A SUMMER TRAINING PROJECT REPORT

ON

“AWERNESS OF MUTAL FUND AND ITS SCOPE IN INDIA”

Submitted in the partial fulfillment for the award of Degree of Bachelor in Business Administration 2011-

UNDER THE GUIDANCE: SUBMITTED BY:

Ms. Poonam Khurana KULDEEP

FACULTY (Management), CPJCHS ENROLLMENT No. 11021501711

BATCH NO. 2011-14

CHANDERPRABHU JAIN COLLEGE OF HIGHER STUDIES & SCHOOL OF LAW

An ISO 9001:2008 Certified Institute (Approved by the Govt of NCT of Delhi

Affiliated to Guru Gobind Singh Indraprastha University, Delhi)

Plot No OCF Sector A-8, Narela New Delhi -40

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College

Declaration

This is to certify that Thesis/Report entitled “Mall Management ”which is submitted by me in partial fulfillment of the requirement for the award of degree B.B.A. to GGSIP University, Dwarka, Delhi comprises only my original work and due acknowledgement has been made in the text to all other material used.

KULDEEP

Name of Student

 

 

 

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PROJECT COMPLETION CERTIFICATE

This is to certify that Mr.KULDEEP HAS satisfactorily completed the project work titled,

“AWARENESS OF MUTUAL FUNDS AND ITS SCOPE IN INDIA” under my guidance during June-

July, 2013 at Prudent Corporate Advisory Services Ltd., New Delhi. Based on the declaration made

by the candidate and my association as a guide for carrying out this work, I recommend this project

report for evaluation as a partial requirement of the BBA Programme of CHANDER PRABHU

JAIN COLLEGE OF HIGHER STUDIES

_________________________

Vishal Kumar

Branch Manager

Prudent Corporate Advisory Services Ltd.

New Delhi

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ACKNOWLEDGEMENT

. I offer my sincere thanks and humble regards to Chanderprabhu Jain College of Higher Studies & School of Law, GGSIP University, New Delhi for imparting us very valuable professional training in BBA.

.

I pay my gratitude and sincere regards to VISHAL KUMAR, my project Guide for giving me the cream of his knowledge. I am thankful to him as he has been a constant source of advice, motivation and inspiration. I am also thankful to him for giving his suggestions and encouragement throughout the project work.

I take the opportunity to express my gratitude and thanks to our computer Lab staff and library staff for providing me opportunity to utilize their resources for the completion of the project.

I am also thankful to my family and friends for constantly motivating me to complete the project and providing me an environment which enhanced my knowledge

KULDEEP

Student’s Signature

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EXECUTIVE SUMMERY

Mutual Funds have gained popularity as an investment vehicle over the past two years. Though

technically, must have been in India since 1964 through Unit Trust of India , the industry has only

recently after new private sector funds and funds backed by global investment houses set up shop in

India.

Mutual Funds have often been associated with equity\stock markets. While that is industry, the debt

or fixed income side has also gained prominence in the recent past. In fact, now mutual funds offer

instruments! schemes for all types of investors from -the risk averse to high risk takers.

The advantages of mutual funds are professional management, diversification, economies of scale,

simplicity, and liquidity.

The disadvantages of mutual fund are high costs, over-diversification, possible tax consequences, and

the inability of management to guarantee a superior return.

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The biggest problems with mutual funds are their costs and fees it include Purchase fee, Redemption

fee, Exchange fee, Management fee, Account fee & Transaction Costs. There are some loads which

add to the cost of mutual fund. Load is a type of commission depending on the type of funds.

Mutual funds are easy to buy and sell. You can either buy them directly from the fund company or

through a third party. Before investing in any funds one should consider some factor like objective,

risk, Fund Manager’s and scheme track record, Cost factor etc.

There are many, many types of mutual funds. You can classify funds based Structure (open-ended &

close-ended), Nature (equity, debt, balanced), Investment objective (growth, income, money market)

etc.

Choosing a mutual fund to invest in requires investor to look at many factor such as time, appetite for

risk; purpose of investment such as if one wants to invest in growth funds, income fund or balanced

fund. These factors vary from person to person.

The project lays a great stress on investor education. The primary objective is to explain in clear and

simple language, the benefits and pitfalls of investing in mutual funds. There is a gap in the market

about quality information on Mutual Funds. Most of the information is either inadequate or biased

towards a particular scheme/fund or a particular category. This project attempts to look at the subject

from the point of view of an ordinary investor who has little time or inclination to get into the

technical details of Mutual Funds.

The first portion of the project explains the basics of a Mutual Fund including the history and

evolution of the history. Then it highlights the types of Mutual Funds and the recent trends in the

industry. A section follows this on how to choose the right fund for you which covers all things one

should look at before investing in a fund.

For this report a survey has also been conducted and analyzed to know the perception of common man

towards mutual funds.

Based on the findings a conclusion has been drawn about what we can do next to accelerate the

growth of mutual funds and their positive impact for the benefit of people.

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CONTENT

SL. NO. LIST OF CONTENT PG.NO.

1 Acknowledgement 4

2 Executive summery 5-6

3 Chapter 1: Introduction to mutual fund 8-44

4 Chapter 2: About the company 44-48

5 Chapter 3: Research methodology 49-52

6 Chapter 4: Data analysis and Findings 53-73

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7 Chapter 5: Suggestion & Conclusion 74-77

8 References 78-80

9 Annexure 81-84

CHAPTER 1

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Introduction to Mutual

Funds

Introduction

What is a Mutual fund'?

Mutual fund is an investment company that pools money from shareholders and invests in a variety of

securities, such as stocks, bonds and money market instruments. Most open-end Mutual funds stand

ready to buy back (redeem) its shares at their current net asset value, which depends on the total

market value of the fund's investment portfolio at the time of redemption. Most open-end Mutual

funds continuously offer new shares to investors. Also known as an openend investment company, to

differentiate it from a closed-end investment company. Mutual funds invest pooled cash of many

investors to meet the fund's stated investment objective. Mutual funds stand ready to sell and redeem

their shares at any time at the fund's current net asset value: total fund assets divided by shares

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outstanding.

In Simple Words, Mutual fund is a mechanism for pooling the resources by issuing units to the

investors and investing funds in securities in accordance with objectives as disclosed in offer

document. Investments in securities are spread across a wide cross-section of industries and sectors

and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the

same direction in the same proportion at the same time. Mutual fund issues units to the investors in

accordance with quantum of money invested by them. Investors of Mutual funds are known as unit

holders. The profits or losses are shared by the investors in proportion to their investments. The

Mutual funds normally come out with a number of schemes with different investment objectives

which are launched from time to time. In India, A Mutual fund is required to be registered with

Securities and Exchange Board of India (SEBI) which regulates securities markets before it can

collect funds from the public. In Short, a Mutual fund is a common pool of money in to which

investors with common investment objective place their contributions that are to be invested in

accordance with the stated investment objective of the scheme. The investment manager would invest

the money collected from the investor in to assets that are defined! permitted by the stated objective of

the scheme. For example, an equity fund would invest equity and equity related instruments and a

debt fund would invest in bonds, debentures, gilts etc. Mutual fund is a suitable investment for the

common man as it offers an opportunity to invest in a diversified, professionally managed basket of

securities at a relatively low cost

Concept of the mutual fund

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

financial goal. The money thus collected is then invested in capital market instruments such as shares,

debentures and other securities. The income earned through these investments and the capital

appreciations realized are shared by its unit holders in proportion to the number of units owned by

them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an

opportunity to invest in a diversified, professionally managed basket of securities at a relatively low

cost. The flow chart below describes broadly the working of a mutual fund:

History of mutual funds in india

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the

initiative of the Government of India and Reserve Bank. The history of mutual funds in India can be

broadly divided into four distinct phases-

FIRST PHASE – 1964-87:

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the

Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve

Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of

India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme

launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under

management.

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SECOND PHASE – 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS):

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

Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual

Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canara bank Mutual

Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89),

Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in

June 1989 while GIC had set up its mutual fund in December 1990.

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

THIRD PHASE – 1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS):

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry,

giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first

Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be

registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was

the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised

Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund)

Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual funds setting up

funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of

January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of

India with Rs.44,541 crores of assets under management was way ahead of other mutual funds.

FOURTH PHASE – SINCE FEBRUARY 2003:

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into

two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under

management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US

64 scheme, assured return and certain other schemes. The Specified Undertaking 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.

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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 the erstwhile UTI

which had in March 2000 more than Rs.76,000 crores of assets under management and 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 industry has entered its

current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds,

which manage assets of Rs.153108 crores under 421 schemes.

ORGANIZATION OF MUTUAL FUND

THE STRUCTURE CONSISTS OF

SPONSOR

Sponsor is the person who acting alone or in combination with another body corporate establishes a

mutual fund. Sponsor must contribute at least 40% of the net worth of the Investment managed and

meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual

Fund) Regulations, 1996. The sponsor is not responsible or liable for any loss or shortfall resulting

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from the operation of the Schemes beyond the initial contribution made by it towards setting up of the

Mutual Fund.

TRUST

The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act,

1882 by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908. TRUSTEE

Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The main

responsibility of the Trustee is to safeguard the interest of the unit holders and ensure that the AMC

functions in the interest of investors and in accordance with the Securities and Exchange Board of

India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of

the respective Schemes. At least 2I3rd directors of the Trustee are independent directors who are not

associated with the Sponsor in any manner.

ASSET MANAGEMENT COMPANY (AMC)

The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The AMC is

required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset

management company of the Mutual Fund. At least 50"10 of the directors of the AMC are independent

directors who are not associated with the Sponsor in any manner. The AMC must have a net worth of

at least 10 cores at all times.

REGISTRAR AND TRANSFER AGENT

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual

Fund. The Registrar processes the application form, redemption requests and dispatches account

statements to the unit holders. The Registrar and Tmnsfer agent also handles communi cations with

investors and updates investor records.

TYPES OF MUTUAL FUNDS SCHEMES IN INDIA

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk

tolerance and return expectations etc. thus mutual funds has Variety of flavours, Being a collection of

many stocks, an investors can go for picking a mutual fund might be easy. There are over hundreds of

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mutual funds scheme to choose from. It is easier to think of mutual funds in categories, mentioned

below:

Fig. 2 Types of mutual funds

A). BY STRUCTURE

1. Open - Ended Schemes:

An open-end fund is one that is available for subscription all through the year. These do not have a

fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related

prices. The key feature of open-end schemes is liquidity.

2. Close - Ended Schemes:

Closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The

fund is open for subscription only during a specified period. Investors can invest in the scheme at the

time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock

exchanges where they are listed. In order to provide an exit route to the investors, some close-ended

funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV

related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the

investor.

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3. Interval Schemes:

Interval Schemes are that scheme, which combines the features of open-ended and close- ended

schemes. The units may be traded on the stock exchange or may be open for sale or redemption

during pre-determined intervals at NAV related prices.

B). BY NATURE

1. Equity Fund:

These funds invest a maximum part of their corpus into equities holdings. The structure of the fund

may vary different for different schemes and the fund manager’s outlook on different stocks. The

Equity Funds are sub-classified depending upon their investment objective, as follows:

• Diversified Equity Funds

• Mid-Cap Funds

• Sector Specific Funds

• Tax Savings Funds (ELSS)

Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk-return

matrix.

2. Debt Funds:

The objective of these Funds is to invest in debt papers. Government authorities, private companies,

banks and financial institutions are some of the major issuers of debt papers. By investing in debt

instruments, these funds ensure low risk and provide stable income to the investors. Debt funds are

further classified as:

• Gilt Funds: Invest their corpus in securities issued by Government, popularly known as

Government of India debt papers. These Funds carry zero Default risk but are associated with

Interest Rate risk. These schemes are safer as they invest in papers backed by Government.

• Income Funds: Invest a major portion into various debt instruments such as bonds, corporate

debentures and Government securities.

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• MIPs: Invests maximum of their total corpus in debt instruments while they take minimum

exposure in equities. It gets benefit of both equity and debt market. These scheme ranks slightly

high on the risk-return matrix when compared with other debt schemes.

• Short Term Plans (STPs):

Meant for investment horizon for three to six months. These funds primarily invest in short term

papers like Certificate of Deposits (CDs) and Commercial Papers (CPs). Some portion of the

corpus is also invested in corporate debentures.

• Liquid Funds:

Also known as Money Market Schemes, These funds provides easy liquidity and preservation of

capital. These schemes invest in short-term instruments like Treasury Bills, inter-bank call money

market, CPs and CDs. These funds are meant for short-term cash management of corporate houses

and are meant for an investment horizon of 1day to 3 months. These schemes rank low on risk-

return matrix and are considered to be the safest amongst all categories of mutual funds.

3. Balanced Funds:

As the name suggest they, are a mix of both equity and debt funds. They invest in both equities and

fixed income securities, which are in line with pre-defined investment objective of the scheme. These

schemes aim to provide investors with the best of both the worlds. Equity part provides growth and

the debt part provides stability in returns.

Further the mutual funds can be broadly classified on the basis of investment parameter viz,

Each category of funds is backed by an investment philosophy, which is pre-defined in the objectives

of the fund. The investor can align his own investment needs with the funds objective and invest

accordingly.

C). BY INVESTMENT OBJECTIVE:

Growth Schemes:

Growth Schemes are also known as equity schemes. The aim of these schemes is to provide capital

appreciation over medium to long term. These schemes normally invest a major part of their fund in

equities and are willing to bear short-term decline in value for possible future appreciation.

Income Schemes:

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Income Schemes are also known as debt schemes. The aim of these schemes is to provide regular and

steady income to investors. These schemes generally invest in fixed income securities such as bonds

and corporate debentures. Capital appreciation in such schemes may be limited.

Balanced Schemes:

Balanced Schemes aim to provide both growth and income by periodically distributing a part of the

income and capital gains they earn. These schemes invest in both shares and fixed income securities,

in the proportion indicated in their offer documents (normally 50:50).

Money Market Schemes:

Money Market Schemes aim to provide easy liquidity, preservation of capital and moderate income.

These schemes generally invest in safer, short-term instruments, such as treasury bills, certificates of

deposit, commercial paper and inter-bank call money.

Load Funds:

A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell

units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%.

It could be worth paying the load, if the fund has a good performance history.

No-Load Funds:

A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is

payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire

corpus is put to work.

OTHER SCHEMES:

Tax Saving Schemes:

Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to time.

Under Sec.80C of the Income Tax Act, contributions made to any Equity Linked Savings Scheme

(ELSS) are eligible for rebate.

Index Schemes:

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

or the NSE 50. The portfolio of these schemes will consist of only those stocks that constitute the

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index. The percentage of each stock to the total holding will be identical to the stocks index weight

age. And hence, the returns from such schemes would be more or less equivalent to those of the

Index.

Sector Specific Schemes:

These are the funds/schemes which invest in the securities of only those sectors or industries as

specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods

(FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of

the respective sectors/industries. While these funds may give higher returns, they are more risky

compared to diversified funds. Investors need to keep a watch on the performance of those

sectors/industries and must exit at an appropriate time.

Why Select Mutual Fund?

The risk return trade-off indicates that if investor is willing to take higher risk then

correspondingly he can expect higher returns and vice versa if he pertains to lower risk

instruments, which would be satisfied by lower returns. For example, if an investors opt for bank

FD, which provide moderate return with minimal risk. But as he moves ahead to invest in capital

protected funds and the profit-bonds that give out more return which is slightly higher as compared

to the bank deposits but the risk involved also increases in the same proportion.

Thus investors choose mutual funds as their primary means of investing, as Mutual funds provide

professional management, diversification, convenience and liquidity. That doesn’t mean mutual

fund investments risk free.

This is because the money that is pooled in are not invested only in debts funds which are less

riskier but are also invested in the stock markets which involves a higher risk but can expect higher

returns. Hedge fund involves a very high risk since it is mostly traded in the derivatives market

which is considered very volatile.

Growth in assets under management

The graph indicates the growth of assets under management over the years.

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Fig. 3 AUM growth

ADVANTAGES OF MUTUAL FUNDS

If mutual funds are emerging as the favourite investment vehicle, it is because of the many advantages

they have over other forms and the avenues of investing, particularly for the investor who has limited

resources available in terms of capital and the ability to carry out detailed research and market

monitoring. The following are the major advantages offered by mutual funds to all investors:

1. Portfolio Diversification:

Each investor in the fund is a part owner of all the fund’s assets, thus enabling him to hold a

diversified investment portfolio even with a small amount of investment that would otherwise require

big capital.

2. Professional Management:

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Even if an investor has a big amount of capital available to him, he benefits from the professional

management skills brought in by the fund in the management of the investor’s portfolio. The

investment management skills, along with the needed research into available investment options,

ensure a much better return than what an investor can manage on his own. Few investors have the

skill and resources of their own to succeed in today’s fast moving, global and sophisticated markets.

3. Reduction/Diversification Of Risk:

When an investor invests directly, all the risk of potential loss is his own, whether he places a deposit

with a company or a bank, or he buys a share or debenture on his own or in any other from. While

investing in the pool of funds with investors, the potential losses are also shared with other investors.

The risk reduction is one of the most important benefits of a collective investment vehicle like the

mutual fund.

4. Reduction Of Transaction Costs:

What is true of risk as also true of the transaction costs. The investor bears all the costs of investing

such as brokerage or custody of securities. When going through a fund, he has the benefit of

economies of scale; the funds pay lesser costs because of larger volumes, a benefit passed on to its

investors.

5. Liquidity:

Often, investors hold shares or bonds they cannot directly, easily and quickly sell. When they invest in

the units of a fund, they can generally cash their investments any time, by selling their units to the

fund if open-ended, or selling them in the market if the fund is close-end. Liquidity of investment is

clearly a big benefit.

6. Convenience and Flexibility:

Mutual fund management companies offer many investor services that a direct market investor cannot

get. Investors can easily transfer their holding from one scheme to the other; get updated market

information and so on.

7. Tax Benefits:

When an equity fund (a scheme that has at least 65% of its money in equities) delivers 10% in one

year, you take home 10% returns on redemption as there is no tax on long-term capital gains earned

on mutual funds.

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But when a non-equity fund, say an income fund, delivers 10% in a year, you have to pay tax on the

capital gains on redemption at 20% after indexation or 10% without indexation, whichever is lower.

That makes many go with funds that are "tax-free" after a year of investment to ensure they take home

maximum returns.

8. Choice of Schemes:

Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.

9. Well Regulated:

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

regulations designed to protect the interests of investors. The operations of Mutual Funds are

regularly monitored by SEBI.

10. Transparency:

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

investments made by your scheme, the proportion invested in each class of assets and the fund

manager's investment strategy and outlook.

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Equity Oriented Mutual Fund Schemes

These are the schemes in which at least 65% of the asset is invested in the shares of domestic

companies. Investment in these schemes is subjected to STT and the rates applicable are described in

the table below for individual investors. Additional to this the mutual fund house also pays STT when

it buys/sells stocks in the stock market for its portfolio.

Product  Transaction STT rate

Equity Oriented Mutual Fund Unit Purchase 0.125%

Equity Oriented Mutual Fund Unit Sell 0.125%

Equity Oriented Mutual Fund Unit Repurchase 0.25%

 

Debt Oriented Mutual Fund Schemes

Taxes are levied on the dividend distributed by debt oriented mutual fund schemes. Rates for dividend

distribution tax (DDT) for individuals and corporate are shown in the table below.

Dividend Distribution

Tax Individuals / HUF Corporate/Others

Equity Schemes NIL NIL

Debt Schemes 12.5%+Surcharge+ Education

Cess

30%+Surcharge+ Education

Cess

Liquid Schemes  25%+Surcharge+ Education Cess30%+Surcharge+ Education

Cess

 

STT is not applicable in the case of debt oriented schemes.

 

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Capital Gain Tax

Additional to the above taxes mutual fund profits are also subject to capital gain tax. Capital gain is

the difference between the sale price and the acquisition price of the asset. Tax treatment is different

for different holding period (long term or short term). Tax details are given in the table below.

Capital Gains TaxEquity

SchemesNon-Equity Schemes

Long Term Capital

Gain TaxNIL

Lesser of 10% without indexation or 20% with indexation +

surcharge and education cess

Short Term Capital

Gain Tax15% Added to total income and taxed as per the slab

 

 

In case of capital loss

In case of capital losses incurred on once investment these losses can be set off against other capital

gains leading to lesser tax outgo. However there are some limitations to this rule so as to restrict

fraudulent tax avoidance. Various capital losses and the head against which you can set it off are

described in the table below.

Capital Loss Set Off Against

Short Term Long Term / Short Term Gain

Long Term (Debt Oriented) Long Term Gain (Debt)

Long Term (Equity Oriented) Cannot be Set Off

 

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Mutual fund investments: Gain from double indexation, reduce tax liability

It's a method that helps you cut on your tax liability significantly if you stretch your investments over

three financial years.

The long-term capital gains earned from non-equity mutual funds are taxed at 10.3% if you don't avail

of the indexation benefit, but if you opt for this route, your gains are taxed at 20.6%. Despite the

higher rate, the indexation facility is beneficial, especially if the inflation is at high levels.

Every financial year, the Income Tax Department declares the cost inflation index (CII). For 2012-13,

it is 852, while for 2011-12, it was 785. So, the indexation benefit over the two years works out to

8.535%. As is evident from the graphic, the tax liability is significantly lower if you choose

indexation.

The advantage of this strategy is multiplied if you stretch your investments over three financial years

and avail of the double indexation facility. Consider that you had invested in a mutual fund on 26

March 2011 (that is, in financial year 2010-11) and redeemed it on 5 April 2012 (that is, in financial

year 2012-13). As the CII for 2010-11 was 711 and that for 2012-13 is 852, the indexation benefit will

be calculated on the basis of growth between 711 and 852, a whopping 19.83%. As is clear from the

chart , the strategy of stretching the investment to three financial years actually helps you book long-

term capital loss, even though your investment has grown.

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DRAWBACKS OF INVESTING THROUGH MUTUAL FUNDS:

1. No Control over Costs: An investor in a mutual fund has no control of the overall costs of

investing. The investor pays investment management fees as long as he remains with the fund, albeit

in return for the professional management and research. Fees are payable even if the value of his

investments is declining. A mutual fund investor also pays fund distribution costs, which he would

not incur in direct investing. However, this shortcoming only means that there is a cost to obtain the

mutual fund services.

2. No Tailor-Made Portfolio: Investors who invest on their own can build their own portfolios of

shares and bonds and other securities. Investing through fund means he delegates this decision to the

fund managers. The very-high-net-worth individuals or large corporate investors may find this to be a

constraint in achieving their objectives. However, most mutual fund managers help investors

overcome this constraint by offering families of funds- a large number of different schemes- within

their own management company. An investor can choose from different investment plans and

constructs a portfolio to his choice.

3. Managing a Portfolio of Funds:

Availability of a large number of funds can actually mean too much choice for the investor. He may

again need advice on how to select a fund to achieve his objectives, quite similar to the situation when

he has individual shares or bonds to select.

4. The Wisdom of Professional Management:

That's right, this is not an advantage. The average mutual fund manager is no better at picking stocks

than the average nonprofessional, but charges fees.

5. No Control:

Unlike picking your individual stocks, a mutual fund puts you in the passenger seat of somebody

else's car.

6. Dilution:

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Mutual funds generally have small holdings of so many different stocks that insanely great

performance by a fund's top holdings still doesn't make much of a difference in a mutual fund's total

performance.

7. Buried Costs:

Many mutual funds specialize in burying their costs and in hiring salesmen who do not make those

costs clear to their clients.

Selection parameters for mutual fund

Investor’s objective:

The first point to note before investing in a fund is to find out whether your objective matches with

the scheme. It is necessary, as any conflict would directly affect your prospective returns. Similarly,

you should pick schemes that meet your specific needs. Examples: pension plans, children’s plans,

sector-specific schemes, etc.

Investor’s risk capacity and capability:

This dictates the choice of schemes. Those with no risk tolerance should go for debt schemes, as they

are relatively safer. Aggressive investors can go for equity investments. Investors that are even more

aggressive can try schemes that invest in specific industry or sectors.

Fund Manager’s and scheme track record:

Since you are giving your hard earned money to someone to manage it, it is imperative that he

manages it well. It is also essential that the fund house you choose has excellent track record. It also

should be professional and maintain high transparency in operations. Look at the performance of the

scheme against relevant market benchmarks and its competitors. Look at the performance of a longer

period, as it will give you how the scheme fared in different market conditions.

Cost factor:

Though the AMC fee is regulated, you should look at the expense ratio of the fund before investing.

This is because the money is deducted from your investments. A higher entry load or exit load also

will eat into your returns. A higher expense ratio can be justified only by superlative returns. It is very

crucial in a debt fund, as it will devour a few percentages from your modest returns.

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Also, Morningstar rates mutual funds. Each year end, many financial publications list the year’s best

performing mutual funds. Naturally, very eager investors will rush out to purchase shares of last year's

top performers. That's a big mistake. Remember, changing market conditions make it rare that last

year's top performer repeats that ranking for the current year. Mutual fund investors would be well

advised to consider the fund prospectus, the fund manager, and the current market conditions. Never

rely on last year's top performers.

How to invest in mutual funds or where to buy?

With entry loads abolished by SEBI and with so many technological advances, we have

different ways of investing in mutual funds .This article explains the different ways of investing

in mutual funds: through agents, AMC’s, demat, and web portals etc.

Through an Agent

This is the oldest and one of the most convenient ways of investing in mutual funds.  Since

the abolition of entry loads, you now have to compensate the agent for his services, and pay him

commission on the amount invested. Agents can charge anywhere from 1-2% of the amount to

be invested.

You should go with this way of investing only if you want convenience and comfort takes more

precedence. Click on AMFI Agent Search Link to search for mutual funds agents in your city.

Direct Investing through an AMC

There are many mutual funds who provide online facilities for investing. To do so though, you

need to have a folio number, which you get only after investing in a particular mutual fund,

which means that you have to go physically to the AMC office to invest for the first time. Next

time onwards, you can invest in that mutual fund, online through their website. Using this

method, makes sure that your entire amount, e.g. Rs 100/-  gets invested and there are no

charges here. 

Investing through a Demat Account

This is one of the most convenient methods of investing in mutual funds. If you have a demat

account, you can browse through all the mutual funds on the site, and just with a few clicks of a

mouse, you can invest in a fund of your choice.

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For eg., ICICI Bank charges Rs 30 or 1.5% per SIP, whichever is lower and HDFC charges Rs

100 per quarter irrespective of the amount invested. The biggest advantage of buying and

selling through a demat account, is that you control everything from one place.

Some of the players in online mutual funds selling are :

5 paisa

Geojit Securities

HDFC Securities

ICICI Direct

India Bulls

InvestSmart Online

Investmentz.com

Kotak Street

Motilal Oswal

Sharekhan

Investing Through Web Portals

FundsIndia.com   : FundsIndia is an online portal which allows you to comfortably invest in

Mutual funds and other kind of financial instruments. You just open an account with them,

and they will send all the documents to your home. You don’t have to pay a single paisa, out

of your pocket . They support SIP, STP, NRI customers, & VIP Investing. FundsIndia offers

different ways of payment too. Overall they can be very helpful if your requirement is

convenience and value added services. FundsIndia makes money from commissions earned

through the AMCs’. The AMC pays a small commission to agents 

FundsSuperMart : FundsSupermart are a strong player in other Asian countries like Hong

Kong, Singapore etc., but they are new to India. As of now, they do not offer a lot of services

& products, like FundsIndia, but you should be able to invest in mutual funds at least, with

them too.

 Visit your bank

A number of banks are mutual fund agents. Just walk into your branch and ask if they are

selling any funds. See if they have a tie-up with the fund house you want to invest in.

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WHAT IS THE PROCEDURE FOR REGESTRING A MUTUAL FUND WITH SEBI

An applicant proposing to sponsor a Mutual fund in India must submit an application in Form A along

with a fee of Rs.20, 000. The application is examined and once the sponsor satisfies certain conditions

such as being in the financial services business and possessing positive net worth for the last five

years, having net profit in three out of the last five years and possessing the general reputation of

fairness and integrity in all business transactions, it is required to complete the remaining formalities

for setting up a Mutual fund. These include inter alia, executing the trust deed and investment

management agreement, setting up a trustee company board of trustees comprising two- thirds

independent trustees, incorporating the asset management company (AMC), contributing to at least

40% of the net worth of the AMC and appointing a custodian. Upon satisfying these conditions, the

registration certificate is issued subject to the payment of registration fees of Rs.20.00 lacs for details;

see the SEBI (Mutual funds) Regulations, 1996.

WORKING OF MUTUAL FUNDS

Fig. 4- Working of mutual fund

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The mutual fund collects money directly or through brokers from investors. The money is invested in

various instruments depending on the objective of the scheme. The income generated by selling

securities or capital appreciation of these securities is passed on to the investors in proportion to their

investment in the scheme. The investments are divided into units and the value of the units will be

reflected in Net Asset Value or NAV of the unit. NAV is the market value of the assets of the scheme

minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of

units outstanding on the valuation date. Mutual fund companies provide daily net asset value of their

schemes to their investors. NAV is important, as it will determine the price at which you buy or

redeem the units of a scheme. Depending on the load structure of the scheme, you have to pay entry or

exit load.

Structure of a mutual fund:

India has a legal framework within which Mutual Fund have to be constituted. In India open and

close-end funds operate under the same regulatory structure i.e. as unit Trusts. A Mutual Fund in India

is allowed to issue open-end and close-end schemes under a common legal structure. The structure

that is required to be followed by any Mutual Fund in India is laid down under SEBI (Mutual Fund)

Regulations, 1996.

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Fig. 5 Structure of mutual funds

The Fund Sponsor:

Sponsor is defined under SEBI regulations as any person who, acting alone or in combination of

another corporate body establishes a Mutual Fund. The sponsor of the fund is akin to the promoter of

a company as he gets the fund registered with SEBI. The sponsor forms a trust and appoints a Board

of Trustees. The sponsor also appoints the Asset Management Company as fund managers. The

sponsor either directly or acting through the trustees will also appoint a custodian to hold funds assets.

All these are made in accordance with the regulation and guidelines of SEBI.

As per the SEBI regulations, for the person to qualify as a sponsor, he must contribute at least 40% of

the net worth of the Asset Management Company and possesses a sound financial track record over 5

years prior to registration.

Mutual Funds as Trusts:

A Mutual Fund in India is constituted in the form of Public trust Act, 1882. The Fund sponsor acts as

a settler of the Trust, contributing to its initial capital and appoints a trustee to hold the assets of the

trust for the benefit of the unit-holders, who are the beneficiaries of the trust. The fund then invites

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investors to contribute their money in common pool, by scribing to “units” issued by various schemes

established by the Trusts as evidence of their beneficial interest in the fund.

It should be understood that the fund should be just a “pass through” vehicle. Under the Indian Trusts

Act, the trust of the fund has no independent legal capacity itself, rather it is the Trustee or the

Trustees who have the legal capacity and therefore all acts in relation to the trusts are taken on its

behalf by the Trustees. In legal parlance the investors or the unit-holders are the beneficial owners of

the investment held by the Trusts, even as these investments are held in the name of the Trustees on a

day-to-day basis. Being public trusts, Mutual Fund can invite any number of investors as beneficial

owners in their investment schemes.

Trustees:

A Trust is created through a document called the Trust Deed that is executed by the fund sponsor in

favour of the trustees. The Trust- the Mutual Fund – may be managed by a board of trustees- a body

of individuals, or a trust company- a corporate body. Most of the funds in India are managed by

Boards of Trustees. While the boards of trustees are governed by the Indian Trusts Act, where the

trusts are a corporate body, it would also require to comply with the Companies Act, 1956. The Board

or the Trust company as an independent body, acts as a protector of the of the unit-holders interests.

The Trustees do not directly manage the portfolio of securities. For this specialist function, the

appoint an Asset Management Company. They ensure that the Fund is managed by ht AMC as per the

defined objectives and in accordance with the trusts deeds and SEBI regulations.

The Asset Management Companies:

The role of an Asset Management Company (AMC) is to act as the investment manager of the Trust

under the board supervision and the guidance of the Trustees. The AMC is required to be approved

and registered with SEBI as an AMC. The AMC of a Mutual Fund must have a net worth of at least

Rs. 10 Crores at all times. Directors of the AMC, both independent and non- independent, should

have adequate professional expertise in financial services and should be individuals of high morale

standing, a condition also applicable to other key personnel of the AMC. The AMC cannot act as a

Trustee of any other Mutual Fund. Besides its role as a fund manager, it may undertake specified

activities such as advisory services and financial consulting, provided these activities are run

independent of one another and the AMC’s resources (such as personnel, systems etc.) are properly

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segregated by the activity. The AMC must always act in the interest of the unit-holders and reports to

the trustees with respect to its activities.

Custodian and Depositories:

Mutual Fund is in the business of buying and selling of securities in large volumes. Handling these

securities in terms of physical delivery and eventual safekeeping is a specialized activity. The

custodian is appointed by the Board of Trustees for safekeeping of securities or participating in any

clearance system through approved depository companies on behalf of the Mutual Fund and it must

fulfil its responsibilities in accordance with its agreement with the Mutual Fund. The custodian should

be an entity independent of the sponsors and is required to be registered with SEBI. With the

introduction of the concept of dematerialization of shares the dematerialized shares are kept with the

Depository participant while the custodian holds the physical securities. Thus, deliveries of a fund’s

securities are given or received by a custodian or a depository participant, at the instructions of the

AMC, although under the overall direction and responsibilities of the Trustees.

Bankers:

A Fund’s activities involve dealing in money on a continuous basis primarily with respect to buying

and selling units, paying for investment made, receiving the proceeds from sale of the investments and

discharging its obligations towards operating expenses. Thus the Fund’s banker plays an important

role to determine quality of service that the fund gives in timely delivery of remittances etc.

Transfer Agents:

Transfer agents are responsible for issuing and redeeming units of the Mutual Fund and provide other

related services such as preparation of transfer documents and updating investor records. A fund may

choose to carry out its activity in-house and charge the scheme for the service at a competitive market

rate. Where an outside Transfer agent is used, the fund investor will find the agent to be an important

interface to deal with, since all of the investor services that a fund provides are going to be dependent

on the transfer agent.

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NET ASSET VALUE (NAV)

Since each owner is a part owner of a mutual fund, it is necessary to establish the value of his part. In

other words, each share or unit that an investor holds needs to be assigned a value. Since the units

held by investor evidence the ownership of the fund’s assets, the value of the total assets of the fund

when divided by the total number of units issued by the mutual fund gives us the value of one unit.

This is generally called the Net Asset Value (NAV) of one unit or one share. The value of an

investor’s part ownership is thus determined by the NAV of the number of units held.

Calculation of NAV:

Let us see an example. If the value of a fund’s assets stands at Rs. 100 and it has 10 investors who

have bought 10 units each, the total numbers of units issued are 100, and the value of one unit is Rs.

10.00 (1000/100). If a single investor in fact owns 3 units, the value of his ownership of the fund will

be Rs. 30.00 (1000/100*3). Note that the value of the fund’s investments will keep fluctuating with

the market-price movements, causing the Net Asset Value also to fluctuate.

For example, if the value of our fund’s asset increased from Rs. 1000 to 1200, the value of our

investors holding of 3 units will now be (1200/100*3) Rs. 36. The investment value can go up or

down, depending on the markets value of the fund’s assets.

Types of Returns on Mutual Fund:

There are three ways, where the total returns provided by mutual funds can be enjoyed by investors:

• Income is earned from dividends on stocks 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 sells securities that have increased in price, the fund has a capital gain. Most funds also

pass on these gains to investors in a distribution. If fund holdings increase in price but are not sold by

the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for a

profit.

Funds will also usually give you a choice either to receive a check for distributions or to reinvest the

earnings and get more shares.

RISK FACTORS OF MUTUAL FUNDS:

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1. The Risk-Return Trade-Off:

Fig. 6 Risk-return trade-off graph

The most important relationship to understand is the risk-return trade-off. Higher the risk greater the

returns / loss and lower the risk lesser the returns/loss.

Hence it is up to you, the investor to decide how much risk you are willing to take. In order to do this

you must first be aware of the different types of risks involved with your investment decision.

2. Market Risk:

Sometimes prices and yields of all securities rise and fall. Broad outside influences affecting the

market in general lead to this. This is true, may it be big corporations or smaller mid-sized companies.

This is known as Market Risk. A Systematic Investment Plan (“SIP”) that works on the concept of

Rupee Cost Averaging (“RCA”) might help mitigate this risk.

3. Credit Risk:

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The debt servicing ability (may it be interest payments or repayment of principal) of a company

through its cash flows determines the Credit Risk faced by you. This credit risk is measured by

independent rating agencies like CRISIL who rate companies and their paper. A ‘AAA’ rating is

considered the safest whereas a ‘D’ rating is considered poor credit quality. A well-diversified

portfolio might help mitigate this risk.

4. Inflation Risk:

The root cause, Inflation. Inflation is the loss of purchasing power over time. A lot of times people

make conservative investment decisions to protect their capital but end up with a sum of money that

can buy less than what the principal could at the time of the investment. This happen when inflation

grows faster than the return on your investment. A well-diversified portfolio with some investment in

equities might help mitigate this risk.

5. Interest Rate Risk:

In a free market economy interest rates are difficult if not impossible to predict. Changes in interest

rates affect the prices of bonds as well as equities. If interest rates rise the prices of bonds fall and vice

versa. Equity might be negatively affected as well in a rising interest rate environment. A well-

diversified portfolio might help mitigate this risk.

6. Political / Government Policy Risk:

Changes in government policy and political decision can change the investment Environment. They

can create a favourable environment for investment or vice versa.

7. Liquidity Risk:

Liquidity risk arises when it becomes difficult to sell the securities that one has purchased. Liquidity

Risk can be partly mitigated by diversification, staggering of maturities as well as internal risk

controls that lean towards purchase of liquid securities.

REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA:

The structure of mutual funds in India is guided by the SEBI. Regulations, 1996.These regulations

make it mandatory for mutual fund to have three structures of sponsor trustee and asset Management

Company. The sponsor of the mutual fund and appoints the trustees. The trustees are responsible to

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the investors in mutual fund and appoint the AMC for managing the investment portfolio. The AMC

is the business face of the mutual fund, as it manages all the affairs of the mutual fund. The AMC and

the mutual fund have to be registered with SEBI.

SEBI REGULATIONS:

• As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to

protect the interest of the investors.

• SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by

private sector entities were allowed to enter the capital market.

• The regulations were fully revised in 1996 and have been amended thereafter from time to time.

• SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of

investors.

• All mutual funds whether promoted by public sector or private sector entities including those

promoted by foreign entities are governed by the same set of Regulations. The risks associated with

the schemes launched by the mutual funds sponsored by these entities are of similar type. There is no

distinction in regulatory requirements for these mutual funds and all are subject to monitoring and

inspections by SEBI.

• SEBI Regulations require that at least two thirds of the directors of trustee company or board of

trustees must be independent i.e. they should not be associated with the sponsors.

• Also, 50% of the directors of AMC must be independent. All mutual funds are required to be

registered with SEBI before they launch any scheme.

• Further SEBI Regulations, inter-alia, stipulate that MFs cannot guarantee returns in any scheme and

that each scheme is subject to 20 : 25 condition [I.e. minimum 20 investors per scheme and one

investor can hold more than 25% stake in the corpus in that one scheme].

• Also SEBI has permitted MFs to launch schemes overseas subject various restrictions and also to

launch schemes linked to Real Estate, Options and Futures, Commodities, etc.

ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI)

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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 organisation. 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 been registered with

Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional 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 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 holders.

The Objectives of Association of Mutual Funds in India: The Association of Mutual Funds of

India works with registered AMCs of the country. It has certain defined objectives which juxtaposes

the guidelines of its Board of Directors. The objectives are as follows:

•This mutual fund association of India maintains high professional and ethical standards in all areas of

operation of the industry.

• It also recommends and promotes the top class business practices and code of conduct which is

followed by members and related people engaged in the activities of mutual fund and asset

management. The agencies who are by any means connected or involved in the field of capital

markets and financial services also involved 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 of India do represent the Government of India, the Reserve Bank 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 a programme of

training and certification for all intermediaries and other engaged in the mutual fund industry.

• AMFI undertakes all India awareness programme for investors in order to promote proper

understanding of the concept and working of mutual funds.

• At last but not the least association of mutual fund of India also disseminate information on Mutual

Fund Industry and undertakes studies and research either directly or in association with other bodies.

AMFI Publications:

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AMFI publish mainly two types of bulletin. One is on the monthly basis and the other is quarterly.

These publications are of great support for the investors to get intimation of the knowhow of their

parked money.

Mutual fund companies in India

The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987

marked the existence of only one mutual fund company in India with Rs. 67bn assets under

management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By the end of the

80s decade, few other mutual fund companies in India took their position in mutual fund market.

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

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

The succeeding decade showed a new horizon in Indian mutual fund industry. By the end of 1993, the

total AUM of the industry was Rs. 470.04 bn. The private sector funds started penetrating the fund

families. In the same year the first Mutual Fund Regulations came into existence with re-registering

all mutual funds except UTI. The regulations were further given a revised shape in 1996.

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

with Franklin Templeton. Just after ten years with private sector players penetration, the total assets

rose up to Rs. 1218.05 bn. Today there are more than 45 mutual fund companies in India.

Major Mutual Fund Companies in India:

• ABN AMRO Mutual Fund • LIC Mutual Fund,

• GIC Mutual Fund. • AEGON Mutual Fund

• Zurich Mutual Fund • BOI AXA Mutual Fund

• UTI Mutual Fund • AXIS bank Mutual Fund

• Standard Chartered Mutual Fund • Religare Invesco Mutual Fund

• Shinsei Mutual Fund • Baroda Pioneer Mutual Fund

• Benchmark Mutual Fund • Chola Mutual Fund,

• Birla Sun Life Mutual Fund, • Can bank Mutual Fund,

• Bank of Baroda Mutual Fund, • HDFC Mutual Fund,

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• HSBC Mutual Fund, • ING Vysya Mutual Fund,

Prudential ICICI Mutual Fund,

State Bank of India Mutual Fund,

Tata Mutual Fund,

Unit Trust of India Mutual Fund,

Reliance Mutual Fund,

Standard Chartered Mutual Fund,

Franklin Templeton India Mutual Fund,

Morgan Stanley Mutual Fund India,

Escorts Mutual Fund,

Alliance Capital Mutual Fund,

Future of Mutual Funds in India

When we consider marketing, we have to see the issues in totality, because we cannot judge an

elephant by its trunk or by its tail but we have to see it in its totality. When we say marketing of

mutual funds, it means, includes and encompasses the following aspects:

Assessing of investors needs and market research

Responding to investor’s needs;

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Product designing;

Studying the macro environment;

Timing of the launch of the product

Choosing the distribution network;

Preparing offer documents and other literature

Getting feedback about sales;

Studying performance indicators about fund performance like N A V

Sending certificates in time and other after fia1es services

Honoring the commitments made for redemptions and repurchase

Paying dividends and other entitlements

Creating positive image about the fund and changing the nature of the market itself. The above are the

aspects of marketing of mutual funds, in totality. Even if there is a single weak-link among the

factors, which are mentioned above, no mutual fund can successfully market its funds. Although

several macroeconomic and demographic factors affect the growth of the industry, the key underlying

driver for all the categories of funds is the key economic indicator – the GDP growth rate.

Future of mutual funds in India is undoubtedly very bright. Currently, the Indian economy is mostly

under tapped. With more and more investors financial awareness it is poised to grow at a very fast

pace. India’s increasing working population will also play its significant role in growth of mutual fund

industry in coming years.

We need to overcome challenges which continue to persist are …

There are continuing concerns that the industry has been grappling with over a

considerable period of time.

1. Under-penetrated population

2. Inaccessibility in smaller towns and cities due to lack of an efficient distribution

3. Heavy reliance on institutional sales

4. Low financial literacy level

5. Cost pressures emanating as a result of inefficiencies in system

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Some of the older public and private sector players will either close shop or be taken over. Out often

public sector players five will sell out, close down or merge with stronger players in three to four

years. In the private sector this trend has already started with two mergers and one takeover. Here too

some of them will down their shutters in the near future to come.

The market will witness a flurry of new players entering the arena. There will be a large number of

offers from various asset management companies in the time to come. Some big names like fidelity,

Principal, Old Mutual etc. arc looking at Indian market seriously. One important reason for it is that

most major players already have presence here and hence these big names would hardly like to get left

behind.

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CHAPTER 2

About the Company

Introduction

Prudent CAS (Corporate Advisory Services) Ltd, Incorporated in year 2000 with a clear vision of providing professional services in the area of personal and corporate investments. It has created a niche segment over a period to time with an excellent quality client base. Over the past few years Prudent Corporate Advisory Services has created in-house capabilities of analyzing funds on various parameters before suggesting them to clients.

46 | P a g e

The team approach worked wonders and in the short-span of just one decade, the Prudent Group expanded its horizon by offering specialized services in the areas of Personal and Corporate Investment Planning through Mutual Funds, Equities, Derivatives, Third Party Products, Fixed Income Products, Life/General Insurance and Real Estate through various companies listed below.

This helps us to provide our clients an optional basket of funds rather than selling the typical available

funds. This approach lets us set our focus on the quality work rather than the just the quantity.

Products in which Prudent has an expertise:

1) Mutual Funds

2) Investment Consultancy

3) Equity and Derivatives broking

4) RBI Relief funds

5) Infrastructure Bonds

5) Life Insurance

6) Real Estate

Prudent Corporate Advisory Services Ltd.

As the flagship company, Prudent Corporate Advisory Services remains the primary arm of the

Prudent Group. It offers specialized services in the area of Personal and Corporate Investment

Planning through Mutual Funds, Debt and Third party products.

Besides having a large pool of their own clients, the company also manages its geographically-spread

business operations through a unique platform for independent financial advisors(IFA) which helps

them to grow and expand their services & support through sales and marketing, technology,

operations, back- office support, training & consultation.

Prudent Products

Prudent Channel since its inception has a strong hold in the market through its Direct Force. It also

has strong hold on the corporate channel - it now wants to have a greater reach to its clients which it

47 | P a g e

has already developed through its 2000+ certified brokers just the beginning of the force that will

grow in leaps and bounds.

know more than how much money you need to retire - or how much you should save for your future

expenses. It is about determining short-term and long-term objectives. Prudent CAS Ltd serves you

with array of financial planning.

If financial models were food, then we could cook up anything nourishing on the menu, from soup to

steak to nuts. If financial models were clothing, we could help produce any outfit, from making

original sketches to stitching together skirts to inventorying racks of gowns.

About Prudent

Prudence (prdns): the exercise of good judgment, common sense, and caution, especially in the conduct of practical matters

Incorporated in year 2000 with a clear vision of providing professional services in the area of personal

and corporate investments. It has created a niche segment over a period to time with an excellent

quality client base. Over the past few years Prudent Corporate Advisory Services has created in-house

capabilities of analyzing funds on various parameters before suggesting them to clients.

The team approach worked wonders and in the short-span of just one decade, the Prudent Group

expanded its horizon by offering specialized services in the areas of Personal and Corporate

Investment Planning through Mutual Funds, Equities, Derivatives, Third Party Products, Fixed

Income Products, Life/General Insurance and Real Estate through various companies listed below.

Prudent Corporate Advisory Services Ltd.

As the flagship company, Prudent Corporate Advisory Services remains the primary arm of the

Prudent Group. It offers specialized services in the area of Personal and Corporate Investment

Planning through Mutual Funds, Debt and Third party products.

Besides having a large pool of their own clients, the company also manages its geographically-spread

business operations through a unique platform for independent financial advisors(IFA) which helps

them to grow and expand their services & support through sales and marketing, technology,

operations, back- office support, training & consultation.

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Prudent Broking Services Pvt. Ltd.

Incorporated in 2004, Prudent Broking Services Pvt. Ltd is a Stock Broking and Depository

Participant service provider. Company is a member with Bombay Stock Exchange (BSE) & National

Stock exchange (NSE) & Central depository services (India) Limited (CDSL). Company is in the

process of creating its national presence by opening offices in various parts of the country.

Prudent Properties.

The Property sector is an important part of the asset class, but the effort and paperwork involved in

purchasing the same can be intimidating. Prudent Property provides real estate solutions not only in

creating an asset class but is also helping the customers in buying their dream realty, whether it be

homes or offices.

Team Prudent

Team Prudent is uniquely positioned to be a part of the client's inner trust-circle and consult them to arrive at independent investment decisions.

The team Prudent consists of certified professionals and Industry experts. This includes top

notch investment advisors, research teams and client servicing teams. Our all branches are

self sufficient and fully equipped to service their clients.Our investment advisors are trained

rigorously to our exacting standards, to understand an investor’s needs and accordingly make

suggestions to them.

Our Back Bone - IT, RESEARCH AND WEB

We have harnessed the potential of information technology for excellent research and

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CHAPTER 3

Research Methodology

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Research Design

The aim of this evaluation study is to gather information and critically analyze the synergy between

the investment needs of individuals. This study is done with the purpose to find out whether planning

is done as per the need and proper matching of mutual funds are utilized to get the financial goals.

Need for the study

For retail investor who does not have the time and expertise to analyze and invest in stocks and bonds,

mutual funds offer a viable investment alternative. This is because mutual funds provide the benefit of

cheap access to expensive stocks. Mutual funds diversify the risk of the investor by investing in a

basket of assets. A team of professional fund managers manages them with in-depth research inputs

from investment analysts. Being institutions with good bargaining power in markets, mutual funds

have access to crucial corporate information which individual investors cannot access. So the present

study has taken up to know the extent of awareness about mutual funds and to analyze the investors’

perception towards mutual funds

Scope of study

The research was limited to the New Delhi .The first stage included gathering information about

personal investment pattern.

The second stage comprised determining the objective of the study and drafting the questionnaire.

The questionnaire was designed keeping in mind the objective of the study. It was designed with due

guidance of the project guide.

Research questions

Creating a research question is a task. Good research questions are formed and worked on, and are

rarely simply found. You start with what interests you, and you refine it until it is workable. The

question sets out what you hope to learn about the topic. This question, together with your approach,

will guide and structure the choice of data to be collected and analysed.

There is no recipe for the perfect research question. The following guidelines highlight some of the

features of good questions.

Good questions are:

Relevant.

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Manageable in terms of research and in terms of your own academic abilities.

Substantial and with original dimensions.

Consistent with the requirements of the assessment.

Clear and simple.

Interesting.

Research objective:

Specific research objectives included the following:

To know about the extent of awareness about mutual funds

To give a brief idea about the benefits available from Mutual Fund investment.

To know about the preferences of investors towards mutual funds

To discuss about the market trends of Mutual Fund investment.

To know about the perceptions of investors towards mutual funds

Observe the fund management process of mutual funds.

To give an idea about the regulations of mutual funds.

To know about the extent of satisfaction of investors towards mutual funds

Research methodology:

Research Design selected for this research is descriptive design and the Universe is New Delhi. Data

was collected in two ways, i.e., Primary data and Secondary data. The data collection method used for

collection of primary data was survey method and the data collection instrument used is structured

questionnaire. The sampling technique used is non-probability convenience sampling. Sample size is

50 respondents and sampling units include businessmen, Government servants, professional and

retired Individuals.

The secondary data was collected through journals, magazines, books, company manuals,

Websites, etc.

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Qualitative analysis

The qualitative analysis part include the mapping of needs with planning and finding gap in the

selection of proper instruments.

Universe & sample of study Sample:

Part of population selected to investigate the properties of the population. Due to scarcity of research

sample of 50 questionnaires were selected.

Convenient Sampling methods were used to save cost and time.

Universe:

The universe for our survey was the people in New Delhi and the sample were places chosen to visit

and get the responses of questions from there.

Limitation

1. Sample size was limited to 50 because of limited time which is small to represent the

whole population.

2. The research was limited to New Delhi city only and if the same research would have been carried

in another city, the results may vary.

3. Sometimes the respondents because of their business didn’t able to concentrate while filling up the

questions. However the researcher tried her level best to overcome the limitation by explaining the

importance of research.

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CHAPTER 4

Data Analysis and

Findings

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Introduction:

In this chapter the main aim of this evaluation study is to gather information and critically analyse the data received during my survey.

As i was limited to do my survey on the adjoining areas surrounding New Delhi due to time and proximity factors. I collected data from this area only.

During my survey i came across wide number of peoples from different age groups with different perception and other varied demographic fields.

The analysis on the Sample size Surveyed is been as follows:

TABLE 4.1 The age and gender of the respondent

Age of the respondent

Gender of the

respondent

N Valid 50 50

Missing 0 0

TABLE 4.2 Age of the respondent

Frequency Percent Valid Percent

Cumulative

Percent

Valid 18 -25 10 20.0 20.0 20.0

26-35 16 32.0 32.0 52.0

36-50 10 20.0 20.0 72.0

51-65 7 14.0 14.0 86.0

66 & above 7 14.0 14.0 100.0

Total 50 100.0 100.0

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PIE CHART 4.1 Age of the respondentAnalysis:

The above pie chart shows the demographic profile of the selected sample. The profile is

spread in age range of 18 years to 66 years and above. The sample comprised mostly the

persons of age group 26 –35 years with the maximum frequency of 16 samples, whereas the

second most sample was present in age group of 36 –50 years with frequency of 10.

TABLE 4.3 Gender of the respondent

Frequency Percent Valid Percent

Cumulative

Percent

Valid Male 36 72.0 72.0 72.0

Female 14 28.0 28.0 100.0

Total 50 100.0 100.0

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PIE CHART 4.2 Gender of the respondent

Analysis:

The gender category represented an unequal distribution between the number of males and

females. It can be said that the survey was male biased but due to the limited time, the

respondents were chosen as first come first serve basis.

TABLE 4.4 Work status of the respondent

Frequency Percent Valid Percent

Cumulative

Percent

Valid Student 8 16.0 16.0 16.0

Business 13 26.0 26.0 42.0

Employed 16 32.0 32.0 74.0

Others 13 26.0 26.0 100.0

Total 50 100.0 100.0

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PIE CHART 4.3 Work status of the respondent

Analysis:

The above chart shows that people mostly were employed and secondly were the business man, least

were the students.

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What factor do you consider for investing?

TABLE 4.5 Frequency distribution of the factors considered for investment

Frequency Percent Valid Percent Cumulative Percent

Valid safety 16 32.0 32.0 32.0

liquidity 13 26.0 26.0 58.0

high return 8 16.0 16.0 74.0

tax benefits 6 12.0 12.0 86.0

guaranteed

return7 14.0 14.0 100.0

Total 50 100.0 100.0

PIE CHART 4.4 Representation of factors considered for investing.

Analysis:

This was the most important question of the entire questionnaire. This question clearly indicates the

psyche of investors in making the investment decision. We can see that most of the investors made

their decisions on direct regard to safety & liquidity, whereas the other investors wanted a

guaranteed return as the motivation to invest. This shows the traditional thought of saving and

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penetration of banking industry in the psyche of consumers.

What investment opportunities do you seek for investing?

TABLE 4.6 Frequency distribution of various investment opportunities

Frequency Percent Valid Percent

Cumulative

Percent

Valid Bank Deposits 11 22.0 22.0 22.0

Post Office/ PPF 10 20.0 20.0 42.0

Stock/ PMS 5 10.0 10.0 52.0

Mutual Funds 9 18.0 18.0 70.0

Insurance 8 16.0 16.0 86.0

Gold (Holding) 4 8.0 8.0 94.0

Real Estates 3 6.0 6.0 100.0

Total 50 100.0 100.0

PIE CHART 4.5 Representation of various investment opportunities.

Analysis:

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It can be seen from pie chart that mostly investors go for investment with a bank or a post

office. More than 40% of the investment are with them. On the other hand rest 60%

comprises of insurance, mutual funds, real estates, gold & stocks. It can be seen that

investment in stocks & mutual funds have been increased over the past years.

TABLE 4.7 Awareness about MF :

Frequency Percent Valid Percent

Cumulative

Percent

Valid Yes 18 36.0 36.0 36.0

No 32 64.0 64.0 100.0

Total 50 100.0 100.0

PIE CHART 4.6 Representation of Awareness about MF

Analysis:

Most of the people are unaware about mutual funds. About 64% people don’t know anything about mutual fund

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TABLE 4.8 Reason of unawareness about MF

Frequency Percent Valid Percent

Cumulative

Percent

Valid Not intrested 17 34.0 45.9 45.9

Lack of information 11 22.0 29.7 75.7

Other reasons 9 18.0 24.3 100.0

Total 37 74.0 100.0

Missing System 13 26.0

Total 50 100.0

PIE CHART 4.7 Reason of unawareness about MF

Analysis:

The above pie chart shows the reason behind not knowing about mutual fund is that most of the

people are really not at all intrested in mutual fund and other who are intrested dint get sufficient

information about it.

TABLE 4.9 Reason why don’t want to invest in mutual fund

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Frequency Percent Valid Percent

Cumulative

Percent

Valid HIgh Risk 14 28.0 41.2 41.2

No guarantee 7 14.0 20.6 61.8

Difficulty in selecting options 3 6.0 8.8 70.6

Lack of Awareness 5 10.0 14.7 85.3

Past experience 5 10.0 14.7 100.0

Total 34 68.0 100.0

Missing System 16 32.0

Total 50 100.0

PIE CHART 4.8 Reason why don’t want to invest in mutual fund

Analysis:

The above pie chart shows the factors that have stopped people to invest in mutual funds. From the

range of options people said that high risk was the reason behind it. Other factors included prior

experience, no guarantee, lack of awareness & difficulty in selecting options. It can be clearly seen

that a perception of loss of money i.e. high risk is associated for mutual funds in eyes of consumers.

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TABLE 4.10 Safest option for investing

Frequency Percent Valid Percent

Cumulative

Percent

Valid Bank Deposits 28 56.0 63.6 63.6

Post Office/ PPF 7 14.0 15.9 79.5

Stock/ PMS 1 2.0 2.3 81.8

Insurance 2 4.0 4.5 86.4

Real Estates 6 12.0 13.6 100.0

Total 44 88.0 100.0

Missing System 6 12.0

Total 50 100.0

PIE CHART 4.9 Representing safest option for investing

Analysis :

Analysis shows that the safest option considered for investing is preferred to be bank and post office.

What return you receive from your investment?66 | P a g e

TABLE 4.11 Frequency of data for various rate of return.

Frequency Percent Valid Percent

Cumulative

Percent

Valid 4-6 % 17 34.0 38.6 38.6

6-7 % 10 20.0 22.7 61.4

7-9 % 12 24.0 27.3 88.6

9 % & above 5 10.0 11.4 100.0

Total 44 88.0 100.0

Missing System 6 12.0

Total 50 100.0

PIE CHART 4.10 Showing the rate of return.

Analysis:

The respondents were then asked to state their earnings from the sources other than that of mutual

funds. From the responses it can be seen that most of the investors received a return in range of 4 –6

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% in their investment, whereas this went high till 9 %.

TABLE 4.12 Features of Mutual Funds.

Frequency Percent Valid Percent

Cumulative

Percent

Valid Flexibility 3 6.0 15.0 15.0

High return 1 2.0 5.0 20.0

Diversification of Funds 4 8.0 20.0 40.0

Tax Benefits 5 10.0 25.0 65.0

Professional Management 3 6.0 15.0 80.0

Regular Income 4 8.0 20.0 100.0

Total 20 40.0 100.0

Missing System 30 60.0

Total 50 100.0

PIE CHART 4.11 Features of mutual funds.

Analysis:

The above chart shows the salient features of mutual funds that attracts customers towards investment.

The factors were flexibility, high return, diversification of funds, the tax benefits that mutual funds

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provide professional management behind mutual funds, the regular income. Among these factors tax

benefits that mutual fund provide is the most appealing factor to consumers. The maximum responses

were recorded for tax benefits that mutual funds provide. The high return was also one of the factors

affecting the decision making process of the consumers.

TABLE 4.13 Sources of knowledge about Mutual Funds.

Frequency Percent Valid Percent

Cumulative

Percent

Valid Print Media 6 12.0 28.6 28.6

Internet 7 14.0 33.3 61.9

TV/ Radio 2 4.0 9.5 71.4

Friends/ Relatives (WOM) 4 8.0 19.0 90.5

Advisors 2 4.0 9.5 100.0

Total 21 42.0 100.0

Missing System 29 58.0

Total 50 100.0

PIE CHART 4.12 Sources of knowledge about Mutual Funds.

Analysis :

More than 50% respondent skipped this question and the who answered relied mostly on internet and

print media

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TABLE 4.14 where from you purchase Mutual Funds.

Frequency Percent Valid Percent

Cumulative

Percent

Valid Banks 8 16.0 44.4 44.4

Brokers/ Distributors 7 14.0 38.9 83.3

Online/ AMCs 1 2.0 5.6 88.9

Others 2 4.0 11.1 100.0

Total 18 36.0 100.0

Missing System 32 64.0

Total 50 100.0

PIE CHART 4.13 Where from you purchase Mutual Funds.

Analysis :

Most of the respondent purchased mutual fund from bank and brokers very less of them relis on the

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other sources.

TABLE 4.15 Mode of Payment adopted

Frequency Percent Valid Percent

Cumulative

Percent

Valid Lumpsum/ One Time 5 10.0 25.0 25.0

Recurring 15 30.0 75.0 100.0

Total 20 40.0 100.0

Missing System 30 60.0

Total 50 100.0

PIE CHART 4.14 Mode of Payment adopted.

Analysis:

The above pie chart shows the mode of payment adopted for investment. The respondents mostly belonged to service class thus they preferred a recurring deposit over a lump sum

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payment of funds. This systematic investment scheme has grown a significant importance over the period of time, which is only to promote the habit of investment for the investor.

TABLE 4.16 Time for holding mutual funds.

Frequency Percent Valid Percent

Cumulative

Percent

Valid Upto 1 yr 6 12.0 33.3 33.3

1 - 3 yrs 8 16.0 44.4 77.8

4 - 8 yrs 2 4.0 11.1 88.9

9 - 15 yrs 2 4.0 11.1 100.0

Total 18 36.0 100.0

Missing System 32 64.0

Total 50 100.0

PIE CHART 4.15 Time for holding mutual funds.

Analysis:

Most of the respondent hold mutual fund for less than 3 years, there were about 75% of such

respondent.

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TABLE 4.17 Mutual Fund mostly preferred

Frequency Percent Valid Percent

Cumulative

Percent

Valid Equity Funds 5 10.0 25.0 25.0

Balanced funds 9 18.0 45.0 70.0

Growth funds 4 8.0 20.0 90.0

Others 2 4.0 10.0 100.0

Total 20 40.0 100.0

Missing System 30 60.0

Total 50 100.0

PIE CHART 4.16 Representation of Mutual Fund mostly preferred

Analysis:

Out of total 50 respondent only 20 responded to this question. And out of that 20 most people choose

balanced fund followed by equity, only 2 respondent preferred growth fund.

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TABLE 4.18 satisfaction level of respondent towards level of return.

Frequency Percent Valid Percent

Cumulative

Percent

Valid Highly satisfied 4 8.0 8.0 8.0

satisfied 13 26.0 26.0 34.0

neutral 16 32.0 32.0 66.0

dissatisfied 14 28.0 28.0 94.0

highly dissatisfied 3 6.0 6.0 100.0

Total 50 100.0 100.0

PIE CHART 4.17 Satisfaction level of respondent towards level of return.

Analysis:

Most of the response came out to be neutral followed by dissatisfied and satisfied,overall there is

same level of satisfaction and dissatisfaction among the people about mutual fund.

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TABLE 4.19 Awareness program interested.

Frequency Percent Valid Percent

Cumulative

Percent

Valid MF 7 14.0 14.0 14.0

Insurance 13 26.0 26.0 40.0

stock market 19 38.0 38.0 78.0

Any other 11 22.0 22.0 100.0

Total 50 100.0 100.0

PIE CHART 4.18 Awareness program interested.

Analysis :

Most of the people are interested in awareness about stock market to learn more about it.Which is

followed by insurance and last one is the mutual fund about which respondent wanted awareness

programs to be conducted.

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CHAPTER 5

Suggestion &Conclusion

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Suggestions

Even though the mutual funds are good source of income, the people lack awareness and information

towards mutual funds. So the following suggestions were made in order to increase the awareness

among the people especially the rural people.

1. Increase awareness among investors: Many investors are still restricting their choices to the non-

governmental options like gold and fixed deposits even the market is flooded with countless

investment opportunities. This is because of lack of awareness about mutual funds which makes many

investors restrict their choice to traditional options like gold and fixed deposits. So awareness relating

to mutual funds must be increased among the investors to encourage them to invest in mutual funds.

2. Provide complete information relating to mutual funds: Even among the investors who invest in

mutual funds are unclear about how they function and how to manage them. So proper information

must be provided to the investors in order to increase the loyalty among the investors.

3. Investors’ fee must be reduced by reducing paper work: Investors fee includes management fee,

distribution fee, distribution fee, and administrative costs, etc., which are generally deducted from the

asset value. This can be possible if the investment is made without agent and if the paper work is

reduced.

4. Better commission should be paid to Asset Management Companies: From the past 4-5 years the

trust of investors on mutual funds is reduced because of the poor performance of mutual funds in

these years. So if better commission is paid to Asset Management Companies which are highly

knowledgeable and by motivating them we can improve the distribution system of mutual funds.

5. Subsidized Investments to rural investors: Because of the issue of commercial viability, mutual

funds were limited to major cities only. So if mutual funds are offered to rural and semi urban

investors at subsidized rates like agricultural loans, the demand for mutual funds increases in rural and

semi urban areas also.

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6. Advertising campaigns must be conducted in rural areas to increase awareness among rural

investors.

Conclusion

Mutual funds are good source of returns for majority of households and it is particularly useful for the

people who are at the age of retirement. However, average investors are still restricting their choices

to conventional options like gold and fixed deposits when the market is flooded with countless

investment opportunities, with mutual funds. This is because of lack of information about how mutual

funds work, which makes many investors hesitant towards mutual fund investments. In fact, many a

times, people investing in mutual funds too are unclear about how they function and how one can

manage them. So the organizations which are offering mutual funds have to provide complete

information to the prospective investors relating to mutual funds. The government also has to take

some measures to encourage people to invest in mutual funds even though it is offering schemes

Mutual funds provide a range of products for investment in both short term and long term. It offers a

wide variety of combination of equity and debt instruments. One of the several factors people make

decisions on the basis of the past performance, the risk associated & guarantee of return.

Hence, we need to make financially aware both partners and customers, so that they can understand

each other and based on need of individual customer appropriate mutual funds can be offered to

customers. This need of customer must be understood by mutual fund seller as we can see a

relationship between highly educated class people and riskier investment options. Majority of the

people wants higher return in short period of time that is why they prefer to invest in stock markets

and mutual funds rather than any other form of investments.

People must be made aware of the benefits of starting early in their life, saving regularly, investing in

the right asset class, the power of compounding, the systematic investment plan and more. These must

be in sync with their future needs may be 25-30 years ahead.

From survey, it is clear that people are inclined to invest in less beneficial but fixed return avenues

such as Banks, Post offices, PPFs.

Mutual Funds now represent perhaps most appropriate investment opportunity for most investors. As

financial markets become more sophisticated and complex, investors need a financial intermediary

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who provides the required knowledge and professional expertise on successful investing. As the

investor always try to maximize the returns and minimize the risk.

Mutual fund satisfies these requirements by providing attractive returns with affordable risks. The

fund industry has already overtaken the banking industry, more funds being under mutual fund

management than deposited with banks. With the emergence of tough competition in this sector

mutual funds are launching a variety of schemes which caters to the requirement of the particular

class of investors. Risk takers for getting capital appreciation should invest in growth, equity schemes.

Investors who are in need of regular income should invest in income plans.

Majority of the respondents are not aware of mutual funds, so By conducting more consumer

awareness creating programmes the company can give more information about the mutual funds and

the mutual funds company .

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References

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Websites:

http://www.moneycontrol.com

http://www.amfiindia.com

http://www.5paise.com

http://www.indiainfoline.com

http://www.nseindia.com

http://www.sebi.gov.in/sebiweb/

http://www.prudentcorporate.com/

http://www.prudentcorporate.com/mutualfundindustry.aspx

http://www.prudentcorporate.com/Archives.aspx

http://www.tflguide.com/2011/12/mutual-fund-taxation-in-india.html

http://articles.economictimes.indiatimes.com/2013-03-25/news/38010413_1_balanced-funds-

equityfund-hybrid-funds

http://www.moneycontrol.com/mutual-funds/amc-assets-monitor

http://www.investopedia.com/articles/mutualfund/112002.asp

http://www.google.com

http://www.wikipedia.com

http://www.sharemaketbasics.com

http://www.sharemarket.com

David F, Swenson. 2005. Unconventional Success. A fundamental Approach to Personal Investment

Ansal, lalit k.(1996), Mutual Funds Management and Working, Deep & Deep Publication, New Delhi.

Frazzini Andrea, “Dumb Money: Mutual Fund flows as the cross-section of stock returns”, NCFM’s

AMFI Material on mutual funds (workbook)

Frazzini Andrea, “Dumb Money: Mutual Fund flows as the cross-section of stock returns”, NCFM’s

AMFI Material on mutual funds (workbook)

Nalini Prabha Tripathy, “Market Timing Abilities and Mutual Fund Performance- An Empirical

Investigation into Equity Linked Saving Schemes” (2012) XIMB Journal of management, Vilakshan,

April 2012, pp 6-8

Panwar Sharad and Madhumathi R “Characteristics and Performance of selected mutual funds in

India.”,(2013)

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Prasanna Chandra, “Investment Analysis and Portfolio Management” sixth reprint2013, Tata

Mcgraw-Hill Publication company limited, New Delhi.

Riter,Jay,R2008, The buying and selling behavior of individual investors at the turn of the

year, journal of finance 43, 701-717.

D.C. Anjaria. Dhaivat Anjaria. 2001 AMFI's Mutual Fund Testing Program.

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Annexure

(Questionnaire)

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A Study on Awareness of Mutual Funds and its scope in India

1. Age of the respondent (in years)

a) 18-25 b) 26-35 c)36-50 d)51-65 e) 66 & above

2. Gender: a) Male b) Female

3. Occupation

a) Student b) Business c) Employed d) Others……………………..

4. Monthly income (from all sources)

a) Up to 5000 b) 5001-15000 c) 15001-25000 d) 25001 & above

5. Do you currently have any investment? a) Yes b) No

6. What are the important Factors Considering before an investment?

a) Safety b) Liquidity c) High Return d) Tax Benefits e) Guaranteed return

7. What type of investment do you process?

a) Bank Deposits b) Post Office/ PPF c) Stock/PMS d) Mutual Funds e) Insurance

f) Gold (Holding) g) Real Estate

8. Are you aware of mutual fund?

a) Yes b) No

9. If not, What Reason do you possess?

a) Not interested b) Lack of information c) other reasons

10. Are you interested in knowing about mutual funds? a) yes b) no

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11. If not, then factors that stop you from investing in Mutual Funds?

a) High Risk b) No Guarantee c) Difficulty in Selection of options d) Lack of Awareness

e) Past experience

12. Which options among the following, you consider to be the safest?

a) Bank Deposits b) Post Office/ PPF c) Stock/PMS d) Mutual Funds e) Insurance

f) Gold (Holding) g) Real Estate

13. What amount of return (% p.a.) do you earn from the investments you do?

a) 4-6 % b) 6-7% c) 7- 9% d) 9% & above

14. features of Mutual Funds that attract you for investment?

a) Flexibility b) High return c) Diversification of funds d) Tax Benefits

e) Professional Management f) Regular Income

15. Source of knowledge?

a) Print Media b) Internet c) TV/ Radio d) Friends/ Relatives (WOM) e) Advisors

16. From where do you purchase Mutual Funds?

a) Banks b) Brokers/ Distributors c) Online/ AMCs d) Others

17. Preferred Mode of Payment:

a) One time/ Lump sum b) Recurring

18. How long do you like to hold Mutual Funds investments?

a) Up to 1 Yr b) 1 – 3 yrs c) 4 – 8 yrs d) 9 – 15 yrs e) 16 yrs & above

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19. Which type of fund do you prefer mostly?

a) Equity Funds b) Balanced Funds c) Growth Funds d) Others

20. What is your level of satisfaction towards the current level of the returns?

a) Highly Satisfied b) Satisfied c) Neutral d) Dissatisfied e) Highly Dissatisfied

21. Are you interested in any kind of investor awareness programmes on financial product?

a) M.F b) Insurance c) Stock Market d) Any other

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