PROJECT REPORT ON MUTUAL FUND

2013
Report submitted in partial fulfillment of the requirement for the awards of

GRADUATE DEGREE IN COMMERCE (2010-2013)

OF
[Type the document subtitle]
ST.XAVIER’S COLLEGE, KOLKATA (AUTINOMOUS)

Submitted by
MOHIT RATHI
ROLL NO. – 081

UNDER THE GUIDANCE OF – PROF. PARTHA PRATIM GHOSH

1
 Topic

MUTUAL FUNDS IN INDIA

Submitted by

MOHIT RATHI

ROLL NO: 081

ST. XAVIER’S COLLEGE

IN FULFILLMENT OF A PROJECT

FOR 3RD YEAR B.COM (HONS)

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 ACKNOWLEDGEMENT

I owe a great many thanks to a great many people who helped and supported me during my
project work.

Any attempt at any level cannot be satisfactorily completed without the support and guidance
of learned people. I would like to express my immense gratitude to Professor Sree Prakash
for his constant support and motivation that has encouraged me to come up with this project.
He has taken pain to go through the project and make necessary correction as and when
needed.

I express my thanks to the Principal, Father Felix Raj and Vice Principal, Father Dominic
Savio, of ST. XAVIER’S COLLEGE, for extending their support.

I would also thank my Institution and the faculty members of the Institution without whom
the project would have been a distant reality.

Finally, we take this opportunity to extend our deep appreciation to our family and friends,
for all that they meant to us during the crucial times of the completion of our project.

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 INDEX

CONTENTS PAGE NO:

1. INTRODUCTION & BACKGROUND OF THE STUDY 5-7
2. OBJECTIVES OF THE STUDY 8-10
3. LITERATURE REVIEW 10
4. DATA & RESEARCH METHODOLOGY 11-12
5. LIMITATIONS OF THE STUDY 13
6. CHAPTERS FOR THE STUDY :
Chapter - I: MUTUAL FUNDS –AN INSIGHT 15-
26

Chapter- II: RESEARCH AND FINDINGS 27-

37

Chapter- III: DATA ANALYSIS & INTERPRETATION

38-56

7. CONCLUSION & RECCOMENDATIONS 56-57

8. REFERENCE & BIBLIOGRAPHY 58

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 INTRODUCTION

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 Mutual of companies where the risk
is high and the returns are also proportionately high. The recent trends in the Mutual Market
have shown that an average retail investor always lost with periodic bearish tends. People
began opting for portfolio managers with expertise in Mutual 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.

Like most developed and developing countries the mutual fund cult has been catching on in
India. The reasons for this interesting occurrence are:

# Mutual funds make it easy and less costly for investors to satisfy their need for capital
growth, income and/or income preservation.

# Mutual fund brings the benefits of diversification and money management to the individual
investor, providing an opportunity for financial success that was once available only to a
select few.

Brief History of the Indian Mutual Funds Industry

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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 of India. 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 non- UTI 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.

 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, 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
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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. 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.

Performance of Mutual Funds in India

Let us start the discussion of the performance of mutual funds in India from the day the
concept of mutual fund took birth in India. The year was 1963. Unit Trust of India invited
investors to park their money in UTI Mutual Fund.

For 30 years it goaled without a single second player. Though the 1988 saw some new mutual
fund companies, but UTI remained in a monopoly position.

The performance of mutual funds in India in the initial phase was not even closer to
satisfactory level. People rarely understood and of course investing was out of question. But
yes, some 24 million shareholders was accustomed with guaranteed high returns by the
beginning of liberalization of the industry in 1992. This good record of UTI became
marketing tool for new entrants. The expectations of investors touched the sky in profitability
factor. However, people were miles away from the preparedness of risks factor after the
liberalization.

The Assets Under management of UTI was Rs.67bn. by the end of 1987. Let me concentrate
about the performance of mutual funds in India through figures. From Rs.67bn. the Assets
Under Management rose to Rs.470 bn. in March 1993 and the figure had a three times higher
performance by April 2004. It rose as high as Rs.1,540 bn.

The performance of mutual funds in India suffered qualitatively. The 1992 stock market
scandal, the losses by disinvestments and of course the lack of transparent rules in the
whereabouts rocked confidence among the investors. Partly owing to a relatively weak stock
market performance, mutual funds have not yet recovered, with funds trading at an average
discount of 1020 percent of their NAV.

The supervisory authority adopted a set of measures to create a transparent and competitive
environment in mutual funds. Some of them were like relaxing investment restrictions into the
market, introduction of open-ended funds and paving the gateway for mutual funds to launch
pension schemes. The measure was taken to make mutual funds the key instrument for long-
term saving. The more the variety offered, the quantitative will be investors.

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 At last to mention, as long as mutual fund companies are performing with lower risks and
higher profitability with lower risks and higher profitability within a short span of time, more
and more people will be inclined to invest until and unless they are fully educated with dos
and don’ts of mutual funds.

OBJECTIVE OF THE STUDY

 The main objective of this project is concerned with getting the opinion of people regarding
mutual funds and what they feel about availing the services of financial advisors.

 We have tried to explore the general opinion about mutual funds. It also covers why/ why not
investors are availing the services of financial advisors.

 To describe the scope of benefits to investors through mutual funds.

 To measure the satisfaction level of investors regarding mutual funds.

 An attempt has been made to measure various variables playing in the minds of investors in
terms of safety, liquidity, service, returns, and tax saving.

 To get insight knowledge of mutual funds.

 To know the mutual funds performance levels in the present market.

 To know the awareness of mutual funds among different groups of investors.

LITERATURE REVIEW

1. Pandian P. in the book “Security Analysis and Portfolio Management” financial investment is
the allocation of money to assets that are expected to yield some gain over a period of time.
It is an exchange of financial claims such as stock and bonds for money. They are expected to
yield returns and experience capital growth over the years.

According to the book Mutual Funds by ICFAI University had described the various key
financial terms which are mentioned below:

Net asset value (Nav) is the market value of the assets of the scheme minus its liabilities. The
Nav per unit on any day is computed as follows

NAV= receivables+accrued income- liabilities- accrued liabilities

No. of shares or units outstanding
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2. According to website about.com author lee McGowan had suggested ten reasons for
buying mutual funds which are given as follows:-

The beauty of a mutual fund is that you can buy a mutual fund and obtain instant access to a
hundreds of individual stocks or bonds. Otherwise, in order to diversify your portfolio, you
might have to buy individual securities, which exposes you to more potential volatility.

Many investors don’t have the resources or the time to buy individual stocks. Investing in
individual securities, such as stocks, not only takes resources, but a considerable amount of
time. By contrast, mutual fund managers and analysts wake up each morning dedicating their
professional lives to researching and analyzing current and potential holdings for their mutual
fund.

A mutual fund comes in many types and styles. There are stock funds, bond funds, sector
funds, target-date mutual funds, money market mutual funds and balanced funds. Mutual
funds allow you to invest in the market whether you believe in active portfolio management
(actively managed funds) or you prefer to buy a segment of the market with no interference
from a manager (passive funds and index mutual funds). The availability of different types of
mutual funds allows you to build a diversified portfolio at low cost and without much
difficulty.

Many mutual fund companies allow investors to get started in a mutual fund with as little as
$1,000. Schwab’s mutual fund family has a minimum of $100 for many of their mutual funds.

3 .Ethical Flavors in Mutual Funds - (http://www.karvy.com/articles/ethical30062001.html)

The concept of a socially responsible fund was hitherto unknown to Indian investors, it is a
popular investment vehicle in the US mutual fund market. Ethical funds, as they are popularly
called, cater to the need of a population segment with personal ethical codes, which are not
in line with normal investment practices. These funds consider environmental, social and
animal cruelty issues before investing in a company. Thus, ethical funds will follow a process
of elimination while taking investment decisions and will not invest in companies that are
engaged in running abattoirs, meat processing and packaging and production of liquor,
tobacco, leather goods pesticides, pisciculture and sericulture.

The first socially responsible fund, to be launched by JM Asset Management Company, is

christened JM Heritage Fund. The scheme, structured as a balanced fund, will invest in equity
and debt, would focus on ahimsa. The 'Ahimsa' fund would provide investors with two

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options - income and balanced. The second plan is a growth-cum-income plan that invests in
both equity and debt. A small percentage of the fund management fees is kept away for
donation to charities involved in animal welfare. Typically, JM Heritage fund would invest in
areas like petrochemicals, auto, metals, banking and finance, engineering and technology. It
might also consider FMCG and pharma companies, provided such outfits are above board
with respect to cruelty issues.

SCOPE OF MUTUAL FUNDS

Scope of Mutual Funds has grown enormously over the years. In the first age of mutual
funds, when the investment management companies started to offer mutual funds, choices
were few. Even though people invested their money in mutual funds as these funds offered
them diversified investment option for the first time. By investing in these funds they were
able to diversify their investment in common Mutuals, preferred Mutuals, bonds and other
financial securities. At the same time they also enjoyed the advantage of liquidity. With
Mutual Funds, they got the scope of easy access to their invested funds on requirement.

But, in today’s world, Scope of Mutual Funds has become so wide, that people sometimes
take long time to decide the mutual fund type, they are going to invest in. Several
Investment Management Companies have emerged over the years, who offer various types
of Mutual Funds, Each type carrying unique characteristics and different beneficial features .

RESEARCH METHODOLGY
Research Design:

The design for this study is Descriptive research.

Descriptive research, also known as statistical research, describes data and characteristics about
the population or phenomenon being studied. Descriptive research answers the questions who,
what, where, when, "why" and how...
Although the data description is factual, accurate and systematic, the research cannot describe
what caused a situation. Thus, Descriptive research cannot be used to create a causal
relationship, where one variable affects another. In other words, descriptive research can be said
to have a low requirement for internal validity.

Sources of Data:

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 Primary Source: The primary data is collected using sampling method and by survey using
questionnaire.
 Secondary Source: Secondary data includes information regarding present market scenario,
Information regarding Mutual Funds and competitors are collected from internet, Magazines and
Newspaper and books.

Sample Planning:

 Sample Size: 100 units.

 Sample Extent: Kolkata city.

Sample design:

A sample design is a definite plan for obtaining a sample from a given population. It refers to
the technique or method the researcher would adopt in selecting items for the sample.

 I have used non-probability sampling.

Duration of the study:

The study was carried out for a period of 3 months, from 15th November 2013 to 30th January
2014.

Data collection:

The sample is selected in a random way, irrespective of them being investor or not or availing
the services or not. Data was collected through mails and personal visits to the known persons,
by formal and informal talks and through filling up the questionnaire prepared.

 Data collection method: Survey

 Data collection tool: Questionnaire

Type of information:

 I have collected facts, awareness, attitudes, future action plan and reasons using
questionnaire.

Type of questions:

 Multiple choice type

Data Analysis and Interpretation:

 Data analysis is based on the data collected by way of questionnaires. The data is tabulated
and has been presented with the help of bar graph, pie charts, line graphs etc.

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LIMITATIONS OF THE STUDY

 The lack of information sources for the analysis part.

 Time and money are critical factors limiting this study.
 The data provided by the prospects may not be 100% correct as they too have their
limitations.
 Generally the respondents were busy in their work and were not interested in
responding rightly.
 Most of the respondents don’t want to disclose the information about their investment
preferences.
 Respondents were reluctant to discover complete and correct information about
themselves and their financial investments.

PLAN OF CHAPTERS
This project has been divided under five categories which includes:

CHAPTER 1 is about the conceptual framework describing what mutual fund is

about, types of mutual fund, its advantages and disadvantages, constituents of mutual

funds, market strategies and its status in the year 2013.

CHAPTER 2 describes the research and findings of mutual funds such as UTI mutual
fund, Reliance mutual fund, ICICI mutual fund, SBI mutual fund, JM mutual fund, Birla
sun life mutual fund, HDFC mutual fund. A comparison between these mutual funds

has been shown under this chapter.

At last CHAPTER 3 includes the data analysis and interpretation of the survey

conducted.

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 CHAPTER-1
MUTUAL FUNDS- AN INSIGHT

1.1 What is a Mutual Fund?

A mutual fund is a trust that pools in savings of a number of investors who share a common
financial goal. The money thus collected is invested by the fund manager in different types of
securities depending upon the objective of the scheme. These could range from shares to
debentures to money market instruments. The income earned through these investments and the
capital appreciations realize by the schemes are shared by its unit holders in proportion to the
number of units owned by them (pro rata). 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 portfolio at a relatively low cost. Anybody with an inventible surplus of as little as a
few thousand rupees can invest in Mutual Funds.

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1.2 Mutual Fund Operation Flow Chart

A mutual fund is the ideal investment vehicle for today’s complex and modern financial scenario.
Markets for equity shares, bonds and other fixed income instruments, real estate, derivatives and other
assets have become mature and information driven. Price changes in these assets are driven by global
events occurring in faraway places. A typical individual is unlikely to have the knowledge, skills,
inclination and time to keep track of events, understand their implications and act speedily. An
individual also finds it difficult to keep track of ownership of his assets, investments, brokerage, dues
and bank transactions, etc.

A mutual fund is the answer to all these situations. It appoints professionally qualified and
experienced staff that manages each of these functions on a full time basis. The large pool of money
collected in the fund allows it to hire such staff at a very low cost to each investor. In effect, the
mutual fund vehicle exploits economies of scale in all three areas: research, investment and
transaction processing. While the concept of individuals coming together to invest money collectively
is not new, the mutual fund in its present form is a 20th century phenomenon. In fact, mutual funds
gained popularity only after the Second World War. Globally, there are thousands of firms offering
tens of thousands of mutual funds with different investment objectives. Today, mutual funds
collectively manage almost as much as or more money as compared to banks.

1.3 Why Select Mutual Fund?

The risk return trade-off indicates that if investor is willing to take higher risk then correspondingly
he can expect higher returns and vise versa if he pertains to lower risk instruments, which would be
satisfied by lower returns. For example, if an investors opt for bank FD, which provide moderate
return with minimal risk. But as he moves ahead to invest in capital protected funds and the profit-
bonds that give out more return which is slightly higher as compared to the bank deposits but the risk
involved also increases in the same proportion.

Thus investors choose mutual funds as their primary means of investing, as Mutual funds provide
professional management, diversification, convenience and liquidity. That doesn’t mean mutual fund
investments risk free.This is because the money that is pooled in are not invested only in debts funds
which are less riskier but are also invested in the stock markets which involves a higher risk but can
expect higher returns. Hedge fund involves a very high risk since it is mostly traded in the derivatives
market which is considered very volatile.

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RETURN RISK MATRIX

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1.4 Advantages of Mutual Funds
The advantages of investing in a Mutual Fund are:

 Diversification: The best mutual funds design their portfolios so individual investments will
react differently to the same economic conditions. For example, economic conditions like a rise in
interest rates may cause certain securities in a diversified portfolio to decrease in value. Other
securities in the portfolio will respond to the same economic conditions by increasing in value.
When a portfolio is balanced in this way, the value of the overall portfolio should gradually
increase over time, even if some securities lose value.

 Professional Management: Most mutual funds pay topflight professionals to manage their
investments. These managers decide what securities the fund will buy and sell.

 Regulatory oversight: Mutual funds are subject to many government regulations that protect
investors from fraud.

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 Liquidity: It’s easy to get your money out of a mutual fund. Write a check, make a call, and
you’ve got the cash.

 Convenience: You can usually buy mutual fund shares by mail, phone, or over the internet.

 Low cost: Mutual fund expenses are often no more than 1.5 percent of your investment.

 Flexibility

 Choice of schemes

 Tax benefits

1.5 Drawbacks of Mutual Fund

Mutual funds have their drawbacks and may not be for everyone:

 No guarantees: No investment is risk free. If the entire stock market declines in value, the value
of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors
encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their
own. However, anyone who invests through a mutual fund runs the risk of losing money.

 Fees and commissions: All funds charge administrative fees to cover their day-to-day expenses.
Some funds also charge sales commissions or “loads” to compensate brokers, financial consultants,
or financial planners. Even if you don’t use a broker or other financial adviser, you will pay a sales
commission if you buy shares in a Load Fund.

 Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70
percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay
taxes on the income you receive, even if you reinvest the money you made.

 Management risk: When you invest in a mutual fund, you depend on the fund’s manager to
make the right decisions regarding the fund’s portfolio. If the manager does not perform as well as
you had hoped, you might not make as much money on your investment as you expected. Of
course, if you invest in Index funds, you forego management risk, because these funds do not
employ managers.

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1.6 Mutual Fund Constituents

All mutual funds comprise four constituents:

 Sponsors
 Trustees
 Asset Management Company (AMC)
 Custodians

Sponsors: The sponsors initiate the idea to set up a mutual fund. It could be a registered
company, scheduled bank or financial institution. A sponsor has to satisfy certain conditions, such
as capital, record (at least five year’s operation in financial services), default free dealings and
general reputation of fairness. The sponsors appoint the Trustee, AMC and Custodian. Once the
AMC is formed, the sponsor is just a stakeholder.

Trust/ Board of Trustees: Trustees hold a fiduciary responsibility towards unit holders
by protecting their interests. Trustees float and market schemes, and secure necessary approvals.
They check if the AMC’s investments are within well-defined limits, whether the fund’s assets are
protected, and also ensure that unit holders get their due returns. They also review any due

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 diligence by the AMC. For major decisions concerning the fund, they have to take the unit holder’s
consent. They submit reports every six months to SEBI; investors get an annual report. Trustees are
paid annually out of the fund’s assets- 0.5 percent of the weekly net asset value.

Fund Managers/AMC: They are the ones who manage money of the investors. An AMC
takes decisions, compensates investors through dividends, maintains proper accounting and
information for pricing of units, calculates the NAV, and provides information on listed schemes. It
also exercises due diligence on investments, and submits quarterly reports to the trustees. A fund’s
AMC can neither act for any other fund nor undertake any business other than asset management.
Its net worth should not fall below Rs. 10 crore. And, its fee should not exceed 1.25 percent if
collections are below Rs. 100 crore and 1 percent if collections are above Rs. 100 crore. SEBI can
pull up an AMC if it deviates from its prescribed role.

Custodian: Often an independent organization, it takes custody of securities and other assets
of mutual fund. Its responsibilities include receipt and delivery of securities, collecting income,
distributing dividends, safekeeping of the units and segregating assets and settlements between
schemes. Their charges range between 0.15-0.2 percent of the net value of the holding. Custodians
can service more than one fund.

1.7 Types of Mutual Fund Scheme in India

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position,
risk tolerance and return expectations etc. thus mutual funds has Variety of flavors, Being a
collection of many stocks, an investors can go for picking a mutual fund might be easy. There

TYPES OF MUTUAL
FUNDS

BY INVESTMENT
BY STRUCTURE BY NATURE OTHER SCHEMES
OBJECTIVE

Open - Ended Tax Saving

Equity Fund Growth Schemes
Schemes Schemes

Close - Ended
Debt Funds Income Schemes Index Schemes
Schemes

Sector Specific
Interval Schemes Balanced Funds Balanced Schemes
Schemes

Money Market
Schemes
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are over hundreds of mutual funds scheme to choose from. It is easier to think about it.

BY STRUCTURE

1. Open - Ended Schemes:

An open-end fund is one that is available for subscription all through the year. These
do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value
("NAV") related prices. The key feature of open-end schemes is liquidity.

2. Close - Ended Schemes:

A closed-end fund has a stipulated maturity period which generally ranging from 3 to
15 years. The fund is open for subscription only during a specified period. 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 they 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.

3. Interval Schemes:
Interval Schemes are that scheme, which combines the features of open-ended and
close-ended schemes. The units may be traded on the stock exchange or may be open for sale
or redemption during pre-determined intervals at NAV related prices.

BY NATURE

1. Equity Fund:
These funds invest a maximum part of their corpus into equities holdings. The
structure of the fund may vary different for different schemes and the fund manager’s outlook
on different stocks. The Equity Funds are sub-classified depending upon their investment
objective, as follows:
 Diversified Equity Funds
 Mid-Cap Funds
 Sector Specific Funds
 Tax Savings Funds (ELSS)

Equity investments are meant for a longer time horizon, thus Equity funds rank high
on the risk-return matrix.

2. Debt Funds:
The objective of these Funds is to invest in debt papers. Government authorities,
private companies, banks and financial institutions are some of the major issuers of debt

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papers. By investing in debt instruments, these funds ensure low risk and provide stable
income to the investors. Debt funds are further classified as:
 Gilt Funds: Invest their corpus in securities issued by Government, popularly known
as Government of India debt papers. These Funds carry zero Default risk but are
associated with Interest Rate risk. These schemes are safer as they invest in papers
backed by Government.
 Income Funds: Invest a major portion into various debt instruments such as bonds,
corporate debentures and Government securities.
 MIPs: Invests maximum of their total corpus in debt instruments while they take
minimum exposure in equities. It gets benefit of both equity and debt market. These
scheme ranks slightly high on the risk-return matrix when compared with other debt
schemes.
 Short Term Plans (STPs): Meant for investment horizon for three to six months.
These funds primarily invest in short term papers like Certificate of Deposits (CDs)
and Commercial Papers (CPs). Some portion of the corpus is also invested in
corporate debentures.
 Liquid Funds: Also known as Money Market Schemes, These funds provides easy
liquidity and preservation of capital. These schemes invest in short-term instruments
like Treasury Bills, inter-bank call money market, CPs and CDs. These funds are
meant for short-term cash management of corporate houses and are meant for an
investment horizon of 1day to 3 months. These schemes rank low on risk-return
matrix and are considered to be the safest amongst all categories of mutual funds.

3. Balanced Funds:
As the name suggest they, are a mix of both equity and debt funds. They invest in
both equities and fixed income securities, which are in line with pre-defined investment
objective of the scheme. These schemes aim to provide investors with the best of both the
worlds. Equity part provides growth and the debt part provides stability in returns.

Further the mutual funds can be broadly classified on the basis of investment parameter
viz,
Each category of funds is backed by an investment philosophy, which is pre-defined in the
objectives of the fund. The investor can align his own investment needs with the funds
objective and invest accordingly.

BY INVESTMENT OBJECTIVE:

Growth Schemes:
Growth Schemes are also known as equity schemes. The aim of these schemes is to
provide capital appreciation over medium to long term. These schemes normally invest a

21
major part of their fund in equities and are willing to bear short-term decline in value for
possible future appreciation.

Income Schemes:
Income Schemes are also known as debt schemes. The aim of these schemes is to
provide regular and steady income to investors. These schemes generally invest in fixed
income securities such as bonds and corporate debentures. Capital appreciation in such
schemes may be limited.

Balanced Schemes:
Balanced Schemes aim to provide both growth and income by periodically
distributing a part of the income and capital gains they earn. These schemes invest in both
shares and fixed income securities, in the proportion indicated in their offer documents
(normally 50:50).

Money Market Schemes:

Money Market Schemes aim to provide easy liquidity, preservation of capital and
moderate income. These schemes generally invest in safer, short-term instruments, such as
treasury bills, certificates of deposit, commercial paper and inter-bank call money.
Load Funds:
A Load Fund is one that charges a commission for entry or exit. That is, each time
you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads
range from 1% to 2%. It could be worth paying the load, if the fund has a good performance
history.

No-Load Funds:
A No-Load Fund is one that does not charge a commission for entry or exit. That is,
no commission is payable on purchase or sale of units in the fund. The advantage of a no load
fund is that the entire corpus is put to work.

OTHER SCHEMES

Tax Saving Schemes:

Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from
time to time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked
Savings Scheme (ELSS) are eligible for rebate.

Index Schemes:
Index schemes attempt to replicate the performance of a particular index such as the
BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks
that constitute the index. The percentage of each stock to the total holding will be identical to
the stocks index weightage. And hence, the returns from such schemes would be more or less
equivalent to those of the Index.
22
1.8 Net Asset Value (NAV)

Since each owner is a part owner of a mutual fund, it is necessary to establish the value of his
part. In other words, each share or unit that an investor holds needs to be assigned a value.
Since the units held by investor evidence the ownership of the fund’s assets, the value of the
total assets of the fund when divided by the total number of units issued by the mutual fund
gives us the value of one unit. This is generally called the Net Asset Value (NAV) of one
unit or one share. The value of an investor’s part ownership is thus determined by the NAV
of the number of units held.

Calculation of NAV:

23
 1.9 Marketing Strategies for Mutual Funds

Business Accounts
 The most common sales and marketing strategies for mutual funds is to sign-up companies as
a preferred option for their retirement plans. This provides a simple way to sign-up numerous
accounts with one master contract. To market to these firms, sales people target human
resource professionals. Marketing occurs through traditional business-to-business marketing
techniques including conferences, niche advertising and professional organizations. For
business accounts, fund representatives will stress ease of use and compatibility with the
company's present systems.

Consumer Marketing
 Consumer marketing of mutual funds is similar to the way other financial products are sold.
Marketers emphasize safety, reliability and performance. In addition, they may provide
information on their diversity of choices, ease of use and low costs. Marketers try to access
all segments of the population. They use broad marketing platforms such as television,
newspapers and the internet. Marketers especially focus on financially oriented media such as
CNBC television and Business week magazine.

Performance

 Mutual funds must be very careful about how they market their performance, as this is
heavily regulated. Mutual funds must market their short, medium and long-term average
returns to give the prospective investor a good idea of the actual performance. For example,
most funds did very well during the housing boom. However, if the bear market that followed
is included, performance looks much more average. Funds may also have had different
managers with different performance records working on the same funds, making it hard to
judge them.

Marketing Fees
 Mutual funds must be very clear about their fees and report them in all of their marketing
materials. The main types of fees include the sales fee (load) and the management fee. The
load is an upfront charge that a mutual fund charges as soon as the investment is made. The
management fee is a percentage of assets each year, usually 1 to 2 percent.

24
1.10 Mutual funds assets rose 11 per cent in 2013

The assets managed by mutual funds jumped by nearly Rs 85,000 crore or about 11 per
cent to Rs 8.78 lakh crore in 2013, with HDFC MF retaining its top position.

The country's 44 fund houses together had an average AUM (Asset Under Management) of
Rs 7,93,331 crore at the end of 2012, which increased to Rs 8,77,973 crore in 2013, as per
latest data available with industry body AMFI (Association of Mutual Funds in India).

Fund houses are upbeat about an even better performance in 2014 on account of various
measures initiated by market regulator Securities and Exchange Board of India (Sebi) as
well as plans of individual players to expand the distribution network across the country,
particularly to smaller cities.

The total AUM includes about Rs 5,777 crore managed through domestic funds.

Among the large funds, ICICI Prudential MF was the biggest gainer followed by Reliance
MF, while HDFC MF saw the smallest growth.

In terms of total funds, HDFC MF managed to retain the top slot, followed by Reliance MF
and ICICI Prudential.HDFC MF had an average AUM of about Rs 1.09 lakh crore at the end
of 2013, a 7.5 per cent rise from the preceding year. ICICI Prudential's AUM rose by an
impressive over 19 per cent to Rs 97,200 crore, while Reliance MF's AUM climbed by 13 per
cent to Rs 1.02 lakh crore. Besides, Reliance MF has surpassed Rs 1 lakh crore mark after
a gap of two quarters.

Among the gainers, mutual funds included - UTI, SBI, Axis, Baroda Pioneer, Birla Sun Life
and Franklin Templeton.

However, Canara Robeco, Goldman Sachs, Edelweiss, IDBI, Indiabulls Mutual and Tata
Mutual Fund, among others witnessed a decline in their AUMs from the levels seen in 2012.
Interestingly, 57 per cent of industry growth has been contributed by top five mutual fund
houses, while Reliance MF and ICICI Prudential together provided 31 per cent of this
increase.

25
 CHAPTER-2
RESEARCH AND FINDINGS

2.1 ICICI Prudential Mutual Fund

ICICI Prudential Asset Management Company Ltd. (IPAMC/ the Company) is the joint
venture between ICICI Bank, a well-known and trusted name in financial services in India
and Prudential Plc, one of UK’s largest players in the financial services sectors. IPAMC was
incorporated in the year 1993. The Company in a span of over 18 years since inception and
just over 13 years of the Joint Venture, has forged a position of preeminence in the Indian
Mutual Fund industry as the third largest asset management company in the country,
contributing significantly to the growth of the Indian mutual fund industry.

The Company manages significant Mutual Fund Asset Under Management (AUM), in
addition to Portfolio Management Services and International Advisory Mandates for clients
across international markets in asset classes like Debt, Equity and Real Estate with primary
focus on risk adjusted returns.

IPAMC has witnessed substantial growth in scale. From merely 2 locations and 6 employees
during inception to the current strength of over 700 employees with reach across around 150
locations, the growth momentum of the Company has been exponential. The organization
today is an ideal mix of investment expertise, resource bandwidth & process orientation.
IPAMC’s Endeavour is to bridge the gap between savings & investments to help create long
term wealth and value for investors through innovation, consistency and sustained risk
adjusted performance.

26
Key information

27
2.2 UTI Mutual Fund

The setting up of the Unit Trust of India (UTI) in 1963 heralded the birth of the Indian mutual
fund industry. In 1964, UTI mutual fund launched its flagship scheme US-64 and went on to
become a generic term for the mutual fund sector till the government allowed public sector
banks to start mutual funds in 1987.

Despite being the trendsetter in the segment, the UTI mutual fund could not sustain the initial
tempo and was on the verge of a collapse in 2001, before the government bailed it out and
restructured the fund. After the restructuring, the fund has somewhat redeemed its credibility
through professional management and a booming market.

The fund's sponsors are public sector financial giants like Life Insurance Corporation, SBI,
Bank of Baroda and Punjab National Bank. The sponsors hold equal stakes in the asset
management company, UTI Asset Management Company Private Limited.

In 2003, UTI was divided into two parts, UTI Mutual Fund (UTI MF) and a specified
undertaking of UTI or UTI-I. UTI MF was brought under SEBI regulations while UTI-I was
kept under direct government control since its schemes offered guaranteed returns.
Here is a list of mutual funds of UTI which includes Liquid Funds, Income Funds, Asset
Allocation Fund, Index Funds, Equity Funds and Balanced Fund.

28
Key Information

29
2.3 HDFC Mutual Fund

HDFC Mutual Fund has been one of the best performing mutual funds in the last few years.
HDFC Asset Management Company Limited (AMC) functions as an Asset Management
Company for the HDFC Mutual Fund.

AMC is a joint venture between housing finance giant HDFC and British investment firm
Standard Life Investments Limited. It conducts the operations of the Mutual Fund and manages
assets of the schemes, including the schemes launched from time to time.

IN 2003, following a decision by the Zurich Insurance Company (ZIC), the Sponsor of Zurich
India Mutual Fund, to divest its asset management business in India, AMC had entered into an
agreement with ZIC to acquire the asset management business. Consequently, all the schemes of
Zurich Mutual Fund in India had been transferred to HDFC Mutual Fund and renamed as HDFC
schemes.

30
Key Information

31
2.4 Reliance Mutual Fund

Reliance mutual fund, promoted by the Anil Dhirubhai Ambani (ADAG) group, is one of the
fastest growing mutual funds in India having doubled its assets over the last one year. In
March, 2006, the Reliance mutual fund emerged as the largest private sector fund house in
the country, overtaking Prudential ICICI which has been holding that position for many
years.

The sponsor of the fund is Reliance Capital Limited, the financial services arm of ADAG.
Reliance Capital Asset Management Limited, a wholly owned subsidiary of Reliance Capital
Limited, acts as the AMC to the fund. Directors of the company include Amitabh
Jhunjhunwala, a senior executive of ADAG. Amitabh Chaturvedi is the managing director of
the AMC.

Key Information

32
2.5 Birla Sun Life Mutual Fund

Birla Sun Life Asset Management Company Limited, the investment manager of Birla Sun
life Mutual Fund, is a joint venture between the Aditya Birla Group and Sun Life Financial
Services, leading international financial services organization.

Established in 1994, Birla Sun life AMC provides investors a range of 18 investment options,
which include diversified and sector specific equity schemes, a wide range of debt and
treasury products, and two offshore funds. Both the sponsors have equal stakes in the AMC.

In recognition to its high quality investment products, Birla Sun Life AMC became India's
first asset management company to be awarded the coveted ISO 9001:2000 certification by
DNV Netherlands.

Key Information

33
2.6 SBI Mutual Fund

SBI Mutual Fund, India's largest bank sponsored mutual fund, is a joint venture between the
State Bank of India and Societe Generale Asset Management, one of the world's top-notch fund
management companies. Over the years, SBI Mutual Fund has carved a niche for itself through
prudent investment decisions and consistent wealth creation.

Since its inception, SBI Funds Management Private Ltd. has launched thirty-two schemes and
successfully redeemed fifteen of them. Throughout this journey, SBI Mutual Fund has profusely
rewarded the 20,00,000 investors who have reposed their faith in it.

Today, the SBI fund boasts of an expertise of managing assets over Rs. 13,000 crores and has a
diverse profile of investors actively parking their investments across 28 active schemes. A vast
network of 82 collection branches, 26 investor service centres, 21 investor service desks and 21
district organizers helps the SBI Mutual Fund to reach out to their investors.

Key Information

34
2.7 JM Mutual Fund

One of India's first private sector mutual funds, JM mutual fund was launched by the one of
the best-known domestic brokerages, JM Financial, owned by the Kampani family. The
Nilesh Kampani-led JM Group played a pivotal role in the development of India's nascent
capital markets in the 1950s .

JM mutual fund is not a part of JM Morgan Stanley, JM Financial's joint venture with
Morgan Stanley for investment banking and other financial services. The fund is sponsored
by JM Financial and Investment Consultancy Services Private Limited and JM Financial
Limited.

The AMC of the fund is JM Financial Asset Management Private Limited. The AMC started
operations in December 1994 with a simultaneous launch of three funds-JM Liquid Fund
(now JM Income Fund), JM Equity Fund and JM balanced Fund. The company is headed by
Vijay Kelkar, former finance secretary and advisor to the government of India, as chairman
of the board.

Key Information

35
2.8 Comparisons of AUM of Asset Management Companies

AUM in Crores

* Note: Quarter End Average AUM rounded to two decimal places. Source: AMFI

36
 CHAPTER-3
Data Analysis And Interpretation

1a. Age distribution of respondents

Below 25 6 6%
26 to 35 18 18%
36 to 45 41 41%
46 to 55 23 23%
Above 56 12 12%

50 41
No. of investors

40
30 23
18
20 12
6
10
0
Less 26 to 35 36 to 45 46 to 55 Above
than 25 56
Age group

Interpretation:
The sample consisted of a total of 100 investors among which 25 % of investors belong to age
group of below 25, 18% of investors belong to 26 to 35 age group, 41% investors belong to 36
to 45 age group and 23% investors belong to 46 to 55 age group and 12% belong to above 56
age group.

37
1b. Qualification of Investors

Graduation/PG 65 65%
Under Graduate 20 20%
Others 15 15%

Qualification of investors
Others
15%
Under
Graduate Graduatio
20% n/ PG
65%

Interpretation:
Out of 100 investors 65% of the investors in Kolkata are Graduate/Post Graduate, 20% are
Under Graduate and 15% are others (under HSC). Level of education also influences investment
decisions.

1c. Occupation of the Investors

Government sec. 18 18%

Private sec. 38 38%

Business 32 32%

Other 12 12%

38
 12%
OCCUPATION
18%

Government
sec.
32%
Private sec.
38%

Interpretation:
In Occupation group out of 100 investors, 38% are Pvt. Employees, 32% are Businessmen, 18%
are Govt. Employees and 12% are in other occupations.

1d. Annual income

Annual income No. of investors Percentage

Up to Rs.1,50,000 12 12%

Rs.1,50,001 to Rs.3,50,000 42 42%

Rs.3,50,001 to Rs.5,50,000 31 31%

Rs.5,50,001 and above 15 15%

39
 50 42
No. of investors

40 31
30
15
20 12

10
0
Up to Rs.1,50,001 Rs.3,50,001 Rs.5,50,001
Rs.1,50,000 to to and above
Rs.3,50,000 Rs.5,50,000

Annual income

Interpretation:
The sample consisted of a total of 100 investors, which shows that most of the investors come
in the tax bracket and which is also one of the main reason to invest in markets and schemes
which provides good returns with tax benefit.

2. Perception of the investors about Investment

Observation Responses Percentage

High future optimization 24 24%
Recession 4 4%
Income generation 28 28%
Vague options 2 2%
Tax benefit 11 11%
Future uncertainty 31 31%

40
 35

30

25

20

15 31
28
24
10

5 11
4 2
0
High future Recession Income Vague option Tax benefit Future
optimization generation uncertainty

Interpretation:

As per the perception of the investors of Kolkata, out of 100 investors, 31% investors do their
investment because of the future uncertainty, 28% invest for income generation, 24% for high
future optimization and 11% for tax benefit.

3. People who are investing

Observation Responses Percentage

Yes 85 85%

No 15 15%

15%

Yes

No
85%

41
Interpretation:

Group of the people who are investing their money is very high in proportion of the people who
do not like to invest their money which is clearly seen in the observation that 85% of the people
invest their money where as only 15% people do not like to invest their money.

4. Type of the investment people have

Type of investment Responses %Response

Saving account 95 95%
Insurance 80 80%
Fixed deposit 62 62%
Real estate 22 22%
Shares 60 60%
Mutual fund 75 75%
Post office 37 37%
Gold/silver 18 18%
PPF/PF 34 34%

100 95
80 80
75
60 62 60
40 22 37 34
20 18
0

Interpretation:

From the above graph it can be inferred that out of 100 people, 95% people have invested in
Saving A/c, 80% in Insurance, 62% in Fixed Deposits, 75% in Mutual Fund, 37% in Post
Office, 60% in Shares or Debentures, 18% in Gold/Silver, 22% in Real Estate and 34% in
PPF/PF.

42
5. Purpose of Investment

Purpose Responses % Responses

Tax benefit 37 37%
Market trend 20 20%
Passion 13 13%
Surplus income 85 85%
Other (please specify) 25 25%

100
80
60
40
20 85
37 20 13 25
0
Tax Market Passion Surplus Other
benefit trend income (please
specify)

Interpretation:

From the above graph it can be inferred that out of 100 people, 85% people have invested to get
surplus income, 37% for tax benefit, 20% of people influenced by market trend, 25% people
have a reason like his friend told him, no specific reason etc.

6. Criteria for Investment

Stability of return 27 27%

Maximum benefits 35 35%
Low risk 12 12%
Tax benefits 15 15%
Other (please specify) 8 8%
Diversification 3 3%

43
 3%
Stability of
8% return
27%
Maximum
15%
benefits

Low risk
12%

35% Tax benefits

Interpretation:

From the responses we received and from above graph it can be inferred that out of 100 people,
35% people have invested their money to get maximum benefits that may includes surplus
income, 27% people have invested to get continues returns, 15% people have invested for tax
benefits, 12% people for low risks and only 3% people have invested their money for
diversification.

7.Duration for which people like to invest

Long Term
Short Term
(More than
(0-1 year
5 year
period)
period)
24%
35% Medium
Term (1-5
year period)
41%

44
Interpretation:

The sample consisted of a total of 100 investors which shows that most of investors are more
willing to invest their money for longer time period as the perception is that they will get higher
returns in long term investment.

8. Investment in different Mutual fund

Mutual Fund Responses %Responses

SBIMF 75 75%
UTI 35 35%
HDFC 40 40%
Reliance 80 80%
ICICI prudential funds 57 57%
JM finance 22 22%
Other (please specify) 30 30%

80
70
60
50
40 75 80
30 57
20 35 40 30
10 22
0

Interpretation:

From the above graph it can be inferred that 80% people have invested their money in Reliance
mutual fund which shows that Reliance is the most popular mutual fund, then 75% invested in
SBIMF and 57% in ICICI prudential mutual fund, 40% have invested in HDFC mutual fund
and other mutual fund includes Kotak, ABN amro, Bank of Baroda etc.

45
9. Term of Investment in Mutual fund

One time investment 35 35%

Monthly Systemic investment plan 55 55%

Daily systemic investment plan 10 10%

Daily
SIP, 10 One
time ,
35
Monthly
SIP, 55

Interpretation:

Above graph shows that out of 100 people, 55 have invested their money as a monthly
Systematic investment plan (SIP), 35 have invested in one time investment and only 10 have
preferred to do their investment in daily systematic investment plan. This results show that 55%
people prefers to investment in monthly SIP.

10. Sources of Investment in Mutual fund

Direct from the AMCs 15 15%

Brokers only 25 25%
Sub-brokers 50 50%
Other sources (please
10 10%
specify)

46
 50

40

30 50
20
25
10 15
10
0
Direct from Brokers only Sub-brokers Other
the AMCs sources

Interpretation:

Above graph shows that out of 100 people, 50% people prefer to invest their money in mutual
fund through sub-brokers which includes all the agents and financial advisors, whereas 25% do
their investment through main brokers and only 15% have did their investment directly through
the AMCs. Here, other sources refer to friends and family advising them to do investment which
accounts to 10% only.

11. Most preferred AMC by Mutual fund Investors

AMCs Responses %Responses

SBIMF 70 70%
UTI 52 52%
Reliance 65 65%
HDFC 42 42%
KOTAL 30 30%
ICICI 60 60%
JM Finance 20 20%

80

60

40
70 65 60
52
20 42
30
20
0
47
SBIMF UTI Reliance HDFC KOTAL ICICI JM Finance
Interpretation:

Above graph shows that out of 100 people in Kolkata, 70% prefers that SBIMF is best AMC
where as 65% prefers that Reliance is the most preferable. ICICI prudential fund was preferred
by 60% people and then UTI was preferred by 52% people. Whereas HDFC was preferred by
42% and Kotal and JM finance stand to 30% and 20% respectively.

12.Criteria for future investment among the Investors

Growth in NAV 5 5%

Having only debt portfolio 27 27%

Having debt & equity
23 23%
portfolio
Only equity portfolio 45 45%

Growth
Having
in NAV, 5
only debt
Only
portfolio,
equity
27
portfolio,
45
Having
debt &
equity
portfolio,
23

Interpretation:

Out of 100 people, 45% people look the only equity portfolio before investing money and 27%
look for only debt portfolio. Whereas 23% people have look for equity and debt portfolio. Only
5% people said preference for investment was Growth in NAV.

48
 13. Factor of Mutual Fund playing an important role to invest in it

Most Important Important Least Important Out of 100%

Brand 45% 50% 5% 100

Performance 79% 20% 1% 100

Management Team 34% 64% 2% 100

90
79
80
70 64
60
50
50 45 Brand

40 34 Performance
30 Management Team
20
20
10 5
1 2
0
Most Important Important Least Important

Interpretation:

According to this survey the investors have given the most important preference for investing to
the performance of the mutual fund. And second preference has been given to the brand name of
the company and last factor to consider is management team.

49
14. “InVESTIng In MuTuAl FundS IS FAR SAFER ThAn InVESTIng In oThER
AVEnuES”

Yes 67 67%

No 33 33%

No
33%

Yes
67%

Interpretation:

The sample consisted of a total of 100 investors, which shows that most of investors agree that
mutual fund options are far safer than investing in equity, bonds, debentures or other such
investing avenues.

50
 FINDINGS OF THE STUDY

 Out of 100 people, 41% belong to age group of 36-45 years.

 65% of investors are graduate/post-graduate. Therefore it is evident that level of education

influences investment decisions.

 38% of investors belong to private sectors, 32% have business background, 18% are
government employees and rest 12% belong to other occupations.

 Among the 100 sample size, 88% of investors come in the tax bracket and which is also one of
the main reason to invest in markets and schemes which provides good returns with tax benefit.

 The next question asked was about the investment factor and among the 100% sample size,
85% respondents said that they do invest in markets.

 From the survey it is found that people go for various types of investment. 95% people go for
savings account, 80% go for various types of insurance schemes, 62% invest in fixed deposits,
60% in shares, 75% in mutual funds and few invest in real estate, post-office, gold/silver and
PF/PPF.

 From the responses we received it can be inferred that out of 100 people, 35% people have
invested their money to get maximum benefits that may includes surplus income, 27% people
have invested to get continues returns, 15% people have invested for tax benefits, 12% people
for low risks and only 3% people have invested their money for diversification.

 Among the 100 sample size, 24% of investors were wish to invest for short term period (0-1
year) whereas 41% of investors were willing to invest their money for medium term (1–5 years)
and 35% of investors for long term investment (more than 5 year).

 When asked about the purpose of investment, 85% of respondents gave preference to surplus
income, 37% to tax benefit and a low percentage of respondents said market trend, passion and
others.
 Among the 100 sample size, 24% of investors were wish to invest for short term period (0-1
year) whereas 41% of investors were willing to invest their money for medium term (1–5 years)
and 35% of investors for long term investment (more than 5 year).
 It is noted that investors give 1st importance to performance of the equity or mutual fund and
then brand name and at last give importance to management team while making the decision in
which they would prefer to invest their money.
 67% of investors think mutual funds are safer than investing in equity, bonds, debentures or
other such investing avenues.

51
 CONCLUSION

The Indian mutual funds industry has transformed totally for good since last decade and has
shown growth and potential. Though the Asset under Management and number of schemes has
increased significantly, but it is yet to be a household product, and needs to cover the retail
segment effectively. Moreover, there are still many remote and potential areas which lack the
required knowledge and infrastructure of mutual funds.

Mutual fund is an excellent product offering great flexibility and liquidity, which can be tailored
to suit any investor’s objective and it is affordable for the all people of different income levels
and saving habits.

After doing study it is concluded that yes mutual funds are much better investment option but as
future is uncertain so no one can give a sure guarantee of good returns, no matter whether it is
equity or a mutual fund.

Investors can minimize their risk by doing little research before investing in the markets which
will help them to decide the right investment plan or product.

52
 RECOMMENDATIONS

 As it has been found from the above findings that mutual funds are providing better returns and
gaining its importance in the finance industry. Therefore, the mutual fund companies in India
should make vice decisions while making investments and provide more benefits to investors.

 As many investors get fooled by some mutual fund companies which gives false promises to
investors for investing their money in their mutual fund. So government should make strict rules
for all the mutual fund companies in order to safe guard the investment of all investors.

 The charges should be reduced to minimum and also the lock in period factor should be
minimized, which will attract more investors from the market.

 Key features of mutual funds should be mentioned in the advertisement. Features like
Diversification, Systematic Investment Plans (SIP), Tax benefits should be mentioned in the
advertisements. Otherwise, people will see mutual funds as normal shares in which we invest
money.

 Many fund firms themselves have provided assurances regarding restitution for losses to
shareholders i.e., reassuring. However, these promises have been short on specifics indicating
how those losses will be measured and how the compensation will be provided.

 Mutual funds should use appropriate and simple names for the schemes, which match the
features of the schemes, so that the investors are not confused and not feel cheated after
investing.

53
 BIBLIOGRAPHY
Websites:
 http://www.amfiindia.com
 http://search.proquest.com
 http://articles.economictimes.indiatimes.com
 http://www.google.com
 http://www.moneycontrol.com
 http://www.bseindia.com
 http://www.nseindia.com
 http://www.icicibank.com
 http://www.sbi.co.in
 http://www.sebi.gov.in
 http://www.finance.yahoo.com

Books:
 Mutual Fund Business- Robert C. Pozen
 AMFI Workbook

54
 ANNEXURE

QUESTIONNAIRE

To study preferences of the investors for investment in Mutual funds

1. Personal Details:

(a) Name:-

(b) Address: - Contact No:-

(c) Age:-

(d) Qualification:-

Graduation/PG Under Graduate Others

(e) Occupation. Please tick (√)

Govt. Sec Pvt. Sec Business Others

(f) What is your annual family income approximately? Please tick (√).

Up to Rs.1,50,001 to Rs.3,50,001 to Rs.5,50,001 and

Rs.1,50,000 3,50,000 5,50,000 above

2. What do you think about the investment?

a) High future optimization

b) Recession
c) Income generation
d) Vague options
e) Tax benefit
f) Future uncertainty

3. Have you been investing?

(a)Yes (b) No
55
4. What kind of instrument you have invested?

a) Savings account
b) Insurance
c) Fixed deposit
d) Real estate
e) Shares
f) Mutual fund
g) Post office
h) Gold/silver
i) PPF/PF

5. Why do you invest?

a) Tax benefit
b) Market trend
c) Passion
d) Surplus income
e) Other (please specify)

6. What criteria do your look during investment?

a) Stability of return
b) Maximum benefits
c) Low risk
d) Tax benefits
e) Other (please specify)
f) Diversification

7. What type of investment do you make?

a) Short term (0-1 year period)

b) Medium term (1-5 year period)
c) Long term (More than 5 year period)

56
8. Which of the Mutual funds you have obtained?

a) SBIMF
b) UTI
c) HDFC
d) Reliance
e) ICICI prudential funds
f) JM finance
g) Other (please specify)

9. When you invest in mutual fund which mode of investment will you prefer?

a) One time investment

b) Monthly Systemic investment plan
c) Daily systemic investment plan

10. From where do you practice mutual fund?

a) Direct from the AMCs

b) Brokers only
c) Sub-brokers
d) Other sources (please specify)

11. Which of the following AMC you have approach so far? Please rank them according
to saving.

a) SBIMF
b) UTI
c) Reliance
d) HDFC
e) KOTAL
f) ICICI
g) JM Finance

57
12. What will you prefer from the following option for future investment in mutual fund?

a) Growth in NAV
b) Having only debt portfolio
c) Having debt & equity portfolio
d) Only equity portfolio

13. Which factor of a Mutual Fund plays an important role to invest in it?

Most Important Important Least Important

Brand
Performance
Management Team

14. “Investing in Mutual Funds is far safer than Investing in other avenues”. Do you
agree?

(a)Yes (b) No

Thank you for your precious time and support.

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