PROJECT REPORT On INVESTMENT THROUGH MUTUAL FUND BY Priyanka Raj 1NH18MBA63 Submitted to DEPARTMENT OF MANAGEMENT STUDIES NEW HORIZON COLLEGE OF ENGINEERING, OUTER RING ROAD, MARATHALLI, BENGALURU In partial fulfilment of the requirements for the award of the degree of MASTER OF BUSINESS ADMINISTRATION Under the guidance of Prof. Jayashree N Asst. Professor 2018-20 CERTIFICATE This is to certify that PRIYANKA RAJ bearing USN 1NH18MBA63 is a bonafide student of Master of Business Administration course of the Institute 2018-20, autonomous program, affiliated to Visvesvaraya Technological University, Belgaum. The internship report on “INVESTMENT THROUGH MUTUAL FUNDS” is prepared by him under the guidance of Prof.Jayashree, in partial fulfilment of requirements for the award of the degree of Master of Business Administration of Visvesvaraya Technological University, Belgaum Karnataka. Signature of Internal Guide Signature of HOD Principal Name of the Examiners with affiliation: Signatures with date 1. External Examiner 2. Internal Examiner DECLARATION I Priyanka Raj, hereby declare that The internship report on “Investment through mutual funds” with reference to “Analytical investment” prepared by me under the guidance of Prof.jaishree, faculty of M.B.A Department, New Horizon College of Engineering. I also declare that this internship report is towards the partial fulfilment of the university regulations for the award of the degree of Master of Business Administration by Visvesvaraya Technological University, Belgaum. I have undergone an industry internship for a period of Eight weeks. I further declare that this report is based on the original study undertaken by me and has not been submitted for the award of a degree/diploma from any other University / Institution. PRIYANKA RAJ Place:Bangalore Date ACKNOWLEDGEMENT The successful completion of the internship would not have been possible without the guidance and support of many people. I express my sincere gratitude to Mahesh,Analytical investment, Bengaluru, for allowing to do my internship at ANALYTICAL INVESTMENT. I thank the staff of Analytical Investment Bengaluru for their support and guidance and helping me in completion of the report. I am thankful to my internal guide prof jaishree, for his constant support and inspiration throughout the project and invaluable suggestions, guidance and also for providing valuable information. Finally, I express my gratitude towards my parents and family for their continuous support during the study. PRIYANKA RAJ 1NH18MBA63 T ABLE OF CONTENTS SL. NUMBER CONTENTS PAGE NUMBERS 1 Executive Summary 1 2 Theoretical Background Of The Study 2-12 3 Industry Profile &Company Profile 13-22 4 Application Of Theoretical Framework 23-30 Analysis And Interpretation Of Financial 5 31-41 Statements And Reports Learning Experience- Findings, 6 42-47 Suggestions And Conclusion 7 Bibliography 48-51 7 An Internship Report on Investment through mutual funds 8 CHAPTER-1 Theoretical Background of the Study 9 Introduction of Investment Decision Through mutual funds. Investment:- ➢ Investment is the current commitment of money for a particular period of time in order to derive anticipated future benefits that will compensate for: • The time for which funds are committed. • The expected rate of Inflation. • The uncertainty of future payment. ➢ An investment refers to sacrifice of current resources in anticipation of a future benefit. ➢ Investment involves commitment of certain current cash flow in anticipation of uncertain future cash flows. Investment Attribute:- The primary objective of any Investment is to increase the rate of return and to reduce the risk. However the other objectives of Investment include: • Return. • Risk. • Liquidity. • Hedge against Inflation. • Safety Investment Objective:- • Regularity of Income • Capital Appreciation • Safety of funds • Tax Shield • Conceal ability • Tangibility • Less Risk • Liquidity • Hedge against inflation ➢ An investment is the commitment of money or other resources in the expectation of obtaining future benefits. ➢ Investment is the employment of funds on assets to earn income or capital appreciation. The individual who makes an investment is known as the investor. ➢ In economic terms, Investment is defined as the net addition made to the capital stock of the country. ➢ In Financial terms, Investment is defined as allocating money to assets with a view to gain profit over a period of time. 10 ➢ Investments in economic and financial terms are inter-related where an individual’s saving flow into the capital market as financial investment, which are further used as economic investment. 11 Introduction of Mutual Funds Mutual Fund is a pooling of money from shareholders and invests in a variety of securities, such as stocks, bonds and money market instruments. Most open-end mutual funds stand ready to buy its shares at current NAV, which depends on the total markets value of the fund’s investment portfolios at the time of redemption. Also known as open end Investment Company, to differentiate it from a closed-end Investments Company. Mutual funds invest pooled cash of many investors to meet the fund’s stated investment objective. Total fund assets divided by shares outstanding i.e., Mutual fund mechanism for pooling the resources by issuing units to the investor and investing funds in securities in accordance with objectives as disclosed in offer document. Investments in securities are spread across a section of industries & sectors and therefore the risk is reduced. Diversification reduces the risk because all stocks may not move in same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them, investors of mutual funds are known as Unit holders. The profit or losses are shared by the investors in proportion to their investments. The investor manager would invest the money collected from the investor into assets that are defined permitted by the stated objective of the scheme, for instance, an equity firm would invest equity and equity related instruments and the debt fund would invest in bonds debentures, gilts etc. Mutual fund is the best investment for the lame man as it offers an opportunity to invest in a diversified, professionally managed group of securities at low cost. 12 Mutual funds Company in India The concepts of mutual funds in India started at 1963. The era between 1963 and 1987 marked the existence of only one mutual fund Company in India with ₹67/- billion Assets under Management by the end of its monopoly era, the Unit Trust of India (UTI), by the end of the 80s decade, few other mutual fund companies in India incorporated in mutual fund market. The new entries in Mutual Fund market were SBI Mutual Fund, Canara bank Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, and Bank of India Mutual Fund. The next decade i.e., by the end of 1993, the total assets under Management of the industry were ₹470.04/- billion. The private sector funds started in fund market. In the same year the first Mutual Fund Regulations came into existence with re- registering all mutual funds except UTI, regulations took revised shape in 1996. Kothari Pioneer was the first private sector mutual fund company in India which has now merged with Franklin Templeton. After 10 years with private sector player’s penetration, the total assets rose up to ₹1218.05 billion. Today there are 44 mutual fund companies in India. 13 Organization of a mutual fund There are many entities involved and the diagram below illustrates the organizational setup of a mutual fund 14 Advantage of Mutual Fund ➢ Professional Investment management Mutual funds hire full-time, high-level investment professionals, as they manage large pools of money. The managers have accessibility to important market information & are able to execute trades on the large & most cost-effective scale. ➢ Diversification Mutual funds invest in a wide range of securities. By this the investment risk will be reduced by possible decline in the value of any one security. Mutual fund unit-holders will benefit from diversification techniques which are available to investors. ➢ Low Cost A mutual fund permit to participate with a minimum amount of ₹5,000/-, & sometimes with even lesser amount. And there are no sales charges to own them. ➢ Convenience and Flexibility One can own just one security rather than many, yet enjoy all the benefits of a diversified portfolio & wide range of services. Mutual fund also uses the services of a high quality custodian & registrar in order to make sure that investor’s amenity remains at the top. ➢ Personal Service Can easily reach out to a specialist who can provide you with all information regarding the investment. These specialists will provide investors with personal assistance in providing fund information, buying & selling the fund units & answer queries about investors account status. ➢ Liquidity In open-ended schemes, one can get back the money promptly at NAV related prices from the mutual fund itself. ➢ Transparency Investor gets regular information on the value of investment in addition to disclosure on the specific investments. 15 Disadvantage of Mutual Fund ➢ Professional Management Some funds don’t perform in neither the market, as their management is not dynamic enough to explore the available opportunity in the market. ➢ Costs The biggest source of AMC income is generally from the entry & exit load which they charge from investors, at the time of purchase. The mutual fund industries are thus charging extra cost under layers of technical rounds. ➢ Dilution Funds have small holdings across different companies; high returns from a few investments, don't make much difference on the overall return. Dilution is also the result of a successful fund getting too big. And manager finds it difficult to get good investment. ➢ Taxes: Fund Managers don't consider your personal tax situation. For instance, when a fund manager sells a security, a capital-gain tax is triggered, which affects how profitable the individual is from the sale.