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To Study the Awareness of Mutual Fund in Mumbai Page 1





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I, Ms.Priyanka B. Kadam MMS Student of Parle Tilak Vidyalaya Associations Institute
of Management (PTVAS IM),, hereby declare that I have completed the project titled To
Study the Awareness of Mutual Fund in Mumbai during the Academic Year 2014.
The report work is original and the information/data and the references included in the report
are true to the best of my knowledge. Due credit is extended on the work of
Literature/Secondary Survey by endorsing it in the Bibliography as per the prescribed format.

(Signature of the Student with Date)
Priyanka B. Kadam

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It gives me great pleasure to deep sense of gratitude towards Mrs. Krutika Zarapkar for her
guidance, motivation and help

I would like to express my thanks to Dr. Harish Kumar S. Purohit and other staff of PTVAs
Institute of Management for providing an environment to complete project successfully.

My heartfelt gratitude and thanks to all those who have helped me for completing my project.
I am also thankful to my colleagues and friends for their suggestion and support.

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1 Executive Summary 7
2 Introduction 8
3 Industry Overview 9-13
4 Company Overview 14-17
5 Literature Review 18-21
6 Objectives & Need Of Study 22
7 Research Methodology 23
8 Mutual Fund 24-38
9 Findings 39-42
10 Recommendations & Suggestions 43
11 Conclusion 44
12 Bibliography 45-46
13 Annexure 47-48

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The project is on the Mutual fund awareness. A mutual fund is a scheme in which several people
invest their money for a common financial goal. The collected money invests in the capital
market, debt and the money market, which they earned, is dividend based on the number of units
which they hold. The mutual fund industry in India has seen dramatic improvements in quantity
as well as quality of product and service offerings in recent years. Along with this project also
touches on the aspect of Systematic Investment Plan and steps of how to invest in Mutual Fund.
An effort has been made to work on the concepts that have been learned in ICICI SECURITIES
along with other useful parameters so that better study can be done.
This report explains the meaning of mutual fund and the investors awareness for investing in
mutual funds with small amount of risk. ICICI DIRECT gives the platform to their investors to
be a part of mutual fund market.
It also explains the Mutual Fund as financial product that how it is important to invest in MF for
the better investment and important to get better returns though Mutual Fund.
Basically, the project is to understand the investors, behaviour& to give recommendations to
common investors on how to select mutual fund as a long term investment option.

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A mutual fund is an entity that pools the money of many investors -- its unit-holders -- to invest
in different securities. Investments may be in shares, debt securities, money market securities or
a combination of these. Those securities are professionally managed on behalf of the unit-
holders, and each investor holds a pro-rata share of the portfolio i.e. entitled to any profits when
the securities are sold, but subject to any losses in value as well.
Theproject To Study the Awareness of Mutual Fund in Mumbai tries to understand the
investors behaviour term investment option. The project will seek to cover all the fundamental
aspects related to mutual funds and investment in them.
The project will also cover the various problems of the global scenario that has affected the
Indian market. Then it will analyse the behaviour of investors in changing scenario. There will
also be a comparative analysis of traditional options of investment available in India & some of
the mutual funds as per the expectations of the investors, so as to understand whether the mutual
funds are catering to the requirements & expectations of the investors or not.

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The Indian mutual fund industry, though still small in comparison to the size of
the Indian economy, offers Indian, and in some cases global investors, both big and small, an
avenue to invest safely and securely, at a reduced cost, in a diverse range of securities, spread
across a wide range of industries and sectors.
The financial services landscape is transforming, with a plethora of changes taking place on the
regulatory front. Against this backdrop, asset management companies (AMCs) realize that they
need to re-structure their businesses in order to meet the evolving needs of their clients and
provide them with complete investment solutions. Although emerging markets such as India
provide a wide range of opportunities, it is important to tap into these avenues to fuel the growth
of the mutual fund industry.
Amidst volatility and uncertainty in the markets, average assets under management (AUM)
posted a growth of 23% for the year ended March 2013. This was considerably higher than the
12% growth reported in March 2012. The industry has grown at a compound annual growth rate
(CAGR) of 18% from 2009 -2013.

Growth in average assets under management (in INR )

Source: AMFI (Association of Mutual Fund in India)
2009 2010 2011 2012 2013
CAGR = 18%
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However, the trend from 2010 depicts that net sales for the mutual fund industry has dipped,
picking up slightly in 2013, to grow by 7%

Net sales vs. net redemptions (2009 -13)

Source: AMFI

A total of 139 new schemes were launched for the year ended March 2013, generating sales of
236,470 million INR. Furthermore, AUM under the equity segment has actually declined 5%,
whereas the debt segment has grown significantly at 36% (see figure 3), which implies that
investors are still wary of investing in the market looking for relatively safer investments by
directing their investments into the debt bucket. Assets under management in the liquid and
money market and gold exchange traded funds (ETFs) grew by 16% and 18% respectively.

2009 2010 2011 2012 2013
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o Category wise assets under management


In a scenario of declining interest rates, for March 2013 the distribution of assets under
management have understandably been heavily skewed towards debt at72% of total assets
under management. A fall in interest rates is indicative of higher returns for long-term debt
and gilt funds. Furthermore, it has been observed that in the case of investments held for over a
period of 24 months, assets under management held by retail investors in the non-equity
segment was 36%, whereas for the short term, it was only 11%, suggesting the fact that in the
current environment, investors are preferring debt funds for an even longer time span
exceeding 24 months.

Retail investors One to three
Six to twelve
Over 24 months
Equity (% to
category )
4.02 7.52 63.04
Non-equity (% to
11.18 15.96 36.25

Source: AMFI

equity debt liquid/money
gold ETF
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A decline in total number of folios 8%

AUM in equity segment registered a decline

Net year for the investment year march 2013 declined 33 %

Assets under management
grew to 8,164 billion INR 23%

Net sales increased for the
year ended March 2013 7 %

Huge inflows in the debt
segment, with a significant

growth in AUM
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Challenges of under penetrated market

The under-penetrated market in India, although showcasing huge opportunities for market
players to sell their products, places multiple roadblocks to tap into these opportunities up to
their optimum potential.

1. Low level of awareness and financial literacy
2. Cultural and attitudinal changes
3. Adapting the distribution channels
4. Reach and scalability

Some basic challenges arise due to very low levels of awareness and financial literacy. The
situation in these cases is such that even if the ability to invest exists, these savings are prevented
from being directed into mutual fund products. This is because of the slow capital market
growth, lack of awareness of mutual funds being a low-cost investment vehicle and the returns
they can generate. In this case, there is also the interplay of cultural and behavioural change
which prevents savings from being streamlined into investment products, diverted from gold or

Indians still feel that gold and property is a less risky alternative as compared to investment in
the capital markets. Also, investors are not aware of low risk products that they can invest in. A
culture change is required in this case, if people are to be convinced to invest in the capital

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ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution,
and was its wholly-owned subsidiary. ICICI (Industrial Credit and Investment Corporation
of India) was formed in 1955 at the initiative of the World Bank, the Government of India and
representatives of Indian industry. The principal objective was to create a development financial
institution for providing medium-term and long-term project financing to Indian businesses.

In the 1990s, ICICI transformed its business from a development financial institution offering
only project finance to a diversified financial services group offering a wide variety of products
and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank.
In 1999, ICICI become the first Indian company and the first bank or financial institution from
non-Japan Asia to be listed on the NYSE. In October 2001, the Boards of Directors of ICICI and
ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance
subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited,
with ICICI Bank.

ICICIs role in Indian financial infrastructure

The bank has contributed to the setup of a number of Indian institutions to establish financial
infrastructure in the country over the years;
National Stock Exchange - NSE was promoted by India's leading financial objective are
establishing a nationwide trading facility for equities, debt instruments and hybrids, by
ensuring equal access to investors all over the country through an appropriate
communication network.
Credit Rating Information Services of India Limited (CRISIL) - In 1987, ICICI Ltd along
with UTI set up CRISIL as India's first professional credit rating agency.
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Asset Reconstruction Company India Limited - Following the enactment of the
Securitization Act in 2002, ICICI Bank together with other institutions, set up Asset
Reconstruction Company India Limited (ARCIL) in 2003
Credit Information Bureau of India Limited - ICICI Bank has also helped in setting
up CIBIL, India's first national credit bureau in 2000

Products :
ICICI Group has always been at the forefront of developing innovative financial products, which
caters to various needs of people from all walks of life. Over the years, it has launched several
financial products that offer financial support, security and more to not just individuals, but too
big and small organizations too.

1. Personal Banking
2. Global Private Clients
3. Corporate Banking
4. Business Banking
5. NRI Banking

-Insurance & Investment
1. Life Insurance
2. General Insurance
3. Securities
4. Mutual Fund
5. Private Equity Practice

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ICICIs Group:
ICICI Group's performance and aspirations are underpinned by a strong organizational
culture of dynamism, meritocracy, excellence in execution and high standards of professional
integrity that have helped it become an industry leader
ICICI Prudential Life Insurance Company
ICICI Securities Limited
ICICI Securities Primary Dealership Limited
ICICI Lombard General Insurance Company
ICICI Venture.

ICICI Securities empowers over 2 million Indians to seamlessly access the capital market
with, an award winning and pioneering online broking platform.

ICICI offers a convenient and easy to use platform to invest in equity and various
other financial products using its unique 3-in-1 account which integrates customer's saving,
trading and demat is the first broker in India to introduce `Digitally
Signed Contract Note' to its customers
ICICI Direct offers an efficient way to investing the benefits of choosing ICICI Direct for
financial planning are:
Convenience - Provides a well-diversified set of investment products under a single sign-
on and completely paper-less investing experience
Expertise - access some of the researched funds selected based on rigorous criterion
Flexibility- select the fund that best suits individuals need
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ICICI Securities Limited.
Ms.Chanda D. Kochhar,Chairperson
Ms.Shilpa Kumar
Mr.AnupBagchi, Managing Director & CEO
Mr. Ajay Saraf, Executive Director
ICICI Securities Holding Inc.
Mr.SankerParameswaran, Director
Mr.SriramIyer, Director
Mr. Warren Law
ICICI Securities, Inc.
Mr.AnupBagchi, Chairman
Mr. Ajay Saraf
Mr. Robert Ng

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Singh (2009) conducted a study on awareness & acceptability of mutual funds and found that
consumers basically prefer mutual fund due to return potential, liquidity and safety and they
were not totally aware about the systematic investment plan. The investors will also consider
various factors before investing in mutual fund.
The study shows that most of respondents are still confused about the mutual funds and have not
formed any attitude towards the mutual fund for investment purpose. It has been observed that
most of the respondents having lack of awareness about the various function of mutual funds.
Moreover, as far as the demographic factors are concerned, gender, income and level of
education have significantly influence the investors attitude towards mutual funds. On the other
hand the other two demographic factors like age and occupation have not been found influencing
the attitude of investors towards mutual funds

Mr.Kohrana, Serves and Tufano (2003), These three author had concluded that studies of
mutual fund industry in 55 countries around the world and tests various hypotheses for why the
fund industry would be preferred by investors over two alternative asset management choices:
do-it-yourself options where the investors purchases primary assets and opaque financial
institution options, such as banking or insurance investments. Consistent with the law and
economics literature, we find that the mutual fund industry is larger in countries with stronger
rules, laws, and regulations, specifically where mutual fund investors rights are better protected.
Their findings that some types of regulation typically regulations that protect fund shareholder
rights lead to a larger fund industry, needs substantial additional study, probably in the form of
detailed country-level analysis. Regulators are writing standards in the European Union and
elsewhere to establish the appropriate forms of protection for fund investors.

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Sarish (2012) undertaken a study on mutual funds, opportunities and challenges. The mutual
fund sectors are one of the fastest growing sectors in Indian Economy and have awesome
potential for sustained future growth. Mutual funds make saving and investing simple,
accessible, and affordable. The advantages of mutual funds include professional management,
diversification, variety, liquidity, affordability, convenience, and ease of recordkeepingas well
as strict government regulation and full disclosure.

LubosPastor and Stambhaugh(2001) concluded on the study after investing in equity mutual
funds that it develops and applies the framework in which pricing models and managerial skills
are combined with information data to select portfolio of mutual funds.
In addition, non-benchmark assets help account for common variation in fund returns, making
the investment problem feasible with a large universe of funds.

Kaminsky, Lyons, and Schmukler (1999) provide an overview of mutual fund activity in
emerging markets .the author is explaining that how do mutual funds behave when they invest in
emerging economies? For one thing, mutual funds flows are not stable. Withdrawals from
emerging markets during recent crises were large, which squares with existing evidence of
financial contagion. International mutual funds are one of the main channels for capital flows to
emerging economies. Although mutual funds have become important contributors to financial
market integration, little is known about their investment allocation and strategies. First, they
describe international mutual funds relative size, asset allocation, and country allocation.
Second, they focus on fund behaviour during crises, by analysing data at the level of both
investors and fund managers. Among their findings: Equity investment in emerging markets has
grown rapidly in the 1990s, much of it flowing through mutual funds.

Russ Wermers (2000) have measured the performance of the mutual fund industry from 1975 to
1994, and we decomposed fund returns and costs into various components. This decomposition
is made possible by employing a new data-base not previously available to researchers. This
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database is created by merging a database of mutual fund holdings with a database of mutual
fund net returns, expenses, turnover levels, and other characteristics. With the database, we are
able to address issues that have been problematic to the study of mutual fund performance for
decades for example, they have provide an estimate of quarterly transactions costs for each
mutual fund in our sample to determine the role of trading costs in the performance puzzle.
Finally, all of their results ignore the higher tax burden of actively managed especially high-
turnover Funds. Of great current interest is whether managers of actively managed funds add
value, net of taxes.

Sahil (2012) Jain has investigated the performance of equity based mutual fund schemes in
India, using CAPM. In the long run, private sector companies have performed far better than the
public sector ones. While HDFC and ICICI have been the best performers, LIC has been the
worst. Among all the 9 mutual fund schemes of LIC theres not a single scheme which has over-
performed. Whereas on the other hand 11 out of 16 schemes of ICICI and 6 out of 9 schemes of
HDFC have over-performed. UTI has been an average performer, since majority of its schemes
have given the returns as expected. While 5 out of 11 schemes of UTI have performed average, 4
have over-performed. The results clearly indicate that over the period of last 15 years, private
sector mutual fund companies (HDFC and ICICI) have outperformed the public sector ones (LIC
and UTI). Beta (risk) analysis shows that while HDFC and ICICI mutual funds have been least
risky, LIC is the most risky. 8 out of 9 schemes (89%) of LIC had beta value greater than 80.
This has been one of the reasons behind the poor performance of LIC. The overall analysis finds
that the private sector mutual fund schemes have been less risky and more rewarding as
compared to the public sector ones.

Dr. Shantanu and Charmi (2012) have explained about financial sector and the developments
in the Indian financial markets, Mutual Funds have emerged to be an important investment
avenue for retail small investors. The investment habit of the small investors particularly has
undergone a sea change. Increasing number of players from public as well as private sectors has
entered in to the market with innovative schemes to cater to the requirements of the investors in
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India and abroad. For all investors, particularly the small investors, mutual funds have provided a
better alternative to obtain benefits of expertise- based equity investments to all types of
investors. So in this scenario where many schemes are flooded in to market, it is important to
analyses needs of consumers and to find out which factors affects consumers' needs the most.

Mrs. P Alekhya (2012) creates awareness that the mutual funds are worth investment practice.
The various schemes of mutual funds provide the investors with a wide range of Investments
options according to his risk bearing capacities and interest. Besides they also give a handy
return to the investors. The paper analyses various schemes of Different Companies. In India
Mutual funds are playing important role. The mutual fund Companies pool the Savings of small
investors and invest those collected huge amount of funds in different sectors of the economy.
They are performing like intermediary between small investor and the Indian
Capital market.

DrR.Narayanasamy, V. Rathnamani (2013) studied about performance analysis of the selected
five equity large cap funds, its clear that all the funds have performed well during the study
period. The fall in the CNX nifty during the year 2011 has impacted the performance of all the
selected funds. In the ultimate analysis it may be concluded that all the funds have performed
well in the high volatile market movement expect Reliance vision. Therefore it is essential for
investors to consider Statistical parameters like alpha, beta, standard deviation while investing in
mutual funds apart from considering NAV and total return in order to ensure consistent
performance of mutual funds.

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ICICI SECURITIES had given a task, to seek an appointment of the ICICI Directs customer and
give them a demo on mutual fund simplified-investors awareness initiative. The study is to
understand the consumers mind set about mutual fund.

The objectives of the study are as following:
Awareness of mutual funds in market, especially in Mumbai area.
To identify the consumer behaviour while selecting a fund.
To identify the consumer perception about mutual funds.

Need for the study as following :
In some part of Mumbai, the consumers who are in banking and investment area they are still
unaware about the mutual fund scheme. The more of the people in Mumbai are middle class
background they think investing in mutual funds mean taking a more risk with low returns. The
study is for understanding the psyche towards the investments. Also making aware about Mutual
Fund is better investment in terms of good returns.

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Research method:
Research methods are understood as all those methods and techniques that are used for conduction of
research. Research methods or techniques refer to methods the researchers use in performing research
operation. In other words, all those methods which are used by the researchers during the course of
studying his research problems are termed as research methods. Since the object of research, particularly
the applied research, is to arrive at a solution for a given problem, the available data and the unknown
aspects of the problem have to be related to each other to make a solution possible. Keeping this in view
the following methods are:

a) Interview

b) Demonstration on MF Simplified

Collection of data:

Primary data:- Survey methods:
This method was adopted because it helps to procure data and detail information from the
respondents. Here collected data size was 50 customers by giving demo and filling
questionnaires, directly talking to the customers

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Mutual fund

Mutual funds are operated by money managers, who invest the fund's capital and attempt to
produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured
and maintained to match the investment objectives stated in its prospectus.

One of the main advantages of mutual funds is that they give small investors access to
professionally managed, diversified portfolios of equities, bonds and other securities, which
would be quite difficult (if not impossible) to create with a small amount of capital. Each
shareholder participates proportionally in the gain or loss of the fund. Mutual fund units, or
shares, are issued and can typically be purchased or redeemed as needed at the fund's current net
asset value (NAV) per share, which is sometimes expressed as NAVPs

Structure of mutual fund

Source: Nivesh Mantra Insurance and Financial Services

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Mutual funds are regulated by the Securities and Exchange Board of India (SEBI). SEBI
issued a comprehensive set of regulations in 1993 and revised them again in 1996. These
included regulations covering the Indian mutual fund industry. All mutual funds in India today
are regulated by SEBI. The Association of Mutual Funds of India (AMFI) is a self-governing
association of Indian Mutual Funds that regulates its members' sales, distribution and
communication practices. Investors can invest in Indian mutual funds directly or through
distributors under codes of practice developed by AMFI.
The fund manager, known as the fund sponsor or fund management company, trades the
fund's investments in accordance with the fund's investment objective. A fund manager must be
a registered investment advisor.
Mutual funds pass taxable income on to their investors by paying out dividends and capital gains
at least annually. The characterization of that income is unchanged as it passes through to the
shareholders. For example, mutual fund distributions of dividend income are reported as
dividend income by the investor. There is an exception: net losses incurred by a mutual fund are
not distributed or passed through to fund investors but are retained by the fund to be able to
offset future gains.
Mutual funds may invest in many kinds of securities. The types of securities that a particular
fund may invest in are set forth in the fund's prospectus, which describes the fund's investment
objective, investment approach and permitted investments. The investment objective describes
the type of income that the fund seeks. For example, a "capital appreciation" fund generally
looks to earn most of its returns from increases in the prices of the securities it holds, rather than
from dividend or interest income.
A mutual fund's investment portfolio is continually monitored by the fund's portfolio manager or
managers.Hedge funds are not considered a type of (unregistered) mutual fund.

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Types of mutual fund
A common man is so much confused about the various kinds of Mutual Funds that he is afraid of
investing in these funds as he cannot differentiate between various types of Mutual Funds with
fancy names. Mutual Funds can be classified into various categories under the following heads:-
o According To Type Of Investments :- While launching a new scheme, every Mutual Fund is
supposed to declare in the prospectus the kind of instruments in which it will make investments
of the funds collected under that scheme. Thus, the various kinds of Mutual Fund schemes as
categorized according to the type of investments are as follows :-
a. Equity Funds / Schemes
b. Debt Funds / Schemes (Also Called Income Funds)
c. Diversified Funds / Schemes (Also Called Balanced Funds)
d. Gilt Funds / Schemes
e. Money Market Funds / Schemes
f. Sector Specific Funds
g. Index Funds

o According To The Time Of Closure Of The Scheme : While launching new schemes,
Mutual Funds also declare whether this will be an open ended scheme (i.e. there is no specific
date when the scheme will be closed) or there is a closing date when finally the scheme will be
wind up. Thus, according to the time of closure schemes are classified as follows :-
a. Open Ended Schemes
b. Close Ended Schemes

Open ended funds are allowed to issue and redeem units any time during the life of the scheme,
but close ended funds cannot issue new units except in case of bonus or rights issue. Therefore,
unit capital of open ended funds can fluctuate on daily basis (as new investors may purchase
fresh units), but that is not the case for close ended schemes. In other words we can say that
new investors can join the scheme by directly applying to the mutual fund at applicable net asset
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value related prices in case of open ended schemes but not in case of close ended schemes. In
case of close ended schemes, new investors can buy the units only from secondary markets.

o According To Tax Incentive Schemes: Mutual Funds are also allowed to float some tax saving
schemes. Therefore, sometimes the schemes are classified according to this also:-

a. Tax Saving Funds
b. Not Tax Saving Funds / Other Funds

o According To the Time of Payout: Sometimes Mutual Fund schemes are classified according
to the periodicity of the pay outs (i.e. dividend etc.). The categories are as follows:-

(a) Dividend Paying Schemes
(b) Reinvestment Schemes

The mutual fund schemes come with various combinations of the above categories. Therefore,
we can have an Equity Fund which is open ended and is dividend paying plan. Before you
invest, you must find out what kind of the scheme you are being asked to invest. You should
choose a scheme as per your risk capacity and the regularity at which you wish to have the
dividends from such schemes

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Mutual Fund Scheme vs. Portfolio Management Scheme

In case of Mutual Fund schemes, the funds of large number of investors is pooled to form a
common investible corpus and the gains / losses are same for all the investors during that given
period of time. On the other hand, in case of Portfolio Management Scheme, the funds of a
particular investor remain identifiable and gains and losses for that portfolio are attributable to
him only. Each investor's funds are invested in a separate portfolio and there is no pooling of

Mfs are suitable for Small investors and big investors.
An individualshould invest in a Mutual Fund even if they can invest directly in the Same

All other investments in equities and debts, the investments in Mutual funds also carry
risk. However, an investment through Mutual Funds is considered better due to the following

(a) Investments of individuals will be managed by professional finance managers who are in a
better position to assess the risk profile of the investments;

(b) In case there are small investors, then their investment cannot be spread into equity shares of
various good companies due to high price of such shares. Mutual Funds are in a much better
position to effectively spread investments across various sectors and among several products
available in the market. This is called risk diversification and can effectively shield the steep
slide in the value of investments.

Thus, the Mutual funds are better options for investments as they offer regular investors a chance
to diversify their portfolios, which is something they may not be able to do if they decide to
make direct investments in stock market or bond market. These are particularly good for small
investors who have limited funds and are not aware of the intricacies of stock markets. For
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example, if anyone want to build a diversified portfolio of 20 scrips, they would probably need
Rs 2, 00,000 to get started (assuming that they make minimum investment of Rs 10000 per
scrip). However, an individual can invest in some of the diversified Mutual Fund schemes for an
low as Rs.10, 000/-

What are risks by investing funds in Mutual Funds:

Everyone is aware that investments in stock market are risky as the value of our investments
goes up or down with the change in prices of the stocks where they have invested. Therefore, the
biggest risk for an investor in Mutual Funds is the market risk. However, different Schemes of
Mutual Funds have different risk profile, for example, the Debt Schemes are far less risk than
the equity funds. Similarly, Balance Funds are likely to be more risky than Debt Schemes, but
less risky than the equity schemes.

What is the difference between Mutual Funds and Hedge Funds:

Hedge Funds are the investment portfolios which are aggressively managed and use advanced
investment strategies, such as leveraged, long, short and derivative positions in both domestic
and international markets with a goal of generating high returns. In case of Hedged Funds, the
number of investors is usually small and minimum investment required is large. Moreover, they
are more risky and generally the investor is not allowed to withdraw funds before a fixed tenure.

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Some other important Terms Used in Mutual Funds

Sale Price: It is the price an individual can pay when they invest in a scheme and is also called
"Offer Price". It may include a sales load.

Repurchase Price: - It is the price at which a Mutual Fund repurchases its units and it may
include a back-end load. This is also called Bid Price.

Redemption Price: It 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 / Front End Load: It is a charge collected by a scheme when it sells the units. Also
called, Front-end load. Schemes which do not charge a load at the time of entry are called No
Load schemes.

Repurchase / Back-end Load: It is a charge collected by Mutual Funds when it buys back /
Repurchases the units from the unit holders.

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High NAV vs. Low NAV The Tale of Two Numbers

The Net Asset Value or the NAV is the price at which a single unit of a particular mutual fund is
traded. It is calculated by dividing the total net value of the assets held by the fund, to the
number of outstanding units.
NAV = Net Assets / Outstanding Units
How NAV differs from Stock Price?
While the NAV might seem to be similar to stock price, the two differ a lot. Since the NAV is
based on a bunch of underlying assets, its value is declared only once (at the end of a day), once
the trading in those underlying assets is completed. In comparison, a stock price (although
fluctuating) is available throughout trading hours. Moreover, unlike a stock price, the NAV does
not give you an idea about the performance of mutual fund scheme.

NAVs - The Highs and Lows of it
If you are planning to invest your money in a mutual fund, do not let the high and low NAV
values influence your decision about short-listing a fund. As discussed, unlike shares, the
absolute value of a mutual fund NAV does not say much about the performance of the fund.

- Low NAV - When a fund house launches a new fund (New Fund Offer - NFO), the units of the
fund are available for a standard NAV of Rs. 10 - this shouldn't be a deterrent. Further, as the
formula above states, a fund could have a lower NAV because its net assets are low or the no. of
outstanding units is high (due to a temporary transition like NAV split, etc.). Also, a fund's NAV
decreases proportionately, whenever it pays out dividends.
- High NAV- Similarly, a high NAV could be because of a good performance over the years.
But then, with mutual funds, the past performance is never a guarantee for future performance.

To Study the Awareness of Mutual Fund in Mumbai Page 32

Myth 1 - Low NAV means More Units = More Dividends
Investors should refrain from being attracted to low NAV funds just because you realize that
your money can fetch you more units and that this might be beneficial when the fund declares a
dividend. Here, the investor will not really benefit because a dividend is nothing but their own
money being paid out. In fact, after the dividend is paid out, the NAV is adjusted accordingly!

Myth 2 - Fund with High NAV have reached their potential
Another common myth is that mutual funds with a high NAV have maxed out their potential and
that they are no longer as lucrative. Now, one must remember that mutual funds have an
underlying portfolio of stocks, which are chosen by an experienced fund manager who has a
well-thought strategy for entering and exiting stocks. As soon as a particular stock has met its
objective, the fund manager sells the stock and buys newer ones that are likely to provide returns
in line with the scheme objectives.
One must understand that at the end, it is the fund performance that should matter and not the
absolute value of the NAV. The money growth will depend on how the fund is performing and
not on the NAV value. Hence, a 20% growth with NAV of 20 is the same as 20% growth with
NAV of 200.

To Study the Awareness of Mutual Fund in Mumbai Page 33

6 Key Questions that Mutual Fund Investors should ask

Once an individual have identified 'mutual funds' as their investment class, the next important
task is to select a scheme or set of schemes that can help to meet their goals.
1. Match individuals Objectives - When it comes to investments, knowledge is the key. Fund
performance is important, but simply picking up last year's top performing funds is not the right
approach because these are ever-changing set. Before arriving at a decision it is necessary to
consider key micro and macro-economic trends, and to align their investment objectives with
those of the scheme. In case of equity investments, it is ideal to remain invested for a long term.

2. Charges and Fees - Every investment comes with its own set of expenses - like transaction
cost, advisory fees, sales and purchase fees and the fund manager's expenses. Based on this
information, one can calculate the expected return on investment. Ensure that your fund house is
efficient and does not impose unreasonable charges/ barriers.
3.Risk v/s Reward - mutual fund scheme should have an allocation as per your risk appetite
(conservative, assertive, aggressive, etc.). Remember, if you are prepared to take more risks, the
scheme should have the potential to provide better returns over the longer term.
To Study the Awareness of Mutual Fund in Mumbai Page 34

4. Tax Treatment - Just like stocks and bonds, mutual funds' tax liabilities are based on short-
term and long-term capital gains. In fact, as an investor, you should consider the 'post-tax returns'
while calculating the absolute returns from a scheme.
Ask questions like:
- Is the invested amount tax exempted?
-Is there a lock-in period to avail the said tax benefit?
-Are the returns tax exempted? What about the dividends and payouts?

5. Evaluate long-term performance - The best metric to evaluate a scheme is its long-term
performance. Along with the average rate of return, see if the scheme has been able to meet its
investment objectives. Evaluate its long-term performance vis-a-vis similar funds in the market.
Also consider key portfolio parameters to ascertain if the fund is taking undue risks, etc.

6. Fund Manager's Capabilities and Investment Processes - Just like any other investment,
the performance of a mutual fund scheme largely depends upon the experience and expertise of
the fund manager and the processes it adheres to while managing your funds. Before handing
over your hard-earned money to them, learn about their credentials and their abilities to achieve
the scheme objectives even in challenging market conditions.

Risks Associated with MF investments
'Mutual funds investments are subject to market risks, please read the offer document carefully
before investing' is a much repeated, but crucial advice. Market risks can be in the form of
economic, financial and political factors that might affect your investments.

To Study the Awareness of Mutual Fund in Mumbai Page 35

Market risks are broadly classified into two types -systemic and non-systemic risks.

-Systemic risks are the ones that affect the entire market. It includes volatility in the stock
market (equity risk), interest rates (interest risk), foreign exchange rates (currency risk),
changes in commodity prices (commodity risk), political factors prevailing in a country and
even extreme changes in weather.
The most effective way to counter systemic risks is to look for investment ideas that can
counter volatility of the markets.

- Non-systemic risks affect investments of a particular sector or industry. While systemic risks
are usually unexpected and unavoidable, a diversified portfolio can reduce the impact of non-
systemic risks.

An investment in mutual funds, like any other, requires a thorough understanding of how
various markets operate. Investors should understand that risk and reward go hand in hand and
are a part of every investment.

To Study the Awareness of Mutual Fund in Mumbai Page 36

Comparison of ICICI with top 3 AMCs
Products Ranking according to the market share of Mutual Fund of ICICI and the top most
Equity fund 3 1 4 2
Debt fund 5 4 3 3
Liquid fund 1 3 4 1
Debt-equity fund 1 3 3 2
The above ranking is according to Crisil. The methodology developed for mutual fund
rankings in India are based on global best practices. Over the past 10 years, these have gained
high acceptance among investors, intermediaries, and asset management companies. The
performance criteria covers not only risk adjusted returns, but also portfolio characteristics like
industry concentration, company concentration, liquidity etc. to make the analysis forward

Comparison Of Assets Under Management From June 2013-June 2014


To Study the Awareness of Mutual Fund in Mumbai Page 37

According to the survey, more of the people are invested in equity mutual fund therefore
following is the comparison of Equity Fund of four AMCs according to their fund size and the 5
years total average return on category:

Equity Fund Size

In the above chart, it is the size of total equity funds of the compared AMCs. HDFC has the
highest equity fund in current scenario. Compared to others reliance has the lowest equity fund in
Equity Returns

ICICI HDFC Birla Sunlife Reliance
Fund Size(Cr)
Fund Size(Cr)
13.4 13.41
ICICI HDFC Birla Sunlife Reliance
YTD Return (%)
Categoty Average Return
(5 Yrs)
To Study the Awareness of Mutual Fund in Mumbai Page 38

In above chart, there comparison of category average return and Year to Date (YTD) return for 5
years on equity.HDFC and Birla sun life has high YTD returns and low returns in average
category. Same with the ICICI Prudential and Reliance.
NAV High - Low (52 Weeks)


According to the Crisil ranking, in the overall comparison HDFC has the highest potential for
being MF distributor in Equity fund. ICICI Prudential being the lowest. Also ICICI can be better
performed in debt and liquid fund market. It has well known identity in financial institution.
Reason for comparison only on the basis of Equity fund i.e. it has high demand in market. People
think it is less risky comparing to the other investments

ICICI HDFC Birla Sunlife Reliance
To Study the Awareness of Mutual Fund in Mumbai Page 39


During the survey, more of the people are not interested investing in mutual fund because they
think there is a high risk in returns. Some of the people dont have time to invest. HNIs are
investing in mutual fund but they dont have time to manage their portfolio or they probably not
Middle income people need more assistants before they invest in mutual fund. Lack of
knowledge about Mutual Fund is headed to less Interest in investing in MF.
Following is the data interpretation collected from the survey:

Q. What is your preferred mode of investment?

More of the people are started preferring online mode of investment. The survey conducted
through ICICI Securities 75% individual does online trading. There are also some people who
still believe in offline trading they feel it is safest.

mode of investment
online offline
To Study the Awareness of Mutual Fund in Mumbai Page 40

Q. Have you invested in any of the following in the last 12 months?

Equity is most preferable investment people think. Only 25% people who know about Mutual
Fund invest in it. And the other individual go for insurance and F&O.

Q. How often do you transact online in any of the above mentioned transactions?

More of the people do transactions like trading on monthly basis. As per their requirement or
preference. 15% people do manage their transactions on yearly basis.

future & options
mutual fund
0 10 20 30 40 50
To Study the Awareness of Mutual Fund in Mumbai Page 41

Q. How does you /would you prefer to make your investments in Mutual Funds

ICICI is best way to invest through, 60% people use it. 20% go through the agent
because they dont know about stock market but still wants to invest. And rest of the people goes
directly with AMC or through company.
Q. Before the demo, were you aware that you can invest in Mutual funds through

85% of the people were aware about the mutual fund through ICICI DIRECT.COM.

10 10
Directly with AMC
Directly with company
0 20 40 60 80 100
To Study the Awareness of Mutual Fund in Mumbai Page 42

Q. If yes, what are the reasons for not investing in Mutual Funds through

All ICICIdirect customers were aware about the mutual fund, but 25% investors were need for
the assistance before investing in it and 40% were not interested. Others were investing through
the brokers.

Q. Which medium of news information and analysis do you use to keep yourself
informed on investment products?
According to the survey, 55% investors keep updated themselves by using financial websites to
comparison with other investment products also they have their financial advisor, broker and,
MF distributor to keep them updating. Rest of the people read media reports and news
updates.20% investors do their ownresearch to keep them informed on their investments.

Q. How do you check the performance of all/any of your investments?
In survey 60% investors track their performances of their investments through there bank or
broker they inform them on weekly or monthly basis to manage their portfolio, 30% investors
ask or take advice from their financial advisor or MF distributor. But more of the people manage
portfolio by themselves to keep the track of the market.

need for assistance investing through
other broker
not intrested
To Study the Awareness of Mutual Fund in Mumbai Page 43


After a thorough study and analysis of the data and information, the financial market in Mumbai, is in its
booming stage, in the short run and in the long run as well. Recommendations and suggestions are
normally given when there are some problems or difficulties lying in the market. Here in this research
report recommendations and suggestions are totally based on the facts, reactions, attitudes, perceptions,
and many other things of the respondentswhich have received from them during research work.
Consumer survey has revealed the fact that the market for mutual fund is still in its expansion stage.
Hence the companies have to do a lot of things and activities to develop the market for mutual fund in this
capital city.
Awareness of mutual fund products must be increased in this city. Conference or seminars on Mutual
Fundscan be conducted. This will no doubt increase the awareness of mutual fund in the minds of the
While the Mutual fund has seen dramatic improvements in quantity as well as quality of product and
service offerings over the past decade. One of the primary reasons for this slow growth is the fact that
mutual funds are a new concept in India, which needs to be still understood by large sections of Indian
Booklets on mutual funds can be distributed at free of cost to the common people with the newspapers,
magazines, journals. This will help in attitude formation of the investors.
Mutual fund companies must tie up with other financial institute like banks, post office to reach to the
mass people in our country.

To Study the Awareness of Mutual Fund in Mumbai Page 44


On the basis of survey and analysis, Mutual Funds are less risky but the people in Mumbai, as in
role of investors they are unaware about its characteristics and features like good returns,
More of the investors invest in Equity fund thinking of less risk and better returns. Also mutual
funds are high cost because of tax consequences and inability of management to guarantee a
superior return.
Their advantage is it can be easily bought or sell as it is a professional management.
ICICI DIRECT.COM taking an initiative to make more awareness about Mutual Fund in
common people.

To Study the Awareness of Mutual Fund in Mumbai Page 45


Online articles

Research Papers

Dr. Binod Kumar Singh, March 2012, Study on investors attitude towards mutual fund
as an investment option , International journal of research in management

Mr. Ajay Kohrana, Henry serves, Peter Tufano April 25,2003, The world of mutual fund

Sarish , 2012 , A Study of Opportunities and Challenges for Mutual Fund in India: Vision
2020,Vsrd International Journal, Research Communication Vol 2 (4)

12 September 2001, Investing in equity mutual funds

Sergio Schmukler and Richard Lyons, November 1999, Mutual Fund Investment in
Emerging Markets

Russ Wermers, August 2000, Mutual Fund Performance: An Empirical Decomposition
into Stock-Picking Talent, Style, Transactions Costs, and Expenses

To Study the Awareness of Mutual Fund in Mumbai Page 46

Sahil Jain, July-Aug. 2012, Analysis of Equity Based Mutual Funds in India

Dr.Shantanu Mehta, Charmi Shah, September 2012, Preference of Investors for Indian
Mutual Funds and its Performance Evaluation

Mrs. P Alekhya, October 2012,A Study on Performance Evaluation of Public & Private
Sector Mutual Funds In India

Dr.R.Narayanasamy, V. Rathnamani, April 2013, Performance Evaluation of Equity
Mutual Funds (On Selected Equity Large Cap Funds)

Websites and references

To Study the Awareness of Mutual Fund in Mumbai Page 47


1. What is your preferred mode of investment
o Online
o Offline

2. Have you invested in any of the following in the last 12 months
o Equity
o future & options
o insurance
o mutual fund
o corporate fixed deposits

3. How often do you transact online in any of the above mentioned transactions
o Weekly
o Monthly
o Quarterly
o Yearly

4. How do you /would you prefer to make your investments in Mutual Funds
o Agent
o Directly With Company
o Directly With AMC

5. Before the demo, were you aware that you can invest in Mutual funds through
ICICI Direct
o Yes
o No
To Study the Awareness of Mutual Fund in Mumbai Page 48

6. If yes, what are the reasons for not investing in Mutual Funds through
o Need more knowledge before i invest in MF
o I invest through other broker or distributor
o Not interested investing in Mutual Fund

7. Which medium of news information and analysis do you use to keep yourself
informed on investment products
o I discuss with my friends, family and or colleagues
o I use financial websites for comparisons and news
o I have a financial advisor or broker or MF distributor who updates me
o I read media reports
o I prefer to do my own research

8. How do you check the performance of all/any of your investments
o I update investment details on a third party portfolio website and check regularly
o My broker or bank provides me the information
o I ask my financial advisor or broker or MF distributor to send me information
o Other