MUTUAL FUNDS AND CONSUMER BUYING BEHAVIOR

  A PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF

POST GRADUATE DIPLOMA IN BUSINESS MANAGEMENT TO M.S.RAMAIAH INSTITUTE OF MANAGEMENT BY AMITAVA MUKHERJEE (REG.NO. 091205)

UNDER THE GUIDANCE OF

PROF. JAISHREE KOWTAL M. S. RAMAIAH INSTITUTE OF MANAGEMENT NEW BEL ROAD, BANGALORE- 560054

INTRODUCTION:

Understanding Mutual Fund Industry

Trying to analyze the consumer behavior towards investment options

Attempting to understand the tactics employed by various brokerage houses, esp. Anand Rathi, to sell their products.

COMPANY PROFILE.

AnandRathi shares and stock brokers ltd. (AR) is a leading full service securities firmProviding the entire gamut of financial services. It has a pan India presence as well asan international presence through offices in Dubai and Bangkok. AR provides a breadthof financial and advisory services including wealth management, investment banking,corporate advisory, brokerage & distribution of equities, commodities, mutual funds andinsurance, structured products - all of which are supported by powerful research teams.

The firm's philosophy is entirely client centric, with a clear focus on providing long termvalue addition to clients. It’s activities are divided into Individuals, Private Clients, corporate and Institutions.

In year 2007 Citigroup Venture Capital International joined the group as a financial partner.

AnandRathi shares and stock brokers ltd. provides end-to-end equity solutions to institutional and individual investors. Consistent delivery of high quality advice on individual stocks, sector trends and investment strategy has established them a competent and reliable research unit . Clients can trade through us online on BSE and NSE for both equities and derivatives. They are supported by dedicated sales & trading teams in our trading desks across the country. Research and investment ideas can be accessed by clients either through their designated dealers, email, web or SMS

It’s products range is vast and variegated. They are:

DMAT AccountsMutual fundsDerivativesCommoditiesCurrenciesBondsInsuranceFixed DepositsPortfolio Management services

It’s branches are spread across the country. They are Andhra Pradesh, Assam, Bihar, Chhattisgarh, Delhi, Goa, Gujarat, Haryana, Jammu & Kashmir, Jharkhand, Karnataka, KeralaMadhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, West Bengal Etc.

The mutual fund industry is a lot like the film star of the finance business. Though it is perhaps the smallest segment of the industry, it is also the most glamorous – in that it is a young industry where there are changes in the rules of the game every day, and there are constant shifts and upheavals. The mutual fund is structured around a fairly simple concept, the mitigation of risk through the spreading of investments across multiple entities, which is achieved by the pooling of a number of small investments into a large bucket.

The mutual fund industry in india started in 1963 with the formation of unit trust of india, at the initiative of the government of india and reserve bank. The Indian MF industry has rs.5.67 lakh crore of assets under management. As of now, there are 33 fund houses in the country including 16 joint ventures and 3 wholly owned foreign asset managers. According to a recent McKinsey report, the total AUM of the Indian mutual fund industry could grow to $350-440 billion by 2012, expanding 33% annually. While the revenue and profit (PAT) pools of Indian AMC’s are pegged at $542 million and $220 million respectively, it is at par with fund houses in developed economies. Operating profits for AMC’s in India, as a percentage of average assets under management, were at 32 basis points in 2006-07, while the number was 12 bps in UK, 17 bps in Germany and 18 bps in the US, in the same time frame.

The most important trend in the mutual fund industry is the aggressive expansion of the foreign owned mutual fund companies and the decline of the companies floated by the nationalized banks and smaller private sector players.

Mutual funds are operated by the AMC constructed by the banks or any other financial organizations. For this purpose, trust is being set up and this trust looks after the proceedings of the mutual funds.

INDUSTRY PROFILE: MUTUAL FUNDS

The asset management company shall not undertake any other business activities except activities in

the nature of portfolio management services, management and advisory services to offshore

funds, pension funds, provident funds, venture capital funds, management of insurance funds,

financial consultancy and exchange of research on commercial basis if any of such activities are

not in conflict with the activities of the mutual fund.

CHARACTERISTICS OF MUTUAL FUNDS: The ownership is in the hands of the investors who have pooled in their funds. It is managed by a team of investment professionals and other service providers. The pool of funds is invested in a portfolio of marketable investments. The investors share is denominated by ‘units’ whose value is called as Net Asset

Value (NAV) which changes every day. The investment portfolio is created according to the stated investment

objectives of the fund.

ADVANTAGES OF MUTUAL FUNDS: Portfolio Diversification Professional Management Low Costs Liquidity Transparency Flexibility Affordability Well Regulated

EXECUTIVE SUMMARY:

Indian stock market has undergone tremendous changes over the years. Investment in mutual funds has

become a major alternative among investors. The project has been carried out to have an overview of

mutual fund industry and to understand investor’s perception about mutual funds in the context of their

trading preference, explore investor’s risk perception & find out their preference over top mutual funds.

The methodology used was data collection using Schedule. Secondary data was collected from

Internet and Books. Primary Data was collected through survey among existing clients along with

the other investors. The procedure adopted to select sample was simple random sampling.

The research design is analytical in nature. A questionnaire was prepared and distributed to

Investors. The investor’s profile is based on the results of a questionnaire that the Investors

completed. The Sample consists of 100 investors from various broker’s premises. The target

customers were Investors who are trading in the stock market. The area of survey was restricted to

people residing in Bangalore.

TOPIC AND RESEARCH REASON:

The Industry has a compelling attraction towards it as it presents a bouquet of study opportunities in the financial derivatives and its associated services. It has variety in terms of the product range and services offered. It comprises of products like Mutual funds, equity, Commodities etc. and services like Portfolio management services.

I chose this topic as helped me to get a complete insight into the field of mutual

funds and its regulations and other compliance requirements. I also got a chance to understand the services offered by various companies to it’s customers. Apart from that my study included the survey of customer preferences and choice in terms of investment decisions.

Hence it provided me an overall understanding of the derivative industry and market preferences. Thus I undertook the study of the stated topic.

AIM OF THE PROJECT:

To understand the concept of mutual fund and analyze the market response towards the purchase of

mutual funds through questionnaire response collection and analysis of the data collected. Market is too

diverse to be classified into distinct segments and the customer’s understanding of the derivative

products is variegated.

SCOPE OF THE STUDY:

In current scenario, the bank rates have been cut down rapidly due to severe competition, so people are not going for contemporary deposits because that cannot provide them the better returns or the desired interest rates. So, they can look for some other investment options like Mutual Funds, which can provide them higher returns in medium to long term and can easily meet their financial goals. To look out for new prospective customers who are willing to invest in Mutual Funds.

RESEARCH METHODOLOGY:

I decided to do the project in two parts. The first part of the project is

comprised of the study of Mutual Funds as a whole and the second part

deals with the investors perception regarding their investment

preferences about investment in Mutual Funds.

The first part of the project i.e. descriptive study is comprising an overall study

of Mutual funds as what it is ,why to invest and where to invest, risk factor

associated with it i.e., an overview of whole Mutual fund industry.

The second part of the project that is related to investors perception about

investment in Mutual funds available in market. Indian Stock market has

undergone tremendous changes over the years. Investment in Mutual Funds

has become a major alternative among Investors. The project has been carried

out to understand investor’s perception about Mutual Funds in the context of their

trading preference and explore investor’s risk perception .

CONCLUSIONS:

In a nutshell, I have learned various practical aspects of trading in the stock market.

I have made about 50-100 calls per day in the initial days of training so as to generate maximum leads.

In addition, I did personal meetings with clients in order to close the deals.

I handled the queries of both the new & existing clients of the company pertaining to different issues like opening of accounts, trading procedures etc.

I also assisted in executing trades from the existing clients so as to get brokerage for the.

I also took part in presentations at various banks.

THANK YOU: