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PROJECT REPORT ON

A STUDY OF CAMPAIGNING, PROMOTING & SELLING


OF MUTUAL FUNDS IN NATIONAL CAPITAL REGION

Submitted in partial fulfillment of the degree of Bachelor of Business


Administrtion of Guru Govind Singh Inderprastha University Delhi

Submitted by:

Name of the student: Anu Yadav

Enrolment no: 0821061807

BBA(B&I) Semester – VI

Ansal Institute of Technology

Gurgaon
Evaluation Certificate

This is to certify that the project titled “The study Campaigning, Promoting &
Selling of Mutual Funds ” submitted by Anu Yadav, a student of BBA (B&I)
program of Ansal Institute of technology, Gurgaon, affiliated to GGSIP University,
Delhi has been examined by the following examiners.

Internal Examiner External Examiner


Project Guide’s Certificate

This is to certify that the project titled “The study Campaigning, Promoting & Selling of
Mutual Funds” submitted by Anu Yadav, a student of BBA (B&I) program of Ansal
Institute of technology, Gurgaon, affiliated to GGSIP University, Delhi is original and
authentic ad has been carried out under my supervision and guidance.

Signature, name & designation of the supervisor


ACKNOWLEDGMENT

I consider it as a great privilege to place a record of my profound gratitude and


indebtedness to my mentor Mr. Navdeep Barwal for his constant attention, invaluable
guidance, and constructive criticism given to me, without which the project would have
not seen the light of the day.

I am thankful to all respondents for giving me their valuable time and genuine
information.

In the end I would like to thank to all my colleagues for giving their support and raising
my confidence in carrying out this project.
CONTENTS
CHAPTER 1 INTRODUCTION
1.1 EXECUTIVE SUMMARY…………………………………
1.2 OBJECTIVE OF THE STUDY…………………………………………...
CHAPTER 2 LITERATURE REVIEW
2.1 INTRODUCTION OF MUTUAL FUND…………………….
2.2 HISTORY OF MUTUAL FUND IN INDIA…………………...
2.3ADVANTAGES OF MUTUAL FUND ……………………
2.4 DISADVANTAGES OF MUTUAL FUND ……………
2.5 CHARACTERISTICS OF MUTUAL FUND……………………
2.6 TYPES OF FUNDS………………………...
2.7 DIFFEERENT METHODS ADOPTED BY AMC TO
TO SELL MUTUAL FUND……………………………………
2.8 METHODS ADOPTED FOR PROMOTION AND
CAMPAIGNING OF MUTUAL FUND……………………..

CHAPTER 3 RESEARCH METHODOLOGY

3.1 RESEARCH DESIGN…………………………….

3.2 DATA COLLECTION METHODS………………………

3.3 SAMPLING PLAN……………………………

CHAPTER 4 DATA ANALYSIS & INTERPRETATION

CHAPTER 5 FINDINGS & CONCLUSIONS

CHAPTER 6 BIBLIOGRAPHY
APPENDIX
CHAPTER ONE

INTRODUCTION
EXECUTIVE SUMMARY

The project covers an over view of the MUTUAL FUND industry. The total corpus
of the AMC industry recently crossed 6 Trillion Rupees. which is around 6% of
current GDP of India. This means that people in India are getting their focus shifted
towards investing in a way which is safe as well as providing returns.
In this report we have discussed about “Sales and Promotion of Mutual Fund in
India” The project also discusses various ways to promote mutual funds and
different ways which are adopted by AMCs to sell mutual fund in India.
OBJECTIVE OF THE STUDY:

The objective of my study is as follows:

• To study the characteristics, needs and importance of Mutual Fund in India.


• To study the various factors which affects the decision of investors while
investing in mutual fund scheme
• To study various methods adopted by AMCs to sell Mutual Fund in India
CHAPTER TWO

LITERATURE REVIEW
INTRODUCTION OF MUTUAL FUND

A mutual fund is simply a financial intermediary that allows a group of investors to


pool their money together with a predetermined investment objective. The mutual
fund will have a fund manager who is responsible for investing the pooled money
into specific securities (usually stocks or bonds). When you invest in a mutual fund,
you are buying shares (or portions) of the mutual fund and become a shareholder of
the fund.
Mutual funds are one of the best investments ever created because they are very cost
efficient and very easy to invest in. By pooling money together in a mutual fund,
investors can purchase stocks or bonds with much lower trading costs than if they
tried to do it on their own.

ACCORDING TO AMFI (ASSOCIATION OF MUTUAL FUND OF


INDIA) :

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 then invested in capital
market instruments such as shares, debentures and other securities. The income
earned through these investments and the capital appreciation realized is shared by
its unit holders in proportion to the number of units owned by them.
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 basket of
securities at a relatively low cost.
History of the Indian Mutual Fund Industry

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 history
of mutual funds in India can be broadly divided into four distinct phases :

First Phase – 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was
set up by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India . In 1978 UTI was de-linked
from the RBI and the Industrial Development Bank of India (IDBI) took over the
regulatory and administrative control in place of RBI. The first scheme launched by
UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets
under management.

Second Phase – 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public
sector banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund
established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of
India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual
fund in June 1989 while GIC had set up its mutual fund in December 1990.
Third Phase – 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund families.
Also, 1993 was the year in which the first Mutual Fund Regulations came into being,
under which all mutual funds, except UTI were to be registered and governed. The
erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first
private sector mutual fund registered in July 1993

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more


comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual
funds setting up funds in India and also the industry has witnessed several mergers
and acquisitions. As at the end of January 2003, there were 33 mutual funds with
total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of
assets under management was way ahead of other mutual funds.

Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit
Trust of India with assets under management of Rs.29,835 crores as at the end of
January 2003, representing broadly, the assets of US 64 scheme, assured return and
certain other schemes. The Specified Undertaking of Unit Trust of India,
functioning under an administrator and under the rules framed by Government of
India and does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It
is registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000
crores of assets under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking
place among different private sector funds, the mutual fund industry has entered its
current phase of consolidation and growth. As at the end of September, 2004, there
were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.
ADVANTAGES OF MUTUAL FUNDS

Following are the advantages of mutual funds:

• LIQUIDITY: Mutual funds are typically very liquid investments. Unless they
have a pre-specified lock-in, your money will be available to you anytime you
want. Typically funds take a couple of days for returning your money to you.
Since they are very well integrated with the banking system, most funds can
send money directly to your banking account.

• DIVERSIFICATION: A good investment practice involves diversifying the


amount in different stocks or bonds. It provides the option to hold a number
of securities and reduce the risk of losing money, which is not subject to the
volatility of a single stock.

• WELL REGUALTED: India mutual funds are regulated by the Securities


and Exchange Board of India, which helps provide comfort to the investors.
Sebi forces transparency on the mutual funds, which helps the investor make
an informed choice. Sebi requires the mutual funds to disclose their
portfolios at least six monthly, which helps you keep track whether the fund
is investing in line with its objectives or not.

• TRANSPARENCY: Regulations for mutual funds have made the industry


very transparent. You can track the investments that have been made on
your behalf and the specific investments made by the mutual fund scheme to
see where your money is going. In addition to this, you get regular
information on the value of your investment.

• EASE OF PROCESS: If you have a bank account and a PAN card, you are
ready to invest in a mutual fund: it is as simple as that! You need to fill in the
application form, attach your PAN (typically for transactions of greater than
Rs 50,000) and sign your cheque and you investment in a fund is made.

DISADVANTAGES OF MUTUAL FUNDS


Following are some of the disadvantages of mutual funds:

• HIGH COSTS & RISKS: Mutual funds require a detailed study of the
investment options as the fee charged by the management firm can be quite
high. Mutual funds are subjected to market risks or asset risks. If the
investment is not sufficiently diversified, it may involve huge losses.

• TAX ISSUES: Although, the returns on investments are quite high, a mutual
fund cannot guarantee lower tax bills. The tax amounts are usually high,
especially in case of short-term gains. Moreover, it is the fund manager who
handles these issues and you cannot dictate terms on the amount of tax to be
paid.

• INVESTOR ISSUES & COMPANY PROFILE :In case of repeated


investments by new entrants, the value of shares owned by current or
existing investor decreases significantly. Also, a mutual fund requires a deep
and long term analysis of the amount of investment and its potential
investment areas. If the company fund managers are changing regularly, it
may adversely affect the returns on your investment. A mutual fund
organization is, however, characterized by frequent changes in jobs and
positions.

CHARACTERISTICS OF MUTUAL FUNDS


1. It belongs to the investors
2. It is managed by investment professionals
3. It is invested in a portfolio of marketable investments
4. The investors share in fund is denominated by unit’s
5. The investment portfolio is created according to the stated investment objective

How mutual funds earn money


A mutual fund is a means of investing that enables individuals to share the risks of
investing with other investors. All contributors to the fund experience an equal
share of gains and losses for each dollar invested. A mutual fund owns the securities
of several corporations. A mutual fund pools money from hundreds and thousands
of investors to construct a portfolio of stocks, bonds, real estate, or other securities,
according to the kind of investments the mutual fund trades. Investors purchase
shares in the mutual fund as if it was an individual security. Fund managers hired
by the mutual fund company are paid to invest the money that the investors have
placed in the fund. Heeding the adage "Don't put all your eggs in one basket" the
holders of mutual fund shares are able to gain the advantage of diversification
which might be beyond their financial means individually.

TYPES OF MUTUAL FUNDS


Mutual funds can be classified into following three categories:

1.BY STRUCTURE:

• Open ended funds: A type of mutual fund that does not have restrictions on
the amount of shares the fund will issue. If demand is high enough, the fund
will continue to issue shares no matter how many investors there are. Open-
end funds also buy back shares when investors wish to sell. The majority of
mutual funds are open-end. By continuously selling and buying back fund
shares, these funds provide investors with a very useful and convenient
investing vehicle.
• Close ended fund: A closed-end fund is a publicly traded investment
company that raises a fixed amount of capital through an initial public
offering (IPO). The fund is then structured, listed and traded like a stock on
a stock exchange.
Also known as a "closed-end investment".The former raises a
prescribed amount of capital only once through an IPO by issuing a fixed
amount of shares, which are purchased by investors in the closed-end fund as
stock. The stock prices of a closed-end fund fluctuate according to market
forces (supply and demand) as well as the changing values of the securities in
the fund's holdings.
• Interval funds: A fund that combines the features of open-ended and closed-
ended schemes, making the fund open for sale or redemption during pre-
determined intervals.

Mutual Fund companies that have launched Interval Funds in India are:

• Birla Sun Life Mutual Fund


• Prudential ICICI Mutual Fund
• ABN-AMRO Mutual Fund
2.BY INVESTMENT OBJECTIVE:

• Growth funds: Most growth funds offer higher potential capital appreciation
but usually at above-average risk. Growth funds are more volatile than funds
in the value and blend categories. The companies in a growth fund portfolio
are in an expansion phase and they are not expected to pay dividends.
Investing in growth funds requires a tolerance for risk and a holding period
with a time horizon of five to 10 years.
• Income funds: A type of mutual fund that emphasizes current income, either
on a monthly or quarterly basis, as opposed to capital appreciation. Such
funds hold a variety of government, municipal and corporate debt
obligations, preferred stock, money market instruments, and dividend-
paying stocks.
• Balance funds: A balanced fund is geared toward investors who are looking
for a mixture of safety, income and modest capital appreciation. The
amounts that such a mutual fund invests into each asset class usually must
remain within a set minimum and maximum.
• Load funds: A mutual fund that comes with a sales charge or commission.
The fund investor pays the load, which goes to compensate a sales
intermediary (broker, financial planner, investment advisor, etc.) for his or
her time and expertise in selecting an appropriate fund for the investor.

3.OTHER SCHEMES:

Tax-saving schemes.
DIFFERENT METHODS OF SALES & PROMOTION
OF MUTUAL FUNDS

A. DIFFERENT METHODS ADOPTED BY VARIOUS


ASSET MANAGEMENT COMPANIES TO SELL THEIR
MUTUAL FUNDS

1. GET IN TOUCH WITH CUSTOMERS


Various AMC directly contact the customers through various database. Then the
AMC convince the client to invest in their mutual fund. Many of the times due to
promotion the customers also contact AMC for investment. Following are the few
banks which use this technique:

• ABN AMRO Mutual Fund ,


• Birla Sun Life Mutual Fund
• Chola Mutual Fund
• Deutsche Mutual Fund
• HDFC Mutual Fund
• HSBC Mutual Fund
• ING Vysya Mutual Fund
• Kotak Mahindra Mutual Fund
• LIC Mutual Fund
• Prudential ICICI Mutual Fund
• Reliance Mutual Fund
• SBI Mutual Fund
• Standard Chartered Mutual Fund
• Tata Mutual Fund
• UTI Mutual Fund

2. ONLINE INVESTMENT
Some mutual fund Web sites allow customers to invest online. However, the
customer must have an account with the banks AMC have partnered with. For
example, Prudential ICICI Mutual Fund allows customers to buy funds online if he
have a banking account with any of the following banks: Centurion Bank, HDFC
Bank , ICICI Bank, IDBI Bank and UTI Bank.

3.THROUGH DISTRIBUTORS
Each AMCs sell its products through various distribution channels. The distributor
in turn gets a variable commission from the AMC.The distributor have a client base
of their own in which they promote the mutual fund. Some of the major distributors
are listed below:
• Indiainfoline Limited
• Sherkhan
• Religare
• Blue Chip India Limited
4 .THROUGH BANKS
Some of the AMCs are sister concern of the bank example Prudential ICICI Mutual
Fund is a sister concern of ICICI BANK. These AMCs aggressively promote their
mutual fund to their client and develop a interest in them to invest in mutual fund in
order to get higher returns.

5. THROUGH ONLINE FINANCE PORTALS


Some of the AMCs sell their Mutual Fund through online trading account example
ICICI Direct sell funds online through online trading account. But the client must
have a trading account with them. Some of the AMCs which sell their product
through online trading accounts are:
HDFC Securities, ICICI Direct, KOTAK Street
METHODS ADOPTED BY AMCs PROMOTION AND
CAMPAIGNING OF MUTUAL FUNDS

1. Through Advertisement
Each AMCs spends a lot of money in order to advertise for its Mutual Fund. The
amount spend is high in case New Fund Offers i.e NFOs. Various mediums of
advertisement use are given below:
• Television
• Radio
• Print Media
• Hoardings

2. Online Blogs:
Various AMC’s promote their product through online blogs. They advertise their
product on various online sites.

3. Telephonic Calls:
Almost all the distributors promote the Mutual Fund with the help of telephone.
They have the phone numbers of existing clients and potential clients. A trained
person makes a call to the clients and promotes the Mutual Fund.

4. By Providing More Commission to Distributors:


The distributor gets a variable commission from the AMC when they sell their
Mutual Fund. The commission varies from 0.5% to 5%. Thus by providing more
commission to the distributor, the AMCs influence the distributor to promote their
products only.
5. By Putting Canopies: This method is adopted by both distributor and AMCs
in order to campaign for the product. They put canopy at a place where they could
interact with maximum number of probable clients.
CHAPTER THREE

RESEARCH METHODOLOGY
RESEARCH DESIGN & METHODOLOGY

A. RESEARCH PROBLEM: -

“Campaigning, Promoting & Selling of Mutual Funds with special reference to


National Capital Region”

B. RESEARCH DESIGN: -

DESCRIPTIVE RESEARCH

Blend of Descriptive method has been used in this research for the collection of data.
As the research is related to the study of consumer satisfaction, which can more
effectively be studied through direct questions, personal interview and informal
talks- experimental research will not much effective. Also, considering the time
constraints, descriptive research leading to conclusive result is the most suitable
design for this research as it is related to why anything happening. It checks the
behavior features of a customer.

C. DATA COLLECTION METHOD: -

• PRIMARY DATA:-Questionnaire Method

The data has been collected through questionnaire method. The questionnaire was
designed in such a way to cover as many aspects of consumer behavior as possible.
Many questions have been asked in it for feedback from customers. In it both
opened ended questions and close ended questions have been asked for study.
• SECONDARY DATA

Under this data is taken from the internet. All the data related to its profile, mission
and capital structure is taken. Even data related to this study is also taken from the
book which is sent to bank’s manager annually and also quarterly related to its
management, mission and many other things.

SAMPLE DESIGN: - RANDOM SAMPLING

SAMPLE SIZE: - 10

SAMPLE UNIT: - INDIVIDUAL

GEOGRAPHICAL LOCATION: - NCR


CHAPTER FOUR

FINDINGS AND CONCLUSIONS


CONCLUSION

• Saving is an integral part of every individual.


• Mutual Fund industry is growing at a brisk pace.
• But there are some hurdles which the industry has to overcome. The biggest
hurdle is to change the mind set of people.
• The investors looks for four basic things, they are – growth of funds invested,
liquidity, tax benefits, and safety.
• Mutual funds satisfies all the above investors needs.
• A lot of skills are required to convince a person in order to invest in Mutual
Fund.
• Past return is the most important factor considered by the investors while
investing in the mutual fund scheme.
• Pass back plays an important role for well know how customers in choosing
the distributor for buying any mutual fund. Pass back is the amount which
the distributor gives to the customer from the commission which a
distributor gets from the AMCs.
• The future of Indian mutual fund market depends to the large extent on the
various initiatives taken and the policies framed by the govt and the
regulators towards the development of this market, but one thing is sure that
in future mutual funds are here to stay, sustain and grow.
FINDINGS

• The Indian investor is highly risk averse.


• He looks for safety and reasonable returns.
• He understands more by emotions and sentiments than by a quantitative
comparison.
• The typical Indian investor looks for the safety of funds, reasonable
returns and liquidity.
• He will be happy if assured a rate of reasonable return on his investment.
They don’t have the right knowledge of market i.e., entry & exit time.
• They don’t have the latest information & technical expertise of timing
the market.
• They need to be educated regarding various investment avenues
available to them &the risk & returns associated with them.
RECOMMENDATIONS

• Expansion of the market for various investment instruments is needed.


• Create awareness among investors regarding the benefits of investing in
mutual fund.
• The commission which the distributor gets from AMCs is variable and may
even vary from different Mutual Funds of same AMCs. SEBI (Security
Exchange Board of India) should make guidelines in fixing or setting the
limits of commission.
• There should be transparency in case of commission between AMC and
distributor.
• Majority of the customers are unaware of the pass back option. The
distributor should give a fixed pass back to each client who invest more than
2 lakhs rupees.
• Small cities should be targeted for the awareness programmes &
promotional activities.
• Today’s investors need technical advice from experts, timely delivery of
documents cheques etc.
• The AMC,s should be positioned as financial advisors ¬ mere as investment
companies.
.

CHAPTER FIVE

BIBLIOGRAPHY
BIBLIOGRAPHY

www.google.com
www.buzzle.com
www.mutualfundsresource.com
www.financialsolutions.com
www.investopedia.com
www.indiastudychannel.com
http://www.scribd.com/doc/17093549/FACTORS-AFFECTING-INVESTORS-
PREFERENCE-FOR-MUTUAL-FUNDS-IN-INDIA