swetha part b

8/7/2019 swetha part b

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INVESTOR AWARENESS TOWARDS MUTUAL FUND

PART B

EXCECUTIVE SUMMARY

BITM MBA BELLARY Page 1


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EXECUTIVE SUMMARY:

The summer project entitled Investors Awareness towards Mutual Fund

Schemes carried on for a period of 10 weeks at Reliance capital asset management

Ltd.The main purpose of the study was to know whether the investors are aware of

various mutual fund schemes that are available in the market.

The required data for this report was collected mainly through the

primary data that is self administered questionnaire and also secondary data like company

journals, induction manual and Geo data manual. Since there are problems associated

with markets, the study can help the investors to take informed decisions regarding

mutual funds. The economic progress of a country is linked with capital market growth.

The growth of the capital market depends upon the saving by the people. As people are

not having sufficient knowledge of different avenues, mutual fund schemes the savings

are mainly directed towards bank deposits. That is why the growth of the capital market

is not as expected but all people are having keen interest to earn high return on their

investment. So my research work is mainly concentrated on mutual funds which give

abnormal returns.

The information collected is analysed and interpreted by using statistical tools such as

charts and graphs are used for systematic presentation. some of the limitations of the

project being done for a short period of 10 weeks and with a The methodology for

carrying out the project was through primary data obtained through self administered

questionnaire.



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RESEARCH DESIGN

STATEMENT OF THE PROBLEM:

This is the first step in the research methodology. It is very important to define the

statement of the problem because of the saying that A problem well defined is half

solved. In this study it is mainly focused on comparative study of mutual funds in the

market .in the context, it is needed to evaluate the various factors which are considered

while purchasing the product. To sustain in the competitive and dynamic market

conditions the observation of the market is necessary. To know the market conditions in

the market and to improve the sale of the company.



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OBJECTIVES OF THE STUDY:

1. To know the awareness among investors about mutual funds.

2. To know the investment pattern of the investors i.e., whether short term, medium

term or long term.

3. To know the awareness among the investors about the various services provided

by mutual fund sectors

4. To know the objective of their investments.

5. To know in which avenues people invest their savings.

SCOPE OF THE STUDY

The project entitled A Study on the Investors awareness towards mutual fund

scheme, enable from the companys point of view to identify which mutual fund

schemes the investors are preferring for investing, so that it helps the company to

improve its sale in the market. So my research work is mainly concentrated on mutual

funds which give abnormal returns.

RESEARCH METHODOLOGY:

Type of research used Exploratory research

Research approach Literature Survey

Research instrument Fund Fact Sheets

Source Website of: Mutualfundindia.com

Sample Size 5

Sample Scope Mutual Fund with other instruments

Sampling Technique Non-probability Sampling (judgmental sampling)Tools Tables, pie chart and bar chart

RESEARCH DESIGN

STATEMENT OF THE PROBLEM:



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This is the first step in the research methodology. It is very important to define the

statement of the problem because of the saying that A problem well defined is half

solved. In this study it is mainly focused on comparative study of mutual funds in the

market .in the context, it is needed to evaluate the various factors which are considered

while purchasing the product. To sustain in the competitive and dynamic market

conditions the observation of the market is necessary. To know the market conditions in

the market and to improve the sale of the company.

OBJECTIVES OF THE STUDY:

1. To know the awareness among investors about mutual funds.

2. To know the investment pattern of the investors i.e., whether short term, medium

term or long term.

3. To know the awareness among the investors about the various services provided

by mutual fund sectors

4. To know the objective of their investments.

5. To know in which avenues people invest their savings.

SCOPE OF THE STUDY

The project entitled A Study on the Investors awareness towards mutual fund

scheme, enable from the companys point of view to identify which mutual fund

schemes the investors are preferring for investing, so that it helps the company to

improve its sale in the market. So my research work is mainly concentrated on mutual

funds which give abnormal returns.

RESEARCH METHODOLOGY:



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Type of research used Exploratory research

Research approach Literature Survey

Research instrument Fund Fact Sheets

Source Website of: Mutualfundindia.com

Sample Size 5

Sample Scope Mutual Fund with other instruments

Sampling Technique Non-probability Sampling (judgmental sampling)

Tools Tables, pie chart and bar chart

The objective of research work in its context the form was to follow systematic

procedure from the statement of the objectives to the analysis and findings. The

methodology followed in the research work is as follows.

The objective of research work in its context the form was to follow systematic

procedure from the statement of the objectives to the analysis and findings. The

methodology followed in the research work is as follows.

Collection of data:

Collection of data is the first step in the research report. The data may

be primary or secondary data. The data collected for this project is primary data

which is collected through structured questionnaire method. As much as possible

ambiguous questions are excluded from questionnaire. The sample size consists of 50

respondents only.

Primary data:

All primary data has been collect from the personally, the required information are

also collected from the end user of the product by survey to know the awareness mutual

fund

Secondary data:



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All secondary data has been collected from the Company Website, Internet, The

required information are also collected form respective FACT SHEETS of different

companies & website of mutual fund India.com, Global research study is also adhered.

LIMITATIONS OF THE STUDY:

1. Due to time and cost constraints the study is limited to particular group and

limited number.

2. The probability of respondents giving accurate information is not 100%, as the

investigator has to accept the answers of respondents as authentic.

3. Lack of co operation from the respondents limits the effectiveness of the

research work.

MUTUAL FUNDS

Meaning

A mutual fund is a trust that pools the money of many investors -- its shareholders

-- to invest in a variety of different securities. Investments may be in stocks, bonds,

money market securities or some combination of these. Those securities are

professionally managed on behalf of the shareholders, and each investor holds a pro rata

share of the portfolio -- entitled to any profits when the securities are sold, but subject to

any losses in value as well.

A mutual fund is a group of investors operating through a fund manager to

purchase a diverse portfolio of stocks or bonds. There are myriad kinds of mutual funds,

each with its own goals and methodologies. Whether or not a mutual fund is a good

investment is a matter of much public debate, with many claiming they are excellent for

the average person, and others saying they are simply a poor way to invest.

For the individual investor, mutual funds provide the benefit of having someone

else manage your investments, take care of record keeping for your account, and

diversify your rupees over many different securities that may not be available or



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affordable to you otherwise. Today, minimum investment requirements on many funds

are low enough that even the smallest investor can get started in mutual funds.

A mutual fund, by its very nature, is diversified -- its assets are invested in many

different securities. Beyond that, there are many different types of mutual funds with

different objectives and levels of growth potential, furthering your chances to diversify.

Many critics of mutual funds point out that scarcely over 20% of mutual funds

outperform the Standard and Pools 500 Index. This means that nearly 80% of the time,

an investor would have been more profitable by simply buying equal shares in all 500 of

the companies currently on the S&P 500.

ADVANTAGES OF MUTUAL FUND INVESTMENT

Professional Management

Mutual Funds provide the services of experienced and skilled professionals,

backed by a dedicated investment research team that analyses the performance and

prospects of companies and selects suitable investments to achieve the objectives of the

scheme.

Diversification

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

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



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decline at the same time and in the same proportion. You achieve this diversification

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

Convenient Administration

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

problems such as bad deliveries, delayed payments and follow up with brokers and

companies. Mutual Funds save your time and make investing easy and convenient.

Return Potential

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

return as they invest in a diversified basket of selected securities.

Low Costs

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

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

other fees translate into lower costs for investors.

Liquidity

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

value related prices from the Mutual Fund. In closed-end schemes, the units can be sold

on a stock exchange at the prevailing market price or the investor can avail of the facility

of direct repurchase at NAV related prices by the Mutual Fund.

Transparency

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

disclosure on the specific investments made by your scheme, the proportion invested in

each class of assets and the fund managers investment strategy and outlook.

FlexibilityThrough features such as regular investment plans, regular withdrawal plans and

dividend reinvestment plans, you can systematically invest or withdraw funds according

to your needs and convenience.

Affordability



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

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

its investment strategy.

Well Regulated

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

provisions of strict regulations designed to protect the interests of investors. The

operations of Mutual Funds are regularly monitored by SEBI.

DISADVANTAGES OF MUTUAL FUNDS INCLUDE

Inability to make ones own decisions

No guarantee that the professional managers will provide anticipated results

Investment company managers can switch styles of investing, even while

adhering to the objectives and policy agreed upon by the mutual fund. This makes

it difficult for the investor to keep track of the investments owned by the fund and

the activity of fund managers.

Past performance, a highly reported indicator is just that, one of many indicators;

it is no guarantee for future performance. Careful scrutiny is warranted when

reading a funds advertisement

TYPES OF MUTUAL FUNDS

Mutual fund schemes may be classified on the basis of its structure and its investment

objectives.

ON THE BASIS OF ITS STRUCTURE

_Open-ended Funds

An open-end fund is one that is available for subscription all through the year.

These do not have a fixed maturity. Investors can conveniently buy and sell units at Net

Asset Value (NAV) related prices. The key feature of open-end schemes is liquidity.

Closed-ended Funds



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A closed-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. Investors

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

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

ON THE BASIS OF INVESTMENT OBJECTIVE\SCHEMES OF MUTUAL

FUND

Growth / Equity Oriented Scheme

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

long- term. Such schemes normally invest a major part of their corpus in equities. Such

funds have comparatively high risks. These schemes provide different options to the

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

option depending on their preferences

Income / Debt Oriented Scheme

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

Such schemes generally invest in fixed income securities such as bonds, corporate

debentures, Government securities and money market instruments. Such funds are less

risky compared to equity schemes. These funds are not affected because of fluctuations in

equity markets.

Balanced Scheme



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

schemes invest both in equities and fixed income securities in the proportion indicated in

their offer documents. These are appropriate for investors looking for moderate growth.

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

affected because of fluctuations in share prices in the stock markets. However, NAVs of

such funds are likely to be less volatile compared to pure equity funds.

Money Market or Liquid Fund

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

preservation of capital and moderate income. These schemes invest exclusively in safer

short-term instruments such as treasury bills, certificates of deposit, commercial paper

and inter-bank call money, government securities, etc. Returns on these schemes fluctuate

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

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

Gilt Fund

These funds invest exclusively in government securities. Government securities

have no default risk. NAVs of these schemes also fluctuate due to change in interest rates

and other economic factors as is the case with income or debt oriented schemes.

Index Funds

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

index, S&P NSE 50 index (Nifty), etc, these schemes invest in the securities in the same

weightage comprising of an index. NAVs of such schemes would rise or fall in

accordance with the rise or fall in the index, though not exactly by the same percentage

due to some factors known as terms. Necessary disclosures in this regard are made in the

offer document of the mutual fund scheme.



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EXCHANGE TRADED FUNDS:

A relatively new innovation, the exchange traded fund (EFT), is often formulated as an

open-end investment company. EFTs combines characteristics of both mutual funds and

closed-end funds. An eft usually tracks a stock index (see index funds. Shares are issued

or redeemed by institutional investors in large blocks (typically of 50,000).Investors

typically purchase shares in small quantities through brokers at a small premium or

discount to the net asset value; this is how the institutional investors makes its profit.

Because the institutional investors handle the majority of trades, EFTs are more efficient

than traditional mutual funds which are continuously issuing new securities and

redeeming old ones, keeping detailed records of such instance and redemption

transactions, and to effect detailed records of such instance and redemption transactions

and to effect such transactions, continually buying and selling securities and maintaining

liquidity position) and therefore tend to have lower expenses. EFTs is traded throughout

the day on a stock exchange, just like closed-end funds.

Exchange traded funds are also valuable for foreign investors who are often able to buy

and sell securities traded on a stock market, but who, or regulatory reasons, are unable to

participate in traditional us mutual funds.

EQUITY FUNDS:

Equity funds which consist mainly of stock investments are the most common type of

mutual fund. Equity funds hold 50 percent of all amounts invested in mutual funds in the

united states. Often equity funds focus investments on particular strategies and certain

type of issues.

CAPITALIZATION:

Fund managers and other investment professionals have varying definitions of mid cap

ranges. The following ranges are used by Russell indexes:

.Russel micro cap Index-micro-cap($54.8-539.5 million)

.Russel 2000 Index-small-cap($182.6-1.8 billion)



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.Russel midcap Index-mid-cap($1.8-13.7 million)

.Russel 1000 Index-large-cap($1.8-386.9 million)

GROWTH VS VALUE:

Other distinction made between growth funds, which invest in stocks of companies that

have the potential for large capital gains, and value funds, which concentrate on stocks

that are undervalued. Growth stocks typically have the potential for a greater return;

however, Such investments also bear larger risks. Growth funds tend not to pay regular

dividends. Sector funds focus on specific industry sectors, such as biotechnology or

energy. Income funds tend to be more conservative investments, with a focus on stocks

that pay dividends. A balanced fund may use a combination of strategies, typically

including some level of investment in bonds, to stay more conservative when it comes to

risk, yet aim for some growth.

INDEX FUNDS VERSUS ACTIVE MANAGEMENT:

An index maintains investments in companies that are part of major stock (or bond)

indices, such as the s &p 500, while an actively managed fund attempts to outperform a

relevant index through superior stock picking techniques. The assets of an index fund

are managed to closely approximate the performance of a particular published index.

Since the composition of an index changes infrequently,an index fund manager makes

fewertrades , on average, than does an active fund manager. For this reason, index funds

generally have lower trading expensesthan actively managed funds, and typically incur

fewer short-term capital gains which must be passes on to shareholders. Additionallly,

index funds do not incur expenses to pay for election of individula stocks (propreitary

selection techniques, eaearch, etc) and deciding when to buy, hold sell individual



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holdings. Instead, a fairly simple computer model can identify whatever changes are

needed to bring the fubnf back into agreement with its target index.

The performance of an actively managd f und largely depends on the investent decisions

of its manager. Statistically, for every investor who out performs the market, theree is one

who underperforms. Among those who outperform there index before expenses, though,

may end up under performing after expense. Before expenses, a well-run index fund

should have average performance. By minimizing the impact of expenses, index funds

should be able to perform better than average.

Certain empirical evidence seems to illustrate that mutual funds do not beat the market

and actively managed mutual funds under perfom other broad based portfolios with

similar characteristics. One study found that nearly 1,500 U.S. mutual funds under

performed the market in approximately half of the years between 1962 and 1992.

Moreover, funds that performed well in the past are not able to beat the market again in

the future (shown by Jensen, 1968, Grimblatt and Titman, 1989.

BOND FUNDS:

Bond funds account for 18% of mutual fund assets. Types of bond funds include term

funds, which have a fixed set of time ( short , medium, or long term) before they mature.

Municipal bond funds generally have lower returns, but have tax advantages and lower

risk .High yield bond funds invest in corporate bonds, including high yield or junk

bonds. With the potential for high yield, these bonds also come with greater risk.

MONEY MARKET FUNDS:

Money market funds hold 26% of mutual fund assets in the United States. Money market

funds entail the least risk, as well as lower rates of return. Unlike certificates of deposits

(CDs), money market shares are liquid and redeemable at any time. The interest rate

quoted by money market funds is known as the 7 day SEC yield.

FUNDSER OF FUNDS:



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Fundser of funds (FOF) are mutual funds which invest in other underlying mutual funds

(i.e., they are funds comprised of other funds). The funds at the underlying level are

typically funds which an investor can invest in individually. A fund of funds will

typically charge a management fee which is smaller than that of a normal fund because it

is considered a fee charged for asset allocation services. The fees charged at the

underlying fund level do not pass through the statement of operations, but are usually

disclosed in the funds annual reports, prospectus, or statement of additional information.

The fund should be evaluated on the combination of the fund level expenses and

underlying fund expense, as these both reduce the return to the investor.

Most FOFs, invest in affiliated funds ( i.e, mutual funds managed by the same advisor),

although some invest in funds managed by other ( unaffiliated) advisors. The cost

associated with investing in an affiliated underlying because of the investment

management research involved in investing in fund advised by a different advisor

recently, FOFs have been classified into those that are actively managed ( in which the

investment advisor reallocates frequently among the underlying funds in order to adjust

to changing market conditions) and those that are passively managed ( th investment

advisor allocates assets on the basis of on an allocation model which is rebalanced on a

regular basis.)

The design of FOFs is structured in such a way as to provide a ready mix of mutual funds

for investors who are unable to or willing to determine their own assets allocation model.

Fund companies such as TIAA CREF, vanguard, and Fidelity have also entered this

market to provide investors with these options and take the guess work out of selecting

funds. The allocation mixes usually vary by the time the investor would like to retire:

2020, 2030, 2050, etc. the more distant the target retirement date , the more aggressive

the asset mix.

HEDGED FUNDS:



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Hedged funds in the United States are pooled investment funds with loose SEC

regulation and should not be confused with mutual funds. Certain hedged funds are

required to register with SEC as investment advisors under the investment advisors Act.

The ACT does not require an Advisor to follow or avoid any particular investment

strategies, nor does it require or prohibit specific investments. Hedge funds typically

charge a management fee of 1% or more, plus a performance fee of 20% of the hedge

funds profits. There may be a lock up period , during which an investor cannot cash

in shares.

BALANCED SCHEMES

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

schemes invest both in equities and fixed income securities in the proportion indicated in

their offer documents. These are appropriate for investors looking for moderate growth.

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

affected because of fluctuations in share prices in the stock markets. However, NAVs of

such funds are likely to be less volatile compared to pure equity funds

THE GROUND RULES FOR MUTUAL FUND INVESTING:

Moses gave to his followers 10 commandments that were to be followed till eternity. The

world of investments too has several ground rules meant for investors who are novices in

their own right and wish to enter the myriad world of investments. These come in handy

for there is every possibility of losing what one has if due care is not taken.



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Assess yourself:

self assessment of one,s needs, expectations and risk profile is of prime importance

failing which , one will make more mistakes in putting money in right places than

otherwise. One should identify the degree of risk bearing capacity one has and also

clearly state the expectations will only bring pain.

Try to understand where the money is going:

It is important to identify the nature of investment and know if one is compatible with

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

In order to avoid any confusion it is better to go through the literature such as offer

document and fact sheets that mutual fund companies provide on their funds.

Dont rush in picking funds, think first:

First one has to decide what he wants the money for and it is this investment goal that

should be the guiding light for all investment done. It is thus important to know the

risks associated with the fund and align it with the quantum of risk ine is willing to

take. One should take a look at the portfolio of the funds for the purpose. Excessive

exposure to any specific sector should be avoided, as it will only add to the risk of

entire portfolio. Mutual funds invest with a certain ideology such as the value

principle or growth philosophy. Both have their share of critics but both

philosophies work for investors of different kinds. Identifying the proposed

investment philosophy of the fund will give an insight into the kind of risks that it

shall be taking in future.

Invest , Dont speculate:

A common investor is limited in the degree of risk that he is willing to take. It is thus

of key importance that there is thought given to the process of investment and to the

time horizon of the intended investment. One should abstain from speculating which



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in other words would mean getting out of one fund and investing in another with the

intention of making quick money . one would do well to remember that nobody can

perfectly time the market so staying invested is the best option unless there are

compelling reasons to exit.

Dont put all the eggs in one basket:

This old age adage is of utmost importance. No matter what risk profile of a person is,

it is always advisable to diversify the risks associated. So putting ones money in

different assets classes is generally the best option as it averages the risk in each

category. Thus, even investors of euity should be judicious and invest some portion of

the investment in debt. Divercification even in any particular asset class (such as

equity, debt) is good. Not all fund managers have the same acumen of fund

management and with identification of the best man being a tough task, it is good to

place money in the hands of several fund managers. This might reduce the maximum

return possible, but will also reduce the risks.

Be regular:

Investing should be a habit and not an exercise undertaken at ones wishes , if one hasto really benefit from them as we said earlier, since it is extremely difficult to know

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

systematic. The basic philosophy of rupee cost averaging would suggest that if one

invests regularly through the ups and downs of the market, he would stand a better

chance of generating more returns than the market for the entire duration. The sips

(systematic investment plans) offered by all funds helps in being systematic. All that

one needs to do is to give post dated cheques to the fund and thereafter one will not

be harried later. The automatic investment plans offered by some funds goes a step

further, as the amount can be directly/ electronically transferred from the account of

the investor.

Do your homework:



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It is important for all investors to research the avenues available to them irrespective

of the investor category they belong to . this is important because an informed

investors is in a better decision to make right decisions. Having identified the risks

associated with the investment is important and so one should try to know all aspects

associated is important and so one should try to know all aspects associated with it.

Asking the intermediaries is one of the ways to take care of the problem.

Find the right funds :

Findings funds that do to not charge many fees is of importance, as the fee charged

ultimately goes from the pocket of the investor. This is even more important for debt

funds as the returns from these funds are not much. Funds that charge more will

reduce the yield to the investor. Finding the right funds is important and one shouldalso use these funds for tax efficiency. Investors of equity should keep in mind that all

dividends are currently tax free in India and so their tax liabilities can be reduced if

the dividend pay out option is used. Investora debt will be charged a tax on dividend

distribution and so can easily avoid the payout options.

Keep track of your investments :

Finding the right fund is important but even more important is to keep track of the

way they are performing in the market. If the market is beginning to enter a bearish

phase, then investors of equity too will benefit by switching to debt funds as the

losses can be minimized. One can always switch back to equity if the equity market

starts to show some buoyancy.



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Know when to sell your mutual funds :

Fund too is of utmost importance . one should book profits immediately when enough

has been earned i.e. the initial expectations from the fund has been met with. Other

factors like non performance, hike in fee charged and change in any basic attribute of

the fund etc. are some of the reasons for to exit.

Drawbacks of Mutual Funds

Investments in mutual funds too are not risk free and so investments warrant some

caution and careful attention of the investor. Investing in mutual funds can be dicey

business for people who do not remember to follow these rules diligently , as people are

likely to commit mistakes by being ignorant or adventurous enough to take risks more

than what they can absorb . this is the reason why people would do well to remember

these rules before they set out invest their hard earnedmoney. Mutual funds have their

drawbacks and may not be for everyone:

No Guarantees: No investment is risk free. If the entire stock market declines in

value, the value of mutual fund shares will go down as well, no matter how

balanced the portfolio. Investors encounter fewer risks when they invest in mutual

funds than when they buy and sell stocks on their own. However, anyone who

invests through a mutual fund runs the risk of losing money.

Fees and commissions: All funds charge administrative fees to cover their day-

to-day expenses. Some funds also charge sales commissions or "loads" to

compensate brokers, financial consultants, or financial planners. Even if you don't



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use a broker or other financial adviser, you will pay a sales commission if you buy

shares in a Load Fund.

Taxes: During a typical year, most actively managed mutual funds sell anywhere

from 20 to 70 percent of the securities in their portfolios. If your fund makes a

profit on its sales, you will pay taxes on the income you receive, even if you

reinvest the money you made.

Management risk: When you invest in a mutual fund, you depend on the fund's

manager to make the right decisions regarding the fund's portfolio. If the manager

does not perform as well as you had hoped, you might not make as much money

on your investment as you expected. Of course, if you invest in Index Funds, you

forego management risk, because these funds do not employ managers.

Mutual Fund Companies in India

The concept of mutual funds in India dates back to the year 1963. The era between 1963

and 1987 marked the existance of only one mutual fund company in India with Rs. 67bn

assets under management (AUM), by the end of its monopoly era, the Unit Trust of India

(UTI). By the end of the 80s decade, few other mutual fund companies in India took their

position in mutual fund market.

The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank

Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of

India mutual funds

The succeeding decade showed a new horizon in indian mutual fund industry. By the end

of 1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds

started penetrating the fund families. In the same year the first Mutual Fund Regulationscame into existance with re-registering all mutual funds except UTI. The regulations

were further given a revised shape in 1996.

Kothari Pioneer was the first private sector mutual fund company in India which has now

merged with Franklin Templeton. Just after ten years with private sector players



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penetration, the total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund

companies in India.

Major Mutual Fund Companies in India

ABN AMRO Mutual Fund

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

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

(India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian

of ABN AMRO Mutual Fund.

Birla Sun Life Mutual Fund

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

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

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

India. Birla Sun Life Mutual Fund follows a conservative long-term approach to

investment. Recently it crossed AUM of Rs. 10,000 crores.

Bank of Baroda Mutual Fund (BOB Mutual Fund)

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

the sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the

AMC of BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank

AG is the custodian.

HDFC Mutual Fund

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

Development Finance Corporation Limited and Standard Life Investments Limited.

HSBC Mutual Fund

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

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

acts as the Trustee Company of HSBC Mutual Fund.

ING Vysya Mutual Fund

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

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

Management (India) Pvt. Ltd. was incorporated on April 6, 1998.

Prudential ICICI Mutual Fund

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

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

on 13th of October, 1993 with two sponsorers, Prudential Plc. and ICICI Ltd. The Trustee

Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset

Management Company Limited incorporated on 22nd of June, 1993.

Sahara Mutual Fund

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

Ltd. as the sponsor. Sahara Asset Management Company Private Limited incorporated on

August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid-up capital of the

AMC stands at Rs 25.8 crore.

State Bank of India Mutual Fund

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

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

it is the largest Bank sponsored Mutual Fund in India. They have already launched 35

Schemes out of which 15 have already yielded handsome returns to investors. State Bank

of India Mutual Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor

base of over 8 Lakhs spread over 18 schemes.

Tata Mutual Fund

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Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsor for

Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The

investment manager is Tata Asset Management Limited and its Tata Trustee Company

Pvt. Limited. Tata Asset Management Limited's is one of the fastest in the country with

more than Rs. 7,703 crores (as on April 30, 2005) of AUM.

Kotak Mahindra Mutual Fund

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

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

its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering

to investors with varying risk - return profiles. It was the first company to launch

dedicated gilt scheme investing only in government securities.

Unit Trust of India Mutual Fund

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

the UTI Mutual Fund with the support of UTI Trustee Company Private Limited. UTI

Asset Management Company presently manages a corpus of over Rs.20000 Crore. The

sponsorers of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank

(PNB), State Bank of India (SBI), and Life Insurance Corporation of India (LIC). The

schemes of UTI Mutual Fund are Liquid Funds, Income Funds, Asset Management

Funds, Index Funds, Equity Funds and Balance Funds.

Reliance Mutual Fund

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The

sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is

the Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which

was changed on March 11, 2004. Reliance Mutual Fund was formed for launching of

various schemes under which units are issued to the Public with a view to contribute to

the capital market and to provide investors the opportunities to make investments in

diversified securities.



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Standard Chartered Mutual Fund

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

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

Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated

with SEBI on December 20,1999.

Franklin Templeton India Mutual Fund

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

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

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

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

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

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

end Income schemes and Open end Fund of Funds schemes to offer.

Morgan Stanley Mutual Fund India

Morgan Stanley is a worldwide financial services company and its leading in the market

in securities, investment management and credit services. Morgan Stanley Investment

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

management services and products to governments, corporations, pension funds and non-

profit organisations. Its services are also extended to high net worth individuals and retail

investors. In India it is known as Morgan Stanley Investment Management Private

Limited (MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF). This is the

first close end diversified equity scheme serving the needs of Indian retail investors

focussing on a long-term capital appreciation.

Escorts Mutual Fund

Escorts Mutual Fund was setup on April 15, 1996 with Excorts Finance Limited as its

sponsor. The Trustee Company is Escorts Investment Trust Limited. Its AMC was

incorporated on December 1, 1995 with the name Escorts Asset Management Limited.



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Alliance Capital Mutual Fund

Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital

Management Corp. of Delaware (USA) as sponsorer. The Trustee is ACAM Trust

Company Pvt. Ltd. and AMC, the Alliance Capital Asset Management India (Pvt) Ltd.

with the corporate office in Mumbai.

Benchmark Mutual Fund

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt.

Ltd. as the sponsorer and Benchmark Trustee Company Pvt. Ltd. as the Trustee

Company. Incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark

Asset Management Company Pvt. Ltd. is the AMC.

Canbank Mutual Fund

Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the

sponsor. Canbank Investment Management Services Ltd. incorporated on March 2, 1993

is the AMC. The Corporate Office of the AMC is in Mumbai.

Chola Mutual Fund

Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance

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

Trustee Company and AMC is Cholamandalam AMC Limited.

LIC Mutual Fund

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

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

constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. .

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

have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the

Investment Managers for LIC Mutual Fund.

GIC MUTUAL FUND

GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a



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Government of India undertaking and the four Public Sector General Insurance

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

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

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

1882.

INVESTMENT PROCEDURES IN MUTUAL FUNDS

Investment procedure in mutual funds eligible person to apply for subscription to the

units of mutual funds schemes (subject wherever relevant to purchase of units of mutual

funds being permitted under respective constitution and relevant statutory regulations)

residents adult individuals guardian companies, corporate bodies, public sector

undertaking, associates of persons or bodies and society registered under the societies

registration act 1860 Act. religious and charitable trust under the provision of sec 11 (5)

(XII) of income tax act 1961. Partnership firms karta of Hindu unlived family bank and

financial institutions non resident non resident Indians, persons of Indian origin (expect

in tax plan) residing abroad. Foreign institutional investors registered under SEBI on full

repartition basis .investments made in the plan by residents adult individual and data of

HUFs only will qualify for tax benefits. Application forms will be available in customer

service centres at the corporate office of the AMC and office of registrars. Application

completed in all absolute discretion to accept reject any application for the purchase of

the units. If in general interest of the unit holders or the business trustees for any other

reasons believes it would be in the best interest of the schemes or tries unit holders to

accept reject such an application.

BUYING AND REDEMTION OF MUTUAL FUND:



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Mutual fund can be bought directly from the mutual fund company or from a stock

broker. either way buying or redeeming shares work with the same way. In all cases the

customers executes all transition with the mutual fund company. Many funds also allow

you to redeem shares over the telephone. You can also set up automatic investment plan

to do work for you. Under this plan, you can have fixed amount of money with drawn

from the bank account and sent to the fund. Using this option requires what your first

authorize it on your application form. Most mutual fund companies do allow this

option.many funds require a initial investment of over $ 1000 .however many of them

waive this requirement if you agree to an automatic investment plan that withdraws from

bank account until you have the maximum limit. Redemption by NRI/OCB/FII

EFFECT OF REDEMPTION:

The unit capital and reserves of the schemes wil stand reduced by an amount equivalent

to the product of the number of units of scheme an investors may be left with fractional

units. Fractional units will be completed and accounted for up to three decimals places.

However fractional units will not affect the investors ability to reddem the units either in

the part or in the full standing to the unit holders credit.

RIGHT TO LIMIT THE REDEMPTION:

The trustee may in the general interest of the unit holders of the scheme offered under

these offer documents and keeping in the view the unforeseen circumstance unusual

market condition limit to the total number of units than in issue of such other % as the

trustee may determine.Any units which by the virtue of these limitations are not reduced

on a particular business day will be carried forward for redemption to the next business

day in order of receipt.

Any units which by the virtue of these limitations are not reduced on a particular business

day, will be carried forward for redemption to the next business day in order of receipt.

Redemption so carried forward for ill be priced on the basis of application. NAV to the

business day on which redemption is made under such circumstance to the extent



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multiple redemption request are received at the same time on a single business day,

redemption will be made on the pro rata basis, based on the sixes of each redemption

request, the balance amount being carried forward for redemption to the next business

days.

SUSPENSION OF SALE AND REDEMPTION OF UNITS:

The trustees may decide to temporarily suspend determination of NAV of the schemes

offered under this document and consequently sale and redemption of units in any of the

following events.

When one or more stock exchange or markets which approves basis for valuation for a

substantial portion of the assets of the schemes are closed otherwise than for ordinary

holidays.

When as a result of political economic or monetary events or any circumstances outside

the control of trustees and AMC, the disposal of the scheme is not responsible, or would

not reasonably be participable without being detrimental to the interest of the unit

holders.

In the event of breakdown in the means of communication used for the valuation of the

investment of the scheme , without which the value of the securities of the schemes

cannot be accurately calculated.

During period of extreme volatile of markets which in the opinion of the AMC are

prejudical to the interest of the unit holders of the scheme.

MUTUAL FUND EXPENSES:



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Mutual fund charge fees for the cost of running the fund.A funds prospectus will list on

all fees charges by the fund.

Sales charges are the fees one may pay when purchasing or redeeming share of a mutual

fund. By law, sale charge may not exceed 8.5% of the amount invested . funds with sales

charges are called load fund . these may be front load or back end load. Funds with no

sales charge are called no load funds.

Redemption fees are charges that may also be imposed when investors sell shares back to

the fund. Mutual fund may charge fees to cover expenses such as advertisement , brokers

cost and toll fre telephone lines.they may also charge management fees and exchange

fees income and distribution mutual fund pay their holder dividend from the earnings of

the stocks, bonds etc.

It is proposed to declare dividends either half yearly or yearly basis. Dividends if

declared will be paid out of net surplus of the schemes to those unit holders on the

notified record date.the dividends will be at such rates as may be decided by the AMC in

the consultation of the trustee.

UNIT HOLDER SERVICES AND RIGHT :

Investors friendly service: in order to provide efficient service the fund will endeavour

to continuously establish and upgrade the system to handle the transaction efficiently and

resolve any investors grievance promptly.

Problem resolution:

The fund will follow up with customer service centres and registered in complaints and

inquiries received for the investors with an endeavour to resolve them promptly.

NAV information:

The NAV of the scheme will be calcuilated daily and announced by the fund on each

business days. The unit holder may obtain the information on the NAV on any business

day , by calling the office or any customer service centres. The funds will use its best

endeavour to publish NAVs , in at least two daily newspaper. Further the AMC shall

endeavour to publish and redemption of the units daily news[a[ers of all India circulation.



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Disclosure of the information under regulation:

The fund will not later than six months after the closure of the financial year, publish

through an advertisement an abridged scheme wise annual report. further the full text of

the annual report will be available for the inspection at the officer of the mutual fund.

Right of unit holders of the schemes:

Unit holders of the scheme have proportionate right in the beneficial ownership of the

assets of the scheme and declaration of the dividend for the receipt of dividend declared

by the fund under the scheme.

When the fund declares a dividend under the scheme, the fund shall dispatch to the

unit holders the dividend warrants within a period of 45 days form the date to declaration

of dividend.

The trustee is bound to make such disclosure to the unit holders in order to keep them

informed about any information known to the trustee with may an adverse bearing on

their investment.

Majority of the trustee or 75% of the unit holders of the scheme of the fund can terminate

the appointment of the AMC shall be subject to the prior to the approval of SEBI and unit

holders of the scheme.

The unit holders have got right to inspect the entire document listed under the document

available for the inspection. The trustee shall obtain the consent of the unit holders.

Whenever required to so on the requisition made by three fourths of the unit holders of

the scheme.

When the trustee decides to wind up or prematurely redeem the units. When any change

in the fundamental attributes of any scheme or any trust or fees and expenses payable or

any other change which would modify the scheme or affect the interest of the unit holders

is proposed to carry out, the same cannot be done unless the consent of not les than three-

fourths of the units holders is obtained

Data analysis and interpretation.



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1. sex

Sex Respondents

Male 32

Female 18

Total 50

sex

mal

64%

femal

36% male

femal



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2. Occupation of the Respondants.

Occupations Respondants

Professional 23

Business 15

Service 8

Others 4

Total 50



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occupatio

professio

nals

61%

business

15%

service

11%

others

13%

professionals

business

service

others

3. income of the respondants per month

Income Respondants

Below 10,000 16

Above 10,000 34



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Total 50


Incom

Below

10000

32%

Above

10000

68%

Below 1000

Above 1000


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4. The guidance given to the investors to invest in the mutual funds

Guidance by Respondents

Financial adviser 16

Own experience 34

Total 50

Investment Guidance

Financial

32%

own

experience

68%

Financial

own experience



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5. Consideration of investing in mutual fund

Considerations Respondents

Brand image 12

Variety of schemes 5

Assets under management 7

Performance 18

Dividends declared 8

Total 50



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Investments depends on

24%

10%

14%

36%

16%

Brand image

variety ofschemes

Assets under

management

performance

Dividends

declared

6. Aspects customers liked most to invest in Mutual fund

Aspects Respondents

Service 4

Good return 20

Tax Saving 12

Growth 9



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Safety 5

Total 50

Aspects

8%

40%

24%

18%

10% service

good return

tax saving

growth

safety

7. Customer mode of investment.

Mode of investment Respondents



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Fixed deposit 8

NSC 7

Mutual funds 18

Insurance 7

Equitys 10

Total 50

8 7

18

710

0

5

10

15

20

Fixed

deposit

NSC Mutal

funds

Insurance Equity

shares

Mode of Investment

Series1



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8. Time period of investment

Time period Respondents

1 year 23

3 year 18

5 year 9

Total 50

Time period

1year

46%

3year

36%

5year

18%

1year

3year

5year



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1. Investment time horizon

Time horizon Respondents

1-3 year 24

3-5 year 15

5 years and above 11

50

Total

Time Horizon

1-3year

48%

3-5 year30%

5years and

above

22%1-3year

3-5 year

5years and above



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2. For the purposes of tax benefits for the present year.

Tax Benefits Respondents

Yes 33

No 17

Total 50



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Investor in Respondents

Pension Fund

Yes 18

No 32

Total 50

Pension Fund

Yes

36%

No

64%

Yes

No



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4. Investor risk appetite in mutual fund.

Investor Risk in mutual Respondants

Fund

High 16

Medium 23

Low 11

Total 50



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Risk Appe t

H ig

32%

Med iu46%

Low22 %

High

Mediu

Low

5. Investors Expected returns in percentage.

Returns in percentage Respondants

10 15% 6

15 25% 22



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25 40% 15

And Above 7

Total 50

Returns

15-25%

50%

25-40%

34%

And above

16%

15-25%25-40%

And above



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FINDINGS

Following are the Aspects found in the Investors Awareness Towards

Mutual Fund Schemes During the study.

In Bellary investors taken the decisions by their own experience to invest are

34 respondents, and through financial advisors 16 respondants out of 50

respondants.

As per my survey there are 24% of the respondants are looking for brand

image of the product, 10% of them depend on the availability of variety of

schemes, 14% of the investors depend on the assets under management, 36%

totally depend on the performance of the company and the remaining 16%

based on dividends declared.

In the mode of investment 8 people invested for fixed deposits, 7 for national

saving certificate, 18 for mutual funds 7 are for insurance and rest of the 10

investors have choosen equity shares as their mode of investment.

By my survey done in bellary we can come to know that out of 50

respondants , 23 respondants are for one year time period , 18 are for 3year

time period and the rest of them are 5year time period for their investment.

We can find that out of 50 respondants the time horizon choosen by 48% of

respondants to one to three years and 30% is for three to five years and 22%

of respondants choosen a time horizon of five years and above

We can also find that out of 50 respondants 66% of them are investing for

tax benefits and 34% are not investing in for the purpose of tax benefit.



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The rate of risk taken by the investors are 32% of them are taking high risk,

46% are taking medium risk, 22% of them take low risk.

We can find that 50% of the investors expect 15 to 25% of returns and 34%

expect 25 to 40% and 16% of them expect more than 40% of returns

SUGGESTIONS

The following are the few suggestions made under the light of the findings from

observation of the market and the results obtained from the investors in bellary .

which are made under the stated limitations of the study.

Investors must be communicated about the schemes on regular basis

Most of the investors invest small and they dont purchase in bulk therefore

continuous visit is crucial. It is recommended to increase the frequency of visits .

Company must offer new and attractive schemes to the investors.

To take care of customers the separate customer helpdeskshould be opened.

This should give timely information to the customers.

The company should come out with innovative methods of providing services,

which satisfies the customers, in the competitive world to the fulest extent.

The company should render quality oriented services to the customers quickly.

As the investment potential is more in rural areas measures should be taken to

create awareness amongst the rural people.



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The extensive training should be given to the executives in the company. Besides,

the company should conduct seminars to the customers about various financial

services.

CONCLUSION

India is a developing country; it needs fund to take up some development activities. The

recent reforms and globalization process have offered tremendous opportunities to float

the money from small investors and use that for development activities.

Mutual fund and equity shares help the Indian economy to turn it self from a developing

country to a developed economy. So the government should provide some basic facilities

to the financial service providing firms.

The Reliance capital asset management ltd is growing at a faster rate. The innovative

service facilities made them to stand first in financial service providing industry. totally,

its way of providing services, management is best.

swetha part b

Documents

Transcript of swetha part b