A

PROJECT REPORT
ON

“A STUDY ON SYSTEMATIC INVESTMENT PLAN IN MUTUAL FUND”

FOR
SHAREKHAN LTD

SUBMITTED TO SAVITRIBAI PHULE PUNE UNIVERSITY

IN PARTIAL FULFILLMENT OF 2 YEARS FULL TIME COURSE
MASTERS OF BUSINESS ADMINISTRATION (MBA)

SUBMITTED BY

Parag Jagtap

UNDER THE GUIDANCE OF

Mrs. Mangalgouri Patil

SINHGAD INSTITUTE OF MANAGEMNT

(Academic year 2018-2020)

1
 DECLARATION

I, Parag Raju Jagtap hereby declare that the project entitled “A STUDY ON SYSTEMATIC
INVESTMENT PLAN IN MUTUAL FUND” written and submitted by me to the Savitribai
Phule Pune University, Pune.

In partial fulfillment of the requirement for the award of degree of Master of Business
Administration under the guidance of Prof. Manglagauri Patil is my original work and the
conclusions drawn therein are based on the material collected by myself.

Place: PUNE

Date: / / Parag Raju Jagtap

2
 ACKNOWLEDGEMENT

I take this opportunity and privilege to express my deep sense of gratitude to Professor M.N.
Navale, Honorable formal president, Dr.Sunanda M.Navale, Founder Secretary, The Sinhgad
Technical Education Society, Pune and Dr. Parag Kalkar, Director SIOM. They have been a
source of inspiration to me and I am indebted to them for initiating me in the field of research.

I am deeply indebted to Faculty Member, SIOM Mrs. Mangalgouri Patil, my research guide at
Sinhgad Institute of Management, Pune, without whose help completion of the project was highly
impossible.

I take this opportunity and privilege to articulate my deep sense of gratefulness to the managing
Director and staff of the Sharekhan Ltd., Pune for their timely help and positive
encouragement.

I wish to express a special thanks to all teaching and non-teaching staff members of Sinhgad
Institute of Management, Pune for their continuous support. I would like to acknowledge all my
family members, relatives and friends for their continuous support. I would like to acknowledge
all my family members, relatives and friends for their help and encouragement.

PLACE: PUNE

DATE: / / PARAG RAJU JAGTAP

3
 INDEX

Sr No Chapters Topics Page No

Executive Summary 5

1 Chapter 1 Introduction to Study 6-9

2 Chapter 2 Organization Profile & Insight 10-19

of Business Environment

3 Chapter 3 Review of Literature 20-27

4 Chapter 4 Research Methodology 28-30

5 Chapter 5 Data Analysis & Interpretations 31-35

6 Chapter 6 Observations, Suggestions and 36-39

Conclusion

7 Chapter 7 Learning’s and contribution to 40-41

organization

8 Bibliography 42

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 EXECUTIVE SUMMARY

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.

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, 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,
Redemption 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 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.

A code of conduct and registration structure for mutual fund intermediaries, which were
subsequently mandated by SEBI. In addition, this year AMFI was involved in a number of
developments and enhancements to the regulatory framework.
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.

5
 CHAPTER-1

INTRODUCTION

6
FINANCE:
Finance is a field that is concerned with the allocation (investment) of assets and liabilities over
space and time, often under conditions of risk or uncertainty. Finance can also be defined as the
art of money management. Participants in the market aim to price assets based on their risk level,
fundamental value, and their expected rate of return. Finance can be split into three sub-
categories: public finance, corporate finance and personal finance.
Finance is defined as the management of money and includes activities like investing,
borrowing, lending, budgeting, saving, and forecasting. There are three main types of finance:
(1) personal, (2) corporate, and (3) public/government.

Personal Finance
Financial planning involves analyzing the current financial position of individuals to formulate
strategies for future needs within financial constraints. Personal finance is specific to every
individual's situation and activity; therefore, financial strategies depend largely on the
person's earnings, living requirements, goals, and desires.

Corporate Finance
Corporate finance refers to the financial activities related to running a corporation, usually with a
division or department set up to oversee the financial activities.

Public Finance

Public finance includes tax, spending, budgeting, and debt issuance policies that affect how a
government pays for the services it provides to the public .The federal government helps prevent
market failure by overseeing the allocation of resources, distribution of income, and economic
stability. Regular funding is secured mostly through taxation. Borrowing from banks, insurance
companies, and other nations also help finance government spending.

MUTUAL FUND:
The first introduction of a mutual fund in India occurred in 1963, when the Government of India
launched Unit Trust of India (UTI). Until 1987, UTI enjoyed a monopoly in the Indian mutual
fund market. Then a host of other government-controlled Indian financial companies came up
with their own funds. These included State Bank of India, Canara Bank, and Punjab National
Bank. This market was made open to private players in 1993, as a result of the historic
constitutional amendments brought forward by the then Congress-led government under the

7
existing regime of Liberalization, Privatization and Globalization (LPG). The first private sector
fund to operate in India was Kothari Pioneer, which later merged with Franklin Templeton.

1.2 DEFINITION:
“A mutual fund is an investment that pools your money with the money of an unlimited
number of other investors. In return, you and the other investors each own shares of the fund.
The fund's assets are invested according to an investment objective into the fund's portfolio of
investments. Aggressive growth funds seek long-term capital growth by investing primarily in
stocks of fast-growing smaller companies or market segments. Aggressive growth funds are also
called capital appreciation funds”.

1.3 CONCEPT OF MUTUAL FUND:

A mutual fund is a common pool of money into which investors place their contributions that are
to be invested in accordance with a stated objective. The ownership of the fund is thus joint or
“mutual”; the fund belongs to all investors. A single investor’s ownership of the fund is in the
same proportion as the amount of the contribution made by him or her bears to the total amount
of the fund. Mutual Funds are trusts, which accept savings from investors and invest the same in
diversified financial instruments in terms of objectives set out in the trusts deed with the view to
reduce the risk and maximize the income and capital appreciation for distribution for the
members. A Mutual Fund is a corporation and the fund manager’s interest is to professionally
manage the funds provided by the investors and provide a return on them after deducting
reasonable management fees

systematic investment plan (SIP)

Systematic Investment Plan (SIP) is an investment route offered by Mutual Funds wherein one
can invest a fixed amount in a Mutual Fund scheme at regular intervals– say once a month or
once a quarter, instead of making a lump-sum investment. The installment amount could be as
little as INR 500 a month and is similar to a recurring deposit. It’s convenient as you can give
your bank standing instructions to debit the amount every month.

SIP has been gaining popularity among Indian MF investors, as it helps in investing in a
disciplined manner without worrying about market volatility and timing the market. Systematic
Investment Plans offered by Mutual Funds are easily the best way to enter the world of

8
investments for the long term. It is very important to invest for the long-term, which means that
you should start investing early, in order to maximize the end returns. So your mantra should be -
Start Early, Invest Regularly to get the best out of your investments.

OBJECTIVES OF PROJECT

1. To understand the concept of mutual fund.

2. To study the benefits of SIP.
3. To give a brief idea about the benefits available from Mutual Fund investment.
4. To evaluate and compare the performance of top mutual fund schemes in INDIA.

LIMITATIONS

1. The lack of information sources for the analysis part

2. Though I tried to collect some primary data but they were too inadequate for the purposes
of the study.
3. Time and money are critical factors limiting this study.
4. The data provided by the prospects may not be 100% correct as they too have their
limitations.

SCOOP

WHY I HAVE CHOSEN THIS COMPANY?

SHAREKHAN LTD.is the brokerage firm in Pune & PCMC. It sells a non-physical product or I
say financial product like, mutual fund & insurance and to work on online platform, l have keen
interest to start my career in Financial sector and this company is established in 1922 and is
growing rapidly.

I believe this company would give me an opportunity to learn new concepts in financial
transaction on exchange platform, and also offers loans against mutual fund units.Ahead of most
of its rivals when it comes to using technology. Its online mode of investment you need to have a
Demat account and units are bought and sold on the BSE and NSE will now get a further boost
as it gets ready to roll out its tie-up with the National Payment Corporate India Lid for e-mandate
facility to enroll SIPs online, paperless and therefore faster.The first distributor of having giant
mutual fund distributor.

9
WHY I HAVE CHOSEN THIS TOPIC?

Finance is the backbone of every business.It tells you about your position in the market, we can
increase our future earnings with small investment. I choose this topic because I was interested to
know how transaction made on online platform.It also allowed me to enhance my analytical
skills, also understand current market scenario.

WHY I HAVE CHOSEN THIS SECTOR?

Financial industry is the backbone of all the business sectors. Finance you say money is needed
in all time to accomplish our short term and long term goal.It helps to do transaction anywhere
and anytime. Finance industry in India is bullish now a day.

10
 Chapter 2

Organization Profile

11
COMPANY NAME:

SHAREKHAN LTD.
Company Area:
PUNE-MAHARASHTRA

Company Location:
573/3, 2nd Floor, JM Road Shivaji Nagar
Pune - 411004

Company Address:

SHAREKHAN LTD.
573/3, 2nd Floor, JM Road Shivaji Nagar
Pune - 411004

12
VISION & MISSION:

Vision:
“To be the best retail broking brand in the retail business of the stock market”.

Mission
To educate and empower the individual investor to make better investment decisions through
quality advices and superior services.

INTRODUCTION OF SHAREKHAN PVT.LTD

Sharekhan Pvt. Ltd. Is one of the leading retail stock broking house of SSKI group which is
running successfully since 1922 in the country. It is the retail broking arm of the Mumbai based
SSKI Group, which has over eight decades of experience in the stock broking business.
Sharekhan offers its customer a wide range of equity related service including trade execution on
BSE, NSE, Derivatives, Depository service, online trading, investment advice etc. The firm’s
online trading and investment site – www.sharekhan.com – was launched on February 8, 2000.
The site gives access to superior content and transaction facility to retail customer across the
country. Known for its jargon-free, investor friendly language and high quality research, the site
has a registered base of over one lakh customer. The content-rich and research oriented portal
has stood out among its contemporaries because of its steadfast dedication to offering customer
best-of-breed technology and superior market information. The objective has been to let
customers make information decisions and to simplify the process of investing in stocks. On
April 17, 2002, Sharekhan launched speed tread, a net based executable application that emulates
the broker terminals along with host other information relevant to the Day Traders. This was for
the first time that a net based trading station of this caliber was offered to the traders. In the last
six months speed trade has become a de facto slandered for the Day Trading community over the
net. Shearkhan’s ground network includes over 1592 centers in 450 cities in India which provide
a host of trading related services. Sharekhan has always believed in investing in technology to
build its business. The company has used some of the best known names in the IT industry, like
Sun Microsystems, Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign
Financial Technologies India Ltd, Spider Software Pvt. Ltd. To build its trading engine and
content.The Morakhiya family holds a majority stake in the company. HSBC, Intel & Carlyle are
the other investor. With a legacy of more than 80 years in the stock markets, the SSKI group
ventured into institutional broking and corporate finance 18 years ago. Presently SSKI is one of
the leading players in institutional broking and corporate finance activities. SSKI holds a sizeable
portion of the market in each of these segments. SSKI’s institutional broking arm account for 7%
of the market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional
portfolio investment in the country.It has 60 institutional clients spread over India, Far East, UK
13
and US. Foreign Institutional investors generate about 65% of the organization’s revenue, with a
daily turnover US$ 2 million. The corporate finance section has a list of very prestigious clients
and has many “firsts” to its credit, in terms of the size of deal, sector tapped etc. The group has
placed over US$ 1 billion in private equity deals. Some of the clients include BPL Cellular
Holding, Gujarat Pipavav, Essar, Hutchison, Planet Asia, and Shopper’s Stop.

Sharekhan is the retail broking arm of SSKI, an organization with more than eight decade of trust
and credibility in the stock market. Amongst pioneers of investment research in the Indian
market. In 1984 venture into institutional broking and the corporate finance. Leading domestic
player in the Indian institutional business.Over US$5 billion of private equity deal.SSKI group
companies ,SSKI investor services ltd (Sharekhan ltd.),S.S.Kantilal Isharlal securities, SSKI
corporate finance.

Profile of the Company

Name: - SHAREKHAN Pvt.Ltd.

Year of Establishment: - 1925

Headquarter: - Sharekhan SSKI, A-206 Phoenix House,

Phoenix Mills Compound, Lower Parel,
Mumbai-Maharashtra,
India – 400013.Nature of Business: - Service Provider.

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NO 2 player in online business
Large network of branded broking outlets in the country servicing around 5, 45, 000 Clients

KEY OFFICIALS DESIGNATION

1. Mr.Shripal Morakhia Chairman
2. Mr. Jaideep Arora CEO
3. Mr. Kaliyan Raman Online Sales Head
4. Mr. Jason Pandey and Mr. Pradeep DP Head
5. Mr. Hemendra Aggarwal Cluster Head
6. Mr. Amit pal Singh and Regional Sales Manager
Mr. Maneet Rastogi

15
BENEFITS OF SHAREKHAN LTD

 Free Depository A/c

 Secure Order by Voice Tool Dial-n-Trade.
 Automated Portfolio to keep track of the value of your actual purchases.
 24x7 Voice Tool access to your trading account.
 Personalized Price and Account Alerts delivered instantly to your Cell Phone & E-mail
address.
 Special Personal Inbox for order and trade confirmations.
 On-line Customer Service via Web Chat.
 Anytime Ordering. NSDL Account.
 Instant Cash Transformation.
 Multiple Bank Option.
 Enjoy Automated Portfolio.
 Buy or sell even single share.

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PRODUCTS AND SERVICES OF SHAREKHAN LTD

Services
Products
 Equity Trading
 Derivatives Trading
 Trade Tiger  Currency Trading
 Sharekhan App  Mutual Funds & SIP
 Sharekhan Mini  Bonds
 Dial-N-Trade  IPO
 Portfolio Mgmt. Services
 Pattern Finder
 Learn to Trade
 Sharekhan Classroom  NRI Services

17
TYPES OF ACCOUNT IN SHAREKHAN PVT.LTD

Sharekhan offers two types of trading account for its clients.

Classic Account )which include a feature known as Fast Trade Advanced Classic Account for the
online users) and
Speed Trade Account

CLASSIC ACCOUNT

This is a user friendly product which allows the client to trade through website
www.sharekhan.com and it is suitable for the retail investor who is risk averse and hence
prefers to invest in stock or who does not trade too frequently. This account allow investor to buy
and sell stocks online along with the following features like multiple watch lists, integrated
Banking, Demat and digital contracts, real-time portfolio tracking with price alert and instant
credit and transfer. This account comes with the following features.
Online trading account for investing in Equities and Derivatives.
Free trading through phone ( Dial-n-Trade )
Two dedicated numbers (1800-22-7500 and 39707500) for placing an orders using cell phones or
landline phones.
Automatic funds transfer with phone banking facilities
Simple and secure Interactive Vice Response based system for authentication
Get the trusted, professional advice of sharekhan Pvt. Ltd tele brokers.
After hours order placement facility between 8.00 am and 9.30 am
Integration of :Online Trading + Saving Bank + Demat Account.
Instant cash transfer facility against purchase & sale of shares.
IPO investment
Instant order and trade confirmation by email
Single screen interface for cash and derivatives.

SPEED TRADE ACCOUNT.

This is an internet based software application, which enables one to buy and sell instant. It is
ideal for active trader and jobbers who transact frequently during day’s session to capitalize on
intra-day price movement. This account comes with the following features.
Instant order execution and confirmation.
Signal screen trading terminal for NSE cash, NSE F&O and BSE
Technical studies
Multiple charting
Real – time streaming quotes, tie-by-tie charts
Market summery (cost traded scrip, highest value etc.)
Hot key similar to broker’s terminal.
Alert and reminders.
Back up facility to place trades on direct phone lines.
Live market debts.

18
REASON TO CHOOSE SHAREKHAN PVT.LTD.

Experience
SSKI has more than eight decades of trust and creditability in the Indian stock market. In the
Asia Money broker’s poll held recently, SSKI won the” India’s Best Broking House for 2004”
award. Ever since it launched Sharekhan as it retail broking division in February 2000, it has
been providing institutional level research and broking services to individual investors.

Technology
With its online trading account one can buy and sell shares in an instant from any PC, laptop and
cell phone with an internet connection. One can get access to its powerful online trading tools
that will help him take complete control over his investment in shares.

Accessibility
Sharekhan provides A DIVICE, EDUCATION, TOOLS AND EXECUTION services for
investors. These services are accessible through its centers across the country over the internet
(through the website www.sharekhan.com) as well as over the voice tool…

Knowledge
In a business where the right information at the right time can translate in to direct profits, one
can get access to a wide range of information on Sharekhan limited’s content-rich portal. Onecan
also get a useful set of knowledge based tools that will empower him to take informed decision.

Customer Service
Sharekhan’s customer service team will assist one for any help that one require relating to
transactions, billing, D-mat account, and other queries. It customer service can be contacted via a
toll free number, email or live chat on www.sharkhan.com.

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CHARGES STRUCTURE

 Fee structure for General Individual for Intraday

Charges Classic Account Speed Trade Account

Account Opening 00 - 2000 - 6000 -
Brokerage Intraday Buy – 0 10 paisa Buy – 0 07 paisa Buy – 0 05 paisa
Sell – 0 00 paisa Sell – 0 00 paisa Sell – 0 00 paisa

 Fee structure for General Individual for Delivery

Charges Classic Account Speed Trade Account

Account Opening 750 - 2000 - 6000 -
Brokerage Delivery Buy – 0 50 paisa Buy – 0 40 paisa Buy – 0 25 paisa
Sell – 0 50 paisa Sell – 0 40 paisa Sell – 0 25 paisa

Trading is T + 2 days
In Deliver, sharekhan provides you 4times facility i e you can buy shares 4 times than your
account have E g If you have rupees 5000 - then you’ll purchase share worth rupees 20,000 -
(here you provide T + 5 days transaction period & within this 5 days you deposited the rest
amount )
In intraday, sharekhan provides you 10times facility i e you can buy shares 10 times than your
account have E g If you have rupees 5000 - then you’ll purchase share worth rupees 50,000 -

20
 Chapter 3

LITERATURE REVIEW

21
Review of Literature

Treynor [2012]13

Developed a methodology for evaluating mutual fund performance that is popularly reward to as
reward to volatility ratio. This measure has been frequently used both by researchers and
practitioners for performance evaluation of mutual fund. The approach developed by Treynor
takes beta or systematic risk to assess the premium per unit of risk.

Sharpe (2011) 14

Who developed a composite measure that considers return and risk evaluated the performance of
34 open-ended mutual fund during period 1994-63 by the measures developed by him. He
concluded that the average mutual fund performance was distinctly inferior to an investment in
the Dow Industrial Average (DJIA).

Jenses (2012) 16

Developed a composite portfolio evaluation technique concerning risk adjusted return. He

evaluated the ability of 115 fund managers in selecting securities during the period 1945-66.
Analysis of net return indicated that, 39 funds had above average returns, while 76 funds yielded
abnormally poor returns, Using gross returns, 48 funds showed above average results and 67
funds below average results. Jensen concluded that, there was very little evidence that funds
were not able to forecast price movements.

Dr. K. Veeraiah and Dr. A. Kishore Kumar (Jan 2014)

,conducted a research on Comparative Performance Analysis of Select Indian Mutual Fund

Schemes. This study analyzes the performance of Indian owned mutual funds and compares their
performance. The performance of these funds was analyzed using a five year NAVs and
portfolio allocation. Findings of the study reveals that, mutual funds out perform naïve
investment. Mutual funds as a medium-to-long term investment option are preferred as a suitable
investment option by investors.

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Mutual funds attracted the interests of academicians, researchers and financial
analysts mostly since 1986. A number of articles have been published in financial
dailies like economic times, business line and financial express, periodicals like
capital market, Business India etc., and in professional and research journals.
Literature Review on performances evaluation of mutual fund is enormous. Various
studies have been carried out in India and abroad to evaluation of mutual funds
schemes from time to time. A few research studies that influenced substantially in
preparing the theses are discussed below in this chapter.

Mutual Funds (MFs)

A Mutual Fund is a trust that pools the money of many investors, its shareholders- to invest in a
variety of different securities. Investment may be in stocks, bonds, money market securities or
some combination of these. Those securities are professionally managed on behalf of the
shareholders, and each investor hold a pro rate share of the portfolio, entitled to any profits when
the securities are sold, but subject to any losses in value as well.

A mutual fund is a group of investors operating through a fund manager to purchase a diverse
portfolio of stocks or bonds. There are myriad kinds of mutual funds, each with its own goals
and methodologies. Whether or not a mutual fund is a good investment is a matter of much
public debate, with many claiming they are excellent for the average person, and others saying
they are simply a poor way to invest.

For the individual investor, mutual funds provide the benefit of having some one else manage
your investments, take care of recordkeeping for your account, and diversify your rupees over
many different securities that may not be available or affordable to you otherwise. Today,
minimum investment requirements on many funds are low enough that even the smallest investor
can get started in mutual funds. A mutual fund, by its very nature, is diversified – its assets are
invested in many different securities. Beyond that, there are many different types of mutual funds
with different objectives and levels of growth potential, furthering your chances to diversify.
Diversification is efficient allocation of funds in various assets, it helps to reduce or minimize the
risk. We this effort, the investors can reduce financial risk and business risk. By owing shares of
multiple companies, the fund value is not devastated if an individual company has attained poor
performance.

MARKET SIZE

The Mutual Fund (MF) industry in India has seen rapid growth in Assets underManagement
(AUM). Total AUM of the industry stood at Rs 23.26 lakh crore(US$ 360.90 billion) as of April
2019. At the same time the number of Mutual fund (MF) equity portfolios reached a record high
of 2.27 billion in February 2019.
On account of rise in investments in the Mutual Funds and other financial
instruments, the revenues of the brokerage industry in India are forecasted to grow by
15-20 per cent to reach Rs 18,000-19,000 crore(US$ 2.80-2.96 billion) in FY2018-

23
19, backed by healthy volumes and a rise in the share of the cash segment. Another
crucial component of India’s financial industry is the insurance industry. The
insurance industry has been expanding at a fast pace. The total first year premium of
life insurance companies grew 17.35 per cent year-on-year to reach US$ 25.44 billion
during April 2018-February 2019. Along with the secondary market, the market for
Initial Public Offers (IPOs) has also witnessed rapid expansion. The total amount of
Initial Public Offerings increased to Rs 84,357 crore(US$ 13,089 million) by the end
of FY18. Over the past few years India has witnessed a huge increase in Mergers and
Acquisition (M&A) activity. The total value of M&A in India rose 53.3 per cent
year-on-year to US$ 77.6 billion in 2018 from US$ 50.6 billion in the preceding year.
Furthermore, India’s leading bourse Bombay Stock Exchange (BSE) will set up a
joint venture with EbixInc to build a robust insurance distribution network in the
country through a new distribution exchange platform.

SYSTEMATIC INVESTMENT PLAN (SIP)

A systematic investment plan (SIP) commits the investor to invest a specified amount every
month (or every quarter) in the units of a fund’s equity scheme. The number of units bought each
month for the investor under the plan will depend on the ruling price: fewer units are bought
when the price is high, and more units are bought when price is low. This is a built-in advantage
of SIPs. It averages out investor’s buying price over the entire period of holding. The SIP
resolves a dilemma often facing investors due to ups and downs in the market price. The investor
finds it difficult to decide when to invest in the equity scheme.
The monthly or quarterly amount to be invested can be as small as Rs. 500 or Rs. 1000. Mutual
funds specify the schemes for which SIP is allowed by them. Some funds charge a lower entry
load under SIP than for one-time investment, but others don’t make any such distinction. An exit
load under SIP is charged if the investor leaves the scheme before a specific period of time.

Why invest using SIP?

Investing through SIP in a mutual fund indubitably is the key solution in order to avoid or
prevent the loopholes of equity investment and yet, continually enjoy the high returns of
investment. Isn’t it great therefore to invest using this effective strategy of SIP? Obviously, yes!
And not only that, it makes all the more sense today when the stock markets are booming and are
tempting to really invest

Benefits of Using SIP

 Small amount: SIPs allow investors to invest with amounts as low as Rs. 500 at regular
intervals. This helps them to invest without any financial burden as well as reduces the
financial risk associated with lump sum investments.

24
  Less Risk: Mutual funds invest in market-linked instruments (equities and debt) and thus
they carry a degree of risk with them. However, under the SIP mode of investment this
market risk gets reduced as units of a mutual fund scheme are bought periodically. At
periodic intervals when markets are up the invested SIP amount buys fewer units of a
fund and vice versa. Thus, a SIP enables you to lower the average cost of your investment
and reduce the risk of your investment by spreading the purchase price over time. This is
known as rupee cost averaging.

 Power of compounding: A SIP enables you to regularly increase your investment

amount by a fixed amount and get the benefit of compounding as you earn returns on the
returns generated by your investment. This is known as power of compounding.

 Automated Process: One of the best features of a SIP is that it can be made automatic.
For this, an investor needs to give a one-time mandate to his/her bank after which the SIP
contributions will be automatically deducted from his/her bank account and invested in
the mutual fund scheme automatically at the selected periodic intervals. This saves one
from the trouble of filling forms and cheques or logging on digital platforms for every
SIP contribution.

Let's explain this with an example.

Let’s assume two people A and B. They both decide to start a SIP of Rs. 1000/- per month and
invest in it till the age of 60.
A started investing Rs 1,000 per year at the age of 25 and B started investing the same amount
every month at the age of 35. Below is a table of how much their money grew to when they
turned 60.

AT AGE INVESTMENT (LACS) WEALTH AT 60 (LACS)

25 4.2 148.6
30 3.6 70.1
35 3 32.8
40 2.4 15.2
45 1.8 6.8
50 1.2 2.8

25
  I have taken a rate of return of 15% compounded.
 At 60, A had built a corpus of Rs 148.6 lakh while person B's corpus was only Rs 32.8
lakh.
 A difference of Rs 1, 20,000 as investment over a 10 year horizon between the two of
them results in a huge difference of Rs. 115.8 lakhs in their end-corpus. That difference is
due to the effect of compounding.
 The longer the (compounding) period, the higher the returns.

Helps to fulfill one’s dreams:

Best part of all is the fact that with the use of SIP, it will make one’s dreams come true. The
investments that are made are ultimately for some objectives such as to buy a house, children’s
education, marriage etc.SIP is all about small investments, over a period of time, result in large
wealth and help fulfill one’s dreams & aspirations.

Convenience:

SIP is very convenient way of investing. The investor has to submit cheques along with the
filled up enrolment form. The mutual fund will deposit the cheques on the requested date and
credit the units to one's account and will send the confirmation for the same.

Other advantages:

There is no entry or exit loads on SIP investments. Capital gains, wherever applicable, are taxed
on a first-in, first-out basis.
People who invest through SIPs capture the lows as well as the highs of the market. In an SIP,
your average cost of investing comes down since you will go through all phases of the market,
bull or bear.

3.5. INVESTMENT THROUGH SIP

This will avoid the risk of locking in to one single valuation but get an 'average' of the valuations
on the various dates that we invest.
SIP is very helpful in a volatile market. Since we invest a fixed amount, we buy more of the
security when its prices fall and less when it is more expensive. Mutual funds define the dates on
which we can make the regular investments (typically 1st/7th/15th/21st of every month). If we
are a salaried employee, we will realize that we have surplus monthly savings and hence this can
become a preferred option for us. We receive our salary on the 5th of the month and hence we
can make the investment every 7th of the month. We can fill the SIP application form and inform
the mutual fund that we want to invest on 7th every month almost all mutual funds provide an
Electronic Clearing Scheme (ECS) with the major banks, this means that we can sign an order to

26
our bank that we allow the mutual fund company to take a specified sum of money from our
bank account on specified dates for a specified period. This saves us the hassle of signing post
datedcheques or of sending cheques on a periodic basis to the mutual fund.

How SIP Works?

Net Asset Value (NAV):

Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit
NAV is the net asset value of the scheme divided by the number of units outstanding on the
Valuation Date.
An SIP allows to take part in the stock market without trying to second-guess its movements. It
is also known as dollar cost averaging.
An SIP means committing yourself to investing a fixed amount every month.
E.g. 1,000 may be invested every month. When the Market price of shares fall, the investor
benefits by purchasing more units; and is protected by purchasing less when the price rises.
Thus the average cost of units is always closer to the lower end.) {NAV: Net Asset Value, or the
price of one unit of a fund can be computed as follows: NAV = [ market value of all the
investments in the fund + current assets + deposits - liabilities] divided by the number of units
outstanding.}

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Top 10 mutual funds in India

Fund Name 1 Year Returns 3 Year Returns 5 Year Returns

ICICI Prudential Bluechip Fund -6.22% 8.68% 9.71%

DSP Tax Saver -2.82% 8.24% 11.67%

Franklin India Equity Fund -12.22% 4.22% 9.51%

ICICI Prudential Value Discovery

-11.23% 3.67% 8.14%
Fund

Axis Long Term Equity Fund -3.75% 11.01% 13.19%

Reliance Tax Saver (ELSS) Fund -19.36% -1.01% 4.43%

DSP Equity Opportunities Fund -6.48% 7.46% 11.48%

Motilal Oswal Long Term Equity

-6.70% 10.43% –
Fund

Aditya Birla Sun Life Pure Value

-23.41% -0.27% 7.56%
Fund

HDFC Equity Fund -5.95% 8.53% 8.17%

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 Chapter 4

RESEARCH METHODOLOGY

29
Methods of Data Collection
PRIMARY DATA

The primary data is that which is collected afresh and for the first time and thus happens to be
original character. It is original data collected by the researcher and the information obtained
from the important concepts. The primary data can be collected from different sources like
observation, personal interviews, telephone interview questionnaire and discussion with some
concerned people

Methods for collecting primary data:

 Observations
 Discussion

SECONDARY DATA

The data which already collected and available in published or unpublished form, such data are
known as secondary data. Secondary data are the data collected processed and published by
someone else for their purpose. Various national, international research institutes, government
and semi-government department newspapers, journals, etc. publish lot of information for the
benefit of society, Researcher can use this information in his project work.

Method for collecting Secondary Data:

 Online Websites
 Books

COLLECTION OF PRIMARY DATA

Interview Method
Personal interviews: Personal interview method requires a person known as the interviewer
asking questions generally in a face-to-face contact to the other person or persons. (At times the
interviewee may also ask certain questions and the interviewer responds to these, but usually the
interviewer initiates the interview and collects the information.)

QUESTIONNAIRES
A questionnaire consists of a number of questions printed or typed in a definite order on a form
or set of forms. The questionnaire is mailed to respondents who are expected to read and

30
understand the questions and write down the reply in the space meant for the purpose in the
questionnaire itself. The respondents have to answer the questions on their own.

Observation Method
Observation becomes a scientific tool and the method of data collection for the researcher, when
it serves a formulated research purpose, is systematically planned and recorded and is subjected
to checks and controls on validity and reliability. Under the observation method, the information
is sought by way of investigator’s own direct observation without asking from the respondent

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 Chapter 5

DATA ANALYSIS & INTERPRETATION

32
CASE 1

1. VALUE OF SIP IF INVESTED Rs 10,000/MONTH (WITH MONTHLY

COMPOUNDING)

RETURN RATE 8% 12% 15%

TENOR OF SIP
5 YEAR 749,667 834863 906,819
10 YEAR 1,851,657 2,333,391 2796,573
15 YEAR 3,493,451 5,055,760 6778,631
20 YEAR 5,93,9472 10,001,479 15,169,550

INTERPRETATION
 As we do SIP for long term mostly it preferred for more than 5 years to see the returns.
 SIP is the best to invest in mutual fund because we get the unit allotted as market is low
we buy high ,as market low we buy less.

Case 2
RUPEE COST AVERAGING:

Month NAV Amount Units Net Units

Invested purchased
Jan 10 Rs 1000 100 100

Feb 12 Rs 1000 83.33 183.33

March 9 Rs 1000 111.11 274.44

April 8 Rs 1000 125 419.44

May 10 Rs 1000 100 519.44

Total Rs 5000 519.44

INTERPRETATION

 It helps a disciplined approach towards investing regularly in mutual funds.

 It helps Investor no needs to monitor external factors like economy condition, interest
rates, inflation etc.

33
  Rupee cost averaging helps to reduces the risk factor associated rather than lumpsum
investing.

3. HIGH NAV VS LOW NAV

SCHEME INVESTMENT NAV as UNITS NAV as VALUE RETURNS

NAME AMOUNT(Rs) on 7- ALLOTED on 7- as on 8-
july- july- july-
2016(Rs) 2017(Rs) 2017(Rs)
HDFC 10000 114.575 87.27907484 140.111 12230 22.30%
BALANCED
FUND

ICIC PRU 10000 98.34 101.6880212 118.82 12080 20.80%

BALANCED
FUND

INTERPRETATION
 Return is not impacted by high or low NAV of mutual fund.

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 4. Rupee-Cost Averaging (unit price rising scenario)

Month Amount Unit Price No. of units

Invested purchased

15-Jan Rs 1000 20 50

15-Feb Rs 1000 22 45.46

15-Mar Rs 1000 23 43.48

15-Apr Rs 1000 25 40

15-May Rs 1000 30 33.33

15-Jun Rs 1000 31 32.26

Total: Rs AvgCost:Rs Total:Rs

6000 24.54 244.53

INTERPRETATION

 Here,the investor in this example acquire 244.53 units at an average cost of Rs.24.54
each.
 This, helps buy less units ,when prices are high.

35
 5. Rupee-Cost Averaging (unit price falling scenario)

Month Amount Unit No. of units

Invested Price purchased

15-Jan Rs 1000 35 28.57

15-Feb Rs 1000 33 30.30

15-Mar Rs 1000 30 33.33

15-Apr Rs 1000 28 35.71

15-May Rs 1000 27 37.03

15-Jun Rs 1000 25 40

Total: Rs Avg Cost: Total: Rs

6000 Rs 29.29 204.87

INTERPRETATION

 The investor in this scenario would have bought 204.87 units at an average cost per unit
of Rs.24.91.
 It helps to get more number of units when unit price per share low.

36
 Chapter 6

FINDINGS, SUGGETIONS AND CONCLUSION

37
FINDINGS
 Investors generally like to invest in Large Cap Companies like Reliance, SBI, etc. to
minimize their risk.

 People can invest in small portion of their monthly salary for investing in mutual fund for
systematic investment plan.

 The most popular medium of investing in Mutual Fund is through SIP and moreover
people like to invest in Equity Fund though it is a risky game.

 The main Objective of most of the Investors is to preserve their Income.

 Investment period is very important to increase the profits, benefit from fluctuations.

38
SUGGESTIONS

 Mutual fund companies should try to educate the investors to invest in mutual
funds through regular awareness programs

 Start early for investing early and stick to a regular investment plan.

 Mutual fund agencies should spread the information about all the aspects of
investing in mutual funds.

 Since investment in mutual fund depends upon the market share condition
,therefore getting more return it is necessary to have invest in best scheme.

 Make investors aware about the benefits of investing mutual fund with there
investment objective. Retail participation in mutual fund is very low. It is
therefore required to increase the reach by offering solutions to the investors
based on there need.

39
CONCLUSION

Mutual Funds now represent perhaps most appropriate investment opportunity for most
investors. As financial markets become more sophisticated and complex, investors need a
financial intermediary who provides the required knowledge and professional expertise on
successful investing. As the investor always try to maximize the returns and minimize the risk.
Mutual fund satisfies these requirements by providing attractive returns with affordable risks.
The fund industry has already overtaken the banking industry, more funds being under mutual
fund management than deposited with banks. With the emergence of tough competition in this
sector mutual funds are launching a variety of schemes which caters to the requirement of the
particular class of investors. Risk takers for getting capital appreciation should invest in growth,
equity schemes. Investors who are in need of regular income should invest in income plans.

The stock market has been rising for over three years now. This in turn has not only protected the
money invested in funds but has also to helped grow these investments.

This has also instilled greater confidence among fund investors who are investing more into the
market through the MF route than ever before.

Reliance India mutual funds provide major benefits to a common man who wants to make his
life better than previous. The mutual fund industry as a whole gets less than 2 per cent of
household savings against the 46 per cent that go into bank deposits. Some fund managers say
this only indicates the sector's potential. "If mutual funds succeed in chipping away at bank
deposits, even a triple digit growth is possible over the next few years

40
 Chapter 7

Learning’s and contribution to organization

41
Learnings
 Importance of Time Management
 Delegation of tasks
 The work was performed in teams. Sometimes, due to some reason, people would remain
absent. At such a time, the seniors would not panic; instead they would maintain their
calm and delegate the responsibility wisely. This helped in understanding the importance
of maintaining a cool head in difficult situations, which will not only help me on the
professional front, but also on the personal front.
 Having a professional attitude in an organization is important and same was taught to me
to act like actual employees which will give you the actual insight of how it is to be a
manager.
 Time is a very crucial aspect when it comes to Deadlines. Everything has a deadline. At
the internship, everyone was assigned tasks and had to finish it on time. This was greatly
helpful in managing time well and helped in learning the importance of time.
 Trading in Equities was taught during the internship period.

 Detailed knowledge about financial services was given so that we could pitch company’s
products to the clients.

Contribution to the Organization

 Generated new clients on behalf of the Company.

 Achieved targets.
 Conducted meetings.
 Made Calls to get new clients.

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 BIBLIOGRAPHY

https://www.sharekhan.com/mutual-funds

https://www.amfiindia.com/indian-mutual

https://economictimes.indiatimes.com/mf/mf-news/mutual-funds

https://www.moneycontrol.com/mutualfundindia/

https://www.hdfcsec.com/systematic-investment-plan-sip

https://www.paisabazaar.com/mutual-funds/best-sip-plans/

DSP Investment Managers Pvt. Ltd.

https://www.franklintempletonindia.com/investor/funds-and-solutions/funds-explorer/equity-
funds

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