EXECUTIVE SUMMARY

Financial investments include shares, other equity investment, as well as bonds which are the
different type of invest preferred now a days. These financial assets are then expected to
provide income or positive future cash flows, as well as may increase or decrease in value
giving the investor/depositor capital gains or losses. My topic for the study is “A study of
investor preferences towards investment in mutual funds”.

Most investor/depositors as well as advisors pay an excellent deal of one time understanding
the deserves of the thousands of investments obtainable in India. very little time, however, is
spent understanding the wants of the capitalist as well as guaranteeing that the foremost
acceptable investments are chosen for him. Most investor/depositors invest for the long term
to fulfill the inflation as well as for the capital appreciation. Success as an investor/depositor
depends upon his investment in right instrument in right time as well as for the right period.
This, in turn, depends on the requirements, needs as well as goals. For most
investor/depositors, however, the three prime criteria of evaluating any investment option are
liquidity, safety as well as level of return.

In this study my objectives are to find out the Preferences of the investors for Asset
Management Company and to know the Preferences for the portfolios. Other To find out the
most preferred channel. For the research about the topic we have used the primary data
collected by the questionnaire. The limitation of the study is the time constraint as well as the
sample size. The result is that the people want to invest more in secure investment.

In few years Mutual Fund has emerged as a tool for ensuring one’s financial well being.
Mutual Funds have not only contributed to the India growth story but have also helped
families tap into the success of Indian Industry.

Mutual fund is a trust that pools the savings of a number of investors who share a common
financial goal. This pool of money is invested in accordance with a stated objective. The joint
ownership of the fund is thus “Mutual”, i.e. the fund belongs to all investors. The money thus
collected is then invested in capital market instruments such as shares, debentures and other
securities. When an investor subscribes for the units of a mutual fund, he becomes part owner
of the assets of the fund in the same proportion as his contribution amount put up with the
corpus.

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Mutual Funds have been a significant source of investment in both government and corporate
securities. It has been for the decades the monopoly of the state with UTI being the key
player with invested funds exceeding Rs. 300 bn. (US $ 10 bn.). The state owned insurance
companies also hold a portfolio of stocks. Presently, numerous mutual funds exist, including
private and foreign companies. Banks - mainly state owned too have established Mutual
Funds (MFs). Foreign participation in mutual funds and asset management companies
permitted on a case-by-case basis.

The Indian mutual fund industry is dominated by the Unit Trust of India, which has a total
corpus of Rs700bn collected from more than 20 million investors. The UTI has many
funds/schemes in all categories i.e. equity, balanced, income etc with some being open-ended
and some being closed-ended. The Unit Scheme 1964 commonly referred to as US 64, which
is a balanced fund, is the biggest scheme with a corpus of about Rs200bn. Most of its
investors believe that the UTI is government owned and controlled, which, while legally
incorrect, is true for all practical purposes. Running a successful Mutual Fund requires
complete understanding of the peculiarities of the Indian Stock Market and also the psyche of
the small investors. This study has made an attempt to understand the financial behavior of
Mutual Fund investors in connection with the preferences of Brand (AMC), Products,
Channel etc. I observed that many of people have fear of Mutual Fund. They think their
money will not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its
related terms. Many of people do not have invested in mutual fund due to lack of awareness
although they have money to invest. As the awareness and income is growing the number of
mutual fund investors are also growing.

“Brand” plays important role for the investment. People invest in those Companies where
they have faith or they are well known with them. There are many AMCs but only some are
performing well due to Brand awareness. Some AMCs are not performing well although
some of the schemes of them are giving good return because of not awareness about Brand.
HDFC, Reliance, UTI, SBIMF, ICICI Prudential etc. they are well known Brand, they are
performing well and their Assets Under Management is larger than others whose Brand name
are not well known like Principle, Sunderam, etc.

Distribution channels are also important for the investment in mutual fund. Financial
Advisors are the most preferred channel for the investment in mutual fund. They can change
investors’ mind from one investment option to others. Many of investors directly invest their

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money through AMC because they do not have to pay entry load. Only those people invest
directly who know well about mutual fund and its operations and those have time.

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 Contents

1. Introduction

Industry Profile
Company’s profile
Structure of organisation

2. Major Learning

3. SWOT Analysis of Company

4. Recommendations

5. References

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 INTRODUCTION TO THE TOPIC

In few years Mutual Fund has emerged as a tool for ensuring one’s financial well being.
Mutual Funds have not only contributed to the India growth story but have also helped
families tap into the success of Indian Industry. As information and awareness is rising more
and more people are enjoying the benefits of investing in mutual funds. The main reason the
number of retail mutual fund investors remains small is that nine in ten people with incomes
in India do not know that mutual funds exist. But once people are aware of mutual fund
investment opportunities, the number who decide to invest in mutual funds increases to as
many as one in five people. The trick for converting a person with no knowledge of mutual
funds to a new Mutual Fund customer is to understand which of the potential investors are
more likely to buy mutual funds and to use the right arguments in the sales process that
customers will accept as important and relevant to their decision.

This Project gave me a great learning experience and at the same time it gave me enough
scope to implement my analytical ability. The analysis and advice presented in this Project
Report is based on market research on the saving and investment practices of the investors
and preferences of the investors for investment in Mutual Funds. This Report will help to
know about the investors’ Preferences in Mutual Fund as an investment option means Are
they prefer any particular Asset Management Company (AMC), Which type of Product they
prefer, Which Option (Growth or Dividend) they prefer or Which Investment Strategy they
follow (Systematic Investment Plan or One time Plan). This Project as a whole can be divided
into two parts.

MEANING OF MUTUAL FUNDS

Mutual fund is a trust that pools the savings of a number of investors who share a common
financial goal. This pool of money is invested in accordance with a stated objective. The joint
ownership of the fund is thus “Mutual”, i.e. the fund belongs to all investors. The money thus
collected is then invested in capital market instruments such as shares, debentures and other
securities. The income earned through these investments and the capital appreciations
realized are shared by its unit holders in proportion 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, professionally managed basket of securities at a
relatively low cost. A Mutual Fund is an investment tool that allows small investors access to
a well-diversified portfolio of equities, bonds and other securities. Each shareholder

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participates in the gain or loss of the fund. Units are issued and can be redeemed as needed.
The funds Net Asset value (NAV) is determined each day.

Investments in securities are spread across a wide cross-section of industries and sectors
and thus the risk is reduced. Diversification reduces the risk because all stocks may not move
in the same direction in the same proportion at the same time. Mutual fund issues units to the
investors in accordance with quantum of money invested by them. Investors of mutual funds
are known as unit holders.

MUTUAL FUND AS AN INVESTMENT OPTION

When an investor subscribes for the units of a mutual fund, he becomes part owner of the
assets of the fund in the same proportion as his contribution amount put up with the corpus
(the total amount of the fund). Mutual Fund investor is also known as a mutual fund
shareholder or a unit holder.
Any change in the value of the investments made into capital market instruments (such as
shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is
defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a
scheme is calculated by dividing the market value of scheme's assets by the total number of
units issued to the investors.

An investor normally prioritizes his investment needs before undertaking an investment.

Different goals will be allocated to different proportions of the total disposable amount.
Investments for specific goals normally find their way into the debt market as risk reduction
is of prime importance, this is the area for the risk-averse investors and here, Mutual Funds
are generally the best option. One can avail of the benefits of better returns with added
benefits of anytime liquidity by investing in open-ended debt funds at lower risk, this risk
of default by any company that one has chosen to invest in, can be minimized by investing
in Mutual Funds as the fund managers analyze the companies financials more minutely than
an individual can do as they have the expertise to do so.

Moving up the risk spectrum, there are people who would like to take some risk and invest
in equity funds/capital market. However, since their appetite for risk is also limited, they
would rather have some exposure to debt as well. For these investors, balanced funds