Mutual Fund Analysis g4d

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MUTUAL FUND ANALYSIS


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INTRODUCTION

A mutual fund is a professionally managed type of collective investment schemethat

pools money from many investors and invests it in stocks,bonds, short-termmoney

market instrume nts and other securities. Mutualfunds have a fund manager who

invests the money on behalf of the investorsby buying / selling stocks, bonds etc.

Currently, the worldwide value of allmutual funds totals more than $US 26 trillion.The

United States leads withthe number ofmutual fund schemes. There are morethan 8000

mutual fundschemes in the U.S.A. Comparatively, India has around 1000 mutual

fundschemes, but this number has grown exponentially in the last few years.TheTotal

Assets under Management in India of all Mutual funds put togethertouched apeak of

Rs. 5,44,535 crs. at the end of August 2008.Indians have been traditionallysavers and

invested money in traditional savings instruments such as bank deposits. Againstthis

background, if we look at approximately Rs. 5 lakh crores which Indian Mutual

Funds

are managing, then it is no mean an achievement. However, there is still a lot tobe

done. As of today there are 41 Mutual Funds in the country. Together they offerover

1000 schemes to the investor. Many more mutual funds are expected toenterIndia in

the next few years.

All these developments will lead to far more participation by the retailinvestor

and ample of job opportunities for young Indians in the mutual fund industry. This

module is designed to meet the requirements of both the investor as well as the

industry professionals, mainly those proposing to enter the mutual fund industry .


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Need for the study: Mutual funds are now booming sector and giving

everything to the investor what he expecting from his investment. Especially

what is the customer preference towards the mutual fund investment and what

he is going to get from his investment and to know about the various funds offer

by the asset management companies.

To compete with this fast growing world financial institutions and financial

intermediaries are most focusing on innovation in their products & services.

Mutual fund companies are new innovation in finance industry and giving

opportunity to small investors to invest their money into the top listed companies

and shot term in nature and providing high liquidity to the customers.

This project would give the understanding whole picture of the Mutual Fund

industry and the financial services provided by Mutual Fund Companies and what

is the customer preference towards risk and return of the Mutual fund and to

understand what are the various steps taking in order to reduce the risk and

maximize the return and who are the customers and how can they be retained

for attaining the organizational goals.

OBJECTIVES


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To study the Operations of Mutual Funds companies in the vizag

market.

To study the Investors Preference towards the Risk & Returns

involved in different Funds in mutual fund companies.

To analyze the Risk profile and performance of mutual funds.

To find what are the different ways by which organizations are

managing and retaining the customers by providing information

about the benefits of the mutual fund investment.

To find out the Investment plans/options & Services provided by

mutual fund companies.

MEHTODOLOGY

Collection of Data:

The data is collected by my for easy understanding of

questionnaire form which is prepared basing on my opinion on IL&FS

INVESTSMART SECURITIES LTD Company.i myself visited wide section

of people for the survey to collect the information which is required to

my study.

I have considered both primary and secondary dada


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Primary Data:

To have the first hand information researcher approaches directly to

the sources of information.

Primary data is collected by administering a questionnaire.the

collected data is presented with the help of various statistical tools

likt pie chart,bar graph etc

Seconary Data:

Seconadary data is the readily available information or collecteddirectly some other people for some purpose.various sources of

secondary dada are

Internet

The Company old records

Brouchers

Research Methodology:

The Data has been collected from 250 people based on sampling

People responded to the questionnaire and all they are approached

directly and individually and are requested to fill the application

personally.

Formulation of questionnaire:

Questionnaire is prepared well for the survey consists of 17 questions

which covers wide variety of aspects like


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Their awareness about mutual fund

Customer preferences on different mutual fund schemes

Their opinion on different types of investments

Their awareness on IL&FS INVESTSMART SECURITIES LTD

Company

Which AMC is giving better returns

Sample Size : 250 Customers of Mutual Funds.

Sample Method : Random convenience sampling.

Sample Unit : Mutual Fund investors.

Sampling Tools : Statistical Tools are like bar and Colum

Charts, Pie charts

LIMITATIONS

This Study may not be comprehensive as the project is only for the

period of two months

This project is limited to only one geographical location that is

Visakhapatnam which may lead to less accuracy.


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Considering few customers perception we cant give the justification

to the project.

INDUSTRY PROFILE

Mutual fund is a mechanism for pooling the resources by issuing units to the

public and investing funds in securities in accordance with objectives as disclosed

in the offer document. The industry has steadily grown over the decade. The

mutual fund collects money directly or throughs brokers from investors. The

money is invested in various instruments depending on the objective of thescheme.

In a Mutual Fund, many investors contribute to form a common pool of

money. This pool of money is invested in accordance with a stated objective.

The ownership of the fund is thus joint or MUTUAL. The fund belongs to all

investors. A single investors ownership of the fund is in the same proportion as

the amount of the contribution made by him bears to the total amount of the

fund. All mutual funds use the money collected from investors to buy those

assets which are specifically permitted by its stated investment objective.

The concept of mutual funds was introduced in India with the formation of

Unit Trust of India in 1963. Today, 32 mutual funds collectively manage. Rs

6713575.19 crore under hundreds of schemes. The industry has steadily grown

over the decade. The mutual fund collects money directly or through brokers


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from investors. The money is invested in various instruments depending on the

objective of the scheme. The term unit-holder includes investors in both the

open-end and the closed-end schemes.

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

The Growth Phases in Mutual Fund Industry


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COMPANY PROFILE

IL&FS Investsmart Limited

IL&FS Investsmart (IIL) which stands for Infrastructure Leasing and

Financial Services is known for its innovative and pioneering

initiatives in the areas of Infrastructure, Corporate and Investment

Banking. IIL was incorporated as Investsmart India Limited on

September 01, 1997. It has received certificate of commencement

of business on October 07, 1997. IIL has owned subsidiary IL&FS

to carry on share and stock broking activities.

GROWTH and Corporate Events:-

IIL has started broking activity in NSE on February 1998 and in

BSE in August 1999.Orix corporation, Japan became share holder

of IIL in January 2002. IL&FS Merchant Banking Services Limited

(IMBSL) and Debt on net India Limited (DIL)merged with IIL. Name

of the company was changed from Investsmart India Limited to

IL&FS InvestSMART in March 2003.

The company is now held by HSBC, one of the world's largest


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banking and financial services organizations. HSBC holds 93%of

share.

In India, The HSBC Group offers a range of financial services

including corporate, commercial, retail and private banking,insurance, asset management, investment banking, equities and

capital markets, institutional brokerage, custodial services. It also

provides software development expertise and global services

facilities for the HSBC Group's operations worldwide.

IL&FS Investsmart is one of India's leading financial services

organizations providing varied range of Financial Services for

corporates and individuals. Investsmart has a strong presence

across wide range of products and operates in the areas of

Investment Management and Advisory Services, Broking Services,

Merchant Banking, Project Syndication, Equity and Debt Broking,

Commodity Broking and Distribution of Financial Products.

TYPES OF MUTUAL FUND SCHEMES

By Structure, the Mutual Funds can be divided into 3 types

Open - Ended Schemes

Close - Ended Schemes

Interval Scheme

Openended funds: Investors can buy and sell units of open-ended funds at

NAV-related price every day


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Close-ended funds: These funds have a stipulated maturity period, which may

vary from three to 15 years.

Interval Funds: These funds combine the features of both open and close-ended

funds.

By Investment Objective, the Schemes can be divided as following:

Growth Schemes

Income Schemes

Balanced Schemes

Money Market Schemes

Growth funds: Growth schemes are ideal for investors with risk appetite.

Income funds: They generally invest their corpus in fixed income securities like

bonds, corporate debentures, and government securities.

Balanced funds: The objective of balanced funds is to provide growth along

with regular income.

Money market funds: These funds strive to provide easy liquidity, preservation

of capital and modest income.

Other Schemes are as following:

Index funds: Index Funds invest their corpus on the specified index such as BSE

Sensex, NSE index, etc

Sector specific schemes: These funds invest only specified sectors like an

industry or a group of industries

Tax saving schemes: Tax saving schemes or equity-linked savings schemesoffer tax rebates to investors under section 88 of the Income Tax Act.

Special schemes: These schemes invest only in the industries specified in the

offer document.


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As a part of research Study Some of the schemes can be explained with the

following details through reference books, related websites, journals and

magazines:

Money market/Liquid Funds:

Liquid funds invest in debt securities of a short-term nature, which

generally means securities of less than one-year maturity. The typical, short

term, interest-bearing instruments these funds invest in include Treasury Bills

issued by governments, Certificates of Deposit issued by bank and Commercial

paper issued by companies.

Debt Funds:

Debt funds are largely considered as Income funds as they invest primarily

in fixed income generating debt instruments. They do not target capital

appreciation but look for current income, and therefore distribute a substantial

part of their surplus to investor. Income funds that target high returns can face

more risks. In Debt Funds there are different types of funds.

Equity Funds:

Equity Funds are high risk appetite. Equity Funds are generally considered

at the higher end of the risk among all funds available in the market. Equities can

appreciate in value in line with the issuers earnings potential, these offers thegreatest potential for growth in capital. According to various levels of risk there

are different types of equity funds available.

Indian households started allocating more of their savings to the capital

markets with investments flowing into equity and debt instruments, besides the

conventional mode of bank deposits.

REASONS FOR INVESTING


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Affordability: Mutual funds allow you to start with small investments.

Convenience: Mutual funds offer tailor-made solutions like systematic

investment plans and systematic withdrawal plans to investors.

Cost effectiveness: A small investor will find that a mutual fund route is a costeffective method. AMC fee is normally 2.5%.

Professional management: The major advantage of investing in a mutual fund

is that you get a professional money manager for a small fee.

Diversification: A mutual fund can effectively diversify its portfolio because of the

large corpus

Liquidity: You can liquidate your investments anytime you want.

Transparency: Mutual funds offer daily NAVs of schemes, which help you to

monitor your investments on a regular basis.

A brief introduction about the organization of mutual fund


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The largest categories of Mutual Funds are the ones floated by the private

sector and by Foreign Asset Management Companies. The largest of these are

Prudential ICICI AMC and Birla Sun Life AMC. The aggregate corpus of assets

managed by this category of AMCs is in excess of Rs.350 bn. Earlier the Indian

Mutual Fund industry was dominated by the Unit Trust of India which has a total

corpus of Rs.700 bn collected from more than 20 million investors. The UTI has

many funds/schemes in all categories i.e. equity, balanced, income etc. with

some being open-ended and some being closed-ended. The Unit Scheme 1964

commonly referred to as US 64, which is a balanced fund, is the biggest

Scheme with a corpus of about Rs.200 bn. UTI was floated by financial

institutions and is governed by a special Act of Parliament.

SPONSER

TRUST/TRUSTEES

AMC

MUTUAL

FUND

TRANSTFER

AGENTCUSTODIAN


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Most of its investors believe that the UTI is government owned and

controlled, which, while legally incorrect, is true for all practical purposes. The

second largest categories of mutual funds are the ones floated by nationalized

banks. Canbank Asset Management floated by Canara Bank and SBI Funds

Management floated by the State Bank of India are the largest of these. GIC AMC

floated by the General Insurance Corporation and Jeevan Bima Sahayog AMC

floated by the LIC are some of the other prominent ones. The aggregate corpus of

funds managed by this category of AMCs is about Rs.200 bn.

There are so many players in Mutual Fund Industry. They are as follows:

ABN AMRO Mutual Fund

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

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

Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank

A G is the custodian of ABN AMRO Mutual Fund.

Birla Sun Life Mutual Fund

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

Life Financial. Sun Life Financial is a global organization evolved in 1871 and is

being represented in Canada, the US, the Philippines, Japan, Indonesia and

Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative long-

term approach to investment. Recently it crossed AUM of Rs. 10,000Crores.

Bank of Baroda Mutual Fund (BOB Mutual Fund)

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

1992 under the sponsorship of Bank of Baroda. BOB Asset Management Company

Limited is the AMC of BOB Mutual Fund and was incorporated on November 5,

1992. Deutsche Bank AG is the custodian.

HSBC Mutual Fund


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

Capital Markets (India) Private Limited as the sponsor. The Board of Trustees,

HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.

ING Vysya Mutual Fund

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

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

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

Prudential ICICI Mutual Fund

It is a joint venture with Prudential Plc. of America, Prudential ICICI Mutual

Fund was setup on 13th of October, 1993 with two sponsors, Prudential Plc. and

ICICI Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC

is Prudential ICICI Asset Management Company Limited incorporated on 22nd of

June, 1993.

Sahara Mutual Fund

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

Corporation Ltd. Sahara Asset Management Company Private Limited

incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The

paid-up capital of the AMC stands at Rs 25.8 cr.

State Bank of India Mutual Fund

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

launch offshore fund, the India Magnum Fund with a corpus of Rs. 225 cr.

approximately. Today it is the largest Bank sponsored Mutual Fund in India. They

have already launched 35 Schemes out of which 15 have already yielded

handsome returns to investors. State Bank of India Mutual Fund has more than

Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread over

18 schemes.

HDFC Mutual Fund


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

Housing Development Finance Corporation Limited and Standard Life

Investments Limited.

Tata Mutual Fund

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

sponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment

Corporation Ltd ., and Tata Investment Corporation Ltd. The investment manager

is Tata Asset Management Limited and its Tata Trustee Company Pvt. Limited.

Tata Asset Management Limited is one of the fastest in the country with more

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

Kotak Mahindra Mutual Fund

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

KMBL. It is presently having more than 1, 99,818 investors in its various schemes.

KMAMC started its operations in December 1998. Kotak Mahindra Mutual Fund

offers schemes catering to investors with varying risk - return profiles. It was the

first company to launch dedicated gilt scheme investing only in government

securities.

Unit Trust of India Mutual Fund

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

2003, manages the UTI Mutual Fund with the support of UTI Trustee Company

Private Limited. UTI Asset Management Company presently manages a corpus of

over Rs.20000 Crore. The sponsors of UTI Mutual Fund are Bank of Baroda

(BOB), Punjab National Bank (PNB), State Bank of India (SBI), and Life Insurance

Corporation of India (LIC).

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

Management Funds, Index Funds, Equity Funds and Balance Funds.


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Reliance Mutual Fund

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts

Act, 1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital

Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as

Reliance Capital Mutual Fund which was changed on March 11, 2004. Reliance

Mutual Fund was formed for launching of various schemes under which units are

issued to the Public with a view to contribute to the capital market and to

provide investors the opportunities to make investments in diversified securities.

Standard Chartered Mutual Fund

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

by Standard Chartered Bank. The Trustee is Standard Chartered Trustee

Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is

the AMC which was incorporated with SEBI on December 20,1999.

Franklin Templeton India Mutual Fund

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

company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of

the largest financial services groups in the world. Investors can buy or sell the

Mutual Fund through their financial advisor or through mail or through their

website. They have Open end Diversified Equity schemes, Open end Sector

Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes, Open

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

Fund of Funds schemes to offer.

Morgan Stanley Mutual Fund India

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

the market in securities, investment management and credit services. Morgan

Stanley

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

customized asset management services and products to governments,


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corporations, pension funds and non-profit organizations. Its services are also

extended to high net worth individuals and retail investors.

Escorts Mutual Fund

Escorts Mutual Fund was setup on April 15, 1996 with Escorts Finance

Limited as its sponsor. The Trustee Company is Escorts Investment Trust Limited.

Its AMC was incorporated on December 1, 1995 with the name Escorts Asset

Management Limited.

Alliance Capital Mutual Fund

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

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

Trust Company Pvt. Ltd. and AMC, the ACAM(Pvt.) Ltd. with the corporate office in

Mumbai.

Benchmark Mutual Fund

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

Services Pvt. Ltd. as the sponsor and Benchmark Trustee Company Pvt. Ltd. as

the Trustee Company. Incorporated on October 16, 2000 and headquartered in

Mumbai, Benchmark Asset Management Company Pvt. Ltd. is the AMC.

Can bank Mutual FundCanbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting

as the sponsor. Canbank Investment Management Services Ltd. incorporated on

March 2, 1993 is the AMC. The Corporate Office of the AMC is in Mumbai.

Chola Mutual Fund

Chola Mutual Fund under the sponsorship of Cholamandalam Investment &

Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee

Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC Limited.

LIC Mutual Fund

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

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


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

1882. . The Company started its business on 29th April 1994. The Trustees of LIC

Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company

Ltd as the Investment Managers for LIC Mutual Fund.

REVIEW OF LITERATURE

SEBI INVESTOR EDUCATION PROGRAM (1994) Different investment avenues

are available to investors. Mutual funds also offer good investment opportunities

to the investors. Like all investments, they also carry certain risks. The investors

should compare the risks and expected yields after adjustment of tax on various

instruments while taking investment decisions. The investors may seek advice

from experts and consultants including agents and distributors of mutual funds

schemes while making investment decisions.

ANDREWS AND PLOBERGER (1994) Despite the wide acceptance of return-

based style analysis, the method has several limitations. One important

drawback is the assumption that style exposures are time invariant. Apply results

on break tests. Strong evidence against the hypothesis of constant time

exposures in time in daily return data of European equity funds. All funds exhibit

at least one break, while 60% of the funds exhibit even more than one break. We

investigate the importance of (i) conditional investment strategies based on

predictive information variables and volatility estimates and (ii) variables related

to the organization of mutual funds. We conclude that the principal economic

rationale behind (the majority of) style breaks is the reliance of mutual fund

managers on conditional investment strategies.

SUJIT SIKIDAR AND AMRIT PAL SINGH (1996) carried out a survey with an

objective to understand the behavioral aspects of the investors of the North

Eastern region towards


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equity and mutual funds investment portfolio. The survey revealed that the

salaried and self employed formed the major investors in mutual fund primarily

due to tax concessions.

ANJAN CHAKARABARTI AND HARSH RUNGTA (2000) stressed the importance

of brand effect in determining the competitive position of the AMCs. Their study

reveals that brand image factor, though cannot be easily captured by computable

performance measures, influences the investors perception and hence his

Fund/scheme selection.

EMIL BOASSON, VIGDIS BOASSON AND JOSEPH CHENG (2001) focused on

the importance of investment principles to be followed by the asset managementcompanies and the ways in which the investors are to be guided. Another

important factor is the brand image of the company which plays a very important

role.

DE BONDT AND THALER (1985) while investigating the possible psychological

basis for investor behavior, argue that mean reversion in stock prices is an

evidence of investor over reaction where investors over emphasize recent firm

performance in forming future expectations.In India, one of the earliest attempts was made by NCAER in 1964 when a survey

of households was undertaken to understand the attitude towards and motivation

for saving of individuals. Another NCAER study in 1996 analyzed the structure of

the capital market and presented the views and attitudes of individual

shareholders.

SEBI NCAER SURVEY (2000) was carried out to estimate the number of

households and the population of individual investors, their economic and

demographic profile, portfolio size, and investment preference for equity as well

as other savings instruments. This is a unique and comprehensive study of Indian

Investors, for; data was collected from 3,00,0000 geographically dispersed rural

and urban households.

Some of the relevant findings of the study are:


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Households preference for instruments match their risk perception;

Bank Deposit has an appeal across all income class; 43% of the non-investor

households equivalent to around 60 million households (estimated) apparently

lack awareness about stock markets; and, compared with low income groups, the

higher income groups have higher share of investments in Mutual Funds (MFs)

signifying that MFs have still not become truly the investment vehicle for small

investors. Nevertheless, the study predicts that in the next two years (i.e., 2000

hence) the investment of households in MFs is likely to increase. We have to wait

and watch the investors reaction to the July 2nd 2001, great fall of the Big

Brother, UTI.

SHARPE Return-based style analysis (RBSA hereafter) has become a popular

tool in analyzing mutual fund returns and investment objectives. The method was

introduced by Sharpe (1988; 1992) as a tool to determine the effective asset mix

of a mutual fund. The principal goal of RBSA is to find the best mimicking

strategy that is in accordance with the investment style of the mutual fund. RBSA

has become a widely accepted analytic tool, both by academics and practitioners.

Besides problems related to misclassification, RBSA has been employed to

address issues concerning performance evaluation and object gaming of mutual

funds, construction of diversified portfolios or efficient portfolios of mutual funds

with specified factor loadings, short-term risk assessment of a mutual fund

manager.


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ANALYSIS

AGE OF THE INVESTORS IN RELIANCE MUTUAL FUNDS:

TABLE:

Age 18-30 yrs 31-50 yrs 51-75 yrs 75 yrs & above Total

No. of Persons 46 134 54 16 250

Percentage 18% 54% 22% 6% 100

GRAPH:


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Inference: From the above graph inferred that out of 250 investors 54% of the investors have the age

between 31-50 yrs, 22% of the investors have the age between 51-75yrs, 18% of the investors have the

age between 18-30years and the remaining 6% of the investors have the age above 75years.

INCOME LEVELS OF THE INVESTORS

TABLE:

Income Levels

(Rs. per annum)

< 1 lakh 1-3 lakh 3-5 lakh 5 lakh & above Total

No. of persons 31 97 84 38 250

Percentage 12 39 34 15 100

GRAPH:


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Inference: It can be inferred that out of 250 investors 39% of the investors have income of 1-3 lakh

rupees per annum, 34% of the investors have 3-5 lakh p.a, and 15% of the investors have 5 lakh and

above p.a and 12% of the investors have less than 1 lakh p.a.

INVESTORS APPROACH TO MAKE FINANCIAL DECISION

TABLE:

Different

approaches

a) Random

decision

b) Friendly

Advice

c) An educated

guess

d) Various

options

Total

No. of persons 53 74 59 64 250

Percentage 21 30 24 26 100

GRAPH:

Inference: It can be inferred that out of 250 investors 30% of the investors were following their

friends advice, 26% of investors are taking the financial decision through their analyzed various


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options, 24% were taking the financial decision through an educated guess and 21% were taking

random decision while making financial decision. Whereas given different options are like random

decision, friendly advice, an educated guess and analyzing the various options.

THE FACTORS CONSIDERED BY THE INVESTORS, WHILE INVESTING IN

MUTUAL FUNDS

TABLE:

Factors Safety & liquidity Returns Risk Tax benefits Total

No. of persons 115 63 14 58 250

Percentage 46 25 6 23 100

GRAPH:


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Inference: It can be inferred that out of 250 investors 46% of investors considered safety and

liquidity, 25% of investors considered Returns, 23% of investors considered tax benefits and 6% of

investors considered Risk while investing in mutual funds.

SATISFACTION WITH CURRENT RATE OF RETURN

TABLE

Satisfied rate of

return

a)Yes b)No Total

No of persons 100 150 250

Percetage 40% 60%

GRAPH

0

20

40

60

80

100

120

140

160

1 2 3 4

a)Yes

b)No


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INVESTMENT OBJECTIVES OF THE INVESTORS

TABLE:

Investment

objectives

a) Near time high

priority goals

b) Low

priority goals

c) Long term

goals

d) Wealth

maximization

Total

No. of persons 95 36 87 32 250

Percentage 38 14 35 13 100

GRAPAH:

Inference: It can be inferred that out of 250 investors 38% of the investors are looking for Near-time

High Priority goals (Ex. New house, vehicles and so on), 35% of the investors opted for long term


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goals, 14% of the investors opted for low priority goals option and remaining 13% of the investors

opted for wealth maximization where in according to their investment objectives

AVERAGE TIME FRAME OF INVESTORS FOR THEIR FUTURE FINANCIAL

COMMITMENTS AND NEEDS

TABLE:

Time frame


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INVESTORS MOST PREFERABLE FUNSDS IN MUTUAL FUNDS

TABLE:

Types of

funds

Equity

Funds

Balanced

Funds

Income

Funds

Money Market

Mutual funds

Total

No. of

persons

52 70 93 35 250

Percentage 21 28 37 14 100

GRAPH:

Inference:It can be inferred that out of 250 investors 37% of the investors preferred Income funds,

28% of the investors preferred balanced funds, 21% of the investors preferred Equity funds and 14%

of the investors preferred Money market mutual funds.


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INVESTORS PREFERABLE SCHEMES IN MUTUAL FUNDS

TABLE:

Types of Schemes a) Open-ended b) Close-ended Total

No. of persons 133 117 250

Percentage 53 47 100

GRAPH:

Inference: It can be inferred that out of 250 investors 53% of the investors preferred open-ended

scheme and 47% of the investors preferred Close-ended scheme.


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RISK TOLEREANCE LEVEL OF THE INVESTORS

TABLE:

Risk Levels Low Risk Moderate/medium High Risk Total

No. of Persons 96 127 28 250

Percentage 38 51 11 100

GRAPH:

Inference:It can be inferred that out of 250 investors 51% of investors are considering medium risk,

38% of the investors are considering the low risk and remaining 11% of the investors are considering

High Risk level while making investments in Mutual Funds


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REPEAT INVESTMENTS OF INVESTORS IN MUTUAL FUNDS

TABLE:

Options Yes No Total

No. of respondents 183 67 250

Percentage 73 27 100

GRAPH:

Inference: It can be inferred that out of 250 investors 73% of the investors are opted for yes and

27% of the investors were opted No. The most of the mutual fund customers were invested repeat

Investments.


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FACTORS INFLUENCING THE INVESTORS TO MAKE REPEAT INVESTMENTS

IN MUTUAL FUNDS

TABLE:

Factors Better returns Services Brand Others Total

No. of persons 136 37 77 0 250


GRAPH:

Inference: It can be inferred that out of 250 investors 54% of investors considered better returns,

15% of the investors considered services, 31% of the investors considered Brand while making

repeat investments.


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THE INVESTORS MOST PREFERRED INVESTMENT PLANS IN MUTUAL FUND

TABLE:

Investments

plans

a) STP b) SIP c) ARP d) SWP Total

No. of Persons 23 107 86 34 250


GRAPH:

Inference: It can be inferred that out of 250 investors 43% of investors were preferred SIP

(Systematic Investment Plan), 34% of investors were preferred to ARP (Automatic Reinvestment

Plan), 14% of investors were preferred to SWP (Systematic Withdrawal Plan ) and 9% of investors

were preferred to STP (Systematic Transfer Plan).


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RATE OF RETURNS EXPECTED BY THE INVESTORS

TABLE:

Expected returns a)30% Total

No. of persons 55 97 81 17 250


GRAPH:

Inference: It can be inferred that the majority out of 250 investors 39% of investors were expecting

10-20% of rate of returns, 32% of the investors were expecting 20-30% of rate of returns, and 22% of

investors are expecting less than 10% and 7% of investors expecting more than 30% returns.


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EXISTING CUSTOMERS PERCEPTION TOWARDS MUTUAL FUNDS

TABLE:

Perception of

the investors

a)Less risky

investment

b) fixed

returns

c)various

plans

d)others Total

No. of persons 132 20 81 17 250


GRAPH:

Inference: It can be inferred that out of 250 investors 53% of majority perceived investing in mutual

funds is less Risky investments compare with author asset management companies, 32% of the

investors perceived there are various plans to invest in mutual funds.


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FINDINGS

54% of the investors are in between 31-50 years.

39% of investors are having income levels of 1-3 lakh rupees.

30% of investors rely on friends advice while taking a financial decision.

40% of the investors have disposable income between Rs.80, 000 & above.

46% of investors are looking for safety and liquidity while making

investment.

38% of the investors are looking for Near-time High Priority goals for Ex.

New house, vehicles and so on.

41% of the investors were having 3-5 years time frame to commit their

financial needs.

37% of the investors give preference to Income funds in a Mutual fund.

53% of the investors give preference to Open-ended schemes.

51% of investors consider medium risk while making investments.

73% of investors make repeated investments.

54% of investors were opted better returns was the one of the best reasonfor repeat investments of Investors.

43% of Investors prefer mostly SIP plans.

39% of investors expect 10-20% of rate of returns from their investments.

53%of investors perceive investing in mutual funds is less risky when

compared with other investment options.


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SUGGESTIONS

As most of the people are looking for near time high priority goals the

mutual fund people can focus on this particular segment of people bysuggesting the funds which fulfill their investment objectives.

Mainly people are interested to invest in income funds so the companies

can concentrate on these funds in order to minimize the risk perception in

the minds of the investors.

Next to SIP, people are willing to invest in ARP schemes so the company

can suggest ARP scheme prior to SIP so that the customers can increase

their fund units and also the company will get more funds to construct

much better portfolios rather than earlier.

Mutual Fund companies are mostly concentrating on urban areas if they

enter in to Semi-Urban and rural areas definitely they will have the goodmarket share from the rural market.


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CONCLUSION

Most of its existing customers who are having the capacity to take

medium risk with the respective expected returns from their investments

which were done in a time frame of respected years to reach their

individual investment objectives. Customers are ready to appetite risk

levels at medium because their risk can be diversified through their

individual constructed portfolios. To reach their investment objectives the

mutual fund investment is providing various investments plans/ options in

particular schemes. Past performance also making the investors to invest

more money in mutual fund without considering the risk levels rather thanexpected returns. So finally customers are prefer to the mutual fund

investment to reach their financial objectives.


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ANNEXURES

Name:

1Occupation:

1) Age:

18-30 31-50 51-75 75 & above

2) Income levels (Per Annum)


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Less than 3 years 3-5 years

5-10 years 10 years and above

9) According to you, which one of the following is the most preferable in Mutual Funds?

Equity Balanced Funds

Income Funds Money Market Fund

10) which type of Mutual funds do you most prefer?

Open Ended Schemes Closed Ended Schemes

11) What is your risk tolerance level of capacity?

Low risk Moderate or medium risk High risk

12) Did you repeat your investments after your initial investment?

Yes No

13) If you made any repeat investments, then what made you to invest more?

Better returns Services

Brand Others

14) In how many different investments schemes you have made in Reliance money?

1

3

2 More than 3

15) Given the following, which investment plan would you prefer the most?

a) STP (Systematic Transfer Plan) b) SIP (Systematic Investment Plan)

c) ARP (Automatic Reinvestment Plan) d) SWP (Systemic Withdrawal Plan)

16) How much return do you expect from your investment(s)?

5-10% 10-20%

20-30% 30% & above


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17) Which one of the following perceptions do you have, while investing in Reliance Money?

a) Less risky investments c) various investment options

b) Fixed returns d) others.

REFERENCES

How to Create and Manage a Mutual Fund or Exchange-Traded

Fund: A Professional's Guide (Wiley Finance) by Melinda Gerber

(Hardcover - Feb 25, 2008)

The New Commonsense Guide to Mutual Funds by Mary Rowland

(Paperback - Jan 1, 1998)

Morningstar Guide to Mutual Funds: Five-Star Strategies for

Success by Christine Benz (Paperback - Oct 26, 2007)

Nightly Business Report: How to Invest in Mutual Funds / How to

Wall Street Works / the Nbr Guide to Stick Market Strategies (3-vhs

Boxset) (VHS Tape - 1992)

How to Invest in Mutual Funds, Nightly Business Report (dvd -

2005)

www.amfiindia.com

Intelligent stock market investing, author NJ Yasaswy. (pg.no.225-

241)

Portfolio Organizer journals.
http://www.amazon.com/Create-Manage-Mutual-Fund-Exchange-Traded/dp/047012055X/ref=sr_1_7?ie=UTF8&s=books&qid=1229138491&sr=8-7http://www.amazon.com/Create-Manage-Mutual-Fund-Exchange-Traded/dp/047012055X/ref=sr_1_7?ie=UTF8&s=books&qid=1229138491&sr=8-7http://www.amazon.com/New-Commonsense-Guide-Mutual-Funds/dp/1576600637/ref=sr_1_11?ie=UTF8&s=books&qid=1229138491&sr=8-11http://www.amazon.com/New-Commonsense-Guide-Mutual-Funds/dp/1576600637/ref=sr_1_11?ie=UTF8&s=books&qid=1229138491&sr=8-11http://www.amazon.com/Morningstar-Guide-Mutual-Funds-Strategies/dp/0470137533/ref=pd_bbs_sr_2?ie=UTF8&s=books&qid=1229138620&sr=8-2http://www.amazon.com/Morningstar-Guide-Mutual-Funds-Strategies/dp/0470137533/ref=pd_bbs_sr_2?ie=UTF8&s=books&qid=1229138620&sr=8-2http://www.amazon.com/Nightly-Business-Report-Invest-Strategies/dp/B000S37TDU/ref=sr_1_15?ie=UTF8&s=video&qid=1229138620&sr=8-15http://www.amazon.com/Nightly-Business-Report-Invest-Strategies/dp/B000S37TDU/ref=sr_1_15?ie=UTF8&s=video&qid=1229138620&sr=8-15http://www.amazon.com/Nightly-Business-Report-Invest-Strategies/dp/B000S37TDU/ref=sr_1_15?ie=UTF8&s=video&qid=1229138620&sr=8-15http://www.amazon.com/Invest-Mutual-Nightly-Business-Report/dp/B000GUHONK/ref=sr_1_11?ie=UTF8&s=dvd&qid=1229138620&sr=8-11http://www.amazon.com/Invest-Mutual-Nightly-Business-Report/dp/B000GUHONK/ref=sr_1_11?ie=UTF8&s=dvd&qid=1229138620&sr=8-11http://www.amfiindia.com/http://www.amazon.com/New-Commonsense-Guide-Mutual-Funds/dp/1576600637/ref=sr_1_11?ie=UTF8&s=books&qid=1229138491&sr=8-11http://www.amazon.com/Morningstar-Guide-Mutual-Funds-Strategies/dp/0470137533/ref=pd_bbs_sr_2?ie=UTF8&s=books&qid=1229138620&sr=8-2http://www.amazon.com/Morningstar-Guide-Mutual-Funds-Strategies/dp/0470137533/ref=pd_bbs_sr_2?ie=UTF8&s=books&qid=1229138620&sr=8-2http://www.amazon.com/Nightly-Business-Report-Invest-Strategies/dp/B000S37TDU/ref=sr_1_15?ie=UTF8&s=video&qid=1229138620&sr=8-15http://www.amazon.com/Nightly-Business-Report-Invest-Strategies/dp/B000S37TDU/ref=sr_1_15?ie=UTF8&s=video&qid=1229138620&sr=8-15http://www.amazon.com/Nightly-Business-Report-Invest-Strategies/dp/B000S37TDU/ref=sr_1_15?ie=UTF8&s=video&qid=1229138620&sr=8-15http://www.amazon.com/Invest-Mutual-Nightly-Business-Report/dp/B000GUHONK/ref=sr_1_11?ie=UTF8&s=dvd&qid=1229138620&sr=8-11http://www.amfiindia.com/http://www.amazon.com/Create-Manage-Mutual-Fund-Exchange-Traded/dp/047012055X/ref=sr_1_7?ie=UTF8&s=books&qid=1229138491&sr=8-7http://www.amazon.com/Create-Manage-Mutual-Fund-Exchange-Traded/dp/047012055X/ref=sr_1_7?ie=UTF8&s=books&qid=1229138491&sr=8-7


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GLOSSARY

Net Asset Value: Net Asset Value 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.

Sale Price: Is the price you pay when you invest in a scheme. It is also called

Offer Price. It may include a sales load.

Repurchase Price Is the price at which a close-ended scheme repurchases

its units and it may include a back-end load. This is also called Bid Price.

Redemption Price is the price at which open-ended schemes repurchase

their units and close-ended schemes redeem their units on maturity. Such prices

are NAV related.

Sales Load Is a charge collected by a scheme when it sells the units. Also

called Front-end load. Schemes that do not charge a load are called No Load

schemes.

Repurchase or Back-end LoadIs a charge collected by a scheme when

it buys back the units from the unit-holders.

Portfolio: A combination of Assets.

Dividend: It is the portion of the companys profit that is distributed to theshareholders.

Growth fund: A mutual fund which invests only in securities which have scope

of good capital growth, rather than current income.


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Growth rate: The growth rate is measured by the increased earning of a

company over its previous achievement, expressed in percentage and

determines the price of a share.

Income fund:A mutual fund with investments mostly in debentures, bonds

and high dividend shares. This type of funds attracts investors interested in

income rather than growth of their investment.

Marketcapitalization: Total market value at the current prices of the total

number of equity shares issued by a company.

ABBREVIATIONS

AMC - Asset Management Company

AMFI - Association of Mutual Funds in India

EPS - Earnings Per Share

FIs - Financial Institutions

GOI - Government of India

IDBI - Industrial Development Bank of India

IPOs - Initial Public Offers

MFs - Mutual Funds

MMMF - Money Market Mutual Fund

MNCs - Multi National Companies

NAV - Net Asset Value

SEBI - Securities and Exchange Board of India

SEC - Securities Exchange Commission

TM - Trading Member

UTI - Unit Trust of India


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T-BILL - Treasury Bill

VSAT - Very Small Aperture Terminal

BSE - Bombay Stock Exchange

NSE - National Stock Exchange

SENSEX - Sensitivity Index

The projects objective is to do an analysis ., A Study on Investors Preference on

Mutual Fund Investment and Its Impact on Increase in Sales W.R.T Vizag Market

VISAKHAPATNAM and also study the different strategies applying to gain the

customer attention. Once the clear objectives were framed the study is intended

to carry out in three phases.

Documents

Mutual Fund Analysis g4d