Finaly to Mutual Funds

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Mutual Funds: Final Report

A

PROJECT REPORTOn

Study of Mutual Funds As A Better Investment

Plan

SUBMITTED TO

PANJAB UNIVERSITY ,CHANDIGARH

IN PARTIAL FULFILMENT OF THE

REQUIREMENT FOR THE DEGREE OF

BACHELOR OF BUSINESS ADMINISTRATION(2010-2011)

SUBMITTED TO:- SUBMITTED BY :-DEPARTMENT OF BUSINESSS ADMINISTRATION ANKITA ASTHANA

POST GRADUATE GOVERNMENT COLLEGE B.B.A 3 RD YEAR

SECTOR -11, CHANDIGARH P.U.PIN -17608000826


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ACKNOWLEDGEMENT

There is always a sense of gratitude, which we express to others for the help and the needy

services they render during the different phases of our lives. I too would like to do it as I

really wish to express my gratitude toward all those who have been helpful to me directly or

indirectly during the development of this project.

I would like to thank my professors Mrs. Richa Rathee,Mr Rakesh Kumar.Mrs EktaNarula and Ms Kanupriya Sharma who were always there to help and guide me when I

needed help. Their perceptive criticism kept me working to make this project more full

proof. I am thankful to them for encouraging and valuable support. Working under them

was an extremely knowledgeable and enriching experience for me.I also owe my thanks to

my H.O.D Prof. Mukesh Sharma for providing me the platform to make my project a

success.

No words can adequately express my overriding debt of gratitude to my parents and friends

whose support helps me in all the way.

ANKITA ASTHANA

Roll no-3420

P.U.PIN-17608000826

B.B.A 3 RD Year


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LIST OF CONTENTS

Title page (i)Declaration (ii)Acknowledgement (iii)List of Tables (v)List of Figures (vi)

CHAPTER 1- INTRODUCTION TO MUTUAL FUNDS

CONCEPT ORIGIN CHARACTERISTICS TYPES CLASSIFICATION FACTORS AFFECTING SELECTION OF MUTUAL FUNDS DIFFERENCE BETWEEN SHARES AND MUTUAL FUNDS RISKS ADVANTAGES & DISADVANTAGES

CHAPTER 2- MUTUAL FUNDS IN INDIA

CONSTITUENTS OF MUTUAL FUNDS VARIOUS INVESTMENT OPTIONS IN MUTUAL FUND OFFER FACILITIES AVAILABLE TO INVESTORS RIGHTS OF MUTUAL FUND UNITHOLDER MAJOR PLAYERS IN THE MARKET

CHAPTER 3 - RESEARCH METHODOLOGY

OBJECTIVES OF THE STUDY

NEED FOR THE STUDY SCOPE OF THE STUDY BASIS OF RESEARCH AND DESIGN LIMITATIONS

CHAPTER 4- ANALYSIS AND INTERPRETATION

CHAPTER 5 RECOMMENDATIONS AND CONCLUSION

BIBLIOGRAPHY

ANNEXURE


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LIST OF TABLES

S.NO TABLE NO. PAGE NO.

1. TABLE NO 1.1 49

2. TABLE NO 2.1 50

3. TABLE NO 3.1 51

4. TABLE NO 4.1 52

5. TABLE NO 5.1 53

6. TABLE NO 6.1 54

7. TABLE NO 7.1 55

8. TABLE NO 8.1 56

9. TABLE NO 9.1 57

10. TABLE NO 10.1 58


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LIST OF FIGURES

S.NO FIGURE NO. PAGE NO.1. FIGURE NO. 1 (a) 262. FIGURE NO 2 (a) 283. FIGURE NO 1.1( i) 494. FIGURE NO 2.1 (i) 505. FIGURE NO 3.1 (i) 516. FIGURE NO 4.1 (i) 527. FIGURE NO 5.1 (i) 538. FIGURE NO 6.1 (i) 54

9. FIGURE NO 7.1 (i) 5510. FIGURE NO 8.1(i) 5611. FIGURE NO 9.1(i) 5712. FIGURE NO 10.1(i) 58

CHAPTER 1


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INTRODUCTION

TO

MUTUAL FUNDS

INTRODUCTION

There are a lot of investment avenues available today in the financial market for an investor

with an investable surplus. He can invest in Bank Deposits, Corporate Debentures, and

Bonds where there is low risk but low return. He may invest in Stock of companies where

the risk is high and the returns are also proportionately high. The recent trends in the Stock

Market have shown that an average retail investor always lost with periodic bearish tends.

People began opting for portfolio managers with expertise in stock markets who would

invest on their behalf. Thus we had wealth management services provided by many

institutions. However they proved too costly for a small investor. These investors have

found a good shelter with the mutual funds.

M t l f d i d t h l t f h i t f ith lti ti l


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companies coming into the country, bringing in their professional expertise in managing

funds worldwide. In the past few months there has been a consolidation phase going on in

the mutual fund industry in India. Now investors have a wide range of Schemes to choose

from depending on their individual profiles.

Investing in various types of assets is an interesting activity that attracts people from all

walks of life irrespective of their occupation, economic status, education and family

background. The investor who is having extra money could invest it in securities market or

in any other asset like gold or property or could simply invest it in his bank account. The

companies that have extra income may like to invest their money in the extension of the

existing business or undertake new venture. All of these activities in a broader sense mean

investment.

As per WARREN BUFFET , Investing is simple, but not easy.

Investment is the employment of funds on assets with the aim of earning income or

appreciation. There has been a significant expansion of Indian sector in terms of scope and

content during the last two decades. A well-developed infrastructure, a number of financial

institutions and a variety of financial instruments have been promoted to cater the needs of

growing saving and expanding capital market in India.

The most remarkable development during 1980s was the entry of Mutual

Funds as an important linkage between saving and capital market. Mutual Funds are for

everyone. Around the world millions of investors invest in mutual funds because of their

safety, ease of investing and the many advantages they offer. A Mutual Fund is a

professionally managed, collective investment fund formed with the objective of raising

money from large number of investors. Thus a Mutual Fund is the most suitable investment


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for the common man as it offers opportunities to invest in a diversified, professionally

managed basket of securities at a relatively low cost.

A mutual fund is a company that pools money from many investors and invests the money

in stocks, bonds, short-term money-market instruments, or other securities. Legally known

as an "open-end company," a mutual fund is one of three basic types of Investment

Company . The two other basic types are closed-end funds and Unit Investment Trusts

(UITs) .

CONCEPT OF MUTUAL FUND

A mutual fund is a common pool of money into which investors place their

contributions that are to be invested in accordance with stated objectives. The ownership of

the fund is thus joint or Mutual ; the fund belong to all investors Mutual Funds meansmobilizing the saving from the small and household sector, making the investment in

capital and money market. Mutual Funds serve as a link between the public saving and the

capital markets, as they mobilize saving from investors and bring them to borrowers in the

capital markets. It works on the principle of small drops of water make a big ocean. A

Mutual fund uses the money collected from investors to buy those assets which are

specifically permitted by its stated investment objective. For instance, if one has Rs.1000 to

invest, it may not fetch very much on its own. But when it is pooled with Rs.1000 from a lot

of people, then, one could create a big fund large enough to invest in a wide variety of

shares, debentures and loans on a commanding scale and thus to enjoy the economies of

large-scale operations. Hence a mutual fund is nothing but a form of collective investment.

It is formed together by coming of a number of investors who transfer their surplus funds to

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ended types were popular. In India it gained momentum only in 1980, though it began in the

year of 1964 with the Unit Trust of India launching its first fund, the Unit Scheme 1964.

Where Do Mutual Funds Invest ?

Broadly, mutual funds invest basically in three types of asset classes. These

classes are as follows;

Stocks : Stocks represent ownership or equity in a company, popularly known as

shares. These may be in form of equity shares or preference shares.

Bonds : these represent the debt from companies, financial institutions or

government agencies.

Money market instruments : These include short-term debt instruments such as

treasury bills, certificate of deposits and inter-bank call money.

CHARACTERISTICS OF MUTUAL FUNDS

Here are some of the traditional and distinguishing characteristics of mutual funds:

Investors purchase mutual fund shares from the fund itself (or through a broker for

the fund), but are not able to purchase the shares from other investors on a

secondary market, such as the New York Stock Exchange or Nasdaq Stock Market.

The price investors pay for mutual fund shares is the funds approximate per share

net asset value (NAV) plus any shareholder fees that the fund imposes at purchase

(such as sales loads).
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Mutual fund shares are "redeemable." This means that when mutual fund investors

want to sell their fund shares, they sell them back to the fund (or to a broker acting

for the fund) at their approximate per share NAV, minus any fees the fund imposes

at that time (such as deferred sales loads or redemption fees ).

Mutual funds generally sell their shares on a continuous basis, although some funds

will stop selling when, for example, they become too large.

The investment portfolios of mutual funds typically are managed by separate entities

known as " investment advisers " that are registered with the SEC.

Mutual funds come in many varieties. For example, there are index funds , stock funds ,

bond funds , money market funds , and more. Each of these may have a different

investment objective and strategy and a different investment portfolio. Different mutual

funds may also be subject to different risks, volatility, and fees and expenses .

All funds charge management fees for operating the fund. Some also charge for their

distribution and service costs, commonly referred to as " 12b-1" fees . Some funds may also

impose sales charges or loads when you purchase or sell fund shares. In this regard, a fund

may offer different " classes " of shares in the same portfolio, with certain fees and expenses

varying among classes.

Mutual funds are subject to SEC registration and regulation, and are subject to numerous

requirements imposed for the protection of investors. Mutual funds are regulated primarily

under the Investment Company Act of 1940 and the rules and registration forms adopted

under that Act. Mutual funds are also subject to the Securities Act of 1933 and the

Securities Exchange Act of 1934. You can find the definition of "open-end company"

Mutual funds are funds that pool the money of several investors to invest in equity or debt
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Funds are selected on quantitative parameters like volatality, FAMA Model, risk adjusted

returns, rolling return coupled with a qualitative analysis of fund performance and

investment styles through regular interactions / due diligence processes with fund managers.

TYPES OF MUTUAL FUNDS

There are many types of mutual funds available to the investors with different needs,

objectives and risk taking capacities. It is completely left to the discretion of the investor to

choose any one of them depending upon his requirement and risk taking capacity. These

different types of funds can be grouped into certain classifications for better understanding.

The main type of mutual funds are-

Open-end v/s Close-end funds:

An open-end fund is that has units available for sale and repurchases at all times. An

investor can buy or redeem units from the fund itself at a price based on the net asset value

(NAV) per unit. NAV per unit is obtained by dividing the amount of the market value of the

funds assets (plus accrued income minus the funds liabilities) by the number of units

outstanding. In other words, the unit capital of an open-end mutual fund is not fixed but

variable. Unlike an open-end fund, the unit capital of a closed-end fund is fixed, as it

makes a one-time sale of a fixed number of units. Closed-end fund do not allow investors to

buy or redeem units directly from the funds. The main objective of these funds is income

generation.


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Marketing of new mutual fund scheme involves initial expenses. These expenses, often

called Loads, may be recovered from the investors in different ways at different times

such as entry-load, exit-load and annual fixed load. Funds that charge front-end, back-end

or deferred loads are called load funds . Funds that make no such charges or loads for sales

expenses are called No-load funds .

Tax-exempt v/s Non-Tax exempt funds:

Generally, when a fund invests in tax-exempt securities, it is called a tax-exempt fund. In

India, after 1999 Union Budget, all of the dividend income received from any of the mutual

funds is tax-free in the hands of investors. However funds other than equity funds have to

pay a distribution tax, before distributing income to the investors. Thus equity fund schemes

are tax-exempt investment, while other funds are taxable for the distributable income.

Money Market Funds:

Money Market Funds invest in securities of a short term nature, which generally means

securities of less than one-year maturity. The typical, short-term, interest-bearing

instruments these funds invest in include Treasury Bills issued by governments, certificate

of deposit issued by bank or commercial paper issued by companies. In India, Money

Market Mutual Funds also invest in the inter-bank call money market.

Gilt Funds:

Gilts are government securities with medium to long-term maturities, typically of over one

year. In India, we have seen the emergence of Government Securities or Gilt Funds. These

funds have little risk to default and hence offer better protection of principal. Debt

Securities prices fall when interest rate level increase.


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CLASSIFICATION OF MUTUAL FUNDS

a) By nature of investment:

Mutual Fund may invest in equities, bonds or other fixed income securities, or short-

term money market, so we have Equity, Bond and Money Market Funds . All of them

invest in financial market.

(b) By investment objective:

Investors and the mutual funds pursue different objectives while investing.

Growth Funds invest for medium to long term capital appreciation.

Income Funds invest to generate regular income, and less for capital appreciation.

Value Funds invest in equities that are considered under-valued today, whose value

will be unlocked in future.

(c) Fund Type by Risk Profile:

Funds are often grouped in order of risk.

Equity Funds have a greater risk of capital loss

Debt Fund seeks to protect the capital while looking for income.

M M k F d d t l i k th th B d F d


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FACTORS AFFECTING SELECTION OF FUND

1. Objective of Fund - First of all investor must see the objective of the fund whether

income oriented or growth. Income oriented is mainly backed by fixed

interest yielding securities like debentures oriented or bonds whereas growth oriented

is backed by equities. It is obvious that growth oriented schemes are more risky than

income oriented schemes, and hence, the returns from such schemes are not

comparable with each other. Investor's objective should coincide with the scheme,

which he proposes to choose.

2. Consistency of Performance - A mutual fund is always intended to give steady long

term returns, and hence, the investor should measure the performance of a fund over a

period of at least three years. Investors are satisfied with a fund that shows a steady and

consistent performance than a fund which performs superbly in one year and then falls in

the next year. Consistency in performance is a good indicator of investment expertise.

3. Historical Background - The success of any fund depends upon the competence of the

management, its integrity, periodicity and experience. The fund's integrity should beabove suspicion. A good historical record could be a better horse to bet on than new

funds. It is in accordance with the maxim "A known devil is better than an unknown

angel."

4. Cost of Operation - Mutual funds seek to do a better job of the investible funds at a

lower cost than the individuals could do for themselves. Hence, the prospective


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Higher the ratio, lower will be the actual returns to the investor.

5. Capacity for Innovation - The efficiency of a fund manager can be tested by means of

innovative schemes he has introduced in the market so as to meet the diverse needs of the

investors. It is quite natural that investor will look for the funds, which are capable of

introducing innovations in the financial market.

6. Investor Servicing - The most important factor to be considered, is prompt and

efficient servicing. Services like quick response to investor queries, prompt dispatch of

unit certificates, quick transfer of units, immediate encashment of units etc. will go a long

way in creating the impression in the mind of the investors.

7. Market Trends - Traditionally it has been found that the stock market index and the

inflation rate tend to move in the same direction whereas the interest rates and the

stock market index tend to move in the opposite direction. This sets the time for the

investor to enter into the fund or come out of it.

8. Transparency in Management - The success of a mutual fund depends to a large

extent on the transparency of the fund management. In these days of investor

awareness, it is very vital that the fund should disclose the complete details regarding the

operation of the fund. It will go a long way in creating a lasting impression in 'the minds

of the investors to patronize the fund for ever.

Difference between Shares and Mutual Funds


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Shares : When companies look for money for their business, they can get it in two ways -

either they borrow from a bank and pay interest ("debt") or they ask people like you and me

to invest and give us shares ("equity"). A share is a part of a business.

To organise such buying and selling, there are commercial "stock exchanges". BSE and

NSE are some of them, though there are a number of other, smaller exchanges in India. An

exchange provides a common place for people to buy or sell shares, with sales happening

on an auction basis - buyers bid for shares at a price they are willing to pay, and sellers

"ask" for a price from buyers. Exchanges match these prices and share exchanges happen

along with payments. "Brokers" facilitate these exchanges, and you pay them a fee as

brokerage, part of which goes to the stock exchange as well.

Mutual funds : When a lot of shares are available on stock exchanges, you and me don't

know which companies to invest in. But let us say a guy named Sandip Subherwal knows,

and keeps track of the market daily. So we give him our money and he buys and sells stocks

for us. This is a mutual fund - it's our money (mutual), and Sandip is a Fund Manager.

There is a structure to this in India, so a fund manager is part of an "asset management

company (AMC)". To protect Sandip from running away with our money, SEBI has some

rules in place, and there are "trustees" for every fund. With this structure the AMC issues

"units" to us for the money we have invested, and tells us how much our units are worth

daily (NAV). We can then choose to exit by selling our units back to the AMC

("redemption").

Mutual funds are not just restricted to shares. They are mutual investments, therefore they

can be anywhere. The common ones are equity (stocks and shares) and Debt. Debt markets

are where companies borrow money, but they want to borrow huge sums of money that you

and I don't have Therefore we pool in our money (mutual fund) and give the big whole lot


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to the company at an interest. Even the government borrows, but again, only large sums of

money. Mutual funds can invest there too. Debt is traditionally "safer" than equity since

there is a fixed valuation and good rating mechanisms to curb risk; and in the same vein, the

profits (and losses) are usually much lesser than equity.

Shares are a part of a business whereas mutual funds are cumulative investment.

RISKS OF MUTUAL FUNDS

It is generally said that the investment in Mutual Funds has moderate return and moderate

risk as compare to other investment avenues. The main risks to the mutual fund unit-

holder are;

Market Risks - In general there are certain risks associated with every kind of

investment on shares. They are called market risks. These market risks can be

reduced, but cannot be completely eliminated even by good investment management.

The prices of shares are subject to wide fluctuations depending upon market

conditions on which nobody has a control. Moreover, every economy has to pass

through a cycle - Boom, Recession, Slump and Recovery. The phase of business

cycle affects the market conditions to a large extent.

Scheme Risks - There are certain inherent risks in the scheme itself. For instance, in a

pure growth scheme, risks are greater. It is obvious because if one expects more returns

as in the case of growth scheme, one has to take more risk.

Investment Risk - Whether the mutual funds makes money in shares or loses depends


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advice goes wrong, the fund has to suffer a lot. The investment expertise of various funds is

different and it is reflected on the returns which they offer to investors.

Business Risks - The corpus of a mutual fund might have been invested in a

company's shares. If the business of that company suffers any set back, it cannot declare

any dividend. It may even go to the extent of winding up the business. Though the mutual

fund can withstand such a risk, its income paying capacity is affected.

Liquidity Risk : Liquidity risk arises when it becomes difficult to sell the securities

that one has purchased. Liquidity Risk can be partly mitigated by diversification, staggering

of maturities as well as internal risk controls that lean towards purchase of liquid securities.

Political Risks - Successive Governments bring with them fancy new economic

ideologies and policies. It is often said that many economic decisions are politically

motivated. Changes in govt. bring in the risk of uncertainty which every player in the financial

service industry has to face. So mutual funds are no exception to it.

ADVANTAGES OF MUTUAL FUNDS

If mutual funds are emerging as the favorite investment vehicle, it is because of many

advantages they have over other forms and avenues of investing, for the investor who

has limited resources available in the terms of capital. The following are the main

advantages offered by mutual funds;

Portfolio diversification: - Mutual Funds normally invest in a well-diversified


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assets. This enables him to hold a diversified investment portfolio even with a small

amount of investment.

Professional management :- The investment management skills, along with a

needed research into available investment options, ensure a much better return than

what an investor can manage on his own. The fund manager tries to earn maximum

return from the available funds by putting his professional knowledge and skills.

Reduction/Diversification of risk: - An investor in mutual fund acquires a

diversified portfolio, no matter how small his investment. Diversification reduces

the risk of loss, as compare to investing directly in one or two shares or debentures

or other instruments. The risk reduction is one of the most important benefits of

mutual fund.

Reduction of transaction costs: - A direct investor bears all the costs of investing

such as brokerage or custody of securities. When going through a fund, he has the

benefit of economies of scale; the funds pay lesser costs because of larger volumes.

Liquidity : - Investment in a mutual fund is more liquid as compare to shares or

debentures. An investor can liquidate the investment, by selling the units to the fund

if open-end, or selling them in the market if the fund is closed-end.

Specified investment objectives: - Mutual Funds focus their investment activities

based on investment objectives such as income, growth or tax saving. An investor

can choose a fund that has investment objectives in line with his objectives.


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Therefore, funds provide the investor with a vehicle to attain his objectives in a

planned manner.

Keeping the Money Market active : - Individual investor cannot have any access to

money market instruments since the minimum amount of investment is out of his

reach. On the other hand, mutual funds keep the money market active by investing

money on the money market instruments

.

Convenience and flexibility: - Mutual Fund management companies offer many

investor services that a direct market investor cannot get. Investor can easily transfer

their holdings from one scheme to the other; get updated market information, and so

on.

DISADVANTAGES OF MUTUAL FUNDS

No Insurance : Mutual funds , although regulated by the government , are

not insured against losses . The Federal Deposit Insurance Corporation (FDIC ) only

insures against certain losses at banks , credit unions , and savings and loans , not

mutual funds. That means that despite the risk-reducing diversification benefits

provided by mutual funds, losses can occur, and it is possible (although extremely

unlikely) that you could even lose your entire investment .
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Dilution : Although diversification reduces the amount of risk involved in

investing in mutual funds, it can also be a disadvantage due to dilution . For

example, if a single security held by a mutual fund doubles in value , the mutual

fund itself would not double in value because that security is only one small part

of the fund's holdings. By holding a large number of different investments ,

mutual funds tend to do neither exceptionally well nor exceptionally poorly.

Fees and expenses : 5Most mutual fund companies charge management and

operating fees that pay for management expenses (usually around 1.0% to 1.

% per year). In addition , some mutual funds charge high sales

commissions , 12b-1 fees , and redemption fees . And some funds buy and

trade shares so often that the transaction costs add up significantly. Some of

these expenses are charged on an ongoing basis, unlike stock investments, for

which a commission is paid only when you buy and sell .

Poor Performance : Returns on a mutual fund are by no means guaranteed.

In fact , on average , around 75% of all mutual funds fail to beat the

major market indexes, like the S&P 500, and a growing number of critics now

question whether or not professional money managers have better stock-

picking capabilities than the average investor .
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CHAPTER 2

MUTUAL FUNDS

IN

INDIA


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HISTORY OF MUTUAL FUNDS IN INDIA

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

at the initiative of the Reserve Bank and the Government of India. The objective then was to

attract the small investors and introduce them to market instruments. Since then, the history

of mutual funds in India can be broadly divided into four distinct phases.

Figure 1 (a)Phases of Mutual funds in India


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Phase 1 1964-87 (Unit Trust of India)

In the first phase, the only player was UTI. In 1963, UTI was established by an Act of

parliament and given a monopoly. The first and still one of the largest schemes,

launched by UTI was Unit Scheme 1964. Later in 1970s and 80s, UTI started

innovating and offering different schemes to suit the needs of different classes of

investors

Phase 2 1987-93 (Entry of Public Sector Funds)

In 1987, with the opening up of the economy, many public sector banks and financial

institutions were allowed to establish mutual funds. The State bank of India established

the first non-UTI mutual fund SBI Mutual Fund in November 1987. This was

followed by many other public sector mutual funds like Canbank Mutual Fund, LIC

Mutual Fund, Indian Bank Mutual Fund, GIC Mutual Fund etc. These mutual funds

helped enlarge the investor community and the investible funds.

Phase 3 1993-96 (Emergence of Private Funds)

A new era in the mutual fund industry began with the permission granted for the entry

of private sector funds in 1993, giving the Indian investors a broader choice of funds

and increasing competition for the existing public sector funds. Foreign fund

management companies were also allowed to operate mutual funds. During the year

1993-94, five private sector mutual funds launched their schemes followed by six others

in 1994-95.

Phase 4 1996 (SEBI Regulation for Mutual Funds)


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(a) The Fund Sponsor

Sponsor is defined under SEBI regulations as any person who, acting alone or in

combination with another body corporate, establishes mutual fund. The sponsor will form a

trust and appoint a board of trustees. The sponsor will also appoint an asset management

company as fund managers and a custodian to hold the fund assets. All these appointments

are made in accordance with SEBI Regulations.

(b) Mutual Fund as Trusts

A mutual fund in India is constituted in the form of a Public Trust created under the Indian

Trusts act, 1882. The fund sponsor acts as the settler of the Trust. A mutual fund is just a

pass-through vehicle. Under the Indian Trust Act, the Trust or the fund has no independent

legal capacity itself and therefore all acts in relation to the trust are taken on its behalf by

the Trustees. Being Public Trusts, mutual funds can invite any number of investors as

beneficial owners in their investment schemes.

(c) Trustees

It is created by sponsor under Indian Trust Act, 1882. A trustee holds the property of the

mutual fund in the trust for the benefit of the unit holders. Trustee may be individuals

comprising a board or a trustee company but generally Trustee Company is preferred

because of limited liability of board of directors. Some of the duties performed by the

trustees are,

To manage the mutual fund in accordance with the laws, regulations, directions and

guidelines issued by SEBI

They must insure that the funds transactions are in accordance with the Trust

Deed


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The Trustees must ensure due diligence on the part of the AMC for the

empanelment of brokers.

The trustees must furnish to SEBI on a half-yearly basis, a report on the funds

activities.

To act in the best interest of the unit holders.

To maintain and defend the mutual fund property against any legal proceedings.

(d) Asset Management Company

Asset Management Company is a body that acts as the investment Manager of the Trust.

The sponsors or trustees appoint the AMC to manage the affairs of the mutual fund. It

should have a minimum net worth of Rs 10 crores at all times. At least fifty percent of the

directors of the AMC should be independent of sponsors or trustees. The AMC can not act

as a trustee of any other mutual fund. Some of the obligations of AMC are;

Investment of funds is in accordance with SEBI Regulation and Trust Deed.

To submit regular returns to the trustees regularly.

They do not undertake any other activity conflicting with managing the fund.

To appoint custodian, registrar and share transfer agents.

Each days NAV is updated on AMFIs website by 8.00 p.m. of the relevant day.

(e) Custodians

The custodian is appointed by the Board of Trustees for safekeeping of physical securities

or participating in any clearing system through approved depository companies on the

behalf of mutual fund in case of dematerialized securities. SEBI requires that each mutual

fund shall have custodian who is independent. Custodian should be an agency which is

registered with SEBI under SEBI Regulation Act, 1996. A mutual funds dematerialized


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securities holding will be held by a Depository through a Depository participant. A funds

physical securities will continue to be held by Custodian. Thus, deliveries of a funds

securities are given or received by a custodian or a depository participant, at the instruction

of AMC.

VARIOUS INVESTMENT OPTIONS IN MUTUAL FUNDS OFFER

To cater to different investment needs, Mutual Funds offer various investment options.

Some of the important investment options include:

Growth Option:

Dividend is not paid-out under a Growth Option and the investor realises only the capital

appreciation on the investment (by an increase in NAV).

Dividend Payout Option:

Dividends are paid-out to investors under the Dividend Payout Option. However, the NAV

of the mutual fund scheme falls to the extent of the dividend payout.

Dividend Re-investment Option:

Here the dividend accrued on mutual funds is automatically re-invested in purchasing

dditi l it i d d f d I t t l f d ff th i t


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option of collecting dividends or re-investing the same.

Retirement Pension Option:

Some schemes are linked with retirement pension. Individuals participate in these options

for themselves, and corporates participate for their employees.

Insurance Option:

Certain Mutual Funds offer schemes that provide insurance cover to investors as an added

benefit.

Systematic Investment Plan (SIP):

Here the investor is given the option of preparing a pre-determined number of post-dated

cheques in favour of the fund. The investor is allotted units on a predetermined date

specified in the offer document at the applicable NAV.

Systematic Withdrawal Plan (SWP):

As opposed to the Systematic Investment Plan, the Systematic Withdrawal Plan allows the

investor the facility to withdraw a pre-determined amount / units from his fund at a pre-

determined interval. The investor's units will be redeemed at the applicable NAV as on

FACILITIES AVAILABLE TO INVESTORS


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There are some facilities provided by the Mutual Fund Companies to their customers.

These facilities are;

Re-purchase Facility - The units of closed ended schemes must be compulsorily listed

in recognized stock exchanges. Such units can be sold or bought at market prices. But,

units of open ended schemes are not at all listed and hence they have to be bought only

from the fund. So, the fund receives the right to buy back the units from its members.

This process of buying back the units from the investors by the fund is called repurchase

facility. This is available in both schemes so as to provide liquidity to investors. The price

fixed for this purpose is called repurchase price.

Re-issue Facility - In the case of open ended schemes, units can be bought only from the

fund and not in the open market. The units bought from the investors are again reissued tothose who are interested in purchasing them. The price fixed for this purpose is called re-

issue price.

Roll Over Facility - At the time of redemption, the investor is given an option to reinvest

his entire investment once again for another term. An investor can overcome an adverse

market condition prevailing at the time of redemption by resorting to this Roll over facility.

This is applicable in the case of closed ended fund.

Lateral Shifting Facility - Some mutual funds permit the investors to shift from one

scheme to another on the basis of Net Asset Value with a view to provide total

flexibility in their operation. This is done without any discount on the fund and without


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any additional charges. This is a great privilege given to the investors. This shifting is called

'lateral shifting'.

RIGHTS OF A MUTUAL FUND UNITHOLDER

The offer document of a scheme lays down the investors rights. Investors are the owner

of the schemes assets and it is imperative that they are aware of their rights. The

important rights of the unit-holders are outlined below:

Right of Proportionate Beneficial Ownership :- Unit-holders have the right to

beneficial ownership of the schemes assets. They have right t any dividend or

income declared under the scheme.

Right to timely service: - Unit-holders are entitled to receive dividend warrants

within 30 days of dividend declaration. Unit-holders have the right to payment of

interest at 15% per annum in the vent of failure on the part of mutual fund to dispatch

the redemption or repurchase proceeds within 10 working days.

Right to Information: - Unit-holders have the right to obtain from the trustees any

information that may have an adverse bearing on their investments. They also have

the right to inspect major documents of the fund. Each unit-holder has the right to


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Right to wind up a scheme: - Investors can demand the trustees to wind up a

scheme prior to its earlier fixed duration and repay the investors, if 75% of the

investors pass a resolution to this effect. This right applies to both closed-end funds

and closed-end or open-end fixed term plan series.

Right to Terminate the AMC: - The appointment of an AMC of a fund can be

terminated by 75% of the unit-holders of the scheme with the prior approval of SEBI.

MAJOR PLAYERS IN THE MUTUAL FUND MARKET

1) ABN AMRO Mutual Fund

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee

(India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset

Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A

G is the custodian of ABN AMRO Mutual Fund.

2) Birla Sun Life Mutual Fund

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life

Financial. Sun Life Financial is a golbal organisation evolved in 1871 and is being

represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart

from India. Birla Sun Life Mutual Fund follows a conservative long-term approach
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to investment. Recently it crossed AUM of Rs. 10,000 crores.

3) Bank of Baroda Mutual Fund (BOB Mutual Fund)

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992

under the sponsorship of Bank of Baroda. BOB Asset Management Company

Limited is the AMC of BOB Mutual Fund and was incorporated on November 5,

1992. Deutsche Bank AG is the custodian.

4) HDFC Mutual Fund

HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers nemely

Housing Development Finance Corporation Limited and Standard Life Investments

Limited.

5) HSBC Mutual Fund

HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital

Markets (India) Private Limited as the sponsor. Board of Trustees, HSBC Mutual

Fund acts as the Trustee Company of HSBC Mutual Fund.

6) ING Vysya Mutual Fund

ING Vysya Mutual Fund was setup on February 11, 1999 with the same named

Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING

Investment Management (India) Pvt. Ltd. was incorporated on April 6, 1998.
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7) Prudential ICICI Mutual Fund

The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of

the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund

was setup on 13th of October, 1993 with two sponsorers, Prudential Plc. and ICICI

Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is

Prudential ICICI Asset Management Company Limited incorporated on 22nd of

June, 1993.

8) Sahara Mutual Fund

Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial

Corporation Ltd. as the sponsor. Sahara Asset Management Company Private

Limited incorporated on August 31, 1995 works as the AMC of Sahara Mutual

Fund. The paid-up capital of the AMC stands at Rs 25.8 crore.

9) State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch

offshor fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately.

Today it is the largest Bank sponsored Mutual Fund in India. They have already

launched 35 Schemes out of which 15 have already yielded handsome returns to

investors. State Bank of India Mutual Fund has more than Rs. 5,500 Crores as

AUM. Now it has an investor base of over 8 Lakhs spread over 18 schemes.

10) Tata Mutual Fund
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sponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment

Corporation Ltd. The investment manager is Tata Asset Management Limited and

its Tata Trustee Company Pvt. Limited. Tata Asset Management Limited's is one of

the fastest in the country with more than Rs. 7,703 crores (as on April 30, 2005) of

AUM.

11) Kotak Mahindra Mutual Fund

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL.

It is presently having more than 1,99,818 investors in its various schemes. KMAMC

started its operations in December 1998. Kotak Mahindra Mutual Fund offers

schemes catering to investors with varying risk - return profiles. It was the first

company to launch dedicated gilt scheme investing only in government securities.

12) Unit Trust of India Mutual Fund

UTI Asset Management Company Private Limited, established in Jan 14, 2003,

manages the UTI Mutual Fund with the support of UTI Trustee Company Privete

Limited. UTI Asset Management Company presently manages a corpus of over

Rs.20000 Crore. The sponsorers of UTI Mutual Fund are Bank of Baroda (BOB),

Punjab National Bank (PNB), State Bank of India (SBI), and Life Insurance

Corporation of India (LIC). The schemes of UTI Mutual Fund are Liquid Funds,

Income Funds, Asset Management Funds, Index Funds, Equity Funds and Balance

Funds.

13) Reliance Mutual Fund


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1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee

Co. Limited is the Trustee. It was registered on June 30, 1995 as Reliance Capital

Mutual Fund which was changed on March 11, 2004. Reliance Mutual Fund was

formed for launching of various schemes under which units are issued to the Public

with a view to contribute to the capital market and to provide investors the

opportunities to make investments in diversified securities.

14) Standard Chartered Mutual Fund

Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by

Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt.

Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is the AMC which

was incorporated with SEBI on December 20,1999.

15) Franklin Templeton India Mutual Fund

The group, Frnaklin Templeton Investments is a California (USA) based company

with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest

financial services groups in the world. Investors can buy or sell the Mutual Fund

through their financial advisor or through mail or through their website. They have

Open end Diversified Equity schemes, Open end Sector Equity schemes, Open end

Hybrid schemes, Open end Tax Saving schemes, Open end Income and Liquid

schemes, Closed end Income schemes and Open end Fund of Funds schemes to

offer.

16) Morgan Stanley Mutual Fund India


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market in securities, investmenty management and credit services. Morgan Stanley

Investment Management (MISM) was established in the year 1975. It provides

customized asset management services and products to governments , corporations,

pension funds and non-profit organisations. Its services are also extended to high net

worth individuals and retail investors. In India it is known as Morgan Stanley

Investment Management Private Limited (MSIM India) and its AMC is Morgan

Stanley Mutual Fund (MSMF). This is the first close end diversified equity scheme

serving the needs of Indian retail investors focussing on a long-term capital

appreciation.

17) Chola Mutual Fund

Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance

Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is

the Trustee Company and AMC is Cholamandalam AMC Limited.

18) LIC Mutual Fund

Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It

contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was

constituted as a Trust in accordance with the provisions of the Indian Trust Act,

1882. . The Company started its business on 29th April 1994. The Trustees of LIC

Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company

Ltd as the Investment Managers for LIC Mutual Fund.

19) GIC Mutual Fund
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Government of India undertaking and the four Public Sector General Insurance

Companies, viz. National Insurance Co. Ltd (NIC), The New India Assurance Co.

Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co.

Ltd. (UII) and is constituted as a Trust .

CHAPTER 3

RESEARCH

METHODOLOGY


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A. Developing the research plan; The second stage of this study consists of developing

the most efficient plan for gathering the relevant data. The method for carrying out study

is followed by: -

Sampling Plan - Sampling can be defined as the section of some part of an aggregate or

totality on the basis of which judgment or an inference about aggregate or totality is

made.

Universe - Universe refers to the total of the items or units in a field of inquiry.

Universe for my Project will be Chandigarh .

Sampling units - It will be the general public.

Sample size - Sample size refers to the total numbers of respondents about whom the

information is desired. The sample size for my study is 50 respondents.

Sampling procedure - It is a way through which sampling is done. According to my

project, I was supposed to collect the primary data, which was to be used by the company.

There are various methods available for collecting primary data i.e.

1. Observation Method.

2. Questionnaire Method.

3. Interview Method.

4. Schedule Method.


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In my project, I used Questionnaire Method for collecting the data. With the help of this

method of collecting data I did a Sample Survey. Sample Survey is that type of survey in

which specified number of units of the universe of the research is questioned.

B. Data Collection The facts and figures were collected through primary as well as

secondary data.

Primary sources - Primary data are those, which are collected afresh and for the

first time, and thus happen to be original in character. I have collected Primary Data by

conducting surveys through Questionnaire.

Secondary sources: - Secondary data , which are already searched, collected and

used by someone else such as books, magazines, news papers, research reports etc. I have

also used secondary data in preparing this research report.

c. Analysis of Data and Interpretations: After collecting the data, tabulation of data

was done wherein classified data put in the forms of tables. After tabulation, the

analysis work of my project was carried out by the use of various techniques.

Although Questionnaire is simpler and effective method, popularly used

to gain maximum information with minimum effort, time and cost, but it must never

be ignored that, the success of the questionnaire depends on the organization of the

questions. The questions added must be such, which includes itself to the respondent to

reply decently without biasness. It should not be such, which may create confusion or

may hurt the emotions of the respondents.


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So I will try my best to prepare a suitable and genuine set of questions which will be

implied just to gain knowledge related to topic and not to go for an in depth personal

investigation of the respondent.

OBJECTIVES OF THE STUDY

The main objectives of conducting this research are as follows,

To know the investment preferences of the investor regarding various investment

schemes.

To study the investors awareness and confidence towards Mutual Funds.

To compare the various Income, Growth & Balanced Schemes and Monthly Income

plans offered by various Mutual Funds companies in India.

To study the satisfaction level of the investors from the investment through Mutual

Funds.

To know the problems faced by investors by investing through Mutual Funds

.

To study the investors awareness about various Mutual Funds Institution.

To analyze mutual funds as a better investment option.


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NEED FOR THE STUDY

The main purpose of doing this project was to know about mutual fund and its functioning.

This helps to know in details about mutual fund industry right from its inception stage,

growth and future prospects.

It also helps in understanding different schemes of mutual funds. Because my study

depends upon prominent funds in India and their schemes like equity, income, balance as

well as the returns associated with those schemes.The project study was done to ascertain the asset allocation, entry load, exit load, associated

with the mutual funds. Ultimately this would help in understanding the benefits of mutual

funds to investors and whether mutual funds offer a better investment option to the

customer.

SCOPE OF THE STUDY

In this project the scope is limited to some prominent mutual funds in the mutual fund

industry.The funds were analyzed depending on their schemes like equity, income, balance

and growth.


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operating in India, their current market standing , consumer preferences regarding

investment in mutual funds and its overall effectiveness as a better investment option.

LIMITATIONS

Although since every effort has been made to collect maximum information from the

respondents even then, the study is subjected to the following limitations and problems.

1. Owing to the paucity of time and resources, research would be concentrated on a

relatively small sample size, limited primarily to the city Chandigarh .

2. The study covers only income, Growth, Balanced and Monthly Income Schemes.

3. The information provided by the respondents may be biased and incorrect.

4. The sample may not represent the whole population

5. Most of this study is restricted to Internet and published data because of the non

availability of primary data.


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CHAPTER 4

ANALYSIS

&

INTERPRETATION


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STATEMENT 1- To know the percentage of respondents making investments.

Table 1.1

OPTIONS NO OF RESPONDENTS %AGE

YES 36 72 NO 14 28

Fig.1.1(i)

INTERPRETATION:

The above data shows that 72% respondents do make investments whereas 28%people do

not make any type of investment.

72%

28%

Yes

No


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STATEMENT 2- To know the percentage of the Monthly Income, invested by the

investors.

Table-2.1

MONTHLY

INVESTMENT

NO. OF

RESPONDENTS %AGE0-5% 18 36%5%-10% 20 40%

10%-20% 9 18%Above 20% 3 6%

Total 50 100%

Fig 2.1(i)

INTERPRETATION:

The above data shows that the majority of the respondents invest 5%-10% of their monthly

income, followed by 0-5% monthly investment. This shows that the Indian investors spent

their most of the part of their monthly income on consumption

36%

40%

18%6%

0-5%

5%-10%

10%-20%

Above 20%


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STATEMENT 3- To know the Investment Preference of the Investors

Table 3.1

2% 14%8%

28%24%

10%14%

Gold

Mutual Funds

Propert y

Bank Deposits

Post Offi ceSchemes

Insurance

Securities

Fig 3.1(i)

INTERPRETATION:

The above data shows that Bank Deposits and Securities are the most preferable investment

alternatives with 28% and 24% respondents in favor of both respectively Traditional

investment alternatives i.e. Gold and Post Office Schemes are loosing investors attention

because of falling rate of return from these investment alternatives.

STATEMENT 4 To know the awareness level about Mutual Funds.

TABLE 4 1

ITEMS

NO. OF

RESPONDENTS %AGEGold 1 2%

Mutual Funds 7 14%Property 4 8%

Bank Deposits 14 28%Post Office

Schemes 7 14%Insurance 5 10%

Securities 12 24%TOTAL 50 100%


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RESPONSE

NO. OF

RESPONDENTS %age

Yes 38 76%

No 12 24%Total 50 100%

76%

24%

Y e

No

Fig 4.1(i)

INTERPRETATION:

The above data shows that 76% respondents are aware of Mutual Funds. The awareness

level so high because of Mutual Fund advertisements in Newspapers & TV, also because

many of the public and private sector banks are providing Mutual Fund Services.

STATEMENT 5- To know the awareness about Mutual Fund Institutions.

Table-5.1


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M.F.

INSTITUTIONS

NO. OF

RESPONSES

ICICI 16

HDFC 33

Kotak Mahindra 16

UTI 38

Sundram 7

Reliance 18Franklin

Templeton 24

SBI 11

Birla Sunlife 20

Standard Charted 22PNB 9

Total 214(50)


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Fig5.1(i)

ICICI, 16

HDFC, 33

KOTAK, 16

U.T.I, 38RELIANCE,

18

FRANKLIN,24

S.B.I, 11

BIRLA , 20PNB, 22

SUNDARAM, 7

INTERPRETATION:

From the above data it can be easily interpreted that UTI is still the most popular Mutual

Fund Institution as all the respondents feel its presence in the Mutual Fund sector followed

by HDFC, ICICI & Standard Charted among private financial institutions. Major public and

private sector banks and foreign mutual funds may be the leaders all over India but in this

region they are still to build a reputation.

STATEMENT 6 To know the number of respondents who have invested in Mutual

Funds.

Table 6.1


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Fig 6.1(i)

INTERPRETATION:

Above table and graph shows that 48% of the respondents have invested in Mutual Funds. It

means that investors are building their confidence in Mutual Funds because of attractive

returns as compare to other forms of investment.

RESPONSE

NO. OF

RESPONDENTS %age

Yes 24 48%

No 26 52%Total 50 100%

56%

48%

YesNo


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STATEMENT 7 To know the Mutual Fund Institutions, in which respondents have

invested.

Table 7.1

M.F. INSTITUTION NO. OF RESPONDENTS %ageUTI 5 20%HDFC 4 17%Stanchart 3 13%Kotak Mahindra 1 4%SBI 3 13%Birla Sunlife 2 8%ICICI 4 17%Reliance 2 8%

Total 24 100%

20%

17%

13%4%13%

8%

17%8%

UTI

HDFC

Stanchart

Kotak Mahindra

SBI

Birla Sunlife

ICICIReliance

Fig 7.1(i)

INTERPRETATION:

The above data shows that UTI is the market leader with 20% investors. This is because

UTI, being the oldest Mutual Fund institution, has a good reputation. ICICI and HDFC havealso reasonable share with 17% investors.

STATEMENT 8 To know the schemes, in which respondents have invested.

Table-8.1


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SCHEME NO. OF RESPONDENTS %age

Income Scheme 8 33%

Growth Scheme 11 46%Balanced Scheme 4 17%Monthly Income plan 1 4%

Total 24 100%

33%

46%

17% 4%

Income Sc heme

Growth Scheme

Balanced Schem

Monthly Incomeplan

Fig 8.1(i)

INTERPRETATION:

The above data shows that maximum investors i.e. 46% are investing in growth schemes.

This is because investors want to yield maximum return by taking benefit of the present

share market boom. Income schemes are also very popular among the old age investors and

the risk averters.

STATEMENT 9 To know factors that influence the investment decision of

respondents for mutual funds.

Table 9.1

FACTORS NO. OF RESPONSES %ageHigh and Regular income 13 23%


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Past Returns 24 43%Recommendations 2 4%

Total 56 (24) 100%

23%

30%

43%

4%

High and Regular income

Company's Name

Past Returns

Recommendations

Fig 9.1(i)

INTERPRETATION:

The above data shows that investors give maximum importance to Past Returns or Track

Record of the company, while making investment in Mutual Funds. High & Regular

Income and Companys Name also influences the investment decision of the respondents.

Very few respondents consider the Recommendations of others, while making investment

in Mutual Fund.

STATEMENT 10 To know the satisfaction level of the investors.

Table 10.1

RESPONSE NO.OF RESPONDENTS %age

Satisfied 46 92%

Not Satisfied 4 8%

Total 50 100%


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92%

8%

Satisfied

Not Satisfied

Fig 10.1 (i)

INTERPRETATION:

The above data shows that 92% respondents are satisfied from their investments and 8%

respondents are still dissatisfied from their investments. It implies that the majority of

respondents expectations are being met.

CHAPTER 5


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RECOMMENDATIONS

&

CONCLUSION

RECOMMENDATIONS TO INVESTORS

1) Assess Yourself - Self-assessment of one's needs; expectations and risk profile is

of prime importance, failing which, one will make more mistakes in putting

money in right places than otherwise. One should identify his degree of risk

bearing capacity and also clearly state the expectations from the investments.

Irrational expectations will only bring pain.


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2) Try to understand where the money is going - It is important to identify the

nature of investment. One can lose substantially if one picks the wrong kind of

mutual fund. In order to avoid any confusion, it is better to go through literature such

as offer document and fact sheets that mutual fund companies provide on their

funds.

3) Don't rush in picking funds, think first - Firstly one has to decide, what the

purpose of his investment is and then purpose should be guiding light for al l

investments. It is thus important to assess the risks in various schemes.

4) Invest, don't speculate - A common investor is limited in the degree of risk that

he is willing to take. One should abstain from speculating i.e. getting out of one fund

and investing in other with the intention of making quick money.

5) Don't put all the eggs in one basket - No matter what the risk profile of a person

is, it is always advisable to diversify the risks associated. So putting one's money

in different asset classes is generally the best option as it averages the risks in

each category.

6) Be regular - Investing should be a habit and not an exercise undertaken at one's

wishes, if one has to really take benefit from them. Since it is extremely difficult to know

when to enter or exit the market, it is important to beat the market by being systematic.

7) Keep Track of your investments - Finding the right fund is important but even

more important is to keep track of the way they are performing in the market. If the

market is beginning to enter a bearish phase, then investors of equity will benefit by


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always switch back to the equity when the market shows some boom.

RECOMMENDATIONS TO MUTUAL FUND PROVIDERS

Chandigarh is quite active in making investments and the awareness of people regarding

various schemes being launched by different AMCs is good..But still a lot has to be done

to make the people more responsive towards mutual fund investment opportunities

.Following are a few suggestions:

1) Regular visits should be made by the executives so as to remain in touch with the agents

and various investing authorities so that the channel remains strong.

2) Application process for mutual fund should be made more easier for the investors and it

should be hassle free.

3) Schemes launched by various banks should provide all the knowledge to the investors

regarding their benefits.

4) More marketing activities like newspaper advertisements,radio and t.v advertisements

,pamphlets ,brochures etc should be employed by banks .

5) Fund managers should act towards gaining faith of investors .

CONCLUSION

Mutual Funds now represent perhaps the most appropriate investment opportunity for most

investors. As financial markets become more sophisticated and complex, investors need a

financial intermediary who provides the required knowledge and professional expertise on


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successful investing. As the investors always try to maximize the returns and minimize the

risk, mutual funds satisfy these requirements by providing attractive returns with

affordable risk.With the emergence of tough competition in this sector, Mutual Funds are

launching a variety of schemes which caters to the requirements of a particular class of

investors. Risk-takers, for getting capital appreciation should invest in growth/equity

schemes. Investors who are in need of regular income should invest in Income Plans.

The major drawbacks in Mutual Funds are that, in an attempt to generate

maximum returns from a scheme, investment managers divert the funds into more risky

instruments such as equity. Another main disadvantage of mutual funds is that an investor

in a mutual fund has no control over the overall cost of investing. He pays investment fees

as he remains with the fund. Investors who invest on their own can build their own

portfolio of shares, bonds and other securities. Investing through funds means he delegates

this decision to the fund managers. But still these drawbacks are over-shadowed by the

advantages that Mutual Funds provide. So they are becoming popular and investors are

switching from other investment alternatives to earn maximum.


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BIBLIOGRAPHY


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BIBLIOGRAPHY

BOOKS AUTHORS

AMFI - - D.C.ANJARIA

MUTUAL FUNDS - DR.UMA SHASHIKANT

REFERENCES

BUSINESS WORLDBUSINESS TODAY

WEBLIOGRAPHY

1) www.mutualfunds.com

2) www.sbimf.com

3) www.amfiindia.com

4)www.google.com

5)www.moneycontrol.com

6)www.indiainfoline.com

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http://www.amfiindia.com/http://www.google.com/http://www.moneycontrol.com/http://www.amfiindia.com/http://www.google.com/http://www.moneycontrol.com/


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ANNEXURE

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QUESTIONNAIRE Name:-..

Age:-...

Sex:-........

Qualification:-

Monthly family income:-.Email Id:-..

Phone Number:-

1). Do you invest money?

o Yes

o No

2) If Yes, in which avenues you invest?

o Mutual Fund

o Banks

o Share Market

o Post Office

o Others

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3) If in mutual funds then what are the reasons for which you invest there

o High and regular income

o Past returns

o Companys name

o Recommendations

4).What is the percentage of monthly income invested by you in various investments

channels.?

o 0-5%

o 5-10%

o 10-20%

o Above 20%

5).Do you know about mutual funds?o Yes

o No

6)Have you invested in any mutual fund?

o Yes

o No

7)What are the various mutual fund institutions you know of?

o U.T.I

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o SBI

o PNB

o Standard Chartered

o Frankfin Templeton

o Reliance

o Kotak Mahindra

o Sundaram

8)Which mutual fund scheme do you prefer the most?

o Income scheme

o Growth scheme

o Balanced scheme

o Monthly Income plan

9)Which AMC do you prefer the most?

o ICICI

o SBI

o Kotak Mahindra

o HDFC

o Standard Chartered

o Franklin Templeton

o U.T.I

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o PNB

o Birla Sunlife

o Reliance

10)Did you face any problem when you invested in mutual funds?

o Yes

o No

11)Are you satisfied with your mutual fund investment plan?

o Yes

o No

12)Do you think mutual fund investment is a better investment option than others?

o

Yeso No

Finaly to Mutual Funds

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