MAJOR PROJECT REPORT SUBMITTED TOWARDS THE PARTIAL

FULFILLMENT OF

ON
Study on Mutual Funds as an Investment option

CERTIFICATE

TO WHOM SO EVER IT MAY CONCERN

This is to certify that the project work Study on Mutual Funds as an
Investment option made by is an authentic work carried out under the
guidance and supervision of Internal guide

Bisht. The project report is

submitted has been found satisfactory for the partial fulfillment of the degree
of Bachelor of Business Administration.

Internal guide

ACKNOWLEDGEMENT

It is in particular that I am acknowledging my sincere feeling towards my

mentors who graciously gave me their time and expertise.
They have provided me with the valuable guidance, sustained efforts and
friendly approach. It would have been difficult to achieve the results in such
a short span of time without their help.
I deem it my duty to record my gratitude towards the project supervisor Ms.
NEHA, Who devoted her precious time to interact, guide and gave me the
right approach to accomplish the task and also helped me to enhance my
knowledge and understanding of the project.

TABLE OF CONTENT
S.No

Particulars

1.

Chapter-1 (Introduction & Literature Review)

Introduction
History

2.

Chapter-2 (Research Objectives & Methodology)

3.

Research Objective of the study

Research Methodology
Research Design
Data Collection
Sampling Design
Sampling Instrument(Questionnaire)

Chapter-3 (Data Processing, Analysis & Interpretation)

Data Processing
Analysis of the problem under study
Interpretation of the result

4.

Findings & Limitations

5.

Suggestions & Recommendations

Conclusion

7.
8.

Bibliography
Annexure

Page No.

CHAPTER 1
INTRODUCTION

INTRODUCTION

DEFINING MUTUAL FUND

A mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. Anybody with an investible surplus of as little as a few hundred rupees can invest
in Mutual Funds. These investors buy units of a particular Mutual Fund scheme that has a
defined investment objective and strategy. The money thus collected is then invested by the fund
manager in different types of securities.
SEBI is the regulatory body to control and regulate the securities market and Mutual Fund
industry in India. So it is an important entity of Mutual Fund Business.
The Flow Chart Below Describes Broadly the Working of a Mutual Fund
Mutual Fund Working
> Investor
> Pool their Money With
> Fund Manager
> Invested In
> Securities
> Generate Returns

There are a lot of investment avenues available today in the financial market for an investor with
an investable surplus. He can invest in Bank Deposits, Corporate Debentures, and Bonds where
there is low risk but low return. He may invest in Stock of companies where the risk is high and
the returns are also proportionately high. The recent trends in the Stock Market have shown that
an average retail investor always lost with periodic bearish tends. People began opting for
portfolio managers with expertise in stock markets who would invest on their behalf. Thus we
had wealth management services provided by many institutions. However they proved too costly
for a small investor. These investors have found a good shelter with the mutual funds.
Mutual fund industry has seen a lot of changes in past few years with multinational companies
coming into the country, bringing in their professional expertise in managing funds worldwide.
In the past few months there has been a consolidation phase going on in the mutual fund industry
in India. Now investors have a wide range of Schemes to choose from depending on their
individualprofiles.
My study gives an overview of mutual funds definition, types, benefits, risks, limitations,
history of mutual funds in India, late, its contribution and its products.

History

of

Mutual

Funds

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the
initiative of the Government of India and Reserve Bank . The history of mutual funds in India
can

be

broadly

divided

into

four

distinct

phases.

First Phase 1964-87: Unit Trust of India (UTI) was established on 1963 by an Act of
Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI
and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative
control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of
1988

UTI

had

Rs.6,700

crores

of

assets

under

management.

Second Phase 1987-1993 (Entry of Public Sector Funds): 1987 marked the entry of non- UTI,
public sector mutual funds set up by public sector banks and Life Insurance Corporation of India
(LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first nonUTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun
90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while
GIC

had

set

up

its

mutual

fund

in

December

1990.

At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores.

Third Phase 1993-2003 (Entry of Private Sector Funds): With the entry of private sector funds
in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider
choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations
came into being, under which all mutual funds, except UTI were to be registered and governed.
The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector
mutual

fund

registered

in

July

1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual
Fund)

Regulations

1996.

The number of mutual fund houses went on increasing, with many foreign mutual funds setting

up funds in India and also the industry has witnessed several mergers and acquisitions. As at the
end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The
Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other
mutual

funds.

Fourth Phase Since February 2003: In February 2003, following the repeal of the Unit Trust
of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified
Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at
the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and
certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an
administrator and under the rules framed by Government of India and does not come under the
purview

of

the

Mutual

Fund

Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered
with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the
erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under management
and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund
Regulations, and with recent mergers taking place among different private sector funds, the
mutual fund industry has entered its current phase of consolidation and growth. As at the end of
September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421
schemes.

ADVANTAGES

OF

MUTUAL

FUNDS

There are numerous benefits of investing in mutual funds and one of the key reasons for its
phenomenal success in the developed markets like US and UK is the range of benefits they offer,
which are unmatched by most other investment avenues. We have explained the key benefits in
this section. The benefits have been broadly split into universal benefits, applicable to all
schemes, and benefits applicable specifically to open-ended schemes.

Universal

Benefits

are

as

follows:-

Affordability: A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. depending
upon the investment objective of the scheme. An investor can buy in to a portfolio of equities,
which would otherwise be extremely expensive. Each unit holder thus gets an exposure to such
portfolios with an investment as modest as Rs.500/-. This amount today would get you less than
quarter of an Infosys share! Thus it would be affordable for an investor to build a portfolio of
investments through a mutual fund rather than investing directly in the stock market.
Diversification: The nuclear weapon in your arsenal for your fight against Risk. It simply means
that you must spread your investment across different securities (stocks, bonds, money market
instruments, real estate, fixed deposits etc.) and different sectors (auto, textile, information
technology etc.). This kind of a diversification may add to the stability of your returns, for
example during one period of time equities might under perform but bonds and money market
instruments might do well enough to offset the effect of a slump in the equity markets. Similarly
the information technology sector might be faring poorly but the auto and textile sectors might
do well and may protect your principal investment as well as help you meet your return
objectives.
Variety: Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two
ways: first, it offers different types of schemes to investors with different needs and risk
appetites; secondly, it offers an opportunity to an investor to invest sums across a variety of
schemes, both debt and equity. For example, an investor can invest his money in a Growth Fund
(equity scheme) and Income Fund (debt scheme) depending on his risk appetite and thus create a

balanced

portfolio

easily

or

simply

just

buy

Balanced

Scheme.

Professional Management: Qualified investment professionals who seek to maximize returns

and minimize risk monitor investor's money. When you buy in to a mutual fund, you are handing
your money to an investment professional who has experience in making investment decisions. It
is the Fund Manager's job to (a) find the best securities for the fund, given the fund's stated
investment objectives; and (b) keep track of investments and changes in market conditions and
adjust

the

mix

of

the

portfolio,

as

and

when

required.

Tax Benefits: Any income distributed after March 31, 2002 will be subject to tax in the
assessment of all Unit holders. However, as a measure of concession to Unit holders of openended equity-oriented funds, income distributions for the year ending March 31, 2003, will be
taxed

at

concessional

rate

of

10.5%.

In case of Individuals and Hindu Undivided Families a deduction upto Rs. 9,000 from the Total
Income will be admissible in respect of income from investments specified in Section 80L,
including income from Units of the Mutual Fund. Units of the schemes are not subject to WealthTax

and

Gift-Tax.

Regulations: Securities Exchange Board of India (SEBI), the mutual funds regulator has
clearly defined rules, which govern mutual funds. These rules relate to the formation,
administration and management of mutual funds and also prescribe disclosure and accounting
requirements. Such a high level of regulation seeks to protect the interest of investors

Benefits of Open-ended Schemes:

Liquidity: In open-ended mutual funds, you can redeem all or part of your units any time you
wish. Some schemes do have a lock-in period where an investor cannot return the units until the
completion

of

such

lock-in

period.

Convenience: An investor can purchase or sell fund units directly from a fund, through a broker
or a financial planner. The investor may opt for a Systematic Investment Plan (SIP) or a
Systematic Withdrawal Advantage Plan (SWAP). In addition to this an investor receives
account

statements

and

portfolios

of

the

schemes.

Flexibility: Mutual Funds offering multiple schemes allow investors to switch easily between
various schemes. This flexibility gives the investor a convenient way to change the mix of his
portfolio

over

time.

Transparency: Open-ended mutual funds disclose their Net Asset Value (NAV) daily and the
entire portfolio monthly. This level of transparency, where the investor himself sees the
underlying assets bought with his money, is unmatched by any other financial instrument. Thus
the investor is in the know of the quality of the portfolio and can invest further or redeem
depending on the kind of the portfolio that has been constructed by the investment manager.

RISK FACTORS OF MUTUAL FUNDS

The

Risk-Return

Trade-off:

The most important relationship to understand is the risk-return trade-off. Higher the risk greater
the

returns/loss

and

lower

the

risk

lesser

the

returns/loss.

Hence it is upto you, the investor to decide how much risk you are willing to take. In order to do
this you must first be aware of the different types of risks involved with your investment
decision.
Market Risk: Sometimes prices and yields of all securities rise and fall. Broad outside
influences affecting the market in general lead to this. This is true, may it be big corporations or
smaller mid-sized companies. This is known as Market Risk. A Systematic Investment Plan
(SIP) that works on the concept of Rupee Cost Averaging (RCA) might help mitigate this
risk.
Credit Risk: The debt servicing ability (may it be interest payments or repayment of principal)
of a company through its cashflows determines the Credit Risk faced by you. This credit risk is
measured by independent rating agencies like CRISIL who rate companies and their paper. A
AAA rating is considered the safest whereas a D rating is considered poor credit quality. A
well-diversified
Inflation
"Rs.

portfolio
Risk:

100

"Remember

Things

today
the

might

is
time

"Mehangai

help

you
worth

when

hear
more

mitigate

bus

Ka

this

people

than

Rs.

ride

risk.

talk
100

costed

about:
tomorrow."

50

Jamana

paise?"
Hai."

The root cause, Inflation. Inflation is the loss of purchasing power over time. A lot of times
people make conservative investment decisions to protect their capital but end up with a sum of
money that can buy less than what the principal could at the time of the investment. This happens
when inflation grows faster than the return on your investment. A well-diversified portfolio with
some

investment

in

equities

might

help

mitigate

this

risk.

Interest Rate Risk: In a free market economy interest rates are difficult if not impossible to
predict. Changes in interest rates affect the prices of bonds as well as equities. If interest rates
rise the prices of bonds fall and vice versa. Equity might be negatively affected as well in a rising
interest rate environment. A well-diversified portfolio might help mitigate this risk.

Political/Government Policy Risk: Changes in government policy and political decision can
change the investment environment. They can create a favorable environment for investment or
vice

versa.

Liquidity Risk: Liquidity risk arises when it becomes difficult to sell the securities that one has
purchased. Liquidity Risk can be partly mitigated by diversification, staggering of maturities as
well

as

internal

Various

risk

controls

investment

that

lean

options

towards

in

purchase

of

Mutual

liquid

securities.

Funds

offer

To cater to different investment needs, Mutual Funds offer various investment options. Some of
the

important

investment

options

include:

Growth

Option:

Dividend is not paid-out under a Growth Option and the investor realises only the capital
appreciation

on

the

investment

Dividend

(by

an

increase

in

Payout

NAV).

Option:

Dividends are paid-out to investors under the Dividend Payout Option. However, the NAV of the
mutual
Dividend

fund

scheme

falls

to

the

extent

Re-investment

of

the

dividend

payout.
Option:

Here the dividend accrued on mutual funds is automatically re-invested in purchasing additional
units in open-ended funds. In most cases mutual funds offer the investor an option of collecting

dividends

or

re-investing

Retirement

the

same.

Pension

Option:

Some schemes are linked with retirement pension. Individuals participate in these options for
themselves,

and

corporates

participate

for

their

Insurance

employees.
Option:

Certain Mutual Funds offer schemes that provide insurance cover to investors as an added
benefit.
Systematic

Investment

Plan

(SIP):

Here the investor is given the option of preparing a pre-determined number of post-dated
cheques in favour of the fund. The investor is allotted units on a predetermined date specified in
the

offer

document

Systematic

at

the

Withdrawal

applicable
Plan

NAV.
(SWP):

As opposed to the Systematic Investment Plan, the Systematic Withdrawal Plan allows the
investor the facility to withdraw a pre-determined amount / units from his fund at a predetermined interval. The investor's units will be redeemed at the applicable NAV as on that day.
Future

of

Mutual

Funds

in

India

By December 2004, Indian mutual fund industry reached Rs 1,50,537 crore. It is estimated that
by 2014 March-end, the total assets of all scheduled commercial banks should be Rs 40,90,000
crore.

List of mutual fund companies in India

Here is the list of mutual funds given out:

A. Bank Sponsored

1. Joint Ventures Predominantly Indian

- Canara Robeco Asset Management Company Limited
- SBI Funds Management Private Limited

2. Joint Ventures Predominantly Foreign

- Baroda Pioneer Asset Management Company Limited

3. Others
- UTI Asset Management Company Ltd

B. Institutions
- LIC Mutual Fund Asset Management Company Limited

C. Private Sector

1. Indian
- Axis Asset Management Company Ltd.
- Benchmark Asset Management Company Pvt. Ltd.
- DBS Cholamandalam Asset Management Ltd.
- Deutsche Asset Management (India) Pvt. Ltd.
- Edelweiss Asset Management Limited
- Escorts Asset Management Limited

- IDFC Asset Management Company Private Limited

- JM Financial Asset Management Private Limited
- Kotak Mahindra Asset Management Company Limited(KMAMCL)
- Quantum Asset Management Co. Private Ltd.
- Reliance Capital Asset Management Ltd.
- Religare Asset Management Company Ltd.
- Sahara Asset Management Company Private Limited
- Tata Asset Management Limited
- Taurus Asset Management Company Limited

2. Foreign
- AIG Global Asset Management Company (India) Pvt. Ltd.
- FIL Fund Management Private Limited
- Fortis Investment Management (India) Pvt. Ltd.
- Franklin Templeton Asset Management (India) Private Limited
- Goldman Sachs Asset Management (India) Private Limited
- Mirae Asset Global Investments (India) Pvt. Ltd.

3. Joint Ventures Predominantly Indian

- Birla Sun Life Asset Management Company Limited
- DSP BlackRock Investment Managers Private Limited
- HDFC Asset Management Company Limited
- ICICI Prudential Asset Mgmt.Company Limited
- Religare AEGON Asset Management Company Pvt. Ltd.
- Sundaram BNP Paribas Asset Management Company Limited

4. Joint Ventures Predominantly Foreign

- Bharti AXA Investment Managers Private Limited
- HSBC Asset Management (India) Private Ltd.
- ING Investment Management (India) Pvt. Ltd.

- JPMorgan Asset Management India Pvt. Ltd.

- Morgan Stanley Investment Management Pvt.Ltd.
- Principal Pnb Asset Management Co. Pvt. Ltd.
- Shinsei Asset Management (India) Pvt. Ltd.

NOW, Here is a list of top Indian mutual funds:

*
*

ABN-AMRO
Baroda

Pioneer

Mutual

Benchmark

Birla

Sunlife

Canbank

DBS

Chola

*
*

Fund

Deutsche
DSP

Merrill

Lynch

Escorts

Fidelity

Franklin

Templeton

HDFC

HSBC

ING

Vysya

JM

Kotak

Mahindra

LIC

Morgan

Stanley

Principal

Prudential

ICICI

Reliance

Sahara

SBI

*
*
*
* UTI

Standard
Sundaram

Chartered
BNP

Paribas
Tata

Fund Houses: Indian Mutual Fund Companies

Corpus (Cr.)
No.
Mutual Fund Name

of

Schemes

31-Dec- 30-Sep-

(Incl

13

13

Net Chg

Options)
AXIS Mutual Fund

381

14,729

12,318

2,412

Baroda Pioneer Mutual Fund

154

7,217

5,263

1,954

Birla Sun Life Mutual Fund

1,687

85,086

77,344

7,742

BNP Paribas Mutual Fund

819

3,674

3,538

136

BOI AXA Mutual Fund

132

1,760

1,082

678

Canara Robeco Mutual Fund

216

7,077

7,616

[538]

Deutsche Mutual Fund

833

18,596

17,059

1,536

DSP BlackRock Mutual Fund

979

32,641

30,486

2,156

Edelweiss Mutual Fund

120

167

194

[27]

Escorts Mutual Fund

66

280

252

28

Franklin Templeton Mutual Fund

386

45,331

44,812

519

Goldman Sachs Mutual Fund

27

3,847

4,149

[302]

HDFC Mutual Fund

1,744

109,393 103,442 5,951

HSBC Mutual Fund

383

7,652

6,718

933

ICICI Prudential Mutual Fund

1,743

97,318

85,303

12,015

IDBI Mutual Fund

199

5,303

4,771

532

IDFC Mutual Fund

1,427

41,362

39,665

1,697

IIFL Mutual Fund

58

225

207

18

Indiabulls Mutual Fund

73

1,225

1,606

[381]

ING Mutual Fund

373

964

1,105

[141]

JM Financial Mutual Fund

310

7,192

6,244

948

JP Morgan Mutual Fund

237

12,928

13,257

[329]

Kotak Mahindra Mutual Fund

681

36,228

35,299

930

L&T Mutual Fund

513

17,003

15,079

1,924

LIC NOMURA Mutual Fund

280

10,010

7,976

2,034

Mirae Asset Mutual Fund

120

582

508

74

Morgan Stanley Mutual Fund

55

3,273

3,290

[17]

Motilal Oswal Mutual Fund

34

434

437

[3]

Peerless Mutual Fund

92

3,399

2,835

564

PineBridge Mutual Fund

109

814

1,103

[289]

PPFAS Mutual Fund

312

267

45

Pramerica Mutual Fund

145

2,043

2,166

[122]

PRINCIPAL Mutual Fund

253

4,547

4,300

247

Quantum Mutual Fund

13

344

315

29

Reliance Mutual Fund

1,340

104,412 95,228

9,184

Religare Invesco Mutual Fund

745

13,734

12,512

1,221

Sahara Mutual Fund

100

194

233

[39]

SBI Mutual Fund

841

65,415

59,558

5,857

Shriram Mutual Fund

24

Sundaram Mutual Fund

892

16,024

13,947

2,077

Tata Mutual Fund

812

19,723

17,966

1,757

Taurus Mutual Fund

183

3,223

2,732

491

Union KBC Mutual Fund

90

2,266

1,980

286

UTI Mutual Fund

1,113

74,351

70,057

4,294

Different Types and Kinds of Mutual Funds

The mutual fund industry of India is continuously evolving. Along the way,
several industry bodies are also investing towards investor education. Yet,
according to a report by Boston Analytics, less than 10% of our households
consider mutual funds as an investment avenue. It is still considered as a
high-risk

option.

In fact, a basic inquiry about the types of mutual funds reveals that these are
perhaps one of the most flexible, comprehensive and hassle free modes of
investments that can accommodate various types of investor needs.
Various types of mutual funds categories are designed to allow investors to
choose a scheme based on the risk they are willing to take, the investable
amount, their goals, the investment term, etc.

Important mutual fund schemes under the following three

categories

based

on

maturity

period

of

investment:

I. Open-Ended - This scheme allows investors to buy or sell units at any point
in

time.

This

does

not

have

fixed

maturity

date.

1. Debt/ Income - In a debt/income scheme, a major part of the investable

fund are channelized towards debentures, government securities, and other
debt instruments. Although capital appreciation is low (compared to the
equity mutual funds), this is a relatively low risk-low return investment
avenue

which

is

ideal

for

investors

seeing

steady

income.

2. Money Market/ Liquid - This is ideal for investors looking to utilize their
surplus funds in short term instruments while awaiting better options. These
schemes invest in short-term debt instruments and seek to provide
reasonable

returns

for

the

investors.

3. Equity/ Growth - Equities are a popular mutual fund category amongst

retail investors. Although it could be a high-risk investment in the short term,
investors can expect capital appreciation in the long run. If you are at your
prime earning stage and looking for long-term benefits, growth schemes
could

be

an

ideal

investment.

3.i. Index Scheme - Index schemes is a widely popular concept in the west.
These follow a passive investment strategy where your investments replicate
the

movements

of

benchmark

indices

like

Nifty,

Sensex,

etc.

3.ii. Sectoral Scheme - Sectoral funds are invested in a specific sector like
infrastructure, IT, pharmaceuticals, etc. or segments of the capital market
like large caps, mid caps, etc. This scheme provides a relatively high risk-

high

return

opportunity

within

the

equity

space.

3.iii. Tax Saving - As the name suggests, this scheme offers tax benefits to its
investors. The funds are invested in equities thereby offering long-term
growth opportunities. Tax saving mutual funds (called Equity Linked Savings
Schemes)

has

3-year

lock-in

period.

4. Balanced - This scheme allows investors to enjoy growth and income at

regular intervals. Funds are invested in both equities and fixed income
securities; the proportion is pre-determined and disclosed in the scheme
related offer document. These are ideal for the cautiously aggressive
investors.
II. Closed-Ended - In India, this type of scheme has a stipulated maturity
period and investors can invest only during the initial launch period known as
the

NFO

(New

Fund

Offer)

period.

1. Capital Protection - The primary objective of this scheme is to safeguard

the principal amount while trying to deliver reasonable returns. These invest
in high-quality fixed income securities with marginal exposure to equities and
mature

along

with

the

maturity

period

of

the

scheme.

2. Fixed Maturity Plans (FMPs) - FMPs, as the name suggests, are mutual fund
schemes with a defined maturity period. These schemes normally comprise
of debt instruments which mature in line with the maturity of the scheme,
thereby earning through the interest component (also called coupons) of the
securities in the portfolio. FMPs are normally passively managed, i.e. there is
no active trading of debt instruments in the portfolio. The expenses which
are charged to the scheme, are hence, generally lower than actively
managed

schemes.

III. Interval - Operating as a combination of open and closed ended schemes,

it allows investors to trade units at pre-defined intervals.

CHAPTER 2
RESEARCH,
OBJECTIVES AND
METHODOLGY

RESEARCH OBJECTIVES OF THE STUDY:-

To study about the mutual funds as an investment option.

To understand the concept of concepts of mutual funds.
To understand the various types of mutual funds products offered by the various mutual

funds company.
To understand the various markets risk affecting the mutual funds.
To know the consumer preference about mutual funds.

RESEARCH:-

Research and experimental development is formal work undertaken systematically

to increase the stock of knowledge, including knowledge of humanity, culture and
society, and the use of this stock of knowledge to devise new applications.
There are several forms of research: scientific, humanities, artistic, economic, social,
business, etc.

RESEARCH METHODOLOGY:RESEARCH

METHODOLOGY

are

the

Procedures

used

in

making

systematic

observations or otherwise obtaining data, evidence, or information as part of a

research project or study.

Methodology- It is a system of principles or methods of procedure in any discipline,

such as education, research, diagnosis, or treatment.
The section of a research proposal in which the methods to be used are described.
The research design, the population to be studied, and the research instruments, or
tools, to be used are discussed in the methodology.

RESEARCH DESIGN:-

Research design is considered as a "blueprint" for research, dealing with at least

four problems, which questions to study, which data are relevant, what data to
collect, and how to analyze the results. The best design depends on the research
question as well as the orientation of the researcher. Every design has its positive
and negative sides. In sociology, there are three basic designs, which are
considered to generate reliable data; these are cross-sectional, longitudinal, and
cross-sequential. Research design can be divided into fixed and flexible research
designs (Robson, 1993).
Others have referred to this distinction as quantitative research designs and
qualitative research designs, respectively. However, fixed designs need not be
quantitative, and flexible design need not be qualitative.

TYPES OF RESEARCH DESIGN

Quantitative Research Designs

Descriptive

Describe phenomena as they exist. Descriptive studies

generally take raw data and summarize it in a useable
form.

Can also be qualitative in nature if the sample size is

small and data are collected from questionnaires,
interviews or observations.

Experimental

The art of planning and implementing an experiment

in which the research has control over some of the
conditions where the study takes place and control
over some aspects of the independent variable(s)
(presumed cause or variable used to predict another
variable)

Quasi-

experimental

A form of experimental research. One in which the

researcher cannot control at least one of the three
elements of an experimental design:

Environment

Intervention (program or practice)

Assignment to experimental and control groups

Qualitative Research Designs

Historical

Collection and evaluation of data related to past

events that are used to describe causes, effects and
trends that may explain present or future events. Data
are often archival.

Ethnographic

Data includes interviews.

The collection of extensive narrative data over an

extended period of time in natural settings to gain
insights about other types of research.

Data are collected through observations at particular

points of time over a sustained period.

Data include observations, records and interpretations

of what is seen.

Case Studies

An in-depth study of an individual group, institution,

organization or program.

Data include interviews, field notes of observations,

archival data and biographical data.

DATA COLLECTION
Data collection is any process of preparing and collecting data, for example,
as part of a process improvement or similar project. The purpose of data
collection is to obtain information to keep on record, to make decisions about
important issues, or to pass information on to others. Data are primarily
collected to provide information regarding a specific topic.

PRIMARY DATA:- Primary research consists of the collection of original

primary data. It is often undertaken after the researcher has gained some
insight into the issue by reviewing secondary research or by analyzing
previously collected primary data

Sources of Primary Data:

Sources for primary data are limited and at times it becomes difficult to obtain data from primary
source because of either scarcity of population or lack of cooperation. Regardless of any
difficulty one can face in collecting primary data; it is the most authentic and reliable data
source. Some of the sources of primary data are
Questionnaire: is the most commonly used method in survey. Questionnaires are a list of
questions either open-ended or close -ended for which the respondent give answers.
Interview: Interview is a face-to-face conversation with the respondent. In interview the main
problem arises when the respondent deliberately hides information otherwise it is an in depth
source of information.
Observations: Observation can be done while letting the observing person know that he is being
observed or without letting him know. Observations can also be made in natural settings as well
as in artificially created environment.

SECODARY DATA:-

Secondary data, is data collected by someone other than

the user. Common sources of secondary data for social science include censuses,
organisational records and data collected through qualitative methodologies or
qualitative research.

Sources of Secondary Data:

Secondary data is often readily available. After the expense of electronic media and
internet the availability of secondary data has become much easier.
Published Printed Sources: There are variety of published printed sources. Their
credibility depends on many factors. For example, on the writer, publishing
company and time and date when published. New sources are preferred and old
sources should be avoided as new technology and researches bring new facts into
light.
Published Electronic Sources: As internet is becoming more advance, fast and
reachable to the masses; it has been seen that much information that is not
available in printed form is available on internet. In the past the credibility of
internet was questionable but today it is not. The reason is that in the past journals
and books were seldom published on internet but today almost every journal and
book is available online. Some are free and for others you have to pay the price.
Unpublished Personal Records:

Letters

Diaries

Chapter 3

DataAnalysis and
interpretation

Q1. Are you aware about Mutual Funds?

a) Yes
b) No

70%
60%
50%
65%

40%
30%

35%

20%
10%
0%

Yes

No

INTERPRETATION:
Among the people surveyed we conclude that most of the people were aware about mutual fund
as shown by the percentage (80%). And less number of people were unaware of the same as
35%.

Q2. What is the most important reason for not investing in mutual funds?

a)
b)
c)
d)

Lack of Knowledge about Mutual Funds

Other options are preferable
Less benefits
No trust on the Fund Managers

35%
30%
25%
20%

35%
30%

15%

25%

10%
10%
5%
0%
Lack of Knowledge about Mutual Funds

Less benefits

INTERPRETATION:

35% people were unaware about mutual fund investing, followed by 30% who felt
it to be a scheme with low bwnefit. 25% were the one who thought of past services
or thought to opt other options than investing through this investment policy and
lastly 10% had no trust on the fund managers.

Q3. Reason For investing in Mutual Funds?

a)
b)
c)
d)

Safety
Good return
Tax benefit
Others

35%
30%
25%
20%

35%

15%
10%

25%

25%

15%

5%
0%
a) Safety

b) Good return

c) Tax benefit

d) Others

INTERPRETATION:
Maximum of the population35%surveyed felt mutual funds to be an investment
opportunity which provides tax benefit then 25%people were with the aspect of
good returns and others option and the last which came was safety.

Q4. Factors considered before investing in Mutual Funds?

a)
b)
c)
d)
e)

Economic Scenario
Company Image
Fund performance
Fund manager image
Tax Incentive

30%
25%
20%
15%

30%
25%

10%
5%

20%
15%
10%

0%

INTERPRETATION:

30%of the population considered companys image as the main

criteria for investing and then 25% for economic scenerio 20% in
tax benefit and 10% and 15% in fund manager image and fund
performance respectively.

Q5. Mutual Funds Schemes prefered for future investment?

a) SIP
b) Traditional Investment

70%
60%
50%
65%

40%
30%

35%

20%
10%
0%
a) SIP 1

b) Traditional Investment

INTERPRETATION:
Most of the people as per the survey prefer SIP schemes of mutual fund fo
future investment and less people for traditional investment.

Q6. Which Mutual Fund Plan do you consider the best?

a) Balanced Plans
b) Equity Plans
c) Income Plans

45%
40%
35%
30%
25%

42%

20%

28%

30%

15%
10%
5%
0%
a) Balanced Plans

b) Equity Plans

c) Income Plans

INTERPRETATION
As per this balanced plans are more preferred by the people
followed by Income plans and then Equity plans because of the
benefits offered by the Balanced plans.

Q7. How long would you like to hold your Mutual Funds'
Investments? *
a)
b)
c)
d)

1 to 3 years
4 to 6 years
7 to 10 years
More than 10years

60%
50%
40%
30%

56%

20%

24%

10%

15%

5%

0%

INTERPRETATION
Maximum of 1-3 years people prefer keeping their funds invested trhn 46 years follwed by 7-10 years and lastly the least is more than 10 years as
it may at times be a very risky situation.

Q8. Where do you gather information about the performance of different

mutual fund schemes?
a)
b)
c)
d)
e)

Financial Institutions
Brokers
Financial Consultants
TV Channels
Magazines Internet

35%
30%
25%
35%

20%
15%
10%

30%

17%

5%

8%

10%

0%

INTERPRETATION:
TV channels took the maximum percentage in gathering the information
follwed by 30% magzines then financil institutions and financial consultants
an dbrokers respectively falling in percentage.

Q9. Which one do you rate as the best investment instrument?

a)
b)
c)
d)
e)
f)
g)
h)

20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%

Savings Bank
Fixed Deposit
Shares/Debentures
Gold/Silver
Postal savings
Real Estate
Insurance
Others

15%

18%

20%
15%

12%

INTERPRETATION:

5%

Gold and silver are the main investment criterial options for
investment and postal savings were the least.

Q10. Which AMC will you prefer to invest?

a)
b)
c)
d)
e)
f)
g)

SBIMF
UTI
Reliance
HDFC
Kotak
ICICI
JM finance

25%

20%

15%
21%
10%

17%

15%

17%

17%

13%

5%

0%
SBIMF

UTI

INTERPRETATION:

Reliance

HDFC

Kotak

ICICI

UTI take the maximum percentage in AMC preference and 13% of

HDFC as the least..

LIMITATIONS

Sample size is limited to 50 only thus the sample size does not adequately represent the

national market.
Market is very Demographical
Limited time was another constraint
Extereme Variability in Market
The next problem was the unaawareness of the customers. Investors do not want to invest
in mutual funds because of the myth that investment in these funds lead to insensitive
returns. They think that market is highly volatile and will not be able to give back the

secured returns.
Another problem is the risk attached with the equity. Investors want to invest in fixed
instruments from where they may be able to get secured returns instead of having
unsecured loans.
Some people were least interested in even knowing about the Product.

SUGGESTIONS AND RECOMMENDATIONS

Advertisements in newspapers is the main source of attraction, so the company must

advertise its product heavily.

Services must n\be improved.
There should be provision of complaint suggestion boxes at each branch.
The company should focus on the advertising strategy and also the marketing of the product.
The company doesnt have enough tax saving plans or appropriate plans for tax so which
they should come up with.

CONCLUSIONS

MUTUAL FUND INVESTMENT is better than other raising funds.

Muttual funds has good returns in investment.
A good brand is always welcomed here , people are more aware and conscious for the

brandso they are ready to spend extra money for better quality.
Muttual funds in india is in a growth stage and it would take some time to enter into the

maturity stage.
People investing into mutual funds basically invest at the financial year end.
They invest in Muttual funds mostly for tax savings purpose other than investment on

return purpose.
At last all consequences are concluded by that SPA is still growing industry in India and
is still exploring its potential and prospects in here.