A PROJECT REPORT

ON

MUTUAL FUND- A TOOL FOR

INCREASING WEALTH

Submitted in partial fulfillment for

MASTER OF BUSINESS ADMIMISTRATION

(AFFILATED BY MAHAMAYA TECHNICAL UNIVERSITY,

NOIDA )

INSTITUTE OF TECHNOLOGY & SCIENCE

GHAZIABAD

Submitted by :- Submitted to :-

TINKU SAINI Prof. ANUSHA AGARWAL

MBA

Batch (2011-2013)

1
 MANAGEMENT DEPARTMENT
DATED: ____________

CERTIFICATE

This is to certify that TINKU SAINI has done his SummerTraining Project on
MUTUAL FUND-A TOOL FOR INCREASING WEALTH in ANAND RATHI Delhi under the
supervision and guidance of his guide and that report embodies the work of candidate himself.

(Prof.ANUSHAAGARWAL)
Internal guide

2
 DECLERATION

I hereby declare that this Project Report entitled THE MUTUAL FUND A TOOL
FOR INCREASING WEALTH is submitted in the partial fulfillment of the
requirement of Master of Business Administration (MBA) of INSTITUTE OF
TECHNOLOGY & SCIENCE, GHAZIABAD is based on primary & secondary data
found by me in various departments, books, magazines and websites & Collected by
me in under guidance of MR. RAJEEV SHUKLA.

DATE: TINKU SAINI

MBA (2011-2013)

3
 ACKNOWLEDGEMENT

"Gratitude is not a thing of expression; it is more matter of feeling."

There is always a sense of gratitude which one express towards others for their help and supervision
in achieving the goals. This formal piece of acknowledgement is an attempt to express the feeling of
gratitude towards people who helpful me in successfully completing of my training.
I would like to express my deep gratitude to MR. TINKU SAINI my training coordinator for their
constant co-operation. He was always there with his competent guidance and valuable suggestion
through out the pursuance of this research project. Special thanks to MR.SANJEEV SHUKLA who
guided me to work honestly and to give valuable suggestion for improving my work Last but not least
I would also like to place of appreciation to all the respondents whose responses were of utmost
importance for the project.
Above all no words can express my feelings to my parents, friends all those persons who supported
me during my project. I am also thankful to all the respondents whose cooperation & support has
helped me a lot in collecting necessary information.
I would also like to thank almighty God for his blessings showered on me during the completion of
project report.

(TINKU SAINI)

4
 PREFACE

Master of Business Administration is a course, which combines both theory and its applications as its
contents of study in the field of management. As part and parcel of this course, every aspirant has to
undergo at least six to eight weeks Industrial Training in an organization.

The purpose of this training is to expose the student of management sciences with real life situations
existing in the organization and to provide an insight into the various functions carried out within the
organization and can visualize things what they have been taught in classrooms.

Education becomes more meaningful when its theoretical aspects are combined with practical
experience.One-can-easily-overcome-the-fear of -joining-organisation-after -the-completion-of the-
course-as-theenvironment-no-longer -remains-align-to-him-and-one-can-easily-fita place-for -
themselves.Actually, it is the life force of management.

I was fortunate enough to do my training in ANAND RATHI. As a complementary to training, every

trainee has to prepare and submit a report on the working of the organization. This report is in
continuation of that tradition. It is an attempt to present an account of practical knowledge and
observations gathered during the training.

ANAND RATHI is one of the Indias leading wealth maximisation Brand that encompass every
sphere of life. In a short span of time, ANAND RATHI has set an example by having a steady and
confident journey to growth and success.

5
 CONTENTS

1. Declaration

2. Acknowledgement

3. Preface

4. Executive Summary

5 INTRODUCTION 9

6. COMPANY PROFILE 13

7. ALL ABOUT MUTUAL FUND 17

8. OBJECTIVES AND SCOPE 77

9. RESEARCH METHODOLOGY 79

10 DATA ANALYSIS & INTERPRETATION 82

11. FINDINGS 102

12. LIMITATION 105

13 SUGGESTION & RECOMMENDATIONS 106

14. CONCLUSION 109

15 BIBLOGRAPHY 111

16. ANNEXURES 112

6
 EXECUTIVE SUMMARY

In few years Mutual Fund has emerged as a tool for ensuring ones financial well

being. Mutual Funds have not only contributed to the India growth story but have also

helped families tap into the success of Indian Industry. As information and awareness is

rising more and more people are enjoying the benefits of investing in mutual funds.

The main reason the number of retail mutual fund investors remains small is that nine

in ten people with incomes in India do not know that mutual funds exist. But once

people are aware of mutual fund investment opportunities, the number who decide to

invest in mutual funds increases to as many as one in five people. The trick for

converting a person with no knowledge of mutual funds to a new Mutual Fund

customer is to understand which of the potential investors are more likely to buy

mutual funds and to use the right arguments in the sales process that customers will

accept as important and relevant to their decision.

This Project gave me a great learning experience and at the same time it gave me

enough scope to implement my analytical ability. The analysis and advice presented in

this Project Report is based on market research on the saving and investment practices

of the investors and preferences of the investors for investment in Mutual Funds. This

Report will help to know about the investors Preferences in Mutual Fund means Are

they prefer any particular Asset Management Company (AMC), Which type of Product

they prefer, Which Option (Growth or Dividend) they prefer or Which Investment

Strategy they follow (Systematic Investment Plan or One time Plan). This Project as a

whole can be divided into two parts.

The first part gives an insight about Mutual Fund and its various aspects, the Company

Profile, Objectives of the study, Research Methodology. One can have a brief

knowledge about Mutual Fund and its basics through the Project.

The second part of the Project consists of data and its analysis collected through survey

done on 200 people. For the collection of Primary data I made a questionnaire and

surveyed of 200 people. I also taken interview of many People those who were coming

at the SBI Branch where I done my Project. I visited other AMCs in Dehradoon to get

some knowledge related to my topic. I studied about the products and strategies of

other AMCs in Dehradoon to know why people prefer to invest in those AMCs. This

Project covers the topic THE MUTUAL FUND A TOOL FOR INCREASING

WEALTH. The data collected has been well organized and presented. I hope the

research findings and conclusion will be of use.

8
Chapter - 1

Introduction

9
INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS

ASPECTS.

Mutual fund is a trust that pools the savings of a number of investors who share a

common financial goal. This pool of money is invested in accordance with a stated

objective. The joint ownership of the fund is thus Mutual, i.e. the fund belongs to all

investors. 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 appreciations realized are shared by its unit holders in

proportion 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. A

Mutual Fund is an investment tool that allows small investors access to a well-

diversified portfolio of equities, bonds and other securities. Each shareholder

participates in the gain or loss of the fund. Units are issued and can be redeemed as

needed. The funds Net Asset value (NAV) is determined each day.

Investments in securities are spread across a wide cross-section of industries and

sectors and thus the risk is reduced. Diversification reduces the risk because all stocks

may not move in the same direction in the same proportion at the same time. Mutual

fund issues units to the investors in accordance with quantum of money invested by

them. Investors of mutual funds are known as unit holders.

10
When an investor subscribes for the units of a mutual fund, he becomes part owner of

the assets of the fund in the same proportion as his contribution amount put up with the

corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual

fund shareholder or a unit holder.

Any change in the value of the investments made into capital market instruments (such

as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme.

NAV is defined as the market value of the Mutual Fund scheme's assets net of its

liabilities. NAV of a scheme is calculated by dividing the market value of scheme's

assets by the total number of units issued to the investors.

ADVANTAGES OF MUTUAL FUND

Portfolio Diversification

Professional management

Reduction / Diversification of Risk

Liquidity

Flexibility & Convenience

Reduction in Transaction cost

Safety of regulated environment

Choice of schemes

Transparency

DISADVANTAGE 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

 12

Chapter 2

Company Profile

13
INTRODUCTION TO ANAND RATHI

ANAND RATHI

AnandRathi is a leading full service securities firm

providing the entire gamut of financial services. The
firm, founded in 1994 by Mr. AnandRathi, today has a
pan India presence as well as an international presence
through offices in Dubai and Bangkok. AR provides a
breadth of financial and advisory services including
wealth management, investment banking, corporate
advisory, brokerage & distribution of equities,
commodities, mutual funds and insurance - all of which
are supported by powerful research teams.
The firm's philosophy is entirely client centric, with a
clear focus on providing long term value addition to
clients, while maintaining the highest standards of
excellence, ethics and professionalism. The entire firm activities are divided across distinct client
groups: Individuals, Private Clients, Corporate and Institutions and was recently ranked by Asia
Money 2006 poll amongst South Asia's top 5 wealth managers for the ultra-rich.

14
ABOUT LOGO

AnandRathi is written in gold lettering with a green

background. It stands for turning your money to gold. Green is
the colour of money and growth. The gold lettering indicates
wealth and prosperity. The font is classy and serious. It gives a
personal feel, a sense of security of your money being in safe hands. The baseline 'behind every
successful investoris understated.'

Thats keeping in line with our philosophy of being client centric. The focus is on client. We just work
behind the scenes to make money for client.

MILESTONES
1994: Started activities in consulting and Institutional equity sales with staff of 15
1995: Set up a research desk and empanelled with major institutional investors
1997: Introduced investment banking businesses Retail brokerage services launched
1999: Lead managed first IPO and executed first M & A deal
2001: Initiated Wealth Management Services
2002: Retail business expansion recommences with ownership model
2003: Wealth Management assets cross Rs1500 crores Insurance broking launched. Launch of
Wealth Management services in Dubai Retail Branch network exceeds 50
2004: Commodities brokerage and real estate services introduced, Wealth Management assets
cross Rs3000 crores, Institutional equities business relaunched and senior research team put in
place. Retail Branch network expands across 100 locations within India.
2005: Real Estate Private Equity Fund Launched, Retail Branch network expands across 200
locations within India.

15
 2006: AR Middle East, WOS acquires membership of Dubai Gold & Commodity Exchange
(DGCX). Ranked amongst South Asia's top 5 wealth managers for the ultra-rich by Asia
Money 2006 poll, Ranked 6th in FY2006 for All India Broker Performance in equity
distribution in the High Net worth Individuals (HNI) Category, Ranked 9th in the Retail
Category having more than 5% market share Completes its presence in all States across the
country with offices at 300+ locations within India
2007: Citigroup Venture Capital International picks up 19.9% equity stake. Retail customer
crosses 200 thousand Establishes presences in over 450 locations.

16
 MUTUAL FUNDS

ALL ABOUT MUTUAL FUNDS

WHAT IS MUTUAL FUND

BY STRUCTURE

BY NATURE

EQUITY FUND

DEBT FUNDS

BY INVESTMENT OBJECTIVE

OTHER SCHEMES

PROS & CONS OF INVESTING IN MUTUAL FUNDS

ADVANTAGES OF INVESTING MUTUAL FUNDS

DISADVANTAGES OF INVESTING MUTUAL FUNDS

MAJOR PLAYERS OF MUTUAL FUNDS IN INDIA

HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

CATEGORIES OF MUTUAL FUNDS

INVESTMENT STRATEGIES

WORKING OF A MUTUAL FUND

 GUIDELINES OF THE SEBI FOR MUTUAL FUND

17

COMPANIES DISTRIBUTION CHANNELS

DOES FUND PERFORMANCE AND RANKING PERSIST?

PORTFOLIO ANALYSIS TOOLS

RESEARCH METHODOLOGY

OBJECTIVE OF RESEARCH

SCOPE OF THE STUDY

DATA SOURCES

SAMPLING

DATA ANALYSIS

ANNEXURES
 18

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. 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

qualities wise as well as quantity wise. Before, the monopoly of the market had seen an

ending phase; the Assets Under Management (AUM) was Rs67 billion. The private

sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till

April 2004; it reached the height if Rs. 1540 billion.

The Mutual Fund Industry is obviously growing at a tremendous space with the mutual

fund industry can be broadly put into four phases according to the development of the

sector. Each phase is briefly described as under.

First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament 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

19

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.At the end of 1993, the

mutual fund industry had assets under management of Rs.47,004 crores.

Third Phase 1993-2003 (Entry of Private Sector Funds)

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. As at the end of January 2003, there were 33

mutual funds with total assets of Rs. 1,21,805 crores.

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 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. consolidation

and growth. As at the end of September, 2004, there were 29 funds, which manage

assets of Rs.153108 crores under 421 schemes.

 21

CATEGORIES OF MUTUAL FUND:

 22

Mutual funds can be classified as follow :

Based on their structure:

 Open-ended funds: Investors can buy and sell the units from the fund, at any point of

time.

Close-ended funds: These funds raise money from investors only once. Therefore,

after the offer period, fresh investments can not be made into the fund. If the fund is

listed on a stocks exchange the units can be traded like stocks (E.g., Morgan Stanley

Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided

liquidity window on a periodic basis such as monthly or weekly. Redemption of units

can be made during specified intervals. Therefore, such funds have relatively low

liquidity.

Based on their investment objective:

Equity funds: These funds invest in equities and equity related instruments. With

fluctuating share prices, such funds show volatile performance, even losses. However,

short term fluctuations in the market, generally smoothens out in the long term, thereby

offering higher returns at relatively lower volatility. At the same time, such funds can

yield great capital appreciation as, historically, equities have outperformed all asset

classes in the long term. Hence, investment in equity funds should be considered for a

period of at least 3-5 years. It can be further classified as:

i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is

tracked. Their portfolio mirrors the benchmark index both in terms of composition

and individual stock weightages.

ii) Equity diversified funds- 100% of the capital is invested in equities spreading

across different sectors and stocks.

iii|) Dividend yield funds- it is similar to the equity diversified funds except that they

invest in companies offering high dividend yields.

iv) Thematic funds- Invest 100% of the assets in sectors which are related through

some theme.

e.g. -An infrastructure fund invests in power, construction, cements sectors etc.

v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector

fund will invest in banking stocks.

vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.

Balanced fund: Their investment portfolio includes both debt and equity. As a result, on
the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal

mutual funds vehicle for investors who prefer spreading their risk across various instruments.

Following are balanced funds classes:

i) Debt-oriented funds -Investment below 65% in equities.

ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

24

Debt fund: They invest only in debt instruments, and are a good option for investors

averse to idea of taking risk associated with equities. Therefore, they invest exclusively

in fixed-income instruments like bonds, debentures, Government of India securities;

and money market instruments such as certificates of deposit (CD), commercial paper
(CP) and call money. Put your money into any of these debt funds depending on your

investment horizon and needs.

i) Liquid funds- These funds invest 100% in money market instruments, a large

portion being invested in call money market.

ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and

T-bills.

iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt

instruments which have variable coupon rate.

iv) Arbitrage fund- They generate income through arbitrage opportunities due to mis-

pricing between cash market and derivatives market. Funds are allocated to equities,

derivatives and money markets. Higher proportion (around 75%) is put in money

markets, in the absence of arbitrage opportunities.

v) Gilt funds LT- They invest 100% of their portfolio in long-term government

securities.

25

vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in

long-term debt papers.

vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an

exposure of 10%-30% to equities.

viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with

that of the fund.

26

INVESTMENT STRATEGY
 1. Systematic Investment Plan: under this a fixed sum is invested each month on a

fixed date of a month. Payment is made through post dated cheques or direct debit

facilities. The investor gets fewer units when the NAV is high and more units when the

NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA)

2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and

give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the

same mutual fund.

3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund

then he can withdraw a fixed amount each month.

27

Mutual Funds
 Before we understand what is mutual fund, its very important to know the area in which
mutual funds works, the basic understanding of stocks and bonds.

Stocks : Stocks represent shares of ownership in a public company. Examples of public companies
include Reliance, ONGC and Infosys. Stocks are considered to be the most common owned
investment traded on the market.

Bonds : Bonds are basically the money which you lend to the government or a company, and in
return you can receive interest on your invested amount, which is back over predetermined amounts
of time. Bonds are considered to be the most common lending investment traded on the market. There
are many other types of investments other than stocks and bonds (including annuities, real estate, and
precious metals), but the majority of mutual funds invest in stocks and/or bonds.

What Is Mutual Fund

A mutual fund is just the connecting bridge or 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 gathered money into specific securities
(stocks or bonds). When you invest in a mutual fund, you are buying units or portions of the mutual
fund and thus on investing becomes a shareholder or unit holder of the fund.

Mutual funds are considered as one of the best available investments as compare to others
they are very cost efficient and also easy to invest in, thus 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. But the biggest advantage to mutual funds is diversification, by minimizing risk &
maximizing returns.

28
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. The flow
chart below describes broadly the working of a mutual fund

29
30
Overview of existing schemes existed in mutual fund category

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position,
risk tolerance and return expectations etc. The table below gives an overview into the existing types
of schemes in the Industry.

31
Type of Mutual Fund Schemes

BY STRUCTURE

Open Ended Schemes

An open-end fund is one that is available for subscription all through the year. These do not have a
fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related
prices. The key feature of open-end schemes is liquidity.

Close Ended Schemes

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15
years. The fund is open for subscription only during a specified period. 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 they 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. SEBI Regulations stipulate that at least one of the two exit routes is
provided to the investor.

Interval Schemes

Interval Schemes are that scheme, which combines the features of open-ended and close-
ended schemes. The units may be traded on the stock exchange or may be open for sale or redemption
during pre-determined intervals at NAV related prices.

32
BY NATURE

Under this the mutual fund is categorized on the basis of Investment Objective. By nature the mutual
fund is categorized as follow:

33
1. Equity fund:

These funds invest a maximum part of their corpus into equities holdings. The structure of the
fund may vary different for different schemes and the fund managers outlook on different stocks. The
Equity Funds are sub-classified depending upon their investment objective, as follows:
Diversified Equity Funds
Mid-Cap Funds
Sector Specific Funds
Tax Savings Funds (ELSS)

Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk-
return matrix.

2. Debt funds:

The objective of these Funds is to invest 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:

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

Income Funds: Invest a major portion into various debt instruments such as bonds, corporate
debentures and Government securities.

MIPs: Invests maximum of their total corpus in debt instruments while they take minimum
exposure 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.

34
 Short Term Plans (STPs): Meant for investment horizon for three to six 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.

Liquid Funds: Also known as Money Market Schemes, These funds provides easy liquidity
and preservation of capital. These schemes invest in short-term instruments like Treasury
Bills, inter-bank call money market, CPs and CDs. 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. Balanced funds: As the name suggest they, 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.

35
Further the mutual funds can be broadly classified on the basis of investment parameter viz,
Each category of funds is backed by an investment philosophy, which is pre-defined in the objectives
of the fund. The investor can align his own investment needs with the funds objective and invest
accordingly.

BY INVESTMENT OBJECTIVE

Growth Schemes: Growth Schemes are also known as equity schemes. The aim of these
schemes is to provide capital appreciation over medium to long term. These schemes normally
invest a major part of their fund in equities and are willing to bear short-term decline in value
for possible future appreciation.

Income Schemes: Income Schemes are also known as debt schemes. The aim of these
schemes is to provide regular and steady income to investors. These schemes generally invest
in fixed income securities such as bonds and corporate debentures. Capital appreciation in
such schemes may be limited.

Balanced Schemes: Balanced Schemes aim to provide both growth and income by
periodically distributing a part of the income and capital gains they earn. These schemes invest
in both shares and fixed income securities, in the proportion indicated in their offer documents
(normally 50:50).

Money Market Schemes: Money Market Schemes aim to provide easy liquidity, preservation
of capital and moderate income. These schemes generally invest in safer, short-term
instruments, such as treasury bills, certificates of deposit, commercial paper and inter-bank
call money.

36
OTHER SCHEMES
 Tax Saving Schemes: Tax-saving schemes offer tax rebates to the investors under tax laws
prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made to any
Equity Linked Savings Scheme (ELSS) are eligible for rebate.
Index Schemes: Index schemes attempt to replicate the performance of a particular index
such as the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only
those stocks that constitute the index. The percentage of each stock to the total holding will be
identical to the stocks index weightage. And hence, the returns from such schemes would be
more or less equivalent to those of the Index.
Sector Specific Schemes: These are the funds/schemes which invest in the securities of only
those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software,
Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are
dependent on the performance of the respective sectors/industries. While these funds may give
higher returns, they are more risky compared to diversified funds. Investors need to keep a
watch on the performance of those sectors/industries and must exit at an appropriate time.

Types of returns:

There are three ways, where the total returns provided by mutual funds can be enjoyed by investors:
Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all
income it receives over the year to fund owners in the form of a distribution.
If the fund sells securities that have increased in price, the fund has a capital gain. Most funds
also pass on these gains to investors in a distribution.
If fund holdings increase in price but are not sold by the fund manager, the fund's shares
increase in price. You can then sell your mutual fund shares for a profit. Funds will also
usually give you a choice either to receive a check for distributions or to reinvest the earnings
and get more shares.

37
Pros & cons of investing in mutual funds:

For investments in mutual fund, one must keep in mind about the Pros and cons of
investments in mutual fund.

Advantages of Investing Mutual Funds:

1. Professional Management - The basic advantage of funds is that, they are professional managed,
by well qualified professional. Investors purchase funds because they do not have the time or the
expertise to manage their own portfolio. A mutual fund is considered to be relatively less expensive
way to make and monitor their investments.

2. Diversification - Purchasing units in a mutual fund instead of buying individual stocks or bonds,
the investors risk is spread out and minimized up to certain extent. The idea behind diversification is
to invest in a large number of assets so that a loss in any particular investment is minimized by gains
in others.

3. Economies of Scale - Mutual fund buy and sell large amounts of securities at a time, thus help to
reducing transaction costs, and help to bring down the average cost of the unit for their investors.

4. Liquidity - Just like an individual stock, mutual fund also allows investors to liquidate their
holdings as and when they want.

5. Simplicity - Investments in mutual fund is considered to be easy, compare to other available

instruments in the market, and the minimum investment is small. Most AMC also have automatic
purchase plans whereby as little as Rs. 2000, where SIP start with just Rs.50 per month basis.

38
Disadvantages of Investing Mutual Funds:

1. Professional Management- Some funds doesnt perform in neither the market, as their
management is not dynamic enough to explore the available opportunity in the market, thus many
investors debate over whether or not the so-called professionals are any better than mutual fund or
investor himself, for picking up stocks.

2. Costs The biggest source of AMC income, is generally from the entry & exit load which they
charge from an investors, at the time of purchase. The mutual fund industries are thus charging extra
cost under layers of jargon.

3. Dilution - Because funds have small holdings across different companies, high returns from a few
investments often don't make much difference on the overall return. Dilution is also the result of a
successful fund getting too big. When money pours into funds that have had strong success, the
manager often has trouble finding a good investment for all the new money.

4. Taxes - when making decisions about your money, fund managers don't consider your personal tax
situation. For example, when a fund manager sells a security, a capital-gain tax is triggered, which
affects how profitable the individual is from the sale. It might have been more advantageous for the
individual to defer the capital gains liability.

39
 MAJOR PLAYERS OF MUTUAL FUND IN INDIA

At present following are the main players in the Mutual Fund Industry:-

1. Unit Trust of India.

2. ABN Amro Mutual Fund.

3. Benchmark Mutual Fund.

4. Birla Sun life Mutual Fund.

5. Can bank Mutual Fund.

6. DBS Chola Mutual Fund.

7. DSP Merrill Lynch Mutual Fund.

8. Deutsche Mutual Fund.

9. Escorts Mutual Fund.

10. Fidelity Mutual Fund.

11. HDFC Mutual Fund.

12. HSBC Mutual Fund.

13. ICICI Prudential Mutual Fund.

14. ING Vysya Mutual Fund.

15. Kotak Mahindra Mutual Fund.

16. LIC Mutual Fund.

17. Lotus India Mutual Fund.

40
18. Optimix Mutual Fund.

19. Principal Mutual Fund.

20. Quantum Mutual Fund.

21. Reliance Mutual Fund.

22. SBI Mutual Fund.

23. Sahara Mutual Fund.

24. Sundaram BNP Paribas Mutual Fund.

25. Tata Mutual Fund.

26. Taurus Mutual Fund.

41
 Guidelines of the SEBI for Mutual Fund Companies
:
To protect the interest of the investors, SEBI formulates policies and regulates the mutual
funds. It notified regulations in 1993 (fully revised in 1996) and issues guidelines from time to
time.
SEBI approved Asset Management Company (AMC) manages the funds by making
investments in various types of securities. Custodian, registered with SEBI, holds the securities
of various schemes of the fund in its custody.
According to SEBI Regulations, two thirds of the directors of Trustee Company or board of
trustees must be independent.
The Association of Mutual Funds in India (AMFI) reassures the investors in units of mutual
funds that the mutual funds function within the strict regulatory framework. Its objective is to
increase public awareness of the mutual fund industry. AMFI also is engaged in upgrading
professional standards and in promoting best industry practices in diverse areas such as
valuation, disclosure, transparency etc.

Documents required (PAN mandatory):

Proof of identity :

1. Photo PAN card

2. In case of non-photo PAN card in addition to copy of PAN card any one of the following:
driving license/passport copy/ voter id/ bank photo pass book.
Proof of address (any of the following ) :latest telephone bill, latest electricity bill, Passport,
latest bank passbook/bank account statement, latest Demat account statement, voter id, driving
license, ration card, rent agreement.

42
Offer document: An offer document is issued when the AMCs make New Fund Offer(NFO).
Its advisable to every investor to ask for the offer document and read it before investing. An
RISK V/S.

RETURN:
 Interpretation:

In the above graph we see that as the risk is increasing return is also increasing. We can say that risk is
directly propotional to the return

Here, we see that in liquid funds, debt fund, balanced fund risk is less so return is also less. While in
index funds, equity funds, sectoral funds risk is high so return is also high
 76

Chapter - 3

Objectives of study
 77

OBJECTIVES OF THE STUDY

1. To find out the Preferences of the investors for Asset Management

Company.

2. To know the Preferences for the portfolios.

3. To find out the most preferred channel.

4. To find out what should do to boost Mutual Fund Industry.

 78

Chapter 4

Research Methodology
 79

RESEARCH METHODOLOGY

This report is based on primary as well secondary data, however primary data

collection was given more importance since it is overhearing factor in attitude studies.

One of the most important users of research methodology is that it helps in identifying

the problem, collecting, analyzing the required information data and providing an

alternative solution to the problem .It also helps in collecting the vital information that

is required by the top management to assist them for the better decision making both

day to day decision and critical ones.

Data sources:

Research is totally based on primary data. Secondary data can be used only for the

reference. Research has been done by primary data collection, and primary data has

been collected by interacting with various people. The secondary data has been

collected through various journals and websites.

Duration of Study:

The study was carried out for a period of two months, from 28th May to 10th July 2012.
 80

Sample size:

The sample size of my project is limited to 200 people only. Out of which only 120

people had invested in Mutual Fund. Other 80 people did not have invested in Mutual

Fund.

Sample design:

Data has been presented with the help of bar graph, pie charts, line graphs etc.
 81

Chapter 5

Data Analysis
&
Interpretation
 82

ANALYSIS & INTERPRETATION OF THE DATA

1. (a) Age distribution of the Investors of Dehradoon

Age Group <= 30 31-35 36-40 41-45 46-50 >50

No. of 12 18 30 24 20 16
Investors

Interpretation:
According to this chart out of 120 Mutual Fund investors of Dehradoon the most are in

the age group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of

41-45yrs i.e. 20% and the least investors are in the age group of below 30 yrs.

(b). Educational Qualification of investors of Dehradoon

Educational Qualification Number of Investors

Graduate/ Post Graduate 88

Under Graduate 25

Others 7

Total 120
Interpretation:
Out of 120 Mutual Fund investors 71% of the investors in Dehradoon are

Graduate/Post Graduate, 23% are Under Graduate and 6% are others (under HSC).

c). Occupation of the investors of Dehradoon

Occupation No. of Investors

Govt. Service 30
Pvt. Service 45
Business 35
Agriculture 4
Others 6

.
Interpretation: In Occupation group out of 120 investors, 38% are Pvt.

Employees, 25% are Businessman, 29% are Govt. Employees, 3% are in

Agriculture and 5% are in others.

(d). Monthly Family Income of the Investors of Dehradoon.

Income Group No. of Investors

<=10,000 5
10,001-15,000 12
15,001-20,000 28
20,001-30,000 43
>30,000 32

Interpretation:

In the Income Group of the investors of Dehradoon, out of 120 investors, 36%

investors that is the maximum investors are in the monthly income group Rs.

20,001 to Rs. 30,000, Second one i.e. 27% investors are in the monthly
income group of more than Rs. 30,000 and the minimum investors i.e. 4%

are in the monthly income group of below Rs. 10,000

(2) Investors invested in different kind of investments.

Kind of Investments No. of Respondents

Saving A/C 195
Fixed deposits 148
Insurance 152
Mutual Fund 120
Post office (NSC) 75
Shares/Debentures 50
Gold/Silver 30
Real Estate 65

Interpretation: From the above graph it can be inferred that out of 200 people,

97.5% people have invested in Saving A/c, 76% in Insurance, 74% in Fixed Deposits,
 60% in Mutual Fund, 37.5% in Post Office, 25% in Shares or Debentures, 15% in

Gold/Silver and 32.5% in Real Estate.

3. Preference of factors while investing

Factors (a) Liquidity (b) Low Risk (c) High Return (d) Trust

No. of 40 60 64 36

Respondents

Interpretation:

Out of 200 People, 32% People prefer to invest where there is High Return, 30% prefer

to invest where there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust
 88

4. Awareness about Mutual Fund and its Operations

Response Yes No
No. of Respondents 135 65

Interpretation:

From the above chart it is inferred that 67% People are aware of Mutual Fund and its

operations and 33% are not aware of Mutual Fund and its operations.
 89

5. Source of information for customers about Mutual Fund

Source of information No. of Respondents

Advertisement 18
Peer Group 25
Bank 30
Financial Advisors 62

Interpretation:

From the above chart it can be inferred that the Financial Advisor is the most

important source of information about Mutual Fund. Out of 135 Respondents, 46%

know about Mutual fund Through Financial Advisor, 22% through Bank, 19%

through Peer Group and 13% through Advertisement.

90

6. Investors invested in Mutual Fund

 Response No. of Respondents
YES 120
NO 80
Total 200

Interpretation:

Out of 200 People, 60% have invested in Mutual Fund and 40% do not have invested

in Mutual Fund.

91

7. Reason for not invested in Mutual Fund

 Reason No. of Respondents

Not Aware 65
Higher Risk 5
Not any Specific Reason 10

Interpretation:

Out of 80 people, who have not invested in Mutual Fund, 81% are not aware of Mutual

Fund, 13% said there is likely to be higher risk and 6% do not have any specific

reason.

92

8. Investors invested in different Assets Management Co. (AMC)

Name of AMC No. of Investors

SBIMF 55
 UTI 75
HDFC 30
Reliance 75
ICICI Prudential 56
Kotak 45
Others 70

Interpretation:

In Dehradoon most of the Investors preferred UTI and Reliance Mutual Fund. Out of

120 Investors 62.5% have invested in each of them, only 46% have invested in SBIMF,

47% in ICICI Prudential, 37.5% in Kotak and 25% in HDFC.

93
9. Reason for invested in SBIMF

Reason No. of Respondents

Associated with SBI 35
Better Return 5
Agents Advice 15

Interpretation:

Out of 55 investors of SBIMF 64% have invested because of its association with

Brand SBI, 27% invested on Agents Advice, 9% invested because of better return.

94

10. Reason for not invested in SBIMF

 Reason No. of Respondents
Not Aware 25
Less Return 18
Agents Advice 22

Interpretation:

Out of 65 people who have not invested in SBIMF, 38% were not aware with SBIMF,

28% do not have invested due to less return and 34% due to Agents Advice.

95

11. Preference of Investors for future investment in Mutual Fund

Name of AMC No. of Investors

SBIMF 76
UTI 45
HDFC 35
 Reliance 82
ICICI Prudential 80
Kotak 60
Others 75

Interpretation:

Out of 120 investors, 68% prefer to invest in Reliance, 67% in ICICI Prudential, 63%

in SBIMF, 62.5% in Others, 50% in Kotak, 37.5% in UTI and 29% in HDFC Mutual

Fund. 96

12. Channel Preferred by the Investors for Mutual Fund Investment

 Channel Financial Advisor Bank AMC
No. of Respondents 72 18 30

Interpretation:

Out of 120 Investors 60% preferred to invest through Financial Advisors, 25% through

AMC and 15% through Bank.

97

13. Mode of Investment Preferred by the Investors

Mode of Investment One time Investment Systematic Investment Plan (SIP)

 No. of Respondents 78 42

Interpretation:

Out of 120 Investors 65% preferred One time Investment and 35 % Preferred through

Systematic Investment Plan.

98

14. Preferred Portfolios by the Investors

Portfolio No. of Investors

Equity 56
Debt 20
 Balanced 44

Interpretation:

From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and 17%

preferred Debt portfolio

99

15. Option for getting Return Preferred by the Investors

Option Dividend Payout Dividend Growth

Reinvestment
No. of Respondents 25 10 85
Interpretation:

From the above graph 71% preferred Growth Option, 21% preferred Dividend Payout

and 8% preferred Dividend Reinvestment Option.

100

16. Preference of Investors whether to invest in Sectoral Funds

Response No. of Respondents

Yes 25
No 95
Interpretation:

Out of 120 investors, 79% investors do not prefer to invest in Sectoral Fund because

there is maximum risk and 21% prefer to invest in Sectoral Fund.

101

Chapter 6
 Findings

102

Findings

Age Group of 36-40 years were more in numbers. The second most Investors were

in the age group of 41-45 years and the least were in the age group of below 30

years.

In Occupation group most of the Investors were Govt. employees, the second most

Investors were Private employees and the least were associated with Agriculture.
 In family Income group, between Rs. 20,001- 30,000 were more in numbers, the

second most were in the Income group of more than Rs.30,000 and the least were in

the group of below Rs. 10,000.

About all the Respondents had a Saving A/c in Bank, 76% Invested in Fixed

Deposits, Only 60% Respondents invested in Mutual fund.

Mostly Respondents preferred High Return while investment, the second most

preferred Low Risk then liquidity and the least preferred Trust.

Only 67% Respondents were aware about Mutual fund and its operations and 33%

were not.

Among 200 Respondents only 60% had invested in Mutual Fund and 40% did not

have invested in Mutual fund.

Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told there is not

any specific reason for not invested in Mutual Fund and 6% told there is likely to be

higher risk in Mutual Fund.

103

Most of the Investors had invested in Reliance or UTI Mutual Fund, ICICI

Prudential has also good Brand Position among investors, SBIMF places after

ICICI Prudential according to the Respondents.

Out of 55 investors of SBIMF 64% have invested due to its association with the

Brand SBI, 27% Invested because of Advisors Advice and 9% due to better return.

Most of the investors who did not invested in SBIMF due to not Aware of SBIMF,

the second most due to Agents advice and rest due to Less Return.
 For Future investment the maximum Respondents preferred Reliance Mutual Fund,

the second most preferred ICICI Prudential, SBIMF has been preferred after them.

60% Investors preferred to Invest through Financial Advisors, 25% through AMC

(means Direct Investment) and 15% through Bank.

65% preferred One Time Investment and 35% preferred SIP out of both type of

Mode of Investment.

The most preferred Portfolio was Equity, the second most was Balance (mixture of

both equity and debt), and the least preferred Portfolio was Debt portfolio.

Maximum Number of Investors Preferred Growth Option for returns, the second

most preferred Dividend Payout and then Dividend Reinvestment.

Most of the Investors did not want to invest in Sectoral Fund, only 21% wanted to

invest in Sectoral Fund.

104

LIMITATION
 Some of the persons were not so responsive.

Possibility of error in data collection because many of investors may have not

given actual answers of my questionnaire.

Some respondents were reluctant to divulge personal information which can

affect the validity of all responses.

105
Suggestion

106
The most vital problem spotted is of ignorance. Investors should be made aware of the benefits. 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 funds offer a lot of benefit which no other single option could offer.

But most of the people are not even aware of what actually a mutual fund is?

They only see it as just another investment option. So the advisors should try

to change their mindsets. The advisors should target for more and more 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 enquire about the

risk tolerance of the investors/customers, their need and time (how long they

want to invest). By considering these three things they can take the customers

into consideration.

Younger people aged under 35 will be a key new customer group into the

future, so making greater efforts with younger customers who show some

interest in investing should pay off.

Customers with graduate level education are easier to sell to and there is a

large untapped market there. To succeed however, advisors must provide sound

advice and high quality.

107
 Systematic Investment Plan (SIP) is one the innovative products launched by

Assets Management companies very recently in the industry. SIP is easy for

monthly salaried person as it provides the facility of do the investment in EMI.

Though most of the prospects and potential investors are not aware about the

SIP. There is a large scope for the companies to tap the salaried persons.

108
Conclusion

109
 Running a successful Mutual Fund 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 investors in connection with the

preferences of Brand (AMC), Products, Channels etc. 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 not have invested in

mutual fund due to lack of awareness although they have money to invest. As the awareness and

Income is growing the number of mutual fund investors are also growing.

Brand plays important role for the investment. People invest in those Companies

where they have faith or they are well known with them. There are many AMCs in

Dehradoon but only some are performing well due to Brand awareness. Some AMCs

are not performing well although some of the schemes of them are giving good return

because of not awareness about Brand. Reliance, UTI, SBIMF, ICICI Prudential etc.

they are well known Brand, they are performing well and their Assets Under

Management is larger than others whose Brand name are not well known like

Principle, Sunderam, etc.

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 investors mind from one investment option 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 operations

110
BIBLIOGRAPHY

WEBSITES

website: WWW.SBIMF.COM

website: WWW.MONEYCONTROL.COM

website: WWW.AMFIINDIA.COM

website: WWW.ONLINERESEARCHONLINE.COM

website: WWW.WIKIPEDIA.ORG

website: WWW.VALUEONLINERESERCH.COM

website: WWW.MUTUALFUNDSINDIA.COM

111
ANNEXURES

112
 QUESTIONNAIRE

A study of preferences of the investors for investment in mutual funds.

1. Personal Details:

(a). Name:-

(b). Add: - Phone:-

(c). Age:-

(d). Qualification:-

Graduation/PG Under Graduate Others

(e).
Occupation. Pl tick ()

Govt. Ser Pvt. Ser Business Agriculture Others

(g). What is your monthly family income approximately? Pl tick ().

Up to Rs. 10,001 to Rs. 15,001 to Rs. 20,001 to Rs. 30,001 and

Rs.10,000 15000 20,000 30,000 above

2. What kind of investments you have made so far? Pl tick (). All applicable.

a. Saving account b. Fixed deposits c. Insurance d. Mutual Fund

e. Post Office-NSC, etc f. Shares/Debentures g. Gold/ Silver h. Real Estate

3. While investing your money, which factor will you prefer?

.
(a) Liquidity (b) Low Risk (c) High Return (d) Trust

4. Are you aware about Mutual Funds and their operations? Pl tick (). Yes No

113

5. If yes, how did you know about Mutual Fund?

 a. Advertisement b. Peer Group c. Banks d. Financial Advisors

6. Have you ever invested in Mutual Fund? Pl tick (). Yes No

7. If not invested in Mutual Fund then why?

(a) Not aware of MF (b) Higher risk (c) Not any specific reason

8. If yes, in which Mutual Fund you have invested? Pl. tick (). All applicable.

a. SBIMF b. UTI c. HDFC d. Reliance e. Kotak f. Other. specify

9. If invested in SBIMF, you do so because (Pl. tick (), all applicable).

a. SBIMF is associated with State Bank of India.

b. They have a record of giving good returns year after year.
c. Agent Advice

10. If NOT invested in SBIMF, you do so because (Pl. tick () all applicable).

a. You are not aware of SBIMF.

b. SBIMF gives less return compared to the others.
c. Agent Advice

11. When you plan to invest your money in asset management co. which AMC will you prefer?

Assets Management Co.

a. SBIMF
b. UTI
c. Reliance
d. HDFC
e. Kotak
f. ICICI

12. Which Channel will you prefer while investing in Mutual Fund?

(a) Financial Advisor (b) Bank (c) AMC

13. When you invest in Mutual Funds which mode of investment will you prefer? Pl. tick ().

a. One Time Investment b. Systematic Investment Plan (SIP)

14. When you want to invest which type of funds would you choose?

a. Having only debt b. Having debt & equity c. Only equity portfolio.
portfolio portfolio.

15. How would you like to receive the returns every year? Pl. tick ().

a. Dividend payout b. Dividend re-investment c. Growth in NAV

16. Instead of general Mutual Funds, would you like to invest in sectorial funds?
Please tick (). Yes No

115