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INTRODUCTION
Definition
Mutual Fund Regulations 1993 defines Mutual fund estabilished
in
the form of a trust by a sponsor to raise money by the trustees
through the
sale of units to the public under one or more schemes for
investing securities
in accordance with these regulations. The rationale behind a
Mutual fund is
that there a large number of investors who lack and or the time
and or the
skills to manage their money.
A mutual fund is nothing more than a collective stock and bonds
.You
can think of a mutual fund as a company that brings together a
group of
people and invests their money in stock , bonds and other
securities each
investos owns shares which represent a portion of holding of the
fund.
In india,mutual fund Regulations.1996 regulates the structure
of
mutual fund. Mutual fund in India are constituted in the form of
a public
trust created under The India Trusts Act,1882.
A Mutual Fund is a trust that pools the saving of a number
of
investors who share common financial goals. 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 appreciation 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
managedPortfolio at a relatively low cost. Anybody with an
investible 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
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and other fixed income instruments, real estate, derivatives and
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
tracks of events understand also finds it difficult to keep
track of ownership
of his assets, investments, brokerage dues and bank transactions
etc.
A mutual fund is to all these situations. It appoints
professionally the qualified and experienced staff that manages
each of this
function on a full time basis. The large pool of money is
collected in the
funds allows it to hire such staff at a very low cost to each
investors. In
effects, the mutual fund vehicle exploits economics of scale in
all three areas
research, investment and transaction processing. While the
concept of
individual coming together to invest money collectively is not
new, thus
mutual fund in its present form is a 20th century phenomenon. In
facts,mutual funds gained popularity only after the Second World
War. Globally,
there are thousand of firms offering tens of thousand of mutual
funds with
different investment objectives. Today, mutual funds
collectively manage
almost as much as or more money as compared to banks
A draft offer document is to be prepared at the time of
launching
the fund. Typically, it pre specifies the investment objective
of the fund, the
risk associated the costs involved in the process and the broad
rules for entry
into and exits 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 track record of
the sponsor
and its financial strength in granting approval to the fund for
commencing
operations.
A sponsor then hires an assets management company to invest
the funds according to the investment objective. It also hires
anothers entity
to be the custodian of the asses of the fund and perhaps a third
one to handleregistry work for the unit holders (subscribers) of
the fund.
In the Indian context, the sponsors promote the Assets
management Company also, in which it holds a majority stake. In
many
Cases a Sponsor can hold a 100% stake in the Assets Management
Company
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(AMC).e.g.Birla Global Finance is sponsor of the Birla Sun Life
Assets
Management Company ltd. Which has floated different mutual
funds
schemes and also acts as an asset manager for the fund collected
under the
schemes.
HISTORY OF THE INDIAN MUTUAL FUNDINDUSTRY
The mutual fund industry in India started in 1963 with the
formation ofunit trust of India ,at,the initiative of the
Government of India and Reserve a
bank.Though the growth was slow,but it accelerated from the year
1987
when non-UTI players entered the industry.
In the past decade , Indian mutual fund industry had seen a
dramatic
improvement both qualiyies wise as well as quantity wise. Before
,the
monopoly had seen an ending phase ;the assests under management
was
Rs.67 billion.
ADVANTAGES OF MUTUAL FUND
Portfolio diversification
Professional management
Reduction/ diversification of risk
Liquidity
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Flexibility and convenience
Reduction in transaction cost
Safety of regulated environment
Choice of schemes
Transparency.
DISADANTAGE OF MUTUAL FUND
No control over cost in the hands of an investor
No tailor-made portfolios
Managing a portfolio funds
Difficulty in selecting a suitable fund scheme
Mutual fund can be classified as follow
Based on their structure :
Open ended funds Investors can buy and sell the nits from the
fund
,at any point of time.
Close ended funds These funds raise money from investors
only
once.Therefore,after te offer period, fresh investments can not
be made into
the fund.
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Based on their investment objective-
Equity funds: These funds invest in equities and equity
related
instruments.Investment in equity funds should be considered for
a period of
at least 3-5 years.It can be further classified as:
1.Index funds
2.Equity diversified funds
3.Dividend yield funds
4.Thematic funds
5.sector funds
6.ELSS
Balanced fund : balanced funds are the ideal mutual funds
vehicle for
investors who prefer spreading their risk scross various
instruments.
1.Debt-oriented funds Inestment below 65% in equities.
2.Equity oriented funds- Invest at least 65% in equities ,
remaning in debt.
Debt fund : They invest only in debt instruments , and are a
good option
for investors averse to idea of taking risk associated with
equities.
1.liquid funds
2.gift funds ST
3.floating rate funds
4.Arbitrage fund
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5.gift funds LT
6.Income funds LT
7.MIPs
8.FMPs
OBJECTIVE OF THE PROPOSED STUDY
To able to understand the technical Know how of Mutual Funds
as
universal appeal in leveraging emerging opportunities.
To be Aware about the behaviour of the customer in
Mutual Funds.
To Guide the customer How to invest in Mutual Funds.
RESEARCH METHODOLOGY
RESEARCH DESIGN:
After research objectives the second stage of research calls for
developing
the most efficient plan to gathering the needed information.
Designing a
research plan includes decisions on data sources, research
approaches, and
research instrument and sampling plan.
DATA COLLECTION TECHNIQUE:
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PRIMARY DATA: Primary data is the data gathered for a specific
purpose
or specific research report. I have collected primary data with
the help of
Questionnaires from the Users (customers) of Reliance Industry,
ICICI bank,
HDFC Bank and Others Private and Nationalized banks.
SECONDARY DATA:
The Secondary Data is the data, which already exits & was
collected for
some other purpose. The secondary data I Have used in my
research report is
basically collected from business magazines,Business
Newspapers,
journals & websites of trade organizations.
RESEARCH APPROACH:
Primary data will be collected in four ways: Observation, Focus
Groups, and
Surveys & Experiments. My approach to the research is survey
based, as it
is best suited to know customer preferences & practices.
ANALYSIS OF DATA:
To know the finding of the research project, an extensive use of
Statistical
techniques as NAV Method, Pie Chat, histogram etc has been
used.
1.On the basis of age of the investors -
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2.Investors invested in different kind of investment
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3.Educational qualification of investors
4.Awareness about Mutual Fu11nd and its operations
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SAMPLE SIZE: ----40
Sample Unit---- Users (Consumer)
SWOT ANALYSIS OF THE MUTUAL FUND
Swot analysis of mutual fund to provide recommendation on
theirperformance growth pretential . It is a powerful tool for
analysis both
complex qualitative ,quantitative facets of an investment
decision.
Our SWOT analysis identifies strenghts and weakness and
relets
them with forward looking opportunities and threats.
SWOT analysis
Strenghts-
Giving the very good return from inception.
Giving the mutual fund exposure.
Weakness
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People is not interested to invest in mutual funds equity
because
risk and trust.
People not detail knowledge about mutual funds.
Not very popular in rural area.
Opportunities
Stability through inceased brand awareness,market penetration
and
service offerings.
Across all categoris of financial services.
Threats
Increasing interest rate scenario.
Execution risk.
Rising inflation could reduce saving and investments.
LIMITION:-
Some of the persons were not so responsive.
Possibility of error in data collection because because many
of
investors may have not given actual answers of my
questionnaire.
The sample size may not adequately represent the whole
market.
Some respondents were reluctant to divulge personal
information
which can affect the vaildity of all responses.
SCOPE OF THE STUDY
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A big boom has been witnessed mutual fund industry in resent
time.A large number of new player have entered the market and
trying to
gain market in this rapidly improving market.
The scope of this project is to know about the Behavior of
the
consumers and to Guide the consumers how to invest in different
securities
of Mutual Funds So they are able to get better return in respect
of their
investment.
CONCLUSION
Running a successful mutual funds requires complete
understanding
of the peculiarities of the Indian stock market and also the
psyche of the
small investors. This study has made an attempt to understand
the financial
behavior of mutual fund. I observed that many of people have
fear of mutual
fund They think their money will not be secure in mutual fund .
They need
the knowledge of mutual fund and its related terms. Many of
people do nothave invested in mutual fund due to lack of awareness
although they money
to invest.As the awareness and income is growing the number of
mutual
fund investors are also growing.
Distribution channels are also important for the investment
in
mutual fund. Financial advisors are the most preferred channel
for the
investment in mutual fund. They can change investores mind from
on
einvestment potion to others. Many of investors directly invest
their money
through AMC because they do not have to pay entry load. Only
those people
invest directly who know well about mutual fund and its
operationa and
those have time.
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SUGGESTIONS ANDRECOMMENDATIONS :--
The most vital problem spotted is of ignorance.Investors should
be
made aware of the benefitis.Nobody will invest until and unless
he is fully
convinced.Investors should be made to realize that ignorance is
no longer
bliss and what they are losing by not investing.
Mutual fund offer a lot of benfit which no other single option
couldoffer.But most of the people are even of what actually a
mutual fund? They
only see it as just another invesment option. So the advisors
should try to
change their mindsets. The advisors should target for more and
young
investors. Young investors as well as persons at the height of
their career
would like to go for advisors due to lack of expertise and
time.
Mutual fund company needs to give the training of the
individual
financial advisors about the fund/ scheme and its objective ,
because they are
the main source to influence the investors.
Before making any investment financial advisors should first
enquireabout the risk tolerance of the investors /customers,
their need and
time. By considering these three things they can take the
customers into
consideration.
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BIBLIOGRAPHY
1. Internet:
www.moneycontrol.com
www.businessstandard.com
www.mutualfundsindia.com
www.amfiindia.com
www.nseindia.com
2. Business News paper, Business Line.
http://www.businessstandard.com/http://www.mutualfundsindia.com/http://www.amfiindia.com/http://www.nseindia.com/http://www.businessstandard.com/http://www.mutualfundsindia.com/http://www.amfiindia.com/http://www.nseindia.com/
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QUESTIONNAIRE
1. Do you know about Mutual Fund?
a. _____ Yes
b. _____ No
2. Your Age:
a. _____ Below 30 yearsb. _____ 30-40 years
c. _____ 40-50 years
d. _____ 50-60 years
e. _____ Above 60 years
3. What percentage of your annual income do you set aside
for savings/investments?
a._____ less than 10%b._____ 10%---20%c._____ 20%---30%d._____
30%---40%e._____ Over -40%
3. How much do You Want to invest?
a. _____ within Rs5000
b. _____ within Rs10000
c. _____ More than above
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5. How do you want to invest in Mutual Fund?
a. _____ One time payment plan
b. _____ SIP(Systematic investment plan)
6. For What Purpose Do you want to invest?
a. _____ For Regular Income
b. _____ For Buying House/Finance& wedding purpose
c. _____ Educate Your Childrens
d. _____ Tax Saving
7. What is the time Horizon for your investment?
a. _____ Short-Term
b. _____ Medium- Long Term
c. _____ Long Term
8. What Channel you will adopt to make in investment?
a. _____ Banking Channel
b. _____ National Distributor Channel
c. _____ Corporate
d. _____ IFA(Individual Financial Advisor)
9. What is the Best basis for Your Investment?
a. _____ Equityb. _____ Debts
c. _____ Partially Equity and Partially Debts
10.Do you think it is safe to make investment directly in Equity
Market
or through Mutual Fund?
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a. _____ Yes
b. _____ No
11.In What Way Do you want to pay Premium?
a. _____Yearly
b. _____Half- yearly
c. _____Quarterly
12.Your Expection on the level of future earning?
a. _____Will Far outpace inflation
b. _____Will be some what ahead of inflation
c. _____Will keep pace of inflation
d. _____May decrease for reason of retirement, recession.etc
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A PROJECT REPORT
ON
Mutual Funds as universal appeal in leveraging
Emerging opportunities.
Submitted in partial fulfillment for
Post graduate diploma in management
Programme of
Batch 2010-12
Submitted by:-
MANDEEP KAUR
PGDM
Batch[2010-2012]
Enrolment No.10037
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DECLARATION
I hereby declare that the work which is being present in this
report
entitled Mutual Funds As a Universal Appeal in leveraging
emerging
opportunities is an auhentic record of my own work carried out
under the
supervision of prof.Taruna Gautam [HOD PGDM] Institute of
management
education.The matter embodied in this report has not been
sudmitted by me
for the award of any other degree.
MANDEEP KAUR
PDM 1st YEAR
(2010-2012)
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ACKNOWLEDGEMENT
The entire journey from the very idea of this project to reality
would
not have possible without the guidance and support of many
experienced
people and I take this opportunity to thanks allof them.
I am deeply indebted to my project guide PROF.TARUNA
GAOTAM[HOD] for their guidance and support that was
indispensable for
the completion of this project.
I would like to thankmy friends for their valuable guidance
andconstant encouragement at every stage from formulation of the
proposal to
drafting of this report.
MANDEEP KAUR
PGDM 1st YEAR2010-2012
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CONTENTS
INTRODUTION. Page 1
OBJECTIVE OF THE PROPOSED STUDY. page 6
RESEARCH METHODOLOGY. Page 6
ANALYSIS OF DATA.. page 7
SWOT ANALYSIS OF THE MUTUAL FUND Page 10
SCOPE OF THE STUDY.. page 12
CONCLUSION page 12
SUGGESTIONS AND RECOMMENDATIONS page 13
BIBLIOGRAPHY page14
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