Mutual Fund as Investment Avnue

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A

SUMMER PROJECT REPORT

ON

MUTUAL FUND AS AN INVESTMENT- AVENUE

PRESENTED TO: PRESENTED BY :

Mrs. NARINDER KAUR ANKUSH MAHAJAN

(LECT.) CLASS MBA-2ND

ROLL-NO.- 2105

UNIVERSITY SCHOOL OF BUSINESS STUDIES

TALWANDI SABO

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ACKNOWLEDGMENT

Knowledge is an experience gained in life, it is the choicest possession, which should not

be shelved but should be happily shared with others.

I express my gratitude to my esteemed guide, SENIOR SALE EXECUTIVE for their valuable critiques,

assistance and encouragement, which enabled me to carry on the project MUTUAL FUND AS

INVESTMENT AVENUE AT NJ INVEST INDIA successfully. He gave me a wonderful

opportunity to work on this project. Their time-to-time guidance and incessant support helped me to

broaden my outlook on the project .I am highly obliged for their support throughout the Training.

I would like to thanks faculty members and valuable works of publishers and authors whose work helped

me during the project.

ANKUSH MAHAJAN

MBA -2ND ROLL-NO. 2105

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ABSTRACT

The project contains the brief description of the mutual fund industry in general. It also includes mutual

fund as an investment- avenue. A survey was conducted to get the primary data to judge the factors that

the investors kept in their mind before they invest in any of the investment tools and thus the first part of

the paper scrutinizes the objectives of the investors for investing in a mutual fund. Second part related to

the investment patterns of investors .that is related to the way or the factors which he takes under

consideration while investing in mutual funds. Third part considers which scheme is better according to

investors. For this the investor concerns the advisors/ friend and consult the various resources from where

he get the help for investing in the various schemes. The last part contains the investors perceptions

about level of satisfaction while investing in mutual funds.. Currently there are more than 2500 schemes

with varied objectives and AMCs are competing against each other by launching new products or

repositioning old ones. MF industry today is facing competition not only from within the industry but also

from other financial products like insurance policies product that provide many of the same economic

functions as mutual funds but are not strictly MFs. Thus paper attempts to study the mutual fund as an

investment -avenue selection behavior of Retail Investors who invest in Mutual funds. Schemes. Analysis

and conclusion based on the actual research of the topic.

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(A) MUTUAL FUND

1. INTRODUCTION

A Mutual Fund is a trust that pools the 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

realized by the scheme 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.

Each Mutual Fund scheme has a defined investment objective and strategy

A Mutual fund is the ideal investment vehicle for todays 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 draft offer document is to be prepared at the time of launching the fund. Typically, it pre

specifies the investment objectives of the fund, the risk associated, the costs involved in the process

and the broad rules for entry into and exit from the fund and other areas of operation. In India, as in

most countries, these sponsors need approval from a regulator, SEBI (Securities exchange Board of

India) in our case. SEBI looks at track records of the sponsor and its financial strength in granting

approval to the fund for commencing operations.

A sponsor then hires an asset management company to invest the funds according to the

investment objective. It also hires another entity to be the custodian of the assets of the fund and

perhaps a third one to handle registry work for the unit holders (subscribers) of the fund.

In the Indian context, the sponsors promote the Asset Management Company also, in which it

holds a majority stake. In many cases a sponsor can hold a 100% stake in the Asset Management

Company (AMC). E.g. Birla Global Finance is the sponsor of the Birla Sun Life Asset Management

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The Structure Consists:

The structure of mutual funds in India is governed by the SEBI Regulations, 1996. These regulations

make it mandatory for mutual funds to have a 3-tier structure of Sponsors-Trustee-AMC (Asset

Management Company). The Sponsor is the promoter of mutual fund, and appoints the Trustee. The

Trustees are responsible to the investors in the mutual funds, and appoint the AMC for managing the

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investment portfolio. The AMC is the business face of the mutual funds, as it manages all the affairs

of mutual funds. The mutual funds and AMC have to be registered by the SEBI.

Sponsor

Sponsor is the person who acting alone or in combination with another body corporate establishes a

mutual fund. Sponsor must contribute at least 40% of the net worth of the Investment Managed and meet

the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual Funds)

Regulations, 1996.The Sponsor is not responsible or liable for any loss or shortfall resulting from the

operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund

Trust

The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882

by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908.

Trustee

Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The main

responsibility of the Trustee is to safeguard the interest of the unit holders and inter-alia ensure that the

AMC functions in the interest of investors and in accordance with the Securities and Exchange Board of

India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of the

respective Schemes. At least 2/3rd directors of the Trustee are independent directors who are not

associated with the Sponsor in any manner.

Asset Management Company (AMC)

The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The AMC is

required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset

management company of the Mutual Fund. At least 50% of the directors of the AMC are independent

directors who are not associated with the Sponsor in any manner. The AMC must have a net worth of atleast 10 crores at all times.

Registrar and Transfer Agent

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The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual

Fund. The Registrar processes the application form, redemption requests and dispatches account

statements to the unit holders.

Custodian

A custodian handles the investment back office of a mutual fund. Its responsibilities include receipt and

delivery of securities, collection of income, distribution of dividends, and segregation of assets between

schemes. The sponsor of a mutual fund cannot act as a custodian to the fund. For example, Deutsche Bank

is a custodian, but it cannot service Deutsche Mutual Fund, its mutual fund arm.

Depository

Indian capital markets are moving away from having physical certificates for securities, to ownership of

these securities in dematerialized form with a Depository.

4.MUTUAL FUND OPERATION (Mutual Fund Operation Flow Chart)

5.TYPES OF MUTUAL FUND

Diagram

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INVESTOR

STOCKES

AND

SECURIT

FUND

GENERATE

INVEST

MANAGE

PASS TO

INVESTO

RS

MUTUAL

FUND

OPERATION


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A Mutual Fund may float several schemes, which may be classified on the basis of its structure, its

investment objectives and other objectives.

Open Ended Schemes

As the name implies the size of the scheme (fund) is open i.e. not specified or pre-determined. Entry to

the fund is always open, the investor who can subscribe at anytime. Such fund stands ready to buy or sell

its securities at anytime. The key feature of Open-ended schemes is Liquidity. It implies that the

capitalization of the fund is constantly changing as investors sell or buy their shares. Further, the shares

or units are normally not traded on the stock exchange but are repurchased by the funds at announced

rates. Open-ended schemes have comparatively better liquidity despite the fact that these are not listed.

The reason is that investors can any time approach mutual fund for sale of such units. No intermediaries

are required. Moreover, the realizable amount is certain since repurchase is at a price based on declared

net asset value (NAV). The portfolio mix of such schemes has to be investments, which are actively

traded in the market. Otherwise it will not be possible to calculate NAV. This is the reason that generally

open-ended schemes are equity based. In Open-ended schemes, the option of dividend reinvestment is

available.

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Close-Ended Schemes

A Close ended schemes have a definite period after which their shares/units are redeemed. The scheme

is open for subscription only during a specified period at the time of launch of a scheme. 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 the units 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. In these types of schemes, the size of the fund kept to be

constant. SEBI regulations stipulate that at least one of the two exit routes is provided to the investor i.e.

either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose

NAV generally on weekly basis.

Interval schemes

Interval Schemes combine the features of both open-ended and close-ended schemes. They are open for

sale or redemption during pre-determined intervals at NAV based prices.

Mutual Fund schemes by Investment Objectives:

EQUITY FUNDS

These funds invest a major part of their corpus in equities. The composition of the fund may vary from

scheme to scheme and the fund managers outlook on various scrips.The Equity Funds are sub-classified

depending upon their investment objective, as follows:

1.Growth Fund: Aim to provide capital appreciations over the medium to long term. These schemes

normally invest a majority of their funds in equities and are willing to bear short term decline in value

for possible future appreciation. These schemes are not for investors seeking regular income or needing

their money back in the short-term

2.Diversified Equity Fund: Diversified equity funds are the most popular among investors. They

invest in many stocks across many sectors, and because they have the freedom to chop and churn their

portfolios as they like, diversified equity funds are a good proxy to the stock market. If a general

exposure to equities is what you want, they are a good option. They can invest in all listed stocks, and

even in unlisted stocks. They can invest in which ever sector they like, in what ever ratio they like.

1.Equity Linked Savings Schemes (ELSS): Equity linked savings schemes (ELSS) are

diversified equity funds that additionally offer income tax benefits to individuals. ELSS is one of the

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many section 80c instruments, along with the more popular debt options like the PPF, NSC and

infrastructure bonds. In this Section 80c grouping. ELSS is unique. Being the only instrument to offer a

total equity exposure.

1. 1.Index Fund: An index fund is a diversified equity fund; with a difference- a fund manager has

absolutely no say in stock selection. At all times, the portfolio of an index fund mirrors an index, both

in its choice of stocks and their percentage holding. As of March 2004, equity index funds tracked

either the Sensex or the Nifty. So, an index fund that mirrors the Sensex will invest only in the 30

Sensex stocks, which too in the same proportion as their weight age in the index.

2.Sector Fund: Sector funds invest in stocks from only one sector, or a handful of sectors. The

objective is to capitalize on the story in the sectors, and offer investors a window to profit from such

opportunities. Its a very narrow focus, because of which sector funds are considered the riskiest

among all equity funds.

2. Mid Cap Fund: These are diversified funds that target companies on the fast growth trajectory.

In the long run, share prices are drivenby growth in a companysturnover and profits. Market players

refer to them as mid-sized companies and mid-cap stocks with size in this context being

benchmarked to a companys market value. So, while a typical large cap stock would have a market

capitalization of over Rs 1,000 crores, a mid-cap stock would have a market value of Rs 250-2,000

crores.

DEBT FUNDS

These Funds invest a major portion of their corpus 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:

1.Gilt Funds: Invest their corpus in securities issued by Government, popularly known as GOI 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.

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2.Income Funds: Income funds aim to maximize debt returns for the medium to longer term. Invest a

major portion into various debt instruments such as bonds, corporate debentures and Government

securities.

2.MIPs: Invests around 80% of their total corpus in debt instruments while the rest of the portion isinvested 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.

1. Short Term Plans (STPs): Meant for investors with an investment horizon of 3-6 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.

2. Liquid Funds: Also known as Money Market Schemes, These funds are meant to provide easy

liquidity and preservation of capital. These schemes invest in short-term instruments like TreasuryBills, inter-bank call money market etc. 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. Floating Rate Funds: These income funds are more insulated from interest rate than their

conventional peers. In other words, interest rate changes, which cause the NAV of a conventional

debt fund to go up or down, have little, or no, impact on NAVs of floating rate funds.

BALANCED FUNDS

These funds, as the name suggests, 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. Each category of fund is backed by an investment philosophy,

which is predefined in the in the objective of the fund. The investor can align his own investment need

with the fund objectives and invest accordingly.

HYBRID FUNDS:-

Growth and Income Fund: Strike a balance capital appreciation and income for the investors. In these

portfolio is a mix between companies with good dividend paying record and those with potential

appreciation. These funds are less risky than growth funds bit more than income funds.

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1) Asset Allocation Fund: These funds follow variable asset allocation policy. These move in an out

of an asset class (equity, debt, money market or even non-financial assets). Asset allocation funds

are those, which follow more stable allocation policies like balanced funds. Those, which flexible

allocation policies, are like aggressive speculative funds.

7.ADVANTAGES OF MUTUAL FUND

Mutual Funds offer several benefits to an investor that are unmatched by the other investment options.Last six years have been the most turbulent as well as exiting ones for the industry. New players have

come in, while others have decided to close shop by either selling off or merging with others. Product

innovation is now pass with the game shifting to performance delivery in fund management as well as

service. Those directly associated with the fund management industry like distributors, registrars and

transfer agents, and even the regulators have become more mature and responsible.

1. Affordability : Small investors with low investment fund are unable to invest in high-grade or

blue chip stocks. An investor through Mutual Funds can be benefited from a portfolioincluding of high priced stock.

2. Diversification : Investors investment is spread across different securities (stocks, bonds,

money market, real estate, fixed deposits etc.) and different sectors (auto, textile, IT etc.). This

kind of a diversification add to the stability of returns, reduces the risk for example during one

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Affordabilit Diversificati

RegulationVariety

TaxProfession

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period of time equities might under perform but bonds and money market instruments might

do well do well and may protect principal investment as well as help to meet return objectives.

3. Variety : Mutual funds offer a tremendous variety of schemes. This variety is beneficial in

two ways: first, it offers different types of schemes to investors

4. Professional Management: Mutual Funds employ the services of experienced and skilled

professionals and dedicated investment research team. The whole team analyses the performance and

balance sheet of companies and selects them to achieve the objectives of the scheme.

5. Tax Benefits: Depending on the scheme of mutual funds, tax shelter is also available. As per

the Union Budget-99, income earned through dividends from mutual funds is 100% tax free.

Under ELSS of open-ended equity-oriented funds an exemption is provided up to Rs.

100,000/- under section 80C.

6. Regulation: All Mutual Funds are registered with SEBI and they function within the

provisions of strict regulations designed to protect the interests of investors. The operations of

Mutual Funds are regularly monitored by SEBI.

8. DISADVANTAGES OF MUTUAL FUND:

The following are the disadvantages of investing through mutual fund:

No control over cost: Since investors do not directly monitor the funds operations, they cannot

control the costs effectively. Regulators therefore usually limit the expenses of mutual funds.

No tailor-made portfolio: Mutual fund portfolios are created and marketed by AMCs, into which

investors invest. They cannot made tailor made portfolio.

Managing a portfolio of funds: As the number of funds increase, in order to tailor a portfolio for

himself, an investor may be holding portfolio funds, with the costs of monitoring them and using

hem, being incurred by him.

Delay in Redemption: The redemption of the funds though has liquidity in 24-hours to 3 days

takes formal application as well as needs time for redemption. This becomes cumbersome for the

investors.

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Non-availability of loans: Mutual funds are not accepted as security against loan. The investor

cannot deposit the mutual funds against taking any kind of bank loans though they may be his assets.

9. RISK INVOLVED IN MUTUAL FUND :

THE RISK-RETURN TRADE-OFF

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

returns/loss and lower the risk lesser the returns/loss. Hence it is up to you, the investor to decide how

much risk you are willing to take. In order to do this you must first be aware of the different types of risks

involved with your investment decision.

MARKET RISK:

Sometimes prices and yields of all securities rise and fall. Broad outside influences affecting the market in

general lead to this. This is true, may it be big corporations or smaller mid-sized companies. This is

known as Market Risk. A Systematic Investment Plan (SIP) that works on the concept of Rupee Cost

Averaging (RCA) might help mitigate this risk.

CREDIT RISK:

The debt servicing ability (may it be interest payments or repayment of principal) of a company through

its cash flows determines the Credit Risk faced by you. This credit risk is measured by independent rating

agencies like CRISIL who rate companies and their paper. An AAA rating is considered the safest

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whereas a D rating is considered poor credit quality. A well-diversified portfolio might help mitigate

this risk.

INFLATION RISK:

Things you hear people talk about: Rs. 100 today is worth more than Rs. 100 tomorrow. Remember

the time when a bus ride cost 50 paisa? Mehangai Ka Jamana Hai.

The root cause, Inflation. Inflation is the loss of purchasing power over time. A lot of times people make

conservative investment decisions to protect their capital but end up with a sum of money that can buy

less than what the principal could at the time of the investment. This happens when inflation grows faster

than the return on your investment. A well-diversified portfolio with some investment in equities might

help mitigate this risk.

INTEREST RATE RISK:

In a free market economy interest rates are difficult if not impossible to predict. Changes in interest rates

affect the prices of bonds as well as equities. If interest rates raise the prices of bonds fall and vice versa.

Equity might be negatively affected as well in a rising interest rate environment. A well-diversified

portfolio might help mitigate this risk.

POLITICAL/GOVERNMENT POLICY RISK:

Changes in government policy and political decision can change the investment environment. They can

create a favorable environment for investment or vice versa.

LIQUIDITY RISK:

Liquidity risk arises when it becomes difficult to sell the securities that one has purchased. Liquidity Risk

can be partly mitigated by diversification, staggering of maturities as well as internal risk controls that

lean towards purchase of liquid securities.

10.NET ASSET VALUE

Net Asset Value (NAV)

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The net asset value of the fund is the cumulative market value of the assets fund net of its liabilities. In

other words, if the fund is dissolved or liquidated, by selling off all the assets in the fund, this is the

amount that the shareholders would collectively own. This gives rise to the concept of net asset value

per unit, which is the value, represented by the ownership of one unit in the fund. It is calculated simply

by dividing the net asset value of the fund by the number of units. However, most people refer loosely

to the NAV per unit as NAV, ignoring the "per unit". We also abide by the same convention.

Definition of NAV

Net Asset Value, or NAV, is the sum total of the market value of all the shares held in the portfolio

including cash, less the liabilities, divided by the total number of units outstanding. Thus, NAV of a

mutual fund unit is nothing but the 'book value.'

11. BASIC CONCEPTS OF LOADS :

1. Entry Load: The load charged at the time of investment is known as entry load. Its meant to

cover the cost that the AMC spends in the process of acquiring subscribers commission payable

to brokers, advertisements, register expenses etc. The load is recovered by way of charging a sale

price higher than the prevailing NAV.

2. Exist Load: Some AMC do not charge an entry load but they charged an exist load i.e., theydeduct a load before paying out the redemption proceeds. Psychologically, investors are much

more willing to pay exist loads as compared to entry loads.

3. Unit: Units mean the investment of the unit holders in a scheme. Each unit represents one

undivided share in the assets of a scheme. The value of each unit changes, depending on the

performance of the fund.

MUTUAL FUND( PLAYERS)SOLD BY OUR COMPANY:

The Indian mutual fund industry is mainly divided into three kinds of categories. These categories include

public sector players, nationalized banks and private sector and foreign players.UTI Mutual Fund

was one of the leading Mutual Fund companies in India till May 2006 with a corpus of more than

Rs.31, 000 Crore and it is the public sector mutual fund. Bank of Baroda, Punjab National Bank,

Can Bank and SBI are the major nationalized banks mutual fund. At present mutual fund

industry is mainly dominated by private and foreign sector players which include major players

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like Prudential ICICI Mutual Fund, HDFC Mutual Fund, Reliance Mutual Fund etc. are private

sector mutual funds players while Franklin Templeton etc. are major foreign mutual fund

players. At present there are more than 33 players operating in Indian. The brief introduction of

major players is given as follows.

ABN AMRO Bank Mutual Fund Birla Sun Life Mutual Fund

HSBC Mutual Fund HDFC Mutual Fund

ING Vysya Mutual Fund Prudential ICICI Mutual Fund

Sahara Mutual Fund State Bank of India Mutual Fund

Tata Mutual Fund Kotak Mahindra Mutual Fund

Reliance Mutual Fund Standard Chartered Mutual Fund

Franklin Templeton India Mutual Fund Morgan Stanley Mutual Fund

Escorts Mutual Fund Benchmark Mutual Fund

Can bank Mutual Fund Chola Mutual Fund

LIC Mutual Fund GIC Mutual Fund

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(C) RESEARCH METHODOLOGY

1. RESEARCH PROBLEM:

To know investors behavior regarding mutual fund as an investment avenue.

2. RESEARCH OBJECTIVES (PRIMARY) :

To know investors behavior regarding mutual fund as an investment avenue.

RESEARCH OBJECTIVES (SECONDARY)

o To identify the objectives of the investors for investing in a mutual fund.

o To identify the investment patterns of investors.

o To find out which scheme is better according to investors.

o To study investors perceptions about level of satisfaction while investing in mutual funds.

3. RESEARCH PLAN :

DATA SOURCE

We have used primary data source to collect the data regarding investors behavior for mutual fund as

an investment avenue. The survey was conducted across PANCHKULA CITY(HARYANA).

RESEARCH APPROACH

Survey approach was under taken to know the behavior of investor regarding mutual fund as an

investment avenue.

RESEARCH INSTRUMENT

Questionnaire was the instrument of collecting data

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SAMPLING PLAN

Sample unit:

All the investors who are occasionally or regularly investing in financial assets and non-financial assets

Sample size:

Survey population comprises of the total reputed businessman, Professionals, and individual investor was

approx 70.

Sampling method:

In this study as suggested by the company a sample of reputed Businessman, Professionals, and individual

investors was selected and it was selected through non-probability, convenience sampling method.

Because all the Businessman, Professionals, and individual investors could not be interviewed as per our

requirement but according to their availability and accessibility we meet them.

Contact method

The total sample size for survey was 70 investors by personal interview

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4. SURVEY ANALYSIS AND INTERPRETATION :

GENDER

There are 19 females and 51males as respondents

Male 51

Female 19

Survey shows only 27 % of the female are interested in investments due to their working backgrounds or

high incomes from other resources etc.

Q1. what is your age?

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AGE

PARTICULARS NO.

20-30 39

30-40 10

40-50 7

50-60 9

60-ABOVE 5

TOTAL 70

From the above table we can say that awareness for investment in youngster has been increased &thats why out of 100, 46% are youngster who do investment and they come in the age group of

20-30, then comes age group of 30-40 from which 16% people do investment and other age group

are 40-50 where they do investment of 13%, 14%belongs to age group of 50-60 they do the

investment, and 11%belongs to the age group of60-above they do their investment. We can say

that youngsters are more careful for their investment.

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Q2 .what is your profession?

Now 70 people doing investment out of which 51% people are from private sector, 21% are from public

sector, 9% are having their business and 19% are others which include retired people, housewives and

student. Reason for investment by all people was to secure the future and reason given by people doing

the job in private was their higher salary and unsecured job.

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PROFESSION

PARTICULARS NO.

BUSINESS 5

JOB IN PRIVATE SECTOR 45

JOB IN PUBLIC SECTOR 17

OTHERS 18

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Q3 Do you invest in mutual fund ?

PARTICULARS

YES 65

NO 5

TOTAL 70

From70people62% of them are doing investment in mutual fund and 38% of them are not investing in

mutual fund but they do investment in other sectors for which information is given in the next question.

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People who were not investing in mutual fund they do invest in sectors like insurance, equity

market, government schemes (includes banks, bonds &other scheme ), real estate, commodities

even people those who do invest in mutual fund they also invest in different sectors. Out of 70%,

44% people do invest in equity market, 37% invest in insurance, 8% in government scheme, 7%

do invest in real estate and 4% do invest in commodities. People do invest in equity market due to

higher returns available in it.

Q5. Rank the company according to your preference from top (1) to bottom (11)?

RANK THE MF FROM TOP 1 TO BOTTOM 11?

PARTICULARS NO

RELIANCE 30

BIRLA 3

TATA 5

LOTUS 2

SBI 5

HDFC 5

ICICI 2

FRANKLIN TEMP. 3

SUNDARAM 2

UTI 2

BENCHMARK 1

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NOT INVESTED 10

TOTAL 70

People who were investing in mutual fund had given the rank to different mutual fund companies on the

basis of what they think about that particular company and had given ranks to different companies. Here

in this data 38% people had given reliance as 1st rank and the second highest is HDFC where 10% people

has given it as 1st rank and the reasons behind giving 1st rank were their return, good credit in market and

tax saving benefit.

Q7. If you are investing in mutual fund then you invest in?

INVEST IN MF SCHEME WISE

PARTICULARS NO.

OPEN ENDED SCHEME 30

CLOSE ENDED SCHEME 20

BOTH 5

NOT INVESTED 15

TOTAL 70

There are two scheme in mutual fund 1 is open ended and another is close ended scheme, in open ended

scheme after some time an investor can withdraw money at any time, while in close ended scheme the

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investor can withdraw after a fixed period of time. Here 42% people invest in open ended scheme while

28% people invest in close ended scheme and 7% do invest in both open ended and close ended scheme.

Q8 .Do you take any reference while investing in mutual fund schemes if yes then from whom?

1.FINANCIAL ADVISOR

PARTICULARS

EXT. IMPORTANT 30

IMPORTANT 20

NEUTRAL 1

UNIMPORTANT 0

EXT.UNIMPORTANT 1

NOT. RESPONDED 18

TOTAL 70

In this question it was asked that do you take any reference before investing or during make any changes

in your investment, then 1st option was that how important is for you to take reference from financial

advisor then 43% says that it is ext important to take reference from financial advisor, 29% says its

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important to take advice from the financial advisor. People take reference from the financial advisor

because he had studied different schemes and he knows where to invest and not to invest.

2) BROKER

PARTICULARS

EXT. IMPORTANT 15

IMPORTANT 15

NEUTRAL 3

UNIMPORTANT 0

EXT.UNIMPORTANT 2

NOT. RESPONDED 35

TOTAL 70

11% people says its ext important to take advice from a broker because he knows about all the scheme

which are there in the market,11% says that its important to take advice from the broker, 2% are neutral

about it.

3) RELATIVES OR FRIEND

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PARTICULARS

EXT. IMPORTANT 25

IMPORTANT 15

NEUTRAL 6

UNIMPORTANT 1

EXT.UNIMPORTANT 3

NOT. RESPONDED 20

TOTAL 70

Some people do take reference from their friends and relatives there are 50% people who say its extimportant to take reference from your friends and relatives, 18% thinks its important to take reference

and 6% are neutral and 1% says unimportant and 5% says ext unimportant to take any reference.

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4) NEWSPAPER & MAGAZINE

PARTICULARS

EXT. IMPORTANT 20

IMPORTANT 10

NEUTRAL 4

UNIMPORTANT 1

EXT.UNIMPORTANT 10

NOT. RESPONDED 25

TOTAL 70

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There are many people who take reference from news paper and magazines while investing in mutual

fund 26% people who take reference from newspaper and magazines and consider it ext important, while

26% says its important to take reference, while 21% are neutral and 11% and 11% are people who says

its unimportant and ext unimportant respectively to take reference.

5) CO. WEBSITE

PARTICULARS

EXT. IMPORTANT 3

IMPORTANT 10

NEUTRAL 2

UNIMPORTANT 5

EXT.UNIMPORTANT 10

NOT. RESPONDED 40

TOTAL 70

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Here 7% people says they take the reference of respective cos website while investing in mutual fund and

consider it as ext important and 7% say its important to take reference from co website and 50% people

are not responding to it.

6) AMFI WEBSITE

PARTICULARS

EXT. IMPORTANT 1

IMPORTANT 3

NEUTRAL 3

UNIMPORTANT 3

EXT.UNIMPORTANT 10

NOT. RESPONDED 50

TOTAL 70

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1% people says that its ext important to take reference of AMFI website before investing in mutual fund,

2% say its important to take reference, 7% people says its ext unimportant and 50% people are not

responding.

Q9. Do you compare the returns or other benefits of mf schemes before investing?

ANNUAL REPORT CHECKING

PARTICULARS

YES 45

NO 5

NOT RESPONDED 20

TOTAL 70

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It is necessary to compare the returns and other benefits because people do invest in for higher returns so

they compare with other companies also. Here 75% people compare the returns and other benefits of

mutual fund scheme before as well as after investing to see how their investment is spread over in

different segments.

Q10. which factors do you consider while investing in mutual fund?

1. SAFETY

PARTICULARS NO

EXT. IMP. 36

IMPORTANT 10

NEUTRAL 3

UNIMPORTANT 1

EXT. UNIMP 0

NOT RESPONDED 20

TOTAL 70

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Investors consider different factors before investment and for many reasons they invest in different

scheme of mutual fund. Here reason for investment is safety of their money and safety of their

future so 50% people consider it ext important, while 26% people says its important for their

investment.

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Many people consider very important to invest in mutual fund to save tax or to take tax benefit.

Therefore 25% people consider it as ext important to invest in tax saving scheme while 23%

people consider it as important for investment,4% people are neutral about it, 0% and 1% consider

it as unimportant and ext unimportant. While 37% people are not responding to it. Most probably

every companies who are in mutual fund business have schemes for saving tax in these schemes

generally companies do invest in govt bonds and othersgovt.sschemes.

2. RETURN EARNINGS

PARTICULARS NO

EXT. IMP. 40

IMPORTANT 9

NEUTRAL 1

UNIMPORTANT 0

EXT. UNIMP 0

NOT RESPONDED 20

TOTAL 70

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Generally people invest in mutual fund companies for higher returns with less risk as compare equity

market and could able to earn good returns.57% people agree that they do invest in mutual fund for higher

returns and consider it as ext important, 13% investors are considering it as important while 29% people

are not responding to it.

3. LIQUIDITY

PARTICULARS NO

EXT. IMP. 40

IMPORTANT 10

NEUTRAL 3

UNIMPORTANT 0

EXT. UNIMP 0

NOT RESPONDED 17

TOTAL 70

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Above graph reveals that majority of the investors means 57% are giving liquidity more emphasis because

by the way of open ended scheme they can any time liquid their position, 24% investors had given no

response about it while 15% of the investors are giving them least importance as compare to 57%

investors.

Q11. How do you monitor the following.

1. NAV

PARTICULARS NO

MONTHLY 29

QUARTELY 3

HALF YEARLY 6

YEARLY 5

NEVER 2

NOT RESPONDED 25

TOTAL 70

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NAV is the net asset value of your investment in units that comes of every week by this you can come to

know how much of your investment has been increased so it becomes necessary to monitor but period of

monitoring depends on investor. Here 41% of investor do monitor monthly, 3% of investors monitors

quarterly, 7% monitor half yearly, 9% monitor yearly,3% never monitor.

2. RISK FACTOR

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PARTICULARS NO

MONTHLY 13

QUARTELY 5

HALF YEARLY 8

YEARLY 26

NEVER 0

NOT RESPONDED 18

TOTAL 70

Risk factor is necessary to be monitor at certain time period though there is not much risk in investing inmutual fund as compare to equity investment but monitoring is necessary to check the returns and see

that the managed properly. Here 13% of investors monitor it monthly, 6% of investors monitor it

quarterly, 9% do half early yearly and 50% do monitor yearly. Risk factor is monitored before investment

also to check the scheme and to see its performance.

3. PORTFOLIO OF

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4. PROFILE OF FUND

MANAGER

PARTICULARS NO.

MONTHLY 3

QUARTELY 0

HALF YEARLY 5

YEARLY 12

NEVER 20

NOT RESPONDED 30

TOTAL 70

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Fund manager is the person who manage the fund of investor who had invested their money in their

company it is necessary that the fund manager should be qualified enough to manager the fund of the

investor because if he fails to manage the fund the investors money is not secure. So 2% investors monitor

profile,14% do yearly and 21% never monitor the profile. Generally investors monitors the profile before

investing.

Q12. Are the following information relevant to analyze the performance of your investment .

1.MONTHLY RESULT

PARTICULARS NO

EXT. RELEVANT 10

RELEVANT 5

NEUTRAL 8

IRREVENT 11

EXT.IRRELEVANT 6

NOT RESPONDED 30

TOTAL 70

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Results are showing the performance of that particular scheme and it is necessary to monitor the

performance of the scheme by this we can analyze the position of our investment. For that investor do the

monitoring 8% of investor consider monthly result ext relevant to monitor the performance of scheme,

6% consider it relevant, 6% are neutral, 4% consider it as irrelevant and 4% consider it as ext irrelevant.

2.QUARTELY RESULT

PARTICULARS NO.

EXT. RELEVANT 8

RELEVANT 8

NEUTRAL 10

IRREVENT 9

EXT.IRRELEVANT 8

NOT RESPONDED 27

TOTAL 70

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For that investor do the monitoring 6% of investor consider quarterly result ext relevant to monitor the

performance of scheme, 6% consider it relevant, 19% are neutral, 7% consider it as irrelevant and 6%

consider it as ext irrelevant.

3.HALF YEARLY

PARTICULARS NO.

EXT. RELEVANT 7

RELEVANT 9

NEUTRAL 21

IRREVENT 3

EXT.IRRELEVANT 3

NOT RESPONDED 27

TOTAL 70

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For that investor do the monitoring 7% of investor consider half yearly result ext relevant to monitor the

performance of scheme,15% consider it relevant, 19% are neutral, 2% consider it as irrelevant and 2%

consider it as ext irrelevant.

4.ANNUALY

PARTICULARS NO

EXT. RELEVANT 40

RELEVANT 3

NEUTRAL 4

IRREVENT 3

EXT.IRRELEVANT 0

NOT RESPONDED 20

TOTAL 70

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For that investor do the monitoring 50% of investor consider annually result ext relevant to monitor the

performance of scheme, 2% consider it relevant, 3% are neutral, 2% consider it as irrelevant and 0%

consider it as ext irrelevant. Because annual result contains each and every information regarding the

performance of the AMC the investments and the portfolio of where the co has invested so all the

investors monitors the annual report.

5.NEWSPAPER

PARTICULARS NO.

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EXT. RELEVANT 33

RELEVANT 7

NEUTRAL 6

IRREVENT 0

EXT.IRRELEVANT 2

NOT RESPONDED 22

TOTAL 70

For that

investor do

the

monitoring

50% of

investor

consider

newspaper

ext relevant to

monitor the

performance of scheme,16% consider it relevant, 5% are neutral, 0% considers it as irrelevant and 4%

consider it as ext irrelevant. Some investors consider newspaper more relevant to get the information of

several reports.

6.AMFI WEBSITE

PARTICULARS NO

EXT. RELEVANT 4

RELEVANT 20

NEUTRAL 6

48

24%

5%

4%

0%1%

16%

50%

NEWSPAPER

EXT. RELEVANT RELEVANT NEUTRAL

IRREVENT EXT.IRRELEVANT NOT RESPONDED


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IRREVENT 2

EXT.IRRELEVANT 9

NOT RESPONDED 30

TOTAL 70

For that investor do the monitoring 4% of investor consider AMFI website ext relevant to monitor the

performance of scheme, 21% consider it relevant, 6% are neutral, 14% considers it as irrelevant and 2%

consider it as ext irrelevant. Some investors consider AMFI website relevant to get the information of

several reports and the position of that particular AMC and that particular scheme.

7.CO. WEBSITE

PARTICULARS NO.

EXT. RELEVANT 4

RELEVANT 25

NEUTRAL 5

IRREVENT 2

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EXT.IRRELEVANT 4

NOT RESPONDED 30

TOTAL 70

For that investor do the monitoring 3% of investor consider co. website ext relevant to monitor the

performance of scheme, 21% consider it relevant, 18% are neutral, 1% considers it as irrelevant and 3%

consider it as ext irrelevant. Some investors consider co. website relevant to get the information of several

reports and the position of that particular AMC and that particular scheme.

Q13. Do you check out the annual reports of your scheme to evaluate the performance of your

scheme?

ANNUAL REPORT CHECKING

PARTICULARS

YES 45

NO 10

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NOT RESPONDED 15

TOTAL 70

In the annual report of the scheme all the information of that particular scheme are given information

about the performance of the scheme, position of the scheme in the market, portfolio of the scheme that

where the investment has been done under this scheme, profile of the fund manager is also given by this

the investors can come to know the position and qualification of the fund manager. So most of the

investors are monitoring the annual report.64% of the investor do monitor the annual report of the

scheme, 22% do not monitor the annual report.

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Q14. Objectives for investment in mutual fund schemes (rank them from 1most preferred to 4 least

preferred).

OBJECTIVE FOR INVESTMENT

PARTICUL

ARS

RANK 1 RANK 2 RANK 3 RANK 5 TOTAL

RETURN

/DIVIDEND

40 20 15 5 80

APRICIATI

ON

34 32 8 6 80

TAX 5 16 34 25 80

LIQUIDITY 1 12 23 44 80

TOTAL 80 80 80 80

Here in this question the investors have ranked the factors on the basis of their objectives that for what

reason they had invested in that particular scheme. 44% of investors had given return/dividend 1 st rank

because every investor want benefits for the risk they had taken by investing in that scheme, 30% of

investors had given appreciation 1st rank because they want something more including their invested

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amount.5% of investor has given tax saving as 1st rank because while investing in some particular scheme

their amount invested is appreciated as well as they get the tax benefit,1% has given 1 st rank to liquidity

because they can withdraw their investment at any time in open ended scheme.

Q15 .In which MF schemes are you interested to invest or investing?

SCHEME INTEREST TO INVEST

PARTICULARS

LARGE CAP 39

MID CAP 26

SMALL CAP 21

SECTORIAL FUND 16

BALANCE FUND 35

BOND FUND 2

INCOME FUND 12

GILT SCHEME 8

ELSS 23

ETF (GOLD) 12

ASIAN EQUITY FUND 5

TOTAL 199

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These are few schemes where the investors invest the schemes in which more no of investors invest are

large cap where the return is tremendous but risk is also more, balance fund in which investment is done

in equity and debt where risk is somewhat less then large cap and return is also less, then comes mid cap

and small cap where risk is there but can get good return, then investment is done in equity linked saving

scheme.

5. LIMITATION OF THE STUDY:

Every research has its own limitation and present research work is no exception to this general rule the

inherent limitation of the study are as under:

Interview method, which was followed in the present research work, is relatively more time consuming.

In addition to this it is very expensive method, especially when spread geographic sample is taken.

Questionnaire method can be used only when respondents are literate and co-operative. Sample size

was 100 that are not enough to study the awareness of Independent individuals. As sampling

techniques is convenient sampling so it may result in personal bias. Even respondent give bias answers.

Time is main constraint of the research as we have been given project as well as study simultaneously.

6.FINDINGS AND RECOMMENDATIONS :

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From the above analysis, I found that even though certainly not the best or deepest of markets in the

world, it has ignited the growth rate in mutual fund industry to provide reasonable options for an ordinary

man to invest his savings.

With the help of

Give more importance to safety and return attributes because Independent Financial Advisors are more

concern about safety and of giving more benefit of the investments to their clients.

Independent Financial Advisors who are not suggesting their clients to invest in mutual funds due to their

lack of knowledge of mutual funds. So, NJ India Invest should arrange mutual fund awareness Program of

their and other independent Financial Advisors on regular basis.

By providing better service NJ India Invest should try to attract the Independent Financial Advisors to

join with them.

NJ India Invest should arrange special mutual fund awareness program for general public. So they

can directly work with NJ India Invest as direct client.

Majority of the Government employees take into consideration tax benefits before making any

investment. So NJ India Invest should highlight tax benefits in mutual funds.

NJ India Invest should launch its brand awareness campaign to be successful in Mutual fund advisory

service provider

o NJ India invest should also concentrate on youngster who are interested in savings so make them

aware about different schemes for investment and arrange seminars for college going students, by

this company gets more customers connected for long period.

o Put hoardings outside the colleges making NJ INDIA known to them and try to attract them.

Key Findings: -

Around 50% of the investors invest to maximize their returns and they are ready to

take moderate risks in their investment portfolio.

Most of the investors give importance to the fact that their investment should grow

in value over a

period of time.

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Growth scheme is the most preferred for investment

Knowledge about mutual funds and their various schemes is moderate among

investors.

It is necessary to make Mutual Fund more popular in the eyes of investors as well

as distributors and also cater trust which has been lost due to US-64.

Most of the investors give importance to return, tax saving etc.

Objectives of the investor are to get something in return for their investment and

the risk they are taking.

Here the objective of the investor between the age of 20-30 is to earn the higher

return.

While the age group above 30years concentrates on safety and tax saving and they

even take care of the liquidity.

ANNEXURE

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QUESTIONNAIRE

Q1 .what is your age?

1) 20-30 ( )

2) 30-40 ( )

3) 40-50 ( )

4) 50-60 ( )

5) 60-above ( )

Q2. what is your profession?

1) Business ( )

2) Job in private sector ( )

3) Job in public sector ( )

4) others ( )

Q3. Do you invest in mutual fund?

1) Yes ( ) (2) No ( )

Q4 .If you are not investing in mutual fund then where do you invest (in proportion)?

1) Insurance ( )

2) Equity market ( )

3) Government schemes ( )

4) Real estate ( )

5) Commodities ( )

Q5 .Rank the company according to your preference from top (1) to bottom (11)?

1) Reliance ( )

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2) Birla ( )

3) Tata ( )

4) Lotus ( )

5) SBI ( )

6) HDFC ( )

7) ICICI ( )

8) Franklin Templeton ( )

9) Sundaram ( )

10) UTI ( )

11) Benchmark ( )

Q6. If you give 1st rank to the company then why?

Q7. If you are investing in mutual fund then you invest in

1) Open ended scheme ( )

2) Close ended scheme ( )

Q8. Do you take any reference while investing in mutual fund schemes if yes then from whom?

SCALE EXTREMELYIMPORTANT

IMPORTANT NEUTRAL UNIMPORTANT EXTREMELY

UNIMPORTANT

1. FINANCIALADVISOR

2.BROKER

3.RELATIVES

&FRIENDS

4.NEWSPAPERS&

MAGAZINES

5.COMPANYS

WEBSITE

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6.AMFI WEBSITE

Q9. Do you compare the returns or other benefits of MF schemes before investing?

1) Yes ( ) (2) NO ( )

Q10. which factors do you consider while investing in mutual fund?

SCALE EXTREMELYIMPORTANT

IMPORTANT NEUTRAL UNIMPORTANT EXTREMELY

UNIMPORTANT

1.SAFETY

2.TAX SAVING

3.RETURN

EARNING

4.LIQUIDITY

Q11. Objectives for investment in mutual fund schemes (rank them from 1most preferred to 4 least preferred),

Rank

1) Return/Dividend

2) Appreciation

3) Tax

4) Liquidity

Q12. Do you check out the annual reports of your scheme to evaluate the performance of your scheme?

1) Yes ( )

2) No ( )

Q13. How do you monitor the following,

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SCALE MONTHLY QUARTERLY HALF YEARLY YEARLY NEVER

1. NAV

2. RISK

FACTOR

3 .PORTFOLIO

OF SECURITIES

4. PROFILE OF

FUND

MANAGER

Q13. Are the following information relevant to analyze the performance of your investment.

SCALEEXTREMELY

RELEVANT

RELEVANT NEUTRAL IRRELEVANT EXTREMELY

IRRELEVANT

1.MONTHLY

RESULT

2.QUARTERLY

RESULT

3.HALF YEARLY

4.ANNUAL

RESULT

5.NEWSPAPER

6.AMFI WEBSITE

7.WEBSITE OF

RESPECTIVE

MF

Q13. Do you check out the annual reports of your scheme to evaluate the performance of your scheme?

3) Yes ( )

4) No ( )

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Q14 .Objectives for investment in mutual fund schemes (rank them from 1most preferred to 4 least preferred),

Rank

Return/Dividend -

Appreciation -

Tax -

Liquidity -

Q15. In which mf scheme are you interested to invest?

1) large cap shares ( ) (2) Mid cap shares ( )

3) Small cap share ( ) (4) Sectorial funds scheme ( )

5) Balance fund ( ) (6) Bond funds scheme ( )

7) Income fund scheme ( ) (8) Gilt scheme ( )

9) ELSS ( ) (10) ETF (gold) ( )

11) Asian equity funds ( )

Name: - Mobile No:-

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Address:-

BIBLIOGRAPHY

WEBSITES

www.wikepidia.org

www.wikipedia.com

www.amfi.com

www.sbimutualfund.com

www.mutualfund.org

www.nse.com

www.bse.com

62
http://www.wikepidia.org/http://www.wikipedia.com/http://www.amfi.com/http://www.sbimutualfund.com/http://www.mutualfund.org/http://www.nse.com/http://www.bse.com/http://www.wikepidia.org/http://www.wikipedia.com/http://www.amfi.com/http://www.sbimutualfund.com/http://www.mutualfund.org/http://www.nse.com/http://www.bse.com/


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