Seminar ii

“A STUDY ON INVESTOR PERCEPTION TOWARDS MUTUAL FUNDS”

A Project Report submitted in partial fulfillment of the requirement

For the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

BY

SANJEET KUMAR SAH

SRM UNIVERSITY

SCHOOL OF MANAGEMENT

MUTUAL FUND

SRM UNIVERSITY [SCHOOL OF MANAGEMENT]

TABLE OF CONTENT

CHAPTER NO.

CONTENT

PAGE No.

CHAPTER:-1

1. INTRODUCTION:-

a. Introduction of mutual fund

b. Opportunity & challenges.

c. Mutual fund industry in india

d. Types of mutual fund

e. Advantages of mutual fund

f. Basis of selection

g. Constituent of mutual fund

h. Marketing strategy

i. Market segment

j. Marketing of funds & challenges.

k. SEBI guidelines

CHAPTER:-2

2.1 Company profile

Product profile

2.2 Objective of study

2.3 Scope of study

2.4 Limitation of study

2.5 Research methodology

2.6 Literature review

CHAPTER:-3

3.3 Data Analysis

CHAPTER:-4

4.1 Findings

4.2 Suggestion

4.3 Conclusion

CHAPTER:-5

Bibliography

CHAPTER:-6

QUESTIONNIRE

MUTUAL FUND


LIST OF TABLES

Table no. Table name Page no.

I

Occupation wise classification

II

Income wise classification

III

Savings

IV

Awareness of mutual fund

V

Investment choice

VI

Choice to invest

VII

Reason to invest

VIII

Investment amount

IX

Preferred fund in mutual fund

X

Awareness of STANDARD CHARTERED mutual fund

XI

Investment in STANDARD CHARTERED mf

XII

Reason to select STANDARD CHARTERED mutual fund

XIII

Attracting attributes of STANDARD CHARTERED mf

XIV

No’s of schemes invested by respondents

XV

Investment in other mf scheme

XVI

Choice other than STANDARD CHARTERED MF

XVII

Suggestion to others

XVIII

Suggested benefits

MUTUAL FUND


LIST OF FIGURES & CHARTS

Serial

no

FIGURES & CHARTS NAME Page no

1 Flow chart of working of mutual fund

2 Concept of mutual fund

3 Classification of mutual fund

4 Advantage of mutual fund

5 Mutual fund constituents

6 Occupation wise classification

7 Income wise classification

8 Savings

9 Awareness of mutual fund

10 Investment choice

11 Choice to invest

12 Reason to invest

13 Investment amount

14 Preferred fund in mutual fund

15 Awareness of STANDARD CHARTERED mutual fund

16 Investment in STANDARD CHARTERED mf

17 Reason to select STANDARD CHARTERED mutual fund

18 Attracting attributes of STANDARD CHARTERED mf

19 No’s of schemes invested by respondents

20 Investment in other mf scheme

21 Choice other than STANDARD CHARTERED MF

22 Suggestion to others

23 Suggested benefits

MUTUAL FUND


INTRODUCTION

a) MUTUAL FUND

Mutual Funds refer to funds which collect money from investors and put this money in

stocks, bonds and other securities to gain financial profit. Persons whose money is used by

the Mutual Fund Manager to buy stocks, bonds and other securities, get a percentage of the

Profit earned by the mutual fund in return of their Investments. In this way, the mutual fund

offers benefit to both parties.

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 appreciation realized is 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.

Fig:-1

A mutual fund is a professionally managed type of collective investment scheme that pools

money from many investors and invests it in stocks, bonds, short-term money market

instruments, and/or other securities. The mutual fund will have a fund manager that trades the

pooled money on a regular basis. Currently, the worldwide value of all mutual funds totals

more than $26 trillion

The mutual fund organization earns profit by using people's money for investment and the

persons who invest in mutual fund acquire financial Profit without going into intensive

MUTUAL FUND


analysis and research on bonds and stocks. The work of stock and bond Market Analysis,

Market Research and Market Speculation is done by the mutual fund managers.

The people who invest in Mutual Funds are generally exposed to much lower Risk compared

to those who directly invest in bonds and stocks. Mutual Fund Investment involves lower

Risk as the investment is diversified in to different bonds and stocks. So, if at any time

Market Value of one particular bond or value of the stocks of any particular company drops,

then the loss incurred by the mutual fund can be offset by the Market Gain of any other bond

or stocks.

Fig:-2

MUTUAL FUND


b) OPPORTUNITY OF MUTUAL FUND:-

Opportunities of Mutual Funds are tremendous especially when investment is concerned. For

any individual who intends to allocate his assets into proper forms of investment and want to

diversify his Investment Portfolio as well as the risks, Mutual Funds can be proved as the

biggest opportunity.

Investors get a lot of advantages with the Mutual Fund Investment. Firstly, they are not

required to carry on intensive research and detailed analysis on Stock Market and Bond

Market. This work is done by the Fund Mangers of the Investment Management Company on

behalf of the investors. In fact, the professional Fund Managers who handle the mutual funds

of any particular company are able to speculate the market trend more correctly than any

common individual. Good Speculation about the trends of stock prices and bond prices leads

to right allocation of funds in the right stocks and bonds resulting in good Rate of Returns.

Investors also get the advantage of high Liquidity of the mutual funds. This means the

investors can enjoy easy access to the funds invested in the mutual funds whenever they

require the money. When the investors invest in any mutual fund, they are given some equity

position in that fund. The investors can any time sell their mutual fund shares to get back the

money invested in mutual funds. The only thing is that the Rate of Return that they will get

may not be favorable as the return depends on the present market condition.

The greatest opportunity that the mutual funds offer is the opportunity of diversifying their

investments. Investment Diversification actually diversifies the Risk associated with

investment. This is because, if at a time, if prices of some stocks are declining, deceasing the

Value of Investment, prices of some other stocks and bonds may tend to rise and in this way

the loss of the mutual fund is offset by the strength of the stocks whose prices are rising. As

all the mutual funds diversify their investments in various common stocks, preferred stocks

and different bonds, the risk to be borne by the investors are well diversified and in other

terms lowered.

MUTUAL FUND


CHALLENGES FACING MUTUAL FUND:-

People find mutual fund investment so much interesting because they think they can gain

high rate of return by diversifying their investment and risk. But, in reality this scope of high

rate of returns is just one side of the coin. On the other side, there is the harsh reality of

highly Fluctuating Rate of Returns. Though there are other disadvantages also, this concern

of fluctuating returns is most possibly the greatest challenge faced by the mutual fund.

The Issue of Fluctuating Returns

In spite of being a diversified investment solution, mutual funds investment in no way

guarantees any return. If the market prices of major shares and bonds fall, then the value of

mutual fund shares are sure to go down, no matter how diversified the mutual fund portfolio

be. It can be said that mutual fund investment is somewhat lower risky than Direct

Investment in stocks. But, every time a person invests in mutual fund, he unavoidably carries

the risk of losing money.

Diversification or Over Diversification- In order to diversify the investment, many times

the mutual fund companies get involved in Over Diversification. The risk of holding a

single financial security is removed by diversification. But, in case of over diversification,

investors diversify so much that many time they end up with investing in funds that are

highly related and thus the benefit of risk diversification is ruled out.

Taxes-Every year, most of the mutual funds sell substantial amount of their holdings. If

they earn profit by this sell, then the investors receive the Profit Income. For most of the

mutual funds, the investors are bound to pay taxes on these incomes, even if they reinvest

the income.

Costs- Most of the mutual funds charge Shareholder Fees and Fund Operating Fees from

the investors. In the year, in which mutual fund fails to make profit and the investors get no

return, these fees only blow up the losses.

MUTUAL FUND


c) MUTUAL FUNDS Vs OTHER STOCK:-

Mutual Funds Vs Individual Stocks has always been a debatable issue. While some like to

play safe with mutual fund investment, some others prefer investment in individual stocks.

When any investor invests in any mutual fund all that he is required to do is pay the

Shareholder Fees and Fund Operating Fees. The whole work of managing funds, starting

from Market Research and analysis of stock and bond price and recent market trends up to

final Allocation of Funds or assets in various stocks and bonds is completely done by the

Professional Fund Managers employed by the Investment Management Company. In this

case, the fund management remains in the hands of the fund managers of the mutual fund

company. But, in case of Direct Investment in individual stocks, the total control remains in

the hands of the individual investors.

But, most of the people agree about the fact, that mutual funds hold some important benefits

over and above Individual Stocks. So, to get the actual depiction of Mutual Funds Vs

Individual Stocks, we will discuss the advantages put forwarded by Mutual Funds.

Diversification. The core concept of mutual funds is to Diversify Investment in order to

lower the risk of investing. As the mutual funds allocate their funds into stocks of different

companies and in different bonds, the risk is diversified. If at a time, market price of some

particular stocks fall, the loss of the mutual fund may be offset by the rise in price of some

other stocks held by that particular mutual fund. But, individual stocks do not hold this

advantage of diversification. If the prices of the stocks go down in the market, the investor

is sure to lose money.

Professional management & efficiency

As mutual funds are managed by the professional fund managers who are specialized in

their field, they carry out the research and analysis work much more efficiently and

naturally speculate more correctly about the market trends of stock prices and bond prices.

In the other case, Individual Stock investment is done directly by the investors who are in

most cases common men who don't have much knowledge about the stock and bond

market. Other than this as the mutual funds get a lot of money from people to invest in, they

can reap the benefit of Economies of Scale with the large sum of invested money.The

origin of mutual fund industry in India is with the introduction of the concept of mutual

MUTUAL FUND


fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year

1987 when non-UTI players entered the market.

In the past decade, Indian mutual fund industry had seen dramatic improvements,

both quality wise as well as quantity wise. Before, the monopoly of the market had seen

an ending phase; the Assets under Management (AUM) were Rs. 67bn. The private

sector entry to the fund family raised the AUM to Rs. 470 by in March 1993 and till

April 2009; it reached the height 2000 bn.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less

than the deposits of SBI alone, constitute less than 11% of the total deposits held by the

Indian banking industry.

The main reason of its poor growth is that the mutual fund industry in India is new in the

country. Large sections of Indian investors are yet to be intellectualed with the concept.

Hence, it is the prime responsibility of all mutual fund companies, to market the product

correctly abreast of selling.

The mutual fund industry can be broadly put into four phases according to the development

of the sector. Each phase is briefly described as under.

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.

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

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Canbank 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 in 1989 and

GIC in 1990. The end of 1993 marked Rs.47, 004 as assets under management.

MUTUAL FUND


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.

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.

MUTUAL FUND


d) Types of Schemes

Fig:-3

Any mutual fund has an objective of earning income for the investors’ and/ or getting

increased value of their investments. To achieve these objectives mutual funds adopt

different strategies and accordingly offer different schemes of investments. On these bases

the simplest way to categorize schemes would be to group these into two broad

classifications:

Operational Classification and Portfolio Classification.

Operational classification: - Operational classification highlights the two main types of

schemes, i.e., open-ended and close-ended which are offered by the mutual funds.

Portfolio classification:- Portfolio classification projects the combination of investment

instruments and investment avenues available to mutual funds to manage their funds. Any

portfolio scheme can be either open ended or close ended.

CLASSIFICATION OF MUTUAL FUND SCHEMES:-

MUTUAL FUND


Operational Classification

Open Ended Schemes:

As the name implies the size of the scheme (Fund) is open i.e., not specified or pre-

determined. Entry to the fund is always open to the investor who can subscribe at any time.

Such fund stands ready to buy or sell its securities at any time. It implies that the

capitalization of the fund is constantly changing as investors sell or buy their shares.

Further, the shares or units are normally not traded on the stock exchange but are

repurchased by the fund at announced rates. Open-ended schemes have comparatively better

liquidity despite the fact that these are not listed. The reason is that investors can any time

approach mutual fund for sale of such units. No intermediaries are required. Moreover, the

realizable amount is certain since repurchase is at a price based on declared net asset value

(NAV). No minute-to-minute fluctuations in rates haunt the investors. The portfolio mix of

such schemes has to be investments, which are actively traded in the market. Otherwise, it

will not be possible to calculate NAV. This is the reason that generally open-ended schemes

are equity based.

Close Ended Schemes:

Such schemes have a definite period after which their shares/ units are redeemed. Unlike

open-ended funds, these funds have fixed capitalization, i.e., their corpus normally does not

change throughout its life period. Close ended fund units trade among the investors in the

secondary market since these are to be quoted on the stock exchanges. Their price is

determined on the basis of demand and supply in the Market. Their liquidity depends on the

efficiency and understanding of the engaged broker. Their price is free to deviate from

NAV, i.e., there is every possibility that the market price may be above or below its NAV. If

one takes into account the issue expenses, conceptually close ended fund units cannot be

traded at a premium or over NAV because the price of a package of investments, i.e., cannot

exceed the sum of the prices of the investments constituting the package. Whatever

premium exists that may exist only on account of speculative activities. In India as per SEBI

(MF) Regulations every mutual fund is free to launch any or both types of schemes.

MUTUAL FUND


Portfolio Classification of Funds:

Following are the portfolio classification of funds, which may be offered. This classification

may be on the basis of (a) Return, (b) Investment Pattern, (c) Specialized sector of

investment, (d) Leverage and (e) Others.

(a) Return based classification:-

To meet the diversified needs of the investors, the mutual fund schemes are made to enjoy a

good return. Returns expected are in form of regular dividends or capital appreciation or a

combination of these two.

I. Income Funds: - For investors who are more curious for returns, Income funds are

floated. Their objective is to maximize current income. Such funds distribute periodically

the income earned by them. These funds can further be splitted up into categories: those that

stress constant income at relatively low risk and those that attempt to achieve maximum

income possible, even with the use of leverage. Obviously, the higher the expected returns,

the higher the potential risk of the investment.

ii. Growth Funds: - Such funds aim to achieve increase in the value of the underlying

investments through capital appreciation. Such funds invest in growth-oriented securities,

which can appreciate through the expansion production facilities in long run. An investor

who selects such funds should be able to assume a higher than normal degree of risk.

iii. Conservative Funds: - The fund with a philosophy of all things to issue offers

document-announcing objectives as: (I) To provide a reasonable rate of return, (ii) To

protect the value of investment and, (iii) To achieve capital appreciation consistent with the

fulfillment of the first two objectives. Such funds which offer a blend of immediate average

return and reasonable capital appreciation are known as middle of the road funds. Such

funds divide their portfolio in common stocks and bonds in a way to achieve the desired

objectives. Such funds have been most popular and appeal to the investors who want both

growth and income.

MUTUAL FUND


(b) Investment Based Classification:-

Mutual funds may also be classified on the basis of securities in which they invest.

Basically, it is renaming the subcategories of return based classification.

I. Equity Fund: - Such funds, as the name implies, invest most of their investible shares in

equity shares of companies and undertake the risk associated with the investment in equity

shares. Such funds are clearly expected to outdo other funds in rising market, because these

have almost all their capital in equity. Equity funds again can be of different categories

varying from those that invest exclusively in high quality blue-chip companies to those that

invest solely in the new, unestablished companies. The strength of these funds is the

expected capital appreciation. Naturally, they have a higher degree of risk.

Equity Oriented Schemes

ii. Bond Funds:-

Such funds have their portfolio consisted of bonds, debentures, etc. this type of fund is

expected to be very secure with a steady income and little or no chance of capital

appreciation. Obviously risk is low in such funds. In this category we may come across the

funds called Liquid Funds, which specialize in investing short-term money market

instruments. The emphasis is on liquidity and is associated with lower risks and low returns.

MUTUAL FUND


Debt Based Scheme

iii. Balanced Fund:-

The funds, which have in their portfolio a reasonable mix of equity and bonds, are known

as balanced funds. Such funds will put more emphasis on equity share investments when the

outlook is bright and will tend to switch to debentures when the future is expected to be

poor for shares.

(c). Sector based classification: -

There are number of funds that invest in a specified sector of economy. While such funds do

have the disadvantage of low diversification by putting all their all eggs in one basket, the

policy of specializing has the advantage of developing in the fund managers an intensive

knowledge of the specific sector in which they are investing. Sector based funds are

aggressive growth funds which make investments on the basis of assessed bright future for a

particular sector.

These funds are characterized by high viability, hence more risky.

Real Estate

Infrastructure

IT Sector

Auto Sector

MUTUAL FUND


Advantages of Investing into a Mutual Fund: -

Fig:-4

Flexibility - Mutual Fund investments also offers a lot of flexibility with features such as

systematic investment plans, systematic withdrawal plans & dividend reinvestment.

Affordability - They are available in units so this makes it very affordable. Because of the

large corpus, even a small investor can benefit from its investment strategy.

Liquidity - In open-ended schemes, there is an option of withdrawing or redeeming money.

Diversification - Risk is lowered with Mutual Funds as they invest across different industries

& stocks.

Professional Management - Expert Fund Managers of the Mutual Fund analyze all options

based on experience & research.

Potential of return -The fund managers who take care of Mutual Fund have access to

information and statistics from leading economists and analysts around the world. Because of

this, they are in a better position than individual investors to identify opportunities for

investments to flourish.

Low Costs – The benefits of scale in brokerage, custodial and other fees translate into lower

costs for investors.

Regulated for investor protection - The Mutual Funds sector is regulated to safeguard the

investor's interests.

MUTUAL FUND


Advantages of Mutual Funds:-

Professional Management – The primary advantage of funds (at least theoretically) is the

professional management of money. Investors purchase funds because they do not have the

time or the expertise to manage their own portfolio. A mutual fund is a relatively inexpensive

way for a small investor to get a full-time manager to make and monitor investments.

Diversification –By owning shares in a mutual fund instead of owning individual stocks or

bonds, risk is spread out. The idea behind diversification is to invest in a large number of

assets so that a loss in any particular investment is minimized by gains in others. In other

words, the more stocks and bonds an individual own, the less any one of them can hurt.

Economies of Scale: – Because a mutual fund buys and sells large amounts of securities at a

time, its transaction costs are lower than as an individual would pay.

Liquidity – Just like an individual stock, a mutual fund allows in converting shares into cash

at any time.

Simplicity – Buying a mutual fund is easy. When an investor invest in the mutual fund then

they need to take form, fill it according to required instructions given and give the demand

draft or cheque of amount whatever they want to invest.

Reduced risk: - As mutual funds invests in large number of companies and are managed

professionally, the risk factor of the investor is reduced. A small investor, on the other hand,

may not be in position to minimize the such risk.

Tax advantage: - There are certain schemes of mutual fund which provide tax advantage

under income tax act. Thus tax liability of investor also reduced when he invest in mutual

fund schemes.

Low operating cost: - Mutual fund has large number of investible funds at their disposal

and thus can avail the large scale of economies. This reduces their operating cost by way of

brokerage, fees, commission etc. Thus, an investor can also gets the benefits of large scale of

economies and low operating cost.

MUTUAL FUND


Disadvantages of Mutual Funds:-

Professional Management – Many investors debate over whether or not the so-called

professionals are any better than an individual or others at picking stocks. Management is by

no means infallible, and, even if the fund loses money, the manager still takes his/her cut.

Costs – The mutual fund industry is masterful at burying costs under layers of jargon. These

costs are so complicated that in this tutorial we have devoted an entire section to the subject.

Dilution – Because funds have smallholdings in so many different companies, high returns

from a few investments. Often don't make much difference on the overall return. Dilution is

also the result of a successful fund getting too big. When money pours into funds that have

had strong success, the manager often has trouble finding a good investment for all the new

money.

Taxes – When making decisions about an individual’s money, fund managers don't consider

about personal tax situation. For example, when a fund manager sells a security, a capital-

gain tax is triggered, which affects how profitable the individual is from the sale. It might

have been more advantageous for the individual to defer the capital gains liability.

F) BASIS FOR SELECTION:-

Investors are selecting the mutual funds on the basis of following aspects of investment:-

Net assets

Portfolio composition

Income composition

Gross income as percentage of net assets

Expenses ratio

Realized gain per unit

Unrealized appreciation per unit

MUTUAL FUND


g) MUTUAL FUND CONSTITUENTS:-

Fig:-5

All mutual funds comprise four constituents – Sponsors, Trustees, Asset Management

Company (AMC) and Custodians.

Sponsors:

The sponsors initiate the idea to set up a mutual fund. It could be a registered company,

scheduled bank or financial institution. A sponsor has to satisfy certain conditions, such as

capital, record (at least five years’ operation in financial services), and de-fault free dealings

and general reputation of fairness. The sponsors appoint the Trustee, AMC and Custodian.

Once the AMC is formed, the sponsor is just a stakeholder.

MUTUAL FUND


Trust/ Board of Trustees:

Trustees hold a fiduciary responsibility towards unit holders by protecting their interests.

Trustees float and market schemes, and secure necessary approvals. They check if the

AMC’s investments are within well-defined limits, whether the fund’s assets are protected,

and also ensure that unit holders get their due returns. They also review any due diligence

by the AMC. For major decisions concerning the fund, they have to take the unit holders

consent. They submit reports every six months to

SEBI:

Investors get an annual report. Trustees are paid annually out of the fund’s assets – 0.5

percent of the weekly net asset value.

Fund Managers/ AMC:

They are the ones who manage money of the investors. An AMC takes decisions,

compensates investors through dividends, maintains proper accounting and information for

pricing of units, calculates the NAV, and provides information on listed schemes. It also

exercises due diligence on investments, and submits quarterly reports to the trustees. A

fund’s AMC can neither act for any other fund nor undertake any business other than asset

management. Its net worth should not fall below Rs. 10 crore. And, its fee should not exceed

1.25 percent if collections are below Rs. 100 crore and 1 percent if collections are above Rs.

100 crore. SEBI can pull up an AMC if it deviates from its prescribed role.

Custodian:

Often an independent organization, it takes custody of securities and other assets of mutual

fund. Its responsibilities include receipt and delivery of securities, collecting income-

distributing dividends, safekeeping of the units and segregating assets and settlements

between schemes. Their charges range between 0.15-0.2 percent of the net value of the

holding. Custodians can service more than one fund.

MUTUAL FUND


h) MARKETING STRATEGIES ADOPTED BY THE MUTUAL FUNDS

The present marketing strategies of mutual funds can be divided into three main headings:

A. Direct marketing

B. Selling through intermediaries.

C. Joint Calls

Direct Marketing:

This constitutes 20 percent of the total sales of mutual funds. Some of the important tools

used in this type of selling are:

Personal Selling: In this case the customer support officer or Relationship Manager of the

fund at a particular branch takes appointment from the potential prospect. Once the

appointment is fixed, the branch officer also called Business Development Associate (BDA)

in some funds then meets the prospect and gives him all details about the various schemes

being offered by his fund. The conversion rate in this mode of selling is in between 30% -

40%.

Telemarketing: In this case the emphasis is to inform the people about the fund. The names

and phone numbers of the people are picked at random from telephone directory. Some fund

houses have their database of investors and they cross sell their other products. Sometimes

people belonging to a particular profession are also contacted through phone and are then

informed about the fund. Generally the conversion rate in this form of marketing is 15% -

20%.

Direct mail: This one of the most common method followed by all mutual funds. Addresses

of people are picked at random from telephone directory, business directory, professional

directory etc. The customer support officer (CSO) then mails the literature of the schemes

offered by the fund. The follow up starts after 3 to 4 days of mailing the literature. The CSO

calls on the people to whom the literature was mailed. Answers their queries and is generally

successful in taking appointments with those people. It is then the job of BDA to try his best

to convert that prospect into a customer.

MUTUAL FUND


Advertisements in newspapers and magazines: The funds regularly advertise in business

newspapers and magazines besides in leading national dailies. The purpose to keep investors

aware about the schemes offered by the fund and their performance in recent past.

Advertisement in TV/FM Channel: The funds are aggressively giving their advertisements in

TV and FM Channels to promote their funds.

Hoardings and Banners: In this case the hoardings and banners of the fund are put at

important locations of the city where the movement of the people is very high. The hoarding

and banner generally contains information either about one particular scheme or brief

information about all schemes of fund.

Selling through intermediaries:

Intermediaries contribute towards 80% of the total sales of mutual funds. These are the

people/ distributors who are in direct touch with the investors. They perform an important

role in attracting new customers. Most of these intermediaries are also involved in selling

shares and other investment instruments. They do a commendable job in convincing investors

to invest in mutual funds. A lot depends on the after sale services offered by the intermediary

to the customer.

Customers prefer to work with those intermediaries who give them right information about

the fund and keep them abreast with the latest changes taking place in the market especially if

they have any bearing on the fund in which they have invested.

Regular Meetings with distributors:

Most of the funds conduct monthly/bi-monthly meetings with their distributors. The objective

is to hear their complaints regarding service aspects from funds side and other queries related

to the market situation. Sometimes, special training programmes are also conducted for the

new agents/ distributors.

Training involves giving details about the products of the fund, their present performance in

the market, what the competitors are doing and what they can do to increase the sales of the

fund.

MUTUAL FUND


Joint Calls:

This is generally done when the prospect seems to be a high net worth investor. The BDA

and the agent (who is located close to the residence or area of operation) together visit the

prospect and brief him about the fund. The conversion rate is very high in this situation,

generally, around 60%. Both the fund and the agent provide even after sale services in this

particular case.

The most important trend in the mutual fund industry is the aggressive explosion of the

foreign owned mutual funds companies and the decline of the companies floated by

nationalized banks and small private sector players.

Many nationalized banks got into the mutual funds business in the early nineties and got of to

a good start due to the stock market boom prevailing then. These banks did not really

understand the mutual funds business and they viewed it as another kind of banking activity.

Few hired specialized staff and generally chose to transfer staff from parent organizations.

The performance of most of the schemes floated by these organizations was not good. Some

schemes had offered guaranteed returns and there parent organizations had to bail out these

AMC by paying large amount of money as the difference between the guaranteed and actual

returns. The service levels were also very bad. Most of these AMC have not been able to

retain staff, float new schemes etc. And it is doubtful whether, barring a few exceptions, they

have serious plans of continuing the activity in a major way.

The experience of some of the AMC floated by the private sector Indian companies was also

very similar. They quickly realized that the AMC business is a business, which makes money

in the long term and requires deep- pocketed support in the intermediate years. Some have

sold out to foreign owned companies, some have merged with others and there is a general

restructuring going on.

The foreign owned companies have deep pockets and have come here with the expectations

of a long haul. They can be credited with the introduction of many new practices such as new

product innovation, sharp improvement in the service standards and disclosure, usage of

technology, broker education and support etc. In fact, they have forced the industry to

upgrade itself and its service level of organization.

MUTUAL FUND


J) MARKETING OF FUNDS AND ITS CHALLENGES:-

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 investors needs;

Product designing;

Studying the macro environment;

Timing of the launch of the product;

Choosing the distribution network;

Finalizing strategies for publicity and advertisement;

Preparing offer documents and other literature;

Getting feedback about sales;

Studying performance indicators about fund performance like NAV;

Sending certificates in time and other after sales activities;

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.

Widening, Broadening and Deepening the Markets

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.

PRODUCT INNOVATION AND VARIETY

A. Investor Preferences

The challenge for the mutual funds is in the tailoring the right products that will help

mobilizing savings by targeting investors needs. It is necessary that the common investor

understands very clearly and loudly the salient features of funds, and distinguishes one fund

from another. The funds that are being launched today are more or less look-alikes, or plain

vanilla funds, and not necessarily designed to take into account the investors varying needs.

MUTUAL FUND


The Indian investor is essentially risk averse and is more passive than active. He is not

interested in frequently changing his portfolio, but is satisfied with safety and reasonable

returns. Importantly, he understands more by emotions and sentiments rather than a

quantitative comparison of funds performance with respect to an index. Mere growth

prospects, in an uncertain market, are not attractive to him. He prefers one bird in the hand to

two in bush, and is happy if assured a rate of reasonable return that he will get on his

investment. The expectations of a typical investor, in order of preference are the safety of

funds, reasonable return and liquidity.

The investor is ready to invest his money over long periods, provided there is a purpose

attached to it which is linked to his social needs and therefore appeals to his sentiments and

emotions. That purpose may be his child education and career development, medical

expenses, health care after retirement, or the need for steady and sure income after retirement.

In a country where social security and social insurance are conspicuous more by their

absence, mutual funds can pool their resources together and try to mobilize funds to meet

some of the social needs of the society.

B. Product Innovations

With the debt market now getting developed, mutual funds are tapping the investors who

require steady income with safety, by floating funds that are designed to primarily have debt

instruments in their portfolio. The other area where mutual funds are concentrating is the

money market mutual funds, sect oral funds, index funds, gilt funds besides equity funds.

The industry can also design separate funds to attract semi-urban and rural investors, keeping

their seasonal requirements in mind for harvest seasons, festival seasons, sowing seasons, etc.

i) MARKET SEGMENTS OF MUTUAL FUND:-

Market Segmentation: Different segments of the market have different risk-return criteria,

on the basis of which they take investment decisions. Not only that, in a particular segment

also there could be different sub-segments asking for yet different risk-return attributes, and

differential preference for various investments attributes of financial product.

MUTUAL FUND


Different investment attributes an investor expects in a financial product are:

Liquidity,

Capital appreciation,

Safety of principal,

Tax treatment,

Dividend or interest income,

Regulatory restrictions,

Time period for investment, etc.

On the basis of these attributes the mutual fund market may be broadly segmented into five

main segments as under.

1) Retail Segment

This segment characterizes large number of participants but low individual volumes. It

consists of individuals, Hindu Undivided Families, and firms. It may be further sub-divided

into:

i. Salaried class people;

ii. Retired people;

iii. Businessmen and firms having occasional surpluses;

iv. HUF for long term investment purpose.

These may be further classified on the basis of their income levels. It has been observed that

prospects in different classes of income levels have different patterns of preferences of

investment. Similarly, the investment preferences for urban and rural prospects would differ

and therefore the strategies for tapping this segment would differ on the basis of differential

life style, value and ethics, social environment, media habits, and nature of work. Broadly,

this class requires security of the principal, liquidity, and regular income more than capital

appreciation. It lacks specialized investment skills in financial markets and highly susceptible

to mob behavior. The marketing strategy involving indirect selling through agency network

and creating awareness through appropriate media would be more effective in this segment.

MUTUAL FUND


2) Institutional Segment :---This segment characterizes less number of participants, and

large individual volumes. It consists of banks, public sector units, financial institutions,

foreign institutional investors, insurance corporations, provident and pension funds. This

class normally looks for more specialized professional investment skills of the fund managers

and expects a structured product than a ready-made product. The tax features and regulatory

restrictions are the vital considerations in their investment decisions. Each class of

participants, such as banks, provides a niche to the fund managers in this segment. It requires

more of a personalized and direct marketing to sustain and increase volumes.

3) Trusts :---This is a highly regulated, high volumes segment. It consists of various types of

trusts, namely, charitable trusts, religious trust, educational trust, family trust, social trust, etc.

each with different objectives. Its basic investment need would be safety of the principal,

regular income and hedge against inflation rather than liquidity and capital appreciation. This

class offers vast potential to the fund managers, if the regulators relax guidelines and allow

the trusts to invest freely in mutual funds.

4) Non-Resident Indians :---This segment consists of very risk sensitive participants, at

times referred as fair weather friends. They need the highest cover against political and

exchange risk. They normally prefer easy exit with repatriation of income and principal. They

also hold a strategic importance as they bring in crucial foreign exchange a crucial input for

developing country like ours. Marketing to this segment requires special kind of products for

groups of foreign countries depending upon the provisions of tax treaties. The range of

suitable products are required to design to divert the funds flowing into bank accounts. The

latest flavor in the mutual fund industry is exclusive schemes for non-resident Indians (NRI.)

5) Corporate :---Generally, the investment need of this segment is to park their occasional

surplus funds that earn return more than what they have to pay on account of holding them.

Alternatively, they also get surplus fund due to the seasonality of the business, which

typically become due for the payment within a year or quarter or even a month. They need

short term parking place for their fund, this segment offers a vast potential to specialized

money market managers. Given the relaxation in the regulatory guidelines, fund managers are

expected design products to this segment. Thus, each segment and sub-segment has their own

risk return preferences forming niches in the market. Mutual funds managers have to analyze

in detail the intrinsic needs of the prospects and design a variety of suitable products for

MUTUAL FUND


them. Not only is that, the products also required to be marketed through appropriately

different marketing strategies.

The Atheists are turning believers. Mutual funds, private sector ones in particular, who had

written off advertising as the A ultimate waste of money have nearly tripled their press media

spend .What interesting is that in this period the share of the private sector mutual funds in

the category total media spending has surged from 20 percent to 52 percent. This can be

attributed to private sector funds (given the data available with the Association of Mutual

Funds of India) seeing an increase share of net inflows relative to the bank-sponsored

counterparts in the public sector.

Clearly advertising types have something to cheer about. But what caused this sudden

attitudinal shift towards advertising? According to experts, funds are being pushed into

advertising more by intermediaries like banks who are reluctant to sell a product whose name

is unfamiliar to investor. Besides, since more open-ended schemes are now available, some

form of ongoing support to keep sales booming has been deemed necessary by the funds. The

industry has discovered that advertising in the changed climate today, when investors are

most receptive to mutual funds, can perk up sales by anywhere between 20-40 percent. MF

has rationale for stepping up marketing spends because the brand is an important part of the

consumer decision to invest in a category that is not yet clearly understood by people.

According to the mutual fund marketers, advertising helps bring recall when consumers are

looking at investment opportunities. Advertising backed by an integrated marketing and

communication campaign designed to attract investors with long term prospective has helped

the fund post a redemption-to-sales ratio of just about five percent as compared to 20-30

percent for the industry on an average.

Direct mail is another medium, which some funds have successfully used. But rather than

sending out mailers to all and sundry, there is a need for appropriate targeting.

Educational seminars are the final leg in the marketing and communication process. In these,

investors conditioned by advertising and hooked by an interesting mailer can have lingering

doubts clarified. Attractive point of purchase (POP) material can also help.

MUTUAL FUND


Another very successful media niche, which has been exploited to the hilt by funds, is

intermediary magazines and newsletters. Besides the low costs of advertising in these

newsletters, these publications circulate to those who are looking for investment opportunities

and thus represent an extremely lucrative target segment. Advertising content by most of the

funds too has undergone a marked change from concept-selling ads dispelling myths, to

selling specific schemes that meet defined objectives/ goals.

k) SEBI GUIDELINES

The SEBI issued a set of regulations and code of conduct of 20 January. 1993 for the

smooth conduct and regulation of Mutual fund. The silent features of these guidelines are a

s follows:

Mutual Fund cannot deal in Option trading, short selling or carrying forward

transactions in securities.

Mutual fund should be formed as trusts and managed by AMC

Restriction to ensure those investments under all schemes do not Exceed 15% of the

funds in the shares and debentures of a single company.

SEBI will grant registration to only those Mutual Funds, which can prove an

efficient and orderly conduct of business.

The Mutual fund should have a custodian, not associated in any way with the AMC

and registered with the board.

The minimum amount to be raised with each closed ended scheme should be Rs. 20

crore and for the open-ended scheme Rs. 50 crore.

The Mutual Fund is obliged to maintain books of account.

The minimum net worth of AMC is Rs. 5 crore of which the minimum contribution

of the sponsor should be 40%.

The Mutual Fund should ensure adequate disclosures to the investors

SEBI can impose suspension of registration in case of violation of the provision of

the SEBI act 1992, to the regulations.

Restrictions to ensure the investments under an individual scheme donot exceed 5%

of the corpus of any companies’ shares and investments under all schemes do not

exceed 10% of the funds in the shares, debentures or securities of a single company.

MUTUAL FUND


CHAPTER:-2

2.1) COMPANY PROFILE:-

The Standard Chartered Group was formed in 1869 through a merger of two banks: The

Standard Bank of British South Africa founded in 1863, and the Chartered Bank of India,

Australia and China, founded in 1853. Both companies were keen to capitalize on the huge

expansion of trade and to earn the handsome profits to be made from financing the movement

of goods from Europe to the East and to Africa.

The Chartered Bank

Founded by James Wilson following the grant of a Royal Charter by

Queen Victoria in 1853

Chartered opened its first branches in Mumbai (Bombay), Calcutta

and Shanghai in 1858, followed by Hong Kong and Singapore in 1859

Traditional business was in cotton from Mumbai (Bombay), indigo

and tea from Calcutta, rice in Burma, sugar from Java, tobacco from

Sumatra, hemp in Manila and silk from Yokohama

Played a major role in the development of trade with the East which

followed the opening of the Suez Canal in 1869, and the extension of

the telegraph to China in 1871

In 1957 Chartered Bank bought the Eastern Bank together with the

Ionian Bank’s Cyprus Branches. This established a presence in the

Gulf

MUTUAL FUND


The Standard Bank

Founded in the Cape Province of South Africa in 1862 by John

Paterson. Commenced business in Port Elizabeth, South Africa, in

January 1863

Was prominent in financing the development of the diamond fields of

Kimberley from 1867 and later extended its network further north to

the new town of Johannesburg when gold was discovered there in

1885

Expanded in Southern, Central and Eastern Africa and by 1953 had

600 Offices

In 1965, it merged with the Bank of West Africa expanding its

Operations into Cameroon, Gambia, Ghana, Nigeria and Sierra Leone

In 1969, the decision was made by Chartered and by Standard to undergo a Friendly merger.

All was going well until 1986, when a hostile takeover bid was made for the Group by Lloyds

Bank of the United Kingdom. When the bid was defeated, Standard Chartered entered a

period of change. Provisions had to be made against third world debt exposure and loans to

corporations and entrepreneurs who could not meet their commitments. Standard Chartered

began a series of divestments notably in the United States and South Africa, and also entered

into a number of asset sales. From the early 90s, Standard Chartered has focused on

developing its strong franchises in Asia, the Middle East and Africa using its operations in

the United Kingdom and North America to provide customers with a bridge between these

markets. Secondly, it would focus on consumer, corporate and institutional banking, and on

the provision of treasury services? areas in which the Group had particular strength and

expertise. In the new millennium we acquired

Grindlays Bank from the ANZ Group and the Chase Consumer Banking operations in Hong

Kong in 2000.

MUTUAL FUND


Establishment of Standard Chartered Bank around the world

Country Year Established Country Year Established

United Kingdom 1853 Australia 1964

China, India, Sri

Lanka 1858 Mexico, Oman 1968

Hong Kong,

Singapore 1859 Peru 1973

Indonesia, Pakistan 1863 Jersey 1978

Philippines 1872 Brazil 1979

Malaysia 1875 Venezuela 1980

Japan 1880 Falkland Islands,

Macau 1983

Zimbabwe 1892 Taiwan 1985

The Gambia, Sierra

Leone, Thailand 1894 Cameroon 1986

Ghana 1896 Nepal 1987

Botswana 1897 Vietnam 1990

USA 1902 Cambodia, South

Africa 1992

Bangladesh 1905 Iran 1993

Zambia 1906 Colombia 1995

Kenya 1911 Laos, Argentina 1996

Uganda 1912 Nigeria 1999

Tanzania 1917 Lebanon 2000

Bahrain 1920 CotedIvoire 2001

Jordan 1925 Mauritius 2002

Korea 1929 Turkey 2003

Qatar 1950 Afghanistan 2004

Brunei, UAE 1958

MUTUAL FUND


Recent strategic alliances and acquisitions

The year 2005 and 2006 were historic years for us as we achieved several milestones with a

number of strategic alliances and acquisitions that will extend our customer or geographic

reach and broaden our product range.

We completed, rebranded and successfully integrated SC First Bank in Korea, which

to date is the biggest acquisition in our history.

We completed full integration between Standard Chartered Bank ,Thailand and

Standard Chartered Nakornthon Bank in October.

We formed strategic alliances with Fleming Family & Partners to expand private

wealth management in Asia and the Middle East.

We acquired stakes in ACB Vietnam and Travelex.

We acquired the business operations of American Express Bank in Bangladesh.

We acquired a stake in Bohai Bank in Tianjin, China, making us the first foreign bank

to be allowed a stake in a local bank in China.

We acquired a 25% stake in First Africa Group Holdings in June 2006.

We acquired an additional 26% stake in Permata Bank through our consortium with

PT Astra International, thus giving the consortium a total stake of 89%.

We acquired Union Bank in Pakistan in September 2006 and we have successfully re

branded all branches.

We launched a tender offer in the end of 2006 for 100% in Hsinchu International

Bank, Taiwan

MUTUAL FUND


PRODUCT PROFILE

EQUITY SCHEME

Imperial Equity Fund

The Standard Chartered Premier Equity Fund, an innovative open –ended equity fund that

attempts to generate wealth over the long term through a potent combination of well defined

investment strategy and a robust investment management structure. At Standard Chartered

Mutual Fund we believe that wealth creation is a patient process that involves a good blend of

myriad themes like the identification of a basket of growth ideas, investing in them at an

early stage and the conviction to hold on for the longer term. For opportunities then will

abound.

Over the past decade, Indian companies have converted their competitive advantage to

market dominance and in the process have created serious wealth for investors over a 5-year

period. If the software and the telephony sectors like the insurance, aviation to name a couple

where we envisage such growth. The Premier Equity Fund will indulge wholeheartedly in

this endeavor to create wealth creation process and thus seek to provide long - term investors

with an option to generate wealth.

Enterprise Equity Fund

A 3 year close-ended equity fund that will invest in IPOs that are slated for launch in the next

three years. It helps you take advantage of the increasing number of IPOs and benefit from

the potential premium on listing of IPOs. So no more applying, waiting for allotment or

refund cheques. Don’t lose out on IPOs.

Equity Arbitrage Fund

The Standard Chartered Arbitrage Fund makes the most the difference across markets by

investing in the cash and futures market. And with up to 35% allocation to debt and money

market instruments, the product suits a low-risk profile perfetcly. You don't have to always

make a choice, but you can make the most from the options. And The Standard Chartered

Arbitrage Fund does exactly that.

MUTUAL FUND


Tax Saver (ELSS) Fund

Standard Chartered has also introduced its Tax saver ELSS fund Specifically in order to

provide income tax benefit to the IT payers Under section 80C of Income Tax Act.

DEBT SCHEME

Standard Chartered all session bond Fund

Investment Objective:-

To generate optimal returns with high liquidity by active management of the portfolio, by

investing predominantly in debt oriented mutual fund schemes and money market

instruments.

There can be no assurance that the investment objective of the

Scheme will be realized.

Ideal investment horizon

The scheme is designed for investors seeking stable returns over a relatively. Longer tenor

period of investment of more than a year.

2.2 OBJECTIVE OF STUDY

Primary objective:-

The primary objective of the study is to understand the mutual fund and understand

the different aspects of mutual funds and their functioning in market.

To understand the investment pattern of mutual fund in different type of schemes

and how these schemes are able to serve the needs of the customer.

To understand how a customer looks at the scheme and what kind of benefit they

want from any scheme.

MUTUAL FUND


To understand the difference between the direct investment in stocks and in mutual

fund and evaluate that which investment is beneficial.

Secondary objective:-

To understand the customer perception towards making investment in any kind of

stock and in mutual fund.

How the mutual funds where issued to customer.

Where these mutual funds are traded.

2.3) SCOPE OF STUDY:-

This study will help in understanding the growing mutual fund market in India and

this will also help us to understand the fast changes in nature of mutual fund.

This study is quite helpful in understanding the functioning of any mutual fund

company in recent loomy market condition.

This study will help in understanding the investment pattern of the mutual fund and

help the customer to choose a particular pattern.

The study will help to understand the organization to understand the changing needs

of the customer and that will the organization to track the customer in future.

The study is done in Patna, where standard chartered mutual fund doesn’t have more

branches that will the organization to expand their firm in Patna by understanding

customer through this study.

MUTUAL FUND


2.4) LIMITATION OF THE STUDY:-

The study was limited to specific area of the PATNA city.

This study was limited to sample size of 150.

The time has constraint of 1 month.

The customer was not providing right information to us.

Non-availability of past data, Balance Sheet etc.

Non-availability of Fund Manager to discuss on fund strategies and growth

projections due to geographical location.

This study has been limited by time and cost factors.

This study has been made from the information given by STANDARD

CHARTERD MF office. Accuracy of the findings is dependent on the quality of

their Responses.

MUTUAL FUND


2.5) RESEARCH METHODOLOGY:-

Research methodology define as the systematic plan, design, collection, analysis and

reporting of data and findings relevant to a specific marketing situation facing the company.

RESEARCH DESIGN:-

The research requires developing the most efficient plan for gathering the needed

information. this involves decision on the data sources, research approaches, research

instrument, sampling plan and contact method.

There are three types of research design as follows:-

EXPLARATORY RESEARCH:-

Explaratory research is conducted when researcher does not know how and why certain

phenomenon occurs. The prime goal for this research is to know unknown, this research is

unstructured.

DESCRIPTIVE RESEARCH:-

Descriptive research is carried out to describe the phenomenon or market characteristics. This

study is done to understand buyer behavior and describe characteristics of the target market.

This study is done for evaluation of the customer preference.

CAUSATIVE RESEARCH:-

Causative research is done to establish the cause and effect relationship.

I use the descriptive research for my study.

MUTUAL FUND


DATA SOURCES:-

PRIMARY DATA:-

Primary data are collected by a study specifically to fulfill the data needs of the problem at

hand. such data are original in character and are generated in large number of surveys

conducted mostly by government and also by individual, institution, and research bodies.

METHODS OF COLLECTING PRIMARY DATA:-

Direct personal interviews.

Indirect oral interviews.

Information from correspondence.

Mail questionnaire method.

SECONDARY DATA:-

Data which are not originally collected but rather obtained from published and unpublished

sources are known as secondary data.

SOURCES OF SECONDARY DATA:-

Published sources

Unpublished sources

SAMPLE:-

When secondary data are not available for the problem under study, a decision may be made

to collect primary data by different methods for information. The information may be

collected by either the census method or sample method.

The sample is a portion of universe.

MUTUAL FUND


SAMPLING METHODS:-

1. Non probability sampling method.

2. Probability sampling method.

Non probability sampling method:-

Judgment sampling:-

In this method of sampling the choice of sample items depends on judgment of the

investigator. In other words, the investigator exercises his judgment in the choice and

includes those items in sample which he thinks are most typical of universe with

regard to characteristics under investigation.

Quota sampling:-

In a quota sample, quotas are set up according to some specified characteristics such

as so many in each of several income groups, so many in each age group etc.

Convenience sampling:-

A convenient sampling is obtained by convenient population. This is also called as

chunk.

Probability sampling method:-

Sampling or unrestricted random samples:-simple or restricted random sampling

technique refers to that sampling in which each and every unit of the population has

an equal opportunity of being selected in the sample.

Restricted random sampling:-

o Stratified sampling:- Stratified random sampling or simply stratified

sampling is one of the random methods which, by using the available

information concerning the population, attempt to design a more efficient

sample than obtained by the simple random procedure.

MUTUAL FUND


o Systematic sampling:- A systematic sample is formed by selecting one unit at

random and then selecting additional unit at evenly spaced intervals until the

samples has been formed.

o Multi stage or cluster sampling:- Under this method, the random selection is

made of primary, intermediate and final (the ultimate) units given from a

given population or stratum.

SAMPLE SIZE:- 150

MATHEMATICAL & STATICAL TOOLS USED FOR DATA ANALYSIS

Percentage method

Average method

2.6) LITERATURE REVIEW:-

The Indian mutual funds industry is witnessing a rapid growth as a result of infrastructural

development, increase in personal financial assets, and rise in foreign participation. With the

growing risk appetite, rising income, and increasing awareness, mutual funds in India are

becoming a preferred investment option compared to other investment vehicles like Fixed

Deposits (FDs) and postal savings that are considered safe but give comparatively low

returns, according to “Indian Mutual Fund Industry”.

This report provides a detailed analysis along with current and future outlook of the Indian

mutual fund industry and explores the market development and potential. The forecasts and

estimations given in this report are not based on a complex economic model, but are intended

as a rough guide to the direction in which the industry is likely to move.

MUTUAL FUND


Key Findings

The Indian mutual funds retail market, growing at a CAGR of about 30%, is forecasted to

reach US$ 300 Billion by 2015.

- At about 84% (as on May 31, 2009), private sector Asset Management Companies account

for majority of mutual fund sales in India.

- Individual investors make up for 96.86% of the total number of investor accounts and

contribute 36.9% of the net assets under management.

Key Issues & Facts Analyzed in the Report

- What are the key factors fueling growth into the Indian mutual fund market?

- Which are the fastest growing products?

- What are the key growth prospects?

- What are the key challenges for the market?

- How the market is likely to move in future?

Key Players

This section provides business analysis of key players in the Indian mutual fund market,

including Reliance Capital, BOB and HDFC,Standard chartered.

Research Methodology Used

Information sources:-

Information for this report has been sourced from books, newspapers, trade journals, white

papers, industry portals, government agencies, trade associations, monitoring industry news

and developments, and through access to more than 3000 paid databases.

Analysis method:-

The analysis methods used in this report include ratio analysis, historical trend analysis,

linear regression analysis using software tools, judgmental forecasting, and cause and effect

analysis.

MUTUAL FUND


CHAPTER:-3

DATA ANALYSIS & INTREPRETATION:-

TABLE:-1

1.Occupation wise classification:-

Occupation No. of respondents Percentage

Professional 15 10%

Business man 99 66%

Employee 12 8%

Govt.employees 18 12%

Student 06 4%

Total 150 100%

Figure:-6

Inference:-

66% of respondent were belonging to businessman category.

4% of respondent were belonging to students category.

0

20

40

60

80

100

120

140

160

1 2 3 4 5 6

Categories of occupation

Occupation wise classification

Occupation

No. of respondents

percentage

MUTUAL FUND


TABLE NO.-2

Income wise classification:-

Income level NO. of respondents Percentage

5000-10000 18 12%

10000-15000 45 30%

15000-20000 63 42%

More than 20000 24 16%

Total 150 100%

Fig:-7

Inference:-

42% of respondent are having income of 15000-20000

12% of respondents are having income of 5000-10000

Income wise classification

0

20

40

60

80

100

120

140

160

5000-

10000

10000-

15000

15000-

20000

More

than

20000

Total

Income levels

No

.of

rep

on

den

ts

NO. of respondents

Percentage

MUTUAL FUND


TABLE NO.-3

Savings:-

Saving No. of respondents Percentage

1000-4000 27 18%

4000-7000 23 15%

7000-10000 72 48%

More than 10000 28 19%

Total 150 100%

Fig:-8

Inference:-

48% of respondent are saving 7000-10000

15% of respondents are saving 4000-7000

Monthly saving

0

20

40

60

80

100

120

140

160

1000-4000 4000-7000 7000-10000 More than

10000

Total

saving

No

. o

f re

sp

on

den

ts

percentage

No. of respondents

MUTUAL FUND


TABLE NO.-4

Awareness of mutual fund among General mass:-

Attributes No. of respondent Percentage

Yes 135 9o%

No 15 10%

Total 150 100%

Figure:-9

Inference:-

90% of respondents was aware of mutual fund

10% was not aware of mutual fund

135

9o%

MUTUAL FUND


TABLE NO.-5

Where do you want to invest most:-

Investment alternatives No. of respondents Percentage

Bank deposits 51 34%

Stock market 14 9.5%

Insurance 38 25.5%

Mutual fund 29 19.5%

Debenture 5 3.5%

Derivatives 13 9%

Total 150 100%

Fig:-10

Inference:-

34% of respondents liked to invest in bank deposit.

3.5% liked to invest in debenture.

Investment pattern

0

50100

150200

250300

350

Ban

k dep

osits

Sto

ck m

arke

t

Insu

ranc

e

Mut

ual fund

debe

ntur

e

Deriv

atives

Total

Invstment alternatives

No

.of

resp

on

den

ts

Percentage

No. of respondents

MUTUAL FUND


TABLE NO.-6

Do you want to invest?

Attributes No. of respondents Percentage

Yes 120 80%

No 30 20%

Total 150 100%

Fig:-11

Inference:-

80% of respondents want to invest.

20 % don’t want to invest

Yes

No

MUTUAL FUND


TABLE NO.-7

Reason to invest in mutual fund:-

Reason No. of respondents Percentage

More return 36 24%

Safety 25 16.5%

Limited risk 27 18%

Capital appreciation 39 26%

Systematic investment 23 15.5%

Total 150 100%

Fig:-12

Inference:-

26% of respondent would like to invest in mutual fund because of capital

appreciation.

15.5% of respondents would like to invest in mutual fund for systematic investment.

reason to select MF

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100120140160

More

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rn

Safe

ty

Lim

ited r

isk

Capital

appre

cia

tion

Syste

matic

investm

ent

Tota

l

Benefits of MF

No

.of

resp

on

den

ts

Series1

Series2

MUTUAL FUND


TABLE NO.-8

Investment amount in Mutual fund:-

Amount No. of respondents Percentage

1000-4000 10 6.7%

4000-7000 18 12%

7000-10000 75 50%

More than 10000 47 31.3%

Total 150 100%

Fig:-13

Inference:-

50% of respondents wants to invest 7000-10000

6.7% respondents wants to invest 1000-4000

0

20

40

60

80

100

120

140

160

1000-

4000

4000-

7000

7000-

10000

More than

10000

Total

Amount

investment amount in MF

No. of respondents

Percentage

MUTUAL FUND


TABLE NO.-9

PREFERRED FUND IN MF

S.NO. FUND NO. OF

RESPONDENTS

PERCENTAGE

1 EQUITY FUND 51 34%

2 DEBT. FUND 24 16%

3 BALANCED FUND 44 29%

4 ELSS SCHEME 41 21%

TOTAL 150 100%

Source : PRIMARY DATA

Fig:-14

Inference:-

34% of respondents prefer equity scheme of mutual fund.

16% of respondents prefer debt scheme of mutual fund.

MUTUAL FUND


TABLE NO.-10

Do you know about STANDARD CHARTERD Mutual fund:-

Attribute Respondents Percentage

Yes 129 86%

No 21 14%

Total 150 100%

Fig:-15

Inference:-

86% of respondents know about the STANDARD CHARTERD mutual fund.

14% of respondents don’t knows the name of STANDARD CHARTERD Mutual

fund.

AWARENESS of STANDARD CHARTERD MF

Yes

No

MUTUAL FUND


TABLE NO.-11

Have you invested in STANDARD CHARTERD Mutual fund?

Attribute No. of respondents Percentage

Yes 120 80%

No 30 20%

Total 150 100%

Fig:-16

Inference:-

80% 0f respondents have invested in STANDARD CHARTERD mutual fund

20% of respondents haven’t invested in mutual fund.

1

2

MUTUAL FUND


TABLE NO.-12

Reason for investing in STANDARD CHARTERD mutual fund:-

Reason Respondents Percentage

For better return 33 27.5%

For minimum risk 39 32.5

For tax benefit 18 15%

For Capital appreciation 30 25%

Total 120 100%

Fig:-17

Inference:-

32.5% of respondents have invested in STANDARD CHARTERD Mutual fund for

minimum risk.

15% for tax benefit.

0

20

40

60

80

100

120

For better return

For tax benefit

Total

Benefits

Benefits of investment in STANDARD CHARTERD MF

Respondents

percentage

MUTUAL FUND


TABLE NO.-13

Attracting elements of STANDARD CHARTERD Mutual fund:-

Reasons Respondents Percentage

Systematic investment

plan(SIP)

18 15%

Limited investment 51 42.5%

Proficiency 27 32.5%

Better fund allocation 18 15%

Diversification of Your fund 6 4%

Total 120 100%

Fig:-18

Inference:-

42.5% of respondents said the limited investment in STANDARD CHARTERD MF

was most attracting.

6% said its diversification is most attractive.

0

20

40

60

80

100

120

Respondents Percentage

benefits

investment types

Systematic investment

plan(SIP)

Limited investment

Proficiency

Better fund allocation

Diversification of Your fund

Total

MUTUAL FUND


TABLE NO.-14

In how many schemes of STANDARD CHARTERD Mutual fund would you like to

invest?

No. of schemes No. of respondent Percentage

1 72 60%

2 15 12.5%

3 16 13.25%

More than 3 17 14.25%

Fig:-19

Inference:-

60% of respondents would like to invest in 1 scheme of STANDARD CHARTERD

Mutual fund.

12.5% would like to invest in 2 schemes of STANDARD CHARTERD mutual fund.

0

10

20

30

40

50

60

70

80

No. of respondent Percentage

No of respondent

Customer interest in STANDARD CHARTERD Mutual fund

1

2

3

More than 3

MUTUAL FUND


TABLE NO.-15

Have you invested in any other mutual fund?


Yes 18 15%

No 102 85%

Total 120 100%

Fig:-20

Inference;-

85% of respondents haven’t invested in other mutual fund.

15% of respondents have invested in other mutual fund

Yes

1

2

MUTUAL FUND


TABLE NO.-16

In which mutual fund have you invested?

Names No. of respondents Percentage

Prudential ICICI mutual fund 2 10.5%

Reliance mutual fund 6 33.3%

Birla sun life mutual fund 3 16.6%

SBI mutual fund 4 22.6%

Others 0 0%

Total 18 100%

Fig:-21

Inference:-

33.3% of respondents have invested in Reliance mutual fund

02468

1012141618

Prudential

ICICI

mutual

fund

Birla sun

life

mutual

fund

Others

Other MF COs

investment in other MF

No. of respondents

Percentage

MUTUAL FUND


TABLE NO.-17

Would you like to suggest others to invest in STANDARD CHARTERD mutual fund?


Yes 96 80%

No 24 20%

Total 120 100%

Fig:-22

Inference:-

80% of respondent would like to suggest to others to invest in STANDARD

CHARTERD Mutual fund.

20% wouldn’t like to suggest.

Yes

1

2

MUTUAL FUND


TABLE NO.-18

For which benefit will you suggest others to invest in STANDARD CHARTERD Mutual

fund?

Benefits No of respondents Percentage

Good return 20 20.8%

Tax benefit 28 29.9

Future benefit 39 40.7%

Capital appreciation 9 9.6%

Total 120 100%

Fig:-23

Inference:-

40.7% of respondents would like to suggest others for future benefits.

9.6% respondents would suggest for capital appreciation

0

20

40

60

80

100

120

Good return Future

benefit

Total

No of respondents

Percentage

MUTUAL FUND


CHAPTER:-4

4.1) FINDINGS:-

66% of respondent were belonging to businessman category. (refer Table no.1)

42% of respondent are having income of 15000-20000 (refer Table no.2)

48% of respondent are saving 7000-10000 (refer Table no.3)

90% of respondents was aware of mutual fund (refer Table no.4)

34% of respondents liked to invest in bank deposits. (refer Table no.5)

80% of respondents want to invest. (refer Table no.6)

26% of respondent would like to invest in mutual fund because of capital

appreciation. (refer Table no.7)

50% of respondents want to invest 7000-10000. (refer Table no.9)

86% of respondents know about the STANDARD CHARTERED mutual fund.

(refer Table no.10)

80% of respondents have invested in STANDARD CHARTERED mutual fund.

(refer Table no.11)

32.5% of respondents have invested in STANDARD CHARTERED Mutual fund

for minimum risk. (refer Table no.12)

15% for tax benefit. (refer Table no.12)

42.5% of respondents said the limited investment in STANDARD CHARTERED

MF was most attracting. (refer Table no.13)

60% of respondents would like to invest in 1 scheme of STANDARD

CHARTERED Mutual fund. (refer Table no.14)

85% of respondents haven’t invested in other mutual fund. (refer Table no.15)

33.3% of respondents have invested in Reliance mutual fund. (refer Table no.16)

80% of respondent would like to suggest to others to invest in STANDARD

CHARTERED Mutual fund. (refer Table no.17)

40.7% of respondents would like to suggest others for future benefits. (refer Table

no.18)

MUTUAL FUND


4.2) PERSONAL OBSERVATION:-

My personal observations/learning’s are as follows:-

I understood the different schemes of mutual fund how these schemes were launched

and designed for customer.

I understood the behavior of the investors how investors are choosing the schemes of

mutual fund.

What were the criteria for selecting the mutual funds

Through personal observation of small market place, I learnt that investor like a

uniform yield from their investment so they were keen interested in STANDARD

CHARTERED Mutual funds.

In this loomy scenario the investor didn’t want to take any more risk in investment so

they like to invest in mutual fund.

Because of less risk in mutual fund the new investor would like invest in mutual

fund’s schemes.

Mutual fund becomes strong investment alternative for existing and new investors.

There will be a wide market place for mutual fund in future.

4.3) SUGGESTION:-

The STANDARD CHARTERED Mutual fund is fastest growing mutual fund

company in India and they don’t have the investor from Income group of 10000-

15000 p.mth. So they should also target these investors who are more interested in

investing in mutual fund.

They should provide more information about their investment product and services

mean they should also concentrate on promotion of their schemes.

The STANDARD CHARTERED Mutual fund should widen their market in Bihar for

next few yrs so they can target investors of that state.

MUTUAL FUND


Basically the equity schemes were performing well in market and rest of the schemes

were performing comparative less so they should also change their strategy for other

schemes like debt fund, children gilt fund, and liquid funds.

The STANDARD CHARTERED Mutual fund has competitors like SBI Mutual fund,

ICICI Mutual funds TATA’s mutual funds etc which were performing equivalent to

STANDARD CHARTERED Mutual fund so they should design their product

according to the changes in their schemes and according to the needs of changing

investors.

Retailers to give the right kind of investment pattern for the investors with the value

added services that in fact help the fund house to pull the investors than to push the

products to them.

Demonstrations about the products should be given to the investors, as it helps to

suggest the right product to the right investors.

The retailers need to send the personal mails to the prospects, this can done by

acquiring the database of the customers of home loan, this helps it penetrating.

Company can reduce the initial amount for all the mutual fund schemes; hence they

can cover huge customers.

For effective relationship, company can provide sufficient information about these

schemes, stock market, others information in local languages.

STANDARD CHARTERED Mutual fund has its own image and good will in the

fund market, it should be a continued.

MUTUAL FUND


4.4) STRATEGICAL SUGGESTION

For selling the mutual fund to the customers the FAB concept is the best option to be

followed by the company. The application of FAB concept will really help the company to

boost up its sale of mutual funds to various new customers. This concept will well guide a

way to reach to the maximum of customers.

FAB includes

F – Features

A – Advantages &

B – Benefits

Features: For success of a product, it must have extra new features than existing one.

Advantages: These extra features should provide more advantage to customers in other

ways.

Benefits: One must look that this new features and advantages must benefit the customers

show only the customers will buy the product.

The FABing concept focuses on the quality and new features that aspire customers to buy it.

Aspiration in the customer is the basic flow of motivation to buy any product. Hence the

product should include all the new features of which is more advantageous and benefits to the

customers.

Thus the company must target to

Add new features in its policies.

Focus on advantage of its policies.

Sale the benefits to the customers.

MUTUAL FUND


4.5) CONCLUSION:-

Finally I would like to conclude my study by saying that the STANDARD CHARTERED

Mutual fund is one of the fastest growing mutual fund company in India which fulfills the

needs of new and existing investors. The STANDARD CHARTERED Mutual fund also

gives a way to forthcoming investors.

Mutual fund is an emerging investment alternative which has grown so fatly in few decades

and definitely it will be the powerful industry in future.

The mutual fund is one of the safe investment alternative in which the new investor, who

belong to limited salaried group, like to invest in these kind of mutual for steady and limited

yield with limited risk, tax benefit.

From the above responses of questionnaire we can say that

Investors are still not very much aware about mutual fund.

Equity fund is most preferable fund.

Advertisement is one of the ways to explore mutual fund.

AMC should be more focuses on fund performance.

The tax benefits on mutual funds made a turning point to its investors.

Company should reduce the initial amount of mutual fund schemes so, it covers lot of

customers.

Banks is most preferable investment on the basis of safety.

MUTUAL FUND


BIBLIOGRAPHY

Websites:

www.mutualfundsindia.com

www.amfi.com

www.mutualfunds.com

www.bseindia.com

www.sebi.com

www.sebi.gov.in

www.capitalmarket.com

www.moneycontrol.com

www.alliancecapitalindia.com

Books

1. David A.Aker, V.Kumar & George S. Day (2002), John Wiley & Sons, INC, Marketing

research.

2. C.R.Kothari (2003), New Age International (p) Ltd, Research methodology

3. V.A. Avadhani (2003). Himalaya Publishers, Security Analysis and Portfolio

Management.

4. Philip kotler, marketing management

5. G.C.beri, Business statistics.

6. Security analysis, Prasanna Chandra.

7. Mutual funds- management and working by: - lalit k. Bansal

http://www.mutualfundsindia.com/

http://www.amfi.com/

http://www.mutualfunds.com/

http://www.bseindia.com/

http://www.sebi.com/

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

http://www.capitalmarket.com/

http://www.moneycontrol.com/

http://www.alliancecapitalindia.com/

MUTUAL FUND


Questionnaire:-

1) Name:-

2) Occupation:-

3) Your monthly income:-

a) 5000-10000

b) 10000-15000

c) 15000-20000

d) More than 20000

4) How much are you saving?

a) 1000-4000

b) 4000-7000

c) 7000-10000

d) More than 10000

5) Do you want to invest?

a) Yes

b) No

c) Can not say

6) Do you know about mutual fund?

a) Yes

b) No

7) Where do you want to invest?

a) Bank deposite

b) Stock market

c) Insurance

d) Mutual fund

e) debenture

f) Derivatives

g) Bonds

MUTUAL FUND


8) If you want to invest in mutual fund, why ?

a) More return

b) Safety

c) Limited risk

d) Capital appreciation

e) Systematic investment

9) How much do you want to invest in mutual fund?

a) 1000-4000

b) 4000-7000

c) 7000-10000

d) More than 10000

10) Do you know about STANDARD CHARTERD Mutual fund?

a) Yes

b) No

11) Have you invested in STANDARD CHARTERED Mutual fund?

a) Yes

b) No

12) If yes , why have you invested in STANDARD CHARTERED mutual fund?

a) For better return

b) For minimum risk

c) For tax benefit

d) For Capital appreciation

13) In which scheme you have invested?

a) Equity scheme

b) Debt scheme

c) Balanced fund scheme

d) Equity linked saving scheme

MUTUAL FUND


14) What attracts you most in STANDARD CHARTERED Mutual fund?

a) Systematic investment plan(SIP)

b) Limited investment

c) Proficiency

d) Better fund allocation

e) Diversification of Your fund

15) In which scheme of STANDARD CHARTERED Mutual fund would you like to invest?

a) Equity/growth fund Scheme

b) Debt fund

c) Children gilt fund Scheme

d) Liquid fund scheme

16) In how many schemes of STANDARD CHARTERED Mutual fund would you like to

invest?

a) 1

b) 2

c) 3

d) In all

17) Have you invested in any other mutual fund?

a) Yes

b) No

18) If you have invested in mutual fund, then in which mutual fund you have invested?

a) Prudential ICICI mutual fund

b) Reliance mutual fund

c) Birla sun life mutual fund

d) STANDARD CHARTERED Mutual fund

e) SBI mutual fund

f) Others

MUTUAL FUND


19) Would you like to suggest others to invest in STANDARD CHARTERED mutual fund?

a) Yes

b) No

20) If yes, then, for which benefit you suggest other to select the STANDARD

CHARTERED mutual fund?

a) Good return

b) Tax benefit

c) Future benefit

d) Capital appreciation

THANK YOU!!!!

Economy & Finance

Seminar ii