1

CHAPTER -1

INTRODUCTION

INTRODUCTION TO MUTUAL FUNDS

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus, a Mutual Fund is the most suitable investment for the common person as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund:

figure 1.1

ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the organizational set up of mutual fund: figure1.2 2

ADVANTAGES OF MUTUAL FUNDS

The advantages of investing in a Mutual Fund are:

# Diversification # Convenient Administration # Return Potential # Low Costs # Liquidity # Transparency # Flexibility # Choice of schemes # Tax benefits # well regulated figure1.3

TAXBENEFIT

Diversification

Regulations

Variety

CHRACTERISTICS: 1. A mutual fund actually belongs to the investors who have pooled their funds. 2. A mutual fund is managed by investment professionals and other service providers, who earn a fee for their services, from the fund. 3. The pool of funds is invested in a portfolio of marketable investments. The value of the portfolio is updated every day. 4. The investors share in the fund is denominated by units. The value of the units changes with change in the portfolios value, every

DISVANTAGES OF MUTUAL FUNDS

1. No control over cost in hands of an investor. 2. No tailor-made port folio. 3. Managing a portfolio funds. 4. Difficulty in selecting a suitable fund.

History of the Indian Mutual Fund Industry:

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. The history of mutual funds in India can be broadly divided into four distinct phases.

First Phase: 1964-1987

An Act of Parliament established Unit Trust of India (UTI) on 1963. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the RBI. In 1978 UTI was delinked 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 cores of AUM.

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

In 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector bank 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.

Third Phase: 1993-2003 (Entry of Private Sector Funds)

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With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be

registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 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. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds.

Fourth Phase Since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29, 835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations.

TYPES OF MUTUAL FUND SCHEMES

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. Schemes according to Maturity Period: A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period. 1. Open-ended Fund An open-ended Mutual fund is one that is available for subscription and repurchase on a continuous basis. These Funds do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices that are declared on a daily basis. The key feature of open-end schemes is liquidity.

2. Close-ended Fund A close-ended Mutual fund has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. 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 the units are listed. In order to provide an exit
7

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 i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis. Fund according to Investment Objective: A scheme can also be classified as growth fund, income fund, or balanced fund considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows: . Growth / Equity Oriented Scheme The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options later. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period. 1. Income / Debt Oriented Scheme The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long-term investors may not bother about these fluctuations. 2. Balanced Fund The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds. 3. Money Market or Liquid Fund These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments
8

such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. 4. Gilt Fund These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes. 5. Index Funds Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in the securities in the same weightage com prising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. There are also exchange traded index funds launched by the mutual funds, which are traded on the stock exchanges.

6. What is NET ASSET VALUE? Investment companies to measure net assets use the Term Net Asset Value (NAV). It is calculated by subtracting liabilities from the value of a fund's securities and other items of value and dividing this by the number of outstanding shares. Net asset value is popularly used in newspaper mutual fund tables to designate the price per share for the fund. The value of a collective investment fund based on the market price of securities held in its portfolio. Units in open-ended funds are valued using this measure. Closed ended investment trusts have a net asset value but have a separate market value. NAV per share is calculated by dividing this figure by the number of ordinary shares. Investments trusts can trade at net asset value or their price can be at a premium or discount to NAV. Value or purchase price of a share of stock in a mutual fund. NAV is calculated each day by taking the closing market value of all securities owned plus all other assets such as cash, subtracting all liabilities, and then dividing the result (total net assets) by the total number of shares outstanding. Calculating NAVs - Calculating mutual fund net asset values is easy. Simply take the current market value of the fund's net assets (securities held by the fund minus any liabilities) and divide by the number of shares outstanding. Therefore, if a fund had net
9

assets of Rs.50 lakh and there are one-lakh shares of the fund, then the price per share (or NAV) is Rs.50.00. An exit load is the commission that an investor has to pay while selling off the mutual funds. This commission is charged by the fund to take care of their running expenses. When such a commission is charged upfront by a fund, it is known as an Entry Load Entry load is the commission that an investor has to pay while purchasing units of a mutual fund. This is a certain percentage that the mutual fund charges to meet its expenses. Certain funds have Exit Load, which means a similar kind of commission, but it is charged when the investor exits the scheme.

How to choose mutual fund?

Mutual funds have emerged as the best in terms of variety, flexibility, diversification, liquidity as well as tax benefits. Besides, through MFs investors can gain access to investment opportunities that would otherwise be unavailable to them due to limited knowledge and resources. MFs have the capability to provide solutions to most investors' needs, however, the key is to do proper selections and have a process for monitoring. Let us see how MFs can make a difference to an investor's financial planning and its results. 1. Planning for long term objectives Many people get overwhelmed by the thought of retirement and they think how they will ever save the huge money that is required to lead a peaceful and happy retired life. However, the fact is that if we save and invest regularly over a period of time, even a small sum of money can suffice. It is a proven fact that the real power of compounding comes with time. Albert Einstein called compounding "the eighth wonder of the world" because of its amazing abilities. Essentially, compounding is the idea that one can make money on the money one has already earned. That is why, the earlier one starts saving, the more time money gets to grow. Through mutual funds, one can set up an investment programme to build capital for retirement years. Besides, it is an ideal vehicle to practice asset allocation and rebalancing thereby maintaining the right level of risk at all times. It is important to know that determination and maintaining the right level of risk tolerance can go a long way in ensuring the success of an investment plan. Besides, it helps in customizing fund category allocations and suitable fund selections. There are certain broad guidelines to determine the risk tolerance. These are:

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Be realistic with regard to volatility. One needs to seriously consider the effect of potential downside loss as well as potential upside gain. Determine a "comfort level" i.e. if one is not confident with a particular level of risk tolerance, and then select a different level. Regardless of the level of risk tolerance, one should adhere to the principles of effective diversification i.e. the allocation of investment assets among different fund categories to achieve a variety of distinct risk/reward objectives and a reduction in overall portfolio risk. It helps to reassess risk tolerance every year. The risk tolerance may change due to either major adjustment in return objectives or to a realization that an existing risk tolerance is inappropriate for one's current situation. Market cap of a company signifies its market value, which is equal to the total number of shares outstanding multiplied by the current stock price. The market cap has a role to play in the kind of returns the stock might deliver and the risk or volatility that one may have to encounter while achieving those returns. For example, large companies are usually more stable during the turbulent periods and the mid cap and small cap companies are more vulnerable. As regards the allocation to each segment, there cannot be a standard combination applicable to all kinds of investors. Each one of us has different risk profile, time horizon and investment objectives. Besides, while deciding on the allocation, one has to keep in mind the fact whether the allocation is being done for an existing investor or for a new investor. While for an existing investor, the allocation that already exists has to be considered, for a new investor the right way to begin is by considering funds that invest predominantly in large cap stocks. The exposure to mid and small caps can be enhanced over a period. (Also read - How to reduce risk while investing?) It is always advisable to take help of professionals to decide the allocation as well as select the appropriate funds. However, investors themselves have an important role to play in this process. 2. Not all award-winning funds may be suitable for everyone Many investors feel that a simple way to invest in mutual funds is to just keep investing in award winning funds. First, it is important to understand that more than the awards; it is the methodology to choose winners that is more relevant. A rating firm generally elaborates on the criteria for deciding the winners i.e. consistent performance, risk adjusted returns, total returns and protection of capital. Each of these factors is very important and has its significance for different categories of funds.

11

Besides, each of these factors has varying degree of significance for different kinds of investors. For example, consistent return really focuses on risk. If someone is afraid of negative returns, consistency will be a more important measure than total return i.e. growth in NAV as well as dividend received. A fund can have very impressive total returns overtime, but can be very volatile and tough for a risk adverse investor. (Also read - 7 investment tips to improve your returns) Therefore, not all the award-winning funds in different categories may be suitable for everyone. Typically, when one has to select funds, the first step should be to consider personal goals and objectives. Investors need to decide which element they value the most and then prioritize the other criteria. Once one knows what one is looking for, one should go about selecting the funds according to the asset allocation. Most investors need just a few funds, carefully picked, watched and managed over period. 3. Evaluate Portfolio performance It is important to evaluate the performance of the portfolio on an on-going basis. The following factors are important in this process: Consider long-term record of accomplishment rather than short-term performance. It is important because long-term record of accomplishment moderates the effects which unusually good or bad short-term performance can have on a fund's record of accomplishment. Besides, longer-term record of accomplishment compensates for the effects of a fund manager's particular investment style. Evaluate the record of accomplishment against similar funds. Success in managing a small or in a fund focusing on a particular segment of the market cannot be relied upon as an evidence of anticipated performance in managing a large or a broad based fund. Discipline in investment approach is an important factor as the pressure to perform can make a fund manager susceptible to have an urge to change tracks in terms of stock selection as well as investment strategy. The objective should be to differentiate investment skill of the fund manager from luck and to identify those funds with the greatest potential of future success.

INVESTMENT STRATEGIES
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1 .Systematic investment plan: under this a fixed sum is invested each month on a fixed date of 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 NAP is low. This is called as the benefit of Rupee cost Averaging (RCV).

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.

Low

High

13

Risk v/s Return

Chapter -2

Company profile

14

HISTORY OF THE COMPANY

The Company was incorporated in 1954, with the object of financing the purchase of commercial vehicles and passenger cars.

15

The company was started with a paid-up capital of Rs.2.00 Lakhs and later went public in 1972.

The Company's shares were listed in the Madras Stock Exchange in 1972 and in the National Stock Exchange in January 1998.

Subsequently, the equity shares of the Company have been delisted from Madras Stock Exchange Limited (MSE) with effect from January 27, 2004, in accordance with SEBI (Delisting of Securities) Guidelines, 2003, for voluntary delisting.

For him it was a lifetime involvement in automobiles, finance and philanthropy Born on November 8, 1912, Mr.Santhanam had his education in Madurai. In 1930, he joined his father in business, and thus began a life-time involvement in automobile and finance.

He moved to Chennai in 1936, and served parent company T.V. Sundaram Iyengar & Sons, in various capacities, gaining rich experience in road transport, marketing of automobiles, manufacture of automobile components, general insurance, banking and finance. In 1954, he
16

founded Sundaram Finance, which together with its subsidiaries, now has an asset base of about Rs.6000 crores. .

He played a crucial role in the establishment of several auto component units in the TVS Group, prominent among which were Wheels India, Brakes India, Sundaram Clayton and Lucas-TVS. He also promoted Madras Motor General Insurance Company, which later merged into the United India Insurance Company. He was Managing Director of the T.V.Sundaram Iyengar & Sons for nearly a decade before becoming its vice-chairman, position he held till his death.

He was not only deeply involved in negotiations with foreign collaborators for the manufacture of quality auto components, but also in financial planning and project financing. His financial acumen was always regarded highly, not just in the TVS group, but outside as well. He served on the Government's Direct Taxes Advisory Committee, and the study Group on Road Transport Financing among others .

For Mr.Santhanam, quality was paramount. He ensured that his auto component distribution companies provided transport operators genuine and quality products at fair prices.

He was also the founder chairman of trade associations such as the Federation of Automobile Dealers' Association and the South India Hire Purchase Association.

He was an ardent supporter of sports, especially football, cricket and tennis. In the late 1940s he promoted TVS Greens, which had several leading national football players. A keen tennis player himself, he sponsored several leading players during the early stages of their career. He was often spotted at Wimbledon during the tennis fortnight cheering on India's maestro, Ramanathan Krishnan.

He championed educational, religious and charitable causes and was instrumental in donating large sums of money from the companies with which he was associated. T S Surendran, Vice-Chairman of Sankara Nethralaya, said Mr.Santhanam had contributed liberally to "the cause of our foundation." He was associated with the foundation for over 25
17

years. The Sundaram Medical Foundation and the hospital managed by it stand testimony of his keen interest in charitable causes.

"Work was worship for him," according to officials in the TVS Group. "His number sense was incredible," said a ranking official of Sundaram Finance, who had worked with him closely. He knew his principal employees by name and qualification. He kept himself updated on the happenings in the group companies and attended meetings of the Sundaram Finance Board.

Mr.Santhanam, according to T T Srinivasaraghavan, Managing Director of Sundaram Finance, was a "visionary."

Even in early 1950s, he had understood the need for a good road infrastructure. "He tirelessly worked for the uplift of transport operators," Mr.Srinivasaraghavan said, and pointed to the travels Mr.Santhanam had undertaken across the country often sipping tea with the drivers.

Mr.Santhanam brought to bear such involvement in the non-banking finance business, encouraging small players to become corporate entities. "He never saw anyone as a competitor," he said.

AWARDS & ACHIEVEMENTS

Certificate of Commendation award by the Government of India under the scheme of Good Tax Payers

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Second Best Tax Payer in the category of Private Sector Company for Assessment Year 1994-95 in Tamil Nadu Region, from the Income Tax Department, Tamil Nadu.

Rolling Trophy by Rotary Club of Madras South West for Best Employer-Employee Relationship for the year 1995-96. Best Tax Payer in the category of Private Sector Company for Assessment Year 199596 in Tamil Nadu Region, from the Income Tax Department, Tamil Nadu. Automan Award to Shri T S Santhanam, Chairman, from Motor India in 1998

Pioneering Service Award to Shri T S Santhanam Chairman, from Chennai Good Transport Association.

Sarige Ratna Award to Shri T S Santhanam, Chairman, from the Bangalore City Lorry Transporting Agents Association (Regd). Most Valued Customer Award to Shri T S Santhanam Chairman, from the State Bank of India.

The Best Financier of the New Millennium 2000 to Shri. G K Raman, Managing
Director, from the All India Motor Transport Congress.

IN RECOGNITION OF SERVICE TO INVESTORS A Certificate of honors was given by the Institute of Chartered Financial Analyst, in recognition of the Company's efforts to set a trail blazing record of investor rewards , fostering the equity cult on ethical lines among the top hundred investor rewarding companies in India for the period 1990-95.
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Birth of Sundaram Finance First finance company to be listed on the Madras Stock Exchange. Started Leasing operations. Formation of Lakshmi General Finance Receivables crossed Rs. 1000 crores (Rs. 10 billion) Deposits crossed Rs. 500 crores (Rs. 5 billion) Formed Sundaram Newton Asset Management Company Ltd. in collaboration with Newton Management Ltd., UK. Received Best Tax Payer Award Received Best Tax Payer Award Receivables crossed Rs. 2000 crores (RS. 20 billion) Promoted Fiat Sundaram Auto Finance Limited, a joint venture with Fidis S.p.A., Italy Promoted Sundaram Home Finance Limited with equity participation from International Finance Corporation (IFC), Washington, and FMO Netherlan ds Promoted Royal Sundaram Alliance Insurance Company Limited, a joint venture with Royal & Sun Alliance Plc, for Non-Life Insurance Promoted Sundaram InfoTech Solutions - InfoTech division of Sundaram Finance Promoted Sundaram Business Services - BPO arm of Sundaram Finance Merger with LGF making SF Billion dollar Balance sheet NBFC BNP Paribas Asset Management Group, France acquires 49.90 % stake in Sundaram Asset Management Company Ltd from SFL.
20

Union de Credit pour le Batiment SA (UCB), a wholly owned subsidiary of BNP Paribas SA, France acquires 49.90% stake in Sundaram Home Finance Ltd from SFL.

SUNDARAM MUTUAL About the company

Sundaram Asset Management Company Limited is one of the largest and well established fund houses in the country. The fund house is sponsored by Sundaram Finance.
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Sundaram Asset Management Corporate Presentation

Our fund basket consists of 12 well researched and class leading equity funds and 4 products in the fixed income category.

Sundaram Mutual is the only fund house in the world with 8 funds in the Lipper global top 120 funds in 2007. Sundaram Select Focus has also bagged the coveted CRISIL CNBC TV 18 Best Large Cap Fund award for two years in a row.

PRODUCTS OF SUNDARAM MUTUAL FUNDS

1. EQUITY FUNDS:
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a) Select focus b) Select midcap c) Growth fund d) Tax saver e) S.M.I.L.E fund f) India Leadership fund g) Equity multiplier fund h) Select small cap i) Rural India fund j) Capex opportunity fund k) Energy opportunity l) Financial services opportunity m) Entertainment opportunity n) Psu opportunity o) Global advantage p) Equity plus q) Balanced funds

2. Fixed income funds

23

a) Money fund b) Ultra short term c) Flexible term short term plan d) Monthly income plan e) Flexible fund flexible income plan f) Bond saver

Chapter-3
24

Objectives & scope

25

OBJECTIVES OF STUDY

To find out the preferences of investors for asset management company.

To know the preferences for the portfolios.

To know why one has invested or not invested in Sundaram Mutual Funds.

To find the most preferred channel.

To find out what should do to boost mutual fund industry.

SCOPE OF THE STUDY

A big boom has been witnessed in mutual fund industry in recent times. A large number of new players have entered into the market and trying to gain market share in this rapidly improving market.

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The research was carried on in Indore. I had been sent at one of the branch of Sundaram finance, Indore where I have completed my project work. I surveyed on my topic A study of preferences of the investors for investment in mutual funds. The study will help to know the preferences of the customers, which company, portfolio, mode of investment, and option for getting return and so on they prefer. This project report will help company to make further planning and strategy.

27

Chapter-4

Research methodology

28

RESEARCH METHODOLOGY

The report is based on primary as well as secondary data, however primary data is given more importance since it is overhearing factor in attitude studies. One of the most usage of research methodology it helps in identifying the problem, collecting and analyzing the required information data and providing the alternative solution to the data. 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 today and critical ones.
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DATA SOURCES:
Research is totally based on primary data .secondary data can be used only for the refrences.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.

SAMPLING: Sampling procedure: the sample was selected of them who are investors whether belongs to
any occupassion like a business man, service in government or private sector. It was also collected through personal visits to per sons by formal or informal talks and by filling the questionnaire prepared. The data has been analyzed by using mathematical/ stastical tool.

Sample size: my sample size is limited to 100 people only. Sample design: data has been presented with the help of bar
graphs etc. graphs, pie charts and line

LIMITATIONS:

Some of the persons were not so responsive. Possibility of error in data collection because many of investors may have not actual answers of my questionnaire.

Sample size may not represent the whole market.

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 Some respondents were reluctant to divulge personal information which can affect the validity of all responses. The research is confined to a certain part of Indore.

Chapter -5

31

Data Analysis & Interpretation

1.

In which you invest your savings?

32

a) b) c) d)

Recurring deposits silver and deposits real state mutual funds

Type of investment Recurring deposits real state gold/silver mutual funds

No. of respondent respondents 15 20 25 40

Figure 5.1

Recurring deposits real state gold/silver mutual funds

It observe that invest 15% of people invest in recurring deposits ,20% in real estate, 25% in gold/silver ,and 40% in mutual funds.

2. Do you know about sundaram mutual fund schemes?

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a) Yes b) No Awareness level

information
Yes No Not much

No. of respondent
56 24 20
100

Total

yes no Not much

it observes that 56% of people have complete knowledge of sundaram mutual and 24% do not have complete information about mutual fund and 20% of our total respondent have some information about our schemes.

3).do you know mutual fund is a good instrument of tax saving?

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a) Yes b) No information yes no Total No. of respondent 76 24 100

Awareness for tax saving

Figure 5.2

yes no

It observes that 76% of our respondent knows that mutual fund is a good tax saving instrument and 24% of our respondent dont know about it. 4) .What is the basic purpose of your investments?

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a) High return b) Tax benefit c) Saving d) Wealth creation e) Risk diversification

Purpose of investment Investment purpose High return Tax benefit saving Wealth creation Risk diversification No. of respondent 20 18 45 10 7

Figure 5.4
50 45 40 35 30 25 20 15 10 5 0 High return Tax benefit saving Wealth creation Risk diversification

It observe that 20% of the investors invest for high return ,18% for the tax benefit ,45% for the saving ,10% for the wealth creation and 7% for the risk diversification purpose.
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5). what returns do you receive at present from all your investments?

37

Investment Returns Less than 5% 5%-10% 10-15% 15%-20% Greater than 20% Total

Number Of Respondents 3 65 20 7 5 100

Figure 5.5

less than 5% 5%-10% 10%-15% 15%-20% greater than 20%

38

It observe that 3% of all the respondents get less than 5%, 65% of all the respondents get between 5%-10%, 20% of all the respondents get between 10%-15%, 7% of all the respondents get between 15%-20% and 5% of all the respondents get more than 20%.

6).which types of funds would you like to prefer for your investment in mutual fund? a) Equity fund c)balanced fund b) Debt fund
39

investment preference Equity fund Debt fund Balanced fund Total

no. of respondent 65 11 24 100

Investment preference
Figure 5.6

70 60 50 40 30 20 10 0 Equity fund Debt fund Balanced fund

We observe that 65% of all the respondents prefer in investment in equity, 11% of all the respondents prefer investment in debt fund, and remaining 24% of all the respondents prefer investment in balanced fund.

7).What is the source of information for customer about mutual fund? a) Advertisement b) peer group
40

c) Bank

d) financial advisors

Source of information Advertisement Peer group Bank

No. of respondents 18 20 25

70 60 50 40 30 20 10 0 Advertisement Peer group Bank Financial advisors

Financial advisors

63

Figure 5.7 it observe that 18% of our respondents know from advertisement, 20% from peer group,25% from bank and 63% from financial advisors.

41

8). what are the preferences of factors while investing? a) b) c) d) Liquidity Low risk High return Trust

factors

liquidity

Low risk

High return

trust

Sales

liquidity Low risk High return trust

20 No. of respondents figure 5.8

30

40

10

Out of 100 people 20% of them invest for liquidity ,30% for low risk,40% for high return and 10% prefer for trust.

42

9). what are your future needs of money? a) b) c) d) children higher education Retirement benefit Childrens marriage Some other.. No. of respondents 25 27 25 23

Type of need a)childrens higher education b)retirement benefit c)childrens marriage d)some other

d)some other

c)childrens marriage

b)retirement benefit

a)childrens higher education

21

22

23

24

25

26

27

28

Figure5.9

It observes that 25% of our respondents need money for their childrens education, 27% for retirement benefit, 25% for childrens marriage and 23% for some other reason.

43

Chapter-6

Result & findings

44

Results and Findings

It observes that 68% of all the respondents invest in mutual fund. It have got 32% of our total respondents who do not invest in any mutual fund at all.

It observes that 56% of all the respondents have complete information of mutual fund. It have got 24% of our total respondents who do not have complete information of mutual fund at all and 20% of our total respondents have some information of mutual fund.

It observes that 89% of all the respondents are interested in getting good deduction from tax. It has got 11% of our total respondents who are not interested in getting good deduction from tax at all.

45

It observe that 76% of all the respondents knows mutual fund is a good instrument of tax saving. It have got 24% of our total respondents who are mutual fund is a good instrument of tax saving.

It observe that our respondent invest in more than one instrument of saving. It observe that 20% of all the respondents Invest for the purpose of high return, 18% Invest for the purpose of tax benefit, 45% Invest for the purpose of saving, 10% Invest for the purpose of wealth creation, 7% Invest for the purpose of risk diversification.

Conclusions

The mutual fund investors prefer more of the equity fund as they want more return on their money. They avoid going in the debt fund because they can get same amount of return on their banks that is also without taking any risk.

Usually people preferred to invest in mutual fund during NFO rather than seeing the performance of mutual fund scheme. Sometimes due to lack of detailed awareness about mutual fund schemes the investors seek advice of distributors.

Investors feel that the AMC should go for more promotional activities & should try to come up with new innovative schemes which can easily be understood by the investors.

Even after seeing the market crash in May2006 people still thinks that mutual fund is much reliable way to invest in stock market. So investors are not going for redemption during crash &
46

were ready to wait. In fact during the crash time many people were ready to invest in mutual fund.

People will not accept the entry load if the company would any such type loads during NFO because during NFO the investors were not sure whether the given scheme can really give them better return or not. We observe that 65% of all the respondents prefer investment in equity fund, 11% of all the respondents prefer investment in Debt fund, and remaining 24% of all the respondents prefer investment in balanced fund.

47

Chapter -7

Suggestions & Recommendation

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Suggestions
There is need to build awareness of the new funds among the investors with constantly being in contact with them. Some of investors have asked for periodical market report about stock market so that they can get the knowledge properly. AMCs should go for increasing more awareness about different facilities of investment such as SIP& STP among investors. Sundaram mutual must try to locate hard working distributors who are providing good business in their respective geographical area.

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 Investors are never going to accept the entry load during NFO. So such type of activity should be avoided as much as possible. The company should advertise their tax saving plan more so that they can gain more customers.

Younger people aged under 35 will be a key new customer into the future, so making greater efforts with younger customers who show some interest in investing should pay off.

Systematic Investment Plan (SIP) is one the innovative products launched by Assets Management companies very recently in the industry. SIP is easy for monthly salaried person as it provides the facility of do the investment in EMI.Though most of the prospects and potential investors are not aware about the SIP.

BIBLIOGRAPHY

NEWS PAPERS OUTLOOK MONEY MUTUAL FUND HAND BOOK

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 FACT SHEET AND STATEMENT WWW.SUNDARAMFINANCE.COM WWW.MUTUALFUNDINDIA.COM Business magazines. Broachers provided by sundaram finance. Sundaram finance ltd. Company magazines. Indian mutual funds handbook by Sundar Sankran. WWW.GOOGLE.CO.IN/INDIAN MUTUAL FUNDS INDUSTRY.

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