awarness & scope of mutul fund [karvey]

8/7/2019 AWARNESS & SCOPE OF MUTUL FUND [KARVEY]

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ACKNOWLEDGEMENT

I take immense pleasure in completing this project and submitting the final project report.

The last 20 days with KARVY STOCK BROKING LTD has been full of learning and sense of

contribution toward the organization. I would like to thank KARVY STOCK BROKING 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 person who helped the

undersigned actively or passively in the completion of successful project.

In this context as a student of SADHANA CENTRE FOR MANAGEMENT AND

LEADERSHIP DEVELOPMENT, Pune I would first of all like to express my gratitude to

Mr.RAVI GAIKWAD for assigning me such a worthwhile topic AWARENESS AND SCOPE

OF MUTUAL FUND to work upon in KARVY STOCK BROKING LTD.

During the actual project work, Mr. Kuldeep Bhorkar (Sr. Relationship Manager) has been a

source of inspiration through his constant guidance; personal interest; encouragement and help. I

convey my sincere thanks to him. In spite of his busy schedule he always find time to guide me

through the project. I am also grateful to him for reposing confidence in my abilities and giving me

the freedom to work on my project.

The project couldnt have been complete without timely and vital help of other office staff. Special

thank to Mr. Ninad Raghatate, Mr. Vikrant Joshi, Mr. Vijay singh, Ms. Sonal Chopra, Ms.

Shweta Singh & last but not the least Mr. Abhijeet sen for their invaluable guidance, keen interest,

cooperation, inspiration and of course moral support through out my project session.AMIT SHARMA

2005 A-38

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INDEX

No. TOPIC Page no.

1. EXECUTIVE SUMMARY 4

2. COMPANY PROFILE 5

3. INTRODUCTION - MUTUAL FUNDS 15

INVESTMENT AND YOU

MUTUAL FUNDS AND YOU

HISTORY OF MUTUAL FUNDS

TYPES OF MUTUAL FUNDS

ADVANTAGES AND DRAWBACKS

FUTURE OF MUTUAL FUNDS

HOW TO JUDGE A MUTUAL FUND

AMCS OPERATING IN INDIA

COMPARISON OF MUTUAL FUNDS

AMFI AND MUTUAL FUNDS

4. PROJECT ANALYSIS 44

DATA COLLECTON 46

DATA INTERPRETATION 48

5. PROJECT FINDINGS AND RECOMMENDATIONS 58

6 QUESTIONAIRE 60

7. BIBLIOGRAPHY 62

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EXECUTIVE SUMMARY: -

The project titled AWARENESS AND SCOPE OF MUTUAL FUND being carried out for

KARVY STOCK BROKING LTD.

KARVY operates in various financial products and services like, Consultancy, Stock Broking,

Mutual Fund, Insurance, 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 days 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 this project the great emphasis is given to the investors mind in respect to investment in Mutual

Fund .The needs and wants of the client is taken into consideration.

I hope KARVY, Pune will recognize this as well as take more references from this project report.

The main objective of this project is to know the Awareness of Mutual Fund among investors 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.

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OVERVIEW: -

KARVY, is a premier integrated financial services provider, and ranked among the top

five in the country in all its business segments, services over 16 million individual

investors in various capacities, and provides investor services to over 300 corporates,

comprising the who is who of Corporate India. KARVY covers the entire spectrum of

Financial services such as Stock broking, Depository Participants, Distribution of

Financial products - mutual funds, bonds, fixed deposit, equities, Insurance Broking,

Commodities Broking, Personal Finance Advisory Services, Merchant Banking &

Corporate Finance, placement of equity, IPOs, among others. Karvy has a professional

management team and ranks among the best in technology, operations and research of

various industrial segments.

EARLY DAYS

The birth of Karvy was on a modest scale in 1981. It began with the vision and enterprise of asmall group of practicing Chartered Accountants who founded the flagship company KarvyConsultants Limited. Company started with consulting and financial accounting automation, and

carved inroads into the field of registry and share accounting by 1985. Since then, they haveutilized their experience and superlative expertise to go from strength to strengthto better theirservices, to provide new ones, to innovate, diversify and in the process, evolved Karvy as one ofIndias premier integrated financial service enterprise.

Thus over the last 20 years Karvy has traveled the success route, towards building a reputation asan integrated financial services provider, offering a wide spectrum of services. And we have madethis journey by taking the route of quality service, path breaking innovations in service, versatilityin service and finallytotality in service. Their highly qualified manpower, cutting-edgetechnology, comprehensive infrastructure and total customer-focus has secured for them theposition of an emerging financial services giant enjoying the confidence and support of an enviable

clientele across diverse fields in the financial world.

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Mile Stones:

PRINCIPAL ACTIVITY OF KARVY ARE-

(1) KARVY CONSULTANTS LIMITED

As the flagship company of the Karvy Group, Karvy Consultants Limited has always remained atthe helm of organizational affairs, pioneering business policies, work ethic and channels ofprogress.

Having emerged as a leader in the registry business, the first of the businesses that Karvy venturedinto, company have now transferred this business into a joint venture with Computer share Limitedof Australia, the worlds largest registrar. With the advent of depositories in the Indian capital

market and the relationships that Company have created in the registry business, Karvy believe thatthey were best positioned to venture into this activity as a Depository Participant. Karvy were oneof the early entrants registered as Depository Participant with NSDL (National SecuritiesDepository Limited), the first Depository in the country and then with CDSL (Central DepositoryServices Limited). Today, Karvy service over 6 lakhs customer accounts in this business spreadacross over 250 cities/towns in India and are ranked amongst the largest Depository Participants inthe country. With a growing secondary market presence, they have transferred this business toKarvy Stock Broking Limited (KSBL), their associate and a member of NSE, BSE and HSE.

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The corporate website of the company, www.karvy.com, gives access to in-depth information onfinancial matters including Mutual Funds, IPOs, Fixed Income Schemes, Insurance, Stock Marketand much more. A link called Resource Center, devoted solely to research conducted by team ofexperts on various financial aspects like Sector Research, deals exclusively with in-depth analysisof the key sectors of the Indian economy. Besides, a host of other links like My Portfolio whichacts as a personalized and customized financial measure, makes this site extremely informativeabout investment options, market trends, news and also about our their company and each of theservices offered here.

(2) KARVY STOCK BROKING LIMITED

Karvy Stock Broking Limited, one of the cornerstones of the Karvy edifice, flows freely towardsattaining diverse goals of the customer through varied services. Creating a plethora of opportunitiesfor the customer by opening up investment vistas backed by research-based advisory services.Here, growth knows no limits and success recognizes no boundaries. Helping the customer createwaves in his portfolio and empowering the investor completely is the ultimate goal.

Karvy is a Member of National Stock Exchange (NSE), The Bombay Stock Exchange (BSE), andThe Hyderabad Stock Exchange (HSE).

(3)KARVY INVESTORS SERVICES LIMITED

Merchant Banking- Recognized as a leading merchant banker in the country, Karvy are registeredwith SEBI as a Category I merchant banker. This reputation was built by capitalizing onopportunities in corporate consolidations, mergers and acquisitions and corporate restructuring,which have earned us the reputation of a merchant banker. Raising resources for corporate orGovernment Undertaking successfully over the past two decades have given us the confidence torenew company focus in this sector.

Karvy quality professional team and their work-oriented dedication have propelled company tooffer value-added corporate financial services and act as a professional navigator for long termgrowth of companies clients, which includes leading corporate, State Governments, foreigninstitutional investors, public and private sector companies and banks, in Indian and globalmarkets.

Karvy financial advice and assistance in restructuring, divestitures, acquisitions, de-mergers, spin-offs, joint ventures, privatization and takeover defense mechanisms have elevated companyrelationship with the client to one based on unshakable trust and confidence.

(4)KARVY COMPUTERSHARE PVT. LIMITED

Karvy have traversed wide spaces to tie up with the worlds largest transfer agent, the leadingAustralian company, Computershare Limited. The company that services more than 75 millionshareholders across 7000 corporate clients and makes its presence felt in over 12 countries across 5continents has entered into a 50-50 joint venture with KARVY.

Mutual Fund Services

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Karvy have attained a position of immense strength as a provider of across-the-board transferagency services to AMCs, Distributors and Investors.

Nearly 40% of the top-notch AMCs including prestigious clients like Deutsche AMC and UTIswear by the quality and range of services that company offer. Besides providing the entire backoffice processing, Karvy provide the link between various Mutual Funds and the investor,including services to the distributor, the prime channel in this operation.

Karvy service enhancements such as Karvy Converz', a full-fledged call center, a top-line website(www.karvymfs.com), the m-investor' and many more, creating a galaxy of customer advantages.www.karvymfs.com

Issue Registry

In company voyage towards becoming the largest transaction-processing house in the IndianCorporate segment, KARVY have mobilized funds for numerous corporate, and emerged as thelargest transaction-processing house for the Indian Corporate sector. With an experience of

handling over 700 issues, Karvy today, has the ability to execute voluminous transactions and hard-core expertise in technology applications have gained company the No.1 slot in the business.Karvy is the first Registry Company to receive ISO 9002 certification in India that standstestimony to its stature

Corporate Shareholder Services

Karvy has been a customer centric company since its inception. Karvy offers a single platformservicing multiple financial instruments in its bid to offer complete financial solutions to thevarying needs of both corporate and retail investors where an extensive range of services areprovided with great volume-management capability.

Today, Karvy is recognized as a company that can exceed customer expectations which is thereason for the loyalty of customers towards Karvy for all his financial needs. An opinion pollcommissioned by The Merchant Banker Update and conducted by the reputed market researchagency, MARG revealed that Karvy was considered the Most Admired in the registrar

category among financial services companies.

(5) KARVY GLOBAL SERVICES LIMITED

The specialist Business Process Outsourcing unit of the Karvy Group. The legacy of expertise andexperience in financial services of the Karvy Group serves us well as company enter the globalarena with the confidence of being able to deliver and deliver well.

Here company offers several delivery models on the understanding that business needs are uniqueand therefore only a customized service could possibly fit the bill. KARVY service matrix haspermutations and combinations that create several options to choose from.

KARVY is in re-engineering and managing processes or delivering new efficiencies, companysservice meets up to the most stringent of international standards. Their outsourcing models aredesigned for the global customer and are backed by sound corporate and operations philosophies,

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and domain expertise. Providing productivity improvements, operational cost control, cost savings,improved accountability and a whole gamut of other advantages.

KARVY operate in the core market segments that have emerging requirements for specializedservices. Their wide vertical market coverage includes Banking, Financial and Insurance Services(BFIS), Retail and Merchandising, Leisure and Entertainment, Energy and Utility and Healthcare.

(6)KARVY COMMODITIES BROKING LIMITED

At Karvy Commodities, they are focused on taking commodities trading to new dimensions ofreliability and profitability. They have made commodities trading, an essentially age-old practice,into a sophisticated and scientific investment option.

Company enables trade in all goods and products of agricultural and mineral origin that includelucrative commodities like gold and silver and popular items like oil, pulses and cotton through awell-systematized trading platform.

The technological and infrastructural strengths and especially the street-smart skills make them anideal broker. Their service matrix is holistic with a gamut of advantages, the first and foremostbeing their legacy of human resources, technology and infrastructure that comes from being part ofthe Karvy Group.

Their wide national network, spanning the length and breadth of India, further supports theseadvantages. Regular trading workshops and seminars are conducted to hone trading strategies toperfection. Every move made is a calculated one, based on reliable research that is converted intovaluable information through daily, weekly and monthly newsletters, calls and intraday alerts.Further, personalized service is provided here by a dedicated team committed to giving hassle-free

service while the brokerage rates offered are extremely competitive.

Karvys commitment to excel in this sector stems from the immense importance that commoditybroking has to a cross-section of investors & dash; farmers, exporters, importers, manufacturersand the Government of India itself.

(7) KARVY INSURANCE BROKING PRIVATE LIMITED

At Karvy Insurance Broking Pvt. Ltd., they provide both life and non-life insurance products toretail individuals, high net-worth clients and corporate. With the opening up of the insurance sectorand with a large number of private players in the business, they are in a position to provide tailor

made policies for different segments of customers. In their journey to emerge as a personal financeadvisor, they will be better positioned to leverage their relationships with the product providers andplace the requirements of their customers appropriately with the product providers. With Indianmarkets seeing a sea change, both in terms of investment pattern and attitude of investors,

insurance is no more seen as only a tax saving product but also as an investment product . Bysetting up a separate entity, we would be positioned to provide the best of the products available inthis business to their customers.

KARVY have wide national network, spanning the length and breadth of India, further supports

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CORNERSTONES OF STRAREGY:-

1. Focus on retail segment.

2. Build a strong pan-India network managed by experienced professionals, build presence across

both metros and class A/B town.

3. Build full-service capabilities leveraging the network-offer the entire gamut of financial services,

backed by strong transaction processing and high volume handling capability.

4. Established a high degree of customer ownership and top-of-mind recall in the local markets-

ensures steady customer traffic and repeat business.

5. Build a trusted brand; ensure high visibility

ACHIVEMENTS:-

Largest independent distributor for financial products

Amongst the top 5 stock brokers

Amongst the top 3 Depository participants

Largest network of branches and business associates

Amongst top 10 investment Bankers.

Ranking 1st in retail procurement in equity IPOs.

Ranking 8th in Merchant Banking services.

MISSION OF KARVY:-

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Their mission is to be a leading, preferred service provider to our customer, and they aim to

achieve this leadership position by building an innovative, enterprising, and technology driven

organization which will set the highest standards of service and business ethics.

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Karvy at a Glance

TRANSACTIONPROCESSING

GROUP

CORPORATEFINANCEGROUP

IT ENABLEDSERVICEGROUP

TECHNOLOGY RESOURCEGROUP

SUPPORT

HR & Admn.STRATEGIC PLANNING,CORPORATE AFFAIRS,TRAINING & DEVELOPMENTCORPORATE QUALITY

SA&FCCOMPLIANCE, LEGAL &

SECRETARIALFINANCE & ACCOUNTS

FINANCIALPRODUCTSDISTRIBUTION

GROUP

E BUSINESS


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INTRODUCTION:-Mutual Funds

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Introduction:

Mutual funds are for everyone. Around the world, millions of investor invests in mutual fundsbecause of their safety, ease of investing and the many advantages they offer. It is very necessarybefore investing that you know some basics of investing which are given below.

Investments and you:

Investment is never an easy process. However, a sound understanding of some basic conceptsmake the process of investment decision-making much easier and the experience much moreenjoyable. The following step can help you get started on your path to becoming a successfulinvestor:

1. Identify your financial needs and goals:

The first step is to get a clear understanding of your own financial needs and goals. Askyourself the question When do I need money and for what purpose? List down your financialgoals and when they will materialise (daughters higher education after 6 years, purchase of ahouse after 10 years), and how much money you will need for the same. The answer will help youarrive at the time frame for your investment short term, medium term or long term.

Financial Goals Amount required at

todays price

Years to achieve

your goal

Investment horizon

Retirement

Daughters higherEducation

Buying a car

Sons computer

course

Rs. 25 Lakhs

Rs. 2 Lakhs

Rs. 4 Lakhs

Rs. 0.5 Lakhs

20 years

6 years

2 years

6 months

Long term

Long term

Medium term

Short term

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2. Understand your tolerance to risk:

Before making an investment decision, it is very necessary for an investor to know his risktolerance limits. Will he be comfortable with fluctuations in the value of his investments? Or wouldhe prefer to settle down for a lower return without many ups and downs. By knowing risk tolerancelimit of himself an investor can decide his portfolio and also choose from a variety of financialinvestment tools , one which suit his portfolio the most.

3. Estimate your required rate of return:

Your required rate of return depends on your financial goals and the time you have to achievethem. Take an example that your retirement goal at 58 years is Rs. 20 Lakhs and your monthlysavings is Rs. 5000, your required rate of return depending on your current age would be:

Present Age Returns

43 years

48 years

9.5 %

21.2%

As you can see, the later you start, the higher will be your required rate of return, hence as yourinvestment horizon reduces, for the same level of saving you may need to take higher risk.Alternatively, if you were not willing to take a higher risk, you would have to save a higher amountevery month- Rs 9800, almost twice the original savings required to achieve your targetaccumulation.

These three steps give a very basic idea about how to invest, when an investor is seekinginvestment in different financial tools. Though there are different steps of investment in eachfinancial tool, these acts as blue print for them too.

Mutual Funds and You:

What is a mutual fund?

A mutual fund is a type of financial intermediary that pools the funds of investors who seekthe same general investment objective and invests them in a number of different types of financialclaims (e.g. equity shares, bonds, money market instrument). These pooled funds providethousands of investors with proportional ownership of diversified managed by professionalinvestment managers.

Where do mutual funds invest?

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Broadly, mutual funds invest basically in three types of asset classes:

Stocks: Stocks represent ownership or equity in a company. These are also called as shares.

Bonds: These represent debt from companies, financial institutions or government agencies.

Money Market Instruments: These include short-term debt instrument such as treasury bills,certificates of deposits and inter bank money.

History of Mutual Funds in India:

In India the setting up of Unit Trust of India (UTI) in 1963 marked the advent of mutual fundindustry. Unit Trust of India was set up by an Act of Parliament. The purpose of establishing ofUnit Trust of India was to give a fillip to the equity market. In the wake of Indo-China war of 1962,there was shortage of savings going into industrial investment for economic development. There

was a need to mobilize adequate amount of risk capital for industrial enterprise. The householdsavings were sought to be channelized into primary and secondary market through units. However,in the initial years, the emphasis in UTI was on income product. MasterShare launched in 1986ushered in the equity-oriented schemes in India. Unit Trust of India launched a variety ofinnovative products suited to meet diverse needs of investors, virtually the complete life cycle ofinvestors.

Evolution of Mutual Fund in India:

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, atthe initiative of the Government of India and Reserve Bank the. The history of mutual funds inIndia can be broadly divided into four distinct phases.

First Phase: 1964-1987

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up bythe Reserve Bank of India and functioned under the Regulatory and administrative control of theReserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial DevelopmentBank of India (IDBI) took over the regulatory and administrative control in place of RBI. The firstscheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores ofassets under management.

Second Phase: 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks

and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed byCanbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian BankMutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LICestablished its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.

At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004crores.

Third Phase: 1993-2003 (Entry of Private Sector Funds)

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With the entry of private sector funds in 1993, a new era started in the Indian mutual fundindustry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year inwhich the first Mutual Fund Regulations came into being, under which all mutual funds, exceptUTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with FranklinTempleton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI(Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual FundRegulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive andrevised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (MutualFund) Regulations 1996

Fourth Phase: Since 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI wasbifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of Indiawith assets under management of Rs.29, 835 crores as at the end of January 2003, representingbroadly, the assets of US 64 scheme, assured return and certain other schemes. The SpecifiedUndertaking of Unit Trust of India, functioning under an administrator and under the rules framed

by Government of India and does not come under the purview of the Mutual Fund Regulations.The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is

registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of theerstwhile UTI which had in March 2000 more than Rs.76, 000 crores of assets under managementand with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations,and with recent mergers taking place among different private sector funds, the mutual fund industryhas entered its current phase of consolidation and growth. As at the end of September, 2004, therewere 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

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The graph indicates the growth of assets over the years

Funds For All Reasons And All Seasons:

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 differentfunds 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 ofreturns.

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 ondividend or interest income. They invest in common stocks with a high potential for rapid growthand capital appreciation.

Aggressive growth funds are suitable for those investors who can afford to assume the risk ofpotential loss in value of their investment in the hope of achieving substantial and rapid gains. Theyare not suitable for investors who must conserve their principal or who must maximize their currentincome.

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GROWTH FUNDS:-

Like aggressive growth funds, growth fund generally invests in stocks for growth rather thanincome. They are considered more conservative in their approach because they usually invest inestablished companies to achieve long-term growth. Growth fund provides low current income butthe investor principal is more stable then it would be in an aggressive growth fund. While thegrowth potential may be less over the short term, many growth funds have superior long-termperformance records.

These funds are suitable for growth oriented investors but not investors who are unable toassume risk or who are dependent on maximizing current income from there investments.

GROWTH AND INCOME FUNDS:-

Growth and income funds seek long-term growth of capital as well as current income. Theinvestments 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 toachieve 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 ofcapital. Growth of capital is of secondary importance.

Fixed income funds offer a higher level of current income than money market funds, but alower stability of principal. Fixed income funds are suitable for investors who want to maximizecurrent 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 theinvestment objective of this class of fund is long-term capital growth with some income. There arehowever many type of equity funds.

BALANCED FUNDS:-

The Balanced funds aims to provide both growth and income. These funds invest in bothshares and fixed income securities in the proportion indicated in their offer documents. It is an ideafor 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 seekinga moderate to high current income. They invest in highly liquid; virtually risk free, short-term debtsecurities of agencies of the Indian government, banks and corporation and treasury bills. Becauseof their short-term investments, money market mutual funds are able to keep a virtually constantunit price; only the yield fluctuates.Money market funds are suitable for those investors who want high stability of principal andcurrent income with immediate liquidity.

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SPECIALITY / SECTOR FUNDS:-

These funds invest in securities of a specific industry or sector of the economy such as healthcare, technology, leisure, utilities or precious metals. The funds enable investor to diversify holdingamong many companies within an industry, a more conservative approach than investing directlyin one particular company.

Sector funds offer a opportunity for sharp capital gains in cases where the funds industry isin favor but also entail the risk of capital losses when the industry is out of favor. While sectorsfunds restrict holdings to a particular industry, other specialty funds such as index funds givesinvestors a broadly diversified portfolio and attempt to mirror the performance of various marketaverages.

OPEN ENDED SCHEMES:-

Open-ended schemes do not have a fixed maturity period. Investors can buy or sell units atNAV- related prices from and to the mutual fund on any business day. These schemes haveunlimited capitalization, open-ended schemes do not have a fixed maturity, there is no cap on theamount you can buy from the fund and the unit capital keep growing. These funds are not generallylisted on any exchange.

Open-ended schemes are preferred for their liquidity. Such funds can issue and redeem unitsany time during the life of schemes. Hence unit capital of open-ended funds can fluctuate on adaily basis. The advantages of open ended schemes are: -

1. Any time exit option2. Any time enter option.

CLOSE ENDED SCHEMES:-

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

HOW LONG TO KEEP INVESTMENT TO GET MAXIMUM RETURNS

Technically open-ended funds you can withdraw your investments even within a week, but toget desired returns positive time frame is required are:

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Funds Time Period

Equity Funds 3 Years (plus)

Balanced Funds 18 months to 3 Years

MIPs 1 Year (plus)

Income Funds 6 months to 1 Year

Liquid Funds few days to 6 months

WHAT RETURNS CAN I EXPECT IF I KEEP MY MONEY FOR SUGGESTED TIME

FRAMES

Funds Returns

Sector funds 22% to 25% p.a

Balance funds 15% to 18% p.a

MIPs Pension Plans 12% to 15% p.a

Income Funds 10% to 12% p.a

Liquid Funds 7% to 9% p.a

The above-mentioned returns in the table are indicative and not assured. All investments inMUTUAL FUNDS are securities and are subject to market risk and the NAVs of the schemes maygo up and down depending upon the factors and forces affecting the security market including thefluctuations in the internal rates .The past performance of the MUTUAL FUNDS is not indicativeof future performance.

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THE RISK RETURN GRAPHS FOR VARIOUS FUNDS:-

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

Liquid Funds

Income Funds

Balanced Funds

Equity Funds

Sector Funds

RISKS

R

E

T

U

R

N

S

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ADVANTAGE OF MUTUAL FUND: -

The advantages of investing in a Mutual Fund are:

Diversification: The best mutual funds design their portfolios so individual investments

will react differently to the same economic conditions. For example, economic conditionslike a rise in interest rates may cause certain securities in a diversified portfolio to decreasein value. Other securities in the portfolio will respond to the same economic conditions byincreasing in value. When a portfolio is balanced in this way, the value of the overallportfolio should gradually increase over time, even if some securities lose value.

Professional Management: Most mutual funds pay topflight professionals to 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 theInternet.

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

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

DRAWBACKS OF MUTUAL FUNDS:-

Mutual funds have their drawbacks and may not be for everyone:

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No Guarantees:

No investment is risk free. If the entire stock market declines in value, the value of mutual fundshares will go down as well, no matter how balanced the portfolio. Investors encounter fewerrisks 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 alsocharge sales commissions or "loads" to compensate brokers, financial consultants, or financialplanners. Even if you don't use a broker or other financial adviser, you will pay a salescommission 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 paytaxes 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 rightdecisions regarding the fund's portfolio. If the manager does not perform as well as you hadhoped, you might not make as much money on your investment as you expected. Of course, ifyou invest in Index Funds, you forego management risk, because these funds do not employmanagers.

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 crore.

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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/YearMar-98

Mar-00

Mar-01

Mar-02 Mar-03Mar-04

Sep-04 4-Dec

Deposits605410

851593

989141

1131188

1280853

-1567251

1622579

Change in % over lastyr

- 15 14 13 12 - 18 3

Source RBI

Mutual Fund AUMs Growth

Month/YearMar-98

Mar-00

Mar-01

Mar-02

Mar-03

Mar-04

Sep-04 4-Dec

MF AUM's 68984 93717 83131 94017 75306137626

151141

149300

Change in % over last yr - 26 13 12 25 45 9 1

Source - AMFI

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

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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 mutual funds.

Emphasis on better corporate governance.

Trying to curb the late trading practices.

Introduction of Financial Planners who can provide need based advice.

HOW TO JUDGE A MUTUAL FUND:-

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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 MFs 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 consider a fund's

performance over several years. Different fund managers adopt 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 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 unitholders for immediate performance are obstacles to long-term growth.

Most funds lack the cash reserves to pay off the massive redemptions which will follow amarket panic. Fund managers can change without notice

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Sundaram Newton Asset Management Company ltd Private foreign

Tara Asset Management Company Ltd.Private Indian

Credit Capital Asset Management Company Ltd

Private IndianTempleton Asset Management Company LtdPrivate foreign

Unit Trust Of IndiaInstitution

COMPARISSION OF MUTUAL FUNDS

**OPERATIONS & DATA COLLECTION:

From the secondary data available from the fact sheet, internet eyc. Analyses between threedifferent types of funds are as follows:-

Equity Diversified Fund

Income Fund

Balanced Fund

Mutual Fund companies that are selected for the analysis are as follows:-

Principal PNB Mutual Fund

Birla Mutual Fund

HDFC Mutual fund

UTI Mutual Fund.

PARAMETERS USED FOR COMPARISION

The parameters that are used for comparison of Principal PNB Mutual Fund Schemes withother Mutual Fund Schemes are done on the following basis:-

Annualized Returns

Standard Deviation

Sharpe Ratio

Beta Ratio

Alpha Ratio

R-Squared

Annualized Returns

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Category Equity

Diversified

Equity

Diversified

Equity

Diversified

Equity

Diversified

1Year

Return 55.93 64.56 68.88 62.57

Asset Size

(Cr) 79.25 463.60 1280.55 1273.09

One Year Return

0

10

20

3040

50

60

70

80

Prin

cipa

lEqu

BirlaAd

vant

a

HDFC

Equi

UTI

Equit

Company

Retur

Return

PERCENTAGE WISE RETURN

Fund Name Principal

Equity

Birla

Advantage

HDFC Equity UTI Equity

1 Month

Return (%) 8.09 6.84 9.23 7.54

6 Month

Return (%) 17.88 19.49 23.95 17.88

1 Year Return

(%) 55.93 64.56 68.88 62.57

3 Year Return

(%) 38.83 46.16 56.95 45.31

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Percentage Wise Return

0

10

20

30

40

50

60

70

80

Principal

Equity

Birla

Advantage

HDFC

Equity

UTI Equity

Company

Returns

1 Month Return (%)

6 Month Return (%)

1 Year Return (%)

3 Year Return (%)

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Interpretation:

HDFC equity is recommended over Principal equity as this fund has a better return as

compared to other Mutual Funds.

The Standard Deviation of Principal Equity Fund is the least hence it is more reliable as

compared to other Mutual Funds.

Sharpe Ratio is in direct relation with the Risk and Return means as the risk is increasing so as

the return, as in the case of HDFC Equity, its risk is high so as the returns of the fund.

Considering the 3-year period than HDFC equity is better than Principal Equity, while the othertwo mutual funds have not completed 3 years.

Beta of UTI Dynamic Equity is 0.95, while that of Principal Equity is 0.76 which means that if

there is 20% change in Index then the change in UTI Dynamic Equity and Principal Equity

would be 19% and 15% respectively. Beta of Birla Advantage and HDFC Equity is some what

in the middle of 0.76 and 0.95. So if the market is bullish then the gain of UTI Dynamic

equity is good while if the market is bearish or declines than the loss of Principal Equity would

be minimum as compared to other mutual funds.

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RECOMMENDATION & SUGGESTIONS:

Principal Mutual Fund has almost all the kinds of Debt Funds and those funds are

performing quite well, hence it should retain its performance.

Principal Mutual Fund should come up with fund of funds, where the fund manager invests

in the different schemes of Principal to make the portfolio of Principal Mutual Fund a

complete Mutual Fund organization.

Most of the business for Mutual Fund Industry comes through Distributors/Agents. During

the stay in branch office in summer training an impression was formed that advisors are not

satisfied by the commission structure. Since, advisors bring mostly retail customers and

retail customers have a major share in the total business, company should take some steps

to nullify the dissatisfaction among the advisors to reap long term results.Some of the big mutual fund companies are buying the Assets of smaller mutual fund companies orbuying the Assets of those mutual fund companies who wants to exit from the mutual fundbusiness such as HDFC Asset Management acquires the Assts of Zurich Asset Management andBirla Asset Management Company acquiring the alliance capital Asset Management. In the sameway Principal Asset Management Company must try to acquire another Asset ManagementCompany if that company wants to sell its Assets. Thus by doing this it can increase its investorbase and also the Asset Under Management.

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LIMITATIONS:

Though the report has given the insight to the various mutual fund schemes but cannot be said

fully relevant because of some limitations these are:-

It is difficult to get full insight of how fund managers have deployed their funds.

There are more than 30 companies and offering various ranges of products and analyzing all of

them is again a difficult task.

Mutual Fund industry performance is dependent on daily churning of portfolio and Net Asset

Value of each fund changes every day, thus the fund which in comparison is doing better today

may not perform well tomorrow and thus it affects the analysis process. Due to the time constraint only four companies share in portfolio is taken for the study.

Remaining 26 companies are not studied or difficult to study because of time limitation though

they have considerable effect on return.

Funds which are compared have different asset size and time period and they may not be so

relevant for comparison. In Debt oriented fund the different rating companies have different

criteria to rate their companies and hence it affects on the analysis part of the research.

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CONCLUSION:

A Mutual Fund pools the money of people with similar investment goals. The money in

turn is invested in various securities depending on the objective of the mutual fund scheme,

and the profits (losses) are shared among investors in proportion to their investments. After

doing the analysis on 4 funds following conclusion can be made.

Out of the different compared fund HDFC equity fund is better on all the front line

risk, return and volatility as compared to all the other funds.

Investors have to compensate their risk with the return. Higher the return higher the

risk.

For the people who are looking for regular income should opt for any of the Debt

Fund, as the long term returns of all the funds are almost the same.

Those who want regular income and also capital appreciation should go for Principal

Balanced Fund.

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ASSOCIATION OF MUTUAL FUNDS IN INDIA:-

With the increase in mutual fund players in India, a need for mutual fund association in Indiawas generated to function as a non-profit organization. Association of Mutual Funds in India(AMFI) was incorporated on 22nd August 1995.

AMFI is an apex body of all Asset Management Companies (AMC), which has beenregistered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are itsmembers. 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 aprofessional and healthy market with ethical lines enhancing and maintaining standards. It followsthe principle of both protecting and promoting the interests of mutual funds as well as their unitholder

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 Board of Directors. Theobjectives are as follows:

This mutual fund association of India maintains high professional and ethical standards inall areas of operation of the industry. It also recommends and promotes the top classbusiness practices and code of conduct which is followed by members and related peopleengaged in the activities of mutual fund and asset management. The agencies that are byany means connected or involved. In the field of capital markets and financial services alsoinvolved in this code of conduct of the association.

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 ReserveBank of India and other related bodies on matters relating to the Mutual Fund Industry.

It develops a team of well-qualified and trained Agent distributors. It implements aprogram of training and certification for all intermediaries and other engaged in the mutualfund industry.

AMFI undertakes all India awareness programmed for investors in order to promoteproper understanding of the concepts and working of mutual funds.

At last but not the least association of mutual fund of India also disseminate informationson Mutual Fund Industry and undertakes studies and research either directly or inassociation with other bodies.

Regulatory Aspects:

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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 theinvestors to make informed investment decision including the disclosure non maximuminvestments proposed to be made by the scheme in the listed securities of the groupcompanies of the sponsor. A close-ended scheme shall be fully redeemed at the end of thematurity period. Unless a majority of the unit holders otherwise decide for its rollover bypassing 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.

The asset management company shall issue to the applicant whose:

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 offer document and advertisement materials shall not be misleading or contain any statementor 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 ofaccounts, records and document, for each scheme so as to explain its transaction and todisclose at any point of time the financial position of each scheme and in particular give atrue and fair view of the state of affairs of the fund and intimate to the board the placewhere such books of accounts, records and documents are maintained.

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The financial year for all the scheme shall end as of March 31 of each year. Every mutualfund or the asset management company shall prepare in respect of each financial year anannual report and annual statement of accounts of the schemes and the fund as specified inEleventh Schedule.

Every mutual fund shall have the annual statement of accounts audited by an auditor who isnot in any way associated with the auditor of the asset 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 shallbe subject to the direction of the Board with regard to any records, documents, or securities thatmay be in its custody or control relating to its activities as mutual funds, trustees or the assetmanagement 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 agencyauthorize to carry out such activity under the act. Such investment limit may be extended to20% of the NAV of the scheme with the prior approval of the Board of Trustees and theBoard of Asset Management Company.

A mutual fund Scheme shall not invest more than 10% of its NAV in unrated debt

instrument issued by a single issuer and the total investment in such instruments shall notexceed 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 companys paid

up capital carrying voting rights.

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

The securities so transferred shall be in conformity with the investment 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 interscheme investment made by all schemes under the same management or in schemes underthe management of any other asset management company shall not exceed 5% of the netasset value of the mutual fund.

The initial issue expenses in respect of any scheme may not exceed 6% of the funds raised underthat scheme.

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

100% growth in the last 6 years.

Number of foreign AMCs is 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 mutual funds.

PROJECT ANALYSIS

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PROBLEM STATEMENT AND OBJECTIVE OF THE

STUDY:-

PROBLEM STATEMENT: -

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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 Awareness of Mutual Fund is a

hindering factor in expected growth of Mutual Fund Business. Under noted problems are

envisaged in this area:

Difficult in convincing people for investment.

Difficult to change mind of the investor according to age and

Profession.

Difficult to make an approach to investors.

Difficult to take an appointment with professional people.

Difficult to get the documents required for formalities from investors

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

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

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

OBJECTIVE OF STUDY:-

In view of the problem cited above, the study aims at analyzing the following major issues:

To know the awareness of MUTUAL FUND among people.

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 FUNDS in India.

To know the different attitudes of people regarding risk, rate of return, period of investment

etc.

To study the diversification of mutual fund.

METHODOLOGY OF STUDY:

Research can be defined as a systemized effort to gain new knowledge. A research is carriedout by different methodologies which have their own pros and cons. Research methodology is away to solve research in study and solving research problems along with logic behind them are

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defined through research methodology. Thus while talking about research methodologies we arenot only talking of research methods but also consider the logic behind the methods. We are incontext of our research studies and explain why it is being used a particular method or techniqueand why the others are not used. So that research result is capable of being evaluated either byresearcher himself or by others.

RESEARCH METHODOLOGY:

Research has its special significance in solving various operational and planning problem ofbusiness and industry. Research methodology is a way to systematically analyze the researchproblem.

ASSUMPTIONS:

1. It has been assumed that sample of hundred represents the whole population

2. The information given by the customer is unbiased

LITERATURE SURVEY:

The project is based on pure findings of facts

Development of Working Hypothesis: The hypothesis could be developed by discussing with theconsulting department heads and guides about this exploratory research and reach to the conclusionthat the data is to be collected by personal interaction with the clients, asking them about theirinvestment planning and their need for financial advisory service from KARVY Stock BrokingLtd.First of all are they aware of tax and investment planning or not and then analyzing the findings toreach to the objectives of research.

COLLECTION OF DATA:

This research is solely based on primary research done by means of questionnaires targeted torespondents who primarily belong to the business and service sector. The sample size is 100.

a. Sampling Methods: A sample is the representative of the populations which will predict thebehaviors of the whole universe

b. The sampling size put under 2 categories: Probability Sampling and Non ProbabilitySampling.

EXECUTION OF PROJECT

It is very essential in the research process to know the accuracy of the findings which depends onhow systematically the study has been carried out so that it can make sense.We have executed the project after prior discussion with our guide and structured in the followingsteps:

a. Preparation of a questionnaire

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b. The focal point of the designing the questionnaire was to comprehend the currentinvestment scenario

c. This questionnaire was primarily aimed to respondents who belong to the service andbusiness class people

d. The questionnaires were discussed through personal interface with the respondents

LIMITATIONS OF STREAMLINING RESULTS:

Every work has its own limitations. Limitations are extent to which the process should notexceed. The following limitations for the project are:1. Duration of project was not enough to make our conclusion on such a vast subject. Time

constraints has also become a major limitation2. The sample size taken for drawing the conclusion was not sizeable3. Investor ignorance was faced during discussions with respondents

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DATA INTERPRETATION

Q1. Do you invest regularly?

YES 89

NO 11

TOTAL 100

Percentage of people making any

investment

89%

11%

YES

NO

It has been observed that approximately 90% of the correspondents invest in some or the

other financial instrument. Though the percentage of choice of investment may vary due to

different factors such as age, education, risk etc.

Q2. Do you invest using-

a. Scientific Tools b. By Intuition

Scientific Tools 47

By Intuition 53

Total 100

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Methods of investment

47%

53%

scientific tools

by intution

It has been observed that there is no major difference between the percentage of people who

invest using scientific tools and those whose who believe in their intuition but it is seen thatthe younger generation is more leaning towards usage of scientific tools than their peers.

Q3. What are you preferred investment priorities?

a. Insurance

YES 77

NO 23

TOTAL 100

49

LIC

77%

23%

YESNO


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A major chunk who have been interviewed it has been observed that almost 80% have some

kind of insurance policy. It has also been observed that though LIC is a public sector

undertaking, people of all ages have more faith in it as compared to other private sector

companies.

b. Bank (Fixed deposit)

YES 49

NO 41

TOTAL 100

There is no major difference between the number of people who prefer keeping their money

in fixed deposit and who dont opt for it. There is however a growing concern about the

falling interest rate in banks on fixed deposit.

c. Bonds & Debentures

YES 34

NO 66

TOTAL 100

50

BONDS & Debentures

YES

NO

Banks(Fixed Deposit)

YES

NO


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It has been observed that only 34% they have invested in Bonds and Debentures AS

compared to those who have not. This may be due to less knowledge about it or the time of

re-demption.

d. Equities & Share Market

YES 45

NO 55

TOTAL 100

By the chart we observe that the percentage of people investing in equity and share market is

not much but there is a going interest among people especially the younger generation to

invest so as to make quick bucks with the market boom.

e. PPF

YES 43

NO 57

TOTAL 100

Out of the total people asked 57% said they invest in PPF and 43% said they dont, but it has

been observed that from the people who said they invest the major chunk are people from

service sector.

51

Equity & Share Market

YES

NO

YES

NO

PPF

43%

57%

YES

NO


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f. NSC

YES 45

NO 55

TOTAL 100

Out of all the people questioned 45% said YES and 55% said NO. People who have said that

YES a major percentage are either business man or working people who want a fix rate of

return and security.

g. Post Office Savings

YES 31NO 69

TOTAL 100

Out of the total correspondent only 31% they invest in post office savings. This could be due

to falling interest rate and better return by other tools.

52

NSC

45%

55%

YES

NO

Post Office Savings

31%

69%

YES

NO


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h. Real Estate

YES 42

NO 58

TOTAL 100

The correspondent who said YES are 42% and who said NO is 58% but this will change as

people are more comfortable in real estate and with falling interest rate people try to find

new avenue of investments.

i. Gold

YES 41

NO 59

TOTAL 100

Out of the total correspondent questioned 41% say they prefer to invest in gold while 59%

say they dont.

53

Real Estate

42%

58%

YES

NO


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j. Others

Of all the correspondents asked only 39% said they have other options to invest other than

the conventional options.

Q4. What percentage of your income do you invest?

Below 10% 30

10%-30% 5730%-50% 10

Above 50% 3

About 60% of people said that they invest between 10%-60% of their total income in some or

other types of financial tools. A major chunk of people belonging to this segment are from IT

sector who are young, large disposable income and have a little knowledge about investment

and are willing to take risk.

YES 39

NO 61

TOTAL 100

54

OTHERS

39%

61%

YES

NO


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Q5. Are you aware about mutual funds?

YES 88

NO 12

TOTAL 100

Only 12% of correspondent said they dont know any thing about mutual fund and 88% said

they know about mutual funds but what we found that they have just a primary or very

negligible knowledge about mutual funds and not really aware of the concept called

MUTUAL FUND.

Q6. What is your perception about mutual funds?

SAFE 15%

RISKY 25%

OTHERS 60%

TOTAL 100%

55

Awareness about mutual funds

88%

12%

YES

NO

15%25%

60%

0%

10%

20%

30%

40%

50%

60%

Safe Risky Others

Perception about mutual funds

Series1


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The percentage of person who say that mutual fund is safe is 5%, an those who say it is risky

is 25% but a major percentage of corresponds opt as other which is about 60%. These are

people who say that mutual funds are high risk and high gain or even people who have no

opinion.

Q7. Have you ever invested in mutual fund?

YES 41

NO 59

TOTAL 100

Out of the total correspondents asked about 41% have said that they had invested in mutual

funds before while 59% said NO. Out of the total people who have said yes a majority ofthem are young, having disposable income and willingness to take risk.

Q8. Do you know different type of mutual scheme present in the market?

YES 36

NO 64

TOTAL 100

56

0

10

20

30

40

50

60

Yes No

investment in mutual funds

0%

20%

40%

60%

80%

100%

Yes No

Types of mutual funds


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Out of total corresponds only 36% said that they know about various mutual schemes as this

number is very small it explains that people still dont know about various schemes in the

market. It also shows that even those who have bought mutual funds are still ignorant about

the different schemes.

Q9. How you choose a mutual fund?

BRAND NAME 35

HIGH NAV 26

HIGH RETURNS 15ADVERTISING 12

OTHERS 12

TOTAL 100

It has been observed that brand name does matter when people are choosing a mutual fund

as 35% said brand name. The next is NAV at about 26%. These two factors play a major role

during selection of mutual funds.

57

Choosing of mutual fund

0

5

10

15

20

25

30

3540

Brand Name High NAV High Returns Advertising Others


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PROJECT FINDINGS

&

RECOMMENDATIONS

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PROJECT FINDINGS:

There is great opportunity for Mutual Fund companies as there is a is a rise in number of

people who want to invest in share market but dont have time and knowledge to do so,also these people want to take less risk .

With booming market and falling interest rate of bank deposits, people see mutual funds as

an attractive financial tool which provide a high return rate at lower risk as compared toequity market.

Young people these days are particularly more interested in mutual funds because they seemutual fund as safe bet. Also these people have large disposable incomes and risk takingcapability too.

The bad part is people are still ignorant about mutual funds and different schemes about

mutual funds, hence it is very necessary to educate them about mutual funds

Advertising can also play a major part as it has been seen that people buy mutual fund

looking at the brand name.

RECOMMENDATIONS:

India is passing through a tremendous growth phase with an average growth rate of 7-8%

per annum. With this growth phase there is growth in each and every sector, hence there isrush to by shares and equities. It is also a very good time for mutual fund companies but itis advisable for them and their brokers that they dont just sell mutual funds but sell theright kind of scheme which is comfortable to a person nature of taking risk and need,

There is a general ignorance and questions about, what are mutual funds? What are

different schemes of mutual funds? How to invest in a mutual? And many more. This thingshould be handled by mutual fund companies and their brokers to provide knowledge totheir clients.

It has been seen that there is a major increase in the percentage of young investors who

have large amount of disposable income with them and want to invest, these type ofprospective clients should be tapped at an early stage.

Small towns, villages are still untapped and can also acts as an business area of very huge

potential.

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Now even co-operative society can invest up to 10% of their capital in mutual funds which

open the door to new and very important client base.

Questionnaire

1. Are you a regular investor?a. Yes b. No

2. Do you invest using a. Scientific Tools b. By Intuition

3. What are your preferred investment priorities?

Name of Investment

Insurance

Bank

Bonds & Debentures

Equities & Share Market

PPF (Public Provident Fund)

NSC (National Saving Schemes)

Post Office Saving Schemes

Real Estate

Gold

Others

4. What percentage of your income do you invest?a. Below 10%b. 10% - 30%c. 30% - 50%d. Above 50%

5. Are you aware about Mutual Funds?a. Yes b. No

6. What is your perception about Mutual Funds?a. Safeb. Riskyc. Others

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7. Have you invested in some Mutual Funds?a. Yes b. No

8. Do you know different type of Mutual Fund scheme present in the market?a. Yes b. No

9. How do you select and choose Mutual Funds?

a. Brand Name b. High NAVc. High Dividends d. Advertisemente. Others

Demographics

1. NAME: _____________________________________________

2. AGE: SEX: M / F

3. MARTIAL STATUS:

4. PROFESSION:

5. ANNUAL INCOME:a. Less than Rs. 1, 00,000/-b. 1, 00,000 - 1, 50,000/-c. 1, 50,000 - 2, 50,000/-d. 2, 50,000 - 5, 00,000/-e. Above 5,00,000/-

6. Contact Number:

7. Email ID : ___________________________________________

*************************Thank you****************************

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BIBLIOGRAPHY

WEB:

www.njindiainvest.com

www.moneycontrol.com

www.amfiindia.com

www.valuesearch.com

BOOKS

AMFI COURSE BOOK
http://www.njindiainvest.com/http://www.amfiindia.com/http://www.njindiainvest.com/http://www.amfiindia.com/

awarness & scope of mutul fund [karvey]

Documents