Executive Summary

This report analyzes the Indian mutual fund industry's dynamics, focusing on the

penetration of systematic investment plans (SIPs) in retail and PSU banks and the need

for awareness in tier 2 and below cities. Data collected from 101 respondents reveals

that a majority are young (66.4% aged 22-28) and predominantly male (82.2%).

Investment behavior shows that 45.6% have invested in mutual funds for 1-3 years, with

many relying on informal sources like financial news and personal networks rather than

financial advisors.

Performance analysis of 47 mutual fund schemes indicates mixed outcomes, with 19

schemes yielding returns between 0-10% and 22 classified as high risk. Notably, Axis

Bluechip and ICICI Prudential achieved the highest Sharpe and Treynor ratios,

suggesting strong risk-adjusted returns.

The preference for SIPs is significant, with 78.2% opting for this method over lump sum

investments. The findings highlight opportunities for enhancing mutual fund offerings

and improving financial literacy in underserved markets. By addressing these gaps,

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financial institutions can foster greater investor engagement and expand mutual fund

penetration across India.

Chapter 1: Introduction

Investing in a diverse portfolio of securities, including stocks, bonds, and money market

instruments, is done through the use of mutual funds, a sort of investment vehicle that

pools money from many different investors. They are run by qualified fund managers

who want to make money for the investors.

Mutual Fund in India

In recent years, the Indian Mutual Fund sector has experienced notable expansion,

fueled by positive economic and demographic factors including increasing income,

higher savings rates, and greater income-earning and spending activities. The

introduction of mutual funds in India can be traced back to July 1964 when UTI (Unit

Trust of India) launched them with the aim of mobilizing individual savings for

substantial capital formation by investing in the capital market. Additionally, there was a

pressing requirement to direct household savings towards circulation and make them

accessible for corporate entities to utilize productively. Simultaneously, there was a

recognition of UTI's potential to serve as an effective solution for bridging the gap

between individual savings and capital formation. UTI maintained a monopoly for nearly

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two decades. However, in the early 1990s, several new players entered the market,

including SBI (1987), Can Bank (1987), LIC (1989), Indian Bank (1990), Bank of India

(1990), PNB (1990), GIC (1991), and others. Currently, the concept of mutual funds has

become widely familiar among retail consumers.

The key advantages of mutual funds include the ability to start with a nominal amount of

INR 500, potential tax benefits in certain schemes, strategic decisions made by experts,

the opportunity to benefit from equity returns, and the advantage of economies of scale

that consumers can enjoy.

Growing Mutual Fund Industry Statistics

● The number of investor accounts (folios) overall and AUM have steadily

increased in the Indian MF sector since May 2014.

● By May 31, 2014, the MF industry's AUM had for the first time surpassed the Rs.

10 lakh crore mark. By August 2017, the AUM had doubled and had officially

surpassed the Rs. 20 lakh crore mark. The AUM finally exceeded Rs. 40 lakh

crores by March 2023.

● The whole size of the MF business increased from Rs. 6.89 lakh crores to Rs.

53.40 lakh crores between June 2012 and March 2024.

● The MF industry doubled in size between June 2019 and June 2024, a five-year

period.

● Between June 2017 and March 2024, the number of investor folios increased

from 5.82 crores to 17.78 crores. The SIP plans have become very popular in
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 part because of the MF distributors. The one crore barrier for SIP accounts was

reached in April 2016. SIP assets stood Rs 10.71 lakh crore as of March 2024,

accounting for over 20% of the industry assets. Further, the number of SIP

accounts reached nearly 8.4 crore with 17 lakh accounts added per month.

For the month of March 2024, the month end assets under management (AAUM)

for the Indian mutual fund industry was more than 50 lakhs crores.

● In a period of 20 years, the AUM of the Indian MF Industry increased by around

six times, from 8.68 trillion as of May 31, 2013, to above 50 trillion as of March,

2024.

● The AUM of the MF Industry increased over twofold in just 5 years, from 22.60

trillion as of May 31, 2018, to 43.20 trillion as of May 31, 2023.

● In May 2014, the industry's AUM reached the landmark of ten trillion rupees (ten

lakh crore), and in just three years, it had expanded more than twofold and first

crossed twenty trillion rupees (twenty lakh crore) in August 2017. In November

2020, the AUM size surpassed 30 trillion (or 30 Lakh) for the first time. As of

March 2024, the industry AUM was more than 50 trillion rupees (50 lakh crore).

PUBLIC SECTOR MUTUAL FUNDS

1. State bank of India mutual fund (SBI)

2. Unit trust of India (UTI)

3. Bank of Baroda mutual funds

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 4. LIC mutual funds

5. Canara robeco

PRIVATE SECTOR MUTUAL FUNDS

1. Edelweiss

2. Birla sun life mutual funds

3. Axis Bluechip

4. Prudential ICICI mutual fund

5. Tata mutual funds

6. IDBI

7. Mirae Asset

8. JM financials

9. Nippon India

10. Bandhan Mutual Fund

1.1 Background

Bandhan Asset Management Company (AMC) operates within the mutual fund industry,

focusing on offering a diverse range of mutual fund products to cater to the investment

needs of its clients. Similar to Kotak Securities, Bandhan AMC generates revenue

primarily through managing investments rather than brokerage fees.

My role at Bandhan AMC centered on conducting comprehensive value research on

various mutual fund schemes. This involved analyzing historical performance,

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assessing risk-return profiles, and providing insights to support investment decisions.

Additionally, I was responsible for handling operations, ensuring smooth transaction

execution, regulatory compliance, and enhancing operational efficiency to deliver a

seamless client experience.

Furthermore, I contributed to marketing efforts aimed at effectively communicating the

unique value propositions of Bandhan AMC's mutual fund products to potential

investors. The company places a strong emphasis on providing insightful research

reports and recommendations, akin to Kotak Securities, to guide investors in making

informed investment choices across different time horizons.

Bandhan AMC's client-centric approach and commitment to delivering robust

investment solutions underscore its role in the mutual fund industry, mirroring the

dedication to excellence observed at Kotak Securities in the realm of equity research

and brokerage services.

Bandhan AMC Ltd.

Bandhan Mutual Fund, established in 2000, ranks among India’s Top 10 fund houses by

Asset Under Management. With an experienced investment team present in over 60

cities, Bandhan Mutual Fund is dedicated to helping savers transition into investors and

create wealth. Our equity offerings are driven by a seven-factor investment framework,

ensuring distinctive and growth-oriented portfolios across market caps and themes like

infrastructure and consumption. On the fixed-income front, our strategies are

underpinned by strong fundamental and macro research, offering both carry-oriented

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and actively managed long-bond funds. We prioritize simplicity, transparency, and

responsive service, ensuring investors have a clear picture of their investments and

receive thoughtful support.

1.2 Relevance

During my internship at Bandhan Mutual Fund, I conducted comprehensive value

research analysis of various products and funds, aiding in the design of a product

portfolio that aligns with client and distributor needs. My responsibilities also

encompassed daily operational tasks, ensuring smooth and efficient workflows.

Leveraging my financial analysis skills honed during my previous internship, I performed

an in-depth comparative study of key pharmaceutical sector firms, which included

reviewing recent corporate activities, financial statements, and management analyses.

This analysis is pivotal for clients seeking to understand business operations in the

pharmaceutical industry and make informed investment decisions.

My report on the mutual fund industry delves into its operations, highlighting the

importance of understanding sector evolution and export trends. It also examines

government regulations impacting the industry. The study aims to validate two

hypotheses: 1) the increasing penetration of SIPs (Systematic Investment Plans) in

retail and PSU banks, and 2) the critical need for expanding mutual fund product

penetration beyond Tier 1 and 2 cities. By providing detailed insights and analysis, this

report will guide organizations in their investment strategies and help them identify

promising opportunities within the mutual fund landscape.

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1.3 Literature review

The mutual fund industry in India has experienced robust growth, driven by increased

participation from retail investors and innovative financial instruments like Systematic

Investment Plans (SIPs). Over the past few years, SIPs have become a popular mode

of investment, particularly within retail and Public Sector Undertaking (PSU) banks.

However, the industry's penetration remains concentrated in Tier 1 and Tier 2 cities,

with significant untapped potential in Tier 3 and Tier 4 regions. This literature review

aims to explore the increasing penetration of SIPs in the mutual fund industry,

particularly in retail and PSU banks, and the industry's aggressive focus on Tier 1 and

Tier 2 cities, while highlighting the need for broader outreach to smaller cities.

SIPs have gained considerable traction as a preferred investment vehicle among retail

investors due to their systematic and disciplined approach. The adoption of SIPs has

significantly increased in the past 3-4 years, driven by various factors such as rising

financial literacy, improved financial products, and strategic initiatives by financial

institutions.

Chowdri (2020) provides a comprehensive analysis of the mutual fund landscape,

emphasizing the pivotal role of SIPs in democratizing investment access for retail

investors. The study highlights the substantial increase in SIP investments facilitated by

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PSU banks, which leverage their extensive networks and public trust to promote these

plans. Similarly, Gupta and Mittal (2016) discuss the strategic efforts by PSU banks to

penetrate the retail market through SIPs, noting the significant growth in SIP accounts

over recent years.

The mutual fund industry's growth has been predominantly concentrated in Tier 1 and

Tier 2 cities, where higher financial literacy and disposable incomes prevail. This urban-

centric growth strategy has resulted in a substantial concentration of assets under

management (AUM) in these cities.

Kandpal and Kavidayal (2014) emphasize the mutual fund industry's focus on Tier 1 and

Tier 2 cities, where marketing and distribution efforts have been intensified. This focus

has resulted in higher mutual fund penetration and significant contributions to the

industry's AUM from these urban centers. Chowdri (2020) reinforces this observation,

noting that the top 15 cities account for 85% of the mutual fund industry's AUM,

highlighting the industry's aggressive push in these regions.

Despite the industry's success in urban centers, mutual fund penetration in Tier 3 and

Tier 4 cities remains limited. Several challenges hinder the growth of mutual funds in

these areas, including lower financial literacy, limited access to financial services, and a

preference for traditional investment avenues such as gold and real estate.

Sharma and Rao (2014) identify key barriers to mutual fund penetration in rural and

semi-urban areas, emphasizing the need for enhanced investor education and

awareness campaigns. Their study on retail investors in Rajasthan highlights the

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significant gap in risk orientation and investment behavior between urban and rural

investors. Similarly, Bharucha and Kaur (2021) discuss the impact of investor

awareness on investment behavior, underscoring the need for targeted educational

initiatives to increase mutual fund adoption in smaller cities.

Technological advancements have played a crucial role in expanding the reach of

mutual funds and SIPs. Online platforms and mobile applications have made it easier

for investors to access mutual fund services, providing a significant boost to the

industry's growth. Some Studies highlights the potential of digital tools to bridge the gap

between urban and rural investors, suggesting that technology-driven solutions could

significantly enhance mutual fund penetration in Tier 3 and Tier 4 cities.

The literature underscores the significant progress made in the penetration of SIPs and

the mutual fund industry in India, particularly in the past few years. The industry's

aggressive focus on Tier 1 and Tier 2 cities has yielded substantial growth, but there

remains considerable untapped potential in Tier 3 and Tier 4 regions. Addressing the

challenges in these areas through targeted investor education, leveraging technology,

and innovative distribution strategies will be crucial for the industry's sustained growth.

Enhancing financial literacy and accessibility in smaller cities will be vital for

democratizing investment and achieving broader financial inclusion.

Abrol and Kavitha (2023) focus on consumer perceptions of mutual funds as an

investment tool. They found that "customers view mutual funds as a convenient,

expertly managed, and diversified way to invest," but there are gaps in consumer

knowledge regarding costs, risks, and performance. The study underscores the

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importance of enhancing financial literacy and providing transparent information to

improve consumer understanding and trust in mutual funds (Anand & Rajoria, 2023)

Parihar & Sharma (2009) examines the relationship between customer demographics

and attitudes towards mutual funds. The study found that "age has played a key role,

with older people frequently displaying more conservative attitudes and favoring lower-

risk investment options," while younger investors tend to have a higher risk appetite.

Additionally, "higher income and education are frequently linked to more favorable

opinions towards mutual funds" (Parihar & Sharma,(2009).

Periasamy and Dinesh (2022) investigate various factors affecting consumers'

investment decisions. They identify "risk tolerance, investment expertise, income level,

age, and financial aspirations" as significant predictors of consumer behavior. The study

suggests that financial institutions should develop efficient marketing plans and provide

appropriate investment options to cater to these factors (Periasamy & Dinesh, 2022).

The reviewed studies indicate that consumer perceptions and preferences towards

mutual funds in India are influenced by a variety of factors, including risk perception,

financial literacy, demographic characteristics, and the role of financial advisors.

Understanding these factors is essential for financial institutions to design tailored

marketing strategies and product offerings that meet the specific needs and preferences

of different consumer segments. Further research is needed to explore how evolving

market dynamics and technological advancements impact investor behavior in the

mutual fund industry.

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1.4 Objective

Overall, the literature on the mutual fund industry and its drivers in Indian landscape

gives useful insights into regulations, variables, difficulties, and environmental

repercussions. These studies help policymakers, industry stakeholders, and

researchers develop strategies for expansion of mutual fund products by providing a

better understanding of the current situation and prospects of patent mobility in India.

The study aims to provide more qualitative analysis of players working in sector,

objectives of the study aims :

● To examine the Systematic Investment Plan (SIP) penetration in retail &

PSU banks

● To examine the need of expansion of awareness regarding the mutual

fund industry below tier 1 & tier 2 cities

● To understand the evolution of Mutual Fund industry in India.

By attaining these goals, the research study tries to offer insightful information about

how consumers view mutual funds as an investing choice. The research will help us

better understand investor behavior, preferences, and decision-making processes. It will

also help us develop strategies to increase investor satisfaction and engagement in the

mutual fund industry.

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 Chapter 2: Methodology

2.1 Project Design

This study uses quantitative research as well as qualitative research approach to

investigate how consumers view mutual funds as a form of investing. The purpose of

the study is to collect information from individual investors in order to understand their

attitudes, preferences, and investing behaviour.

The data for this research study will be collected through an online survey using Google

Forms from 101 respondents. The survey questionnaire will be divided into two

sections: Demographics and understanding investor perspective. The survey

questionnaire will consist of 16 questions

Demographics Section: The demographics section will collect data on the participants'

ages, genders, educational backgrounds, and occupations. Understanding the

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relationship between consumer attitudes and individual traits depends on these

demographic data.

Understanding Investor Perspective Section: The many facts of consumer perceptions

on mutual funds will be covered in this section. including risk tolerance, familiarity with

mutual funds, main motivations for investing, factors influencing investment choices,

anticipated returns, and difficulties faced by investors. The questions will be created to

collect both qualitative feedback and quantitative ratings (such as Likert scales),

allowing participants to express their thoughts and offer in-depth views.

2.2 Sample and Data sampling

To achieve the study's aims, data analysis is primarily oriented towards qualitative and

quantitative data:

Mutual Fund performance: The sample includes mutual fund industry factsheets, such

as performance tables, SIP performance, and investment objectives. These factsheets

span the fiscal years 2020-21 to 2023-24.

Survey analysis: Based on surveys filled by individual investors from Jaipur, examining

different angles of investor behavior. Industry and market data: To provide context for

the analysis, information about the Indian mutual fund industry's landscape, including

market size, growth rates, and trends, is included.

2.3 Method used for Analysis

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To analyze the Indian mutual fund industry, I incorporated industry and market statistics,

focusing on market size, growth rates, and emerging trends. Evaluating mutual fund

products' performance involved examining returns, risk levels, risk-return analysis,

Treynor’s ratio, and Sharpe’s ratio and measure.

Additionally, I conducted a behavioral analysis of individual investors' perceptions of SIP

(Systematic Investment Plan) penetration in retail and PSU banks to gauge acceptance

and popularity. The study also explored expanding mutual fund products beyond Tier 1

and 2 cities, considering demographic and economic factors influencing investment

behaviors. By integrating financial analysis and evaluating mutual fund products based

on Assets Under Management (AUM), I used fundamental analysis to predict long-term

market movements and identify promising investment opportunities. This

comprehensive approach provided a holistic view of the mutual fund industry, enabling

informed decision-making and strategic planning for enhanced market penetration and

product expansion.

Return

For each mutual fund scheme under study, the monthly returns are computed as:

Ri = ln (ending NAV / beginning NAV)

The market returns are computed on similar lines with BSE Sensex (The Bombay Stock

Exchange Sensitive Index) as benchmark. The return on the market portfolio is

computed as:

Rm = ln(ending sensex / beginning Sensex)

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The logarithmic mean is computed to obtain mean monthly market return. The returns

thus obtained are absolute returns and are retained throughout the study.

Risk: Standard deviation: Measure of Total Risk

Financial analysts and statisticians prefer to use a quantitative risk surrogate called the

variance of returns, denoted by

Where ri = return on individual mutual fund unit. ram = mean rate of return. The square

root of the variance is called the standard deviation σ = √ (Var (r)) The standard

deviation and the variance are equally acceptable and equivalent quantitative measures

of an asset’s total risk. The variance and standard deviation are computed from

logarithmic monthly returns.

Beta: Measure of Systematic Risk

To obtain the measure of systematic risk (Beta) of the mutual fund scheme, Market

Model is applied. The mathematical form of the model is:

rp =α + β * rm + ep

Where, rp is the return on the mutual fund scheme, rm is the return on the market, α is

the intercept, β is the slope or the beta coefficient, ep is the error term.

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Higher values of β indicate a high sensitivity of fund returns against market returns; the

lower value indicates low sensitivity. Higher β values are desired for the mutual funds

during bull phase of the market and lower β values are desired during the bear phase to

outperform the market. The error term ep is an approximation for unique risk. There are

unequal sample observations and non-identical time periods for the selected mutual

fund schemes. It is assumed that beta is stationary during the period. The constants α

and β are computed through regression analysis by regressing the monthly market

return with the monthly mutual fund return. The regression also provides the value of r 2

(coefficient of determination) that gives the strength of co-relation between the market

and the fund returns and indicates the extent of diversification.

Treynor’s Ratio

Jack Treynor (1965) conceived an index of portfolio performance measure called as

reward to volatility ratio, based on systematic risk defined in equation (8). He assumes

that the investor can eliminate unsystematic risk by holding a diversified portfolio. Hence

his performance measure denoted as TP is the excess return over the risk free rate per

unit of systematic risk, in other words it indicates risk premium per unit of systematic

risk.

where Tp = Treynor’s Ratio, rp = portfolio return, rf = risk free return and βp = Beta

coefficient for portfolio. As the market beta is 1, Treynor’s index Tp for benchmark

17
portfolio is (rm-rf) where rm = market return. If TP of the mutual fund scheme is greater

than (rm-rf), then the scheme has outperformed the market.

The major limitation of the Treynor Index is that it can be applied to the schemes with

positive betas during the bull phase of the market. The results will mislead if applied

during bear phase of the market to the schemes with negative betas. The second

limitation is it ignores the reward for unsystematic or unique risk.

Sharpe’s Ratio

William F.Sharpe (1966) devised an index of portfolio performance measure, referred to

as reward to variability ratio denoted by SP defined in equation (9). He assumes that a

small investor invests fully in the mutual fund and does not hold any portfolio to

eliminate unsystematic risk and hence demands a premium for the total risk.

where Sp = Sharpe’s Ratio, rp = portfolio return, rf = risk free return, and σp = standard

deviation of portfolio returns. The SP for benchmark portfolio is where σm =

standard deviation of market returns. If SP of the mutual fund scheme is greater than

that of the market portfolio, the fund has out performed the market.

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The superiority of the Sharpe ratio over the Treynor ratio is, it considers the point

whether investors are reasonably rewarded for the total risk in comparison to the

market. A mutual fund scheme with a relatively large unique risk may outperform the

market in Treynor’s index and may underperform the market in Sharpe ratio. A mutual

fund scheme with large Treynor ratio and low Sharpe ratio can be concluded to have

relatively larger unique risk. Thus, the two indices rank the schemes differently.

The major limitation of the Sharpe ratio is that it is based on the Capital Market Line

(CML). The major character of the capital market line is only the efficient portfolios can

be plotted on the CML but not inefficient. Hence, we assume that a managed portfolio

(mutual fund scheme) is an efficient portfolio.

Methodological Limitations of the Study:

The present study has the following limitations:

1. The NAVs used in the study are obtained from AMFI’s website, which in turn is

supplied by the members. Members in turn have not followed any uniform rule in its

computation due to the flexibilities offered under SEBI regulations.

2. Initially all mutual fund schemes were directly linked to stock market. In the recent 2

years numerous schemes which are independent of stock market (debt & money market

funds) are introduced and such schemes’ returns need not have correlation with BSE

sensex, and the sensex is not adjusted for dividends.

3. Banks are free to accept deposits at any interest within the ceilings fixed by Reserve

Bank of India and interest rates can vary from client to client. Hence there can be an

inaccuracy in the risk-free rates.

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4. The analysis is not free from the limitations of non-identical time periods and unequal

sample observations.

5. The study excludes the effect of entry and exit loads of the mutual funds.

Chapter 3: Analysis

3.1 Quantitative Analysis

Table-I shows that 19 schemes gave returns between 0-10, and the remaining 28 gave

greater returns. From the systematic risk point of view (β) 4 schemes are of low risk, 2

are of below average risk, 3 are of average risk, 6 of them are in above average risk

and 22 high risk class.

Table-II shows that the total risk of a mutual fund is of below average type. It conveys

that the total risk is below average with low market risk and the mutual fund’s risk

diversification is very poor. Out of the 47 schemes, 27 are at one extreme of low risk

20
and other 4 at extreme average risk. Out of 27 low risky schemes gave net losses and

all the4 low risky schemes outperformed the market.

A look at Table III reveals that out of 50 schemes 35 have underperformed the market,

25 are found to have higher total risk than the market and only 27 schemes have given

returns higher than the risk free rates. The 50 Bandhan mutual fund schemes under

study can be located in the 2X2 risk-return matrix in relation with the benchmark

portfolio.

SHARPE RATIO

● The highest sharpe ratio in equity schemes is of Axis Bluechip 0.253367576 and

lowest of Mirae Asset -0.452089607 both in the private sector.

● In debt schemes the highest sharpe ratio is of ICICI Prudential 0.260231369

from private sector and lowest of UTI -0.353076928 from public sector.

● Comparing Sharpe ratio public and private the highest of public was of SBI

Bluechip 0.247424801 and the lowest was of UTI -0.353076928 both in debt

category, and the highest of private was of ICICI Prudential 0.260231369 and the

lowest was of Mirae Asset -0.452089607 in debt and equity category

21
 respectively

● Comparing all the schemes overall the highest Sharpe ratio is of ICICI Prudential

0.260231369 (debt scheme) and the lowest is of Mirae Asset -0.452089607

(equity scheme). So the best risk adjusted performance is of ICICI Prudential in

equity schemes private Sector

TREYNOR PERFORMANCE INDEX

It can be used to compare the schemes in terms of the risk adjusted performance. A

higher value implies that the given mutual fund scheme has a better risk-adjusted return

in comparison to the other schemes. So clearly, a higher treynor ratio is an indicator for

suitable investment

The ranking is in order:

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 ***Orange for Equity schemes

Blue for Debt Schemes

3.2 Behavioral Analysis

Demographic Analysis

We have collected a response from a set of 101 respondents out of which majority of

our sample of age 22-28 which accounts about 66.4% and the next set of respondents

are from age group of 30-35 which accounts about 13%.

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 Figure 1 : Age Demarcation

Out of 101 respondents, 82.2% constitute the Male and 17.8% constitute the Female.

Figure 2: Gender split

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Majority of the sample are from tier 1 cities which constitutes around 76.2% and 19.8%

of the respondents are from tier 2 cities, Below tier 2 cities only 4 responses are there

which constitutes around 4%

Figure 3: Demographic Demarcation

Out of the respondents from the survey, major chunk of people investing in mutual fund

industry from last 1-3 years that is 45.6%. 22.8% of respondents investing in mutual

fund industry from more than 5 years.

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 Figure 4: Investment Timeline in Mutual Funds

Out of the 101 respondents, only 18.8% of people are making investment with the help

of financial advisors. 31.7% & 32.7% of the respondents make their investment decision

from Financial news & media and Personal network respectively.

Figure 5: Source of Investment Decision

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3.4.2.2 Finding Underlying Correlations

Correlation between Age, Gender, Which city investor is residing, any sales person

approached and how long they are investing

The provided correlation analysis examines the relationship between five variables. The

correlation coefficient between age and how long they are investing is 0.5435, indicating

a positive correlation. The analysis is based on a sample size of 101 observations for

both age and how long

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 Chapter 4: Results & Discussion

The analysis of mutual fund schemes provides a comprehensive view of their

performance and risk profiles. Among the 47 schemes examined, 19 generated returns

between 0-10%, while 28 achieved returns exceeding 10%, with only two schemes

producing returns above 60%. In terms of systematic risk (β), four schemes exhibited

low risk (β<0.3), two were classified as below-average risk (0.3<β<0.5), three as

average risk (0.5<β<0.7), six as above-average risk (0.7<β<0.9), and 22 schemes were

categorized as high risk (β>0.9).

Risk distribution indicated that 27 schemes were low risk (σ<10%), ten were below-

average risk (10%<σ<15%), and two fell into the average risk category (15%<σ<20%).

Among the low-risk schemes, 23 yielded returns between 0-10%, while four achieved

returns of 10-20%. In comparison to a benchmark portfolio, 35 out of 50 schemes

underperformed, with 25 exhibiting higher total risk. Only 27 schemes provided returns

exceeding the risk-free rate, highlighting mixed performance against benchmarks.

Sharpe ratio analysis identified the best risk-adjusted performance among equity and

debt schemes. Axis Bluechip led equity schemes with a Sharpe ratio of 0.253, while

Mirae Asset recorded -0.452. In debt schemes, ICICI Prudential achieved a Sharpe ratio

of 0.260, whereas UTI posted -0.353. The Treynor performance index showed Canara

Robeco leading in public sector schemes with a Treynor ratio of 6.40, while the lowest

ratios were noted for LIC and Baroda at -2.11.

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Survey results highlighted a strong preference for systematic investment plans (SIPs),

with 78.2% of investors opting for SIPs over lump-sum investments (21.8%). This trend

suggests alignment with banks' goals to enhance SIP penetration. Despite the low-risk

profiles of many schemes, most failed to outperform the market, indicating a need for

improved risk management strategies.

Behavioral analysis revealed that 66.4% of respondents were aged 22-28, primarily

male (82.2%), with most from tier 1 cities (76.2%). Investment patterns showed 45.6%

had been investing for 1-3 years, with only 18.8% consulting financial advisors,

indicating reliance on informal information sources. These findings highlight significant

opportunities for expanding mutual fund penetration, especially among younger

investors and in less penetrated markets.

29
 Chapter 5: Conclusion & Recommendations

The following inferences can be made from the data analysis:

The majority of respondents are males, with a significant representation in the 18–24

and 22-28 age groups. Most respondents hold a master's degree, indicating a higher

level of knowledge and education among participants. There is a need for increased

female participation in mutual fund investments, as females currently make up only

17.8% of the sample.

A significant portion of respondents invest a small percentage of their income (less than

5%) into mutual funds. The majority of investors prefer holding their investments for

more than three years, primarily aiming to achieve future financial goals. There is a

strong preference for systematic investment plans (SIPs) over lump-sum investments,

with 78.2% of respondents opting for SIPs.

Market risk is identified as the most commonly perceived moderate risk associated with

mutual funds. Investors exhibit a balanced view of risk, understanding the inherent risks

involved in mutual fund investments. The majority of mutual fund schemes have low to

average systematic risk (β), with a considerable number of schemes falling into the

high-risk class.

Out of the 47 mutual fund schemes examined, 28 achieved returns greater than 10%,

while only two schemes managed returns above 60%. Many schemes underperformed

relative to the market, with 35 out of 50 schemes not meeting benchmark performance

and 25 exhibiting higher total risk than the market. Sharpe ratio and Treynor

30
performance indices indicate varying risk-adjusted performance among schemes, with

some schemes showing negative ratios.

Key factors influencing mutual fund selection include professional management, brand

image, diversification, and past performance. Equity funds emerge as the most popular

type of mutual fund among respondents. Most respondents reside in tier 1 cities

(76.2%), with limited representation from tier 2 (19.8%) and below tier 2 cities (4%).

There is significant potential for expanding mutual fund penetration in tier 2 and below

tier 2 cities, which are currently underpenetrated markets. A substantial portion of

respondents rely on informal information sources for investment decisions, such as

financial news and personal networks. Only 18.8% of respondents make investment

decisions with the help of financial advisors.

A positive relationship exists between age and investment duration, indicating that as

investors age, their tenure in mutual fund investments increases. There is a weak

positive correlation between age and gender, suggesting a slightly higher investment

duration among older male investors. These findings underscore the need for targeted

strategies to improve mutual fund performance, enhance SIP adoption, and expand

mutual fund penetration, particularly in underpenetrated markets and among female

investors. Enhanced financial education and advisory services, along with tailored

marketing efforts, can drive substantial growth in the mutual fund industry.

31
Recommendations

Increase Assets Under Management (AUM) for Individual Investors: Banks and the

Association of Mutual Funds in India (AMFI) should collaborate to create targeted

initiatives aimed at increasing AUM from individual investors. This can include

personalized financial planning services, attractive investment options, and incentives

for long-term investments. Develop and promote diversified mutual fund products

tailored to meet the specific needs and risk profiles of individual investors, encouraging

higher investment contributions.

Expand Investor Awareness Programs in Below Tier 2 Cities: Asset Management

Companies (AMCs) should focus on conducting more investor awareness programs in

below tier 2 cities. These programs should aim to educate potential investors about the

benefits of mutual funds, the importance of systematic investment plans (SIPs), and

basic financial literacy. Utilize local media, community events, and partnerships with

local institutions to effectively reach and educate the target audience in these

underpenetrated markets.

Shift Market Concentration to Equity Funds: Bandhan Mutual Fund should consider

shifting its market concentration more towards equity funds rather than debt-oriented

mutual funds. This can be achieved by developing a range of equity-focused investment

products that cater to different risk appetites and investment goals. Highlight the

potential for higher returns with equity investments, especially in a growing economy,

and educate investors on the long-term benefits of including equity funds in their

investment portfolios.

32
Enhance Financial Education and Advisory Services: Create and implement thorough

investor education programs to increase understanding and interest in mutual funds.

Focus on explaining key concepts, investment strategies, and risk management

measures in a clear and accessible manner. Provide greater access to professional

financial advisors who can offer personalized guidance and help investors make

informed decisions based on their financial objectives and risk tolerance.

Improve Transparency in Communication: Mutual fund companies should prioritize

transparency in their communication with investors. Provide clear and understandable

information on fund performance, fees, risks, and investment goals to build trust and

confidence among investors. Offer regular and transparent performance reports that

show the fund's past performance, benchmark comparisons, and portfolio holdings to

enable investors to monitor their investments effectively.

Simplify the Investment Process: Develop and offer user-friendly online platforms and

mobile applications to streamline the investment process. Simplify account opening,

investment selection, and redemption processes to make managing mutual fund

investments easier for investors..

Emphasize the importance of diversification in investment portfolios to help investors

reduce risk and adopt a well-balanced investment approach. Educate investors on the

benefits of maintaining a long-term investment horizon to capitalize on potential mutual

fund returns and better align their investment strategies with their long-term financial

goals.

33
7.2 Tables:

Table I: Risk (β) and return of mutual funds (no. of schemes)

Risk→ Low Risk Below Average Above High Risk Total

Avg.
1 year β<0.3 Avg. Risk Risk 0.9>β

Return(%) Risk
0.3>β<0.5 0.5>β<0.7

0.7>β<0.9

0-10 4 1 2 3 9 19

10-20 0 1 0 1 2 4

20-40 0 0 0 1 9 10

40-60 0 0 0 0 2 2

>60 0 0 1 1 0 2

Total 4 2 3 6 22 47

Table II: Risk (Standard Deviation) and Return of Mutual Funds (No.of Schemes)

Risk→ Low Risk Below Average Above High Risk Total

Avg.
1 year ↓ σ<10% Avg. Risk Risk σ>25%

34
Return 10%> 15%> Risk

(%)
σ<15% σ<20% 20%>

σ<25%

0-10 23 0 0 0 0 23

10-20 4 0 0 0 0 4

20-40 0 8 0 0 0 8

40-60 0 2 0 0 0 2

>60 0 0 2 0 0 2

Total 27 10 2 0 0 39

Table III: Risk & Return: Mutual Funds Vs Bench Mark Portfolio

S.No. Funds rp σp rm Benchmark Index

1 Bandhan Large 36.69% 13.13% 33.76 BSE 100 TR

Cap Fund

2 Bandhan Small 70.57 17.04% 58.25 BSE 250 SmallCap

Cap Fund

3 Bandhan Core 56.31 13.12% 45.25 NIFTY LargeMidcap 250

Equity Fund TRI

4 Bandhan Flexi 36.89 12.46% 39.47 BSE 500 TRI

35
 Cap Fund

5 Bandhan Multi 42.52 - 46.84 NIFTY 500 Multicap

Cap Fund 50:25:25 TRI

6 Bandhan 53.47 - 58.02 BSE 150 Midcap Index

Midcap Fund

7 Bandhan ELSS 34.91 12.63% 39.47 BSE 500 TR

Tax Saver Fund

8 Bandhan 35.97 13.64% 39.47 BSE 500 TRI

Focused Equity

Fund

9 Bandhan 42.46 13.35% 39.47 Tier 1: BSE 500 TRI

Sterling Value
Tier 2: BSE 400
Fund
MidSmallCap TRI

10 Bandhan 87.17 15.93% 114.26 BSE India Infrastructure

Infrastructure TRI

Fund

11 Bandhan 59.48 - 70.14 Nifty Transportation and

Transportation Logistics Index

& Logistics

Fund

36
12 Bandhan Nifty 27.22 - 28.03 Nifty 50 TRI

50 Index Fund

13 Bandhan Nifty 32.81 - 33.68 Nifty 100 TRI

100 Index Fund

14 Bandhan 31.26 - 34.14 Nifty100 Low Volatility 30

Nifty100 Low TRI

Volatility 30

Index Fund

15 Bandhan 64.67 - 67.8 Nifty200 Momentum 30

Nifty200 TRI

Momentum 30

Index Fund

16 Bandhan BSE 24.65 12.79% 25.19 BSE Sensex TRI

Sensex ETF

17 Bandhan Nifty 27.91 12.83% 28.03 Nifty 50 TRI

50 ETF

18 Bandhan 7.56 0.69% 8.15 Nifty 50 Arbitrage Index

Arbitrage Fund

19 Bandhan Equity 10.75 2.85% 14.84 CRISIL Equity Savings

Savings Fund Index

20 Bandhan 18.95 7.03% 14.77 NIFTY 50 Hybrid

Balanced Composite debt 50:50

37
 Advantage Index

Fund

21 Bandhan 11.52 3.23% 11.55 CRISIL Hybrid 85+15

Regular Conservative Index

Savings Fund

22 Bandhan Hybrid 25.31 10.11% 26.14 CRISIL Hybrid 35+65

Equity Fund Aggressive Index

23 Bandhan US 38.78 - 37.11 Bandhan Retirement

Equity Fund of Fund

Fund

24 Bandhan US 6.95 - 7.04 ICE 0-1 Year US

Treasury Bond Treasury Securities Index

0-1 year Fund

of Fund

25 Bandhan Asset 12.66 - 11.55 CRISIL Hybrid 85+15

Allocation Fund Conservative Index

of Funds –

conservative

plan

26 Bandhan Asset 20.32 - 14.77 NIFTY 50 Hybrid

Allocation Fund Composite debt 50:50

of Funds – Index

38
 Moderate plan

27 Bandhan Asset 27.39 - 26.14 CRISIL Hybrid 35+65

Allocation Fund Aggressive Index (

of Funds –

agressive plan

28 Bandhan All 6.71 0.65% 6.52 NIFTY Medium Duration

Seasons Bond Debt Index

Fund

29 Bandhan 6.70 0.12% 6.85 Nifty 1D Rate Index

Overnight Fund

30 Bandhan Liquid 7.37 0.13% 7.36 NIFTY Liquid Index A-I

Fund

31 Bandhan Ultra 7.18 0.16% 7.52 NIFTY Ultra Short

Short-Term Duration Debt Index A-I

Fund

32 Bandhan Low 6.97 0.17% 7.32 NIFTY Low Duration Debt

Duration Fund Index A-I

33 Bandhan 6.73 0.17% 7.42 NIFTY Money Market

Money Manager Index A-I

Fund

34 Bandhan 6.61 0.49% 6.71 Nifty Banking & PSU

Banking & PSU

39
 Debt Fund Debt Index A-II

35 Bandhan 6.74 0.49% 6.91 Tier 1: NIFTY Corporate

Corporate Bond Bond Index A-II, Tier 2:

Fund NIFTY AAA Short

Duration Bond Index

36 Bandhan Bond 6.85 0.75% 7.06 Tier 1: NIFTY Short

Fund – Short Duration Debt Index A-II

Term Plan (Tier 2: NIFTY AAA Short

Duration Bond Index

37 Bandhan Bond 6.05 1.21% 6.52 Tier 1: NIFTY Medium

Fund – Medium Duration Debt Index A-III

Term Plan Tier 2: NIFTY AAA

Medium Duration Bond

Index

38 Bandhan 6.85 0.43% 7.06 NIFTY Short Duration

Floating Rate Debt Index A-I

Fund

39 Bandhan Credit 6.35 0.58% 8.11 Tier 1: NIFTY Credit Risk

Risk Fund Bond Index B-II, Tier 2:

65% NIFTY AA Short

Duration Bond Index +

35% NIFTY AAA Short

40
 Duration Bond Index

40 Bandhan Bond 6.28 2.23% 7.17 NIFTY Medium to Long

Fund – Income Duration Debt Index AIII

Plan

41 Bandhan 8.83 3.74% 6.60 NIFTY Composite Debt

Dynamic Bond Index A-III

Fund

42 Bandhan 7.24 2.30% 6.90 CRISIL 10 year Gilt Index

Government

Securities Fund

- Constant

Maturity Plan

43 Bandhan 9.29 3.78% 7.86 CRISIL Dynamic Gilt

Government Index

Securities Fund

– Investment

Plan

44 Bandhan 6.71 0.62% 7.14 CRISIL IBX Gilt Index -

CRISIL IBX Gilt April 2026

April 2026 Index

Fund

45 Bandhan 6.80 0.95% 7.22 CRISIL-IBX Gilt Index

41
 CRISIL IBX Gilt

June 2027

Index Fund

46 Bandhan 6.81 1.09% 7.20 CRISIL-IBX Gilt Index

CRISIL IBX Gilt

April 2028 Index

Fund

47 Bandhan 6.97 1.90% 7.41 Crisil IBX Gilt Index -

CRISIL IBX Gilt April 2032

April 2032 Index

Fund

48 Bandhan 7.03 0.76% 7.51 CRISIL IBX 90:10 SDL

CRISIL IBX plus Gilt Index –

90:10 SDL Plus November 2026

Gilt– November

2026 Index

Fund

49 Bandhan 7.12 0.93% 7.56 CRISIL IBX 90:10 SDL

CRISIL IBX plus Gilt Index –

90:10 SDL Plus September 2027

Gilt– September

2027 Index

42
 Fund

50 Bandhan 7.43 2.17% 7.80 CRISIL IBX 90:10 SDL

CRISIL IBX plus Gilt Index – April

90:10 SDL Plus 2032

Gilt–April 2032

Index Fund

Table IV: Calculation of Sharpe ratio and treynor Index (Private Sector Equity)

Axis Edelweiss IDBI JM Mirae

Bluechip financials Asset

Years Yearly Yearly Yearly Yearly Yearly

Returns Returns Returns Returns Returns

2023 18.31 10.68 12.41 4.73 12.48

2022 7.43 2.94 5.33 1.6 0.22

2021 37.96 37.76 27.5 20.94 0.22

2020 5.97 3.97 1.06 1.65 7.65

2021 3.29 1.29 1.06 1.43 3.86

Risk free Axis Edelweiss IDBI JM Mirae

43
 return Bluechip financials Asset

Excess Excess Excess Excess Excess

Return Return Return Return Return

2023 6.933 11.377 3.747 5.477 -2.203 5.547

2022 7.315 0.115 -10.255 -12.645 -5.715 -2.095

2021 6.861 31.099 20.899 20.639 14.079 -6.641

2020 7.524 -11.494 -7.424 -6.464 -5.874 0.126

2019 7.746 -9.036 -5.216 -6.686 -9.176 -3.886

Axis Edelweiss IDBI JM Mirae Asset

Bluechip financials

Average 4.4122 2.3502 0.0642 -1.778 5.547

Standard 17.415 16.798 13.251 9.201 5.287

deviation

Sharpe ratio 0.2533 0.1399 0.0048 -0.1932 -0.4520

Trenor 5.88 2.42 0.08 -4.04 -2.43

Performance

Index

44
Table VII: Calculation of Sharpe ratio and Treynor Index (Private Sector Debt)

Bandhan Nippon ICICI Pru Tata Aditya Birla

India

Yearly Yearly Yearly Yearly Yearly

return return return return return

2023 10.76 11.75 12.46 9.35 9.71

2022 6.51 6.1 6.71 2.79 5.03

2021 2.59 1.26 3.22 3.19 1.42

2020 12.67 13.66 15.61 11.21 14.24

2019 6.22 5.21 5.12 6.97 4.67

Risk Free IDFC Nippon ICICI Pru Tata Aditya

return India Income Birla

Year Excess Excess Excess Excess Excess

Return Return Return Return Return

2023 6.933 3.827 4.817 5.527 2.417 2.777

2022 7.315 -0.805 -1.215 -0.605 -4.525 -2.285

2021 6.861 -4.271 -5.601 -3.641 -3.671 -5.441

45
2020 7.524 5.146 6.136 8.086 3.686 6.716

2019 7.746 -1.526 -2.536 -2.626 -0.776 -3.076

IDFC Nippon ICICI Pru Tata Income Aditya Birla

India

Average 0.4742 0.3202 1.3482 -0.5738 -0.2618

Standard 3.913 4.991 5.181 3.618 4.919

Deviation

Sharpe 0.121 0.064 0.261 -0.158 0.053

Ratio

Treynor 0.272 0.180 0.202 -0.455 0.156

performance

table n

Table VIII: Calculation of Sharpe ratio and treynor Index (Public Sector Equity)

Sbi Bluechip UTI Baroda Canara LIC

Robecco

Years Yearly Yearly Yearly Yearly Yearly

returns returns returns returns returns

2023 11.41 12.75 11.77 8.44 14.93

46
2022 -3.58 5.2 -3.12 -9.05 1.33

2021 29.74 29.77 22.64 50.42 26.25

2020 4.48 3.79 3.13 1.86 1.76

2019 7.86 -3.36 -3.23 12.27 -2.66

Years Risk SBI UTI Baroda Canara LIC

free Bluechip Robecoo

return

Excess Excess Excess Excess Excess

return return return return return

2023 6.933 4.477 5.817 4.837 1.507 7.997

2022 7.315 -10.895 -2.115 -10.435 -16.365 -5.985

2021 6.861 22.879 22.909 15.779 43.559 19.389

2020 7.524 -3.044 -3.734 -4.394 -5.664 -5.764

2019 7.746 0.114 -11.106 -10.976 4.524 -10.406

SBI UTI Baroda Canara LIC

Bluechip Robecoo

Average 2.7062 2.3542 -1.0378 5.5122 1.0462

47
Standard 12.59 12.96 11.35 22.73 12.36

deviation

Sharpe ratio 0.214 0.181 -0.091 0.2424 0.084

Treynor 2.421 2.4522 -1.166 6.409 1.230

Performance

index

Table IX: TABLE SHOWING TYPE OF INVESTMENT

CATEGORY NUMBER OF RESPONDANTS

LUMPSUM 21.8%

SIP 78.2%

48