Summer intership report on idfc mutual fund for MBA

A

Project Study Report On

Training Undertaken at

IDFC AMC ltd, Ahmadabad

“STUDY ABOUT INVESTORS PERCEPTION AND INVESTMENT PETTERN IN MUTUAL FUND AT IDFC

AMC ltd”

Submitted by: - MANTHAN SONI (Enr. No: - 137690592115)

MBA PROGRAMME 2013-2015

In partial fulfillment of the requirements for Summer Internship Programme for the award of the degree of

MASTER OF BUSINESS ADMINISTRATIONSHRI JAIRAMBHAI PATEL INSTITUTE OF BUSINESS MANAGEMENT AND COMPUTER

APPLICATIONS (NICM-MBA)

Submitted to:-

GUJARAT TECHNOLOGICAL UNIVERSITY,

AHMEDABAD

PREFACE

With the growth of rapid industrialization the need of management is felt every where. A

research report provides the most natural condition under which a student can learn and got

success in implementing the theoretically learned in to the practical and current

environment of daily practices done by the people (investor) it helps a student to learn, to

improve, to improvise, to experiment, to find knowledge in all possible ways and to

translate that knowledge into action.

MBA is a foundation stone to the management career. The classroom learning needs to

practical exposure. To develop concrete managerial and administrative skills of potential

manager, it is important that the interaction to the real environment be there.

The project is a real life venture for me. It is a great privilege that you have spread your for

reading this. In forthcoming pages, an attempt has been made to present the different aspect

of my project.

Date: Manthan soni

Place: Gandhinagar (GTU’s Enrollment No: -

137690592115)

Declaration

This project report entitled “Understanding Study of Investors perception and

investment pattern in mutual fund at IDFC” has been submitted to Gujarat

Technological University, Ahmadabad in partial fulfillment for the award of degree of

Master of Business Administration. I, the undersigned hereby declare that this report has

been completed by me under the guidance of Mr.Pankil thakker (Assistant Vise President)

and Prof.Rashesh Patel (Faculty Member, ShriJairambhai Patel Institute of Business

Management & Computer Applications, Gandhinagar.)

The report is entirely the result of my own efforts and has not been submitted either in part

or whole to any other institute or university for any degree.

Manthan soni

(GTU’s Enrollment No: - 137690592115)

Date:

Place: Gandhinagar

ACKNOWLEDGEMENT

“Chain of mistakes leads towards failures, chain of failures leads to experience & chain of experience leads to success.” That’s what a life’s path is. I express my heartfelt thanks to Dr. S.O. Junare, Director of NICM for providing me an opportunity for carrying out this study.

My special thanks to Prof. Rashesh Patel, Assistant Professor, NICM, who had been a mentor and had supported me by his vast knowledge, experience and wisdom. He had been a constant support me throughout the completion of the study

I take the opportunity to thank Mr. Hardik, Senior vise president, IDFC, who has motivated us to achieve new heights and work creatively.

I would also like to thank my guide Mr. Pankil Thakker, Assistant Vise President, IDFC. Who have immensely guided, supported and helped me in the process of completion of my Organizational Study through his constant encouragement and suggestions.

I take the opportunity to thank Mrs.Rekha nair, Sales manager, IDFC. Who had been a constant support throughout the completion of the study?

My sincere and humble thanks to all my faculty members, my beloved parents, my dear friends and each and everyone who have been never ending source of knowledge, inspiration and support to me.

Signature of the Student

Manthan soniEr.No: - 137690592115

Shri Jairambhai Patel Institute of Business Management and Computer Applications

(Formerly known as National Institute of Cooperative Management),

Approved by AICTE, New Delhi and Affiliated with Gujarat Technological UniversityOpposite Amusement Park, Indroda Circle, Gandhinagar - 382 007

Phone: 079 – 23213043, 37 - 38 - 39 Fax : 079 – 23213036

Web: www.nicm.coop E mail: [email protected]

CERTIFICATE

This is to certify that (……Name of the student……), student of MBA

(2012-2014 batch) at Post Graduate Centre of Gujarat Technological University – MBA,

SJPI has prepared a Summer Internship Project Report on “ (….Topic….) ” in partial

fulfillment of two years full-time MBA Programme of Gujarat Technological University,

Ahmedabad. This project work has been undertaken under my supervision and found

satisfactory.

Date : ----------------- (…….NAME OF FACULTY GUIDE…….) Place: Gandhinagar Core Faculty – MBA Dept. &

Project Guide

Dr. S O Junare

Director – Technical Campus

ABSTRACT

Being such a hot and much talked about financial product in the recent times, I take it as a great

opportunity to study and analyze the Indian mutual fund Industry and give my observation on it. It

will not only help building my career but it will also help Mahindra finance in certain aspect.

The Indian Mutual Funds Industry has witnessed a sea change since UTI was first established in

1963. From a single player the number of players has increased to more than 30 and the number of

schemes has spiraled to more than 3500. The last decade has been a period of rapid growth for the

MF industry. The industry is in nascent stage at present. It has come a long way and still has lots of

potential for growth.

My project in IDFC mainly deals with to Understanding Investors perception and investment pattern

in mutual fund at IDFC and also selling through several financial channels available in the market.

And my main aim is to attain profit for the company and give them good business. Fist part of study,

I undertake the research study survey through questionnaire fill up on investment pattern in mutual

fund by Investors. And after that I visited the list of bank given to me Kotak, HDFC, Axis Bank etc.

And Meet with Relationship manager and try to give them knowledge about the product and then try

to sale the product to their client and Understanding of Investors perception and investment pattern

in mutual fund.

And in these project my main aim to see which schemes are giving better returns and at a reasonable

risk. But risk itself is a very subjective terms that depend on person to person. And also how asset

management companies are performing and how their ranking in investment terms is.

And during the course of the project I have not only learnt about mutual fund industry but also try to

Understanding of Investors perception and investment pattern in mutual fund at IDFC the company.

INTRODUCTION

Chapter - 01 INTRODUCTION

1.1 IMPORTANCE OF MUTUAL FUNDS

1.2 NEED & IMPORTANCE OF STUDY

1.3 DESIGN OF STUDY

a. Statement of Problem

b. Objectives

c. Study Methodology

d. Data Analysis & Interpretation

e. Limitation

Chapter- 02 REVIEW OF LITERATURE

Chapter - 03 COMPANY PROFILE

Chapter- 04 Data Analysis & Interpretation

Questionnaire

CHAPTER-I

INTRODUCTION

The one investment vehicle that has truly come of age in India in the past decade is mutual

funds. Today, the mutual fund industry in the country manages around Rs 329,162 crore

(As of Dec, 2006) of assets, a large part of which comes from retail investors. And this

amount is invested not just in equities, but also in the entire gamut of debt instruments.

Mutual funds have emerged as a proxy for investing in avenues that are out of reach of

most retail investors, particularly government securities and money market instruments.

Specialization is the order of the day, be it with regard to a scheme’s investment objective

or its targeted investment universe. Given the plethora of options on hand and the hard-sell

adopted by mutual funds vying for a piece of your savings, finding the right scheme can

sometimes seem a bit daunting. Mind you, it’s not just about going with the fund that gives

you the highest returns. It’s also about managing risk–finding funds that suit your risk

appetite and investment needs.

So, how can you, the retail investor, create wealth for yourself by investing through mutual

funds? To answer that, we need to get down to brass tacks–what exactly is a mutual fund?

Very simply, a mutual fund is an investment vehicle that pools in the monies of several

investors, and collectively invests this amount in either the equity market or the debt

market, or both, depending upon the fund’s objective. This means you can access either the

equity or the debt market, or both, without investing directly in equity or debt.

The essential features of the mutual funds distinguishing from other of the

investments are:-

The mutual fund is a trust into which many relatively small investors invest their

money to form a large pool of cash which is then invested in securities by the manager of

the trust.

The price at which units can be bought and sold is governed solely by the value of

the underlying securities held by the MF and dealing in units are on the basis of net market

value of the investment per unit.

The managers of MF are obliged to redeem any units in issue on demand or certain

specified period.

All dividend income that the MF receives on its investments is paid out to unit

holders.

Since the unit held by investor evidences the ownership of the fund’s assets, the

value of an investors part ownership is determined by the NAV of the number of units held.

Concept of a Mutual Fund

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

common financial goal. The money thus collected is then invested in capital market

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

these investments and the capital appreciation realized is shared by its unit holders in

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

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

professionally managed basket of securities at a relatively low cost. The flow chart below

describes broadly the working of a mutual fund:-

Figure 1

Savings form an important part of the economy of any nation. With savings invested in

various options available to the people, the money acts as the driver for growth of the

country. Indian financial scene too presents multiple avenues to the investors. Though

certainly not the best or deepest of markets in the world, it has ignited the growth rate in

mutual fund industry to provide reasonable options for an ordinary man to invest his

savings.

Investment goals vary from person to person. While somebody wants security, others might

give more weightage to returns alone. Somebody else might want to plan for his child’s

education while somebody might be saving for the proverbial rainy day or even life after

retirement. With objectives defying any range, it is obvious that the products required will

vary as well.

Investors earn from a Mutual Fund in three ways:

1. Income is earned from dividends declared by mutual fund schemes from time to

time.

2. If the fund sells securities that have increased in price, the fund has a capital gain.

This is reflected in the price of each unit. When investors sell these units at prices

higher than their purchase price, they stand to make a gain.

3. If fund holdings increase in price but are not sold by the fund manager, the fund's

unit price increases. You can then sell your mutual fund units for a profit. This is

tantamount to a valuation gain.

Though still at a nascent stage, Indian MF industry offers a plethora of schemes and serves

broadly all type of investors. The range of products includes equity funds, debt, liquid, gilt

and balanced funds. There are also funds meant exclusively for young and old, small and

large investors. Moreover, the setup of a legal structure, which has enough teeth to

safeguard investors’ interest, ensures that the investors are not cheated out of their hard-

earned money. All in all, benefits provided by them cut across the boundaries of investor

category and thus create for them, a universal appeal.

Investors of all categories could choose to invest on their own in multiple options but opt

for mutual funds for the sole reason that all benefits come in a package.

Conceptual Framework of Mutual Fund

A mutual fund is constituted as a public trust created under the Indian Trust Act, 1882.

SEBI (mutual fund) regulations, 1996 regulate the structure of the mutual funds in India.

As per these regulations should have the following three-tier structure:

i) Sponsor

ii) Trust/trustee

iii) Asset Management Company

Apart from this mutual fund consist of

Figure 2

Sponsor

Sponsor is the person who acting alone or in combination with another body corporate

establishes a mutual fund. The sponsor establishes the mutual fund and registers the same

with SEBI. Sponsor appoints the Trustees, custodians and the AMC with prior approval of

SEBI and in accordance with SEBI Regulations. Sponsor must have a 5-year track record

of business interest in the financial markets. Sponsor must have been profit making in at

least 3 of the above 5 years. Sponsor must contribute at least 40% of the net worth of the

Investment Managed and meet the eligibility criteria prescribed under the Securities and

Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor is not responsible

or liable for any loss or shortfall resulting from the operation of the Schemes beyond the

initial contribution made by it towards setting up of the Mutual Fund.

Trust

The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian

Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration

Act, 1908.

Trustee

Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals).

The main responsibility of the Trustee is to safeguard the interest of the unit holders and

inter alia ensure that the AMC functions in the interest of investors and in accordance with

the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the

provisions of the Trust Deed and the Offer Documents of the respective Schemes. At least

2/3rd directors of the Trustee are independent directors who are not associated with the

Sponsor in any manner.

Asset Management Company (AMC)

The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The

AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to

act as an asset management company of the Mutual Fund. At least 50% of the directors of

the AMC are independent directors who are not associated with the Sponsor in any manner.

The AMC must have a net worth of at least 10 crore at all times.

Registrar and Transfer Agent

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to

the Mutual Fund. The Registrar processes the application form, redemption requests and

dispatches account statements to the unit holders. The Registrar and Transfer agent also

handles communications with investors and updates investor records.

Custodian

A custodian is an agent, bank, trust company, or other organization which holds and

safeguards an individual's, mutual funds, or investment company's assets for them.

Advantages of Mutual Funds

1. Professional Management

Mutual Funds provide the services of experienced and skilled professionals, backed by a

dedicated investment research team that analyses the performance and prospects of

companies and selects suitable investments to achieve the objectives of the scheme. This

risk of default by any company that one has chosen to invest in, can be minimized by

investing in mutual funds as the fund managers analyze the companies’ financials more

minutely than an individual can do as they have the expertise to do so. They can manage

the maturity of their portfolio by investing in instruments of varied maturity profiles.

2. Diversification

Mutual Funds invest in a number of companies across a broad cross-section of industries

and sectors. This diversification reduces the risk because seldom do all stocks decline at the

same time and in the same proportion. You achieve this diversification through a Mutual

Fund with far less money than you can do on your own.

3. ConvenientAdministration

Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as

bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds

save your time and make investing easy and convenient.

4. ReturnPotential

Over a medium to long-term, Mutual Funds have the potential to provide a higher return as

they invest in a diversified basket of selected securities. Apart from liquidity, these funds

have also provided very good post-tax returns on year to year basis. Even historically, we

find that some of the debt funds have generated superior returns at relatively low level of

risks. On an average debt funds have posted returns over 10 percent over one-year horizon.

The best performing funds have given returns of around 14 percent in the last one-year

period. In nutshell we can say that these funds have delivered more than what one expects

of debt avenues such as post office schemes or bank fixed deposits. Though they are

charged with a dividend distribution tax on dividend payout at 12.5 percent (plus a

surcharge of 10 percent), the net income received is still tax free in the hands of investor

and is generally much more than all other avenues, on a post-tax basis.

5. LowCosts

Mutual Funds are a relatively less expensive way to invest compared to directly investing

in the capital markets because the benefits of scale in brokerage, custodial and other fees

translate into lower costs for investors.

6. Liquidity

In open-end schemes, the investor gets the money back promptly at net asset value related

prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock

exchange at the prevailing market price or the investor can avail of the facility of direct

repurchase at NAV related prices by the Mutual Fund. Since there is no penalty on pre-

mature withdrawal, as in the cases of fixed deposits, debt funds provide enough liquidity.

Moreover, mutual funds are better placed to absorb the fluctuations in the prices of the

securities as a result of interest rate variation and one can benefits from any such price

movement.

7. Transparency

Investors get regular information on the value of your investment in addition to disclosure

on the specific investments made by your scheme, the proportion invested in each class of

assets and the fund manager's investment strategy and outlook.

8. Flexibility

Through features such as regular investment plans, regular withdrawal plans and dividend

reinvestment plans; you can systematically invest or withdraw funds according to your

needs and convenience.

9. Affordability

A single person cannot invest in multiple high-priced stocks for the sole reason that his

pockets are not likely to be deep enough. This limits him from diversifying his portfolio as

well as benefiting from multiple investments. Here again, investing through MF route

enables an investor to invest in many good stocks and reap benefits even through a small

investment. Investors individually may lack sufficient funds to invest in high-grade stocks.

A mutual fund because of its large corpus allows even a small investor to take the benefit

of its investment strategy.

10.ChoiceofSchemes

Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.

11.WellRegulated

All Mutual Funds are registered with SEBI and they function within the provisions of strict

regulations designed to protect the interests of investors. The operations of Mutual Funds

are regularly monitored by SEBI.

12.Tax Benefits

Last but not the least, mutual funds offer significant tax advantages. Dividends distributed

by them are tax-free in the hands of the investor. They also give you the advantages of

capital gains taxation. If you hold units beyond one year, you get the benefits of indexation.

Simply put, indexation benefits increase your purchase cost by a certain portion, depending

upon the yearly cost-inflation index (which is calculated to account for rising inflation),

thereby reducing the gap between your actual purchase cost and selling price. This reduces

your tax liability. What’s more, tax-saving schemes and pension schemes give you the

added advantage of benefits under Section 88. You can avail of a 20 per cent tax exemption

on an investment of up to Rs 10,000 in the scheme in a year.

Disadvantages of mutual fundsMutual funds are good investment vehicles to navigate the complex and unpredictable

world of investments. However, even mutual funds have some inherent drawbacks.

Understand these before you commit your money to a mutual fund.

1. No assured returns and no protection of capital

If you are planning to go with a mutual fund, this must be your mantra: mutual funds do not

offer assured returns and carry risk. For instance, unlike bank deposits, your investment in

a mutual fund can fall in value. In addition, mutual funds are not insured or guaranteed by

any government body (unlike a bank deposit, where up to Rs 1 lakh per bank is insured by

the Deposit and Credit Insurance Corporation, a subsidiary of the Reserve Bank of India).

There are strict norms for any fund that assures returns and it is now compulsory for funds

to establish that they have resources to back such assurances. This is because most closed-

end funds that assured returns in the early-nineties failed to stick to their assurances made

at the time of launch, resulting in losses to investors. A scheme cannot make any guarantee

of return, without stating the name of the guarantor, and disclosing the net worth of the

guarantor. The past performance of the assured return schemes should also be given.

Indian Equity

Income from dividends-(investor-free & DDT-NIL)

Iincome from capital gains-(short term-15% & long term- free)

2. Restrictive gains

Diversification helps, if risk minimization is your objective. However, the lack of

investment focus also means you gain less than if you had invested directly in a single

security. Assume, Reliance appreciated 50 per cent. A direct investment in the stock would

appreciate by 50 per cent. But your investment in the mutual fund, which had invested 10

per cent of its corpus in Reliance, will see only a 5 per cent appreciation.

3. Taxes

During a typical year, most actively managed mutual funds sell anywhere from 20 to 70

percent of the securities in their portfolios. If your fund makes a profit on its sales, you will

pay taxes on the income you receive, even if you reinvest the money you made.

4. Management risk

When you invest in a mutual fund, you depend on the fund's manager to make the right

decisions regarding the fund's portfolio. If the manager does not perform as well as you had

hoped, you might not make as much money on your investment as you expected. Of

course, if you invest in Index Funds, you forego management risk, because these funds do

not employ managers.

TYPES OF MUTUAL FUND SCHEMES

There are a wide variety of Mutual Fund schemes that cater to your needs, whatever your

age, financialposition, risk tolerance and return expectations. Whether as the foundation of

your investmentprogramme or as a supplement, Mutual Fund schemes can help you meet

your financial goals.

TYPES OF MUTUAL FUND SCHEME

Figure 3

(AI) By Structure

Open-Ended Schemes

These do not have a fixed maturity. You deal directly with the Mutual Fund for your

investments and redemptions. The key feature is liquidity. You can conveniently buy and

sell your units at Net Asset Value ("NAV") related prices.

Close-Ended Schemes

By structureBy Investment

ObjectivesOther Schemes

Open-ended Schemes

Interval Schemes

Sector specific fund

Index Schemes

Tax saving fund

Small cap fund

Equity SchemesDebt Schemes

Close Ended Schemes

MM Mutual fund

Other Debt Schemes

FMP

Any Other Equity Fund

Mid cap Fund

Large cap fund

Schemes that have a stipulated maturity period (ranging from 2 to 15 years) are called

close-ended schemes. You can invest directly in the scheme at the time of the initial issue

and thereafter you can buy or sell the units of the scheme on the stock exchanges where

they are listed. The market price at the stock exchange could vary from the scheme's NAV

on account of demand and supply situation, Unit holders' expectations and other market

factors.

One of the characteristics of the close-ended schemes is that they are generally traded at a

discount to NAV but closer to maturity, the discount narrows. Some close-ended schemes

give you an additional option of selling your units directly to the Mutual Fund through

periodic repurchase at NAV related prices. SEBI Regulations ensure that at least one of the

two exit routes are provided to the investor.

Interval Schemes

These combine the features of open-ended and close-ended schemes. They may be traded

on the stock exchange or may be open for sale or redemption during predetermined

intervals at NAV related prices.

(B) By Investment Objective

Growth Schemes

Aim to provide capital appreciation over the medium to long term. These schemes

normally invest amajority of their funds in equities and are willing to bear short-term

decline in value for possible futureappreciation. These schemes are not for investors

seeking regular income or needing their money backin the short term.

Income Schemes

Aim to provide regular and steady income to investors. These schemes generally invest in

fixed income securities such as bonds and corporate debentures. Capital appreciation in

such schemes may be limited.

Ideal for

Retired people and others with a need for capital Stability and regular income

Investor who need some income to supplement their earnings.

Balanced Schemes

Aim to provide both growth and income by periodically distributing a part of the income

and capital gains they earn. They invest in both shares and fixed income securities in the

proportion indicated in their offer documents. In a rising stock market the NAV of these

schemes may not normally keep pace, or fall equally when the market falls.

Ideal for:

Investors looking for a combination of income and moderate growth.

Money Market/Liquid Schemes

Aim to provide easy liquidity, preservation of capital and moderate income. These schemes

generally invest in safer, short-term instruments such as treasury bills, certificates of

deposit, commercial paper and inter-bank call money. Returns on these schemes may

fluctuate, depending upon the interest rates prevailing in the market.

Ideal for:

Corporate and individual investors as a means to park their surplus funds

for short periods or awaiting a more favorable investment alternative.

Other Schemes

Tax Saving Schemes

These schemes offer tax rebates to the investors under tax laws as prescribed from time to

time. This is made possible because the Government offers tax incentives for investment in

specified avenues. For example, Equity Linked Savings Schemes (ELSS) and Pension

Schemes. The details of such tax saving schemes are provided in the relevant offer

documents.

Ideal for:

Investors seeking tax rebates.

Special Schemes

This category includes index schemes that attempt to replicate the performance of a

particular index such as the BSE Sensex or the NSE 50, or industry specific schemes

(which invest in specific industries) or sectorial schemes (which invest exclusively in

segments such as A Group shares or initial public offerings)

Different Modes of Receiving the Income Earned From

Mutual Fund Investments

Mutual funds offer three methods of receiving income:

Growth Plan :

In this plan, dividend is neither declared nor paid out to the investors but it is built

into the value of the NAV. In the other words, the NAV increases over time due to

such incomes and the investor realizes only the capital appreciation on redemption

of his investment.

Income plan or Dividend Payout Plan:

In this plan, dividends are paid-out to the investors. In other words, the NAV only

reflects the capital appreciation or depreciation in the market price of the underlying

portfolio.

Dividend Reinvestment Plan:

In this plan, dividend is declared but not paid out to the investors. Instead, it is

reinvested back in to the scheme at the then prevailing NAV. In other words, the

investor is given additional units and not cash as dividend.

RISK

TYPE OF FUND

Money Market Fund Debt Fund

Gilt FundHybrid Fund

Equity Fund

Aggressive Growth Fund

Flexible Asset Allocation Fund

Growth Funds

High Yield Debt Funds

Diversified Equity Fund

Index Fund

Value Funds

Money Market Funds

Equity Income Funds

Focused Debt Funds

Diversified Debt Fund

Balanced FundsGilt Funds

RISK HIERARCHY OF MUTUAL FUNDS

Growth and Income Funds

Mutual Fund Investment Strategies

Systematic Investment Plan (SIP):

SIPs entail an investor to invest a fixed sum of money at regular intervals in MF scheme

the investor has chosen. This may help you gain from any appreciation in the event of

upside or alternatively, average your cost during downside.

Seeing the present volatility in the market SIP is the best option available to the investor

due to regular entry into the market which causes rupee cost averaging and hence covers

the volatility.

Systematic Withdrawal Plan (SWPs):

These plans are best suited for people nearing retirement. In these plans investor invest in a

mutual fund scheme and is allowed to withdraw a fixed sum of money at regular intervals

to take care of expenses.

Systematic Transfer Plan (STP):

They allow the investor to transfer on a periodic basis a specified amount from one scheme

to another with in the same fund family meaning two schemes belonging to the same

mutual fund. A transfer will be treated as redemption of units from the scheme from which

the transfer is made.

METHODOLOGY OF STUDY:

I have prepared questionnaire for the person whom I meet to recognize the factors which they take

into account while investing in mutual fund and then also I see various factors like age , occupation ,

income group , locality and then see how this factor affect while investing in various schemes.

And sometimes I also tried to contact Relationship manager of Bank and try to convince about our

product and if he feels satisfied then we take permission to give corporate presentation to his

employees and then try to convince and then sell the product to there client. We also provide them

after sale service by sending them statement every month and also the factsheet of the various AMC

so they can know there return exactly and also know properly that where their money is invested.

SCOPE OF STUDY :

This project provides me with learning insight about mutual fund and also little bit about equity

market. The Mutual fund industry in India comprises of a large number of fund houses and schemes,

however the project is limited to study of a few fund houses and schemes which are performing well

in the current market scenario. The analysis will mainly be carried on mainly by the data collected

from investors and from the internet

The primary research required going to various employees and speaking to relationship

managers of various banks and customers present in Ahmedabad.

The secondary research required exploring research papers, newspapers, magazines, fact

sheets of various funds and their offer documents.

SCHEDULE:

ACTIVITY TIME PERIOD

Training on mutual fund- learns about the concept of mutual

fund and the different schemes related to different mutual

fund. And also Something about taxation and Financial

planning 09-06-14 to 18-06-14

Then done survey by asking People to fill questionnaire and

Understanding of Investors perception and investment

pattern in mutual fund

19-06-14 to 1-07-14

And after that I visited the list of bank given to me Kotak,

HDFC, Axis Bank etc. And Meet with Relationship manager

2-07-14 to 20-07-14

Submission of project proposal report 21-07-14 to 23-07-14

Submit of project interim report

Submission of project final report

Total project period 09-06-14 to 10-08-14

GROWTH OF MUTUAL FUND INDUSTRY IN INDIA

While the Indian mutual fund industry has grown in size by about 320% from March, 1993

(Rs.470 billion) to December, 2010 (Rs.4505 billion) in terms of AUM, the AUM of the

sector excluding UTI has grown over times from Rs.152 billion in March 1999 to $ 148

billion as at March 2008.

Though India is a minor player in the global mutual fund industry, its AUM as a proportion

of the global AUM has steadily increased and has doubled over its levels in 1999.

The growth rate of Indian mutual fund industry has been increasing for the last few years. It

was approximately 0.12% in the year of 1999 and it is noticed 0.50% in 2010 in terms of

AUM as percentage of global AUM.

Some facts for the growth of mutual funds in India

• 100% growth in the last 6 years.

• Number of foreign AMC’s is in the queue to enter the Indian markets.

• Our saving rate is over 23%, highest in the world. Only channelizing these savings

in mutual funds sector is required.

• We have approximately 29 mutual funds which are much less than US having more

than 800. There is a big scope for expansion.

• Mutual fund can penetrate rural like the Indian insurance industry with simple and

limited products.

• SEBI allowing the MF's to launch commodity mutual funds.

RISKS OF INVESTING IN MUTUAL FUNDS

Market / Interest Risk

Volatility of prices leading to “floating” returns

Largely mitigated with a holding period of over 6 months

Credit Risk

Potential default of bonds on the portfolio

Equity Risk

Possibility of the fund manager not able to meet redemptions

GROWTH OF MUTUAL FUND INDUSTRY IN INDIA

While the Indian mutual fund industry has grown in size by about 320% from March, 1993

(Rs.470 billion) to December, 2010 (Rs.4505 billion) in terms of AUM, the AUM of the

sector excluding UTI has grown over times from Rs.152 billion in March 1999 to $ 148

billion as at March 2008.

Though India is a minor player in the global mutual fund industry, its AUM as a proportion

of the global AUM has steadily increased and has doubled over its levels in 1999.

The growth rate of Indian mutual fund industry has been increasing for the last few years. It

was approximately 0.12% in the year of 1999 and it is noticed 0.50% in 2010 in terms of

AUM as percentage of global AUM.

Some facts for the growth of mutual funds in India

• 100% growth in the last 6 years.

• Number of foreign AMC’s is in the queue to enter the Indian markets.

• Our saving rate is over 23%, highest in the world. Only channelizing these savings

in mutual funds sector is required.

• We have approximately 29 mutual funds which are much less than US having more

than 800. There is a big scope for expansion.

• Mutual fund can penetrate rural like the Indian insurance industry with simple and

limited products.

• SEBI allowing the MF's to launch commodity mutual funds.

• Emphasis on better corporate governance.

• Trying to curb the late trading practices.

• Introduction of Financial Planners who can provide need based advice.

IMPACT OF TECHNOLOGY

Mutual fund, during the last one decade brought out several innovations in their products

and is offering value added services to their investors. Some of the value added services

that are being offered are:

• Electronic fund transfer facility.

• Investment and re-purchase facility through internet.

• Added features like accident insurance cover, med claim etc.

• Holding the investment in electronic form, doing away with the traditional form of

unitcertificates.

• Cheque writing facilities.

• Systematic withdrawal and deposit facility.

ONLINE MUTUAL FUND TRADING

The innovation the industry saw was in the field of distribution to make it more easily

accessible to an ever increasing number of investors across the country. For the first time in

India the mutual fund start using the automated trading, clearing and settlement system of

stock exchanges for sale and repurchase of open-ended de-materialized mutual fund units.

Systematic Investment Plan (SIP) and Systematic Withdrawal Plan (SWP) were options

introduced which have come in very handy for the investor to maximize their returns from

their investments. SIP ensures that there is a regular investment that the investor makes on

specified dates making his purchases to spread out reducing the effect of the short term

volatility of markets. SWP was designed to ensure that investors who wanted a regular

income or cash flow from their investments were able to do so with a pre-defined

automated form. Today the SW facility has come in handy for the investors to reduce their

taxes.

HOW TO INVEST IN MUTUAL FUNDS.

Step One- Identify your investment needs. Your financial goals will vary, based on your

age, lifestyle, financial independence, family commitments, level of income and expenses

among many other factors. Therefore, the first step is to assess your needs.

Step Two- Choose the right Mutual Fund. Once you have a clear strategy in mind, you

now have to choose which Mutual Fund and scheme you want to invest in. The offer

document of the scheme tells you its objectives and provides supplementary details like the

track record of other schemes managed by the same Fund Manager. Some factors to

evaluate before choosing a particular Mutual Fund are:

The track record of performance over the last few years in relation to the

appropriate yardstick and similar funds in the same category.

How well the Mutual Fund is organized to provide efficient, prompt and

personalized service.

Degree of transparency as reflected in frequency and quality of their

communications.

Step Three- Select the ideal mix of Schemes.

Investing in just one Mutual Fund scheme may not meet all your investment needs. You

may consider investing in a combination of schemes to achieve your specific goals.

The following charts could prove useful in selecting a combination of schemes that

satisfy your needs.

Figure 4

This plan may suit

Investor seeking Income & moderate growth.

Investor looking for growth & stability with moderate risk

Conservative Plan

Growth SchemeIncome SchemeMoney SchemeBalanced Scheme

Figure 5

Step Four - Invest regularly.

Step Five- Keep your taxes in mind

Step Six- Start early It is desirable to start investing early and stick to a regular investment

plan. If you start now, you will make more than if you wait and invest later. The power of

Aggressive Plan

Growth Scheme

Income Scheme

Money market Scheme

Balanced Scheme

compounding lets you earn income on income and your money multiplies at a compounded

rate of return.

Step Seven-The final step all you need to do now is to get in touch with a Mutual Fund or

yourAgent/broker and start investing. Reap the rewards in the years to come. Mutual Funds

are suitable for every kind of investor-whether starting a career or retiring, conservative or

risk taking, growth oriented or income seeking.

What fees and commissions will you pay when you invest in mutual

funds?

The fees and commissions you may be charged can vary widely from one fund, and one

dealer, to the next. Some of the charges may be negotiable, but you should make sure that

you understand all of the costs before you invest. There are two main costs to consider –

themanagement and operating expenses that are charged tothe fund each year, and the

sales charges (or loads) that you pay when you buy or sellthe fund.

Management and Operating Expenses are expenses paid each year by the fund and

include such things as the manager’s fees, legal and accounting fees, custodial fees and

bookkeeping costs. The Management Expense Ratio (MER) is the percentage of the

fund’s average net assets that these expenses represent. For example, if a $100 million fund

has $2 million in costs for the year its MER will be 2%. MERs can range from under 1%

per year for some money market funds to almost 3% for some equity funds. The higher the

MER, the greater the impact on the fund’s performance and the return to its investors

because these expenses are removed before the value is reported.

Sales Charges (Loads) are the commissions that you may have to pay when you buy or

redeem units of a fund. Sales charges may be applied when you buy units of the fund

(Afront-end load), when you redeem your units (a back-end load), or there may be no

sales charges at all (no-load).Where front-end loads are charged, the rate can vary

fromdealer to dealer and may be negotiable. Shop around, andremember that every dollar

you pay up-front in commissionis a dollar that does not go to work for you in the

fund.Many funds are sold on a back-end load basis, meaninggenerally that the sales charges

are applied only when youredeem the fund. Back-end load fees are paid by the

fundmanagement company to your mutual fund salesperson – youdo not pay this fee. You

do, however, pay a ‘redemption fee’ ifyou redeem your units in the fund before a certain

time period,typically 7 years. Redemption fees decline each year thatyou hold the

investment.

For example, you might have to paya 6% fee if you redeem the fund after one year, 4% if

youredeem after three years, and no commission if you redeemafter seven years.An

increasing number of funds are being sold on a no-loadbasis, in which investors pay no

sales charges, but beforeyou decide that a no-load fund is right for you, consider thefund’s

performance, its management expense ratio and thelevel of service and advice you will

receive.

Different Avenues of investment

OPTIONS RETURN RISK LIQUIDITY

Savings account Very low Very low High

Fixed Deposits Low Low Low

Direct Equity Very high return Very high High

Insurance Medium Low Low

Company fixed deposits Low High Very low

Debentures Low Medium Medium

Bonds Low Low Low

Mutual funds High Medium High

Post office schemes Low Low Low

Government securities Low Low Low

Real estate High High Low

Currency High High High

Bullion Medium High Medium

STATEMENT OF PROBLEM

Mutual Funds are Financial intermediaries concern with the mobilizing savings of surplus

income & channelisation of these savings in those avenues where there is demand of funds.

The main purpose behind this study of investment preferences in Mutual Funds is to see

that how the investors are employing their resources in a manner to afford, combine

benefits to low risks, steady or consistent returns, high liquidity & capital appreciation

through diversification & Expert Management.

Therefore the activities of mutual funds have both short & long term impact on the savings

& capital market & the national economy. Mutual Funds, thus, assist the process of

financial depending & intermediation.

Objectives of the Study

• To study various investment alternatives and in particular investors

preference towards mutual funds.

• To study the preference of investors in today’s scenario (less risk and more return).

• To assess the risk of investors with reference to diversifiable risk &

non-diversifiable risk.

• To study market potentiality of mutual fund among investors.

• To study whether the investors are considering IDFC a better option or not.

Research Methodology

Research Methodology is a systematic method of discovering new facts or verifying old

facts, their sequence, inter-relationship, casual explanation and the natural laws which

governs them. In it we study the various steps that are generally adopted by a researcher in

the studying his research problem along with the logic behind them.

Different stages involved in research consists of enacting the problem, formulating a

hypothesis, collecting the facts or data, analyzing the facts and reaching certain conclusion

either in the form of solution towards the concerned problem or in generalization for some

theoretical formulation.

Type of Sample Design: Judgment Sampling

Sample Size: 200

In Research Methodology mainly Data plays an important role.

The Data is divided in two parts:

a) Primary Data.

b) Secondary Data.

Primary Data is the data, which is collected directly by direct personal interview,

Interview, indirect oral investigation, Information received through local agents, Drafting a

schedule, drafting a questionnaire.

Secondary Data is the data, which is collected from:

Various books.

Magazine and material.

Internet

Fact sheets of various MFs

The data which is stored in the organization and provide by the FINANCE people are also

secondary data. The various information is taken out regarding that subject as well other

subject from various sources and stored. The last years data stored can also be secondary

data. This data is kept for the internal use of the organization.

The FINANCE manual is for the internal use of the organization they are secondary data

which help people to gain information. In this report the data plays a very crucial role. For

this report the data was provided to me by FINANCE department and other departmental

head in the organization.

SURVEY ANALYSIS

Sampling Method

The sampling method so as to obtain a representative sample is the Non- Probability

Sampling methods. Under non-probability sampling, we selected the respondents to the

survey on the basis of Judgment sampling with Convenience taken into account.

Research instrument

The research instrument used for this survey is a structured questionnaire. The

questionnaire contains both open-ended and close ended questions. The questionnaire

provides a provision with respect to rating scales.

Assumptions

The sample selected represents the population fully.

The data has been collected by administering an open and close ended questionnaire

to sample of end investors andwith the assumption that the primary data collected is

true and reflects the actual preferences of the investors.

The sample selected has thorough knowledge of the subject.

LIMITATIONS OF THE STUDY

1) Sometime stock market are not performing well so people are not interested to invest

2) Sometime because of negative sentiments in the market people are not ready to invest for e.g.

the subprime crisis in US affected the stock market in India.

3) Many people have good knowledge of the equity market by themselves so they don’t want to

invest in mutual fund

4) Many are looking for the short term benefits for which sometime mutual fund is not the best

option

5) Many people who want to have high risk high return are not suitable for mutual fund

6) Some people are not ready to invest in mutual fund because of the lack of knowledge about the

product

7) Most of the time people are busy in their schedule and so they don’t want to listen to anything on

the telephone calls.

8) In small towns people are not willing to purchase mutual fund because of lack of knowledge they

rather prefer to invest in real state

9) It is also difficult to measure economic factor associated with time constrain

10) Time constrain

CHAPTER-II

LITERATURE REVIEW

Literature on mutual fund performance evaluation is enormous. A few research studies that

haveinfluenced the preparation of this paper substantially are discussed in this section.

Sharpe, William F. (1966) suggested a measure for the evaluation of portfolio performance.

Drawing onresults obtained in the field of portfolio analysis, economist Jack L. Treynor has

suggested a newpredictor of mutual fund performance, one that differs from virtually all

those used previously byincorporating the volatility of a fund's return in a simple yet

meaningful manner.

Michael C. Jensen (1967) derived a risk-adjusted measure of portfolio performance

(Jensen’s alpha) that estimates how much a manager’s forecasting ability contributes to

fund’s returns.

As indicated by Statman (2000), the e SDAR of a fund portfolio is the excess return of the

portfolio overthe return of the benchmark index, where the portfolio is leveraged to have the

benchmark index’sstandard deviation.

NarayanRao,ET. al., evaluated performance of Indian mutual funds in a bearmarket through

relative performance index, risk-return analysis, Treynor’s ratio, Sharpe’s ratio,

Sharpe’smeasure , Jensen’s measure, and Fama’s measure. The study used 269 open-ended

schemes (out of totalschemes of 433) for computing relative performance index. Then after

excluding funds whose returns areless than risk-free returns, 58 schemes are finally used for

further analysis. The results of performancemeasures suggest that most of mutual fund

schemes in the sample of 58 were able to satisfy investor’sexpectations by giving excess

returns over expected returns based on both premiums for systematic riskand total risk.

Bijan Roy, ET. al., conducted an empirical study on conditional performance of

Indianmutual funds. This paper uses a technique called conditional performance evaluation

on a sample ofeighty-nine Indian mutual fund schemes .This paper measures the

performance of various mutual fundswith both unconditional and conditional form of

CAPM, Treynor- Mazuy model and Henriksson-Mertonmodel. The effect of incorporating

lagged information variables into the evaluation of mutual fundmanagers’ performance is

examined in the Indian context. The results suggest that the use ofconditioning lagged

information variables improves the performance of mutual fund schemes, causingalphas to

shift towards right and reducing the number of negative timing coefficients.

Mishra, et al., (2002) measured mutual fund performance using lower partial moment. Inthis

paper, measures of evaluating portfolio performance based on lower partial moment are

developed.

Risk from the lower partial moment is measured by taking into account only those states in

which returnis below a pre-specified “target rate” like risk-free rate. Kshama Fernandes

(2003) evaluated index fundimplementation in India. In this paper, tracking error of index

funds in India is measured .Theconsistency and level of tracking errors obtained by some

well-run index fund suggests that it is possibleto attain low levels of tracking error under

Indian conditions. At the same time, there do seem to beperiods where certain index funds

appear to depart from the discipline of indexation. K. Pendaraki et al.studied construction of

mutual fund portfolios, developed a multi-criteria methodology and applied it tothe Greek

market of equity mutual funds. The methodology is based on the combination of discrete

andcontinuous multi-criteria decision aid methods for mutual fund selection and

composition. UTADISmulti-criteria decision aid method is employed in order to develop

mutual fund’s performance models.

Goal programming model is employed to determine proportion of selected mutual funds in

the finalportfolios.

Zakri Y.Bello (2005) matched a sample of socially responsible stock mutual funds

matchedto randomly select conventional funds of similar net assets to investigate

differences in characteristicsof assets held, degree of portfolio diversification and variable

effects of diversification on investmentperformance. The study found that socially

responsible funds do not differ significantly fromconventional funds in terms of any of

these attributes. Moreover, the effect of diversification oninvestment performance is not

different between the two groups. Both groups underperformed theDomini 400 Social Index

and S & P 500 during the study period.

Michael C. Jensen (1967) derived a risk-adjusted measure of portfolio performance

(Jensen’s alpha) that estimates how much a manager’s forecasting ability contributes to

fund’s returns.

As indicated by Statman (2000), the e SDAR of a fund portfolio is the excess return of the

portfolio over the return of the benchmark index, where the portfolio is leveraged to have

the benchmark index’s standard deviation. S.Narayan Rao,ET. al., evaluated performance of

Indian mutual funds in a bear market through relative performance index, risk-return

analysis, Treynor’s ratio, Sharpe’s ratio, Sharpe’s measure , Jensen’s measure, and Fama’s

measure. The study used 269 open-ended schemes (out of total schemes of 433) for

computing relative performance index. Then after excluding funds whose returns are less

than risk-free returns, 58 schemes are finally used for further analysis. The results of

performance measures suggest that most of mutual fund schemes in the sample of 58 were

able to satisfy investor’s expectations by giving excess returns over expected returns based

on both premiums for systematic risk and total risk.

DEFNITION OF MUTUAL FUNDS

DEFNITION:

A mutual fund, also referred to as an open-end fund, is an investment company that spreads its money across a diversified portfolio of securities -- including stocks, bonds, or money market instruments.

Shareholders who invest in a fund each own a representative portion of those investments, less any expenses charged by the fund.

Mutual fund investors make money either by receiving dividends and interest from their investments, or by the rise in value of the securities. Dividends, interest and profits from the sale of any securities (capital gains) are passed on to the shareholders in the form of distributions. And shareholders generally are allowed to sell (redeem) their shares at any time for the closing market price of the fund on that day.

DEFNITION:

Mutual funds have been around for a long time, dating back to the early 19th century. The first modern American mutual fund opened in 1924, yet it was only in the 1990’s that mutual funds became mainstream investments, as the number of households owning them nearly tripled during that decade. With recent surveys showing that over 88% of all investors participate in mutual funds, you're probably already familiar with these investments, or perhaps even own some. In any case, it's important that you know exactly how these investments work and how you can use them to your advantage.

A mutual fund is a special type of company that pools together money from many investors and invests it on behalf of the group, in accordance with a stated set of objectives. Mutual funds raise the money by selling shares of the fund to the public, much like any other company can sell stock in itself to the public. Funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles, such as stocks, bonds and money market instruments. In return for the money they give to the fund when purchasing shares, shareholders receive an equity position in the fund and, in effect, in each of its underlying securities. For most mutual funds, shareholders are free to sell their shares at any time, although the price of a share in a mutual fund will fluctuate daily, depending upon the performance of the securities held by the fund.

DEFNITION:

A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund wil have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become a shareholder of the fund.

.DEFNITION:

An open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. mutual funds raise money by selling shares of the fund to the public, much like any other type of company can sell stock in itself to the public. Mutual funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles, such as stocks, bonds and money market instruments. In return for the money they give to the fund when purchasing shares, shareholders receive an equity position in the fund and, in effect, in each of its underlying securities. For most mutual funds, shareholders are free to sell their shares at any time, although the price of a share in a mutual fund will fluctuate daily, depending upon the performance of the securities held by the fund. Benefits of mutual funds include diversification and professional money management. Mutual funds offer choice, liquidity, and convenience, but charge fees and often require a minimum investment. A closed-end fund is often incorrectly referred to as a mutual fund, but is actually an investment trust. There are many types of mutual funds, including aggressive growth fund, asset allocation fund, balanced fund, blend fund, bond fund, capital appreciation fund, clone fund, closed fund, crossover fund, equity fund, fund of funds, global fund, growth fund, growth and income fund, hedge fund, income fund, index fund, international fund, money market fund, municipal bond fund, prime rate fund, regional fund, sector fund, specialty fund, stock fund, and tax-free bond fund.

DEFNITION:

A security that gives 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. Shares are issued and can be redeemed as needed

How to Calculate the value of a Mutual Fund:

The investor’s funds are deployed in a portfolio of securities by the fund manager. The

value of these investments keeps changing as the market price of the securities change.

Since investors are free to enter and exit the fund at any time, it is essential that the market

value of their investments is used to determine the price at which such entry and exit will

take place. The net assets represent the market value of assets, which belong to the

investors, on a given date.

Net Asset Value or NAV of a mutual fund is the value of one unit of investment in the fund,

in net asset terms.

NAV= Net Asset of the scheme / Number of Units Outstanding

Where Net Assets are calculated as:-

(Market value of investment + current assets and other assets + Accrued income – current

liabilities and other liabilities – less accrued expenses) / No. of Units Outstanding as at the

NAV date.

NAV of all schemes must be calculated and published at least weekly for closed – end

schemes and daily for open- end schemes.

The major factors affecting the NAV of a fund are :

Sale and purchase of securities

Sale and repurchase of units

Valuation of assets

Accrual of income and expenses

. NAV-:

Net Asset Value 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.

How is NAV calculated?

The value of all the securities in the portfolio in calculated daily. From this, all expenses are deducted

and the resultant value divided by the number of units in the fund is the fund’s NAV.

Expense Ratio

AMCs charge an annual fee, or expense ratio that covers administrative expenses, salaries,

advertising expenses, brokerage fee, etc. A 1.5% expense ratio means the AMC charges Rs1.50 for every

Rs100 in assets under management.

A fund's expense ratio is typically to the size of the funds under management and not to the returns

earned. Normally, the costs of running a fund grow slower than the growth in the fund size - so, the more

assets in the fund, the lower should be its expense.

Entry load and an exit load

Some Asset Management Companies (AMCs) have sales charges, or loads, on their funds

(entry load and/or exit load) to compensate for distribution costs. Funds that can be purchased

without a sales charge are called no-load funds. Entry load is charged at the time an investor

purchases the units of a scheme. The entry load percentage is added to the prevailing NAV at the

time of allotment of units. Exit load is charged at the time of redeeming (or transferring an

investment between schemes). The exit load percentage is deducted from the NAV at the time of

redemption (or transfer between schemes). This amount goes to the Asset Management Company

and not into the pool of funds of the scheme.

How does "entry load" affect the investment returns?

A 2.25% entry load sounds small. But it still bites a chunk off the returns over a long period

of time. For instance, Rs 1 lakh invested directly in the no-load option of an equity fund that

grows at a rate of 15% over a period of 20 years yields around Rs 16.36 lakh against Rs

15.99 lakh that a load fund would return—a difference of Rs 36,820. This is because even a

small sum of 2.25% gets compounded over the years.

The pinch remains the same even in a systematic investment plan (SIP). As SIPs entail

investments on a regular basis, say every month, you end up paying entry loads on all your

investment installments. Assume you had invested Rs 5,000 in Reliance Vision Fund (RVF)

on January 1, 2003 through a monthly SIP. If you had withdrawn your entire investment

after five years, on December 31, 2007, you would have got back Rs 11.52 lakh in the no-

load option and Rs 11.25 lakh in a load option, a difference of a cool Rs 25,914.

Are investments in mutual fund units risk-free or safe?

This depends on the underlying instrument that a mutual fund invests in, based on its investment

objectives. Mutual funds that invest in stock market-related instruments cannot be termed “risk-free

or safe” as investment in shares are inherently risky by nature, whereas funds that invest in fixed-

income instruments are relatively safe and those that invest only in government securities are the

safest.

Why Mutual Funds are an investment option?

Firstly, we are not all investment professionals. We go to a doctor when we need medical advice or a

lawyer for legal guidance, similarly mutual funds are investment vehicles managed by professional

fund managers. And unless you rate highly on the Investment IQ Quiz, we recommend you use this

option for investing. Mutual funds are like professional money managers, however a key factor in

their favor is that they are more regulated and hence offer investors the ability to analyze and

evaluate their track record.

Secondly, investing is becoming more complex. There was a time when things were quite simple -

the market went up with the arrival of the first monsoon showers and every year around Diwali.

Since India started integrating with the world (with the start of the liberalization process), complex

factors such as an increase in short-term US interest rates, the collapse of the Brazilian currency or

default on its debt by the Russian government, have started having an impact on the Indian stock

market. Although it is possible for an individual investor to understand Indian companies (and

investing) in such an environment, the process can become fairly time consuming. Mutual funds

(whose fund managers are paid to understand these issues and whose asset management company

invests in research) provide an option of investing without getting lost in the complexities.

Lastly, and most importantly, mutual funds provide risk diversification: Diversification of a portfolio

is amongst the primary tenets of portfolio structuring (see The Need to Diversify). And a necessary

one to reduce the level of risk assumed by the portfolio holder. Most of us are not necessarily well

qualified to apply the theories of portfolio structuring to our holdings and hence would be better off

leaving that to a professional. Mutual funds represent one such option.

How to select a mutual fund scheme?

What's strategy got to do with selecting a mutual fund? Shouldn't you just go and invest in the best

performing fund? The answer is no. Mutual fund investing requires as much strategic input as any

other investment option. But the advantage is that the strategy here is a natural extension of your

asset allocation plan (use our Asset Allocator to understand what your optimum asset allocation plan

should be, based on your personal risk profile). The following processes are important to select a

mutual fund scheme.

Identify funds whose investment objectives match your asset allocation needs

Just as you would buy a computer that fits your needs and budget, you should choose a mutual fund

that meets your risk tolerance (need) and your risk capacity (budget) levels (i.e. has similar

investment objectives as your own). Typical investment objectives of mutual funds include fixed

income or equity, general equity or sector-focused, high risk or low risk, blue-chips or turnarounds,

long-term or short-term liquidity focus. The investment objectives match yours are

Evaluate past performance, look for consistency. Although past performance is no guarantee of

future performance, it is a useful way of assessing how well or badly a fund has performed in

comparison to its stated objectives and peer group. A good way to do this would be to identify the

five best performing funds (within your selected investment objectives) over various periods, say 3

months, 6 months, one year, two years and three years. Shortlist funds that appear in the top 5 in

each of these time horizons as they would have thus demonstrated their ability to be not only good

but also, consistent performers. .

Are investments in mutual fund units risk-free or safe?

This depends on the instrument mutual fund invests in, based on its investment objectives.

Mutual funds that invest in stock market-related instruments cannot be termed “risk-free or

safe” as investment in shares are inherently risky by nature, whereas funds that invest in

fixed-income instruments are relatively safe and those that invest only in government

securities are the safest.

Role of a Fund Manager:

Fund managers are responsible for implementing a consistent investment strategy that reflects the

goals and objectives of the fund. Normally, fund managers monitor market and economic trends and

analyze securities in order to make informed investment decisions.

How are mutual funds regulated?

All Asset Management Companies (AMCs) are regulated by SEBI and or the RBI (in case the AMC

is promoted by a bank). In addition, every mutual fund has a board of directors that represents the

unit holders’ interests in the mutual fund.

CHAPTER: -III

COMPANY PROFILE-

IDFC have been an integral part of the country's development story since 1997, when our company was formed with the specific mandate to build the nation.Since 2005, we have built on our vision to be the 'one firm' that looks after the diverse needs of infrastructure development. Whether it is financial intermediation for infrastructure projects and services, adding value through innovative products to the infrastructure value chain or asset maintenance of existing infrastructure projects, we focus on supporting companies to get the best return on investments.Our growth has been driven by the substantial investment requirements of the infrastructure sector in India combined with the growth in the Indian economy over the last several years. Our ability to tap global as well as Indian financial resources makes us the acknowledged experts in infrastructure finance. This, coupled with a strong synergy between the company management and key shareholders, and a dedicated team of over 550 people makes us an organization that is committed to improving the face of India's infrastructure sector.At IDFC, our commitment to building India's infrastructure goes beyond business. We work closely with government entities and regulators to advise and assist them in formulating policy and regulatory frameworks that support private investment and public-private partnerships in infrastructure development.

Mission“To be the leading knowledge-driven financial services company, creating enduring value, promoting infrastructure and nation building”

Values

IntegrityWe engage in honest and straight forward communication with all stakeholders and adhere to the highest ethical standards in everything we do. Our reputation is paramount. We will act in the best interests of our clients but without compromising our values and principles.

Nurturing HumilityWe are modest enough to know that we can be wrong and smart enough to learn from our mistakes. We treat everyone as an equal— no task is beneath us.

StewardshipWe act as custodians of our firm and accept the charge of passing on a better business than the one we inherited. Our actions will be guided by rules and ethical principles creating long term value with due care for society and environment.

PartnershipWe emphasize a ONE FIRM culture. We foster mutual respect and proactively collaborate with each other, with clients, and with partners keeping just one thing in mind – to be the best at what we do.

InitiativeWe encourage new ideas and independent action within a culture that fosters sharing knowledge and information, critical debate and constructive dissent.

ResponsibilityWe take complete ownership for our actions, emphasizing a results-oriented and problem-solving approach to business. We are personally accountable to the communities that we serve.

ExcellenceWe constantly strive to raise industry standards, be the employer of choice, and work to be the best rather than the biggest. Dedication to excellence results in superior execution and generates creative, imaginative and innovative outcomes.

Board Committees

Audit Committee

: Mr. S. H. KhanChairmanDr. Omkar GoswamiMr. Gautam KajiMs. Marianne ØklandMs. Snehlata Shrivastava

Nomination & Remuneration Committee

: Dr. Omkar GoswamiChairmanDr. Rajiv B. LallMr. Gautam KajiMr. Donald Peck

Stakeholders' Relationship Committee

: Mr. S. H. KhanChairmanDr. Rajiv B. LallMr. Vikram Limaye

Corporate Social Responsibility Committee

: Dr. Rajiv B. LallChairmanDr. Omkar GoswamiMr. Vikram Limaye

Executive Committee

: Dr. Rajiv B. LallChairmanMr. S. S. KohliMr. S. H. KhanDr. Omkar GoswamiMr. Donald PeckMr. Vikram Limaye

Risk Committee

: Mr. Gautam KajiChairmanMr. S. H. KhanDr. Rajiv B. LallMs. Marianne ØklandMr. Vikram Limaye

History & Timelines

Our Group was born out of the need for a specialized financial intermediary for infrastructure. Incorporated on January 30, 1997 in Chennai, our company was set up on the recommendations of the 'Expert Group on Commercialisation of Infrastructure Projects' under the Chairmanship of Dr. Rakesh Mohan.Since then, we have been a leading catalyst for providing private sector infrastructure development in India. We focus on developing and leveraging our knowledge base in the infrastructure space to devise and provide appropriate financing solutions to our customers. Our strong capitalization reflects the crucial role that we play in infrastructure development.

1997

IDFC is founded on the recommendations of the 'Expert Group on Commercialization of Infrastructure Projects' under the Chairmanship of Dr. Rakesh Mohan. The group is conceptualized to channel private capital into commercially viable projects.

1999

Is notified as a Public Financial Institution under Section 4A of the Companies Act.

2000

Gets registered with SEBI as a merchant banker.

2001

Gets registered with SEBI as a debenture trustee. Sets up Infrastructure Development Corporation (Karnataka) Limited (iDeCK)

2002

Sets up IDFC Private Equity as an investment manager for private equity funds. Sets up Uttaranchal Infrastructure Development Company Limited (UDEC).

2003

Successfully raises $200 million for the India Development Fund, the first infrastructure-focused private equity fund.

2005

Becomes a public company after listing its shares on NSE and BSE.

2006

Successfully raises $450 million for its second infrastructure - focused private equity fund.

2007

Raises Rs. 2,100 crore through QIP. Sets up IDFC Project Equity Company Limited as a specialized project finance entity

focused on developing Indian infrastructure projects. Establishes IDFC Projects to develop, implement, own and operate projects in the

infrastructure space.

2008

Successfully raises $930 million through the India Infrastructure Fund to invest equity capital in infrastructure projects and $700 million in its third private equity fund.

Enters into asset management by acquiring the AMC business of Standard Chartered Bank in India.

Incorporates IDFC Capital (Singapore) Pte Limited, for an emerging markets private equity fund-of-funds business.

2009

The company's loan book crosses Rs. 20,000 crore with more than 200 infrastructure projects funded.

Establishes IDFC Foundation to focus on capacity building, policy advisory and sustainability initiatives.

Becomes part of Nifty 50.

2010

Raises additional capital of Rs. 26,542 million through a Qualified Institution Placement at Rs.168.25 per share and CCPS at a conversion price of Rs.176 per share. Government shareholding reduces to 18%.

Classified as an Infrastructure Finance Company (IFC). Raises Rs. 480 crores in the first tranche of its Long Term Infrastructure Bonds.

2011

Certified as India's first "Green Data Centre".

IDFC opens an office in US. Sets up IDFC Foundation as a Section 25 Company for all its developmental work. IDFC & Natixis Global Asset Management enter into a strategic partnership. Raise USD 310 million of ECB's. Starts "Partners Program".

2012

IDFC Completes 15 years with over 1.5 million investors. Launches "In Our Hands" an youth engagement initiative, to socialize the policy advocacy

work being done under the aegis of the India Infrastructure Report (IIR). Releases a handbook titled "EVOLVING PERSPECTIVES IN THE DEVELOPMENT OF

INDIAN INFRASTRUCTURE", encompassing the policy work done in the last 15 years.

IDFC business

Corporate Investment Banking

Project Finance Financial Markets Group Securities

Alternative Asset Management

Private Equity Infrastructure Real Estate

Public Market Asset Management

Mutual Fund

Foundation Government Advisory Services Policy Advocacy Capacity Building Initiatives Community Engagement

Structure of the organization

Company’s structure

Structure of the company consists of following entities:-

Country head State head distribution channel Cluster heads of investments Individual brokers Back office operation Sales team

State head looks after all the operation in Karnataka region like Bellary, Mysore and other cities of Karnataka

and coordinates with asset management companies i.e. AMCs and reports to country head, and cluster heads

of investments are responsible for sales team and report to state head distribution channel and sales people

who directly interact with investors for the investments report to cluster head investment. Sales team is

supported by back office operations, like role of back office operation

SWOT analysis of the company and its competitor

STRENGTH

BRANDNAME KNOWN TO BE ETHICAL PRESENCE IN ALL OVER INDIA EXPERIENCED PEOPLE IN THE

COMPANY UNBIASNESS

WEAKNESS

BRANCHASE OF COMPANY IS LESS ONLY 27 IN INDIA.

LACK OF MANPOWER NOT HAVING NECESSARY

INFRASTRUCTURE

OPPORTUNITY

ZERO BASE LACK OF PROPER SERVICES

AVAILABLE IN THE MARKET ABSENCE OF LEADER IN THE

MARKET, IN DISTRIBUTION ( MUTUAL FUNDS)

HUGE POTENTIAL OF MUTUAL FUND MARKET

GROWTH OF MUTUAL FUND MARKET

INCREASE IN INCOME LEVEL OF PEOPLE

THREATS

INDIVIDUAL BROKERS ITS COMPETITOR’S

PROMOTIOAL ACTIVITIES

ITS COMPETITOR’NEW BUSINESS PLANS

ATTRITION LACK OF MANPOWER NOT HAVING NECESSARY

INFRASTRUCTURE

Average Assets under Management

Assets under management (AUM) is a financial term denoting the market value of all the funds being managed by a financial institution (a mutual fund, hedge fund, private equity firm, venture capital firm, or brokerage house) on behalf of its clients, investors, partners, depositors, etc.The average Assets under management of all Mutual funds in India for the quarter Jul-13 to Sep-13 (in INR billion) is given below:

Sr No

Mutual Fund Name Average AUM  %

1 HDFC Mutual Fund 1,034.42 12.70%

2 Reliance Mutual Fund 952.28 11.69%

3 ICICI Prudential Mutual Fund 853.03 10.48%

4 Birla Sun Life Mutual Fund 773.44 9.50%

5 UTI Mutual Fund 700.57 8.60%

6 SBI Mutual Fund 595.58 7.31%

7 Franklin Templeton Mutual Fund 448.12 5.50%

8 IDFC Mutual Fund 396.65 4.87%

9 Kotak Mahindra Mutual Fund 352.99 4.34%

10 DSP BlackRock Mutual Fund 304.86 3.74%

11 Tata Mutual Fund 179.66 2.21%

12 Deutsche Mutual Fund 170.59 2.10%

13 L&T Mutual Fund 150.79 1.85%

14 Sundaram Mutual Fund 139.47 1.71%

15 JPMorgan Mutual Fund 132.57 1.63%

16 Religare Invesco Mutual Fund 125.12 1.54%

17 Axis Mutual Fund 123.18 1.51%

18 LIC NOMURA Mutual Fund 79.76 0.98%

19 Canara Robeco Mutual Fund 76.16 0.94%

Sr No

Mutual Fund Name Average AUM  %

20 HSBC Mutual Fund 67.18 0.83%

21 JM Financial Mutual Fund 62.44 0.77%

22 Baroda Pioneer Mutual Fund 52.63 0.65%

23 IDBI Mutual Fund 47.71 0.59%

24 PRINCIPAL Mutual Fund 43.00 0.53%

25 Goldman Sachs Mutual Fund 41.49 0.51%

26 BNP Paribas Mutual Fund 35.38 0.43%

27 Morgan Stanley Mutual Fund 32.90 0.40%

28 Peerless Mutual Fund 28.35 0.35%

29 Taurus Mutual Fund 27.32 0.34%

30 Pramerica Mutual Fund 21.66 0.27%

31 Union KBC Mutual Fund 19.80 0.24%

32 Indiabulls Mutual Fund 16.06 0.20%

33 ING Mutual Fund 11.05 0.14%

34 PineBridge Mutual Fund 11.03 0.14%

35 BOI AXA Mutual Fund 10.82 0.13%

36 Mirae Asset Mutual Fund 5.08 0.06%

37 Motilal Oswal Mutual Fund 4.37 0.05%

38 Quantum Mutual Fund 3.15 0.04%

39 PPFAS Mutual Fund 2.67 0.03%

40 Escorts Mutual Fund 2.52 0.03%

41 Sahara Mutual Fund 2.33 0.03%

42 IIFL Mutual Fund 2.07 0.03%

43 Edelweiss Mutual Fund 1.94 0.02%

44 Daiwa Mutual Fund 0.51 0.01%

45 IL&FS Mutual Fund (IDF) - 0.00%

46 Shriram Mutual Fund - 0.00%

47 SREI Mutual Fund (IDF) - 0.00%

Grand Total 8,142.68100.0%

A COMPARATIVE ANALYSIS OF MUTUAL FUND SCHEMES

Equity Diversified Scheme

Scheme NAV 1 year annualized

3 year annualized

5 year annualized

Since Inception

Birla Sun Life Frontline Equity Fund 58.39 -0.53 26.659 34.53 36.58

DBS Chola Opportunities Fund-Cumulative

34.98 09.83 25.7 33.17 12.39

DSP Merrill Lynch Equity Fund-Growth

10.96 05.36 N.A N.A 8.56

DSP Merrill Lynch India T.I.G.E.R Fund –Growth

37.63 -04.33 29.13 N.A 38.34

DSP Merrill Lynch Top 100 Equity Growth Fund

69.38 06.92 30.923 37.71 44.36

DWS Alpha Equity Growth Fund 62.76 08.23 29.07 38.283 39.77

DWS Investment Opportunity Fund 31.20 11.23 30.27 N.A 29.07

Fidelity Equity Fund –Growth 23.15 -04.41 23.47 N.A 29.49

HDFC Growth Fund-Growth 60.53 08.61 28.24 34.63 31.77

HSBC Equity Fund- Growth 85.34 08.91 25.19 41.81 46.15

ICICI Prudential Dynamic Plan-Growth 72.81 01.98 27.67 31.78 29.76

ICICI Prudential Infrastructure Fund-Growth

25.17 17.82 N.A N.A 34.26

IDFC Imperial Equity fund-Growth 16.27 06.82 N.A N.A 17.48

Kodak 30-Growth 81.09 05.78 26.67 39.29 45.02

Kodak Opportunities-Growth 35.71 08.57 26.61 39.28 41.39

Reliance growth fund-growth 331.5 06.97 26.72 47.17 31.91

Reliance Regular Saving Fund-Equity-Growth

20.86 18.41 26.56 N.A 22.62

SBI Magnum Sector Umbrella-Contra Fund-Growth

34.73 09.11 16.74 22.78 17.64

Sundaram BNP Paribas CAPEX opportunities Fund-Growth

19.18 -06.67 N.A N.A 20.18

Sundaram BNP Paribas Select Focus-Growth

71.01 13.47 30.40 36.91 40.29

Tata Equity PE Fund-Growth 31.91 02,87 22.71 N.A 32.81

Tata Infrastructure Fund-Growth 29.56 04.78 32.06 N.A 36.26

Templeton India Growth Fund-Growth 82.19 10.51 24.84 N.A 32.63

UTI Dividend Yield Fund-Growth 19.68 06.28 21.49 N.A 22.68

UTI Contra Fund-(G) 10.64 02.12 16.49 N.A 18.82

ELSS

Scheme Name NAV 1 Year Annualized

3 Year Annualized

5 Year Annualized

Since Inception

DWS Tax Saving Fund 12.34 1.59 N.A N.A 8.52

Fidelity Tax Advantage Fund 14.23 -1.43 N.A N.A 14.48

Franklin India Taxshield-Growth 112.2 08.39 14.23 27.32 26.56

HDFC Long Term Tax Adv. Fund 68.49 05.29 12.38 18.45 24.32

HSBC Tax Saver Equity Fund 12.56 1.62 16.86 N.A 17.86

Kodak Tax Saver Scheme 14.43 -10.13 22.49 N.A 15.64

Principal Personal Tax Saver 82.40 -5.85 24.51 33.74 26.49

Reliance Tax Saver-Growth 17.64 3.06 12.73 N.A 13.45

Sundaram BNP Paribas Tax Saver 32.61 7.63 22.50 40.94 29.56

Tata Tax Advantage Scheme 19.41 3.57 13.57 17.83 17.78

Balance

Scheme Name NAV 1 Year Annualized

3 Year Annualized

5 Year Annualized

Since Inception

Birla Sun Life Balanced Fund 29.34 -2.82 14.42 21.39 13.21

DSP Merrill Lynch Balanced Fund-Growth

46.82 7.19 22.72 22.72 18.38

FT India Balanced Fund-Growth

36.62 0.36 18.52 25.78 18.62

HDFC Balanced Fund-Growth 34.27 5.61 14.72 21.62 17.82

Kodak Balance Fund 20.53 2.75 17.78 28.43 17.77

Tata Balanced Fund-Growth 56.82 0.08 18.79 26.78 19.72

UTI Children’s Career Balanced 12.45 1.24 09.57 16.84 15.22

MIP

Scheme Name NAV 1 Year Annualized

3 Year Annualized

5 Year Annualized

Since Inception

Baroda Pioneer MIP Fund 14.96 5.67 12.78 N.A 12.93

Birla Sun Life Savings MIP 2 Savings-Growth

14.54 13.54 22.37 N.A 18.59

DBS Chola MIP Regular-Growth

15.55 5.54 10.74 14.43 10.89

FT India Monthly Income Plan 22.46 3.84 7.72 9.22 09.73

HSBC MIP Savings-Growth 1.4 3.56 8.78 N.A 10.99

LICMF MIP-Growth 27.67 7.65 10.67 09.78 09.49

Principal MIP-MIP Growth 15.36 9.67 11.64 N.A 08.96

Reliance MIP 15.68 8.11 10.76 19.89 16.56

Tata Monthly Income Fund (G) 21.45 5.61 13.41 17.41 17.72

Gilt Fund

Scheme Name NAV 1 Year Annualized

3 Year Annualized

5 Year Annualized

Since Inception

Birla Sun Life Gilt Plus Regular Plan – Growth

31.40 07.33 10.68 14.78 12.93

DSP Blackrock G Sec Plan A Long Duration – Growth

31.98 06.91 11.28 13.65 12.06

DWS Gilt Fund - Regular – Growth

10.99 08.11 16.67 26.41 21.02

Fidelity Flexi Gilt Fund – Growth

11.87 08.98 15.99 29.10 26.09

ICICI Prudential Gilt Fund Investment Plan - Growth 

31.65 05.82 11.67 18.54 12.91

Mirae Asset Gilt Fund - Investment Plan - Provident Fund

10.36 9.61 18.51 24.61 19.71

Reliance Gilt Securities Fund -Retail – Growth

11.92 10.17 19.71 32.76 29.62

Templeton India Govt. Securities Fund - Composite Plan –Growth

32.66 08.45 13.41 18.34 14.72

Debt (Income) Fund

Scheme Name NAV 1 Year Annualized

3 Year Annualized

5 Year Annualized

Since Inception

Birla Sun Life Income Fund - Growth 

33.11 06.47 09.89 10.78 10.18

Birla Sun Life Income Plus - Growth 

41.41 05.68 09.18 11.68 11.28

Canara Robeco Income Scheme - Growth 

18.99 09.73 09.87 10.78 10.20

ICICI Prudential Income Fund –Growth

29.42 06.44 09.74 08.99 09.18

IDFC Dynamic Bond Fund - Plan A - Growth 

18.71 07.61 07.99 09.98 09.64

Kotak Bond Regular Plan – 25.64 08.61 10.61 11.45 10.23

Growth

Reliance Income Fund - Retail - Growth Plan – Growth

30.89 07.81 09.78 11.28 10.93

CHRONICLE ORDER OF COMPANIES GIVING MOST RETURN.

  Fund   Category 5 YrReturn

DSPML T.I.G.E.R. Fund Equity: Diversified 45.45  

Tata Infrastructure Equity: Diversified 44.92  

Magnum Contra Equity: Diversified 44.81  

Kodak Opportunities Equity: Diversified 44.57  

UTI Infrastructure Equity: Diversified 43.14  

Reliance Growth Equity: Diversified 42.88  

Magnum Multiplier Plus Equity: Diversified 42.76  

Sundaram BNP Paribas Select Midcap Equity: Diversified 40.64  

HDFC Top 200 Equity: Diversified 39.29  

BoB Growth Equity: Diversified 38.57  

Principal Child Benefit Hybrid: Equity-oriented 36.79  

Magnum Balanced Hybrid: Equity-oriented 31.24  

HDFC Prudence Hybrid: Equity-oriented 29.68  

Birla Sun Life Income Debt: Medium-term 8.29  

ABN AMRO Flexi Debt Plan Debt: Medium-term 7.78  

ICICI Prudential Long-term Debt: Medium-term 7.55  

Birla Dynamic Bond Retail Debt: Medium-term 7.51  

Kotak Flexi Debt Debt: Medium-term 7.47  

Sundaram BNP Paribas S... Equity: Diversified 43.35  

ICICI Prudential Dynamic Equity: Diversified 43.26  

DWS Investment Opportunity Equity: Diversified 43.07  

DSPML Equity Fund Equity: Diversified 42.89  

DSPML Top 100 Equity Reg Equity: Diversified 41.96  

Kotak 30 Equity: Diversified 41.33  

IDFC Premier Equity fund Equity-oriented 29.67

RANKING OF THE COMPANY

By looking at this table we can rank various asset management companies on the basis of asset under

management. They are as follows:

1) Reliance mutual fund

2) ICICI prudential mutual fund

3) UTI mutual fund

4) BIRLA sun life mutual fund

5) SBI mutual fund

By looking at this rank we can say that in India people prefer to invest in

reliance scheme and they are having great faith on Reliance Company.

SCHEMES OF IDFC

Scheme: IDFC Advantage Fund

Type Open ended growth schemeInvestment 70% in equity & 30% in DebtpatternFund Objective Long term growth of capitalInvestment Min of one yearhorizon

Scheme: IDFC Dividend Yield plus

Type Open ended Growth SchemeInvestment 100% in equitypatternFund objective Capital growth & incomeInvestment Min of one yearhorizon

Scheme: IDFC Equity plan

Type Open ended equity linked savings schemesInvestment 80% in equity & 20% in short term, money market &

liquid instrumentsFund objective Long term growth of capital along with income tax

relief for investmentInvestment Minimum of 3yearshorizon

Scheme: IDFC Index Fund

Type Open ended index Linked SchemeInvestment 100% in SecuritiespatternFund Objective Generate ReturnsInvestment Min of one YearHorizon

Scheme: IDFC opportunities Fund

Type Open ended growth schemeInvestment 70-100% in equity, 30% in cash & money marketpattern instrumentsFund objective Long term growth of capitalInvestment Minimum of one yearhorizon

Scheme: IDFC Mid Cap Fund

Type Open ended growth schemeInvestment 65-100% in equity related companies with marketpattern capitalization of Rs.150 crores to Rs.1,500 crores

35% in equity related companies with a marketcapitalization.

Fund Objective Long term growth of capitalInvestment Minimum of 1 yearhorizon

Scheme: IDFC Balance Fund

Type Open ended balanced schemeInvestment 50 to 75% in equity 25-50% in debtpatternFund object To balance income requirements with long term growth

of capitalInvestment Minimum of one yearhorizon

Scheme: IDFC Asset Allocation Fund

Type Open ended fund of fundsInvestment Aggressive plan 70-80% in equity 20-25% indebtpattern Moderate plan 40-60% in equity 40-60% indebt

Conservative plan 20-25% in equity 75-80% indebtFund objective Income & capital Application with diversification in

equity & debt schemes in line with risk profile ofinvestor

Investment Minimum of one yearhorizon

Scheme: IDFC Gilt Plus

Type Open ended governments securities schemesInvestment 100% in securities permitted by RBIpatternFund objective To generate in income & capital appreciation through

investments in government securities.Investment Least 6 months to 1 yearhorizon

Scheme: IDFC Dynamic Bond Fund

Type Open ended income schemeInvestment 50-65% in Government securities, 25-35% in corporatepattern bonds, 0-25% in cash liquid instruments.Fund objective To generate optimal returns with high liquidityInvestment Minimum of one yearhorizon

Scheme: IDFC Income Plus

Type Open ended income schemeInvestment 100% in debt & money marketpatternFund objective To generate consistent incomeInvestment Minimum of 1 yearhorizon

CHAPTER-IV

TABLE -1:

AGE WISE CLASSIFICATION OF RESPONDENTS

AGE NO. OF RESPONDENTS PERCENTAGE

BELOW 20 NIL NIL20-29 69 34.530-39 13 6.540-49 34 1750-59 35 17.5

ABOVE 60 49 24.5TOTAL 200 100

A G E W I S E N O O F R E S P O N D E N T S

4 9 2 0 - 2 96 9 3 0 - 3 9

4 0 - 4 9

3 51 3

5 0 - 5 9

A B O V E 6 03 4

Interpretation:

According to the survey the respondents were of different age groups. There are

no respondents of age below 20 are in no number. The investors of age 20-29 are 69 in

number with 34.5%. The investors of age 30-39 are 13 with 6.5%, 40-49 there are 34

investors with 17% and in between 50-59 there are 35 investors with 17.5% and above 60

there are 49 investors with 24.5%.

TABLE-2:

GENDER OF THE RESPONDENTS

GENDER NO. OF RESPONDENTS PERCENTAGE

MALE 158 79FEMALE 42 21TOTAL 200 100

GENDER OF THE RESPONDENTS

/ 180

OF

RE

SPO

ND

EN

TS 160

PE

RC

EN

TA

GE

140

120 NO. OF100 RESPONDENTS

80 PERCENTAGE60

40

NO

.

200

MALE FEMALE

GENDER

Interpretation:In the survey number of male respondents are more in number that

is about 79% & the next position has been occupied by female respondents they are

about 21% of the sample so, mainly men are preferring to go for investments.

TABLE-3:

OCCUPATION OF THE RESPONDENTS

OCCUPATION NO. OF RESPONDENTS PERCENTAGEHOUSE HOLD 9 4.5

BUSINESS 46 23SERVICE 84 42

PROFESSIONAL 30 15RETIRED 15 7.5STUDENT 16 8

TOTAL 200 100

OCCUPATION OF THE RESPONDENTS

16 9 HOUSE HOLD1546 BUSINESS

30 SERVICE

PROFESSIONAL

RETIRED

84STUDENT

Interpretation:

According to the survey the respondents were of different occupations. Most of

respondents are from service sector is about 42% of the sample. Respondents from the

business are occupying 23%, then comes professional with 15%, students occupy 8%,

retired people occupy 7.5%, with house hold occupying 4.5%.

TABLE-4:

ANNUAL INCOME OF THE RESPONDENTS

ANNUAL NO. OF RESPONDENTS PERCENTAGE

< 1,00,000 53 26.51-2 LAKHS 84 422-3 LAKHS 48 24

ABOVE 3 LAKHS 15 7.5TOTAL 200 100

OF

RE

SP

ON

DE

NT

S /

PE

RC

EN

TA

GE

NO

.

ANNUAL INCOME OF THE RESPONDENTS

908070

NO. OF60RESPONDENTS50

40 PERCENTAGE3020100

0 S SHS

00 H H

LAK LAK

K

1,00, A

<2 3 3L- -

VE1 2

ABO

ANNUAL INCOME

Interpretation:

According to the survey, the respondents of the income group of less than 1 lack are

of 26.5%. They were about 42% of the respondents are of the income group between 1-2

lack. 24% of the respondents were of the income group 2-3 lacks. 7.5% respondents were of

the income group more than 3 lacks.

TABLE-5:

DO THE RESPONDENTS INVEST THEIR MONEY

INVESTMENTS NO.OF RESPONDENTS PERCENTAGE

YES 200 100NO NIL NIL

TOTAL 200 100

RESPONDENTS INVESTING THEIR MONEY

OF

RE

SPO

ND

EN

TS

/P

ER

CE

NT

AG

EN

O.

250

200

150NO. OFRESPONDENTS

100 PERCENTAGE

50

0

YES NO

INVESTMENTS

Interpretation:All the respondents considered in the sample, do invest their savings.

Out of the total sample the respondents going for investments are total in numbers with all

the two hundred respondents considered in sample are going for complete investments with

100%.

TABLE-6:

What percent of your income do you keep aside for different investment options?

OPTIONS NO. OF RESPONDENTS PERCENTAGE

0% to 5% 24 12

5% to 10% 38 19

10% to 15% 60 30

15% to 20% 34 17

20% to 30% 24 12

Above 30% 20 10TOTAL 200 100

0% to 5%

5% to 10%

10% to 15%

15% to 20%

20% to 30%

Above 30%

0

10

20

30

40

50

60

70

income keep aside

NO. OF RESPONDENTS

TABLE-7

Important factors to you consider before choosing an investment?

OPTIONSNO. OF

RESPONDENTS PERCENTAGE

Safety of investment principle 70 35

Opportunity for growth 82 41

Liquidity 48 24TOTAL 200 100

Safety of in-vestment prin-

ciple

Opportunity for growth

Liquidity0

10

20

30

40

50

60

70

80

90

Important factors

NO. OF RESPONDENTS

TABLE-8:

INVESTORS PREFERENCE FOR VARIOUS INVESTMENTS

OBJECIVES

OPTIONSRANK SCORE

SECURITY 1 55YEILD 2 47

MATURITY 4 35TAX BENEFITS 5 22

LIQUIDITY 3 40

INVESTMENT OBJECTIVE OF THE INVESTOR

SECURITYLIQUIDITY 7%

20%YEILD

SECURITY13%

YEILD

MATURITY

MATURITYTAX BENEFITS

LIQUIDITYTAX BENEFITS 27%33%

Interpretation:

Different types of investors look forward to different investment objectives. Most of the

investors ranked 1st to security, 2nd rank to yield, 3rd rank has been given to liquidity, 4th

& 5th ranks for maturity & tax benefits.

INVESTOR PREFERENCE FOR VARIOUS INVESTMENTS

OBJECTIVES

ATTRIBUTES I II III IV V WEIGHTED RANKAVERAGE

SECURITY 88 64 32 9 7 55 IYEILD 63 44 46 24 23 47 IIMATURITY 19 24 45 85 27 35 IVTAX BENEFIT 8 25 5 42 120 22 VLIQUIDITY 22 43 72 40 23 40 III

MODEL CALCULATION:

= 88*5 + 64*4 + 32*3 + 9*2 + 7*1 / 1 + 2 + 3 + 4 + 5

= 440 + 256 + 96 +18 + 7 / 15

= 817/15

= 55.

TABLE-9:

AWARENESS OF MUTUAL FUNDS

OPTIONS NO. OF RESPONDENTS PERCENTAGEYES 200 100NO 00 00

TOTAL 200 100

YES NO0

50

100

150

200

250

AWARENESS OF MUTUAL FUNDS

NO. OF RESPONDENTS

Interpretation:

According to the survey, most investors are aware of mutual funds. It can be observed from the above table that 100% of respondents are aware of Mutual

TABLE-10:

AWARENESS OF MUTUAL FUNDS IS THROUGH

OPTION NO. OF RESPONDENTS PERCENTAGEADVERTISEMENT 52 26

FRIENDS 37 19FAMILY MEMBERS 19 10

FINANCIAL ADVISORS 66 32RELATIVES 26 13

TOTAL 200 100

INFLUENCE OF INVESTMENT DECISION ISTHROUGH

ADVERTISEMERELATIVES NT ADVERTISEMENT13% 26%

FRIENDS

FINANCIAL FAMILY MEMBERS

ADVISORS FRIENDS FINANCIAL ADVISORS32% FAMILY 19% RELATIVES

MEMBERS10%

Interpretation:

According to the survey, the respondents are more aware of mutual funds through

Financial Advisors who occupy 32%, followed by Advertisements 26%, Friends 19%,

Relatives 13% & Family Members 10%

TABLE 11:

MUTUAL FUND IS A GOOD INVESTMENT OPTION.

OPTIONS NO. OF RESPONDENTS PERCENTAGEYES 159 79.5NO 41 20.5

TOTAL 200 100

MUTUAL FUND IS A GOOD INVESTMENT OPTION

/ 180

OF

RE

SPO

ND

EN

TS 160

PE

RC

EN

TA

GE

140

120 NO. OF100 RESPONDENTS

80 PERCENTAGE60

40

NO

.

200

YES NO

OPTIONS

Interpretation:

Many of the individuals are of the view that mutual fund is a good investment

option. Of the total sample survey around 79.5% of the respondents feel that mutual fund is

a good investment option & 20.5% of the respondents feel that it is not a good investment

option.

TABLE 12:

What is your return expectation on your investment in mutual fund?

OPTIONNO. OF RESPONDENTS PERCENTAGE

Up to 8% 52 26

Between 8% to 18% 80 40

Above 18% 68 34TOTAL 200 100

Up to 8% Between 8% to 18%

Above 18%0

10

20

30

40

50

60

70

80

90

return expectation

NO. OF RESPONDENTS

TABLE 13

How long are you planning to stay invest in mutual fund?

OPTION NO. OF RESPONDENTS PERCENTAGE< 1 year 46 23

1 to 3 year 75 37.53 to 5 year 50 25> 5 year 29 15.5TOTAL 200 100

< 1 year 1 to 3 year 3 to 5 year > 5 year0

10

20

30

40

50

60

70

80

NO. OF RESPONDENTS

NO. OF RESPONDENTS

TABLE-14:

RESPONDENTS PREFFERING IDFC AS A

DISTRIBUTOR OF MUTUAL FUNDS

OPTION NO. OF RESPONDENTS PERCENTAGE

IDFC 138 69OTHERS 62 31TOTAL 200 100

IDFC AS A DISTRIBUTOR OFMUTUAL FUNDS

/

160

OF

R

ESP

ON

DE

NT

S

PE

RC

EN

TA

GE

140120

NO. OF100 RESPONDENTS80

PERCENTAGE604020N O .

0

IDFC OTHERS

OPTIONS

Interpretation:

According to the survey, 69% of the respondents are aware of idfc as a

distributor of mutual funds & these 69% of the investors would like to invest in idfc

mutual fund option. The rest 31% of the respondents would like to prefer others.

TABLE-15:

TYPE OF FUNDS RESPONDENTS PREFER TO

OPTION NO.OF RESPONDENTS PERCENTAGEDEBT FUND 42 30.5

EQUITY FUND 78 56.5HYBRID FUND 18 13

TOTAL 138 100

TYPE OF FUNDS RESPONDENTS PREFER TO

90

OF

R

ESP

ON

DE

NT

S 80

PE

RC

EN

TA

GE 70

60 NO. OF50 RESPONDENTS

40 PERCENTAGE3020

N O . 100

DEBT FUND EQUITY FUND HYBRIDFUND

OPTIONS

Interpretation:

From the survey conducted the respondents prefer Equity funds more in number

they occupy 56.5%, followed by Debt funds with 30.5% and a very few respondents

prefer to hybrid funds with 13%.

TABLE-16:

TYPE OF SCHEME PREFERED BY RESPONDENT IN DEBT FUNDS

OPTION NO. OF RESPONDENTS PERCENTAGELIQUID FUND 2 5FLOATE RATE 4 10

GILT FUND 5 12DYNAMIC BOND FUND 15 35

INCOME PLUS 7 17

BOND INDEX FUND 9 21TOTAL 42 100

TYPE OF SCHEME PREFERED BY RESPONDENT INDEBT FUNDS

5%LIQUID FUND

21% 10% FLOATE RATE12% GILT FUND

DYNAMIC BOND FUND

17% INCOME PLUS

35% BOND INDEX FUND

Interpretation:

Based on the survey, it is found that the respondents prefer dynamic bond fund

which occupies 35%, then follows is the bond Index Fund with 21%, thirdly Income Plus

is seen with more percentage with 17, followed by Gilt Fund, Floating Rate Fund, &

Liquid Fund with 12, 10, 5.

TABLE-17:

TYPE OF SCHEME PREFERED IN EQUITY FUNDS

OPTION NO. OF RESPONDENTS PERCENTAGEADVANTAGE FUND 26 33

MID CAP 6 8EQUITY PLAN 4 5

MNC FUND 5 6INDEX FUND 3 4

DIVIDEND YEILD PLUS 32 41INDIA OPPURTUNITIES FUND 2 3

TOTAL 78 100

TYPE OF SCHEME PREFFERED IN EQUITY

FUNDS ADVANTAGE FUND

MID CAP

3%EQUITY PLAN

33%MNC FUND41%

INDEX FUND

4% 6% 5%8%

DIVIDEND YEILD PLUS

INDIA OPPURTUNITIESFUND

Interpretation:

Based on the survey, that out of 78 sample size, most of the investors choose

dividend yield plus which occupies 41%, followed by Advantage Fund with 33%, then

MNC fund with 6%, mid cap 8%, Equity plan 5%, India opportunities fund 3%.

TABLE-18:

TYPE OF SCHEME PREFERRED IN HYBRID FUND

OPTION NO. OF RESPONDENTS PERCENTAGEMIP I 3 16.7MIP II 4 22.2

BALANCED FUND 11 61.1TOTAL 18 100

TYPE OF SCHEME PREFERRED IN HYBRIDFUND

/O

F

RE

SPO

ND

EN

TS 70

PE

RC

EN

TA

GE

60

50 NO. OF40 RESPONDENTS

30 PERCENTAGE2010

N O .

0

MIP I MIP II BALANCEDFUND

OPTIONS

Interpretation:

Based on the survey, it is found that the respondents prefer to choose balanced

fund with 61.1% of sample, followed by MIP I & MIP II schemes in the Hybrid Fund

Type with 22.2% & 16.7%.

TABLE 19:

RESPONDENTS PREFFERING OTHER BRANDS OF MUTUAL

FUNDS

OPTION NO.OF RESPONDENTS PERCENTAGEHDFC 12 19

FRANKLIN TEMPLETON 18 29HSBC 6 10

KOTAK MAHINDRA 11 18DSP MERYLLICH 5 8

UTI 10 16TOTAL 62 100

RESPONDENTS PREFFERING OTHER BRANDSOF MUTUAL FUNDS

HDFC

FRANKLIN

16% 19% TEMPELTON

8% HSBC

KOTAK MAHINDRA

18% 29%10% DSP MERYILCH

UTI

Interpretation:

Based on the survey, it is found that the respondents would definitely prefer other

brands of Mutual Funds with Franklin Templeton in the lead with 29%, then HDFC with

18%, UTI in the fourth place with 16%, Kotak Mahindra with 18%, HSBC with 10% &

DSP merllich with 8%.

.

TABLE 20:

RESPONDENT RECOMMENDING IDFC MUTUAL FUND AS A

BETTER INVESTMENT OPPURTUNITY

OPTIONS NO. OF RESPONDENTS PERCENTAGEYES 156 78NO 44 22

TOTAL 200 100

IS IDFC A BETTER INVESTMENT

/ 180

OF

RE

SPO

ND

EN

TS 160

PE

RC

EN

TA

GE

140

120 NO. OF100 RESPONDENTS

80 PERCENTAGE60

40

NO

.

200

YES NO

OPTIONS

Interpretation:

According to the survey the respondents recommending Birla Sun Life Mutual

Fund as a better investment opportunity is of 78%. & the respondents who do not

recommend idfc as a better investment opportunity are 22%.

TABLE 21:

Tick & Rate IDFC mutual fund as compare to other mutual fund company. (1= very good & 5= very bad)

1 2 3 4 5

OPTIONS NO. OF RESPONDENTS PERCENTAGE1 120 602 32 163 24 124 16 85 8 4TOTAL 200 100

1 2 3 4 5

0

20

40

60

80

100

120

OPTIONS

OPTIONSNO. OF RESPONDENTS

TABLE 22:

Express your Experience to invest in mutual fund.

___________________________________________________________________________________

___________________________________________________________________________________

Questionnaire

Name: - __________________________________________________ Mobile

no.:-________________

Q: (1) AGE:-

BELOW 2020-2930-39

40-4950-59ABOVE 60

Q: (2) GENDER:-

MALEFEMALE

Q: (3) OCCUPATION:-

HOUSE HOLDBUSINESSSERVICEPROFESSIONALRETIREDSTUDENT

Q: (4) ANNUAL INCOME:-

< 1,00,0001-2 LAKHS2-3 LAKHSABOVE 3 LAKHS

Q: (5) DO THE YOU INVEST THEIR MONEY

YESNO

Q: (6) what percent of your income do you keep aside for different investment options?

0% to 5%5% to 10%10% to 15%15% to 20%20% to 30%Above 30%

Q: (7) Important factors to you consider before choosing an investment?

Safety of investment principleOpportunity for growthLiquidity

Q: (8) INVESTORS PREFERENCE FOR VARIOUS INVESTMENTS OBJECIVES

SECURITYYEILDMATURITY

TAX BENEFITSLIQUIDITY

Q: (9) AWARENESS OF MUTUAL FUNDS

YESNO

Q: (10) AWARENESS OF MUTUAL FUNDS IS THROUGH

ADVERTISEMENTFRIENDSFAMILY MEMBERSFINANCIAL ADVISORSRELATIVES

Q: (11) MUTUAL FUND IS A GOOD INVESTMENT OPTION.

YESNO

Q: (12) what is your return expectation on your investment in mutual fund?

Up to 8%Between 8% to 18%Above 18%

Q: (13) How long are you planning to stay invest in mutual fund?

< 1 year1 to 3 year3 to 5 year> 5 year

Q: (14) RESPONDENTS PREFFERING IDFC AS A DISTRIBUTOR OF MUTUAL FUNDS

IDFCOTHERS

Q: (15) TYPE OF FUNDS RESPONDENTS PREFER TO

DEBT FUNDEQUITY FUNDHYBRID FUND

Q: (16) TYPE OF SCHEME PREFERED BY RESPONDENT IN DEBT FUNDS

LIQUID FUNDFLOATE RATEGILT FUNDDYNAMIC BOND FUNDINCOME PLUSBOND INDEX FUND

Q: (17) TYPE OF SCHEME PREFERED IN EQUITY FUNDS

ADVANTAGE FUNDMID CAPEQUITY PLANMNC FUNDINDEX FUNDDIVIDEND YEILD PLUSINDIA OPPURTUNITIES FUND

Q: (18) TYPE OF SCHEME PREFERRED IN HYBRID FUND

MIP IMIP IIBALANCED FUND

Q: (19) RESPONDENTS PREFFERING OTHER BRANDS OF MUTUAL FUNDS

HDFCFRANKLIN TEMPLETONHSBCKOTAK MAHINDRADSP MERYLLICHUTI

Q: (20) RESPONDENT RECOMMENDING IDFC MUTUAL FUND AS A

BETTER INVESTMENT OPPURTUNITY

YES

NO

Q: (21) Tick & Rate IDFC mutual fund as compare to other mutual fund company. (1= very good & 5= very bad)

1 2 3 4 5

Q: (22) express your Experience to invest in mutual fund.

___________________________________________________________________________________

___________________________________________________________________________________