SUMMER INTERNSHIP PROGRAMME

ON

“MUTUAL FUND AS AN INVESTMENT INSTRUMENT”

Submitted in partial fulfillment for

MASTER IN BUSINESS ADMINISTRATION(MBA)

Program of
Regional College of Management
Chandrasekharpur
Bhubaneswar

Prepared by

DEEPAK KUMAR PARIJA

Roll.no- 1606247024

Date- 29:08:2017

Supervised by:
Internal Guide: External Guide:

Dr. SANJUKTA MISHRA MR. ANUP KUMAR MISHRA

0
 Acknowledgement
Ii is my pleasure to be indebted to various people, who directly or indirectly
contributed in the development of this work and who influenced my thinking,
behavior, and act during the course of study.

I express my sincere gratitude to MR.ANUP KUMAR MISHRA(Regional

Distribution Head)worthy principal for providing me an opportunity to undergo
summer training at KARVY STOCK BROKING LIMITED.

I am thankful to Mr. ANUP KUMAR MISHRA(Regional Distribution Head) for

this support , cooperation and motivation provided to me during the training for
constant inspiration , presence and blessings .

Lastly , I would like to thank the almighty and my parents for their moral
support and my friends with whom I shared my day to day experience and
received lots of suggestions that improved my quality of work .

Internal Guide

Dr. SANJUKTA MISHRA

Date: DEEPAK KUMAR PARIJA

1
 Certificate

This is to certify that , the project report on ‘MUTUAL FUND AS

AN INVESTMENT INSTRUMENT’ in KARVY BROKING
LIMITED submitted by DEEPAK KUMAR PARIJA for partial
fulfillment of the requirements for the degree of MBA(MASTER IN
BUSINESS ADMINISTRATION)in RCM(REGIONAL COLLEGE
OF MANAGEMENT).

The student has worked under my direct supervision and guidance

and that,no part of the project report has been submitted for the
award of any other Degree, Diploma, fellowship other similar titles
or prizes and that the work has not been published in any journal or
magazine.

I WISH HIS ALL SUCCESS IN FUTTURE END.

EXTERNAL GUIDE:
(Mr. ANUP KUMAR MISHRA)
Regional Distribution Head
KARVY STOCK BROKING LIMITED

2
 DECLARATION

I hereby declare that this Project Report entitled “MUTUAL FUND

AS AN INVESTMENT INSTRUMENT” in the partial fulfillment
of the requirement of MBA(MASTER IN BUSINESS
ADMINISTRATION) of the REGIONAL COLLEGE OF
MANAGEMENT ( RCM) ,BHUBANESWAR is based on primary &
secondary data found by me in various department books , magazines
and websites & collected by me in under guidance of
MR. ANUP KUMAR MISHRA, Regional Distribution Head

DATE: DEEPAK KUMAR PARIJA

3
 CONTENT

1 EXECUTIVE SUMMERY 5

2 OBJECTIVE OF STUDY 6

3 COMPANY PROFILE 8

4 PROMOTERS AND MANAGEMENT TEAM 10

OF KARVY

5 MIUTUAL FUND 19

6 ADVANTAGES AND 19
DISADVANTAGES OF MUTUAL
FUND
7 TYPES OF MUTUAL FUND 21

8 MARKETING STRATEGIES FOR 29

MUTUAL FUND
9 SELECTION PARAMETERS FOR 30
MUTUAL FUND
10 HISTORY OF MUTUAL FUND 33
INDUSTRY

11 RESEARCH METHODOLOGY 39

12 QUESTIONARE 47

13 FINDINGS 49

14 CONCLUSION 50

15 RECOMMENDATION 51

16 LIMITATION OF THE STUDY 52

17 GLOSARY 53

18 BIBILOGRAPHY 54

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 Executive Summary

In few years mutual fund has emerged as a tool for ensuring onesfinancial
wellbeing. Mutual funds have notonly contributed to the India growth story but
have also helped families tap into the success of Indian industry. As information
andawareness is rising more and more people are enjoying the benefits of investing
the 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 Fund exists. But
once people are aware of mutual fund investment opportunities, the number of who
decided to invest in mutual fund increases 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 understandwhich 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.

The project gave me a great learning experience and at same time it gave me
enough scope to implement my analytical ability. The analysis and advice
presented in this project is based on market research on the saving and investment
practices of the investor and preference of the investor for investment in Mutual
Funds. This report will help to know about the investors Preference 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).This Project
as a whole can sbe divided into two parts.

The First part gives an insight about Mutual Fund and its various aspects, the
company profile ,Objective of the study ,Research methodology . One can have a
brief knowledge about Mutual Fund and its basics through the project.

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 OBJECTIVE:
 To give a brief idea about the benefits available from Mutual Fund
investment.
 To study some of the mutual fund schemes.
 To study Mutual Fund Distribution Channels.
 To study Marketing strategies of Mutual Funds.

 Explore the recent developments in the mutual funds in India.

 To understand client view point on mutual fund as an investment
instrument.

6
Company
profile

7
COMPANY PROFILE

K- Krishna Prasad
A- Arun
R- Radha Krishna
V- Venkat Krishna
Y- Yogendar

Karvy is a premier integrated financial service provider, and ranked among the top
five in the country in all its business segments, service over 16 million individual
investor in various capacities.

At karvyvalue , we help you realize your financial dreams come true . We provide
a platform for you to invest in a range of financial product such as mutual funds,
fixed deposits, NCDs, Tax free bonds and many more. We stand out from the rest
of the industry on account of the way we put your invest in top of everything else.

8
KARVY STORY:

One fateful evening in the summer of 1982, 5 young men who worked
for a renowned chartered accountancy firm decided that it was time they
struck out on their own to create an enterprise that would someday
become an iconic name in the financial services space.
They came from ordinary middle class backgrounds. They had two
assets; one was their education and the other an unquenchable desire to
succeed. They had a lot stacked against them: the environment was not
conducive to entrepreneurship; technology was not fully supportive,
financial markets were largely unregulated; they were based out of
Hyderabad while most key players in the financial world were in Mumbai or
other metros and the wolf was at the door. The odds seemed
insurmountable.
These remarkable young men’s “Never say die” approach held them in
good stead over the years. They stuck to their dreams, burnt the midnight
oil, embraced technology and made it work for them and through sheer
dint of determination, eventually overcame all obstacles.
First came the registry business, followed by broking, and the rest
became a lesson for every young individual to emulate.

9
PROMOTERS & MANAGEMENT TEAM
Mr. C. Parthasarathy
Chairman & Managing Director

Mr. C. Parthasarathy is the Chairman and Managing Director of the diversified

financial services Karvy group. C Parthasarathy (CP as he is better known in the
Industry), has the uncanny knack of staying ahead of the curve and the foresight to
spot opportunities that seem invisible on the horizon for the others. Karvy’s entire
history is a case study of turning adversity into opportunity. CP is a chartered
accountant by qualification, whose entrepreneurial energy drove him to co-found
Karvy in 1983 with a less-than-modest capital of Rs 150,000.
Over the years CP’s vision and leadership skills have helped the group navigate
through the turbulent times with a strong sense of purpose and clarity of thought.
CP is one of the pioneers of financial inclusion. Under his leadership Karvy has
won numerous industry awards and accolades. He also is an independent Director
in many listed companies.

Mr. M. Yugandhar
Managing Director

Mr. M Yugandhar, Managing Director is a founder member of the KARVY Group.

He is a Fellow Member of the Institute of Chartered Accountants of India and has
varied experience in the field of financial services spanning over 30 odd years.
Yugandhar has helped position and build a strong brand for the group in the

10
registry and other financial services businesses. The registry business of Karvy is
one of its flagship businesses and with the collaboration with Computershare has
grown to become the largest registrar in India for over two decades. Yugandhar has
played a key role in building strong relationships with public sector banks and
other PSUs which has helped Karvywin some important mandates from some of
India’s renowned companies.
Karvy under his guidance has helped create the equity cult and substantially built
retail investor wealth. He is an Independent Director on the board of several
reputed companies.

Mr. M. S. Ramakrishna
Director

Mr. M S Ramakrishna, Director, founder member of KARVY GROUP, he is the

orchestrator of technology initiatives such as the call center in the service of the
customer.
Mr. Ramakrishna was a member of the Hyderabad Stock Exchange and has more
than 30 years of experience in the financial services arena. He has helped KARVY
diversify into the field of medical transcription leveraging on the company's core
competency of transaction processing.
He is an Independent Director on the board of several reputed companies.

11
MANAGEMENT TEAM:
Mr. V.Mahesh
Managing Director – Karvy Data Management

Mr. V Mahesh, is the Managing Director of Karvy Data Management and has work
experience spanning over 2 decades with in depth exposure to operations on most
financial services businesses. Commencing his professional stint with the Registry
business where he has to his credit managing over 300 IPOs and other forms of
offerings, he was amongst the first few to work closely on the Book Building
process initiated by SEBI in 1995. After initially working with MCS as an
Assistant Vice President, he moved to Karvy. He was also responsible to initiate
the process of setting up the Depository participant business in Karvy and was
responsible for both the operations and the marketing of the business. He has been
nominated by the NSDL to various committees which addressed key changes to the
overall processes and policies for the Demat business.
Nurturing the passion for understanding and interpreting technology and processes,
he was responsible to create and set up the centralized broking platform,
centralized back office operations for all financial products and creating a network
of over 500 branches covering over 300 locations for Karvy. He is also
instrumental in creating and launching the Online platform of Karvy Stock Broking
Limited.
He is a Post Graduate in Commerce from University of Madras (M.Com). and also
completed Post Graduate Diploma in Computer Applications.

12
Mr. V. Ganesh
CEO – Karvy Computershare

Mr. V Ganesh is a Chartered and Cost Accountant by profession and has over 2.5
decades of experience in the financial services space and is part of Karvy Group’s
leadership team. Before joining KARVY, he was associated with ITC’s risk
management and financial audit services department. Earlier he was associated
with Proctor and Gamble and was responsible for product pricing and financial
support functions for P&G’s soaps and health care businesses.
He was instrumental in setting up the Mutual Fund registry business for Karvy. At
KARVY, for over 2 decades, Ganesh has been instrumental in building a strong
techno-commercial base with emphasis on establishing a pan India branch
network, back office processing, call center, web initiatives, online trading, B2B
interfaces etc., in the transfer agency and BPO businesses.

Mr. SushilSinha
Wholetime Director - KarvyComtrade

Mr. SushilSinha, the Country Head of KarvyComtrade Ltd, has successfully made
KarvyComtrade a force to reckon with in the marketplace. With over 10 years of
expertise in the broking sector, he is a well-known face today in the electronic and
print media. Under his aegis, the company has won numerous honours and awards
nationwide, including the UTV Bloomberg Leadership Award 2011 and India’s
Best Market Analyst Award—for two consecutive years—by Zee Business.

13
Having joined KarvyComtrade in December 2005 as Senior Manager (Business
Development), he has steadily climbed up the organizational ladder to head the
business now. Before joining KCTL, he worked in Geojit Financial Securities for
two years. Prior to that, he had worked with the Agriculture department in the
Government of Jharkhand under various capacities for four years.
A science graduate, Mr. Sinha has completed two MBAs, one majoring in
Personnel Management & Industrial Relations from Patna University and the other
in Agri Business Management from IIPM, Bangalore, a Ministry of Commerce,
Government of India institution.

Mr. P. B. Ramapriyan
Vice President & Head - Financial Product Distribution

Mr. Ramapriyan is working with Karvy for over 2 decades, He has strength of sorts
in the distribution of Financial products including Equity, Bonds, Fixed Deposits
and Auto Finance. He has successfully marketed several financial products for
large number of corporate of various sizes. He is also responsible for managing the
Pan India Network of brokers and sub-brokers. He has been instrumental in
Karvy’s success in distribution of debt products.

Mr. Rajiv R. Singh

Vice President & Business Head - Karvy Stock Broking Limited

14
Mr. Rajiv R. Singh is the Vice President & Business Head of the Equity Broking
business. He has been associated with Karvy for more than a decade. He joined
Karvy in 2001 and moved up the corporate ladder with his sheer dedication,
commitment and hard work.

Rajiv, with an enormous experience in finance industry leads the responsibility of

all aspects of Karvy’s equity broking business which includes strategy, revenue
generation, business development and overall customer satisfaction. Rajiv is
widely regarded as a results-driven leader who plays a key role in building the
stock broking business of KSBL and make it one of the largest stock broking
houses in the country. Rajiv also plays a key role in identifying skills and
motivating staff in providing outstanding client service.

Rajiv is a Certified Management Accountant–CMA.

Mr. J. Ramaswamy
Group Head - Corporate Affairs

Mr. Ramaswamy, the Group Head for Corporate Affairs, is the official
spokesperson for the Karvy Group. Mr. Ramaswamy has more than 25 years of
experience in various spheres of the financial services industry, of which 10 years
has been in the Legal and Secretarial division of Reliance, handling various public
issues, mergers, monitoring performance of various departments, liaising with
regulatory bodies and outside agencies (viz., the stock exchange, SEBI, DCA and
others), and coordinating all the board meetings.
The Corporate Affairs Division is involved in integration and strategic planning of
all the business divisions of Karvy. Mr. Ramaswamy’s job responsibility
encompasses monitoring the performance of all divisions through regular reviews,
initiating and implementing new business initiatives, corporate communication and
media relations, acting as official spokesperson for the entire Group,
conceptualizing various policies and procedures to improve the internal work
environment, and working on a parallel platform with the HR department to
15
develop models for raising productivity and cost-effectiveness. He oversees the
international business of Karvy Global Services.

Mr. Deepak Gupta

Group Head - HR

Mr. Deepak Gupta brings with him over 20 years of experience in HR, spanning
financial services, ITes and manufacturing. Prior to joining Karvy, he was Chief
People Officer, Human Resources, with Bajaj Finance Limited, a Rahul Bajaj
Group Company, based at Pune. He has also had a successful career with a few
prominent corporate, including SREI, Enam, CRISIL, CEAT Financial Services
and Reliance Industries.
Deepak holds a Master’s degree in Human Resources Development from Jamnalal
Bajaj Institute of Management and a diploma in Business Management and
Industrial Relations.

Mr. G. Krishna Hari

Group Head - Finance

Mr. G. Krishna Hari holds a Bachelors degree in Commerce and is associate

member of the Institute of Chartered Accountants of India (ICAI). He has over 27
years of experience in the areas of finance and accounts functions encompassing
fund raising, financial reporting, management accounting, working capital
management, taxation, budgeting and forecasting and financial due diligence
reviews for mergers & acquisitions and investment proposals.
He has been associated with the Karvy Group for the past 15 years and is currently
designated as the Vice President- Finance & Accounts at Karvy Stock Broking

16
Limited. Prior to joining Karvy, he was the head of finance & accounts division in
Asia Pacific Investment Trust Limited, Hyderabad (Formerly Nagarjuna
Investment Trust Limited) an NBFC Company.

WHO WE ARE:
The KarvyGroup is today a well diversified conglomerate. Its businesses straddle
the entire financial services spectrum as well as data processing and managing
segments. Since most of its financial services were retail focused, the need to build
scale and skill in the transaction processing domain became imperative. Also
during stressed environment in the financial services segment, the non financial
businesses bring in a lot of stability to the group’s businesses.
Karvy’s financial services business is ranked among the top-5 in the country across
its business segments. The Group services over 70 million individual investors in
various capacities, and provides investor services to over 600 corporate houses,
comprising the best of Corporate India.
The Group offers stock broking, depository participant, distribution of financial
products (including mutual funds, bonds and fixed deposits), commodities
broking, personal finance advisory services, merchant banking & corporate
finance, wealth management, NBFC (loans to individuals, micro and small
businesses), Data management, Forex& currencies, Registrar & Transfer agents,
Data Analytics, Market Research among others.
Karvy prides itself on remaining customer centric as all times through a
combination of leading edge technology, Professional management and a wide
network of offices across India.
Karvy is committed to its quest as an Equal Opportunity Employer and believes in
the rights for differently-abled persons. We have over 12% employees who are
challenged in some form in one of our prominent businesses.

17
Mutual Fund

18
 MUTUAL FUND
Mutual Fund- A Mutual Fund is a professionally managed investment scheme ,
usually run by asset management company that brings together a group of people
and invest their money in Stocks, Bonds and other securities.

Objective of Mutual Fund- There are many different types of mutual fund ,each
with its own set of goals . The investment objective is the goal that the fund
manager sets for the mutual fund when deciding which stocks and bonds should be
in the fund’s portfolio.

Advantages of Mutual Fund:

 Portfolio Diversification
 Professional Management
 Reduction /Diversification
 Liquidity
 Flexibility & Convenience
 Reduction in Transaction Cost
 Safety or regulated environment
 Choice of schemes
 Transparency

Disadvantage of Mutual Fund:

 No control over cost in the Hands of an Investor.
 No tailors-made portfolios.
 Managing a portfolio Funds.
 Difficulty in selecting a suitable Fund Schemes.

TOP 10 MUTUAL FUNDS

19
 1. Franklin Opportunities Fund
2. Kotak Select Focus Fund
3. SBI Blue Chip Fund
4. Birla Sun Life Top 100 Fund
5. Birla Sun Life Frontline Equity Fund
6. BNP Paribas Equity Fund
7. Franklin India Blue Chip Fund
8. IDBI India Top 100 Equity Fund
9. JP Morgan India Equity Fund
10.Religare Invesco Business Leaders Fund

Why Select Mutual Fund?

The risk return trade-off indicates that if investor is willing to take higher
risk then correspondingly he can expect higher returns and vise versa if he pertains
to lower risk instruments, which would be satisfied by lower returns. For example,
if an investors opt for bank FD, which provide moderate return with minimal risk.
But as he moves ahead to invest in capital protected funds and the profit-bonds that
give out more return which is slightly higher as compared to the bank deposits but
the risk involved also increases in the same proportion.
Thus investors choose mutual funds as their primary means of investing, as
Mutual funds provide professional management, diversification, convenience and
liquidity. That doesn’t mean mutual fund investments risk free.
This is because the money that is pooled in are not invested only in debts
funds which are less riskier but are also invested in the stock markets which
involves a higher risk but can expect higher returns. Hedge fund involves a very

20
high risk since it is mostly traded in the derivatives market which is considered
very volatile.

RETURN RISK MATRIX

HIGHIER RISK HIGHER RISK

MODERATE RETURNS HIGHIER RETURNS

Venture Capital
Equity

Bank FD Mutual Funds

Postal Savings

LOWER RISK LOWER RISK

LOWER RETURNS HIGIER RETURNS

21
Different types of Mutual Fund:

22
What is a Systematic Investment Plan?
A Systematic Investment Plan or SIP is a smart and hassle free mode for investing
money in mutual funds. SIP allows you to invest a certain pre-determined amount
at a regular interval (weekly, monthly, quarterly, etc.). A SIP is a planned approach
towards investments and helps you inculcate the habit of saving and building
wealth for the future.

How does it work?

A SIP is a flexible and easy investment plan. Your money is auto-debited from your
bank account and invested into a specific mutual fund scheme. You are allocated
certain number of units based on the ongoing market rate (called NAV or net asset
value) for the day.
Every time you invest money, additional units of the scheme are purchased at the
market rate and added to your account. Hence, units are bought at different rates
and investors benefit from Rupee-Cost Averaging and the Power of Compounding.

23
Rupee-Cost averaging

With volatile markets, most investors remain skeptical about the best time to invest
and try to 'time' their entry into the market. Rupee-cost averaging allows you to opt
out of the guessing game. Since you are a regular investor, your money fetches
more units when the price is low and lesser when the price is high. During
volatile period, it may allow you to achieve a lower average cost per unit.

Power of Compounding

Albert Einstein once said, "Compound interest is the eighth wonder of the world.
He who understands it, earns it... he who doesn't... pays it." The rule for
compounding is simple - the sooner you start investing, the more time your money
has to grow.

Example
If you started investing Rs.10000 a month on your 40th birthday, in 20 years’ time
you would have put aside Rs.24 lakhs. If that investment grew by an average of 7%
a year, it would be worth Rs.52.4 lakhs when you reach 60.

However, if you started investing 10 years earlier, your Rs.10000 each month
would add up to Rs.36 lakh over 30 years. Assuming the same average annual
growth of 7%, you would have Rs.1.22 Cr on your 60th birthday - more than
double the amount you would have received if you had started ten years later!

Other Benefits of Systematic Investment Plans

· Disciplined Saving - Discipline is the key to successful investments. When
you invest through SIP, you commit yourself to save regularly. Every investment is
a step towards attaining your financial objectives.

· Flexibility - While it is advisable to continue SIP investments with a long-term

perspective, there is no compulsion. Investors can discontinue the plan at any time.
One can also increase/ decrease the amount being invested.

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· Long-Term Gains - Due to rupee-cost averaging and
the power of compounding SIPs have the potential to deliver attractive returns over
a long investment horizon.

· Convenience - SIP is a hassle-free mode of investment. You can issue a

standing instruction to your bank to facilitate auto-debits from your bank account.

SIPs have proved to be an ideal mode of investment for retail investors who do not
have the resources to pursue active investments.

Definition of Lumpsum:

Definition: A lump sum amount is defined as a single complete sum of money. A

lump sum investment is of the entire amount at one go.

For example: if an investor is willing to invest the entire amount available with
him in a mutual fund, it will refer to as lump sum mutual fund investment.

Description: Lump sum investment is considered as one way of investing into

mutual funds. The other method being that of systematic investment plan,
popularly known as SIP. Usually lump sum investments are undertaken by big
players and investors, in stocks especially those related to assets that are likely to
appreciate in the long term, making the investment profitable except in cases of
high volatility.

STP- Systematic Transfer Planwhere by an investor is able to invest

lumpsumamount in a scheme and regularly transfer a fixed or variable amount to
another scheme.

25
SWP: Systematic Withdrawal Plan is a service offered by mutual fund that
provides a specific payout amount to the shareholders at predetermined intervals,
generally monthly, quarterly, semiannually or annually.

NAV- Net Asset Value is the sum total of the market value of all the shares held
in the portfolio including cash ,less the liabilities, divided by the total number of
units outstanding.
NAV- Asset- Debts
No of Outstanding Units

(a) On the basis of Objective:

Equity Funds/ Growth Funds

Funds that invest in equity shares are called equity funds. They carry the principal
objective of capital appreciation of the investment over the medium to long-term.
The returns in such funds are volatile since they are directly linked to the stock
markets. They are best suited for investors who are seeking capital appreciation.
There are different types of equity funds such as Diversified funds, Sector specific
funds and Index based funds.

Diversified funds:
These funds invest in companies spread across sectors. These funds are generally
meant for risk-taking investors who are not bullish about any particular sector.

Sector funds:
These funds invest primarily in equity shares of companies in a particular business
sector or industry.These funds are targeted at investors who are extremely bullish
about a particular sector.

Index funds:
These funds invest in the same pattern as popular market indices like S&P 500 and
BSE Index. The value of the index fund varies in proportion to the benchmark
index. 23

Tax Saving Funds:

These funds offer tax benefits to investors under the Income Tax Act. Opportunities
provided under this scheme are in the form of tax rebates U/s 88 as well saving in

26
Capital Gains U/s 54EA and 54EB. They are best suited for investors seeking tax
concessions.

Debt / Income Funds:

These Funds invest predominantly in high-rated fixed-income-bearing instruments
like bonds, debentures, government securities, commercial paper and other money
market instruments. They are best suited for the medium to long-term investors
who are averse to risk and seek capital preservation. They provide regular income
and safety to the investor.

Liquid Funds / Money Market Funds:

These funds invest in highly liquid money market instruments. The period of
investment could be as short as a day. They provide easy liquidity. They have
emerged as an alternative for savings and short-term fixed deposit accounts with
comparatively higher returns. These funds are ideal for Corporates, institutional
investors and business houses who invest their funds for very short periods.

Gilt Funds:
These funds invest in Central and State Government securities. Since they are
Governmentbacked bonds they give a secured return and also ensure safety of the
principal amount. They are best suited for the medium to long-term investors who
are averse to risk.

Balanced Funds
These funds invest both in equity shares and fixed-income-bearing instruments
(debt) in some proportion. They provide a steady return and reduce the volatility of
the fund while providing some upside for capital appreciation. They are ideal for
medium- to long-term investors willing to take moderate risks.

Hedge Funds
These funds adopt highly speculative trading strategies. They hedge risks in order
to increase the value of the portfolio.

27
(b) On the basis of Flexibility:

Open-ended Funds
These funds do not have a fixed date of redemption. Generally they are open for
subscription and redemption throughout the year. Their prices are linked to the
daily net asset value(NAV). From the investors' perspective, they are much more
liquid than closed-ended funds. Investors are permitted to join or withdraw from
the fund after an initial lock-in period.

Close-ended Funds:
These funds are open initially for entry during the Initial Public Offering (IPO) and
thereafter closed for entry as well as exit. These funds have a fixed date of
redemption. One of the characteristics of the close-ended schemes is that they are
generally traded at a discount to NAV; but the discount narrows as maturity nears.
These funds are open for subscription only
once and can be redeemed only on the fixed date of redemption. The units of these
funds are 24listed (with certain exceptions), are tradable and the subscribers to the
fund would be able to exit from the fund at any time through the secondary market.

Interval funds:
These funds combine the features of both open-ended and close-ended funds
wherein the fund is close-ended for the first couple of years and open-ended
thereafter. Some funds allow fresh subscriptions and redemption at fixed times
every year (say every six months) in order to reduce the administrative aspects of
daily entry or exit, yet providing reasonable liquidity.

28
 Marketing Strategies for Mutual Funds

Business Accounts
 The most common sales and marketing strategies for mutual funds is to sign-up
companies as a preferred option for their retirement plans. This provides a simple way to sign-up
numerous accounts with one master contract. To market to these firms, sales people target human
resource professionals. Marketing occurs through traditional business-to-business marketing
techniques including conferences, niche advertising and professional organizations. For business
accounts, fund representatives will stress ease of use and compatibility with the company's
present systems.

Consumer Marketing
 Consumer marketing of mutual funds is similar to the way other financial products are
sold. Marketers emphasize safety, reliability and performance. In addition, they may provide
information on their diversity of choices, ease of use and low costs. Marketers try to access all
segments of the population. They use broad marketing platforms such as television, newspapers
and the internet. Marketers especially focus on financially oriented media such as CNBC
television and Business week magazine.

Performance
 Mutual funds must be very careful about how they market their performance, as this is
heavily regulated. Mutual funds must market their short, medium and long-term average returns
to give the prospective investor a good idea of the actual performance. For example, most funds
did very well during the housing boom. However, if the bear market that followed is included,
performance looks much more average. Funds may also have had different managers with
different performance records working on the same funds, making it hard to judge them.

Marketing Fees
 Mutual funds must be very clear about their fees and report them in all of their marketing
materials. The main types of fees include the sales fee (load) and the management fee. The load
is an upfront charge that a mutual fund charges as soon as the investment is made. The
management fee is a percentage of assets each year, usually 1 to 2 percent.

SELECTION PARAMETERS FOR MUTUAL FUND

29
Your objective:
The first point to note before investing in a fund is to find out whether your objective
matches with the scheme. It is necessary, as any conflict would directly affect your prospective
returns. Similarly, you should pick schemes that meet your specific needs. Examples: pension
plans, children’s plans, sector-specific schemes, etc.

Your risk capacity and capability:

This dictates the choice of schemes. Those with no risk tolerance should go for debt
schemes, as they are relatively safer. Aggressive investors can go for equity investments.
Investors that are even more aggressive can try schemes that invest in specific industry or
sectors.

Fund Manager’s and scheme track record:

Since you are giving your hard earned money to someone to manage it, it is imperative
that he manages it well. It is also essential that the fund house you choose has excellent track
record. It also should be professional and maintain high transparency in operations. Look at the
performance of the scheme against relevant market benchmarks and its competitors. Look at the
performance of a longer period, as it will give you how the scheme fared in different market
conditions.

Cost factor:
Though the AMC fee is regulated, you should look at the expense ratio of the fund before
investing. This is because the money is deducted from your investments. A higher entry load or
exit load also will eat into your returns. A higher expense ratio can be justified only by
superlative returns. It is very crucial in a debt fund, as it will devour a few percentages from your
modest returns.

Also, Morningstar rates mutual funds. Each year end, many financial publications list the
year's best performing mutual funds. Naturally, very eager investors will rush out to purchase

30
shares of last year's top performers. That's a big mistake. Remember, changing market conditions
make it rare that last year's top performer repeats that ranking for the current year. Mutual fund
investors would be well advised to consider the fund prospectus, the fund manager, and the
current market conditions. Never rely on last year's top performers.

Types of Returns on Mutual Fund:

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.

31
 WHO CAN INVEST?

Who can invest?

First of all, distributors need to be aware of mutual fund units.

Mutual Funds in India are open to investment by:

1.ResidentIncluding :

a) Resident Indian Individuals

b) Indian Companies / Partnership Firm
c) Indian Trust / Charitable Institutions
d) Banks / Financial Institutions
e) Non- Banking Finance Companies
f) Insurance Companies
g) Provident Fund
h) Mutual Fund

2) Non- Residents Including

a) Non-Resident Indians, and person of Indian Origin.

b) Overseas Corporate Bodies (OCBs).

3) Foreign Entities.

a) Foreign Institutional (FII) registered with SEBI.

b) Foreign Citizens / Entities are not allowed to invest in mutual funds in

India.

32
History of
Indian Mutual
Fund Industry

33
History of Indian Mutual Fund Industry:

The mutual fund industry in India started 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 of 1987 when non-UTI players
entered he industry.

In the past decadeIndian mutual fund industry had seen a dramatic environment,
both qualities wise as well as quantity wise, before the monopoly of the market had
seen an ending phase; Asset under management company (AUM) was RS.67
billion,The private sector entry to the fund family raised the AUM to RS 470billion in march
1993 and till April 2004; it reached the height if RS 1540 billion.

The Mutual Fund Industry is obviously growing tremendous space with the mutual
fund industry can be broadly put into four phases according to development of the
sector.

Each phase is briefly discussed as under:

First Phase – 1964-87
Unit Trust 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 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.6,700crores of assets under
management.

Second Phase -1987-1993(entry of public sector Funds)

34
1987 marked the entry of non-UTI public sector mutual fund set up by public
sector banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund is 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 (June 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.47,000Crores.

Third Phase -1993-2003(Entry of private sector Fund)

1993 was the year in which the first Mutual Fund Regulation 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) Regulation 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.1,21,805crores.

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.29,835crores as at the end of
January 2003 ,responding broadly, the assets of US 64 scheme, assured return and
certain other schemes.

Then second is the UTI Mutual Fund Ltd, Sponsored by SBI, PNB, BOB and LIC ,
It is registered with SEBI and functions under Mutual Fund Regulations,
consolidation and growth . As at the end of Dec 2015 ,there were over 1900 Mutual
Funds scheme in India.

35
Major Mutual Fund Companies in India

 ABN AMRO Mutual Fund

 Reliance Mutual Fund
 Birla Sun Life Mutual Fund
 Standard Chartered Mutual Fund
 Bank of Baroda Mutual Fund
 Franklin Templeton India Mutual Fund
 HDFC Mutual Fund
 Morgan Stanley Mutual Fund India
 HSBC Mutual Fund
 Escorts Mutual Fund
 ING Vysya Mutual Fund
 Alliance Capital Mutual Fund
 Prudential ICICI Mutual Fund
 Benchmark Mutual Fund
 State Bank of India Mutual Fund
 Canbank Mutual Fund
 Tata Mutual Fund
 Chola Mutual Fund
 Unit Trust of India Mutual Fund
 LIC Mutual Fund

36
 Market Share
Reliance Mutual Fund HDFC Mutual Fund Birla Sun Life Mutual Fund
ICICI Prudential Mutual Fund Kotak Mahindra Mutual Fund UTI Mutual Fund
LIC Mutual Fund SBI Mutual Fund IDFC Mutual Fund
TATA Mutual Fund Franklin templeton Mutual Fund DSP Black Mutual Fund
23 others players

13.64% 14.55%
2.73%
3.64%
2.73% 20.00%
2.73%
4.55%

4.55% 3.64%

9.09% 9.09% 9.09%

37
WORKING MUTUAL FUNDS

The mutual fund collects money directly or through brokers from investors.
The money is invested in various instruments depending on the objective of the
scheme. The income generated by selling securities or capital appreciation of these
securities is passed on to the investors in proportion to their investment in the
scheme. The investments are divided into units and the value of the units will be
reflected in Net Asset Value or NAV of the unit. NAV is the market value of the
assets of the scheme minus its liabilities. The per unit NAV is the net asset value of
the scheme divided by the number of units outstanding on the valuation date.
Mutual fund companies provide daily net asset value of their schemes to their
investors. NAV is important, as it will determine the price at which you buy or
redeem the units of a scheme. Depending on the load structure of the scheme, you
have to pay entry or exit load.

38
Research
Methodology&Findings

39
 Research Methodology

ThisReport is based on primary as well assecondary data, however primary data

collection was given more important 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 or 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 decisions and critical ones.

Risks involved in investing in Mutual Funds:

Mutual Funds do not provide assured returns. Their returns are linked to their
performance. They invest in shares, debentures and deposits. All these investments
involve an element of risk. The unit value may vary depending upon the
performance of the company and companies may default in payment of
interest/principal on their debentures/bonds/deposits. Besides this, the government
may come up with new regulation which may affect a particular industry or class
of industries. All these factors influence the performance of Mutual Funds.

40
RETURN VS RISK

41
 Data Analysis & Interpretation

1. Analyzing According to Age:

Age of Investors

>=30; 3; 3.00%
>50; 10; 10.00%
31-35; 12; 12.00%
46-50; 18; 18.00%

36-40; 35; 35.00%

41-45; 22; 22.00%

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

Interpretation - Here, it is been found that most of the investors i.e,35% of

the investors who invest in Mutual Fund lies in between the age group of 36-40,
they are more reluctant as well as experienced in this field of Mutual Fund.

Then the Second highest age group lies in between the age group of 41-45 (22%),
they are also aware of the benefits in investing in mutual fund. The least interested
group is the Youth Generations.

42
2.Analyzing according to Qualifiaction:

Interpretation - Out of my survey of 100 people, 71% of the investors are

Graduates and Post Graduates and 16.67% are Under Graduates and Others,
around 12.5%, which may include persons who have passed their 10th standard or
12th standard invests in Mutual Funds.

3.Analyzing according to Occupation:

43
Interpretation - Here it is amazed to see that around 46% of the investment is
been invested by the persons working in Private sectors, according to them
investing in Mutual Funds is more safer as well as more gainer. Then we find that
the businessmen of around 25%gives more preference in investing in mutual funds,
they think that investing in mutual fund is better than investing in shares as well as
Post office. Next we see that the persons working in Government sectors of around
24% only invests in Mutual Fund.

4.Analyzing data according to mode of investment:

Interpretation - It can be clearly stated from the above Figure that 82% of the
investors like to invest in SIP, as the investor feels that they are more comfortable
to save via SIP than the Long term. While 18% of the investors find SIP as very
burdensome, and they are more reluctant to save in Long term investment

44
5.Analyzingdata according to from where they came to
know about Mutual Fund:

Interpretation - Here from the Line Graph it can be clearly stated that around 46%
of the investors came to know the benefits of Mutual Fund from Financial
Advisors. According to the suggestions given by the financial advisors, people use
to choose Mutual Funds Scheme.

Then Secondly, 24% and 21% of the people used to know from Advertisement and
Peer group respectively.

Lastly 9% of the investors do invests after being intimated by the Banks about the
benefits of Mutual Funds.

45
FREQUENT QUESTIONS ASKED BY CLIENTS-
What is Mutual Fund?
Why should we invest in Mutual Fund?
What is the benefit of investing in Mutual Fund?
Which fund is better for investment?
What is the actual time for redemption?
How to know the Fund details?
What is the process for investment?

46
 Questionnaire Sample
A STUDY OF PREFERENCE INVESTORS FOR INVESTMENT IN MUTUAL FUND

Name: ...................

Age: ……………..

Mob: …………..

Email.ID:……………

Address…………….

Ques.1What is your Qualification?

(a) Under-graduation (b) Graduation (c) Post Graduation

(d) Others

Ques.2What is your Occupation?

(a) Government (b) Private (c) Business (d)

Others

Ques.3What is your monthly income?

(a) <=10000 (b) 10001-20000 (c) 20001-30000 (d)

>30000

Ques.4 Do you have any idea about Mutual Fund?

(a) Yes (b) No

47
Ques.5 From where you came to know about Mutual Fund?

(a) Advertisement (b) Peer Group (c) Banks (d)

Financial Advisors

Ques.6Where you will prefer to invest?

(a) Savings (b) FD (c) Insurance (d) Mutual Fund (e)PO (f) Shares (g) Gold
(h) Real Estate

Ques.7 Which is your preference while investing?

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

Trust

Ques.8 Which Mutual Fund Company you will prefer to invest?

(a) Reliance (b) SBI (c) UTI (d) HDFC (e)

Others

Ques.9 Which mode of investment will you prefer?

(a) Long Term (b) Short Term

Ques10 Objective of investment?

(a) Preservation (b) Current Income (c) Conservative Growth

(d) Aggressive Growth

48
 Findings
Through this Project the results that were derived are:
 People who lie under the age group of 36-40 have more experience and
are more interested in investing in Mutual Funds.
 There was a lot of lack of awareness or ignorance, that’s why out of 200
people, 120 people have invested in Mutual Fund and 80 people is
unaware of investing in Mutual Funds.
 Generally, People employed in Private sectors and Businessman are more
likely to invest in Mutual Funds, than other people working in other
professions.
 Generally investors whose monthly income is above Rs. 20001-30000 are
more likely to invest their income in Mutual Fund, to preserve their
savings of at least more than 20%.
 People generally like to save their savings in Mutual Fund, Fixed
Deposits and Savings Account.
 Many people came to know about Mutual Fund from Financial Advisors,
Advertisement as well as from their Peer group , and they generally
invest in the Mutual Fund by taking advices from their Legal Advisors.
 Investors generally like to invest in Large Cap Companies like Reliance,
SBI, etc. to minimize their risk.
 The most popular medium of investing in Mutual Fund is through SIP
and moreover people like to invest in Equity Fund though it is a risky
game.
 The main Objective of most of the Investors is to preserve their Income.

49
 Conclusion

Mutual funds are one of the most highly growing products in financial services
market. Mutual funds are suitable for all types of investors from risk adverse to
risk bearer. Mutual funds have many options of return, risk free return, constant
return, market associated return, etc. mutual funds are suitable to all age of
investors, businessmen, salary person, etc. Investors need not to be expert in equity
market; mutual funds can satisfy their need. Fund managers are expert in this area
and invest fund in well diversified portfolio, high return with low risk is possible
inn mutual fund. In todays world, investors are showing more trust in mutual fund
than any other financial product. There is no need of a financial consultant, if you
have good knowledge of mutual funds and their type to invest. Mutual fund is
subject to market risk, despite of that it have low risk than stock market.

50
 Recommendation
 Mutual Fund is subject to market risk, analyzing particular fund before
investing.
 Study historical return of funds, risk measurement ratios to evaluate fund.
 There should be similarity in your and funds objective.
 For high return invest in diversified funds, for tax saving invest in ELSS
equity funds,for moderate risk and return invest in balance funds, for assure
return invest in debtand liquid funds.
 As per my opinion, investor should invest around 30% in mutual fund

51
 Limitations of the project

 Some of the persons were not so responsive.

 Possibility of error in data collection because of many investors may have
not given actual answers of my questionnaire.
 Sample size is limited to 200 visitors of State Bank of India, Bhubaneswar
out of these only 120 had invested in Mutual Fund .The sample size may not
adequately represents the whole market.
 The Research confined to a certain part of Bhubaneswar.
 Some respondents were reluctant to divulge personal information which can
affect the validity of all response.

52
 Glosary
 ABBREVIATIONS-
NAV- NET ASSET VALUE

AMC- ASSET MANAGEMENT COMPANY

KYC- KNOW YOUR CUSTOMER

SIP- SYSTEMATIC INVESTMENT PLAN

SWP- SYSTEMATIC WITHDRWAL PLAN

STP- SYSTEMATIC TRANSFER PLAN

IPO- INITIAL PUBLIC OFFERING

MIP- MONTHLY INCOME PLAN

RED- REDEMPTION

GST- GOODS & SERVICE TAX

CAMS- COMPUER AGE MANAGEMENT SERVICES

AUM- ASSET UNDER MANAGEMENT COMPANY

 Specialized Vocabulary

12-BIBLIOGRAPHY& REFERENCES
53
 NEWS PAPER
 TELEVISION CHANNEL (CNBC )
 MUTUAL FUND SIMPLIFIED (RITU GUPTA)
 WWW.MONEYCONTROL.COM
 WWW.MUTUALFUNDINDIA.COM
 WWW.INVESTOPEDIA.COM
 WWW.VALUERESEARCH.COM
 WWW.MORNINGSTAR.IN
 WWW.NISM.NIC.IN
 WWW.IIBF.COM
 WWW.SBIMF.COM

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