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NIS ACADEMY, AURANGABAD
Submitted by :RUSHENDRA TARTE MBA( Two Year Programme) Batch (2009-2010) Enrolment No-474800850
Under Guidance :Mr. KETAN NANIVADEKAR SMART MONEY FINANCIAL SERVICES, AURANGABAD.
The NIS Academy, Aurangabad. 3
ACKNOWLEDGEMENT With regard to my Project with Mutual Fund I would like to thank each and every one who offered help, guideline and support whenever required. I am extremely grateful to my guide, Mr. KETAN NANIVADEKAR for their valuable guidance and timely suggestions. I would like to thank all faculty members of THE NIS ACADEMY, AURANGABAD for the valuable guidance& support. I would also like to extend my thanks to my members and friends for their support.
The NIS Academy, Aurangabad. 3
This is to certify that Mr. RUSHENDRA S.TARTE (Enrolment No-474800850) a student of The NIS
Academy, Aurangabad has completed project work on “STUDY OF MUTUAL FUND INDUSTRY” under my guidance and supervision. I certify that this is an original work and has not been copied from any source.
Signature of Guide Name of Project Guide: Mr. KETAN NANIWADEKAR Date- 10,Aug 2009
The NIS Academy, Aurangabad. 3
4740800850 The NIS Academy.DECLERATION I hereby declare that this Project Report entitled “STUDY OF MUTUAL FUND INDUSTRY” in the partial fulfillment of the requirement of Master of Business Administration (MBA) of THE INS ACADEMY. Aurangabad. AURANGABAD is based on primary & secondary data found by me in various departments. KETAN NANIVADEKAR. books. 3 . magazines and websites & Collected by me in under guidance of s Mr. DATE: RUSHENDRA TARTE Enrollment No.
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. Mutual Funds have not only contributed to the India growth story but have also helped families tap into the success of Indian Industry. Which type of Product they prefer. Aurangabad. The NIS Academy. 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 Project gave me a great learning experience and at the same time it gave me enough scope to implement my analytical ability. Which Option (Growth or Dividend) they prefer or Which Investment Strategy they follow (Systematic Investment Plan or One time Plan). This Report will help to know about the investors’ Preferences in Mutual Fund means Are they prefer any particular Asset Management Company (AMC). 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.EXECUTIVE SUMMARY In few years Mutual Fund has emerged as a tool for ensuring one’s financial well being. 3 . But once people are aware of mutual fund investment opportunities. This Project as a whole can be divided into two parts. As information and awareness is rising more and more people are enjoying the benefits of investing in mutual funds.
For the collection of Primary data I made a questionnaire and survey. One can have a brief knowledge about Mutual Fund and its basics through the Project. the Company Profile. The NIS Academy.” The data collected has been well organized and presented. Objectives of the study. 3 . I hope the research findings and conclusion will be of use. Aurangabad. The second part of the Project consists of data and its analysis collected through survey. Research Methodology. This Project covers the topic “STUDY OF MUTUAL FUND INDUSTRY.The first part gives an insight about Mutual Fund and its various aspects.
3 . No 1 DECLARATION 2 4 Content ACKNOWLEDGEMENT 2 Page No 3 EXECUTIVE SUMMARY 5 4 INTRODUCTION 8 5 COMPANY PROFILE 31 6 OBJECTIVES AND SCOPE 35 7 RESEARCH METHODOLOGY 37 8 DATA ANALYSIS AND INTERPRETATION 43 9 FINDINGS AND CONCLUSIONS 55 SUGGESTIONS & RECOMMENDATIONS 10 11 BIBLIOGRAPHY 60 62 The NIS Academy.CONTENTS Sr. Aurangabad.
Introduction Definition SEBI (Mutual Fund) Regulations 1993 defines Mutual Fund as “a fund established in the form of a trust by a sponsor to raise money by the trustees through the sale of The NIS Academy. 3 . Aurangabad.
professionally managed basket of securities at a relatively low cost. acting on behalf of the Mutual Fund. Anybody with an investible surplus of as little as a few thousand rupees can invest in mutual fund . that’s where the understanding of fund ends. investing means buying mutual funds After all. professional fund managers. in the United States alone. Typically. Thus. the cost involved in the process and the broad rules for entry into and exit from funds and others areas of operation. it specifies the investment objectives of the fund. That means that.Each mutual fund scheme has defined investment objective and strategy. The organization that manages the investment is called the Asset Management Company (AMC). In fact. As you probably know. Aurangabad. too many people. a Mutual Fund is the most suitable investment for the common person as it offers an opportunity to invest in a diversified.units to the public under one or more schemes for investing securities in accordance with these regulations” The rationale behind a mutual fund is that there a large number of investors who lack the time and or the skills to manage their money. The NIS Academy. manage the investments (investor’s money) for their benefit in return for a management fee. 3 . its common knowledge that investing in mutual fund is (or at least should be) better than simply letting cash waste away in a saving account but for most people. A Draft offer documents is to be prepared for launching a fund. trillions of dollars alone are invested in mutual fund. the risk associated. More than 80 million people or one half of the household in America invest in mutual funds. mutual funds have become extremely popular over the last couple of decades what was once just another obscure instrument is now part of daily lives. Hence.
which regulates securities markets before it can collect fund from the public.Mutual fund is a mechanism for pooling the resources by issuing unit to the investors and investing funds in securities in accordance with the objective as disclosed in offer document. Diversification reduces the risk because all stock may or may not move in the same direction in the same proportion to their proportion at the same time.The profit or losses are shared by the investors in proportion to their investment. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investor of mutual are called unit holders. Investment in securities is spread across a wide section of industry and sector and the risk is reduced. The NIS Academy. SEBI (Mutual Fund) Regulations. 3 . bonds and other securities Each investors owns shares which represent a portion of holding of the fund. Mutual funds in India are constituted in the form of a Public Trust created under The Indian Trusts Act. The mutual fund usually comes out with a number of schemes with different investment objectives which are launched from time to time. In India. INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS ASPECTS. A mutual fund is required to be registered with the SEBI. A mutual fund is nothing more than a collective stock and /or bonds. You can think of a mutual fund as a company that brings together a group of people and invests their money in stock. 1996 regulates the structure of mutual funds. Aurangabad. 1882.
Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. i. 3 . bonds and other securities. debentures and other securities. Aurangabad. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with The NIS Academy. the fund belongs to all investors. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion the number of units owned by them. Mutual fund issues units to the investors in accordance with quantum of money invested by them. A Mutual Fund is an investment tool that allows small investors access to a welldiversified portfolio of equities. Units are issued and can be redeemed as needed. The funds Net Asset value (NAV) is determined each day. Each shareholder participates in the gain or loss of the fund. professionally managed basket of securities at a relatively low cost. Investors of mutual funds are known as unit holders. This pool of money is invested in accordance with a stated objective.Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. The joint ownership of the fund is thus “Mutual”. The money thus collected is then invested in capital market instruments such as shares.e. When an investor subscribes for the units of a mutual fund.
NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors. ADVANTAGES OF MUTUAL FUND The NIS Academy. Mutual Fund investor is also known as a mutual shareholder or a unit holder.the fund (the total amount of the fund). 3 . Aurangabad. debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net of its liabilities. Any change in the value of the investments made into capital market instruments (such as shares.
• • • • • • • • • Portfolio Diversification Professional management Reduction / Diversification of Risk Liquidity Flexibility & Convenience Reduction in Transaction cost Safety of regulated environment Choice of schemes Transparency. 3 . The NIS Academy. Aurangabad.
DISADVANTAGE OF MUTUAL FUND • • • • No control over Cost in the Hands of an Investor No tailor-made Portfolios Managing a Portfolio Funds Difficulty in selecting a Suitable Fund Scheme The NIS Academy. 3 . Aurangabad.
at the initiative of the Government of India and Reserve Bank. First Phase – 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. Aurangabad. the monopoly of the market had seen an ending phase. The private sector entry to the fund family raised the Aum to Rs. The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund industry can be broadly put into four phases according to the development of the sector. both qualities wise as well as quantity wise. In the past decade. Though the growth was slow. The NIS Academy. Before. 470 billion in March 1993 and till April 2004.6. but it accelerated from the year 1987 when non-UTI players entered the Industry. Indian mutual fund industry had seen a dramatic improvement. the Assets Under Management (AUM) was Rs67 billion. 3 . The first scheme launched by UTI was Unit Scheme 1964.700 crores of assets under management. it reached the height if Rs. 1540 billion. 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. Each phase is briefly described as under. At the end of 1988 UTI had Rs.HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY The mutual fund industry in India started in 1963 with the formation of Unit Trust of India.
The industry now functions under the SEBI (Mutual Fund) Regulations 1996. Third Phase – 1993-2003 (Entry of Private Sector Funds) 1993 was the year in which the first Mutual Fund Regulations came into being. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. 1.UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87). 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. The NIS Academy. Bank of India (Jun 90). except UTI were to be registered and governed. LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. Punjab National Bank Mutual Fund (Aug 89). As at the end of January 2003.004 crores. Bank of Baroda Mutual Fund (Oct 92). Indian Bank Mutual Fund (Nov 89).Second Phase – 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non. the mutual fund industry had assets under management of Rs.At the end of 1993. under which all mutual funds.805 crores. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. Aurangabad.47.UTI. 3 .21. there were 33 mutual funds with total assets of Rs.
One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. which manage assets of Rs. 3 . Structure of the Indian mutual fund industry: The Indian mutual fund industry is dominated by the Unit Trust of India and which has a total corpus of Rs 700bn collected from more than 20 million investors . assured return and certain other schemes The second is the UTI Mutual Fund Ltd. following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. consolidation and growth. 2004. representing broadly. Aurangabad. there were 29 funds. It is registered with SEBI and functions under the Mutual Fund Regulations. As at the end of September.Fourth Phase – since February 2003 In February 2003.The UTI has The NIS Academy.835 crores as at the end of January 2003.153108 crores under 421 schemes. sponsored by SBI. PNB. BOB and LIC. the assets of US 64 scheme.29.
GIC AMC floated by General Insurance Corporation and Jeevan Bima Sahayog AMC floated by the LIC are some of the prominent ones. which is a balanced fund. 3 .e. The United Scheme 1964 commonly referred to as US64. Can bank Asset management floated by Canara Bank and SBI Funds Management floated by the State Bank of India are the largest of these. balanced. which.many fund /schemes in all categories i. income etc with some being open ended and some being closed ended. The second largest categories of mutual funds are the ones floated by nationalized banks. Most of its investors believe that the UTI is government owned and controlled. The largest of these are Prudential ICICI AMC and Birla SUN LIFE AMC. is true for all practical purposes. is the biggest scheme with a corpus of about Rs 200bn URI was floated by financial institution and is governed by a special act of the parliament. Recent trends in the mutual fund industry: The most important in the mutual fund industry is the aggressive expansion of the foreign owned mutual fund companies and the decline of the companies floated by the The NIS Academy. equity. Aurangabad. The aggregate corpus of funds managed by this category of AMC’s is about Rs 150 billion The third largest categories of the mutual funds are the once floated by the private sector and by the foreign asset management companies. while legally incorrect. The aggregate corpus of the asset managed by this category of AMC s is in excess of Rs 250bn.
Few hired specialized staff and generally choose to transfer staff from the parent organization. These banks did not really understand the mutual fund business and they just viewed it as another kind of banking activity. Some schemes had offered guaranteed returns and their patent organization had to bail out these AMCs by paying large amount of money the difference between the guaranteed and actual returns. they have serious plans of continuing the activity in a major way. which makes money in the long term and requires deep pocketed support in the intermediate years. They quickly realized that the AMCs business is a business. broker education etc.nationalized bank and smaller private sector players. float. sharp improvement in the service standards and disclosure. The experience of some of the AMCs floated by private sector Indian companies was also very similar. usage of technology. The foreign owned companies have deep pockets and have come in here with the expectation of a long haul. Many nationalized banks got into the mutual fund business in the early nineties and go off to a good start due to the stock market boom prevailing then. some have merged with the others and there is general restructuring going on. they have forced the industry to upgrade itself and service levels of the organization like UTI have improved dramatically in the last few years in response to the competition provided by these. The NIS Academy. Aurangabad. They can be credited with introducing many new practices such as new product innovation. In fact. 3 . and it is doubtful whether barring a few expectations. The service level was also bad. and new schemes etc. Most of these AMCs have not been able to retain staffs. Some have sold out to foreign owned companies.
But this does not mean there is no room for other players. SEBI is working out the norms for enabling the existing mutual fund scheme to trade in derivatives. The NIS Academy. Here too some of them will down their shutter in the near future to come. are looking at Indian market seriously. The market will witness a flurry of new players entering the area. In the private sector this trend has already started with two mergers and one takeover. many market players have called on the Regulator to initiate the process immediately.Future scenario: The asset base will continue to grow at an annual rate of about 30 to 35% over the next few years as investor’s shift their asset from banks and other traditional avenues. so that the mutual funds can implement the changes that are required to trade in derivates. 3 . close down or merge with strong players in three to four years. Aurangabad.Out of ten public sectors players five will sell out. There will be a large number of offers from various asset management companies in times to come. Some big names like Fidelity. Some of the older public and private sector players will either close or be taken over. The mutual fund industry is awaiting the derivation in India as this would enable it to hedge its risk and this in turn would be reflected in its Net Asset Value (NAV). Principal and Old Mutual etc. Importantly.
The regulations were fully revised in 1996 and been amended. The NIS Academy. SEBI notified regulation for mutual funds in 1993. 3 . The objectives of SEBI are – to protect the interest of investors in securities. There is no distinction in regulatory requirement of the mutual fund and all are subject to monitoring and inspecting by SEBI. Aurangabad. Thereafter mutual fund sponsored by private sector entities were allowed to enter the capital market. As far as mutual are concerned. from time to time SEBI has also issued guidelines to the mutual fund from time to time to protect the interest of the investors. The risks associated with the scheme launched by mutual funds sponsored by these entities are of similar type. and to regulate the securities market.Role of SEBI in mutual fund: In the year 1992 SEBI act was passed. 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 regulation. SEBI formulates policies and regulation the mutual fund to protect the interest of the investors. to promote the development of. Therefore.
3 . Aurangabad.CATEGORIES OF MUTUAL FUND: The NIS Academy.
investment in equity funds should be considered for a period of at least 3-5 years. At the same time. after the offer period. It can be further classified as: The NIS Academy. fresh investments can not be made into the fund. 3 .. at any • point of time. most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly. Redemption of units can be made during specified intervals. Morgan Stanley Growth Fund). Therefore. even losses. Recently. short term fluctuations in the market. historically. generally smoothens out in the long term. • Close-ended funds: These funds raise money from investors only once. With fluctuating share prices.g. such funds have relatively low liquidity. However. equities have outperformed all asset classes in the long term. thereby offering higher returns at relatively lower volatility. Therefore. such funds can yield great capital appreciation as. such funds show volatile performance.Mutual funds can be classified as follow : Based on their structure: Open-ended funds: Investors can buy and sell the units from the fund. Hence. If the fund is listed on a stocks exchange the units can be traded like stocks (E. Based on their investment objective: Equity funds: These funds invest in equities and equity related instruments. Aurangabad.
A banking sector fund will invest in banking stocks.g. iii|) Dividend yield funds. .100% of the capital is invested in equities spreading across different sectors and stocks. construction. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. they fall between equity and debt funds. like BSE Sensex or Nifty is tracked.it is similar to the equity diversified funds except that they invest in companies offering high dividend yields. The NIS Academy. vi) ELSS.Invest 100% of the assets in sectors which are related through some e. cements sectors etc. Aurangabad.Equity Linked Saving Scheme provides tax benefit to the investors. . Balanced fund: Their investment portfolio includes both debt and equity. on the risk-return ladder. ii) Equity diversified funds. Following are balanced funds classes: i) Debt-oriented funds -Investment below 65% in equities.Invest 100% of the capital in a specific sector. As a result. 3 theme.g. e. -An infrastructure fund invests in power. Their portfolio mirrors the benchmark index both in terms of composition and individual stock weightages. v) Sector funds.In this case a key stock market index.i) Index funds. iv) Thematic funds.
The NIS Academy.They invest 100% of their portfolio in government securities of and T-bills. and money market instruments such as certificates of deposit (CD). Government of India securities. Debt fund: They invest only in debt instruments. i) Liquid funds. Higher proportion (around 75%) is put in money markets. Put your money into any of these debt funds depending on your investment horizon and needs.These funds invest 100% in money market instruments.ii) Equity-oriented funds -Invest at least 65% in equities.Invest in short-term debt papers. v) Gilt funds LT. Aurangabad. Floaters invest in debt instruments which have variable coupon rate. Funds are allocated to equities.They invest 100% of their portfolio in long-term government securities. derivatives and money markets. debentures. such funds invest a major portion of the portfolio in long-term debt papers. Therefore. they invest exclusively in fixed-income instruments like bonds. and are a good option for investors averse to idea of taking risk associated with equities. iii) Floating rate funds . ii) Gilt funds ST. in the absence of arbitrage opportunities. vi) Income funds LT.They generate income through arbitrage opportunities due to mispricing between cash market and derivatives market. remaining in debt. commercial paper (CP) and call money. a large portion being invested in call money market. iv) Arbitrage fund.Typically. 3 .
Aurangabad. This is called as the benefit of Rupee Cost Averaging (RCA) 2.vii) MIPs. viii) FMPs.fixed monthly plans invest in debt papers whose maturity is in line with that of the fund. 3 . Systematic Transfer Plan: under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum.Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities. 3. to an equity scheme of the same mutual fund. at a fixed interval. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of a month. The investor gets fewer units when the NAV is high and more units when the NAV is low. Payment is made through post dated cheques or direct debit facilities. INVESTMENT STRATEGIES: 1. The NIS Academy. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month.
RETURN: The NIS Academy.RISK V/S. 3 . Aurangabad.
Indian 1. Ltd. 2. 5. J. 3. Private Ltd. 10. Credit Capital Asset Management Co. 2. Benchmark Asset Management Co. 2. BOB Asset Management Co. Ltd. Private Ltd 9. Ltd. Aurangabad. Tata Asset Management Ltd. 3. Cholamandalam Asset Management Co.MAJOR PLAYERS 1. Kotak Mahindra Asset Management Co. 7. Private Sector 1. 6. 4. Ltd. Sahara Asset Management Co. UTI Asset Management Co. M. Sundaram Asset Management Co. 3 . Jeevan Bima Sahayog Asset Management Co. Institutions 1. 2. Financial Asset Management Private Ltd. Private Ltd. Ltd. Ltd. SBI Funds Management Private Ltd. Bank Sponsored 1. Others 1. 8. Canbank Investment Management Services Ltd. Escorts Asset Management Ltd.Predominantly Indian 1. 3. Joint Ventures . Reliance Capital Asset Management Ltd. The NIS Academy.
6. Standard Chartered Asset Management Co. DSP Merrill Lynch Fund Managers Ltd. 2.Predominantly Indian 1. Private Ltd The NIS Academy. Birla Sun Life Asset Management Co. 3. 9. Ltd. 8. Deutsche Asset Management (India) Private Ltd. 3. HDFC Asset Management Co. 3 . Morgan Stanley Investment Management Private Ltd. 3. Prudential ICICI Asset Management Co. Ltd. 4. Ltd. ABN AMRO Asset Management (India) Ltd.2. HSBC Asset Management (India) Private Ltd. ING Investment Management (India) Private Ltd. Franklin Templeton Asset Management (India) Private Ltd. Fidelity Fund Management Private Ltd. Aurangabad.Predominantly Foreign 1. Private Ltd. 7. Joint Ventures . 4. 2. 5. Joint Ventures . Principal Pnb Asset Management Co.
Indian Companies/Partnership Firms. distributors need to be aware of who mutual fund units. and Persons of Indian Origin. Mutual funds. Aurangabad. Indian Trust/Charitable Institutions. Non-Banking Finance Companies. Overseas Corporate Bodies (OCBs) and • • 3) Foreign entities. The NIS Academy. Banks/Financial Institutions. viz.Who can invest? Who can invest in Mutual Funds in India: First of all. Mutual funds in India are open to investment by 1) Residents including: a) b) c) d) e) f) g) h) Resident Indian Individuals. 2) Non-Residents including: Non-Resident Indians. Insurance Companies. Provident funds. 3 .
Foreign Institutional Investors(FII) registered with SEBI. Foreign citizens/ entities are not allowed to invest in mutual funds in The NIS Academy.• • India. 3 . Aurangabad.
Company Profile The NIS Academy. Aurangabad. 3 .
be secure and lead a tension free financial future life. Insurance & Loans We adopt modern technologies combined with in depth learning of trends to provide money management solutions. We assure the Best. SMS is a authorized and certified member of Bombay Stock Exchange ( BSE ) & National Stock Exchange ( NSE The NIS Academy. Our Directors are highly qualified . 3 .SMART MONEY FINANCIAL SERVICES ( SMFS ) is an Organization engaged in providing Complete Financial Solutions under one roof. SMFS is a Channel partner of Brokerage House “Angel Broking Ltd” for providing broking services in Share Investment and trading.000 man-hours experience in Banking and Financial Services Industry. They are also certified as Financial Consultants by the various Authorized Financial Institutions viz.Insurance & Regulatory Development Authority. SMFS was founded in January 2008 and is run by professionals having more than 10. Aurangabad. We provide complete Wealth management Solutions ranging from Investments. Affordable and Quality financial products at best value for maximum returns.B.E. . Personal Financial Planning is the need of today for every individual to manage his Financial health. AMFIAssociation of Mutual Funds in India. MBA having a working experience of more than 7 years in Banking and Financial Services Industry. IRDA.
Our Director is one of the Top most Insurance Advisor in No 1 Private Insurance Company ( Life and Non Life Insurance ) and has won many awards. We provide Advisory services for Portfolio management ( PMS ) and investments in Mutual Funds. Aurangabad. Insurance is one of the basic needs of every individual . Relince MF. Vehicle Insurance or a Health Insurance.) .We help and guide our customer select the right Insurance product at the right value as per the need – be it the Life Insurance. Axis Bank for providing our customers with suitable Loans at competitive interest rates to fulfill the individual needs and goals. ICICI Prudential MF. HDFC MF. Property Insurance. The NIS Academy. UTI MF. 3 . Kotak MF. HDFC Bank. We provide Portfolio Management Services ( PMS) in Stocks for High Networth Individuals ( HNI ) and Retail Customers. DSP Blacrock MF etc. Our Director is an empanelled Distributor for all major AMCs viz. We are also associated with major Banks like ICICI Bank.
3 .Our Vision : “To work and act as a Family Financial Doctor – to touch as many families as possible . Aurangabad.providing them with requisite knowledge . guidance & solutions for complete Family Financial Planning & related services – and provide a better and tension-free Financial Future ” The NIS Academy.
Objectives and scope The NIS Academy. Aurangabad. 3 .
I surveyed on my Project Topic “A study of Mutual Fund Industry ” on the visiting to individual & government offices employee. mode of investment. 3. To find out what should do to boost Mutual Fund Industry. 4. To know why one has invested or not invested in Mutual fund To find out the most preferred channel. To know the Preferences for the portfolios. I had been sent at one of the branch of ANGEL BROKING (SMART MONEY) where I completed my Project work. option for getting return and so on they prefer. 2. Scope of the study A big boom has been witnessed in Mutual Fund Industry in resent times. The NIS Academy. 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 Aurangabad. The study will help to know the interest & preferences of the customers. Aurangabad. 5.OBJECTIVES OF THE STUDY 1. To find out the Preferences of the investors for Asset Management Company. This project report may help the company to make further planning and strategy. which company. portfolio. 3 .
Research Methodology The NIS Academy. 3 . Aurangabad.
Sampling: Sampling procedure: The sample was selected of them who are the Businessman/govt. from 7 th June to 30th July 2009. One of the most important users of research methodology is that it helps in identifying the problem. analyzing the required information data and providing an alternative solution to the problem . however primary data collection was given more importance since it is overhearing factor in attitude studies.RESEARCH METHODOLOGY This report is based on primary as well secondary data. irrespective of them being investors or not or availing the services or not. Research has been done by primary data collection. Data sources: Research is totally based on primary data. and primary data has been collected by interacting with various people. employee. collecting. 3 . Duration of Study: The study was carried out for a period of two months.It also helps in collecting the vital information that is required by the top management to assist them for the better decision making both day to day decision and critical ones. Secondary data can be used only for the reference. The secondary data has been collected through various journals and websites. It was also The NIS Academy. Aurangabad.
Aurangabad. Other 90 people did not have invested in Mutual Fund. line graphs etc. Sample design: Data has been presented with the help of bar graph. 3 . Out of which only 10 people had invested in Mutual Fund. The NIS Academy.collected through personal visits to persons. Sample size: The sample size of my project is limited to 100 people only. by formal and informal talks and through filling up the questionnaire prepared. The data has been analyzed by using mathematical/Statistical tool.
to build on Weaknesses . our clients have been able to take advantage of niche markets and focus on product innovation which allows them to capture greater margins.to cover Opportunities . Through our SWOT analysis.to capture Threats . * Good brand equity * Giving the very good return from inception * Stabilized and loyal clients.SWOT Analysis of the organization:SWOT analysis of organizations to provide recommendations on their performance and growth potential. The NIS Academy. Aurangabad. SWOT Analysis Strengths: * Rich experience of the management.to defend against. SWOT Analysis identifies your company’s: Strengths . 3 . It is a powerful tool for analyzing both complex qualitative and quantitative facets of an investment decision. * Well combination of new energetic and experienced employees. The results of this analysis have been fed into marketing and organizational strategic plans and have been highly successful in strategy formulation. This helps to identify company and industry specific critical drivers and catalysts. Our SWOT analysis identifies strengths and weaknesses and relates them with forward looking opportunities and threats.
Opportunities: * Stability through increased brand awareness. * Increasing interest rate scenario. * People not detail knowledge about mutual funds. Aurangabad. * Competition from local players.* Wide variety of investment product to match with every level of customer * Giving the mutual fund exposure Weakness: * People is not interested to invest in mutual fund & equity because risk & trust. * Execution risk. * Increase in customer’s wallet share. * 6 pay commission. 3 . * Not very popular in rural area. market penetration and Service offerings. * Across all categories of financial services. Threats. * Rising inflation could reduce savings and investments The NIS Academy.
Dept.Limitation: Some of the persons were not so responsive. Some respondents were reluctant to divulge personal information which can affect the validity of all responses. 3 . The sample size may not adequately represent the whole market. & part of Aurangabad. The research is confined to a certain Govt. The NIS Academy. Aurangabad. Possibility of error in data collection because many of investors may have not given actual answers of my questionnaire.
Data Analysis & Interpretation The NIS Academy. 3 . Aurangabad.
5 0 0 <=30 31-35 36-40 41-45 4 3 2 1 46-50 0 >50 Age group of the Investors Interpretation: The NIS Academy.ANALYSIS & INTERPRETATION OF THE DATA 1. On the basis of Age of the Investors: Age Group No. of <= 30 0 31-35 36-40 41-45 46-50 >50 4 3 2 1 0 Investors Investors invested in Mutual Fund 4.5 3 2.5 2 1. 3 .5 4 3.5 1 0. Aurangabad.
40%. 3 . 2. Aurangabad. of Investors 4 3 2 1 0 Govt. of Investors 3 4 2 0 1 5 No. Service Business 3 4 2 0 Agriculture 1 Others Occupation of the customers Interpretation: The NIS Academy.According to this chart out of 10 Mutual Fund investors of Auranagabad the most are in the age group of 31-35 yrs. Occupation of the investors of Aurangabad. Service Pvt. 30% and the least investors are in the age group of below 46-50 yrs.e.e. i. Occupation Govt. Service Business Agriculture Others . Service Pvt. No. the second most investors are in the age group of 36-40yrs i.
Priority of Investments Saving A/C Fixed deposits Insurance Mutual Fund RD Real Estate No. 3 .In Occupation group out of 10 investors. (3) Investors invested in different kind of investments of Aurangabad. of Respondents % 98 50 99 10 45 35 priority of inves tment R eal es tate R D Mutual F und Ins urance F ix ed D epos its S aving A/c 0 20 10 35 45 99 50 98 40 60 80 100 120 No.of R es pondents% The NIS Academy. Employees. 40% are Pvt. 0% are in Agriculture and 10% are in others. Aurangabad. 20% are Businessman. 30% are Govt. Employees.
11% in Mutual Fund. 3 .6% in Insurance.Interpretation: From the above graph it can be inferred that out of 200 people. Educational Qualification of investors of Aurangabad. 4. 43% in RD and 21.6% in Fixed Deposits.6% in Real Estate. 51. 98 % people have invested in Saving A/c. Educational Qualification Graduate/ Post Graduate Under Graduate Others Total Number of Investors 5 2 3 120 The NIS Academy. Aurangabad. 91.
30% 50% 20% Graduate/Post Graduate Under Graduate Others Interpretation: The NIS Academy. Aurangabad. 3 .
Out of 120 Mutual Fund investors 50% of the investors in Aurangabad are Graduate/Post Graduate, 20% are Under Graduate and 30% are others (under HSC).
4. Preference of factors while investing
Factors (a) Liquidity (b) Low Risk (c) High Return (d) Trust
No. of Respondents
The NIS Academy, Aurangabad. 3
L iquidity L owRisk H ig hReturn T rust
The NIS Academy, Aurangabad. 3
Out of 100 People, 40% People prefer to invest where there is High Return, 31% prefer to invest where there is Low Risk, 10% prefer easy Liquidity and 19% prefer Trust
5. Awareness about Mutual Fund and its Operations
Response No. of Respondents
The NIS Academy, Aurangabad. 3
Interpretation: From the above chart it is inferred that 39% People are aware of Mutual Fund and its operations and 61% are not aware of Mutual Fund and its operations. 3 . 30% through AMC and 10% through Bank. Preference of Investors for future investment in Mutual Fund The NIS Academy. Channel Preferred by the Investors for Mutual Fund Investment Channel No. 6. of Respondents Financial Advisor 6 Bank 1 AMC 3 30% 10% F ina ncial Advisor B a nk AMC 60% Interpretation: Out of 10 Investors 60% preferred to invest through Financial Advisors. 7. Aurangabad.
Source of information for customers about Mutual Fund The NIS Academy. 16% in ICICI Prudential. 16% in UTI and 10% in HDFC Mutual Fund. of Investors 30 14 10 20 16 6 4 Others K otak Nam e of AMC IC IC I Prudential R eliance H D F C UTI S BIMF 0 4 6 16 20 10 14 30 5 10 15 20 25 30 No. 3 .Name of AMC SBIMF UTI HDFC Reliance ICICI Prudential Kotak Others No. Aurangabad. 30% in SBIMF. 6% in Kotak. 8. 4% in Others. 20% prefer to invest in Reliance. of Inves tors Interpretation: Out of 100 investors.
of Respondents 13 25 30 42 5 0 No.Source of information Advertisement Peer Group Bank Financial Advisors No. 42% know about Mutual fund Through Financial Advisor. 30 % through Bank. 25% through Peer Group and 13% through Advertisement. 3 . Aurangabad. Out of 100 Respondents. of R espondents 4 0 3 0 2 0 1 0 0 Advertisem ent P eer Group 1 3 2 5 3 0 B a nk 4 2 F ina nc ia l Advisors S ource of Inform a tion Interpretation: From the above chart it can be inferred that the Financial Advisor is the most important source of information about Mutual Fund. The NIS Academy.
.. Designation :……………………………………………. Company/Business Name :…………………………………………….000) (10-15) (15-20) (20-30) Vehicle Owned Interested in :……………………………………………. :……………………………………………… :……………………………………………… :……………………………………………… :……………………………………………. Income per month (<10... : Personal Financial Planning. Name Education Address Telephone No. 3 ... Aurangabad. Equity Mutual Funds Retirement Plans Child Education plans Term Insurance Plans Med claim/Health insurance plans Vehicle/Property insurance Personal/ Business loans Homes loans Period of call back :…………………………………………… The NIS Academy.QUESTIONNAIRE A study of preferences of the investors for investment in mutual funds. Date of Birth Occupation :……………………………………………… ……………………………………………………………….
3 . Aurangabad.Findings and Conclusion The NIS Academy.
98% Invested in Fixed Deposits. Aurangabad. Mostly Respondents preferred High Return while investment. Only 61% Respondents were aware about Mutual fund and its operations and 39% were not. For Future investment the maximum Respondents preferred SBI Mutual Fund. 39% told there is not any specific reason for not invested in Mutual Fund. Among 100 Respondents only 10% had invested in Mutual Fund.50% Invested in insurance.Findings In Aurangabad in the Age Group of 36-40 years were more in numbers. the second most preferred Reliance . the second most Investors were Govt.. Out of 90 Respondents 61% were not aware of Mutual Fund. employees About all the Respondents had a Saving A/c in Bank. Among 100 Respondents only 10% had invested in Mutual Fund and 40% did not have invested in Mutual fund. The NIS Academy. The second most Investors were in the age group of 41-45 years and the least were in the age group of below 45-50 years. 3 . the second most preferred Low Risk then trust and the least preferred Liquidity. In Occupation group most of the Investors were Private employees. ICICI Prudential has been preferred after them. Only 99% Respondents invested in Mutual fund 10%.
Aurangabad. 3 . ICICI Prudential has also good Brand Position among investors. 60% Investors preferred to Invest through Financial Advisors. 30% through AMC (means Direct Investment) and 10% through Bank. The NIS Academy. Most of the Investors had invested in SBI or Reliance Mutual Fund.
They think their money will not be secure in Mutual Fund. Some AMCs are not performing well although some of the schemes of them are giving good return because of not awareness about Brand. As the awareness and income is growing the number of mutual fund investors are also growing. SBIMF. Sunderam. Financial Advisors are the most preferred channel for the investment in mutual fund. There are many AMCs in Aurangabad but only some are performing well due to Brand awareness. etc. UTI. The NIS Academy. Reliance. Many of investors directly invest their money through AMC because they do not have to pay entry load. Many of people do not have invested in mutual fund due to lack of awareness although they have money to invest. ICICI Prudential etc. 3 . This study has made an attempt to understand the financial behavior of Mutual Fund investors in connection with the preferences of Brand (AMC). They need the knowledge of Mutual Fund and its related terms. they are well known Brand.Conclusion Running a successful Mutual Funds requires complete understanding of the peculiarities of the Indian Stock Market and also the psyche of the small investors. Products. “Brand” plays important role for the investment. Aurangabad. I observed that many of people have fear of Mutual Fund. they are performing well and their Assets Under Management is larger than others whose Brand name are not well known like Principle. Channels etc. They can change investors’ mind from one investment option to others. Distribution channels are also important for the investment in mutual fund. People invest in those Companies where they have faith or they are well known with them.
Only those people invest directly who know well about mutual fund and its operations and those have time. Aurangabad. 3 . The NIS Academy.
Suggestions And Recommendations The NIS Academy. 3 . Aurangabad.
Nobody will invest until and unless he is fully convinced. Investors should be made aware of the benefits. By considering these three things they can take the customers into consideration. The NIS Academy.Suggestions and Recommendations The most vital problem spotted is of ignorance. Mutual funds offer a lot of benefit which no other single option could offer. because they are the main source to influence the investors. But most of the people are not even aware of what actually a mutual fund is? They only see it as just another investment option. their need and time (how long they want to invest). Aurangabad. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing. So the advisors should try to change their mindsets. The advisors should target for more and more young investors. 3 . Younger people aged under 35 will be a key new customer group into the future.. so making greater efforts with younger customers who show some interest in investing should pay off. Young investors as well as persons at the height of their career would like to go for advisors due to lack of expertise and time. Mutual Fund Company needs to give the training of the Individual Financial Advisors about the Fund/Scheme and its objective. Before making any investment Financial Advisors should first enquire about the risk tolerance of the investors/customers.
Though most of the prospects and potential investors are not aware about the SIP. There is a large scope for the companies to tap the salaried persons. 3 . Aurangabad. Systematic Investment Plan (SIP) is one the innovative products launched by Assets Management companies very recently in the industry. The NIS Academy. SIP is easy for monthly salaried person as it provides the facility of do the investment in EMI.
COM WWW. PLEASE READ THE OFFER DOCUMENT CAREFULLY BEFORE INVESTING” The NIS Academy.COM WWW.ONLINERESEARCHONLINE. 3 .BIBLIOGRAPHY • • • • • • • • • NEWS PAPERS TELEVISION CHANNEL MUTUAL FUND HAND BOOK FACT SHEET AND STATEMENT WWW. Aurangabad. MUTUALFUNDSINDIA.COM ”MUTUAL FUND INVESTMENT IS SUBJECT TO MARKET RISKS.MONEYCONTROL.COM WWW.AMFIINDIA.COM WWW.SBIMF.