STUDY ON MUTUAL FUNDS A FINANCIAL PLANNING TOOL

Report submitted to Avagmah Business School in partial fulfillment of the requirements for the award of

Post Graduate Program in Management

Submitted by

Amith Bansal

Register No.: 10JAPG1005

Under the guidance of

Balaji rao

Professor

SBM Jain College

Bangalore

NJ India Invest Ltd.

Bangalore

2011

DECLARATION

I hereby declare that the research entitled “MUTUAL FUNDS

A FINANCIAL PALLANING TOOL” submitted to Avagmah

Business School in partial fulfillment of the requirements for

the award of PGPM, is a record of independent work carried

out by me under the supervision and guidance of Balaji Rao,

Professor, SBM Jain College, Bangalore. This work has not

formed the basis for the award of any Degree and has not

been submitted previously to any other College/University.

Bangalore

August __, 2011 Amith Bansal

Balaji RaoProfessorSBM Jain CollegeBangalore

CERTIFICATE

I certify that this project entitled “MUTUAL FUNDS A

FINANCIAL PLANNING TOOL” submitted to Avagmah Business

School in partial fulfillment of the requirements for the award

of PGPM, is a record of independent work carried out by Mr.

Amith Bansal under my supervision and guidance. This work

has not formed the basis for the award of any Degree and

has not been submitted previously to any other

College/University.

Bangalore Balaji Rao

August __, 2011 Mentor

ACKNOWLEDGEMENT

I write this page to sincerely thank all those people who helped me in

completing this project work successfully.

First and foremost, I express my respect and sincere gratitude to my parents,

for supporting me through every step. I thank God Almighty, for his blessings

and care.

I would like to express my deep sense of gratitude SBMJC Bengaluru, for

providing the best of opportunities.

I bestow my sincere gratitude to Mr.Balaji Rao my research guide for the

guidance and encouragement given to me.

I am deeply indebted to Mr. Pramod K Padaki, Branch Manager, NJ India

Invest PVT Ltd, Bangalore under whose guidance the project was carried out,

for his valuable support, motivation and assistance which served as the

forces that helped me to bring this project to its present shape.

I thank all other department heads and managers and the whole team of the

NJ India Invest Pvt Ltd, Bangalore for giving me support during my study in

the company. Their support was inevitable for the completion.

Last but not the least; I thank my friends of SBMJC who helped me whenever I

needed help.

Amith Bansal

Table of Contents

1. MUTUAL FUND INDUSTRY IN INDIA

1.1.Evolution of mutual funds in India1.2.Concept of mutual fund1.3.Role of SEBI and AMFI in mutual fund industry1.4.The characteristics of mutual funds1.5.Types of mutual fund schemes1.6.Benefits of investing in mutual funds1.7.Disadvantages of mutual funds1.8.Risk involved in mutual fund

2. COMPANY PROFILE2.1. Vision & mission of NJ India invest2.2. Philosophy2.3. Management2.4. Service standards2.5. Products2.6. Recognitions

3. MUTUAL FUND FINANCIAL PLANNING TOOL3.1. Need of financial planning3.2. Meaning of financial planning3.3. Will financial planning help you?3.4. Meaning of mutual fund3.5. Difference b/w savings and investments3.6. Investment in mutual funds makes money

4. RESEARCH METHODOLOGY4.1.Research designs4.2.Sampling design4.3.Questionnaire design4.4.Objective of study4.5.Scope of study4.6.Limitations of study

5. FINDINGS SUGGESTIONS CONCLUSIONS BIBILOGRAPHY QUESTIONNAIRE APPENDIX

Executive Summary

The project talks about “the various factors considered by the customers

while going for investment in mutual fund”. The first few pages talk about the

introduction and evolution on mutual funds in India. This is followed by

company profile of NJ INDIA INVEST PVT LTD., and study objectives that how

do the mutual funds help investor in financial planning. 

The present economy is highly influenced undertakings in the country. The

major chunk of our GDP comes from financial sector which is very important

for a developing country like India. Due to uncertainty in the market and low

return it is necessary for investors to find the answer and way of capital

growth with better return.

All investment involves risk in varying degrees and hence it is necessary to

understand risk and know it can affect your investment. There are also risks

that are not in our control like inflation risk, Risk pertaining to political

environment for instance.

Mutual fund is indeed of great benefit in this respect. They provide the

services of experienced and skilled professionals who determine this risk and

monitor them on ongoing basis. They are also backed by thorough research.

When investors are confronted with an outstanding range of products from

traditional bank deposits to money multiple schemes, it has to be judged on

yardsticks of Returns, Liquidity, Safety and Tax efficiency. The target

audience was from random population where the basic objective of the study

is to find the objective of the investors for investing in a mutual fund<

identify the investment patterns of investors.

CHAPTER – 1MUTUAL FUNDS INDUSTRY IN INDIA

CHAPTER – 1

MUTUAL FUND INDUSTRY IN INDIA

The origin of mutual fund industry in India is with the

introduction of the concept of mutual fund by UTI in the year 1963.

Though the growth was slow, but it accelerated from the year 1987

when non-UTI players entered the industry. In the past decade, Indian

mutual fund industry had seen a dramatic improvement, both quality

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

seen an ending phase; the Assets under Management (AUM) was Rs.

67bn. The private sector entry to the fund family raised the AUM to Rs.

470 bn in March 1993 and till April 2004, it reached the height of 1,540

bn.

Putting the AUM of the Indian Mutual Funds Industry into

comparison, the total of it is less than the deposits of SBI alone,

constitute less than 11% of the total deposits held by the Indian

banking industry.

The mutual fund industry is a lot like the film star of the finance

business. Though it is perhaps the smallest segment of the industry, it

is also the most glamorous – in that it is a young industry where there

are changes in the rules of the game every day, and there are constant

shifts and upheavals. The mutual fund is structured around a fairly

simple concept, the mitigation of risk through the spreading of

investments across multiple entities, which is achieved by the pooling

of a number of small investments into a large bucket. Yet it has been

the subject of perhaps the most elaborate and prolonged regulatory

effort in the history of the country

1.1 EVOLUTION OF MUTUAL FUNDS IN INDIA

The formation of Unit Trust of India marked the evolution of the

Indian mutual fund industry in the year 1963. The primary objective at

that time was to attract the small investors and it was made possible

through the collective efforts of the Government of India and the

Reserve Bank of India. The history of mutual fund industry in India can

be better understood divided into following phases:

Phase 1. Establishment and Growth of Unit Trust of India - 1964-87

Unit Trust of India enjoyed complete monopoly when it was

established in the year 1963 by an act of Parliament. UTI was set up by

the Reserve Bank of India and it continued to operate under the

regulatory control of the RBI until the two were de-linked in 1978 and

the entire control was transferred in the hands of Industrial

Development Bank of India (IDBI). UTI launched its first scheme in

1964, named as Unit Scheme 1964 (US-64), which attracted the largest

number of investors in any single investment scheme over the years.

UTI launched more innovative schemes in 1970s and 80s to suit

the needs of different investors. It launched ULIP in 1971, six more

schemes between 1981-84, Children's Gift Growth Fund and India Fund

(India's first offshore fund) in 1986, Master share (India’s first equity

diversified scheme) in 1987 and Monthly Income Schemes (offering

assured returns) during 1990s. By the end of 1987, UTI's assets under

management grew ten times to Rs 6700 cr’s.

Phase II. Entry of Public Sector Funds - 1987-1993

The Indian mutual fund industry witnessed a number of public

sector players entering the market in the year 1987. In November

1987, SBI Mutual Fund from the State Bank of India became the first

non-UTI mutual fund in India. SBI Mutual Fund was later followed by

Canbank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank

of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993,

the assets under management of the industry increased seven times to

Rs. 47,004 crores. However, UTI remained to be the leader with about

80% market share.

1992-

93

Amount

Mobilised

Assets Under

Management

Mobilisation

as % of gross

Domestic

Savings

UTI 11,057 38,247 5.2%

Public

Sector1,964 8,757 0.9%

Total 13,021 47,004 6.1%

Phase III. Emergence of Private Sector Funds - 1993-96

The permission given to private sector funds including foreign fund

management companies (most of them entering through joint ventures

with Indian promoters) to enter the mutal fund industry in 1993,

provided a wide range of choice to investors and more competition in

the industry. Private funds introduced innovative products, investment

techniques and investor-servicing technology. By 1994-95, about 11

private sector funds had launched their schemes.

Phase IV. Growth and SEBI Regulation - 1996-2004

The mutual fund industry witnessed robust growth and stricter

regulation from the SEBI after the year 1996. The mobilization of funds

and the number of players operating in the industry reached new

heights as investors started showing more interest in mutual funds.

Investors' interests were safeguarded by SEBI and the Government

offered tax benefits to the investors in order to encourage them. SEBI

(Mutual Funds) Regulations, 1996 was introduced by SEBI that set

uniform standards for all mutual funds in India. The Union Budget in

1999 exempted all dividend incomes in the hands of investors from

income tax. Various Investor Awareness Programmes were launched

during this phase, both by SEBI and AMFI, with an objective to educate

investors and make them informed about the mutual fund industry.

In February 2003, the UTI Act was repealed and UTI was stripped of

its Special legal status as a trust formed by an Act of Parliament. The

primary objective behind this was to bring all mutual fund players on

the same level.

UTI was re-organised into two parts:

1. The Specified Undertaking,

2. The UTI Mutual Fund

Presently Unit Trust of India operates under the name of UTI

Mutual Fund and its past schemes (like US-64, Assured Return

Schemes) are being gradually wound up. However, UTI Mutual Fund is

still the largest player in the industry.

Phase V. Growth and Consolidation - 2004 Onwards

The industry has also witnessed several mergers and acquisitions

recently, examples of which are acquisition of schemes of Alliance

Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund and PNB Mutual

Fund by Principal Mutual Fund. Simultaneously, more international

mutual fund players have entered India like Fidelity, Franklin

Templeton Mutual Fund etc. There were 29 funds as at the end of

March 2006. This is a continuing phase of growth of the industry

through consolidation and entry of new international and private sector

players.

It is estimated that by 2013 March-end, the total assets of all

scheduled commercial banks should be Rs 70,90,000 corer. The

annual composite rate of growth is expected 15.4% during the rest of

the decade. In the last 5 years there is an annual growth rate of 12%.

According to the current growth rate, by year 2015, Mutual fund India

assets will be double

1.2 CONCEPTMutual 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 are 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:

Mutual Fund Operation Flow ChartThe simplest mutual funds definition is that they are an

investment group set up by professional investors and headed by an

investment manager. Individuals are then able to invest small amounts

of money into the fund for making a reasonable profit. There are an

incredibly large number of mutual funds. While some mutual funds aim

to produce short term, high yield profits, others look for the long term

profit.

1.3 Role of SEBI and AMFI in Mutual Fund Industry:SEBI formulates policies and regulates the mutual funds to project the

interest of the investors .SEBI notified regulations for the mutual funds in

1993. Thereafter, mutual funds sponsored by private sector entitles were

allowed to enter the capital market

SEBI plays an important role in forming policies and regulates the

mutual funds to protect the interest of the investors. The regulations

for mutual funds was notified by SEBI in 1993 which later paved the

way for private sector entities in the capital market.

As far as mutual funds are concerned, SEBI formulates policies and

regulates the mutual funds to protect the interest of the investors.

SEBI notified regulations for the mutual funds in 1993. Thereafter,

mutual funds sponsored by private sector entities were allowed to

enter the capital market. The regulations were fully revised in 1996

and have been amended thereafter from time to time. SEBI has also

issued guidelines to the mutual funds from time to time to protect the

interests of investors.

SEBI Regulations stipulate that at least one of the two exit routes is

provided to the investor i.e. either repurchase facility or through listing

on stock exchanges.

1.4 THE CHARACTERISTICS OF MUTUAL FUNDS Below are some of the common characteristics/features of

Mutual Funds.

The ownership is in the hands of the investors who have pooled

in there funds

It is managed by team of investment professionals and other

service providers

The pool of funds in invested in a portfolio of marketable

investments

Brokers are to be paid charges for getting transactions of buying

or selling of shares matured.

Rare in time access to price sensitive information related to

shares

Limited resources do not allow them to have a well balanced

portfolio

Poor knowledge about investment business does not make stock

investment a gainful proposition for them as compared to

professional expertise of fund managers.

Small investors cannot Ancash the opportunity of firm allotment

in case of over subscription of share issue.

Equity Mutual Funds: Predominantly investing in Equity & Equity

related instruments (Diversified)

Sector Funds: Technically called thematic funds, investing in

particular sectors

Index Funds: Investing in BSE listed stocks, managing the funds

passively

Fund of funds: Investing in the best performing Mutual Funds

 1.5 TYPES OF MUTUAL FUND SCHEMES

Schemes according to Maturity Period:

A mutual fund scheme can be classified into open-ended scheme

or close-ended scheme depending on its maturity period.

Open-ended Fund/ Scheme

An open-ended fund or scheme is one that is available for

subscription and repurchase on a continuous basis. These schemes do

not have a fixed maturity period. Investors can conveniently buy and

sell units at Net Asset Value (NAV) related prices which are declared on

a daily basis. The key feature of open-end schemes is liquidity.

Close-ended Fund/ Scheme

A close-ended fund or scheme has a stipulated maturity period

e.g. 5-7 years. The fund is open for subscription only during a specified

period at the time of launch of the scheme. Investors can invest in the

scheme at the time of the initial public issue and thereafter they can

buy or sell the units of the scheme on the stock exchanges where the

units are listed. In order to provide an exit route to the investors, some

close-ended funds give an option of selling back the units to the

mutual fund through periodic repurchase at NAV related prices. SEBI

Regulations stipulate that at least one of the two exit routes is

provided to the investor i.e. either repurchase facility or through listing

on stock exchanges. These mutual funds schemes disclose NAV

generally on weekly basis.

Schemes according to Investment Objective:

A scheme can also be classified as growth scheme, income

scheme, or balanced scheme considering its investment objective.

Such schemes may be open-ended or close-ended schemes as

described earlier. Such schemes may be classified mainly as follows:

Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over

the medium to long- term. Such schemes normally invest a major part

of their corpus in equities. Such funds have comparatively high risks.

These schemes provide different options to the investors like dividend

option, capital appreciation, etc. and the investors may choose an

option depending on their preferences. The investors must indicate the

option in the application form. The mutual funds also allow the

investors to change the options at a later date. Growth schemes are

good for investors having a long-term outlook seeking appreciation

over a period of time.

Income / Debt Oriented Scheme

The aim of income funds is to provide regular and steady income

to investors. Such schemes generally invest in fixed income securities

such as bonds, corporate debentures, Government securities and

money market instruments. Such funds are less risky compared to

equity schemes. These funds are not affected because of fluctuations

in equity markets. However, opportunities of capital appreciation are

also limited in such funds. The NAVs of such funds are affected

because of change in interest rates in the country. If the interest rates

fall, NAVs of such funds are likely to increase in the short run and vice

versa. However, long term investors may not bother about these

fluctuations.

Balanced Fund

The aim of balanced funds is to provide both growth and regular

income as such schemes invest both in equities and fixed income

securities in the proportion indicated in their offer documents. These are

appropriate for investors looking for moderate growth. They generally

invest 40-60% in equity and debt instruments. These funds are also

affected because of fluctuations in share prices in the stock markets.

However, NAVs of such funds are likely to be less volatile compared to

pure equity funds.

Money Market or Liquid Fund

These funds are also income funds and their aim is to provide easy

liquidity, preservation of capital and moderate income. These schemes

invest exclusively in safer short-term instruments such as treasury bills,

certificates of deposit, commercial paper and inter-bank call money,

government securities, etc. Returns on these schemes fluctuate much less

compared to other funds. These funds are appropriate for corporate and

individual investors as a means to park their surplus funds for short

periods.

Gilt Fund

These funds invest exclusively in government securities.

Government securities have no default risk. NAVs of these schemes also

fluctuate due to change in interest rates and other economic factors as is

the case with income or debt oriented schemes.

Index Funds

Index Funds replicate the portfolio of a particular index such as the

BSE Sensitive index, S&P NSE 50 index (Nifty), etc These schemes invest

in the securities in the same weight age comprising of an index. NAVs of

such schemes would rise or fall in accordance with the rise or fall in the

index, though not exactly by the same percentage due to some factors

known as "tracking error" in technical terms. Necessary disclosures in this

regard are made in the offer document of the mutual fund scheme.

There are also exchange traded index funds launched by the mutual

funds which are traded on the stock exchanges

1.6 Benefits of investing in mutual funds:.

Figure showing various advantages of investing in Mutual Funds

PRROFESSIONAL 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 the companies and selects

suitable investments to achieve the objectives of the scheme.

DIVESIFICATION:Mutual funds invest in a anumber 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 proportions. You achieve this diversification through a Mutual

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

CONVENIENT ADMINISTRATIONInvesting 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.

RETURN POTENTIALOver a medium to long term, mutual funds have the potential to

provide higher returns as they invest in a diversified basket of selected

securities.

LOW COSTSMutual funds are a relatively less expensive way to invest

compared to directly investing the capital markets because the

benefits of scale in brokerage, custodial and other fees translate into

lower costs for investors.

LIQUIDITY:In open-end schemes, the investor gets the money back

promptly at net asset value related prices from the mutual funds. In

closed-end schemes, the units can be sold o 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.

TRANSPARENCY:You 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

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.

AFFORDABILITY:Investors individually may lack sufficient funds to invest in high

grade stocks. A mutual fund because of its large corpus allows even a

small investors to take the benefits of its investment strategy.

CHOICE OF SCHEMES:Mutual funds offer a family of schemes to suit your varying needs

over a lifetime.

WELL REGULATED:All mutual funds are registered with SEBI and they are function

within the provisions of strict regulations designed to protect the

interest of investors. The operations of mutual funds are regularly

monitored by SEBI.

1.7 DISADVANTAGES OF MUTUAL FUNDS

NO CONTROL OVER COSTS:An investor in a mutual fund has no control over the overall cost

of investing. He pays investment management fees as long as he

remains with the fund, albeit in return for the professional

management and research.

NO TAILOR-MADE PORTFOLIOS:Investing through funds means he delegates this decision to the

fund managers. High net worth individuals or large corporate investors

may find this to be a constraint in achieving other objective.

NO GUARANTEES:

No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money.

FEES AND COMMISSIONS:

All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund. 

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.

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.

MANAGING A PORTFOLIO OF FUNDS: As the number of funds increase, in order to tailor a portfolio for

himself, an investor may be holding portfolio funds, with the costs of

monitoring them and using hem, being incurred by him.

DELAY IN REDEMPTION: The redemption of the funds though has liquidity in 24-hours

to 3 days takes formal application as well as needs time for

redemption. This becomes cumbersome for the investors.

NON-AVAILABILITY OF LOANS: Mutual funds are not accepted as security against loan. The

investor cannot deposit the mutual funds against taking any kind of

bank loans though they may be his assets.

1.8 RISK INVOLVED IN MUTUAL FUND

MARKET RISK

Sometimes prices and yields of all securities rise and fa ll. Broad

outside influences affecting the market in general lead to this. This is

true, may it be big corporations or smaller mid-sized companies. This is

known as Market Risk.

CREDIT RISK:

The debt servicing ability (may it be interest payments or

repayment of principal) of a company through its cash flows

determines the Credit Risk faced by you. This credit risk is measured

by independent rating agencies like CRISIL who rate companies and

their paper. An „AAA‟ rating is considered the safest whereas a „D‟

rating is considered poor credit quality. A well-diversified portfolio

might help mitigate this risk.

INFLATION RISK:

Inflation is the loss of purchasing power over time. A lot of times

people make conservative investment decisions to protect their capital

but end up with a sum of money that can buy less than what the

principal could at the time of the investment. This happens when

inflation grows faster than the return on your investment. A well-

diversified portfolio with some investment in equities might help

mitigate this risk.

INTEREST RATE RISK:

In a free market economy interest rates are difficult if not

impossible to predict. Changes in interest rates affect the prices of

bonds as well as equities. If interest rates raise the prices of bonds fall

and vice versa. Equity might be negatively affected as well in a rising

interest rate environment. A well-diversified portfolio might help

mitigate this risk.

POLITICAL/GOVERNMENT POLICY RISK:

Changes in government policy and political decision can change

the investment environment. They can create a favorable environment

for investment or vice versa.

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.

CHAPTER 2COMPANY PROFILE

CHAPTER 2

COMPANY PROFILE

NJ India Invest Pvt. Ltd. is one of the leading advisors and

distributors of financial products and services in India. In year 1994, NJ

India Invest Pvt. Ltd was established by Mr. Neeraj Chokse and Mr.

Jignesh Desai in Surat. NJ has over a decade of rich exposure in

financial investments space and portfolio advisory services. From a

humble beginning, NJ over the years has evolved out to be a

professionally managed, quality conscious and customer focused

financial investment advisory & distribution firm.

NJ prides in being a professionally managed, quality focused and

customer centric organization. The strength of NJ lies in the strong

domain knowledge in investment consultancy and the delivery of

sustainable value to clients with support from cutting-edge technology

platform, developed in- house by NJ.

At NJ we believe in …

Having single window, multiple solutions that are

integrated for simplicity and sapience

Making innovations, accessions, value-additions, a

constant process

Providing customers with solutions for tomorrow

which will keep them above the curve, today

NJ has over INR 30 billion* of mutual fund assets under advice

with a wide presence in over 60 locations* in 15 states* in India. The

numbers are reflections of the trust, commitment and value that NJ

shares with its clients.

NJ Wealth Advisors, a division of NJ, focuses on providing

financial planning and portfolio advisory services to premium clients of

high net-worth. At NJ Wealth Advisors, we have developed processes

that focus on providing the best in terms of the advice and the ongoing

management of your portfolio and financial plans.

At NJ, our experience, knowledge and understanding enables us

to provide you with the expected value, in an enhanced way. As a

leading player in the industry, we continue to successfully meet the

expectations of our clients, through meaningful and comprehensive

solutions offered by NJ Wealth Advisors

2.1 VISION & MISSION OF NJ India invest

Vision

To be the leader in our field of business through,

Total Customer Satisfaction

Commitment to Excellence

Determination to Succeed with strict adherence to

compliance

Successful Wealth Creation of our Customers

Mission

Ensure creation of the desired value for our customers,

employees and associates, through constant improvement,

innovation and commitment to service & quality. To provide

solutions which meet expectations and maintain high

professional & ethical standards along with the adherence to the

service commitments.

2.2 PHILOSOPHY:

At NJ our Service and Investing philosophy inspire and

shape the thoughts, beliefs, attitude, actions and decisions of

our employees. If NJ would resemble a body, our philosophy

would be our spirit which drives our body.

Service Philosophy:

Our primary measure of success is customer satisfaction

…

We are committed to provide our customers with

continuous, long-term improvements and value-additions to

meet the needs in an exceptional way. In our efforts to

consistently deliver the best service possible to our customers,

all employees of NJ will make every effort to:

Think of the customer first, take responsibility, and make prompt

service to the customer a priority

Deliver upon the commitments & promises made on time

Anticipate, visualize, understand, meet, exceed our customer’s

needs

Bring energy, passion & excellence in everything we do

Be honest and ethical, in action & attitude, and keep the

customer’s interest

Strengthen customer relationships by providing service in a

thoughtful &

Proactive manner and meet the expectations, effectively

Investing Philosophy:

We aim to provide Need-based solutions for long-term wealth

creation and also to provide all customers of NJ, directly or indirectly,

with true, unbiased, need-based solutions and advice that best meets

their stated & un-stated needs. In our efforts to provide quality

financial & investment advice, we believe that Clients want need-based

solutions, which fits them

Long-term wealth creation is simple and straight Asset-Allocation

is the ideal & the best way for long-term wealth creation Educating and

disclosing all the important facets which the customer needs to be

aware of.

The solutions must be unbiased, feasible, practical, executable,

measurable and flexible constant monitoring and proper after-sales

service is critical to complete the on-going process

At NJ our aim is to earn the trust and respect of the employees,

customers, partners, regulators, industry members and the community

at large by following our service and investing philosophy with

commitment and without exceptions.

2.3 MANAGEMENTThe management at NJ brings together a team of people with

wide experience and knowledge in the financial services domain. The

management provides direction and guidance to the whole

organization. The management has strong visions for NJ as a globally

respected company providing comprehensive services in financial

sector.

The Customer First‟ philosophy in deeply ingrained in the

management at NJ. The aim of the management is to bring the best to

the customers in terms of Range of products and services offered

Quality Customer Service

All the key members of the organization put in great focus on the

processes & systems under the diverse functions of business. The

management also focuses o n utilizing technology as the key enabler

for all the activities and to leverage the technology for enhancing

overall customer experience.

2.4 SERVICE STANDARDS:

Service in words, service in action

Service is the key to unlocking customer satisfaction, which

again is key for sustainability of any business. At NJ we understand this

very well. NJ has set strict processes in place to deliver quality services

to customers. At NJ strict quality service standards are set and a well-

defined process is established and followed religiously by our quality

customer service teams. Performance is evaluated on a frequent basis

and glitches are ironed out.But quality service also involves quality

people in addition to processes. NJ gives significant focus to the proper

training and development of the people involved in the service delivery

chain

Further we,

Have well-defined "Privacy Policy" to keep clients‟ information

confidential internal audits done on the same at regular intervals

Receive various statistics which are analyzed on an ongoing basis to

improve the service standards

We are committed to improve and enhance our services and

undertake new service initiatives. Such and Other services

differentiate us with other service providers in the industry.

Our Service Commitments

The service commitments are to guide the actions of the people

at NJ. Clearly stated, customers can freely communicate any such

actions/events wherein they feel that any of the following

commitments have been breached / compromised. At NJ we desire to

honor our commitments at all points of time and to all our customers

without any bias.

To provide customer- focused need-based valued services

To provide reliable, accurate and timely information.

To maintain all records in privacy.

To optimize services/benefits at least justifiable cost.

To develop and grow the customers‟ business.

To provide constructive after sales service.

To honor our service commitments.

2.5 PRODUCTS:

Mutual funds

Reality

Insurance

Fixed Deposits

PMS

Mutual funds:

A mutual fund is an investment that pools money from many

individuals and invests it according to the fund's stated objectives.

Professional money managers make investment decisions on behalf of

fund investors, buying and selling investments such as money market

investments, bonds and stocks.

Reality Desk:The growth is the result of the structural changes taking place in

the economy supported by the strong fundamentals and a favorable

demographic profile. The developments in the Real Estate sector

symbolize this changing face of India. . The changing landscape offers

a miscellany of great opportunities and greater challenges. Riding past

the obscurity with sense and executing functions with efficiency, will

be he key to turning your realty aspirations into a reality. At NJ India

Realty, we understand the challenges in shaping reality from your

realty aspirations. With our fully integrated end-to-end service model

we offer solutions that would enable you to meet the challenges of

development, fortify your own transformation and exploit the

opportunities available in the Indian realty sector. At NJ India Realty,

we have made backward & forward integration of value-added services

to the core-realty services which lie at the heart of the business. NJ

India Realty has a rich experience and a vast repertoire in project

planning & execution in the realty domain. The strong processes and

systems in place ensure the effective & timely execution of the

projects. High- quality assurance forms the under-current in the entire

value-chain of service delivery.

Insurance:Life insurance offers a way to replace the loss of income that

occurs when someone dies. Life insurance is insurance for you and

your family’s peace of mind. With a life insurance policy in place you

can:

Provide security to your family

Protect your home mortgage, loans, credit card borrowings etc.

Provide finance to your loved ones to achieve their goals in your

absence

Ensure that your family is able to maintain their lifestyle, no

matter what happens

Take care of your estate planning needs

Look at other retirement saving/investment vehicles

Fixed Deposits:

Company fixed deposits is a fixed deposit scheme offers by a

company. It works similar to a bank deposit where you earn interest income.

Company FD’s offer much higher returns than bank FD’s. Since they entail

higher risks. The higher the risk, the higher is the interest rate offered.

Furthermore, company fixed deposits are unsecured. This means, you have

to lien on the assets of company, in case it goes into financial difficulties and

is wound up. Hence it is of utmost importance to obtain professional financial

advice with regards to company Fixed Deposits.

Portfolio Management Services (PMS):

Portfolio Management Services (PMS) is a sophisticated

investment vehicle that offers a customized investing into stocks, fixed

income products, cash, other structured products and mutual funds

units etc. to meet specific investment objectives. Though, PMS is

managed by a professional managers, it has potential to address the

personal preferences tailored into the investment portfolio giving the

freedom and flexibility required for achieving the financial goals.

NJ’s main focus is though on mutual funds advisory and

distribution. At NJ, we believe that mutual funds, as an asset class, can

be looked at for almost all of the financial needs

Recognitions:

Some of the awards and recognitions that company have received in

past.

Year 2000For outstanding performance presented by Chairman, Prudential

Plc, at London.

Year 2002:For outstanding performance presented by group Chief

Executive,

Prudential Plc,. At London.

Year 2003 For outstanding performance presented by group chief

executive, prudential Plc. At London.

Year 2004Among most valued business associates presented by HDFC

standard Live at Edinburgh, Scotland

Year 2004For outstanding performance by Deputy CEO, Prudential

Singapore at Malaysia.

Year 2006Award for mobilizing the Highest Number of SIP’s at National

Level by Fidelity Mutual Fund Plc at Mumbai

CHAPTER- 3MUTUAL FUNDS A FINANCIAL PLANNING TOOL

CHAPTER -3

MUTUAL FUNDS A FINANCIAL PLANNING TOOL

Life is a roller coaster ride full of ups and downs. In theory,

everybody knows what we have to save for. Retirement, child’s

education, children’s marriage, medical emergencies, family

obligations and many more such responsibilities that life brings with it.

But no matter how much you save, the truth is it’s never enough.

That’s probably why, we need a plan. A plan with a purpose to not

only save and eventually help create a lifelong corpus. We bring to you

some simple financial planning tools to help you take your first steps in

creating this corpus:

Financial Planning is based on the premise that every individual has

certain basic financial needs that are expressed at various stages of

life (getting married, buying assets like homes, vehicles, or providing

for your child's education and wedding and retiring finally). With the

help of Financial Planning, you can prepare yourself well in time for all

these goals.

Financial Planning is an approach to building long term relationships

with clients. It is also a need for large sections of investors. This unit

introduces the concept of financial planning

3.1 Need Financial PlanningYou may have many dreams, needs and desires. For example, you

could be dreaming of:

Owning a new car

Buying a dream house

Providing your children with the best education

Planning a grand wedding for your children

Having a great time after your retirement

3.2 Financial Planning:Everyone has needs and aspirations. Most needs and aspirations

call for a financial commitment. Providing for this commitment

becomes a financial goal. Fulfilling the financial goal sets people on the

path towards realizing their needs and aspirations. People experience

happiness, when their needs and aspirations are realized within an

identified time frame. For example, a father wants his son, who has

just passed his 10th standard Board examinations, to become a doctor.

This is an aspiration. In order to realize this, formal education

expenses, coaching class expenses, hostel expenses and various other

expenses need to be incurred over a number of years. The estimated

financial commitments towards these expenses become financial

goals. These financial goals need to be met, so that the son can

become a doctor. Financial planning is a planned and systematic

approach to provide for the financial goals that will help people realize

their needs and aspirations, and be happy.

Meaning of financial planning

Identifying your current financial status

Listing and prioritizing your goals

Creating a sound investment plan to achieve them

Monitoring the plan to facilitate swift corrective action

Assessment of Financial Goals:The financial goals related to

Owning a new car

Buying a dream house

Providing your children with the best education

Planning a grand wedding for your children

Having a great time after your retirement

3.3 Will Financial Planning help youInstead of investing in an ad-hoc manner, Financial Planning helps

you take a holistic, all-round view. Briefly, Financial Planning

comprises:

Investment Planning: To make your wealth grow

Cash Flow Planning: To provide for assets and meet the periodic

cash requirements

Tax Planning: To save on taxes and increase your income

Insurance Planning: To protect yourself, your family and your

assets

Children's Future Planning: To give your children a financially

secure future

Retirement Planning: Because retirement is a time to relax, not

to get worried

3.4 Meaning of Mutual Fund? A Mutual Fund is a trust that pools the savings of a number of

investors who share a common financial goal. The corpus of the fund is

then deployed in investment alternatives (these could be equities,

debentures / bonds or money market instruments.) that help to meet

predefined investment objectives. The income earned through these

investments are shared by its unit holders in proportion to the number

of units they own.

Does a Mutual Fund appreciate your investment?The mutual fund manager invests money into various stocks of

various companies and different sectors. You own part of this fund

based on amount you invest. The beauty is that you can benefit with

returns which are as high as equity markets or if you want have a safe

investment like that of debt instruments. It is not an alternative option

to stocks and bonds; in fact, it invests into stock, bond, money market

and such other securities.

Concept of Mutual FundMutual fund is a mechanism by means of which a lot many

investors chip in their savings to form a common pool of money. Now,

this is invested in line with some pre decided objectives. Ownership of

fund is “Mutual” and it belongs to everyone who invested in the same

proportion of the amount contributed by them to the fund.

Need to invest in a Mutual Fund:Investor who doesn’t have the time to study and monitor the

market constantly, or the deep understanding of the financial market,

a Mutual Fund offers an opportunity to invest in a diversified,

professionally managed basket of securities at a relatively low cost.

Benefits of investing in a mutual fundThere are many benefits of investing in mutual funds, below are

some of the main benefits which will help you understand mutual funds

and it benefits better.

Professional Management: Your money is managed by experienced fund managers using

who are experts in their field, after much solid research and in-depth

study.

Constant monitoring: 

Your investments are monitored on an ongoing basis for best

returns.

Research: 

A thorough study is made before investing. Market conditions,

global trends, industry growth predictions, sector future, Company

profile, financials, growth potential … everything is considered. 

Liquidity: Open-ended mutual funds are priced daily and are always willing

to buy back units from investors. This means that investors can sell

their investments in mutual fund anytime without worrying about

finding a buyer at the right price. 

Diversification:

 Mutual funds aim to minimize risk through diversification by

investing in a number of companies across a broad section of

industries and sectors. Through Mutual Funds, you can achieve

diversification that would have otherwise not been possible.

Tax Efficiency:

 The dividends are tax-free in the hands of the investor. . Also

Investments for over 12 months qualify for long-term capital gains,

which are currently exempt from tax. For Resident Indians there is no

TDS on redemption of the units under the Indian IncomeTaxAct1961. 

Transparency: 

Prices of open ended mutual funds are declared daily. Regular

updates on the value of your investment are available. 

Regulated industry:

 Mutual funds are registered with SEBI and they function under

strict regulations designed to protect the interests of investors.

The different options that mutual funds offer:Investors have varying investment needs. To meet this, Mutual

Funds offer various investment plans like.

Growth Option

Dividend is not paid-out under a Growth Plan and the investor

realises only the capital appreciation on the investment.

Dividend Payout OptionDividends are paid-out to investors under a Dividend Payout

Option. However, the NAV of the mutual fund scheme falls to the

extent of the dividend payout.

Dividend Re-investment Plan

The dividend accrued on mutual funds is automatically re-

invested in purchasing additional units in open-ended funds.

Insurance Plan 

These schemes offer insurance cover as part of the investment

toinvestors.

Systematic Investment Plan (SIP) 

Investors are given the option of giving post-dated cheques (or a

direct debit of the bank account) in favor of the fund. The investor is

allotted units on a pre-determined date specified in the Offer

Document at the applicable NAV.

Systematic Encashment Plan (SEP)

The Systematic Encashment 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 that day.

The Tax Saving Options: An investor can save on taxes by investing under the following sections of the Income Tax Act, 1961

Section 80C (Investment avenues are discussed below in detail)

Section 80D (Health Insurance premium etc.)

Section 80E (Educational loan)

Section 80G (Donation to specified institutions)

Section 80U (deduction for handicapped person)

Section 24 (Housing loan interest)

Under Section 80C for tax deduction an individual could invest up to a maximum limit of Rs 100000 in one or more of the following options put together:

(a) PPF (Public Provident Fund) - under this scheme the maximum investment permissible in a financial year is Rs 70,000(b) EPF ( Employees Provident Fund)(c) Life Insurance Premium (d) Pension Plan premium (under Sec 80CCC)(e) ULIP(f) ELSS (Equity Linked Saving Scheme) - offered by Mutual Funds(g) NSC (National Savings Certificate)(h) 5 yrs Bank Fixed Deposit(i) 5 yrs Post Office Time Deposit(j) Infrastructure Bonds / NABARD Rural Bonds(k) NPS - New Pension Scheme (under Sec 80CCD) 

How is the ELSS offered by MFs? How is the return in the ELSS

compared to other schemes like PPF and NSC? 

The Equity Linked Savings Scheme (ELSS) could be open-ended

or close-ended in nature. Majority of the ELSS schemes are open-

ended. This means that they are open for subscription on all business

days. As the name suggests, the scheme primarily invests in equity

market by buying equity stocks of companies listed on the stock

exchanges. The units of the scheme are offered at the NAV (net asset

value). The NAV is announced for all business days and keeps changing

primarily depending upon the movement in the prices of stocks held in

the portfolio of the scheme. 

Equity as an asset class has given a higher return over the long

term. ELSS has the potential to give substantially higher returns as

compared to that from PPF or NSC over the long-term. The returns

from PPF or NSC are in the range of 8% and at times may not beat the

inflation. Returns from ELSS could fluctuate depending upon the

performance of the equity market and also the stock selection criteria

of the particular fund manager. Returns from ELSS could even be

negative in the short to medium term. As on 31st December, 2009, the

average compounded annualized growth rate (CAGR) over 3 and 5

years period by the ELSS category of Funds was 8.2% & 20.1%

respectively. Taurus Tax Shield is the best performing ELSS over 3

years period. It has given a CAGR of 23.6% and 18.3% over 3 & 5 years

respectively. 

ELSS also scores over other tax saving schemes since it offers

tax free return (long-term capital gains and dividends are totally tax

free as per the current tax structure). Only PPF offers tax free return

but it has a maturity period of 15 years.

Net Asset Value (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.

Are returns from mutual funds guaranteed? Mutual Funds do not offer guaranteed returns to investors. While

SEBI regulations allow Mutual Funds to offer guaranteed returns

subject to the Fund meeting certain conditions, most Funds do not

offer such guarantees. In case of a guaranteed return scheme, the

sponsor or the AMC, guarantees a minimum level of return and makes

good the difference if the actual returns are less than the guaranteed

minimum.

3.5 The Difference between Saving and Investing:Even though the words "saving" and "investing" are often used

interchangeably, there are differences between the two.

Saving provides funds for emergencies and for making specific

purchases in the relatively near future (usually three years or less).

Safety of the principal and liquidity of the funds (ease of converting to

cash) are important aspects of savings Rupeess. Because of these

characteristics, savings Rupeess generally yield a low rate of return

and do not maintain purchasing power. 

Investing, on the other hand, focuses on increasing net worth

and achieving long-term financial goals. Investing involves risk (of loss

of principal) and is to be considered only after you have adequate

savings.

Savings vs. Investment

Savings Rs. Investment Rs.

Safe Involve risk

Easily accessible Volatile in short time periods

Low return Offer potential appreciation

Used for short-term goals For mid- & long-term goals

3.6 Investment in a Mutual Fund Makes Money

The fund earns income on its investments, and distributes it to you in the form of dividends.

The fund produces capital gains by selling securities at a profit, and distributes those gains to you.

You sell your shares of the fund at a higher price than you paid for them.

Mutual fund is for all Reasons and Seasons

Offering wide range of services/options/plans. Benefits of professional management at lower cost. Offers liquidity because of daily pricing. Compounding interest within a period. Strategic asset allocation.

The mutual funds are one of the best options for the individual small investor; there are many mutual funds already available for the investor to choose from. It must be realized that the performance of different funds varies from time to time. The Indian investors have moved over to mutual funds in a gradual process. But, there is little doubt that mutual funds will increasingly attract the small investors as compared to other intermediaries such as banks and insurance companies.

CHAPTER - 4RESEARCH METHODOLOGY

CHAPTER - 4

RESEARCH METHODOLOGY

4.1 RESEARCH DESIGNThe research design that is adopted in this study is descriptive

design. Descriptive research is used to obtain information concerning the

current status of the phenomena to describe, "What exists" with respect

to variables or conditions in a situation. The focus of this study was on

self-reported decisions made by various investors regarding the

investment patterns in mutual funds. Thus it involves Statement of the

problem, Identification of information needed to solve the problem,

Selection or development of instruments for gathering the information,

Identification of target population and determination of sampling

procedure, Design of procedure for information collection, Collection of

information, Analysis of information, Generalizations and/or predictions.

4.2 SAMPLING DESIGN

SAMPLING TECHNIQUE:The sampling technique used is simple random sampling. Simple

random sampling is also known as “probability sampling” or “chance

sampling”. Under this sampling design, every item of the universe has an

equal chance of inclusion in the sample.

SAMPLE SIZE:The sample size for this study is 100 investors, consisting of volatile

investors in different investments residing in Bangalore.

SAMPLE UNIT:Individuals, families, corporate, firms and sole proprietors were the

target respondent groups from which the data were collected.

SOURCES OF DATA:Data were collected through both primary and secondary data

sources. Primary data was collected through questionnaires. The research

was done in the form of direct personal interviews and through telephone

interviews.

PRIMARY DATAA primary data is a data, which is collected afresh and for the first

time, and thus happen to be original in character. The primary data with

the help of questionnaire were collected from various investors.

4.3 QUESTIONNAIRE DESIGNProper care has been taken to ensure that the information needed

match the objectives, which in turn match the data collected through the

questionnaire. The basic cardinal rules of Questionnaire design like using

simple and clear words, the logical and sequential arrangement of

questions has been taken care of.

SECONDARY DATASecondary data consist of information that already exists

somewhere, have been collected. Secondary data is collected from

company websites, other websites, company fact sheets, magazines and

brochures.

STATISTICAL TOOLSThe statistical tools used for this analysis are:

Simple Percentage analysis:Percentages are calculated and in certain cases percentages along

with cross tabulation has been calculated.

4.4 OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVES:

Find out the attitude of investors towards Mutual Funds.

Find out the proportion of various investments.

Find out the main usage of Mutual Funds.

SECONDARY OBJECTIVES:

To analyze the perception about mutual funds of Non-investors

4.5 SCOPE OF THE STUDY

The research study undertaken does not probe too much about

whether the respondents have a very fine insight into mutual funds.

The research involves only a general study related to the

investment attitude of investors towards UTI mutual funds. The

research would reveal results regarding the investment attitude of

various investors about UTI mutual funds and thus in turn helps the

organization to identify the attitude of various investors and to

improve the marketing of mutual funds.

The study has helped the researcher to gain real time experience

by interacting with the investors and has helped to analyze “The

attitude of the investors towards UTI Mutual Funds”.

The study will help the concern to work on the areas of importance

for further planning.

The study has been done with a motive to change the attitude of

the investors and help them gain more knowledge on their

investment

4.6 LIMITATIONS OF THE STUDY

The project done is restricted to UTI Mutual funds in surroundings

only.

As the survey was pertaining to investment attitude of investors,

biased information may restrict validity of inference possible.

The study was constrained by limitations of time.

The raw data was collected with the help of structured

questionnaire technique. Therefore study is bounded by the

limitation of this technique.

Questionnaire used for market survey1) Age Profile.

20-30 30-40 40-50 50-above

2) Educational qualification:

Graduate Postgraduate Others

3) How much is your monthly income?

Below 20000 10000-30000 Above 50000

4) What is your occupation?

Professional Government sector

Business Others

5) Do you have any investment till now?

Yes No

6) Which are all the investment products do you know?

FD MF

Postal Schemes Bonds

Stocks Real estate

7) Do you invest in mutual fund? If yes, go to Q No 8.

Yes No

If No,

a) Reasons for not investing in mutual funds?

Not aware of MF’s High Risk

Not any specific reason conservative nature

b) Risk perception about mutual funds.

High risky Moderate

Low risky No idea

c) If not mutual fund where else you would like to invest?

Stocks Banks

Insurance Real estate

Gold Others if any _____

d) Whom you refer most in making investment decision?

ScalesPartially Dependent Independent

Fully Dependent

Financial Advisor      

Broker      

Friends or Relatives      

Internet or Magazines      

Co's website      

AMFI website      

e) Would you like to invest in future?

Yes No

If Yes,

8) How do you come to know the product?

Newspaper InternetFinancial Advisor Banks Existing Investor Others

9) Whom you refer while investing in mutual fund schemes?

ScalesPartially Dependent

Independent

Fully Dependent

Financial Advisor      

Broker      

Friends or Relatives      

Internet or Magazines      

Co's website      

AMFI website      

10) Your investment consists in mutual funds consist of ,

Debt Equity

Gold Debt& Equity

Others

11) While investing in Mutual fund which factor you consider most?

ScalesImportant

Neutral

Unimportant

Liquidity      

Risk      

Return      

Company Reputation      

Tax savings      

Safety      12) How do you monitor your portfolio?

Scales Monthly quarterlyHalf yearly Yearly

Risk factor        NAV        Portfolio of securities        Profile of fund manager        

13) How would you like to receive the returns every year?

Dividend payout Dividend re-investment

Growth in NAV

14) When you invest in Mutual Funds which mode of investment will you prefer?

One Time Investment Systematic Investment Plan

(SIP)

15) Which of these provide information relevant to analyze the performance of your investment?

ScalesImportant

Neutral

Unimportant

Regular updates      

Family      

Friends      Mutual Fund Company      

AMFI website      

16) Objective for investing in mutual fund?

Scales Rank1 Rank2Rank3 Rank4 Rank5 Rank6

Liquidity            

Risk            Return/ Long term wealth creation            

Company Reputation            Tax savings            

Safety            

Chapter -5

FINDINGS, SUGGESTION AND CONCLUSION

Chapter 5

Analysis and Interpretations

1) Age Profile.

20-30 30-40 40-50 50-above

Out of sample size of 100 people, the percentage variation

was as follows,

9%67%22%2%

From the figure it is found that almost 67% of the investors of Mutual

Funds are of the age 30-40 years, 20% of the investors belong to the

age group of 40-50 years , 10% belong to the age group of 20-30

years and only 2% belongs to age group of above 50. Thus, there are

more of above middle-aged investors who can easily follow the

investment and the market movements.

2) Educational qualification:

Graduate Postgraduate Others

36%49%15%

From the figure we can say the educational qualifications of

respondents was , there were 36% of graduates, 49% of

postgraduates, and only 15% of others.

3) How much is your monthly income?

Below 20000 20000-50000 Above 50000

<20k 20k-50k >50k0

10

20

30

40

50

60

18% of investor’s have a income between Rs below 20000 per

month, 30% of investor’s have a income between Rs. 20000- 50000 per

month, 52% have a income of above 50000 per month.

4) What is your occupation?

Professional Government sector

Business Others

ProfessinalGovt, sector

BusinessOthers

0

5

10

15

20

25

30

35

40

45

From above figure we can say that occupational distribution of

investors is professional 43%, where as Government Sector, Business

Men and Other Sectors are having 15%, 27%, and 15% respectively.

5) Do you have any investment till now?

Yes No

89 11

Out of 100 respondents 89% of them were having investment in

different things like gold, real estate, FD’s, mutual funds, postal

deposits etc, and rest 11% did not had any investment till now.

6) Which are the entire investment products do you know?

FD MF

Postal Schemes Bonds

Stocks Real estate

20182114225

Out of 100 respondents 20 % were for fixed deposits, 18% for Mutual

Funds,

21% for postal deposits, 14% for bonds, 22% for stocks, and only 5%

for real estate.

7) Do you invest in mutual fund? If yes, go to Q No 8.

Yes No

3466

Out of 100, 36% of respondents are already investing in mutual funds,

and 66% of respondents do not invest in mutual funds.

If No,

a) Reasons for not investing in mutual funds?

Not aware of MF’s High Risk

Not any specific reason Conservative nature

0

10

20

30

40

50

60

15

59

3

16

1559316

Out of 100 respondents 15 responded as they were not aware of

mutual funds,59 said it was very risky to invest in mutual funds,10 of

them denied by telling there is not any specific reason to not invest in

mutual funds, and 16 of them said it s because of there conservative

nature.

b) Risk perception about mutual funds.

High risky Moderate

Low risky No idea

High risk Moderate risk Low risk No idea0

10

20

30

40

50

60

59%16%5%20%

Many of non investors perception about mutual funds was recorded as

follows 59% of them said that it s of high risk, 16% said is moderate ,

5% said it s low risky, and 20% said that they have no idea about risk

factor in mutual funds.

c) If not mutual fund where else you would like to invest?

Stocks Banks

Insurance Real estate

Gold Others if any

Stocks Banks Insurance Real estate Glod Others

0

5

10

15

20

25

30

35

19%35%20%15%9%2%

Non mutual fund investors were investing in other investments like mentioned above, 35% of them insisted to put there money in Banks in form of FD’s, followed by 20% said they like to invest in insurance, 19% in stocks, 15% in real estate, 9% in gold, and rest 2 % in other investments.

d) Whom you refer most in making investment decision?

Scales Not Important Important More important

Financial Advisor  25% 55% 20%

Broker 15% 60% 25%

Friends or Relatives 45% 35% 20%

Internet or Magazines  80% 20% 0%

Finan

cial A

dvisor

Broke

r

Frien

ds/Rela

tive

Internet/

Magazi

nes0%

10%20%30%40%50%60%70%80%90%

100%

Fully dependentIndependentPartially dependent

Many investors gave importance to financial advisor i.e., 55% of

them refer advisor when they consider any investment to be

made, 60% refer brokers, 35% said they refer their friends and

relatives, only 20 % consider and refer internet and magazines.

By this we can say that advisors and brokers are most referred

while making any investment.

e) Would you like to invest in future?

Yes No May be

49%31%20%

From above questions we can interprate that 49% of the non mutual

fund investors are willing to invest in future, 31 % are still not willing to

invest in mutual funds because of many reasons, and there were 20%

of respondents who were not sure they opted for may be in future.

If Yes,

8) How do you come to know the product?

Newspaper InternetFinancial Advisor Banks Existing Investor Others

25

20

45

7

1

Mutual fund investors were asked that which media provided more information about the product from listed Medias above, out of which 25% respondents selected newspapers, 20% internet followed by 45% was financial advisors, 2% said banks, 7% reported as existing investors, and only 1 % selected other sources.

9) Whom you refer while investing in mutual fund schemes?

ScalesPartially Dependent

Independent

Fully Dependent

Financial Advisor  28% 32% 40%

Friends or Relatives  68% 18% 22%

Internet or Magazines  15% 85%  0% 

Co's website  27% 53%  20% 

AMFI website  00% 22%  78%

Financial Advisor

Friends/Relatives

Internet/magazines

Co's website

AMFI website

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

most importantimportantnot important

85%of investors of mutual funds opted the role of internet/magazines important followed by 53% said company website is also important, 32% selected financial advisors, 22% opted AMFI website . out of all this 78% of the respondents think that AMFI website is most important source of information about all mutual funds.

10) Your investment consists in mutual funds consist of ,

Debt Equity

Gold Debt& Equity

Others

Debt Equity Gold D&E Others0

10

20

30

40

50

60

70

80

90

632188924

Many of the mutual fund investors portfolio consist of both debt and equity i.e. 89%, 63% said they have only debt, 21% have only equity, 8% have gold, and 24% had in others.

11) While investing in Mutual fund which factor you consider most?

ScalesImportant

Neutral

Unimportant

Liquidity 56% 25% 19%

Risk 12% 39% 49%

Return 85% 15% 0%

Company Reputation 8% 74% 18%

Tax savings 49% 29% 22%

Safety 22% 78% 0%

LiquidityRiskReturnAMCTax savingsSafety

Here in this question the investors have ranked the factors on the basis of their objectives that for what reason they had invested in that particular scheme. 85% of investors had given returns more importance because every investor want benefits for the risk they had taken by investing in that scheme, 56% of investors had given importance to liquidity because they can withdraw their investment at any time in open-ended scheme. 49% of investors has given importance to tax savings while investing in some particular scheme their amount invested is appreciated as well as they get the tax benefit, 22% has given importance to safety.

12) How do you monitor your portfolio?

Scales Monthly quarterlyHalf yearly Annually

Risk factor  21% 36% 29% 14%NAV  36% 0% 54% 10%Portfolio of securities  0% 15% 39% 46%

Risk factor NAV Portfolio of securities0

10

20

30

40

50

60

MonthlyQuaretlyHalf-yearlyAnnually

Investors considered different factors to monitor their investment, according to risk factor 36% of them consider to monitor quarterly, depending on NAV 54% opted for half yearly, 46% selected annually for portfolio of securities.

13) How would you like to receive the returns every year?

Dividend payout Dividend re-investment

Growth in NAV

34%43%23%

In matters of returns investors response was volatile depending on their occupations, 23% selected dividend payout option, followed by 43% selected dividend re-investment option and 43% a major portions selected growth in NAV.

14) When you invest in Mutual Funds which mode of investment will you prefer?

One Time Investment Systematic Investment Plan (SIP)

46%54%

Mutual fund investors preferred SIP(systematic investment plan) over one time investment, 54% of respondents selected for SIP over lump sum payments , and only 46 % opted for one time investment, any how it depends on their own factors of consideration like income, age, savings, etc.,

15) Which of these provide information relevant to analyze the performance of your investment?

ScalesImportant

Neutral

Unimportant

Regular updates  40% 60% 4%

Mutual Fund Company  60% 40% 0%

AMFI website 65% 35% 0%

Regular updates AMC's AMFI website0

10

20

30

40

50

60

70

ImportantNeutralUnimportant

65% of investors opted AMFI website as good source of information about their investments performance, 60% Investors in mutual funds assume that mutual fund company itself provide information relevant to analyze the performance of their investments.

Whereas 60% of investors were neutral about the updates on their investments, other 40 % preferred regular updates on their portfolios.

16) Objective for investing in mutual fund?

Scales Rank1 Rank2Rank3 Rank4 Rank5 Rank6

Savings            

Risk tolerance            

Objective for investing in mutual fund

05

1015202530354045

Saving

s

Retur

ns

Divers

ificat

ion

Risk to

leran

ce

Factors/Reasons

No. of investors

NO of investors

Return/ Long term wealth creation            

Diversification            

Returns has been the main reason for preferring mutual funds as 41% of

the respondents have opted for it, while saving is the reason for 28% of

investor’s, risk tolerance for 23% and diversification for 8% of the

respondents

Findings:

Majority of the investors are above 41 years. Returns earned on

Mutual Funds are the cause for many investors to invest in mutual

funds.

Mutual Funds Friends and Agents are the knowledge providers for

most of the investments for mutual funds.

All the investors agree, “High Risk involves High returns.”

Most of the respondents ranked equity as first; this is clear out

indication that equity is the best alternative to invest.

Majority of respondents feel better returns, tax benefits and safety

are the influencing factor to invest in mutual funds.

Suggestion:

The investors should be given the option of attending investor’s

education programmers’ once in a month.

The information about the products should be revealed exactly to

the investors, and they should be advised on the risks attached to

them.

Programmers creating awareness towards the various products of

Mutual Funds should be conducted especially in the Villages.

Portfolio of the securities should be kept under check so as to

increase the growth of funds, which in turn will increase the

satisfaction of the investors.

Providing proper reports revealing all the information related to the

investment have to be sent to the investors regularly and this can

change the general attitude towards mutual funds.

Conclusions:

In any Mutual Fund Industry investors awareness plays an important

role. With the increasing number of Mutual Fund organizations, there is a

need for every company to educate investors and the general public on

various aspects concerned with the mutual fund investments which in turn

reveals their attitude towards such investments. The Mutual fund industry

is growing at a tremendous pace. A large number of plans have come up

from different financial resources. With the Stock markets soaring the

investors are attracted towards these schemes. Only a small segment of

the investors still invest in Mutual funds and the main sources of

information still are the financial advisors followed by advertisements in

different media.

From the comparative analysis provided in report, it emerges that

each investment alternative has its strengths and weakness. Some

options seek to achieve superior returns, but with correspondingly higher

risk. Other provides safety at the expense of liquidity and growth. Options

such as bank deposits offer safety and liquidity, but at the cost of return.

Mutual funds seek to combine the advantages of investing in each of

these alternatives while dispensing with the shortcoming. Clearly it is in

the investor’s interest to focus his investment on mutual funds.

However, a note of caution is in order. While the mutual funds are

one of the best options for the individual small investors, there are many

mutual funds already available for the investor to choose from. It must be

realized that the performance of different funds varies from time to time.

Also, the Indian mutual fund sector has been in an evolving phase over

the past five years during which time several investors have encountered

some poorly performing funds, while others have been fortunate to be

with good performers.

Bibliography

NEWSPAPERS – ECONOMIC TIMES, BUSINESS LINE, TIMES OF INDIA

MAGAZINE- BUSINESS WORLD

http://www.sebi.gov.in/mf

http://www.taurusmutualfund.com

http://valueresearch.com

http://www.njfundz.com

http://www.AMFI.com