mutual fund

A PROJECT REPORT

ON

“MUTUAL FUNDS IS THE BETTER INVESTMENTS PLAN”

Submitted in partial fulfillment for

MASTER OF BUSINESS ADMIMISTRATION

Programme of

Chhattisgarh Swami Vivekanand Technical University, Bhilai

Submitted by :- Under Guidance :-

MBA( Two Year Programme) Relationship Manager

ACKNOWLEDGEMENT

With regard to my Project with Mutual Fund I would like to thank each and every one

who offered help, guideline and support whenever required.

First and foremost I would like to express gratitude to Manager UTI

Financial Center Model Colony, Shivaji Nagar ,Pune and other staffs for their support

and guidance in the Project work. I am extremely grateful to my guide, Relationship

Manager Miss Prashansha Chauhan for their valuable guidance and timely

suggestions. I would like to thank all faculty members of UTI Financial Center.

NEHA SONI

DECLERATION

I hereby declare that this Project Report entitled “THE MUTUAL FUND IS BETTER

INVESTMENT PLAN in UTI Mutual Fund submitted in the partial fulfillment of the

requirement of Master of Business Administration (MBA) of Sri Shakracharya College

Of Institute Of Technology And Management is based on primary & secondary data

found by me in various departments, books, magazines and websites & Collected by

me in under guidance of Miss Prashansha Chauhan.

DATE: NEHA SONI

MBA (Two Years)

CONTENTS

Acknowledgement

Declaration

Executive Summary

Chapter - 1 INTRODUCTION

Chapter - 2 COMPANY PROFILE

Chapter - 3 OBJECTIVES AND SCOPE

Chapter - 4 RESEARCH METHODOLOGY

Chapter - 5 DATA ANALYSIS AND INTERPRETATION

Chapter - 6 FINDINGS AND CONCLUSIONS

Chapter - 7 SUGGESTIONS & RECOMMENDATIONS

BIBLIOGRAPHY

MUTUAL FUNDS

ALL ABOUT MUTUAL FUNDS

WHAT IS MUTUAL FUND

EQUITY FUND

DEBT FUNDS

BY INVESTMENT OBJECTIVE

ADVANTAGES OF INVESTING MUTUAL FUNDS

DISADVANTAGES OF INVESTING MUTUAL FUNDS

MUTUAL FUNDS INDUSTRY IN INDIA

MAJOR PLAYERS OF MUTUAL FUNDS IN INDIA

HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

CATEGORIES OF MUTUAL FUNDS

INVESTMENT STRATEGIES

WORKING OF A MUTUAL FUND

RESEARCH REPORT

SCOPE OF THE STUDY

OBJECTIVE OF RESEARCH

DATA SOURCES

SAMPLING

DATA ANALYSIS

QUESTIONNAIRE

Chapter-1

Introduction

INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS ASPECTS.

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

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

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

investors. The money thus collected is then invested in capital market instruments

such as shares, debentures and other securities. The income earned through these

investments and the capital appreciations realized are shared by its unit holders in

proportion the number of units owned by them. Thus a Mutual Fund is the most

suitable investment for the common man as it offers an opportunity to invest in a

diversified, professionally managed basket of securities at a relatively low cost. A

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

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

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

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

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

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

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

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

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

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

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

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

a mutual fund shareholder or a unit holder.

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

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

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

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

scheme's assets by the total number of units issued to the investors.

ADVANTAGES OF MUTUAL FUND

1. Professional Management - The basic advantage of funds is that, they are

professional managed, by well qualified professional. Investors purchase funds

because they do not have the time or the expertise to manage their own portfolio. A

mutual fund is considered to be relatively less expensive way to make and monitor

their investments.

2. Diversification - Purchasing units in a mutual fund instead of buying individual

stocks or bonds, the investors risk is spread out and minimized up to certain extent.

The idea behind diversification is to invest in a large number of assets so that a loss

in any particular investment is minimized by gains in others.

3. Economies of Scale - Mutual fund buy and sell large amounts of securities at a

time, thus help to reducing transaction costs, and help to bring down the average cost

of the unit for their investors.

4. Liquidity - Just like an individual stock, mutual fund also allows investors to

liquidate their holdings as and when they want.

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

other available instruments in the market, and the minimum investment is small. Most

AMC also have automatic purchase plans whereby as little as Rs. 2000, where SIP

start with just Rs.50 per month basis.

DISADVANTAGE OF MUTUAL FUND

1. Professional Management - Some funds doesn’t perform in neither the market, as

their management is not dynamic enough to explore the available opportunity in the

market, thus many investors debate over whether or not the so-called professionals

are any better than mutual fund or investor himself, for picking up stocks.

2. Costs – The biggest source of AMC income, is generally from the entry & exit load

which they charge from an investors, at the time of purchase. The mutual fund

industries are thus charging extra cost under layers of jargon.

3. Dilution - Because funds have small holdings across different companies, high

returns from a few investments often don't make much difference on the overall

return. Dilution is also the result of a successful fund getting too big. When money

pours into funds that have had strong success, the manager often has trouble finding

a good investment for all the new money.

4. Taxes - when making decisions about your money, fund managers don't consider

your personal tax situation. For example, when a fund manager sells a security, a

capital-gain tax is triggered, which affects how profitable the individual is from the

sale. It might have been more advantageous for the individual to defer the capital

gains liability.

HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

The mutual fund industry in India started in 1963 with the formation of Unit Trust of

India, at the initiative of the Government of India and Reserve Bank. Though the

growth was slow, but it accelerated from the year 1987 when non-UTI players

entered the Industry.

In the past decade, Indian mutual fund industry had seen a dramatic improvement,

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

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

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

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

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

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

development of the sector. Each phase is briefly described as under.

 First Phase – 1964-87

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

Reserve Bank of India and functioned under the Regulatory and administrative

control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the

Industrial Development Bank of India (IDBI) took over the regulatory and

administrative control in place of RBI. The first scheme launched by UTI was Unit

Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under

management.

Second Phase – 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector

banks and Life Insurance Corporation of India (LIC) and General Insurance

Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund

established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab

National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of

India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund

in June 1989 while GIC had set up its mutual fund in December 1990.At the end of

1993, the mutual fund industry had assets under management of Rs.47,004 crores.

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

1993 was the year in which the first Mutual Fund Regulations came into being, under

which all mutual funds, except UTI were to be registered and governed. The erstwhile

Kothari Pioneer (now merged with Franklin Templeton) was the first private sector

mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more

comprehensive and revised Mutual Fund Regulations in 1996. The industry now

functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of January

2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.

Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was

bifurcated into two separate entities. One is the Specified Undertaking of the Unit

Trust of India with assets under management of Rs.29,835 crores as at the end of

January 2003, representing broadly, the assets of US 64 scheme, assured return and

certain other schemes

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is

registered with SEBI and functions under the Mutual Fund Regulations. consolidation

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

assets of Rs.153108 crores under 421 schemes.

CATEGORIES OF MUTUAL FUND:

Mutual funds can be classified as follow :

Based on their structure:

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

point of time.

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

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

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

Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of close-

ended funds provided liquidity window on a periodic basis such as monthly or weekly.

Redemption of units can be made during specified intervals. Therefore, such funds

have relatively low liquidity.

Based on their investment objective:

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

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

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

term, thereby offering higher returns at relatively lower volatility. At the same time,

such funds can yield great capital appreciation as, historically, equities have

outperformed all asset classes in the long term. Hence, investment in equity funds

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

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

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

and individual stock weightages.

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

across different sectors and stocks.

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

they invest in companies offering high dividend yields.

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

some theme.

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

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

sector fund will invest in banking stocks.

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

Balanced fund: Their investment portfolio includes both debt and equity. As a

result, on the risk-return ladder, they fall between equity and debt funds. Balanced

funds are the ideal mutual funds vehicle for investors who prefer spreading their risk

across various instruments. Following are balanced funds classes:

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

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

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

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

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

securities; and money market instruments such as certificates of deposit (CD),

commercial paper (CP) and call money. Put your money into any of these debt funds

depending on your investment horizon and needs.

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

portion being invested in call money market.

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

and T-bills.

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

instruments which have variable coupon rate.

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

mis-pricing between cash market and derivatives market. Funds are allocated to

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

money markets, in the absence of arbitrage opportunities.

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

securities.

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

long-term debt papers.

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

exposure of 10%-30% to equities.

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

that of the fund.

INVESTMENT STRATEGIES

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

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

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

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

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

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

of the same mutual fund.

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

fund then he can withdraw a fixed amount each month.

UTI SIP Systematic Investment Plan

What is UTI Systematic Investment Plan (SIP) ?

A Systematic Investment Plan from UTI Mutual Fund is a disciplined approach of

investing in UTI MF schemes , where one can make regular investments

according to per-opted schedules. So let’s plan for the future and get relieved

from investments worries. It’s time to aim to get rich by building your investment

through this time tested mechanism.

What is offer?

A systematic Investment plan from UTI mutual fund is a disciplined

approach Of investing in UTI MF schemes-equity, balance and debt – where one can make regular investment according to pre opted schedules. So,plan for the future and get relived from day to day investment worries. Build your investment is a regular way of investment through this time tested mechanism.

UTI investment plan is regular way of investment which allow to

you as low as Rs. 500/- per month. It is disciplined investment approach.

How does UTI SIP work?

UTI SIP enables you to invest a pre-determined amount of money in

chosenschemes at the applicable NAV based sale price on each transaction date.

Each transaction will fetch you additional units that will be added to your investment

account, thereby helping you to build your investment at regual intervals. A

statement confirming transaction and allotment of units for each transaction will be

sent to you.

How to make UTI SIP to work for you?

It makes good sense to invest regularly.

But how do you start ?

1. Set your financial goal

2. Identify the scheme

3. Decide the SIP amount

4. Look for a long- term commitment: UTI SIP is most effective when opted for a

longer/extended period of time . the chance of bigger gains increase with the

extended time horiozon.

5. Aim for the big picture : Market fluctuations are a way of life . You add more

units to your investment account when the markets are low. To get the out of

these fluctuations, start today. The sooner you start,the earlier you reach your

financial goals.

6. Start investing.

How do you benefit from UTI SIP?

Rupee Cost Averaging

The fixed amount which you invest every month in a fund is used to purchase units

at the prevailing NAV-based price on such date of investment chosen every

month .By investing a uniform amount regularly. One can average out the cost of

acquisition of units .Your average cost per unit is what determines your overall return

on your investments.

Month Amount you

invest (rs.)

Sale

Price

No. of

units

1 5000 11.00 454.55

2 5000 10.50 476.19

3 5000 10.25 487.80

4 5000 10.50 476.19

5 5000 11.00 454.55

Total 25000 2349.28

Cost per unit for a lump sum investment of rs. 25000 in month 1=rs.11/-,average

cost per unit for a SIP investment of rs.5000 pm over 5 months

=rs.25000/2349.28=rs.10.64 As evident from the table ,if you were to invest through

sip ,the average purchase price works out lower at rs.10.64 compared to the

purchase price of rs. 11 in case of a lump sum investment . The figure of sale price

used are hypothecial and are for illustrative purposes only

RISK V/S. RETURN:

Working of a Mutual fund :

The entire mutual fund industry operates in a very organized way. The investors,

known as unit holders,handover their savings to the AMCs under various schemes.

The objective of the investment should match with the objective of the fund to best

suit the investors’ needs. The AMCs further invest the funds into various securities

according to the investment objective. The return generated from the investments is

passed on to the investors or reinvested as mentioned in the offer document.

Chapter – 2

Company Profile

COMPA NY PRO FILE

Type : Public

Industry : Mutual fund

Founded : 1963

Headquarters : Mumbai, Maharashtra India.

Key people : U K Sinha, Managing Director

Website : www.UTImf.com

Introduction of UTI

"Unit Trust of India" means the Unit Trust of India established under the Unit Trust of

India Act, 1963. The Unit Trust of India (UTI) has the world's largest share in

domestic mutual fund industry.

UTI Bank was the first of the new private banks to have begun operations in 1994,

after the Government of India allowed new private banks to be established. The Bank

was promoted jointly by the Administrator of the specified undertaking of the Unit

Trust of India (UTI - I), Life Insurance Corporation of India (LIC) and General

Insurance Corporation Ltd. The Bank today is capitalized to the extent of Rs.232.86

Crores with the public holding at 47.50 %.

January 14, 2003 is when UTI Mutual Fund started to pave its path following the

vision of UTI Asset Management Co. Ltd. (UTIAMC), which was appointed by UTI

Trustee Co, Pvt. Ltd. for managing the schemes of UTI Mutual Fund and the

schemes transferred/migrated from the erstwhile Unit Trust of India.

Work culture :

We believe in providing an environment that encourages employees to achieve and fulfil personal goals and that of the company. When the combined force of both, the employees and the company flow in one direction, there is ample amount of possibilities, opportunities and growth.

Employee Benefits:

Competitive salaries

Comfortable work environment

Career opportunities

Insurance benefits

Recreational amenities

History

THE EVOLUTION:

The formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in the year 1963. The primary objective at that time was to attract the small investors and it was made possible through the collective efforts of the Government of India and the Reserve Bank of India.

Unit Trust of India was created by the UTI Act passed by the Parliament in 1963. For more than two decades it remained the sole vehicle for investment in the capital market by the Indian citizens. In mid- 1980s public sector banks were allowed to open mutual funds. The real vibrancy and competition in the MF industry came with the setting up of the Regulator SEBI and its laying down the MF Regulations in 1993.UTI maintained its pre-eminent place till 2001, when a massive decline in the market indices and negative investor sentiments after Ketan Parekh scam created doubts about the capacity of UTI to meet its obligations to the investors. This was further compounded by two factors; namely, its flagship and largest scheme US 64 was sold and re-purchased not at intrinsic NAV but at artificial price and its Assured Return Schemes had promised returns as high as 18% over a period going up to two decades.

UTI Mutual Fund was created as a SEBI registered fund like any other mutual fund. The assets and liabilities of schemes where Government had to come out with a bail-out package were taken over directly by the Government in a new entity called Specified Undertaking of UTI, SUUTI. SUUTI holds over 27% stake Axis Bank.

Corporate Awards

Trusted Brand Gold Award in the category of investment fund company by Readers Digest in 2008

UTI AMC has been awarded best debt fund house by outlook money & NDTV profit in 2008

awarded for “STAR FUND HOUSE OF THE YEAR” by ICRA Mutual Fund Awards 2010 in the Equity Category.

COMPETITOR

Reliance Money

ICICI PRUDENTIAL MUTUAL FUND

SBI MUTUAL FUND

BIRLA SUN LIFE MUTUAL FUND

HDFC MUTUAL FUND

MISSION:

To make UTI Mutual Fund:• The most trusted Brand, admired by all stakeholders•The largest and most efficient money manager with global presence• The best in class customer service provider• The most preferred employer• The most innovative and best wealth creator• A socially responsible organization known forbest corporate governance.

VISION:

To be the most Preferred Mutual Fund.To be a dominant player in the Indian mutual fund space, recognized for its high levels of ethical and professional conduct and a commitment towards enhancing investor interest.

Chapter - 3

Objectives and scope

SCOPE AND OBJEC TI VE OF T HE S TUD Y

Sco pe of the st ud y : -

The study covers various aspects of mutual fund like basic concept, types, future of

mutual fund in India & the schemes etc. But it does not cover these aspects in detail

relating with the legal aspects and the provisions made in different acts.

The time horizon selected for the study is from April 2007 to March 2008. All the

schemes have been analyzed with the consideration of this time frame.

Obje ctives: -

1. To study the various offers of the company, services ranging from equities,

commodities, portfolio management etc.

2. The objective of the study was to collect information on the various securities

revolving in the market & thus providing customer service to clients to help them

invest capital in profitable plans.

3. To know about returns of the fund which one is beneficial.

4. To know their portfolio management.

Chapter – 4

Research Methodology

RESEARCH METHODOLOGY

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

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

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

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

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

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

day to day decision and critical ones.

Data sources:

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

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

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

collected through various journals and websites.

Duration of Study:

The study was carried out for a period of 45 days, from 4th June to 16th July 2012.

Sampling:

Sampling procedure:

The sample was selected of them who are the customers/visitors of Unit Trust Of

India (UTI), Tech Mahindra, HDFC Bank, irrespective of them being investors or not

or availing the services or not. It was also collected through personal visits to

persons, by formal and informal talks and through filling up the questionnaire

prepared. The data has been analyzed by using mathematical/Statistical tool.

Sample size:

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

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

Fund.

Sample design:

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

Limitation:

Some of the persons were not so responsive.

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

given actual answers of my questionnaire.

Sample size is limited to 200 visitors of Unit Trust Of India, Modal Colony

Branch, Pune out of these only 120 had invested in Mutual Fund. The sample.

size may not adequately represent the whole market.

Some respondents were reluctant to divulge personal information which can

affect the validity of all responses.

The research is confined to a certain part of Pune.

Chapter – 5

Data Analysis &

Interpretation

ANALYSIS & INTERPRETATION OF THE DATA

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

A

g

e

G

r

o

u

p

<= 30

31-35

36-40

41-45

46-50

>50

N

o

.

o

f

I

n

v

e

s

t

o

12

18

30

24

20

16

r

s

Interpretation:

According to this chart out of 120 Mutual Fund investors of Pune the most are in the

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

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

(b). Educational Qualification of investors of Pune.

Educational Qualification

Number of Investors

Graduate/ Post Graduate

88

<=30 31-35 36-40 41-45 46-50 >500

5

10

15

20

25

30

35

1218

3024

2016

Age group of the Investors

Inv

es

tors

inv

es

ted

in M

utu

al F

un

d

Under Graduate

25

Others 7

Total 120

71%

23% 6%

Graduate/Post Graduate Under Graduate Others

Interpretation:

Out of 120 Mutual Fund investors 71% of the investors in Pune are Graduate/Post

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

c). Occupation of the investors of Pune.

.

Occupation No. of Investors

Govt. Service 30

Pvt. Service 45

Business 35

Agriculture 4

Others 6

Govt. Service

Pvt. Service Business Agriculture Others0

10

20

30

40

50

3545

30

4 6

Occupation of the customers

No

. of

Inve

sto

rs

Interpretation:

In Occupation group out of 120 investors, 38% are Pvt. Employees, 25% are

Businessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are in others.

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

Income Group No. of

Investors

<=10,000 5

10,001-15,000 12

15,001-20,000 28

20,001-30,000 43

>30,000 32

<=10 10-15 15-20 20-30 >3005

101520253035404550

512

28

43

32

Income Group of the Investorsn (Rs. in Th.)

No

. of

Inv

es

tors

Interpretation:

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

that is the maximum investors are in the monthly income group Rs. 20,001 to Rs.

30,000, Second one i.e. 27% investors are in the monthly income group of more

than Rs. 30,000 and the minimum investors i.e. 4% are in the monthly income group

of below Rs. 10,000

(2) Investors invested in different kind of investments.

Kind of Investments

No. of Respondents

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

Saving A/c

Fixed D

eposits

Insura

nce

Mutu

al Fund

Post Office

(NSC)

Shares/D

ebenture

s

Gold/Silv

er

Real Esta

te

0 50 100 150 200 250

195148152

12075

5030

65

No.of Respondents

Kind

s of I

nves

tmen

t

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

97.5% people have invested in Saving A/c, 76% in Insurance, 74% in Fixed Deposits,

60% in Mutual Fund, 37.5% in Post Office, 25% in Shares or Debentures, 15% in

Gold/Silver and 32.5% in Real Estate.

3. Preference of factors while investing

Factor

s

(a)

Liq

uidi

ty

(

b

)

L

o

w

(c

)

H

ig

h

R

et

(

d

)

T

r

u

s

R

i

s

k

ur

n

t

No. of

Respo

ndents

40 6

0

6

4

3

6

20%

30%32%

18%

Liquidity Low Risk High Return Trust

Interpretation:

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

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

Trust

4. Awareness about Mutual Fund and its Operations

68%

33%

Yes No

Interpretation:

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

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

Response Yes No

No. of

Respondents

135 65

5. Source of information for customers about Mutual Fund

Source of information No. of

Respondents

Advertisement 18

Peer Group 25

Bank 30

Financial Advisors 62

Advertisement Peer Group Bank Financial Advisors0

10203040506070

18 25 30

62

Source of Information

No.

of R

espo

nden

ts

Interpretation:

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

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

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

Peer Group and 13% through Advertisement.

6. Investors invested in Mutual Fund

Response No. of Respondents

YES 120

NO 80

Total 200

Yes60%

No40%

Interpretation:

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

in Mutual Fund.

7. Reason for not invested in Mutual Fund

Reason No. of

Respondents

Not Aware 65

Higher Risk 5

Not any Specific

Reason

10

81%

13%6%

Not Aware Higher Risk Not Any

Interpretation:

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

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

specific reason.

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

Name of AMC

No. of Investors

SBIMF 55UTI 75

HDFC 30Reliance 75

ICICI Prudential 56Kotak 45Others 70

UTI

Reliance

ICICI

SBIMF

Kotak

HDFC

Others

0 10 20 30 40 50 60 70 80

75

75

56

55

45

30

70

No. of Investors

Na

me

of

AM

C

Interpretation:

In Pune most of the Investors preferred UTI and Reliance Mutual Fund. Out of 120

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

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

9. Reason for invested in UTIMF

Reason No. of

Respondents

Associated with

UTI

55

Better Return 5

Agents Advice 15

64%9%

27% Chart Title

Interpretation:

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

UTI, 27% invested on Agent’s Advice, 9% invested because of better return.

10. Reason for not invested in UTIMF

Reason No. of

Respondents

Not Aware 25

Less Return 18

Agent’s Advice 22

38%

28%

34%

Not Aware Less Return Agent's Advice

Interpretation:

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

28% do not have invested due to less return and 34% due to Agent’s Advice.

11. Preference of Investors for future investment in Mutual Fund

Name of AMC

No. of Investors

UTIMF 45SBI 76

HDFC 35Reliance 82

ICICI Prudential

80

Kotak 60Others 75

SBIMF

UTI

HDFC

Reliance

ICICI Prudential

Kotak

Others

0 10 20 30 40 50 60 70 80 90

76

45

35

82

80

60

75

No. of Investors

Nam

e of

AM

C

Interpretation:

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

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

12. Channel Preferred by the Investors for Mutual Fund Investment

Channel Financi

al

Ba

nk

AM

C

Adviso

r

No. of

Responde

nts

72 18 30

60%15%

25%

Financial Advisor Bank AMC

Interpretation:

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

through AMC and 15% through Bank.

13. Mode of Investment Preferred by the Investors

Mode of

Investment

One time

Investment

Systematic

Investment Plan

(SIP)

No. of

Respondent

s

78 42

Interpretation:

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

Systematic Investment Plan.

65%

35%

One time Investment SIP

14. Preferred Portfolios by the Investors

Portfolio No. of

Investors

Equity 56

Debt 20

Balanced 44

47%

17%

37%

Equity Debt Balance

Interpretation:

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

17% preferred Debt portfolio

15. Option for getting Return Preferred by the Investors

Optio

n

Divi

dend

Payo

ut

Divi

dend

Rein

vest

men

t

G

r

o

w

t

h

No.

of

Resp

onde

nts

25 10 8

5

21%

8%

71%

Dividend Payout Dividend Reinvestment Growth

Interpretation:

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

and 8% preferred Dividend Reinvestment Option.

16. Preference of Investors whether to invest in Sectoral Funds

Respons

e

No. of

Respondents

Yes 25

No 95

Interpretation:

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

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

21%

79%

Yes No

Chapter – 6

Findings and Conclusion

Findings

In Pune in the Age Group of 36-40 years were more in numbers. The second

most Investors were in the age group of 41-45 years and the least were in the age

group of below 30 years.

In Pune most of the Investors were Graduate or Post Graduate and below HSC

there were very few in numbers.

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

most Investors were Private employees and the least were associated with

Agriculture.

In family Income group, between Rs. 20,001- 30,000 were more in numbers,

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

were in the group of below Rs. 10,000.

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

Deposits, Only 60% Respondents invested in Mutual fund.

Mostly Respondents preferred High Return while investment, the second most

preferred Low Risk then liquidity and the least preferred Trust.

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

33% were not.

Among 200 Respondents only 60% had invested in Mutual Fund and 40% did

not have invested in Mutual fund.

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

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

be higher risk in Mutual Fund.

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

Prudential has also good Brand Position among investors, UTIMF places after ICICI

Prudential according to the Respondents.

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

Brand UTI, 27% Invested because of Advisor’s Advice and 9% due to better return.

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

UTIMF, the second most due to Agent’s advice and rest due to Less Return.

For Future investment the maximum Respondents preferred Reliance Mutual

Fund, the second most preferred ICICI Prudential, UTIMF has been preferred after

them.

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

AMC (means Direct Investment) and 15% through Bank.

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

of Mode of Investment.

The most preferred Portfolio was Equity, the second most was Balance

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

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

most preferred Dividend Payout and then Dividend Reinvestment.

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

to invest in Sectoral Fund.

Conclusion

Running a successful Mutual Fund requires complete understanding of the

peculiarities of the Indian Stock Market and also the psyche of the small investors.

This study has made an attempt to understand the financial behavior of Mutual Fund

investors in connection with the preferences of Brand (AMC), Products, Channels etc.

I observed that many of people have fear of Mutual Fund. They think their money will

not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its

related terms. Many of people do not have invested in mutual fund due to lack of

awareness although they have money to invest. As the awareness and income is

growing the number of mutual fund investors are also growing.

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

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

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

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

because of not awareness about Brand. Reliance, UTIMF, SBI, ICICI Prudential etc.

Distribution channels are also important for the investment in mutual fund. Financial

Advisors are the most preferred channel for the investment in mutual fund. They can

change investors’ mind from one investment option to others. Many of investors

directly invest their money through AMC because they do not have to pay entry load.

Only those people invest directly who know well about mutual fund and its operations

and those have time.

Chapter – 7

Suggestions

And

Recommendations

Suggestions and Recommendations

The most vital problem spotted is of ignorance. Investors should be made

aware of the benefits. Nobody will invest until and unless he is fully convinced.

Investors should be made to realize that ignorance is no longer bliss and what they

are losing by not investing.

Mutual funds offer a lot of benefit which no other single option could offer. But

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

see it as just another investment option. So the advisors should try to change their

mindsets. The advisors should target for more and more young investors. Young

investors as well as persons at the height of their career would like to go for advisors

due to lack of expertise and time.

Mutual Fund Company needs to give the training of the Individual Financial

Advisors about the Fund/Scheme and its objective, because they are the main source

to influence the investors.

Before making any investment Financial Advisors should first enquire about the

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

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

consideration.

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

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

investing should pay off.

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

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

advice and high quality.

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

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

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

the prospects and potential investors are not aware about the SIP. There is a large

scope for the companies to tap the salaried persons.

BIBLIOGRAPHY

NEWS PAPERS

OUTLOOK MONEY

COMPANY BROCHUERS

TELEVISION CHANNEL (CNBC AAWAJ)

MUTUAL FUND HAND BOOK

FACT SHEET AND STATEMENT

WEBSITE

WWW.UTIMF.COM

WWW.AMFIINDIA.COM

WWW. MUTUALFUNDSINDIA.COM

QUESTIONNAIRE

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

1. Personal Details:

(a). Name:- (b). Add: - Phone:- (c). Age:- (d). Qualification:-

(e). Occupation. Pl tick (√)

Go

vt.

Ser

P

vt

.

S

er

Busin

ess

Agricult

ure

Othe

rs

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

Up to Rs.10,000

Rs. 10,001 to 15000

Rs. 15,001 to 20,000

Rs. 20,001 to 30,000

Rs. 30,001 and above

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

a.

Saving

account

b. Fixed deposits c.

Insuranc

e

d.

Mutual

Fund

e. Post

Office-

f.

Shares/Debentures

g. Gold/

Silver

h. Real

Estate

Graduation/PG Under

Graduate

Others

NSC,

etc

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

(a)

Liquidit

y

(b)

Low

Risk

(c)

High

Return

(d)

Trust

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

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

a.

Advertisemen

t

b.

Peer

Group

c.

Banks

d.

Financial

Advisors

6. Have you ever invested in Mutual Fund? Pl tick (√). Yes No 7. If not invested in Mutual Fund then why?

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

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

a

.

S

B

I

b.

U

TI

M

F

c

.

H

D

F

C

d.

Re

lia

nc

e

e

.

K

o

t

a

k

f.

O

th

er

.

s

p

e

ci

f

y

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

a. UTIMF is associated with State Bank of India.

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

c. Agent’ Advice

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

a. You are not aware of UTIMF.

b. UTIMF gives less return compared to the others.

c. Agent’ Advice

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

Assets Management Co.

a. UTIMF

b. SBI

c. Reliance

d. HDFC

e. Kotak

f. ICICI

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

(a) Financial

Advisor

(b) Bank (c) AMC

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

a. One Time Investment b. Systematic Investment Plan

(SIP)

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

a. Having only debt portfolio

b. Having debt & equity portfolio.

c. Only equity portfolio.

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

a. Dividend

payout

b. Dividend

re-

investment

c. Growth in

NAV

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