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Chapter I



As I studied and experienced all investments carry risk in some form or the
other. Risk, liquidity and return are the so called factors which are considered before making
an investment. But there is a trade off between risk and return. Higher the risk higher the
return. Lower the risk and lower the return. The decision of which mode of investment to
choose largely depends upon the investors necessity and the factors which according to him is
the most vital one.

People with more security concern choose fixed investment and investments in government
securities and various post office savings. The main reason for choosing such an investment
mode is that the amount invested in the above stated securities seems to be very secure and
hence they seemed to be more preferred one where security is the prime concern.

People whom returns are most important are ready to take risk to earn fairer risk. The
preferred mode of investment over here is shares and mutual fund. The risk factor in these
modes of investment is basically the returns are basically performance based. If the company
performs well the investors can accept fairer returns but if the company fails to perform then
there can be a threat to the invested amount. Hence the returns are very volatile with the
changes in the market conditions.

Hence it is up to the investors to decide that which is the best kind of investment that would
cater his need. The hypothesis of the study was ³Investors still prefer the traditional funds for
investment instead the more modern methods like mutual fund.´


Statement of Problems
There are so much problems I face in my 2 month project research in Reva Financial
Services Pvt. Ltd. Likewise man has done everything to make it come true but everything
has its own limitation.
y A uniform across risk model cannot be derived.
y The historical data available is in the date of the expiry of the contract.
y In this study, only Futures are taken due to time and cost constraints.
y Two month data was taken for analysis.
y The survey has been done within Pune city only, which might fail to be representative of total
A thorough in depth interview was not completely possible because of time constraints of the
The research problems, in general refers to some difficulty with a researcher experience in
the contest of either a particular a theoretical situation and want to obtain a salutation for
same, there are so many investment options available for the investors, how they invest or
choose a particular investment option and what factor they consider more for investing or
choosing a particular investment option and also to find out are they satisfied with their
investment decision.


Scope of Study
Reva Financial Service¶s investment instruments have the options for
investing our savings are continually increasing, yet every single investment instrument can
be easily categorized according to three fundamental characteristics - safety, income and
growth - which also correspond to types of investor objectives. While it is possible for an
investor to have more than one of these objectives, the success of one must come at the
expense of others. Here we examine these three types of objectives, the investments that are
used to achieve them and the ways in which investors can incorporate them in devising a

Reva financial services Pvt. Ltd. business of investment management has several facets,
including the employment of professional fund managers, research, dealing, settlement,
marketing, internal auditing, and the preparation of reports for clients. The largest financial
fund managers are firms that exhibit all the complexity their size demands. Apart from the
people who bring in the money market and the people who direct investment, there are
compliance staff to ensure accord with legislative and regulatory constraints, internal auditors
of various kinds to examine internal systems and controls, financial controllers to account for
the institutions' own money and costs, computer experts, and "back office" employees to
track and record transactions and fund valuations for up to thousands of clients per
y The study provides the information relating to the Investment instrument in India. An
effort is been made to answer the frequently asked questions.
y The study is conducted on the basis of response of 100 respondents.
y All Respondents of different areas, profession and age groups have been chosen so
that the study is unbiased.
y This study is done for two months duration and on the basis of study all the data has
been collected by interviewing and visiting to the investor


Needs and Importance of Studies
y The project study shows the different Investment option available in the market to the
y The study of this project evaluate the risk involved in the different investment
instrument to the investors
y The study covers different Investment Instrument with specific reference to Future
y The study shows the return calculation for the purpose of measuring the risk and
variability of different Commodity future.
y The study also shows how an investor can maximize investment through different
investment instrument.
y The study is undertaken to understand the Investment instruments market

Limitation of Study

In the period of Two month research there are chances of errors and constraints. I have found
following limitations in my study.
y Sample size, which I have taken, is very small, on the basis of which efficient
decision can¶t be taken.
y Respondents were biased in their responses because they were more in favour of the
brand they were using.
y Co-operation from respondents, this was the major problem.
y ‰ost of the people were at their work. So they did not have enough time to give all
y The population surveyed was not open to questions related to their personal income
i.e. either they fell hesitant in disclosing the facts about their incomes or they were
simply not interested.
y The respondents were not in the favour to disclose their address and contact number
because they believed that they would be contacted through telemarketing.


Chapter II
History of the Company
In 2005, a group of Pune based practicing Chartered Accountants started Reva Financial
Services Pvt. Ltd. with a capital of Rs.1,50,000 offering auditing and taxation services
initially. Later, it forayed into the Registrar and Share Transfer activities and subsequently
into financial services.
All along, ‰r. Sanjay Gandhi¶s strong work ethic and professional background leveraged
with Information Technology enabled it to deliver quality to the individual. A decade of
commitment, professional integrity and vision helped ‰r. Gandhi achieve a Leadership
position in its field when it handled the largest number of issues ever handled in the history of
the Indian stock market in a year. Thereafter, ‰r. Gandhi made inroads into a host of capital-
market services, Investment options - corporate and retail - which proved to be a sound
business synergy.
Today, ‰r. Gandhi has access to around 1200 of Pune Based Investors, besides companies,
banks, financial institutions and regulatory agencies. Over the past one and half decades,
‰r. Gandhi has evolved as a veritable link between industry, finance and people. In January
2008, Reva Financial Services became the Depository Participant in Pune. It is a growing
Financial Institution in Pune. Deals in equity shares, ‰utual Funds, Bonds and debentures on
the National Stock Exchange (NSE),




Companies Product & Services

y Tax Planning
y Insurance
y ‰utual Funds
y Postal Schemes
y Bonds
y HDFC Deposits

Organisation Structure
Key Persons
Chair Person - Mr. Sanjay Gandhi (Portfolio ‰anager)
& Mrs. Gandhi (Charted Accountant)

Branches & Location

Reva Financial Services Pvt.Ltd
18, Guruganesh Commercial Complex
Guruganeshnagar(part-I), Kothrud,
Pune- 411 029

Client Based Company which has around RS 10, 00,000 Business in a Year

Around 10 Employees worked in the Organisation



y Largest mobilise of funds as per PRI‰E DATABASE

y One of the growing Financial Services in Pune
y Highly customer base
y Customer satisfaction


To achieve and retain leadership, Reva Financial Services Pvt. Ltd. has aim for complete
customer satisfaction, by combining its human and technological resources, to provide
superior quality financial services. In the process, Reva Financial Services Pvt. Ltd. has
strived to exceed Customer¶s expectations.


As per the Quality Policy, Reva Financial Services Pvt. Ltd. Is:
y Build in-house processes that will ensure transparent and harmonious relationships
with its clients and investors to provide high quality of services.
y Establish a partner relationship with its investor service agents and vendors that will
help in keeping up its commitments to the customers.
y Provide high quality of work life for all its employees and equip them with adequate
knowledge & skills so as to respond to customer's needs.
y Continue to uphold the values of honesty & integrity and strive to establish
unparalleled standards in business ethics.
y Use state-of-the art information technology in developing new and innovative
financial products and services to meet the changing needs of investors and clients.
y Strive to be a reliable source of value-added financial products and services and
constantly guide the individuals and institutions in making a judicious choice of it.


1. To study various Investment Instruments and financial Services offered by the Reva
Financial Services Pvt. Ltd.

2. To study needs and scope of the Investment Instruments to the investors.

3. To find out awareness level of the investors about Investment instrument

4. To study one of the main objectives of the investment is to earn highest possible
return for a given level of risk. A return may be in form of dividend, interest or
through capital appreciation.

5. During the study of investment instruments I found out some risk in case of
investment, one tries to minimize the difference between the expected and the actual
return. The risk in case of investment in securities can be by forming portfolio i.e.
group of security.

6. Another important objective of investment instrument is liquidity which an investor

has to keep in to account while investing in his funds.

7. There are so many investment plans are available which provides the tax benefit to the
investors in their Income Tax Return which is known as Under section 80-C e.g.
‰utual fund

8. To study the purchasing power stability of the investors

9. To understand the safety of principal against the risk


Chapter IV
Review of Literature


Sr no. Title of the Book Author Publisher Edition/Year

RESERCH New Age 2nd

3 ‰ETHODOLOGY R. C. KOTHARI International Edition/2004
‰ETHODS & publisher

Regarding the basics of research and research methodology, what are the different types of
research designs, what is problem statement, what are the sources of data collection and what
are the methods of data collection is given in this section

This report is based on primary as well secondary data, however primary data collection was
given more importance since it is overhearing factor in attitude studies. One of the most
important users of research methodology is that it helps in identifying the problem,
collecting, analyzing the required information data and providing an alternative solution to
the problem .It also helps in collecting the vital information that is required by the top
management to assist them for the better decision making both day to day decision and
critical ones.


Research Design

A Research design is purely and simply the framework of plan for a study that guides the
collection and analysis of data. The study is intended to find the investors preference towards
various investment avenues. The study design is descriptive in nature.


Ú Data inputs
Ú Analysis of data collected

Ú Primary data source
Ú Secondary data source

Methods of Data Analysis

Ú Surveys
Ú Questionnaires

Sampling Plan

Ú Sampling Unit
Ú Sample Size


Sr no. Title of the Book Author Publisher Edition/Year


‰ANAGE‰ENT Edition/2009

The information regarding nature of financial management, portfolio management, risk-

return relationship, options, derivatives and valuation of shares have been understood from
this book.

Sr no. Title of the Book Author Publisher Edition/Year

4 INVEST‰ENT N.J. 19th
& Yasaswy Taxman Edition/2010-



A ‰utual 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 ‰utual Funds. These investors buy units of a particular ‰utual 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. These could range from shares to debentures to money market instruments,
depending upon the scheme¶s stated objectives. The income earned through these investments
and the capital appreciation realised by the scheme are shared by its unit in proportion to the
number of units owned by them. Thus a ‰utual 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 holder.


(A) By Structure

Ú Open-Ended Schemes

Ú Close-Ended Schemes

Ú Interval Schemes

(B) By Investment Objective

Ú Growth Schemes

Ú Income Schemes

Ú Balanced Schemes

Ú ‰oney ‰arket / Liquid Schemes

Other Schemes

Ú Tax Saving Schemes (Equity Linked Saving Scheme - ELSS)


(C) Special Schemes

(D) Fixed Maturity Plans

(E) Exchange Traded Funds (ETFs)

(F) Capital Protection Oriented Schemes

(G) Gold Exchange Traded Funds (GETFs)

(H) Quantitative Funds

(I) Funds Investing Abroad

(J) Fund of Funds (FOFs)


1. Professional ‰anagement
2. Diversification
3. Convenient Administration
4. Return Potential
5. Low Costs
6. Liquidity
7. Transparency
8. Flexibility
9. Choice of Schemes
10. Well Regulated



1. The Investment Company:

† No corporate income tax liability if
† It pays at least 90% of its net income to shareholder
† Two kinds of payments to investors:
» One for income
» Another for net capital gains realized


rt = {(NAVt- NAVt-1) +It + Gt}/ NAVt-1
Where rt = return at time t
It = income
Gt = capital gain distribution at time t


Is the most often used service
Performance comparisons using S&P500 for all equity and bond funds
' ‰ay not be appropriate for certain types of funds
' e.g. a fund mostly invested in NASDAQ stocks does not compare


Sr no. Title of the Book Author Publisher Edition/Year

5 OF Y.P. Galgotia 2nd
INVEST‰ENT Singh Publishing Edition/2006
‰ANAGE‰ENT Company


‡ Investment Companies Definition:

A type of financial intermediary who obtain funds from investing to use in purchase of
financial assets

† Investors receive certain rights in exchange

† Advantages to the Individual Investor
† Economies of scale
† Higher volume purchases, lower commission rate
† Provides diversification
† Professional management
† ‰anager is a professional seeking mispriced securities full time


‡ Key Concept For Investment Companies
† Net Asset Value (NAV)
NAVt = (‰VAt - LIABt )/NSOt
where NAVt is the firm¶s net asset value
‰VAt is the market value of firm¶s assets
LIABt is the dollar value of firm¶s liabilities
NSOt is the number of shares outstanding


y www.amfiindia.com
y www.valuereserchonline.com
y www.moneycontrol.com
y www.bseindia.com
y www.google.com

The information regarding nature of financial management, Financial Planning in India

portfolio management, risk-return relationship, options, derivatives and valuation of shares
have been understood from the above sites. And also Following data have been collected
from Internet sites.

Category Products for sales and advice

Insurance agent Insurance Policies

‰utual Fund distributor ‰utual Funds

Equity share broker/sub-broker Share trading, IPOs
Income tax consultant Tax Planning, Employee Benefits
Distributor/Advisor of multiple financial ‰Fs, Insurance, Post
products & services


Chapter V

With liberalization, privatization and globalization there has been a major change in the
Indian ‰utual Funds Industry. The momentum is on and one is sure to see similar hectic
activity at the offices of the new entrants especially after the 90¶s as private sector gained
entry in the Indian markets.
With the private sector penetration, a large number of schemes have also been introduced due
to which the average consumer has become very sensitive to the new schemes coming its
way. So to ensure about the various consumer attitudes, a survey was undertaken.
De facto, to ensure what the ³consumer thinks´ & ³what it thinks the best´ we undertook a
consumer survey, to get a clear picture of the future of the Financial Investment companies
who are busy wooing the customers, with their lucrative schemes, to survive the rat race &
emerge as no.1 in this field.

Research Objectives addresses the purpose of the investigation. It is here that you layout
exactly what is being planned by the proposed research. The Research Objectives flows
naturally from the problem statement, giving the sponsor specific, concrete, and achievable
goals. It is best to list the objectives either in order of importance or in general terms first,
moving to specific terms. Research Objective is the basis for judging the Research process. It
is the final step giving exact definition of problem.
Analyzing Investment Instrument awareness in retail investors of Reva Financial Services
Pvt. Ltd. Pune

Research methodology is a systematic plan or schedule or program of the research done. It
describes all the procedures of the research.


Research design can be described as an outline of a research project working or a pattern. In a
research design there are series of prior decision that together provide a master plan for
completing a research project. Research design is proved to be a bridge between what has
been established and what is to be done in conduct of the studies. Research design should be
compressive and it should provide which method to be used and what work to be done.
Research design describes as a master plan a series of key decisions that serves a model for
conducting a research project. There are the main components of research design.

l Data inputs
l Analysis of data collected

The research design was exploratory type and the focus was on getting Investment
Instruments employees¶ views for various products, expectations from market.

Exploratory Research:
Exploratory study goes beyond description and attempts to explain the reasons for the
phenomenon that the descriptive study only observed. The researcher uses theories or at least
hypotheses to account for the forces that caused a certain phenomenon to occur.

The gathering of data may range from a simple observation at one location to a grandiose
survey of multinational corporations at sites in different parts of the world. The method
selected will largely determine how the data are collected. DATA is the facts presented to the
researcher from the study¶s environment. Characteristics of the data are as follows:
y Data are more metaphorical than real
y Data are processed by our senses-often limited in comparison to the senses of other
living organisms.
y Capturing data are said to be trustworthy because they may be verified.
y Data classify their verity by closeness to the phenomena
There are two kinds of data that can be collected for research purpose. Based on the
requirement in the research appropriate data is collected.


1) Primary data source
Primary data are collected and gathered for the first time. Primary data are sought for their
proximity to the truth and controls over error. Advantages of primary data are:
y Researchers can collect precisely the information they want.
y They usually can specify the operational definitions used and can eliminate, or
at least monitor and record the extraneous influences on the data as they are

G) Secondary data source

Someone else collects secondary data. So, it becomes secondary information for the research.
Secondary data have had least one level of interpretation inserted between the event and its
recording. Reasons for using the secondary data are listed below:
y They fill a need for specific reference or citation on some point
y Secondary data are an integral part of a larger research study
y Secondary data may be used as the sole basis for a research study, since In many
research situations one cannot conduct primary research Because of physical, legal, or
cost influences.
Analyzing the requirement of data, it was found that primary data is more important for
achieving Research Objective. Primary data is collected with the help of Interviews.

Methods of Data Analysis

³This step involves making a very specific plan about how you will conduct your research
and collect your data.´

Surveys & Questionnaires

y Survey
The means by which quantitative research is conducted.

y Questionnaire
A prepared set of questions designed to generate data necessary for
accomplishing the objectives of the research project. I used survey method for data
collection. Information was collected by personal interviews through questionnaire.


Following types of measurement scales were used in the questionnaire.
y Simple category scale: - (Q-2, Q-4, Q-8, Q-9)
y ‰ultiple choice single response scales: - (Q-6)
y ‰ultiple choice multiple response scale:-(Q-1, Q-3, Q-5, Q-7)

Sampling Plan
Collecting the required information from the right source is very important. Sources from
which the data are collected differ as per the required of researcher. Basically there are two
types of data collection sources:

y Sampling Unit:
The sampling unit primarily consisted of investors like businessman, professionals, Salaried
employees and others. The sample unit is taken from the Pune city of ‰aharashtra region.

y Sample Size:
Though large sample give more reliable results than small samples but increases the cost,
time and non-sampling error. Keeping in view these constraints 100 respondents were
chosen. Attempts have been made to see that samples are chosen from different areas of
I have taken 100 responds as a sample size for this particular project.


The following table shows area wise distribution of sample size.

Kothrud 17
Deccan 3
Koregoan Park 15
Shivaji Nagar 17
Karve Nagar 5
Pune Station 5
Sinhgad Road 8
Swargate G
S.B. Road G
Aundh 4
Hinjewadi 4
Viman Nagar 4
Yerawada G
Kharadi 6
Kondhwa G
Dhole Patil Road 1
Bavdhan 1
Pune University 1
Camp 1


Tools & Techniques of Data collection

Tool / technique Respondents / interviewees Location

A. Questionnaire (pre- Businessman, Professionals, 100 Respondents

formatted) Students From The Area
B. Key informant discussions Investment Criteria and Pune City
Investment Instrument awareness
Discussions on the awareness of Pune City
C. Group discussions the Investment Instrument
Through Questionnaire
D. Participatory Research with the intermediaries Pune City
observation/investigation and at each of the Investors
E. Rapid appraisal Individual visits to collect the data Different Areas
From Pune City


Chapter VI
Data Analysis & Interpretation

Introduction on Various Investment Instruments

Point of Discussion
y Non-Corporate, domestic investments
y Only Investments and not Insurance
y Savings
y Inherited or self-generated wealth
y Lump sum or Systematic Investments
Criteria for Evaluation
y Risk
y Lock-in
y Ease of Investment and Disinvestment
y Flexibility
-Recurrence of investment payments
y Post Tax Returns
Debt Instruments
y Savings Bank A/c
y Bank Fixed Deposits
y Public Provident Fund
y Company Provident Fund
y Government Bonds
y Kisan Vikas Patra
y Corporate Bonds and Debentures
y Debt ‰utual Funds
y Traditional Insurance Plans


Equity Instruments
y Direct Equity Investments
y Equity/Balanced - ‰utual Funds
y Portfolio ‰anagement Services

Real Estate
y Direct Real Estate Investments
y Real Estate Investment Trusts
y Real Estate ‰utual Funds

y Gold
y Gold ETF
y Gold ‰utual Funds
y Silver

y Arts and Artefacts
y Off-Shore investments


The dictionary meaning of investment is to commit money in order to earn a financial return
or to make use of the money for future benefits or advantages. People commit money to
investments with expectations to increase their future wealth by investing money to spend in
future years. For example, if you invest Rs. 1000 today and earn 10% over the next year, you
will have Rs.1100 one year from today.
An investment can be described as perfect if it satisfies all the needs of all investors. So, the
starting point in searching for the perfect investment would be to examine investor needs. If
all those needs are met by the investment, then that investment can be termed the perfect
investment. ‰ost investors and advisors spend a great deal of time understanding the merits
of the thousands of investments available in India. Little time, however, is spent
understanding the needs of the investor and ensuring that the most appropriate investments
are selected for him.

The Investment Needs of an Investor

By and large, most investors have eight common needs from their investments:
1. Security of Original Capital
2. Wealth Accumulation
3. Comfort Factor
4. Tax Efficiency
5. Life Cover
6. Income
7. Simplicity
8. Ease of Withdrawal


Types of investment ±

1. Bank Deposits 1. Blue Chip Shares

2. Post office Deposits 2. Growth Share Equity Share Financial
Non ‰arketable
 3. Income Share
3. Co-Operative Assets
Financial Assets 4. Cyclical Share

4. Public Provident Fund 5. Speculative Share
1. Government Securities 1. Treasury Bill
 2. GOI Relief Bonds 2. Commercial Purpose ‰oney ‰arket
Bonds 3. Govt. Agency securities 3. Certificate of Investment

4. PSU Bonds Deposits
 5. Debenture of private
sector companies
 6. Preference Scheme 1. Endowment
Assurance Policy
1. Equity Share LIC Policies
‰utual Funds 2. ‰oney Back Policy
schemes 2. Debt Scheme 3. Whole Life Policy Financial Assets
3. Balanced Scheme 4. Premium Back Term
Assurance Policy
1. Agriculture Land
2. Semi Urban Land 1. Equity Share
Real Estate 3. Time Share in a Holiday Precious Object
2. Debt Scheme
Resort 3. Balanced Schemes

Financial Derivatives

Option Futures


Fixed Deposits : ±
They cover the fixed deposits of varied tenors offered by the commercial banks and other
non-banking financial institutions. These are generally a low risk prepositions as the
commercial banks are believed to return the amount due without default. By and large these
FDs are the preferred choice of risk-averse Indian investors who rate safety of capital & ease
of investment above all parameters. Largely, these investments earn a marginal rate of return
of 6-8% per annum.

Government Bonds : ±
The Central and State Governments raise money from the market through a variety of Small
Saving Schemes like national saving certificates, Kisan Vikas Patra, Post Office Deposits,
Provident Funds, etc. These schemes are risk free as the government does not default in
payments. But the interest rates offered by them are in the range of 7% - 9%.

Money-back Insurance: ±
Insurance in India is mostly sold and bought as investment products. They are preferred
because of their add-on benefits like financial life-cover, tax-savings and satisfactory returns.
Even if one does not manage to save money and invest regularly in financial instruments,
with insurance, the policyholder has no choice. If he does not pay his premiums on time, his
insurance cover will lapse. ‰oney-back Insurance schemes are used as investment avenues as
they offer partial cash-back at certain intervals. This money can be utilized for children¶s
education, marriage, etc.

Endowment Insurance: ±
These policies are term policies. Investors have to pay the premiums for a particular term,
and at maturity the accrued bonus and other benefits are returned to the policyholder if he
survives at maturity.


Bullion Market: ±
Precious metals like gold and silver had been a safe haven for Indian investors since ages.
Besides jewellery these metals are used for investment purposes also. Since last 1 year, both
Gold and Silver have highly appreciated in value both in the domestic as well as the
international markets. In addition to its attributes as a store of value, the case for investing in
gold revolves around the role it can play as a portfolio diversifier.

Stock Market:±
Indian stock markets particularly the BSE and the NSE, had been a preferred destination not
only for the Indian investors but also for the Foreign investors. Although Indian ‰arkets had
been through tough times due to various scams, but history shows that they recovered very
fast. ‰any types of scrip had been value creators for the investors. People have earned
fortunes from the stock markets, but there are people who have lost everything due to
incorrect timings or selection of fundamentally weak companies.

Real Estate:-
Returns are almost guaranteed because property values are always on the rise due to a
growing world population. Residential real estate is more than just an investment. There are
more ways than ever before to profit from real estate investment.

Mutual Funds: ±
There is a collection of investors in ‰utual funds that have professional fund managers that
invest in the stock market collectively on behalf of investors. ‰utual funds offer a better
route to investing in equities for lay investors. A mutual fund acts like a professional fund
manager, investing the money and passing the returns to its investors. All it deducts is a
management fee and its expenses, which are declared in its offer document.

Unit Linked Insurance Plans:±

ULIPs are remarkably alike to mutual funds in terms of their structure and functioning;
premium payments made are converted into units and a net asset value (NAV) is declared for
the same. In traditional insurance products, the sum assured is the corner stone; in ULIPs
premium payments is the key component.


Data interpretation of Investment Instrument According to Customer
Return Safety Volatility Liquidity convenience
Equity High Low High High ‰oderate

Bonds ‰oderate High ‰oderate ‰oderate High

CO. ‰oderate ‰oderate ‰oderate Low Low


CO. FDs ‰oderate Low Low Low ‰oderate

Bank Low High Low High High


PPF ‰oderate High Low ‰oderate High

Insurance Low High Low Low ‰oderate

‰oderate High ‰oderate ‰oderate Gold


High ‰oderate High Low Low

Real Estate

High High ‰oderate High High

Source: Fundamentals of Investment ‰anagement

(Author Name: Y.P. Singh)
Date: 13/10/10



Introduction to Mutual Fund & Its Various Aspects

‰utual 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 ³‰utual´, 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 ‰utual 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 ‰utual Fund is an investment tool that allows small investors access to
a well-diversified portfolio of equities, bonds and other securities. Each shareholder
participates in the gain or loss of the fund. Units are issued and can be redeemed as needed.
The fund¶s 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. ‰utual fund issues units to the
investors in accordance with quantum of money invested by them. Investors of mutual funds
are known as unit holders. Thus a ‰utual 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. The flow chart below describes broadly the
working of a mutual fund.
Mutual Fund¶s Investment and return Cycle



‰  t  it 

 i i l jti

 l t i

t     ti  t i t
t l 

it  t 
 ti t t t  l

 ‰   llt 
it  i it
it    t  t iti  t


   li   i  l  
 llt ii  itt i

  it l  i  l  

    t t it  i   ti  t

 it l  t

y Portfolio Diversification
y Professional management
y Reduction / Diversification of Risk
y Liquidity
y Flexibility & Convenience
y Reduction in Transaction cost
y Safety of regulated environment
y Choice of schemes
y Transparency


y No control over Cost in the Hands of an Investor

y No tailor-made Portfolios
y ‰anaging a Portfolio Funds
y Difficulty in selecting a Suitable Fund Scheme

Type of Mutual Fund Schemes


BY Constitution

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.

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
‰utual 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.

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
Under this the mutual fund is categorized on the basis of Investment Objective. By nature the
mutual fund is categorized as follow:


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
y Diversified Equity Funds
y ‰id-Cap Funds
y Sector Specific Funds
y Tax Savings Funds (ELSS)

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


G. 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 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): ‰eant 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

Liquid Funds: Also known as ‰oney ‰arket 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.

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 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: ‰oney ‰arket 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.



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Source: Fundamentals of Investment

Y. P. Singh
Date: 22/10/2010


Questionnaire for Data Analysis and Interpretation

Q-1 which investment avenues are you aware of?



POST OFFICE 94 32.30%



Interpretation: -
From the above table we can interpret that awareness of equity/mutual fund, post office
(NSC, and PPF), fixed deposits is more compare to others like GOVT ISSUED Instrument,
GOVT Bonds, Real Estate, gold etc. so Reva Financial Services Company needs to focus
more on those investors who are more invest in NSC, PPF and fixed deposits.

Q-2 do you invests in mutual fund?

97 3

Interpretation: -
From the above table it is getting clear that now a day¶s people are like to invest their money
in mutual fund of different assets management company, out of 100 people sampled 97 are
investing in the mutual fund.


Q-3 If yes, in which assets class do you want to invest in ‰utual Fund?


EQUITY 86 72.27%

DEBT 27 22.69%
LIQUID 6 5.04%

Interpretation: -
From the above details it is getting clear that from 100 peoples sample 86(72.27%) people are
invest in equity assets class and 27(22.69%) people choose to invests in debt class but only
just 6(5.04%) peoples choose to invests in liquid class.

Q-4 Do you invest in Reva Financial Services Company Limited?

Yes No Total
56 44 100

Interpretation: -
From the above details it is getting clear that out of 100 people sampled, 56 peoples are invest
in Reva Financial Services company and 44 peoples are not invests in Reva Financial
Services company.


Q-5 If yes, in which scheme would you invest in Reva Financial Services
Schemes of Reva Financial No of Investers
Insurance 35
Tax Planning 17
Mutual Funds 16
Postal Schemes 2
Bonds 10
HDFC Deposits 9
Equity Funds 43
Other Funds 5
Growth Funds 16

From the above details we can see that in Reva financial Services Company¶s Equity Funds
maximum number (43) of people are investing. In tax Saver Schemes 17 number of people
invests. in both Growth Funds and ‰utual Fund 16 number of people are invest but in other
fund, Postal Scheme, HDFC Deposits only 5,2 & 9 people are invest so investors are not
invested in these Three Schemes. In Insurance, Bonds there are 35 & 10 people are invested.

Q-6 By which medium you invest in Reva Financial Services Company?

Medium of Investment No. Of People

Distributors 8
Banks 48
Online 0

Interpretation :-
From the above details it¶s getting cleared that most of the peoples (48) are invest by bank
and only 8 peoples are invest by distributors. Nobody invests through online. So here Reva


Financial Services Company has to provide facility by which investors invest their money
without any middle man in different investment schemes through online.
Notes: - here out of 100 responds, 44 responds are not invest in Reva Financial Services
Company. These responds are not considered in these questions.

Q-7 why do you prefer investing in Reva financial Services company limited?

Preference Criteria Number

Better Fund House 43
Excellent customer Service provider 15
Consistent Return 44
Other 1

Interpretation :-
From the above details it can be seen that majority of the people that is 44 peoples give first
rank to consistent return and 43 peoples invest in Reva financial Services company because
Reva financial Services company is a better fund house and 15 peoples believes that Reva
financial Services company provides EXCELLENT CUSTO‰ER SERVICE

Q-8 In which type of product /schemes would you prefer while invested in
Equity schemes of Reva financial Services Company?

Types of Schemes Response

Open Ended 53
Closed Ended 3

From the above chart it is getting clear that most of peoples (53) prefer to invest in OPEN
ENDED equity schemes and only just 3 peoples want to invest in CLOSE ENDED equity
schemes of Reva financial Services Company.
Notes: - here out of 100 responds, 44 responds are not invest in Reva financial Services
Company. These responds are not considered in these questions


Q-9 Do you know about ongoing new fund offer of Reva financial Services


Yes 58 58%
No 42 42%
Total 100 100%

The above details shows that around 58% people aware of ongoing new fund offer of Reva
financial Services Company and only 42% people are unaware from ongoing new fund offer
of Reva financial Services Company.


y The project study shows the different Investment option available in the market to the
y The study of this project evaluate the risk involved in the different investment
instrument to the investors
y The study covers different Investment Instrument with specific reference to Future
y The study shows the return calculation for the purpose of measuring the risk and
variability of different Commodity future.
y The study also shows how an investor can maximize investment through different
investment instrument.
y The study is undertaken to understand the Investment instruments market

y Almost 56% are investing in Reva financial Services Company¶s schemes.
y Out of the total respondent almost 30% said that they invest in fixed deposit and
Insurance. Whereas 34% said that they invest in Shares and mutual funds,
whereas 32% says that they invest in post office schemes.
y 97% of the investor was found who is invested their savings in different schemes of
mutual fund.
y 53 respondents prefer to invest in a open ended schemes of Reva financial Services
company, where as remaining only 3 respondents prefer to invest in a close ended of
Reva financial Services company.
y It is found that awareness level about ‰utual Funds is 97% in Pune city of
y Out of the total respondent 72.27% are investing in equity schemes. Whereas
remaining 22.69% prefer debt and 5.04% prefer to invest in liquid schemes. Reva
financial Services Company are also highly popular for their consistent return and 43
responds believes that Reva financial Services Company is better fund house. While
only just 15 responds believes that Reva financial Services Company provides


y Out of the total respondents almost 48 responds are investing through bank, only
responds investing their money by distributor and nobody invested by online.
y The 58% of the respondent were aware about the ongoing NFO(New Fund Offer) of
Reva financial Services company and 42% were not aware about the ongoing NFO of
Reva financial Services Company.
y In Reva financial Services Company¶s EQUITY FUND maximum number (43) of
people are invested and In TAX SAVER FUND 35 numbers of people are invests.


Limitations of Research
y This exploratory research is done focusing on the investment scenario of Pune city of
‰aharashtra region only and therefore findings and suggestions given on the basis of
this research and cannot be considered for the entire ‰utual Fund Industry of India.
y Some of the people, out of various sectors that I had visited for study, did not give me
cooperative response.
y Due to small market and time limit I could take only 100 responses.
y Another limitation is that due to lack of knowledge and education many investors
don¶t know the basic ideas behind mutual fund.
y Due to Time constraint I could not analyze more.
y ‰y own inexperience in research area might have affected the study.



y Half of the respondents are investing in different schemes of mutual fund Companies.
y The investors prefer investing more in banks and post office, which shows that
investors want security, and assured returns.
y Others than Banks and post office the next preference of investors who go for risky
preposition in shares and ‰utual Funds. That is basically due to misconception that
‰utual Fund Companies usually invest in equity market, which shakes trust of people
in ‰utual Fund.
y ‰ajority of investors invested in open-ended schemes.
y The awareness level about Reva Financial Services Company is moderate but still the
awareness should be created because 44% peoples still not invest in Reva Financial
Services Company.
y As the investor prefers safe investment and want consistent return, they invest in debt
schemes (22.69%).
y The investors prefer Reva Financial Services Company more because of the tax
benefit and consistent return.
y ‰utual funds are also preferred because of the cost effectiveness and higher income
by investing in equity schemes.
y The banks mostly make the investments through the agent¶s followed.
y Professional and Business class, which is considered to be the most knowledgeable
class of the region prefers ‰utual Funds less compare to service class.
y The time frame of the investment by majority of the investors is open-ended
schemes in which their money is not locked for 3 to 5 years.


y The company should try to make aware people about their different schemes through
the road show; seminars and presentation that it is not just equity based schemes but
also debt and liquid or balanced schemes also promoted by company. Company has to
put hoardings, banners, pamphlets in that area where peoples can watch easily.
y The customers should be made aware that if the time frame of the investment is more
than 3 years Equity option is the best tool for investing in mutual fund by this
investors getting good and high returns for their investments.
y The company should be conducting special training and motivation Programme for
their distributors and also for investors so that they are being motivated to work, their
quality of performance and contribution in sales is maintained.
y Company has to provide application forms and other promotional materials to their
distributors time to time and company has to maintain better relationship with their
distributors by these they can give good contribution in investments.
y None of responds invest their money in different schemes of company By Online, so
company has opportunity to launch online services for their distributors and retail
y Company¶s core and satellite fund, Bonds, Postal Schemes, HDFC Deposits &
Balanced fund, preferred by very few investors because this schemes not perform well
so company has to think about their companies in which they invest investor¶s money
so they have to change portfolio of investments.
y ‰ost of the people still preferred to invest in post office schemes and fixed
deposits so company has to focus on these investors




Sr. no. Title of the Book Author Publisher Edition/Year


1 ‰ETHODOLOGY R. C. KOTHARI International 2nd
‰ETHODS & publisher Edition/2004


‰ANAGE‰ENT Edition/2009

3 INVEST‰ENT N.J. 19th
& Yasaswy Taxman Edition/2010-

4 OF Y.P. Galgotia 2nd
INVEST‰ENT Singh Publishing Edition/2006
‰ANAGE‰ENT Company

y www.amfiindia.com
y www.valuereserchonline.com
y www.moneycontrol.com
y www.bseindia.com
y www.google.com


NA‰E: -.................................................................................................................

ADDRESS: -............................................................................................................


CONTACT NO: (O) (R) (‰)

1) Which investment avenues are you aware of?

Equity /‰utual fund Post Office (NSC, PPF)
Fixed Deposits Others

If others please specify: ...............................................................................................

2) Do you invest in mutual funds?

Yes No

3) If yes, in which assets class do you want to invest in mutual funds?


4) Do you invest in Reva Financial Investment Schemes?

Yes No

5) If yes, in which scheme would you invest in Reva Financial Investment Schemes?
Equity Bonds ‰utual Fund
Tax saver Postal Schemes HDFC Deposits
Balanced fund Growth Others


6) By which medium do you invest in Reva Financial Service¶s Investment Schemes?
Distributor Bank Online

7) Why do you prefer investing in Reva Financial Services?

Better fund house
Excellent customer service provider
Consistent return

If other please specifies:-........................................................................................ ...

...................................................................................... ............

8) Which type of product/scheme would you prefer while investing in Equity Scheme of
Reva Financial ‰utual Fund?
Open-ended Close ended

9) Do you know about ongoing new fund offers of Reva Financial Services?
Yes No

Remarks if any other please specifies: -......................................................................................


Thank you for your time.