INTRODUCTION

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What is Investment?
Investment is a process of allocating money to different financial instruments with the
goal of earning good returns in the future. There are numerous investment vehicles
such as mutual funds, equities, debt securities, etc. available in the market for
investors. Some of these investments are riskier as compared with others. Before
investing in different types of investment avenues, it is imperative for investors to
know their financial goals and assess risk appetite.

Different Types of Investments:

1. Banks
2. Stocks
3. Mutual Funds
4. Insurance
5. Post Office
6. Gold
7. Real Estate
8. PPF
Out of All these investment options our focus is going to be on RETURNS,
Mutual Funds and comparative study between Mutual Funds and other
investment options.

2
What are Mutual Funds?
A Mutual Fund is a trust that pools the savings of a number of investors who allocate
a common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures, government and other securities. The income
earned through investments and the capital appreciation realized is shared by its unit
holders in proportion to the number of units owned by them. Thus, a Mutual Fund is
the most suitable investment for the common man as it offers an opportunity to invest
in a diversified, Multidimensional professionally managed basket of securities at a
relatively low cost. The accelerated growth of mutual funds highlights a need for
Comparative Analysis of Mutual Fund and Traditional Investment.
Investors always look for safer investment avenues and want to maximize their
returns in accordance with their risk tolerance. One tries to invest money as early as
possible so that the money will grow accordingly in his lifetime. Choosing a wise
investing option is very crucial because a balance is required to be maintained
between the risks and returns

involved. Return is motivating force and the principal reward in the investment
process. One of the important reasons that’s why one needs to invest wisely is to meet
the cost of inflation. Inflation is the rate at which the cost of living increases at that
time. The cost of living is simply what it cost to buy the goods and services one needs
to live. Inflation causes money to lose value because it will not buy the same amount
of a goods or services in the future as it does now or did in the past. Savings, when
not invested will gradually lose its value due to inflation or rise price level. Hence if a
person saves, investment becomes a compulsion and not an option. Usually, investors
in a country like India prefer bank deposits and insurances as their favorite
instruments of investments. The increasing awareness towards the structured products
and financial literacy has drawn investors or Householders’ attention towards mutual
funds and equity markets. These draw our attention for comparison of resource
mobilization towards these investment avenues and draw some conclusive remarks
between Mutual Fund Investment and Traditional Investment.

3
Investment Cycle in Mutual Fund:

Figure 1

Structure of Mutual Fund in India:

The structure of Mutual Funds in India is a three-tier one that comes with other
substantial components. It is not only about varying AMCs or banks creating or
floating a variety of mutual fund schemes. However, there are a few other players that
play a major role into the mutual fund structure. There are three distinct entities
involved in the process – the sponsor (who creates a Mutual Fund), trustees and the
asset management company (which oversees the fund management). The structure of
Mutual Funds has come into existence due to SEBI (Securities and Exchange Board
of India) Mutual Fund Regulations, 1996 that plays the role of a primary watchdog in
all of the transactions. Under these regulations, a Mutual Fund is created as a Public
Trust. We will look into the structure of Mutual Funds in a detailed manner.

4
Figure 2

5
Basic terms that are used in Mutual Funds:
• NAV: The performance of a particular scheme of a mutual fund is denoted by
Net Asset Value (NAV). Mutual funds invest the money collected from the
investors in securities markets. In simple words, Net Asset Value is the market
value of the securities held by the scheme. Since market value of securities
changes every day, NAV of a scheme also varies on day-to-day basis. The
NAV per unit is the market value of securities of a scheme divided by the total
number of units of the scheme on any particular date. NAV is required to be
disclosed by the mutual funds on a regular basis - the mutual funds on a
regular basis - daily or wee daily or weekly - depending on the type of scheme.
• 2. LOAD: It is a charge collected by a mutual fund when it sells units. It can
be either front-end load (i.e., the charge is collected when an investor buys the
units) or back-end load (i.e., the charge collected hen the investor sells back
the units). Some schemes do not charge any load and are called No Load
Schemes.
• 3. PORTFOLIO: A portfolio comprises of investments in a variety of
securities and asset classes. This diversification reduces the overall risk. es the
overall risk. The portfolio risk depends on the nature of each in the nature of
each investment in the portfolio and the overall impact (favorable or
unfavorable) of the various risk factors on each security. A mutual fund
scheme states the kind of portfolio it seeks to construct as well as the risks
involved under each asset class.
• CUSTODIAN: The custodian, an independent organization, has the physical
possession of all securities purchased by the mutual fund, and securities
purchased by the mutual fund, and undertakes responsibility for its handling
and safe Takes responsibility for its handling and safekeeping. For instance,
the Stock Holding Corporation of India Ltd (SCHIL) is the custodian for most
fund houses in the country.
• REGISTRAR: A Registrar holds and maintains the details of the transactions
carried out by each Unit holder in a Mutual Fund scheme. He is appointed by
the AMC to serve the Unit holder for the purchases, sales or switching of
Units that he may carry out. The dividend distributions, recording of
nominations or transfers are some other services rendered by the Registrar. He
may also have Investor Service Centers in various cities, where an investor
can investor can get over-the-count r can get over-the-counter service.
• ASSET MANAGEMENT COMPANY (AMC): A highly regulated
organization that pools money from many people into a portfolio structured to
achieve certain objectives. Hence, it is termed as an Asset Management
Company. Typically, an AMC manages several funds - open-end /closed-end
across several categories - growth, income, balanced. Every mutual fund has
an AMC associated with it.
• INITIAL PUBLIC OFFER (IPO): The sale of a company's shares or a fund
houses mutual fund to investors for the first mutual fund to investors for the
first time.

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• STOCKS: Stocks represent ownership or equity in a company. This asset class
has historically outperformed all other asset classes over all other asset classes
over the long-term but to be more volatile in the short-term.
• DEBT INSTRUMENTS: This represents debt papers of corporate and
government agencies. They provide income in the form of interest payments
and principal if held till maturity. There can be price volatility due to interest
rate movements as well as well as economic and political instability. economic
and political instability.
• MONEY MARKET INSTRUMENTS: These are inter-bank Call Money,
Commercial Paper, Treasury Bills, Certificates of Deposit (CDs), Bill
Rediscounting and short-term bonds. They pay interest and are the least
volatile all the asset classes.
• SALE OR REPURCHASE/REDEMPTION PRICE: The price or NAV a unit
holder is charged while investing in an open-ended scheme is called sales
price. It may include sales load, if applicable. Repurchase or redemption price
is the price or NAV at which an open-ended scheme purchases or redeems its
units from the unit holders. It may include exit load, if may include exit load,
if applicable. applicable.
• SWITCHING FACILITY: Switching facility provides investors with an
option to transfer to transfer the funds amongst different types of schemes or
plans. Investors can opt to switch units between Dividend Plan and Plan and
Growth Plan at NAV based prices. Growth Plan at NAV based prices.
Switching is also allowed into/from other select open-ended schemes currently
within the Fund family or schemes that may be launched in the future at NAV
based prices.
• EXPENSE RATIO: The expense ratio for a fund is the annual expenses of a
fund (at the end of the financial year), including
• the management fee, administrative costs, divided by the number of units on
that day.
• STATEMENT OF ACCOUNT: It is the statement showing the complete
portfolio of an investor regarding investment in the mutual fund scheme. It
also shows current worth of holdings.
• SALES PRICE: The price or NAV a Unit holder is charged while investing in
an open-ended scheme is called sales price. It may include sales load, I price.
It may include sales load, if applicable.
• REPURCHASE/REDEMPTION PRICE: Repurchase or redemption price is
the price or NAV at which an open-ended scheme purchases or redeems its
units from the Unit holder. It redeems its units from the Unit holder. It may
incl may include exit load, if applicable.
• BROKERAGE COMMISSION: An additional expense which does not pass
through the statement of operations and cannot be controlled by the investor is
controlled by the investor is brokerage commissions brokerage commissions.
Brokerage commissions are incorporated into the price of the fund and are
reported usually 3 months after the fund's annual report in the statement of
additional information. Brokerage commissions are directly related to
portfolio turnover (portfolio turnover refers to the number of times the fund's

7
 assets are bought and sold over the course of and sold over the course of a
year).

Different types of Mutual Funds:

Schemes according to Maturity Period:
A mutual fund scheme can be classified into open-ended scheme or close-ended
scheme depending on its maturity period.
• Open-ended Fund/ Scheme
An open-ended fund or scheme is one that is available for subscription and repurchase
on a continuous basis. These schemes do not have a fixed maturity period. Investors
can conveniently buy and sell units at Net Asset Value (NAV) related prices which
are declared on a daily basis. The key feature of open-end schemes is liquidity.

• Close-ended Fund/ Scheme

A close-ended fund or scheme has a stipulated maturity period e.g., 5-7 years. The
fund is open for subscription only during a specified period at the time of launch of
the scheme. Investors can invest in the scheme at the time of the initial public issue
and thereafter they can buy or sell the units of the scheme on the stock exchanges
where the units are listed. In order to provide an exit route to the investors, some
close-ended funds give an option of selling back the units to the mutual fund through
periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least
one of the two exit routes is provided to the investor i.e., either repurchase facility or
through listing on stock exchanges. These mutual funds schemes disclose NAV
generally on weekly basis.

Schemes according to Investment Objective:

A scheme can also be classified as growth scheme, income scheme, or balanced

scheme, or balanced scheme considering its investment objective. Such schemes may
be open-ended or close-ended schemes as described earlier. Such schemes may be
classified mainly as earlier. Such schemes may be classified mainly as follows:

• Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the medium to long-
term. Such schemes normally invest a major part of their corpus in equities. Such

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funds have comparatively high risks. These schemes provide different options to the
investors like dividend option, capital appreciation, etc. and the investors may choose
an option depending on their preferences. The investors must indicate the option in
the application form. The mutual funds also allow the investors to change the options
at a later date. Growth schemes are good for investors having a long-term outlook
seeking appreciation over a period of time.
• Income / Debt Oriented Scheme
The aim of income funds is to provide regular and steady income to investors. Such
schemes generally invest in fixed income securities such as bonds, corporate
debentures, Government securities and money market instruments. Such funds are
less risky compared to equity schemes. These funds are compared to equity schemes.
These funds are not affected because of fluctuations in equity markets. However,
opportunities of capital appreciation are also limited in such funds. The NAVs of such
funds are affected because of change in interest rates in the country. If the interest
rates fall, NAVs of such funds are likely to increase in the short run and vice versa.
However, long term investors may versa. However, long term investors may not
bother not bother about these fluctuations.
• Balanced Fund
The aim of balanced funds is to provide both growth and regular income as such
schemes invest both in equities and fixed income securities in the proportion indicated
in their offer documents. These are appropriate for investors looking for moderate
growth. They generally invest 40-60% in equity and debt instruments. These funds are
also affected because of fluctuations in share prices in the stock markets. However,
NAVs of such funds are likely markets. However, NAVs of such funds are likely to
be less volatile compared to pure equity funds.
• Money Market or Liquid Fund
These funds are also income funds and their aim is to provide easy liquidity,
preservation of capital and moderate income. These schemes invest exclusively in
safer short-term instruments such as treasury bills, certificates of deposit, commercial
paper and inter-bank call money, government securities, etc. Returns on these
schemes fluctuate much less compared to other funds. These funds are appropriate for
corporate and individual investors as a means to park their surplus funds for short
periods.
• Gilt Fund
These funds invest exclusively in government securities. Government securities have
ties. Government securities have no default risk. no default risk. NAVs of these
schemes also fluctuate due to change in interest rates and other economic factors as is
the case with income or debt-oriented schemes.
• Index Funds
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive
index, S&P NSE 50 indices (Nifty), etc. These schemes invest in the securities in the

9
same weight age comprising of an index. NAVs of such schemes would rise or fall in
accordance with the rise or fall in the index, though not exactly by the same
percentage due to some factors known as "tracking error" in technical terms.
Necessary disclosures in this regard are made in the offer document of the mutual
fund scheme. There are also exchange traded index funds launched by the mutual
funds which are traded on the stock exchanges.
• Sector specific funds
These are the funds/schemes which invest in the securities of only those sectors or
industries as specified in specified in the offer documents. e.g., Infrastructure,
Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum
stocks, etc. The returns in these funds are dependent on the performance of the
respective sectors/industries. While these funds may give higher returns, they are
riskier compared to diversified funds. Investors need to keep a watch on the
performance of those sectors/industries and must exit at an appropriate time. They
appropriate time. They may also seek advice of an e may also seek advice of an
expert.
• Tax Saving Schemes
These schemes offer tax rebates to the investors under specific provisions of the
Income Tax Act, 1961 as the Government offers tax incentives for investment in
specified avenues. e.g., Equity Linked Savings Schemes

(ELSS). Pension schemes launched by the mutual funds also offer tax benefits. ULIP
schemes also offer tax benefits. These schemes are growth oriented and invest pre-
dominantly in equities. Their growth opportunities and risks associated like any
equity-orient equity-oriented scheme.

Trend of Mutual Fund in India till now and its future:

According to a reputed financial advisory company it was stated that the
financialization of assets will lead to structural growth for the industry. It further
added that the mutual funds are attracting a higher share of money flowing into
financial assets. Gross household investments in mutual funds are on the rise and have
grown at a compound annual growth rate of 27.3% between the financial year 2013
and 2020. Comparing with the gross household investment in financial assets grew at
a compound annual growth rate of 11.5% during the financial year 2012 to 2020.
The asset under management (AUM) for the Indian mutual fund industry is expected
to increase at the pace of 12.7% annually to ₹92 trillion by 2030.
Elara Capital further mentioned that mutual fund's assets under management as a
percentage of GDP is only 12% in India against the world average of 63%, showing

10
great growth potential. Comparing with other developing countries, in South Africa
and Brazil, it is 48% and 68%, respectively.

Figure 3

Investing in Mutual Funds Online or Offline:

Since 2013, every mutual fund scheme is sold in two different categories: Regular and
direct. Both categories refer to the same scheme but are priced differently [in terms of
the expense ratio and the net asset value].
Schemes that have a broker (or an intermediary involved) are regular funds. Direct
funds are the same scheme, but there is no broker involved, and you can invest
directly with the fund house. They are also run by the same fund managers and have
the same style of investment, but slightly different prices. Think of it like buying a
packet of chips at a general store vs at the airport. Regular plans are priced higher
because brokers are given distribution fees.
There are several online platforms and apps that sell mutual funds to anyone willing
to invest. The taglines are either about saving taxes or being able to invest with as
little as Rs.100 or Rs. 500. Investing online most often is a seamless and paperless

11
process. You add your bank account and complete the KYC process. After that, you
can set up SIPs or invest via Lumpsum and in any Equity, Debt, or Hybrid scheme.
However, it is important to be mindful of the fact that you could need a financial
advisor to guide you when you are making investment choices, [especially if you are
new to it], recommends Jaikishan. Also, one should be aware of cross-selling of
unwanted financial products that can occur when investing by oneself, online.
You have to ask yourself if you can rely on yourself to research and take investment
decisions. If you do, then investing via online aggregators, which sell direct funds,
could be your go-to option. You can do this even on a particular mutual fund house’s
(AMC) website. Online platforms also provide you with real-time updates on the
performance of the funds in your kitty.
Nonetheless, if you would rather have an expert take care of your financial plans,
investing offline via a broker or a financial advisor makes better sense.

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RESEARCH METHODOLOGY

13
Research Methodology
Research as a process involves defining and redefining problems hypothesis
formulation organizing and evaluating data, deriving deduction inference and
conclusion etc. after careful testing.
For collecting the information for this project, I have used the source of data. For the
collection of data, I have used in depth interview method for that purpose. I have
taken a general interview of Investor. Thus, the data obtained through this method is
primary one and true.
Primary Data -
The data was a generally collected by face-to-face interaction with the Cluster Head,
Branch Manager and Relationship Managers in the organization and walk in investors
in the office, the technique applied through personal direct survey.

Primary data most important role is knowing the

• Investor attitude, requirement and opinion
• Investor awareness about the various investment options available in the
market.
Secondary Data -
Secondary data is the data already collected by someone else. This data is not
especially collected to solve present or specific problem. The information is relevant
and can be used for our purpose
There are three major sources of secondary data collection
• Internet
• Company Factsheet
• Newspaper
• Books, magazines etc.

14
 PURPOSE OF THE STUDY

The purpose behind this study is to guide investors about basics of investments,
various options available for investments, risk and returns related to a particular
investment. The process of starting an investment, investment and financial planning
and clearing queries of the investors.

15
 OBJECTIVE OF THE STUDY

• To know the Mutual Fund industry.

• To know that how mutual fund is better option of investment than other
options like bank deposits, public provident fund, instruments in the stock
market, gold, real estates.
• To study various schemes of mutual fund in ABSLAMC.
• To compare ABSLAMC mutual funds with other investment options like
investments in Bank, Equities, PPF, Gold, Real Estate, etc.
• To observes the recent trends in the industry and how investors are switching
towards modern investment opportunities.

16
 SCOPE OF THE STUDY
The project work would focus on the following areas of:
• Importance of understanding the Mutual Fund industry and why one should
consider is as a n investment option and not stick to traditional methods of
investment.
• Investor’s perspective and angle of look at the Mutual Fund industry.
• How to plan investments for different group of investors on the basis of
various factors like: age, income level, profession, purpose of investment.

17
 LIMITATIONS OF THE STUDY
• Time constraints: Due to shortage or less span of time it may be possible that
all related and concerned aspects may not be covered in the project.
• Analysis is limited to availability of data.
• Research is limited to only one organization other Asset Management
Companies are not considered in this research.
• Due to confidentiality issues, there are restrictions on disclosing some
information and data.
• Approximate values are used for the analyzing at some parts. Hence, the
results also reveal the approximate values and not the exact values.

18
COMPANY PROFILE

19
Aditya Birla Sun Life Asset Management Company Limited
Aditya Birla Sun Life Asset Management Company Ltd. (ABSLAMCAMC), which
was established in 1994 formerly known as Birla Sun Life Asset Management
Company Limited, is an investment managing company registered under the
Securities and Exchange Board of India. It is a joint venture between the Aditya Birla
Capital of India and the Sun Life Financial Inc. of Canada. The company offers
sector-specific equity schemes, fund of fund schemes, hybrid and monthly income
funds, debt and treasury products and offshore funds.
ABSLAMCAMC is primarily the investment manager of Aditya Birla Sun Life
Mutual Fund, a registered trust under the Indian Trusts Act, 1882. ABSLAMCAMC
also operates multiple alternate strategies including Portfolio Management Services,
Real Estate Investments and Alternative Investment Funds. ABSLAMCAMC is one
of the leading asset managers in India, with a pan India presence across 280 plus
locations and a total AUM of over Rs. 3,120 billion under its suite of mutual fund
(excluding our domestic FoFs), portfolio management services, offshore and real
estate offerings and 7.3 million investor folios for the quarter ending September 30,
2021.

History
Birla Sun Life Asset Management Company was established in 1994 as a joint
venture between the Aditya Birla Group and the Sun Life Financial of Canada where
the former owns 51% and the rest by latter which is a leading international financial
services organization providing a diverse range of wealth accumulation, protection
products, and services to individuals and corporate customers.
Aditya Birla Financial Services Group (ABFSG) is the umbrella brand for all the
financial services business of The Aditya Birla Group. ABFSG ranks among the top
five fund managers in India (including LIC) with an AUM of around Rs 3 trillion by
2021.[6] The company provides life insurance, asset management, lending (excluding
Housing), housing finance, equity & commodity broking, wealth management and
distribution, online money management portal—Aditya Birla Money MyUniverse,
general insurance advisory and private equity and health insurance businesses, for
retail and corporate customers. In FY 2013–14, ABFSG reported consolidated
revenue from these businesses at just under ₹70 billion (US$930 million) and profits
of about ₹7.5 billion (US$100 million). The company has 14,000 employees and over
6 million customers, with 1,500 points of presence and about 130,000 agents/channel
partners.
Sun Life Financial, Inc. operates in India through Aditya Birla Sun Life Asset
Management. Established in 1994, Birla Sun Life Asset Management Company Ltd.
(BSLAMC), investment manager for Birla Sun Life mutual fund, has been a joint
venture between the Aditya Birla Group and Sun Life Financial Inc. since 1999. Birla
Sun Life Mutual Fund was the fourth largest Fund house in India based on domestic
average assets under management as published by AMFI for the quarter ended March
31, 2014.

20
On 20 April 2021, Aditya Birla Sun Life Asset management company filed Draft Red
Herring Prospectus (DRHP) to the Securities and Exchange Board of India in order to
raise funds through an initial public offering (IPO).
Aditya Birla Sun Life Asset management company's IPO subscriptions to open on
September 29, 2021 and close on October 1, 2021 at a price band of Rs 695 - Rs 712
per share.
Under ABSLAMC, it offers a various investment schemes including debt and treasury
products, investment solutions including fund of fund schemes, Wealth Creation, Tax
Savings, diversified and sector specific equity schemes and also introduced research-
based investments, wealth management services, Regular Income Schemes, offshore
funds, hybrid and monthly income funds, and Savings Schemes. Till year 2020, it had
the largest team of research analysts in the Insurance industry with operations in
major worldwide markets, including the United Kingdom, United States, Canada,
Japan, Indonesia, Philippines, Ireland, China, Hong Kong, Bermuda, and India.

Company Hierarchy

MD CEO
(Bala
Subramanyam
)
NATIONAL
HEAD
(Bhavdeep
Bhatt)
WEST ZONE EAST NORTH SOUTH
ZONE ZONE ZONE
(Vaibhav
Chug)

ROMG MADHYA
MUMBAI GUJARAT
PRADESH
( Manish
Shukla)
MARATHWADA SOUTH
PUNE VIDHARBHA GOA
MAHARASHT
(Sandesh
RA
Ballamwar)

NASHIK AURANGABAD JALGAON NANDED

DEPUTY RELATIONSHIP
MANAGER
(Rahul Chitte)
ASSESTENT
RELATIONSHIP
MANAGER
(Nirali Chawda)

Chart 1

21
 PRESENTATION, ANALYSIS AND
INTERPRETATNION OF DATA

Bank vs Mutual Funds

What is a Bank?

22
A bank is a financial institution which performs the deposit and lending function. A
bank allows a person with excess money (Saver) to deposit his money in the bank and
earns an interest rate. Similarly, the bank lends to a person who needs money
(investor/borrower) at an interest rate. Thus, the banks act as an intermediary between
the saver and the borrower.
The bank usually takes a deposit from the public at a much lower rate called deposit
rate and lends the money to the borrower at a higher interest rate called lending rate.

Chart 2
As a part of our research study, we will be considering top five private and public
banks each.

Private Banks
Private Sector Banks refer to those banks where most of the capital is in private
hands.

23
List of top five Pvt. Banks by Market Capitalization:
1) HDFC
2) ICICI
3) AXIS
4) KOTAL MAHINDRA LTD.
5) INDUSIND BANK LTD.

Public Banks
Public Sector Banks (PSBs) are a major type of government owned banks in India,
where a majority stake (i.e., more than 50%) is held by the Ministry of Finance of the
Government of India or State Ministry of Finance of various State Governments of
India.
1) SBI
2) BANK OF BARODA
3) PNB
4) BANK OF INDIA
5) IDBI BANK

Investments in Banks
As popular investment vehicles, fixed deposits in bank, recurring deposits and savings
accounts and mutual funds have enabled investors to grow their savings and earn

24
returns easily. However, the benefits offered by both these avenues vary in terms of
your investment needs. Hence, before choosing where to invest, it is best known about
all these investment avenues in detail.
1] Savings Bank Account
Savings account is one of the most essential investments. There are numerous banks
in the country which provide attractive interest rates on savings accounts. The interest
is calculated on a daily basis and is credited in a periodic manner.
• It helps to fulfil short-term financial goals
• Caters hassle-free withdrawals and deposits
• One can start investing with minimum cash
Savings Account is one of the basic financial products that everyone must have and
use. A savings account will let one save money, transfer funds, withdraw money and
also will give returns in the form of interest on the funds that you have in your
account. Not many investment products in the market give you the dual benefit of
liquidity and interest. But a savings account will not only help you save some money
but will also let you withdraw cash whenever you need it.
Returns
As per the new Reserve Bank of India (RBI) mandate, interest on savings account is
calculated on a daily basis based on your closing amount. The interest accumulated
will be credited to your account on half yearly basis or quarterly basis depending on
the savings account type and the bank’s rule. However, recently, the RBI has advised
the banks to credit the interest on Savings Bank account on quarterly basis as it will
be more beneficial to the customers.

Following table and chart will enlighten us on the average returns

from a bank savings account:

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 HDFC BANK 3.25%
ICICI BANK 3.25%
AXIS BANK 3.25%
KOTAK BANK 3.50%
INDUSIND BANK 4.50%
STATE BANK OF INDIA 2.83%
PUNJAB NATIONAL BANK 2.97%
BANK OF BARODA 3.01%
CANARA BANK 2.90%
UNION BANK OF INDIA 2.70%
Table 1

I N T E R EST R AT ES O N SAV I N G S A C C O UN T
5.00%
4.50%
4.50%
4.00%
3.50%
3.50% 3.25% 3.25% 3.25%
3.01% 2.90%
2.83% 2.97% 2.70%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%

Chart 3

2] Recurring Deposit Accounts

When it comes to risk-free investments, a recurring deposit is one of the popular
options available to us. Under this investment scheme, one needs to deposit a fixed
amount every month for a specific period of time. One will earn interest on the

26
invested amount as per the interest rate offered by the bank with which the Recurring
Deposit account is opened.
Returns
Listed below are the interest rates offered to the general public by top 5 public and
private banks operating in India that allows us to open a recurring deposit account
with them. The rates have been segregated according to various investment periods.

Citizens below the Senior Citizens

age of 60
HDFC 5.01% 5.55%
ICICI 4.96% 5.48%
AXIS 4.97% 4.97%
KOTAK 4.98% 5.47%
INDUSIND 5.91% 6.41%
SBI 5.20% 5.78%
PNB 4.93% 5.43%
BOB 4.90% 5.40%
CANARA 5.21% 5.71%
UBI 5.76% 6.26%

Table 2

27
 INTEREST RATES ON RECURRING ACCOUNT
7.00%

6.00%

5.00%

4.00%

3.00%

2.00%

1.00%

0.00%

Citizens below the age of 60 Senior Citizens

Chart 4

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3] Fixed Deposit Accounts
Fixed deposits are a safe investment option that guarantees consistent interest rates,
special interest rates for senior citizens, various interest payment options, and no
market-related risks, with income tax deductions. It is important to compare the latest
fixed deposit rates among leading banks in the country before opening a new fixed
deposit or renewing an existing one.
Returns
Here are the latest fixed deposit rates for the year 2021.

< 2Cr. > 2Cr. < 2Cr. > 2Cr.

Below 60 Senior Citizens below the age of Senior

Citizens 60 Citizens
HDFC 4.00% 4.52% 3.38% 3.90%

ICICI 4.17% 4.68% 3.58% 3.56%

AXIS 4.44% 3.49% 4.81% 3.87%

KOTAK 4.26% 4.78% 3.62% 3.62%

INDUSIND 4.84% 5.34% 4.41% 4.41%

SBI 4.55% 5.09% 2.98% 3.48%

PNB 4.31% 4.68% 3.24% 3.24%

BOB 4.35% 3.52% 3.52% 3.52%

CANARA 4.63% 4.98% 4.63% 4.98%

UBI 4.27% 4.27% 4.27% 4.27%

Table 3

29
 4.00%
4.17%
4.44%

Chart 5
4.26%
HDFC

4.84%
4.55%

< 2CR.
4.31%

BELOW 60
4.35%
ICICI

4.63%
4.27%
AXIS

4.52%
4.68%
3.49%
4.78%
5.34%
KOTAK

5.09%

> 2CR.
4.68%
3.52%
4.98%

SENIOR CITIZENS
4.27%
INDUSIND

3.38%
3.58%
4.81%
SBI

3.62%
4.41%
2.98%
< 2CR.

3.24%
BELOW 60
PNB

3.52%
4.63%
4.27%
BOB

3.90%
3.56%
3.87%
INTEREST RATES ON FIXED DEPOSITS

3.62%
4.41%
CANARA

3.48%
> 2CR.

3.24%
3.52%
UBI

4.98%
SENIOR CITIZENS

4.27%

30
Mutual Funds against Bank
I] ABSLAMC Banking & PSU Debt Fund
• ABSLAMC Banking & PSU Debt Fund is an income generating scheme
investing in a portfolio of securities issues by the government owned entities
like PSUs and PFIs which makes the portfolio highly credit worthy.
• This Fund Falls under Banking and PSU Fund Category
• Class: Debt
• Objective: To generate reasonable returns by primarily investing in debt and
money market securities that are issued by Banks, Public Sector Undertakings
(PSUs) and Public Financial Institutions (PFIs) in India.
• Fund Managers: Mr. Kaustubh Gupta & Mr. Harshil Suvarnkar
• Date of Inception: 22nd March 2002.
• Minimum Investment: INR 1,000/-
• Fund Type: Open Ended
• Load Structure: No Entry or Exit Load
• Current Net Asset Value (as on 29th Oct. 2021): INR 291.94

RISK

Figure 4

31
Returns
Investment Performance – Regular Plan – Growth NAV as on 29th Oct. ‘21 INR
291.94

Inception – April 19, 2002 Y1 Y3 Y5 Since

Inception
ABSLAMC Banking & PSU Debt 4.20% 8.64% 7.48% 8.26%
Fund
Value of Std Investment of 10,000 10,420 12,819 14,349 29,194

Benchmark – NEFTY Banking & 4.56% 8.58% 7.20% 8.31%

PSU Debt Index
Value of Std Investment of 10,000 10,456 12,799 14,163 29,376
Additional Benchmark – CRISIL 10 1.65% 8.30% 5.85% 6.65%
Yr. Gilt Index
Value of Std Investment of 10,000 10,165 12,698 13,291 23,857

Table 4

Summary:
This fund provides a convenient and liquid investment avenue to park short term
savings. Better returns can be earned with lower risk and quality debt investments.
The fund designs it investment portfolio of debt securities so as to generate returns by
prudently investing in sectors and issues of debt securities that provide consistently
superior yields at low levels of risk.

32
II] ABSLAMC Banking & Financial Services Fund
• ABSLAMC Banking and Financial Services Fund is an open-ended equity
scheme that concentrates on the companies engaged in banking and financial
services businesses with a growth-oriented investment style.
• This Fund Falls under Sectoral/Thematic Fund Category
• Class: Equity
• Objective: The primary investment objective of the scheme is to generate
long-term capital appreciation to unit holders from a portfolio that is invested
predominantly in equity and equity related securities of companies engaged in
banking and financial services.
• Fund Managers: Mr. Dhaval Gala
• Date of Inception: 15th December 2013.
• Minimum Investment: INR 1,000/-
• Fund Type: Open Ended
• Load Structure: No Entry. Exit Load: For redemption/switch-out of units on
or before 30 days from the date of allotment: 1.00 % of applicable NAV.
• Current Net Asset Value (as on 29th Oct. 2021): INR 40.71

RISK

Figure 5

33
Returns
Investment Performance – Regular Plan – Growth NAV as on 29th Oct. ‘21 INR
40.17

Inception – December 14, 2013 Y1 Y3 Y5 Since

Inception
ABSLAMC Banking & Financial 69.60% 17.28% 12.59% 19.30%
Services Fund
Value of Std Investment of 10,000 16,935 16,126 18,103 40,170

Benchmark – NEFTY Financial 62.53% 21.44% 19.10% 20.08%

Services TRI
Value of Std Investment of 10,000 16,232 17,902 23,990 42,297
Additional Benchmark – Nifty 50 53.72% 20.82% 16.81% 15.71%
TRI
Value of Std Investment of 10,000 15,354 17,625 21,761 31,566

Table 5

Summary
Fortunes of the banking and financial services sector are typically linked with
economic growth. There are numerous factors that work in favor of the banking and
financial services sector. Some of the key factors are: robust demand from middle
class, rural penetration and technology-enabled services. Characteristics of the rising
middle class include higher purchasing power and also the ability take on extra debt to
meet their aspiring lifestyle. Similarly with the advent of technology, the reach of
banks has extended to envelope the rural population that was previously unbackable.
As a result, the banking and financial services sector has been able to deliver better
returns. In this backdrop, ABSLAMC Banking and Financial Services Fund could be
your answer to unlocking higher returns.
This fund is suitable for investor seeking long-term capital growth and comfortable
with investments in equity and equity related securities of companies engaged in
banking and financial services.

34
INTERPRETATION:
From the above table and graphical chart, we can see that the returns form
investment in a savings bank account ranges from 2.70% to 4.50%, averaging to
3.22% p.a. Whereas, returns form investment in a recurring bank account ranges
between 4.93% to 5.91%, for investors below the age of 60, and 4.97% to 6.41% for
senior citizens averaging to 5.41% p.a., While, investment in a fixed bank account for
an amount up-to 2Cr. ranges between 4.00% to 5.34% p.a. and 2.98% to 4.98% for
an amount above 2Cr., averaging to 4.16% p.a. differing from bank to bank.
Altogether, investment in bank fetches one a return of 6% - 6.50% per annum.
On the contrary, investment in a Mutual Fund considering ABSLAMC
Banking & PSU Debt Fund and ABSLAMC Banking & Financial Services Fund
we see that is gives an annualized 7.48% - 12.59% annualized return for a span of 5
years. Although, the returns from such funds can cross 15% - 18% also and it my as
well go below the above-mentioned percentages depending upon the NAV of that
particular fund on a particular day.
Over all it can be interpreted that investment in banks are safe but returns are less,
while mutual funds are risky but returns are by almost 2 to 3 times compared to
investments in banks.

35
Equities vs MF
Stocks refer to equity investment made in any company. When you buy stocks of a
company, you are in essence taking partial ownership of that specific company. Most
of the trading in the Indian stock market takes place on its two stock exchanges: the
Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The BSE
has been in existence since 1875. The NSE, on the other hand, was founded in 1992
and started trading in 1994. However, both exchanges follow the same trading
mechanism, trading hours, and settlement process. To invest in stocks, you need a De-
mat account and need to opt for the services of a stockbroker. The stockbroker can
either charge a flat fee or a certain percentage for every transaction. Trading of stocks
takes place on various stock exchanges where an investor can buy and sell shares as
per their profit-maximizing strategy. If you are using the services of a traditional
broker, you can expect professional guidance. On the other hand, for discount brokers,
you need to do your research and analysis.

Returns
Involves high levels of risks and unlike mutual funds, your investments are not
diversified. Go for it if you have a high-risk appetite. If you have invested in a
fundamentally-sound stock, you can expect good returns from it. While direct equity
investing provides high returns, it is feasible for those investors who can understand
the working of equity markets regularly. Various studies have shown that over longer
time frames (more than 10 years), equities are equipped to outperform other asset
classes like gold, fixed income instruments and property among others. However over
shorter time frames, equities can prove to be the riskiest asset class. Investing in
equities would imply buying shares/stock of a listed company. This in turn would
involve understanding the future business prospects of the company, being aware of
the various economic, legal and political factors that can have an impact on the
company's business prospects. Also studying factors like interest rates and
competition (domestic and overseas) would be vital.

36
 Following is a Tabular and Graphical representation of returns from few of the
Indices of National Stock Exchange:

Index 1Y 2Y 3Y 4Y 5Y 10Y
NIFTY 23.34% 38.84% 59.04% 61.62% 112.37% 259.76%
NIFTYMIDCAP 44.47% 75.54% 68.20% 41.99% 110.13% 378.07%
NIFTYSMALL 57.09% 90.90% 71.80% 21.44% 92.62% 294.62%
BANKNIFTY 14.23% 7.59% 30.00% 35.41% 94.19% 318.61%
NIFTYIT 56.46% 138.08% 163.65% 226.60% 273.00% 520.02%
NIFTYPHARMA 4.47% 67.04% 54.55% 44.60% 32.78% 195.67%
NIFTYFINANCE 14.43% 15.81% 49.21% 60.71% 133.23% 385.88%
NIFTY500 29.27% 48.35% 62.62% 55.22% 114.82% 299.93%

Table 6

Returns from NSE Indices

600.00%

500.00%

400.00%

300.00%

200.00%

100.00%

0.00%

1Y 2Y 3Y 4Y 5Y 10Y

Chart 6

37
 Following is a Tabular and Graphical representation of returns from few of the
Indices of Bombay Stock Exchange:

Index 1Y 2Y 3Y 4Y 5Y 10Y
SENSEX 21.31% 37.43% 60.65% 67.89% 118.82% 262.05%
BSE100 24.36% 40.62% 57.40% 57.05% 110.52% 268.19%
BSE200 26.77% 44.86% 61.16% 58.25% 114.84% 290.84%
BSE500 29.20% 48.45% 62.79% 55.93% 115.62% 295.49%
MIDCAP 37.82% 64.38% 60.59% 38.63% 107.15% 369.84%
SMLCAP 60.50% 111.96% 96.10% 49.38% 140.48% 405.25%

Table 7

Returns from BSE Indices

450.00%

400.00%

350.00%

300.00%

250.00%

200.00%

150.00%

100.00%

50.00%

0.00%
SENSEX BSE100 BSE200 BSE500 MIDCAP SMLCAP

1Y 2Y 3Y 4Y 5Y 10Y

Chart 7

38
Mutual Funds against Stock
ABSLAMC Flexi Cap Fund
• ABSLAMC Flexi Cap Fund is a diversified equity scheme that looks for
opportunities without any sectoral or market cap bias with the aim to
providing long-term capital appreciation.
• This Fund Falls under Flexi Cap Fund Category
• Class: Equity
• Objective: The objective of the scheme is long term growth of capital,
through investment in equity & equity related instruments across market cap
(Large, Mid & Small) companies.
• Fund Managers: Mr. Anil Shah & Mr. Vinod Bhat
• Date of Inception: 28th August 1998.
• Minimum Investment: INR 100/-
• Fund Type: Open Ended
• Load Structure: No Entry. Exit Load: For redemption/switch-out of units
within 1 year from the date of allotment: 1.00% of applicable NAV. For
redemption/switch out of units after 1 Year from the date of allotment: NIL.
• Current Net Asset Value (as on 29th Oct. 2021): INR 1,171.44

RISK

Figure 6

39
Returns
Investment Performance – Regular Plan – Growth NAV as on 29th Oct. ‘21 INR
1,171.44

Inception – August 27, 1998 Y1 Y3 Y5 Since

Inception
ABSLAMC Flexi Cap Fund 59.89% 20.42% 14.50% 22.80%
Value of Std Investment of 10,000 15,968 17,455 19,691 11,71,440
Benchmark – S&P BSE All Cap 60.75% 21.52% 16.37% NA
Index TRI
Value of Std Investment of 10,000 16,054 17,934 21,358 NA
Additional Benchmark – NIFTY 53.72% 20.82% 16.81% 15.38%
50 TRI
Value of Std Investment of 10,000 15,354 17,625 13,291 2,76,074

Table 8

Summary:
This fund is an open-ended dynamic scheme investing across Large Cap, Mid Cap
and Small Cap stocks suitable for an investor looking at a long-term capital growth. A
diversified portfolio having disciplined Large Cap bias over years ensures focus of
quality companies with strong management and sound balance sheet.

40
INTERPRETATION:
The above charts and tables represent that investment in the equity market
give a phenomenal returns and excessive returns if the investor is patient enough for a
period of 5-10 years. Also, the returns depend on the in which sector and company
one invests at what point of time. In a span of 1 year itself one can expect a return of
30% to 35% p.a. on an average or may be much more, but also with more returns
come more risk.
On the other hand, mutual funds like ABSLAMC Flexi Cap Fund have given
an annualized return of 22.80% since the date of inception of the fund (i.e.) if a
person had invested 10,000 INR in 1998, its value would have been approximately
11,00,000 INR in 2021.
Looking through a bird’s eye view, investments in stock market will pay us
much more returns compared to that of investment in mutual funds. Although, flexi
cap funds are risky but are comparatively risky than directly investing into the stock
market. Also, mutual funds are managed by literate fund managers of the AMC the
risk gets reduced as a person with lesser knowledge investing in the stock market
might end up into loses if investments are made in wrong stocks at wrong time.

41
Gold vs Mutual Funds
The yellow metal has also been a traditionally popular investment option in India.
You can invest in gold bars, coins, jewelry, or even digital gold. But if you go with
physical gold, security will always be a cause of concern. Even with digital gold, you
will be responsible for timing your buy and sell. As an asset class, gold is highly
volatile. While the price has risen significantly in the last couple of years, there is no
saying as to where the prices of gold will be in the future. When the goal is to beat
inflation, you can consider alternative options like gold. It can be an important part of
a well-diversified portfolio as a hedge against inflation. Historically, gold performs
well when the price of living increases.
Following is a table which represents the historical movement of the average
annual price for gold from 2001 – 2021 in India:

Year Price in INR (24K per 10 Grams) Returns

2001 4,300.00 6.90%
2002 4,990.00 6.10%
2003 5,600.00 2.50%
2004 5,850.00 11.50%
2005 7,000.00 15.00%
2006 8,500.00 23.00%
2007 10,800.00 17.00%
2008 12,500.00 20.00%
2009 14,500.00 40.00%
2010 18,500.00 79.00%
2011 26,400.00 46.50%
2012 31,050.00 -14.50%
2013 29,600.00 -15.93%
2014 28,007.00 -16.63%
2015 26,344.00 22.80%
2016 28,624.00 10.44%
2017 29,668.00 17.70%
2018 31,438.00 37.82%
2019 35,220.00 134.31%
2020 48,651.00 3.79%
2021 49,030.00 6.90%

Table 9

42
 Gold Prices
60000.00

50000.00

40000.00

30000.00

20000.00

10000.00

0.00
2000 2005 2010 2015 2020 2025

Chart 8

Returns
Gold is a commodity whose price fluctuation over the years has made it the most
reliable investment vehicle. There has been a steady rise in the price of gold in the last
decade or two. It is considered a low-risk investment when viewed from a long-term
perspective. An investor should invest some percentage of their total investment
amount in gold to hedge themselves against any potential market risk. Gold has been
a favorite investment option among Indians and it was a lucrative and revering
investment instrument when India became an independent nation on 15th August
1947. The average gold price for the year 1947 is around ₹88.62 per 10 gm and today
it has peaked up to near ₹48,000 per 10 gm in the retail bullion market — logging
around 54,000 per cent return post-independence. However, importance of gold
investment was realized after the 2008 global economic slowdown. People around the
world come to know that gold is an investor's haven when other investments like
equity, bond, etc. start nosediving. Till 2008, gold price was at around ₹12,500 per 10
gm but after that there was steep rise in gold investment globally. So, gold price has
jumped from ₹12,500 per 10 gm in 2008 to ₹48,000 per 10 gm in today's the retail
bullion market — logging around 284 per cent in the last 13 years.

43
ABSLAMC Gold ETF
• This Fund Falls under Others Fund Category
• Class: Exchange Traded Fund (ETF)
• Objective: The investment objective of the Scheme is to generate returns that
are in line with the performance of gold, subject to tracking errors. The
Scheme does not guarantee/indicate any returns. There can be no assurance
that the schemes’ objectives will be achieved.
• Fund Managers: Mr. Lovelish Solanki & Mr. Kedarnath Mirajkar
• Date of Inception: 13th May 2011
• Minimum Investment: 1,00,000 units and in multiples thereof.
• Fund Type: Open Ended
• Load Structure: No Entry or Exit Load
• Current Net Asset Value (as on 30th Nov. 2021): INR 43.99

RISK

Figure 7

44
Returns
Investment Performance – Regular Plan – Growth NAV as on 30th Nov. ‘21 INR
43.99

Inception – May 13, 2011 Y1 Y3 Y5 Since

Inception
ABSLAMC Gold ETF - 16.12% 9.65% 6.66%
1.12%
Value of Std Investment of 10,000 9,887 15,663 15,853 19,746
Benchmark – Domestic Price of - 16.79% 10.48% 7.63%
Physical Gold 0.65%
Value of Std Investment of 10,000 9,934 15,938 16,463 21,714

Table 10

Summary:
This fund is an open-ended scheme tracking physical price of Gold suitable for
investors who are seeking returns that are in line with the performance of gold over
long term, subject to tracking errors.

45
INTERPRETATION:
As seen on the line chart above, gold has given a promising return over the
past two decades. Also, the yellow metal has been a favorite choice for Indian women
as investment as well as jewelry. The safe heaven metal has shown a 134.31% p.a.
return as well as dipped to a negative (-16.63%) at a certain point of time.
Investments in physical gold as dual advantage of investment as well as physical
position which can be used. Also, one can get loans against the gold.
Comparing physical gold with a gold mutual fund like the ABSLAMC Gold
ETF, mutual fund as given a return of 16.21% annualized return in a period of 3
years. It can be seen that returns from mutual funds are less. Also, one misses out the
physical possession of the asset.
Meanwhile, a fear of theft, making charges, deterioration of the asset comes
along if one wants to invest in physical gold.

46
Real Estate vs Mutual Funds
Real Estate Investment refers to any investment made in physical properties
such as land, buildings, shops, etc. It involves purchase, ownership and management
of the real estate property. An individual can earn from real estate in two ways. One
way is to buy a property and then sell it at a higher price after few years. Another way
to generate income on your real estate is to put it up on rent. An investor should
carefully analyze some key factors such as size and locality of the investment
property as these factors play a significant role in price appreciation of real estate.
Real estate has always been a popular investment option in India. But the rising real
estate prices across the country makes it an ideal choice only for a tiny portion of
investors. Also, a decision about purchasing a property needs to be taken with utmost
care. Right from the cost of the property, geographic location to the rental yield, there
are several vital considerations.
Real estate sector is one of the most globally recognized sectors. It comprises of four
sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is
well complemented by the growth in the corporate environment and the demand for
office space as well as urban and semi-urban accommodations. The construction
industry ranks third among the 14 major sectors in terms of direct, indirect and
induced effects in all sectors of the economy.
In India, the real estate sector is the second-highest employment generator, after the
agriculture sector. It is also expected that this sector will incur more non-resident
Indian (NRI) investment, both in the short term and the long term. Bengaluru is
expected to be the most favored property investment destination for NRIs, followed
by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.

Returns
Investing in real estate should only be considered by investors with a long-term
investment horizon. The Reserve Bank of India’s House Price Index tracking home
prices in 10 major cities puts the average return from real estate in the last 10 years at
11.60% per year. This exceeds the return offered by the equity market at 11.00% as
well as Gold offering a return of 8.80% over the last 10 years. It is important to note
that this is the average all India return and the return varies across cities. The best
performing city among the 10 cities covered under the data is Lucknow with a return
of 16.10% per year. Kolkata comes in next at 13.30% per year. Homes in Mumbai
and Delhi delivered returns of 11.20% and 12.20%, respectively. Jaipur was at the
bottom with a return of 6.10% per year.

47
ABSLAMC Infrastructure Fund
• ABSLAMC Infrastructure Fund is an open-ended equity scheme that seeks to
participate in growth and development of infrastructure in India by investing
in equity & equity related securities of companies in the Infrastructure Sector.
• This Fund Falls under Sectorial/Thematic Fund Category
• Class: Equity
• Objective: The scheme seeks to provide medium to long-term capital
appreciation, by investing predominantly in a diversified portfolio of equity
and equity related securities of companies that are participating in the growth
and development of Infrastructure in India.
• Fund Managers: Mr. Vineet Maloo
• Date of Inception: 17th March 2006
• Minimum Investment: INR 1000/-
• Fund Type: Open Ended
• Load Structure: No Entry. Exit Load: For redemption/switch-out of units on
or before 30 days from the date of allotment: 1.00 % of applicable NAV.
• Current Net Asset Value (as on 30th Nov. 2021): INR 47.49

RISK

Figure 8

48
Returns
Investment Performance – Regular Plan – Growth NAV as on 30th Nov. ‘21 INR
47.49

Inception – March 17, 2006 Y1 Y3 Y5 Since

Inception
ABSLAMC Infrastructure Cap 57.14% 16.05% 12.49% 10.42%
Fund
Value of Std Investment of 10,000 15,772 15,637 18,016 47,490
Benchmark – Nifty Infrastructure 46.56% 19.16% 14.12% 5.75%
TRI
Value of Std Investment of 10,000 14,702 16,929 19,361 24078
Additional Benchmark – S&P 30.28% 17.67% 17.80% 12.54%
BSE SENSEX TRI
Value of Std Investment of 10,000 13,056 16,301 22,697 64,040

Table 11

Summary:
This fund aims at investing in companies likely to gain from India’s economic
reforms. This fund is suitable for investors who are looking for long term capital
growth. It is expected that the investors will gain from investments in equities and
equity related securities of companies expected to benefit from the economic reforms,
PSU disinvestment and increased government spending.

49
INTERPRETATION:
Real Estate has often been confused as an investment because it demands
financial commitment. Hence, whenever we get some extra money in hand, we save it
towards buying a plot or a property. The average 10-year return on real estate
investment has been 10%. This is based on the reports published by several real estate
research firms that compared returns from nine biggest cities in India. However, the
rates may vary if you look at particular cities. One enjoys the possession of the
physical asset in case of investment in real estate which can be used by the investor
for residence, or can be rented out of residence or commercial use and use is as a
secondary source of income as well as generate wealth on holding the property for
longer duration.
On the other hand, if we look at the mutual fund returns in the last decade, the
average returns varied between 13% to 16 %. Not all schemes have given the same
returns; for some, the amount has been even more than this. Moreover, when we if
calculate the post-tax returns, the difference between the returns, i.e., real estate and
mutual fund, is even more vast.
The investor loses the opportunity for physical position in case of mutual
funds, also misses out on monthly rent as a source of income. Meanwhile, a possible
risk of fraudulent transfer of property involved and the liquidity is very less in case of
holding a physical real estate property.

50
Public Provident Fund vs Mutual Funds
Public Provident Fund is another fixed income savings scheme started by Government
of India. Under this scheme, the interest on your principal investment is paid by the
government. Anyone can contribute any amount to the PPF subject to a minimum of
Rs 500 and a maximum of Rs 1.5 lakh per year. Facilities such as withdrawal and
extension of maturity are available in a PPF account. You can also avail loan backed
by your PPF account. Typically, a PPF account has a maturity period of 15 years
which can be extended further. PPF account also has tax benefits. Investment up to
₹1,50,000 is tax deductible and interest earned on this amount is also tax-free. This is
the USP of PPF account which has attracted numerous investors throughout its
lifetime.
The interest calculation for PPF takes place on a monthly basis. However, such
interest is added to the balance in a PPF account at the end of every financial year.
Furthermore, such monthly calculation takes place in the following manner –
The lowest balance in a PPF account on a specific month’s 5th date and that month’s
end date is considered for interest calculation for that month. For instance, if a PPF
account shows a balance of Rs.500 on 5th January and Rs.1500 on 31st January, then
interest for January will be calculated on Rs.500 and not Rs.1500. Therefore, if a
person deposits on any date after 5th, they will not be able to enjoy any interest on
that contribution for that specific month. Therefore, a PPF account holder should
make any additional deposit for a specific month before the 5th of that month to
maximize their PPF returns.
If one wants to know the current interest rate of PPF then one should contact the
service like their bank, post office or financial service to learn more about it, where
most of the times the Public Provident Fund interest rate is somewhere between 7.8%
to 8.0% only and it may also drop to a certain level due to change in National budget
and the economy. All this information can be available at the registered office, and
during the period of 2016 – 2017, the interest rates on the public provident fund
scheme was around 8.1 % to 8.7%, which has been brought down to 7.8% to 8.0%.
Every year new budget is given and in the same budget plan they will release
information regarding the PPF scheme interest rates, and the amount added in PPF
account will always be an option to apply for an exemption in Income Tax for similar
year.

51
Returns
Below is a table showing the interest rates offered to Public Provident Fund
account holders since its launch to current date as mentioned in the below table
from 1986 to the current PPF interest rate:

From-To PPF Interest Rate

01/04/1986 - 14/01/2000 12.00%
15/01/2000 - 28/02/2001 11.00%
01/03/2001 - 28/02/2002 9.50%
01/03/2002 - 28/02/2003 9.00%
01/03/2003 - 30/11/2011 8.00%
01/12/2011 - 30/12/2012 8.60%
01/04/2012 - 31/03/2013 8.80%
01/04/2013 - 31/03/2016 8.70%
01/04/2016 - 30/09/2016 8.10%
01/10/2016 - 31/03/2017 8.00%
01/04/2017 - 30/06/2017 7.90%
01/07/2017 - 26/12/2017 7.80%
27/12/2017 - 30/09/2018 7.60%
01/10/2018 - 30/06/2019 8.00%
01/07/2019 - 31/03/2020 7.90%
01/04/2020 - 31/03/2021 7.10%

Table 12

PPF Interest Rate

01/04/2020 - 31/03/2021 7.10%
01/07/2019 - 31/03/2020 7.90%
01/10/2018 - 30/06/2019 8.00%
27/12/2017 - 30/09/2018 7.60%
01/07/2017 - 26/12/2017 7.80%
01/04/2017 - 30/06/2017 7.90%
01/10/2016 - 31/03/2017 8.00%
01/04/2016 - 30/09/2016 8.10%
01/04/2013 - 31/03/2016 8.70%
01/04/2012 - 31/03/2013 8.80%
01/12/2011 - 30/12/2012 8.60%
01/03/2003 - 30/11/2011 8.00%
01/03/2002 - 28/02/2003 9.00%
01/03/2001 - 28/02/2002 9.50%
15/01/2000 - 28/02/2001 11.00%
01/04/1986 - 14/01/2000 12.00%
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00%

Chart 9

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ABSLAMC Tax Relief ’96 (U/S 80C)
• ABSLAMC Tax Relief ’96 (U/S 80C) is an open-ended ELSS that provides an
opportunity to save tax while growing your money through equity
investments.
• This Fund Falls under ELSS Fund Category
• Class: Equity
• Objective: An open-ended equity linked savings scheme (ELSS) with the
objective of long-term growth of capital through a portfolio with a target
allocation of 80% equity, 20% debt and money market securities.
• Fund Managers: Mr. Ajay Garg
• Date of Inception: 30th December 1995
• Minimum Investment: INR 500/-
• Fund Type: Open Ended
• Load Structure: No Entry or Exit Load.
• Current Net Asset Value (as on 30th Nov. 2021): INR 41.50

RISK

Figure 9

53
Returns
Investment Performance – Regular Plan – Growth NAV as on 30th Nov. ‘21 INR
41.50

Inception – May 29, 1996 Y1 Y3 Y5 Since

Inception
ABSLAMC Tax Relief ‘96 20.07% 10.78% 12.92% 10.91%
Value of Std Investment of 10,000 12,025 13,598 18,363 41,500
Benchmark – S&P BSE 200 TRI 35.95% 18.29% 17.17% 11.22%
Value of Std Investment of 10,000 13,630 16,561 22,097 43131
Additional Benchmark – Nifty 50 32.19% 17.38% 17.04% 10.74%
TRI
Value of Std Investment of 10,000 13,249 16,182 21,968 40,687

Table 13

Summary:
Tax Planning is an integral part of financial planning. However, most of us end up
opting for those tax saving instruments which may not align to our asset allocation
and financial goals. Thus, being stuck with tax saving products ‘just’ to save tax and
not to build your investment portfolio. Hence whichever tax bracket one falls under, it
is important to plan their tax saving investments effectively during the year instead of
making it last minute activity. ABSLAMC Tax Relief ’96 is an equity linked saving
scheme which can help to build wealth over long term along with saving tax for you
under section 80C of the Income Tax Act, 1961. It primarily invests in equities and
comes along with a 3-year mandatory lock-in period. One can invest in this scheme
either through systematic investment plan or by making a lumpsum investment.

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INTERPRETATION:
As can be seen on the table and the bar chart above, investments in Public
Provident Fund have fetched a return of 12% to 7.10% over a period of two decades.
The rate of return is different at different time period. The USP of PPF account which
has attracted numerous investors throughout its lifetime is the tax benefits of
investment up to ₹1,50,000 is tax deductible and interest earned on this amount is also
tax-free.
On the contrary, investments in a ELSS category mutual fund fetches a return
of approximately 20% to 25%. It also provides tax benefit of up-to ₹1,50,000 under
section 80C of the Income Tax Act, 1961. However, unlike PPF which is tax-free at
every stage, ELSS returns are taxable at 10% if the gain exceeds Rs. 1 lakh in the
year.
It is generally observed that one misses out of building his/her investment
portfolio being stuck with tax saving products just to save tax.

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FINDINGS AND CONCLUSIONS

56
• Investments in bank against Mutual Funds:
In this case, people in the higher age group tends to invest more in banks than
in mutual funds due to fear of losing money as mutual funds are riskier and
related to the stock market. One gets a fixed return on the bank investments
irrespective of the fluctuations in the stock market, unlike investments in
mutual funds.
• Investments in Equities against Mutual Funds:
Here, it is found that people with higher risk appetite and patient enough for a
period of 5-10 years can be benefited more than the one who invests in mutual
funds. As the financial literacy is increasing people are opting to invest in the
stock market and mutual funds.

• Investments in Physical Gold against Mutual Funds:

Under this situation, investors still prefer to invest in the yellow metal as
compared to mutual funds related Exchange Traded Funds. However, liquidity
is low in case of holding physical gold.

• Investments in Real Estate against Mutual Funds:

Here, an investor enjoys the physical possession of the asset and use the
property as a source of secondary income. However, the liquidity is very low
as compared to investment in the mutual fund. Also, rate of change in the rate
of the property may vary from various locations.

• Investments in Public Provident Fund against Mutual Funds:

An investor just looking at saving the tax tends to invest more in PPF
schemes. However, ELSS category funds also help in saving taxes till some
extent. Person investing only in tax saving products misses out on creating a
diversified portfolio which can help and reducing the risk and still gains more
returns.

• There are advantages of diversification, economies of scale, liquidity,

professional management in the mutual fund industry.
• There has been a consistent growth in the Asset Under Management and one
of the fastest growing industries in India.
• It was also found that investors in the higher age group prefer investing in the
mutual fund offline and via broker through a regular plan than investing online
as they are not much techno savvy and are still attached to doing thing in the
traditional paper methods. On the other hand, young investors who are well
versed to the latest technology prefer making the transactions online as they
are fast and find them easy.

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 SUGGESTIONS AND
RECOMMENDATIONS

58
• Mutual fund is best option of investment as it provides
diversification and tax benefits.
• To get good return long term investment should be selected
because of market fluctuations.
• Investment should start as early as possible because the power
of compounding allows you earn income on income.
• Before investment set your financial goal that how much you
can invest and what are the expected returns.
• Decide your risk tolerance power.
• Don’t invest in a single scheme. Choose multiple options, so
that market fluctuations don’t affect your whole investment.
• Consult with a specialist who has the full knowledge about mutual funds and
market situations.

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BIBLIOGRAPHY

60
Websites:
• https://mutualfund.adityabirlacapital.com/
• https://economictimes.indiatimes.com/
• https://www.policybazaar.com/
• https://www.moneycontrol.com/
• https://posts.whiteinsights.com/
• https://www.bloomberg.com/
• https://www.nseindia.com/
• https://www.bseindia.com/
• https://www.nism.ac.in/
• https://www.valuenotes.biz/

Magazines and Newspapers

• Economic Times
• ABSLAMC Factsheet
• Dalal Street Investment Journal
• Mutual Fund Insights

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