Summer Internship Report on Mutual Fund

I take this platform to convey my gratitude to the officials of Aditya Birla Money for their prompt response and guidance.

I would like to express my gratitude to Ms. Shruti Sharda. Without her outright support and prompt response, it would not be possible to do any justice as well as bring authenticity to the project. I would like to be debtor to my college mentor Mrs. Shweta Mehta and Mr. Sahrsh Bembey from placement cell for constant support and encouragement along with faculties of IILM who train me to enter business era.

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Bibhuti Jha Summer Management Trainee (SMT) Aditya Birla Money Mart Ltd. Faridabad 1 DECLARATION I hereby declare that the Project work entitled, Mutual Fund: Performance Evolution & Marketing submitted by me for the partial fulfillment of the Post Graduate Program (PGP) to IILM Institute for Higher Education, is my own original work and has not been submitted earlier either to IILM or to any other Institution for the fulfillment of the requirement for any course of study.

I also declare that no chapter of this manuscript in whole or in part is lifted and incorporated in this report from any earlier / other work done by me or others. Place : Faridabad Date: 30/6/2010 Name of Student: Bibhuti Jha Address: IILM Institute for Higher Education Golf Course Road, Sector – 53 Gurgaon, State – Haryana Executive summary This study has been undertaken to evaluate the performance of the Mutual Funds and marketing of it because Mutual funds have been a significant source of investment in both government and corporate securities for long run.

A mutual fund is a scheme in which several people invest their money for a common financial cause. The collected money invests in the capital market and the money, which they earned, is divided based on the number of units, which they hold.

To get a realistic and holistic view of the SIP this is a mouthed to invest money in mutual fund as Birla sun life mutual fund. To get a more detailed understanding of a particular function of the company, I studied the need, uses and benefits of SIP with respect to the wealth management, equity, sales and distribution.

Different statistical tools were used on the data obtained to get the average returns, absolute returns, standard deviation, Fund Beta, R-squared value, residual value, Relative Performance Index were calculated. These variables of the funds were compared with the same variables of the market to assess how the different funds have performed against the market. A Statistical test, Mann Whitney U-Test, was done on the returns of the fund with respect to the Sensex returns.

Another U-Test was done taking absolute return as the variable.

These U- Test were done to test the hypothesis which was that the fund returns over the period of time are similar to the market returns over the period of time. All the funds were classified into a hierarchical cluster on the basis of their average returns, absolute returns, standard deviation, fund beta, and relative performance index. This classification was to see whether the funds have similar properties or not. The mutual fund industry started in India in a small way with the UTI Act creating what was effectively a small savings division within the RBI.

Over a period of 25 years this grew fairly successfully and gave investors a good return, and therefore in 1989, as the next logical step, public sector banks and financial institutions were allowed to float mutual funds and their success emboldened the government to allow the private sector to foray into this area.

The advantages of mutual fund are professional management, diversification, and economies of scale, simplicity, and liquidity. The disadvantages of mutual fund are high costs, over-diversification, possible tax consequences, and the inability of management to guarantee a superior return.

The biggest problems with mutual funds are their costs and fees it include Purchase fee, fee, Exchange fee, Management fee, Account fee & Transaction Costs. There are some loads which add to the cost of mutual fund. Load is a type of commission depending on the type of funds. Mutual funds are easy to buy and sell.

You can either buy them directly from the fund company or through a third party. Before investing in any funds one should consider some factor like objective, risk, Fund Manager’s and scheme track record, Cost factor etc. There are many, many types of mutual funds.

You can classify funds based Structure (open-ended ; close-ended), Nature (equity, debt, balanced), Investment objective (growth, income, money market) etc. The most important trend in the mutual fund industry is the aggressive expansion of the foreign owned mutual fund companies and the decline of the companies floated by nationalized banks and smaller private sector players. Reliance Mutual Fund, UTI Mutual Fund, ICICI Prudential Mutual Fund, HDFC Mutual Fund and Birla Sun Life Mutual Fund are the top five mutual fund company in India.

Birla Sun Life mutual funding is considered to be most reliable mutual funds in India. People want to invest in this institution because they know that this institution will never dissatisfy them at any cost. All the mutual funds gave similar returns with respect to the market expect for certain time period. There is a positive correlation with the absolute returns of the market and the mutual funds over the period of time. The study showed that the standard deviation of the funds were high during the boom period in comparison with the market and were comparatively lower when the recessionary trend started.