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INDIAN INSTITUTE OF PLANNING AND MANAGEMENT NEW DELHI
THESIS REPORT ON “STUDY OF INVESTMENT PATTERNS OF SMALL AND MEDIUM ENTERPRISES (SMEs)”
SUBMITTED TO: PROF.SUMANTA SHARMA PROF. VIJAY KR.BODDU EXTERNAL GUIDE: MR.ANIRUDH SHARMA
SUBMITTED BY: DIVYA KOTHIWAL PGP-FW-2008-2010 ALUMNI ID NO.: DF/08/10-F-579
Starting with the acknowledgement, I have presented with the background of the Mutual Fund Industry. There is information on mutual fund comprising of things like as to what mutual fund is: its history, types of mutual funds etc. Next there is information of study etc., actual analysis but firstly starting with giving some information on the type of questionnaire design used, sampling technique, research design etc., The primary objective of the report is to study the investment patterns of Small and Medium Enterprises and to further establish if the type of trade they are in affects the investment decisions in Mutual Funds. We did a market research by making the company fill a structured questionnaire and find out their exposure to Mutual Funds.
This is to certify that the thesis titled “Study of investment patterns of Small and Medium Enterprises(SMEs)” prepared by Ms. Divya Kothiwal for the award of degree in Master of Business Administration has been completed under my supervision & guidance. It is an original piece of work based on primary as well as secondary data. This work is satisfactory and complete in every respect. I wish her all the success for her future endeavour. Thanking you Yours Sincerely
THESIS APPROVAL LETTER Dear Divya Kothiwal,
to be conducted under the guidance of Mr.sharma@iipm. Vijay Kr.DIVYA KOTHIWAL This is to inform that your thesis proposal on “Study of Investment Patterns of Small & Medium Enterprises”.-0124-3350714 by sending at least four response sheets (attached along with this mail) at regular intervals before the last date of thesis submission. NB: 1) A thesis would be rejected if there is any variation in the topic/title from the one approved and registered with us. Boddu at boddu. Regards.vijay@iipm. a thesis should aim at adding value to the existing knowledge base. Anirudh Sharma is hereby approved and the topic registration id number is DF/08/10-F-579 Make it a comprehensive thesis by ensuring that all the objectives as stated by you in your synopsis are met using appropriate research design.edu Phone: +91 0124 3350701 (D) +91 0124 3350715 (Board) SYNOPSIS Name: Divya Kothiwal PGP/FW/08-10 DF/08/10-F-579 . Prof .edu Ph. You are required to correspond with your internal guide Prof.Sumanta Sharma Dean (Projects) IIPM Sumanta. 2) The candidate needs to handwrite at least 1200 to 1500 words on the summary of thesis at the time of viva.
Mr. NCR analyzing their investment patterns.com Thesis Topic: “Study of Investment Enterprises” Patterns of Small & Medium Specialization Area: Finance Introduction: I will be focusing primarily on the small and medium enterprises in New Delhi. Later. Anirudh Sharma (Manager. PGP/FW/08-10 DF/08/10-F-579 . ICICI Bank) will be helping me in the research and the study. The basic aim of the research in the initial stages will be to analyze the trend of the mutual fund industry. My External Guide.DIVYA KOTHIWAL Section: F. followed by the primary research and by forecasting with and without the two external forces or factors and finally coming up with a solution in the final stage.7 Batch: Fall/Winter 2008-2010 Phone Number: 9818593910 E-mail Id: kothiwaldivya@gmail.
understand it and derive the factors that are responsible or affect the investment patterns of SMEs in relation to the mutual fund industry. To further establish that if the type of trade affects the investment decisions in Mutual funds. Research Methodology: Secondary Data: This form of methodology will be used for finding the trend followed by the enterprises and forecasting the possible outcome in the coming years.DIVYA KOTHIWAL Research Objectives: 1. an analysis of pre-existing data in a different way to answer the questions or else to answer a separate question than the originally intended one will help with the use of secondary data. Hypothesis: Mapping the concerned area to do a market research study with the help of the questionnaires and find out their exposure to the Mutual Funds. A primary research will help show (in which I would be visiting officials of various companies in this business) the forecasting in which I would be using all the tools possible to forecast what could go wrong and what can possibly be the effects and after effects? PGP/FW/08-10 DF/08/10-F-579 . the questions will be open ended but will make sure that the information that will be extracted from the same should be very effective in coming to conclusions.ups involved in this business. The sources for the same will consist of internet. Scope of the Work: The scope for this study is to gather information from the various sources. To study and understand the investment patterns of SMEs. books and so on. Primary Data: This form of data will be used to in the form of questionnaires which will be filled by the top management and officials of various enterprises and set. relevant study papers. 2. Mostly. newspaper articles. Hence.
Anirudh Sharma Qualification: MBA Designation: Manager Company: ICICI Bank Ltd PGP/FW/08-10 DF/08/10-F-579 . on the market conditions and the various ups and downs.DIVYA KOTHIWAL Justification for choosing the topic : Mutual funds industry has been moving up and a growing sector recently. I would study all that affects these changes. Details of External Guide: Name: Mr. the fund value changes. It is very important to understand how the various enterprises work towards handling the mutual funds in their respective companies? Depending.
They really made my learning experience the most memorable and respectable one.DIVYA KOTHIWAL ACKNOWLEDGEMENT I sincerely feel that the guidance and support extended towards me by all the members of ICICI was more than I could expect. without whose guidance and support I could not have completed my project. PGP/FW/08-10 DF/08/10-F-579 . I express my immense gratitude towards all the members of this organization. I take the opportunity to express my sincere gratitude to my project guide Mr. Anirudh Sharma. It was a great honour to be associated with a company. I am also thankful to all the other managers and employees for taking out time from their busy schedule and guiding me in order to make this project a success.
6 Current investment patterns 5. Acknowledgement 2.3 Data collection and job requirement 5.4 Risks 3.3 Disadvantages 3.6 Procedure of opening a folio 4. Mutual fund companies in India 5.1 Returns 3.1 Purpose 5. The analysis 6.4 Limitations 5.3 Scope of study PGP/FW/08-10 DF/08/10-F-579 . The study 5.5 About Small and Medium enterprises 5. Background 3.DIVYA KOTHIWAL TABLE OF CONTENTS 1.7 Instruments in Indian debt market 6.2 Scope 5.2 Advantages 3.2 Sampling 6. Mutual Funds 3.1 Sources of data 6.5 Mutual fund types 3.
DIVYA KOTHIWAL 6.6 Procedure of data collection 7. Annexures 10. Conclusion 9.4 Research design 6.1 Findings 8. Results and interpretation 7.5 Questionnaire design 6. References PGP/FW/08-10 DF/08/10-F-579 .
Marketing Research and data collection which involved mapping the allotted area.DIVYA KOTHIWAL BACKGROUND My work involved two tasks: I. 2) Collection: Data must be obtained from relevant sources. Lead generation through series of appointments with the prospective company. and dissemination of information for the purpose of assisting management in decision making related to the identification and solution of problems (and opportunities) in marketing. collection. implications. II. and recommendations are provided in a format that makes this information actionable and directly useful as an input into decision making. interpreted.” 1) Identification: Involves defining the marketing research problem (or opportunity) and determining the information that is needed to address it. 3) Analysis: Data are analyzed. and inferences are drawn. getting the required information by asking the company to fill the questionnaire. Here is a little background on marketing research: “Marketing research is defined as the systematic and objective identification. PGP/FW/08-10 DF/08/10-F-579 . analysis. 4) Dissemination of information: The findings.
DIVYA KOTHIWAL Mutual Funds A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal.either growing its assets (capital gains) and/or generating income (dividends) for its investors. Thus a Mutual Fund is a 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 fund's unit price increases. You can then sell your mutual fund units for a profit.these could be equities. mutual funds have risks and costs associated with returns. 3) If fund holdings increase in price but are not sold by the fund manager. When investors sell these units at prices higher than their purchase price. This is tantamount to a valuation gain. As a shareholder. The corpus of the fund is then deployed in investment alternatives that help to meet predefined investment objectives. Distributions in the form of capital gains (short-term and long-term) and dividends may be passed on (paid) to shareholders as income or reinvested to purchase more shares. the risks of a fund and the expenses associated with fund's operation directly impact your return. One could make money from a mutual fund in three ways: 1) Income is earned from dividends declared by mutual fund schemes from time to time. the fund has a capital gain. 2) If the fund sells securities that have increased in price. This is reflected in the price of each unit. Like any business. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. they stand to make a gain. PGP/FW/08-10 DF/08/10-F-579 . debentures / bonds or money market instruments. You can look at the flowchart to understand in brief as to how mutual funds work. Every mutual fund has a goal . It is essentially a diversified portfolio of financial instruments .
five. three. year to date. you should evaluate returns for a time period of several years-not just one year or less. you want to know the fund's return-its track record over a specified period of time. Generally expressed as an annualized percentage rate.DIVYA KOTHIWAL A. and ten year. A fund that has a high return in one year may have experienced losses in other years-these fluctuations may not be apparent in its average return. you can use it to evaluate and compare mutual funds within the same fund category. PGP/FW/08-10 DF/08/10-F-579 . and since the inception of the fund. So what exactly is "return?" A mutual fund's return is the rate of increase or decrease in its value over a specific period of time usually expressed in the following increments: one. Since average returns can sometimes "hide" short-term highs and lows. Since return is a common measure of performance. While a fund's return shows its track record. Returns on Mutual Funds As an investor. keep in mind that past performance is no guarantee of future results. return is calculated assuming that all distributions from the fund are reinvested.
invests in many stocks . A stock mutual fund. and selling securities. Further diversification can be achieved by investing in multiple funds which invest in different sectors or categories. When investing in a single fund. Spreading your investment across a range of securities can help to reduce risk. Diversification may help to reduce risk but will never completely eliminate it. by mail. mutual funds can eliminate the cost an investor would incur when proper due diligence is given to researching securities. along with prevailing market conditions and other factors. What does this mean? Fund managers have more money to research more securities more in depth than the average investor. This minimizes the risk attributed to a concentrated position. and obtaining information can be accomplished conveniently by telephone. the mutual fund manager will decide when to buy or sell securities. This cost of managing numerous securities is dispersed among all the investors according to the amount of shares they own with a fraction of each dollar invested used to cover the expenses of the fund. buying and selling shares. changing distribution options. Furthermore. or online. an investor will still need to evaluate a mutual fund based on investment goals and risk tolerance before making a PGP/FW/08-10 DF/08/10-F-579 . for example.hundreds or even thousands. Advantages of Mutual Funds What are the key advantages of mutual fund investing? • Diversification Using mutual funds can help an investor diversify their portfolio with a minimum investment. the loss maybe offset by other securities that appreciate in value. Although a fund's shareholder is relieved of the day-to-day tasks involved in researching. buying. • Convenience With most mutual funds. As per the stated objectives set forth in the prospectus. This helps to reduce the risk associated with a specific industry or category. This eliminates the investor of the difficult task of trying to time the market. If a few securities in the mutual fund lose value or become worthless.DIVYA KOTHIWAL B. It is possible to lose all or part of your investment • Professional Management Mutual funds are managed and supervised by investment professionals. an investor is actually investing in numerous securities.
unlike purchasing a bond directly. government. Bond funds. As with any type of investment. Fees and commissions are determined by the specific fund and the institution that executes the order. Fees or commissions may or may not be applicable. its yield fluctuates. unlike a certificate of deposit.DIVYA KOTHIWAL purchase decision. mutual funds are not insured or guaranteed by an agency of the U. Disadvantages • Risks and Costs Changing market conditions can create fluctuations in the value of a mutual fund investment. while a money market fund seeks a stable share price. • No Guarantees The value of your mutual fund investment. too. orders are not executed until the close of business when the NAV (Net Average Value) of the fund can be determined. could fall and be worth less than the principle initially invested. However.S. • The Diversification Penalty Diversification can help to reduce your risk of loss from holding a single security. unlike a bank deposit. • Liquidity Mutual fund shares are liquid and orders to buy or sell are placed during market hours. In addition. Investors should always read the prospectus carefully before investing in any mutual fund. but it limits your potential for a "home run" if a single security increases dramatically in value. C. And. that diversification does not protect you from an overall decline in the market. Remember. PGP/FW/08-10 DF/08/10-F-579 . will not re-pay the principle at a set point in time. there are drawbacks associated with mutual funds. There are fees and expenses associated with investing in mutual funds that do not usually occur when purchasing individual securities directly.
money markets) offer the greatest price stability but have yielded the lowest long-term returns. Of all the asset classes. Investors looking for a fund which incorporates all asset classes may consider a balanced or hybrid mutual fund.DIVYA KOTHIWAL • Costs In some cases. The school of thought when investing in mutual funds suggests that the longer your investment time horizon is the less affected you should be by short-term volatility. should not be compared to a stock fund with below average risk. Risk Every type of investment. Bonds typically experience more short-term price swings. While a fund with higher risk has the potential for higher return. Reading the prospectus will help you to understand the risk associated with that particular fund. the more concerned you should be with short-term volatility and higher risk. Even though both funds have low risk for their respective categories. including mutual funds. redemption fees. At the discretion of the manager(s). This is the risk/return trade-off. PGP/FW/08-10 DF/08/10-F-579 . involves risk. the shorter your investment time horizon. risk and potential return are related. stock funds overall have a higher risk/return potential than bond funds. the efficiencies of fund ownership are offset by a combination of sales commissions. and in turn have generated higher long-term returns. D. it also has the greater potential for losses or negative returns. cash investments (i. stocks historically have been subject to the greatest short-term price fluctuations—and have provided the highest long-term returns. Risk refers to the possibility that you will lose money (both principal and any earnings) or fail to make money on an investment.e. Keep track of the cost basis of your initial purchase and new shares that are acquired by reinvesting distributions. Therefore. for example. A bond fund with below-average risk. • Defining Mutual fund risk Different mutual fund categories as previously defined have inherently different risk characteristics and should not be compared side by side. Higher risks are usually taken with the expectation of higher returns at the cost of increased volatility. If the fund is purchased in a taxable account. These funds can be very conservative or very aggressive. taxes may have to be paid on capital gains. A fund's investment objective and its holdings are influential factors in determining how risky a fund is. It's important to compare the costs of funds you are considering. and operating expenses. However. Asset allocation portfolios are mutual funds that invest in other mutual funds with different asset classes. Generally speaking.
sold. financial problems (rising inflation. Mutual funds face risks based on the investments they hold. a poor harvest) will weaken a country's economy and cause investments in that country to decline. • • Call Risk: The possibility that falling interest rates will cause a bond issuer to redeem—or call—its high-yielding bond before the bond's maturity date. Interest Rate Risk: The possibility that a bond fund will decline in value because of an increase in interest rates. Following is a glossary of some risks to consider when investing in mutual funds. Inflation Risk: The possibility that increases in the cost of living will reduce or eliminate a fund's real inflation-adjusted returns. a sector stock fund (which invests in a single industry. and shifted between funds with different asset classes according to market conditions. government default). A stock fund that invests across many industries is more sheltered from this risk defined as industry risk. Bond income is also affected by the change in interest rates. bond values will go down and vice versa. Credit Risk: The possibility that a bond issuer will fail to repay interest and principal in a timely manner. Bond yields are directly related to interest rates falling as interest rates fall and rising as interest rise.DIVYA KOTHIWAL securities are bought. dollar against foreign currencies. Income Risk: The possibility that a fixed-income fund's dividends will decline as a result of falling overall interest rates. Bond values are inversely related to interest rates. For example. such as telecommunications) is at risk that its price will decline due to developments in its industry. Also called default risk. Also called exchange-rate risk. Industry Risk: The possibility that a group of stocks in a single industry will decline in price due to developments in that industry. • • • • • • PGP/FW/08-10 DF/08/10-F-579 . Income risk is greater for a short-term bond fund than for a longterm bond fund.S. or natural disasters (an earthquake. a bond fund faces interest rate risk and income risk. Similarly. Country Risk: The possibility that political events (a war. If interest rates go up. national elections). Currency Risk: The possibility that returns could be reduced for Americans investing in foreign securities because of a rise in the value of the U.
Market Risk: The possibility that stock fund or bond fund prices overall will decline over short or even extended periods. E. or "lose money. • Principal Risk: The possibility that an investment will go down in value.Ended Schemes Interval Schemes • By Investment Objective o o o o Growth Schemes Income Schemes Balanced Schemes Money Market Schemes • Other Schemes o o Tax Saving Schemes Special Schemes Index Schemes Sector Specific Schemes DF/08/10-F-579 PGP/FW/08-10 . Stock and bond markets tend to move in cycles. Mutual Fund Types Wide varieties of Mutual Fund Schemes exist to cater to the needs such as financial position. risk tolerance and return expectations etc. with periods when prices rise and other periods when prices fall.DIVYA KOTHIWAL • Manager Risk: The possibility that an actively managed mutual fund's investment adviser will fail to execute the fund's investment strategy effectively resulting in the failure of stated objectives." from the original or invested amount. TYPES OF MUTUAL FUND SCHEMES • By Structure o Open .Ended Schemes o o Close . The table below gives an overview into the existing types of schemes in the Industry.
These schemes do not have a fixed maturity period. Such funds have comparatively high risks. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. Close-Ended Schemes: A close-ended fund or scheme has a stipulated maturity period e. corporate debentures. 5-7 years. Government securities and money market instruments. The fund is open for subscription only during a specified period at the time of launch of the scheme. some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i. In order to provide an exit route to the investors. Such schemes generally invest in fixed income securities such as bonds. Such schemes normally invest a major part of their corpus in equities. • Mutual Funds by Investment Objective Growth / Equity Scheme: The aim of growth funds is to provide capital appreciation over the medium to long-term. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed.g.DIVYA KOTHIWAL • Mutual Funds by Structure Open-Ended Schemes: An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. The key feature of open-end schemes is liquidity. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis. Income / Debt Oriented Scheme: The aim of income funds is to provide regular and steady income to investors. Such funds are less risky compared to equity PGP/FW/08-10 DF/08/10-F-579 . Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.e.
opportunities of capital appreciation are also limited in such funds. These funds are also affected because of fluctuations in share prices in the stock markets. However. preservation of capital and moderate income. However. Returns on these schemes fluctuate much less compared to other funds. These schemes invest exclusively in safer short-term instruments such as treasury bills. These funds are not affected because of fluctuations in equity markets. etc. They generally invest 4060% in equity and debt instruments. commercial paper and inter-bank call money. Risk Hierarchy of Different Mutual Funds PGP/FW/08-10 DF/08/10-F-579 .DIVYA KOTHIWAL schemes. government securities. NAVs of such funds are likely to be less volatile compared to pure equity funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. Money Market / Liquid Schemes: These funds are also income funds and their aim is to provide easy liquidity. These are appropriate for investors looking for moderate growth. certificates of deposit. Balanced Funds: 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.
DIVYA KOTHIWAL Others: PGP/FW/08-10 DF/08/10-F-579 .
Gilt Funds: 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. Sector-Specific Schemes: These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents E.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Tax Saving Schemes: These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues. E.g. Equity Linked Savings Schemes (ELSS). Pension Schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest pre-dominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme. Load or No Load Funds: Load Fund is one that charges a percentage of NAV for entry or exit. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing and distribution expenses. The investors should take the loads into consideration while making investment as these affect their yields/returns. However, the investors should also consider the performance track record and service standards of the mutual fund which are more important. A no-load fund is one that does not charge for entry or exit. It means the investors can enter the fund/scheme at NAV and no additional charges are payable on purchase or sale of units.
Here is a sales sheet of various types of mutual funds as on April 2008:
Sales during the month of April, 2008 Amount in Rs. Crores Structure Open End Close End No. of Amount No. of Amount Schemes Schemes 31 370 6 30 271 11 179 6 143 30 5 222 152 57 8 541 157 33 4071 118553 386820 352 510770 49 265 331 29 4222 4430
Balanced ELSS FOF Investing Overseas Gilt GOLD ETF Growth Income Liquid/Mone y Market Other ETF Total
Total No. of Amount Schemes 37 370 41 450 6 143 30 5 271 417 57 8 872 157 33 4100 122775 386820 352 515200
F. Procedure of Opening up a Folio Fresh Purchase: After deciding on the type of scheme, the investor will have to fill in the Application form, attach a payment instrument and submit it at any of the funds' collection centers before the cut off time. The investor has to invest in rupees and units will be allotted to him in fractions depending upon the NAV.
Additional Purchase: Buying more units either of the same scheme or of a different scheme under the SAME FOLIO is an additional purchase, which can be done through Additional Purchase slips provided along with the account statement. After filling the same, the investor will have to attach a cheque with it and submit it at any of the collection centers before the cut-off time.
Switch Units: A switch request will have to be filled in and submitted at any of the collection centers before the cut off time. SWITCH can be done with either partial or all units under a particular scheme to another scheme as specified by him under the same folio.
Redeem / Repurchase Units: If the fund is open ended, the investor has to send the repurchase requisition slip, duly completed and signed, to any of our branches. It is possible to lodge repurchase requests on the Internet also. The redemption can be done for all units, partial units, or for an amount.
Mutual Fund Companies in India ABN AMRO Mutual Fund ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund. Birla Sun Life Mutual Fund Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial. Sun Life Financial is a golbal organisation evolved in 1871 and is being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment. Recently it crossed AUM of Rs. 10,000 crores. Bank of Baroda Mutual Fund (BOB Mutual Fund) Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the sponsorship of Bank of Baroda. BOB Asset Management
Ltd. 1998. 2000 with two sponsorers’ nemely Housing Development Finance Corporation Limited and Standard Life Investments Limited. ING Vysya Mutual Fund ING Vysya Mutual Fund was setup on February 11. ING Investment Management (India) Pvt. Board of Trustees. HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund. Deutsche Bank AG is the custodian. 2002 with HSBC Securities and Capital Markets (India) Private Limited as the sponsor. The AMC. HSBC Mutual Fund HSBC Mutual Fund was setup on May 27. 1992. was incorporated on April 6. HDFC Mutual Fund HDFC Mutual Fund was setup on June 30. PGP/FW/08-10 DF/08/10-F-579 . It is a joint venture of Vysya and ING.DIVYA KOTHIWAL Company Limited is the AMC of BOB Mutual Fund and was incorporated on November 5. 1999 with the same named Trustee Company.
The paid-up capital of the AMC stands at Rs 25.. KMAMC started its operations in December 1998. Now it has an investor base of over 8 Lakhs spread over 18 schemes. Limited. one of the largest life insurance companies in the US of A. The sponsorers for Tata Mutual Fund are Tata Sons Ltd. and the AMC is Prudential ICICI Asset Management Company Limited incorporated on 22nd of June. 1993. approximately. 1993 with two sponsorers. It is presently having more than 1. Kotak Mahindra Mutual Fund Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. Kotak Mahindra Mutual Fund offers schemes catering to investors with varying risk . Prudential ICICI Mutual Fund was setup on 13th of October. Sahara Mutual Fund Sahara Mutual Fund was set up on July 18. 2005) of AUM. as the sponsor.818 investors in its various schemes. Sahara Asset Management Company Private Limited incorporated on August 31.703 crores (as on April 30. 225 cr. and ICICI Ltd.return profiles. Tata Mutual Fund Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act. Today it is the largest Bank sponsored Mutual Fund in India. It was the first company to launch dedicated gilt scheme investing only in government securities PGP/FW/08-10 DF/08/10-F-579 . Prudential Plc. 1882.8 crore. 5. State Bank of India Mutual Fund State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshor fund.500 Crores as AUM.DIVYA KOTHIWAL Prudential ICICI Mutual Fund The mutual fund of ICICI is a joint venture with Prudential Plc.99. State Bank of India Mutual Fund has more than Rs. Tata Asset Management Limited's is one of the fastest in the country with more than Rs. 7. They have already launched 35 Schemes out of which 15 have already yielded handsome returns to investors. The investment manager is Tata Asset Management Limited and its Tata Trustee Company Pvt. and Tata Investment Corporation Ltd. 1996 with Sahara India Financial Corporation Ltd. of America. the India Magnum Fund with a corpus of Rs. 1995 works as the AMC of Sahara Mutual Fund. The Trustee Company formed is Prudential ICICI Trust Ltd.
2 bn. Franklin Templeton India Mutual Fund The group. Equity Funds and Balance Funds. 2003. The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Investors can buy or sell the Mutual Fund through their financial advisor or through mail or through their website. Index Funds. Punjab National Bank (PNB). UTI Asset Management Company presently manages a corpus of over Rs. Ltd. (as of April 30. Asset Management Funds. Income Funds. Its services are also PGP/FW/08-10 DF/08/10-F-579 . 1995 as Reliance Capital Mutual Fund which was changed on March 11. It is one of the largest financial services groups in the world. is the AMC which was incorporated with SEBI on December 20. Frnaklin Templeton Investments is a California (USA) based company with a global AUM of US$ 409. and Life Insurance Corporation of India (LIC). It was registered on June 30. 1882.20000 Crore. pension funds and non-profit organisations. 2000 sponsored by Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Open end Hybrid schemes. The sponsorers of UTI Mutual Fund are Bank of Baroda (BOB). Open end Sector Equity schemes. established in Jan 14. It provides customized asset management services and products to governments. Standard Chartered Asset Management Company Pvt. 2004. Open end Tax Saving schemes. Standard Chartered Mutual Fund Standard Chartered Mutual Fund was set up on March 13. Morgan Stanley Investment Management (MISM) was established in the year 1975. They have Open end Diversified Equity schemes. Reliance Mutual Fund Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act. State Bank of India (SBI). manages the UTI Mutual Fund with the support of UTI Trustee Company Private Limited. Reliance Mutual Fund was formed for launching of various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities. Closed end Income schemes and Open end Fund of Funds schemes to offer.DIVYA KOTHIWAL Unit Trust of India Mutual Fund UTI Asset Management Company Private Limited. The schemes of UTI Mutual Fund are Liquid Funds. Ltd. corporations. Limited is the Trustee. 2005). investment management and credit services. Morgan Stanley Mutual Fund India Morgan Stanley is a worldwide financial services company and its leading in the market in securities.1999. Open end Income and Liquid schemes.
with the corporate office in Mumbai. 1997. as the Trustee Company. 2001 with Niche Financial Services Pvt. It contributed Rs. 1882. The Trustee is ACAM Trust Company Pvt. Incorporated on October 16. was setup on January 3. Alliance Capital Mutual Fund Alliance Capital Mutual Fund was setup on December 30. 1996 with Escorts Finance Limited as its sponsor. and AMC. 1995 with the name Escorts Asset Management Limited. Ltd. 1987 with Canara Bank acting as the sponsor. Ltd. The Company started its business on 29th April 1994. In India it is known as Morgan Stanley Investment Management Private Limited (MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF). 2000 and headquartered in Mumbai. 1993 is the AMC. The Corporate Office of the AMC is in Mumbai. Chola Mutual Fund Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance Company Ltd. This is the first close end diversified equity scheme serving the needs of Indian retail investors focussing on a long-term capital appreciation. the Alliance Capital Asset Management India (Pvt) Ltd. . is the Trustee Company and AMC is Cholamandalam AMC Limited. Ltd. LIC Mutual Fund was constituted as a Trust in accordance with the provisions of the Indian Trust Act. Benchmark Asset Management Company Pvt. The Trustee Company is Escorts Investment Trust Limited. The Trustees of PGP/FW/08-10 DF/08/10-F-579 . LIC Mutual Fund Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. Cholamandalam Trustee Co. incorporated on March 2. Ltd. 2 Crores towards the corpus of the Fund. Its AMC was incorporated on December 1. of Delaware (USA) as sponsorer. Canbank Investment Management Services Ltd. as the sponsorer and Benchmark Trustee Company Pvt.DIVYA KOTHIWAL extended to high net worth individuals and retail investors. Benchmark Mutual Fund Benchmark Mutual Fund was setup on June 12. is the AMC. Escorts Mutual Fund Escorts Mutual Fund was setup on April 15. Ltd. 1994 with Alliance Capital Management Corp. Canbank Mutual Fund Canbank Mutual Fund was setup on December 19.
viz. PGP/FW/08-10 DF/08/10-F-579 . (UII) and is constituted as a Trust in accordance with the provisions of the Indian Trusts Act. 1882. National Insurance Co. The New India Assurance Co. Ltd (NIC). Ltd (OIC) and United India Insurance Co. GIC Mutual Fund GIC Mutual Fund. (NIA). Ltd. a Government of India undertaking and the four Public Sector General Insurance Companies.DIVYA KOTHIWAL LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the Investment Managers for LIC Mutual Fund. Ltd. The Oriental Insurance Co. sponsored by General Insurance Corporation of India (GIC).
company’s contact number. PGP/FW/08-10 DF/08/10-F-579 . financial head’s name. b. company’s line of work etc. Cold calling sometimes doesn’t yield the desired results d. • Scope of the Study The scope of study is limited to studying the investment patterns and exposure to mutual funds of SMEs in Nehru Place.DIVYA KOTHIWAL The Study Purpose of the study The purpose of the study is to evaluate how much SMEs have an exposure to mutual funds and what are their investment patterns. Telephonic calls to fix an appointment with the concerned person. d. Fundoodata etc. Existing database given by Reliance ( small proportion) c. b. Mapping the areas given to us which involves fieldwork and in turn involves gathering information like company name. c. Not getting enough appointments as the financial heads may refuse to talk to us. Relationship management • Limitations of the Study a. Sometimes you can’t reach the right person who is actually the decision maker in the organization. e. • Data Collection and Job Requirement The methods that I have employed in collecting data are: • a. Online Directories like Just dial. Database sometimes given on the net is not updated which leads to wastage of time and effort.
DIVYA KOTHIWAL e. Small sample size PGP/FW/08-10 DF/08/10-F-579 . Corporates not revealing true information sometimes f.
SMEs in India met the expectations of the government and developed in a manner. which made it possible for them to achieve the following objectives: • • • • • • • • • High contribution to domestic production Significant export earnings Low investment requirements Operational flexibility Location wise mobility Low intensive imports Capacities to develop appropriate indigenous technology Import substitution Technology oriented industries Competitiveness in domestic and export markets At the same time one has to understand the limitations of SMEs. It can be observed that by and large. and particularly for small scale industries from 1951 to 1991. Certain products were reserved for small-scale units for a long time. till the nation adopted a policy of liberalization and globalization. though this list of products is decreasing due to change in industrial policies and climate. which are: • • • Low capital base Inadequate exposure to international environment Inability to face impact of WTO regime PGP/FW/08-10 DF/08/10-F-579 . Due protection was accorded to both sectors. both planners and government earmarked a special role for small-scale industries and medium scale industries in the Indian economy.DIVYA KOTHIWAL • About Small and Medium Enterprises (SMEs) With the advent of planned economy from 1951 and the subsequent policy followed by government of India.
production efficiencies and costs. Large corporate are accessing funds directly from the capital markets. PGP/FW/08-10 DF/08/10-F-579 . SMEs are now conscious of quality. The following points more clearly brings out why banks and mutual fund companies should focus on SMEs: • • • • Government and RBI pushing for SME funding in urban and semi urban areas. etc. the SMEs have made significant contribution towards technological development and exports. SMEs have become big producers and exporters of consumer goods. SMEs have been established in almost all major sectors in the Indian industry such as: • • • • • • • • • • • Food processing Agricultural inputs Chemicals & pharmaceuticals Electronics Textiles and Garments Leather and leather goods Meat products Bio-engineering Sports goods Plastics products Computer software.DIVYA KOTHIWAL • • Inadequate contribution towards R&D Lack of professionalism In spite of these limitations.
These products have to be made known to the investors for whom they are meant. The project undertaken deals with the marketing of these new and existing funds and FMP s to the SMEs. Commercial papers.DIVYA KOTHIWAL • • • SMEs have a repayment record comparable to the best borrowers. Bank fixed deposits. Large corporate are increasingly outsourcing work to SMEs. The project therefore started with the study of the history of mutual fund industry in India and various stages which contributed to its evolution in India and the various factors and developments added at each stage. Sector growing at over 10% per annum. Bust just making the funds and FMP s available is not a solution-neither for the SMEs nor for the banks. When the thought and research process was started for the first one it was found out that the SMEs has several investment options in their pockets from the very starting like: • • • • Fixed interest government bonds. Share market. Although as we can see that there were various options available in the hands of the people but if we give a good analyzing look at most of these options today and have a comparative evaluation for various investments with reference to the rate of return and the unavoidable evil inflation rate we can see very clearly that in most of these investments the rate of return is very much closer to the inflation PGP/FW/08-10 DF/08/10-F-579 . As clearly stated above. SMEs sector has become a major source of income for the banks and mutual fund companies and is therefore selling like hot cake.
Current Investment Pattern of SMEs The investment pattern of people whose investment perspective have taken a new turn. has changed a lot and they are looking towards new horizons of investments. So what is required by all the AMC s and other broking houses is that apart from the normal business they are doing they should also organize or sponsor several such seminars in which various prospective clients could be called and all their doubts can be cleared off according to their convenience and they should be encouraged to be a part of this booming Indian economy.DIVYA KOTHIWAL rate which minimizes the net increase in the income and increase of the wealth of the people keeping it somewhere around 1-3%. Currently the chief options available for investment are: • • • • • • • • • Government bonds and debentures Commercial papers and deposits Fixed deposits PPF Retirement and Pension schemes Equity based MF & ELSS plan Direct trading into stock market Multi commodity exchange Real estate Now we can make out that today people are not just looking towards a simple and safer saving but they are making attempts to get an investment which can lead for a healthy return along with the security of money and moreover they are PGP/FW/08-10 DF/08/10-F-579 .
Instruments in the Indian Debt Market: • Certificate of Deposit: Issued by the scheduled commercial banks excluding the regional rural banks. So a wise diversification no doubt reduces the net risk and makes the total portfolio a better returning one and obviously a lesser risky. PGP/FW/08-10 DF/08/10-F-579 .DIVYA KOTHIWAL diversifying their investment and following the simple policy of don t keep all your eggs in one basket. Factors affecting the investors while making the portfolio: • • • • • • • • • Time frame of investment Return on investment Risk-benefit ratio Diversification of risk Tax benefits Risk coverage Value added features Flexibility and liabilities of investments Inflation rate If we analyze closely we can see that the MF more or less satisfy all the parameters of the present day investor. These are unsecured negotiable promissory notes. may be this is the reason behind the fast and healthy growth of the MF industry. Hence we can conclude by saying that the present day investor is much wiser and has more number of baskets to keep his eggs in.
These are issued mainly by Financial Institutions such as ICICI/IDBI/IFCI or by commercial Banks • Public Sector Undertaking (PSU) Bonds : These are medium and long term obligations issued by public sector companies where the PGP/FW/08-10 DF/08/10-F-579 . • Government Securities: These are medium to long term interest bearing obligations issued by the Government of India and the States through the RBI. • Floating rate bonds: Short to medium term interest bearing instruments issued by financial corporations. They are assigned a credit rating by the rating agencies. as secured instruments in the form of certificates. also issued through an auction procedure. These are issues where the rates are prespecified and the investor (a corporate or an individual) only bids for quantity.DIVYA KOTHIWAL • Commercial Paper: A CP is a short term. • Corporate debentures: These are issued by companies with physical assets. while those issued by Private corporations are secured. Such bonds if issued by Financial Institutions are generally unsecured. The maturity varies between 3 months to 1 year. A typical maturity ranges from 3 years to 5 years. The RBI here acts only as a Depository. The yield is determined on the basis of bids tendered and accepted. RBI issues T. unsecured instrument issued by corporate bodies (public and private) to meet short term working capital requirements.Bills for different tenures ranging from 91 days to 364 days. • Treasury Bills: These are short term obligations issued through the RBI also by the government of India at a Discount. • Bank and Financial institution Bond : Most of these are in the form of promissory notes transferable by endorsement and delivery.
PGP/FW/08-10 DF/08/10-F-579 . The minimum maturity is 5 years for taxable bonds and 7 years for tax free bonds. Such bonds are generally not guaranteed by the government and are transferable in the Formby endorsement and delivery The Analysis Sources of Data Data are of two types namely primary and secondary: Primary Data refers to information that is developed or gathered by the researcher specifically for the research project at hand. Secondary Data refers to information that has previously been gathered by someone other than the researcher and/or for some other purpose than the research project at hand. When deciding if the data to be collected is secondary in nature. then the data should be classified as primary. ask the following question: Would the data have been collected as a part of the normal course requirements? If the answer is no. Some PSU bonds Carry tax exemptions.DIVYA KOTHIWAL government shareholding is grater than 51%.
In our organization data was found on the company server. EXTERNAL DATA External data are data that originate external to the organization. The information may be in a ready to use format or may require processing.DIVYA KOTHIWAL INTERNAL DATA Internal data are data available within the organization for which the research is being conducted. This data was found on company websites. online databases and some syndicated services. PGP/FW/08-10 DF/08/10-F-579 . it included published material.
QUANTITATIVE RESEARCH A research methodology that seeks to quantify the data and. In my study.DIVYA KOTHIWAL QUALITATIVE RESEARCH An unstructured. we had a large number of representative cases which had structured data collection and we also recommended a final course of action. Sampling Sampling Design PGP/FW/08-10 DF/08/10-F-579 . exploratory research methodology based on small samples that provides insights and understanding of the problem setting. Just Dial etc. Secondary data would include the already existing database given initially by Reliance Mutual fund house and also data collected on the internet through websites like Fundoodata. typically. primary data is the data that I collected by mapping the companies in Nehru place and appointments that I had with financial heads who gave valuable information. applies some form of statistical analysis Our research involved quantity.
The customers were sampled on the basis of convenience sampling. Sample Size The sample size for the project was taken as 200. This was also done on the basis of convenience sampling. Scope of Study The research is categorically classified into three sub-researches on the basis of the products provided by the company. namely: • • • Geographical scope Product scope Time scope or extent of study Geographical scope The geographical scope covers areas from where the samples have been taken. The scope of this study essentially includes the regions. areas. The scope of the study can be broadly categorized into three scopes. Majorly the sample has been taken from Nehru place and the adjoining areas and a couple of samples have been taken from Okhla Industrial Estate PGP/FW/08-10 DF/08/10-F-579 .DIVYA KOTHIWAL The sample chosen from the target population for retailers was based on the size of the particular area of Delhi as well as the number of retailers present in that particular area. and the product categories in which the surveys have been conducted. The market research was based on convenient sampling.
Pilot Testing: It was essential to test the information collection instrument or the process we designed. Before going further to decide the method of data collection. will consistently measure the same thing each time? In whatever PGP/FW/08-10 DF/08/10-F-579 . This was done with the help of internet. 5.. 3. Procedure for Data Collection Data collection means gathering information to address those critical evaluation questions that may be in the minds of the company/ researcher. Reliability: Will the evaluation process designed consistently measure what we want it to measure? That is whether multiple interviews. or observers. I first identified the area that I would work in and in that I identified the companies which were capable of making an investment who had decent turnover so that they could have the capacity to invest atleast 1 crore which is the minimum amount for institutional investment. 2. reports. and summaries. database provided by the company as well as cold callings. we identified some of the important issues in this regard. 4. The product category of this study is mutual funds and specifically highly liquid debt schemes catering to corporate clients. we needed to obtain appropriate permission or clearance to collect information from people or other sources. Hence we reviewed information in prior records. settings.DIVYA KOTHIWAL Product scope The product scope features the product category in which the research has been carried out. And the procedure for data collection to be adopted depends on the requirements of the research. Protocol Needs: In many situations. These were: 1. For the purpose of data collection. It may also be a concern if our presence during data collection may possibly alter the results. Availability: We realized that there may be some information already available that can help answer some questions or guide the development of new guidelines. Reactivity: Reactivity refers to how the way of asking a question would alter the response we would get.
depending on the nature of the query. Questionnaire A questionnaire is a structured technique for data collection that consists of a series of questions that a respondent answers. Having kept these issues in mind. 2. numeric open-ended as well as text-open ended questions. we adopted the following methods for data collection: 1. PGP/FW/08-10 DF/08/10-F-579 .DIVYA KOTHIWAL instrument we design. The questionnaire comprised of multiple choice. Validity: Validity means will the information collection methods designed produce information that measures what we require to measure? We should be sure that the information we collect is relevant to the purpose in hand. Personal interviews were conducted in companies where I went for the appointment. Personal Interview An interview is called personal when the Interviewer asks the questions face-toface with the Interviewee. These were mainly of the form of structured interviews. will people interpret our questions the same way each time? 6.
DIVYA KOTHIWAL Results and Interpretation In this section we present all the facts and figures along with analysis collected during the market research activities performed during the course of thesis work. Companies at Nehru place which is considered to be the IT hub of Delhi were consciously chosen for the purpose of study as they house maximum number of companies in the city across various segments. The analysis is based on the questionnaire. PGP/FW/08-10 DF/08/10-F-579 . a copy of which is there in this report. The numbers of companies covered have already been mentioned (200). The software used to analyse the data is Microsoft Excel and Stats software. The primary purpose of the study was to understand the current investment patterns of SMEs and their exposure to mutual funds.
Now which type of instruments are we talking about here remains to be seen which will come up in later questions. From the information given by ICICI we are here assuming that most companies are investing in either bank FDs or share market. PGP/FW/08-10 DF/08/10-F-579 . Next question will prove whether it is true or not. A diversified portfolio would mean investing in more than one instruments.DIVYA KOTHIWAL The Findings Diversified Portfolio Figure 11 tells us that about how companies invest their money at present in the market. We see that about 55% of the companies had diversified portfolio and 45% didn’t.
PGP/FW/08-10 DF/08/10-F-579 . Now if companies are majorly investing in FDs and Equity then Savings and Returns should be the two biggest factors in compelling the company to invest. about 61% of investments were either done in equity or bank FDs where in Bank FD’s share is 32% which actually proves our hypothesis earlier on based on past information. only 14% of the companies invest in mutual funds which justifies our hypothesis showing lack of penetration of mutual funds in SMEs. It may be because of this only that Reliance Mutual Fund House’s Fixed Maturity Plan which is on the similar line as bank FD is selling like hot cake. This figure also shows another important result.DIVYA KOTHIWAL Investment Tools Company Invests In Instruments Company invests in as you can see.e. majority i.
This might indicate that companies are not aware about how safe mutual funds are on the debt side. This is an early indication that companies are not much aware about the safety and steady retruns given by mutual funds. This could be because of companies investing in bank FDs and equity. PGP/FW/08-10 DF/08/10-F-579 .DIVYA KOTHIWAL Reason for investment As you can see from the above figure 45% of companies invests for savings purpose and 30% returns which confirms. Rank Instruments If you look at the ranking you can make out that majorly companies are opting for either bank FDs (95) or RBI bonds (66) which are safe as 1st rank or 2 nd or prefer for equities (116).
DIVYA KOTHIWAL Frequency of company investment The above figure shows the frequency of company investment where you can see majorly companies do it once in 15 days or once in a week. One. companies are not aware about highly liquid debt funds that we have in mutual funds where in you can PGP/FW/08-10 DF/08/10-F-579 . Short investment or Long term investment As you can see from the above figure that mainly companies are going for long term investments which indicates two things.
it gives an indication that companies are sticking to longer term Bank Fixed deposits. Expected return on Equity investments As we can see from the above figure that undoubtedly companies are expecting 20% and above return on their equity investment which is again reasonable as capital gain has been increased to 15% recently. Second. Expected rate of return on Debt investments Mainly companies are expecting return on debt investment to be above 6% which is reasonable enough.DIVYA KOTHIWAL invest even for one day and get return on it. PGP/FW/08-10 DF/08/10-F-579 .
Mutual funds offer liquidity steady returns and tax advantage as well. Its not only with the relationship managers. So this highlights the point that relationship management is quite necessary if you want to bring in business for the company. but it applies to all segments. On whose advice do you invest This figure shows role of relationship management to an extent as 41% of the companies are investing through relationship managers. If you want your company to grow you have to have PGP/FW/08-10 DF/08/10-F-579 .DIVYA KOTHIWAL Awareness Level if Already Investing in Mutual Funds As you can see those who are already investing know the benefits provide by mutual funds.
Reason for company investing in Debt Mutual Funds Here you can clearly see that mainly companies are investing in debt mutual funds because it offers steady returns and liquidity (total-74%) PGP/FW/08-10 DF/08/10-F-579 . As earlier on we had a chart which showed those who invested in mutual funds knew about liquidity in mutual funds. This figure is actually bringing in one of the limitations of the study which is wrong information provided by the company due to either lack of knowledge or some other reason. and they also knew everything about mutual funds. But ehre the figure are giving contradictory views.DIVYA KOTHIWAL good relationship with the client from whom you are thinking of bringing in the business. Type of mutual fund you company invests in This again confirms the hypothesis that there is lack of awareness about highly liquid debt schems for corporates as you can see companies are heavily investing in equity (62%) which actually brings in another interesting point in the forefront.
DIVYA KOTHIWAL Reason for investing in equity mutual funds As you can see mainly companies are investing in equity mutual funds for greater return over inflation which currently is a big factor in India. Company not investing in mutual funds because: PGP/FW/08-10 DF/08/10-F-579 .
DIVYA KOTHIWAL As you can see the reason for not investing is dipersed but majorly its either because of lack of knowledge or low returns as compared to share market which again strengthens our claim of companies investing in equities more than mutual funds. Would you consider investing in mutual funds if: PGP/FW/08-10 DF/08/10-F-579 .
PGP/FW/08-10 DF/08/10-F-579 . once companies are made aware about this they are either ready to invest in them or can think of investing.DIVYA KOTHIWAL Since mutual funds provides liquidity. steady returns.tax benefits. low risk.
PGP/FW/08-10 DF/08/10-F-579 .DIVYA KOTHIWAL Awareness about current account surplus earning interest As it is clear from the above figure that mostly people are not aware about current account surplus earning interest for even one day (61%) which again strengthens our argument that companies are not aware about liquid funds that much. Would you invest in mutual funds if you knew about benefits: As you can clearly see that most of the companies (89%) are ready to invest if given proper information about mutual funds which is a very important point. So this gives mutual fund companies motivation to explore even more areas where they can find prospective clients.
This is a good indication for mutual fund houses that are always in a hunt to find new corporate. PGP/FW/08-10 DF/08/10-F-579 .DIVYA KOTHIWAL Would you like to know more about mutual funds As you can see the eagerness of companies once they are provided the right information about mutual funds. It states that 94% companies want to know more about mutual funds.
though the sample size is small but it still gives an indication that the sector in which an SME is in will affect its decision to whether or not invest in mutual funds but a conclusive research needs to be done on this.DIVYA KOTHIWAL Conclusion The conclusion is that currently a lot of companies are still not fully informed about the benefits that are associated with investing in mutual funds. The ones which are investing are investing more in equity schemes which shows that they don’t know much about the highly liquid debt schemes that mutual fund provides. Non mutual fund investors are mainly investing their money in bank fixed deposits of longer maturity when they can get better returns if they park money in mutual funds. Also. PGP/FW/08-10 DF/08/10-F-579 . Its now the job of mutual fund houses to increase their efforts even more and try to create more and more awareness about mutual funds.
Which are the investment tools your company invests in? Bank Fixed Deposit Mutual Funds RBI Bonds Others Equity Equities 3. Does your company have a diversified portfolio? Yes No 2.DIVYA KOTHIWAL Annexure In the annexure I am attaching the questionnaire which used for analysis and interpretation: A Study On Investment Pattern of Small & Medium Enterprise (SME) Segment (Focus on Mutual Funds) Name: __________________________ Company: __________________________ Designation: __________________________ Contact Number: __________________________ 1. Your company primarily invest for Tax Benefits Returns Liquidity Savings Any other (Please Specify) PGP/FW/08-10 DF/08/10-F-579 .
6%-7% d. Long-term investments (Please specify the period) _____________________ 7. Once in 6 Months f.14% c. c. Once in 3 Months e. 5% .DIVYA KOTHIWAL 4. Rank the investments options according to your company’s preference of Investment: Bank Fixed Deposit RBI Bonds Mutual Funds Equities Any other (Please Specify) 5. Below 4% b.20% d. Once a Month d.9% b. What is the expected rate of return of your company from equity investments? a. b. 15% . Are you aware of the various schemes offered by Mutual Funds? Do you know that Mutual Funds offers Liquidity to your funds? Do you know that Mutual Funds offers steady returns? Do you know you can get Tax Advantages by investing in Mutual Funds? Yes Yes Yes Yes No No No No PGP/FW/08-10 DF/08/10-F-579 . Once a Week b. What is the frequency of your company’s investment? a. Does your company go in for: a. If your company invests in mutual finds: a. Once a Year 6. Short-term b. Above 20% 9. 4%-5% c. 10% . d. Once in 15 Days c. What is the expected rate of return of your company from debt investments? a. Above 7% 8.
Your company does not invest in Mutual Funds because of i) Bitter Past Experience ii) Lack of Knowledge iii) Lack of Confidence in Service Being Provided iv) Difficulty in Selection of Schemes v) Inefficient Investment Advisors vi) Low Returns as compared to Share Market Yes Yes Yes Yes Yes No No No No No b. iii) Investment for a Shorter Duration. 4. Debt Bank Distributor Agent Direct Investment RM Equities Balanced f. 3.DIVYA KOTHIWAL e. Which type of Mutual Fund does your company primarily invest in? g. Even for One Day iv) Steady Returns v) Net Returns Better than a Bank Fixed Deposit with High Liquidity vi) Diversification of Portfolio vii) Minimization of Risks PGP/FW/08-10 DF/08/10-F-579 . 2. ii) Greater Liquidity vis-à-vis Others. 5. Your company invests in Equities Mutual Funds because it offers: Higher Returns Long Term Capital Gains Returns>Inflation Wealth Creation Tax Advantage Any Other Higher Returns than debt Tax Advantage funds Returns>Inflation Any other i. If your company does not invest in Mutual Funds: a. Your company invests in Debt Mutual Funds because it offers: Steady Returns Risk Mitigation Liquidity Any Other Tax Benefits h. Would you invest in Mutual Funds for your company if it offered (Y/N) i) Greater Tax Benefits vis-à-vis Others. Primarily on whose external advice do you invest? 1. Your company invests in Balanced Mutual Funds because it offers: 10.
Lesser risk etc.DIVYA KOTHIWAL 11. Tax Benefits. Would you be interested to know more about Mutual Funds? Yes No PGP/FW/08-10 DF/08/10-F-579 . would you consider it as an investment option in the future for your company? Yes No 13. Liquidity. Are you aware that current account surpluses can also earn interest by parking in Mutual Funds even for one day? Yes No 12. Diversification of portfolio. ..If Mutual Funds offer you Steady Returns.
com Richard I. Statistics For Management www. Levin.org PGP/FW/08-10 DF/08/10-F-579 .worldbank.DIVYA KOTHIWAL References www.com www.amfiindia. David S.mutualfundsindia. Rubin Seventh edition.
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