A PROJECT REPORT

ON

A STUDY ON AWARENESS OF PEOPLE ABOUT

MUTUAL FUNDS IN VISAKHAPATNAM

Submitted by
J.R.A. SANTOSH
In partial fulfillment for the award of the degree
Of
MASTERS IN BUSINESS ADMINISTRATION (IBF)
2009-11

Submitted to
DR. VIJAY DAS (Functional Guide)
DR. RADHA RAGURAMAPATRUNI (Industrial Guide)

GITAM INSTITUTE OF INTERNATIONAL BUSINESS

GITAM UNIVERSITY: VISHAKAPATNAM

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 DECLARATION

I hereby declare that this summer internship project report entitled “A study on awareness of

people about Mutual funds in Visakhapatnam” submitted in the partial fulfillment of the

requirements of the award of the Master Degree in Business Administration, of GITAM Institute

of International Business, Visakhapatnam, Andhra Pradesh is a bonafide record of the project

work carried out by me during the period of eight weeks from 21 st April 2010 to 20th June 2010

under the guidance of Mr.Kumar (Relationship Manager) at ICICI Prudential Asset Management

Company. The report is thoroughly for education purpose only and I also assure that no part of

this work has been presented earlier in for any degree or similar awards from any other

universities.

Date: 26-07-2010
Place: Visakhapatanam

J.R.A. SANTOSH
MBA (IBF)
GITAM Institute of International Business.

ACKNOWLEDGEMENT
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 I avail this opportunity to express my profound sense of sincere and deep gratitude to
many people who are responsible for the knowledge and experience I have gained during the
internship programme.

My heartful thanks to the industrial and functional guides Dr. Vijay Das, Professor and
Dr. Radha Raguramapatruni, Professor, GITAM Institute of International Business,
Visakhapatnam, for keeping the faith in me by being my Guide and providing me with the
valuable guidance and suggestions throughout my project.

I have great pleasure in expressing my deep sense of gratitude to guide Mr. Kumar
(Relationship Manager, ICICI Prudential Asset Management Company, Vishakapatnam),

I would like to express a special word of thanks to each and every division and the staff
of the Vijay Home Appliances ltd. for providing all the required information and the facilities for
the successful completion of my project. I bow down to my family and my well wishers for the
care, moral support and the encouragement that they have given me, which gave me the strength
and courage in reaching to the successful completion of this project.

Above all, I thank the ALMIGHTY GOD without whose blessings and grace nothing
would have been possible.

J.R.A.SANTOSH

EXECUTIVE SUMMARY

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In few years Mutual Fund has emerged as a tool for ensuring one’s 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

100 people. For the collection of Primary data I made a questionnaire and surveyed of 100

people. I also taken interview of many People those who were coming at the ICICI

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Dwarakanagar Branch where I done my Project. The data collected has been well organized and

presented. I hope the research findings and conclusion will be of use

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 Chapter 1

INTRODUCTION

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INTRODUCTION

Mutual funds are financial intermediaries, which collect the savings of investors and invest them
in a large and well-diversified portfolio of securities such as money market instruments,
corporate and government bonds and equity shares of joint stock companies. A mutual fund is a
pool of common funds invested by different investors, who have no contact with each other.
Mutual funds are conceived as institutions for providing small investors with avenues of
investments in the capital market. Since small investors generally do not have adequate time,
knowledge, experience and resources for directly accessing the capital market, they have to rely
on an intermediary, which undertakes informed investment decisions and provides consequential
benefits of professional expertise. The raison d’être of mutual funds is their ability to bring
down the transaction costs. The advantages for the investors are reduction in risk, expert
professional management, diversified portfolios, and liquidity of investment and tax benefits. By
pooling their assets through mutual funds, investors achieve economies of scale. The interests of
the investors are protected by the SEBI, which acts as a watchdog. Mutual funds are governed by
the SEBI (Mutual Funds) Regulations, 1993.

THE GOAL OF MUTUAL FUND

The goal of a mutual fund is to provide an individual to make money. There are several
thousand mutual funds with different investments strategies and goals to chosen from. Choosing
one can be over whelming, even though it need not be different mutual funds have different
risks, which differ because of the fund’s goals fund manager, and investment style.

The fund itself will still increase in value, and in that way you may also make money therefore
the value of shares you hold in mutual fund will increase in value when the holdings increases in
value capital gains and income or dividend payments are best reinvested for younger investors
Retires often seek the income from dividend distribution to augment their income with
reinvestment of dividends and capital distribution your money increase at an even greater rate.
When you redeem your shares what you receive is the value of the share.

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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 the market and trying to gain market share in this rapidly improving market.

The research was carried on in Visakhapatnam. I had been sent to the Dwaraka Nagar branch of
ICICI Prudential Asset Management Company where I completed my Project work. I surveyed
on my Project Topic “A study of preferences of the Investors for investment in Mutual Fund” on
the visiting customers of the ICICI AMC.

The study will help to know the preferences of the customers, which company, portfolio, mode
of investment, option for getting return and so on they prefer. This project report may help the
company to make further planning and strategy.

OBJECTIVES OF STUDY:

1. To study the consumer awareness regarding Mutual Funds

2. To study the pattern of consumer behavior within the available investment options and to
test awareness among the consumer about the various mutual funds.

3. To create awareness about mutual funds industry and different products of mutual funds
available in ICICI Prud.AMC. Various respondents are not aware of the mutual fund
products and the risk and returns involved with them.

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LIMITATIONS TO THE STUDY:

Though the present study aimed to achieve the above-mentioned objectives in full earnest and
accuracy, it was in a weak position due to certain limitations. Some of the limitations of this
study may be summarized as follows:

 Getting accurate responses from the respondents due to their inherent problems was
difficult. They were partial, and refused to cooperate.

 Very few people have knowledge about Mutual funds and the other products of the
Mutual Funds.

 Locating the target respondents was very time consuming.

 Sample size was limited due to the limited period of days allocated for the survey.

 The selection of respondents to cover the various strata of the society was tedious and
time consuming.

STUDY METHODOLOGY

Research Design : Descriptive Research

Research Instrument : Structured, non-disguised

Sample Method : Non-Probability Sampling

Sample Size : 100

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Sampling Design : Convenience Sampling

SOURCES OF DATA

➢ Primary Data : Structured, Non-Disguised Questionnaire

➢ Secondary Data : Reference from distributors & banks

The whole study is based upon primary and secondary data. Therefore, information has been
collected from interacting with different investors and from various magazines, journals,
websites, and bulletins.

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 LITERATURE REVIEW

Mutual funds are as much about marketing as investing in the 1990’s,which is why the hoary
cliché” Mutual funds are sold, not bought” is a true as ever. As Glorianne Stromberg once
told Canadian Business magazine, the fund business may have started out in the portfolio
management business, but “somewhere along the line, the marketers got hold of it, and the
advisory function has been almost superseded by the sales function.”

-JONATHAN CHEVREAU, THE WEALTHY BOOMER

Successful fund marketing creates value for Fund companies, dealers and unit holders so that
each is satisfied. The definition goes much deeper than simply "selling something to somebody".
Fund marketers must understand. Both "Needs &Wants" side of the equation and “Product, Ideas
Services" side of the equation. Not only must marketing fully understand both sides of the
equation, but it must also effectively communicate the details of each in order to successfully
bridge the gap between the two. Every facet of modern marketing has been effectively employed
to dramatically grow the Indian mutual fund industry

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 Chapter 2

HISTORY OF MUTUAL FUNDS

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BACKGROUND

HISTORY AND STRUCTURE OF 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 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. It was set up by the
Reserve Bank of India and functioned under the Regulatory and administrative control of the
Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development
Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The
first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700
crores of assets under management.

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

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.

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

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in
which the first Mutual Fund Regulations came into being, under which all mutual funds, except
UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993
SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual
Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund)
Regulations 1996. The number of mutual fund houses went on increasing, with many foreign
mutual funds setting up funds in India and also the industry has witnessed several mergers and
acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,
21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was
way ahead of other mutual funds.

Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated
into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets
under management of Rs.29, 835 crores as at the end of January 2003, representing broadly, the
assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of
Unit Trust of India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund Regulations. The
second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with
SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile
UTI which had in March 2000 more than Rs.76, 000 crores of assets under management and with
the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and
with recent mergers taking place among different private sector funds, the mutual fund industry
has entered its current phase of consolidation and growth. As at the end of September, 2004,
there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

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MUTUAL FUND OPERATIONS FLOW CHART

The flow chart below describes broadly the working of a Mutual Fund:

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 Chapter – 3

CLASSIFICATION OF MUTUAL FUNDS

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CLASSIFICATION OF MUTUAL FUND SCHEMES:

Any mutual fund has an objective of earning income for the investors and/ or getting increased
value of their investments. To achieve these objectives mutual funds adopt different strategies
and accordingly offer different schemes of investments. On this basis the simplest way to
categorize schemes would be to group these into two broad classifications:

OPERATIONAL CLASSIFICATION AND PORTFOLIO CLASSIFICATION.

Operational classification highlights the two main types of schemes, i.e., open-ended and close-
ended which are offered by the mutual funds.

Portfolio classification projects the combination of investment instruments and investment

avenues available to mutual funds to manage their funds. Any portfolio scheme can be either
open ended or close ended.

OPERATIONAL CLASSIFICATION

(A) Open Ended Schemes:

As the name implies the size of the scheme (Fund) is open – i.e., not specified or pre-
determined. Entry to the fund is always open to the investor who can subscribe at any time. Such
fund stands ready to buy or sell its securities at any time. It implies that the capitalization of the
fund is constantly changing as investors sell or buy their shares. Further, the shares or units are
normally not traded on the stock exchange but are repurchased by the fund at announced rates.
Open-ended schemes have comparatively better liquidity despite the fact that these are not
listed. The reason is that investors can any time approach mutual fund for sale of such units. No
intermediaries are required. Moreover, the realizable amount is certain since repurchase is at a
price based on declared net asset value (NAV). No minute to minute fluctuations in rates haunt
the investors. The portfolio mix of such schemes has to be investments, which are actively
traded in the market. Otherwise, it will not be possible to calculate NAV. This is the reason

17
that generally open-ended schemes are equity based. Moreover, desiring frequently traded
securities, open-ended schemes hardly have in their portfolio shares of comparatively new
and smaller companies since these are not generally traded. In such funds, option to reinvest its
dividend is also available. Since there is always a possibility of withdrawals, the management of
such funds becomes more tedious as managers have to work from crisis to crisis. Crisis may
be on two fronts, one is, that unexpected withdrawals require funds to maintain a high level
of cash available every time implying thereby idle cash. Fund managers have to face questions
like ‘what to sell’. He could very well have to sell his most liquid assets. Second, by virtue of
this situation such funds may fail to grab favourable opportunities. Further, to match quick cash
payments, funds cannot have matching realization from their portfolio due to intricacies of the
stock market. Thus, success of the open- ended schemes to a great extent depends on the
efficiency of the capital market and the selection and quality of the portfolio.

(B) Close Ended Schemes:

Such schemes have a definite period after which their shares/ units are redeemed. Unlike open-
ended funds, these funds have fixed capitalization, i.e., their corpus normally does not change
throughout its life period. Close ended fund units trade among the investors in the secondary
market since these are to be quoted on the stock exchanges. Their price is determined on the
basis of demand and supply in the market. Their liquidity depends on the efficiency and
understanding of the engaged broker. Their price is free to deviate from NAV, i.e., there is every
possibility that the market price may be above or below its NAV. If one takes into account the
issue expenses, conceptually close ended fund units cannot be traded at a premium or over NAV
because the price of a package of investments, i.e., cannot exceed the sum of the prices of the
investments constituting the package. Whatever premium exists that may exist only on account
of speculative activities. In India as per SEBI (MF) Regulations every mutual fund is free to
launch any or both types of schemes.

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PORTFOLIO CLASSIFICATION OF FUNDS

Following are the portfolio classification of funds, which may be offered. This classification may
be on the basis of (A) Return, (B) Investment Pattern, (C) Specialised sector of investment, (D)
Leverage and (E) Others.

(A) Return based classification:

To meet the diversified needs of the investors, the mutual fund schemes are made to enjoy a
good return. Returns expected are in form of regular dividends or capital appreciation or a
combination of these two.

1. Income Funds: For investors who are more curious for returns, Income funds are floated.
Their objective is to maximize current income. Such funds distribute periodically the income
earned by them. These funds can further be splitted up into categories: those that stress constant
income at relatively low risk and those that attempt to achieve maximum income possible, even
with the use of leverage. Obviously, the higher the expected returns, the higher the potential risk
of the investment.

2. Growth Funds: Such funds aim to achieve increase in the value of the underlying investments
through capital appreciation. Such funds invest in growth oriented securities which can
appreciate through the expansion production facilities in long run. An investor who selects such
funds should be able to assume a higher than normal degree of risk.

3. Conservative Funds: The fund with a philosophy of “all things to all” issue offer document
announcing objectives as: (i) To provide a reasonable rate of return, (ii) To protect the value of
investment and, (iii) To achieve capital appreciation consistent with the fulfillment of the first
two objectives. Such funds which offer a blend of immediate average return and reasonable
capital appreciation are known as “middle of the road” funds. Such funds divide their portfolio in
common stocks and bonds in a way to achieve the desired objectives. Such funds have been most
popular and appeal to the investors who want both growth and income.

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(B) Investment Based Classification:

Mutual funds may also be classified on the basis of securities in which they invest. Basically, it
is renaming the subcategories of return based classification.

1. Equity Fund: Such funds, as the name implies, invest most of their investible shares in
equity shares of companies and undertake the risk associated with the investment in equity
shares. Such funds are clearly expected to outdo other funds in rising market, because these have
almost all their capital in equity. Equity funds again can be of different categories varying from
those that invest exclusively in high quality ‘blue chip companies to those that invest solely in
the new, unestablished companies. The strength of these funds is the expected capital
appreciation. Naturally, they have a higher degree of risk. Examples:

2. Bond Funds: Such funds have their portfolio consisted of bonds, debentures, etc. this type of
fund is expected to be very secure with a steady income and little or no chance of capital
appreciation. Obviously risk is low in such funds. In this category we may come across the funds
called ‘Liquid Funds’ which specialize in investing short-term money market instruments. The
emphasis is on liquidity and is associated with lower risks and low returns.

3. Balanced Fund: The funds, which have in their portfolio a reasonable mix of equity and
bonds, are known as balanced funds. Such funds will put more emphasis on equity share
investments when the outlook is bright and will tend to switch to debentures when the future is
expected to be poor for shares.

(C) Sector Based Funds:

There are number of funds that invest in a specified sector of economy. While such funds do
have the disadvantage of low diversification by putting all their all eggs in one basket, the policy
of specializing has the advantage of developing in the fund managers an intensive knowledge of
the specific sector in which they are investing. Sector based funds are aggressive growth funds

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which make investments on the basis of assessed bright future for a particular sector. These
funds are characterized by high viability, hence more risky.

WHY MUTUAL FUNDS?

Mutual Funds are becoming a very popular form of investment characterized by many
advantages that they share with other forms of investments and what they possess uniquely
themselves. The primary objectives of an investment proposal would fit into one or combination
of the two broad categories, i.e., Income and Capital gains. How mutual fund is expected to be
over and above an individual in achieving the two said objectives, is what attracts investors to
opt for mutual funds. Mutual fund route offers several important advantages.

Diversification: A proven principle of sound investment is that of diversification, which is

the idea of not putting all your eggs in one basket. By investing in many companies the mutual
funds can protect themselves from unexpected drop in values of some shares. The small
investors can achieve wide diversification on his own because of many reasons, mainly funds at
his disposal. Mutual funds on the other hand, pool funds of lakhs of investors and thus can
participate in a large basket of shares of many different companies. Majority of people consider
diversification as the major strength of mutual funds.

Expertise Supervision: Making investments is not a full time assignment of investors. So

they hardly have a professional attitude towards their investment. When investors buy mutual
fund scheme, an essential benefit one acquires is expert management of the money he puts in the
fund. The professional fund managers who supervise fund’s portfolio take desirable decisions
viz., what scrip’s are to be bought, what investments are to be sold and more appropriate
decision as to timings of such buy and sell. They have extensive research facilities at their
disposal, can spend full time to investigate and can give the fund a constant supervision. The
performance of mutual fund schemes, of course, depends on the quality of fund managers
employed.

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 Chapter - 4

MARKETING OF MUTUAL FUNDS

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MARKETING STRATEGIES ADOPTED BY THE MUTUAL FUNDS

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

1. Direct marketing
2. Selling through intermediaries

DIRECT MARKETING:

This constitutes 20 percent of the total sales of mutual funds. Some of the important tools used in
this type of selling are:

1. Personal Selling:

In this case the customer support officer or Relationship Manager of the fund at a particular
branch takes appointment from the potential prospect. Once the appointment is fixed, the branch
officer also called Business Development Associate (BDA) in some funds then meets the
prospect and gives him all details about the various schemes being offered by his fund. The
conversion rate in this mode of selling is in between 30% - 40%.

2. Telemarketing:

In this case the emphasis is to inform the people about the fund. The names and phone numbers
of the people are picked at random from telephone directory. Some fund houses have their
database of investors and they cross sell their other products. Sometimes people belonging to a
particular profession are also contacted through phone and are then informed about the fund.
Generally the conversion rate in this form of marketing is 15% - 20%.

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3. Direct mail:

This one of the most common method followed by all mutual funds. Addresses of people are
picked at random from telephone directory, business directory, professional directory etc. The
customer support officer (CSO) then mails the literature of the schemes offered by the fund. The
follow up starts after 3 – 4 days of mailing the literature. The CSO calls on the people to whom
the literature was mailed. Answers their queries and is generally successful in taking
appointments with those people. It is then the job of BDA to try his best to convert that prospect
into a customer.

4. Advertisements in newspapers and magazines:

The funds regularly advertise in business newspapers and magazines besides in leading national
dailies. The purpose to keep investors aware about the schemes offered by the fund and
their performance in recent past. Advertisement in TV/FM Channel: The funds are
aggressively giving their advertisements in TV and FM Channels to promote their funds.

5. Hoardings and Banners:

In this case the hoardings and banners of the fund are put at important locations of the city where
the movement of the people is very high. The hoarding and banner generally contains
information either about one particular scheme or brief information about all schemes of fund.

SELLING THROUGH INTERMEDIARIES:

Intermediaries contribute towards 80% of the total sales of mutual funds. These are the people/
distributors who are in direct touch with the investors. They perform an important role in
attracting new customers. Most of these intermediaries are also involved in selling shares and
other investment instruments. They do a commendable job in convincing investors to invest in
mutual funds. A lot depends on the after sale services offered by the intermediary to the

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customer. Customers prefer to work with those intermediaries who give them right information
about the fund and keep them abreast with the latest changes taking place in the market
especially if they have any bearing on the fund in which they have invested.

Regular Meetings with distributors:

Most of the funds conduct monthly/bi-monthly meetings with their distributors. The objective is
to hear their complaints regarding service aspects from funds side and other queries related to
the market situation. Sometimes, special training programmes are also conducted for the new
agents/ distributors. Training involves giving details about the products of the fund, their present
performance in the market, what the competitors are doing and what they can do to increase the
sales of the fund.

MARKETING OF FUNDS : CHALLENGES AND OPPORTUNITIES

When we consider marketing, we have to see the issues in totality, because we cannot judge an
elephant by its trunk or by its tail but we have to see it in its totality. When we say marketing of
mutual funds, it means, includes and encompasses the following aspects:

➢ Assessing of investors needs and market research;

➢ Responding to investors needs;

➢ Product designing;

➢ Studying the macro environment;

➢ Timing of the launch of the product;

➢ Choosing the distribution network;

➢ Finalizing strategies for publicity and advertisement;

➢ Preparing offer documents and other literature;

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➢ Getting feedback about sales;

➢ Studying performance indicators about fund performance like NAV;

➢ Creating positive image about the fund and changing the nature of the market itself.

The above are the aspects of marketing of mutual funds, in totality. Even if there is a single
weak-link among the factors which are mentioned above, no mutual fund can successfully
market its funds.

WIDENING, BROADENING AND DEEPENING THE MARKETS

There are certain issues that are directly linked with the marketing of mutual funds, the first of
which is widening, broadening and deepening of the market for the mutual fund products.
Consider the geographical spread of the investors in the mutual fund industry. Almost 80% of the
funds are mobilized from less than 10 centers in the country. In fact there are only around 35
centers in the country, which account for almost 95% of the funds mobilized. Considering the
vast nature of this country, the first priority is that the geographic spread has to be widened and
the market has to be deepened. Secondly, the mutual funds must try to spread their wings not
only within the country, but also outside the country.

A. Markets in Rural and Semi-Urban Areas

There exists a large investor base in rural and semi-urban areas, having a population of about one
lakhs, which normally has access to only post office savings and bank deposits. This is the single
largest untapped market for mutual funds in India. Rural marketing, unlike the marketing of
mutual funds in the metros and urban areas, would require a completely different strategy, and
different means of communication to the target customer. Typically, investors in the rural and
semi-urban areas are not well educated and are inadequately exposed to the capital market
mechanisms. Therefore, more emphasis has to be given to the electronic media and other forms
of publicity such as wall paintings, hoardings, and educational films. It is also important to

26
utilize the services of local intermediaries like Gram Sevaks, Postmasters, School teachers,
Agricultural Co-operative Societies and Rural Banks. It would therefore be more expensive to
market mutual funds in such markets than marketing in the cities.

The mutual fund industry can collectively undertake this job of creating awareness among the
rural population about the mutual funds as a new form of savings; translate that awareness into
increased fund mobilization. Collective Advertisements can be released .AMFI can coordinate
this task on behalf of the various Mutual Fund houses. The retail distribution network,
comprising of the district representatives and the collection centers can be best utilized to create
such awareness and expand the market. Simplification of literature in regional languages, group
meetings in these semi-urban and rural areas, visits by mobile vans with some audio visual aids
and the like, should help develop these markets. In other words, the untapped markets in the
country should ideally be the first thing that the mutual funds in India should Endeavour to tap,
not entirely relying upon the investors in the 35 odd cities of the country. By concentrating on
these areas, the investor base will get more broad based. Once the semi urban population gets
acquainted with the concept of mutual funds, it will naturally give the much needed stability to
the market.

B. Overseas Markets

The second aspect with respect to the widening and deepening the market is expanding the
overseas investor base. A target group with large potential, which can be tapped is non-resident
Indians. If offered after sales services of international standard, reasonable return and easy access
to information, NRI’s are willing to invest in Indian mutual funds. The expansion of the
distribution network and quick dissemination of information, coupled with prompt and timely
service, efficient collection and remittance mechanism, will play an important role in mobilizing
and retaining these funds. NRI’s will also require a continuous presence in their market, because
that generates trust and confidence, which translates into sustained mobilization of funds.

PRODUCT INNOVATION AND VARIETY

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A. Investor Preferences

The challenge for the mutual funds is in the tailoring the right products that will help mobilizing
savings by targeting investors’ needs. It is necessary that the common investor understands very
clearly and loudly the salient features of funds, and distinguishes one fund from another. The
funds that are being launched today are more or less look-alikes, or plain vanilla funds, and not
necessarily designed to take into account the investors’ varying needs. The Indian investor is
essentially risk averse and is more passive than active. He is not interested in frequently
changing his portfolio, but is satisfied with safety and reasonable returns. Importantly, he
understands more by emotions and sentiments rather than a quantitative comparison of funds’
performance with respect to an index. Mere growth prospects, in an uncertain market, are not
attractive to him. He prefers one bird in the hand to two in bush, and is happy if assured a rate of
reasonable return that he will get on his investment. The expectations of a typical investor, in
order of preference are the safety of funds, reasonable return and liquidity.

The investor is ready to invest his money over a long period, provided there is a purpose attached
to it which is linked to his social needs and therefore appeals to his sentiments and emotions.
That purpose may be his child’s education and career development, medical expenses, health
care after retirement, or the need for steady and sure income after retirement. In a country where
social security and social insurance are conspicuous more by their absence, mutual funds can
pool their resources together and try to mobilize funds to meet some of the social needs of the
society.

B. Product Innovations

With the debt market now getting developed, mutual funds are tapping the investors who require
steady income with safety, by floating funds that are designed to primarily have debt instruments
in their portfolio. The other area where mutual funds are concentrating is the money market
mutual funds, sectoral funds, index funds, gilt funds besides equity funds. The industry can also
design separate funds to attract semi-urban and rural investors, keeping their seasonal
requirements in mind for harvest seasons, festival seasons, sowing seasons, etc.

28
ADVERTISING AND SALES PROMOTION

By their very nature, mutual funds require higher advertisement and sales promotion expenses
than any consumer product offering measurable performance. Different kinds of advertising and
sales promotion exercises are required to serve the needs of different classes of investors. For
instance, an aggressive ‘push’ marketing strategy is required for retail markets, where investors
are not adequately aware of the product and do not have specialized skill in financial market, in
contrast with ‘pull’ marketing strategies for the wholesale market.

There are certain issues with reference to advertisement, publicity literature and offer
documents, which deserve attention. Most of the mutual fund advertisements look similar,
focusing on scheme features, returns and incentives. An investor exposed to the increasing
number of mutual fund products finds that all the available brands are rather identical, and
cannot appreciate any distinction.

The present form of application, brochures and other literature is generally lengthy, cumbersome
and at times complicated leading to higher emphasis on advertisement. One of the limiting
factors is the regulatory framework governing advertisements of mutual fund products. For
instance, in the offer documents, mutual funds are required to mention the fund objectives in
clear terms. Immediately thereafter, the first risk factor that has to be mentioned is that there is
no certainty whether the objectives of the fund will be achieved or not. Some more relaxation’s
in these may facilitate bringing more novelty in advertisements, within a broad framework,
without luring investors through false promises, and will certainly improve the situation.
Another hurdle is the statutory disclaimer required to be carried along with every advertisement.
Mutual funds have to provide risk factors. Under the present mutual fund regulations, a prior
approval by SEBI is a must before a mutual fund can launch its fund. In the regulation itself, a
period of one month has been provided. But in a month’s time, perhaps the situation may so
change, that the timing of launch gets affected. The requirement for getting approval, which
normally takes about 2 months’ time, defeats the purpose for which the fund was designed also.

29
QUALITY OF SERVICE

This industry primarily sells quality of services, given that the performance cannot be promised.
It is with this attribute along with procedural simplicity, that the fund gradually builds its brand
and its class of loyal investors. The quality of services is broadly categorized as:

Ø Timely services after the sale of the units; and

Ø Continuous reporting of investment performance.

Mutual fund managers must give due attention and evaluate their performance on each front.
They may also consider an option of conducting a service audit for controlling and improving the
quality of service.

MARKET RESEARCH

Investment in mutual fund is not a one-time activity. It is a continuous activity. The same
investor, if satisfied, will come to the fund again and again. When the investor sends his
application, it is not only an application, but it also contains vital information. Most of this
information if tabulated and analyzed would provide important insights into investor needs,
preferences and behavior and enables us to target customers need more accurately, to achieve
better penetration, deeper loyalty and reduced costs. It is in this context that direct marketing will
assume increased importance. Knowing the customer thoroughly is of utmost importance. Unlike
the consumer goods industry, it is not possible for mutual fund industry to test market and have
pilot projects before launch. At the same time, focusing and concentrating on a particular
geographic area where the fund has a strong presence and proven marketing network, can help
reduce network, can help reduce issue expenses and ultimately translate into higher returns for
the investor. Very little research on investor preference is available, but the industry can
collectively have a data bank, and share the information for appropriate use.

Market Segmentation:

30
Different segments of the market have different risk-return criteria, on the basis of which they
take investment decisions. Not only that, in a particular segment also there could be different
sub-segments asking for yet different risk-return attributes, and differential preference for
various investments attributes of financial product. Different investment attributes an investor
expects in a financial product are:

➢ Liquidity,

➢ Capital appreciation

➢ Safety of principal,

➢ Tax treatment,

➢ Dividend or interest income,

➢ Regulatory restrictions,

➢ Time period for investment,

On the basis of these attributes the mutual fund market may be broadly segmented into five main
segments as under.

1) Retail Segment

This segment characterizes large number of participants but low individual volumes. It consists
of individuals, Hindu Undivided Families, and firms. It may be further sub-divided into:

i. Salaried class people;

ii. Retired people;

iii. Businessmen and firms having occasional surpluses;

2) Institutional Segment

31
This segment characterizes less number of participants, and large individual volumes. It consists
of banks, public sector units, financial institutions, foreign institutional investors, insurance
corporations, provident and pension funds. This class normally looks for more specialized
professional investment skills of the fund managers and expects a structured product than a
ready-made product. The tax features and regulatory restrictions are the vital considerations in
their investment decisions. Each class of participants, such as banks, provides a niche to the fund
managers in this segment. It requires more of a personalized and direct marketing to sustain and
increase volumes.

3) Trust

This is a highly regulated, high volumes segment. It consists of various types of trusts, namely,
charitable trusts, religious trust, educational trust, family trust, social trust, etc. each with
different objectives. Its basic investment need would be safety of the principal, regular income
and hedge against inflation rather than liquidity and capital appreciation. This class offers vast
potential to the fund managers, if the regulators relax guidelines and allow the trusts to invest
freely in mutual funds.

4) NRI’s:

This segment consists of very risk sensitive participants, at times referred as ‘fair weather
friends.’ They need the highest cover against political and exchange risk. They normally prefer
easy exit with repatriation of income and principal. They also hold a strategic importance as they
bring in crucial foreign exchange – a crucial input for developing country like ours. Marketing to
this segment requires special kind of products for groups of foreign countries depending upon the
provisions of tax treaties. The range of suitable products is required to design to divert the funds
flowing into bank accounts. The latest flavour in the mutual fund industry is exclusive schemes
for non-resident Indians (NRI’s).SBI MF has already launched an exclusive scheme for NRI’s.
ICICI Prudential and JM Mutual are in process of finalizing details and some more funds have
also confirmed that they are planning such schemes. The MF industry is also looking to tap the

32
vast NRI funds of about $5 billion that were transferred to the local banks as FCNR and NRE
deposits on the redemption of the Resurgent India Bonds in October, 2003. HDFC was one of the
first to launch a fixed maturity plan to NRI’s after the RIB redemption .The scheme had
collected Rs.16-17 crores. Sundaram and HDFC MF are currently in the process of
strengthening distribution net-works overseas, especially in the Middle East. Sanjay Santhanam,
Vice President Marketing &Sales of Sundaram MF says, “We are intensifying our efforts at
tapping NRI money. To begin with, we are looking at a representative office and a distribution
network in Dubai. Then we will work out specialized products and asset allocation models.NRI
are used to seeing low interest rates so their return expectations are different from domestic
investors. The large South Indian population in the Middle East will surely connect with the
Sundaram brand.”

5) Corporates

Generally, the investment need of this segment is to park their occasional surplus funds that earn
returns more than what they have to pay on account of holding them. Alternatively, they also get
surplus fund due to the seasonality of the business, which typically become due for the payment
within a year or quarter or even a month. They need short term parking place for their fund,.
This segment offers a vast potential to specialized money market managers.

Inspired Marketing will help Mutual Funds walk away with the bank Deposits

Bankers better watch out! The Indian mutual fund industry will soon start relieving the banking
system of its prized deposits.

Innovative distribution, marketing and aggressive concept selling will drive savings into the lap
of the Indian Mutual Fund industry in the next millennium. Fund chiefs predicted that ease of
transactions, thanks to technology and increased awareness, would lead to more investors
putting their money into mutual funds. The day was not far, they said, when small savings
account s too began moving into mutual funds.

Significantly, fund chiefs were unanimous that the credibility gap which the industry suffered for
the past few years did not exist anymore. All the fund chiefs were unanimous that

33
performance, service and support were all imperative for growth. “Performance, transparency
and after sales service and genuine retail investor interest as opposed to hot corporate money, an
important contributor to many mutual fund schemes, will drive the industry growth.
“Performance, transparency, after sales customer service and genuine retail investor interest are
opposed to hot corporate money, an important contributor to many mutual fund schemes, will
drive the industry growth, On the state of market in general, fund chiefs attempted to allay fears
that an overvalued market may pose hurdles to stock picking.

According to them, while investors may feel that information technology, pharmaceuticals and
consumer goods stocks - or the BSE Sensex for that matter – might have peaked, new
opportunities are opening up in areas like retail, healthcare and even in internet business.

Fund chiefs also made a case for the code to prevent mutual funds from projecting short-term
gains in an attempt to attract investors into their schemes. They were of the view that, “Mutual
Funds have to agree to present performances in an annualized fashion, over a longer period. The
industry as a whole should standardize its performance.”

34
 Chapter 5

COMPANY PROFILE

35
ICICI Prudential Asset Management Company enjoys the
strong parentage of Prudential plc, one of UK's largest players
in the insurance & fund management sectors and ICICI Bank, a
well-known and trusted name in financial services in
India. ICICI Prudential Asset Management Company, in a span
of just over eight years, has forged a position of pre-eminence
in the Indian Mutual Fund industry as one of the largest asset
management companies in the country with average assets
under management of Rs. 73,822.45 Crore (as of June 30,
2010). The Company manages a comprehensive range of
schemes to meet the varying investment needs of its investors
spread across 230 cities in the country.
   

Key Indicators

At inception - As on June 30,

 
May 1998 2010

Average Assets Under Rs. 73,822.45

Rs. 160 Crore
Management Crore

Number of Funds Managed 2 40

   
Sponsors  
   
Securities and Exchange Board of India, vide its letter no. MFD/PM/567/02
dated June 4, 2002, has accorded its approval in recognizing ICICI Bank Ltd.
as a co-sponsor consequent to the merger of ICICI Ltd. with ICICI Bank Ltd.

36
 ICICI Bank is India's second-largest bank with total assets of Rs. 3,997.95
billion (US$ 100 billion) at March 31, 2008 and profit after tax of Rs. 41.58
billion for the year ended March 31, 2008. ICICI Bank is second amongst all
the companies listed on the Indian stock exchanges in terms of free float market
capitalization Free float holding excludes all promoter holdings, strategic
investments and cross holdings among public sector entities. The Bank has a
network of about 1,308 branches and 3,950 ATMs in India and presence in 18
countries. ICICI Bank offers a wide range of banking products and financial
services to corporate and retail customers through a variety of delivery
channels and through its specialised subsidiaries and affiliates in the areas of
investment banking, life and non-life insurance, venture capital and asset
management. The Bank currently has subsidiaries in the United Kingdom,
Russia and Canada, branches in Unites States, Singapore, Bahrain, Hong Kong,
Sri Lanka, Qatar and Dubai International Finance Centre and representative
offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand,
Malaysia and Indonesia. Our UK subsidiary has established branches in
Belgium and Germany. ICICI Bank's equity shares are listed in India on
Bombay Stock Exchange and the National Stock Exchange of India Limited
and its American Depositary Receipts (ADRs) are listed on the New York
Stock Exchange (NYSE). (Source: Overview at www.icicibank.com).
   
   
Headquartered in London, Prudential plc and its affiliated companies together
constitute one of the world's leading financial services groups. Prudential
provides insurance and financial services in a number of markets around the
world, including in Asia, the US, the UK, Europe and the Middle East.
Founded in 1848, the company has £249 billion in funds under management (as
of 31 December 2008) and more than 21 million customers worldwide. 

Prudential has been writing life insurance in the United Kingdom for 160 years
and has had the largest long-term fund in the United Kingdom, for over a

37
century. In the United Kingdom, Prudential is a leading retirement savings and
income solutions and life assurance provider. M&G is Prudential's fund
management business in the United Kingdom and Europe, with almost £140
billion in funds under management (as of 31 December 2008). In the United
States, Jackson National Life, which we acquired in 1986, is one of the largest
life insurance companies providing retirement savings and income solutions.

In Asia, Prudential is the leading Europe-based life insurer in terms of market

coverage and number of top three ranking positions. It is also one of the largest
and most successful fund managers in Asia with more top five market rankings
than any other regional player. Today, Prudential has life insurance and fund
management operations spanning 13 diverse markets in Asia. 

Prudential plc is incorporated and with its principal place of business in the
United Kingdom. It is not affiliated in any manner with Prudential Financial,
Inc., a company whose principal place of business is in the United States. 

38
 Chapter – 5

DATA ANALYSIS & INTERPRETATION

ANALYSIS AND INTERPRETATION OF DATA

Knowing the awareness and perception of the customers is very important in any industry. This
provides insight into the customer behavior and his expectation from the industry players. A
proper understanding of the awareness and perception would definitely benefit the players. This

39
survey attempt to know the mutual fund investor better. It examines some interesting choices of
the retail investor including the reasons behind investing in mutual funds and the risk tolerance
levels of the investors. The investor knowledge about the mutual funds and what according to
him are the best mutual funds is also analyzed. This Visakhapatnam city survey was conducted
to know the retail investor awareness and perception about mutual funds. It is hoped that this
survey in Visakhapatnam city would go a long way in benefiting for ICICI mutual fund. The
total sample for the study was 100 across Visakhapatnam city.

I. AN OVERVIEW:

This section shows a simple overview of respondents like their age, gender, income profile,
saving habits and qualification

(A) AGE-PROFILE

Table No. I(a) showing age profile of respondents:

S. No Age No .of respondents Percentage

1. 20-25 19 19%

2. 25-40 40 40%

40
 3. 40-55 21 21%

4. 55-60 15 15%

5. 60-Above 5 5%

Total 100 100%

Age-profile

55-60
15% 20-25
19%
20-25
60-Above
25-40
5%
40-55
40-55
25-40 55-60
21%
40% 60-Above

INTERPRETATION :

The maximum number of respondents belongs to the age group of 25-40 years, followed by 40-
55 years of age category.

(B) INCOME PROFILE

Table No. I(b) showing income wise profile of respondents:

S. No Income No. of respondents Percentage

1. Less then 1.0 Lakh 34 17%

2. 1.0-2.0 Lakh 38 38%

3. 2.0-3.0 Lakh 30 30%

4. 3.0-5.0 Lakh 6 6%

5. More then 5.0 Lakh 4 4%

41
 6. No response 5 5%

Total 100 100%

Income Profile
40% 38%
35%
30% Less then 1.0 Lakh
30%
1.0-2.0 Lakh
25%
2.0-3.0 Lakh
20% 17%
3.0-5.0 Lakh
15%
More then 5.0 Lakh
10% 6%
4% 5% No response
5%
0%
No. of respondents

INTERPRETATION:
The break up of the respondents. Around 38%of the respondents have an income between of
Rs.1.0-2.0 Lakhs per annum and 30% of respondents in between 2.0-3.0 Lakhs .it display the
income profile of respondents.

(C) SAVING HABITS

Table No. I(c) showing saving habits profile of respondents:

S. No Savings No. of respondents Percentage

1. Up to Rs. 2000 31 31%

2. Rs.2001-5000 33 33%

3. Rs.5001-10000 16 16%

4. Rs.10001-20000 3 3%

5. Above Rs.20001 1 1%

6. No Response 16 16%

42
 Total 100 100%

Saving Habits of respondents

No response
16% up to Rs.2000
aboveRs.200 Rs. 2001-5000
01 up to Rs.5001-10000
1% Rs.2000
31% Rs.10001-20000
Rs.10001-
aboveRs.20001
20000
3% No response
Rs.5001-
10000 Rs. 2001-5000
16% 33%

INTERPRETATION: In this survey around 33% of the respondents reported to have a saving
in the range of Rs.2001-5000 per month .only 1% of the respondents reported having in higher
bracket i.e more then 20001 per month.

(D) QUALIFICATION

Table No. I(d) showing Qualification profile of respondents:

S.No Qualification No. of respondents Percentage

1. Undergraduates 6 6%

2. Graduates 39 39%

3. Postgraduates 40 40%

4. Others 1 1%

5. No response 14 14%
40%
39% Total 100 100%
40%
35% Undergraduates
30% Graduates
25% Postgraduates
20% 14% Others
15% No response
6%
10%
1% 43
5%
0%
No. of respondents
INTERPRETATION:
The surveyed group is well educated group with 40% being post graduates and 39% being
graduates. Around 6% of the samples collected were undergraduates.

II. KNOWLEDGE OF MUTUAL FUNDS

In the survey, I attempted to understand from the investors their knowledge of Mutual fund.

(A) KNOWLEDGE OF MUTUAL FUND

Table No. II (a) showing knowledge of mutual fund of respondents:

S. No Knowledge of No. of respondents Percentage

Mutual Funds

1. Very good 4 4

2. Good 9 9

3. Average 19 19

4. Poor 64 64

5. No response 4 4

Total 100 100%

44
 Knowledge of Mutual Fund

No Very
respon good Very good
se 4% Good
4% Good
9%
Average
Averag
Poor
Poor e
64% 19% No response

INTERPRETATION:

In this survey it was found that 64% of the respondents don’t know or their knowledge is very
poor about Mutual funds. they, while 4% respondents rated their understanding as very good
about Mutual funds. it shows knowledge of Mutual funds are very low.

45
(B) KNOWLEDGE RELATED TO SHARE MARKET

Table No. II (b) showing knowledge related to share market of respondents:

S. No Knowledge related No. of respondents Percentage

to share market

1. Yes 32 32%

2. No 64 64%

3. Can’t say 4 4%

Total 100 100%

Knowledge related to share market:

Can't
say
4% Yes
32%
Yes
No
No Can't say
64%

INTERPRETATION:

It was found that 64% of the respondents don’t know that the Mutual fund is related to share
market. They also don’t know that Mutual funds returns is affected by the fluctuation in share
market.

46
III. INVESTMENT OBJECTIVE/DECISIONS
This section of survey was aimed at understanding the main reason behind the investment
decision made by an individual. I tried to catch the factor that contributes to making of an
investment portfolio off an individual.

(A) INVESTMENT OBJECTIVE

S. No Investment objective No. of respondents Percentage

1. Capital Gain 21 21%

2. Generate Regular return 6 6%

3. Secure Future 59 59%

4. Tax benefits 14 14%

Total 100 100%

Investment Objective of Investor

tax capital capital gain

benefit gain generate reguar
s 21% return
14% genera secure future
te tax benefits
secure
future reguar
59% return
6%

INTERPRETATION: Total number of 100 responses was generated for this question and
multiple responses were sought for the various investment objectives. the analysis brings out the
fact that investor were more concerned about the secure future(59%) and capital gains(21%), and
after that they considered tax benefits(14%) and regular return(6%) as their main investment
objectives.

(B) DECISION AFFECTING FACTORS

47
 S. No Decision affecting Factors No. of respondents Percentage

1. Economic scenario 19 19%

2. Company image 44 44%

3. Fund performance 21 21%

4. Fund manager image 2 2%

5. Tax incentive 14 14%

Total 100 100%

DECISION AFFECTING FACTORS

88
90
80
70 Economic scenario
60
38 42 Company image
50
28 Fund performance
40
30 Fund manager image
20 4
Tax incentive
10
0
No. of Respondents

INTERPRETATION:

There are certain overall factors that tend to affect the investment decision of the investor, such
as economic scenario. I tried to know the respondents opinion on these macro factors that further
tend to affect their investment decisions. This survey showed that company image acts as the
determining factor for their investment with 44%.the second most important factor was fund
performance (21%) and economic scenario (19%).

(C) INFORMATION SOURCES REGARDING MUTUAL FUNDS

48
 S. No Information sources No. of respondents Percentage

1. Print media 29 29%

2. Electronic media 21 21%

3. Friends/Relative 6 6%

4. Financial advisors 19 19%

5. Personal analysis 4 4%

6. Agents 21 21%

Total 100 100%

Information sources regarding Mutual Funds

Print media
21% 29% Electronic media
Friends/Relative
4%
Financial advisors
19% 21%
Personal analysis
6%
Agents

INTERPRETATION:

In this survey I asked from the respondents about the kind of media that affect their investment
decision.29% of the respondents said that the print media is the major influencer in making the
investment decisions, electronic media(21%) and agents(21%) were the second major influencer
in investment decision making.

(D) PRIORITY OF REASON FOR INVESTMENT:

S. No Priority for investment No. of respondents Percentage

1. Saving for future 51 51%

49
 2. Tax incentive 14 14%

3. Returns 23 23%

4. Future outlook 7 7%

5. Brand value 2 2%

6. Risk factors 3 3%

Total 100 100%

Priority of reason for investment

Brand value
Risk factors
2% Saving for future
3%
Future outlook
7% Tax incentive
Saving for future
Returns 51% Returns
23%
Future outlook
Brand value
Risk factors
Tax incentive
14%

INTERPRETATION:

In this survey I found that saving for the future was the foremost important criteria for
investment in the minds of investors (51%),while 23%respondents said that they considered the
returns before making investment decisions.

IV. RISK-RETURN PROFILE

50
In my study I also tried to understand the risk and return matrix of an individual investor. This
was done in order to obtain information on the relationship between the kind of funds an
individual investor opts to invest in and the relative expectation he has on the return front.

(A)INVESTMENT AVENUES:

S. No Investment Avenues No. of respondents Percentage

1. Post office schemes 12 12%

2. Insurance 4 4%

3. Banks 66 66%

4. Share market 3 3%

5. Mutual funds 7 7%

6. Govt. securities 8 8%

Total 100 100%

Investment Avenues

Post office schemes

Govt. Insurance
Mutual funds securities
7% 8% Post office Banks
schemes Share market
Share
12%
market Mutual funds
3% Insurance
4% Govt. securities
Banks
66%

INTERPRETATION:

51
The risk return matrix of an individual is the key factor in framing his investment portfolio. I
asked the respondents to select the investment avenues they would prefer to keep their
investment portfolio. 66% of investor preferred to have banks savings as one of the investment
avenue., while 12% of the investor said that they would certainly would like to have post office
schemes as one of their preferred investment avenue.

(B) RETURN EXPECTATION FROM MUTUAL FUNDS

S. No Return expectation from Mutual funds No. of respondents Percentage

1. 5%-10% 5 5%

2. 11%-15% 24 24%

3. 16%-20% 31 31%

4. More then 20% 16 16%

5. Can’t say 24 24%

Total 100 100%

52
 Return expectation from Mutual funds

5%- 5%-10%
Can’t 10%
say 5% 11%- 11%-15%
24% 15%
16%-20%
24%
More More then 20%
then
Can’t say
20% 16%-
16% 20%
31%

INTERPRETATION: In this survey when I came to return expected ,I found that 31% of the
investor are expecting a return in range of 16%-20%,while 24%of the investor are expecting
11%-15% rate of return but 24% of investor can’t said about return expectation.

(C) INVESTMENT PATTERN PREFERRED IN MUTUAL FUND BY INVESTOR:

S. No Investment pattern preferred in No. of respondents Percentage

Mutual fund

1. Growth schemes 41 41%

2. Balanced schemes 11 11%

3. ELSS 18 18%

4. Sector specific schemes 6 6%

5. Liquid schemes 7 7%

6. Can’t say 17 17%

Total 100 100%

53
 Investment pattern preferred in Mutual fund by investor

41%
45%
Growth schemes
40%
35% Balanced schemes
30%
ELSS
25% 18% 17%
20% Sector specific schemes
11%
15%
6% 7% Liquid schemes
10%
5% Can’t say
0%
No. of respondents

INTERPRETATION:
The type of schemes selected for investment depends largely on the risk return matrix of an
individual and the time horizon of his investment. My findings demonstrate that 41% of
investors prefer to invest in growth schemes,18% of investor in ELSS schemes.

(D) SOURCES OF PRODUCT INFORMATION

S. No Sources of product information No. of respondents Percentage

1. Company brochures 39 39%

2. Company websites 3 3%

3. Investment advisor 14 14%

4. Newspaper 37 37%

5. Friends and relatives 7 7%

Total 100 100%

54
 Sources of product information

39% 37%
40%

30% Company brochures

Company websites
20% 14% Investment advisor
Newspaper
7% Friends and relatives
10% 3%

0%
No. of respondents

INTERPRETATION:
This chart represents the different sources of product information, through which investor
generally tend to know regarding the mutual fund’s new schemes and products.39% of the
respondents said that they receive the product information from the company brochures and 37%
of the respondents said that they get it from newspaper.

Chapter 6

55
 FINDINGS FROM THE ANALYSIS

FINDINGS FROM THE SURVEY:

The following findings were attained out of the survey conducted.

 Some People were less interested in knowing about the product.

 They have the impression that these funds are not safe, as the money is locked in for a
particular period, which is known as the lock in period.

 Mutual funds, in a country like India is in its growth stage and it would take some time to
enter into the maturity stage.

 People investing into mutual funds basically invest at the financial year-end.

56
 They invest into these funds mostly for tax saving purposes other than investment or
return purposes.

57
 Chapter - 7

RECOMMENDATIONS

RECOMMENDATIONS :

 There should be more awareness made about the ICICI mutual fund and their services by
giving more advertisement.

 ICICI mutual fund should organize some events to build its Brand Image in the minds of
the people.

 As per customer’s point of view, they feel that ICICI mutual fund should open more
number of branches for the convenience of people.

58
CONCLUSION

AS been analyzed people are very rarely aware of mutual funds as people were not properly
educated about the policies but when made aware they wanted to get more information about the
funds by this we can say that mutual fund is in its infant stage today but it will reach its growth
stage within no time. Mutual funds in this competitive world is very helpful for the people who
are interested into investments as this particular fund can take less investment but give u hefty.

Chapter 9
59
 APPENDICES

Questionnaire

Name :

Age :

Gender :

Income :

Saving habits :

Qualification :

60
Q1. Do you know about the Mutual Funds?

(a) Very good (b) Good (c) Average (d) Poor

(e) No response

Q2. What is your objective /motive behind investment ?

(a) Capital gain (b) Generate regular

(c) Secure future (d) Tax benefits

Q3. Where do you generally invest/save?

(a)Post office schemes (b)Insurance (c)Banks

(d)Share market (e)Mutual funds (f)Govt. securities

Q4. How do you prioritize the reason for investment?

[Rank from 1-5, 1 being highest priority]

Saving for future __________

Tax incentives __________

Returns __________

Future outlook __________

Brand value __________

Risk factor __________

61
Q5. How did you come to know about mutual fund?

(a) Print media (b) Electronic media (c)

Friend/relative

(d) Financial advisor/C.A (c) Personal analysis (f) Agents

Q6. What factors affect your decision for investment in Mutual Fund?

(a) Economic scenario (b) Company image (c) Fund performance

(d) Fund manager image (e) Tax incentive

Q7. How much return you expect from Mutual Fund?

(a)5%-10% (b)11% -15% (c)16%-20%

(d)more than 20% (e)can’t say

Q8. What kind of investment pattern you prefer in Mutual Fund ?

(a) Growth schemes (b) Balanced schemes (c) ELSS

(d) Sector specific schemes (e) Income schemes (f) Liquid schemes

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Q9. What are the sources of information gathering for you regarding mutual fund?

(a) Company brochures (b) Company websites (c) Investment advisor

(d) Newspaper (e) Friends and relatives

Q10. Are you aware that by investing in diversified investment avenues the average rate of return
would considerable go up?

(a) Yes (b) No

Q11. Do you know that mutual fund is related to share market?

(a) Yes (b) No (c) Can’t say

DYNAMIC PLAN:

Top Holdings (Jun 30, 10)

Equity Sector Value Asset
(Rs cr) %
Reliance Oil & Gas 177.98 7.80
ICICI Bank Banking/Finance 100.72 4.41
Infosys Technology 96.57 4.23
BHEL Engineering 95.83 4.20
TCS Technology 95.36 4.18
Cadila Health Pharmaceuticals 90.03 3.95
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Bharti Airtel Telecom 89.59 3.93
Ipca Labs Pharmaceuticals 84.02 3.68
SBI Banking/Finance 78.29 3.43
ONGC Oil & Gas 77.19 3.38

Sector Allocation (Jun 30, 10)

Sector % -- 1-Year --
High Low
Technology 12.86 14.25 6.32
Oil & Gas 12.03 16.17 9.25
Banking/Finance 11.93 23.42 8.43
Pharmaceuticals 7.63 16.59 7.63
Engineering 5.77 7.42 3.19
Metals & Mining 5.45 5.83 2.19

Asset Allocation (%) (Jun 30, 10)

Equity 76.73
Others 1.91
Debt 0.00
Mutual Funds N.A
Money Market 0.00
Cash / Call 21.36

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