REPORT

ON
“STUDY OF POLULARITY OF MUTUAL FUND AMOND
INVESTORS”
In partial fulfillment for the

BACHELOR OF BUSINESS ADMINISTRATION

(Affiliated to University,)

Pradesh

SUBMITTED TO:- SUBMITTED BY:

XXXXX UTKARSH GARG
Roll. XXXXXXXX
BBA.

P.O. Bidholi Via-Prem Nagar,

Dehradun-248007
 DECLARATION

I Utkarsh Garg student of MBA hereby declare that the training report presented in this project

report entitled

“STUDY OF POLULARITY OF MUTUAL FUND AMOND INVESTORS”. For the

fulfillment of the award of BBA from UPES is based on my work. The project embodies the

result of original work and studies carried out by me and the contents of the project do not form

the basis for the award of any other degree to me or to anybody else

DATE

PLACE:-
 ACKNOWLEDGEMENT

I would like to express my extreme gratitude to Mrs. Sakshi Sharma for her inspiring and

supporting guidance during the course of this project . No words of appreciation are good

enough for the constant encouragement , which I have received from her.

I would also thank my institution and my faculty members without whom this project

would have been a distant reality.

At last I would like to extend my sincere thanks to all the respondents to whom

I visited for giving their support and valuable information , which helps me in

completing my project work

S.No. TABLE OF CONTENT PAGE NO.

I CHAPTER-1

INTRODUCTION 5-8
OBJECTIVES 9
RESEARCH METHODOLOGY 10
LIMITATIONS 11

II CHAPTER-2

REVIEW OF LITERATURE 12-30

III CHAPTER-3

INDUSTRY PROFILE 31-38

COMPANY PROFILE 39-46

IV CHAPTER-4

DATA ANALYSIS & INTERPRETATION 47-70

FINDINGS 71

V CHAPTER-5

SUMMARY& CONCLUSIONS 72-74

SUGGESTIONS 75-76

VI CHAPTER- 6

BIBLIOGRAPHY 77-78

VI CHAPTER- 7

ANNEXURE 79-82
 INTRODUCTION

Investment can be defined as an item of value purchased for income or capital

appreciation. Investments are made to achieve a specific objective and savings are made
to meet an unforeseen event.

There are various avenues of investments in accordance with individual

preferences. Investments are made in different asset classes depending on an individual’s
risk and return characteristics Investment choices are physical assets and financial assets.
Gold and Real estates are examples of physical assets, which have a physical
form to them. There is a strong preference for these assets, as these assets can be
purchased with cash and held for a long term. The obvious disadvantages with physical
assets are the risks of loss and theft, lower levels of return; illiquid secondary markets;
and adhoc valuations and transactions.
Financial assets are securities, which are certificates embodying a financial
contract between parties. Bonds, Equity shares, Deposits and Insurance policies are some
of the examples of financial assets. In financial assets investors only hold the proof of
their investments in the form of a certificate or account. These products are usually liquid,
transferable and in most cases, stored electronically with high degree of safety.
But a minimum amount of cash is always kept in hand for transactions and
contingencies. To face the contingencies and unexpected events the insurance came into
existence.
Another avenue of investment is mutual funds. It is created when investors put
their money together. It is therefore a pool of the investor’s funds. The most important
characteristics of a mutual fund is that the contributors and the beneficiaries of the fund
are the same class of people, namely the investors. The term mutual means that investors
contribute to the pool, and also benefit from the pool. There are no other claimants to the
funds. The pool of funds held mutually by investors is the mutual fund.
 A mutual fund pools the money of people with similar investment goals. The
money in turn is invested in various securities depending on the objectives of the mutual
fund scheme, and the profits (or loss) are shared among investors in proportion to their
investments.

Mutual fund schemes are usually open-ended (perpetually open for

investments and redemptions) or closed end (with a fixed term). A mutual fund scheme
issues units that are normally priced at Rs.10 during the initial offer. Thus, the number of
units you own as against the total number of units issued by the mutual fund scheme
determines your share in the profits or loss of a scheme.
In the case of open-end schemes, units can be purchased from or sold back to
the fund at a Net Asset Value (NAV) based price on all business days.
The NAV is the actual value of a unit of the fund on a given day. Thus, when
you invest in a mutual fund scheme, you normally get an account statement mentioning
the number of units that have been allotted to you and the NAV based price at which the
units have been allotted. The account statement is similar to your bank statement.
Mutual funds invest basically in three types of asset classes:

Stocks: Stocks represent ownership or equity in a company, popularly known as shares.

Bonds: These represent debt from companies, financial institutions or Government

agencies.
Money market instruments: These include short-term debt instruments such as treasury
bills, certificate of deposits and inter-bank call money.
A mutual fund’s business is to invest the funds thus collected, according to the wishes of
the investors who created the pool. In many markets these wishes are articulated as
investment mandates.

Analysis of The perception towards these mutual funds is done here in this
project. Even what factors the investors look before investing can also be observed.

OBJECTIVES
  To study the level of awareness of mutual funds

 To analyse the perception of investors towards mutual funds.

 To study the factors considered by the investors and those which ultimately
influence him while investing.

 To determine the type of mutual fund investor prefers the most.

RESEARCH METHODOLOGY

Primary data is data that is tailored to a company’s needs, by customizing true approach
focus groups, survey, field-tests, interviews or observation.
 Primary data delivers more specific results than secondary research, which is an
especially important consideration when one launching a new product or service. In
addition, primary research is usually based on statistical methodologies. The tiny sample
can give an accurate representation of a particular market.
Secondary data is based on information gleaned from studies previously
performed by government agencies, chambers of commerce, trade associations and other
organizations. This includes census bureau information. Much kind of this information
can be found in libraries or on the web, but looks and business publications, as well as
magazines and newspapers.

Analysis of individual investment patterns can be done by this primary data

analysis. In this project I have done a survey with a questionnaire with a sample size of
100 individuals who are employees and tax payees. The questionnaire includes the
economic status of the individuals, age group, marital status, investments made etc.

As Bajaj Capitaldistributes several investment products like mutual funds,

insurance, shares, debentures etc. This survey will help them in developing marketing
strategies for their investment products.

LIMITATIONS
Geographic Scope: The sample used for the study has been taken from the investors of the
Noida.

Frame work: Sampling frame (i.e the list of population members) from which the sample
units are selected was incomplete as it takes into consideration only those (target
investors) who have made their investments during March and April 2018.

Although adequate care was taken to elicit the accurate information from the respondents,
some of them have felt difficulty in crystallizing their feelings into words. Apart from the
problem faced in articulating, it is the validity of the feedback can be speculated.

Despite the above limitations the study is useful in that it does point out the trends and
helps to identify the dimensions for improving the scope of mutual funds.
 MUTUAL FUNDS

THEORITICAL BACKGROUND
Mutual fund is a mechanism for pooling the resources by issuing units to the investors
and investing funds in securities in accordance with objectives as disclosed in offer
document.
A mutual fund is an investment vehicle for investors who pool their savings for investing
in diversified portfolio of securities with the aim of attractive yields and appreciation in
their value.
Investments in securities are spread across a wide cross-section of industries and sectors
and thus the risk is reduced .Mutual funds issues units to the investors in accordance with
quantum of money invested by them. Investors of mutual funds are known as unit-
holders. The profit or losses are shared by the investors in proportion to their investments.
The mutual funds normally come out with a number of schemes with different investment
objectives, which are launched from time to time. A mutual fund is required to be
registered with securities and exchange board of India.
A mutual fund is setup in the form of a trust, which has
1. Sponsor
2. Trustees
3. Asset Management Company and
4. Custodian.
The trust is established by a sponsor or more than one sponsor who is like promoter of a
company. The trustees of mutual fund hold its property for the benefit of the unit-holders.
Asset management company (AMC) approved by SEBI manages the funds by making
investments in various types of securities.
Respective asset management companies (AMC) management mutual fund schemes.
Different business groups have sponsored these AMC s. some international funds are also
operation independently in India like Aliens and Template.

A BRIEF HISTORY OF MUTUAL FUND

The concept of” mutual fund” is a new feather in Indian capital market but not to
international capital markets. The formal origin of mutual funds can be traced to Belgium
where society generated Belgium was established in 1822 as an investment company to
finance investments in National Industries with high associated risk. The concept of
mutual funds spread to USA in the beginning of 20th century and three investment
companies were started in 1924 since then the concept of mutual funds has been growing
all around the world

In India, first mutual fund was started in 1964 when unit trust of India (UTI) was
established in the similar line of operation of the UK.

The term ‘Mutual fund’ has not been explained in British literature but it is considered as
synonym of investment trust of

DEFINITIONS

The concept of mutual fund has been defined in various ways.

“The mutual fund as an important vehicle for bringing wealth holders and deficit units
together indirectly”
...Mr. James pierce
“Mutual fund as financial intermediaries which being a wide variety of securities with in
the reach of the most modest of investors”.
…Frank Relicy

According to SEBI mutual fund regulations 1993, “Mutual fund means a fund established
in the form of trust by sponsor to raise moneys by the trustees through the sale of units to
the public under one or more schemes for investing in securities in accordance with these
regulations.

CONCEPT OF MUTUAL FUNDS

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

VALUE CHAIN OF MUTUAL FUND

SPONSOR:

Any person who, acting alone or in combination with another body corporate,
establishes a mutual fund.

Asset Management Company

A firm that invests the pooled funds of retail investors in securities in line with the
stated investment objectives. For a fee, the investment company provides more than
diversification, liquidity, and professional management service than is normally available
to individual investors.

Trustee

The Board of Trustees or the Trustee company who hold the property of the Mutual
Fund in trust for the benefit of the unit holders.

Mutual Fund

A fund established in the form of a trust to raise money through the sale of units to the
public or a section of the public under one or more schemes for investing in securities,
including money market instruments.

Transfer Agent

A transfer agent is employed by a mutual fund to maintain records of shareholder

accounts calculate and disburse dividends and prepare and mail shareholder account
statements, federal income tax information and other shareholder notices.

Custodian

Mutual funds are required by law to protect their portfolio securities by placing them
with a custodian. Nearly all mutual funds use qualified bank custodians.

Unit Holder
 A person who is holding units in a scheme of a mutual fund.

CLASSIFICATION OF SCHEMES

 By Structure

Open-ended

A scheme where investors can buy and redeem their units on any business day. Its units
are not listed on any stock exchange but are bought from and sold to the mutual fund.

Close-ended

A mutual fund scheme that offers a limited number of units, which have a lock-in period,
usually of three to five years. The units of closed-end funds are often listed on one of the
major stock exchanges and traded like securities at prices, which may be higher or lower
than its NAV.In India 90% of the schemes is open-ended fund and the rest 10% is close-
ended funds. There are 1062 open-ended funds and 119 close-ended funds.

By Objective
A scheme can also be classified as growth scheme, income scheme, or balanced scheme
considering its investment objective. Such schemes may be open-ended or close-ended
schemes as described earlier. Such schemes may be classified mainly as follows:

Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the medium to long- term.
Such schemes normally invest a major part of their corpus in equities. Such funds have
comparatively high risks. These schemes provide different options to the investors like
dividend option, capital appreciation, etc. and the investors may choose an option
depending on their preferences. The investors must indicate the option in the application
form. The mutual funds also allow the investors to change the options at a later date.
Growth schemes are good for investors having a long-term outlook seeking appreciation
over a period of time.

Income / Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to investors. Such
schemes generally invest in fixed income securities such as bonds, corporate debentures,
Government securities and money market instruments. Such funds are less risky
compared to equity schemes. These funds are not affected because of fluctuations in
equity markets. However, opportunities of capital appreciation are also limited in such
funds. The NAVs of such funds are affected because of change in interest rates in the
country. If the interest rates fall, NAVs of such funds are likely to increase in the short run
and vice versa. However, long-term investors may not bother about these fluctuations.

Balanced Fund

The aim of balanced funds is to provide both growth and regular income as such schemes
invest both in equities and fixed income securities in the proportion indicated in their offer
documents. These are appropriate for investors looking for moderate growth. They
generally invest 40-60% in equity and debt instruments. These funds are also affected
because of fluctuations in share prices in the stock markets. However, NAVs of such
funds are likely to be less volatile compared to pure equity funds.
Money Market or Liquid Fund

These funds are also income funds and their aim is to provide easy liquidity, preservation
of capital and moderate income. These schemes invest exclusively in safer short-term
instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank
call money, government securities, etc. Returns on these schemes fluctuate much less
compared to other funds. These funds are appropriate for corporate and individual
investors as a means to park their surplus funds for short periods.

Gilt Fund

These funds invest exclusively in government securities. Government securities have no

default risk. NAVs of these schemes also fluctuate due to change in interest rates and
other economic factors as, is the case with income or debt oriented schemes.

Index Funds

Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index,
S&P NSE 50 index (Nifty), etc These schemes invest in the securities in the same
weightage comprising of an index. NAVs of such schemes would rise or fall in
accordance with the rise or fall in the index, though not exactly by the same percentage
due to some factors known as "tracking error" in technical terms. Necessary disclosures in
this regard are made in the offer document of the mutual fund scheme.

There are also exchange traded index funds launched by the mutual funds that are traded
on the stock exchanges.

AVENUES OF INVESTMENTS

Savings form an important part of the economy of any nation. With the savings invested
in various options available to the people, the money acts as the driver for growth of the
country. Indian financial scene too presents a plethora of avenues to the investors.
Banks:

Considered as the safest of all options, banks have been the roots of the financial system
in India. For an ordinary person though, they have acted as the safest investment avenue
wherein a person deposits money and earns interest on it. One and all have effectively
used the two main modes of investment in banks, savings accounts and fixed deposits.
However, today the interest rate structure in the country is headed southwards, keeping in
line with global trends. With the banks offering little above 7% in their fixed deposits for
one year, the yields have come down substantially in recent times. Add to this, the
inflationary pressures in economy and you have a position where the savings are not
earning. The inflation is creeping up, to almost 8% at times, and this means that the value
of money saved goes down instead of going up. This effectively mars any change f
gaining from the investments in banks.

Post office Schemes

Among all saving options, post office schemes have been offering the highest rates.
Added to it is that the investments are safe with the department being a government of
India entity. So the two basic and most sought for features, those of return safety and
quantum of returns were being handsomely taken care of Public Provident Funds act as
options to save for the post retirement period for most people and have been considered
good option largely due to the fact that returns were higher than most other options and
also helped people gain from tax benefits under various sections. The following are the
post office savings schemes available for the investors:

Monthly Income scheme:

This scheme offers an interest of 8%p.a, payable monthly and a bonus of 10% payable
at maturity after 6 years. There is no tax deductible at source (TDS) applicable on
investments made in this scheme.

National Savings Scheme:

 This scheme offers an interest of 8% p.a; compounded half yearly and payable at
maturity in 6 years.

Post Office Time Deposits:

There are 4 options available to investors depending on the term of investment desired
by the investor. They are:

1 year) this gives an interest of 6.25% p.a

2 year) This gives an interest of 6.5% p.a

3 year) This gives an interest of 7.25% p.a

4 year) This gives an interest of 7.5% p.a

Kisan Vikas Patra:

An important feature of this scheme is that it assures that the money invested doubles in
8 years and 7 months.

Public Provident Fund:

This scheme gives a return of 8% per annum, compounded annually for maturity of 15
years.

Government of India Bonds:

The GOI Bonds have the following investment options:

6.5% Tax free bonds

 There is no ceiling on the amount of investment in these bonds. The effective yields of
these bonds are 9.28% p.a for the period of 5 years and premature encashment option
available to investors only after the completion of 3 years.

8% Taxable Bonds:

These bonds do not have any TDS charged on them. There is no maximum limit of
investment in these bonds but there should be a minimum investment of Rs.1, 000. The
maturity period is 6 years. The investor has the option of interest payable half yearly or
cumulative. The investors can also avail tax benefit under section 80L of income Tax Act,
up to Rs. 15,000.

Company Fixed Deposits:

Companies have used fixed deposit schemes as a means of mobilizing funds for their
operations and have paid interest on them. The safer a company is rated, the lesser the
return offered has been the thumb rule. However, there are several potential roadblocks in
these.

The danger of financial position of the company not being understood by the investor
lurks.

1. Liquidity is a major problem with the amount being received monthly

after the due dates.

2. The safety of principal amount has been found lacking.

Stock markets:

Stock markets provide an option to invest in a high risk, high return game. While the
potential return is much more than 10-11% any of the options discussed above can
generally generate, the risk is undoubtedly of the highest order. However, as it might
appear, people generally are clueless as to how the stock market functions and in the
process can endanger the hard-earned money.

For those who are not adept at understanding the stock market, the task of
generating superior returns at similar levels of risk is arduous to say the least. This is
where mutual funds come into picture.

COMPARISION OF OTHER AVENUES WITH MUTUAL FUNDS

The mutual fund sector operates under stricter regulations as compared to most
other investment avenues. Apart from offering investors tax efficiency and legal comfort,
how do mutual funds compare with other products?

Company Fixed Deposits versus Mutual Funds

Fixed deposits are unsecured borrowings by the company accepting the deposit.
Credit rating of the fixed deposit program is an indication of the inherent default risk in t
he investment. The money of investors in a mutual fund scheme are invested by the AMC
in specified investments under that scheme. These investments are held and managed in-
trust for the benefit of the scheme’s investors. On the other hand, there is no such direct
correlation between a company’s fixed deposit mobilization, and the avenues where it
deploys these resources.

There can be no certainty of yield, unless a named guarantor assures a return or to a

lesser extent, if the investment is in a serial gilt scheme. O the other hand, the return under
a fixed deposit is certain, subject only to the default risk of the borrower.

The basic value at which fixed deposits are encashable is not subject to market risk.
However, the value at which units of a scheme are redeemed entirely depends on the
market. If securities have gained value during the period, then the investor can even earn
that is higher than what she anticipated when she invested. Conversely, she could also end
up with a loss.
 Early encashment of fixed deposits is always subject to a penalty charged by the
company that accepted the fixed deposit. Mutual fund schemes also have the option of
charging a penalty on ”early” redemption of units (by way of an “exit load”).

Bank Fixed Deposits versus Mutual Funds

Bank fixed deposits are similar to company fixed deposits. The major difference is
that banks are more stringently regulated than are companies. They even operate under
stricter requirements regarding Statutory Liquidity ratio(SLR) and Cash Reserve Ratio
(CRR) mandated by RBI.

While the above are for comfort, bank deposits too are subject to default risk.
However, given the political and economic impact of bank defaults, the government as
well as Reserve Bank of India (RBI) tries to ensure that banks do not fail.

Further, the Deposit Insurance and Credit Guarantee Corporation (DICGC) protect
bank deposits up to Rs. 100,000. The monetary ceiling of Rs.100,000 is for all the
deposits in all the branches of a bank, held by the depositor in the same capacity and right.

Bonds and Debentures versus Mutual funds

As in the case of fixed deposits, credit rating of a bond or debenture is an indication of

the inherent default risk in the investment. However, unlike fixed deposits, bonds and
debentures are transferable securities.

While an investor may have an early encashment option from the issuer ( for instance
through a “put” option), liquidity is generally through a listing in the market, implications
of this are:

The value that the investor would realize in an early exit is subject to market risk.
The investor could have a capital gain or a loss. This aspect is similar to a mutual fund
scheme.
 A hypothecation or mortgage of identified fixed and / or current assets could back
debt securities, e.g secured bonds or debentures. In such a case, if there is a default, the
identified assets become available for meeting redemption requirements.

An unsecured bond or debenture is for all practical purposes like a fixed deposit, as
far as access to assets is concerned.

A custodian for the benefit of investors in the scheme holds the investment of a
mutual fund scheme.

Equity versus Mutual fund

Investment in both equity and mutual funds are subject to market risk. Investment in an
open-end mutual fund eliminates this direct risk of not being able to dell the investment in
the market. An indirect risk remains, because the scheme has to realize its investments to
pay investors. The AMC is however in a better position to handle the situation. Further,
on account of various SEBI regulations, such as illiquid securities are likely to be only a
part of the scheme’s portfolio.

Another benefit of equity mutual fund scheme is that they give investors the benefit of
portfolio diversification through a small investment.

RISK AND RETURN GRID:

An investor has mainly three investment objectives.

1. Safety of Principal

2. Return

3. Liquidity

BANKS FIXED BONDS AND EQUITY MUTUAL

DEPOSIT DEBENTURE MARKET FUND
S
Returns Low Low to Low to Moderate to Better
Moderate moderate high
Administrativ High Moderate Moderate to Low to Low
e expenses to High high Moderate
Risk Low Low to Low to High Moderate
Moderate moderate
Investment Less Few Few Many More
options
Network High Low Low Low but Low but
penetratio penetratio penetration improving fast improving
n n
Liquidity At a cost Low Low to Moderate to Better
moderate High
Quality of Not Not Not Transparent Transparen
Assets transparen transparen transparent t
t t
Guarantee Maximum None
Rs 1 lakh

Pricing

The net asset value of the fund is the cumulative market value of the asset fund net of its
liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the assets
in the fund, this is the amount that the shareholders would collectively own. This gives
rise to the concept of the net asset value per unit, which is the value, represented by the
ownership of one unit in the fund. It is calculated simply by dividing the net asset value of
the fund by the number of units. However, most people refer loosely to the NAV per unit
as NAV, ignoring the “per unit”. We also abide by the same convention.

Calculation of NAV
 The most important part of the calculation is the valuation of the assets owned by
the fund. Once it is calculated, the NAV is simply the net value of assets divided by the
number of units outstanding. The detailed methodology for the calculation of the asset
value is given below.

Asset value = (Value of investments+ receivables+ accrued income+ other current

assets- liabilities- accrued expenses) /Number of units outstanding.

ADVANTAGES OF INVESTING IN MUTUAL FUND:

Number of options available

Mutual funds invest according to the underlying investment objective as specified

at the time of launching a scheme. Mutual fund have equity funds, debt funds, gilt funds
and many others that cater to the different needs of the investor. While equity funds can
be as risky as the stock markets themselves, debt funds offer the kind of security that is
aimed for at the time making investments. The only pertinent factor here is that the fund
has to be selected keeping the risk profile of the investor in mind because the products
listed above have different risks associated with them.

Diversification

Diversification reduces the risk because all stocks don’t move in the same direction
at the same time. One can achieve this diversification through a Mutual Fund with far less
money that one can on his own.

Professional Management

Mutual Funds employ the services of the skilled professionals who have years of
experience to back them up. They use intensive research techniques to analyze each
investment option for the potential of returns along with their risk levels to come up with
the figures for the performance that determine the suitability of any potential investment.

Potential of returns

Returns in the mutual are generally better than any option in any other avenue over
a reasonable period of time. People can pick their investment horizon and stay put in the
chosen fund for the duration.

Liquidity

The investors can withdraw or redeem money at the Net Asset Value related prices
in the open-end schemes. In the Closed-end Schemes, the units can be transacted at the
prevailing market price on a stock exchange. Mutual Funds also provide the facility of
direct repurchase at NAV related prices.

Well Regulated

The Mutual Fund industry is very well regulated. All investment has to be
accounted for, decisions judiciously taken. SEBI acts as a true watch dog in this case and
can impose penalties on the AMC’s at fault. The regulations designed to protect the
investors interests are implemented effectively.

Transparency

Being under a regulatory frame work, Mutual Funds have to disclose their holdings,
investment pattern and all the information that can be considered as material, before all
investors. This means that investment strategy, outlooks of the markets and scheme
related details are disclosed with reasonable frequency to ensure that transparency exists
in the system.

Flexible, Affordable and Low cost

Mutual Funds offer a relatively less expensive way to invest when compared to
other avenues such as capital market operations. The fee in terms of brokerages, custodial
fees and other management fees are substantially lower than other options and are directly
linked to the performance of the scheme. Investment in Mutual Funds also offer a lot of
flexibility with features such as regular investment plans, regular withdrawal plans and
dividend investment plans enabling systematic investment or withdrawal of funds.

Convenient Administration

Investment in the mutual fund reduces paper work and helps you avoid many
problems such as bad deliveries, delayed payments and follow up with brokers and
companies. Mutual Funds save your time and make investing easy and convenient.

TAXATION ON MUTUAL FUNDS

An Indian mutual fund registered with the SEBI, or schemes sponsored by

specified public sector banks/financial institutions and approved by the central
government or authorized by the RBI are tax exempt as per the provisions of section
10(23D) of the income tax act. The mutual fund will receive all income without any
deduction of tax at source under the provisions of section 196(iv), of the income tax act.
 MUTUAL FUND INDUSTRY

INDUSTRY OVERVIEW

The financial markets in India are in the process of maturing. The markets
witnessed many structural changes in the years gone by primarily due to the market
regulators proactive approach to the changes in the global scenario as well as to meet the
needs of domestic investors.

The RBI has carried out major reforms in the Indian financial markets in the last
few years primarily by reducing Cash Reserve ratio by 4% over three years and Bank
Rate by 5% over five years. It is due to measures like these that the Indian economy is
currently showing fundamental robustness, with the GDP expected to grow by almost 8%.
With rising exports and stable inflation of around 5%, the foreign exchange reserves are at
an all time high of $118 billion. The interest rates in the country are at record lows and
have led to an increase in credit flow to the commercial sector.

The equity markets have passed through a tumultuous phase in the last 3 years.
The improving macro-economic fundamentals of the Indian economy have led the market
players to expect a bright future. During the year, the equity markets around the world are
showing good performance. However the markets in India outperformed the world major
scripts showed around more than 75% growth in last 12 months. The year began with
resumption of peace process with Pakistan and end of war in Gulf. The market also has
welcome robust increase in agriculture production with more-than-normal monsoons.
Most of the groundwork for the disinvestment completed over the last few years, the last
Government had started disinvestments and new government has already acquired shape
and started it is not reluctant of divestment.
 The debt markets have witnessed a rally for over 2 years and now seem to be
stabilizing. The measures to deepen and widen the debt markets continued throughout the
year. A key step in developing the markets was the launch of Negotiated Dealing System
(NDS). NDS allows electronic bidding in primary markets, thereby bringing about
transparency in trading, electronic settlement of trades and better monitoring and controls.
Issuances of a 30-year paper, floaters ranging from 5 to 15 years and securities with call
and put options by the government will also go a long way in deepening the markets. In a
bid to increase the retail participation, non-competitive bidding is being encouraged by
the RBI.

INDUSTRY STRUCTURE

Global Scenario

At the end of 2018:Q3, mutual fund assets worldwide were $ 17.28 trillion, having
increased 18 percent over the year 2005:Q3.

Worldwide mutual fund assets (trillions of US dollars)

Worldwide assets of Equity, Bond, Money Market & Balanced fund
(Billions of US dollars)

Composition of world Wide mutual fund assets by the types of fund 2018 Q4

Source: Ici.org

The end of 2018:Q3, mutual fund assets were split into 44% Equity, 18% Money market,
20% Bonds, 9% Balanced / Mixed and remaining 8% unclassified.

Worldwide mutual fund assets by region 2018;Q3

At the end of 2018:Q3 by region, 55% of the global assets was in America, 34% in
Europe and the remaining 11% in Africa and Asia / Pacific.

World wide mutual funds by the type of fund 2018;Q2

At the end of the fourth quarter of 2018, the number of mutual funds worldwide stood at
54,986. By type of fund, 41 percent were equity funds, 24 percent were bond funds, 20
percent were balanced/mixed funds, and 6 percent were money market funds.

Number of funds 2000-2018;Q3

2000 2001 2002 2003 2004 2005 2018

 Q4 Q1 Q2 Q3
1
All Reporting Countries 52,746 51,692 52,849 54,110 54,569 54,984 55,095 55,919 56,095

Equity 22,453 20,381 22,348 22,974 22,688 22,364 22,796 23,043 23,050

Bond 15,474 13,128 12,183 11,619 11,886 13,309 13,127 13,213 13,225

Money Market 6,745 4,692 4,277 4,394 4,974 3,623 3,618 3,598 3,569

Balanced/Mixed 6,375 11,110 11,155 11,228 11,465 11,603 11,111 11,291 11,181

Other 612 1,000 1,195 1,310 1,578 1,997 2,364 2,659 3,017
Countries Reporting in
Every Period2 35,962 39,367 41,620 42,393 41,689 42,356 42,093 42,529 42,377

Equity 15,656 18,637 20,630 20,808 20,018 19,920 19,971 20,052 19,952

Bond 10,867 10,176 9,830 9,946 9,847 9,961 10,004 10,026 10,076

Money Market 2,701 2,786 2,727 2,674 2,652 2,899 2,901 2,867 2,831

Balanced/Mixed 6,149 6,926 7,500 7,723 7,857 8,095 7,674 7,966 7,850
Other 589 842 933 1,242 1,315 1,481 1,543 1,618 1,668

MUTUAL FUNDS IN INDIAN SCENARIO

Unit Trust of India was the first mutual fund set up in India in the year 1963. In early
1990s, Government allowed public sector banks and institutions to set up mutual funds.

In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The
objectives of SEBI are – to protect the interest of investors in securities and to promote
the development of and to regulate the securities market.

As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual
funds to protect the interest of the investors. SEBI notified regulations for the mutual
funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed
to enter the capital market. The regulations were fully revised in 1996 and have been
amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds
from time to time to protect the interests of investors.

All mutual funds whether promoted by public sector or private sector entities including
those promoted by foreign entities are governed by the same set of Regulations. There is
no distinction in regulatory requirements for these mutual funds and all are subject to
monitoring and inspections by SEBI. The risks associated with the schemes launched by
the mutual funds sponsored by these entities are of similar type. It may be mentioned here
that Unit Trust of India (UTI) is not registered with SEBI as a mutual fund (as on January
15, 2002).

In February 2003, following the repeal of Unit Trust of India act 1963; UTI was
bifurcated into two separate entities. One is the specified undertaking of UTI with assets
under the 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 administrator & under rules framed by Government of India and
does not come under the purview of mutual fund regulation.

The second is the UTI mutual fund Ltd sponsored by SBI, BOB & LIC. It is
registered with SEBI & 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 setting up of a UTI mutual fund, conforming to the SEBI,
mutual fund regulation 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.
231358.03 crores under 421 schemes.

GROWTH IN ASSETS UNDER MANAGEMENT

 Bajaj Capital's Mission Statement

“The focus of our organization is to be the most useful, reliable and efficient provider of
Financial Services. It is our continuous endeavor to be a trustworthy adviser to our clients,
helping them achieve BCIBL financial goals”.
Bajaj Capital Ltd.

T
he Bajaj Capital Group is one of India’s premier Investment Advisory and Financial
Planning companies. It is also SEBI- approved Category Merchant Bankers.

Bajaj Capital is among the pioneers of the investment advisory and financial planning industry in
India. For over four decades, the Company has been serving Indian investors, and giving shape
to the vision of its founder-chairman, Mr. K.K. Bajaj.

It offers personalized Investment Advisory and Financial Planning services to individual

investors, corporate houses, institutional investors, Non-Resident Indians (NRIs) and High Net
worth Clients, among others.

As one of India’s largest distributors of financial products, we offer a wide range of investment
products such as Mutual Funds, life and general insurance, bonds, post office schemes, etc.
offered by reputed public and private and government organizations.

Company Profile:
Bajaj Capital is one of India’s leading Financial Services companies offering Free Advice on
Investments, Insurance, Tax Saving, Retirement Planning, Financial Planning, Children’s Future
Planning and other services. It also has a wide range of products and services for Corporate,
High Net worth Individuals, and NRIs all under one roof.

At Bajaj Capital, it believes in dreaming big. Dreams inspire us to excel. They ignite hope and
kindle in us the passion to stretch there limits. It also believes that nothing can or should stop us
from realizing our dreams and financial constraints should be the last thing to stop anyone.

Four decades of excellence:

For over four decades, we have been helping people realize BCIBL aspirations by helping them
make their wealth grow, and plan their financial lives. Today, Bajaj Capital is a one of the
largest financial planning and investment advisory companies in India, with a strong
presence all over the country. It takes pride in serving our customers both individual and
institutional, and is known for our strong professionalism and work ethics.

Wide range of services:

We offer a comprehensive range of services including financial planning and investment advice,
and the entire gamut of financial instruments and investment products of almost all major
companies, both public and private. In addition, we also provide investment
assistance by helping you complete all the formalities, and help you keep regular
track of your investments.

These services and products are delivered through our network of 134 Bajaj Capital
Investment Centers located all over the country.

Bajaj Capital is also a SEBI- approved Category Merchant Banker. They raise
resources for over 1,000 top institutions and corporate houses every year, and
offer specialized services to Non- Resident Indian (NRIs) and High Net worth
Clients.

Key Personnel

 Mr. K.K. Bajaj

Chairman

 Mr. Rajiv Deep Bajaj

Vice Chairman & Managing Director

0
  Mr. Sanjiv Bajaj
Joint Managing Director

 Mr. Anil Chopra

CEO & Director

Introducing Bajaj Capital Insurance Broking Ltd (BCIBL)

“By your side whenever you need us”
Risks are unavoidable in personal life and in business, but can be managed by proper
planning.

As a true partner, BCIBL promises to use their knowledge for customer benefit. Be
it advice on the right insurance products or looking after your rights and interests
in case of a claim, with a mission-“we’ll be by your side... whenever you need us”.

That's exactly where they at Bajaj Capital Insurance Broking Ltd. step in. At
BCIBL, an IRDA licensed "Composite Insurance Broker" bearing license
number CB 042/02, they call it Risk Management. They help customers to identify
the potential risks and pass some of them on to insurance companies.

They are customer’s partners, who help them to identify and understand various
risks, prioritize them and eventually manage them.

As a broker, BCIBL do not offer customers just a single option but multiple
options available, and help you select the most appropriate one.

Products:
They offer a wide range of Life and General Insurance products offered by the
insurance companies that cover almost the entire spectrum of risks that individuals
or your business may face.

BCIBL offers a wide range of insurance packages including:

 Personal Lines

1
 Auto
 Home
 Travel
 Accident & Health

 Property Insurance

 Fire and Special Peril

 Marine
 Machinery Breakdown
 Electronic Equipment Insurance

 Loss of Profits etc.

 Liability Insurance

 Commercial
 General Liability
 Product Liability
 Workman's Compensation/ Employer's Liability

 Contingency Risks

 Event Cancellation
 Wedding Insurance
 All Risk for Mobiles, Computers and Laptops etc.

 Industrial All Risk and Project Insurance

 Specialty Products

 Professional Indemnity/Errors & Omissions (E&O)

 Directors and Officers Liability (D&O)
 Fidelity Guarantee

2
  Commercial Cyber Crime Insurance
 Credit Insurance
 Mutual Fund & Asset Protection

Why consult BCIBL?

 As IRDA licensed Insurance Brokers, BCIBL are your

representatives unlike an agent who represents an insurance company.
 At BCIBL, BCIBL consider it your right to receive independent,
unbiased and professional advice.
 BCIBL enjoy the 'Preferred Insurance Broker' status with many of
the Insurance companies. This, in essence, translates into a greater benefit
for customers.
 In fact, BCIBL enjoy a transactional relationship with almost all
the Insurance companies present in India.
 We are therefore proud to say that many companies have come up
with insurance products based on our feedback.
 We have a strong operational and servicing team, and an all-India
reach.
 We also have the support of a strong IT infrastructure and responsive
call centers. As such, we are easily accessible.
Milestones:

Bajaj Capital has contributed to the growth of the Indian Capital Market at every step.

3
In 1965, BCIBL were the first to innovate the Companies Fixed Deposit. Today,
BCIBL is playing an active role in the growth of the Indian Mutual Fund industry.

BCIBL is also working closely with private insurance companies to deepen India's
insurance market.

Here is a brief gist of BCIBL’s journey through the years.

1964
Bajaj Capital sets up its first Investment Centre in New Delhi to guide individual
investors on where, when and how to invest.

India's first Mutual Fund, Unit Trust of India (UTI) is incorporated in the same year.

1965
Bajaj Capital is incorporated as a Company. In the same year, the company
introduces an innovative financial instrument the Company Fixed Deposit. EIL
Ltd. (Oberoi Hotels, then known as Associated Hotels of India Ltd.) becomes the
first company to raise resources through Company Fixed Deposits.
1966
Bajaj Capital expands its product range to include all UTI schemes and
Government saving schemes in addition to Company Fixed Deposits.

1969
Bajaj Capital manages its first Equity issue (through an associate company) of
Grauer & Wells India Ltd.; right from drafting the prospectus to marketing the issue.

1975
Bajaj Capital starts offering 'need-based' investment advice to investors, which
would later be known as 'Financial Planning' in the investment world.

1981
SAIL becomes the first government company to accept deposits, followed by
IOC, BHEL, BPCL, HPCL and others; thus opening the floodgates for growth of
retail investment market in India.

Bajaj Capital plays an active role in all the schemes as 'Principal Brokers.

4
1986
Public Sector Undertakings (PSUs) begin making public issues of bonds MTNL,
NHPC, IRFC offer a series of Bond Issues. Bajaj Capital is among the top ranks of
resource mobilizes.

1987
SBI leads the launch of Public Sector Mutual Funds in India. Bajaj Capital plays a
significant role in fund mobilization for all these players.

1991
SBI issues India Development Bonds for NRIs. Bajaj Capital becomes the top
mobiliser with collections of over US $20 million.

1993
The first private sector Mutual Fund Kothari Pioneer is launched, followed by Birla
and Alliance in the following years. Bajaj Capital plays an active role and is ranked
among the top mobilisers for all these schemes.

1995
IDBI and ICICI begin issuing their series of Bonds for retail investors. Bajaj
Capital is the co- manager in all these offerings and consistently ranks among the
top five mobilisers on an all- India basis.

1997
Private sector players lead the revival of Mutual Funds in India through Open-
ended Debt schemes. Bajaj Capital consolidates its position as India's largest
retail distributor of Mutual Funds

1999
Bajaj Capital begins marketing Life and General Insurance products of LIC and
GIC (through associate firms) in anticipation of opening up of the Insurance Sector.
Bajaj Capital achieves the milestone of becoming the top 'Pension Scheme' seller in
India and launches marketing of GIC's Health Insurance schemes.

2000
Bajaj Capital implements its vision of being a 'One-stop Financial Supermarket.'
The Company offers all kinds of financial products, including the entire range of
investment and insurance products through its Investment Centers. Bajaj Capital

5
offers 'full-service merchant banking' including structuring, management and
marketing of Capital issues. Bajaj Capital reinvents 'Financial Planning' in its
international sense and upgrades its entire team of Investment Experts into Financial
Planners.

2002
The Company focuses on creating investor awareness for Financial Planning and
need-based investing. To achieve this goal, the company introduced the
International College of Financial Planning. The graduates of this institute become
Certified Financial Planners (CFPs), a coveted professional qualification.

2004
Bajaj Capital obtains the All India Insurance Broking License. Simultaneously, a
series of wealth creation seminars are launched all over the country, making Bajaj
Capital a household name.

2005
Bajaj Capital launches 360° Financial Planning, a software-based program
aimed at encouraging scientific and holistic investing.

2007
Bajaj Capital launches Stock Broking and Depository (Demat) Services.

2008
Bajaj Capital launches Just Trade, an online Platform for investing in Equities,
Mutual Funds, IPO's

6
Objectives of Bajaj Capital:

 To serve their clients with utmost dedication and integrity so that they
exceed their expectations and build enduring relationships.
 To offer unparalleled quality of service through complete knowledge
of products, constant innovation in services and use of the latest
technology.
 To always give honest and unbiased financial advice and earn their
clients' everlasting trust.
 To serve the community by educating individuals on the merits of Financial
Planning and in turn help shape a financially strong society.
 To create value for all stake holders by ensuring profitable growth.
 To build an amicable environment that accords respect to every individual
and permits their personal growth.
 To utilize the power of teamwork to function as a family and build
a seamless organization.

The Significance of the Logo of Bajaj capital:

 The logo depicts Lord Ganesha who is the source of all our values and ethics in
business.
 The large ears of Lord Ganesha remind Bajaj Capital to hear more. They listen
carefully to our clients to understand their needs.
 The weight of the trunk on the mouth symbolizes silence. Bajaj Capital
works silently, without blowing their own trumpet.
 The long trunk symbolizes continuous exploration. Bajaj Capital explores
all avenues to provide the best investment opportunities for our clients.
 The heavy posture of Ganesha symbolizes stability. Bajaj Capital helps

7
 our clients to attain financial stability through wise investments.

53
 Lord Ganesha is known as the remover of obstacles and bestower of
prosperity. Bajaj Capital emulates His example and tries their best to help
our clients attain prosperity by proper financial planning.
 The logo has a yellow background. Yellow is the color of gold, which
symbolizes wealth. According to Vedic lore, it is also the color
associated with Brihaspati, the guru and counselor of the Gods. We offer
our clients sage counsel to make their wealth grow.
 The letters are in red. Red is the color rajas symbolizing power and
incessant activity. It symbolizes our aggressive quest for your well-being and
happiness.
 The white streak represents the trunk of Lord Ganesha. White is the color
of satvaguna, and implies our selfless commitment to your life-long
happiness.

Strengths of Bajaj Capital:

 Wide range of products and services

 41 years experience as Investment Advisors and Financial Planners

 More than eight lakh satisfied clients all over India

 Countrywide network of 134 branches

 Over 12,000 NRI clients across the globe

 Personalized wealth management advice

 24 x 7 online accessibility through www.bajajcapital.com

 Strong team of qualified and experienced professionals including CAs,

MBAs, MBEs, CFPs, CSs, Insurance experts, Legal experts and others

8
 SEBI-Approved Category I Merchant Bankers

 Group Co BCIBL is an IRDA-licensed Direct Insurance Broker

9
10
 DATA ANALYSYS

SOME OF THE SCHEMES OF MUTUAL FUNDS:

Standard Chartered Mutual Fund

Schemes:

Grindlays cash fund: It is an Open-ended Income scheme with high liquidity. A

scheme that invests in money market instruments like Treasury Bills, Call
money, Repos , Short-term Corporate Debentures, Commercial Papers,
Certificate of Deposits, etc that provide a high level of stability and easy
liquidity .

Tax:

The GCF is also very taxed efficient. It comes with a daily (compulsory
reinvestment), Weekly (compulsory reinvestment), Monthly and Bi-monthly
dividend options. Each day gains are declared in the form of dividends and then
reinvested after netting it off against Dividend Distribution Tax (currently
20.91%).This dividend is completely tax free. So the net tax incidence is just
20.91% as compared to 36.5925% for comparable non mutual fund option.

Grindlays Floating Rate Fund: It seeks to generate stable returns with a low
risk strategy by creating a portfolio that is substantially invested in good quality
floating rate debt or money market instruments, fixed rate debt and money
market instruments.

GFRF primarily invests in Floating rate debentures and bonds, Short

tenor fixed rate instruments and long tenor fixed rate instruments swapped to
floating rate.

11
Plans: The fund comes in two plans

 Short term plan for investors with a time horizon of 1-6 months.
 Long term plan for investors with a time horizon of beyond 6 months.

Grindlays Debt Funds: Debt funds are funds that invest only in debt securities
and are designed to primarily protect your capital and provide better returns
by investing in high quality debt securities.

Operations of Debt funds: There are two important sources of revenue

that a debt fund earns:

a) Interest income

When you invest in a Bank / Company deposit, it offers you a fixed rate of
interest with the principal being returned on maturity. Similarly when a debt
fund invests in various debt securities the issuers of these securities offer a rate
of interest and the principal on maturity. The issuers of these securities could
either could either be various corporates like Reliance, Hindalco, ICICI, Bharat
Petroleum or the Government of India.

b) Mark to Market gain/loss

As interest rates on bank fixed deposits change frequently so do interest rates

on debt securities. Interest rates and debt security prices are in fact the two
sides in seesaw. In general, prices fall when interest rates rise and rise when
interest rates fall. If the interest rates were to decline then newer bonds would
be issued at lower interest rates than existing bonds. Consequently old bonds
would be dearer and hence prices of these older bonds would rise.

Similarly if interest rates were to raise then value of old bonds would fall, as
newer bonds would bear higher interest rates. The traded price of a bond may

12
thus differ from its face value. The longer a bonds period to maturity, the more
its price tend to fluctuate as market interest rates change.

DSP Merrill lynch Mutual Fund:

Schemes

Liquidity Fund:

It is an open-ended fund liquid scheme seeking to generate a reasonable

return commensurate with low risk and high degree of liquidity from a
portfolio constituted of money market securities and high quality debt
securities.

Floating rate Fund:

It is an open-ended income scheme seeking to generate income

commensurate with prudent risk from a portfolio substantially constituted of
floating rate debt securities and fixed rate debt securities swapped for floating
rate returns. The scheme may also invest in fixed rate debt securities and
money market securities.

Short term Fund:

It is an open-ended income scheme seeking to generate income commensurate

with prudent risk, from a portfolio constituting of money market securities,
floating rate debt securities and debt securities.

Bond fund:

It is an open-ended income scheme seeking to generate an attractive

return, consistent with prudent risk from a portfolio, which is substantially
constituted of high quality debt securities of issuers predominantly domiciled in
India.

13
Equity Fund:

It is an open ended growth scheme seeking to generate long term capital

appreciation, from a portfolio which is substantially constituted of equity and
equity related securities of issuers domiciled in India. The scheme may also
invest a certain portion of its corpus in debt and money market securities, in
order to meet liquidity requirements from time to time.

T.I.G.E.R Fund:

It is an open ended growth scheme whose primary investment objective

is to seek to generate capital appreciation, from a portfolio that is substantially
constituted of equity securities of corporates, which could benefits from
structural changes brought about by continuing liberalization in economic
policies by the government and / or from continuing investments in
infrastructure, both by public and private sector.

14
 HDFC MUTUAL FUND

Schemes

HDFC Growth Fund:

It is a open ended scheme seeking to generate long term capital

appreciation from a portfolio that is invested predominantly in equity and
equity related instruments

HDFC Equity Fund:

It is an open-ended growth scheme to achieve capital appreciation.

HDFC Top 200 Fund:

It is an open-ended growth scheme seeking to generate long-term capital

appreciation from a portfolio of equity and equity-linked instruments primarily
drawn from the companies in BSC 200 index.

HDFC Balanced Fund:

It is an open ended balanced scheme seeking to generate capital

appreciation along with current income from a combined portfolio of equity
and equity related and debt & money market instruments.

HDFC Tax Savers Fund:

It is an open-ended equity linked saving scheme with a lock-in period of 3

yrs seeking to generate long term growth of capital.

15
HDFC Gilt Fund:

It is an open-ended income scheme seeking to generate credit risk-free

returns through investments in sovereign securities issued by central
government or state government.

Birla Sun Life Mutual Fund:

Schemes

Birla Advantage Fund:

It is an open-ended diversified equity fund and portfolio remains over

wait across banks MNC pharma, IT and Telecom.

Birla Dividend Yield Plus:

It is an open-ended growth scheme investing in high dividend yield companies

and continuously having a positive outlook on banking sector.

Birla Mid cap Fund:

It is an open ended growth scheme investing primarily in mid cap stocks

and the portfolio remains well diversified across pharmaceutical, banking,
consumer non durable, IT, Hotels.

Birla MNC Fund:

It is an open-ended growth scheme investing in multi national companies

and the portfolio remains over weight across consumer non-durable, IT, Agro
chemicals.

Birla Gilt Plus:

It is an open-ended government security scheme.

Birla Equity Plan:

16
 It is an open-ended equity linked savings scheme with a lock-in for three
years.

Kotak Mutual Fund

Schemes:

Kotak 30:

It is an open-ended equity growth scheme seeking to generate capital

appreciation from a portfolio of predominantly and equity related securities
with investment in, generally, not more than 30 stocks.

Kotak opportunities:

It is an open-ended equity growth scheme seeking to generate capital

appreciation from a diversified portfolio of equity and equity related securities.

Kotak Global India:

It is an open-ended growth scheme seeking to generate capital

appreciation from a diversified portfolio of equity and equity related securities
issued by globally competitive Indian companies.

Kotak Liquid:

It is an open-ended debt scheme to provide reasonable returns and high

level of liquidity by investing in debt and money market instruments of
different maturities so as to spread the risk across different kinds of issuers in
debt markets.

17
 Chola mutual fund:

Schemes:Cholamandalam growth fund:

It is an open ended scheme seeking to generate long term capital appreciation,

income through investments in equity & equity related instruments; the
secondary objective is to generate some current income and distributive
dividend.

Chola midcap fund:

It is an open ended scheme seeking to generate capital appreciation by

investing primarily in mid cap stocks. The scheme will invest primarily that
have a market capitalization between Rs.300 crores to Rs. 3000 crore.

Chola opportunities fund:

It is an open ended scheme which will invest mainly to generate long term
capital appreciation from a diversified portfolio of equity and equity related
securities.

Chola Multi-cap fund:

It is an open-ended growth scheme which will provide long term capital

appreciation by investing in a well diversified portfolio of equity and equity
related instruments across all ranges of market capitalization.

Chola Gilt investment plan:

It is an open-ended growth scheme seeking to generate returns from a portfolio

by investing in Government securities.

18
Chola monthly income plan:

It is an open-ended growth scheme seeking to generate monthly income

through investment in range of debt, equity and money market instruments.

CHOOSING FUNDS

When it comes down to it, the decision to invest in a mutual fund is

one you have to make on your own. When you try to choose an investment,
however, it is a good idea to seek the guidance of a financial advisor who will
review its objective to make sure it supports your financialgoal.

As an investor, your goals are unique, and a financial advisor can

help match you with the best funds. Remember, however, when you are
choosing funds, to consider how much risk you are comfortable with and when
you'll need the money. If you have the time to weather the market's ups and
downs, you may want to consider equity investments.

Before you select a mutual fund, it is essential to read the

prospectus carefully to learn all you can about the fund's performance,
investment goals, risks, charges and expenses.

DECISION MAKING FACTORS WHILE INVESTING IN MUTUAL

FUNDS

Before looking at the mutual funds available to you, it may be best to decide
the mix of stock, bond, and money market funds you prefer. Some experts
believe this is the most important decision in investing. Here are some general
points to keep in mind when deciding what your investment strategy should be.

19
Diversify. It is a good idea to spread your investment among mutual funds that
invest in different types of securities. Stocks, bonds, and money market
securities work differently. Each offers different advantages and disadvantages.
You may also want to diversify within the same class of securities.
Diversifying can keep you from putting all your eggs in one basket and
therefore, may increase your returns over along period of time.
Consider the effects of inflation. Since the money you set aside today may be
intended to be used several years down the road, you need to look at inflation.
Inflation measures the increase of general prices over time.

Conservative investments like money market funds often may be popular

because they are managed to keep a steady value. But their return after
accounting for the inflation rate can be very low, perhaps even negative.

For example, a 4% inflation rate over a period of many years could erase a
money market fund's 3% yield over the same period of time. So even though
such an investment may give some safety of principal, it may not be able to
grow enough in value over the years or even keep up with the rate of inflation.

Patience is a virtue. It's no secret—the prices of common stocks can change

quite a bit from day to day. Therefore, the part of your account invested in
stock funds would likely fluctuate in value much the same way.

If you don't need your money right away (for at least 5 years), you probably
don't need to panic if the stock market declines or you find that your quarterly
statement shows the value of your investment has fallen. In the past, the stock
market has regained lost value over time. Although you are not assured it will
do so in the future, try to be patient and allow your stock funds time to
recover.
Remember the saying, "buy low, and sell high." Switching out of a stock
mutual fund when prices are low is usually not the way to make the most of

20
your investment. Of course, if a fund continues to under-perform over time as
well as your other fund choices, you may want to consider changing
funds.

Look at your age. Younger investors may be more at ease with stock funds,
because they have time to wait out the short-term ups and downs of stock
prices. By investing in a stock fund, they might be able to receive high returns
over the long-term.
On the other hand, people who are closer to retirement may be more interested
in protecting their money from possible drops in prices, since they'll need to
use it soon. In this case, it may be wise to place a greater percentage of money
in bond and/ or money market funds, which may not have such large changes
in value.

How can you determine an investment mix appropriate for your age? One
way is to subtract your age from 100. The answer you come up with may be a
good number to start with in deciding what portion of your total investments to
put into stock mutual funds.

Risk. When you are choosing funds, be sure to consider how much risk you are
comfortable with and how close you are to retirement. If retirement is around
the corner, you may want a portfolio with very little risk. On the other hand, if
you are younger, and have the time to weather the market's ups and downs, you
may want to choose a more aggressive investment strategy.

READ FUND DOCUMENTS

Your primary source of data concerning the mutual fund will be the
prospectus. It is a legal document illustrating the rules and regulations that a
mutual fund must follow and contains information on the fund's goal and
strategy, risks, performance, financial highlights fees and expenses, and a wide
variety of information that you should know before investing.

21
What are the fund' s goal and strategy?

Goals vary from fund to fund, and they're important to understand so

you can decide if they match your personal objectives. Some funds
generate income for their shareholders, while others concentrate on capital
appreciation. Some focus on a combination of the two, and others are oriented
towards tax benefits or preservation of capital.

Funds also implement differing strategies to help accomplish their goals. The
Goals and Strategies section of a prospectus details the types of securities in
which fund managers can invest and how managers analyze them

Funds can be limited to domestic investments, focus on a certain country or

region, or invest anywhere in the world. In addition, some funds invest only in
specific industries or in particular types of companies. Others invest in large-,
medium- or small-capitalization companies.

What are the risks?

As with all investments, each fund, whether domestic, international or sector

specific, carries different risks. The Main Risks section of a prospectus
explains which ones are associated with the securities in that particular fund,
which may help you decide what level of risk you're comfortable having in
your investment portfolio.

How has a fund performed?

While historical performance doesn't predict how a fund will do in the future,
you may be interested in how it performed in past market environments.
Depending on the age of the fund, a prospectus will provide its 1- 5- and 10-

22
year average annual returns, including a comparison to its benchmark index
over the same period.

What are financial highlights?

In this section a prospectus lists 5 years of annual financial information, if a

fund is less than 5 years old, provides data since inception. Information
includes net asset values at the beginning and end of each year, and details the
gains or losses, dividends and distributions that account for any changes.

Financial Highlights also show fund asset information such as net assets ratios
to average net assets for expenses and net investment income, and portfolio
turnover rates.

What are the expenses of a fund?

Operating a fund entails some costs you should be aware of. The Fees and
Expenses section breaks out these costs and who pays them. In addition, an
example of fund expenses is provided to help you compare the cost of investing
in one fund versus another.

Who's managing the fund?

In the Management section, a prospectus gives a brief biography of a fund' s

managers, including how long they have worked on the fund and their overall
industry experience.

.MARKET SEGMENTATION

Market segmentation is the division of market into homogeneous

groups, which will respond differently to promotions, communications,

23
advertising and other marketing mix variables. A different marketing mix can
target each group, or “segment”, because the segments are created to minimize
inherent differences between respondents within each segment and maximize
differences between each segment.
Market segmentation was first described in the 1950’s, when product
differentiation was the primary marketing strategy used. In the 1970’s and
1980’s, market segmentation began to take off as a means of expanding sales
and obtaining competitive advantages.

Uses of Market Segmentation

There are many good reasons for dividing a market into smaller segments. The
primary reasons:
Easier marketing
It is easier to address the needs of smaller groups of customers,
particularly if they have many characteristics in common (e.g. seek the same
benefits, same age, gender, etc.).
Find niches
Identify under-served or un-served markets. Using “niche marketing”,
segmentation can allow a new company or new product to target less contested
buyers and helps a mature product seek new buyers.

Efficient
More efficient use of marketing resources is by focusing on the best
segments for the investor offering—product, price, promotion, and place
(distribution). Segmentation can help avoid sending the wrong message or
sending message to the wrong people.
Classification variables
Classification variables are used to classify survey respondents into
market segments. Almost any demographic, geographic, Psychographic or
behavioral variable can be used to classify people into segments.

24
Demographic variables — Age, gender, income, ethnicity, martial status,
education, occupation, household size, length of residence, type of residence,
etc.

Geographic variables – City, state, zip code, census tract, country, region,
metropolitan or rural location, population density, climate, etc.

Psychographic variables – Attitudes, lifestyle, hobbies, risk aversion,

personality traits, leadership traits, magazines read, television programs
watched, PRIZM clusters, etc.

Behavioral variables – Brand loyalty, usage level, benefits sought, distribution

channels used, reaction to marketing factors, etc.
Summary
Target marketing or market segmentation based on customer needs and
wants can increase profits. Target market identifies customer groups and the
reasons they purchase. Market segmentation helps a business be more
responsive to changing customer needs. An overall marketing plan or strategy
visually shows how all aspects of a marketing effort work together. The
ultimate goal of any business is to sell the product or service.

PRIMARY DATA FOR THE PROJECT:

For the customized needs o the project, primary data was collected
through a survey in the twin cities of Hyderabad & Secunderabad. A Random
sample of 100 investors were surveyed. They were all asked to answer a
questionnaire true to their knowledge. The feedback obtained from the
customer was instrumental, gauging the perception of the investors towards
mutual funds. It also throws light on the factors, which influence them to make

25
decisions while investing. Further the interaction with few of the investors goes
a long way in understanding the inlaid reasons for their decisions.

SECONDARY DATA:

The main sources of secondary data are the web sites of various mutual
fund houses like cholamandalam mutual fund, Franklintempletonindia, ICICI,
BIRLA SUNLIFE, KOTAK and more such houses. Many references were
collected from different libraries to gain an insight on mutual funds. Previous
studies conducted in this field provided valuable help. In addition to the above
sources, Working with Bajaj associates and interaction with their personnel
provided a pragmatic edge to my theoretical concepts.

Survey Details

Total Sample Size 100

Economic Status Criterion Tax payees & Non tax payees

Age groups 23 years and above

Martial Status Criterion Married, Married with children &
Unmarried

26
 FACTORS CONSIDERED BY INVESTORS

WHILE INVESTING

Every investor considers several factors while investing in any of the products
as it deals with the most important need of life “money”.

The five main factors that were considered are:

1. Safety & security
2. Tax exemption
3. Liquidity
4. Profitability
5. Return pattern

Factors considered by investors

While investing
17%
31%
14%

12% 26%
Safety & security Tax exemption
Liquidity Profitability
Return pattern

SAMPLE SIZE 100

27
ECONOMIC STATUS TAX PAYEES AND NON-TAX PAYEES

The above graph shows that 31% people consider safety & security as the main
factor while investing, 26% goes for Tax exemption, 17% considered return
pattern in the investment, 14% went with profitability and 12% showed interest
in liquidity.

ANALYSIS OF THE ABOVE GRAPH:

In a developing country like India most of the people fall in the lower middle
class and middle class sectors. The attitude of the investors is of primary
concern. As more and more options that warrant high returns are available in
the market, investor tends to be more skeptical. So, while investing in any
avenue, their first priority is safety and security. Even the age of the investor
plays a major role in the decision-making. For example, if the investor is in the
age of 50 and above, he usually looks for low or no risks while investing.
Therefore, 31% of investors surveyed preferred safety & security.

Next is the “tax exemption”; as there is tremendous boom in the

corporate sector and the remuneration system for a particular sector has
changed. This created a change in income levels and thereby affected the
expenditure patterns. In the past, it took employee years of time to reach a five-
figured salary. But, gradually the system has changed. Even the employee in
the lower level or the middle level of the corporate ladder is receiving a
handsome emolument. So, they are opting for the exemption of tax. Therefore,
the next preference is for tax exemption that is 26% of the total.

Besides investors going for Safety & security, there are investors who
opt for return on investments they made. They are mainly in the age group of
23 and 35. Because these investors are likely to think that, at this age they are
mentally more stable and feel that they can cope with financial risks. Any
profits made would further bolster their financial stability. And so, 17% went
with return pattern of their investment. In the same way, 14% of the investors

28
look for profitability, especially those who are already doing business, i.e.
those who are already accustomed to taking risks.Out of the total, 12% of
investors preferred liquidity. The main reason for this could be that, that
making the invested money liquefied as and when required is important, and
this is not possible if the investments are made in any insurance, Bank deposits,
etc.

Though there are numerous factors that can be attributed to an investor’s

psyche, by large, we can conclude that maximum number of investors is
investing in those sectors where there is safety & security for their principal.
The other factors antecede safety.

INVESTMENT PATTERN:

Investment pattern

7% 5% 4%
2%
9% 42%

31%

Bank deposits insurance mutual fund

bonds shares Equity
none

Sample size 100

Economic status Tax payees & non-tax payees

From the above graph, it is clear that 42% opted for an investment in bank
deposits, 31% for insurance, 7% for shares, 9% for mutual fund, 2% for bonds,
5% for equity and remaining 4% have invested in some other investments such
as real estates etc.

29
ANALYSIS OF THE ABOVE GRAPH:

The investment pattern of an investor is also very important because this shows
the avenues where the people are really interested. Here, 42% have invested in
bank deposits as it is very safe and risk free. Out of the sample of 100,it is
observed that those who opted for an investment in banks in the form of
deposits are found to be in the age group of 40 and above and are in
government services.

The next preference, as observed in the pie chart for investment pattern
is “Insurance”. People generally opt for life insurance because it promotes a
sense of safety & security for the dependents on the person and even his
belongings. So, the next priority is insurance. 7% of the investors went for an
investment in shares as it brings quick returns, although shares are prone to
high risks.

As shown 9% of the investors opted for an investment in mutual

funds. From this we can infer that the market of mutual fund is picking up
slowly. According to the survey, the people who have invested in the mutual
funds belong to high-income range and they want an exemption from tax and a
mere 2% opted for bonds, 5% for investment in equity and 4% have invested in
other investments such as Real estate to make quick returns on their
investments.

30
 AWARENESS TOWARDS MUTUAL FUNDS:

Awareness towards mutual

funds

13%

87%

Aware of mutual fund Not aware of mutual fund

In the above pie chart, we can observe that nearly 90% of investors are aware
of mutual funds and only 13% people are not aware of it. This shows that most
of the investors know about mutual funds in one or the other way.

ANALYSIS OF THE ABOVE GRAPH:

Of the sample surveyed, almost all of the people are aware of mutual funds.
They are aware of the term “mutual fund”. Though the questionnaire cannot
identify the extent of the awareness. Through the interaction it is found that
they are not actually aware of the advantages in investing mutual funds, various
types of mutual funds and different schemes offered in it. It is found that
People often have an inhibition that investments in mutual funds can be done

31
only by those who have surplus amount of money with them and want to avail
tax redemption.

MUTUAL FUND INVESTMENTS:

Mutual funds are medium risk investments. Though Investing in mutual fund
doesn’t assure a fixed amount of returns, nevertheless, they are not low. The
awareness about mutual funds is the primary criterion.

Mutual fund investments

19%
6%

75%

Equity funds Debt funds Liquid funds

Sample size 16

Criterion Mutual fund investors in the survey

From the graph, it is clear that only 16 out of 100 invested in mutual funds.
From those 16, 12 have invested in Equity funds, 3 in liquid funds and the
remaining 1 in debt funds.

ANALYSIS OF THE ABOVE GRAPH:

32
Only 16 out of 100 invested in mutual funds this can be mainly attributed to
the low level of awareness, various inhibitions and a not so clear idea about the
mutual funds. It is very important to have a clear perception of mutual funds,
how they work and how the money is invested in different portfolios according
to the investors’ choice.

Investors who opted for equity funds are 12 of 16 percent. Equity funds
being the majority preference can be reasoned as they want their investments to
be put in various sectors i.e. DIVERSIFIED FUNDS so that they can make
profits out of it easily. Even some went for INDEX FUNDS as the investments
are made in Bench Nark Index Stock like BSE, NSE.

A few (3%of 16%) investors made investments in liquid funds as they

want a Short term investments where the investor need not wait for much time
for the return. These are also called as Money Markets for short term.

Only a single investor went for debt funds where investments are in
various debt products like Certificate of Deposits (CD’s), Commercial papers
and call money as the investor want a secured investment, which he can avail
in Debt Funds.

33
 FINDINGS

 Many of the investors are aware of mutual funds but most of their
perception towards them is not positive.
 Investors are mainly concerned with the risk factors of mutual funds and
are not directing towards them.
 The investors who have invested in mutual funds mainly go for it
because of the Liquidity matter and Tax exemption.
 Most of the people don’t know the advantages of mutual funds and the
various types of mutual funds.
 There are nearly 1173 schemes of mutual funds offered by various
mutual fund houses, which an ordinary person is not aware.
 A common investor basically looks for the Tax exemption and Safety &
security while investing.
 Investors often feel that those people, who have surplus amount with
them and invest to avail Tax exemption, can do investing in mutual
funds.

34
35
 SUMMARY

This report is an attempt to provide an analysis of the perception of an investor

towards mutual funds. However, what has been reported is only the tip of
iceberg in terms of data that are available.

However, my examinations suggests that employees are interested to

invest in mutual funds provided sufficiently educated and a know-how is
provided on its working. Though the self-employed are investing in mutual
funds and insurance, they are investing small amounts in them because they do
not want to take high risks.

Bajaj stock broking ltd should educate the people about the various
advantages of investing in mutual funds and create an awareness regarding
various investment options.

In conclusion, it is important to remember that the main purpose for

initiating the project is to analyze the perception of an ordinary investor
towards the mutual funds and the aspects that guide him to make investment
decisions. The study does not aim to advocate investments in mutual funds.

36
 CONCLUSION

Mutual funds are still and would continue to be the unique financial tool in
the country. One has to appreciate the fact that every aspect of life as its
periods of high and lows. This has been the case with the stock markets. Why
not apply the same logic to mutual funds? Mutual funds have not failed in any
country where they worked with regulatory frame work. Their future is bright.
The poor performance of many mutual funds schemes may be mostly attributed
to the quality of personal involved and their matter of fund management.

37
 SUGGESTIONS

Make people aware of mutual funds by:

 Arranging free seminars in different organizations about mutual fund

investments.

 Arranging stalls in Public places is a good publicity.

 More advertisements need to come to explain the various advantages of

mutual funds and even the various schemes offered by them.

What to expect from a financial advisor

The key for mutual fund investors is to define and recognize the value of
professional financial services, and then insist on getting that value. When
you pay a sales charge or a fee, what can you expect a professional to do for
you? Your advisor should at least:

 Understand investor needs and help him formulate long-term investment

goalsandobjectives.
Before making specific recommendations, advisor should try to gain a
whole picture of investors past experience, lifestyle and goals, as well as his
other investments and current financial situation. When the investor
planning to retire, for example? Does the investor have life insurance? Does
he own real estate? How secured is his job?
 Help the investor develop realistic expectations by discussing the risks and
rewardsofeachinvestment.Every investment choice has its strengths and
weaknesses, and investor should never feel less than fully informed. When
investor ask questions, or have doubts,

38
 Investor should expect your financial advisor to answer honestly, and help
him develop a strategy that is both realistic and comfortable for him.

 Match investor’s goals and objectives with appropriate mutual funds.

Investor should expect your advisor to make clear and specific
recommendations, and explain the reasons behind them in terms he can
understand. Of course, the advisor should be confident and well informed
about the management and portfolio
strategiesofanymutualfundsrecommended.
 Continually monitor investor portfolio and help you interpret performance.
Your advisor cannot influence or predict a fund's results. However, he or
she should discuss results with you and help you judge your progress. You
should feel that you canalwaysaskyouradvisor,"HowamIdoing?"

 Conduct regular reviews to ensure that your strategy continues to provide

optimal results for you.

 One of the most valuable services your advisor can provide is to help you
"stay on course" with your investment program. But "staying on course"
long term does not necessarily mean staying put. Expect your financial
advisor to work with you to adjust your portfolio in response to any
significant change in your lifestyle, priorities, assets or responsibilities.
 These are the basic services that investors should expect from their financial
advisors. Beyond the basics, many investors could use even more
specialized assistance, like advice on retirement plan distribution options,
setting up and servicing retirement plans for small businesses and self-
employed individuals,
developing tax-advantaged strategies for children's college education,
insurance, estate, and trust planning; and year-end mutual fund tax advice.
If you need specialized services, there are many financial advisors who can
help you obtain the help you n

39
40
BIBLIOGRAPHY
S.No. Name of the Author Publisher Page Nos.

1 Punithavathi Securities Analysis and Portfolio 29,30,411&412

Pandyan Management
2 V.A.Avadhani Investment and Securities Markets in 427,428
India
MAGAZINES:
1. Business standard
2. Economic times
Marketing dictionary A. IVONAVIC

S.NO WEBSITE’S MONTH OF SEARCH

1 http:// www.Bajaj.com May 2007

2 http:// www.amfiindia.com May 2007

3 http:// www.ici.org May2007

4 http:// www.google.com May 2007

5 http:// www.moneycontrol.com June 2007

6 http:// www.franklintempletonindia.com June 2007

41
42
 Investor’s perception towards Mutual Funds

PERSONAL INFORMATION

A) Name:
B) Type of Business:
C) Address:
D) Telephone: Mobile:
E) Fax: Email:
F) Annual Income:

ANNEXURE

1.In which part of these modes have you made your major part of
investment?
[] Shares [] Equity [] Mutual Fund [] Insurance
[] Bank Deposit [] Bonds
[] Others Specify---------------------------------
2.Why do you prefer the above option?
[] Return Pattern [] Tax Exemption
[] Liquidity [] Safety & Security
[] Profitability [] Guaranteed Return
[] Others Specify-----------------------------------
3.How long would you like to invest?
[] Short term (below 1yr) [] Medium term (up to 2yrs)
[] Long term (above 3yrs)

4.Have you seen any advertisements for Mutual Funds?

[] Yes [] No

43
5.If yes, what are the advertisement have you seen for?
[] Birla sunlife mutual funds [] Reliance mutual fund
[] Chola mutual funds [] Standard charted mutual funds
[] Franklin Templeton mutual fund [] Sundaram mutual fund
[] HDFC mutual fund [] UTI mutual fund
[] ING VYSA mutual fund [] Any other specify--------------------
[] Prudential ICICI mutual fund
6. Rank the following services preferred by you from a financial Advisory
Institution?
Services Rank
1. Telephone services
2. Online services
3. Mobile services
4. Personal services
7. Mention the names of mutual funds you have invested?
---------------------------------------------------------------------
8. In which scheme of mutual funds have you invested?
[] Debt [] Equity
[] Liquidity [] Mixed (Debt & Equity)
[] Others specify---------------------------
9. What was the approximate return you got on your investment?
[] Debt [] Equity
[] Liquidity [] Mixed
[] Others specify---------------------------
10. Which factors you consider the most while, investing in mutual funds?
[] Return patterns [] Performance
[] Services [] Risk factors
[] Quality of portfolio [] Professional management
[] Wealth creation

44
11. Which period of dividend income you prefer the most?
[] Monthly [] Quarterly
[] Half yearly [] Annual
12. How often you need reminders (recall) about mutual fund?
[] Monthly [] Quarterly
[] Half yearly [] Annual
13. If you need so, which mode you would prefer?
[] Account statements [] Remainder letters
[] Television & Internet [] News papers & Magazines
14. Please rank your expectations from a mutual funds Advisory concern
Expectations Rank
1. Right Advice
2. Speed of transaction
3. Research inputs
4. Reputations
5. Reliability
6. Investor facilitation
7. Advertisements
8. Easy procedure
15. Are you willing to invest in mutual funds?
[] Yes [] No
If no, specify the reason------------------------------------------
If yes, do you need further assistance from Wealth Management
Executives from
Bajaj Consultants Ltd?
[] Yes [] No
16. As investors please specify your needs, expectations and
recommendations to Develop the mutual funds.

45