ON
Submitted by :-
Under Guidance :-
KANCHAN BIDWAI
SAMPATH KRISHNAN
ACKNOWLEDGEMENT
With regard to my Project with Mutual Fund I would like to thank each and every one
who offered help, guideline and support whenever required.
First and foremost I would like to express gratitude to Manager AXIS BANk
Parel Branch and other staffs for their support and guidance in the Project work.. I am
extremely grateful to my guide, SAMAPTH KRISHNAN for their valuable guidance
and timely suggestions.
I would also like to extend my thanks to my members and friends for their
support specially .Mr Ashish Ponda Assistant Vise President Axis Bank Limited Worli
& Ms. Rupali Varhadi Assistant Manager, Sales tax, income tax .And lastly, I would
like to express my gratefulness to the parents for seeing me through it all.
KANCHAN BIDWAI
CERTIFICATE
This is to certify that Mrs. ----------- a student of has completed project work on
MUTUAL
I certify that this is an original work and has not been copied from any source.
Signature of Guide
Name of Project Guide
Date-
DECLERATION
I hereby declare that this Project Report entitled THE MUTUAL FUND IS BETTER
INVESTMENT PLAN in AXIS BANK Mutual Fund submitted in the partial
fulfillment of the requirement of Bachlor of Banking & Insurance (BBI) of
INSTITUTE OF KETS V.G. VAZE KELKAR COLLEGE, MUMBAI is based on
primary & secondary data found by me in various departments, books, magazines and
websites & Collected by me in under guidance of SAMAPTH KRISHNAN.
DATE:
KANCHAN BIDWAI
BBI (Three Years)
EXECUTIVE SUMMARY
In few years Mutual Fund has emerged as a tool for ensuring ones financial well
being. Mutual Funds have not only contributed to the India growth story but have also
helped families tap into the success of Indian Industry. As information and awareness is
rising more and more people are enjoying the benefits of investing in mutual funds.
The main reason the number of retail mutual fund investors remains small is that nine
in ten people with incomes in India do not know that mutual funds exist. But once
people are aware of mutual fund investment opportunities, the number who decide to
invest in mutual funds increases to as many as one in five people. The trick for
converting a person with no knowledge of mutual funds to a new Mutual Fund
customer is to understand which of the potential investors are more likely to buy
mutual funds and to use the right arguments in the sales process that customers will
accept as important and relevant to their decision.
This Project gave me a great learning experience and at the same time it gave me
enough scope to implement my analytical ability. The analysis and advice presented in
this Project Report is based on market research on the saving and investment practices
of the investors and preferences of the investors for investment in Mutual Funds. This
Report will help to know about the investors Preferences in Mutual Fund means Are
they prefer any particular Asset Management Company (AMC), Which type of Product
they prefer, Which Option (Growth or Dividend) they prefer or Which Investment
Strategy they follow (Systematic Investment Plan or One time Plan). This Project as a
whole can be divided into two parts.
The first part gives an insight about Mutual Fund and its various aspects, the Company
Profile, Objectives of the study, Research Methodology. One can have a brief
knowledge about Mutual Fund and its basics through the Project.
The second part of the Project consists of data and its analysis collected through survey
done on 200 people. For the collection of Primary data I made a questionnaire and
surveyed of 200 people. I also taken interview of many People those who were coming
at the AXIS BANK Branch where I done my Project. I visited other AMCs in Worli
Mumbai Office to get some knowledge related to my topic. I studied about the
products and strategies of other AMCs in Mumbai to know why people prefer to invest
in those AMCs.
INVESTMENT PLAN. The data collected has been well organized and presented. I
hope the research findings and conclusion will be of use.
CONTENTS
Acknowledgement
Declaration
Executive Summary
Chapter - 1
INTRODUCTION
Chapter - 2
COMPANY PROFILE
Chapter - 3
Chapter - 4
RESEARCH METHODOLOGY
Chapter - 5
Chapter - 6
Chapter - 7
MUTUAL FUNDS
RESEARCH REPORT
OBJECTIVE OF RESEARCH
SCOPE OF THE STUDY
DATA SOURCES
SAMPLING
DATA ANALYSIS
QUESTIONNAIRE
Chapter - 1
Introduction
When an investor subscribes for the units of a mutual fund, he becomes part owner of
the assets of the fund in the same proportion as his contribution amount put up with the
corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual
fund shareholder or a unit holder.
Any change in the value of the investments made into capital market instruments (such
as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme.
NAV is defined as the market value of the Mutual Fund scheme's assets net of its
liabilities. NAV of a scheme is calculated by dividing the market value of scheme's
assets by the total number of units issued to the investors.
Portfolio Diversification
Professional management
Liquidity
Choice of schemes
Transparency
No tailor-made Portfolios
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)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund
established in June 1987 followed by 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 established its mutual fund in June
1989 while GIC had set up its mutual fund in December 1990.At the end of 1993, the
mutual fund industry had assets under management of Rs.47,004 crores.
Third Phase 1993-2003 (Entry of Private Sector Funds)
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. As at the end of January 2003, there were 33
mutual funds with total assets of Rs. 1,21,805 crores.
Open-ended funds: Investors can buy and sell the units from the fund, at any point of
time.
Close-ended funds: These funds raise money from investors only once. Therefore,
after the offer period, fresh investments can not be made into the fund. If the fund is
listed on a stocks exchange the units can be traded like stocks (E.g., Morgan Stanley
Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided
liquidity window on a periodic basis such as monthly or weekly. Redemption of units
can be made during specified intervals. Therefore, such funds have relatively low
liquidity.
i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is
tracked. Their
Balanced fund: Their investment portfolio includes both debt and equity. As a result, on
the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal
mutual funds vehicle for investors who prefer spreading their risk across various instruments.
Following are balanced funds classes:
Debt fund: They invest only in debt instruments, and are a good option for investors
averse to idea of taking risk associated with equities. Therefore, they invest exclusively
in fixed-income instruments like bonds, debentures, Government of India securities;
and money market instruments such as certificates of deposit (CD), commercial paper
(CP) and call money. Put your money into any of these debt funds depending on your
investment horizon and needs.
i) Liquid funds- These funds invest 100% in money market instruments, a large
portion being invested in call money market.
ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and
T-bills.
iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt
instruments which have variable coupon rate.
iv) Arbitrage fund- They generate income through arbitrage opportunities due to mispricing between cash market and derivatives market. Funds are allocated to equities,
derivatives and money markets. Higher proportion (around 75%) is put in money
markets, in the absence of arbitrage opportunities.
v) Gilt funds LT- They invest 100% of their portfolio in long-term government
securities.
vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in
long-term debt papers.
vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an
exposure of 10%-30% to equities.
viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with
that of the fund.
INVESTMENT STRATEGIES
1. Systematic Investment Plan: under this a fixed sum is invested each month on a
fixed date of a month. Payment is made through post dated cheques or direct debit
facilities. The investor gets fewer units when the NAV is high and more units when the
NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA)
2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and
give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the
same mutual fund.
3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund
then he can withdraw a fixed amount each month.
Chapter 2
Company Profile
Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC)
and other four PSU insurance companies, i.e. National Insurance Company Ltd., The New
India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India
Insurance Company Ltd.
The Bank as on 31st March, 2011 is capitalized to the extent of ` 410.54 crores with the
public holding (other than promoters and GDRs) at 53.60%.
The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai.
The Bank has a very wide network of more than 1281 branches (including 169 Service
Branches/CPCs as on 31st March, 2011). The Bank has a network of over 6270 ATMs (as on
31st March, 2011) providing 24 hrs a day banking convenience to its customers. This is one of
the largest ATM networks in the country.
The Bank has strengths in both retail and corporate banking and is committed to adopting the
best industry practices internationally in order to achieve excellence.
Funds restrict their investments only to shares of a particular sector and hence,
are riskier than Diversified Equity Funds. Index Funds invest passively only in
the stocks of a particular index and the performance of such funds move with
the movements of the index.
Axis Equity Fund
Axis Long Term Equity Fund
Axis Midcap Fund
Axis Focused 25 Fun
Debt schemes
Debt Funds invest only in debt instruments such as Corporate Bonds,
Government Securities and Money Market instruments either completely
avoiding any investments in the stock markets as in Income Funds or Gilt Funds
or having a small exposure to equities as in Monthly Income Plans or Children's
Plan. Hence they are safer than equity funds. At the same time the expected
returns from debt funds would be lower. Such investments are advisable for the
risk-averse investor and as a part of the investment portfolio for other investors.
Axis
Axis
Axis
Axis
Banking
Banking
Banking
Banking
Debt
Debt
Debt
Debt
Fund
Fund
Fund
Fund
Daily Dividend
Growth
Monthly Dividend
Weekly Dividend
BALANCED SCHEMES
Magnum Balanced Fund invests in a mix of equity and debt investments. Hence
they are less risky than equity funds, but at the same time provide
commensurately lower returns. They provide a good investment opportunity to
investors who do not wish to be completely exposed to equity markets, but is
looking for higher returns than those provided by debt funds.
Axis Liquid Fund
Axis Treasury Advantage Fund
Axis Short Term Fund
Axis Dynamic Bond Fund
Hybrid Funds :
Axis Triple Advantage Fund
Axis Income Saver
Gold Fund :
Axis Gold Fund
Axis Gold ETF
Awards & recognition received by the Bank during the Year 2010:
Chapter - 3
Objectives and scope
Chapter 4
Research Methodology
RESEARCH METHODOLOGY
This report is based on primary as well secondary data, however primary data
collection was given more importance since it is overhearing factor in attitude studies.
One of the most important users of research methodology is that it helps in identifying
the problem, collecting, analyzing the required information data and providing an
alternative solution to the problem .It also helps in collecting the vital information that
is required by the top management to assist them for the better decision making both
day to day decision and critical ones.
Data sources:
Research is totally based on primary data. Secondary data can be used only for the
reference. Research has been done by primary data collection, and primary data has
been collected by interacting with various people. The secondary data has been
collected through various journals and websites.
Duration of Study:
The study was carried out for a period of two months, from 15th July to 15th Aug 2012.
Sampling:
Sampling procedure:
The sample was selected of them who are the customers/visitors of Axis Bank LTD,
Parel Branch, irrespective of them being investors or not or availing the services or not.
It was also collected through personal visits to persons, by formal and informal talks
and through filling up the questionnaire prepared. The data has been analyzed by using
mathematical/Statistical tool.
Sample size:
The sample size of my project is limited to 50 people only. Out of which only 30
people had invested in Mutual Fund. Other 20 people did not have invested in Mutual
Fund.
Sample design:
Data has been presented with the help of bar graph, pie charts, line graphs etc.
Limitation:
Possibility of error in data collection because many of investors may have not
given actual answers of my questionnaire.
Chapter 5
Data Analysis
&
Interpretation
Age Group
<= 30
31-35
36-40
41-45
46-50
>50
No. of
12
18
30
24
20
16
Investors
Interpretation:
According to this chart out of 30 Mutual Fund investors of Mumbai the most are in the
age group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of 4145yrs i.e. 20% and the least investors are in the age group of below 30 yrs.
Number of Investors
18
Under Graduate
10
Others
Total
30
Interpretation:
Out of 30 Mutual Fund investors 71% of the investors in Mumbai are Graduate/Post
Graduate, 23% are Under Graduate and 6% are others (under HSC).
Occupation
No. of Investors
Govt. Service
Pvt. Service
Business
Agriculture
Others
3
10
7
4
6
Interpretation:
In Occupation group out of 30 investors, 38% are Pvt. Employees, 25% are
Businessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are in
others.
No. of Investors
5
10
11
2
2
Interpretation:
In the Income Group of the investors of Mumbai, out of 30 investors, 36%
investors that is the maximum investors are in the monthly income group Rs.
20,001 to Rs. 30,000, Second one i.e. 27% investors are in the monthly
income group of more than Rs. 30,000 and the minimum investors i.e. 4%
are in the monthly income group of below Rs. 10,000
Fixed deposits
Insurance
Mutual Fund
Post office (NSC)
Shares/Debentures
Gold/Silver
Real Estate
No. of Respondents
195
148
152
120
75
50
30
65
Interpretation: From the above graph it can be inferred that out of 50 people,
97.5% people have invested in Saving A/c, 76% in Insurance, 74% in Fixed Deposits,
60% in Mutual Fund, 37.5% in Post Office, 25% in Shares or Debentures, 15% in
Gold/Silver and 32.5% in Real Estate.
(a) Liquidity
(d) Trust
No. of
40
60
64
36
Respondents
Interpretation:
Out of 50 People, 32% People prefer to invest where there is High Return, 30% prefer
to invest where there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust
Response
No. of Respondents
Interpretation:
Yes
35
No
15
From the above chart it is inferred that 67% People are aware of Mutual Fund and its
operations and 33% are not aware of Mutual Fund and its operations.
No. of Respondents
18
2
10
20
Interpretation:
From the above chart it can be inferred that the Financial Advisor is the most
important source of information about Mutual Fund. Out of 35 Respondents, 46%
know about Mutual fund Through Financial Advisor, 22% through Bank, 19%
through Peer Group and 13% through Advertisement.
No. of Respondents
YES
30
NO
20
Total
200
Interpretation:
Out of 50 People, 60% have invested in Mutual Fund and 40% do not have invested in
Mutual Fund.
No. of Respondents
8
2
10
Interpretation:
Out of 20 people, who have not invested in Mutual Fund, 81% are not aware of Mutual
Fund, 13% said there is likely to be higher risk and 6% do not have any specific
reason.
Name of AMC
SBIMF
UTI
HDFC
Reliance
ICICI Prudential
Kotak
Others
No. of Investors
55
75
30
75
56
45
70
Interpretation:
In Mumbai most of the Investors preferred UTI and Reliance Mutual Fund. Out of 30
Investors 62.5% have invested in each of them, only 46% have invested in SBIMF,
47% in ICICI Prudential, 37.5% in Kotak and 25% in HDFC.
No. of Respondents
35
5
10
Interpretation:
Out of 50 investors of AXISMF 64% have invested because of its association with
Brand SBI, 27% invested on Agents Advice, 9% invested because of better return.
Reason
Not Aware
Less Return
Agents Advice
No. of Respondents
20
18
17
Interpretation:
Out of 50 people who have not invested in AXISMF, 38% were not aware with SBIMF,
28% do not have invested due to less return and 34% due to Agents Advice.
No. of Investors
6
10
5
12
4
Kotak
Others
3
10
Interpretation:
Out of 50 investors, 68% prefer to invest in Reliance, 67% in ICICI Prudential, 63% in
SBIMF, 62.5% in Others, 50% in Kotak, 37.5% in UTI and 29% in HDFC Mutual
Fund.
Financial Advisor
12
Bank
8
AMC
10
Interpretation:
Out of 30 Investors 60% preferred to invest through Financial Advisors, 25% through
AMC and 15% through Bank.
Interpretation:
Out of 30 Investors 65% preferred One time Investment and 35 % Preferred through
Systematic Investment Plan.
No. of Investors
Equity
Debt
Balanced
10
8
12
Interpretation:
From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and 17%
preferred Debt portfolio
Dividend Payout
8
Dividend
Reinvestment
10
Growth
12
Interpretation:
From the above graph 71% preferred Growth Option, 21% preferred Dividend Payout
and 8% preferred Dividend Reinvestment Option.
No. of Respondents
18
12
Interpretation:
Out of 30 investors, 79% investors do not prefer to invest in Sectoral Fund because
there is maximum risk and 21% prefer to invest in Sectoral Fund.
Chapter 6
Findings and
Conclusion
Findings
In Mumbai in the Age Group of 36-40 years were more in numbers.
The second most Investors were in the age group of 41-45 years and
the least were in the age group of below 30 years.
In Mumbai most of the Investors were Graduate or Post Graduate and
below HSC there were very few in numbers.
Conclusion
Running a successful Mutual Fund requires complete understanding of the
peculiarities of the Indian Stock Market and also the psyche of the small
investors. This study has made an attempt to understand the financial
Chapter 7
Suggestions
And
Recommendations
BIBLIOGRAPHY
NEWS PAPERS
OUTLOOK MONEY
WWW.AXISMUTUALFUND.COM
WWW.MONEYCONTROL.COM
WWW.AMFIINDIA.COM
WWW.ONLINERESEARCHONLINE.COM
WWW. MUTUALFUNDSINDIA.COM
Mutual Funds
Stocks : Stocks represent shares of ownership in a public company. Examples of public companies
include Reliance, ONGC and Infosys. Stocks are considered to be the most common owned
investment traded on the market.
Bonds : Bonds are basically the money which you lend to the government or a company, and in
return you can receive interest on your invested amount, which is back over predetermined amounts
of time. Bonds are considered to be the most common lending investment traded on the market. There
are many other types of investments other than stocks and bonds (including annuities, real estate, and
precious metals), but the majority of mutual funds invest in stocks and/or bonds.
Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position,
risk tolerance and return expectations etc. The table below gives an overview into the existing types
of schemes in the Industry.
Type of Mutual Fund Schemes
BY STRUCTURE
Open Ended Schemes
An open-end fund is one that is available for subscription all through the year. These do not
have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV")
related prices. The key feature of open-end schemes is liquidity.
Close Ended Schemes
A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15
years. The fund is open for subscription only during a specified period. Investors can invest in the
scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme
on the stock exchanges where they are listed. In order to provide an exit route to the investors, some
close-ended funds give an option of selling back the units to the Mutual Fund through periodic
repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is
provided to the investor.
Interval Schemes
Interval Schemes are that scheme, which combines the features of open-ended and closeended schemes. The units may be traded on the stock exchange or may be open for sale or redemption
during pre-determined intervals at NAV related prices.
BY NATURE
1. Equity fund:
These funds invest a maximum part of their corpus into equities holdings. The structure of the
fund may vary different for different schemes and the fund managers outlook on different stocks. The
Equity Funds are sub-classified depending upon their investment objective, as follows:
Equity investments are meant for a longer time horizon, thus Equity funds rank high on the riskreturn matrix.
2. Debt funds:
The objective of these Funds is to invest in debt papers. Government authorities, private companies,
banks and financial institutions are some of the major issuers of debt papers. By investing in debt
instruments, these funds ensure low risk and provide stable income to the investors. Debt funds are
further classified as:
Gilt Funds: Invest their corpus in securities issued by Government, popularly known as
Government of India debt papers. These Funds carry zero Default risk but are associated with
Interest Rate risk. These schemes are safer as they invest in papers backed by Government.
Income Funds: Invest a major portion into various debt instruments such as bonds, corporate
debentures and Government securities.
MIPs: Invests maximum of their total corpus in debt instruments while they take minimum
exposure in equities. It gets benefit of both equity and debt market. These scheme ranks
slightly high on the risk-return matrix when compared with other debt schemes.
Short Term Plans (STPs): Meant for investment horizon for three to six months. These funds
primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial
Papers (CPs). Some portion of the corpus is also invested in corporate debentures.
Liquid Funds: Also known as Money Market Schemes, These funds provides easy liquidity
and preservation of capital. These schemes invest in short-term instruments like Treasury
Bills, inter-bank call money market, CPs and CDs. These funds are meant for short-term cash
management of corporate houses and are meant for an investment horizon of 1day to 3
months. These schemes rank low on risk-return matrix and are considered to be the safest
amongst all categories of mutual funds.
3. Balanced funds: As the name suggest they, are a mix of both equity and debt funds. They invest in
both equities and fixed income securities, which are in line with pre-defined investment objective of
the scheme. These schemes aim to provide investors with the best of both the worlds. Equity part
provide growth and the debt part provides stability in returns.
Further the mutual funds can be broadly classified on the basis of investment parameter viz,
Each category of funds is backed by an investment philosophy, which is pre-defined in the objectives
of the fund. The investor can align his own investment needs with the funds objective and invest
accordingly.
BY INVESTMENT OBJECTIVE
Growth Schemes: Growth Schemes are also known as equity schemes. The aim of these
schemes is to provide capital appreciation over medium to long term. These schemes normally
invest a major part of their fund in equities and are willing to bear short-term decline in value
for possible future appreciation.
Income Schemes: Income Schemes are also known as debt schemes. The aim of these
schemes is to provide regular and steady income to investors. These schemes generally invest
in fixed income securities such as bonds and corporate debentures. Capital appreciation in
such schemes may be limited.
Balanced Schemes: Balanced Schemes aim to provide both growth and income by
periodically distributing a part of the income and capital gains they earn. These schemes invest
in both shares and fixed income securities, in the proportion indicated in their offer documents
(normally 50:50).
Money Market Schemes: Money Market Schemes aim to provide easy liquidity, preservation
of capital and moderate income. These schemes generally invest in safer, short-term
instruments, such as treasury bills, certificates of deposit, commercial paper and inter-bank
call money.
OTHER SCHEMES
Tax Saving Schemes: Tax-saving schemes offer tax rebates to the investors under tax laws
prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made to any
Equity Linked Savings Scheme (ELSS) are eligible for rebate.
Index Schemes: Index schemes attempt to replicate the performance of a particular index
such as the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only
those stocks that constitute the index. The percentage of each stock to the total holding will be
identical to the stocks index weightage. And hence, the returns from such schemes would be
more or less equivalent to those of the Index.
Sector Specific Schemes: These are the funds/schemes which invest in the securities of only
those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software,
Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are
dependent on the performance of the respective sectors/industries. While these funds may give
higher returns, they are more risky compared to diversified funds. Investors need to keep a
watch on the performance of those sectors/industries and must exit at an appropriate time.
Types of returns
There are three ways, where the total returns provided by mutual funds can be enjoyed by investors:
Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all
income it receives over the year to fund owners in the form of a distribution.
If the fund sells securities that have increased in price, the fund has a capital gain. Most funds
also pass on these gains to investors in a distribution.
If fund holdings increase in price but are not sold by the fund manager, the fund's shares
increase in price. You can then sell your mutual fund shares for a profit. Funds will also
usually give you a choice either to receive a check for distributions or to reinvest the earnings
and get more shares.
1. Professional Management- Some funds doesnt perform in neither the market, as their
management is not dynamic enough to explore the available opportunity in the market, thus many
investors debate over whether or not the so-called professionals are any better than mutual fund or
investor himself, for picking up stocks.
2. Costs The biggest source of AMC income, is generally from the entry & exit load which they
charge from an investors, at the time of purchase. The mutual fund industries are thus charging extra
cost under layers of jargon.
3. Dilution - Because funds have small holdings across 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.
4. Taxes - when making decisions about your money, fund managers don't consider your 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.
Scheme Name
Date
Mar 26
, 2008
Mar 26
, 2008
Mar 26
, 2008
Mar 26
, 2008
Mar 26
, 2008
Mar 26
, 2008
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Mar 26
, 2008
Mar 26
, 2008
Mar 26
, 2008
Mar 25
, 2008
Mar 26
, 2008
Mar 26
, 2008
Mar 26
, 2008
Mar 25
, 2008
Mar 26
, 2008
NAV
(Rs.)
8.45
Last 1
Week
5.12
Since
Inception
-94.64
8.26
5.05
-40.42
12.44
5.03
15.35
14.07
20.92
9.01
4.65
-17.17
10.2
4.62
23.69
9.93
4.56
-0.85
10.19
4.51
22.39
6.36
3.75
-81.78
124.66
3.44
29.97
141.51
3.14
13.71
9.89
2.91
-7.88
10.25
2.38
2.39
7.64
1.86
-49.52
9.93
1.58
-0.94
A mutual fund is a professionally-managed firm of collective investments that pools money from
many investors and invests it in stocks, bonds, short-term money market instruments, and/or other
securities.in other words we can say that A Mutual Fund is a trust registered with the Securities and
Exchange Board of India (SEBI), which pools up the money from individual / corporate investors and
invests the same on behalf of the investors /unit holders, in equity shares, Government securities,
Bonds, Call money markets etc., and distributes the profits.
The value of each unit of the mutual fund, known as the net asset value (NAV), is mostly calculated
daily based on the total value of the fund divided by the number of shares currently issued and
outstanding. The value of all the securities in the portfolio in calculated daily. From this, all expenses
are deducted and the resultant value divided by the number of units in the fund is the funds NAV.
NAV =
Advantages of a MF
Mutual Funds provide the benefit of cheap access to expensive stocks
Mutual funds diversify the risk of the investor by investing in a basket of assets
A team of professional fund managers manages them with in-depth research inputs
from investment analysts.
Being institutions with good bargaining power in markets, mutual funds have access to
crucial corporate information, which individual investors cannot access.
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the
initiative of the Government of India and Reserve Bank. The history of mutual funds in India can be
broadly divided into four distinct phases.
First Phase 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament 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.
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life
Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual
Fund was the first non- UTI Mutual Fund established in June 1987 followed by 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 established its mutual fund in
June 1989 while GIC had set up its mutual fund in December 1990.At the end of 1993, the mutual
fund industry had assets under management of Rs.47,004 crores.
Third Phase 1993-2003 (Entry of Private Sector Funds)
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. As at the end of January 2003, there were 33 mutual funds with total assets of Rs.
1,21,805 crores.
Open-ended funds: Investors can buy and sell the units from the fund, at any point of time.
Close-ended funds: These funds raise money from investors only once. Therefore, after the
offer period, fresh investments can not be made into the fund. If the fund is listed on a stocks
exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund). Recently,
most of the New Fund Offers of close-ended funds provided liquidity window on a periodic
basis such as monthly or weekly. Redemption of units can be made during specified intervals.
Therefore, such funds have relatively low liquidity.
i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked. Their
portfolio mirrors the benchmark index both in terms of composition and individual stock
weightages.
ii) Equity diversified funds- 100% of the capital is invested in equities spreading across different
sectors and stocks.
iii) Dividend yield funds- it is similar to the equity diversified funds except that they invest in
companies offering high dividend yields.
iv) Thematic funds- Invest 100% of the assets in sectors which are related through some theme.
e.g. -An infrastructure fund invests in power, construction, cements sectors etc.
v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector fund will invest
in banking stocks.
vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.
Balanced fund: Their investment portfolio includes both debt and equity. As a result, on the risk-return
ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors
who prefer spreading their risk across various instruments. Following are balanced funds classes:
Investment strategies:
1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of a
month. Payment is made through post dated cheques or direct debit facilities. The investor gets fewer
units when the NAV is high and more units when the NAV is low. This is called as the benefit of
Rupee Cost Averaging (RCA)
2. Systematic Transfer Plan:
instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund.
3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can
withdraw a fixed amount each month.
The entire mutual fund industry operates in a very organized way. The investors, known as unit
holders,handover their savings to the AMCs under various schemes. The objective of the investment
should match with the objective of the fund to best suit the investors needs. The AMCs further invest
the funds into various securities according to the investment objective. The return generated from the
investments is passed on to the investors or reinvested as mentioned in the offer document.
To protect the interest of the investors, SEBI formulates policies and regulates the mutual
funds. It notified regulations in 1993 (fully revised in 1996) and issues guidelines from time to
time.
SEBI approved Asset Management Company (AMC) manages the funds by making
investments in various types of securities. Custodian, registered with SEBI, holds the securities
of
various
schemes
of
the
fund
in
its
custody.
According to SEBI Regulations, two thirds of the directors of Trustee Company or board of
trustees must be independent.
The Association of Mutual Funds in India (AMFI) reassures the investors in units of mutual
funds that the mutual funds function within the strict regulatory framework. Its objective is to
increase public awareness of the mutual fund industry. AMFI also is engaged in upgrading
professional standards and in promoting best industry practices in diverse areas such as
valuation, disclosure, transparency etc.
Offer document: An offer document is issued when the AMCs make New Fund Offer(NFO).
Its advisable to every investor to ask for the offer document and read it before investing. An
offer document consists of the following:
Standard Offer Document for Mutual Funds (SEBI Format)
Summary Information
Glossary of Defined Terms
Risk Disclosures
Legal and Regulatory Compliance
Expenses
Condensed Financial Information of Schemes
Constitution of the Mutual Fund
Investment Objectives and Policies
Management of the Fund
Offer Related Information.
Key Information Memorandum: a key information memorandum, popularly known as KIM,
is attached along with the mutual fund form. And thus every investor get to read it. Its contents
are:
1
2. Iestment objective
3. Aset allocation pattern of the scheme.
4. Risk profile of the scheme
5. Plans & options
6. Minimum application amount/ no. of units
7. Benchmark index
8. Dividend policy
9. Name of the fund manager(s)
10 . Expenses of the scheme: load structure, recurring expenses
11. Performance of the scheme (scheme return v/s. benchmark return)
12. Year- wise return for the last 5 financial year.
Distribution channels:
Mutual funds posses a very strong distribution channel so that the ultimate customers doesnt
face any difficulty in the final procurement. The various parties involved in distribution of
mutual funds are:
1. Direct marketing by the AMCs: the forms could be obtained from the AMCs directly. The
investors can approach to the AMCs for the forms. some of the top AMCs of India are;
Reliance ,Birla Sunlife, Tata, SBI magnum, Kotak Mahindra, HDFC, Sundaram, ICICI, Mirae
Assets, Canara Robeco, Lotus India, LIC, UTI etc. whereas foreign AMCs include: Standard
Chartered, Franklin Templeton, Fidelity, JP Morgan, HSBC, DSP Merill Lynch, etc.
2 .Broker/ sub broker arrangements: the AMCs can simultaneously go for broker/sub-broker to
popularize their funds. AMCs can enjoy the advantage of large network of these brokers and
sub brokers.eg: SBI being the top financial intermediary of India has the greatest network. So
the AMCs dealing through SBI has access to most of the investors.
3. Individual agents, Banks, NBFC: investors can procure the funds through individual agents,
independent brokers, banks and several non- banking financial corporations too, whichever he
finds convenient for him.
Research report
Objective of research;
The main objective of this project is concerned with getting the opinion of people
regarding mutual funds and what they feel about availing the services of financial
advisors.
I have tried to explore the general opinion about mutual funds. It also covers why/ why
not investors are availing the services of financial advisors.
Along with it a brief introduction to Indias largest financial intermediary, SBI has
been given and it is shown that how they operate in mutual fund deptt
Scope of the study:
The research was carried on in the Northern Region of India. It is restricted to Mumbai. I have
visited people randomly nearby my locality, different shopping malls, small retailers etc.
Data sources:
Research is totally based on primary data. Secondary data can be used only for the reference.
Research has been done by primary data collection, and primary data has been collected by
interacting with various people. The secondary data has been collected through various
journals and websites and some special publications of SBI .
Sampling:
Sampling procedure:
The sample is selected in a random way, irrespective of them being investor or not or
availing the services or not. It was collected through mails and personal visits to the
known persons, by formal and informal talks and through filling up the questionnaire
prepared. The data has been analyzed by using the measures of central tendencies like
mean, median, mode. The group has been selected and the analysis has been done on
the basis statistical tools available.
Sample size:
The sample size of my project is limited to 50 only. Out of which only 35 people
attempted all the questions. Other 15 not investing in MFs attempted only 2 questions.
Sample design:
Data has been presented with the help of bar graph, pie charts, line graphs etc.
Limitation:
Time limitation.
Research has been done only at Mumbai.
Some of the persons were not so responsive.
Possibility of error in data collection.
Possibility of error in analysis of data due to small sample size.
QUESTIONNAIRE
A study of preferences of the investors for investment in mutual funds.
1. Personal Details:
(a). Name:(b). Add: -
Phone:-
Under Graduate
Others
Occupation. Pl tick ()
Govt. Ser
Pvt. Ser
Business
Agriculture
Others
Rs. 10,001 to
15000
Rs. 15,001 to
20,000
Rs. 20,001 to
30,000
2. What kind of investments you have made so far? Pl tick (). All applicable.
a. Saving account
e. Post Office-NSC, etc
b. Fixed deposits
f. Shares/Debentures
c. Insurance
g. Gold/ Silver
d. Mutual Fund
h. Real Estate
(d) Trust
(e).
4. Are you aware about Mutual Funds and their operations? Pl tick ().
Yes
No
b. Peer Group
c. Banks
d. Financial Advisors
Yes
No
8. If yes, in which Mutual Fund you have invested? Pl. tick (). All applicable.
a. SBIMF
b. UTI
c. HDFC
d. Reliance
e. Kotak
f. Other. specify
12. Which Channel will you prefer while investing in Mutual Fund?
(a) Financial Advisor
(b) Bank
(c) AMC
13. When you invest in Mutual Funds which mode of investment will you prefer? Pl. tick ().
a. One Time Investment
14. When you want to invest which type of funds would you choose?
a. Having only debt
portfolio
15. How would you like to receive the returns every year? Pl. tick ().
a. Dividend payout
b. Dividend re-investment
c. Growth in NAV
16. Instead of general Mutual Funds, would you like to invest in sectorial funds?
Please tick ().
Yes
No