Comparison Of Different Kinds Of Mutual Funds And Study Of Investors Behavior Towards Mutual Funds

Gitarattan International Business School Affiliated to Guru Gobind Singh Indraprastha University Guided By: Ms Manish Mohpatra Submitted By: Bharti Rai Roll no- 12319103910 MBA(2010-2012)

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DECLARATION
This is to certify that the project report titled Comparison of Different kinds of mutual funds study of investors behavior towards mutual funds has been accomplished by Anurag Rastogi. This project is being submitted in the partial fulfilment of requirements for the award of the Post Graduate Diploma in International Marketing (PGDIM) from Sri Guru Gobind Singh College of Commerce. This work has not been submitted by her anywhere else for the award of any degree or diploma. All sources of information and help have been duly mentioned and acknowledged.

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ACKNOWLEDGEMENT

Preparing a project report of this nature is an arduous task and I was fortunate enough to get the support from a large number of people to whom I shall always remain grateful. I would like to give a special thanks to and Ms Manisha Mohpatra (project mentor), for the valuable advice, guidance, and precious time and support that they have offered in making this project a success. Last but not the least I would also like to thank all the respondents for giving their precious time and relevant information required for completing the project.

BHARTI RAI

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TABLE OF CONTENTS
Chapter No. Ch.#1.0 1.1 1.2 1.2 1.3 1.4 Ch.#2.0 2.1 2.3 2.4 Ch 3.0 3.1 3.2 Ch 4.0 Ch 5.0 Ch.6.0 Ch 7.0 Subject Introduction History and AMFI & Its Role Objectives of the project Types of mutual funds and their benefits Major Players SWOT of Industry Company Profile SWOT of the company Mutual Funds schemes comparison SIP Vs Lump Sum plans Methodology and Analysis Research Methodology Analysis and Diagrammatic representation Limitation of the study Recommendations Conclusion Bibliography Annexure 43 44-55 56 57 58 59 60-62 5-9 10 11-16 17 20 25-32 33 33-35 36 Page No.

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HISTORY OF MUTUAL FUNDS

Massachusetts Investors Trust (now MFS Investment Management) was founded on March 21, 1924, and after one year, it had 200 shareholders and $392,000 in assets. The entire industry, which included a few closed ended funds, represented less than $10 million in 1924. Huge downfall in the stock market in 1929 hindered the growth of mutual funds. As the stock market crashed so in this response, Congress passed the Securities Act of 1933 and the securities Exchange Act of 1934. These laws require that a fund be registered with the Securities and Exchange Commission (SEC) and provide prospective investor with a prospectus that contains all required disclosures about the fund, the securities themselves, and fund manager. The SEC helped draft the investment Company Act 1940, which sets forth the guidelines with which all SEC- registered funds today must comply. By the end of the 1960s, there were approximately 270 funds costing $48 billion in assets. The first retail index fund, First Index Investment Trust, was formed in 1976 and headed by John Bogle, who conceptualized many of the key tenets of the industry in his 1951 senior thesis at Princeton University. It is now called the Vanguard 500 index fund and is one of the worlds largest mutual funds with value more than $100 billion in assets. A key factor in mutual fund growth was the 1975 change in the Internal Revenue Code allowing individuals to open individual open accounts (IRAs). Even people already enrolled in corporate pension plans could contribute a limited amount depending on individuals. The mutual fund industry started in India in a small way with UTI act creating what was effectively a small saving decision with the RBI. Over the period of 35 yrs. this grew fairly successfully and gave investors a good return, and therefore in 1989, public sector banks and financial institutions were allowed to float mutual funds and their success emboldened the government to allow the private sector to foray into this area. The initial years of the industry also saw the emerging years of the Indian equity market, when a number of mistakes were made and hence the mutual funds scheme, which invested in lesser known stocks and at very high levels, became loss leaders for retail investor, for whom the mutual fund is actually intended, has not yet returned to the industry in a big way. But to be fair, the industry too has focused on bringing in the large investors, so that it can create a significant corpus, which can make the retail investors fell more secure

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ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI) AND ITS ROLE

AMFI is the apex body of all the registered asset management companies. It was incorporated on August 22, 1995 as a non profit organization. As of now, all the 32 asset management companies that have launched mutual funds schemes are its members. The objective of AMFI is to develop the Indian mutual funds industry on profession, healthy and ethical lines. It also aims to enhance and maintain standards in all areas in a view to protecting and promoting the interests of the mutual funds and their units holders. AMFI interacts with SEBI, RBI and the government on all matters concerning the mutual fund industry. It also provides training and certification to agent distributors and for all intermediaries and others engaged in the industry. AMFI works through a number of committees, some of which are standing committees to address areas where there is a need for constant vigil and improvements and other which are adhoc committees continued to address specific issues. SECURITIES AND EXCHANGE BOARD OF INDIA Securities and Exchange Board of India (SEBI) was established in 1988 to regulate and develop the growth of the capital market. In the year 1992, Securities and Exchange board of India Act was pass to protect the interest of the investors in securities and to promote the development of, and to regulate the securities market. As far as mutual funds are concerned, SEBI formulates the policies and regulates the mutual funds to protect the interest of investors. In 1993, SEBI notified regulations for the mutual funds. After this notification, mutual funds sponsored by private sector entities were allowed to enter the capital market. All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of regulations released by SEBI. There is no distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspection by SEBI.

HISTORY OF INDIAN MUTUAL FUNDS

The mutual fund industry started in India started in 1963 with the formation of Unit Trust of India, at the initiative of government of India and RBI. The history of mutual funds in India can be broadly divided into four distinct phases:

FIRST PHASE- 1964-87

UNIT TRUST OF INDIA(UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was delinked from the RBI and the industrial Development Bank of India (IDBI)

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took over the regulatory and administrative control in place of Reserve Bank of India. Unit scheme was the first scheme launched by UTI in 1964.

SECOND PHASE-1987-1993 (Entry Of Public Sector Funds)

1987 marked the entry of non UTI, public sector banks set up public sector funds, 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 (June 90), Bank of Baroda Mutual Fund (Oct 92). LIC establishes its Mutual Fund in June 1989 while GIC has set up its mutual funds in Dec 1990. At the end of 1993, mutual fund industry had assets under management of Rs. 47,004 crores.

THIRD PHASE -1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS)

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund Industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Funds Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs. 44,541 crores of asset management was way ahead of other mutual funds.

FOURTH PHASE- SINCE FEBRUARY 2003

In February 2003 following the repeal of Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. 29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come at the purview of the Mutual Fund Regulations.

1999- YEAR OF THE FUNDS

Mutual funds have been around for a long period of time to be precise for 36 years but the year 1999 saw immense future potential and developments in this sector. 1999 saw as the year of resurgence of the

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mutual funds and the regaining of investor confidence in these MFs. This time around all the participants are involved in the revival of the funds of the AMCs, the unit holders, the other related parties. However the sole factor that gave lifer to the revival of the funds was the Union Budget on mutual funds taxation benefits are provided later. It provided centre stage to the mutual funds, made them more attractive and provide acceptability among the investors. The union budget exempted mutual fund dividend given out by equity oriented schemes from tax, both at the hands of the investors as well as the mutual fund. No longer were the mutual funds interested in selling the concept of mutual funds they wanted to talk business which would mean to increase asset base, and to get asset base and investor base they had to be fully armed with a whole lot of schemes for every investor. So new schemes for new IPOs were inevitable. The quest to attract investor extended beyond just new schemes. The funds started to regulate themselves and were all out winning the trust and confidence of the investors under the aegis of the Association of Mutual Funds of India (AMFI).

2003-2004: A retrospect
The year 2003 was extremely eventful for mutual funds. The aggressive competition in the business took its toll and two more mutual funds bit the dust. Alliance decided to remain in the ring after a highly public bidding war did not yield an acceptable price, while Zurich has been sold to HDFC Mutual. The growth of the industry continued to be corporate focused barring a few initiatives by mutual funds to expand the retail base. Large money brought with it the problems of low retention and consequently low profitability, which is one of the problems plaguing the business. But at the same time the industry did see a spectacular growth in assets, particularly among the private sector players, on the back of the continuing debt bull run. Equity did not find favor with investors since the market was lack-luster and performances of funds, barring a few, were quite disappointing for the investors. The other aspect of this issue is that institutional investors do not usually favor equity. It is largely a retail segment product and without retail depth, most mutual funds have been unable to tap this market. Overall FY2003 can be summed up as the year of the maturing of the mutual fund industry. It was the year when fund houses went through turmoil and consolidation and the strong ones emerged stronger. Investors too became savvier, and began investing based on far more scientific criteria than the past, and with clearly defined investment horizons. Distribution gave way increasingly to intermediation and more and more distributors graduated to providing technical advise to their clients. Thus the industry has come of age in FY2003, and we hope that FY2004 and beyond will see us come out of a stormy adolescence to become a trusted avenue for saving.

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The history of the Indian Mutual fund industry can be traced to the formation of UTI in 1963. This was a joint initiative of the government of India an RBI. It held monopoly for nearly 30 years. Since 1987, nonUTI mutual funds entered the scenario. These consisted of LIC, GIC and public-sector bank backed Indian mutual funds. SBI Mutual fund was the first of this kind. 1993 saw the entry of private sector players on the Indian Mutual Funds scene. Mutual Fund Regulations were revised in 1996 to accommodate changing market needs. With the Sensex on a scorching bull rally, many investors prefer to trade on stocks themselves. Mutual funds are more balanced since they diversify over a large number of stocks and sectors. In the rally of 2000, it was noticed that mutual funds did better than the stocks mainly due to prudent fund management based on the virtues of diversification. Some of the major players on the Indian mutual fund scene: ABN AMRO Mutual Fund Benchmark Mutual Fund

Birla Sunlife Mutual Fund

IDFC Mutual Fund SBI Mutual Fund

Canara Bank Mutual Fund

UTI Mutual Fund Deutsche Mutual Fund DSP Merrill Lynch Mutual Fund Escorts Mutual Fund Fidelity Mutual Fund

In India, SEBI (the Securities and Exchange Board of India) is the regulating authority that SEBI formulates policies and regulates the mutual funds to protect the interest of the Indian investors. There have been revisions and amendments from time to time. Even mutual funds promoted by foreign entities come under the purview of SEBI when operating in India. SEBI has revised its regulations to allow Indian mutual funds to invest in gold.

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OBJECTIVES

To gain knowledge of different kinds of mutual funds in the market.

To gain knowledge and get acquainted with mutual fund industry and its general operations.

Comparative study of mutual funds.

To know how in general customers go about in making an investment.

To know how the customers manage the risk involved in an investment.

To know why customers go for an investment in Mutual Funds Industry

To gather knowledge about the various mutual funds players and assessment in the mutual funds sector.

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MUTUAL FUND

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital marketinstruments such as shares, debentures and other securities. The income earned throughthese investments and the capital appreciation realised are shared by its unit holdersin proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The small savings of all the investors are put together to increase the buying power and hire a professional manager to invest and monitor the money. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual Funds. Mutual fundscheme has a defined investment objective and strategy .A mutual fund is nothing more than a collection of stocks and bonds. investors can think of a mutual fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund. Investors can make money from a mutual fund in three ways: 1) Income is earned from dividends on stocks and interest on bonds. A fund paysout nearly all of the income it receives over the year to fund owners in the form of a 2) 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. 3) If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price. investors can then sell your mutual fund shares for a profit. Funds also usually give investors a choice either to receive a check for distributions or to reinvest the earnings and get more shares.Mutual Fund is a investment company that pools money from shareholders and invests in a variety of securities, such as stocks, bonds and money market instruments. Most openend mutual funds stand ready to buy back (redeem) its shares at their current net asset value, which depends on the total market value of the fund's investment portfolio at the time of redemption. Most openend mutual funds continuously offer new shares to A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term moneymarket instruments, and/or other securities.The mutual fund will have a fund manager

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that trades the pooled money on a regular basis. Also known as an open-end investment company, to differentiate it from a closed-end investment company. Mutual funds invest pooled cash of many investors to meet the fund's stated investment objective. Mutual funds stand ready to sell and redeem their shares at any time at the fund's current net asset value: total fund assets divided by shares outstanding. In Simple Words, Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as 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 unitholders. In Short, a mutual fund is a common pool of money in to which investors with common investment objective place their contributions that are to be invested in accordance with the stated investment objective of the scheme. The investment manager would invest the money collected from the investor in to assets that are defined/ permitted by the stated objective of the scheme. For example, an equity fund would invest equity and equity related instruments and a debt fund would invest in bonds, debentures, gilts etc. Mutual Fund is a 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 profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. In India, A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.Mutual funds can give investors access to emerging

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MUTUAL FUNDS TYPES

1. OPEN ENDED FUNDS
Open ended schemes do not have fixed maturity, they offer anytime liquidity the investor buy sell the units at net asset value (NAV) related prices. Open-end funds raise money by selling shares of the fund to the public, much like any other type of company which can sell stock in itself to the public. Mutual funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles, such as stocks, bonds and money market instruments.

2. CLOSE ENDED FUNDS

These funds have stipulated maturity ranging from 2 yrs. to 15 yrs. Investor can invest directly in the scheme at time of initial issue. Thereafter you can buy or sell the units of scheme on the stock exchange where they are listed. The market price at stock exchange could vary from scheme NAV on account of demand and supply situation unit holder expectation and other market factors. These schemes are generally traded at a discount to their NAV but close to maturity the discount narrows.

3. GROWTH / EQUITY ORIENTED SCHEMES

These schemes aim to provide capital appreciation over medium to long term. These schemes normally invest a majority of their funds in equities. Such funds have comparatively high risks and these schemes normally invest a major part of their corpus in equities. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the options in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

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4. INCOME / DEBT ORIENTED SCHEME

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations. These are ideal for retired people with a need for capital stability and regular income and investors who need some income to supplement their earnings.

5. BALANCED FUND
The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in the share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds.

6. MONEY MARKET or LIQUID FUND

These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds depending upon interest rates prevailing in market. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods.

7. GILT FUND
These funds invest exclusively in government securities. Government securities have no default risks. NAVs of these schemes also fluctuate with change in interest rates and other economic factors as in the case with income or debt oriented schemes.

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8. INDEX FUNDS
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive Index, S&P NSE 50 index (Nifty), etc. These schemes invest in the securities in the same weightage comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as tracking error in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges. They are passively managed funds wherein the fund manager invests in the fund stock comprising the index in similar weights. Index fund while reducing the risk associated with the market, offer many benefits to investor.

9. TAX SAVING SCHEME

These scheme offer tax rebate to the investors under the tax law as prescribed from time to time. The government offer tax incentives on investments in specific avenues like equity-linked saving schemes (ELSS), pension scheme, infrastructure schemes. These are ideal for investors seeking tax rebates.

10. INDUSTRY SPECIFIC or SECTOR SCHEME

These funds invest in specific industries or sectors. Sectoral fund schemes are ideal for investors who have already decided to invest in a particular sector or segment.

Benefits Of Investing In Mutual Funds

Professional Management
Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and select suitable investments to achieve the objectives of the scheme.

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Diversification
Mutual Funs invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.

Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and follow-up with brokers and companies. Mutual Funds save your time and make investing easy and convenient.

Return Potential
Over a medium to long-term, Mutual Funds have a potential to provide higher return as they invest in a diversified basket of selected securities.

Low Costs
Mutual Funds are relatively a less expensive way to invest compared to directly investing in the capital markets because the benefits of benefit of scale in brokerage, custodial and other fees translate into lower costs for investors.

Liquidity
In open-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In close-ended schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can avail the facility of direct repurchase at NAV related prices by the MF..

Transparency
You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund managers investment strategy and outlook.

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Flexibility
Through futures such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience.

Affordability
Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy.

Choice of Schemes
Mutual Funds offer a family of schemes suits your varying needs over a life time.

Well Regulated
All mutual funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of mutual funds are monitored by SEBI.

Mutual funds Vs other Investments

Mutual funds offer several advantages over investing in individual stocks. For example, the transaction costs are divided among all the mutual fund shareholders, who also benefit by having a third party (professional fund managers), apply expertise and dedicate time to manage and research investment options. However, despite the professional management, mutual funds are not immune to risks. They share the same risks associated with the investments made. If the fund invests primarily in stocks, it is usually subject to the same ups and downs and risks as the stock market.

Share Classes
Mutual funds offer more than one class options. For example, a fund can offer class A and class B shares. Each class will invest in the same pool (or investment portfolio) of securities and will have the same investment objectives and policies. But each class will have different shareholder services and / or distributions arrangements with different fees and expenses. These differences are suppose to reflect different costs involved in servicing investors in various classes: For example: one class may be sold through brokers with a front end load, and other class may be sold directly to the public with no load but some fee included in the classs expenses (sometimes referred to as class C shares). Still a third class might have a minimum investment of $1,00,00,000 and be

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available only to financial institutions (a so called institutional share class). In some cases, by aggregating regular investments made by many individuals, a retirement plan (such as 401(k) plan) may qualify to purchase institutional shares ( and gain the benefit of their typically lower expense ratios) even though no members of the plan would qualify individually. As a result, each class will likely have different performance results. A multi-class structure offers investors the ability to select a fee and expense structure that is most appropriate for their investment goals (including the length of time that they expect to remain invested in the fund).

NAV
A mutual fund is a common investment vehicle where the assets of the fund belong directly to the investors. Investors subscriptions are accounted for by the fund not as liabilities or deposits but as Unit Capital. On the other hand, the investment made on the behalf of the investors is reflected on the asset side and are the main constituent of the balance sheet. The funds Net Assets are therefore defined as the assets liabilities. As there are many investors in the funds, it is common practice for mutual funds to compute share of each investor on the basis of the value of net assets per share/unit, commonly known as Net Asset Value (NAV). The following are the regulatory requirements and accounting definitions laid down by SEBI NAV = Net Assets of the schemes / no. of units outstanding i.e. market value of investments + receivables + other accrued income + other assets. Accrued expenses other payables other liabilities No. of units outstanding as at the NAV date. For the purpose of the NAV calculation, the day on which NAV is calculated by a fund is known as the valuation date. Funds NAV is affected by four sets of factors: Purchase and sale of investment securities Valuation of all investment securities held Other assets and liabilities, and Units sold or redeemed

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MEASURING MUTUAL FUND PERFORMANCE

CHANGE IN NAV THE MOST COMMON MEASURE
PURPOSE- If an investor wants to compute the return on investment between two dates; he can simply use the Per Unit Net Asset Value at the beginning and the end periods, and calculate the change in the value of NAV between the two dates in absolute and percentage terms.

FORMULA
For NAV change in absolute terms: NAV at the end of the period / NAV at the beginning of the period For NAV change in percentage terms: (Absolute change in NAV/NAV at the beginning)*100

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MAJOR PLAYERS
SBI MUTUAL FUNDS
SBI Mutual Fund is Indias largest bank sponsored mutual fund and has an desirable track record in judicious investments and consistent wealth creation. The fund traces its origin to SBI - Indias largest banking enterprise. The institution has grown vastly since its inception and today it is India's largest bank, patronized by over 80% of the top corporate houses of the country. This Fund is a joint venture between the State Bank of India and Socit Gnrale Asset Management, one of the worlds leading fund management companies that manages over US$ 500 Billion all over the world.

Products
The main products in which customers deals in hope of profit maximization trusting on the company are:

Equity schemes (Example: Magnum Equity Fund, Magnum Global Fund, Magnum Index Fund,
Magnum Midcap Fund, Magnum Multicap Fund, SBI Bluechip Fund)

Debt schemes (Example: Magnum Guilt fund -long term, Magnum Children saving plan) Balanced schemes (Example: Magnum Balanced Funds)

HDFC MUTUAL FUND (AMC):

HDFC Asset Management Company Ltd (AMC) came into existence under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000. In terms of the Investment Management Agreement, the Trustee has appointed the HDFC Asset Management Company Limited to manage its Mutual Fund. The paid up capital of the AMC is Rs. 24.162 crore. The Sponsor of Zurich India Mutual Fund, Zurich Insurance Company (ZIC), following a review of its

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overall strategy, had decided to divest its Asset Management business in India. The AMC had entered into an agreement with ZIC to acquire the business, subject to necessary regulatory approvals. On obtaining the approvals by regulatory, the following Schemes of Zurich India Mutual Fund have merged to HDFC Mutual Fund on June 19, 2003. The AMC is managing 24 open ended schemes and 13 close ended schemes. HDFC Growth Fund (HGF), HDFC Balanced Fund (HBF), HDFC Income Fund (HIF), HDFC Liquid Fund (HLF), HDFC Long Term Advantage Fund (HLTAF), HDFC Children's Gift Fund (HDFC CGF), HDFC Gilt Fund (HGILT), HDFC Short Term Plan (HSTP), HDFC Index Fund, HDFC Floating Rate Income Fund (HFRIF), HDFC Equity Fund (HEF), HDFC Top 200 Fund (HT200), HDFC Capital Builder Fund (HCBF), HDFC TaxSaver (HTS) these are open ended scheme of the fund. And the close ended schemes are HDFC Fixed Maturity Plans - Series II, HDFC Fixed Maturity Plans Series III, HDFC Fixed Maturity Plans - Series IV, HDFC Fixed Maturity Plans - Series V, HDFC Fixed Maturity Plans - Series VI, HFDC Fixed Maturity Plans - Series VII, HFDC Fixed Maturity Plans - Series VIII, HFDC Fixed Maturity Plans - Series IX.

RELIANCE MUTUAL FUND:

Reliance Mutual Fund (RMF) is one of Indias top Mutual Funds, with Average Assets Under Management of Rs. 1,02,730 Crs (AAUM for 31st May 09 ) and an investor base of over 72.30 Lacs. Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of the fastest growing mutual funds across country. RMF offers investors a well-rounded portfolio of products to fulfill varying investor requirements and has presence in 118 cities all over the country. Reliance Mutual Fund constantly and continuously endeavors to launch innovative products and customer service initiatives to increase value and returns to investors. "Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of Reliance Capital Asset Management Limited, the balance paid up capital being held by minority shareholders." Mission statement of RMF is: To create and nurture a world-class, high performance environment aimed at delighting our customers Reliance Capital Asset Management Limited (RCAM) is a registered company under the Companies Act, 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund.

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RCAM was approved as the Asset Management Company for the Mutual Fund by SEBI on June 30, 1995. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds) Regulations, 1996. Consistent to this IMA, RCAM is legally authorized to act as Investment Manager of Reliance Mutual Fund. The net worth of the Asset Management Company including preference shares as on September 30, 2007 is Rs.151.02 crores. The total net worth of the Asset Management Company as on March 31, 2008 is Rs 709.39 crores.

TATA MUTUAL FUNDS : EXPERTISE THAT IS TRUSTED

Backing provided by one of the most trusted and valued brands in India, Tata Mutual Fund has earned the trust of lacs of investors with its consistent performance and world-class service and better returns. Tata Mutual Fund manages around Rs. 21,304.00 crores as on May 31, 2009 worth of assets across its varied offerings. Tata Mutual Fund offers an investment option for everyone, whether one is a businessman or salaried professional, a pension holder or housewife, an aggressive investor or a conservative capital builder. The Tata Asset Management philosophy is centered on consistency as well as long-term results. Tata Asset Management aims at overall excellence, within the framework of transparent and rigorous risk. Consistency: Company strives to deliver consistent results through its value-based investing method. Flexibility: Tata Mutual Fund offers investors a broad range of managed investment products in various asset classes and risk parameters, with operational flexibility to suit their different investment needs. Stability: Companys commitment is to provide the highest quality of service and integrity is the foundation upon which it builds trust with its clients. Service: Tata offer a wide range of services to assist investors have a fulfilling and rewarding financial planning experience with. Company has designed its services keeping in mind the needs of investors, giving them a smooth and hassle-free financial planning process.

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SWOT OF INDUSTRY

STRENGTHS:
Less risky compared to direct trading of shares Professional management Diversified portfolio Low at operational cost

WEAKNESS:
Expenses (entry & exit loads) born by investors Portfolios are not made according to the customers choice Customer does not have the custody of the investments Documentation is complicated

OPPORTUNITY:
Simplify the documentation Abolish entry loads Reduce the lock in period for ELSS funds Fixed deposits rates are going down that attracts the investors to invest in Mutual Funds

THREATS:
With abolishment of entry load no incentive will be there for the distributors to sell the funds. Instability in the market.

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COMPANY PROFILE

Overview of Bonanza as a whole :-

A financial powerhouse! Thats what Bonanza is for you! Established in the year 1994, Bonanza developed into one of the largest financial services and broking house in India within a short span of time. Today, Bonanza is the fastest growing financial service with 5 mega group companies under it. With diligent effort, acknowledged industry leadership and experience, Bonanza has spread its trustworthy tentacles all over the country with pan-India presence across more than 1632 outlets spread across 535 cities. With a smorgasbord of services across all verticals in finance, Bonanzas offers you the perfect blend of financial services right from Equity Broking, Advisory Services that cover Portfolio Management Services, Mutual Fund Investments, and Insurance to exceptional Depository Services. Bonanza believes in being technologically advanced so that we can offer you our tech-savvy customers - an integrated and innovative platform to trade online as well as offline. Besides, we also have one of the finest and most dedicated research teams with experts who have in-depth, unsurpassed knowledge of the market place. All this and more makes Bonanza the perfect place for you to take your first step in the direction of financial success.

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Vision & Values

Vision

To be one of the most trusted and globally reputed financial distribution companies.

Values

Customer-centric approach At Bonanza, customers come first. And their satisfaction is not just our top priority but also the driving force for us, every single day.

Transparency Honesty is our forte. We believe in dealing on thoroughly ethical grounds, being fair and transparent with our customers.

Meritocracy We recognize and appreciate efforts put in by our employees. And we, as a matter of fact, reward and distinguish each one of them, ceaselessly.

Solidarity

We believe in sharing a forthright and respectful relationship with our business partners and employees. We consider them both as our team associates, who work together. Succeed together.

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Milestones

4th largest in terms of no. of offices for 2008-2009*. Top Equity Broking House in terms of branch expansion for 2008*. 6th in terms of Trading terminals in for two consecutive years 2007- 2008*. 9th in terms of Sub Brokers for 2007* Nominated among the Top 3 for the "Best Financial Advisor Awards 08" in the category of

National Distributors Retail instituted by CNBC-TV18 and OptiMix.

Nominated among the Top 3 for the "Best Financial Advisor Awards 09" in the category of

National Distributors Retail instituted by CNBC-TV18 and OptiMix

Awarded

by

BSE Major

Volume

Driver

04-05,06-07,07-08 .

Ranked 2nd by UTI MF & CNBC TV 18 Financial Awards 2009 in the category Best Financial

Advisor- Retail.

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Bonanza as a company:-

Different areas of the company

Which includes:

1.Bonanza Portfolio Ltd.

Member: NSE, BSE, NSDL, CDSL Distribution:PMS, Mutual Funds, IPO.

2. Bonanza Commodity Brokers Pvt. Ltd.

NCDEX

AND

MCX

Commodity

Derivatives.

3. Bonanza Global DMCC

Dubai

Gold

and

Commodity

Exchange(U.A.E) 4. Bonanza Financial Academy Arbitrage curse NCF

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Brokerage

and

account

opening

fees

at

Bonanza

Portfolio Ltd.:CHARGES DEMAT ACCOUNT

1. Rate of account opening

Client can open general demat and Trading account with company by paying Rs.500/- and there will be AMC of Rs.250/- per year.

2 .Rate of brokerages

Intraday: - For intraday transaction the

rate of brokerage is nominal i.e. 0.02% on each transaction.

Delivery: - For delivery the rate of

brokerage transaction. is 0.20% on each

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 Commodity trading: - The rate of

brokerage in commodity trading is 0.02%.

FUND PERFORMANCE
Top Performers Scheme DSP BR World Gold Fund (G) AIG World Gold Fund (G) Birla Sun Life CEF - Global PMP (G) SBI Magnum SFU - Emerging Businesses Fund (G) ICICI Pru FMCG Fund - (G) Sundaram Energy Opportunities Fund (G) Religare Mid Cap Fund (G) Birla Sun Life Small & Midcap Fund (G) Reliance Long-Term Equity Fund (G) ICICI Pru R.I.G.H.T. Fund (G) % Returns 9.03 4.95 4.94 4.52 4.48 2.16 2.09 2.04 1.99

1.95

*Returns upto 1 yr are absolute and over 1 yr are CAGR

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Mutual Fund Rating Radar

Check Whether You Are Invested Into The Right Fund

Are you rattled with the most buzzing question amongst mutual funds? To Buy or to Sell Fund A. Just select the fund you are invested / investing and get the opinion of our in-house MF Research team about the fund.

The ratings are based purely on the basis of past performance, volatility, statistical ratios, company and sector concentration of the fund along with few qualitative parameters as well. We also take into

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consideration factors like the costs/expense ratios of funds, corpus size, and funds adherence to mandate in the last 5 years. The research process does not have any bias towards any fund house / mutual fund. Funds which have not completed a year as on 31-December-2009 have not been rated. The funds are ranked on the said parameters and are divided in 5 divisions. The five divisions account for top 10%, next 25%, middle 30%, next 25% and bottom 10% of funds which are ranked 5-Star, 4Star, 3-Star, 2-Star and 1-star respectively.

SWOT OF THE COMPANY

STRENGTH:
Top performing funds that have 5 star ratings from ICRA Funds in all the categories from open ended equity, Sectoral funds, Debt funds & ELSS funds Choice of choosing any SIP date to the customer

WEAKNESS:

Products not advertised extensively

Short term returns are not that good

OPPORTUNITIES:
Improve the marketing of the products

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Fixed deposits rates are going down that attracts the investors to invest in Mutual Funds

THREAT:
Increasing competition in the industry Global slowdown affected the MF industry badly and the retail investors are not ready to invest in the market though it is growing but not at a expected growth rate. Intense Competition and easy availability of substitutes.

MUTUAL FUND SCHEMES COMPARISON

Below is a comparison between different mutual fund schemes on the basis of their investment objectives, portfolio of investments and the level of risk associated.

Equity Funds Types Investment Objectives Aggressive Growth Funds Capital Appreciation Portfolio Investments Invest in less Highly Volatile of Risk Associated

researched shares of speculative nature

Growth Funds

Capital

Invest in companies

Volatile but less than

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Appreciation

that are expected to outperform the market in the future

Aggressive funds

growth

Specialty Funds

Capital Appreciation

They criteria

follow

stated for

Concentrated diversified funds

and

hence are riskier than

investments and their portfolio comprises of only those companies that criteria. Diversified Equity Funds Capital Appreciation A small portion of investment in liquid money diversified equities concentration market, equity without on a meet their

Well or risk

diversified

and

reduce sector-specific company-specific

funds invest mainly in

particular sector. Equity Funds Index Capital Appreciation Portfolio funds of these of Risk associated is the same as that of the benchmark index. Broader indices (like S&P CNX Nifty or BSE Sensex) are less risky than narrow indices (like BSEBANKEX or CNX Bank Index) Value Funds Capital Appreciation Value funds invest in those companies that have fundamentals sound and These funds are

comprises

the same companies that form the index and is constituted in the same proportion as the index.

exposed to a lower risk level as compared to growth funds or specialty funds

whose share prices are currently under-

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valued. Equity or Income Dividend To generate high recurring income and steady capital appreciation Investments made in companies are those which These funds are

generally exposed to the lowest risk level as compared equity funds to other

Yield Funds

issue high dividends (such as Power or Utility companies).

Income / Debt Funds and Money Market Funds Types Investment Objectives Diversified Debt Funds To generate fixed current income Portfolio Investments These funds invest in all securities issued by entities belonging to all sectors of the market High Yield To earn higher Invest issued issuers "below grade" Assured Return Funds To offer assurance of annual returns to investors in period through out the stated lockPredominantly securities debt A low-risk in securities by who those are More volatile and bear diversified funds higher debt default risk than Low default remains volatility, risk of Risk Associated

Debt funds

interest returns

considered to be of investment

investment opportunity

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Fixed

Term

To generate some expected returns in a short period

Usually debt schemes /

invest

in

Low risk fund

Plan Series

income

MoneyMarket Funds

Recurring

income

Invest in short-term (maturing within one year) interest bearing debt instruments

Safest fund option,

mutual investment interst

and capital safety

rate risk remains of Risk Associated

Types

Investment Objectives

Portfolio Investments Debt and

Balanced Funds

To generate regular income, moderate capital appreciation and at the same time minimizing the risk erosion of capital

securities, equity and shares

Limited principal moderate

risk

to and

convertible securities, preference

long-

term growth

held in a relatively equal proportion

Growth-andIncome Funds

Capital growth and some income current

These funds invest in companies appreciation those issuing dividends known having and for high potential for capital

Safer compared riskier income funds

as to than

growth funds and

Asset Allocation Funds

Capital Growth and income generation

These funds invest in financial assets or non-financial (physical) assets

Success of these funds depends upon the skills of a fund manager in anticipating market trends

GROWTH VS. DIVIDEND

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Its important to first get an overview of the two options before we venture into explaining why there is a discrepancy between them. Broadly, mutual funds have two options - growth and dividend. Under the dividend option, income generated by the mutual fund scheme on its investments is distributed to the investor. This income/dividend is not assured by the mutual fund and is linked closely to the performance of stock/debt markets. The investor can choose to either encash the dividend or re-invest it in the same mutual fund scheme (through the dividend re-investment facility). Under the growth option, the investor does not receive an income; in this case the growth option NAV already reflects the growth in investments (if any) registered by the mutual fund. If the investor is in need of an income, he can redeem (either completely or partially depending on his investment objective) his units; the difference in the growth option between the time he bought the mutual fund and redeemed it is effectively his income. The Common Perception Investors believe that after the dividend is distributed, growth NAV and dividend NAV do not appreciate or depreciate in the same proportion. In other words they believe that since the growth NAV is higher than the dividend NAV, it has appreciated more than the dividend NAV. Therefore, they think that they are better off selecting the growth option as opposed to the dividend option. While there are several reasons why investors must choose a particular option (growth or dividend), this is certainly not one of them, mainly because the reality behind the discrepancy between the two options is far from the perception. To know when to select which option, read our article on this subject: What happens when dividend is declared? Once a dividend is declared by the mutual fund, the dividend option NAV diminishes to the extent of the dividend declared. The growth option NAV on the other hand remains unchanged (for simplicitys sake we have ignored the market movement on that particular day). The diminution in the dividend option NAV equals the amount of dividend declared.

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What investors should do

As we have impressed no matter what option the investor chooses, dividend and growth NAVs will appreciate/depreciate based on the market movement; there is no other factor at play over here. Which option (growth or dividend) to select is dictated entirely by the investors investment objective and income/liquidity constraints. Investment funds fall under two broad definitions - income and growth. An income fund provides investors with earnings from the dividends of the companies into which the fund manager puts money. A growth fund looks to grow the original sum invested as much as possible, or sometimes by a set amount. To provide a stream of income to investors, fund managers look for companies that pay out relatively high dividends. "An income stock generates lots of cash and pays some of it out as dividends," explains Hugh Yarrow, co-manager of the Rathbone Income fund. "Such companies are slightly more mature and don't need to put cash back into the business, so they give it to investors. A growth company, on the other hand, will tend to use its cash-flow to invest back into the business." Whether you chose an income fund or a growth fund as your first investment depends on your circumstances and aims. With their more mature companies, income funds are often seen as less risky. However, this doesn't mean growth funds invest exclusively in high-risk young companies. Ed Burke runs the Invesco Perpetual UK Growth fund: "I'm looking to have a high quality group of companies that can generate good levels of free cash-flow per share," he explains. However, income-producing stocks are included in growth funds because the income, when reinvested, forms an important part of a company's total returns over the long term. "Usually a company growing its dividend has a strong franchise and is capable of growing the cash-flow per share," Burke adds.

Picking a fund
Generally speaking, younger investors may want to go for growth as they have a long investing future in front of them to recoup any losses. Those in later life can't afford to take such risks with their money and may be better advised to stick to safer investments. Certainly, investments in a pension need to be lower risk, particularly towards the time the investor is approaching retirement.

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Peak performance
Some growth funds performed way beyond expectations during the dotcom boom at the end of the 1990s. Fund managers made the most of rising prices in telecoms media and technology companies to achieve some outstanding returns for investors. But the boom was an anomaly and couldn't defy gravity forever. Today, growth managers don't expect a repeat of the quick profits made during that time. "Since 2000 there has been a return to the basic principles of investment, and dividends are an important part of that," explains Burke. In other words, managers who got their fingers burnt in the boom are careful not to invest in companies that promise over the top growth, because of the risks to investors' money. Equity income funds have a steadier track record, and over the long term income provides about half the total return of the equity market, points out Yarrow. He adds: "Income stocks also outperform when the market is weakening because of their defensive qualities."

Best of both worlds

It is possible to buy an income fund and a growth fund to capitalize on the advantages that come with each type of investing. The charges on each type of fund are similar and selecting a good example of each type of fund could spread risk, giving exposure to a variety of companies. Some investment houses manage both income and growth funds, which provide a little of each style in the same fund. But, explains Gee, there are only a handful of these funds: "There's nothing wrong with those funds, but there is less choice," she says. "If you have a bit of money you can chose income and growth options from a whole variety of funds, which is better."

Debt Funds
Debt Funds invest in long-term borrowing of the government or corporate issuers at fixed rates of interest. These funds earn their returns from the interest payments that they receive from bonds / gilts and the fluctuations in the market price of their holdings. A Debt Fund is suitable for investors with a low risk appetite.

Equity Funds
Equity funds typically invest in stocks of companies. Compared to Debt and Hybrid Funds, these are high-return funds. Here's a tip: equities investments give the best results if you enter give your investments 3-5 years to grow.

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Open and closed-end funds are both pools of investor money and they are both managed by professionals to maximize diversification within a set strategy. The difference is in how the fund is structured in terms of ownership. An open-end fund issues and redeems shares on demand, whenever investors put money into the fund or take it out. This happens routinely every day and the total assets of the fund grow and shrink as money flows in and out. That means the more investors buy the Vanguard 500 Index fund, for instance, the more shares there will be. There's no limit to the number of shares the fund can issue. Nor is the value of each individual share affected by the number outstanding, since net asset value (NAV) is determined solely by the change in prices of the stocks or bonds the fund owns, not the size of the fund itself. A closed-end fund is a different animal. Like a company, it issues a set number of shares in an initial public offering and they trade on an exchange. A fund like France Growth Fund trades on the New York Stock Exchange just like any other stock. Its share price is determined not by the total value of the assets it holds, but by investor demand for the fund. Investing in closed-end funds can be very confusing for the novice investor and we don't recommend it. Since these funds are traded on the open market, most sell at a discount to their underlying asset value for a number of reasons. Most investors who buy closed-end funds look for those with solid returns that are trading at large discounts. They bet that the spread between the discount and the underlying asset value will close. If you don't understand the mechanics of evaluating the discount spread, however, you're better off sticking to open-end funds

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COMPARISON OF DIFFERENT MUTUAL FUNDS

By FIIs as on Jul 3, 2010 Amount in Rs. Crores Nature Gross Pur. Equity Debt 2302.70 1478.60 Gross Sale 1900.80 299.40 401.9 1179.2 Amount in Rs. Crores Nature Gross Pur. Equity Debt 755.70 5103.60 Gross Sale 962.80 1222.50 -207.1 3881.1 Net Net

By MFs as on Jul 2, 2010

Open Ended & Close Ended Funds

Open and closed-end funds are both pools of investor money and they are both managed by professionals to maximize diversification within a set strategy. The difference is in how the fund is structured in terms of ownership. An open-end fund issues and redeems shares on demand, whenever investors put money into the fund or take it out. This happens routinely every day and the total assets of the fund grow and shrink as money flows in and out. That means the more investors buy the Vanguard 500 Index fund, for instance, the more shares there will be. There's no limit to the number of shares the fund can issue. Nor is the value of each individual share affected by the number outstanding, since net asset value (NAV) is determined solely by the change in prices of the stocks or bonds the fund owns, not the size of the fund itself.

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A closed-end fund is a different animal. Like a company, it issues a set number of shares in an initial public offering and they trade on an exchange. A fund like France Growth Fund trades on the New York Stock Exchange just like any other stock. Its share price is determined not by the total value of the assets it holds, but by investor demand for the fund. Investing in closed-end funds can be very confusing for the novice investor and we don't recommend it. Since these funds are traded on the open market, most sell at a discount to their underlying asset value for a number of reasons. Most investors who buy closed-end funds look for those with solid returns that are trading at large discounts. They bet that the spread between the discount and the underlying asset value will close. If you don't understand the mechanics of evaluating the discount spread, however, you're better off sticking to open-end funds. Open-Ended funds and closed-ended funds can be regarded as two main collective investment instruments. Open-Ended funds (OEFs) are funds which stay open; there is no fixed number of shares and are usually not traded on exchanges (eg: mutual funds). Closed-Ended funds (CEFs) have fixed number of shares and are traded through exchanges just like stocks. Here are the key differences between open-ended and closed-ended funds. 1. Whenever an investor buys shares of open-ended funds the funds asset rise as money is added (equal to the price of shares) to the asset pool, and whenever an investor liquidates shares the funds asset decline as money is taken from the pool of assets. But in closed end funds as buying and selling activities not directly affect funds asset. 2. The value of open-ended funds is equal to their Net Asset Value (NAV). But value of closedended funds can deviate from NAV. Positive deviation is named as premium and negative deviation as discount. 3. The expense ratio of open-ended funds is often higher than closed-ended funds. This is because CEFs do not have to deal with regular creation and redemption of shares. 4. As closed ended funds are traded on exchanges, they are bound to obey some rules which make them more transparent to investors, especially to its shareholders. 5. Because of their low expense ratio, CEFs are allowed to invest more in illiquid securities than OEFs. 6. For creating and redeeming shares, open-ended funds are forced to keep some part of their asset as money, where as closed-ended funds can invest all (most) of their asset to build a portfolio of stocks or other securities. 7. In periods of market panic, for rising money in hand, open-ended fund managers can be forced to sell some asset of their portfolio which they want to hold and this can harm the liquidity and balance of the fund. This is not a problem with closed-ended funds as buying and selling

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activities are between market participants (investors, brokers and market makers) and the fund is not directly involved in it.

SIP OR LUMPSUM OR LONG TERM INVESTMENT,

WHICH ONE IS BETTER
Moral of the story is both styles of investments give good returns in equities if held for the long-term. As long as you remain invested in the right fund, SIP or lump sum Investments both do well. Historically, investors have earned an average of 15 per cent annualised per annum if they remained invested for more than 10 years. Why the sudden importance of SIP and why everybody and her/his aunt is suggesting SIPs? Well, here are the main reasons: SIPs help you in avoiding timing the market It instills discipline towards investments You do not necessarily have to invest a big amount SIP helps you in being a regular investor All said and done remember that the basic purpose of investing is to get money when you need it the most. Hence invest wisely. Some trends never go out of fashion. Probably because they are time tested and proven. Taking a leaf out of the age-old piggy bank concept, fund houses are now re-inventing the systematic investment plans (SIPs). The product, a great success globally so far, has proved to be a great way to accumulate wealth for retail investors with low risk appetite. The virtues of rupee cost averaging and compounding has made it a popular plan to invest with. Drawing from this success, a few fund houses have launched daily SIPs in India. The new product plans to collect a small sum from an individual on a daily basis and invest in the market, much like depositing a

Page 44

penny in a piggy bank. To help you decode the new product, heres a pocket guide on daily SIPs and things you must keep in mind before investing in it.

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Research Methodology
Title Comparative Analysis of Different kinds of mutual funds study of investors behavior towards mutual funds

Purpose:
The purpose of methodology is to describe the process involved in research work. This includes the overall research design, data collection method, the field survey and the analysis of data.

Research Objective:
To gauge the pattern of investment by the investors and their inclination towards the mutual funds investment and also take a deep insight of what all factors are important before doing an investment

Research Design:

Appropriate and structured questionnaire was designed. Surveyed a sample of 100 investors.

Sources of Data:
Primary data Secondary data

Method UsedThe method used for the research is Judgmental Non Probability sampling method.

Analysis:
The important factors and data collected were sequentially analyzed and graphed.

Limitations of the Study:

The sample size is only 100 so the sample may not be truly representative of the Delhi population.

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Analysis and Diagramatic Representation

Q1 a) b) c) d) What is your age? Age bracket 25-35 35-45 45-55 55 and above

Percentage 36 28 24 12

InterpretationMajority of the respondents were in the age group of 25-35 and 35-45. And this is the time period where generally people like to make more investments as they are earning good in this stage.

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Q 2 a) b) c) d)

What is your income bracket? Percentage Income 15 1.5-3 lakh rupees 32 3-5 lakh rupees 29 5-8 lakh rupees 24 8 lakh and above

InterpretationOut of the total 65 respondents the income bracket majorly was in the 3-5 lakh rupees bracket. Just 15% of the respondents were in the 1.5-3lakh bracket.

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What is your source of information while investing in mutual funds?

a) b) c) d) e)

Source Internet Newspaper Financial Advisor Friends Television

Percentage 19 12 28 20 21

InterpretationThe study shows that while making the investment in any mutual fund generally the investors prefer taking a professional support ie of a financial advisor or reports and articles on the net. News programs on TV are also a good source.

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Q4. Are you a regular or a new investor in mutual fund? Type a) REGULAR b) NEW Percentage 46 54

InterpretationThere was a fair mix of the experienced and nave invetors in the mutual funds industry out of the sample of 100 investors.

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Q5. Which type of fund you prefer the most? Type a) Regular income b) Debt c) Diversified Equity d) Sector funds e) ELSS (tax shield) Percentage 31 19 27 9 14

InterpretationThis simply shows that the people surveyed rely more on constant incomes and in equity instruments rather than debt funds.

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Q6. Which Features attract you the most while choosing a specific Mutual Fund?

Feature a) Flexibility b) Return c) Managed by professional people d) Risk Diversion e) Less Expenses

Preference Percentage 10 26 11 22 31

InterpretationMinimization of the investment cost and getting a good return by diversifying their investment portfolio are the basic factors that an investor keeps in mind before investing any specific mutual fund type.

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Q7. What type of Mutual Fund Scheme you prefer?

Type a) Open Ended Scheme b) Close Ended Scheme

Preference Percentage 68 32

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Q8. What type of return you expect? Return Time Period Monthly Quarterly Semi annual Annual Percentage 16 20 28 38

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Q9. What is your investment horizon?

Investment Time Horizon Up to 6 months Up to 1 year Up to 2 years Up to 3 years Up to 5 years 5 years and above

Percentage 10 21 26 24 12 7

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Q10. What are your near future liabilities?

Liability Child marriage Children Education Parents medical expenses Debt Others

Preference Percentage 16 28 19 26 11

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Q11) Would you be interested in knowing more about mutual funds than what your current knowledge is? a) yes b) no [61] [39]

InterpretationMajority investors were interested in knowing more about the mutual funds investment techniques and schemes, which is a good sign for the mutual fund industry.

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LIMITATIONS OF THE STUDY

While surveying I encounter with some problems like-

A survey should involve a larger sample size otherwise the findings of the survey cannot be generalized. A larger sample size may increase the time and cost of collecting the primary data with the help of questionnaire, so I kept the sample size small. Companies generally dont entertain students for survey purposes; it is not allowed to get the questionnaire filled. Many of the respondents were not willing to fill the questionnaire. Some people were not willing to respond and few of them who responded were in hurry hence the active participation was lacking. Due to which I faced difficulties in collecting informations regarding our questionnaire.

Another problem which I face was that people were hesitating to give information about their views freely. Many people dont even know the concept of mutual funds, so it means awareness about the industry needs to be generated.

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RECOMMENDATIONS
Forms should be readily available with the distributors. They should promote/advertise aggressively.
Simplify the forms, make them easy to fill More lucrative incentives for the distributors. Educate the investors that they can invest in the mutual funds directly through fund houses without any entry and exit loads.

There is lack of awareness among people about mutual funds so there should be more
advertising and other promotional campaigns to make them aware.

People are more interested in investing in equity funds rather than debt funds because
companies are promoting more for equity funds. Companies should equally promote debt funds also as the provide security to customers.

Companies should give knowledge to its customer about its computerized operations.

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CONCLUSION
This report is a comparison between different kinds of mutual funds traded in India. It studies various factors, which affects common investors decision for investment in mutual fund and stock market. Moreover it discusses the various measures of revival of common investor confidence in the Indian stock market. The report includes all the basics about the mutual funds, the history of the mutual fund industry as well as its rise in India. It also includes the complete profile of the mutual funds industry that consist all the major players in the market, different types of the funds offer to the investor, their performance in during the last three years with the special focus on funds by Birla Sunlife Mutual Funds AMC LTD. During the study it also appeared that investors give preference to the age factor, while investing there surplus money and consider analyst recommendation, NAV of funds and performance in past few years. The study involved the comparative analysis of the different mutual funds available to the investors. The different funds available to an investor are debt fund, equity fund, sectoral fund etc. The different options to an investor are growth, dividend etc. During the study I came up to a point that majority of the mutual funds investors are investing by the open ended scheme and many are very much willing to gather more information about mutual funds which is a very good indicator for the industry. And it has also been observed that in a very short time period Birla Sun Life AMC Ltd has emerged out as a major player in the market.

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BIBLIOGRAPHY
Websites www.bonannzaonline .com

www.mutualfundsindia.com www.wikipedia.com www.economywatch.com/mutual-funds/index-fund.html www.investopedia.com www.reliancemf.com www.sbimutualfund.com www.economywatch.com/mutual-funds.html www.valuesearchonline.com www.godmind.co.in www.mutualfundadvisorindia.in www.google.com
Magazines and Newspapers The Economic Times

.BusinessLine and Business Standard newspapers

Business Today and Business week.

Books and Articles

Sharma, Sandhir Research Methodology 3rd edition. Chapter-4th Data Analysis Methods

Kothari K.C. Research Methodology 2nd edition Chapter 7th Techniques of researching. Maheshwari N. S. Financial Management Sankaran, Sankaran Indian Mutual Funds Handbook

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ANNEXURE

QUESTIONNAIRE ON MUTUAL FUNDS

NAME :

AGE :

ADDRESS :

OCCUPATION :

1. What is your age? a) b) c) d) 25-35 years 35-45 years 45-55 years 55 and above

2. What is your income bracket? a) 1.5-3 lakh rupees b) 3-5 lakh rupees c) 5-8 lakh rupees d) 8 lakhs and above

3. What is your source of information while investing in mutual funds? a) Internet b) Newspaper c) Financial Advisor d) Friends e) Television

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4. Are you a regular or a new investor in mutual fund? a) REGULAR b) NEW

5. Which type of fund you prefer the most? a) Regular income [ 31] b) Debt [ 19] c) Diversified Equity [ 27] d) Sector funds [ 9] e) ELSS (tax shield) [14 ] 6 . Which Features attract you the most while choosing a specific Mutual Fund? a) Flexibility b) Return c) Managed by professional people d) Risk Diversion e) Less Expenses 7. What type of Mutual Fund Scheme you prefer? a) Open Ended Scheme b) Close Ended Scheme 8. What type of return you expect? a) Monthly b) Quarterly c) Semi annually d) Annually 9. What is your investment horizon? Up to 6 Up to 1 Up to 2 Up to 3 Up to 5 5 years months year years years years and above

10. What are your near future liabilities? Child marriage Children Education

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Parents medical expenses Debt Others

11) Would you be interested in knowing more about mutual funds than what your current knowledge is? a) yes b) no

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