A PROJECT REPORT ON

MUTUAL FUNDS IS THE BETTER INVESTMENTS PLAN

Submitted in partial fulfillment for

MASTER OF BUSINESS ADMIMISTRATION

Programme of Chhattisgarh Swami Vivekanand Technical University, Bhilai

Submitted by :-

Under Guidance :-

MBA( Two Year Programme)

Relationship Manager

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 UTI Financial Center Model Colony, Shivaji Nagar ,Pune and other staffs for their support and guidance in the Project work. I am extremely grateful to my guide, Relationship Manager Miss Prashansha Chauhan for their valuable guidance and timely suggestions. I would like to thank all faculty members of UTI Financial Center.

NEHA SONI

DECLERATION

I hereby declare that this Project Report entitled THE MUTUAL FUND IS BETTER INVESTMENT PLAN in UTI Mutual Fund submitted in the partial fulfillment of the requirement of Master of Business Administration (MBA) of Sri Shakracharya College Of Institute Of Technology And Management is based on primary & secondary data found by me in various departments, books, magazines and websites & Collected by me in under guidance of Miss Prashansha Chauhan.

DATE:

NEHA SONI MBA (Two Years)

CONTENTS Acknowledgement Declaration Executive Summary

Chapter - 1 Chapter - 2 Chapter - 3 Chapter - 4 Chapter - 5 Chapter - 6 Chapter - 7

INTRODUCTION COMPANY PROFILE OBJECTIVES AND SCOPE RESEARCH METHODOLOGY DATA ANALYSIS AND INTERPRETATION FINDINGS AND CONCLUSIONS SUGGESTIONS & RECOMMENDATIONS

BIBLIOGRAPHY

MUTUAL FUNDS

ALL ABOUT MUTUAL FUNDS

WHAT IS MUTUAL FUND EQUITY FUND DEBT FUNDS BY INVESTMENT OBJECTIVE ADVANTAGES OF INVESTING MUTUAL FUNDS DISADVANTAGES OF INVESTING MUTUAL FUNDS MUTUAL FUNDS INDUSTRY IN INDIA MAJOR PLAYERS OF MUTUAL FUNDS IN INDIA HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY CATEGORIES OF MUTUAL FUNDS INVESTMENT STRATEGIES WORKING OF A MUTUAL FUND

RESEARCH REPORT
SCOPE OF THE STUDY OBJECTIVE OF RESEARCH DATA SOURCES SAMPLING DATA ANALYSIS QUESTIONNAIRE

Chapter-1 Introduction

INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS ASPECTS.

Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. This pool of money is invested in accordance with a stated objective. The joint ownership of the fund is thus Mutual, i.e. the fund belongs to all investors. 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 the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. A Mutual Fund is an investment tool that allows small investors access to a welldiversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The funds Net Asset value (NAV) is determined each day.

Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders.

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.

ADVANTAGES OF MUTUAL FUND

1. Professional Management - The basic advantage of funds is that, they are

professional managed, by well qualified professional. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. A mutual fund is considered to be relatively less expensive way to make and monitor their investments.

2. Diversification - Purchasing units in a mutual fund instead of buying individual

stocks or bonds, the investors risk is spread out and minimized up to certain extent. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others.

3. Economies of Scale - Mutual fund buy and sell large amounts of securities at a
time, thus help to reducing transaction costs, and help to bring down the average cost of the unit for their investors.

4. Liquidity - Just like an individual stock, mutual fund also allows investors to
liquidate their holdings as and when they want.

5. Simplicity - Investments in mutual fund is considered to be easy, compare to

other available instruments in the market, and the minimum investment is small. Most AMC also have automatic purchase plans whereby as little as Rs. 2000, where SIP start with just Rs.50 per month basis.

DISADVANTAGE OF MUTUAL FUND

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.

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. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the Industry.

In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets Under Management (AUM) was Rs67 billion. The private sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till April 2004; it reached the height if Rs. 1540 billion.

The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under.

First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit

Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management.

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

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.

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. consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

CATEGORIES OF MUTUAL FUND:

Mutual funds can be classified as follow :

Based on their structure:

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 closeended 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.

Based on their investment objective:

Equity funds: These funds invest in equities and equity related instruments. With
fluctuating share prices, such funds show volatile performance, even losses. However, short term fluctuations in the market, generally smoothens out in the long term, thereby offering higher returns at relatively lower volatility. At the same time, such funds can yield great capital appreciation as, historically, equities have outperformed all asset classes in the long term. Hence, investment in equity funds should be considered for a period of at least 3-5 years. It can be further classified as:

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:

i) Debt-oriented funds -Investment below 65% in equities. ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

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
mis-pricing 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.

UTI SIP Systematic Investment Plan

What is UTI Systematic Investment Plan (SIP) ?
A Systematic Investment Plan from UTI Mutual Fund is a disciplined approach of investing in UTI MF schemes , where one can make regular investments according to per-opted schedules. So lets plan for the future and get relieved

from investments worries. Its time to aim to get rich by building your investment through this time tested mechanism. What is offer? A systematic Investment plan from UTI mutual fund is a disciplined approach Of investing in UTI MF schemes-equity, balance and debt where one can make regular investment according to pre opted schedules. So,plan for the future and get relived from day to day investment worries. Build your investment is a regular way of investment through this time tested mechanism . UTI investment plan is regular way of investment which allow to you as low as Rs. 500/- per month. It is disciplined investment approach.

How does UTI SIP work?

UTI SIP enables you to invest a pre-determined amount of money in chosenschemes at the applicable NAV based sale price on each transaction date. Each transaction will fetch you additional units that will be added to your investment account, thereby helping you to build your investment at regual intervals. A statement confirming transaction and allotment of units for each transaction will be sent to you.

How to make UTI SIP to work for you?

It makes good sense to invest regularly. But how do you start ?

1. Set your financial goal 2. Identify the scheme 3. Decide the SIP amount

4. Look for a long- term commitment: UTI SIP is most effective when opted for a
longer/extended period of time . the chance of bigger gains increase with the extended time horiozon.

5. Aim for the big picture : Market fluctuations are a way of life . You add more
units to your investment account when the markets are low. To get the out of these fluctuations, start today. The sooner you start,the earlier you reach your financial goals.

6. Start investing. How do you benefit from UTI SIP?

Rupee Cost Averaging The fixed amount which you invest every month in a fund is used to purchase units at the prevailing NAV-based price on such date of investment chosen every month .By investing a uniform amount regularly. One can average out the cost of acquisition of units .Your average cost per unit is what determines your overall return on your investments. Month Amount you invest (rs.) 1 2 3 4 5 Total 5000 5000 5000 5000 5000 25000 Sale Price 11.00 10.50 10.25 10.50 11.00 No. of units 454.55 476.19 487.80 476.19 454.55 2349.28

Cost per unit for a lump sum investment of rs. 25000 in month 1=rs.11/-,average cost per unit for a SIP investment of rs.5000 pm over 5 months =rs.25000/2349.28=rs.10.64 As evident from the table ,if you were to invest through sip ,the average purchase price works out lower at rs.10.64 compared to the purchase price of rs. 11 in case of a lump sum investment . The figure of sale price used are hypothecial and are for illustrative purposes only

RISK V/S. RETURN:

Working of a Mutual fund:

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.

Chapter 2 Company Profile

COMPANY PROFILE

Type Industry Founded Headquarters

: : : :

Public Mutual fund 1963 Mumbai, Maharashtra India. U K Sinha, Managing Director www.UTImf.com

Key people

Website

Introduction of UTI
"Unit Trust of India" means the Unit Trust of India established under the Unit Trust of India Act, 1963. The Unit Trust of India (UTI) has the world's largest share in domestic mutual fund industry. UTI Bank was the first of the new private banks to have begun operations in 1994, after the Government of India allowed new private banks to be established. The Bank was promoted jointly by the Administrator of the specified undertaking of the Unit Trust of India (UTI - I), Life Insurance Corporation of India (LIC) and General Insurance Corporation Ltd. The Bank today is capitalized to the extent of Rs.232.86 Crores with the public holding at 47.50 %. January 14, 2003 is when UTI Mutual Fund started to pave its path following the vision of UTI Asset Management Co. Ltd. (UTIAMC), which was appointed by UTI Trustee Co, Pvt. Ltd. for managing the schemes of UTI Mutual Fund and the schemes transferred/migrated from the erstwhile Unit Trust of India.

Work culture :
We believe in providing an environment that encourages employees to achieve and fulfil personal goals and that of the company. When the combined force of both, the employees and the company flow in one direction, there is ample amount of possibilities, opportunities and growth.

Employee Benefits:

Competitive salaries Comfortable work environment Career opportunities Insurance benefits Recreational amenities

History
THE EVOLUTION:
The formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in the year 1963. The primary objective at that time was to attract the small investors and it was made possible through the collective efforts of the Government of India and the Reserve Bank of India. Unit Trust of India was created by the UTI Act passed by the Parliament in 1963. For more than two decades it remained the sole vehicle for investment in the capital market by the Indian citizens. In mid- 1980s public sector banks were allowed to open mutual funds. The real vibrancy and competition in the MF industry came with the setting up of the Regulator SEBI and its laying down the MF Regulations in 1993.UTI maintained its pre-eminent place till 2001, when a massive decline in the market indices and negative investor sentiments after Ketan Parekh scam created doubts about the capacity of UTI to meet its obligations to the investors. This was further compounded by two factors; namely, its flagship and largest scheme US 64 was sold and re-purchased not at intrinsic NAV but at artificial price and its Assured Return Schemes had promised returns as high as 18% over a period going up to two decades. UTI Mutual Fund was created as a SEBI registered fund like any other mutual fund. The assets and liabilities of schemes where Government had to come out with a bailout package were taken over directly by the Government in a new entity called Specified Undertaking of UTI, SUUTI. SUUTI holds over 27% stake Axis Bank.

Corporate Awards

Trusted Brand Gold Award in the category of investment fund company by Readers Digest in 2008

UTI AMC has been awarded best debt fund house by outlook money & NDTV profit in 2008

awarded for STAR FUND HOUSE OF THE YEAR by ICRA Mutual Fund Awards 2010 in the Equity Category.

COMPETITOR

Reliance Money

ICICI PRUDENTIAL MUTUAL FUND

SBI MUTUAL FUND

BIRLA SUN LIFE MUTUAL FUND

HDFC MUTUAL FUND

MISSION:
To make UTI Mutual Fund: The most trusted Brand, admired by all stakeholders The largest and most efficient money manager with global presence The best in class customer service provider The most preferred employer The most innovative and best wealth creator A socially responsible organization known for best corporate governance.

VISION:
To be the most Preferred Mutual Fund. To be a dominant player in the Indian mutual fund space, recognized for its high levels of ethical and professional conduct and a commitment towards enhancing investor interest.

Chapter - 3 Objectives and scope

SCOPE AND OBJECTIVE OF THE STUDY

Scope of the study:The study covers various aspects of mutual fund like basic concept, types, future of mutual fund in India & the schemes etc. But it does not cover these aspects in detail relating with the legal aspects and the provisions made in different acts.

The time horizon selected for the study is from April 2007 to March 2008. All the schemes have been analyzed with the consideration of this time frame.

Objectives:1. To study the various offers of the company, services ranging from equities, commodities, portfolio management etc.

2. The objective of the study was to collect information on the various securities revolving in the market & thus providing customer service to clients to help them invest capital in profitable plans.

3. To know about returns of the fund which one is beneficial.

4.

To know their portfolio management.

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 45 days, from 4th June to 16th July 2012.

Sampling: Sampling procedure:

The sample was selected of them who are the customers/visitors of Unit Trust Of India (UTI), Tech Mahindra, HDFC Bank, 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 200 people only. Out of which only 120 people had invested in Mutual Fund. Other 80 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:

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

Sample size is limited to 200 visitors of Unit Trust Of India, Modal Colony Branch, Pune out of these only 120 had invested in Mutual Fund. The sample. size may not adequately represent the whole market.

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 Pune.

Chapter 5 Data Analysis & Interpretation

ANALYSIS & INTERPRETATION OF THE DATA 1. (a) Age distribution of the Investors of Pune.

A g e

< = 3 0

3 1 3 5

3 6 4 0

4 1 4 5

4 6 5 0

> 5 0

G r o u p N o . 1 2 1 8 3 0 2 4 2 0 1 6

o f

I n v e s t o

r s

Investors invested in Mutual Fund

35 30 25 20 15 10 5 0 18 30 24 20 16

12

<=30

31-35

36-40

41-45

46-50

>50

Age group of the Investors

Interpretation:
According to this chart out of 120 Mutual Fund investors of Pune the most are in the age group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of 41-45yrs i.e. 20% and the least investors are in the age group of below 30 yrs.

(b). Educational Qualification of investors of Pune.

Educational Qualification Graduate/ Post Graduate Under Graduate Number of Investors 88 25

Others Total

7 120

6%

23%
71%

Graduate/Post Graduate

Under Graduate

Others

Interpretation:
Out of 120 Mutual Fund investors 71% of the investors in Pune are Graduate/Post Graduate, 23% are Under Graduate and 6% are others (under HSC).

c). Occupation of the investors of Pune.

Occupation
. Govt. Service Pvt. Service Business Agriculture Others

No. of Investors
30 45 35 4 6

50 45 40 35 30 25 20 15 10 5 0

No. of Investors

35

45 30 4 6 Others

Govt. Service

Pvt. Service

Business

Agriculture

Occupation of the customers

Interpretation:
In Occupation group out of 120 investors, 38% are Pvt. Employees, 25% are Businessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are in others.

(d). Monthly Family Income of the Investors of Pune. Income Group No. of Investors
<=10,000 10,001-15,000 15,001-20,000 20,001-30,000 >30,000 5

12 28 43 32

50 45 40 35 30 25 20 15 10 5 0

No. of Investors

43 28 12 5 <=10 10-15 15-20 20-30 >30 32

Income Group of the Investorsn (Rs. in Th.)

Interpretation:
In the Income Group of the investors of Pune, out of 120 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

(2) Investors invested in different kind of investments. Kind of Investments

Saving A/C

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

65
Kinds of Investment

30 50 75 120

152 148
195 0 100 200 300

No.of Respondents

Interpretation: From the above graph it can be inferred that out of 200 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.

3. Preference of factors while investing

Factor s (a) Liq uidi ty L o ( b ) (c ) H ig h R ( d ) T r u

et ur

s t

R i s k No. of Respo ndents 40 6 0

6 4

3 6

18% 32%

20%

30%

Liquidity

Low Risk

High Return

Trust

Interpretation:
Out of 200 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

4. Awareness about Mutual Fund and its Operations

Response No. of Respondents

Yes 135

No 65

33%

67%

Yes

No

Interpretation:
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.

5. Source of information for customers about Mutual Fund

Source of information No. of Respondents Advertisement Peer Group Bank Financial Advisors 18 25 30 62

80 No. of Respondents 60 40 20 0 18 25 30 Bank Financial Advisors 62

Advertisement Peer Group

Source of Information

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 135 Respondents, 46% know about Mutual fund Through Financial Advisor, 22% through Bank, 19% through Peer Group and 13% through Advertisement.

6. Investors invested in Mutual Fund

Response YES NO Total No. of Respondents 120 80 200

No 40%

Yes 60%

Interpretation:
Out of 200 People, 60% have invested in Mutual Fund and 40% do not have invested in Mutual Fund.

7. Reason for not invested in Mutual Fund

Reason

No. of Respondents

Not Aware Higher Risk Not any Specific Reason

65 5 10

13%

6% 81%

Not Aware

Higher Risk

Not Any

Interpretation:
Out of 80 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.

8. Investors invested in different Assets Management Co. (AMC) Name of AMC

SBIMF UTI HDFC Reliance ICICI Prudential Kotak Others

No. of Investors 55 75 30 75 56 45 70

Others

70 30 45 55 56

HDFC
Name of AMC Kotak SBIMF ICICI Reliance UTI 0 20

75
75 40 No. of Investors 60 80

Interpretation:
In Pune most of the Investors preferred UTI and Reliance Mutual Fund. Out of 120 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.

9. Reason for invested in UTIMF Reason No. of Respondents

Associated with UTI Better Return Agents Advice 5 15 55

0% 27%

9%

64%

Interpretation:
Out of 55 investors of UTIMF 64% have invested because of its association with Branch UTI, 27% invested on Agents Advice, 9% invested because of better return.

10. Reason for not invested in UTIMF Reason No. of Respondents

Not Aware Less Return Agents Advice 25 18 22

34%

38% 28%

Not Aware

Less Return

Agent's Advice

Interpretation:
Out of 65 people who have not invested in UTIMF, 38% were not aware with UTIMF, 28% do not have invested due to less return and 34% due to Agents Advice.

11. Preference of Investors for future investment in Mutual Fund

Name of AMC
UTIMF SBI HDFC Reliance ICICI Prudential Kotak Others

No. of Investors 45 76 35 82 80 60 75

Others Kotak Name of AMC ICICI Prudential Reliance HDFC UTI SBIMF 0 20 35 45 60

75

80 82

76 40 60 80 100

No. of Investors

Interpretation:
Out of 120 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.

12. Channel Preferred by the Investors for Mutual Fund Investment

Channel

Financi al Adviso r

Ba nk

AM C

No. of Responde nts

72

18

30

25% 15% 60%

Financial Advisor

Bank

AMC

Interpretation:
Out of 120 Investors 60% preferred to invest through Financial Advisors, 25% through AMC and 15% through Bank.

13. Mode of Investment Preferred by the Investors

Mode of Investment One time Investment Systematic Investment Plan (SIP) No. of Respondents 78 42

35% 65%

One time Investment

SIP

Interpretation:
Out of 120 Investors 65% preferred One time Investment and 35 % Preferred through Systematic Investment Plan.

14. Preferred Portfolios by the Investors Portfolio No. of Investors

Equity Debt Balanced 56 20 44

37%

46% 17%

Equity

Debt

Balance

Interpretation:
From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and 17% preferred Debt portfolio

15. Option for getting Return Preferred by the Investors

Optio n Divi dend Payo ut Divi dend Rein vest men t No. of Resp onde nts 25 10 G r o w t h 8 5

21%

8%
71%

Dividend Payout

Dividend Reinvestment

Growth

Interpretation:
From the above graph 71% preferred Growth Option, 21% preferred Dividend Payout and 8% preferred Dividend Reinvestment Option.

16. Preference of Investors whether to invest in Sectoral Funds Response No. of Respondents Yes No 25 95

21% 79%

Yes

No

Interpretation:
Out of 120 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 Pune 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 Pune most of the Investors were Graduate or Post Graduate and below HSC

there were very few in numbers. In Occupation group most of the Investors were Govt. employees, the second

most Investors were Private employees and the least were associated with Agriculture. In family Income group, between Rs. 20,001- 30,000 were more in numbers,

the second most were in the Income group of more than Rs.30,000 and the least were in the group of below Rs. 10,000. About all the Respondents had a Saving A/c in Bank, 76% Invested in Fixed

Deposits, Only 60% Respondents invested in Mutual fund. Mostly Respondents preferred High Return while investment, the second most

preferred Low Risk then liquidity and the least preferred Trust. Only 67% Respondents were aware about Mutual fund and its operations and

33% were not. Among 200 Respondents only 60% had invested in Mutual Fund and 40% did

not have invested in Mutual fund.

Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told there is

not any specific reason for not invested in Mutual Fund and 6% told there is likely to be higher risk in Mutual Fund. Most of the Investors had invested in Reliance or UTI Mutual Fund, ICICI

Prudential has also good Brand Position among investors, UTIMF places after ICICI Prudential according to the Respondents. Out of 55 investors of UTIMF 64% have invested due to its association with the

Brand UTI, 27% Invested because of Advisors Advice and 9% due to better return. Most of the investors who did not invested in UTIMF due to not Aware of

UTIMF, the second most due to Agents advice and rest due to Less Return. For Future investment the maximum Respondents preferred Reliance Mutual

Fund, the second most preferred ICICI Prudential, UTIMF has been preferred after them. 60% Investors preferred to Invest through Financial Advisors, 25% through

AMC (means Direct Investment) and 15% through Bank. 65% preferred One Time Investment and 35% preferred SIP out of both type

of Mode of Investment. The most preferred Portfolio was Equity, the second most was Balance

(mixture of both equity and debt), and the least preferred Portfolio was Debt portfolio. Maximum Number of Investors Preferred Growth Option for returns, the second

most preferred Dividend Payout and then Dividend Reinvestment. Most of the Investors did not want to invest in Sectoral Fund, only 21% wanted

to invest in Sectoral Fund.

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 behavior of Mutual Fund investors in connection with the preferences of Brand (AMC), Products, Channels etc. I observed that many of people have fear of Mutual Fund. They think their money will not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its

related terms. Many of people do not have invested in mutual fund due to lack of awareness although they have money to invest. As the awareness and income is growing the number of mutual fund investors are also growing. Brand plays important role for the investment. People invest in those Companies where they have faith or they are well known with them. There are many AMCs in Pune but only some are performing well due to Brand awareness. Some AMCs are not performing well although some of the schemes of them are giving good return because of not awareness about Brand. Reliance, UTIMF, SBI, ICICI Prudential etc.

Distribution channels are also important for the investment in mutual fund. Financial Advisors are the most preferred channel for the investment in mutual fund. They can change investors mind from one investment option to others. Many of investors directly invest their money through AMC because they do not have to pay entry load. Only those people invest directly who know well about mutual fund and its operations and those have time.

Chapter 7 Suggestions And Recommendations

Suggestions and Recommendations

The most vital problem spotted is of ignorance. Investors should be made

aware of the benefits. Nobody will invest until and unless he is fully convinced. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing. Mutual funds offer a lot of benefit which no other single option could offer. But

most of the people are not even aware of what actually a mutual fund is? They only see it as just another investment option. So the advisors should try to change their mindsets. The advisors should target for more and more young investors. Young investors as well as persons at the height of their career would like to go for advisors due to lack of expertise and time. Mutual Fund Company needs to give the training of the Individual Financial

Advisors about the Fund/Scheme and its objective, because they are the main source to influence the investors.

Before making any investment Financial Advisors should first enquire about the

risk tolerance of the investors/customers, their need and time (how long they want to invest). By considering these three things they can take the customers into consideration.

Younger people aged under 35 will be a key new customer group into the

future, so making greater efforts with younger customers who show some interest in investing should pay off. Customers with graduate level education are easier to sell to and there is a

large untapped market there. To succeed however, advisors must provide sound advice and high quality. 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. There is a large scope for the companies to tap the salaried persons.

BIBLIOGRAPHY
NEWS PAPERS OUTLOOK MONEY COMPANY BROCHUERS TELEVISION CHANNEL (CNBC AAWAJ) MUTUAL FUND HAND BOOK FACT SHEET AND STATEMENT

WEBSITE

WWW.UTIMF.COM WWW.AMFIINDIA.COM WWW. MUTUALFUNDSINDIA.COM

QUESTIONNAIRE A study of preferences of the investors for investment in mutual funds.

1. Personal Details: (a). Name:(b). Add: (c). Age:Phone:-

(d). Qualification:Graduation/PG Under Graduate (e). Occupation. Pl tick () Go vt. Ser P vt . S er Busin ess Agricult ure Othe rs Others

(g). What is your monthly family income approximately? Pl tick (). Up to Rs.10,0 00 Rs. 10,0 01 to 150 00 Rs. 15,0 01 to 20,0 00 Rs. 20,0 01 to 30,0 00 Rs. 30,0 01 and abov e

2. What kind of investments you have made so far? Pl tick (). All applicable. a. Saving b. Fixed deposits c. Insurance d. Mutual

account e. Post OfficeNSC, etc f. Shares/Debentures g. Gold/ Silver

Fund h. Real Estate

3. While investing your money, which factor will you prefer? . (a) Liquidity (b) Low Risk (c) High Return (d) Trust

4. Are you aware about Mutual Funds and their operations? Pl tick ().

Yes

No

5. If yes, how did you know about Mutual Fund? a. Advertisement b. Peer Group c. Banks d. Financial Advisors

6. Have you ever invested in Mutual Fund? Pl tick ().

Yes

No

7. If not invested in Mutual Fund then why? (a) Not aware of MF (b) Higher risk (c) Not any specific reason

8. If yes, in which Mutual Fund you have invested? Pl. tick (). All applicable. a . b. U TI S B I M F c . H D F C d. Re lia nc e e . K o t a k f. O th er . s p

e ci f y

9. If invested in UTIMF, you do so because (Pl. tick (), all applicable). a. UTIMF is associated with State Bank of India. b. They have a record of giving good returns year after year. c. Agent Advice

10. If NOT invested in UTIMF, you do so because (Pl. tick () all applicable). a. You are not aware of UTIMF. b. UTIMF gives less return compared to the others. c. Agent Advice

11. When you plan to invest your money in asset management co. which AMC will you prefer?

Assets Management Co. a. UTIMF b. SBI c. Reliance d. HDFC e. Kotak f. ICICI

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

b. Systematic Investment Plan (SIP)

14. When you want to invest which type of funds would you choose? a. Having only debt portfolio b. Having debt & equity portfolio. c. Only equity portfolio.

15. How would you like to receive the returns every year? Pl. tick (). a. Dividend payout b. Dividend reinvestment c. Growth in NAV

16. Instead of general Mutual Funds, would you like to invest in sectorial funds? Please tick (). Yes No