project on Investor Preference in Mutual Funds

A study on investor preference in mutual fund

CHAPTER 1

INTRODUCTION

A mutual fund is a professionally managed collective investment scheme that pools

money from many investors. This money is then invested in Stocks, bonds, short–term

money market instruments, and/or other securities.

Mutual fund is an investment vehicle that is made up of funds collected from many

investors, for the purpose of investing in many securities such as stocks, bonds, money

market instrument and similar assets. Mutual funds are operated by money managers,

who invest the fund’s capital and attempt to produce capital gains and income for the

fund’s investors. A mutual fund’s portfolio structured and maintains to match Investment

objectives.

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

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

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

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

proportion to the number of units owned by them. The term risk has a variety of

meanings in business and everyday life. At its most general level, risk is used to describe

any situation where there is uncertainty about what outcome will occur. Life is obviously

very risky. Even the short term future is often highly uncertain. In probability and

statistics, financial management and investment management, risk is often used in more

specific sense to indicate possible variability of outcomes around some expected value

The security and exchange board of India(Mutual fund) Regulation,1993 define a mutual

fund “ a fund establish in the form of a trust by a sponsor, to raise funds by the trustees

through the sale of unit to the public, under one or more schemes, for investing in

securities in accordance with these regulation.”

According to Weston.J.Fred and Brigham, Eugene, Unit trust are “corporations which

accept dollars from savers and the use these dollars to buy stock, bonds, short term debt

instruments issued by business or government units; these operation pools funds and thus

reduce risk by diversification”.

Gsss center for PG studies and Research


TOPIC CHOOSEN TO STUDY


The project deals with the customer preference in Mutual funds in India. The Indian

mutual fund is in radical transformation in the industry over the years. The competition is

intense in the current scenario as there are a variety of players in all types of fund

schemes. The industry has witnesses’ enormous growth in terms of size, operations,

investor base and variety of schemes. It is further expanding to the needs of investors and

market pressures. At this point, there is a need for mutual fund investors. Past

performance is taken as reference by many investors though it may not be a true indicator

of future performance. In this project, I made attempt to know the customers preference

in mutual funds by using different measure. The result of various measures is given to get

a comprehensive picture of the preference of selected mutual funds.

NEED FOR THE STUDY

The Indian Equity Market has grown significantly during the last three years; Mutual

Funds are not left far behind. Both the avenues have created wealth for the investors. But

for the creation of wealth through this avenue a proper understanding of the Mutual

Funds is must.

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

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

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

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

proportion to the number of units owned by them.

In general, investments in Funds are risky, because they are exposed to economic forces

or factors, which the future is uncertain. By its very nature, risk concerns the uncertain

future. If investors know what happened to a Fund’s returns in the past, they can predict

the likely range of Fund’s returns in future. The greater is this range, the more risky are

Fund’s prospects. Thus, investors and their advisors need more information to help them

assess the risks and to analyses the performance of Mutual Fund in various schemes.

Investors must ultimately be responsible for understanding or making predictions about

the performance and risks associated with the major market sectors, as well as the extent

to which sectors are likely to move with one another. Much of this information is



common to many Funds and can be most efficiently provided to investors by third parties,

such as financial planners and database providers. But, most of the investors are not

aware of the investment opportunities in mutual funds in India. Hence, it is necessary to

find out how the companies are providing information about the investments to the

investors, whether that information is sufficient to educate the investors regarding the

performance of mutual Funds, and how the investors are benefited.

OBJECTIVE OF THE STUDY

To study about the mutual fund industry.

To find out the Preferences of the investors.

To measure the satisfaction level of investors regarding mutual funds

To study the difference between various investment options offered Aditya birla sunlife.

SCOPE OF THE STUDY

The study is limited to Mysore city.

In general it confines to measure the performance.

It include comparative study on equity mutual funds

It focuses on the preference in people about different investment opportunities in mutual

fund.

RESEARCH METHODOLOGY

• Definitions of the population

Since the study is mainly related to know the investment patterns of the investors on

different products of company. Their potentiality of earning income and reducing risk of

the investment community on the products, where each security in the market has to be

analyzed through their earnings over the others.

• Type of research

This is a descriptive research where survey method is adopted to collect primary

information from the investors using different scales as required and the required

secondary information for the analysis.



• Primary Data

A questionnaire schedule was prepared and the primary data was collected through

survey method.

• Secondary Data

Company website

Books

Related information from net

Customer database

• Sample Size

The population being large the survey was carried among the clients of Aditya Birla

sunlife. They will be considered adequate to represent the characteristics of the entire

population.

• Sampling Procedure

The sampling procedure followed in this study is non-probability convenient sampling.

Simple random procedures are used to select the respondent from the available database.

The Investment pattern of Investors on different products research work will be carried

on the basis of structured questionnaire. The study is restricted to the investors of Mysore.

Techniques for data analysis

The analysis of data collection is completed and presented systematically with the use of

Microsoft Excel and MS-Word. The various tools which were used for presentation are:

• Bar graphs.

• Pie charts.

• Column graphs.



LITERATURE REVIEW

Investment is the sacrifice of certain present value for the uncertain future reward. It

entails arriving at numerous decisions such as type, mix, amount, timing, grade etc of

investment and disinvestments. Further such decisions making has not only to be

continuous but rational too. Instead of keeping the savings idle you may like to use

savings in order to get return on it in the future, which is known as 'investment'. There

are various investment avenues such as Equity, Bonds, Insurance, and Bank Deposit

etc. A Portfolio is a combination of different investment assets mixed and matched for

the purpose of achieving an investoes goal. There are various factors which affects

investors' portfolio such as annual income, government policy, natural calamities,

economical changes etc.

Bansal says, “Investors increasing allocation of cash is not because their ability to bear

that risk has been impacted”

Preeti Sigh says, “Investment is the employment of fund with the aim of achieving

additional income or growth in value. The essential quality of investment is that it

involves waiting for reward. The term investment does not appear to be simple as it has

been define. Investment is the allocation of monetary resources to asset that are expected

to yield or positive return over a given period of time”

Miglani (2007) in his study made an attempt to understand the Mutual Fund industry and

its implications on the common investors on one hand and its returns and performance on

the other. An analysis was made on the perceptual views of investors in “Investment

Decision Making.

An empirical study of perceptual View of Investors” by Yesh Pal Davar and Suveera Gill

(2007). The results of this study suggest that investor’s preferences are supposedly

related to the actual performance of investments and the same is taken into account while

forming an opinion about making future investment decision.

In their study entitled “A study on Investors perception towards Mutual Fund

investments”, S. Sudalaimuthu and P. Senthil Kumar (2008) was concentrated on

highlighting the investor awareness and preference in Mutual Fund schemes, factor that



influences the investor in selecting Mutual Fund scheme, the level of satisfaction on the

investment of Mutual Fund, problems faced by Mutual Fund investors and the investment

objectives, preference among Fund types (balanced, growth, dividend etc.).

An Empirical Study of “Indian Individual Investors’ Behaviour”

by Syed. Tabassum Sultana (2010) was an attempt to know the profile of the investors

and also to know their characteristics so as to know their preference with respect to their

investments. The study also tried to unravel the influence of demographic factors like

gender and age on risk tolerance level of the investors.

Mr. M. Jaidev in his book has “Investment policy and performance of Mutual Fund” has

studied the Indian Public Sector Mutual Funds. In this book he has covered risk, rate of

return. Investment policy and pricing of mutual funds. In this book he has done an

empirical study covering all aspects of mutual fund investment along with the regulatory

framework.

NaliniPrava Tripathy in her book “Mutual Funds in India. Emerging Issues” provides a

detailed evaluation of investment management which is not only helpful for influencing

marketing operations but also for securities selection, investment research and timing and

resource allocation

LIMITATIONS

• The investment pattern analysis has been limited to few investors.

• This study is conducted to analyze their pattern not all those factors that really matter

while investing.

• It is conducted in Mysore city.

• An interpretation of this study is based on the assumption that the respondents have

given correct information.

• The economy and industry are so wide and comprehensive that it is difficult to

encompass all the likely factors influencing the investors' investment pattern in the

given period of time.

• Besides the study has the limitation of time, place and resources.



CHAPTER 2

INDUSTRY PROFILE

In recent years, India has evolved as one of the fastest growing markets for mutual funds,

posting a compounded annual growth rate (CAGR) of around 17.6% during the five year

period of 2004-08 as against the global average of 4% during the same period. The

Mutual fund industry in mature markets like US, France and UK, on the other hand, have

witnessed a comparatively lower rate of growth. The rapid growth of the Mutual fund

industry in India can largely be attributed to the rising personal income, growing risk

appetite of investors and increasing reach of Asset Management Companies (AMCs) &

distributors. Today, mutual fund has become one of the preferred forms of 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. Further, the buoyancy in the

domestic stock markets in recent years has fueled growth in the Indian Mutual fund

industry.

The industry witnessed evolution of many private sector mutual funds with new fund

offerings in the last few years. Today, there are over 40 private sector mutual funds (as on

March 31, 2008) with the total number of schemes amounting to 1002 as of Dec-08. The

major private sector mutual funds include Prudential ICICI Mutual Fund, Birla Sun Life

Mutual Fund, HDFC Mutual Fund, Tata Mutual Fund, Reliance Mutual Fund and

Sundaram BNP Paribas Mutual Fund to name a few. Moreover, the industry has also

endeavoured to tap overseas markets, offering a slew of products to overseas Indian

investors.

Nonetheless, despite emerging as one of the fastest growing markets for mutual funds, the

share of Indian Mutual fund industry in the global Mutual fund industry has remained

low. It accounts for just 0.3% of the total net assets of the global Mutual fund industry,

which is lesser than other emerging countries such as China (1.5%) and Brazil (2.5%).

The Indian mutual fund industry which grew at a rapid pace in the last few years,

witnessed significant moderation in growth during FY09. The liquidity crunch world-

over consequent to the turmoil in the global financial markets had adverse impact on the

resource mobilisation of the industry. Moreover, given the uncertain conditions prevailing



in the domestic stock markets, the domestic mutual funds witnessed severe redemption

pressures from the domestic corporate sector, which in turn called for the intervention by

the RBI.

HISTORY (WORLD WIDE)

The origin of pooled investing concept dates back to the late 1700s in Europe, when a

Dutch merchant and broker invited subscriptions from investors to form a trust to provide

an opportunity to diversify for small investors with limited means. The emergence of

investment pooling in England in the 1800s brought the concept closer to the US shores.

The enactment of two British laws, the Joint Stock Companies Acts of 1862 and 1867,

permitted investors to share in the profits of an investment enterprise and limited investor

liability to the amount of investment capital devoted to the enterprise. Shortly thereafter,

in 1868, the Foreign and Colonial Government Trust was formed in London.

It resembled the United State fund model in basic structure, providing the investor of

moderate means the same advantages as the large capitalists by spreading the investment

over a number of different stocks.

The Scottish American Investment Trust, formed in February 1873, by fund pioneer

Robert Fleming, invested in the economic potential of the united state, chiefly through

American railroad bonds. Many other trusts followed them, who not only targeted

investment in America, but led to the introduction of the fund investing concept on the

United States shores in the late 1800s and the early 1900s.



Company Profile

Company information

Incorporation year : 1994

Registered office : Birla Sun Life Asset Management Company Ltd

One India Bulls Center, Tower 1, 17th floor

Jupiter mill compound, 841, SenapathiBapat

Marg, Elphinstone Road, Mumbai-400013

Telephone number : 022-66928000

Branch office : Birla Sun Life Asset Management Company Ltd

No, 442-443, Laxman Plaza, Chamaraja Double

Road, Near Ramaswamy circle, Mysore-570024

Ph-0821-424400/1/2

E-mail ID : www.birlasunlife.com

Industry : Financial Services

Chairman : Mr. Donald Stewart

Chief Executive officer : Balasubramanian

Company secretary : Rajiv Joshi

Auditor : Haribhakti& Co

Registrar : Computer Age Management Services Pvt. Ltd.

Birla Sun Life Asset Management Company Ltd. (BSLAMC), the investment manager of

Birla Sun Life Mutual Fund, is a joint venture between the Aditya Birla Group and the

Sun Life Financial Inc. of Canada. The joint venture brings together the Aditya Birla

Group's experience in the Indian market and Sun Life's global experience.

Established in 1994, Birla Sun Life Mutual fund has emerged as one of India's leading

flagships of Mutual Funds business managing assets of a large investor base. Our



solutions offer a range of investment options, including diversified and sector specific

equity schemes, fund of fund schemes, hybrid and monthly income funds, a wide range of

debt and treasury products and offshore funds.

Birla Sun Life Asset Management Company has one of the largest team of research

analysts in the industry, dedicated to tracking down the best companies to invest in.

BSLAMC strives to provide transparent, ethical and research-based investments and

wealth management services.

The Aditya Birla Group

The Aditya Birla Group is one of India's largest business houses. Global in vision, rooted

in Indian values, the Group is driven by a performance ethic pegged on value creation for

its multiple stakeholders.

The Group operates in 26 countries – India, UK, Germany, Hungary, Brazil, Italy,

France, Luxembourg, Switzerland, Australia, USA, Canada, Egypt, China, Thailand,

Laos, Indonesia, Philippines, UAE, Singapore, Myanmar, Bangladesh, Vietnam,

Malaysia, Bahrain and Korea.

A US $29 billion corporation in the League of Fortune 500, the Aditya Birla Group is

anchored by an extraordinary work force of 130,000 employees, belonging to 40 different

nationalities. Over 60 per cent of its revenues flow from its operations across the world.

The Aditya Birla Group is a dominant player in all its areas of operations viz;

Aluminium, Copper, Cement, Viscose Staple Fibre, Carbon Black, Viscose Filament

Yarn, Fertilisers, Insulators, Sponge Iron, Chemicals, Branded Apparels, Insurance,

Mutual Funds, Software and Telecom. The Group has strategic joint ventures with global

majors such as Sun Life (Canada), AT&T (USA), the Tata Group and NGK Insulators

(Japan), and has ventured into the BPO sector with the acquisition of TransWorks, a

leading ITES/BPO company.

Sun Life Financial

Sun Life Financial Inc is a leading international financial services organization providing

a diverse range of wealth accumulation and protection products and services to

individuals and corporate customers. Chartered in 1865, Sun Life Financial Inc and its



partners today have operations in key markets worldwide, including Canada, the United

States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China

and Bermuda.

Birla Sun Life Asset Management Company follows a long-term, fundamental research

based approach to investment. The approach is to identify companies, which have

excellent growth prospects and strong fundamentals. The fundamentals include the

quality of the company’s management, sustainability of its business model and its

competitive position, amongst other factors.

Vision

To be a leader and role model in a broad based and integrated financial services

business.

Mission

To consistently pursue investor's wealth optimization by:

Achieving superior and consistent investment results.

Creating a conducive environment to hone and retain talent.

Providing customer delight.

Institutionalizing system-approach in all aspects of functioning.

Upholding highest standards of ethical values at all times.

Values

Integrity

Commitment

Passion

Seamlessness

Speed

Products & Services



With Aditya Birla Money by your side, you will always have access to the most viable

wealth management products and solutions. As your partners, we help you build a lasting

legacy for yourself and your loved ones.

Our Products:

Mutual Funds

Mutual Funds give you access to Indian equity and debt securities. We offer you advice

on the entire universe of mutual funds:

Equity funds – growth or capital appreciation

Debt funds – capital preservation

Choose from an array of more than 15 fund houses with various schemes.

PMS

Portfolio Management System is a unique way to build a customized portfolio of Indian

equities. At Aditya Birla Money, we act as authorized distributors for various PMS

providers to meet the growing needs of investors and expand a portfolio beyond equities

and bonds.

Direct Equity

Aditya Birla Money offers you convenient, simple and efficient trading in Indian equities.

We provide you with a seamless platform to invest in the Indian secondary markets. Your

Wealth Management advisor will provide you valuable advice based on our in-house

research.

Structured Products

ABM brings you customized investment solutions, giving you access to various asset

classes. Unlike most other structures, returns can be linked to a variety of asset types such

as equity indices, basket of stocks, and commodities.

Alternate Asset Products



Even if your interests lie beyond the stock market, Aditya Birla Money has a solution for

you. Through our distribution tie-ups, we offer a wide range of Private Equity Fund

(which invest in unlisted securities) to give you the opportunity of investing in the

growing Indian economy. With these products and investment strategy, you can preserve

your capital, ensure risk protection, leverage and diversify.

Real Estate

If your interests lie in real estate, we offer niche property investment services. We bring

in a combination of in-depth market knowledge and real estate industry expertise to offer

a range of specialized real estate investment services. We provide expert advice and

innovate real estate solutions tailor made to your needs and objectives

Loan against Securities and Mutual Funds

Our tie-up with Aditya Birla Finance lets you use your share investments as security

against borrowing. This way, you are able to investment more, and increase the size of

your overall portfolio.

Gold

A healthy portfolio is about diversification and risk management. To this end, we offer

multiple avenues of investing in gold. Holding gold in a portfolio can provide distinct

benefits, as it is not correlated with most other assets.

Life Insurance

While offering solutions for building and preserving capital, your Relationship Manager

will offer you comprehensive advice on how best to provide for financial protection to

loved ones and cover risks and uncertainties.

Our affiliation with Birla Sun Life Insurance provides the opportunity to obtain even

more favorable offers, which can result in lower costs and greater benefits. Our Policy

Analyst ensures that the planning you’ve previously done remains current and

competitive.

Our Services:



Research

Our quality research provides clients with the information they need to make informed

investment decisions. The Aditya Birla Money research team is dedicated to keeping you

updated with access to the latest publications and a wide range of industry happenings

including: market depth, breaking commentary, long-term forecasts, detailed daily

updates and the latest financial news.

Highly proactive services

Our service includes Daily Market Update, Weekly update on mutual Funds and Event

Based SMS to keep you completely informed on the markets.

Online Portfolio Access

Wherever you are, our network works for you. The online portfolio ensures every detail

of your investments is at your fingertips. You can constantly monitor the composition of

your portfolio, so you always know if your long term objectives are being met.

Financial planning

We offer a comprehensive financial planning session to help devise your investment

strategy. This is followed by complimentary personalized report outlining specific

recommendations on the step-by-step actions you need to take to achieve your financial

goals.

Regular Portfolio Reviews

Your portfolio undergoes regular reviews to ensure your money is constantly working in

your best interest, keeping your personal financial goals in sight.and towards your

personal financial goal.

AREA OF OPERATION

Today, BSLAMC is present in 111 locations, including 105 branches across India.

National level head s of the department will look after all major activities of the company

and further functions maintained by the Zonal offices and regional branch offices. There

is some targets are given for the branches office managers and executives.



OWNERSHIP PATTERN

Birla Sun Life AMC where Aditya Birla Financial Services (ABFS) and Canada-based

Sun Life (India) AMC Investment have almost 50:50 ownership. The last stake change

took place in March 2010 when Aditya Birla Novo transferred its 50percent stake to

ABFS.

DIRECTORS OF BIRLA SUNLIFE ASSET MANAGEMENT COMPANY

Mr. Kumar Mangalam Birla Associate Director

Mr.AjaySrinvasan Associate Director

Mr. Donald Stewart Associate Director and Chairman

Mr.S.S.Raman Independent Director

Mr.N.NJambusaria Independent Director

Mr.N.CSinghal Independent director

Mr. Bobby Parikh Independent Director

Mr.R.Vaidyanathan Independent Director

Mr.PankajRazdanAssociated Director

Mr.Kevin Strain Additional Director

Mr.Bharat Patel Independent Director

INFRASTRUCTURE FACILITIES

Birla Sun outlets are designed to be place where retail investors can come in touch with

investment opportunities in an atmosphere of convince and comfort. The look and feel of

the offices across India projects a consistent branch image for the company. The features

that enable a unique facility for retailing financial service include among other.

In Mysore branch office building was constructed in the year 2007.This const on average

45lakh rupees and building was constructed in 1000sq.ft.of land. And the interior

equipment like computers, photo copy machine, lightings, furniture, ventilation system,

etc costs of 15lakh rupees.



ACHIEVENT/AWARD

Birla Sun Life Asset Management Company is the investment manager of Birla Sun Life

Mutual fund. Birla Sun Life Mutual Fund not only offers a spectrum of savings and

investment products for individual, corporate and institutional investors, but also manages

two offshore funds. It offers portfolio advisory services for high net worth investors. It is

also setting up offshore real estate fund. The fund house is currently ranked among the

top five asset management companies in the country, enjoying the trust of 25 lakh

investors and managing average assets of over Rs.65000 crore including offshore funds.

(as on 31March 2010).

Having registered strong growth for consecutive years. BSLAMC today has 104 own

branches and it offers a wide range of investment solutions across asset classes for

investors. Birla Sun Life Mutual Fund has been recognized for its strong growth

momentum and demonstrative fund performance not just in India but also internationally.

BSLAMC has received recognitions from various institutes of international repute such

as Lipper, Outlook Money and The Asset magazine, Hong Kong.

2008

The company’s Tax Fund as the third best performing equity fund in the world and the

best in India, over a 10-year time frame.

The fund house was also named the debt Fund House of The year and received three

prestigious awards, a cross investment classes for the year 2008 at the same ceremony.

2009

“Star Fund house of the year-Debt” by the fund house at the ICRA Mutual Fund Award

2009

The fund house was the winner of “Best Fund House award” for 2009.

The fund house was awarded the “Best Group- Mixed Asset Category” by Lipper.

The Asian Investor, a Hong Kong based magazine named it the best “Onshore Fund

House-India “at the investment performance awards 2009 placing it alongside the best

fund houses across Asia.

2010



Birla Sun Life Mutual Fund was recognized as The Mutual Fund House of the year by

CNBCTV18-CRISIL,

“Best Fund House “at the Outlook Money Awards 2010.

BSLAMC was also adjudged the runner up for the “Best Fund House” award for the year

2010.

It was adjudged the best, Asset Management Company in India, by the Asset magazine,

Hong Kong, as part of their Triple A investment performance awards 2010.

2011

Birla Sun Life Asset Management Company Adjudged the “Best Debt Fund house”17 th

January 2011,

2012

Birla Sun Life Asset Management Company Received Debt Mutual Fund House of the

year CNBC-TV18-CRISIL.

COMPETITORS INFORMATION

Reliance Mutual Fund

Reliance Mutual Funds (RMF) was established as trust under Indian Trust act, 1982.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. Reliance has earned an approximate net profit of INR276 crore

while in 2011 the same figure had stood at INR261 crore.

UNIT TRUST OF INDIA MUTUAL FUND

UTI Asset Management Company private limited, established in Jan 14, 2003, and

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

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

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

National Bank (PNP),State Bank of India(SBI)and Life Insurance Corporation of



India(LIC).The schemes of UTI Mutual Fund are liquid Funds, Income Funds, Aseet

Management Funds, Index Funds, equity Funds and Balance Funds.



HSBC MUTUAL FUND

HSBC Mutual Fund was set up 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.

ING Vysya Mutual Fund

ING Vysya Mutual Fund was set up 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.

STATE BANK OF INDIA MURUAL FUND

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

offshore fund, the India Magnum Fund with a corpus of Rs.225 crore approximately.

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

35schemes out of which 15 have already yielded handsome returns to investors. State

Bank of India has more than Rs.5500Crores as AUM. Now it has an investor base of over

8lakh spread over 18schemes.

HDFC MUTUAL FUND

HDFC Mutual Fund was set up on June 30, 2000 with two sponsors Housing

Development Finance Corporation Limited and Standard life investments Limited. HDFC

Mutual Fund has been the biggest performer in 2011-2012 fiscal, replacing Reliance

Mutual Fund. In 2012, this represents a growth of 5.6 percent on a year-on-year basis. In

the same period HDFC Mutual Fund, which is the biggest of its kind in India, has gone

up from INR 242 crore to INR 269 crore

However, Birla Sun Life AMC (Asset Management Company) saw a 30percent dip in its

profits in 2012.



SWOT ANALYSIS

STRENGHS: WEAKNESS:

Brand Reach

Brand image

Efficient sale staff

Prompt services provider

Image of an ethical player

Good relationship with distributors

Fair understanding of market and

competition.

In ability to fully cover the outstation market.

Rural population undiscovered since there is low

awareness and higher focus on urban market and

distributor

OPPORTUNITIES: THREATS:

Unexplored/outstation market

Target export segment aggressively

Substitutes products like Bank FDs, RDs, etc

Mis-selling of Insurance as Mutual funds

The company is facing strong competition from

since there is present of 34 mutual fund companies.

SWOT analysis is a strategic planning tool to evaluate the Strengths, Weaknesses,

opportunities, and Threats involved in a project or in a business venture. It involves

specifying the Objectives of the business Venture or project and identifying the internal

and external factors that are favorable and unfavorable in achieving that objective.

The aim of any SWOT analysis is to identify the key internal and external factors that are

important in achieving the objective. SWOT analysis groups key pieces of information

into two main categories.

Internal Factors-The strengths and weaknesses internal to the organization

External factors-The opportunities and threats presented by the external

environment.



FUTURE GROWTH AND PROSPECTS

Over the past year, Birla Sun Life Mutual Fund has scaled up efforts to connect with new

investors and markets. BSLAMC initiatives to create understanding about systematic

Investment Planning and Financial discipline in markets with low investor education,

helped expand our reach in smaller markets alongside our significant presence in large

markets.

Currently Birla Sun life’s asset under management (AUM) was reached over

80000cr.And end of the financial year 2012-2013 Birla Sun Life is focusing as the 3rd

largest AMC in India. And its main aim to reach the first position in Indian mutual fund

industry.

FUTURE AND GROWTH OF MUTUAL FUND IN INDIA

According to report of Business maps of India, Important aspects related to the future of

mutual funds in India are:-

•There is a huge scope in the future for the expansion of the mutual funds

industry.

•A number of foreign based assets management companies are venturing into

Indian market

•The Securities Exchange Board of India has allowed the introduction of

commodity mutual funds.

•The emphasis is being given on the effective corporate governance of Mutual

Funds.

•The Mutual funds in India has the scope of penetrating into the rural and semi

urban areas

•Financial planners are introduced into the market, which would provide the

people with better financial planning.

According to RNCOS research report titled “Current and Future outlook of

Mutual Fund Industry”, key finding are:-

•The Indian mutual funds retail market, growing at a Compounded Annual

Growth Rate (CAGR) of about 30%, is forecasted to reach US$ 300 Billion by

2015.



•Income and growth schemes made up for majority of Assets Under Management

(AUM) in the country.

•At about 84% (as on March 31, 2008), private sector Asset Management

Companies account for majority of mutual fund sales in India.

•Individual investors make up for 96.86% of the total number of investor accounts

and contribute 36.9% of the net assets under management.

Based on KPMG report titled “Indian Mutual Fund Industry – The Future in a Dynamic

Environment Outlook for 2015” key results are:-

KPMG in India is of the view that the industry AUM is likely to continue to grow in the

range of 15 to 25 percent from the period 2010 to 2015 based on the pace of economic

growth. In the event of a quick economic revival and positive reinforcement of growth

drivers identified, KPMG in India is of the view that the Indian mutual fund industry may

grow at the rate of 22 to 25 percent in the period from 2010 to 2015, resulting in AUM of

INR 16,000 to 18,000 billion in 2015. In the event of a relatively slower economic revival

resulting in the identified growth drivers not reaching their full potential, KPMG in India

is of the view that the Indian mutual fund industry may grow in the range of 15 to 18

percent in the period from 2010 to 2015, resulting in AUM of INR 15,000 to 17,000

billion in 2015. Industry profitability may reduce further as revenues shrink and

operating costs escalate. Product innovation is expected to be limited. Market deepening

and widening is expected with the objective of increased retail penetration and

participation in mutual funds. The regulatory and compliance framework for mutual

funds is likely to get aligned with the other frameworks across the financial services

sectors.



ANALYSIS OF FINANCIAL STATEMENT

Statement of Profit and loss account for the year ended March 31, 2013

Particulars 31-03-2013 31-03-2012

INCOME

Revenue from operation

Other incomes

TOTAL INCOME

EXPENSES

Employee benefit expenses

Administrative and other expenses

Distribution and scheme expenses

Finance cost

Depreciation and Amortization expenses

TOTAL EXPENSES

PROFIT BEFORE TAX

Tax expenses

Current tax

Deferred tax

(Excess)/short provision for tax of earlier years

PROFIT AFTER TAX

3,963,895,760

386,631,338

4,350,527,098

971,760,267

620,681,076

1,433,705,536

6,494,674

104,188,446

3,136,829,999

1,213,697,099

340,500,000

574,307

(465,645)

873,088,437

3,073,508,398

419,763,769

3,493,272,167

808,295,801

614,914,168

882,146,263

1,881,997

124,308,056

2,431,546,285

1,061,725,882

322,000,000

(17,450,192)

(5,922,733)

763,098,807



Balance sheet as at March 31, 2013

PARTICULARS Year ended

31-03-2013

Year ended

31-03-2012

(A)Share holders fund

Share capital

Reserve and surplus

(B)Non- current Liabilities

Other long term liabilities

Long term provisions

(C) Current liabilities

Trade payables

Other short term liabilities

Short term provisions

TOTAL(A+B+C)

(D)FIXED ASSETS

Tangible asset

Intangible asset

Non -current investment

Deferred tax asset(net)

Long term loans and advances

(E)CURRENT ASSETS

Current investment

Trade receivables

Cash and Cash equivalent

Short-term loans and advances

Other Current Assets

TOTAL OF (D+E)

180,000,000

3,706,880,856

3,886,880,856

10,634,082

4,207,007

14,841,089

578269675

73314768

426586400

1,078,170,843

4,979,892,788

78,610,963

138,919,231

426,171,454

28,685,245

397,480,072

1,069,866,965

2,128,681,542

139,463,646

40,658,542

1,147,162,807

454,059,286

3,910,025,823

4,979,892,788

180,000,000

2,833,792,419

3,013,792,419

62,566,548

43,406,941

105,973,489

472453592

34715748

287621276

794,790,616

3,914,556,524

95,690,775

193,086,240

573,480,063

29,259,552

1,046,762,304

1,938,278,934

1133269161

76801213

45465733

370394251

350347232

1,976,277,590

3,914,556,524



CHAPTER 3

THEORETICAL BACKGROUND OF THE STUDY

In this section introduce the theoretical foundations of the analysis step by step. First, we

introduce what a mutual fund is. A mutual fund is a trust that pools the savings of a

number of investors who share a common financial goal. The money thus collected is

invested in capital market instruments such as shares, debentures, and other securities.

The income earned through these investments is shared by its unit holders in proportion

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

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

professionally managed basket of securities at a relatively low cost. The objectives of

mutual fund are to maximize the return to the investor who participates in equity

indirectly through mutual fund.

Mutual Funds

Mutual funds are being thought of as a vehicle for investors to pool their money in and

have it jointly managed by an assumingly professional manager A fund is divided into

units and holders are entitled to a proportionate fund share. A mutual fund is ready to buy

back its shares at their current net asset value; in turn, the shareholders are only entitled to

sell their shares back to the fund. The disclosure of information for the potential “unit

holder” of the fund is ensured by the government and requires it to be provided in the

fund prospectus. Funds invest in securities indicated in their prospectus and what are

according to legal regulation varying from country to country.

There are several types of mutual funds traded at the Helsinki Stock Exchange, which

differ by the assets they invest in:

Asset Allocation Funds apportion their investments across a mixture of asset classes,

namely stocks, bonds, and cash and equivalents. The main purpose is to optimize the

return given the associated level of risk by pursuing the finest mix of stocks, bonds, and

cash and equivalents. Asset Allocation Funds are generally distinguished by the way they

allot their investments among these asset classes. Conservative and aggressive asset

allocation funds differ by the portion of their investments in asset classes with historically



different risk/return potential (more risk/higher return for aggressive and less risk/lower

return for conservative).

Bond Funds invest primarily in bonds. These funds diversify by investing in an array of

bonds. Bond Funds are usually classified by the types of bonds they invest in, e.g.

government Bond Funds, corporate Bond Funds, international Bond Funds, and

municipal Bond Funds. Similar to individual bonds, the share price of Bond Funds

normally falls when interest rates go up, and rises when interest rates decline.

Equity Funds invest mainly in common stocks. Diversification is achieved by investments

across a number of different companies or industries in compliance with the fund's

investment objectives stated in their prospectus. Equity funds are usually categorized by

the types of stocks they invest in.

Hedge Funds are extremely flexible in their investment options because they use financial

instruments generally beyond the reach of other mutual funds, due to stricter regulation

and disclosure requirements. Hedge Funds are allowed to use short-selling, leverage,

concentrated investments and derivatives. This flexibility, which includes use of hedging

strategies to protect downside risk, gives hedge funds the ability to best manage

investment risks.

Money Market Funds are composed of short-term debt instruments, including

commercial paper, negotiable certificates of deposit, bankers' acceptances, Treasury bills,

and discount notes of various organizations. These funds seek to preserve capital while

providing income and liquidity.

Mutual funds are also classified by their investment strategies:

Yield Funds’ objective is to achieve a high level of current income by buying government

and corporate bonds as well as high yielding common and preferred stocks. They are not

designed to provide major capital gains.

Growth Funds’ main investment objective is capital growth. Funds exploiting the growth

strategy commonly invest in companies whose earnings are expected to grow at a faster

rate than the average earnings growth of the market index. Funds utilizing the value

strategy generally invest in companies whose stock is either trading at a price that is



relatively low compared to its historical trading range, or compared to prices of

companies in similar industries.

We consider mutual funds’ performance as the best proxy for professional investors’

skills, because lenders trust their money to mutual fund managers, who are thought of as

able to make better investment decisions.

In sum, in this part we described what a mutual fund is and what the main differences

between various kinds of mutual funds are. We also explained why we believe a mutual

fund’s performance is an appropriate proxy for professional investors’ skills.

Mutual Fund investment Instrument

Mutual funds are invested in 3 types of funds

Stocks

Bonds

Money market instrument

Stocks:-Stocks represent ownership or equity in a company popularly known as shares.

Bonds:-These represent debt from companies, financial institution or government

agencies.

Money Market instrument:-includes short term-debts such as treasury bills, certificate

of deposits, and interbank call money

STRUCTURE OF MUTUAL FUND

The structure of the mutual fund in India is governed by SEBI (MUTUAL FUND)

Regulations,1996.This regulations make it mandatory for the mutual funds to have a

three-tier structure of Sponsor-Trustee-Asset Management Company(AMC).

SEBI REGULATIONS

In India, the mutual fund industry is highly regulated with a view to imparting operational

transparency and protecting the investor's interest. The structure of a mutual fund is

determined by SEBI regulations. These regulations require a fund to be established in the



form of a trust under the Indian Trust Act, 1882. A mutual fund is typically externally

managed. It is now an operating company with employees in the traditional sense.

Instead, a fund relies upon third parties that are either affiliated organizations or

independent contractors to carry out its business activities such as investing in securities.

A mutual fund operates through a four-tier structure. The four parties that are required to

be involved are a sponsor, Board of Trustees, an asset management company and a

custodian.

TYPES OF MUTUAL FUNDS

Open –ended schemes

The open ended schemes do don have a fixed maturity and are open for subscription the

whole year. One can buy and sell units at the NAV related prices to the Mutual funds.

These schemes are normally not listed on the stock changes and can be redeemed to the

mutual fund.

Closed-ended Funds

A close end fund has a stipulated maturity period which generally ranging from 3 to 15

years. The fund is open for subscription only during a specified period. Investor can

invest in the scheme at the time of the initial public issue and thereafter they can buy or

sell the units of the schemes on the stock exchanges where they 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.

Interval Funds

Interval funds combine the features of open –ended and close ended schemes. They are

open for sale or redemption during pre-determined intervals at NAV related prices.



INVESTMENT OBJECTIVES

Equity Fund Dividend

The aim of equity fund dividend is to provide fund appreciation over the medium to long

-term. Such schemes normally invest a majority of their corpus in equities. It has been

proven that returns from stocks, have outperformed most other kind of investment held

over the long term.

Equity Fund Growth

The aim of equity fund growth is to provide capital appreciation over the medium to

long-term. Such schemes normally invest a majority of their corpus in equities. It has

been proven that from stocks, have outperformed most other kind of investment held over

the long term.

Balanced Fund Dividend

The aim of balance funds dividend is to provide both dividend and regular income. Such

schemes periodically distribute a part of their earnings and invest both in equities and

fixed income securities in proportion indicated in their offer document

Balance Funds Growth

The aim of balance funds is to provide both growth and regular income. Such schemes

periodically distribute a part of their earning and invest both in equities and fixed income

securities in proportion indicated in their offer document.

OTHER SCHEMES

Tax saving schemes

This schemes offer tax rebates to the investors under specific provisions of the Indian

Income Tax Laws as the Government offers tax incentives for investment in specified

avenues. Investment made in equity Linked Savings Schemes (ELSS)and Pension

Schemes are allowed as deduction u/s88 of the Income Tax act,1961.



SPECIAL SCHEMES:

Industry Specific Schemes

Industry Specific Schemes invest only in industries specified in the offer document. The

investment of these funds is limited to specific industries like Info Tech, FMCG, and

Pharmaceutical etc.

Index Schemes

Index Funds attempt to replicate the performance of a particular index such as the BSE

Sensex or the NSE 50.

Spectral Schemes

Spectral Funds are those, which invest exclusive in a specified industry or a group of

industries or various segments such as “A “Group shares or initial public offering.

TAX-BENEFITS

No tax on dividends in the hands of the investor (only a 12.61% dividend

distribution tax paid by the fund before distribution of dividend.

No dividend distribution tax for equity mutual funds (completely tax free

dividends)

Tax liability when the investment is redeemed /withdrawn (not every year)

Long term capital gains tax benefits

Benefit for indexation for investments held over a year

Opportunities of Mutual Funds are tremendous specially when investment is concerned.

For any individual who intends to allocate his assets into proper forms of investment and

want to diversify his Investment Portfolio as well as the risks, Mutual Funds can be

proved as the biggest opportunity.

Investors get a lot of advantages with the Mutual Fund Investment. Firstly, they are not

required to carry on intensive research and detailed analysis on Stock Market and Bond

Market. This work is done by the Fund Mangers of the Investment Management

Company on behalf of the investors. In fact, the professional Fund Managers who handle

the mutual funds of any particular company are able to speculate the market trend more



correctly than any common individual. Good Speculation about the trends of stock prices

and bond prices leads to right allocation of funds in the right stocks and bonds resulting in

good Rate of Returns.

Investors also get the advantage of high Liquidity of the mutual funds. This means the

investors can enjoy easy access to the funds invested in the mutual funds whenever they

require the money. When the investors invest in any mutual fund, they are given some

equity position in that fund. The investors can any time sell their mutual fund shares to

get back the money invested in mutual funds. The only thing is that the Rate of Return

that they will get may not be favorable as the return depends on the present market

condition.

The greatest opportunity that the mutual funds offer is the opportunity of diversifying

their investments. Investment Diversification actually diversifies the Risk associated with

investment. This is because, if at a time, if prices of some stocks are declining, deceasing

the Value of Investment, prices of some other stocks and bonds may tend to rise and in

this way the loss of the mutual fund is offset by the strength of the stocks whose prices

are rising. As all the mutual funds diversify their investments in various common stocks,

preferred stocks and different bonds, the risk to be borne by the investors are well

diversified and in other terms lowered.

Mutual funds are managed by experts. This is one big advantage of mutual funds. The

way experts research and selects assets makes mutual funds ideal for beginners. As

mutual fund invests in variety of assets it provides excellent diversification. Due to

diversified portfolio, risk of investing reduces to great extent. Assets of different sectors

are held in portfolio. Due to this bad performance of one sector is balanced by good

performance of other sector. Like stocks, mutual funds are also available in smaller units.

This makes mutual fund very affordable. At times mutual fund NAV can be as low as

$1/unit. No matter if one would like to make one time purchase or systematic monthly

purchases (SIP), mutual funds are affordable. Mutual funds have been specifically

designed to accommodate small investors. There is another price requirement of small

investors. We do not like our funds locked helplessly for too long. Liquidity of mutual

funds makes it ideal for beginners. Any time we want, we can sell our mutual fund units.

Mutual fund redemption forms are available online. One shall just download the form, fill



few details, and units can be redeemed. From the date of filling the form, mutual funds

can be redeemed in matter of 3/4 days.

Mutual Funds for Beginners has its Disadvantages also

Mutual funds are moody and unpredictable like stocks. One cannot be sure if the returns

will be positive or negative. It will not be wrong to say that mutual funds are as risky as

stocks. This is one reason why one can make losses in short term in mutual fund

investing. But regardless of whether the fund is giving positive or negative returns, fees

will be charged. Mutual funds never guarantee returns but they will charge fees for sure.

We cannot even question mutual fund manager on his work. Basically we have no

control on how fund is managed. Not only this, even mutual fund NAV’s are like a

puzzle. A common man can never know how accurately the NAV is calculated. If you are

paying $1/unit for a mutual fund, one cannot do its price valuation.

Are Mutual Funds of Only One Type?

No, mutual funds are of mainly four types. Depending on the type of goal, one can select

a suitable fund. Generally people buy mutual funds of open ended type. The variety that

is offered by open ended funds covers all needs. In case people are interested in capital

protection and assured returns option, the same is also offered by closed ended funds.

How to Buy Mutual Fund

The easiest way to buy mutual funds is using online trading platforms. The online

trading platforms allow purchase of mutual fund units as well. This facility is not

provided with standard share trading platforms. You must contact your broker by email or


http://www.moneycontrol.com/mutual-funds/performance-tracker/returns/capital-protection-funds.html

http://www.moneycontrol.com/mutual-funds/performance-tracker/returns/capital-protection-funds.html

http://www.getmoneyrich.com/wp-content/uploads/2012/04/Mutual-Funds-for-Beginners-types.jpg


toll free number. Tell them that you would like to trade mutual fund units. They will

include mutual fund buying-selling facility with some extra fees. One can also buy

mutual fund units directly from fund house website. Mutual fund can be bought form

websites by making payments using online banking.

How can a mutual fund make money for its Investors?

There are many ways to make money from mutual funds. Basically we can make money

in 3 ways from mutual fund investment. When Mutual funds earn dividends from its

share holdings it distributes them among investors. The interest earned from holding debt

linked options is also distributed as dividend income. The most common way of making

money from mutual funds is capital gain. When price of shares increases mutual funds

sell them to book profits. The practice of selling units for capital gains continues through

the year. At the end of the year, net capital gain is distributed proportionally among unit

holders. It may happen that Net Asset Value (NAV) of fund appreciates over a period of

time. This can happen due to decrease in expenses or liabilities of mutual fund.

The increase in NAV can be encased by selling units. Dividend and capital gain

distribution is done by cheque, or funds are re-invested to buy more units. Profit booking

due to NAV appreciation shall be done directly by investors by selling units.

Expense Ratio of Mutual Funds must be looked at

There are several expenses that need to be managed to operate mutual fund. But who pays

for this expense? We investors have to bear this cost. In mutual fund brochures all

expense are categorized. One type of funds expense is called management expense. The

fees paid to people like fund manager are categorized as management expense. Mutual


http://www.getmoneyrich.com/wp-content/uploads/2012/04/Mutual-Funds-for-Beginners.jpg


fund companies also market their products. The expense of marketing and selling are

funded from funds asset. This also includes printing leaflets and brochures. This expense

is called as distribution expense. Fund houses use brokers who sell units directly to

investors. The compensation paid to brokers is also categorized as distribution expense.

All other expense which cannot be categorized as management and distribution expense

are called other expense. Expense ratio will be total of all expense divided by fund’s net

asset value. Suppose a fund’s net asset value is 1.5%. It means for $1000 asset, $15 is

used to manage funds expense. Generally, bigger will be the fund lower will be

the expense ratio. Ideally a mutual fund shall delivery best results with minimum

expense.

Tools used for data analysis and interpretation:

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

was given more importance since it is overhearing factor in attitude studies. One of the

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

collecting, analyzing the required information data and providing an alternative solution

to the problem .It also helps in collecting the vital information that is required by the top

management to assist them for the better decision making both day to day decision and

critical ones.

My research project has a specified framework for collecting the data in an effective

manner. Such framework is called “RESEARCH DESIGN”. The research process which

was followed by me consisted following steps.

A. PROBLEM:

The problem at hand was to study the preference of mutual funds by people regarding

mutual funds in the city.

B. DEVELOPING THE RESEARCH PLAN:

The development of Research Plan has the following Steps:

1. DATA SOURCES: Two types of data were taken into consideration i.e.

Secondary data & primary data. My major emphasis was on gathering the primary data.

The secondary data has been used to make things more clear.



(i) Primary Data: Direct collection of data from the source of information,

technology including personal interviewing, survey etc.

(ii) Secondary Data: Indirect collection of data from sources containing past or

recent past information like Bank’s Brochures, Annual publications, Books, Fact sheets

of mutual funds, Newspaper & Magazines etc.

2. RESEARCH INSTRUMENT

A close friend questionnaire was constructed for my survey. Questionnaire consisting of a

set of questions made to be filled by various respondents.

3. SAMPLING PLAN

The sampling plan calls for three decisions.

a) Sampling Unit: I have completed my survey in Mysore.

b) Sample Size: The sample consisted of 60 respondents. The sample was drawn

from walk in customers of Aditya Birla sunlife mutual funds. The selection of the

respondents was done on the basis of simple random sampling.

c) Contact Methods

I have contacted the respondents through personal interviews.

C. COLLECTING THE INFORMATION

After this, I have collected the information from the respondents with the help of

questionnaire

D. ANALYZE THE INFORMATION

The next step is to extract the pertinent findings from the collected data. I have tabulated

the collected data & developed frequency distributions. Thus the whole data was grouped

aspect wise and was presented in tabular form. Thus, frequencies & percentages were

prepared to render impact of the study.

E. PRESENTATIONS OF FINDINGS

This was the last step of the survey.



CHAPTER 4:

DATA ANALYSIS AND INTERPREATION

Table no 4.1

Approximate income status of the respondents:

Sl no. Income status No. Of respondents percentage

1 Up to 10000 3 5

2 10001-15000 8 13

3 15001-20000 16 27

4 20001-30000 18 30

5 30001 and above 15 25

Total 60 100

Graph no 4.1

Up to 10000 10001-15000 15001-20000 20001-30000 30001 and above

Total

3 816 18 15

60

513

27 30 25

100

Chart TitleNo. Of respondents percentage

Interpretation: among the respondents majority of them have their income levels in

between 20001 to 30000 i.e. 30% which is high when compared to other income level

group which comes up to 27% in 15001 to 20000 and 25% in 30001 and above, This

clearly states that we can expect more investment.



Table no 4.2

Features of mutual funds that impressed the respondents:

Sl no. Features No. Of respondents Percentage

1 Diversification 12 20

2 Better return and safety 28 47

3 Reduction in risk and

transaction cost

6 10

4 Regular income 9 15

5 Tax benefit 5 8

Total 60 100

Graph no 4.2

0

20

40

60

80

100Chart Title

No. Of respondentsPercentage

Interpretation: the above graph states that the respondents liked the feature ‘better return

and safety’ than any other which was preferred by 47% of the respondents. It shows that

majority of the respondents are not risk takers.



Table no 4.3

Awareness of mutual fund to respondents:

Sl no. Sources No. Of respondents Percentage

1 Advertisement 15 25

2 Peer group 14 23

3 Banks 10 17

4 Financial advisor 21 35

Total 60 100

Chart no 4.3

Advertisement Peer group Banks Financial advisor Total1 2 3 4

0

20

40

60

80

100

120

15 14 1021

60

25 2317

35

100

No. Of respondents Percentage

Interpretation: from the above inference it is clear that majority of the respondents know

about mutual funds through financial advisors with 35% followed by advertising with

25%.



Table no 4.4

Schemes preferred by the respondents:

Sl no. Schemes No of respondents Percentage

1 Open ended 24 40

2 Close ended 6 10

3 Liquid fund 0 0

4 Mid cap 6 10

5 Growth fund 7 12

6 Regular income fund 17 28

7 Long cap 0 0

8 Sector fund 0 0

Total 60 100

CHART NO 4.4

Open ended

Close ended

Liquid fund

Mid cap Growth fund

Regular income

fund

Long cap Sector fund

Total0

20

40

60

80

100

120

24

60

6 717

0 0

60

40

100

10 12

28

0 0

100

No of respondents Percentage

Interpretation: from the above interference the majority of the respondents i.e. 40% prefer

open ended scheme of mutual fund, it may be because there is no fixed maturity and are

open for subscription the whole year. One can buy and sell units at the NAV related

prices to the Mutual funds. No respondents prefer long cap ,sector fund ,etc.



Table no 4.5

The need for investment by the respondents:

SL NO. Investment needs No of

respondents

Percentage

1 To build a corpus for retirement 0 0

2 To save for children

education/marriage

13 22

3 To provide for medical

emergency

6 10

4 To provide family financial

security

5 8

5 To create wealth 29 48

6 All of the above 7 12

Total 60 100

Chart no 4.5

13

6

5

29

7

60

No of respondents

To build a corpus for retirementTo save for children education/marriageTo provide for medical emergencyTo provide family financial se-curityTo create wealthAll of the aboveTotal

Interpretation: from the above chart we see that majority of the respondents having 29%

prefer to invest to create wealth followed by to build corpus for retirement with 13%and

more.



Table no 4.6

Investors investment on mutual fund:

Sl no. Investment option No. Of respondents Percentage

1 Aditya birla sun life mutual

fund

46 77

2 Tata mutual funds 0 0

3 Franklin Templeton 0 0

4 Reliance 3 5

5 ICICI prudential 5 8

6 SBI 6 10

7 Others 0 0

Total 60 100

Chart no 4.6

Adity

a bi

rla su

n lif

e m

utua

l fun

d

Tata

mut

ual f

unds

Fran

clin

tem

plet

on

Relia

nce

Icici

prud

entia

l

Sbi

Oth

ers

Tota

l

1 2 3 4 5 6 7

020406080

100120

Chart Title

Axis Title

Interpretation: Here the preference of the respondents towards different options which are

available for the respondents it clearly shows that Aditya Birla sun life mutual funds is

preferred more with 46% of the respondents choosing it. We can also see that none of the

respondents choose Franklin Templeton.



Table no 4.7

Satisfaction level of the respondents in the service offered by Aditya Birla sun life

mutual funds:

Sl. no Satisfaction level No of respondents Percentage

1 Extremely satisfied 31 52

2 Satisfied to the lesser extent 24 40

3 Dissatisfied to lesser extent 3 5

4 Extremely dissatisfied 2 3

Total 60 100

Chart no 4.7

0

20

40

60

80

100

31 24

3 2

6052

40

5 3

100

No of respondents Percentage

Interpretation: when it comes satisfaction of the services rendered by Aditya Birla sun life

mutual funds, Most of the respondents choose to be extremely satisfied with 52% and

40% of the respondents choose to have been satisfied to the lesser extent and the

remaining, that is 3 and 2 were dissatisfied to lesser extent and extremely dissatisfied

respectively.



Table no 4.8

Plans preferred by respondents:

Sl. no Plans No. Of respondents Percentage

1 SIP(systematic investment

plan)

19 32

2 Lump sum 25 42

3 Depends upon the financial

condition

16 26

Total 60 100

Chart no 4.8

SIP(systematic investment plan)

Lump sum Depends upon the financial condition

Total0

20

40

60

80

100

120

Chart Title

Axis Title

Interpretation: majority of the respondents with 42% of them have choose to invest in

lumpsum followed by SIP with 32%.the reason to invest lumpsum may be because we

have seen that the income level of the major respondents is between 20001 to 30000.



Table no 4.9

Preferable channels to invest in mutual fund:

Sl no. Channel No. Of respondents Percentage

1 Financial advisor 14 24

2 Bank 21 35

3 AMC 5 8

4 Aditya birla sun life mutual

funds

20 33

Total 60 100

Chart no 4. 9

14

21

5

20

60

Financial advisorBankAMCAditya birla sun life mutual fundsTotal

Interpretation: In the above chart it shows that majority of the respondents prefer to invest

in banks as they think that banks are safer to invest and have a perception that banks are

more trustworthy.



Table no 4.10

Respondent’s perception towards mutual funds:

Sl no. Perception about mutual fund No. Of

respondents

Percentage

1 A vehicle of pool money from investor

in a basket of securities by a

professional manager

7 12

2 Invest the money by a mutually co

operative group

23 38

3 High returns with moderate brisk 17 28

4 Safe vehicle for investment purpose 13 22

Total 60 100

Chart no 4.10

020406080

100120


Axis Title

Axis Title

Interpretation: The perception of mutual funds by the respondents who preferred

investing in mutual funds varied from one option to another but most of the respondents

invested in mutual funds because it was a way to invest through mutually co operative

group.



Table no 4.11

Types of mutual chosen by the respondents:

Sl no. Types of funds No. of respondents Percentage

1 Having a debt portfolio 8 13

2 Having a debt and equity

portfolio

40 67

3 Only equity port folio 12 20

Total 60 100

Chart no 4.11

Having a

debt p

ortfolio

Having a

debt a

nd equity

portfolio

Only eq

uity port f

olioTo

tal0

20406080

100

No.of respondentsPercentage

Axis Title

Axis Title

Interpretation: Most of the respondents showed interest in investing in ‘debt and equity

portfolio’. When it comes to percentage debt and equity portfolio leads with 67%.the

combination debt and equity fund is known to give a better profit with low risk.



Table no 4.12

Preferred channel of returns every year:

Sl no. Returns No. Of respondents Percentage

1 Dividend payout 19 32

2 Dividend re investment 21 35

3 Growth in NAV 20 33

Total 60 100

Chart no 4.12

Dividend payout

Dividend re investment

Growth in NAV

Total0

102030405060708090

100

Chart Title


Axis Title

Axis Title

Interpretation: the respondents results were very close when it came to deciding on how

they wanted to receive their returns every year, the options chosen by the respondents

came to 32% choose dividend payout, 35% choose dividend re-invest and 33% choose

growth in NAV.



Table no 4. 13

Schemes opted by respondents in Aditya Birla sun life mutual funds:

Sl no. Aditya birla mutual fund

scheme

No . of respondents Percentage

1 BSL frontline equity 14 23

2 BSL banking and finance 37 62

3 Short term opportunity 9 15

total 60 100

Chart no 4.13

BSL frontline equity BSL banking and finance Short term opportunity total0

20

40

60

80

100

120

Chart Title

No . of respondents Percentage

Interpretation: the schemes opted by the respondents in Aditya Birla sun life mutual funds

resulted in 62% in BSL banking and finance, 23% in BSL frontline equity and 15% in

short term opportunity.



Table no 4. 14

Different sectors invested by respondents:

Sl no. Sector No. Of respondents Percentage

1 General 0 0

2 Oil and petroleum 10 17

3 Gold fund 14 23

4 Diversified equity fund 16 27

5 Power sector 0 0

6 Debt fund 14 23

7 Banking fund 6 10

8 Real estate fund 0 0

60 100

Chart no 4.14

1 2 3 4 5 6 7 80

20

40

60

80

100

120

Chart Title

Axis Title

Interpretation: From the above chart we can see that major respondents have choose

diversified equity fund than any other fund like gold fund and more, with a percentage of

27% .preference of diversified equity funds might be because the risk level is diversified

and when it comes to gold there is a perception always that gold market never falls.



Table no 4.15

Percentage of returns expected by the respondents:

Sl no. Expectation No. Of respondents Percentage

1 5-10% 6 10

2 10-15% 14 23

3 15-20% 26 44

4 Above 20% 14 23

Total 60 100

Chart no 4.15

5-10% 10-15% 15-20% Above 20% Total0

20

40

60

80

100

120

Chart Title

No. Of respondents Percentage

Interpretation: The return on investment choose by the respondents seems to be average

return, this shows that the respondents are not high risk takers instead they prefer having

an average return with average investment.



CHAPTER 5

SUMMARY OF FINDING S

First and foremost we find out that the majority of the investors falls into the

income bracket of Rs 20001 to 30000.

By many investors mutual fund is preferred because of its ‘better return and

safety’ feature.

Financial advisors have played an important role in educating people about

mutual funds when compared to any other channel.

Most of the people who have opted to invest have invested in the intension to

create wealth.

It is found that investors in Mysore have opted Aditya Birla sun life mutual funds

The investors in Mysore usually prefer investing at once i.e. lump sum than SIP.

Mysoreans feel that being safe is the right way and have chosen banks to be the

safe place to invest.

The perception on mutual funds in the people of Mysore is that it is investing in a

mutually co operative group.

Investors are not into risk taking hence they have choose both debt and equity

portfolio.

We find out that when it comes to receiving the returns on investment everyone

invested chooses to save or gain more money.

Diversified equity fund, gold fund, and more are preferred.

Mostly Respondents preferred High Return while investment, the second most

preferred Low Risk then liquidity and the least preferred Trust.



Suggestion/recommendation:

1. Awareness on mutual funds is very much required in Mysore.

2. Proper practice of viewing the market is needed to be shown to many of the new

investors.

3. More attractive schemes introduced in the market to the people would be very

beneficial.

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

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

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

are losing by not investing.

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

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

source to influence the investors.

6. Younger people aged under 35 will be a key new customer group into the future,

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

investing should pay off.

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

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

and high quality.

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

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

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

Though most of the prospects and potential investors are not aware about the SIP.

There is a large scope for the companies to tap the salaried persons.



Conclusion:

Running a successful Mutual Fund requires complete understanding of the peculiarities of

the Indian Stock Market and also the psyche of the small investors. This study has made

an attempt to understand the financial behavior of Mutual Fund investors in connection

with the preferences of Brand (AMC), Products, and Channels etc. I observed that many

of people have fear of Mutual Fund. They think their money will not be secure in Mutual

Fund. They need the knowledge of Mutual Fund and its related terms. Many of people do

not have invested in mutual fund due to lack of awareness although they have money to

invest. As the awareness and income is growing the number of mutual fund investors are

also growing.

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

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

only some are performing well due to Brand awareness. Some AMCs are not performing

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

awareness about Brand. Reliance, UTI, SBIMF, ICICI Prudential etc. they are well

known Brand, they are performing well and their Assets Under Management is larger

than others whose Brand name are not well known like Principle, Sunderam, etc.


project on Investor Preference in Mutual Funds

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