INTRODUCTION

A mutual fund is a type of financial vehicle made up of a pool of money collected from many
investors to invest in securities like stocks, bonds, money market instruments, and other
assets. Mutual funds are operated by professional money managers, who allocate the fund
assets and attempt to produce capital gains or income for the fund investors. A mutual fund
portfolio is structured and maintained to match the investment objectives stated in its
prospectus .Mutual funds give small or individual investors access to professionally managed
portfolios of equities, bonds, and other securities. Each shareholder, therefore, participates
proportionally in the gains or losses of the fund. Mutual funds invest in a vast number of
securities, and performance is usually tracked as the change in the total market cap of the
fund derived by the aggregating performance of the underlying investments.

 A mutual fund is a type of investment vehicle consisting of a portfolio of stocks,

bonds, or other securities. 
 Mutual funds give small or individual investors access to diversified, professionally
managed portfolios at a low price.
 Mutual funds are divided into several kinds of categories, representing the kinds of
securities they invest in, their investment objectives, and the type of returns they
seek.
 Mutual funds charge annual fees (called expense ratios) and, in some cases,
commissions, which can affect their overall returns.
 The overwhelming majority of money in employer-sponsored retirement plans goes
into mutual funds.

The Mutual Fund Life Cycle Is:

INVESTORS

MUTUAL
FUND FUND
RETURNS
LIFE MANAGER
CYCLE

SECURITIES

1
The Mutual Fund Industry in India was started with a humble beginning by establishing the
Unit Trust of India in the year 1963, by the Government of India. “The main aim of the UTI
was to enable the common investors to participate in the prosperity of capital market through
portfolio management aimed at reasonable return, liquidity and safety and to contribute to
India’s industrial development by channelizing household savings into corporate investment”.
By the year 1993, UTI occupied nearly 80 per cent of the market share and developed
manifold in terms of number of investors, investable funds, reserves with wide marketing
network and efficient leadership. The Chartered Financial Analyst had commented that,
“Mutual Funds today form 1/10th of the banking industry’s size. If we compare this an
indication in the current interest rate scenario, Mutual Fund has ample shelf-space to grow
into an industry like the banking industry in India.

A mutual fund is a company that pools money from many investors and invests the money
insecurities such as stocks, bonds, and short-term debt. The combined holdings of the mutual
fund are known as its portfolio. Investors buy shares in mutual funds. Each share represents
an investor’s part ownership in the fund and the income it generates.

MAJOR MUTUAL FUNDS COMPANIES IN INDIA

1. HDFC BANK Asset Management Company
2. AIG Global Investment Group Mutual Fund
3. Birla Sun Life Mutual Fund
4. Bank of Baroda Mutual fund
5. DBS Chula Mutual Fund
6. Franklin Templeton India Mutual Fund
7. HDFC Mutual fund
8. ICICI Prudential Mutual fund
9. JM Financial Mutual fund
10. JP Morgan Mutual fund
11. Kotak Mahindra Mutual fund
12. LIC Mutual fund
13. Reliance Mutual fund
14. Sahara Mutual fund
15. State Bank of India Mutual fund
16. Standard Charted Mutual fund
17. Tata Mutual fund

2
INDUSTRY PROFILE

History of the Indian Mutual Fund Industry

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at
the initiative of the Government of India and Reserve Bank. The history of mutual funds in
India can be broadly divided into four distinct phases.
First Phase – 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by
the Reserve Bank of India and functioned under the Regulatory and administrative control of
the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial
Development Bank of India (IDBI) took over the regulatory and administrative control in
place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988
UTI had Rs.6700 crores of assets under management.

Second Phase – 1987-1993 (Entry of Public Sector Funds)

In the year 1987 marked the entry of non- UTI, public sector mutual funds set up by public
sector banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund
established in June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank
Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of
Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had
set up its mutual fund in December 1990.At the end of 1993, the mutual fund industry had
assets under management of Rs.47004 crores.
Third Phase – 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year
in which the first Mutual Fund Regulations came into being, under which all mutual funds,
except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged
with Franklin Templeton) was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI
(Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing,
with many foreign mutual funds setting up funds in India and also the industry has witnessed

3
several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds
with total assets of Rs.121805 crores. The Unit Trust of India with Rs.44541 crores of

assets under management was way ahead of other mutual funds.

Fourth Phase – since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of
India with assets under management of Rs.29835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and certain other schemes.
The Specified Undertaking of Unit Trust of India, functioning under an administrator and
under the rules framed by Government of India and does not come under the purview of the
Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB,
BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations.
With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76000
crores of assets under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place
among different private sector funds, the mutual fund industry has entered its current phase of
consolidation and growth. As at the end of October 31, 2003, there were 31 funds, which
manage assets of Rs.126726 crores under 386 schemes.

4
 REVIEW OF LITERATURE

1. Dr. Sandeep Bansal, Deepak Garg and Sanjeev K Saini (2012),

Have studied Impact of Sharpe Ratio & Treynor’s Ratio on Selected Mutual Fund Schemes.
This paper examines the performance of selected mutual fund schemes, that the risk profile of
the aggregate mutual fund universe can be accurately compared by a simple market index that
offers comparative monthly liquidity, returns, systematic & unsystematic risk and complete
fund analysis by using the special reference of Sharpe ratio and Treynor’s ratio.

2. Rahul Singal, Anuradha Garg and Dr Sanjay Singla (May 2013),

Have done Performance Appraisal of Growth Mutual Fund. The paper examines the
performance of 25 Growth Mutual Fund Schemes. Over the time period Jan2004 to Dec
2008. For this purpose three techniques are used (I) Beta (II)Sharpe Ratio (III) Treynor Ratio.
Rank is given according to result drawn from this scheme and comparison is also made
between results drawn from different schemes and normally the different are insignificant.

3. Jafri Arshad Hasan, (2013),

Has studied The Performance Evaluation of Indian Mutual Fund Industry past, Present and
Future. This article will discuss the past performance of the Indian mutual fund industry and
the pace of growth it achieved after being succumbed to regulatory changes by SEBI,
international factors and its non performance that affected the industry and its sentiments. It
will also analyse the future implications of the current changes that are being implemented by
the regulator.

4. Mrs.V. Sasikala and Dr. A. Lakshmi (Jan 2014)

Have studied The Mutual Fund Performance Between 2008 And 2010: Comparative
Analysis. The paper entitled “comparative analysis of mutual fund performance between
2008 &2010. The paper was undertaken to know the after meltdown period risks and returns
of 2008 top hundred mutual funds and compare with 2010 top hundred mutual funds
published in Business today. The analysis of alpha, beta, standard deviation, Sharpe ratio and
R-squared are declare high, low, average, above average and below average of risks and
return of funds.

5
5. Dr. K. Mallikarjuna Rao and H. Ranjeeta Rani, (Jul 2013)

Have studied Risk Adjusted Performance Evaluation of Selected Balanced Mutual Fund
Schemes in India. In this paper, an attempt has been made to study the performance of
selected balanced schemes of mutual funds based on risk-return relationship models and
various measures. Balanced schemes of mutual funds are the ones which are mostly preferred
by Indian investors because of their balanced portfolio in equity and debt. A total of 10
schemes offered by various mutual funds have been studied over the time period April, 2010
to march, 2013(3years).

6. Priyanka G. Bhatt and Prof. (Dr.) Vijay H.Vyas (2014)6 ,

In their article made performance analysis of the six selected equity funds and concluded that
all the funds have performed well during the study period. They also pointed out that the fall
in the CNX NIFTY during the year 2011 has impacted the performance of all the selected
funds. In the eventual analysis, they concluded that it is fundamental for investors and
prospective investors to consider these parameters like Sharpe ratio & treynor ratio along
with beta and standard deviation as have given specific performance evaluations from various
dimension to make certain steady performance of mutual funds in India.

6
 STATEMENT OF THE PROBLEM

It is clear from the review of literature that, plenty of research work has been done on various
schemes of mutual funds at national and international level. A closure examination of review
of literature has revealed that rare and scanty research work has been done on Comparative
analysis of mutual funds. To say in more specific terms, there are no studies conducted on
Mutual Funds. Hence, there prevails a research gap, to fill this research gap the researcher
intends to undertake the research on the topic entitled “Comparative Analysis of Mutual
Funds in Public and private sectors “.

7
 NEED AND SIGNIFICANCE OF THE STUDY

The main purpose of doing this project was to know about mutual fund and its functioning.
This helps to know in details about mutual fund industry right from its inception stage
growth and future proposals.

 Mutual funds with its comparison of public and private mutual funds companies. It is clear
to indicate which sector mutual fund companies are efficient in nature.
 This project report is useful to the investor to choose most profitable mutual fund companies
in the mutual fund market for the investment.

8
 OBJECTIVE OF THE STUDY

 To study and understand the concept of mutual funds.

 To study the history, growth, present & future scenario of the mutual funds.
 To make a comparative analysis of public & private sector mutual funds.
 To evaluate the performance of selected public and private sector mutual
funds.

9
 RESEARCH DESIGN

TYPES OF RESEARCH:

DESCRIPTIVE RESEARCH: Descriptive research aims to accurately and systematically

describe a population, situation or phenomenon. It can answer what, when, where, how
questions, but not why questions. To determine cause and effect, experimental research is
required. A descriptive research design can use a wide variety of quantitative and qualitative
methods to investigate one or more variables. Unlike in experimental research, the researcher
does not control or manipulate any of the variables, but only observes and measures them.

DATA COLLECTION:

The present study is purely based on the secondary sources of information. So, required
secondary information has been collected from the published records of

 Association of Mutual Funds of India (AMFI)

 Value Research website
 asset Management Companies (AMCs)
 websites
 journals,
 magazines
 CMIE Reports and Prowess database.

TOOLS OF ANALYSIS:

Secondary data collected from various published records are systematically arranged,
classified, tabulated, analyzed and interpreted by using appropriate statistical tools and
techniques.

SCOPE AND LIMITATIONS OF THE STUDY

10
 A study on comparative analysis of mutual funds in public and private sector mainly
focused on comparative analysis of mutual funds.
 This project is completely based on totally secondary data.
 Time is the major constraint for completion of the project. The study is prepared
within a limited time.
 Money is another major constraint for completion of the project.
 It is mainly based on the data available in various websites.

11