A ReportOnCustomer Perception towards Mutual Fund

ByPallavi SinghEnrolment No: 14BSP0938

Reliance Money Solutions Pvt. Ltd.

A ReportOnCustomer Perception towards Mutual Fund

ByPallavi SinghEnrolment No: 14BSP0938Reliance Money Solution Pvt. Ltd.A report submitted in partial fulfilment of the requirements of PGPM Program ofIBS MumbaiDistribution ListCompany guide Faculty guideMr. Nilesh M. Aras Mr. Hemant Purandare

Date of Submission 21st April 2015

TABLE OF CONTENTS

ABSTRACT As a part of the PGPM curriculum I am doing my internship at Reliance Money Solutions Pvt. Ltd, Mumbai. The report below is presently my experience in the company for the period of 50 days. During this period my work was to understand Portfolio Management and my role was to fix client meets through telecalling. Next initiative was taken to select a project which entitled A study on customer perception towards mutual fund. The primary objective of the study is to find the perception of the people towards mutual fund and their investment pattern. It was mainly carried out to assess the awareness the mutual fund amongst other investment avenues.

The descriptive research is used by the researcher. The primary data was collected from the respondents. The respondents were directly interviewed and their responses are recorded. The collected data was analyzed Percentage analysis was the main tools used for the analysis. This study brought to the surface various insights. The study showed that those who invested in mutual fund it were the best avenue. The people invested in mutual funds mainly in order to cater to their future needs. The satisfaction level regarding the performance of mutual fund was moderate amongst the respondent.

INTRODUCTION

MutualFunds: An overviewAMutualFundis a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested by thefundmanager 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 realized by the scheme are shared by its unit holders in proportion to the number of units owned by them (pro rata). Thus aMutualFundis 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 investible surplus of as little as a few thousand rupees can invest inMutualFunds. EachMutualFundscheme has a defined investment objective and strategy. CONCEPT OF MUTUAL FUND

Types ofMutualFundsMutualfundschemes may be classified on the basis of its structure and its investment objective.ByStructure: Open-ended FundsAn open-endfundis 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. Closed-ended FundsA closed-endfundhas a stipulated maturity period which generally ranging from 3 to 15 years. Thefundis open for subscription only during a specified period. Interval FundsInterval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.By Investment Objective:- Growth FundsThe aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a majority of their corpus in equities Income FundsThe aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income. Balanced FundsThe aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, Money Market FundsThe aim of money market funds is 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 FundsA LoadFundis one that charges a commission for entry or exit. That is, each time you buy or sell units in thefund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if thefundhas a good performance historyMutualFunds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme. Convenient Administration:Investing in aMutualFundreduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and follow up with brokers and companies.MutualFunds save your time and make investing easy and convenient Benefits ofMutualFundinvestment

Low Costs:MutualFunds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. Liquidity:In open-end schemes, the investor gets the money back promptly at net asset value related prices from theMutualFund Flexibility:Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, one can systematically invest or withdraw funds according to your needs and convenience. No Control over Cost:An Investor inmutualfundhas no control over the overall costs of investing. He pays an investment management fee (which is a percentage of his investments) as long as he remains invested infund, whether thefund value is rising or declining. He also has topayfunddistribution costs, which he would not incurin direct investing. No Tailor-Made Portfolios:Investing throughmutualfunds means delegation of the decision of portfolio composition to thefundmanagers. The very high net worth individuals or large corporate investors may find this to be a constraint in achieving their objectives. Limitations ofmutualfundinvestment Managing A Portfolio Of Funds:Availability of large no. of funds can actually mean too much choice for the investors. He may again need advice on how to select afundto achieve his objectives. Taxes:During a typical year, most actively managedmutualfunds sell anywhere from 20 to 70 percent of the securities in their portfolios. If yourfundmakes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made. Cost of ChurnThe portfolio offunddoes not remain constant. The extent to which the portfolio changes is a function of the style of the individualfundmanager i.e. whether he is a buy and hold type of manager or one who aggressively churns thefund.

MAIN TEXTThe Indian mutual funds industry is witnessing a rapid growth as a result of infrastructural development, increase in personal financial assets, and rise in foreign participation. With the growing risk appetite, rising income, and increasing awareness, mutual funds in India are becoming a preferred investment option compared to other investment vehicles like Fixed Deposits (FDs) and postal savings that are considered safe but give comparatively low returns, according to Indian Mutual Fund Industry.This report provides a detailed analysis along with current and future outlook of the Indian mutual fund industry and explores the market development and potential. The forecasts and estimations given in this report are not based on a complex economic model, but are intended as a rough guide to the direction in which the industry is likely to move.Currently there are more than 600 schemes with varied objectives and Asset Management Companies compete against one another by launching the new products or repositioning the old ones. In the future, mutual fund industry has to face competition not only from within the industry but also from other financial products that may provide many of the same economic function as Mutual Funds but not are strictly Mutual Funds.

In India, Retail investor behaviour has traditionally focused on the higher income customers in vertical financial market segments. Equal attention is needed regarding the cross market financial behaviour of the millions of households at the middle and lower end of the income distribution. Keeping all these in background an attempt is made in this Research to study the Perception of customers towards Mutual Funds. OBJECTIVE OF THE STUDY1. Evaluate Perception towards risk involved in mutual funds in comparison to other financial avenues.2. To study the Mutual Fund as financial instruments with comparison to its other financial instruments available in the market.3. To study the pattern of consumer behaviour within the available investment options and to test awareness among the consumer about the various mutual funds houses.

Assumption1. The sample selected represents the population fully.2 .The sample selected has thorough knowledge of the object.3 .The data has been collected by administering an open and close ended questionnaire to sample of end investors with the assumption that primary data collected is true and reflects the actual preferences of the investors.

RESEARCH METHODOLOGY:Research Design: Descriptive ResearchResearch Instrument: StructuredSample Method: Non-Probability SamplingSampling Design: Convenience SamplingSources of DataPrimary Data: Structured Non-Disguised QuestionnaireSecondary Data: Reference from distributors & banks.The whole study is based upon primary and secondary data. Therefore, information has been collected from interacting with different investors and from various magazines, journals, websites, and bulletins.LIST OF INFORMATION REQUIREDPrimary Data: Primary data are generated when a particular problem is investigated by the researcher employing questionnaire, telephone survey, personal interviews, and observations.LIMITATION The research is confined to a certain part of Mumbai. Some respondents were reluctant to divulge personal information which can affect the validity of all responses. The sample size may not adequately represent the whole market. Possibility of error in data collection because many of investors may have not given actual answers of my questionnaire. Some of the persons were not so responsive.

QUESTIONNAIREName of customer:AddressCityTelephone no:Mobile no:E mail address1. Occupation Government employee New employee Businessmen Retired1. Age group 20-40 years 40-60 yearsAbove 60years1. Annual household income Less than 1.5lakhsBetween 1.5-3lakhsBetween 3-5lakhsAbove 5lakhs

4.Are you interested in investment? Yes No

Do you have any existing investment?YesNo

1. Where do you make investment?Fixed depositPropertyMutual fundsInsuranceShares

1. you want investment for?Children educationRetirementHouseVacation abroadAny other

1. for which companys mutual funds you are interested Reliance mutual fundkotak mutual fundSbi mutual fundICICI prudentialMutual fundOther mention here 1. what is your expected return less than 10%Between 10% to 30%Above 30%1. how much risk you can take Minimum riskModerate riskHigh risk

1. how much you can invest50005000-25000Above 250001. how long you can invest Less than 1 year Between 1 to 3 year More than 3 year1. What is the future of mutual fund? Excellent Good Bad Poor1. Which is more profitable FD or mutual fund?FDMutual fund