Mutual Funds For Individual Investors in India

 

 

A PROJECT REPORT ON MUTUAL FUNDS FOR INDIVIDUAL INVESTORS IN INDIA CONDUCTED FOR  METLIFE INDIA INSURANCE CO. LTD SUBMITTED IN PARTIAL FULLFILLMENT OF   MASTER IN MARKETING MANAGEMENT SUBMITTED BY RAJESH B. SURASE MMM-1 NEVILLE WADIA INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH PUNE-411 001 (2010-11)

 Neville Wadia Institute of Management Management Studies and Research , Pune - 411001

 

 

ACKNOWLEDGEMENT

I take immense pleasure in completing this project and submitting the summer project report. The last 90 days with Metlife India Insurance Co.Ltd. has been full of learning and sense of contribution toward the organization. I would like to thank Metlife India Insurance Co.Ltd. for giving me an opportunity of learning and contributing through this project. I also take this opportunity to thank all those people that made this experience a memorable one. A successful project can never be prepared by the single effort of the person to whom  project is assigned, but it also demand the help and guardianship of some conversant   per perso son n wh who o he help lped ed th thee un unde ders rsig igne ned d ac acti tive vely ly or pa pass ssiv ivel ely y in the the comp comple leti tion on of  successful project. In this context as a student of Neville Wadia Institute of Management Studies and Research. I would first of all like to express my gratitude to Mr.Santosh Dastane (Director) Prof. Vikas Dole, Pro. Radha Dogra (Co-ordinator). Who provide me good opportunity to work work with Metlife India Insurance Co.Lt Co.Ltd. d. During the actual project work, Mr. Sohan Singh (Sales Manager) has been a source of  inspiration through his constant guidance; personal interest; encouragement and help. I convey my sincere thanks to him. him. In spite of his busy schedule he always always finds time to guide me through the project. I am also grateful to Mr. Nitin Baviskar (AM) for  reposing confidence in my abilities and giving me the freedom to work on my project. Last but not least, I would like to thanks all of my friends and well wishers for giving me their support during this project knowingly or unknowingly. RAJESH SURASE

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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INDEX  

CHAPTER NO.

CONTENTS

I

I.I I.II I.III I.IV I.V I.VI I.VII I.VIII I.IX I.X I.XI I.XII I.XIII I.VIX I.XV I.XVI II

III

IV

Introduction What is Mutual Fund? Growth of Mutual Fund. Phases of growth. Types of Mutual Fund. Mutual Fund In India. How long to keep Investment. Return Expected. Advantage of Mutual Fund. Drawbacks of Mutual Funds. Association of Mutual Fund. Future of Mutual Fund. Regulatory aspects How to judge Mutual Fund. History of Mutual Fund. Structure of Mutual Fund. AMC’s operating currently.

PAGE NO.

12 13 13 15 19 20 21 22 24 25 27 29 33 35 36 37

Problem Statements and Objectives of Study. II.I Problem Statements. II.II Objectives of Study.

40 41

Research Methodology. III.I Methodology of Study. III.II Research Methodology. III.III Assumptions. III.VI Literature Survey. III.V Probability Sampling. III.VI Sampling Size. III.VII Execution of Project.

43 43 43 44 44 45 45

Limitations. IV.I Limitations.

47

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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  V

VI

VII

Analysis of Mutual Fund. V.I Analysis on the basis of Schemes. V.II Comparison between Bank and MF Industry. Data collection VI.I Questionnaire VI.II Personal Visits.

53 54

VI.III

54

Interpretation of Data.

VII.I

VIII

IX

Telephonic Information.

49 50

56

VII.II VII.III VII.IV VII.V VII.VI VII.VII VII.VIII

Percentage of Investment to Total Income. Investment in Financial Product in Percentage. Awareness of Mutual Fund. Perception of Mutual Fund. Comparison between Ri Risk In Investment and Re Returns. Identification of Mutual Fund Industry. Comparison on the basis of place. Risk taken ability by different Age Groups.

57 58 59 60 61 62 63

VII.VIX

Pe Perrcent ntaage of total Inco ncome Invest in Mutual ual Fund. nd.

64

Project Findings and Recommendations. VIII.I Project Findings. VIII.II Recommendations.

66 66

Bibliography.

67

 

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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EXECUTIVE SUMMARY:MUTU TUAL AL FU FUND NDS S FO FOR R IN INDI DIVI VIDU DUAL AL IN INVE VEST STOR ORS S IN Thee proj Th projec ectt ti titl tled ed “MU INDIA” being carried out for  METLIFE INDIA INSURANCE CO. LTD.

Metlife operates in various financial products and services like, Consultancy, Mutual Fund, Registrar and Transfer Agent, Research, Mapin etc. The evaluation of financial planning has been increased through decades, which is best seen in customer rise. Now a day’s investment of saving has assumed great importance. According to the study of the markets, it is being observed that markets are doing well in Mutual fund. In near future a proper financial planning is required to invest money in all type of financial product because there is good potential in market to invest. In th this is pr proj ojec ectt th thee gr grea eatt em emph phas asis is is gi give ven n to the the inve invest stor or’s ’s mi mind nd in resp respec ectt to inve invest stm ment ent in Mu Mutu tual al Fu Fund nd .The .The ne need edss and and wa want ntss of the the cli client ent is take taken n into into consideration. I hope Metlife, Pune will recognize this as well as take more references from this  project report. The main objective of this project is to know the Mutual Funds for individual investors in India and also to know the investing pattern of people in different Financial Project. IT sector has been given more emphasis for the study of the project because it is the only sector where all type of Age group, Income class and different level of people are represented. After analyzing the feedback the conclusion has been made that the Indian financial market is having lots of potential customer the only thing is to give a proper guidance to the prospective customers.

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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COMPANY PROFILE 

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COMPANY PROFILE MetLife Inc. is a leading provider of insurance and other financial services to milli mi llions ons of ind indivi ividua duall and ins instit tituti utiona onall cus custom tomers ers thr throug oughou houtt the Uni United ted State States. s. Through its subsidiaries and affiliates, MetLife Inc. offers life Insurance, annuities, automobile and homeowner’s insurance and retail banking services to individuals, as well as group insurance, reinsurance and retirement and savings products and services to corporations and other institutions. Outside the U.S., the MetLife Companies have direct insurance operations in Asia Pacific, Latin America and Europe. MetLife is one of the largest insurance and financial services companies in the U.S. The company’s unparalleled franchises and brand names uniquely position it to be the pre eminent provider of protection and savings and investment products in the U.S. In addition, MetLife’s international operations are focused on emerging markets where the demand for insurance and savings and investment products is expected to grow rapidly in the future. MetLife’s well recognized brand names, leading market positions, competitive and innovative product offerings and financial strength and expertise will help drive future growth and enhance shareholders value, building on a long history of tradition and integrity.

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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Thei Th eirr serv servic ices es ar aree wi wide dely ly ne netw twor orke ked d ac acro ross ss Indi India. a. Th Thei eirr se serv rvic ices es ha have ve increasingly offered customer oriented convenience, which they provide to a spectrum of investors, high-net worth or otherwise, with equal dedication and competence.

But true to their spirit, this success is not their final destination, but just a  platform to launch further enhanced quality services to provide investors the latest in convenient, customer-friendly products. Over the years they have ensured that the trust of their customers is their biggest returns. Factors such as their success in the Electronic custody business has helped  build on their tradition of trust even more. Consequentially their retail client base expanded very fast. To empower the investor further they have made serious efforts to ensure that their research calls are disseminated systematically to all their clients through various delivery channels like email, chat, SMS, phone calls etc. In the future, their focus will be on the emerging businesses and to meet this objective, they have enhanced their manpower and revitalized their knowledge base with enhances focus on Futures and Options as well as the commodities business.

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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CHAPTER:-I   INTRODUCTION:-

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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INTRODUCTION

Finan Financia ciall pla planni nning ng is the pro proces cesss of ide identi ntifyi fying ng one one’s ’s we wealt alth h acc accumu umula latio tion n and   prote protecti ction on goa goals ls and dev develo elopin ping g a coo coordi rdinat nated ed pla plan n to hel help p pri priori oritie tiess one one’s ’s fut future ure financ fin ancial ial dec decisi ision. on. Fi Finan nancia ciall pla planni nning ng sho should uld be tak taken en as ser seriou iously sly as a med medic ical al  prescription, as it deals with ones financial health. It should be seen not just as a means of achieving financial security, but as making a vital contribution to one’s overall happiness and peace of mind. Finan Financia ciall pla planni nning ng can be ma manag nagea eable ble or overwh overwhelm elming ing dep depend ending ing upo upon n how one approaches it. Without guidance; it’s hard to know what one needs and when one needs it. With right information, tools and timeline, the choices become much easier. In fact too many people are investing in MUTUAL FUNDS. After all it’s common knowledge that investing in mutual fund is {or at least should be} better than simply letting your cash waste in a saving account, but for most people that’s where the understanding of funds end. It doesn’t help that mutual fund sale people speak a strange language that, that sounding sort of English, is interspersed with jargon like NAV, load/no-load, etc.   Originally MUTUAL FUNDS FUNDS were heralded as a way for the little guy to get a piece of  a mark market et.. In Inst stea ead d of sp spen endi ding ng al alll th thee fr free ee ti time me bu buri ried ed in the the fina financ ncia iall pa page gess of  ECONOMIC TIMES all one has to do is buy a mutual funds and be set on his way to financial freedom. But it’s not that easy. MUTUAL FUNDS are in excellent idea in Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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theory but in reality they haven’t always delivered. Not all mutual funds are created equal, and investing in mutual fund isn’t easy as throughing one’s money at the first sales person who solicits business.

I.I WHAT ARE MUTUAL FUNDS: Needs for capital growth, income and/or income preservation. And a mutual fund  brings the benefit of diversification and money management to the individual investors,  providing an opportunity The popularity of MUTUAL FUNDS over the past few years has soared. The reasons MUTUAL FUNDS make it easy and less costly for investors to satisfy therefore financial success that was once available only to the very rich. A MUTUAL FUND is a body corporate registered with the Securities and Exchange Board of India (SEBI) that pools up the money from individual/ corporate investors and invests the same on behalf of the investors / unit holders in equity shares, govt. securities, Bonds call money market etc. and distributes the profits. In other words a mutual fund allows an investor to indirectly take a position in a basket of asset. UNIT TRUST OF INDIA is the first mutual fund set up under a separate Act, UTI Act in 1963 and started its operation in 1964 with the issue of unit under the scheme US-64. Currently public sector banks like SBI, Canara bank, Bank of India, and Institution like IDBI ID BI,, GI GIC, C, and and LIC LIC HD HDFC FC Fo Fore reig ign n in inst stit itut utio ion n like like Al Alli lian ance ce Mo Morg rgan an Stan Stanle ley, y, Templeton, Principle HSBC and private financial Co. like first India mutual fund DSP Merrill Lynch, Sundaram, Kotak etc.have floated their own mutual funds. Presently there are 33 mutual funds in India and close to 400 mutual fund schemes. Currently the total fund under the mutual fund management in India are a little over Rs. 1,39,000 crores. The private funds account for around 77 percent.

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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ONE CAN MAKE MONEY FROM MUTUAL FUND IN THREE WAYS:

Income is earned from dividends and interest on bonds. A fund pays out nearly all income it receives over the year to fund owners in the form of a distribution.



If the fund sell securities that have increased in price, the fund have a capital gain most fund also pass on this gain to investor in a distribution.



If fund holding increases in price but are not sold by the fund manager, the fund shares increase in price. One can sell then this mutual fund shares the profit.

I.II GROWTH OF MUTUAL FUNDS: The Mutual Fund industry in India has been on a roll as the Asset under Management continues to see strong spurt in growth. The asset under management swelled to Rs. 1,67,978 cr. by May 31 st 2005 from Rs 1,01,565 cr. in January 2000. This apart the industry has also seen a spurt in the number of schemes on offer, which amount to 460 at present, catering to varied needs of investors. A booming economy, soaring stock market, and a conductive regulatory environment, amongst a slew of other factor have added to the growth of the industry. Given a huge opportunity in sub-urban and ruler markets, which lie hitherto untapped, and growing income level in the country, the industries future looks bright.

I.III THE PHASES OF GROWTH: The Indian Mutual Fund industry has come a long way since the inception of UTI in 1963. According to AMFI the evolution of industry can be broadly divided into four   phases, which mark its transaction from the period when UTI ruled the roost to a period of competition and increased awareness among investors.

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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FIRST PHASE (1964-87) UTI remained the only Mutual Funds player in the country till 1987. UTI started its operat ope ration ion in Jul July y 196 1964 4 wit with h a vi view ew to enc encour ouragi aging ng sav saving ingss and inv invest estmen ments ts and   participation in the income, profits and gains accruing to the cooperation from the Acquisition, holding, management and disposal of securities. UTI witnessed a slow and steady growth over the 1970s and 1980s and by the end of 1988 it had an AUM of Rs. 67bn. It still continues to be the largest player in the Domestic Mutual Fund industry with a AUM of Rs.23500 cr. as on March 31st, 2005.

SECOND PHASE (1987-93) Public Sector Mutual Funds set up by public sector banks, Life Insurance Corporation of India and the General Insurance Corporation of India entered the market in 1987.The first known UTI mutual fund was the SBI mutual fund established in June 1987, followed by Canara Bank mutual fund in December 1987, Punjab National bank mutual fund in August 1989,Indian Bank mutual fund in November 1989,Bank of India mutual fund in June 1990 and Bank of Baroda mutual fund in October 1992.LIC set up its mutual fund in June 1989 while GIC established its mutual fund in December 1990. During this period, the total asset of the industry grew to about Rs.610 bn with the total  No. of schemes increasing to about 167 by the end of 1994.

THIRD PHASE (1993-2003) This phase marked the entry of private sector funds. The phase also signaled the intens int ensifi ificat cation ion of the com compet petiti ition. on. Bot Both h dom domest estic ic and for foreig eign n pla player yerss ent entere ered d the market, offering a wide variety of schemes to investors. Kothari Pioneer Mutual Fund was the first private sector fund to be established in association with the foreign funds. The opening up of the market to private players saw the international players like Morgan Stanley, Jar dine Fleming, JP Morgan, George Soros and Capital International entering the market. Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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FOURTH PHASE (SINCE FEB 2003) In February 2003 the Unit Trust of India Act 1963 was repealed and UTI was bifurcated

into two separate entities: Specified undertaking of the Unit Trust of India, which is still under the government of India, and the UTI Mutual Fund Limited. This was done in the wake of the severe payment crisis that the UTI suffered on account of its assured return schemes of US – 64 that finally resulted in an adverse impact on the Indian capital markets .US - 64 was the first scheme launched by UTI with the significant equity exposure and the returns of which are not linked to the market. I.IV TYPES OF MUTUAL FUNDS : Mutual Funds have specific investment objectives such as growth of capital, safety of   principal current income or tax exempt income, one can select one fund or any number  of different funds to help one meets ones specific goals. In general mutual fund fall under 3 general categories : 

Equity fund invest in shares of common stocks.



Fixed income funds invest in government or corporate securities which offer  fixed rate of returns.



Balanced fund invest in a combination of both stocks and bonds.

AGGRESSIVE GROWTH FUNDS :-

These funds seek to provide maximum growth of capital with secondary emphasis on dividend or interest income. They invest in common stocks with a high potential for  rapid growth and capital appreciation. Aggressive growth funds are suitable for those investors who can afford to assume the risk of potential loss in value of their investment in the hope of achieving substantial Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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and rapid gains. They are not suitable for investors who must conserve their principal or  who must maximize their current income.

GROWTH FUNDS:-

Like aggressive growth funds, growth fund generally invests in stocks for growth rather  than income. They are considered more conservative in their approach because they usually invest in established companies to achieve long-term growth. Growth fund  provides low current income but the investor principal is more stable then it would be in an aggressive growth fund. While the growth potential may be less over the short term, many growth funds have superior long-term performance records. These funds are suitable for growth oriented investors but not investors who are unable to as assu sume me ri risk sk or wh who o ar aree de depe pend nden entt on ma maxi ximi mizi zing ng curr curren entt inco income me from from ther theree investments.

GROWTH AND INCOME FUNDS:Growth and income funds seek long-term growth of capital as well as current income. The investments strategies use to reach these goals vary among funds. Growth and income funds have low to moderate stability of principal and moderate   potential for current income and growth. They are suitable for investors who can assume some risk to achieve growth of capital but want to maintain a moderate level of  current income.

FIXED INCOME FUNDS:The goal of fixed income fund is to provide high current income consistent with the level of capital. Growth of capital is of secondary importance. Fixed income funds offer a higher level of current income than money market funds,  but a lower stability of principal. Fixed income funds are suitable for investors who Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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want to maximize current income and who can assume a degree of capital risk in order  to do so.

EQUITY FUNDS:Funds that invest in stocks represent the largest category of mutual fund. Generally the invest inv estme ment nt obj object ective ive of this this cla class ss of fun fund d is lon long-t g-term erm cap capita itall gro growth wth wit with h som somee income. There are however many type of equity funds.

BALANCED FUNDS:-  The Balanced funds aims to provide both growth and income. These funds invest in   both both sha share ress and fix fixed ed inc incom omee secur securiti ities es in the pro propor portio tion n ind indic icate ated d in the their ir off offer  er  documents. It is an idea for investors who are looking for the combinations of income and moderate growth.

MONEY MARKET FUNDS/ LIQUID FUNDS:For the cautious investors these funds provide a very high stability of principal while seeking a moderate to high current income. They invest in highly liquid; virtually risk  free, fre e, sho shortrt-te term rm deb debtt sec securi uritie tiess of age agenci ncies es of the Ind Indian ian gov govern ernmen ment, t, ban banks ks and corporation and treasury bills. Because of their short-term investments, money market mutual funds are able to keep a virtually constant unit price; only the yield fluctuates. Money Mon ey mar market ket fun funds ds are sui suitab table le for tho those se inv invest estors ors who want hig high h st stabi abilit lity y of   principal and current income with immediate liquidity.

SPECIALITY / SECTOR FUNDS:These funds invest in securities of a specific industry or sector of the economy such as health care, technology, leisure, utilities or precious metals. The funds enable investor  to diversify holding among many companies within an industry, a more conservative approach than investing directly in one particular company. Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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Sector funds offer a opportunity for sharp capital gains in cases where the fund’s industry is “in favor” but also entail the risk of capital losses when the industry is out of  favor. While sectors funds restrict holdings to a particular industry, other specialty funds such as index funds gives investors a broadly diversified portfolio and attempt to mirror the performance of various market averages.

OPEN ENDED SCHEMES:Open-ended schemes do not have a fixed maturity period. Investors can buy or sell units at NAV- related prices from and to the mutual fund on any business day. These scheme sch emess hav havee unl unlimi imited ted cap capita italiz lizati ation, on, ope open-e n-ende nded d sc schem hemes es do not hav havee a fix fixed ed maturity, there is no cap on the amount you can buy from the fund and the unit capital keep growing. These funds are not generally listed on any exchange. Open-ended schemes are preferred for their liquidity. Such funds can issue and redeem units any time during the life of schemes. Hence unit capital of open-ended funds can fluctuate on a daily basis. The advantages of open ended schemes are: 1. An Any y ttim imee eexi xitt o opt ptio ion n 2. An Any y ti time me eent nter er o opt ptio ion. n.

CLOSE ENDED SCHEMES:Close-ended schemes have fixed maturity periods. Investors can buy into these funds during the period when these funds are open in the initial issue. After that such scheme cannot issue new units except in case of bonus or right issue. However after the initial issue you can buy or sell units of the schemes on the stock exchange where they are listed. The market price of the unit could vary from the NAV of the schemes due to demand and supply factor 

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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I.V MUTUAL FUNDS IN INDIA:  Mutual Funds in India

UTI

JV’s with foreign Partners Birla Capital Prudential ICICI Alliance Capital Kothari Pioneer 

Private sector  

Foreign Houses

Templeton Alliance Morgan Stanley

Banks SBI CANARA PNB BOI etc.

Public

Indian Houses

TATA JM

Institutions GIC LIC etc.

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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I.VI HOW LONG TO KEEP INVESTMENT TO GET MAXIMUM RETURNS:Get desired returns technically open-ended funds you can withdraw your investments even within a week, but to positive time frame is required are:

Funds

Time Period

Equity Funds Balanced Funds MIP’s Income Funds Liquid Funds

3 Years (plus) 18 months to 3 Years 1 Year (plus) 6 months to 1 Year   few days to 6 months

I.VII WHAT RETURNS CAN I EXPECT IF I KEEP MY MONEY FOR  SUGGESTED TIME FRAMES:-

Funds Sector funds Balance funds MIP’s Pension Plans Income Funds Liquid Funds

Returns 22% to 25% p.a 15% to 18% p.a 12% to 15% p.a 10% to 12% p.a 7% to 9% p.a

Thee abov Th abovee-me ment ntio ione ned d re retu turn rnss in th thee tabl tablee ar aree indi indica cati tive ve and and no nott as assu sure red. d. Al Alll investments in MUTUAL FUNDS are securities and are subject to market risk and the  NAVs of the schemes may go up and down depending upon the factors and forces affecting the security market including the fluctuations in the internal rates .The past  performance of the MUTUAL FUNDS is not indicative of future performance.

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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THE RISK RETURN GRAPHS FOR VARIOUS FUNDS:Sector Funds R  E T U R  N S

Equity Funds Balanced Funds Income Funds Liquid Funds RISKS

The above Graph shows the Risk and Returns generated by different Funds. Liquid Funds are less Risky and also generate less Returns where as Sector Funds are more Risky but generate more Returns by the example of above two Funds it is clear that Risk and Returns are directly proportional to each other. Other Funds like Equity Funds, Balanced Funds and Income Funds are also gives the same percentage of  Returns as the Risk involved.

I.VIII ADVANTAGE OF MUTUAL MUTUAL FUND:Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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The advantages of investing in a Mutual Fund are: •

bestt mut mutual ual fun funds ds des design ign the their ir por portfo tfolio lioss so ind indivi ividua duall Diversification: The bes investments will react differently to the same economic conditions. For example, economic conditions like a rise in interest rates may cause certain securities in a diversified portfolio to decrease in value. Other securities in the portfolio will resp respon ond d to th thee same same ec econ onom omic ic cond condit itio ions ns by incr increa easi sing ng in va valu lue. e. Wh When en a   portf portfoli olio o is bal balanc anced ed in thi thiss way way,, th thee val value ue of the ove overal ralll por portfo tfolio lio sho should uld gradually increase over time, even if some securities lose value.

•

Mostt mut mutual ual fun funds ds pay top topfli flight ght pro profes fessio sional nalss to Professional Professi onal Management: Management: Mos manage their investments. These managers decide what securities the fund will  buy and sell.

•

Regulatory oversight: Mutual funds are subject to many government regulations

that protect investors from fraud. •

Liquidity: It's easy to get your money out of a mutual fund. Write a check, make

a call, and you've got the cash. •

Convenience: You can usually buy mutual fund shares by mail, phone, or over 

the Internet. •

Low cost: Mutual fund expenses are often no more than 1.5 percent of your 

investment. Expenses for Index Funds are less than that, because index funds are not actively managed. Instead, they automatically buy stock in companies that are listed on a specific index. •

Transparency: Mutual Fund schemes are said to be Transparent because they

show the clear allocation of Funds to Investors.

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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  •

Flexibility: Mutual funds are flexible because they change time to time and also

if an Investors wants his money back before the maturity of the Fund He/she can easily redeem it.

 

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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I.IX DRAWBACKS OF MUTUAL FUNDS: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 funds shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they  buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money. •

Fees and commissions:

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

Taxes:

During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made. •

Management risk:

When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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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.

I.X ASSOCIATION OF MUTUAL FUNDS IN INDIA:With the increase in mutual fund players in India, a need for mutual fund association in India was generated to function as a non-profit organization. Associati Association on of Mutual Funds in India (AMFI) was incorporated on 22nd August 1995. AMFI is an apex body of all Asset Management Compani Companies es (AMC), which has been registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members. It functions under the supervision and guidelines of its Board of Directors. Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. It follows the principle of both protecting and promoting the interests of  mutual funds as well as their unit holder 

The objectives of Association of Mutual Funds in India :-  The Association of Mutual Funds of India works with 30 registered AMCs of the country. It has certain defined objectives, which juxtaposes the guidelines of its B Board oard of Directors. The objectives are as follows: 

This mutual fund association of India maintains high professional and ethical standards gin all areas of operation of the industry.



It also recommends and promotes the top class business practices and code of  conduc con ductt whi which ch is fol follow lowed ed by mem member berss and rel relate ated d peo people ple eng engage aged d in the activities of mutual Fund and asset management. The agencies that are by any means mea ns con connec nected ted or inv involv olved ed In the fie field ld of capit capital al mar market ketss and fin financ ancial ial services also involved in this code of cconduct onduct Of the association. Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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  

AMFI interacts with SEBI and works according to SEBIs guidelines in the

mutual fund Industry. 

Association of Mutual Fund in India do represent the Government of India, the Reserve Bank of India and other related bodies on matters relating tto o the Mutual Fund Industry.



It develops a team of well qualified and trained Agent distributors. It implements a pro progra gramme mmerr of tra traini ining ng and certi certific ficati ation on for all int interm ermedi ediari aries es and oth other  er  engaged in the mutual fund industry.



AMFI undertakes all India awareness programmed for investor’s in order to  promote Proper understanding of tthe he concepts and worki working ng of mutual funds.



At last but not the least association of mutual fund of India also disseminate Informati Infor mation’s on’s on Mutu Mutual al Fund Industry and under undertake takess studi studies es and rese research arch either directly or iin n association with other bodi bodies. es.

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I.XI FUTURE OF MUTUAL FUND IN INDIA:By December 2004, Indian mutual fund industry reached Rs 1,50,537 crore. It is estimated that by 2010 March-end, the total assets of all scheduled commercial banks should be Rs 40,90,000 crores. The annual composite rate of growth is expected 13.4% during the rest of the decade. In the last 5 years we have seen annual growth rate of 9%. According to the current growth rate, by year 2010 the asset will be double. Let us discuss the following table: Aggregate deposits of Scheduled Com Banks in India (Rs.Crore) Month/Year

Mar-98 Mar-00 Mar-01 Mar-02

Deposits

60541 0

85159 3

98914 1

-

15

14

Change in % over last yr 

Mar-03

1131188 1280853 13

12

MarSep-04 04 -

4-Dec

1567251 1622579

-

18

3

Source – RBI 

Mutual Fund AUM’s Growth Month/Year 

Mar98

MF AUM's

68984 93717 83131 94017 75306

Change in % over  last yr 

-

Mar00

26

Mar01

13

Mar02

12

Mar03

25

Mar-04 Sep-04 4-Dec 13762 6

15114 1

45

9

149300 1

Source - AMFI 

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Some facts for the growth of mutual funds in India :- 





100% growth in the last 6 years.  Number of foreign AMC's are in the queue to enter the Indian markets like Fidelity Investments, US based, with over US$1trillion assets under management worldwide.



Our saving rate is over 23%, highest in the world. Only channelizing these savings in mutual funds sector is required.



We have approximately 29 mutual funds which is much less than US having more than 800. There is a big scope for expansion.



'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are concentrating on the 'A' class cities. Soon they will find scope in the growing cities.



Mutual fund can penetrate rural like the Indian insurance industry with simple and Limited products.



SEBI allowing the MF's to launch commodity c ommodity mutual funds.



Emphasis on better corporate governance.



Trying to curb the late trading practices.



Introduction of Financial Planners who can provide need based advice.

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I.XII REGULATORY ASPECT :Schemes of mutual funds:

The Asset management company shall launch no schemes unless the trustees approve such scheme and a copy of the offer has been filed with the Board.



Every mutual fund shall along with the offer documents of each scheme pay filing fees.



The offer document shall contain disclosures which are adequate in order to enable the inv enable invest estors ors to mak makee inf inform ormed ed inv invest estmen mentt dec decis ision ion inc includ luding ing the disclosure non maximum investments proposed to be made by the scheme in the listed securities of the group companies of the sponsor. A close-ended scheme shall be fully redeemed at the end of the maturity period. “Unless a majority of  the unit holders otherwise decide for its rollover by passing a resolution”.



The mutual fund and asset management company shall be liable to refund the application money to the applicants:-



If the mutual fund fails to receive the minimum subscription amount referred to in clause (i) of sub- regulation.



If the moneys received from the applicants for units are in excess of subscription as referred to in clause (ii) of sub-regulation.

o

The asset management company shall issue to the applicant whose

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  

application has been accepted, unit certificates or a statement of accounts



specifying the number of units allotted to the applicant as soon as possible



 but not later than six weeks from the date of closure of the initial



subscription list and or from the date of receipt of the request from the unit



Holders in any open ended scheme.

Rules Regarding Advertisement:-



The off offer er doc docume ument nt and adv advert ertis iseme ement nt ma mater terial ialss sha shall ll not be mis misle leadi ading ng or  contain any statement or opinion, which are incorrect or false.

Investment objectives and valuation policies:

The price at which the units may be subscribed or sold the price at which such unit may at any time be repurchased by the mutual fund shall be made available to the investors.

General Obligation:•

Every asset management company for each scheme shall keep and maintain  proper book of accounts, records and document, for each scheme so as to explain its transaction and to disclose at any point of time the financial position of each scheme and in particular give a true and fair view of the state of affairs of the fund and intimate to the board the place where such books of accounts, records and documents are maintained.

•

The financial year for all the scheme shall end as of March 31 of each year. Every mutual fund or the asset management company shall prepare in respect of  each financial year an annual report and annual statement of accounts of the schemes and the fund as specified in Eleventh Schedule. Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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  •

Every mutual fund shall have the annual statement of accounts audited by an audi audito torr wh who o is no nott in any any way asso associ ciat ated ed wi with th the the audi audito torr of the the as assset management comp

Procedure for Action In Case Of Default:-



On and from the date of the suspension of the certificate or the approval, as the case may be, the mutual fund, trustees or asset management company, during the  period of suspension and shall be subject to the direction of the Board with regard to any records, documents, or securities that may be in its custody or  control relating to its activities as mutual funds, trustees or the asset management company. Restrictions on Investments:



A mutual fund scheme shall not invest more than 15% of its NAV in debt instrument issued by a single issuer, which are rated not below investment grade  by a credit rating agency authorize to carry out such activity under the act. Such investment limit may be extended to 20% of the NAV of the scheme with the  prior approval of the Board of Trustees and the Board of Asset Management Company.



A mutual fund Scheme shall not invest more than 10% of its NAV in unrated debtt ins deb instru trumen mentt is issue sued d by a sin single gle issue issuerr and the tot total al inv invest estmen mentt in suc such h instruments shall not exceed 25% of the NAV of the Board of Trustees and the Board of Asset management.



  No mutual funds under all its schemes should own more than 10% of any company’s paid up capital carrying voting rights. Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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  

Such transfers are done at the prevailing market price for quoted instrument on spot basis.



Thee secu Th securi riti ties es so tr tran ansf sfer erre red d shal shalll be in conf confor ormi mity ty wi with th the the inve invest stme ment nt objectives of the scheme to which such transfer has been made.



A scheme may invest in another scheme under the same asset management company or any other mutual fund without charging any fees, provided that aggregated intercourse inter scheme investment made by all schemes under the same management or in schemes under the management of any other asset management company shall not exceed 5% of the net asset value of the mutual fund. The initial issue expenses in respect of any scheme may not exceed 6% of 



the funds raised under that scheme. Every mutual fund shall buy and sell securities on the basis of deliveries and shall in all cases of purchases, take delivery of relative securities and in all cases of sale, deliver the securities and shall in no case put itself in a position whereby it has to make short sale or carry forward transaction or engage in Badla finance.



Every mutual fund shall get the securities purchased or transferred in the name of the mutual fund on account of the concerned scheme, wherever investments are intended to be of long-term nature.



Pending deployment of funds of a scheme a mutual fund can invest the funds of  the scheme in short term deposits of scheduled commercial banks.



 No mutual fund scheme shall make any investment in ; o

Any unlisted securit security y of an associate or g group roup company of the sponsor or 

o

Any security issued by way of private placement by an associate or group company of the sponsor.

The listed securities of group companies of the sponsor which is in excess of 30% of  the net assets (of all the schemes of a mutual fund) Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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  

 No mutual fund scheme shall invest more than 105 of its NAV in the equity shares or equity related instrument of any company. Provided that, the limit of  10 percent shall not be applicable for investments in index fund or sector or  industry specific schemes.



A Mutual fund scheme shall not invest more than 5% of its NAV in the equity shares or equity related investments in case of open-ended schemes and 10 % of  its NAV in case of close ended schemes.

I.XIII HOW TO JUDGE A MUTUAL FUND:Consider this – The Indian mutual fund (MF) industry reached Rs. 1,50,537 crore in December 2004. The industry witnessed a 100% growth in the last six years. By year  2010, MF assets are expected to double. India has 29 MF’s compared to 800 in the US. In the last one year, the number of retail investors in India has increased steadily. The  big question is how to judge a MF before investing? It is important for an investor to consid con sider er a fun fund's d's per perfor forman mance ce ove overr sever several al yea years. rs. Dif Differ ferent ent fun fund d man manage agers rs ado adopt pt different strategies to improve performance. While one fund manager may have played it cautious by investing in good quality stocks over the years and given a return of 30% over a five-six year period, another one who invested in speculative stocks may have struck gold in that year, thereby outperforming tits counterpart by a long way. Thus it is important to look at consistency of returns over a period of time rather than going by absolute returns generated in the short term. Let us look at the advantages of investing in a MF. To begin with, you don't have to make your investment decisions. Your money is handled by top professionals hired by fund houses who decide what securities the fund will buy and sell. Moreover, MF industry is highly regulated, thus, protecting investors from fraud. Regulators block  funds from having more than a certain percentage of the fund in any one firm. This

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 prevents from over exposure in one particular industry or stock. It's easy to get your  money out of a MF. It is very convenient to buy a MF unit over phone or Internet. An investor should consider certain drawbacks before investing in MF. Unlike a fixed deposit, MF does not give any guarantee on returns. If the entire stock market declines in value, the value of MF shares will go down as well. An investor has to shell out an entry and exit load. When you invest in a MF, you depend on the fund's managers to make the right decisions regarding the fund's portfolio. If the manager does not perform well, you might not make as much money on you investment as you expected. The short-term focus of money managers and pressure from unit holders for immediate performance are obstacles to long-term growth.Most funds lack the cash reserves to pay off the massive redemptions which will follow a market panic. Fund managers can change without notice.

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I.XIV THE HISTORY OF MUTUAL FUNDS:THE INDIAN TIMELINE:1963: UTI is India’s first mutual fund. 1964: UTI launches US-64. 1971: UTI’s ULIP (Unit-Linked Insurance Plan) is second scheme to be

launched. 1986: UTI Mastershare, India’s first true ‘mutual fund’ scheme, launched. 1987: PSU banks and insurers allowed to float mutual funds; State Bank of 

India (SBI) first off the blocks. 1992: The Harshad Mehta-fuelled bull market arouses middle-class interest

in shares and mutual funds. 1993: Private sector and foreign players allowed; Kothari Pioneer first private fund house to start operations; SEBI set up to regulate industry. 1994: Morgan Stanley is the first foreign player. 1996: Sebi’s mutual fund rules and regulations, which forms the basis of most

current laws, come into force. 1998: UTI Master Index Fund is the country’s first index fund. 1999: The takeover of 20th Century AMC by Zurich Mutual Fund is the first

acquisition in the mutual fund industry. 2000: The industry’s assets under management crosses Rs 1,00,000 crore. Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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2001: US-64 scam leads to UTI overhaul. 2002: UTI bifurcated, comes under SEBI purview; mutual fund distributors

 banned from giving commissions to investors; floating rate funds and Foreign debt funds debut. 2003: AMFI certification made compulsory for new agents; fund of funds launched.

I.XV STRUCTURE OF MUTUAL FUND IN INDIA:The Indian mutual fund industry is dominated by the Unit Trust of India which has a total corpus of Rs.700bn collected from more than 20 million investors. The UTI has many funds schemes in all categories i.e. equity , balanced , income etc with some   being open ended and some being close ended . The unit schemes 1964 commonly referred to as US 64 , which is a Balanced fund is a biggest schemes with a corpus of  about Rs. 200 billion UTI was floated by financial institution and is governed by a special act of parliament . Most of its investors believe that UTI is government owned and controlled which while legally incorrect, is true for all practical purposes. The second largest category of mutual funds is the ones floated by Nationalize Banks. Canbank Asset Management floated by Canera Bank and SBI Funds Management floated by State Bank of India are the largest of it. GIC AMC floated by General Insurance Corporation and Jeevan Bema Sahayog AMC floated by LIC are some of the other prominent ones. The aggregate corpus of funds managed by this category of  AMCs is about 150bn. The third largest category of mutual fund is the ones floated by the private sector and  by foreign Asset Management Company . The largest of these are Prudential ICICI AMC and Birla Sunlife AMC. The aggregate corpus of asset managed by this category of AMCs is in excess of Rs. 250bn.

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I.XVI Some of AMCs operating operating currently are:NAME OF AMC Alliance capital asset management (I)Pvt. Ltd

OWNERSHIP Private foreign

Birla Su Sunlife Asset Ma Management Company ltd. Bank of Baroda Asset management Company LTD

Private In Indian Bank

Bank of India Asset Management Company Ltd Bank Canbank Investment Management Services Ltd Bank Cholamandalam Cazenove Asset Management Company Ltd. Dundee Asset Management Company Ltd

Private foreign Private foreign

DSP Merrill Merrill Lynch Lynch ASSET ASSET Managem Management ent Compan Company y Ltd Ltd Escorts Asset management ltd

Private Private foreign foreign Private Indian

First India Asset Management Ltd Private Indian GIC Asset Management Company Ltd. Institution IDBI Investment Management Company Ltd Institution Indfund Management Ltd Bank ING Inves Investme tment nt Asset Asset Manag Manageme ement nt Compa Company ny Pvt. Pvt. Ltd Ltd

Private Private foreig foreign n

J M Capital Management limited

Private Indian

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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Jardine Fleming Asset Management ltd Private foreign Kotak Mahindra Asset Management Company Private Indian Kothari Pioneer Asset Management Company

Private Indian

Morgan Stanley Morgan Stanley Asset Asset Manag Managemen ementt Comp Company any Pvt Ltd Punjab National Bank Asset Management Company Ltd

Private Private foreign foreign

Reliance Capital Asset Management Company State Bank of India Funds Management ltd.

Private Indian

Bank

Bank Shriram Asset Management Company Ltd. Private Indian Sun F and C Asset Management Company Ltd. Private foreign Sundar Sund aram am Newt Newton on Asse Assett Man Manag agem eme ent Compa ompany ny ltd ltd Tara Asset Management Company Ltd.

Pr Priv ivat ate e for forei eign gn Private Indian

Credit Capital Asset Management Company Ltd Private Indian Templeton Asset Management Company Ltd Private foreign Unit Trust Of India Institution

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CHAPTER:- II   PROBLEM STATEMENT AND OBJECTIVE OF THE   STUDY:-

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II.I PROBLEM STATEMENT:Due to the falling Rate of Interest on Bank deposits, it is obvious that Investment in Mutual Fund will grow in year to come. However lack of knowledge of Mutual Funds is a hindering factor in expected growth of Mutual Funds Business. Under  noted problems are envisaged in this area: •

Difficulty in convincing people for investment.

•

Difficulty to change mind of the investor according to age and Profession.

•

Difficulty to make an approach to investors.

•

Difficulty to take an appointment with professional people.

•

Difficulty to get the documents required for formalities from investors

•

Difficulty to overcome an impassionate person who wants return in less time.

•

Difficulty in follow up the people whose names are being stored in a data.

•

Difficulty to remove the fear of risk from the minds of investors.

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II.II OBJECTIVE OF STUDY:In view of the problem cited above, the study aims at analyzing the following major  issues: MUTUAL FUNDS FOR INDIVIDUAL INVESTORS IN INDIA. •

•

To know the different Asset management companies involve in MUTUAL FUND.

•

To know the different aspects of MUTUAL FUND according to different age,  profession etc.

•

To see the interest of people in investing in MUTUAL FUNDS.

•

To know the future of MUTUAL FUND FUNDS S in India.

•

•

To know the different attit attitudes udes of peopl peoplee regar regarding ding risk, rate of retur return, n, period of  investment etc. To study the diversification of mutual fund.

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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CHAPTER :- III   

 RESERCH METHODOLOGY:

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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METHODOLOGY Y OF STUDY:-  III.I METHODOLOG Research can be defined as systemized effort to gain new knowledge. A research is carried out by different methodologies which have their own pros and cons. Research methodology is a way to solve research in studying and solving research problem along with logic behind them are defined through research methodology. Thus while talking about research methodology we are not only talking of research methods but also considered the logic behind the methods. We are in context of our research studies and explain why it is being used a particular method or technique and why the others are not used. So that research result is capable of being evaluated either by researcher himself  or by others

III.II Research Methodology: Methodology:-Resear Res earch ch has its spe specia ciall sig signif nifica icance nce in sol solvin ving g var variou iouss ope operat ration ional al and pla planni nning ng  problem of business and industry. Research methodology is the way to systematically solve the research problem.

III.III ASSUMPTIONS:1. It has has be been en assu assume med d th that at samp sample le of 10 100 0 resp respon onde dent ntss repr repres esen ents ts the the wh whol olee  population. 2. The in informa formation tion g given iven b by y the ccusto ustomer mer is unbia unbiased sed

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III.IV Literature Survey:The project is based on pure findings of facts. Development of Working Hypothesis:The Hypothesis could be developed by discussing with the concerning department heads and guides about this exploratory research and reached to the conclusion that the data is to be collected by personal interaction with the customers, asking them about the services and the improvement required. First of all they are aware of mutual funds or  not and then analyzing the findings to reach to the objectives of research. Collection of Data:-There was secondary data available for the study and also primary data collected by carrying out by the survey which has been carried out to through  personal interviews of the customers. The sample size was roughly 100. a. Sam Sampli pling ng metho methods: ds: - A sam sample ple is the rep repres resent entati ative ve of the popu popula latio tion n whi which ch will predict the behavior of the whole universe.   b. The samp samplin ling g siz sizee put under two cate categor gories ies:: Pro Probab babili ility ty sampl sampling ing and non  probability sampling.

III.V Probability sampling:This is the process of selecting the elements or group of elements from as well defined  population by such procedure which gives every element in the population an equal chance of being selected for observation. The sampling method use for this survey is the area sampling which is a sub type of probability sampling.  

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III.VI Sampling size:Large sample gives reliable result than small sample. However, it is not feasible to target entire population or even a substantial portion to achieve a reliable result. So, in this aspect selecting the sample to study is known as sample size. Hence, for my project my sample size was 100.The Sample Size of 100 is not enough to draw a conclusion but as per the time assigned it was difficult to take a sample size more than 100.The Sample Size consist of both the Professional and Business class people. IT peoples, Doctors, Jewelers, Timber Merchants & Real estate Agents are taken as Sample . III.VII Execution of the project:It is the very important step in the research process accuracy findings depends on how systematically the study has been carried out in time so that it can make some sense when required. I have executed the project after prior discussion with the guide and structured in following steps: a. Preparation of questionnaire. b. Collection of list of some of the clients interview of the customer so that

more interaction is impossible and the variety of responses can be registered to have a good data for analysis. c. Visiting the corporate and asking about their feedback on the mutual funds

services they are availing. Try to find out their satisfaction level with the existing mutual fund.

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CHAPTER :- IV   LIMITATIONS:  

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IV.I Limitations:Every work has its own limitation. Limitations are extent to which the process should not exceed. Limitations of this project are:1. Duration of Project was not enough to make a conclusion on such a vast subject

time constraint has become a big limitation. 2. The Sample Size being taken for drawing a conclusion was too small to get an

accurate result. 3. Chang Changing ing the Men Mentali tality ty of people fo forr invest investing ing in a partic particular ular Fi Financi nancial al Produ Product ct is a very difficult task. All the above mentioned statements are the limitations of the project. Time, Sample Size & Mentality of investor are the main limitations of the project. The study is  b bei eing ng do done ne by ta taki king ng and and ke keep epin ing g al alll th thee limi limita tati tion onss in mi mind nd.. Th Thee proj projec ectt is completed in prescribed time. To find the Awareness of Mutual Fund the Sample Size is not at all enough because the population size is much bigger than the sample size and the last limitation was to change the mentality of the investor to invest in a  particular type of the Investment Product. As the Indian Market is having a large number of potential customers to draw a conclusion in such a small size may not be reliable.

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CHAPTER:- V   ANALYSIS OF MUTUAL FUNDS:- 

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V.I ANALYSIS OF MUTUAL FUNDS ON THE BASIS OF SCHEMES:Thee sche Th scheme mess ha have ve been been di divi vide ded d in into to 10 di diff ffer eren entt ca cate tego gori ries es for for the the pu purp rpos osee of  meaningful comparison. The categories are as follows: 1. Equity diversified Funds. 2. Equity ELSS Funds. 3. Equity sectoral Funds. 4. Balanced Funds. 5. Income Funds. 6. Liquid Funds. 7 .Gilt Funds. 8. MIPS (Monthly income plans) 9. Index Funds. 10. Hybrid Funds.

There are many asset management companies being involved in mutual fund but people inv nves estt

th thiing rep eput uted ed mut utua uall

fu fund nd li like ke IC ICIC ICII

PRU RUD DENTIAL TIAL,,

FR FRA ANKLIN LIN

TEMPLETON, HSBC, KOTAK, HDFC etc. All the companies have different mutual fund schemes vary from different needs of a customer. Like in the month of June the IPO of Kotak contra has been issued with different concept and also being accepted by the investors. Where as, the IPO of SBI comma is been introduced in the July and till now being appreciated by the investors. The mutual fund is been described by its  NAVs.

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Sr No.

SCHEME NAME

NAV AS ON 15/06/09

1

HDFC TAX SAVER

85.7

2

FRANKLIN TAX SHIELD

78.25

3 4

SUNDARAM TAX SAVER UTI EQUITY TAX SAVING

15.34 20.59

5

PRINCIPAL TAX SAVER ALLIANCE CAPITAL TAX RELIEF

122.2

6

96

141.14

7

PRU ICICI TAX PLAN

57.94

8

BIRLA EQUITY PLAN

43.08

In this table as on 15/07/05 HDFC TAX SAVER is having highest NAV as compared to FRANKLIN, SUNDARAM, UTI etc. These are the top eight best equity linked saving schemes in the mid of July.

 

V.II COMPARISAN BETWEEN BANKS AND MUTUAL FUNDS IN DIFFERENT ASPECTS:BANKS Returns

Low

MUTUAL FUNDS Better

 

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  Administrative exp. Risk Investment option Network Liquidity

High Low Less High Penetration At a cost

Low Moderate More Low but improving Better  

Quality of asset Interest calculation Guarantee

N ot TBalance ransparebetween nt Min. 10th and 31st of  month. Max. Rs. 1Lakh on Deposit

Transparent Everyday None

In the above table the Comparison is made between Banks and Mutual Funds with different aspects. Now a day due to low Rate of interest people prefer to invest in those  products which give more Returns in less time without Risk. Now a days also nearly 40% of people keep there money in Banks because they are less Risky (reference with chart 8.2). The Returns expected in Mutual Funds are high where as in bank it is low   but the Guarantee of money back is more than Mutual fund. Thus both Bank and Mutual Fund are good enough in themselves. It is depend on the Investor what type of  investment they want to do.

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CHAPTER :- VI 

 DATA COLLECTION:

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DATA COLLECTION: Proceeding further after determines the Methodology and limitation of the study the next step is to analyze the Data being collected for the study. Data is being collected from various sources like:

Questionnaire



Personal visit



Telephonic Information etc.

VI.I QUESTIONAIRE:-

Questionnaire is a written form being given to the prospective investor to give feedback about the services provided to them and also to find the satisfaction level of the investor for a particular investment product. After filling up of form the next step is to evaluate the form in different dimensions and draw a conclusion. It is difficult to get a Questionnaire filled by corporate because of time they don’t have time to fill the Questionnaire so at the time of meeting them  personally or after that the Questionnaire is filled by us. The Sample size taken for this study is 100 which is not enough to draw a conclusion but due to time limitation only this much size has been taken into Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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consideration. After analyzing the Questionnaire the following evaluation has  been done:CATEGORY OF INVESTORS

IT PEOPLE DOCTORS TIMBER MERCHANTS JEWELLERS REAL ESTATE AGENTS

TOTAL INCOME

RISK

HIGH HIGH HIGH HIGH HIGH

RETURN

LOW LOW HIGH HIGH HIGH

HIGH HIGH HIGH HIGH HIGH

After analyzing the above table the conclusion was made that the business people are more Risk taker while professional people are less Risk taker where the return expected in both the case are high. VI.II PERSONAL VISIT:-

The second way of collecting data is Personal Visits to the Corporates personally by fixing an appointment. Personal Visit gives a clear picture of the conclusion drawn in Questionnaire It gives a clear view of the client Awareness about the product .Some of the difficulties in making Personal Visits are:

To take a time or appointment from the corporates.



To convenes investor to invest in a particular product.

Personal Visit gives a clear picture about the Investment areas of both the categories PROFESSIONAL PEOPLE PPF KISAN VIKAS PATR BANK ACCOUNT INSURANCE FURTHER STUDIES etc.

BUSINESS PEOPLE LAND GOLD STOCKS INSURANCE VEHICLES etc.

From the above table it is clear that the Professional people invest in the Value Added items where as Business people they invest in Future Prospect assets like land, gold etc. VI.III TELEPHONIC INFORMATION:-

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The further source of collecting data is telephonic information with the existing customer and the prospective investors. It is very difficult to reveal the data of  investors from the company itself because it has been kept as a secret document. After getting a data some problems too come in the way. Some are:

People are not ready to listen.



People ask question like from where did you get the number?



From this source not much of the Information is drawn.



Few res respon ponden dents ts whe where re not hap happy py wi with th the lev level el of cus custom tomer er ser servic vices es endured by



Angel broking pvt. Ltd. Particularly about the delays in replying or not replying the queries raised by them.

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CHAPTER :- VII   INTERPRETATION AND ANALYSIS OF   DATA:-

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CHART:- VII.I From the data collected through the questioner, observation made during the personal visits the data revealed following information :-

PERCENTAGE OF INVESTMENT TO TOTAL INCOME The following table and pie chart throw the light on the percentage of saving out of  income.

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INCOME Over 50% 30%-50% 10%-30% 10% &  below

 NO. of  PEOPLE 1 5 56

PERCENTAGE 1% 5% 56%

38

38%

Percentage in Income People Invest Invest

1%

5%

38%

56%

Ov e err 50%

30- 50%

10- 30%

Below 10 10%

 

In the above chat it has been observed that people invest mostly between 10% to 30% of their income as the moderate level of income is in the range of rupees 30,000 to 40,000. There are very few people who invest above 50% of their Income as their  income level is too high say above Rs 10,000,00. Investors are having different responsibilities toward the society and family due to which they are not able to invest more money money in Financia Financiall product .The .There re are many peopl peoplee who invest only 10% of  there income according to total Sample Size.

CHART:-VII.II

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INVESTMENT IN FINANCIAL PRODUCTS FINAN INANCI CIAL AL IN INST STR RUM UME ENT NTS S

% OF OF IINV NVES ESTM TME ENT

INSURANCE

28%

MUTUAL FUNDS SHARE REAL ESTATES PPF BONDS

25% 13% 9% 19% 6%

These are many Financial Instrument in Indian Market. People in early days kept their  money in Bank. They think Bank is the only place where the money is safe till today also 40% of people feel the same but many of them have started investing in other  Financial Products like Insurance, Stock Markets etc. The Post Office savings are less  preferred by the Investors due to the less Returns in more Time. Businessmen mostly invest in tangible assets like land, building, gold etc. 6% 28%

19%

INSURANCE MUTUAL FUNDS FUNDS SHARE REAL REAL ESTATE

9%

PPF 13%

25%

BONDS

market mar ket cam camee int into o exi exist stenc encee onl only y fro from m early early 90s tha that’s t’s why the per percen centag tagee investment in stocks is low as In this chart it is clear that people mainly invest and keep their money in banks .Stock compared to banks. People generally invest in risk free financial product like PPF, NSC etc. as they get tax exemption. Investment in Insurance is also preferred by people because it is not a risky instrument.

CHART:-VII.III Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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AWARENESS OF MUTUAL FUNDS OUT OF 100 PEOPLE:Awareness of Mutual Funds

7%

Yes No

93%

In chart VII.III the awareness of mutual fund is determ determined ined in the percentag percentagee terms only 7% of the total population are not aware of MUTUAL FUNDS. As Mutual Funds of India are growing rapidly the awareness of Mutual Funds is increasing among the Investors although & every Investor knows about Mutual Funds by its nomenclature. They are not really aware of the concept.

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CHART :- VII.IV PERCEPTION PERCEPTI ON ABOUT MUTUAL FUND

Safe Risky Other

10% 28% 62%

Perception of Investors

10%

Safe 28% 62%

Risky Others

From the above pie chart it is clear that people perceive mutual fund as an risky product whereas 62% of investors believe that mutual fund gives high returns. Only 10 % of people feel that it is safe. Out of 100 sample size it is very difficult to determine the exact perception of investors. Due to continuous increase in mutual fund industries the perception of people are changing slowly.

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CHART :-VII. V COMPARITIVE STUDY OF RISK , INVESTMENT AND RETURN . GAGE ROUP 25-35 35-45 45-60 60& ABOVE

RISK 60% 25% 10% 5%

RETURN INVESTMENT 35% 45% 15% 15% 20% 10% 30% 30%

Risk Return and Investment Chart according to different age group 60% 50% 40% RISK

30%

RETURN

20%

INVESTMENT

10% 0% 25-35

45-60

In chart VII.V above it is determined that p people eople of the age group 25-30 yrs are more risk takers as compared to other age groups. However they are able to invest less because they do not h have ave any responsibil responsibility ity toward the society society and family. They also invest less because they don’t get proper guidance. As the age increases the saving percentage decrease but the people above 55 are keener to invest because they become free from all the responsibilities of the family and society. At this stage they need continuous flow of income. Middle age people of the age group of 35-45 yrs. are not investing much because they are bound to many responsibilities towards family and society. Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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CHART:- VII.VI IDENTIFICATION IDENTIFICATIO N OF MUTUAL FUND COMPANIES ASPECTS Brand Name Good Services High Yield Advertisement Any other reason

PERCENTAGE 39 24 15 10 12

40 35 30 25 Percentage 20 Series1

15

Series2 10 5 0 Brand Name

Good Services

Hig High h Yeild Advertiseme ertisement nt

Any other  other  reason

Aspects

From the above chart it is clear that Brand Name plays an important role for attracting investors. Secondly, good services are also expected by an investor from the companies. In other reasons investors generally pointed out the identification of the companies known by their friends or relatives. Advertisements and high yield are the secondary aspects of identifying the mutual fund industries.

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CHART :- VII.VII COMPARISON ON THE BASIS OF PLACE:Awareness in Mutual Fund out of  100 people 80

70

  e    l 60   p   o   e    P 40    f   o   o 20    N

30

Series1

0 Pune

Bhilai Place

In chart VII.VII it is clear that the people staying in small town are less aware of  MUTUAL FUNDS as compared to big cities. The approximate population of Pune is 7 times more than Bhilai . Investors of small place like Bhilai are less aware of the Mutual Fund & they feel it as a risky Financial Product where as the investors of Pune are fully Aware of the concept of the Mutual Fund and evince interest in investing in new IPO’s etc.

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CHART :- VII.VIII RISK TAKEN BY DIFFERENT AGE GROUP :AGE GROUP 25-35 35-45 45-60 60 & above

RISK TAKEN IN PERCENTAGE 60 20 17 3

RISK TAKEN IN PERCENTAGE

3% 17% 25-35 35-45 45-60 20%

60%

60 & above

In chart VII.VIII the risk taking ability are being depicted. The person of younger  younger  age are willing to take more risk as compared to the elder age group people. The middle age people do not take much risk because of much responsibility toward family and society With reference to this chart only 17% of income of middle age  people is being invested in risk prone securities.

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CHART :- VII.IX PERCENTAGE OF TOTAL INCOME INVEST IN MUTUAL FUND:INVESTORS CATEGORY IT SECTOR PEOPLE DOCTORS TIMBER MERCHANTS JEWELLERS REALESTATE

% OF TOTAL INCOME INVEST IN MUTUAL FUNDS 50% 30% 7% 3%

AGENTS

10% PERCENTAGE OF TOTAL INCOME INVEST IN MUTUAL FUND

IT SECTOR PEOPLE

10 10% % 3%

DOCTORS

7%

50%

TIMBER MERCHANTS JEWELLERS

30% REALESTATE AGENTS

In the Pie chart above it is clear that professional people are more indented to invest in comparison with business people who are high risk takers. Business people are more in dined to invest in real estate, land etc. This is because business people want money in

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less time as and when required while Professional people believe in continuous flow of  money.

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CHAPTER :- VIII   PROJECT FINDINGS AND  RECOMMENDATIONS:-

VIII.I PROJECT FINDINGS:Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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

There is a great potential for investment in Mutual Funds as people wants to save for various future obligation.



Since Rate of Interest on Bank deposit is falling people will be attracted towards investments in Mutual Funds because of high rate of returns.( with reference to VII.IV)



Comparatively people of small towns are less aware of other investment avenues viz Mutual Fund.( with reference to VII.VII).



People of young age group are ready to take risk and they can be targeted for  investment in Mutual Fund. (with reference to VII.VIII).



Some of the people who were personally contacted showed reservation about dealing with MetLife India Insurance Co. Ltd. (with reference to VI.III)

VIII.II RECOMMENDATION:•

It is seen that MetLife brand is not seen enough in the market place and hence the brand is invisible to the naked eyes of the consumer and hence MetLife should beef up its publicity campaigns and promotional activities so that MetLife becomes an easily recognizable brand.

•

For creating a brand image in our country MetLife should go for a brand ambassador.

•

•

In MetLife, they should provide training to its employees in the field of  Insurance, Stock broking, Mutual fund etc. MetLife should conduct more surveys in order to interact with customer  to know their preferences for improving its services.

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CHAPTER:-IX 

 BIBLIOGRAPHY:-  

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IX.I REFERENCES:-

1.www.njindiainvest.com 2.http://mutualfunds.about.com 3.www.shcil.com 4.I. M Panday 5.Fact Sheet of various Mutual Funds. 6. C.R.Kothari Research methodology

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IX.II QUESTIONAIRE:-

1.WHAT PERCENTAGE OF INCOME DO YOU INVEST?    

OVER 50% 30% TO 50% 10% TO 30% Below 10%

2.WHAT ARE THE VARIOUS INVESTMENT SCHEMES IN WHICH YOU HAVE INVESTED?      

Insurance Mutual funds Shares Real Estate PPF (Public provident Funds) Bonds

3.WHAT ARE THE INVESTMENT?   TYPE OF INVESTMENT INSURANCE MUTUAL FUNDS SHARE REAL ESTATE PPF BONDS

BREAK

UP

IN

PERCENTAGE

TERMS

TO

YOUR 

PERCENTAGE

  4.ARE YOU AWARE OF MetLife?  

Yes  No Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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  5.WHAT IS YOUR PERCEPTION ABOUT MUTUAL FUNDS?   

Safe Risky Others

6. WHAT ARE DIFFERENT TYPES OF MUTUAL FUNDS ARE YOU AWARE OF? 

  

 

Growth schem Growth schemes. es.(provide appreciation of capital over medium to long term) Income schemes.(provide regular and continuous income to investor) Balance schemes.(provide both growth and income) Money market and Liquid Schemes.(provide easy liquidity preservation of capital and moderate income). Tax saving schemes.(offer tax rebates under tax laws) Guilt funds(generating returns by investing in securities created and issued  by a central gov. or state gov.)

7. WHICH OF THEM DO YOU PREFER?      

Growth schemes Income schemes Balance schemes Money Market and Liquid schemes Tax saving schemes Guilt Funds

8. DO YOU THINK THE MUTUAL FUNDS ARE NOT AS POPULAR IN INDIA AS IN OTHER COUNTRIES?  

Risk involved as returns are not assured. Any other reason please specify…………………………………………

9.HOW DO YOU LOOK MUTUAL FUND COMPANIES? 

Brand Name



Good Service Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

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

High Yield Advertisement 



Any Other Reason……………………………...........................................



  10.NAME 11.AGE    

25-35 35-45 45-60  60 & above

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