A PROJECT REPORT
ON
“MUTUAL FUNDS IS THE BETTER INVESTMENTS PLAN”
Submitted in partial fulfillment for
MASTER OF BUSINESS ADMIMISTRATION
Programme of
Chhattisgarh Swami Vivekanand Technical University, Bhilai
Submitted by :- Under Guidance :-
MBA( Two Year Programme) Relationship Manager
ACKNOWLEDGEMENT
With regard to my Project with Mutual Fund I would like to thank each and every one
who offered help, guideline and support whenever required.
First and foremost I would like to express gratitude to Manager UTI
Financial Center Model Colony, Shivaji Nagar ,Pune and other staffs for their support
and guidance in the Project work. I am extremely grateful to my guide, Relationship
Manager Miss Prashansha Chauhan for their valuable guidance and timely
suggestions. I would like to thank all faculty members of UTI Financial Center.
NEHA SONI
DECLERATION
I hereby declare that this Project Report entitled “THE MUTUAL FUND IS BETTER
INVESTMENT PLAN in UTI Mutual Fund submitted in the partial fulfillment of the
requirement of Master of Business Administration (MBA) of Sri Shakracharya College
Of Institute Of Technology And Management is based on primary & secondary data
found by me in various departments, books, magazines and websites & Collected by
me in under guidance of Miss Prashansha Chauhan.
DATE: NEHA SONI
MBA (Two Years)
CONTENTS
Acknowledgement
Declaration
Executive Summary
Chapter - 1 INTRODUCTION
Chapter - 2 COMPANY PROFILE
Chapter - 3 OBJECTIVES AND SCOPE
Chapter - 4 RESEARCH METHODOLOGY
Chapter - 5 DATA ANALYSIS AND INTERPRETATION
Chapter - 6 FINDINGS AND CONCLUSIONS
Chapter - 7 SUGGESTIONS & RECOMMENDATIONS
BIBLIOGRAPHY
MUTUAL FUNDS
ALL ABOUT MUTUAL FUNDS
WHAT IS MUTUAL FUND
EQUITY FUND
DEBT FUNDS
BY INVESTMENT OBJECTIVE
ADVANTAGES OF INVESTING MUTUAL FUNDS
DISADVANTAGES OF INVESTING MUTUAL FUNDS
MUTUAL FUNDS INDUSTRY IN INDIA
MAJOR PLAYERS OF MUTUAL FUNDS IN INDIA
HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY
CATEGORIES OF MUTUAL FUNDS
INVESTMENT STRATEGIES
WORKING OF A MUTUAL FUND
RESEARCH REPORT
SCOPE OF THE STUDY
OBJECTIVE OF RESEARCH
DATA SOURCES
SAMPLING
DATA ANALYSIS
QUESTIONNAIRE
Chapter-1
Introduction
INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS ASPECTS.
Mutual fund is a trust that pools the savings of a number of investors who share a
common financial goal. This pool of money is invested in accordance with a stated
objective. The joint ownership of the fund is thus “Mutual”, i.e. the fund belongs to all
investors. The money thus collected is then invested in capital market instruments
such as shares, debentures and other securities. The income earned through these
investments and the capital appreciations realized are shared by its unit holders in
proportion the number of units owned by them. Thus a Mutual Fund is the most
suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost. A
Mutual Fund is an investment tool that allows small investors access to a well-
diversified portfolio of equities, bonds and other securities. Each shareholder
participates in the gain or loss of the fund. Units are issued and can be redeemed as
needed. The funds Net Asset value (NAV) is determined each day.
Investments in securities are spread across a wide cross-section of industries and
sectors and thus the risk is reduced. Diversification reduces the risk because all
stocks may not move in the same direction in the same proportion at the same time.
Mutual fund issues units to the investors in accordance with quantum of money
invested by them. Investors of mutual funds are known as unit holders.
When an investor subscribes for the units of a mutual fund, he becomes part owner
of the assets of the fund in the same proportion as his contribution amount put up
with the corpus (the total amount of the fund). Mutual Fund investor is also known as
a mutual fund shareholder or a unit holder.
Any change in the value of the investments made into capital market instruments
(such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the
scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net
of its liabilities. NAV of a scheme is calculated by dividing the market value of
scheme's assets by the total number of units issued to the investors.
ADVANTAGES OF MUTUAL FUND
1. Professional Management - The basic advantage of funds is that, they are
professional managed, by well qualified professional. Investors purchase funds
because they do not have the time or the expertise to manage their own portfolio. A
mutual fund is considered to be relatively less expensive way to make and monitor
their investments.
2. Diversification - Purchasing units in a mutual fund instead of buying individual
stocks or bonds, the investors risk is spread out and minimized up to certain extent.
The idea behind diversification is to invest in a large number of assets so that a loss
in any particular investment is minimized by gains in others.
3. Economies of Scale - Mutual fund buy and sell large amounts of securities at a
time, thus help to reducing transaction costs, and help to bring down the average cost
of the unit for their investors.
4. Liquidity - Just like an individual stock, mutual fund also allows investors to
liquidate their holdings as and when they want.
5. Simplicity - Investments in mutual fund is considered to be easy, compare to
other available instruments in the market, and the minimum investment is small. Most
AMC also have automatic purchase plans whereby as little as Rs. 2000, where SIP
start with just Rs.50 per month basis.
DISADVANTAGE OF MUTUAL FUND
1. Professional Management - Some funds doesn’t perform in neither the market, as
their management is not dynamic enough to explore the available opportunity in the
market, thus many investors debate over whether or not the so-called professionals
are any better than mutual fund or investor himself, for picking up stocks.
2. Costs – The biggest source of AMC income, is generally from the entry & exit load
which they charge from an investors, at the time of purchase. The mutual fund
industries are thus charging extra cost under layers of jargon.
3. Dilution - Because funds have small holdings across different companies, high
returns from a few investments often don't make much difference on the overall
return. Dilution is also the result of a successful fund getting too big. When money
pours into funds that have had strong success, the manager often has trouble finding
a good investment for all the new money.
4. Taxes - when making decisions about your money, fund managers don't consider
your personal tax situation. For example, when a fund manager sells a security, a
capital-gain tax is triggered, which affects how profitable the individual is from the
sale. It might have been more advantageous for the individual to defer the capital
gains liability.
HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY
The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank. Though the
growth was slow, but it accelerated from the year 1987 when non-UTI players
entered the Industry.
In the past decade, Indian mutual fund industry had seen a dramatic improvement,
both qualities wise as well as quantity wise. Before, the monopoly of the market had
seen an ending phase; the Assets Under Management (AUM) was Rs67 billion. The
private sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993
and till April 2004; it reached the height if Rs. 1540 billion.
The Mutual Fund Industry is obviously growing at a tremendous space with the
mutual fund industry can be broadly put into four phases according to the
development of the sector. Each phase is briefly described as under.
First Phase – 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the
Reserve Bank of India and functioned under the Regulatory and administrative
control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the
Industrial Development Bank of India (IDBI) took over the regulatory and
administrative control in place of RBI. The first scheme launched by UTI was Unit
Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under
management.
Second Phase – 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund
established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of
India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund
in June 1989 while GIC had set up its mutual fund in December 1990.At the end of
1993, the mutual fund industry had assets under management of Rs.47,004 crores.
Third Phase – 1993-2003 (Entry of Private Sector Funds)
1993 was the year in which the first Mutual Fund Regulations came into being, under
which all mutual funds, except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first private sector
mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of January
2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.
Fourth Phase – since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit
Trust of India with assets under management of Rs.29,835 crores as at the end of
January 2003, representing broadly, the assets of US 64 scheme, assured return and
certain other schemes
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. consolidation
and growth. As at the end of September, 2004, there were 29 funds, which manage
assets of Rs.153108 crores under 421 schemes.
CATEGORIES OF MUTUAL FUND:
Mutual funds can be classified as follow :
Based on their structure:
Open-ended funds: Investors can buy and sell the units from the fund, at any
point of time.
Close-ended funds: These funds raise money from investors only once.
Therefore, after the offer period, fresh investments can not be made into the fund. If
the fund is listed on a stocks exchange the units can be traded like stocks (E.g.,
Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of close-
ended funds provided liquidity window on a periodic basis such as monthly or weekly.
Redemption of units can be made during specified intervals. Therefore, such funds
have relatively low liquidity.
Based on their investment objective:
Equity funds: These funds invest in equities and equity related instruments. With
fluctuating share prices, such funds show volatile performance, even losses.
However, short term fluctuations in the market, generally smoothens out in the long
term, thereby offering higher returns at relatively lower volatility. At the same time,
such funds can yield great capital appreciation as, historically, equities have
outperformed all asset classes in the long term. Hence, investment in equity funds
should be considered for a period of at least 3-5 years. It can be further classified as:
i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is
tracked. Their portfolio mirrors the benchmark index both in terms of composition
and individual stock weightages.
ii) Equity diversified funds- 100% of the capital is invested in equities spreading
across different sectors and stocks.
iii|) Dividend yield funds- it is similar to the equity diversified funds except that
they invest in companies offering high dividend yields.
iv) Thematic funds- Invest 100% of the assets in sectors which are related through
some theme.
e.g. -An infrastructure fund invests in power, construction, cements sectors etc.
v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking
sector fund will invest in banking stocks.
vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.
Balanced fund: Their investment portfolio includes both debt and equity. As a
result, on the risk-return ladder, they fall between equity and debt funds. Balanced
funds are the ideal mutual funds vehicle for investors who prefer spreading their risk
across various instruments. Following are balanced funds classes:
i) Debt-oriented funds -Investment below 65% in equities.
ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.
Debt fund: They invest only in debt instruments, and are a good option for investors
averse to idea of taking risk associated with equities. Therefore, they invest
exclusively in fixed-income instruments like bonds, debentures, Government of India
securities; and money market instruments such as certificates of deposit (CD),
commercial paper (CP) and call money. Put your money into any of these debt funds
depending on your investment horizon and needs.
i) Liquid funds- These funds invest 100% in money market instruments, a large
portion being invested in call money market.
ii) Gilt funds ST- They invest 100% of their portfolio in government securities of
and T-bills.
iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt
instruments which have variable coupon rate.
iv) Arbitrage fund- They generate income through arbitrage opportunities due to
mis-pricing between cash market and derivatives market. Funds are allocated to
equities, derivatives and money markets. Higher proportion (around 75%) is put in
money markets, in the absence of arbitrage opportunities.
v) Gilt funds LT- They invest 100% of their portfolio in long-term government
securities.
vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in
long-term debt papers.
vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an
exposure of 10%-30% to equities.
viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with
that of the fund.
INVESTMENT STRATEGIES
1. Systematic Investment Plan: under this a fixed sum is invested each month on a
fixed date of a month. Payment is made through post dated cheques or direct debit
facilities. The investor gets fewer units when the NAV is high and more units when
the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA)
2. Systematic Transfer Plan: under this an investor invest in debt oriented fund
and give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme
of the same mutual fund.
3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual
fund then he can withdraw a fixed amount each month.
UTI SIP Systematic Investment Plan
What is UTI Systematic Investment Plan (SIP) ?
A Systematic Investment Plan from UTI Mutual Fund is a disciplined approach of
investing in UTI MF schemes , where one can make regular investments
according to per-opted schedules. So let’s plan for the future and get relieved
from investments worries. It’s time to aim to get rich by building your investment
through this time tested mechanism.
What is offer?
A systematic Investment plan from UTI mutual fund is a disciplined
approach Of investing in UTI MF schemes-equity, balance and debt – where one can make regular investment according to pre opted schedules. So,plan for the future and get relived from day to day investment worries. Build your investment is a regular way of investment through this time tested mechanism.
UTI investment plan is regular way of investment which allow to
you as low as Rs. 500/- per month. It is disciplined investment approach.
How does UTI SIP work?
UTI SIP enables you to invest a pre-determined amount of money in
chosenschemes at the applicable NAV based sale price on each transaction date.
Each transaction will fetch you additional units that will be added to your investment
account, thereby helping you to build your investment at regual intervals. A
statement confirming transaction and allotment of units for each transaction will be
sent to you.
How to make UTI SIP to work for you?
It makes good sense to invest regularly.
But how do you start ?
1. Set your financial goal
2. Identify the scheme
3. Decide the SIP amount
4. Look for a long- term commitment: UTI SIP is most effective when opted for a
longer/extended period of time . the chance of bigger gains increase with the
extended time horiozon.
5. Aim for the big picture : Market fluctuations are a way of life . You add more
units to your investment account when the markets are low. To get the out of
these fluctuations, start today. The sooner you start,the earlier you reach your
financial goals.
6. Start investing.
How do you benefit from UTI SIP?
Rupee Cost Averaging
The fixed amount which you invest every month in a fund is used to purchase units
at the prevailing NAV-based price on such date of investment chosen every
month .By investing a uniform amount regularly. One can average out the cost of
acquisition of units .Your average cost per unit is what determines your overall return
on your investments.
Month Amount you
invest (rs.)
Sale
Price
No. of
units
1 5000 11.00 454.55
2 5000 10.50 476.19
3 5000 10.25 487.80
4 5000 10.50 476.19
5 5000 11.00 454.55
Total 25000 2349.28
Cost per unit for a lump sum investment of rs. 25000 in month 1=rs.11/-,average
cost per unit for a SIP investment of rs.5000 pm over 5 months
=rs.25000/2349.28=rs.10.64 As evident from the table ,if you were to invest through
sip ,the average purchase price works out lower at rs.10.64 compared to the
purchase price of rs. 11 in case of a lump sum investment . The figure of sale price
used are hypothecial and are for illustrative purposes only
RISK V/S. RETURN:
Working of a Mutual fund :
The entire mutual fund industry operates in a very organized way. The investors,
known as unit holders,handover their savings to the AMCs under various schemes.
The objective of the investment should match with the objective of the fund to best
suit the investors’ needs. The AMCs further invest the funds into various securities
according to the investment objective. The return generated from the investments is
passed on to the investors or reinvested as mentioned in the offer document.
Chapter – 2
Company Profile
COMPA NY PRO FILE
Type : Public
Industry : Mutual fund
Founded : 1963
Headquarters : Mumbai, Maharashtra India.
Key people : U K Sinha, Managing Director
Website : www.UTImf.com
Introduction of UTI
"Unit Trust of India" means the Unit Trust of India established under the Unit Trust of
India Act, 1963. The Unit Trust of India (UTI) has the world's largest share in
domestic mutual fund industry.
UTI Bank was the first of the new private banks to have begun operations in 1994,
after the Government of India allowed new private banks to be established. The Bank
was promoted jointly by the Administrator of the specified undertaking of the Unit
Trust of India (UTI - I), Life Insurance Corporation of India (LIC) and General
Insurance Corporation Ltd. The Bank today is capitalized to the extent of Rs.232.86
Crores with the public holding at 47.50 %.
January 14, 2003 is when UTI Mutual Fund started to pave its path following the
vision of UTI Asset Management Co. Ltd. (UTIAMC), which was appointed by UTI
Trustee Co, Pvt. Ltd. for managing the schemes of UTI Mutual Fund and the
schemes transferred/migrated from the erstwhile Unit Trust of India.
Work culture :
We believe in providing an environment that encourages employees to achieve and fulfil personal goals and that of the company. When the combined force of both, the employees and the company flow in one direction, there is ample amount of possibilities, opportunities and growth.
Employee Benefits:
Competitive salaries
Comfortable work environment
Career opportunities
Insurance benefits
Recreational amenities
History
THE EVOLUTION:
The formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in the year 1963. The primary objective at that time was to attract the small investors and it was made possible through the collective efforts of the Government of India and the Reserve Bank of India.
Unit Trust of India was created by the UTI Act passed by the Parliament in 1963. For more than two decades it remained the sole vehicle for investment in the capital market by the Indian citizens. In mid- 1980s public sector banks were allowed to open mutual funds. The real vibrancy and competition in the MF industry came with the setting up of the Regulator SEBI and its laying down the MF Regulations in 1993.UTI maintained its pre-eminent place till 2001, when a massive decline in the market indices and negative investor sentiments after Ketan Parekh scam created doubts about the capacity of UTI to meet its obligations to the investors. This was further compounded by two factors; namely, its flagship and largest scheme US 64 was sold and re-purchased not at intrinsic NAV but at artificial price and its Assured Return Schemes had promised returns as high as 18% over a period going up to two decades.
UTI Mutual Fund was created as a SEBI registered fund like any other mutual fund. The assets and liabilities of schemes where Government had to come out with a bail-out package were taken over directly by the Government in a new entity called Specified Undertaking of UTI, SUUTI. SUUTI holds over 27% stake Axis Bank.
Corporate Awards
Trusted Brand Gold Award in the category of investment fund company by Readers Digest in 2008
UTI AMC has been awarded best debt fund house by outlook money & NDTV profit in 2008
awarded for “STAR FUND HOUSE OF THE YEAR” by ICRA Mutual Fund Awards 2010 in the Equity Category.
COMPETITOR
Reliance Money
ICICI PRUDENTIAL MUTUAL FUND
SBI MUTUAL FUND
BIRLA SUN LIFE MUTUAL FUND
HDFC MUTUAL FUND
MISSION:
To make UTI Mutual Fund:• The most trusted Brand, admired by all stakeholders•The largest and most efficient money manager with global presence• The best in class customer service provider• The most preferred employer• The most innovative and best wealth creator• A socially responsible organization known forbest corporate governance.
VISION:
To be the most Preferred Mutual Fund.To be a dominant player in the Indian mutual fund space, recognized for its high levels of ethical and professional conduct and a commitment towards enhancing investor interest.
Chapter - 3
Objectives and scope
SCOPE AND OBJEC TI VE OF T HE S TUD Y
Sco pe of the st ud y : -
The study covers various aspects of mutual fund like basic concept, types, future of
mutual fund in India & the schemes etc. But it does not cover these aspects in detail
relating with the legal aspects and the provisions made in different acts.
The time horizon selected for the study is from April 2007 to March 2008. All the
schemes have been analyzed with the consideration of this time frame.
Obje ctives: -
1. To study the various offers of the company, services ranging from equities,
commodities, portfolio management etc.
2. The objective of the study was to collect information on the various securities
revolving in the market & thus providing customer service to clients to help them
invest capital in profitable plans.
3. To know about returns of the fund which one is beneficial.
4. To know their portfolio management.
Chapter – 4
Research Methodology
RESEARCH METHODOLOGY
This report is based on primary as well secondary data, however primary data
collection was given more importance since it is overhearing factor in attitude studies.
One of the most important users of research methodology is that it helps in identifying
the problem, collecting, analyzing the required information data and providing an
alternative solution to the problem .It also helps in collecting the vital information that
is required by the top management to assist them for the better decision making both
day to day decision and critical ones.
Data sources:
Research is totally based on primary data. Secondary data can be used only for the
reference. Research has been done by primary data collection, and primary data has
been collected by interacting with various people. The secondary data has been
collected through various journals and websites.
Duration of Study:
The study was carried out for a period of 45 days, from 4th June to 16th July 2012.
Sampling:
Sampling procedure:
The sample was selected of them who are the customers/visitors of Unit Trust Of
India (UTI), Tech Mahindra, HDFC Bank, irrespective of them being investors or not
or availing the services or not. It was also collected through personal visits to
persons, by formal and informal talks and through filling up the questionnaire
prepared. The data has been analyzed by using mathematical/Statistical tool.
Sample size:
The sample size of my project is limited to 200 people only. Out of which only 120
people had invested in Mutual Fund. Other 80 people did not have invested in Mutual
Fund.
Sample design:
Data has been presented with the help of bar graph, pie charts, line graphs etc.
Limitation:
Some of the persons were not so responsive.
Possibility of error in data collection because many of investors may have not
given actual answers of my questionnaire.
Sample size is limited to 200 visitors of Unit Trust Of India, Modal Colony
Branch, Pune out of these only 120 had invested in Mutual Fund. The sample.
size may not adequately represent the whole market.
Some respondents were reluctant to divulge personal information which can
affect the validity of all responses.
The research is confined to a certain part of Pune.
Chapter – 5
Data Analysis &
Interpretation
ANALYSIS & INTERPRETATION OF THE DATA
1. (a) Age distribution of the Investors of Pune.
A
g
e
G
r
o
u
p
<= 30
31-35
36-40
41-45
46-50
>50
N
o
.
o
f
I
n
v
e
s
t
o
12
18
30
24
20
16
r
s
Interpretation:
According to this chart out of 120 Mutual Fund investors of Pune the most are in the
age group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of
41-45yrs i.e. 20% and the least investors are in the age group of below 30 yrs.
(b). Educational Qualification of investors of Pune.
Educational Qualification
Number of Investors
Graduate/ Post Graduate
88
<=30 31-35 36-40 41-45 46-50 >500
5
10
15
20
25
30
35
1218
3024
2016
Age group of the Investors
Inv
es
tors
inv
es
ted
in M
utu
al F
un
d
Under Graduate
25
Others 7
Total 120
71%
23% 6%
Graduate/Post Graduate Under Graduate Others
Interpretation:
Out of 120 Mutual Fund investors 71% of the investors in Pune are Graduate/Post
Graduate, 23% are Under Graduate and 6% are others (under HSC).
c). Occupation of the investors of Pune.
.
Occupation No. of Investors
Govt. Service 30
Pvt. Service 45
Business 35
Agriculture 4
Others 6
Govt. Service
Pvt. Service Business Agriculture Others0
10
20
30
40
50
3545
30
4 6
Occupation of the customers
No
. of
Inve
sto
rs
Interpretation:
In Occupation group out of 120 investors, 38% are Pvt. Employees, 25% are
Businessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are in others.
(d). Monthly Family Income of the Investors of Pune.
Income Group No. of
Investors
<=10,000 5
10,001-15,000 12
15,001-20,000 28
20,001-30,000 43
>30,000 32
<=10 10-15 15-20 20-30 >3005
101520253035404550
512
28
43
32
Income Group of the Investorsn (Rs. in Th.)
No
. of
Inv
es
tors
Interpretation:
In the Income Group of the investors of Pune, out of 120 investors, 36% investors
that is the maximum investors are in the monthly income group Rs. 20,001 to Rs.
30,000, Second one i.e. 27% investors are in the monthly income group of more
than Rs. 30,000 and the minimum investors i.e. 4% are in the monthly income group
of below Rs. 10,000
(2) Investors invested in different kind of investments.
Kind of Investments
No. of Respondents
Saving A/C 195Fixed deposits 148Insurance 152Mutual Fund 120Post office (NSC) 75Shares/Debentures 50Gold/Silver 30 Real Estate 65
Saving A/c
Fixed D
eposits
Insura
nce
Mutu
al Fund
Post Office
(NSC)
Shares/D
ebenture
s
Gold/Silv
er
Real Esta
te
0 50 100 150 200 250
195148152
12075
5030
65
No.of Respondents
Kind
s of I
nves
tmen
t
Interpretation: From the above graph it can be inferred that out of 200 people,
97.5% people have invested in Saving A/c, 76% in Insurance, 74% in Fixed Deposits,
60% in Mutual Fund, 37.5% in Post Office, 25% in Shares or Debentures, 15% in
Gold/Silver and 32.5% in Real Estate.
3. Preference of factors while investing
Factor
s
(a)
Liq
uidi
ty
(
b
)
L
o
w
(c
)
H
ig
h
R
et
(
d
)
T
r
u
s
R
i
s
k
ur
n
t
No. of
Respo
ndents
40 6
0
6
4
3
6
20%
30%32%
18%
Liquidity Low Risk High Return Trust
Interpretation:
Out of 200 People, 32% People prefer to invest where there is High Return, 30%
prefer to invest where there is Low Risk, 20% prefer easy Liquidity and 18% prefer
Trust
4. Awareness about Mutual Fund and its Operations
68%
33%
Yes No
Interpretation:
From the above chart it is inferred that 67% People are aware of Mutual Fund and its
operations and 33% are not aware of Mutual Fund and its operations.
Response Yes No
No. of
Respondents
135 65
5. Source of information for customers about Mutual Fund
Source of information No. of
Respondents
Advertisement 18
Peer Group 25
Bank 30
Financial Advisors 62
Advertisement Peer Group Bank Financial Advisors0
10203040506070
18 25 30
62
Source of Information
No.
of R
espo
nden
ts
Interpretation:
From the above chart it can be inferred that the Financial Advisor is the most
important source of information about Mutual Fund. Out of 135 Respondents, 46%
know about Mutual fund Through Financial Advisor, 22% through Bank, 19% through
Peer Group and 13% through Advertisement.
6. Investors invested in Mutual Fund
Response No. of Respondents
YES 120
NO 80
Total 200
Yes60%
No40%
Interpretation:
Out of 200 People, 60% have invested in Mutual Fund and 40% do not have invested
in Mutual Fund.
7. Reason for not invested in Mutual Fund
Reason No. of
Respondents
Not Aware 65
Higher Risk 5
Not any Specific
Reason
10
81%
13%6%
Not Aware Higher Risk Not Any
Interpretation:
Out of 80 people, who have not invested in Mutual Fund, 81% are not aware of
Mutual Fund, 13% said there is likely to be higher risk and 6% do not have any
specific reason.
8. Investors invested in different Assets Management Co. (AMC)
Name of AMC
No. of Investors
SBIMF 55UTI 75
HDFC 30Reliance 75
ICICI Prudential 56Kotak 45Others 70
UTI
Reliance
ICICI
SBIMF
Kotak
HDFC
Others
0 10 20 30 40 50 60 70 80
75
75
56
55
45
30
70
No. of Investors
Na
me
of
AM
C
Interpretation:
In Pune most of the Investors preferred UTI and Reliance Mutual Fund. Out of 120
Investors 62.5% have invested in each of them, only 46% have invested in SBIMF,
47% in ICICI Prudential, 37.5% in Kotak and 25% in HDFC.
9. Reason for invested in UTIMF
Reason No. of
Respondents
Associated with
UTI
55
Better Return 5
Agents Advice 15
64%9%
27% Chart Title
Interpretation:
Out of 55 investors of UTIMF 64% have invested because of its association with Branch
UTI, 27% invested on Agent’s Advice, 9% invested because of better return.
10. Reason for not invested in UTIMF
Reason No. of
Respondents
Not Aware 25
Less Return 18
Agent’s Advice 22
38%
28%
34%
Not Aware Less Return Agent's Advice
Interpretation:
Out of 65 people who have not invested in UTIMF, 38% were not aware with UTIMF,
28% do not have invested due to less return and 34% due to Agent’s Advice.
11. Preference of Investors for future investment in Mutual Fund
Name of AMC
No. of Investors
UTIMF 45SBI 76
HDFC 35Reliance 82
ICICI Prudential
80
Kotak 60Others 75
SBIMF
UTI
HDFC
Reliance
ICICI Prudential
Kotak
Others
0 10 20 30 40 50 60 70 80 90
76
45
35
82
80
60
75
No. of Investors
Nam
e of
AM
C
Interpretation:
Out of 120 investors, 68% prefer to invest in Reliance, 67% in ICICI Prudential, 63% in
SBIMF, 62.5% in Others, 50% in Kotak, 37.5% in UTI and 29% in HDFC Mutual Fund.
12. Channel Preferred by the Investors for Mutual Fund Investment
Channel Financi
al
Ba
nk
AM
C
Adviso
r
No. of
Responde
nts
72 18 30
60%15%
25%
Financial Advisor Bank AMC
Interpretation:
Out of 120 Investors 60% preferred to invest through Financial Advisors, 25%
through AMC and 15% through Bank.
13. Mode of Investment Preferred by the Investors
Mode of
Investment
One time
Investment
Systematic
Investment Plan
(SIP)
No. of
Respondent
s
78 42
Interpretation:
Out of 120 Investors 65% preferred One time Investment and 35 % Preferred through
Systematic Investment Plan.
65%
35%
One time Investment SIP
14. Preferred Portfolios by the Investors
Portfolio No. of
Investors
Equity 56
Debt 20
Balanced 44
47%
17%
37%
Equity Debt Balance
Interpretation:
From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and
17% preferred Debt portfolio
15. Option for getting Return Preferred by the Investors
Optio
n
Divi
dend
Payo
ut
Divi
dend
Rein
vest
men
t
G
r
o
w
t
h
No.
of
Resp
onde
nts
25 10 8
5
21%
8%
71%
Dividend Payout Dividend Reinvestment Growth
Interpretation:
From the above graph 71% preferred Growth Option, 21% preferred Dividend Payout
and 8% preferred Dividend Reinvestment Option.
16. Preference of Investors whether to invest in Sectoral Funds
Respons
e
No. of
Respondents
Yes 25
No 95
Interpretation:
Out of 120 investors, 79% investors do not prefer to invest in Sectoral Fund because
there is maximum risk and 21% prefer to invest in Sectoral Fund.
21%
79%
Yes No
Chapter – 6
Findings and Conclusion
Findings
In Pune in the Age Group of 36-40 years were more in numbers. The second
most Investors were in the age group of 41-45 years and the least were in the age
group of below 30 years.
In Pune most of the Investors were Graduate or Post Graduate and below HSC
there were very few in numbers.
In Occupation group most of the Investors were Govt. employees, the second
most Investors were Private employees and the least were associated with
Agriculture.
In family Income group, between Rs. 20,001- 30,000 were more in numbers,
the second most were in the Income group of more than Rs.30,000 and the least
were in the group of below Rs. 10,000.
About all the Respondents had a Saving A/c in Bank, 76% Invested in Fixed
Deposits, Only 60% Respondents invested in Mutual fund.
Mostly Respondents preferred High Return while investment, the second most
preferred Low Risk then liquidity and the least preferred Trust.
Only 67% Respondents were aware about Mutual fund and its operations and
33% were not.
Among 200 Respondents only 60% had invested in Mutual Fund and 40% did
not have invested in Mutual fund.
Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told there is
not any specific reason for not invested in Mutual Fund and 6% told there is likely to
be higher risk in Mutual Fund.
Most of the Investors had invested in Reliance or UTI Mutual Fund, ICICI
Prudential has also good Brand Position among investors, UTIMF places after ICICI
Prudential according to the Respondents.
Out of 55 investors of UTIMF 64% have invested due to its association with the
Brand UTI, 27% Invested because of Advisor’s Advice and 9% due to better return.
Most of the investors who did not invested in UTIMF due to not Aware of
UTIMF, the second most due to Agent’s advice and rest due to Less Return.
For Future investment the maximum Respondents preferred Reliance Mutual
Fund, the second most preferred ICICI Prudential, UTIMF has been preferred after
them.
60% Investors preferred to Invest through Financial Advisors, 25% through
AMC (means Direct Investment) and 15% through Bank.
65% preferred One Time Investment and 35% preferred SIP out of both type
of Mode of Investment.
The most preferred Portfolio was Equity, the second most was Balance
(mixture of both equity and debt), and the least preferred Portfolio was Debt portfolio.
Maximum Number of Investors Preferred Growth Option for returns, the second
most preferred Dividend Payout and then Dividend Reinvestment.
Most of the Investors did not want to invest in Sectoral Fund, only 21% wanted
to invest in Sectoral Fund.
Conclusion
Running a successful Mutual Fund requires complete understanding of the
peculiarities of the Indian Stock Market and also the psyche of the small investors.
This study has made an attempt to understand the financial behavior of Mutual Fund
investors in connection with the preferences of Brand (AMC), Products, Channels etc.
I observed that many of people have fear of Mutual Fund. They think their money will
not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its
related terms. Many of people do not have invested in mutual fund due to lack of
awareness although they have money to invest. As the awareness and income is
growing the number of mutual fund investors are also growing.
“Brand” plays important role for the investment. People invest in those Companies
where they have faith or they are well known with them. There are many AMCs in
Pune but only some are performing well due to Brand awareness. Some AMCs are
not performing well although some of the schemes of them are giving good return
because of not awareness about Brand. Reliance, UTIMF, SBI, ICICI Prudential etc.
Distribution channels are also important for the investment in mutual fund. Financial
Advisors are the most preferred channel for the investment in mutual fund. They can
change investors’ mind from one investment option to others. Many of investors
directly invest their money through AMC because they do not have to pay entry load.
Only those people invest directly who know well about mutual fund and its operations
and those have time.
Chapter – 7
Suggestions
And
Recommendations
Suggestions and Recommendations
The most vital problem spotted is of ignorance. Investors should be made
aware of the benefits. Nobody will invest until and unless he is fully convinced.
Investors should be made to realize that ignorance is no longer bliss and what they
are losing by not investing.
Mutual funds offer a lot of benefit which no other single option could offer. But
most of the people are not even aware of what actually a mutual fund is? They only
see it as just another investment option. So the advisors should try to change their
mindsets. The advisors should target for more and more young investors. Young
investors as well as persons at the height of their career would like to go for advisors
due to lack of expertise and time.
Mutual Fund Company needs to give the training of the Individual Financial
Advisors about the Fund/Scheme and its objective, because they are the main source
to influence the investors.
Before making any investment Financial Advisors should first enquire about the
risk tolerance of the investors/customers, their need and time (how long they want to
invest). By considering these three things they can take the customers into
consideration.
Younger people aged under 35 will be a key new customer group into the
future, so making greater efforts with younger customers who show some interest in
investing should pay off.
Customers with graduate level education are easier to sell to and there is a
large untapped market there. To succeed however, advisors must provide sound
advice and high quality.
Systematic Investment Plan (SIP) is one the innovative products launched by
Assets Management companies very recently in the industry. SIP is easy for monthly
salaried person as it provides the facility of do the investment in EMI. Though most of
the prospects and potential investors are not aware about the SIP. There is a large
scope for the companies to tap the salaried persons.
BIBLIOGRAPHY
NEWS PAPERS
OUTLOOK MONEY
COMPANY BROCHUERS
TELEVISION CHANNEL (CNBC AAWAJ)
MUTUAL FUND HAND BOOK
FACT SHEET AND STATEMENT
WEBSITE
WWW.UTIMF.COM
WWW.AMFIINDIA.COM
WWW. MUTUALFUNDSINDIA.COM
QUESTIONNAIRE
A study of preferences of the investors for investment in mutual funds.
1. Personal Details:
(a). Name:- (b). Add: - Phone:- (c). Age:- (d). Qualification:-
(e). Occupation. Pl tick (√)
Go
vt.
Ser
P
vt
.
S
er
Busin
ess
Agricult
ure
Othe
rs
(g). What is your monthly family income approximately? Pl tick (√).
Up to Rs.10,000
Rs. 10,001 to 15000
Rs. 15,001 to 20,000
Rs. 20,001 to 30,000
Rs. 30,001 and above
2. What kind of investments you have made so far? Pl tick (√). All applicable.
a.
Saving
account
b. Fixed deposits c.
Insuranc
e
d.
Mutual
Fund
e. Post
Office-
f.
Shares/Debentures
g. Gold/
Silver
h. Real
Estate
Graduation/PG Under
Graduate
Others
NSC,
etc
3. While investing your money, which factor will you prefer? .
(a)
Liquidit
y
(b)
Low
Risk
(c)
High
Return
(d)
Trust
4. Are you aware about Mutual Funds and their operations? Pl tick (√). Yes No
5. If yes, how did you know about Mutual Fund?
a.
Advertisemen
t
b.
Peer
Group
c.
Banks
d.
Financial
Advisors
6. Have you ever invested in Mutual Fund? Pl tick (√). Yes No 7. If not invested in Mutual Fund then why?
(a) Not aware of MF (b) Higher risk (c) Not any specific reason
8. If yes, in which Mutual Fund you have invested? Pl. tick (√). All applicable.
a
.
S
B
I
b.
U
TI
M
F
c
.
H
D
F
C
d.
Re
lia
nc
e
e
.
K
o
t
a
k
f.
O
th
er
.
s
p
e
ci
f
y
9. If invested in UTIMF, you do so because (Pl. tick (√), all applicable).
a. UTIMF is associated with State Bank of India.
b. They have a record of giving good returns year after year.
c. Agent’ Advice
10. If NOT invested in UTIMF, you do so because (Pl. tick (√) all applicable).
a. You are not aware of UTIMF.
b. UTIMF gives less return compared to the others.
c. Agent’ Advice
11. When you plan to invest your money in asset management co. which AMC will you prefer?
Assets Management Co.
a. UTIMF
b. SBI
c. Reliance
d. HDFC
e. Kotak
f. ICICI
12. Which Channel will you prefer while investing in Mutual Fund?
(a) Financial
Advisor
(b) Bank (c) AMC
13. When you invest in Mutual Funds which mode of investment will you prefer? Pl. tick (√).
a. One Time Investment b. Systematic Investment Plan
(SIP)
14. When you want to invest which type of funds would you choose?
a. Having only debt portfolio
b. Having debt & equity portfolio.
c. Only equity portfolio.
15. How would you like to receive the returns every year? Pl. tick (√).
a. Dividend
payout
b. Dividend
re-
investment
c. Growth in
NAV
16. Instead of general Mutual Funds, would you like to invest in sectorial funds? Please tick (√). Yes No
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