A COMPARATIVE STUDY OF MUTUAL FUNDS AND UNIT LINKED INSURANCE PLAN
EXECUTIVE SUMMARY :
In few years Mutual Fund has emerged as a tool for ensuring one’s financial well being. Mutual Funds have not only contributed to the India growth story but have also helped families tap into the success of Indian Industry. As information and awareness is rising more and more people are enjoying the benefits of investing in mutual funds. The main reason the number of retail mutual fund investors remains small is that nine in ten people with incomes in India do not know that mutual funds exist. But once people are aware of mutual fund investment opportunities, the number who decide to invest in mutual funds increases to as many as one in five people. The trick for converting a person with no knowledge of mutual funds to a new Mutual Fund customer is to understand which of the potential investors are more likely to buy mutual funds and to use the right arguments in the sales process that customers will accept as important and relevant to their decision.
The analysis and advice presented in this Project Report is based on the study on the saving and investment practices of the investors and preferences of the investors for investment in Mutual Funds. This Report will help to know about the investors’ Preferences in Mutual Fund means Are they prefer any particular Asset Management Company (AMC), Which type of Product they prefer, Which Option (Growth or Dividend) they prefer or Which Investment Strategy they follow (Systematic Investment Plan or One time Plan). Further this project also talks about the investments made by people in unit linked insurance plan (ULIP).
This project talks about the comparison between the mutual funds and the unit linked insurance plan. Here the preferences and choices of the investors has been analyzed and enhanced upon to know how investors plans to invest their money and in which financial product i.e mutual funds or ulips .
OBJECTIVES OF THE STUDY AND SCOPE
• To study the various benefits and disadvantages of mutual funds and unit linked insurance plans. • To study the various features of ULIPs and Mutual funds. • To study the comparison between the mutual funds and ulips.
Literature on mutual fund performance evaluation is enormous. A few research studies that have Influenced the preparation of this paper substantially are discussed. Sharpe, William F. (1966) suggested a measure for the evaluation of portfolio performance. Drawing on results obtained in the field of portfolio analysis, Economist Jack L. Treynor has suggested a new predictor of mutual fund performance, one that differs from virtually all those used previously by incorporating the volatility of a fund's return in a simple yet meaningful manner. Michael C. Jensen (1967) derived a risk-adjusted measure of portfolio performance (Jensen’s alpha) that estimates how much a manager’s forecasting ability contributes to fund’s returns. As indicated by Statman (2000), the e SDAR of a fund portfolio is the excess return of the portfolio over the return of the benchmark index, where the portfolio is leveraged to have the benchmark index’s standard deviation. S.Narayan Rao , evaluated performance of Indian mutual funds in a bear market through relative performance index, risk-return analysis, Treynor’s ratio, Sharpe’s ratio, Sharpe’s measure , Jensen’s measure, and Fama’s measure. The study used 269 open-ended schemes (out of total schemes of 433) for computing relative performance index. Then after excluding funds whose returns are less than risk-free returns, 58 schemes are finally used for further analysis. The results of performance measures suggest that most...
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