A SUMMER TRAINING PROJECT REPORT ON “AWERNESS OF MUTAL FUND AND ITS SCOPE IN INDIA” Submitted in the partial fulfillment for the award of Degree of Bachelor in Business Administration 2011- UNDER THE GUIDANCE: SUBMITTED BY: Ms. Poonam Khurana KULDEEP FACULTY (Management), CPJCHS ENROLLMENT No. 11021501711 BATCH NO. 2011-14 1 | Page College
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A SUMMER TRAINING PROJECT REPORT
ON
“AWERNESS OF MUTAL FUND AND ITS SCOPE IN INDIA”
Submitted in the partial fulfillment for the award of Degree of Bachelor in Business Administration 2011-
CHANDERPRABHU JAIN COLLEGE OF HIGHER STUDIES & SCHOOL OF LAW
An ISO 9001:2008 Certified Institute (Approved by the Govt of NCT of Delhi
Affiliated to Guru Gobind Singh Indraprastha University, Delhi)
Plot No OCF Sector A-8, Narela New Delhi -40
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College
Declaration
This is to certify that Thesis/Report entitled “Mall Management ”which is submitted by me in partial fulfillment of the requirement for the award of degree B.B.A. to GGSIP University, Dwarka, Delhi comprises only my original work and due acknowledgement has been made in the text to all other material used.
KULDEEP
Name of Student
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PROJECT COMPLETION CERTIFICATE
This is to certify that Mr.KULDEEP HAS satisfactorily completed the project work titled,
“AWARENESS OF MUTUAL FUNDS AND ITS SCOPE IN INDIA” under my guidance during June-
July, 2013 at Prudent Corporate Advisory Services Ltd., New Delhi. Based on the declaration made
by the candidate and my association as a guide for carrying out this work, I recommend this project
report for evaluation as a partial requirement of the BBA Programme of CHANDER PRABHU
JAIN COLLEGE OF HIGHER STUDIES
_________________________
Vishal Kumar
Branch Manager
Prudent Corporate Advisory Services Ltd.
New Delhi
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ACKNOWLEDGEMENT
. I offer my sincere thanks and humble regards to Chanderprabhu Jain College of Higher Studies & School of Law, GGSIP University, New Delhi for imparting us very valuable professional training in BBA.
.
I pay my gratitude and sincere regards to VISHAL KUMAR, my project Guide for giving me the cream of his knowledge. I am thankful to him as he has been a constant source of advice, motivation and inspiration. I am also thankful to him for giving his suggestions and encouragement throughout the project work.
I take the opportunity to express my gratitude and thanks to our computer Lab staff and library staff for providing me opportunity to utilize their resources for the completion of the project.
I am also thankful to my family and friends for constantly motivating me to complete the project and providing me an environment which enhanced my knowledge
KULDEEP
Student’s Signature
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EXECUTIVE SUMMERY
Mutual Funds have gained popularity as an investment vehicle over the past two years. Though
technically, must have been in India since 1964 through Unit Trust of India , the industry has only
recently after new private sector funds and funds backed by global investment houses set up shop in
India.
Mutual Funds have often been associated with equity\stock markets. While that is industry, the debt
or fixed income side has also gained prominence in the recent past. In fact, now mutual funds offer
instruments! schemes for all types of investors from -the risk averse to high risk takers.
The advantages of mutual funds are professional management, diversification, economies of scale,
simplicity, and liquidity.
The disadvantages of mutual fund are high costs, over-diversification, possible tax consequences, and
the inability of management to guarantee a superior return.
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The biggest problems with mutual funds are their costs and fees it include Purchase fee, Redemption
fee, Exchange fee, Management fee, Account fee & Transaction Costs. There are some loads which
add to the cost of mutual fund. Load is a type of commission depending on the type of funds.
Mutual funds are easy to buy and sell. You can either buy them directly from the fund company or
through a third party. Before investing in any funds one should consider some factor like objective,
risk, Fund Manager’s and scheme track record, Cost factor etc.
There are many, many types of mutual funds. You can classify funds based Structure (open-ended &
WHAT IS THE PROCEDURE FOR REGESTRING A MUTUAL FUND WITH SEBI
An applicant proposing to sponsor a Mutual fund in India must submit an application in Form A along
with a fee of Rs.20, 000. The application is examined and once the sponsor satisfies certain conditions
such as being in the financial services business and possessing positive net worth for the last five
years, having net profit in three out of the last five years and possessing the general reputation of
fairness and integrity in all business transactions, it is required to complete the remaining formalities
for setting up a Mutual fund. These include inter alia, executing the trust deed and investment
management agreement, setting up a trustee company board of trustees comprising two- thirds
independent trustees, incorporating the asset management company (AMC), contributing to at least
40% of the net worth of the AMC and appointing a custodian. Upon satisfying these conditions, the
registration certificate is issued subject to the payment of registration fees of Rs.20.00 lacs for details;
see the SEBI (Mutual funds) Regulations, 1996.
WORKING OF MUTUAL FUNDS
Fig. 4- Working of mutual fund
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The mutual fund collects money directly or through brokers from investors. The money is invested in
various instruments depending on the objective of the scheme. The income generated by selling
securities or capital appreciation of these securities is passed on to the investors in proportion to their
investment in the scheme. The investments are divided into units and the value of the units will be
reflected in Net Asset Value or NAV of the unit. NAV is the market value of the assets of the scheme
minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of
units outstanding on the valuation date. Mutual fund companies provide daily net asset value of their
schemes to their investors. NAV is important, as it will determine the price at which you buy or
redeem the units of a scheme. Depending on the load structure of the scheme, you have to pay entry or
exit load.
Structure of a mutual fund:
India has a legal framework within which Mutual Fund have to be constituted. In India open and
close-end funds operate under the same regulatory structure i.e. as unit Trusts. A Mutual Fund in India
is allowed to issue open-end and close-end schemes under a common legal structure. The structure
that is required to be followed by any Mutual Fund in India is laid down under SEBI (Mutual Fund)
Regulations, 1996.
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Fig. 5 Structure of mutual funds
The Fund Sponsor:
Sponsor is defined under SEBI regulations as any person who, acting alone or in combination of
another corporate body establishes a Mutual Fund. The sponsor of the fund is akin to the promoter of
a company as he gets the fund registered with SEBI. The sponsor forms a trust and appoints a Board
of Trustees. The sponsor also appoints the Asset Management Company as fund managers. The
sponsor either directly or acting through the trustees will also appoint a custodian to hold funds assets.
All these are made in accordance with the regulation and guidelines of SEBI.
As per the SEBI regulations, for the person to qualify as a sponsor, he must contribute at least 40% of
the net worth of the Asset Management Company and possesses a sound financial track record over 5
years prior to registration.
Mutual Funds as Trusts:
A Mutual Fund in India is constituted in the form of Public trust Act, 1882. The Fund sponsor acts as
a settler of the Trust, contributing to its initial capital and appoints a trustee to hold the assets of the
trust for the benefit of the unit-holders, who are the beneficiaries of the trust. The fund then invites
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investors to contribute their money in common pool, by scribing to “units” issued by various schemes
established by the Trusts as evidence of their beneficial interest in the fund.
It should be understood that the fund should be just a “pass through” vehicle. Under the Indian Trusts
Act, the trust of the fund has no independent legal capacity itself, rather it is the Trustee or the
Trustees who have the legal capacity and therefore all acts in relation to the trusts are taken on its
behalf by the Trustees. In legal parlance the investors or the unit-holders are the beneficial owners of
the investment held by the Trusts, even as these investments are held in the name of the Trustees on a
day-to-day basis. Being public trusts, Mutual Fund can invite any number of investors as beneficial
owners in their investment schemes.
Trustees:
A Trust is created through a document called the Trust Deed that is executed by the fund sponsor in
favour of the trustees. The Trust- the Mutual Fund – may be managed by a board of trustees- a body
of individuals, or a trust company- a corporate body. Most of the funds in India are managed by
Boards of Trustees. While the boards of trustees are governed by the Indian Trusts Act, where the
trusts are a corporate body, it would also require to comply with the Companies Act, 1956. The Board
or the Trust company as an independent body, acts as a protector of the of the unit-holders interests.
The Trustees do not directly manage the portfolio of securities. For this specialist function, the
appoint an Asset Management Company. They ensure that the Fund is managed by ht AMC as per the
defined objectives and in accordance with the trusts deeds and SEBI regulations.
The Asset Management Companies:
The role of an Asset Management Company (AMC) is to act as the investment manager of the Trust
under the board supervision and the guidance of the Trustees. The AMC is required to be approved
and registered with SEBI as an AMC. The AMC of a Mutual Fund must have a net worth of at least
Rs. 10 Crores at all times. Directors of the AMC, both independent and non- independent, should
have adequate professional expertise in financial services and should be individuals of high morale
standing, a condition also applicable to other key personnel of the AMC. The AMC cannot act as a
Trustee of any other Mutual Fund. Besides its role as a fund manager, it may undertake specified
activities such as advisory services and financial consulting, provided these activities are run
independent of one another and the AMC’s resources (such as personnel, systems etc.) are properly
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segregated by the activity. The AMC must always act in the interest of the unit-holders and reports to
the trustees with respect to its activities.
Custodian and Depositories:
Mutual Fund is in the business of buying and selling of securities in large volumes. Handling these
securities in terms of physical delivery and eventual safekeeping is a specialized activity. The
custodian is appointed by the Board of Trustees for safekeeping of securities or participating in any
clearance system through approved depository companies on behalf of the Mutual Fund and it must
fulfil its responsibilities in accordance with its agreement with the Mutual Fund. The custodian should
be an entity independent of the sponsors and is required to be registered with SEBI. With the
introduction of the concept of dematerialization of shares the dematerialized shares are kept with the
Depository participant while the custodian holds the physical securities. Thus, deliveries of a fund’s
securities are given or received by a custodian or a depository participant, at the instructions of the
AMC, although under the overall direction and responsibilities of the Trustees.
Bankers:
A Fund’s activities involve dealing in money on a continuous basis primarily with respect to buying
and selling units, paying for investment made, receiving the proceeds from sale of the investments and
discharging its obligations towards operating expenses. Thus the Fund’s banker plays an important
role to determine quality of service that the fund gives in timely delivery of remittances etc.
Transfer Agents:
Transfer agents are responsible for issuing and redeeming units of the Mutual Fund and provide other
related services such as preparation of transfer documents and updating investor records. A fund may
choose to carry out its activity in-house and charge the scheme for the service at a competitive market
rate. Where an outside Transfer agent is used, the fund investor will find the agent to be an important
interface to deal with, since all of the investor services that a fund provides are going to be dependent
on the transfer agent.
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NET ASSET VALUE (NAV)
Since each owner is a part owner of a mutual fund, it is necessary to establish the value of his part. In
other words, each share or unit that an investor holds needs to be assigned a value. Since the units
held by investor evidence the ownership of the fund’s assets, the value of the total assets of the fund
when divided by the total number of units issued by the mutual fund gives us the value of one unit.
This is generally called the Net Asset Value (NAV) of one unit or one share. The value of an
investor’s part ownership is thus determined by the NAV of the number of units held.
Calculation of NAV:
Let us see an example. If the value of a fund’s assets stands at Rs. 100 and it has 10 investors who
have bought 10 units each, the total numbers of units issued are 100, and the value of one unit is Rs.
10.00 (1000/100). If a single investor in fact owns 3 units, the value of his ownership of the fund will
be Rs. 30.00 (1000/100*3). Note that the value of the fund’s investments will keep fluctuating with
the market-price movements, causing the Net Asset Value also to fluctuate.
For example, if the value of our fund’s asset increased from Rs. 1000 to 1200, the value of our
investors holding of 3 units will now be (1200/100*3) Rs. 36. The investment value can go up or
down, depending on the markets value of the fund’s assets.
Types of Returns on Mutual Fund:
There are three ways, where the total returns provided by mutual funds can be enjoyed by investors:
• Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all income
it receives over the year to fund owners in the form of a distribution.
• If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also
pass on these gains to investors in a distribution. If fund holdings increase in price but are not sold by
the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for a
profit.
Funds will also usually give you a choice either to receive a check for distributions or to reinvest the
earnings and get more shares.
RISK FACTORS OF MUTUAL FUNDS:
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1. The Risk-Return Trade-Off:
Fig. 6 Risk-return trade-off graph
The most important relationship to understand is the risk-return trade-off. Higher the risk greater the
returns / loss and lower the risk lesser the returns/loss.
Hence it is up to you, the investor to decide how much risk you are willing to take. In order to do this
you must first be aware of the different types of risks involved with your investment decision.
2. Market Risk:
Sometimes prices and yields of all securities rise and fall. Broad outside influences affecting the
market in general lead to this. This is true, may it be big corporations or smaller mid-sized companies.
This is known as Market Risk. A Systematic Investment Plan (“SIP”) that works on the concept of
Rupee Cost Averaging (“RCA”) might help mitigate this risk.
3. Credit Risk:
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The debt servicing ability (may it be interest payments or repayment of principal) of a company
through its cash flows determines the Credit Risk faced by you. This credit risk is measured by
independent rating agencies like CRISIL who rate companies and their paper. A ‘AAA’ rating is
considered the safest whereas a ‘D’ rating is considered poor credit quality. A well-diversified
portfolio might help mitigate this risk.
4. Inflation Risk:
The root cause, Inflation. Inflation is the loss of purchasing power over time. A lot of times people
make conservative investment decisions to protect their capital but end up with a sum of money that
can buy less than what the principal could at the time of the investment. This happen when inflation
grows faster than the return on your investment. A well-diversified portfolio with some investment in
equities might help mitigate this risk.
5. Interest Rate Risk:
In a free market economy interest rates are difficult if not impossible to predict. Changes in interest
rates affect the prices of bonds as well as equities. If interest rates rise the prices of bonds fall and vice
versa. Equity might be negatively affected as well in a rising interest rate environment. A well-
diversified portfolio might help mitigate this risk.
6. Political / Government Policy Risk:
Changes in government policy and political decision can change the investment Environment. They
can create a favourable environment for investment or vice versa.
7. Liquidity Risk:
Liquidity risk arises when it becomes difficult to sell the securities that one has purchased. Liquidity
Risk can be partly mitigated by diversification, staggering of maturities as well as internal risk
controls that lean towards purchase of liquid securities.
REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA:
The structure of mutual funds in India is guided by the SEBI. Regulations, 1996.These regulations
make it mandatory for mutual fund to have three structures of sponsor trustee and asset Management
Company. The sponsor of the mutual fund and appoints the trustees. The trustees are responsible to
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the investors in mutual fund and appoint the AMC for managing the investment portfolio. The AMC
is the business face of the mutual fund, as it manages all the affairs of the mutual fund. The AMC and
the mutual fund have to be registered with SEBI.
SEBI REGULATIONS:
• As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to
protect the interest of the investors.
• SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by
private sector entities were allowed to enter the capital market.
• The regulations were fully revised in 1996 and have been amended thereafter from time to time.
• SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of
investors.
• 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. The risks associated with
the schemes launched by the mutual funds sponsored by these entities are of similar type. There is no
distinction in regulatory requirements for these mutual funds and all are subject to monitoring and
inspections by SEBI.
• SEBI Regulations require that at least two thirds of the directors of trustee company or board of
trustees must be independent i.e. they should not be associated with the sponsors.
• Also, 50% of the directors of AMC must be independent. All mutual funds are required to be
registered with SEBI before they launch any scheme.
• Further SEBI Regulations, inter-alia, stipulate that MFs cannot guarantee returns in any scheme and
that each scheme is subject to 20 : 25 condition [I.e. minimum 20 investors per scheme and one
investor can hold more than 25% stake in the corpus in that one scheme].
• Also SEBI has permitted MFs to launch schemes overseas subject various restrictions and also to
launch schemes linked to Real Estate, Options and Futures, Commodities, etc.
ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI)
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With the increase in mutual fund players in India, a need for mutual fund association in India was
generated to function as a non-profit organisation. Association of Mutual Funds in India (AMFI) was
incorporated on 22nd August, 1995.
AMFI is an apex body of all Asset Management Companies (AMC) which has been registered with
Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional SEBI. Till
date all the AMCs are that have launched mutual fund schemes are its members. It functions under the
supervision and guidelines of its Board of Directors. Association of and healthy market with ethical
lines enhancing and maintaining standards. It follows the principle of both protecting and promoting
the interests of mutual funds as well as their unit holders.
The Objectives of Association of Mutual Funds in India: The Association of Mutual Funds of
India works with registered AMCs of the country. It has certain defined objectives which juxtaposes
the guidelines of its Board of Directors. The objectives are as follows:
•This mutual fund association of India maintains high professional and ethical standards in all areas of
operation of the industry.
• It also recommends and promotes the top class business practices and code of conduct which is
followed by members and related people engaged in the activities of mutual fund and asset
management. The agencies who are by any means connected or involved in the field of capital
markets and financial services also involved in this code of conduct of the association.
• AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund industry.
• Association of Mutual Fund of India do represent the Government of India, the Reserve Bank of
India and other related bodies on matters relating to the Mutual Fund Industry.
• It develops a team of well qualified and trained Agent distributors. It implements a programme of
training and certification for all intermediaries and other engaged in the mutual fund industry.
• AMFI undertakes all India awareness programme for investors in order to promote proper
understanding of the concept and working of mutual funds.
• At last but not the least association of mutual fund of India also disseminate information on Mutual
Fund Industry and undertakes studies and research either directly or in association with other bodies.
AMFI Publications:
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AMFI publish mainly two types of bulletin. One is on the monthly basis and the other is quarterly.
These publications are of great support for the investors to get intimation of the knowhow of their
parked money.
Mutual fund companies in India
The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987
marked the existence of only one mutual fund company in India with Rs. 67bn assets under
management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By the end of the
80s decade, few other mutual fund companies in India took their position in mutual fund market.
The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank Mutual Fund,
Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund.
The succeeding decade showed a new horizon in Indian mutual fund industry. By the end of 1993, the
total AUM of the industry was Rs. 470.04 bn. The private sector funds started penetrating the fund
families. In the same year the first Mutual Fund Regulations came into existence with re-registering
all mutual funds except UTI. The regulations were further given a revised shape in 1996.
Kothari Pioneer was the first private sector mutual fund company in India which has now merged
with Franklin Templeton. Just after ten years with private sector players penetration, the total assets
rose up to Rs. 1218.05 bn. Today there are more than 45 mutual fund companies in India.
Major Mutual Fund Companies in India:
• ABN AMRO Mutual Fund • LIC Mutual Fund,
• GIC Mutual Fund. • AEGON Mutual Fund
• Zurich Mutual Fund • BOI AXA Mutual Fund
• UTI Mutual Fund • AXIS bank Mutual Fund
• Standard Chartered Mutual Fund • Religare Invesco Mutual Fund
• Shinsei Mutual Fund • Baroda Pioneer Mutual Fund
• Benchmark Mutual Fund • Chola Mutual Fund,
• Birla Sun Life Mutual Fund, • Can bank Mutual Fund,
• Bank of Baroda Mutual Fund, • HDFC Mutual Fund,
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• HSBC Mutual Fund, • ING Vysya Mutual Fund,
Prudential ICICI Mutual Fund,
State Bank of India Mutual Fund,
Tata Mutual Fund,
Unit Trust of India Mutual Fund,
Reliance Mutual Fund,
Standard Chartered Mutual Fund,
Franklin Templeton India Mutual Fund,
Morgan Stanley Mutual Fund India,
Escorts Mutual Fund,
Alliance Capital Mutual Fund,
Future of Mutual Funds in India
When we consider marketing, we have to see the issues in totality, because we cannot judge an
elephant by its trunk or by its tail but we have to see it in its totality. When we say marketing of
mutual funds, it means, includes and encompasses the following aspects:
Assessing of investors needs and market research
Responding to investor’s needs;
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Product designing;
Studying the macro environment;
Timing of the launch of the product
Choosing the distribution network;
Preparing offer documents and other literature
Getting feedback about sales;
Studying performance indicators about fund performance like N A V
Sending certificates in time and other after fia1es services
Honoring the commitments made for redemptions and repurchase
Paying dividends and other entitlements
Creating positive image about the fund and changing the nature of the market itself. The above are the
aspects of marketing of mutual funds, in totality. Even if there is a single weak-link among the
factors, which are mentioned above, no mutual fund can successfully market its funds. Although
several macroeconomic and demographic factors affect the growth of the industry, the key underlying
driver for all the categories of funds is the key economic indicator – the GDP growth rate.
Future of mutual funds in India is undoubtedly very bright. Currently, the Indian economy is mostly
under tapped. With more and more investors financial awareness it is poised to grow at a very fast
pace. India’s increasing working population will also play its significant role in growth of mutual fund
industry in coming years.
We need to overcome challenges which continue to persist are …
There are continuing concerns that the industry has been grappling with over a
considerable period of time.
1. Under-penetrated population
2. Inaccessibility in smaller towns and cities due to lack of an efficient distribution
3. Heavy reliance on institutional sales
4. Low financial literacy level
5. Cost pressures emanating as a result of inefficiencies in system
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Some of the older public and private sector players will either close shop or be taken over. Out often
public sector players five will sell out, close down or merge with stronger players in three to four
years. In the private sector this trend has already started with two mergers and one takeover. Here too
some of them will down their shutters in the near future to come.
The market will witness a flurry of new players entering the arena. There will be a large number of
offers from various asset management companies in the time to come. Some big names like fidelity,
Principal, Old Mutual etc. arc looking at Indian market seriously. One important reason for it is that
most major players already have presence here and hence these big names would hardly like to get left
behind.
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CHAPTER 2
About the Company
Introduction
Prudent CAS (Corporate Advisory Services) Ltd, Incorporated in year 2000 with a clear vision of providing professional services in the area of personal and corporate investments. It has created a niche segment over a period to time with an excellent quality client base. Over the past few years Prudent Corporate Advisory Services has created in-house capabilities of analyzing funds on various parameters before suggesting them to clients.
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The team approach worked wonders and in the short-span of just one decade, the Prudent Group expanded its horizon by offering specialized services in the areas of Personal and Corporate Investment Planning through Mutual Funds, Equities, Derivatives, Third Party Products, Fixed Income Products, Life/General Insurance and Real Estate through various companies listed below.
This helps us to provide our clients an optional basket of funds rather than selling the typical available
funds. This approach lets us set our focus on the quality work rather than the just the quantity.
Products in which Prudent has an expertise:
1) Mutual Funds
2) Investment Consultancy
3) Equity and Derivatives broking
4) RBI Relief funds
5) Infrastructure Bonds
5) Life Insurance
6) Real Estate
Prudent Corporate Advisory Services Ltd.
As the flagship company, Prudent Corporate Advisory Services remains the primary arm of the
Prudent Group. It offers specialized services in the area of Personal and Corporate Investment
Planning through Mutual Funds, Debt and Third party products.
Besides having a large pool of their own clients, the company also manages its geographically-spread
business operations through a unique platform for independent financial advisors(IFA) which helps
them to grow and expand their services & support through sales and marketing, technology,
operations, back- office support, training & consultation.
Prudent Products
Prudent Channel since its inception has a strong hold in the market through its Direct Force. It also
has strong hold on the corporate channel - it now wants to have a greater reach to its clients which it
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has already developed through its 2000+ certified brokers just the beginning of the force that will
grow in leaps and bounds.
know more than how much money you need to retire - or how much you should save for your future
expenses. It is about determining short-term and long-term objectives. Prudent CAS Ltd serves you
with array of financial planning.
If financial models were food, then we could cook up anything nourishing on the menu, from soup to
steak to nuts. If financial models were clothing, we could help produce any outfit, from making
original sketches to stitching together skirts to inventorying racks of gowns.
About Prudent
Prudence (prdns): the exercise of good judgment, common sense, and caution, especially in the conduct of practical matters
Incorporated in year 2000 with a clear vision of providing professional services in the area of personal
and corporate investments. It has created a niche segment over a period to time with an excellent
quality client base. Over the past few years Prudent Corporate Advisory Services has created in-house
capabilities of analyzing funds on various parameters before suggesting them to clients.
The team approach worked wonders and in the short-span of just one decade, the Prudent Group
expanded its horizon by offering specialized services in the areas of Personal and Corporate
Investment Planning through Mutual Funds, Equities, Derivatives, Third Party Products, Fixed
Income Products, Life/General Insurance and Real Estate through various companies listed below.
Prudent Corporate Advisory Services Ltd.
As the flagship company, Prudent Corporate Advisory Services remains the primary arm of the
Prudent Group. It offers specialized services in the area of Personal and Corporate Investment
Planning through Mutual Funds, Debt and Third party products.
Besides having a large pool of their own clients, the company also manages its geographically-spread
business operations through a unique platform for independent financial advisors(IFA) which helps
them to grow and expand their services & support through sales and marketing, technology,
operations, back- office support, training & consultation.
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Prudent Broking Services Pvt. Ltd.
Incorporated in 2004, Prudent Broking Services Pvt. Ltd is a Stock Broking and Depository
Participant service provider. Company is a member with Bombay Stock Exchange (BSE) & National
Stock exchange (NSE) & Central depository services (India) Limited (CDSL). Company is in the
process of creating its national presence by opening offices in various parts of the country.
Prudent Properties.
The Property sector is an important part of the asset class, but the effort and paperwork involved in
purchasing the same can be intimidating. Prudent Property provides real estate solutions not only in
creating an asset class but is also helping the customers in buying their dream realty, whether it be
homes or offices.
Team Prudent
Team Prudent is uniquely positioned to be a part of the client's inner trust-circle and consult them to arrive at independent investment decisions.
The team Prudent consists of certified professionals and Industry experts. This includes top
notch investment advisors, research teams and client servicing teams. Our all branches are
self sufficient and fully equipped to service their clients.Our investment advisors are trained
rigorously to our exacting standards, to understand an investor’s needs and accordingly make
suggestions to them.
Our Back Bone - IT, RESEARCH AND WEB
We have harnessed the potential of information technology for excellent research and
portfolio management through specialized software which works on real-time market
information and generates error-free reports.
For IT-savvy investors, we possess a secured user-friendly website that contains excellent
research and portfolio management tools to help client to access their portfolios round the
clock. The research team and the website are backed by a team of veteran IT professionals,
developers, designers, programmers and high-end Servers. The entire focus is on security of
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information, integrity of data, and accuracy of real-time reports.
Research Team
We constantly endeavor to achieve optimum client & partner satisfaction and confidence
building by providing various tailor-made reports according to client needs. We possess
dedicated qualified team that research and analyze the various financial products available in
the marketplace.
Apart from our own reports, we make available reports of leading research houses on various
subjects. We also provide regular reports to our clients on stock analysis and overall market
analysis with recommendations and stocks to watch.
Prudent Channel Partner
Prudent Channel since its inception has a strong hold in the market through its Direct Force. It also
has strong hold on the corporate channel - it now wants to have a greater reach to its clients which it
has already developed through its brokers.
Prudent Channel Partners offers comprehensive financial planning services to help you answer the
toughest questions about your financial future. Though attaining your financial goals can never be
guaranteed, proper planning can greatly increase your odds of success. In order to build successful
client relationships, Prudent Channel Partner strives to help each client succeed. But unlike most
financial advisors, our definition of success is not just financial. To us, success can only be achieved
when all of a client's goals are met - whether the goals are related to family, marriage, charity, civic
organization, or anything else.
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CHAPTER 3
Research Methodology
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Research Design
The aim of this evaluation study is to gather information and critically analyze the synergy between
the investment needs of individuals. This study is done with the purpose to find out whether planning
is done as per the need and proper matching of mutual funds are utilized to get the financial goals.
Need for the study
For retail investor who does not have the time and expertise to analyze and invest in stocks and bonds,
mutual funds offer a viable investment alternative. This is because mutual funds provide the benefit of
cheap access to expensive stocks. Mutual funds diversify the risk of the investor by investing in a
basket of assets. A team of professional fund managers manages them with in-depth research inputs
from investment analysts. Being institutions with good bargaining power in markets, mutual funds
have access to crucial corporate information which individual investors cannot access. So the present
study has taken up to know the extent of awareness about mutual funds and to analyze the investors’
perception towards mutual funds
Scope of study
The research was limited to the New Delhi .The first stage included gathering information about
personal investment pattern.
The second stage comprised determining the objective of the study and drafting the questionnaire.
The questionnaire was designed keeping in mind the objective of the study. It was designed with due
guidance of the project guide.
Research questions
Creating a research question is a task. Good research questions are formed and worked on, and are
rarely simply found. You start with what interests you, and you refine it until it is workable. The
question sets out what you hope to learn about the topic. This question, together with your approach,
will guide and structure the choice of data to be collected and analysed.
There is no recipe for the perfect research question. The following guidelines highlight some of the
features of good questions.
Good questions are:
Relevant.
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Manageable in terms of research and in terms of your own academic abilities.
Substantial and with original dimensions.
Consistent with the requirements of the assessment.
Clear and simple.
Interesting.
Research objective:
Specific research objectives included the following:
To know about the extent of awareness about mutual funds
To give a brief idea about the benefits available from Mutual Fund investment.
To know about the preferences of investors towards mutual funds
To discuss about the market trends of Mutual Fund investment.
To know about the perceptions of investors towards mutual funds
Observe the fund management process of mutual funds.
To give an idea about the regulations of mutual funds.
To know about the extent of satisfaction of investors towards mutual funds
Research methodology:
Research Design selected for this research is descriptive design and the Universe is New Delhi. Data
was collected in two ways, i.e., Primary data and Secondary data. The data collection method used for
collection of primary data was survey method and the data collection instrument used is structured
questionnaire. The sampling technique used is non-probability convenience sampling. Sample size is
50 respondents and sampling units include businessmen, Government servants, professional and
retired Individuals.
The secondary data was collected through journals, magazines, books, company manuals,
Websites, etc.
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Qualitative analysis
The qualitative analysis part include the mapping of needs with planning and finding gap in the
selection of proper instruments.
Universe & sample of study Sample:
Part of population selected to investigate the properties of the population. Due to scarcity of research
sample of 50 questionnaires were selected.
Convenient Sampling methods were used to save cost and time.
Universe:
The universe for our survey was the people in New Delhi and the sample were places chosen to visit
and get the responses of questions from there.
Limitation
1. Sample size was limited to 50 because of limited time which is small to represent the
whole population.
2. The research was limited to New Delhi city only and if the same research would have been carried
in another city, the results may vary.
3. Sometimes the respondents because of their business didn’t able to concentrate while filling up the
questions. However the researcher tried her level best to overcome the limitation by explaining the
importance of research.
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CHAPTER 4
Data Analysis and
Findings
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Introduction:
In this chapter the main aim of this evaluation study is to gather information and critically analyse the data received during my survey.
As i was limited to do my survey on the adjoining areas surrounding New Delhi due to time and proximity factors. I collected data from this area only.
During my survey i came across wide number of peoples from different age groups with different perception and other varied demographic fields.
The analysis on the Sample size Surveyed is been as follows:
TABLE 4.1 The age and gender of the respondent
Age of the respondent
Gender of the
respondent
N Valid 50 50
Missing 0 0
TABLE 4.2 Age of the respondent
Frequency Percent Valid Percent
Cumulative
Percent
Valid 18 -25 10 20.0 20.0 20.0
26-35 16 32.0 32.0 52.0
36-50 10 20.0 20.0 72.0
51-65 7 14.0 14.0 86.0
66 & above 7 14.0 14.0 100.0
Total 50 100.0 100.0
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PIE CHART 4.1 Age of the respondentAnalysis:
The above pie chart shows the demographic profile of the selected sample. The profile is
spread in age range of 18 years to 66 years and above. The sample comprised mostly the
persons of age group 26 –35 years with the maximum frequency of 16 samples, whereas the
second most sample was present in age group of 36 –50 years with frequency of 10.
TABLE 4.3 Gender of the respondent
Frequency Percent Valid Percent
Cumulative
Percent
Valid Male 36 72.0 72.0 72.0
Female 14 28.0 28.0 100.0
Total 50 100.0 100.0
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PIE CHART 4.2 Gender of the respondent
Analysis:
The gender category represented an unequal distribution between the number of males and
females. It can be said that the survey was male biased but due to the limited time, the
respondents were chosen as first come first serve basis.
TABLE 4.4 Work status of the respondent
Frequency Percent Valid Percent
Cumulative
Percent
Valid Student 8 16.0 16.0 16.0
Business 13 26.0 26.0 42.0
Employed 16 32.0 32.0 74.0
Others 13 26.0 26.0 100.0
Total 50 100.0 100.0
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PIE CHART 4.3 Work status of the respondent
Analysis:
The above chart shows that people mostly were employed and secondly were the business man, least
were the students.
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What factor do you consider for investing?
TABLE 4.5 Frequency distribution of the factors considered for investment
Frequency Percent Valid Percent Cumulative Percent
Valid safety 16 32.0 32.0 32.0
liquidity 13 26.0 26.0 58.0
high return 8 16.0 16.0 74.0
tax benefits 6 12.0 12.0 86.0
guaranteed
return7 14.0 14.0 100.0
Total 50 100.0 100.0
PIE CHART 4.4 Representation of factors considered for investing.
Analysis:
This was the most important question of the entire questionnaire. This question clearly indicates the
psyche of investors in making the investment decision. We can see that most of the investors made
their decisions on direct regard to safety & liquidity, whereas the other investors wanted a
guaranteed return as the motivation to invest. This shows the traditional thought of saving and
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penetration of banking industry in the psyche of consumers.
What investment opportunities do you seek for investing?
TABLE 4.6 Frequency distribution of various investment opportunities
Frequency Percent Valid Percent
Cumulative
Percent
Valid Bank Deposits 11 22.0 22.0 22.0
Post Office/ PPF 10 20.0 20.0 42.0
Stock/ PMS 5 10.0 10.0 52.0
Mutual Funds 9 18.0 18.0 70.0
Insurance 8 16.0 16.0 86.0
Gold (Holding) 4 8.0 8.0 94.0
Real Estates 3 6.0 6.0 100.0
Total 50 100.0 100.0
PIE CHART 4.5 Representation of various investment opportunities.
Analysis:
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It can be seen from pie chart that mostly investors go for investment with a bank or a post
office. More than 40% of the investment are with them. On the other hand rest 60%
comprises of insurance, mutual funds, real estates, gold & stocks. It can be seen that
investment in stocks & mutual funds have been increased over the past years.
TABLE 4.7 Awareness about MF :
Frequency Percent Valid Percent
Cumulative
Percent
Valid Yes 18 36.0 36.0 36.0
No 32 64.0 64.0 100.0
Total 50 100.0 100.0
PIE CHART 4.6 Representation of Awareness about MF
Analysis:
Most of the people are unaware about mutual funds. About 64% people don’t know anything about mutual fund
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TABLE 4.8 Reason of unawareness about MF
Frequency Percent Valid Percent
Cumulative
Percent
Valid Not intrested 17 34.0 45.9 45.9
Lack of information 11 22.0 29.7 75.7
Other reasons 9 18.0 24.3 100.0
Total 37 74.0 100.0
Missing System 13 26.0
Total 50 100.0
PIE CHART 4.7 Reason of unawareness about MF
Analysis:
The above pie chart shows the reason behind not knowing about mutual fund is that most of the
people are really not at all intrested in mutual fund and other who are intrested dint get sufficient
information about it.
TABLE 4.9 Reason why don’t want to invest in mutual fund
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Frequency Percent Valid Percent
Cumulative
Percent
Valid HIgh Risk 14 28.0 41.2 41.2
No guarantee 7 14.0 20.6 61.8
Difficulty in selecting options 3 6.0 8.8 70.6
Lack of Awareness 5 10.0 14.7 85.3
Past experience 5 10.0 14.7 100.0
Total 34 68.0 100.0
Missing System 16 32.0
Total 50 100.0
PIE CHART 4.8 Reason why don’t want to invest in mutual fund
Analysis:
The above pie chart shows the factors that have stopped people to invest in mutual funds. From the
range of options people said that high risk was the reason behind it. Other factors included prior
experience, no guarantee, lack of awareness & difficulty in selecting options. It can be clearly seen
that a perception of loss of money i.e. high risk is associated for mutual funds in eyes of consumers.
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TABLE 4.10 Safest option for investing
Frequency Percent Valid Percent
Cumulative
Percent
Valid Bank Deposits 28 56.0 63.6 63.6
Post Office/ PPF 7 14.0 15.9 79.5
Stock/ PMS 1 2.0 2.3 81.8
Insurance 2 4.0 4.5 86.4
Real Estates 6 12.0 13.6 100.0
Total 44 88.0 100.0
Missing System 6 12.0
Total 50 100.0
PIE CHART 4.9 Representing safest option for investing
Analysis :
Analysis shows that the safest option considered for investing is preferred to be bank and post office.
What return you receive from your investment?66 | P a g e
TABLE 4.11 Frequency of data for various rate of return.
Frequency Percent Valid Percent
Cumulative
Percent
Valid 4-6 % 17 34.0 38.6 38.6
6-7 % 10 20.0 22.7 61.4
7-9 % 12 24.0 27.3 88.6
9 % & above 5 10.0 11.4 100.0
Total 44 88.0 100.0
Missing System 6 12.0
Total 50 100.0
PIE CHART 4.10 Showing the rate of return.
Analysis:
The respondents were then asked to state their earnings from the sources other than that of mutual
funds. From the responses it can be seen that most of the investors received a return in range of 4 –6
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% in their investment, whereas this went high till 9 %.
TABLE 4.12 Features of Mutual Funds.
Frequency Percent Valid Percent
Cumulative
Percent
Valid Flexibility 3 6.0 15.0 15.0
High return 1 2.0 5.0 20.0
Diversification of Funds 4 8.0 20.0 40.0
Tax Benefits 5 10.0 25.0 65.0
Professional Management 3 6.0 15.0 80.0
Regular Income 4 8.0 20.0 100.0
Total 20 40.0 100.0
Missing System 30 60.0
Total 50 100.0
PIE CHART 4.11 Features of mutual funds.
Analysis:
The above chart shows the salient features of mutual funds that attracts customers towards investment.
The factors were flexibility, high return, diversification of funds, the tax benefits that mutual funds
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provide professional management behind mutual funds, the regular income. Among these factors tax
benefits that mutual fund provide is the most appealing factor to consumers. The maximum responses
were recorded for tax benefits that mutual funds provide. The high return was also one of the factors
affecting the decision making process of the consumers.
TABLE 4.13 Sources of knowledge about Mutual Funds.
Frequency Percent Valid Percent
Cumulative
Percent
Valid Print Media 6 12.0 28.6 28.6
Internet 7 14.0 33.3 61.9
TV/ Radio 2 4.0 9.5 71.4
Friends/ Relatives (WOM) 4 8.0 19.0 90.5
Advisors 2 4.0 9.5 100.0
Total 21 42.0 100.0
Missing System 29 58.0
Total 50 100.0
PIE CHART 4.12 Sources of knowledge about Mutual Funds.
Analysis :
More than 50% respondent skipped this question and the who answered relied mostly on internet and
print media
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TABLE 4.14 where from you purchase Mutual Funds.
Frequency Percent Valid Percent
Cumulative
Percent
Valid Banks 8 16.0 44.4 44.4
Brokers/ Distributors 7 14.0 38.9 83.3
Online/ AMCs 1 2.0 5.6 88.9
Others 2 4.0 11.1 100.0
Total 18 36.0 100.0
Missing System 32 64.0
Total 50 100.0
PIE CHART 4.13 Where from you purchase Mutual Funds.
Analysis :
Most of the respondent purchased mutual fund from bank and brokers very less of them relis on the
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other sources.
TABLE 4.15 Mode of Payment adopted
Frequency Percent Valid Percent
Cumulative
Percent
Valid Lumpsum/ One Time 5 10.0 25.0 25.0
Recurring 15 30.0 75.0 100.0
Total 20 40.0 100.0
Missing System 30 60.0
Total 50 100.0
PIE CHART 4.14 Mode of Payment adopted.
Analysis:
The above pie chart shows the mode of payment adopted for investment. The respondents mostly belonged to service class thus they preferred a recurring deposit over a lump sum
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payment of funds. This systematic investment scheme has grown a significant importance over the period of time, which is only to promote the habit of investment for the investor.
TABLE 4.16 Time for holding mutual funds.
Frequency Percent Valid Percent
Cumulative
Percent
Valid Upto 1 yr 6 12.0 33.3 33.3
1 - 3 yrs 8 16.0 44.4 77.8
4 - 8 yrs 2 4.0 11.1 88.9
9 - 15 yrs 2 4.0 11.1 100.0
Total 18 36.0 100.0
Missing System 32 64.0
Total 50 100.0
PIE CHART 4.15 Time for holding mutual funds.
Analysis:
Most of the respondent hold mutual fund for less than 3 years, there were about 75% of such
respondent.
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TABLE 4.17 Mutual Fund mostly preferred
Frequency Percent Valid Percent
Cumulative
Percent
Valid Equity Funds 5 10.0 25.0 25.0
Balanced funds 9 18.0 45.0 70.0
Growth funds 4 8.0 20.0 90.0
Others 2 4.0 10.0 100.0
Total 20 40.0 100.0
Missing System 30 60.0
Total 50 100.0
PIE CHART 4.16 Representation of Mutual Fund mostly preferred
Analysis:
Out of total 50 respondent only 20 responded to this question. And out of that 20 most people choose
balanced fund followed by equity, only 2 respondent preferred growth fund.
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TABLE 4.18 satisfaction level of respondent towards level of return.
Frequency Percent Valid Percent
Cumulative
Percent
Valid Highly satisfied 4 8.0 8.0 8.0
satisfied 13 26.0 26.0 34.0
neutral 16 32.0 32.0 66.0
dissatisfied 14 28.0 28.0 94.0
highly dissatisfied 3 6.0 6.0 100.0
Total 50 100.0 100.0
PIE CHART 4.17 Satisfaction level of respondent towards level of return.
Analysis:
Most of the response came out to be neutral followed by dissatisfied and satisfied,overall there is
same level of satisfaction and dissatisfaction among the people about mutual fund.
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TABLE 4.19 Awareness program interested.
Frequency Percent Valid Percent
Cumulative
Percent
Valid MF 7 14.0 14.0 14.0
Insurance 13 26.0 26.0 40.0
stock market 19 38.0 38.0 78.0
Any other 11 22.0 22.0 100.0
Total 50 100.0 100.0
PIE CHART 4.18 Awareness program interested.
Analysis :
Most of the people are interested in awareness about stock market to learn more about it.Which is
followed by insurance and last one is the mutual fund about which respondent wanted awareness
programs to be conducted.
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CHAPTER 5
Suggestion &Conclusion
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Suggestions
Even though the mutual funds are good source of income, the people lack awareness and information
towards mutual funds. So the following suggestions were made in order to increase the awareness
among the people especially the rural people.
1. Increase awareness among investors: Many investors are still restricting their choices to the non-
governmental options like gold and fixed deposits even the market is flooded with countless
investment opportunities. This is because of lack of awareness about mutual funds which makes many
investors restrict their choice to traditional options like gold and fixed deposits. So awareness relating
to mutual funds must be increased among the investors to encourage them to invest in mutual funds.
2. Provide complete information relating to mutual funds: Even among the investors who invest in
mutual funds are unclear about how they function and how to manage them. So proper information
must be provided to the investors in order to increase the loyalty among the investors.
3. Investors’ fee must be reduced by reducing paper work: Investors fee includes management fee,
distribution fee, distribution fee, and administrative costs, etc., which are generally deducted from the
asset value. This can be possible if the investment is made without agent and if the paper work is
reduced.
4. Better commission should be paid to Asset Management Companies: From the past 4-5 years the
trust of investors on mutual funds is reduced because of the poor performance of mutual funds in
these years. So if better commission is paid to Asset Management Companies which are highly
knowledgeable and by motivating them we can improve the distribution system of mutual funds.
5. Subsidized Investments to rural investors: Because of the issue of commercial viability, mutual
funds were limited to major cities only. So if mutual funds are offered to rural and semi urban
investors at subsidized rates like agricultural loans, the demand for mutual funds increases in rural and
semi urban areas also.
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6. Advertising campaigns must be conducted in rural areas to increase awareness among rural
investors.
Conclusion
Mutual funds are good source of returns for majority of households and it is particularly useful for the
people who are at the age of retirement. However, average investors are still restricting their choices
to conventional options like gold and fixed deposits when the market is flooded with countless
investment opportunities, with mutual funds. This is because of lack of information about how mutual
funds work, which makes many investors hesitant towards mutual fund investments. In fact, many a
times, people investing in mutual funds too are unclear about how they function and how one can
manage them. So the organizations which are offering mutual funds have to provide complete
information to the prospective investors relating to mutual funds. The government also has to take
some measures to encourage people to invest in mutual funds even though it is offering schemes
Mutual funds provide a range of products for investment in both short term and long term. It offers a
wide variety of combination of equity and debt instruments. One of the several factors people make
decisions on the basis of the past performance, the risk associated & guarantee of return.
Hence, we need to make financially aware both partners and customers, so that they can understand
each other and based on need of individual customer appropriate mutual funds can be offered to
customers. This need of customer must be understood by mutual fund seller as we can see a
relationship between highly educated class people and riskier investment options. Majority of the
people wants higher return in short period of time that is why they prefer to invest in stock markets
and mutual funds rather than any other form of investments.
People must be made aware of the benefits of starting early in their life, saving regularly, investing in
the right asset class, the power of compounding, the systematic investment plan and more. These must
be in sync with their future needs may be 25-30 years ahead.
From survey, it is clear that people are inclined to invest in less beneficial but fixed return avenues
such as Banks, Post offices, PPFs.
Mutual Funds now represent perhaps most appropriate investment opportunity for most investors. As
financial markets become more sophisticated and complex, investors need a financial intermediary
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who provides the required knowledge and professional expertise on successful investing. As the
investor always try to maximize the returns and minimize the risk.
Mutual fund satisfies these requirements by providing attractive returns with affordable risks. The
fund industry has already overtaken the banking industry, more funds being under mutual fund
management than deposited with banks. With the emergence of tough competition in this sector
mutual funds are launching a variety of schemes which caters to the requirement of the particular
class of investors. Risk takers for getting capital appreciation should invest in growth, equity schemes.
Investors who are in need of regular income should invest in income plans.
Majority of the respondents are not aware of mutual funds, so By conducting more consumer
awareness creating programmes the company can give more information about the mutual funds and