53790265 ULIP n Mutual Funds

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Sanghvi Institute of Management and Science

A Research Project ReportOn

Mutual funds Versus Unit Linked Insurance Plans

Guided By: - Submitted By: -

Prof. Swaranjeet Arora Ankit Kharnal

Mr. Jayesh Kothari Rahul Cornelius


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CERTIFICATE

This is to certify that the work entitled Mutual funds Versus Unit Linked

Insurance Plans is a piece of research work done by Mr. Ankit Kharnal & Mr.

Rahul Cornelius under my guidance and supervision The candidate has put in an

attendance of more than 45 days with me.

To the best of my knowledge and belief, the Project Work:

(i) Embodies the work of the candidates them self;

(ii) Has duly been completed;

(iii) Is up to the standard both in respect of content and language for being

referred to the examiner.

Mrs. Swarnajeet Arora


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ACKNOWLEDGEMENT

Giving thanks seems to be the most pleasant of all things but is none the

different when one actually tries to put it in to words. We find ourselves at loss to

express my feelings.

We undersigned, Rahul Cornelius & Ankit Kharnal convey our sincere thanks

to MR. JAYESH KOTHARI (Territory Manager SBI LIFEINSURANCE

COMPANY LTD.), for their interest, acute suggestions, masterly guidance,

helping, coordinating in carrying this project work, and also for their guidance that

helped us in accomplishment of making this project useful.

Secondly we would like to express our sincere thanks to the faculty members

Mrs. SWARNJEET ARORA & Ms. EKTABAJAJ, for their interest, acute

suggestions masterly guidance, helping, coordinating in carrying this project

work, and also for their guidance that helped us in making this project useful.

Last but not the least, we would like to thank all the respondents without those

our project would not have reached at this level, who directly or indirectly helpedus in the endeavor, and all our friends who had supported us directly or indirectly

while making this project report.

Ankit Kharnal

Rahul Cornelius


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INDEX

S.no Topics

1 Introduction

2 Objective of the Study

3 Research Methodology

4 Mutual Fund an Overview

5 Types Of Mutual Fund

6 Different Plans In Mutual Fund

7 Expenses ans TERS8 Types Of Risk

9 Benefits of Mutual Fund

10 Disadvantages of Mutual Fund

11 Frequently Used Terms

12 Unit Linked Insurance Plans

13 Key Features Of ULIP

14 Are ULIPs Similar To Mutual funds?

15 Comparison Unit Linked Or WITH

PROFITS16 Five Steps Of Selecting the Right ULIP

17 ULIP Versus Mutual funds

18 Data Collection

19 Hypothesis for Z-test

20 Results and Interpretation

21 Factors of investors of Mutual Fund AndULIP

22 Conclusion

23 References24 Annexure


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INTRODUCTION

Starting out as an industry with a single player, the UTI, in 1963, the mutual fund

industry in India has come a long way since then. Today, close to 30 players,

offering over 460 schemes, dot the industry landscape.

A mutual fund is vehicle pool money from investors, with a promise that

professional managers who are expected to honour the promise would invest the

money in a particular manner.

In four decades of its existence in India, the mutual fund industry has gone

through several structural changes. From the days of UTIs monopoly to 1987,

when the industry was opened first to other public sector enterprises, and then to

private sector players in 1993, It has come a long way. The entry of private

player has galvanized the sector as on product innovation, market penetration,

identifying new channels of distribution, and last but not the least, improving

investor service.

Further, the emergence of India as a major investment destination has done a

world of good to the mutual fund industry in the country as it is witnessing entry

of many big names in the global players like Morgan Stanley, Principal, Sun life,and Fidelity, while Vanguard is mulling over its India debut, augurs well for the

industry as not only these global investment management firms bring with them

the expertise gained internationally but also bring the best international practices

in terms of performances and investor services which will benefit the industry and

will go a long way in helping it catch up with its counter parts in developed

markets like US and the UK.


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Objective of the Study:

1) To exploring the investors preference towards the Mutual Fund and ULIP.

2) To evaluate the risk and return in Mutual Fund and ULIP.

3) To gain the in depth knowledge about the Indian Mutual Fund and ULIP

Industry.

4) To identify the investors confidence in Mutual Fund and ULIP.

5) To offer few suggestions based on the findings of the study.

Research Methodology:

1) A questionnaire has been prepared which consist of 14 questions and it

has been administered on the investors of Indore. 35-35 respondents

have been chosen from Mutual Funds and ULIP holders.

2) Sampling Technique: - Simple Random Sampling.

3) Sampling Unit: - Respondents are from Indore (M.P.).

4) Tools for Analysis: - Z-test, Factor Analysis.

5) Hypothesis for Z-test: -

H0 =There isno significant difference in perception of customer for

products offered by Mutual Funds companies and ULIP companies

H1 = There is a significant difference in perception of customer for

products offered by Mutual Funds companies and ULIP companies

.


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MUTUAL FUND AN OVERVIEW

CONCEPTA Mutual fundis a trust that pools the savings of a number of investors whoshare a common financial goal. It is essentially a diversified portfolio of financialinstruments - these could be equities, debentures / bonds or money marketinstruments. The corpus of the fund is then deployed in investment alternativesthat help to meet predefined investment objectives. The income earned throughthese investments and the capital appreciation realised are shared by its unitholders in proportion to the number of units owned by them. Thus a Mutual fundis a suitable investment for the common man as it offers an opportunity to investin a diversified, professionally managed basket of securities at a relatively low

cost.


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ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates theorganisational set up of a mutual fund:

You could make money from a Mutual fundin three ways:

1) Income is earned from dividends declared by Mutual fundschemes from timeto time.

2) If the fund sells securities that have increased in price, the fund has a capitalgain. This is reflected in the price of each unit. When investors sell these units atprices higher than their purchase price, they stand to make a gain.

3) If fund holdings increase in price but are not sold by the fund manager, thefund's unit price increases. You can then sell yourMutual fundunits for a profit.This is tantamount to a valuation gain.


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TYPES OF MUTUAL FUNDS

Mutual fund schemes may be classified on the basis of their structure and theirinvestment objective:

By Structure

Open-ended Funds

An open-ended fund or scheme is one that is available for subscription andrepurchase on a continuous basis. These schemes do not have a fixed maturityperiod. Investors can conveniently buy and sell units at Net Asset Value (NAV)related prices, which are declared on a daily basis. The key feature of open-endschemes is liquidity.

Close-ended Funds

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years.The fund is open for subscription only during a specified period at the time oflaunch of the scheme. Investors can invest in the scheme at the time of the initialpublic issue and thereafter they can buy or sell the units of the scheme on the

Types of Mutual Fund

By Structure By Investment Objective Other EquityRelated Schemes

OpenEndedFunds

CloseEndedFunds

GrowthFunds

IncomeFunds

BalancedFunds

MoneyMarketFunds

TaxSavingSchemes

IndexSchemes

SectoralSchemes


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stock exchanges where the units are listed. In order to provide an exit route tothe investors, some close-ended funds give an option of selling back the units tothe Mutual fundthrough periodic repurchase at NAV related prices. SEBIRegulations stipulate that at least one of the two exit routes is provided to theinvestor i.e. either repurchase facility or through listing on stock exchanges.These mutual funds schemes disclose NAV generally on weekly basis.

By Investment Objective

Growth Funds

The aim of growth funds is to provide capital appreciation over the medium tolong- term. Such schemes normally invest a major part of their corpus in equities.Such funds have comparatively high risks. These schemes provide differentoptions to the investors like dividend option, capital appreciation, etc. and theinvestors may choose an option depending on their preferences. The investorsmust indicate the option in the application form. The mutual funds also allow theinvestors 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.

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 notaffected because of fluctuations in equity markets. However, opportunities ofcapital appreciation are also limited in such funds. The NAVs of such funds areaffected 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.

Balanced Funds

The aim of Balanced Funds is to provide both growth and regular income. Suchschemes periodically distribute a part of their earning and invest both in equitiesand fixed income securities in the proportion indicated in their offer documents.This proportion affects the risks and the returns associated with the balancedfund - in case equities are allocated a higher proportion, investors would beexposed to risks similar to that of the equity market.

Balanced funds with equal allocation to equities and fixed income securities areideal for investors looking for a combination of income and moderate growth.


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Money Market Funds

The aim of Money Market Funds is to provide easy liquidity, preservation ofcapital and moderate income. These schemes generally invest in safer short-term instruments such as Treasury Bills, Certificates of Deposit, CommercialPaper and Inter-Bank Call Money. Returns on these schemes may fluctuatedepending upon the interest rates prevailing in the market.

These are ideal for corporate and individual investors as a means to park theirsurplus funds for short periods.

Gilt Fund

These funds invest exclusively in government securities. Government securitieshave no default risk. NAVs of these schemes also fluctuate due to change ininterest rates and other economic factors as are the case with income or debtoriented schemes.

Other Equity Related Schemes

Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions of theIndian Income Tax laws, as the Government offers tax incentives for investmentin specified avenues.

Investments made in Equity Linked Savings Schemes (ELSS) and PensionSchemes are allowed as deduction underSection 88 of the Indian Income TaxAct, 1961.

Index Schemes

Index Funds attempt to replicate the performance of a particular index such asthe BSE Sensex or the NSE S&P CNX 50.

Sectoral Schemes

Sectoral Funds are those, which invest, exclusively in specified sector(s) such asFMCG, Information Technology, Pharmaceuticals, etc. These schemes carryhigher risk as compared to general equity schemes as the portfolio is lessdiversified, i.e. restricted to specific sector(s) / industry (ies).


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Sector specific funds / schemes

These are the funds/schemes, which invest in the securities of only those sectorsor industries as specified in the offer documents. E.g. Pharmaceuticals, Software,Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns inthese funds are dependent on the performance of the respectivesectors/industries. While these funds may give higher returns, they are more

risky compared to diversified funds. Investors need to keep a watch on theperformance of those sectors/industries and must exit at an appropriate time.They may also seek advice of an expert.

Load or no-load Fund

A Load Fund is one that charges a percentage of NAV for entry or exit. That is,each time one buys or sells units in the fund, a charge will be payable. Thischarge is used by the Mutual fundfor marketing and distribution expenses.Suppose the NAV per unit is Rs.10. If the entry as well as exit load charged is1%, then the investors who buy would be required to pay Rs.10.10 and those

who offer their units for repurchase to the Mutual fundwill get only Rs.9.90 perunit. The investors should take the loads into consideration while makinginvestment as these affect their yields/returns. However, the investors shouldalso consider the performance track record and service standards of the mutualfund, which are more important. Efficient funds may give higher returns in spite ofloads.

A no-load fund is one that does not charge for entry or exit. It means theinvestors can enter the fund/scheme at NAV and no additional charges arepayable on purchase or sale of units.

Assured return scheme

Assured return schemes are those schemes that assure a specific return to theunit holders irrespective of performance of the scheme.

A scheme cannot promise returns unless such returns are fully guaranteed bythe sponsor or AMC and this is required to be disclosed in the offer document.

Investors should carefully read the offer document whether return is assured forthe entire period of the scheme or only for a certain period. Some schemesassure returns one year at a time and they review and change it at the beginning

of the next year.


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DIFFERENT PLANS IN MUTUAL FUNDS

To cater to different investment needs, Mutual Funds offer various investmentoptions. Some of the important investment options include:

Growth Option

Dividend is not paid-out under a Growth Option and the investor realizes only thecapital appreciation on the investment (by an increase in NAV).

Dividend Payout Option

Dividends are paid-out to investors under the Dividend Payout Option. However,the NAV of the Mutual fundscheme falls to the extent of the dividend payout.

Dividend Re-investment Option

Here the dividend accrued on mutual funds is automatically re-invested inpurchasing additional units in open-ended funds. In most cases mutual fundsoffer the investor an option of collecting dividends or re-investing the same.

Retirement Pension Option

Some schemes are linked with retirement pension. Individuals participate in

these options for themselves, and corporate participate for their employees.

Insurance Option

Certain Mutual Funds offer schemes that provide insurance cover to investors asan added benefit.

Systematic Investment Plan (SIP)

Here the investor is given the option of preparing a pre-determined number ofpost-dated cheques in favour of the fund. The investor is allotted units on apredetermined date specified in the offer document at the applicable NAV.


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Systematic Encashment Plan (SEP)

As opposed to the Systematic Investment Plan, the Systematic Encashment Planallows the investor the facility to withdraw a pre-determined amount / units fromhis fund at a pre-determined interval. The investor's units will be redeemed at the

applicable NAV as on that day.


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EXPENSES AND TER'S

Mutual funds bear expenses similar to other companies. The fee structure of aMutual fundcan be divided into two or three main components: management fee,non-management expense, and 12b-1/non-12b-1 fees. All expenses are

expressed as a percentage of the average daily net assets of the fund.

Management Fees

The management fee for the fund is usually synonymous with the contractualinvestment advisory fee charged for the management of a fund's investments.However, as many fund companies include administrative fees in the advisoryfee component, when attempting to compare the total management expenses ofdifferent funds, it is helpful to define management fee as equal to the contractualadvisory fee + the contractual administrator fee. This "levels the playing field"when comparing management fee components across multiple funds.

Contractual advisory fees may be structured as "flat-rate" fees, i.e., a single feecharged to the fund, regardless of the asset size of the fund. However, manyfunds have contractual fees, which include breakpoints, so that as the value of afund's assets increases, the advisory fee paid decreases. Another way in whichthe advisory fees remain competitive is by structuring the fee so that it is basedon the value of all of the assets of a group or a complex of funds rather thanthose of a single fund.

Non-management Expenses

Apart from the management fee, there are certain non-management expenses,which most funds must pay. Some of the more significant (in terms of amount)non-management expenses are: transfer agent expenses (this is usually theperson you get on the other end of the phone line when you want topurchase/sell shares of a fund), custodian expense (the fund's assets are kept incustody by a bank which charges a custody fee), legal/audit expense, fundaccounting expense, registration expense (the SEC charges a registration feewhen funds file registration statements with it), board of directors/trusteesexpense (the disinterested members of the board who oversee the fund areusually paid a fee for their time spent at board meetings), and printing andpostage expense (incurred when printing and delivering shareholder reports).


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Fees and Expenses Borne by the Investor (not the Fund)

Fees and expenses borne by the investor vary based on the arrangement madewith the investor's broker. Sales loads (or contingent deferred sales loads(CDSL)) are not included in the fund's total expense ratio (TER) because they donot pass through the statement of operations for the fund. Additionally, fundsmay charge early redemption fees to discourage investors from swapping money

into and out of the fund quickly, which may force the fund to make bad trades toobtain the necessary liquidity. For example, Fidelity Diversified International Fund(FDIVX) charges a 1 percent fee on money removed from the fund in less than30 days.

Brokerage Commissions

An additional expense, which does not pass through the statement of operationsand cannot be controlled by the investor, is brokerage commissions. Brokeragecommissions are incorporated into the price of the fund and are reported usually3 months after the fund's annual report in the statement of additional information.

Brokerage commissions are directly related to portfolio turnover (portfolioturnover refers to the number of times the fund's assets are bought and sold overthe course of a year). Usually the higher the rate of the portfolio turnover, thehigher the brokerage commissions. The advisors ofMutual fundcompanies arerequired to achieve "best execution" through brokerage arrangements so that thecommissions charged to the fund will not be excessive.


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TYPES OF RISK

Risk is an inherent aspect of every form of investment. ForMutual fundinvestments, risks would include variability, or period-by-period fluctuations intotal return. The value of the scheme's investments may be affected by factors

affecting capital markets such as price and volume volatility in the stock markets,interest rates, currency exchange rates, foreign investment, changes ingovernment policy, political, economic or other developments.

Market Risk

At times the prices or yields of all the securities in a particular market rise or falldue to broad outside influences. When this happens, the stock prices of both anoutstanding, highly profitable company and a fledgling corporation may beaffected. This change in price is due to "market risk".

Inflation Risk

Sometimes referred to as "loss of purchasing power." Whenever the rate ofinflation exceeds the earnings on your investment, you run the risk that you'llactually be able to buy less, not more.

Credit Risk

In short, how stable is the company or entity to which you lend your money whenyou invest? How certain are you that it will be able to pay the interest you arepromised, or repay your principal when the investment matures?

Interest Rate Risk

Changing interest rates affect both equities and bonds in many ways.Movements in the interest rates influence Bond prices in the financial system.Generally, when interest rates rise, prices of the securities fall and when interestrates drop, the prices increase. Interest rate movements in the Indian debtmarkets can be volatile leading to the possibility of large price movements up ordown in debt and money market securities and thereby to possibly largemovements in the NAV.

Investment Risks

In the sectoral fund schemes, investments will be predominantly in equities ofselect companies in the particular sectors. Accordingly, the NAV of the schemesare linked to the equity performance of such companies and may be morevolatile than a more diversified portfolio of equities.


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Liquidity Risk

Thinly traded securities carry the danger of not being easily saleable at or neartheir real values. The fund manager may therefore be unable to quickly sell anilliquid bond and this might affect the price of the fund unfavorably. Liquidity risk

is characteristic of the Indian fixed income market.


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BENEFITS OF INVESTING IN MUTUAL FUND

1. Access to professional money managers

Experienced fund managers using advanced quantitative and mathematicaltechniques manage your money.

2. Diversification

Mutual funds aim to reduce the volatility of returns through diversification byinvesting in a number of companies across a broad section of industries andsectors. It prevents an investor from putting "all eggs in one basket". Thisinherently minimizes risk. Thus with a small investible surplus an investor canachieve diversification which would have otherwise not been possible.

3. Liquidity

Open-ended mutual funds are priced daily and are always willing to buy backunits from investors. This mean that investors can sell their holdings in Mutualfundinvestments anytime without worrying about finding a buyer at the rightprice. In the case of other investment avenues such as stocks and bonds, buyersare not necessarily available and therefore these investment avenues are lessliquid compared to open-ended schemes of mutual funds.

4.Tax Efficiency

(i) Equity Funds

Currently, dividends are tax-free in the hands of the investor. There is nodistribution tax payable by the Mutual fundon dividends distributed. There is notax deduction at source on dividends as well. Investments for over 12 monthsqualify for long-term capital gains. Moreover for resident investors there is noTDS on redemption of the units. The recently introduced Securities TransactionTax is applicable to equity fund investments.


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(ii) Debt Funds

Currently, dividends are tax-free in the hands of the investor. However, there isdistribution tax together with surcharge and education cess, as may beapplicable, payable by the Mutual fundon dividends distributed. There is no taxdeduction at source on dividends as well. Investments for over 12 months qualifyfor long-term capital gains. For resident investors there is no TDS on redemption

of the units.

Low transaction costs - Since mutual funds are a pool of money of manyinvestors, the amount of investment made in securities is large. This thereforeresults in paying lower brokerage due to economies of scale.

Transparency - Prices of open-ended mutual funds are declared daily. Regularupdates on the value of your investment are available. The portfolio is alsodisclosed regularly with the fund manager's investment strategy and outlook.

Well-regulated industry - All the mutual funds are registered with SEBI and they

function under strict regulations designed to protect the interests of investors.

Convenience of small investments - Under normal circumstances, anindividual investor would not be able to diversify his investments (and thusminimize risk) across a wide array of securities due to the small size of hisinvestments and inherently higher transaction costs. A Mutual fundon the otherhand allows even individual investors to hold a diversified array of securities dueto the fact that it invests in a portfolio of stocks. A Mutual fundtherefore permitsrisk diversification without an investor having to invest large amounts of money.

DISADVANTAGES OF MUTUAL FUND


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Professional Management

Did you notice how we qualified the advantage of professional management withthe word "theoretically"? Many investors debate over whether or not the so-calledprofessionals are any better than you or I at picking stocks. Management is by no

means infallible, and, even if the fund loses money, the manager still takeshis/her cut. We'll talk about this in detail in a later section.

Costs

Mutual funds don't exist solely to make your life easier--all funds are in it for aprofit. The mutual fund industry is masterful at burying costs under layers of

jargon. These costs are so complicated that in this tutorial we have devoted anentire section to the subject.

Dilution

It's possible to have too much diversification (this is explained in our articleentitled "Are You Over-Diversified?"). Because funds have small holdings in somany different companies, high returns from a few investments often don't makemuch difference on the overall return. Dilution is also the result of a successfulfund getting too big. When money pours into funds that have had strong success,the manager often has trouble finding a good investment for all the new money.

Taxes

When making decisions about your money, fund managers don't consider your

personal tax situation. For example, when a fund manager sells a security, acapital-gain tax is triggered, which affects how profitable the individual is from thesale. It might have been more advantageous for the individual to defer the capitalgains liability.

FREQUENTLY USED TERMS


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Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest tomutual funds in terms of their structure and functioning. As is the case wit mutualfunds, the insurance company allots units investors in ULIPs and a net assetvalue (NAV) is declared for the same on a daily basis.

Similarly ULIP investors have the option of investing across various schemessimilar to the ones found in the mutual funds domain, i.e. diversified equity funds,

balanced funds and debt funds to name a few. Generally speaking, ULIPs can betermed as Mutual fundschemes with an insurance component.

However it should not be construed that barring the insurance element there isnothing differentiating mutual funds from ULIPs.

Unit-linked insurance plans, ULIPs, are distinct from the more familiar withprofits policies sold for decades by the Life Insurance Corporation.

With profits policies are called so because investment gains (profits) are

distributed to policyholders in the form of a bonus announced every year.

ULIPs also serve the same function of providing insurance protection againstdeath and provision of long-term savings, but they are structured differently.

In with profits policies, the insurance company credits the premium to a commonpool called the life fund, after setting aside funds for the risk premium on lifeinsurance and management expenses.

Every year, the insurer calculates how much has to be paid to settle death andmaturity claims. The surplus in the life fund left after meeting these liabilities is

credited to policyholders accounts in the form of a bonus.

In a ULIP too, the insurer deducts charges towards life insurance (mortalitycharges), administration charges and fund management charges.

The rest of the premium is used to invest in a fund that invests money in stocksor bonds.

The number of units represents the policyholders share in the fund.

The value of the unit is determined by the total value of all the investments made

by the fund divided by the number of units.

If the insurance company offers a range of funds, the insured can direct thecompany to invest in the fund of his choice. Insurers usually offer three choices an equity (growth) fund, balanced fund and a fund, which invests in bonds.

In both with profits policies as well as unit-linked policies, a large part of the firstyear premium goes towards paying the agents commissions.


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KEY FEATURES OF ULIPs


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Insurers love ULIPs for several reasons. Most important of all, insurers can sellthese policies with less capital of their own than what would be required if theysold traditional policies.

In traditional with profits policies, the insurance company bears the investmentrisk to the extent of the assured amount. In ULIPs, the policyholder bears most ofthe investment risk.

Since ULIPs are devised to mobilise savings, they give insurance companies anopportunity to get a large chunk of the asset management business, which hasbeen traditionally dominated by mutual funds.

1. Term/Tenure

The ULIP client must have the option to choose a term/tenure.

If no term is defined, then the term will be defined as '70 minus the age of theclient'. For example if the client is opting for ULIP at the age of 30 then the policyterm would be 40 years.

The ULIP must have a minimum tenure of 5 years.

2. Sum Assured

On the same lines, now there is a sum assured that clients can associate with.The minimum sum assured is calculated as: (Term/2 * Annual Premium) or (5 *Annual Premium) whichever is higher.

There is no clarity with regards to the maximum sum assured.The sum assuredis treated as sacred under the new guidelines; it cannot be reduced at any pointduring the term of the policy except under certain conditions - like a partialwithdrawal within two years of death or all partial withdrawals after 60 years ofage. This way the client is at ease with regards to the sum assured at hisdisposal.

3. Premium payments

If less than first 3 years premiums are paid, the life cover will lapse and policy willbe terminated by paying the surrender value. However, if at least first 3 yearspremiums have been paid, then the life cover would have to continue at theoption of the client.

4. Surrender value

The surrender value would be payable only after completion of 3 policy years.


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5. Top-ups

Insurance companies can accept top-ups only if the client has paid regularpremiums till date. If the top-up amount exceeds 25% of total basic regularpremiums paid till date, then the client has to be given a certain percentage ofsum assured on the excess amount. Top-ups have a lock-in of 3 years (unlessthe top-up is made in the last 3 years of the policy).

6. Partial withdrawals

The client can make partial withdrawals only after 3 policy years.

7. Settlement

The client has the option to claim the amount accumulated in his account aftermaturity of the term of the policy up to a maximum of 5 years. For instance, if theULIP matures on January 1, 2007, the client has the option to claim the ULIPmonies till as late as December 31, 2012. However, life cover will not be

available during the extended period.

8. Loans

No loans will be granted under the new ULIP.

9. Charges

The insurance company must state the ULIP charges explicitly. They must alsogive the method of deduction of charges.

10. Benefit Illustrations

The client must necessarily sign on the sales benefit illustrations. Theseillustrations are shown to the client by the agent to give him an idea about thereturns on his policy.

Agents are bound by guidelines to show illustrations based on an optimisticestimate of 10% and a conservative estimate of 6%. Now clients will have to signon these illustrations, because agents were violating these guidelines andprojecting higher returns.

While what the IRDA has done is commendable, a lot more needs to be done. AtPersonalfn, we have our own wish list with regards to ULIP portfolios:

Regular disclosure of detailed ULIP portfolios. This is a problem with the industry;for all their talk on being just like (or even better than) mutual funds, ULIPportfolios are nowhere near theirMutual fundcounterparts in frequency as wellas in transparency.


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On the same lines, other data points like portfolio turnover ratios need to bementioned clearly so clients have an idea on whether the fund manager isinvesting or punting.

ULIPs (especially the aggressive options) need to mention their investmentmandate, is it going to aim for aggressive capital appreciation or steady growth.In other words will it be managed aggressively or conservatively? Will it invest in

large caps, mid caps or across both segments? Will it be managed with thegrowth style or the value style?

Exposure to a stock/sector in a ULIP portfolio must be defined. Diversified equityfunds have a limit to how much they can invest in a stock/sector. Investmentguidelines for ULIPs must also be crystallised.

Our interaction with insurance companies indicates that there is little clarity onthis front; we believe that since ULIPs invest so heavily in stock markets theymust have very clear-cut investment guidelines.

ARE ULIPS SIMILAR TO MUTUAL FUNDS?


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In structure, yes; in objective, no. Because of the high first-year charges, mutualfunds are a better option if you have a five-year horizon.

But if you have a horizon of 10 years or more, then ULIPs have an edge. Toexplain this further a ULIP has high first-year charges towards acquisition(including agents commissions).

As a result, they find it difficult to outperform mutual funds in the first five years.But in the long-term, ULIP managers have several advantages overMutual fundmanagers.

Since policyholder premiums come at regular intervals, investments can beplanned out more evenly.

Mutual fundmanagers cannot take a similar long-term view because they havebulk investors who can move money in and out of schemes at short notice.

COMPARISON, UNIT LINKED OR WITHPROFITS

The two strong arguments in favour of unit-linked plans are that the investorknows exactly what is happening to his money and two, it allows the investor to


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choose the assets into which he wants his funds invested.

A traditional with profits, on the other hand, is a black box and a policyholderhas little knowledge of what is happening. An investor in a ULIP knows howmuch he is paying towards mortality, management and administration charges.

He also knows where the insurance company has invested the money. The

investor gets exactly the same returns that the fund earns, but he also bears theinvestment risk.

The transparency makes the product more competitive. So if you are willing tobear the investment risks in order to generate a higher return on your retirementfunds, ULIPs are for you.

Traditional with profits policies too invest in the market and generate the samereturns prevailing in the market. But here the insurance company evens outreturns to ensure that policyholders do not lose money in a bad year. In thatsense they are safer.

ULIPs also offer flexibility. For instance, a policyholder can ask the insurancecompany to liquidate units in his account to meet the mortality charges if he isunable to pay any premium installment.

This eats into his savings, but ensures that the policy will continue to cover hislife.

FIVE STEPS OF SELECTING THE RIGHT ULIP

1. Understand the concept of ULIPs


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Do as much homework as possible before investing in an ULIP. This way you willbe fully aware of what you are getting into and make an informed decision.

More importantly, it will ensure that you are not faced with any unpleasantsurprises at a later stage. Our experience suggests that investors on mostoccasions fail to realize what they are getting into and unscrupulous agentsshould get a lot of 'credit' for the same.

Gather information on ULIPs, the various options available and understand theirworking. Read ULIP-related information available on financial Web sites,newspapers and sales literature circulated by insurance companies.

2. Focus on your need and risk profile

Identify a plan that is best suited for you (in terms of allocation of money betweenequity and debt instruments). Your risk appetite should be the deciding criterionin choosing the plan.

As a result if you have a high-risk appetite, then an aggressive investment optionwith a higher equity component is likely to be more suited. Similarly your existinginvestment portfolio and the equity-debt allocation therein also need to be givendue importance before selecting a plan.

Opting for a plan that is lop-sided in favour of equities, only with the objective ofclocking attractive returns can and does spell disaster in most cases.

3. Compare ULIP products from various insurance companies

Compare products offered by various insurance companies on parameters like

expenses, premium payments and performance among others. For example,information on premium payments will help you get a better picture of theminimum outlay since ULIPs work on premium payments as opposed to sumassured in the case of conventional insurance products.

Compare the ULIPs' performance i.e. find out how the debt, equity and balancedschemes are performing; also study the portfolios of various plans. Expenses area significant factor in ULIPs, hence an assessment on this parameter iswarranted as well.

Enquire about the top-up facility offered by ULIPs i.e. additional lump sum

investments, which can be made to enhance the policy's savings portion. Thisoption enables policyholders to increase the premium amounts, thereby providingpresenting an opportunity to gainfully invest any surplus funds available.

Find out about the number of times you can make free switches (i.e. change theasset allocation of your ULIP account) from one investment plan to another.


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Some insurance companies offer multiple free switches every year while othersdo so only after the completion of a stipulated period.

4. Go for an experienced insurance advisor

Select an advisor who is not only conversant with the functioning of debt andequity markets, but also independent and unbiased. Ask for references of clients

he has serviced earlier and crosscheck his service standards.

When your agent recommends a ULIP from a given company, put forth someproduct-related questions to test him and also ask him why the products fromother insurers should not be considered.

Insurance advice at all times must be unbiased and independent; also your agentmust be willing to inform you about the pros and cons of buying a particular plan.His job should not be restricted to doing paper work like filling forms anddelivering receipts; instead he should keep track of your plan and offer youadvice on a regular basis.

5. Does your ULIP offer a minimum guarantee?

In a market-linked product, protecting the investment's downside can be a hugeadvantage. Find out if the ULIP you are considering offers a minimum guaranteeand what costs have to be borne for the same.

ULIPs Versus MUTUAL FUNDS

1. Mode of investment/ investment amounts


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Mutual fundinvestors have the option of either making lump sum investments orinvesting using the systematic investment plan (SIP) route, which entailscommitments over longer time horizons. The fund house lays out the minimuminvestment amounts.

ULIP investors also have the choice of investing in a lump sum (single premium)or using the conventional route, i.e. making premium payments on an annual,

half-yearly, quarterly or monthly basis. In ULIPs, determining the premium paid isoften the starting point for the investment activity.

This is in stark contrast to conventional insurance plans where the sum assuredis the starting point and premiums to be paid are determined thereafter.

ULIP investors also have the flexibility to alter the premium amounts during thepolicy's tenure. For example an individual with access to surplus funds canenhance the contribution thereby ensuring that his surplus funds are gainfullyinvested; conversely an individual faced with a liquidity crunch has the option ofpaying a lower amount (the difference being adjusted in the accumulated value of

his ULIP). The freedom to modify premium payments at one's convenienceclearly gives ULIP investors an edge over theirMutual fundcounterparts.

2. Expenses

In Mutual fundinvestments, expenses charged for various activities like fundmanagement, sales and marketing, administration among others are subject topre-determined upper limits as prescribed by the Securities and Exchange Boardof India.

For example equity-oriented funds can charge their investors a maximum of

2.5% per annum on a recurring basis for all their expenses; any expense abovethe prescribed limit is borne by the fund house and not the investors.

Similarly funds also charge their investors entry and exit loads (in most cases,either is applicable). Entry loads are charged at the timing of making aninvestment while the exit load is charged at the time of sale.

Insurance companies have a free hand in levying expenses on their ULIPproducts with no upper limits being prescribed by the regulator, i.e. the InsuranceRegulatory and Development Authority. This explains thecomplex and at times'unwieldy' expense structures on ULIP offerings. The only restraint placed is that

insurers are required tonotify the regulator of all the expenses that will becharged on their ULIP offerings.

Expenses can have far-reaching consequences on investors since higherexpenses translate into lower amounts being invested and a smaller corpusbeing accumulated. ULIP-related expenses have been dealt with in detail in thearticle "Understanding ULIP expenses".


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3. Portfolio disclosure

Mutual fundhouses are required to statutorily declare their portfolios on aquarterly basis, albeit most fund houses do so on a monthly basis. Investors getthe opportunity to see where their monies are being invested and how they havebeen managed by studying the portfolio.

There is lack of consensus on whether ULIPs are required to disclose theirportfolios. During our interactions with leading insurers we came across divergentviews on this issue.

While one school of thought believes that disclosing portfolios on a quarterlybasis is mandatory, the other believes that there is no legal obligation to do soand that insurers are required to disclose their portfolios only on demand.

Some insurance companies do declare their portfolios on a monthly/quarterlybasis. However the lack of transparency in ULIP investments could be a causefor concern considering that the amount invested in insurance policies is

essentially meant to provide for contingencies and for long-term needs likeretirement; regular portfolio disclosures on the other hand can enable investors tomake timely investment decisions.

ULIPs vs. Mutual Funds ULIPs Mutual Funds

Investment amounts

Determined by theinvestor and can bemodified as well

Minimum investmentamounts aredetermined by the fundhouse

Expenses

No upper limits,expenses determinedby the insurancecompany

Upper limits forexpenses chargeableto investors have beenset by the regulator

Portfolio disclosure Not mandatory*Quarterly disclosuresare mandatory

Modifying assetallocation

Generally permittedfor free or at anominal cost

Entry/exit loads have tobe borne by theinvestor

Tax benefits

Section 80C benefitsare available on allULIP investments

Section 80C benefitsare available only oninvestments in tax-saving funds


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* There is lack of consensus on whether ULIPs are required to disclose theirportfolios. While some insurers claim that disclosing portfolios on a quarterlybasis is mandatory, others state that there is no legal obligation to do so.

4. Flexibility in altering the asset allocation

As was stated earlier, offerings in both the mutual funds segment and ULIPs

segment are largely comparable. For example plans that invest their entirecorpus in equities (diversified equity funds), a 60:40 allotment in equity and debtinstruments (balanced funds) and those investing only in debt instruments (debtfunds) can be found in both ULIPs and mutual funds.

If a Mutual fundinvestor in a diversified equity fund wishes to shift his corpus intoa debt from the same fund house, he could have to bear an exit load and/or entryload.

On the other hand most insurance companies permit their ULIP inventors to shiftinvestments across various plans/asset classes either at a nominal or no cost

(usually, a couple of switches are allowed free of charge every year and a costhas to be borne for additional switches).

Effectively the ULIP investor is given the option to invest across asset classes asper his convenience in a cost-effective manner.

This can prove to be very useful for investors, for example in a bull market whenthe ULIP investor's equity component has appreciated, he can book profits bysimply transferring the requisite amount to a debt-oriented plan.

5. Tax benefits

ULIP investments qualify for deductions under Section 80C of the Income TaxAct. This holds well, irrespective of the nature of the plan chosen by the investor.On the other hand in the mutual funds domain, only investments in tax-savingfunds (also referred to as equity-linked savings schemes) are eligible for Section80C benefits.

Maturity proceeds from ULIPs are tax free. In case of equity-oriented funds (forexample diversified equity funds, balanced funds), if the investments are held fora period over 12 months, the gains are tax free; conversely investments soldwithin a 12-month period attract short-term capital gains tax @ 10%.

Similarly, debt-oriented funds attract a long-term capital gains tax @ 10%, whilea short-term capital gain is taxed at the investor's marginal tax rate.

Despite the seemingly similar structures evidently both mutual funds and ULIPshave their unique set of advantages to offer. As always, it is vital for investors tobe aware of the nuances in both offerings and make informed decisions


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HYPOTHESIS FOR Z TEST

Hypothesis (Z Test)Z test Comparative series test

Z test is based on the normal probability distribution and is used for judging the

significance of several statistical measures, particularly the mean. The relevanttest statistics is worked out and compared with its probable value (to be readfrom table showing area under normal curve) at a specified level of significancefrom the judging the significance of the measures concerns. This is mostfrequently used in research study. The test used even when binominaldistributions or t distribution is applicable on the presumption that such adistribution tends to approximate normal distribution as V becomes larger. Z testis generally used for comparing the mean of a sample to sum hypothesizedmeans for the population in case of large sample or when population variance isknown. Z test is also used for judging the significance of difference betweenmeans of two independent samples in case of large samples or when the

populations variance is known. Z test is also used for comparing the sampleproportion to a theoretical value o population or for finding the difference inproportions of 2 independent samples when n happens to large. Besides this testmay be used for judging the significance of median, mode, coefficient ofcorrelation and several other measures.

In this study I have used this tool to evaluate the HFCs pre and postperformance after liberalization, has it improved or reduced.

The hypothesis is taken as : -

Ho.: There is no significant difference in perception of customer forproducts offered by Mutual Funds companies and ULIP companies.

H1: There is significanct difference in perception of customer forproducts offered by Mutual Funds companies and ULIP companies.

The Z test was applied to test the significance at 5% level of significance.


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Results and Interpretation

Value of Z-TEST

Particular Mean Standard-Deviation

Z-calculatedvalue

Mutual Fund

ULIP

35.14286

35.97143

38.23863

45.761390.0822

Factors

Mutual Fund

Factor of investors preference for mutual fundF1 F2 F3 F4 F5

INVESTMENTFLEXIBILITY

COREPRODUCTFACTOR

RISKRETURNFACTOR

TRANSPARENCYTAX FREEINCOME

Lock In Period Less benefit Market Risk Information Tax rebates

Death BenefitTermInsurance Fewer Returns Charges Less Flexible

Less Safe More RiskyLess AssuredReturns

Short Term

INVESTMENT FLEXIBILITYInvestment flexibility gives options to choose from various plans available, andgives investor facility to switch between the plans even after investing, thismakes it easy for the investor to switch between the plans in the term as whichplan providing high returns and NAV. Death benefit in case of ULIP makesinvestors money more secure. It is measured by item 11,14,9 and these

variables are Lock In Period, Death Benefit and Less Safe Variable 11 is thestrongest and explains 17.5289 per cent variance and has a total factor load of2.851039.

CORE PRODUCT FACTORWorks under high risk high return, the investment long or short termed, providereturns, and side by side, covers the insurance Factor; this provides double


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benefit to the investor as he gets the returns and growth of both i.e. the

investment and the insurance cover at the time of maturity. It is measured byitem10, 12, 1, 5 and these variables are Less benefit, Term Insurance, MoreRisky and Short Term Variable 10 is the strongest and explains 14.2961 percent variance and has a total factor load of 2.236417783.

RISK RETURN FACTORThe returns covers all the possible risk, provide the minimum sum assured, theNAV goes according to the market but never falls too short of providing a goodreturns, and if for a time period it falls short then the losses can be covered thenext moment the NAV climbs up, thus making the sum assured returns in thedespite of Market risk involved. It is measured by item 6,8,13 and these variablesare Market Risk, Fewer Returns and Less Assured Returns Variable 06 isthe strongest and explains 12.76165per cent variance and has a total factor loadof 0.519326.

TRANSPARENCY

The investors are provided with all the details of the plans available, making themeasy to choose accordingly, i.e. which plan is providing high rates ofreturns, which plan is having the high NAV in the market, that can bedecided by the investors before investing their hard earned money, it ismeasured by item 2,3 and these variables are Information and ChargesVariable 02 is the strongest and explains 12.42219 per cent variance andhas a total factor load of 0.126049.

TAX FREE INCOME

All the returns which the investors get are totally tax free, i.e. they are not taxableunder any head of income tax, this makes the investors save all the tax onthe growth provided by the available plans, all the funds so generated aretermed white and gives the investors the chance to use the way freely asthey like. It is measured by item 4,7 and these variables are Tax rebatesand Less Flexible Variable 04 is the strongest and explains 10.81671 percent variance and has a total factor load of 1.510473.


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ULIP (Unit Linked Insurance Plan)

INVESTORS PROTECTIONTax saving option as all the returns are tax free, insurance cover also goes sideby side thus covering the risk involved, this insures that the returns provided bythe plan can be used by the way investor likes, and at the time of maturity thereturns thus provided are of both, the fund invested and the insurance benefit. It

is measured by item 4, 12 and these variables are Tax Rebates and TermInsurance Variable 04 is the strongest and explains 12.48766 per cent varianceand has a total factor load of 1.643967.

COST AND TIME EFFECTIVENo hidden charges, all the charges are clearly mentioned in it, the market risk soinvolved gets minimized by the lock in period provided, the lock in period insuresminimum time period for which the fund is invested and it provides the return thusmaking the fund grow in that period of time, and at the time of maturity into a

handsome amount. It is measured by item 6, 3, 11 and these variables are

Market Risk and Charges Variable 06 is the strongest and explains 12.37681per cent variance and has a total factor load of 0.684604.

SECURITY OPTIONSVarious security and flexibility options insures proper and safe management offunds, the funds so invested goes to the invested market according to theportfolio designed, this insures safe and sound growth of funds as they areinvested in various area and not in the same place. It is measured by item 9,7and these variables are Less Safe and Flexible Variable 09 is the strongestand explains 12.18735 per cent variance and has a total factor load of -0.27762.

RISK MANAGEMENTInvestment in the said plans provides the facility of switching and insurance i.e.the money so invested never goes out in the same place, minimizing the risk ofgetting less returns, investments in the places according to the portfolio designedhelps to compensate the losses, if arise from the other place from where theinvestor is getting higher returns thus minimizing the risks in every possible way.It is measured by item 10, 1 and these variables are Less benefit and More

F1 F2 F3 F4 F5 Ff6 F7Investor'sProtection

Cost andTimeEffective

SecurityOptions

RiskManagement

InformationFlow

TermAnalysis

Riding the YeildCurve

Tax Rebates Market Risk Less Safe Less benefit Death Benefit Short Term Assured ReturnsTermInsurance Charges Flexible More Risky Information Fewer Returns


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Risky Variable 10 is the strongest and explains 11.87087 per cent variance andhas a total factor load of 1.522173.

INFORMATION FLOWAll the needed information is given resulting proper fund management andinvestment, the factors and the details are clearly mentioned thus making it easyfor the investor to invest accordingly to the right plan of his choice. It is measured

by item 14,2 and these variables are Death Benefit and Information Variable14 is the strongest and explains 11.82194 per cent variance and has a totalfactor load of 1.432328.

TERM ANALYSISShort term results in high returns in less period of time, while giving out all thebenefits of a long termed plan. This results in the growth in short span giving theinvestor the choice of reinvesting the growth in another plan after the maturity inshort period of time, It is measured by item 5 and the variable is Short TermVariable 5 is the strongest and explains 9.314896per cent variance and has atotal factor load of 0.897818.

RIDING THE YIELD CURVEThe term for which the money is invested is known as the lock in period, itinsures the money to grow in the beat possible way while covering all the risksinvolved, this results in the assured sum of returns, in the short period of time. Itis measured by item 13,8 and these variables are Assured Returns and FewerReturns Variable 13 is the strongest and explains 8.770282 per cent variance

and has a total factor load of 0.373159.


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Conclusion

1. The study shows that information of both the investment options is easily

available.

2. The investment done by investors is according to their needs i.e. the term

of the plan, returns, tax rebates, flexibility and risk.

3. From the study done we can easily draw an inference that the number of

Mutual Fund investor and ULIP investors are equal.

4. Both investments have provided assured returns to investors.


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REFERENCE

1) Sisodiya, A. (2006). Mutual Fund Industry in India: An Introduction. The

ICFAI Material.

2) Pandian, Punithavathy (2007). Security Analysis and Portfolio Management.

Vikas Publishing House PVT LTD.

3) Hugonnier; Julien; kaniel and Ron (June 27, 2007). Mutual Fund Portfolio

Choice in the Presence of Dynamic Flows.

4) Sethu; Baid and Rachana. Trends and Structure of the Indian Mutual Fund

Industry.

5) Sisodiya, Singh; Reddy; Santhosh; Zaheer and Feroz. On a Growth Trail.

6) Kurien and A P. Investor Education AMFI, Playing An Important Role.

7) Singh and Kumar. Mutual Fund Regulations: The Journey So Far.

8) www.amfiindia.com

9) www.moneycontrol.com

10) www.google.com

11) www.icicidirect.com

12) www.bseindia.com
http://www.amfiindia.com/http://www.moneycontrol.com/http://www.google.com/http://www.icicidirect.com/http://www.bseindia.com/http://www.amfiindia.com/http://www.moneycontrol.com/http://www.google.com/http://www.icicidirect.com/http://www.bseindia.com/


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13) www.nseindia.com

Annexure

CUSTOMER PREFERENCE FOR ULIP VERSUS MUTUAL

FUND

Dear Respondent,

We are the students of MBA (FT) - 3rd Semister and undertakenresearch project on ULIP VERSUS MUTUAL FUND - ACOMPARITIVE STUDY.

In this questionnaire various factors are enumerated whichhighlights the customers interest towards these two products.

I assure you that the information provides by you are used forthe academic purpose only & will be kept confidential.

Name

Designation

Organization

Give your response for the statements by encircling the

appropriate 5-pt. scale as given below.

1 2 3 4 5

StronglyAgree

Agree Neither agree NorDisagree

Disagree StronglyDisagree

1 Do you agree that investing in Mutual fund is morerisky as compare to in ULIP?

1 2 3 4 5

2 Do you think that information about Mutual Fund ismore available as compare to ULIP?

1 2 3 4 5

3 Do you agree that Charges in Mutual fund are morethan ULIP?

1 2 3 4 5
http://www.nseindia.com/http://www.nseindia.com/


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4 Do you think that Tax rebates in Mutual Funds are lessas Compared to ULIP?

1 2 3 4 5

5 Do you think investment done in Mutual Funds is forshort term as compared to ULIP?

1 2 3 4 5

6 Do your agree that market risk is more in mutual fundinvestments as compared to ULIP?

1 2 3 4 5

7 Do you agree that Mutual fund is less flexible ascompared to ULIP?

1 2 3 4 5

8 Do you think that Mutual funds provide fewer returnsthan ULIP?

1 2 3 4 5

9 Do you think that money invested is less safe inMutual Funds as compared to ULIP?

1 2 3 4 5

10

Do you agree that Mutual Funds provide less benefitthan ULIP?

1 2 3 4 5

1

1

Do you think Lock in period in Mutual Fund is more

than ULIP?

1 2 3 4 5

12

Do you agree that Mutual Funds do not provide terminsurance while ULIP has an option of Insurance?

1 2 3 4 5

13

Do you think that Mutual Funds provide less assuredreturns as compared to ULIP?

1 2 3 4 5

14

Do you agree that Mutual Funds do not provide deathbenefit while ULIP provides?

1 2 3 4 5


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Analysis For Mutual Fund

Total Variance Explained

Initial Eigenvalues

Component Total% ofVariance

Cumulative%

1 2.846159 20.329706 20.32971

2 2.374664 16.96188565 37.291593 1.656274 11.83052845 49.12212

4 1.465028 10.46448365 59.5866

5 1.153452 8.238944808 67.82555

6 0.849601 6.068581162 73.89413

7 0.813201 5.808576247 79.70271

8 0.683386 4.881331328 84.58404

9 0.540699 3.862137881 88.44618

10 0.489164 3.494028448 91.9402

11 0.362545 2.589604542 94.52981

12 0.315302 2.252154073 96.78196

13 0.269885 1.927747461 98.70971

14 0.180641 1.29029029 100Extraction Method: Principal Component Analysis.

Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings

Total% ofVariance

Cumulative% Total

% ofVariance

Cumulative%

2.846159 20.32971 20.32971 2.454046 17.5289 17.5289

2.374664 16.96189 37.29159 2.001454 14.2961 31.825

1.656274 11.83053 49.12212 1.786631 12.76165 44.58664

1.465028 10.46448 59.5866 1.739107 12.42219 57.00884

1.153452 8.238945 67.82555 1.51434 10.81671 67.82555

Rotated Component Matrix

Component

1 2 3 4 5

VAR00014 0.814922-

0.061762158 -0.09852 -0.11198 -0.18491

VAR00010 0.814133 0.053396277 0.07631 0.100269 -0.16152

VAR00013 0.6256 0.180014642 0.115342 0.012069 0.177988

VAR00008 0.596385-

0.056182872 -0.11745 0.435937 0.358592

VAR00009 0.032998 0.889173151 -0.12318 -0.03678 -0.04454

VAR00011 0.028292 0.838429981 -0.12715 0.235603 0.012284

VAR00004 0.397635 0.508814651 0.261514 0.294849 -0.28225VAR00005 -0.09404 0.31023718 -0.78053 -0.26673 0.089473

VAR00007 -0.23269 0.090156464 0.688626 -0.22197 0.18061

VAR00012 0.335756-

0.094764851 0.611228 -0.30392 0.135473

VAR00001 0.025079 0.26311268 0.126122 0.814979 -0.02165

VAR00002 -0.03674-

0.007958321 0.264203 -0.68893 -0.09974


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VAR00003 -0.16528 0.03913529 -0.06089 0.153201 0.785489

VAR00006 0.122753-

0.150204229 0.312775 -0.08638 0.724983Extraction Method: Principal Component Analysis.Rotation Method: Varimax with Kaiser Normalization.

aRotation converged in 8iterations.

Total factor load0.814922 0.889173151 -0.78053 0.814979 0.785489

0.814133 0.838429981 0.688626 -0.68893 0.724983

0.6256 0.508814651 0.611228 0.126049 1.510473

0.596385 2.236417783 0.519326

2.851039


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Analysis For ULIP

Total Variance Explained ULIP

Initial Eigenvalues

Component Total

% of

Variance

Cumulative

%1 2.287246 16.33747 16.33747

2 1.994137 14.24384 30.58131

3 1.662629 11.87592 42.45723

4 1.587179 11.33699 53.79423

5 1.265931 9.042363 62.83659

6 1.179814 8.42724 71.26383

7 1.059237 7.56598 78.82981

8 0.774172 5.529801 84.35961

9 0.596394 4.259959 88.61957

10 0.517976 3.699827 92.3194

11 0.365126 2.608041 94.92744

12 0.308062 2.200444 97.1278813 0.218547 1.561053 98.68894

14 0.183549 1.311062 100

Extraction Method: Principal Component Analysis.

Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings

Total% ofVariance

Cumulative% Total

% ofVariance

Cumulative%

2.287246 16.33747 16.33747 1.748273 12.48766 12.48766

1.994137 14.24384 30.58131 1.732753 12.37681 24.86447

1.662629 11.87592 42.45723 1.70623 12.18735 37.05182

1.587179 11.33699 53.79423 1.661921 11.87087 48.92269

1.265931 9.042363 62.83659 1.655072 11.82194 60.74463

1.179814 8.42724 71.26383 1.304085 9.314896 70.05953

1.059237 7.56598 78.82981 1.22784 8.770282 78.82981

Rotated Component Matrix

Component

1 2 3 4 5 6 7

VAR00004 0.86361 0.093336 -0.08805 0.047957 0.231824 0.026924 0.101267

VAR00012 0.780357 -0.10275 0.268689 -0.13853 -0.31455 -0.09194 -0.05429

VAR00006 -0.21857 0.728219 0.382334 -0.16684 -0.14094 0.172691 -0.12166

VAR00003 0.051092 -0.70358 0.194855 -0.2896 -0.08905 0.00979 -0.13402

VAR00011 0.383529 0.659967 0.130201 -0.09055 -0.09037 -0.16464 0.009195VAR00009 -0.08438 -0.14314 -0.85182 -0.25454 -0.12629 0.064676 -0.07555

VAR00007 0.031564 -0.04454 0.574205 -0.5122 -0.02244 -0.42901 0.216749

VAR00010 -0.11424 -0.13282 0.078685 0.780922 -0.29818 -0.0073 0.172358

VAR00001 0.062324 0.212975 0.180996 0.74125 0.351345 -0.04628 -0.05175

VAR00014 0.036797 -0.13672 0.163543 -0.02769 0.900006 0.008252 0.070015

VAR00002 -0.23567 0.357341 -0.27592 0.017052 0.532323 -0.47309 -0.08752

VAR00005 -0.07325 0.012928 -0.10552 -0.01892 -0.00375 0.897818 0.072544


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VAR00013 0.121578 0.000537 0.154082 0.107208 0.103371 0.100277 0.896955

VAR00008 0.306468 -0.14343 0.439508 0.145568 0.365433 0.086273 -0.5238Extraction Method: Principal Component Analysis.Rotation Method: Varimax with Kaiser Normalization.

a Rotation converged in 10 iterations.

Total factor load0.86361 0.728219 -0.85182 0.780922 0.900006 0.897818 0.896955

0.780357 -0.70358 0.574205 0.74125 0.532323 -0.5238

1.643967 0.659967 -0.27762 1.522173 1.432328 0.373159

0.684604

53790265 ULIP n Mutual Funds

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