: Many investors find it difficult to

select one option from the plethora of funds/schemes/plans available.
 Why Students Must Invest in Mutual Funds – Benefits

1. More Years for the Compounding Growth

Investments through SIPs have the power of compounding. More years of investing and frequent investing
will lead to exponential growth. Let’s understand this with an example. A & B are two persons (of same
age) who invest ₹500 every month. A began investing as a student right at the age of 18 and B started later
at the age of 24. Let’s calculate their SIP returns by the time both of them are 30, i.e. A has invested for
12 years (from 18 to 30) and B has invested for 6 years (from 24 to 30). We assume that they invested a
fixed amount of ₹500 all these years at an average 12% rate of return. If we calculate the wealth
created, A will earn ₹1.6 Lakh while he invested Rs 72,000. On the other hand, B will earn around ₹52,000
for an investment of Rs 36,000. In a matter of only 6 years, A has earned about 3 times more of B.

One can increase the amount of SIP subsequently each year, called Top-up SIP. As a student, you can start
investing with a low amount as of ₹500 or ₹1,000. Some mutual funds also come with a SIP as low as ₹100
monthly payment. You can opt for Flexible SIP in which every month the amount may differ. It becomes
more pocket friendly for students.

2. Disciplined Habit of Saving/Investment

Investments, especially through SIPs develop a habit of managing finances and regular savings. When
young, there is a tendency to spend more as students usually do not think much along the line of investment.
However, If this disciplined approach evolves at a young age, you will learn to curtail unnecessary
expenses and rather invest them. It will also prove beneficial in later stages of life when not only income
but also responsibilities and expenditures rise

3. Capacity to Bear Risks

There are a number of MF schemes; the financial target, investment horizon and risk appetite of the
investors will determine which plan is suitable to them. Students can generally opt for Large Cap Equity
Funds if they seek stable returns as well as lower risk. However, as a student you usually have higher risk
potential. With plenty of time on your hands, you can bear some risk and stay invested for a long duration
in Mid Cap Funds or Small Cap Funds. Students may experiment with Contra Funds that invest on
unnoticed & beaten down stocks with a view that its value realisation and price hike will happen when it
gets recognized in the market. It can yield high returns in the long term.

The reason for high risk potential is you have lesser responsibilities (no worry of children’s education,
running a family) and hence you can aim for wealth creation by aiming to grow your money instead of
protecting it. Also, you have a longer time horizon to stay invested when you start early. Mutual Funds are
always recommended for long term investment as money has time to grow and then only an investor can
experience the fruits of high returns.

One can go for Multi Cap Funds or Hybrid Funds if seeking a diversified portfolio or a balance of risk
return ratio. If parents seek to park some extra cash for their children and are looking for safer options then
they can invest in Debt Funds as well.
4. Financial Back Up against Bad Times

In case, you go through rough patches in life such as unemployment, delayed salary, recession, loss in
business, etc. then the money invested through years can act as your lifeboat. If you start early, you have
more financial back up to safeguard you against hard times. If you have invested via SIP those can also be
discontinued temporarily during hard economic times. Although it is not advisable to do so unless an
extreme financial exigency.

5. Higher Accumulated Fund Corpus

Mutual Funds help in building corpuses to fund children’s higher education, weddings, property purchase
and even retirement plans. The earlier you start to invest, the higher capital appreciation you generate.
Starting early sets you up for a better future and the dreams and aspirations you have.

6. Earn Pocket Money through Dividend Payout

Dividend is the profit distribution among the shareholders of a company or the unit holders of a mutual
fund. You can opt for a dividend option for any MF scheme and the profit earnings made by the fund will
be shared from time to time. It can be a good source of income and serve as pocket money for students.
 Types of Mutual Fund schemes-

A. Schemes according to Maturity Period:

A mutual fund scheme can be classified into open-ended scheme or close-ended scheme
depending on its maturity period.

Open-ended Fund/ Scheme

An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous
basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units
at Net Asset Value (NAV) related prices which are declared on a daily basis. The key feature of open-
end schemes is liquidity.

Close-ended Fund/ Scheme

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for
subscription only during a specified period at the time of launch of the scheme. Investors can invest in
the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the
scheme on the stock exchanges where the units are listed. In order to provide an exit route to the
investors, some close-ended funds give an option of selling back the units to the mutual funds NAV
related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the
investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds
schemes disclose NAV generally on weekly basis.

B. Schemes according to Investment Objective:

A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its
investment objective. Such schemes may be open-ended or close-ended schemes as described earlier.
Such schemes may be classified mainly as follow.

1 Equity Funds-
Equity funds are considered to be the more risky funds as compared to other fund types, but they also
provide higher returns than other funds. It is advisable that an investor looking to invest in an equity
fund should invest for long term i.e. for 3 years or more. There are different types of equity funds each
falling into different risk bracket. In the order of decreasing risk level, there are following types of
equity funds:

➢ Growth Funds - Growth Funds also invest for capital appreciation (with time horizon of 3 to
5 years) but they are different from Aggressive Growth Funds in the sense that they invest in
companies that are expected to outperform the market in the future. Without entirely adopting
speculative strategies, Growth Funds invest in those companies that are expected to post
above average earnings in the future.
➢ Sector Funds: Equity funds that invest in a particular sector/industry of the market are known
as Sector Funds. The exposure of these funds is limited to a particular sector (say Information
Technology, Auto, Banking, Pharmaceuticals or Fast Moving Consumer Goods) which is
why they are more risky than equity funds that invest in multiple sectors.
➢ Mid-Cap or Small-Cap Funds: Funds that invest in companies having lower market
capitalization than large capitalization companies are called Mid-Cap or Small-Cap Funds.
Market capitalization of Mid-Cap companies is less than that of big, blue chip companies
(less than Rs. 2500 crores but more than Rs. 500 crores) and Small-Cap companies have
market capitalization of less than Rs. 500 crores. Market Capitalization of a company can be
calculated by multiplying the market Price of the company's share by the total number of its
outstanding shares in the market. The shares of Mid-Cap or Small-Cap Companies are not as
liquid as of Large-Cap Companies which gives rise to volatility in share prices of these
companies and consequently, investment gets risky.

➢ Equity Linked Saving Scheme- These funds are well diversified and reduce sector-specific
or company-specific risk. However, like all other funds diversified equity funds too are
exposed to equity market risk. One prominent type of diversified equity fund in India is
Equity Linked Savings Schemes (ELSS). As per the mandate, a minimum of 90% of
investments by ELSS should be in equities at all times. ELSS investors are eligible to claim
deduction from taxable income (up to Rs 1 lakh) in the past.

➢ Dividend Yield Funds -The objective of Equity Income or Dividend Yield Equity Funds is
to generate high recurring income and steady capital appreciation for investors by investing
in those companies, which issue high dividends. Equity Income or Dividend Yield Equity
Funds are generally exposed to the lowest risk level as compared to other equity funds.

➢ Gold Fund- The objective of this fund is accumulating the money at the gold rate according
to the units held by the investors. This is one of the new funds introduced. Here all the
investors will invest for the pool account of mutual fund and that amount is invested in the
gold. And according to the fluctuation of the rates of gold in the market, fund manager invest
when rates are in good rates like this profit earned from this gold fund is distributed according
to the units held by the investors
2. Debt funds-
Funds that invest in medium to long-term debt instruments issued by private companies, banks,
financial institutions, governments and other entities belonging to various sectors (like infrastructure
companies etc.) are known as Debt / Income Funds. Debt funds are low risk profile funds that seek to
generate fixed current income (and not capital appreciation) to investors. In order to ensure regular
income to investors, debt (or income) funds distribute large fraction of their surplus to investors.
Although debt securities are generally less risky than equities, they are subject to credit risk (risk of
default) by the issuer at the time of interest or principal payment. To minimize the risk of

Default, debt funds usually invest in securities from issuers who are rated by credit rating agencies and
are considered to be of "Investment Grade". Debt funds that target high returns are more risky. Based
on different investment objectives, there can be following types of debt funds:

➢ Diversified Debt Funds - Debt funds that invest in all securities issued by entities belonging
to all sectors of the market are known as diversified debt funds. The best feature of diversified
debt funds is that investments are properly diversified into all sectors which results in risk
reduction. Any loss incurred, on account of default by a debt issuer, is shared by all investors
which further reduces risk for an individual investor.

➢ High Yield Debt funds - Understand the risk of default is present in all debt funds, and
therefore, debt funds generally try to minimize the risk of default by investing in securities
issued by only those borrowers who are considered to be of "investment grade". But, High
Yield Debt Funds adopt a different strategy and prefer securities issued by those issuers who
are considered to be of "below investment grade". The motive behind adopting this sort of
risky strategy is to earn higher interest returns from these issuers. These funds are more volatile
and bear higher default risk, although they may earn at times higher returns for investors.

➢ Assured Return Funds - Although it is not necessary that a fund will meet its objectives or
provide assured returns to investors, but there can be funds that come with a lock-in period and
offer assurance of annual returns to investors during the lock-in period. Any shortfall in returns
 is suffered by the sponsors or the Asset Management Companies (AMCs). These funds are
generally debt funds and provide investors with a low-risk investment opportunity.

➢ Fixed Term Plan Series - Fixed Term Plan Series usually are closed-end schemes having
short-term maturity period (of less than one year) that offer a series of plans and issue units to
investors at regular intervals. Unlike closed-end funds, fixed term plans are not listed on the
exchanges. Fixed term plan series usually invest in debt / income schemes and target short-
term investors. The objective of fixed term plan schemes is to gratify investors by generating
some expected returns in a short period.

3. Balanced Fund-

A balanced fund is one that has a portfolio comprising debt instruments, convertible securities, and
Preference equity shares. Their assets are generally held in more or less equal proportions between
debt/money market securities and equities. By investing in a mix of this nature, balanced funds seek to
attain the objectives of income, moderate capital appreciation and preservation of capital, and are ideal
for investors with a conservative and long-term orientation.
 Showing on Mutual Fund Structure in India

• Sponsor: Sponsor is basically a promoter of the fund. For example Bank of Baroda,
Punjab National Bank, State Bank of India and Life Insurance Corporation of India (LIC)
are the sponsors of UTI Mutual Funds. Housing Development Finance Corporation
Limited (HDFC) and Standard Life Investments Limited are the sponsors of HDFC mutual
funds. The fund sponsor raises money from public, who become fund shareholders. The
pooled money is invested in the securities. Sponsor appoints trustees.

• Trustees: Two third of the trustees are independent professionals who own the fund and
supervises the activities of the AMC. It has the authority to sack AMC employees for non-
adherence to the rules of the regulator. It safeguards the interests of the investors. They are
legally appointed i.e. approved by SEBI.
 • AMC: Asset Management Company (AMC) is a set of financial professionals who
manage the fund. It takes decisions on when and where to invest the money. It doesn‟t own
the money. AMC is only a fee-for-service provider.

The above 3 tier structure of Indian mutual funds is very strong and virtually no chance for
fraud.

• Custodian: A Custodian keeps safe custody of the investments (related documents of

securities invested). A custodian should be a registered entity with SEBI. If the promoter
holds 50% voting rights in the custodian company it can‟t be appointed as custodian for the
fund. This is to avoid influence of the promoter on the custodian. It may also provide fund
accounting services and transfer agent services. JP Morgan Chase is one of the leading
custodians.

• Transfer Agents: Transfer Agent Company interfaces with the customers, issue a fund‟s
units, help investors while redeeming units. Provides balance statements and fund
performance fact sheets to the investors.

❖ Flow of operation:
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 realised
are 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. The flow chart below describes
broadly the working of a mutual fund
Showing on Mutual Fund operation flow chart

Mutual fund schemes may be classified on the basis of:

➢ By its maturity and

➢ By its investment objective

❖ By Maturity:
• Open-ended Funds:

An open-end fund is one that is available for subscription all through the year. These do
not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value
("NAV") related prices. The key feature of open-end schemes is liquidity.
 • Closed-ended Funds:

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15
years. The fund is open for subscription only during a specified period. Investors can invest
in the scheme at the time of the initial public issue and thereafter they can buy or sell the
units of the scheme on the stock exchanges where they are listed.
In order to provide an exit route to the investors, some close-ended funds give an option of
selling back the units to the Mutual Fund through periodic repurchase at NAV related
prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the
investor.
• Interval Funds

Interval funds combine the features of open-ended and close-ended schemes. They are open
for sale or redemption during pre-determined intervals at NAV related prices.

❖ By Investment Objective:

• Growth Funds:

The aim of growth funds is to provide capital appreciation over the medium to long- term.
Such schemes normally invest a majority of their corpus in equities. It has been proven that
returns from stocks, have outperformed most other kind of investments held over the long
term. Growth schemes are ideal for investors having a long-term outlook seeking growth
over a period of time.
• Income Funds:

The aim of income funds is to provide regular and steady income to investors. Such
schemes generally invest in fixed income securities such as bonds, corporate debentures
and Government securities. Income Funds are ideal for capital stability and regular income.
• Balanced Funds:

The aim of balanced funds is to provide both growth and regular income. Such schemes
periodically distribute a part of their earning and invest both in equities and fixed income
securities in the proportion indicated in their offer documents. In a rising stock market, the
NAV of these schemes may not normally keep pace, or fall equally when the market
 falls. These are ideal for investors looking for a combination of income and moderate
growth.
• Money Market Funds:

The aim of money market funds is to provide easy liquidity, preservation of capital and
moderate income. These schemes generally invest in safer short-term instruments such as
treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns
on these schemes may fluctuate depending upon the interest rates prevailing in the market.
These are ideal for corporate and individual investors as a means to park their surplus funds
for short periods.
• Tax Saving Schemes:

These schemes offer tax rebates to the investors under specific provisions of the Indian
Income Tax laws as the Government offers tax incentives for investment in specified
avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension
Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also
provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing
in Mutual Funds.
• Index funds: :

Index Funds invest their corpus on the specified index such as BSE Sensex, NSE index,
etc. as mentioned in the offer document. They try to mimic the composition of the index in
their portfolio. Not only are the shares, even their weight age replicated. Index funds are a
passive investment strategy and the fund manager has a limited role to play here. The NAVs
of these funds move along with the index they are trying to mimic save for a few points
here and there. This difference is called tracking error.
• Special schemes:

These schemes invest only in the industries specified in the offer document. Examples are
InfoTech funds, FMCG funds, pharmacy funds, etc These scheme are mean for aggressive
and well-informed investors.
RISK V/S REWARD

Volatility in the market activity can be referred to as the risk in the mutual fund investment. The sudden
upward and downward sentiments of the markets and individual issues can be attributed to several key
factors. These factors comprise:
• Inflation

• Interest rate changes

• General economic scenario

The aforementioned factors are the main cause of worry amongst the investors. Most of the investors
fear that the value of the stock they have invested will fall considerably. However, it is here one can
notice its reward angle. It is this element of volatility that can also bring them substantial long-term
return in comparison to a savings account.

➢ BEST MUTUAL FUNDS IN INDIA

Before knowing about the best mutual fund in India. It is important to know the factors that actually
decide their fate in the market. In order to get an actual ideal of the best performing mutual funds in the
market, one need to track its current Net Asset Value or NAV. NAV stands for the latest market value
of the holdings of a fund that brings down the fund's liabilities, which are generally indicated in terms
of per share amount. On a daily basis, most of the funds' NAV is decided.

This is determined after the trade closes on certain financial exchanges. The net asset value of the
mutual funds is ascertained at the end of the trading day. An increase in NAV signifies rise in the
holdings of the shareholder. The Fund Firm will then do the transaction on the shares along with the
sales fees. While open-ended net asset value of the mutual funds is issued daily, the close-ended NAV
of the mutual fund is released on a weekly basis. You can calculate net asset value of the mutual fund
easily. Track the latest market value of the net assets of the fund and then subtract that by the number
of outstanding shares.
 Why Invest in Mutual Funds
Mutual funds are the most convenient mode of investment even for those who are new to investing.
The few main reasons to start investing in a mutual fund are :
• Convenient: When one invests in stocks, there is a lot of research required before and one also
needs to put in a lot of time and efforts. With mutual funds, there is minimal paper work and is thus
convenient in a lot of ways. With online platforms these days, you can buy a mutual fund as easy
as it is to purchase flight tickets! You can simply visit your broker's website online and place your
order. Furthermore, you can also easily transfer your funds from one mutual fund to another.

• Easy diversification:
When you invest in mutual funds your risks are diversified. How? Let's say one of the funds that
you have purchased drops low in the market. However, your overall investment is not affected
 because you have invested in other funds as well. Purchasing stocks of different companies
diversifies the risk.

• Provides access to inaccessible assets:

With mutual funds, you can invest with an amount as low as Rs.100. Thus, even if you do not have
the capital to purchase a single stock, mutual fund enables you to do so.

• Well regulated and transparent:

Mutual funds are government regulated so you need not worry about anybody taking away your
money and running away. The entire process is transparent and done with legality.

• Professional management:
A team of professional managers and researchers manage mutual funds. These fund managers
handle your investments professionally and help you take proper investment decisions.
 Top mutual funds in India

Here are some of the top mutual funds in India that are listed below:
• Reliance Mutual Fund.

• The DSP ML Tiger Fund.

• SBI Magnum Contra Fund.

• HDFC Equity Fund.

• Prudential ICICI mutual Fund.

• SBI Mutual Fund.

➢ Some facts for the growth of mutual fund industry in India:

a) 100% growth in the last 6 years.

b) Numbers of foreign AMC‟s are in the queue to enter the Indian markets like Fidelity
Investments, US based, with over US$1trillion assets under management worldwide.
 c) Our saving rate is over 23%, highest in the world. Only channelizing these savings in
mutual funds sector is required.

d) We have approximately 37 mutual funds which are much less than US having more than
800. There is a big scope for expansion.

e) 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are
concentrating on the 'A' class cities. Soon they will find scope in the growing cities.

f) Mutual fund can penetrate rural like the Indian insurance industry with simple and limited
products

g) SEBI allowing the MF's to launch commodity mutual funds.

h) Emphasis on better corporate governance.

i) Trying to curb the late trading practices.

j) Introduction of Financial Planners who can provide need based advice.

The Indian mutual funds business is expected to grow significantly in the coming years due to a high
degree of transparency and disclosure standards comparable to anywhere in the world, though there are
many challenges that need to be addressed to increase net mobilization of funds in this sector, as said
by Mr. A.P. Kurian, Chairman of the Association of Mutual Funds of India.
Indian Mutual fund industry exhibited 200% growth in the last 10 yrs from Rs.470 billion to Rs1400
billion in terms of assets under management. The Mutual Funds industry is expected to jump sharply
from its present share of 6% of GDP to 40% in the next 10yrs provided the country‟s growth rate is
consistently above 6%. The growing investor preference for mutual funds has resulted in the assets
under management of mutual funds growing 8-folds in last 5 yrs. Number of foreign AMC's are in the
queue to enter the Indian markets like US based Fidelity Investments, with over US$1trillion assets
under management worldwide. Our saving rate is over 23%, highest in the world. Only channelling
these savings in mutual funds sector is required. There is a big scope for expansion as we have 37
mutual funds which is much less than US having more than 800.

➢ Role of mutual fund in stock exchange:

Mutual funds are an ideal vehicle for investment by retail investors in the stock market for several
reasons.

a) It pools investments of small investors together increasingly thereby the participation in the
stock market.

b) Mutual funds being institutional investors, can invest in market analysis generally not available
or accessible to individual investors, providing therefore informed decisions to small investors.

c) Mutual fund can diversify the portfolio in better way as compared with individual investors
due to the expertise and availability of funds.
 ➢ Mutual Fund Investors
Mutual funds in India are open to investment by
o Residents including:-
• Resident Indian Individuals, including high net worthindividuals and the retail or small
investors. Indian Companies
• Indian Trusts/Charitable Institutions
• Banks
• Non-Banking Finance Companies
• Insurance Companies
• Provident Funds
o Non-Residents, including
• Non-Resident Indians
• Other Corporate Bodies (OCBs)
. Foreign entities, namely, Foreign Institutional Investors (FIIs) registered with SEBI. Foreign
citizens/ entities are however not allowed to invest in mutual funds in India.
Market survey plays a vital role in understanding the investment pattern of the customer and
the level of satisfaction. It is very important for the company to perform such activities like
market research and surveys at regular intervals and accordingly further plans and policies can
be formulated.

➢ MUTUAL FUND IN INDIA

Concept of mutual fund entered Indian financial scene way back in 1964 that was
famous unit 64 later earned famed under name of US 64 had a near monopoly status
for more that 2 decades. This fund was a public sector closed ended fund that list of
fund holdings are allocation of total assets amongst various assets statements was never
known to the investing public. It was only at economic liberalization process that began
after 1991 that Indian financial sector began opening up. This it was in year 1993 the
first privet sector open-ended mutual fund was launched by the Kothari pioneer asset
management company.

This blue chip fund and prima fund (both equity funds) provided first hand of
competition to Unit Trust of India. Suddenly, Indian investor had wide range of invest
opportunity, were not available in pre-reforms era between 1997 to 2001 tremendous
 growth of Indian Mutual Fund Industry with number of players increasing and
balanced funds. Between years 1998-2001 boom in Indian stock market was led by
InfoTech companies. Huge project margins saw an unprecedented rise share prices.
This was time when some AMC launched IT sector mutual fund.

Growth of Mutual Fund Industry in India

First Phase 1964-1987

• The Mutual Fund industry in India started in 1963.
• 1st Mutual fund scheme was launched in 1964.
• From a mere AUM of ₹ 25 Crores it scaled to ₹ 6,700 Crores in 1988.
Second Phase 1987-1993
• Entry of public sector mutual funds set up by PSU banks, LIC and General Insurance

Corporation in 1987
• Industry’s AUM stood at ₹ 47,004 Crores by end of 1993
Third Phase 1993-2003
• Entry of private sector mutual funds leading to an increase in mutual fund houses
• The SEBI (Mutual Funds) Regulations of 1993 were replaced by a comprehensive
set of regulations in 1996
• By the end of Jan’03, the AUM has skyrocketed to ₹ 121,805 Crores with 33 mutual
houses managing them
Fourth Phase 2003-2014
• This phase is noted as the phase of “consolidation” due to M&As.
• It was also marred by the global melt-down
• The Industry lost 17% of its AUM due to the 2008-09 global crisis.
• In March 2014, the AUM doubled to ₹ 824,250 Crores from ₹ 417,300 Crores in
March 2009.
Fifth Phase 2014-Present
• The Industry’s AUM crossed the milestone of ₹ 10 Lakh Crore on 31st May 2014
• In less than 4 years, AUM doubled & crossed ₹ 20 lakh crore in August 2017.
• The Industry AUM currently stands at ₹ 24.25 Lakh Crore spread over 8.38crores
folio accounts across 40+ Mutual Fund houses*

10 best-performing mutual funds in the last 5 years

We have put together the 10 best-performing mutual funds in the last five years to make it
easier to choose the right one best suited to your financial capacity and risk appetite.
While there are several investment options out there, mutual funds are one of the best and
simplest avenues that offer sizable returns.

It’s often said that “While saving money is wise, investing it is profitable”, and for good reason.
Investing your money helps multiply it and build wealth rather than leaving it sitting idle in
your bank accounts. While there are several investment options out there, mutual funds are one
of the best and simplest avenues that offer sizable returns.

While most people are aware of mutual funds, the challenge and confusion often ensue when
those new to the mutual fund space realize that there are several different mutual funds. There
are multiple parameters such as expense ratio, performance against a benchmark, fund
manager’s experience, etc, to consider before investing. Understanding that doing extensive
research on this can be tedious and time-consuming, we’ve put together the 10 best-performing
mutual funds in the last five years to make it easier to choose the right one best suited to your
financial capacity and risk appetite.

1. Axis Bluechip Fund (Large-Cap)

Launched by Axis Mutual Fund, the Axis Bluechip Fund currently has an AUM of INR
29,160.6 crore and invests in blue-chip stocks or stocks of large organizations that are
financially stable and established. While they are less volatile than mid-cap or small-cap stocks
and have sufficient liquidity, they are rated high risk and the minimum SIP is set to INR 500
with the minimum lump sum investment set to INR 5000. The Axis Bluechip Fund aims to
generate long-term capital growth through investment in a diverse portfolio and is suitable for
investors who are looking for long-term capital appreciation. The 5-year CAGR for the fund is
18.50%.

2. Canara Robeco Bluechip Equity Fund (Large-Cap)

An equity mutual fund scheme launched by Canara Robeco Mutual Fund, this scheme has been
available since 2013 and seeks to provide capital appreciation by mainly investing in
companies having large market capitalization. With a current Asset Under Management
(AUM) of INR 3,691.25 cr, the fund is rated extremely high risk and the minimum SIP
(Systematic Investment Plan) is set to 1000. While the returns are taxed at 15% if the fund is
redeemed before one year, customers are required to pay 10% along with an LTCG tax on the
returns of INR 1 lakh+ in a financial year. The fund offers a 5-year CAGR of 18.08%.
3. PGIM India Mid-Cap Opportunities Fund
With an expense ratio of 0.37% and a minimum SIP amount of INR 1000, the PGIM India
Midcap Opportunities fund currently has an AUM of INR 2383.38 cr. While the minimum
lump sum amount is INR 5000, for units crossing 10% of the investment, 0.5% will be the
levied charges for redemption within 90 days. Classified as very high risk, the PGIM India
Midcap Opportunities Fund is best suited for investors who aim to invest for at least 3-4 years
and are seeking high returns, and have a 5-year CAGR of 21.23%.

4. Axis Mid-Cap Fund

Having an AUM of INR 13,834.27 cr, the companies chosen for the portfolio of this fund are
the ones with high growth prospects to assist the investment goal of quick wealth creation.
While the Axis Midcap Fund is a moderately high risk, it’s suitable for those looking to invest
for 3-4 years and wish to receive high returns. However, being a high-risk fund, investors also
need to be prepared for the possibility of moderate losses in their investments. The fund has a
5-year CAGR of 21.13% and is ideal for long-term goals such as education, retirement, etc.

5. Nippon India Small-Cap Fund

Looking to focus on small-cap companies across sectors, the Nippon India Small-cap Fund is
extremely high risk with minimum SIP investments set to INR 100 while the lump sum
investment is 5000 with an exit load of 1% if redeemed within a month. Made available to
investors in 2013, the fund is ideal for those with greater risk appetite and are expecting higher
returns although investors need to be ready for moderate losses owing to the risk factor. The
fund offers a 5-year CAGR of 23.61%.

6. SBI Small-Cap Fund

With a Net Asset Value (NAV) of INR 102.68 as of 16th Aug 2021, the SBI small-cap fund
has an AUM of INR 9,620.21 cr with an expense ratio of 0.84%. Being extremely high risk,
the fund has a minimum SIP of INR 500. The stock selection strategy includes both growth
and value investing. Providing a 5-year CAGR of 23.31%, the fund aims to provide investors
with opportunities for long-term wealth growth.
7. Parag Parikh Flexi-Cap Fund
Rated extremely high risk, the Parag Parikh Flexi-cap fund has an AUM of INR 13,186.70 cr
but has a lower expense ratio of 0.89%. With a minimum lump sum investment amount of INR
5000, the fund comes with an exit load of 2% if redeemed within 365 days and 1% if redeemed
between 366-730 days. Aiming to achieve long-term capital appreciation by investing
primarily in equity and equity-related instruments, the fund is suitable for those looking to
invest for 3-4 years and offers a 5-year CAGR of 21.51%.

8. PGIM India Flexi-Cap Fund

Aiming to generate income by investing in an actively managed diversified portfolio, the PGIM
India Flexi-cap fund is extremely high risk and has an AUM of INR 1,688.70 cr. Having been
made available to investors in March 2015, the fund offers high returns but investors need to
be wary of experiencing moderate losses due to its high-risk nature. The PGIM India Flexi-cap
fund offers a 5-year CAGR of 20.79%.

9. Quant Tax Plan (ELSS)

With an AUM of INR 327.45 cr, the Quant Tax Plan seeks to generate capital appreciation by
investing in equity shares that display growth potential. Rated extremely high risk, the fund has
a minimum SIP investment and a minimum lump sum investment of INR 500. Under Section
80C, up to INR 1.5 lakh on the returns will be exempted from tax but the fund requires a lock-
in period of 3 years. Returns over INR 1.5 lakh will be taxed at 10%. The fund offers a 5-year
CAGR of 23.92%.

10. Mirae Asset Tax Saver Fund (ELSS)

Having a low expense ratio of just 0.48%, the Mirae Asset Tax Saver Fund has a zero exit load
with higher returns than the category average. Being an open-ended ELSS, the fund comes
with a lock-in period of 3 years and is open to investing across market capitalizations. Its
flexible approach offers a diversified portfolio containing stable, established companies and
shows high growth potential. With a 5-year CAGR of 22.45%, the Mirae Asset Tax Saver fund
is best suited for investors looking to place their money in an investment for 3 years. The fund
serves a dual purpose – tax-saving and long-term wealth creation
About the Company
Bank of Baroda (BOB) is an Indian nationalised banking and financial services
company. It is under the ownership of the Ministry of Finance of the government of India. It is
the fourth largest nationalised bank in India, with 132 million customers, a total business of
US$218 billion, and a global presence of 100 overseas offices. Based on 2019 data, it is ranked
1145 on Forbes Global 2000 list.

The Maharaja of Baroda, Maharaja Sayajirao Gaekwad III, founded the bank on 20 July 1908
in the Princely State of Baroda, in Gujarat. The government of India nationalized the bank,
along with 13 other major commercial banks of India on 19 July 1969; the bank has been
designated as a profit-making public sector undertaking (PSU).

History

Maharaja Sayajirao Gaekwad III, the founder of Bank of Baroda

In 1908, Maharaja Sayajirao Gaekwad III, set up the Bank of Baroda (BOB), with other
stalwarts of industry such as Sampatrao Gaekwad, Ralph Whitenack, Vithaldas Thakersey,
Tulsidas Kilachand and NM Chokshi. Two years later, BOB established its first branch
in Ahmedabad. The bank grew domestically until after World War II. Then in 1953 it crossed
the Indian Ocean to serve the communities of Indians in Kenya and Indians in Uganda by
establishing a branch each in Mombasa and Kampala. The next year it opened a second branch
in Kenya, in Nairobi, and in 1956 it opened a branch in Tanzania at Dar-es-Salaam. Then in
1957, BOB took a big step abroad by establishing a branch in London. London was the center
of the British Commonwealth and the most important international banking center. In 1958
BOB acquired Hind Bank (Calcutta; est. 1943), which became BOB's first domestic
acquisition.

➢ 1960s

In 1961, BOB acquired New Citizen Bank of India. This merger helped it increase its branch
network in Maharashtra. BOB also opened a branch in Fiji. The next year it opened a branch
in Mauritius

In 1963, BOB acquired Surat Banking Corporation in Surat, Gujarat. The next year BOB
acquired two banks: Umbergaon People's Bank in southern Gujarat and Tamil Nadu Central
Bank in Tamil Nadu state.
In 1965, BOB opened a branch in Guyana. That same year BOB lost its branch
in Narayanganj (East Pakistan) due to the Indo-Pakistani War of 1965. It is unclear when BOB
had opened the branch. In 1967 it suffered a second loss of branches when the Tanzanian
government nationalised BOB's three branches there at (Dar es Salaam, Mwanga, and Moshi),
and transferred their operations to the Tanzanian government-owned National Banking
Corporation.

In 1969, the Indian government nationalised 14 top banks including BOB. BOB incorporated
its operations in Uganda as a 51% subsidiary, with the government owning the rest.

➢ 1970s

In 1972, BOB acquired Bank of India's operations in Uganda. Two years later, BOB opened a
branch each in Dubai and Abu Dhabi.

Back in India, in 1975, BOB acquired the majority shareholding and management control of
Bareilly Corporation Bank (est. 1954) and Nainital Bank (est. in 1922), both in Uttar
Pradesh and Uttarakhand respectively. Since then, Nainital Bank has expanded to Uttarakhand,
Uttar Pradesh, Haryana, Rajasthan and Delhi state. Right now BOB have 99% shareholding in
Nainital Bank.

International expansion continued in 1976 with the opening of a branch in Oman and another
in Brussels. The Brussels branch was aimed at Indian firms from Mumbai (Bombay) engaged
in diamond cutting and jewellery having business in Antwerp, a major center for diamond
cutting.

Two years later, BOB opened a branch in New York and another in the Seychelles. Then in
1979, BOB opened a branch in Nassau, the Bahamas.

➢ 1980s

In 1980, BOB opened a branch in Bahrain and a representative office in Sydney, Australia.
BOB, Union Bank of India and Indian Bank established IUB International Finance, a licensed
deposit taker, in Hong Kong. Each of the three banks took an equal share. Eventually (in 1999),
BOB would buy out its partners.

A second consortium or joint-venture bank followed in 1985. BOB (20%), Bank of

India (20%), Central Bank of India (20%) and ZIMCO (Zambian government; 40%)
established Indo-Zambia Bank in Lusaka. That same year BOB also opened an Offshore
Banking Unit (OBU) in Bahrain (Gulf).
Back in India, in 1988, BOB acquired Traders Bank, which had a network of 34 branches in
Delhi.

➢ 1990s

In 1992, BOB opened an OBU in Mauritius, but closed its representative office in Sydney. The
next year BOB took over the London branches of Union Bank of India and Punjab & Sind
Bank (P&S). P&S's branch had been established before 1970 and Union Bank's after 1980.
The Reserve Bank of India ordered the takeover of the two following the banks' involvement
in the Sethia fraud in 1987 and subsequent losses.

Then in 1992 BOB incorporated its operations in Kenya into a local subsidiary. The next year,
BOB closed its OBU in Bahrain. In 1996, BOB Bank entered the capital market in December
with an initial public offering (IPO). The government of India is still the largest shareholder,
owning 66% of the bank's equity.

In 1997, BOB opened a branch in Durban. The next year BOB bought out its partners in IUB
International Finance in Hong Kong. Apparently this was a response to regulatory changes
following Hong Kong's reversion to the People's Republic of China. The now wholly owned
subsidiary became Bank of Baroda (Hong Kong), a restricted license bank. BOB also acquired
Punjab Cooperative Bank in a rescue. BOB incorporate a wholly–owned subsidiary, BOB
Capital Markets, for broking business.

In 1999, BOB merged in Bareilly Corporation Bank in another rescue. At the time, Bareilly
had 64 branches, including four in Delhi. In Guyana, BOB incorporated its branch as a
subsidiary, Bank of Baroda Guyana. BOB added a branch in Mauritius and closed its Harrow
Branch in London.

➢ 2000s

In 2000 BOB established Bank of Baroda (Botswana). The bank has three banking offices, two
in Gaborone and one in Francistown. In 2002, BOB converted its subsidiary in Hong Kong
from deposit taking company to a Restricted License Bank

In 2002 BOB acquired Benares State Bank (BSB) at the Reserve Bank of India's request. BSB
had been established in 1946 but traced its origins back to 1871 and its function as the treasury
office of the Benares state. In 1964 BSB had acquired Bareilly Bank (est. 1934), with seven
branches in western districts of Uttar Pradesh; BSB also had taken over Lucknow Bank in
1968. The acquisition of BSB brought BOB 105 new branches. Lucknow Bank, a unit bank
with its only office in Aminabad, had been established in 1913. Also in 2002, BOB listed Bank
of Baroda (Uganda) on the Uganda Securities Exchange (USE). The next year BOB opened an
OBU in Mumbai.

In 2004 BOB acquired the failed south Gujarat Local Area Bank. BOB also returned to
Tanzania by establishing a subsidiary in Dar-es-Salaam. BOB also opened a representative
office each in Kuala Lumpur, Malaysia, and Guangdong, China

In 2005 BOB built a Global Data Centre (DC) in Mumbai for running its centralised banking
solution (CBS) and other applications in more than 1,900 branches across India and 20 other
counties where the bank operates. BOB also opened a representative office in Thailand

In 2006 BOB established an Offshore Banking Unit (OBU) in Singapore.

In 2007, its centenary year, BOB's total business crossed 2.09 trillion (short scale), its branches
crossed 2000, and its global customer base 29 million people. In Hong Kong, Bank got Full
Fledged Banking license and business of its Restricted License Banking subsidiary was taken
over Bank of Baroda branch in Hong Kong w.e.f.01.04.2007.

In 2008 BOB opened a branch in Guangzhou, China (02/08/2008) and in Kenton, Harrow
United Kingdom. BOB opened a joint venture life insurance company with Andhra
Bank and Legal & General (UK) called IndiaFirst Life Insurance Company.

In 2009 Bank of Baroda (New Zealand) was registered. As of 2017 BOB (NZ) has 3 branches:
two in Auckland, one in Wellington.

➢ 2010s

In 2010 Malaysia awarded a commercial banking licence to a locally incorporated bank to be

jointly owned by Bank of Baroda, Indian Overseas Bank and Andhra Bank.

In 2011 BOB opened an Electronic Banking Service Unit (EBSU) at Hamriya Free Zone,
Sharjah (UAE). It also opened four new branches in existing operations in Uganda, Kenya (2),
and Guyana. BOB closed its representative office in Malaysia in anticipation of the opening of
its consortium bank there. BOB received 'In Principle' approval for the upgrading of its
representative office in Australia to a branch. BOB also acquired Mumbai-based Memon
Cooperative Bank, which had 225 employees and 15 branches in Maharashtra and three in
Gujarat. It had to suspend operations in May 2009 due to its precarious financial condition.
The Malaysian consortium bank, India International Bank Malaysia (IIBM), finally opened in
Kuala Lumpur, which has a large population of Indians. BOB owns 40%, Andhra Bank owns
25%, and IOB the remaining 35% of the share capital. IIBM seeks to open five branches within
its first year of operations in Malaysia, and intends to grow to 15 branches within the next three
years.

On 17 September 2018, the government of India proposed the merger of Dena Bank and Vijaya
Bank with the Bank of Baroda, pending approval from the boards of the three banks, effectively
creating the third largest lender in the country.[10] The merger was approved by the Union
Cabinet and the boards of the banks on 2 January 2019. Under the terms of the merger, Dena
Bank and Vijaya Bank shareholders received 110 and 402 equity shares of the Bank of Baroda,
respectively, of face value ₹2 for every 1,000 shares they held. The merger came into effect on
1 April 2019. Post-merger, the Bank of Baroda is the third largest bank in India, after State
Bank of India and HDFC Bank. The consolidated entity has over 9,500 branches,13,400
ATMs, 85,000 employees and serves 120 million customers. The amalgamation is the first-
ever three-way consolidation of banks in the country, with a combined business of
Rs14.82 trillion (short scale), making it the third largest bank after State Bank of India (SBI)
and ICICI Bank. Post-merger effective 1 April 2019, the bank has become the India's third
largest lender behind SBI and ICICI Bank.

Bank of Baroda announced in May 2019 that it would either close or rationalise 800–900
branches to increase operational efficiency and reduce duplication post-merger. The regional
and zonal offices of the merged companies would also be closed. PTI quoted an unnamed
senior bank official as stating that Bank of Baroda would look to expand in eastern India as it
already had a strong presence in the other regions.

TRUSTEES: Trustees are like internal regulators in a mutual fund, and their job is to protect
the interest of unitholders. Sponsors appoint trustees. Trustees appoint the AMC, which,
subsequently seek their approval for the work it does, and reports periodically to them on how
the business is being run. Trustees float and market schemes, and secure necessary approvals.
They check if the AMC’s investments are within defined limits and whether the fund’s assets
are protected. Trustees can be held accountable for financial irregularities in the mutual fund.
CUSTODIAN: A custodian handles the investment back office of a mutual fund. Its
responsibilities include receipt and delivery of securities, collection of income, distribution of
dividends, and segregation of assets between schemes. The sponsor of a mutual fund mutual
fund cannot act as a custodian to the fund. This condition, formulated in the interest of
investors, ensures that the assets of mutual fund are not in the hands of its sponsor.

REGISTRAR : Registrars, also known as transfer agents, handle all investor-related

services. This includes issuing and redeeming units, sending fact sheet and annual reports.
Some fund houses handle such functions in-house.
The main objectives of the Trust are:
• To carry on the activity of a Mutual Fund as may be permitted at law and
formulate and devise various collective Schemes of savings and investments
for people in India and abroad and also ensure liquidity of investments for the
Unit holders;
• To deploy Funds thus raised so as to help the Unit holders earn reasonable
returns on their savings
• To take such steps as may be necessary from time to time to realize the effects
without any limitation

Vision, Mission & Market Strategy:-

o Vision statement –
• “Empowering everyone to live their dream”

o Mission statement-
• “To offer unparalleled value by providing the customer transparent, convenient and
effective anytime-anywhere integrated financial transaction capability”

o Marketing strategy- to provide

• Simple, easy-to-understand, safe and secure trading platform/software
• Uncomplicated, easy-to-understand brokerage/trading cost structure without any riders
 • Easy access to the financial market through convenient modes of distribution
• Sound, genuine, unbiased advise individual investments.

Detail Study about the company

About Baroda Asset Management India Limited.

Baroda Asset Management India Limited (“AMC”), investment manager to Baroda Mutual
Fund (“Mutual Fund”), is a wholly owned subsidiary of Bank of Baroda and is positioned to
serve the varied asset management needs of investors in India through a range of equity, debt
and money market offerings.
With a focus on enhancing the overall customer experience, the AMC is working towards:

1. Enhancing the existing product range to include products that will provide investors
with a much wider choice suited to their diverse needs and risk profiles

2. Providing consistent investment performance through sound investment management

3. Creating an increasing number of access points for investors through the vast branch
network of Bank of Baroda

4. Bringing in the high levels of compliance and corporate governance

5. Introducing increasingly innovative and useful service features on an ongoing basis

6. Making it easier for investors to receive prompt and effective levels of customer service

Brief history of the company : In 2008, Pioneer Global Asset Management

SpA (“PGAM”) acquired 51% stake in the AMC, which was renamed as Baroda
Pioneer Asset Management Company Ltd. and PGAM became a co-sponsor of the
Mutual Fund. The joint venture had Rs. 30 crores in AAuM in June 2008 which grew
to Rs. 12,044 crores in July 2019. The AMC continues its path of success as it grew to
become a serious player in the mutual fund industry.
Our sponsor for 10 years, Pioneer Investments, with their merger worldwide with another asset
management company, have moved out of the joint venture and Bank of Baroda, India’s 2nd
largest PSU Bank has now become the sole sponsor for the Mutual Fund.

On September 28, 2018, Bank of Baroda acquired the entire shareholding of UniCredit S.p.A.
(erstwhile PGAM, which merged into its holding company viz. UniCredit S.p.A. effective
November 1, 2017) held in the AMC and Baroda Pioneer Trustee Company Private Limited
(“Trustee”). Subsequently, the names of the AMC and Trustee have been changed to Baroda
Asset Management India Limited and Baroda Trustee India Private Limited respectively,
and the name of our Mutual Fund has been changed to Baroda Mutual Fund.

Sponsors

Baroda Asset Management India Ltd (BAML) is a wholly owned subsidiary of Bank of Baroda

On September 28, 2018, Bank of Baroda acquired the entire shareholding of UniCredit S.p.A.
held in Baroda Pioneer Asset Management Company Limited (“AMC”) and Baroda Pioneer
Trustee Company Private Limited (“Trustee”). Subsequently, the names of the AMC and
Trustee have been changed to Baroda Asset Management India Limited and Baroda Trustee
India Private Limited respectively, and the name of our mutual fund has been changed to
Baroda Mutual Fund.

Bank of Baroda: In the Indian banking universe, Bank of Baroda occupies a distinct position.
Bank of Baroda is a state owned bank with more than 109 years of successful existence. The
biggest strength is its uninterrupted profit performance and consistent record in dividend
payments. The name inspires confidence among its customers. A consistent track-record, sound
financials and its contribution to social sectors and policy-making have given Bank of Baroda
a unique place in the Indian banking universe.

Baroda Pioneer Mutual Fund Updated on December 1, 2021 , 10360 views Baroda Pioneer
Asset Management Company Ltd. is a joint endeavour of Bank of Baroda and Pioneer
Investment. This joint venture was formed in the year 2008. Over the years, the company has
created a strong base in India and today it operates over 40 cities across the country. Baroda
Pioneer Mutual Fund aims to cater the needs of its customers by offering a wide range of mutual
fund products such as Debt fund, Money market funds, Equity Funds, etc.

AMC Baroda Pioneer Mutual Fund

Date of Setup November 24, 1994

AUM INR 12240.30 crore (Jun-30-2018)

CEO/MD Mr. Anthony Heredia

CIO Mr. Sanjay Chawla

Compliance Officer Ms. Farhana Mansoor investor

Service Officer Mr. Amitabh Ambastha

Customer Care Number 022-4219 7999

Telephone +91 22 30741000

Fax +91 22 30741001

E-mail info [AT]barodapioneer.in

Website www.barodapioneer.in. Read more at: https://www.fincash.com/l/baroda-pioneer-

mutual-fund

Type of Mutual Funds Offered by Baroda

Mutual Fund Top Equity Mutual Funds
These are the Mutual Fund schemes that invest their corpus predominantly in equity and
equity-related instruments of various companies. The returns offered by equity schemes are not
constant. Equity funds can be considered as a long-term investment option. Baroda Pioneer
Mutual Fund offers equity plans to ensure long-term growth of the investors. Minimum 65
percent funds of the corpus are put into equity or securities related to equity. It makes the
investors the partial owners of the equity securities in the investors’ fund portfolio. Baroda
Pioneer Equity Fund is ideal for investors who have a high-risk appetite and are seeking for
long-term returns. The Best equity funds offered by Baroda Pioneer Mutual Funds are as
follows.
• Baroda Pioneer Mid-Cap Fund Growth
• Baroda Pioneer Multi Cap Fund Growth
• Baroda Pioneer ELSS 96 Growth
• Baroda Pioneer Large Cap Fund Growth
• Baroda Pioneer Banking And Financial Services Fund Growth.

Top Debt Mutual Funds

In case of debt funds, the accumulated money is invested in fixed income instruments like
government and corporate Bonds. People having low risk appetite can choose debt funds as
one of the investment options and can also choose the tenure. Debt funds generally offer
constant returns. The best and Best Debt Funds offered by Baroda Pioneer Mutual Fund are as
follows.
• Baroda Pioneer Treasury Advantage Fund Growth
• Baroda Pioneer Liquid Fund Growth
• Baroda Pioneer Short Term Bond Fund Growth
• Baroda Pioneer Credit Risk Fund Growth
• Baroda Pioneer Dynamic Bond Fund Growth.
 Top Hybrid Mutual Funds
Hybrid or Balanced Fund refer to the scheme that invests the fund money in a combination of
both equity and fixed income instruments. This mutual fund scheme is good for people having
medium risk-appetite. Some of the best schemes offered Baroda Mutual Funds under the hybrid
funds category are below as follows.
• Baroda Pioneer Hybrid Equity Fund Growth
• Baroda Pioneer Conservative Hybrid Fund Growth.

Top ELSS Funds Mutual Funds

Baroda Pioneer Mutual Fund offers Tax Saving Scheme like ELSS'96 to provide investors
long-term capital growth and also tax benefit under Section 80C of income tax Act,1961. The
risk level associated with it is moderate.
Baroda Pioneer ELSS 96 Growth.

1. Baroda Pioneer Liquid Fund

To generate income with a high level of liquidity by investing in a portfolio of money market
and debt securities.
Baroda Pioneer Liquid Fund is a Debt - Liquid Fund fund was launched on 5 Feb 09. It is a
fund with Low risk and has given a CAGR/Annualized return of 7.1% since its launch. Ranked
22 in Liquid Fund category. Return for 2020 was 4.1% , 2019 was 6.6% and 2018 was 7.5% .
Below is the key information for Baroda Pioneer Liquid Fund:-

Baroda Pioneer Liquid Fund Growth

Launch Date 5 Feb 09
NAV (04 Dec 21) ₹2,403.54 ↑ 0.21 (0.01 %)
Net Assets (Cr) ₹5,944 on 31 Oct 21
Category Debt - Liquid Fund
AMC Baroda Pioneer Asset Management Co. Ltd. Rating
☆☆☆☆
Risk Low
 Expense Ratio 0.31
Sharpe Ratio -4.62
Information Ratio -2.17
Alpha Ratio -0.3
Min Investment 5,000 Min
SIP Investment 500
Exit Load NIL
Yield to Maturity 3.62%
Effective Maturity 18 Days
Modified Duration 18 Days.

comparison of Baroda mutual fund with compititors

Name Last Price Market Cap. Net Interest Net Profit Total Assets
(Rs. cr.) Income
SBI 488.65 436,101.14 265,150.63 20,410.47 4,534,429.63

Bank of Baroda 92.25 47,705.82 70,495.06 828.95 1,155,364.78

PNB 39.50 43,493.51 80,749.77 2,021.62 1,260,632.62

IOB 21.75 41,112.75 16,965.53 831.47 274,010.34

Canara Bank 215.00 39,003.80 69,239.79 2,557.58 1,153,675.03

Union Bank 47.10 32,191.66 68,767.34 2,905.97 1,071,705.85

Bank of India 54.85 22,508.06 40,599.44 2,160.30 725,856.45

Central Bank 22.60 19,618.92 22,730.23 -887.58 369,214.99

Indian Bank 153.40 19,105.07 39,105.79 3,004.68 626,005.03

UCO Bank 13.40 16,020.98 14,446.16 167.04 253,336.10

Bank of Mah 19.95 13,427.34 11,868.54 550.23 196,665.01

Punjab & Sind 16.85 6,828.75 6,973.91 -2,732.90 110,481.88

Vijaya Bank 46.05 6,005.60 12,589.84 727.02 177,632.05

Oriental Bank 43.45 5,953.56 17,867.69 54.99 271,909.55

Corporation Bk 9.80 5,874.30 15,622.63 -6,332.98 213,577.86

United Bank 4.50 4,081.18 8,559.88 -2,315.92 151,529.93

Syndicate Bank 15.15 4,065.84 21,725.40 -2,588.30 311,278.86

Allahabad Bank 7.60 3,440.89 16,864.29 -8,333.96 248,575.76

Dena Bank 12.65 2,857.69 8,932.23 -1,923.15 120,859.80

Andhra Bank 9.10 2,816.94 18,932.22 -2,786.13 249,311.41

About the topic
 What is an Equity fund

There are many different types of mutual funds based on the securities that they invest in. For
example:

• Equity mutual funds invest in direct equity i.e. stocks

• Debt mutual funds invest in bonds, treasury bills, CDs etc
• Gold mutual funds invest in gold.

Today we will discuss the most lucrative mutual fund type in India - Equity Mutual Funds.

An Equity Fund is a Mutual Fund Scheme that invests predominantly in shares/stocks of

companies. They are also known as Growth Funds.
Equity Funds are either Active or Passive. In an Active Fund, a fund manager scans the market,
conducts research on companies, examines performance and looks for the best stocks to invest.
In a Passive Fund, the fund manager builds a portfolio that mirrors a popular market index, say
Sensex or Nifty Fifty.

Furthermore, Equity Funds can also be divided as per Market Capitalisation, i.e. how much the
capital market values an entire company’s equity. There can be Large Cap, Mid Cap, Small or
Micro Cap Funds.

Also there can be a further classification as Diversified or Sectoral / Thematic. In the former,
the scheme invests in stocks across the entire market spectrum, while in the latter it is restricted
to only a particular sector or theme, say, Infotech or Infrastructure.

Thus, an equity fund essentially invests in company shares, and aims to provide the benefit of
professional management and diversification to ordinary investors

An equity fund is a mutual fund scheme that invests predominantly in equity stocks

In the Indian context, as per current SEBI Mutual Fund Regulations, an equity mutual fund
scheme must invest at least 65% of the scheme’s assets in equities and equity related
instruments. An Equity Fund can be actively managed or passively managed. Index funds and
ETFs are passively managed. An Equity Fund is a Mutual Fund Scheme that invests
predominantly in shares/stocks of companies. They are also known as Growth Funds.
Equity Funds are either Active or Passive. In an Active Fund, a fund manager scans the market,
conducts research on companies, examines performance and looks for the best stocks to invest.
In a Passive Fund, the fund manager builds a portfolio that mirrors a popular market index, say
Sensex or Nifty Fifty.

Furthermore, Equity Funds can also be divided as per Market Capitalisation, i.e. how much the
capital market values an entire company’s equity. There can be Large Cap, Mid Cap, Small or
Micro Cap Funds. Also there can be a further classification as Diversified or Sectoral /
Thematic. In the former, the scheme invests in stocks across the entire market spectrum, while
in the latter it is restricted to only a particular sector or theme, say, Infotech or Infrastructure.

Thus, an equity fund essentially invests in company shares, and aims to provide the benefit of
professional management and diversification to ordinary investors. Equity mutual funds are
principally categorized according to company size, the investment style of the holdings in the
portfolio and geography.

The size of an equity fund is determined by a market capitalization, while the investment style,
reflected in the fund's stock holdings, is also used to categorize equity mutual funds. Equity
funds are also categorized by whether they are domestic (investing in stocks of only Indian
companies) or international (investing in stocks of overseas companies). These can be broad
market, regional or single-country funds.

Some specialty equity funds target business sectors, such as health care, commodities and real
estate and are known as Sectoral Funds.

IDEAL INVESTMENT VEHICLE

In many ways, equity funds are ideal investment vehicles for investors that are not as well-
versed in financial investing or do not possess a large amount of capital with which to invest.
Equity funds are practical investments for most people.

The attributes that make equity funds most suitable for small individual investors are the
reduction of risk resulting from a fund's portfolio diversification and the relatively small
amount of capital required to acquire shares of an equity fund. A large amount of investment
capital would be required for an individual investor to achieve a similar degree of risk reduction
through diversification of a portfolio of direct stock holdings. Pooling small investors' capital
allows an equity fund to diversify effectively without burdening each investor with large capital
requirements.

The price of the equity fund is based on the fund's net asset value (NAV) less its liabilities. A
more diversified fund means that there is less negative effect of an individual stock's adverse
price movement on the overall portfolio and on the share price of the equity fund.

Equity funds are managed by experienced professional portfolio managers, and their past
performance is a matter of public record. Transparency and reporting requirements for equity
funds are heavily regulated by the federal government.

A FUND FOR EVERYONE

Equity funds are very popular amongst the retail investors among various categories of mutual
fund products. Whether it’s a particular market sector (technology, financial, pharmaceutical),
a specific stock exchange (such as the BSE or NSE), foreign or domestic markets, income or
growth stocks, high or low risk, or a specific interest group (political, religious, brand), there
are equity funds of every type and characteristic available to match every risk profile and
investment objective that investors may have.

WHAT ARE DIFFERENT CATEGORIES OF EQUITY FUNDS

There are different types of equity mutual fund schemes and each offers a different type of
underlying portfolio that have different levels of market risk.

1. Large Cap Equity Funds invest a large portion of their corpus in companies with
large market capitalization are called large-cap funds. This type of fund is known to offer
stability and sustainable returns, over a period of time.

Large Cap companies are generally very stable and dominate their industry. Large-cap stocks
tend to hold up better in recessions, but they also tend to underperform small-cap stocks when
the economy emerges from a recession. Large-cap tend to be less volatile than mid-cap and
small-cap stocks and are therefore considered less risky.

2. Mid-Cap Equity Funds invest in stocks of mid-size companies, which are still
considered developing companies. Mid-cap stocks tend to be riskier than large-cap stocks
 but less risky than small-cap stocks. Mid-cap stocks, however, tend to offer more growth
potential than large-cap stocks.

3. Small Cap Funds invest in stocks of smaller-sized companies. Small cap is a term used
to classify companies with a relatively small market capitalization. However, the definition
of small cap can vary among market intermediaries, but it is generally regarded as a
company with a market capitalization of less than ₹ 100 crores. Many small caps are young
companies with significant growth potential.

However, the risk of failure is greater with small-cap stocks than with large-cap and mid-cap
stocks. As a result, small-cap stocks tend to be the more volatile (and therefore riskier) than
large-cap and mid-cap stocks. Historically, small-cap stocks have typically underperformed
large-cap stocks during recessions but have outperformed large-cap stocks as the economy has
emerged from recessions. The smallest stocks of the small caps are called micro-cap stocks.
While the opportunity for these companies to experience extreme growth is great, the risk to
lose a large amount of money is also possible

4. Multi Cap Equity Funds or Diversified Equity Funds invests in stocks of

companies across the stock market regardless of size and sector. These funds provide the
benefit of diversification by investing in companies spread across sectors and market
capitalisation. They are generally meant for investors who seek exposure across the market
and do not want to be restricted to any particular sector. They invest in companies across
different market caps and hence reduce the amount of risk in the fund. Diversification helps
prevent events that could affect a single sector for affecting the fund, and hence reduce risk.

5. Thematic Equity Funds: These funds invest in securities of specific sectors such as
Information Technology, Banking, Service and pharma sector etc., which is specified in
their scheme information documents. So, the performance of these schemes depends on the
performance of the respective sector. These funds may give higher returns, but they also
come with increased risks

EQUITY LINKED SAVINGS SCHEME (ELSS):

Equity-Linked Savings Scheme (ELSS) is an equity mutual fund investment that invests at
least 80 per cent of its assets in equity and equity-related instruments. ELSS can be open-ended
or close ended. Investments in an ELSS qualify for tax deductions under Section 80C of the
Income Tax Act within the overall limit of ₹1.5 lakh. The amount you invest in ELSS is
deducted from your taxable income, which helps you lower the amount of income tax you are
liable to pay. Investments in ELSS are subject to a three-year lock-in period.

Investing in equity mutual funds comes at slightly higher risk as compared to debt mutual
funds, but they also give your money a chance to earn higher returns. Now that you know more
about different types of equity mutual funds, what are you waiting for? Contact your investment
advisor today.

Advantages of Equity Mutual Funds

1. Expert management: Equity funds are monitored by experts with an immense

knowledge of mutual funds. These expert fund managers know every aspect of mutual funds.
They analyse the markets and alter funds (whenever required) accordingly to leverage the
market trends.

2. Tax benefit: ELSS (Equity Linked Savings Scheme - a type of equity fund) as per the
Section 80C of the IT (Income Tax) Act, 1961, offers tax benefit of up to ₹ 46,800/- by
investing ₹ 1,50,000/-.
For other equity mutual funds, tax is levied as per the STCG and LTCG norms.

3. Diversification: This reduces the risk exposure of equity funds due to the widespread
of your investments across the stocks of various companies. This helps to spread out
your risk across various instruments.

4. High returns potential: Equity investing majorly invests in stocks of companies.

Stocks represent proportionate ownership of a company's business and its profits and
losses. Due to this, they have high returns potential that can outpace the market average.
 5. Convenience: One can invest in one-go with lump sum investment mode or like an
instalment with SIP investment mode. For monthly salaried employees who can’t invest
in one-go then SIP is the best option for them.

6. Liquidity: The redeemed amount from equity funds are credited to your bank account
in three days due to which equity mutual funds offer high liquidity.

7. Affordable: One can start investing with an amount as low as ₹ 500/- in equity mutual
funds by starting their SIP at a predefined time interval. This makes it easier on our
wallets when it comes to investing.

Disadvantages of Equity Mutual Funds

1. Management Cost: Since the funds are managed by professional fund managers one
has to expect a certain fee that is liable to pay for their expert management.

2. Not for Short Term: Since equity mutual funds are highly reactive to market
volatility, investors need to invest for the long term to bring out its best essence. Short
term investing in equity can prove to be highly risky because of the uncertain nature of
markets.

3. Choice Overload: There are more than 1000+ equity schemes for investors to choose
in mutual funds. This makes it really challenging for investors to choose from such a
widespread spectrum of equity schemes. Investors have to be very careful while
choosing from such options because mistakes may happen while choosing equity funds
if you are not careful.

4. Lock-in period: ELSS funds which are a type of equity mutual funds that offer the
tax benefit under the Section 80C of the Income Tax (IT) Act have a lock-in period of
3 years. This simply means investors cannot choose to vote out from the scheme before
the completion of its maturity period.

5. Poor Management: If the fund manager abuses his authority and constantly churns
the portfolio then it simply increases your expenditure on fees. This can lead you to
gain suboptimal returns.
These are the advantages and disadvantages of equity mutual funds. Investors are advised to
careful study each and every aspect of equity mutual funds before diving in this realm. Allocate
your funds as per your risk-taking ability and invest accordingly in equity funds.

Long Term or Short Term Equity Funds?

There’s one parameter that investors need to take care of and that is the time horizon of
investment. When people think of investing, they should always have a long term approach for
it since long term investment period offers several benefits over short term investment period.
Long term investment period complements equity mutual funds whereas short term investment
period might prove to be quite risky in equity investing.

Equity funds invest majorly in stocks of companies. Stock holdings represent the proportionate
holdings of a company’s business and its profits and losses. Hence, growth in stock valuation
entirely depends on the individual company.

This makes equity funds highly reactive to the market volatility. Any change in the market can
change the business process of a company.

It is obvious that companies with strong fundamentals and proficient years of experience shall
develop in the coming years. Hence, for this long term equity investment is highly preferable.
Benefits of Long Term Equity Funds

Drawbacks of Short Term Equity Funds

Investing in equity funds for short can be risky because of the volatile nature of equity mutual
funds. If markets are hit by some misfortune events then it may crash resulting in a crash of
valuations of funds and stocks.

Moreover, the power of compounding will not be applicable since compound interest is a long
term strategy and one gains substantial interest the longer the investor is invested. Not to forget
the tax loophole of 15% as per the STCG.

Long Term Equity Funds

Lump sum and SIP investment mode both have their benefits that can help investors to gain
superior returns.
One can invest in lump sum mode when markets fall and buy more quality funds at lower
valuation thus acquiring more units.

SIP mode benefit includes the ease of investment by investing at regular predefined intervals
unlike lump sum. However, SIP fails to consider the market valuation and invests at a
predefined date.

To club both these benefits, RankMF introduced SmartSIP that is an advanced order type to
SIP and invests smartly depending on the market volatility. Here’s what SmartSIP does:

1. Invests regularly when markets are fairly valued

2. Invests double when markets are undervalued

3. Skips investing & partially sells to profit when markets are overvalued

Because of this smart way of investment, SmartSIP is highly preferable for investors.

Get detailed information on how SmartSIP works and how it is an advanced investment option
to SIP and lump sum.

How Do Equity Mutual Funds Work?

Equity mutual funds are certainly a very important asset of the investing domain for generating
superior returns. Investors who invest in equity mutual funds and take advantage of its high
return potential should also know about the working of equity mutual funds.
Equity mutual funds work by investing the majority of investors funds in equities (stocks) of
various companies. Stocks have a great potential to generate superior returns on your
investment and generate alpha. They are highly reactive to the market volatility due to which
it makes it possible for them to generate such impressive returns.

If an investor buys a stock it simply means that he is a proportionate owner of the corporate
and its business profits and losses.

Hence, if you are heavily invested in one stock and if its valuation falls down then chances are
you may incur huge losses.

Diversification with Equity Mutual Funds

• Mutual funds offer optimum diversification by pooling in investor’s money and

spreading it across stocks of various companies.
• This reduces your exposure to risk by not exposing all your investments in one
particular stock only.
• Moreover, this diversification and fund or stock selection is done by expert fund
managers.
• These fund managers are expert in this field due to their immense knowledge in this
sector and prominent years of experience.
• In equity mutual funds, a minimum of 65% of investors investible corpus is invested in
equities (stocks).
• This is spread across various stocks of companies and the rest is invested in other asset
classes.
• These asset classes provide their benefits as well that may get in line with the advantages of
equity mutual funds.

Why Should I Invest in Equity Mutual Funds?

When investment is considered, every investor thinks of gaining good returns on it. As far as
gaining good returns is considered, equity mutual funds are the best because of its idealistic
potential of generating high returns.
Equity mutual funds invest directly in company’s shares. It simply means that an equity
investor is a proportionate owner of a company's business and profits and losses. Hence, equity
mutual funds have high returns potential.

Here are the advantages of equity mutual funds so that investors know of why should they
invest in equity mutual funds:

1. Expert management: Equity funds are monitored by experts with an immense

knowledge of mutual funds. These expert fund managers know every aspect of mutual funds.
They analyse the markets and alter funds (whenever required) accordingly to leverage the
market trends.

2. Tax benefit: ELSS (Equity Linked Savings Scheme - a type of equity fund) as per the
Section 80C of the IT (Income Tax) Act, 1961, offers tax benefit of up to ₹ 46,800/- by
investing ₹ 1,50,000/-
For other equity mutual funds, tax is levied as per the STCG and LTCG norms.

3. Diversification: This reduces the risk exposure of equity funds due to the widespread
of your investments across the stocks of various companies. This helps to spread out
your risk across various instruments.

4. High returns potential: Equity investing majorly invests in stocks of companies.

Stocks represent proportionate ownership of a company's business and its profits and
losses. Due to this, they have high returns potential that can outpace the market average.
 5. Convenience: One can invest in one-go with lump sum investment mode or like an
instalment with SIP investment mode. For monthly salaried employees who can’t invest
in one-go then SIP is the best option for them.

6. Liquidity: The redeemed amount from equity funds are credited to your bank account
in three days due to which equity mutual funds offer high liquidity.

7. Affordable: One can start investing with an amount as low as ₹ 500/- in equity mutual
funds by starting their SIP at a predefined time interval. This makes it easier on our
wallets when it comes to investing.

Who Should Invest in Equity Mutual Funds?

Investors should analyse their risk appetite and their investment profile and then invest
accordingly. Once you analyse your investment profile, see below which category you fit in.
Below categories of investors may invest in equity funds:

1. Long term investment period: Investors with a long term investment period should
invest in equity funds because they can yield superior returns in the long term.
 2. Investor looking for high returns: High returns is the essence of equity funds. Such
type of investors who actively want to take risk for high returns should allocate money
in equity funds.

3. Young investors: Young investors have a high risk appetite and long term investment
period making them an ideal type of investor suitable for investing in equity funds.

4. Market-savvy investors: Investors who have a good knowledge in markets and are
well-versed with the market trends can definitely invest in equity mutual funds.

Equity Mutual Funds vs Other Investment Options

Equity mutual funds are superior to other investment options, this is what many investors must
have heard. But it is important for every investor to know the difference of Equity Mutual
Funds vs Other Investment Options.

Investors must have a clear idea about investment since half knowledge can prove to be very
dangerous in investing and one will never be able to make quality returns on their investment.

Here is a list of equity funds vs other investment options to help you get a distinct idea about
how much equity funds can be good for your investment goals as compared to other investment
options.
 1) Equity funds vs debt funds

Investments majorly done in stocks of companies Investments majorly done in bonds, government securities,
certificate of deposits, treasury bills, etc

Investments made for generating high returns Investments made to safeguard the invested amount

Risk is moderately high to high Risk is low to moderate

Investment held for more than 12 months are liable for Investment held for more than 36 months are liable for
LTCG tax LTCG tax

Suitable for achieving your financial goals Best alternative for fixed deposits and savings account

You can save tax of up to 46,800/- by investing in There is no option to save tax
ELSS funds - a type of equity fund

2) Equity funds vs stocks

Less risk exposure as compared to stocks due to High risk exposure

diversification

Tax benefit as per the Section 80C of the IT Act No tax benefit

Discipline way of investment with SIP Investment in one-go only

High cost due to management provided by fund managers Low cost as compared to equity funds

3) Equity funds vs index funds

High return potential Mirrors the market index performance

May be actively managed funds Passively managed funds

High risk Low risk as compared to equity funds

High management cost No or minimum management cost

Offers tax benefit under the Section 80C of the IT Act No tax benefit

Fund managers are actively involved Fund managers may not be actively involved as
compared to equity Funds

4) Equity funds vs real estate

High liquidity Less liquidity

Pocket friendly investing (investors can invest starting Significant amount is required
from ₹ 500/-)

Tax benefit including the Section 80C of the IT Act No tax benefit

Less risk as compared to real estate High risk

Less paperwork required A lot of paperwork required

Benefit of power of compounding No benefit of compounding

5) Equity funds vs gold

No fear of theft Fear of theft

High returns potential Comparatively lower returns than equity funds

Low liquidity High liquidity

Cannot be used as a commodity Can be used as a commodity

Less paperwork required No paperwork required

Extensive research required No research required

 6) Equity funds vs fixed deposits

High returns potential Low returns

No lock in period (except for ELSS funds) Lock-in period of 5 years

High risk No risk

High liquidity Low liquidity

LTCG and STCG tax involved Tax levied as per the income tax slab

Tax benefit as per the Section 80C of the IT Act No tax benefit

These are the differences between equity funds vs other investment options. Investors should
consider these points before investing. Invest in equity funds by allocating a certain portion of
your funds to optimally create wealth.

Growth Fund

A growth fund is a diversified portfolio of stocks that has capital appreciation as its
primary goal, with little or no dividend payouts. The portfolio mainly consists of
companies with above-average growth that reinvest their earnings into expansion,
acquisitions, and/or research and development (R&D). Most growth funds offer higher
potential capital appreciation but usually at above-average risk.

KEY TAKEAWAYS

• A growth fund is a mutual fund or exchange-traded fund (ETF) that includes

companies primed for revenue or earnings growth at a pace that is faster than
that of either industry peers or the market overall.
• Growth funds are separated by market capitalization into small-, mid-, and
large-cap.
 • Most growth funds are high-risk, high-reward, and are therefore best suited to
market participants with a long-term investment horizon and a healthy risk
tolerance.

FEATURES OF GROWTH FUNDS

Potential for higher profits

As growth funds invest in companies which have a good tendency to grow, these funds have a
strong potential to generate profits for the investors. However, there is a higher risk in growth
funds and their performance entirely depends on prevailing market conditions.

Professional management
Your money invested in growth funds is managed by an expert fund manager. The fund
managers follow a strategy to achieve maximum capital gains for their investors. Decisions
taken by the fund managers are based upon investing in young, innovative companies in order
to grow the value of its portfolio.

As a seasoned professional who is well-versed with the nuances of the market, you can be
assured that your investment objectives are met in the long run.
Diversification
As an investor, you are always advised to diversify your investments. When you invest in
growth funds, your investment portfolio is diversified, which further lowers your investment
risks.

Long term investment

Investors who are looking at maximizing their returns over the medium to long term period
(more than 5 years) can benefit from investing in growth funds. These funds leverage the power
of compounding to offer higher returns over a period of time, compared to other traditional
financial investments.

Types of Growth Funds

Growth funds, along with value funds and blend funds, are one of the main types of
mutual funds. They are more volatile than funds in the value and blend categories.
Growth funds are typically split by market capitalization, with funds representing
small-cap, mid-cap, and large-cap groupings.

Large-cap growth mutual funds are one of the largest types of mutual funds in terms
of market share. Large-blend funds, which offer investors value and growth, are also
very popular. Foreign large-cap growth funds are much lower in terms of market share.

Foreign growth funds are becoming more common for investors who want to take
advantage of global growth. These funds invest in international stocks posting strong
revenue and earnings growth. For international growth funds, technology and
consumer sectors are the most common. Large internet names such as Tencent
(TCTZF), Baidu (BIDU), and Alibaba (BABA) can be found among the top 10
holdings for many international growth funds.

Largest Growth Fund

As of November 2020, one of the largest growth funds is the Growth Fund of America
(AGTHX) from American Funds. This mutual fund has $225 billion in assets under
management (AUM), as of November 2020, and up 17.6% over the last year, even with
all the stock market volatility. The fund's average annual return is 13.26% over the last
10 years.1

The Growth Fund of America has Facebook (FB) as its largest holding, representing
5.8% of assets. Technology stocks represent the largest sector weighting at 23.2%.
Consumer Discretionary stocks follow closely behind with 20% of assets. 1

Technology stocks are a major part of growth funds. With high growth and high P/E
and P/S ratios, technology stocks fit the criteria perfectly for growth funds.

Growth funds

A mutual fund that invests in growth stocks (an emerging company) to attain maximum capital
appreciation is a growth mutual fund. This is why they seek out companies with a proven track
record of great revenue growth or younger companies with potential. On the flip side, the risk
is also on the higher side. These funds, along with blend and value funds, form one of the main
categories of equity mutual funds. They are split in the small, mid and large groupings of
market capitalisation.

A growth fund portfolio is made up of companies that register fast-paced progress and can
deliver higher returns to investors. They, then, reinvest the earnings for research and
development, acquisitions and expansions. As it comprises of stocks with little or next to no
dividend payouts, companies that pay out dividends are of little interest to a growth fund
manager. However, when the market falls, it can hit the investors badly just as it can reap
significant capital gains when the market is high!

Who should invest in growth funds?

Growth funds are high-risk investment instruments. Therefore, you must consider investing in
growth funds only if you are an aggressive risk seeker. For this reason, it has the potential to
deliver high returns. If you are close to your retirement, then it would be prudent to not invest
in these funds. It is best suitable for long-term investments. Hence, opt for these only if you are
risk-tolerant and are willing to invest for at least 5 to 10 years.

Even though you can exit the fund early, it comes with an exit load. The only returns will be
from selling the funds, and your profit will be the surplus selling price over the purchase price.
If you think this suits your investment persona, go ahead and invest in growth funds. Therefore,
younger investors who have a long-term investment at hand find them particularly appealing.

Features & benefits of growth funds

Potential for high returns

This fund attracts a lot of investors due to its potential for capital appreciation.
Professional fund managers spend a considerable amount of effort in identifying and
picking out these stocks.

Risk factors

As an investor, it is crucial for you to know that growth funds are for people with
more risk tolerance. However, in the long-run growth, funds have the potential to
grow substantially.

Stock volatility

One major drawback of growth funds is that they are extremely volatile with the
stocks experiencing a sudden rise and drop. Therefore, it is best suited for highly
risk-tolerant investors.
Tax-efficiency

Growth funds attract long term capital gain tax or LTCG tax at 10% if the earning is
above Rs 1 lakh and held more than a year. Nevertheless, they are more tax-efficient
than that of value stock mutual funds.

Additional expenses

These funds require a management charge and therefore, will cost you more in terms
of your expense ratio. The AMC will use a part of your profit to pay off the fees every
year as well.

Expert money management

A team of qualified professionals, who identify growth stocks for the investors,
manages a growth fund. The buying and selling decisions of the stocks belie in the
expert hands of the fund managers. Hence, it leaves your role to be limited to that of
a passive investor.

Diversified portfolio

Having a mix of growth stocks in a mutual fund helps with diversification Therefore,
it reduces the overall risk of investing in volatile stocks to a certain extent.

Disadvantages of growth funds

High market risks

The downfall of growth fund is that you are left exposed to the risk of losing a
significant portion of your invested amount when the markets go downwards.
Possible value depreciation

These funds are also prone to decline in value and are highly volatile. The value of
the stocks can fall or rise as per the market demand.

No dividends

Growth funds may not deliver regular returns in the form of dividents, bonus, interest,
bonus, and so on.

Long-term commitment

If you want to benefit from a growth fund, then you will have to be ready to commit
to the fund for a period of 5 years to 10 years. Therefore, a growth fund is not for
those seeking to make a quick profit in a short period. If the above information
meets your investment goals and risk profile, you can invest in growth funds for
long-term capital appreciation. Start investing now!

Aggressive Growth Fund

Aggressive Growth Fund is a type of mutual fund which is not risk-averse in its selection of
investments and aims to achieve the highest capital gains. As an investor, an aggressive growth
fund is best suited for those who are prepared to take on high risk. The potential in such a high-
risk fund lies in the fact that along with having high growth potential, they are usually coupled
with a lot of share price volatility.

The Stock market and aggressive growth funds usually have a very large positive correlation
Aggressive growth funds have large betas. Thus this means that during economic downturns
very bad results are usually produced. It also means that during economic upswings very good
results are produced. Other common terms for Aggressive Growth Fund is maximum capital
gains fund and capital appreciation fund.

An aggressive growth fund may purchase a company's initial public offerings (IPOs) of stock
and then turn around to sell it off to produce big profits. Aggressive growth funds may also be
invested in derivatives, such as options, so that gains can be increased. This growth-oriented
version of the general growth investment strategy can be relatively risky but have a greater
potential for greater returns.

How will you know if your fund is Aggressive Growth?

Look out for the terms strategic equity, capital opportunity, capital appreciation or aggressive
growth. Many aggressive growth stock mutual funds will have any of these terms within its
names. This is however a general rule and does not necessarily have to hold true in all cases.

Look into the best mutual fund research sites for a more sure way to find out whether a fund is
an aggressive growth fund. You must look under Fund Objective for the term aggressive
growth. A mutual fund that has the words aggressive growth in its name can be considered as
a growth fund. The Objective is an investment strategy and category is a label for reference
which means that there is a difference in meaning of the terms. Further, this means that in case
you have a growth fund in your portfolio, an aggressive growth fund may not be needed as an
addition.

Another way to make certain that a growth fund is after all an aggressive growth fund is to look
at its beta. Beta measures a fund's movement, comparing it to the overall market. For instance,
if a beta of 1.00 is given by the market, an aggressive growth fund will be having a beta which
is considerably higher than 1.00. This could be 1.10 or even more.
Common features of aggressive growth funds
• Aggressive growth funds provide some of the highest returns in equity markets.

• They also come with high risks.

• There are a few aggressive growth funds that come with unique investment
strategies that intend to offer market returns higher than average.

However, the latent investments of such funds will typically be unpredictable in nature.
They are impulsive, and hence, they are pretty risky.

Who can invest in an aggressive growth fund?

Any individual who is looking for returns higher than average can invest in aggressive growth
funds. These funds usually perform better than regular growth funds. This is because they
invest in companies that can relate to vigorous or competitive growth projections and strategies.

These funds invest in stocks that have dynamic goals towards achieving high revenues when
compared to regular growth stocks. They should not be taken by risk-averse investors.
Aggressive growth fund managers typically look for a rise in the value of portfolios through
capital appreciation.

Why are aggressive growth funds associated with high risk?

When you choose an aggressive growth fund, money will be invested as per different financial
assumptions and calculations made for the future. These assumptions are made for various
stages of financial growth. Hence, they come with higher levels of risk when compared to other
types of normal growth funds. The primary goal of aggressive growth funds is to invest money
to earn grand capital gains. Due to the high-risk level related to these funds, one should monitor
the risk metrics of such funds on a regular basis. An investor can learn about the 3 main risk
metrics related to mutual funds known as standard deviation, Sharpe Ratio, and Beta. With the
help of these metrics, an investor can get a clear understanding of the various risks of the fund.

What is the significance of investing in aggressive growth funds?

These funds invest in equity securities and other stock that have the ability to generate excellent
returns. Hence, most of these stocks invested in such funds are usually bought very quickly and
even sold quickly for making profits.
 They can then be reinvested in the same fund or given as distribution payments to different
investors. Since they have the ability to generate superb returns, they should ideally be a part
of your diversified investment portfolio at least in a small portion.

What you should be aware of regarding aggressive growth funds

Aggressive growth funds are schemes that offer high returns and come with high risks. Hence,
they can either very well or very badly. This is because of the high price instability. In a bull
market, aggressive growth funds attain great gains, whereas in a bear market, these funds go
through heavy losses.

Table showing the top aggressive growth funds in India

Expense Net assets 1- Market Net

1-year
Name of fund ratio (in (in Rs.) (in year cap (in assets (in Turnover
return
%) crore) rank crore) crore)

Canara Robeco
Emerging Equities 2.25 3,559 45/83 27,965.65 13.24 3,559 50.00
Fund - Regular Plan

Aditya Birla Sun Life

2.34 3,372 29/83 9,017.73 15.35 3,372 264.00
Pure Value Fund

HDFC Mid-Cap
2.13 19,339 39/83 11,538.76 13.88 19,339 58.25
Opportunities Fund

Edelweiss Mid Cap

2.34 669 7/83 11,257.96 22.35 669 298.00
Fund - Regular Plan

L&T Emerging
2.08 5,001 7/22 5,494.63 24.13 5,001 50.67
Businesses Fund
Mirae Asset Emerging
Bluechip Fund - 2.38 5,006 50/83 25,787.10 12.54 5,006 72.00
Regular Plan

Reliance Small Cap

2.00 6,545 2.00 4,056.29 23.50 6,545 131.00
Fund

Principal Emerging
2.34 1,657 13/83 19,619.09 17.45 1,657 70.00
Bluechip Fund

SBI Small & Midcap

2.32 771 2/22 2,453.05 37.08 771 80.00
Fund

Investing Options in Mutual Funds There are two options in Mutual Funds— growth &
dividend. Under the growth option, all profits made by the fund are invested back into the
scheme. And thus, an investor does not receive any intermediate payments in the form of
dividend and bonus. An investor gets return only on selling the units, which is determined by
the NAV (Net Asset Value) of the scheme. In the growth option, the Power of Compounding
works. Moreover, the NAV increases over a period of time, which, in turn, helps in giving more
returns to the investors.

This option is best suited for investors who are planning to invest for a longer period of time.
Coming to the dividend option, here an investor receives regular Income at periodic intervals
in the form of a dividend. Whenever the NAV of the fund reaches a certain level, the fund
distributes the profit to its investors as a dividend. Therefore, at the time of selling the units,
the NAV of the fund does not change drastically. Also, the power of compounding is less in
this option. A dividend option in Mutual Fund is suitable for investors who are planning for a
short-term investment or are looking for a regular income. Though, the frequency of dividends
is not guaranteed and sometimes, the dividend is not declared throughout the year.
 Growth Funds versus Value Funds
Most Asset Management Companies (AMCs) offer two types of funds – growth funds and
value funds, which are also known as dividend funds. All mutual funds aim at growing your
investment, but each kind of fund offers a different kind of investing style to suit various kinds
of investors. As the names suggest, growth funds focus on consistent growth of your
investment, while value funds concentrate on giving value or regular returns for your
investment.

Growth Funds

Growth funds are an equity mutual fund portfolio aiming at capital appreciation and usually
does not have any dividend payment. The money put in by investors is constantly reinvested
in the stock market for gains. Due to this, the NAV of a growth fund is usually high when the
stocks are gaining and it could go down when the stocks are losing in the market. Growth funds
are moderate-to-high in risk levels and consists of companies that with good growth. Growth
funds come in various kinds of portfolios – large capitalisation (cap), small cap, mid-cap,
micro-cap, diversified equity funds, etc.

Large-cap growth funds invest in the biggest players in the market, have high growth record,
and could comprise either domestic companies and/or international companies. Among the best
large-cap funds in India are: SBI Blue Chip Fund, Kotak Select Focus Fund and Franklin India
Opportunities Fund. Small and mid-cap funds have a healthy mix of stocks of small and
medium companies, domestic and/or international, that give good returns. Some of the best
small and mid-cap growth funds in India are: DSP BlackRock Micro Cap Fund, Franklin India
Smaller Companies Fund and Mirae Asset Emerging Bluechip Fund.

Value Funds

Value funds are a kind of equity mutual fund where the stocks are generally considered
undervalued but have a higher dividend yield. These stocks may not be doing well in the market
currently but the fund managers may think that they have a potential for growth. Value funds
do not give immediate returns but ensure safety of your capital and give good dividends.
Dividends are given out only when the fund has made good profit. However, if certain stocks
in the value fund gains market value, then the fund may start paying equity returns as well.
Value funds are, therefore, focused on “perceived safety”. Important value funds in India are:
L&T India Value Fund, Templeton India Equity Income Fund and ICICI Prudential Value
Discovery Fund.

Difference between Growth Funds and Value Funds

The primary differences between growth mutual funds and value mutual funds are as outlined
below:

• The companies in a growth fund portfolio register higher earnings and market growth,
while those in a value fund portfolio are likely to show a lower sales and earnings
but give out higher dividends.

• Because of the lower cost of the stocks that are part of a value fund, it may be cheaper
to buy than a growth fund. Within the growth fund, large-cap funds would be costlier
than other kinds such as small and mid-cap funds.

• Growth funds are good for individuals who are looking for capital appreciation and
steady long-term growth. People who want a regular income should go for value
funds.

• Growth funds give higher returns than value funds because your money is being
reinvested regularly. In value funds, the investment is more or less stagnant until a
dividend payout is made or any component company’s stocks see a capital
appreciation. The value of the dividends depends on the value-hike of the stocks in
the portfolio.

• Value funds give you steady returns over a longer period of time, while growth funds
could give higher returns both in the long-term and short-term.

• During the times of recession, value funds tend to do better, or at least stay afloat longer,

than growth funds.

 • Dividend payouts of value funds are done periodically depending on the performance
of the fund, which ensures a steady profitable income for you. However, in growth
funds, you need to either sell or redeem your investment to make profit.
• Growth funds come at a higher risk than value funds. This is because growth funds are
heavily dependent on the stock market and if the stocks crash at some point, the
returns will take a hit.

• The downside in growth funds is fluctuation of stock prices in the market leading to
uncertainty in profits, while the risk in value funds is that the stocks that looked
underpriced may turn out to be correctly priced and hence yield little profit.

• Taxation in India is the same on both value and growth funds, depending on whether
they are equity-dominated or debt-heavy. Equity funds are tax-free on long-term
capital gains but debt fund gains are taxed at 20% with indexation and 10% without
indexation. For short-term capital gains, equity funds have to pay a flat rate of 15%,
while the gains from debt funds is added to a person’s income and taxed as per their
income tax slab.

In an ideal investment portfolio, you should have both value funds and growth funds, in order
to balance out the risks. Value funds add stability to your portfolio and growth funds allow
your investment to grow. For investors looking to have a little of both without investing in
separate funds, there are also hybrid or blended funds that offer the best of both the growth and
value worlds.

Growth vs Dividend Mutual Fund

Mutual funds offer two broad types of options – Growth and Dividend. There are several
misconceptions about these options among lay investors. In the debate of growth vs dividend,
some think growth option is better while others think that, dividend option is better. One option
is not necessarily better than other. You should select the option which is more suited to your
investment needs viz. financial objective and tax situation. In this article, we will discuss the
difference between growth and dividend options and how they work. Before you endeavour
how to choose mutual funds, you must know the following 3 things -
What is dividend option?

In dividend option, profits made by the mutual fund scheme are paid out to investors at certain
intervals. The most common dividend pay-out interval is annual. However, some schemes also
offer other pay-out intervals e.g. daily, monthly, quarterly etc. Some schemes may offer
multiple pay-out options. One type of dividend option is dividend re-investment option,
whereby dividends paid by the scheme are re-invested in the scheme. Here are some important
points to note about dividend option:-

• As per SEBI regulations, dividends are to be paid out from the accumulated profits of
the scheme.
• There is no assurance about dividend pay-out rate or timing of dividend payments.
• The dividend paid to investors is adjusted from the scheme NAV. Therefore, you will
see a drop in NAV (ex-dividend NAV) of your scheme after you receive dividend. In a
dividend re-investment option, the unit balance goes up.
• Dividends paid by both equity and debt mutual fund is taxed in the hands of the
investors at the applicable income tax slab rates of the investors. Income Tax Act
provides for mandatory deduction of TDS @ 10% from dividend income in case of
Resident Individual. However, no TDS is deducted if aggregate dividend distributed or
likely to be distributed during the financial year to an individual unit holder does not
exceed Rs 5,000. In the absence of Permanent Account Number, the TDS rate would
be 20%.

What is growth option?

In growth option, profits made by the scheme are re-invested in the scheme instead of being
paid out to investors. Since profits are re-invested in the scheme, you may earn profits on profit
and thereby benefit from compounding. If you think, growth vs dividend, you should invest in
growth option if you do not need regular cash-flows. Here are some important points to note
about growth option:-

• The underlying portfolio of both dividend and growth options are exactly the same.
When a fund manager books profit the impact is same in both dividend and growth
option. The only difference is that, profits are re-invested in growth option and
distributed in dividend option.
 • The NAV of growth option will always be higher than the dividend option because the
profits re-invested in the growth option may grow in value over time.
• The total returns of growth option are usually higher than dividend option over
sufficiently long investment horizon due to compounding effect.
• From an investment perspective, growth and dividend re-investment options are exactly
the same. However, taxation of growth and dividend re-investment options are
different.
• There is no incidence of taxation in growth option unless you redeem. In equity funds,
short term capital gains (held for less than 12 months) are taxed at 15% and long term
capital gains (held for more than 12 months) of up to Rs 1 lakh are tax exempt and
thereafter, taxed at 10%. In debt funds, short term capital gains (held for less than 36
months) are taxed as per the income tax slab of the investor and the long term capital
gains (held for more than 36 months) are taxed at 20% after allowing indexation
benefits.

Growth or dividend option – Key differences

Following is the the difference between dividend and growth option of mutual funds -

Differences Dividend Option Growth Option

Profits
booked by
Distributed to investors Re-invested in the scheme
fund
manager

Net Asset Dividends paid are deducted from

NAV will be higher because profits re-
Value the NAV. So ex-dividend NAV is
invested may earn profits (compounding)
(NAV) lower

Total returns will be lower Total returns will usually be higher

Total
compared to growth option in the compared to dividend option over
Returns
long term due to periodic payouts sufficiently long investment horizon
 Differences Dividend Option Growth Option

Taxed as per the income tax slab rate Short term and long term capital gains tax
Taxation
of the investor applies depending on when you redeem

If you need regular cash-flows from If you do not need regular cash-flows,
Who should
your investment then you can invest invest in growth option since your total
invest
in dividend option returns may be higher

Top 5 growth funds

1. L&T Emerging Businesses Fund To generate long-term capital appreciation

from a diversified portfolio of predominantly equity and equity related securities,
including equity derivatives, in the Indian markets with key theme focus being
emerging companies (small cap stocks). The Scheme could also additionally invest in
Foreign Securities. L&T Emerging Businesses Fund is a Equity - Small Cap fund was
launched on 12 May 14. It is a fund with High risk and has given a CAGR/Annualized
return of 21.9% since its launch. Ranked 2 in Small Cap category. Return for 2020
was 15.5% , 2019 was -8.1% and 2018 was -13.7%

2. IDFC Infrastructure Fund The investment objective of the scheme is to seek to generate
long-term capital growth through an active diversified portfolio of predominantly equity and
equity related instruments of companies that are participating in and benefiting from growth in
Indian infrastructure and infrastructural related activities. However, there can be no assurance
that the investment objective of the scheme will be realized. IDFC Infrastructure Fund is a
Equity - Sectoral fund was launched on 8 Mar 11. It is a fund with High risk and has given a
CAGR/Annualized return of 8.8% since its launch. Ranked 1 in Sectoral category. Return for
2020 was 6.3% , 2019 was -5.3% and 2018 w as -25.9%
Growth of 10,000 investment over the years.

Date Value

30 Nov 16 ₹10,000

30 Nov 17 ₹15,364

30 Nov 18 ₹11,556

30 Nov 19 ₹11,228

30 Nov 20 ₹10,923

30 Nov 21 ₹19234

3.Aditya Birla Sun Life Small Cap Fund (Erstwhile Aditya Birla Sun Life Small &
Midcap Fund) An Open ended Small and Mid Cap Equity Scheme with an objective to generate
consistent long-term capital appreciation by investing predominantly in equity and equity
related securities of companies considered to be small and midcap. The Scheme may also invest
a certain portion of its corpus in fixed income securities including money market instruments,
in order to meet liquidity requirements from time to time. Aditya Birla Sun Life Small Cap
Fund is a Equity - Small Cap fund was launched on 31 May 07. It is a fund with Moderately
High risk and has given a CAGR/Annualized return of 12.4% since its launch. Ranked 1 in
Small Cap category. Return for 2020 was 19.8% , 2019 was -11.5% and 2018 was -22.6%

Aditya Birla Sun Life Small Cap Fund Growth

Launch Date 31 May 07

NAV (10 Dec 21) ₹55.3348 ↑ 0.01 (0.01 %)

Net Assets (Cr) ₹2,969 on 31 Oct 21

Category Equity - Small Cap

Risk Moderately High

Expense Ratio 2.18

Sharpe Ratio 3.26

Information Ratio -0.57

Alpha Ratio -4.01

Min Investment 1,000

Min SIP Investment 1,000

Exit Load 0-365 Days (1%),365 Days and above(NIL)

4.Franklin Build India Fund The Scheme seeks to achieve capital appreciation by
investing in companies engaged directly or indirectly in infrastructure related activities.
Franklin Build India Fund is a Equity - Sectoral fund was launched on 4 Sep 09. It is a fund
with High risk and has given a CAGR/Annualized return of 16.6% since its launch. Ranked 4
in Sectoral category. Return for 2020 was 5.4% , 2019 was 6% and 2018 was -10.7% .

Below is the key information for Franklin Build India Fund

Franklin Build India Fund Growth

 Launch Date 4 Sep 09
NAV (10 Dec 21) ₹65.9582 ↑ 0.09 (0.14 %)
Net Assets (Cr) ₹1,132 on 31 Oct 21
Category Equity - Sectoral AMC
Risk High Expense
Ratio 2.4
Sharpe Ratio 3.18
Information Ratio 0
Alpha Ratio 0
Min Investment 5,000
Min SIP Investment 500
Exit Load 0-1 Years (1%),1 Years and
above(NIL)

5. SBI Small Cap Fund (Erstwhile SBI Small & Midcap Fund) The Scheme seeks to
generate income and long term capital appreciation by investing in a diversified portfolio of
predominantly in equity and equity related securities of small & midcap Companies SBI Small
Cap Fund is a Equity - Small Cap fund was launched on 9 Sep 09. It is a fund with Moderately
High risk and has given a CAGR/Annualized return of 21.2% since its launch. Ranked 4 in
Small Cap category. Return for 2020 was 33.6% , 2019 was 6.1% and 2018 was -19.6% .

Below is the key information for SBI Small Cap Fund SBI Small Cap Fund Growth
Launch Date 9 Sep 09
NAV (10 Dec 21) ₹105.963 ↑ 0.55 (0.52 %)
Net Assets (Cr) ₹10,626 on 31 Oct 21
Category Equity - Small Cap AMC
Risk Moderately High Expense
Ratio 1.97
Sharpe Ratio 3.82
Information Ratio 0.26
Alpha Ratio 1.77
Min Investment 5,000 Min
SIP Investment 500
Exit Load 0-1 Years (1%),1 Years and above(NIL)
 SUGGESTIONS AND RECOMMENDATION 
➢ The most vital problem spotted is of ignorance. Investors should be made aware of the
benefits. Nobody will invest until and unless he is fully convinced. Investors should be
made to realize that what they are losing by not investing.

➢ Mutual funds offer lots of benefit which no other single option could offer. But most of
the people are not even aware of what actually a mutual fund is? They only see it as
just another investment option. So the advisors should try to change their mindsets.

➢ The advisors should target for more and more young investors. Young investors as well
as persons at the height of their career would like to go for advisors due to lack of
expertise and time.

➢ Baroda Mutual Fund needs to give the training of the Individual mutual fund about the
Fund/Scheme and its objective, because they are the main source to influence the
investors.

➢ Before making any investment Mutual fund should first enquire about the risk tolerance
of the investors/customers, their need and time (how long they want to invest). By
considering these three things they can take the customers into consideration.

➢ Younger people aged under 35 will be a key new customer group into the future, so
making greater efforts with younger customers who show some interest in investing
should pay off.

➢ Customers with graduate level education are easier to sell and there is a large untapped
market there. To succeed however, advisors must provide sound advice and high
quality.

➢ Systematic Investment Plan (SIP) is one the innovative products launched by Assets
Management companies in the industry.
➢ SIP is easy for monthly salaried person as it provides the facility of do the investment
in EMI. Though most of the prospects and potential investors are not aware about the
SIP.

➢ There is a large scope for the companies to tap the salaried persons.

➢ SIP is more comfortable then lumpsum because in India there is bit difficult to trust on
other person.
 FINDINGS AND CONCLUSION
➢ In Jaipur the investors in the Age Group of 36-40 years were more in numbers. The
second most Investors were in the age group of 41-45 years and the least were in the
age group of below 30 years.

➢ In family Income group, between Rs. 20,001- 30,000 were more in numbers, the
second most were in the Income group between Rs.30,000-40,000 and the least were
in the group of below Rs. 10,000.

➢ About all the Respondents had a Saving A/c in Bank, 76% Invested in Fixed Deposits,
Only26% Respondents invested in Mutual fund.

➢ Mostly Respondents preferred High Return while investment, the second most
preferred Low Risk then liquidity and the least preferred Trust.

➢ Only 30% Respondents were aware about Mutual fund and its operations and 60%
were not.

➢ Among 100 Respondents only 26% had invested in Mutual Fund and 74% did not have
invested in Mutual fund.

➢ Most of the Investors had invested in LIC and preferred to invest in that due to security.

➢ Out of 26 investors of Baroda mutual fund 41% have invested due to its association
with the Brand Baroda, 29% Invested because of Advisor’s Advice and 30% due to
better return.

➢ Most of the investors who did not invested in BOB due to not Aware of BOB , the
second most due to risks.

➢ For Future investment the maximum Respondents preferred Reliance Mutual Fund,
the second most preferred ICICI Prudential, SBIMF has been preferred after them.
➢ 25% Investors preferred to Invest through Financial Advisors, 15% from their
colleagues and 55% through Bank.

➢ 15% preferred One Time Investment and 85% preferred SIP out of both type of Mode
of Investment.

➢ The most preferred Portfolio was GOLD, the second most was EQUITY and the least
preferred Portfolio was Debt portfolio.

➢ Maximum Number of Investors Preferred Growth Option for returns.

 BIBLIOGRAPHY
➢ https://www.fincash.com/l/best-growth-mutual-funds

➢ https://www.investor.gov/introduction-investing/investing-
basics/investment-products/mutual-funds-and-exchange-traded-
1#Info

➢ https://www.hdfcfund.com/learn/beginner/mutual-funds/what-
mutual-fund

➢ https://cleartax.in/s/best-mutual-funds-india

➢ https://surejob.in/nfo.html

➢ https://www.adityabirlacapital.com/abc-of-money/what-is-a-growth-
funds

➢ https://www.financialexpress.com/money/mutual-funds/10-best-
performing-mutual-funds-in-the-last-5-years/2338616/

➢ https://www.fincash.com/l/best-growth-mutual-funds