A Summer Internship Project Report on “Dynamics of Mutual Fund Distribution” Submitted in partial fulfillment of the requirements for the

degree of Post Graduate Diploma in Management (Marketing) By HANISH DHILLON (Roll No. ISBS M 48) Under the guidance of Mr. Dilraj Singh Manger Banking & Corporate Channel-HDFC AMC Ltd A Study Conducted for HDFC AMC Ltd

At Indira School of Business Studies, Tathawade, Pune 411033 (2008-10)


Chapter/ Sub Headings 1 2 3 4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 5 6 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 -


Page No

Acknowledgements Executive Summary Objectives IntroductionMutual Funds History of Mutual Funds Current state of Mutual Funds Key Characteristics Advantages of Investing in Mutual Funds Disadvantages of Investing in Mutual Funds Risks Associated with Investing in Mutual Funds Categories of Mutual Funds Snapshot of Various funds Risk Hierarchy of Different Mutual Funds

4 5 8 10 11 12 14 16 20 22 23 25 28 29

Company Profile- HDFC AMC Research Study Introduction Review of Literature Type of Research Data collection Technique Scope of the Study Data sources Sampling procedure Sample Size Techniques for Analysis 2

30 41 42 42 42 42 43 43 43 43 43

6.10 6.11 7 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 8 9 10


Data presentation tools Limitations

44 44

Data Analysis - Bar Graph 7.1 - Bar Graph 7.2 - Bar Graph 7.3 - Bar Graph 7.4 - Bar Graph 7.5 - Bar Graph 7.6 - Bar Graph 7.7 - Bar Graph 7.8 - Bar Graph 7.9 Research Conclusions Recommendations Annexure and Bibliography 45 46 48 49 51 53 55 57 58 60 62 65



I take this opportunity to express my deep sense of gratitude to all those who have contributed significantly by sharing their knowledge and experience in the completion of this project work. I am greatly obliged to, for providing me with the right kind of opportunity and facilities to complete this venture. My first word of gratitude is due to Mr. Dilraj Singh – Manager Banking & Corporate Channel, HDFC Mutual Fund, My corporate guide, for his kind help and support and his valuable guidance throughout my project. I am thankful to him for providing me with necessary insights and helping me out at every single step. I am highly thankful to Prof. Bidyut Gogoi – My internal faculty guide under whose able guidance this project work was carried out. I thank him for his continuous support and mentoring during the tenure of the project. Finally, I would also like to thank all my dear friends for their cooperation, advice and encouragement during the long and arduous task of carrying out the project and preparing this report.





The Indian mutual fund industry has witnessed significant growth in the past few years driven by several favorable economic and demographic factors such as rising income levels and the increasing reach of Asset Management Companies (AMCs) and distributors. However, after several years of relentless growth, the industry witnessed a fall of 8 percent in the assets under management in the financial year 2008-09 that has impacted revenues and profitability. Recent developments triggered by the global economic crisis have served to highlight the vulnerability of the Indian mutual fund industry to global economic turbulence and exposed our increased dependence on corporate customers and the retail distribution system. It is therefore an opportune time for the industry to dwell on the experiences and develop a roadmap through a collaborative effort across all stakeholders, to achieve sustained profitable growth and strengthen investor faith and confidence in the health of the industry. Innovative strategies of AMCs and distributors, enabling support from the regulator SEBI, and pro-active initiatives from the industry bodies CII and AMFI are likely to be the key components in defining the future shape of the industry. Total Investment scenario is changing, in past people were not interested in investment because there were no good options available for investment. Now there are many options available for investment like life Insurance, Mutual fund, Equity market, Real asset, etc. The basic objective of any financial services company would be to provide an absolute tailor made products and services to the customer and to advocate them, enrich them and finally retain them into the organization. The underlying difference or core competence that can help any AMC outperform others is by providing differentiated services that are tailor made as according to the customers need and objective of investing money in a Mutual Fund. 6

This project involves study of mutual fund Industry and evaluating and suggesting measures to improve the services provided by the various Banking Channels of HDFC AMC and also to identify the strong and the weak points so that an appropriate sales pitch can be developed. The sales pitch highlighted features like HDFC being the pioneer in terms of AUM, its huge distributor base, returns being independent of the market ups and downs, etc. During the Internship I mainly worked with two of the highest revenue generator Banking Channels mainly HDFC Bank, Boat Club Road and DBS Bank, Dhole Patil Road. Initially Cold Calls were made to different customers (Retail) from company‘s database and appointments were sought. Thereafter a brief questionnaire was filled up by them regarding their perception about HDFC AMC. The need for this research is to emphasize and understand the expectations of customers of mutual funds and how the company can be more customers centric instead of Product Centric. This report summarizes the current state of the Indian mutual fund industry highlighting the key challenges and issues. We have also presented the ‘Voice of Customers’ to understand their needs and priorities. I acknowledge the inputs received from AMCs, distributors, customers and service providers for this report.




OBJECTIVES OF THE PROJECT As the title of the project suggests, the objective of the project is to find out the satisfaction level of different Banking Channels with respect to the services & overall quality provided by the AMC. The following are the sub objectives of the project: • • • • To understand the different investment options provided by HDFC mutual funds through its mutual fund schemes. To know the investors’ expectations on mutual funds offered by HDFC AMC. Find out there preference parameters for selling a particular fund. Understanding the competition for the service provided by different mutual fund companies. Finding out ways and means to improve on the services by HDFC Mutual Fund. Understanding the different ratios & portfolios so as to tell the Banks about these terms, by this, managing the relationship with the Banks. Understanding the attitude and behavior of the distributors and channel partners towards HDFC AMC. To identify and over come the gap between the management perception and the customers expectation. To come up with strategies to maintain better business relationships with our banking channels.




4.1 MUTUAL FUNDS A mutual fund is a professionally-managed firm of collective

investments that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities, it is a trust registered with the Securities and Exchange Board of India (SEBI), which pools up the money from individual / corporate investors and invests the same on behalf of the investors /unit holders, in equity shares, Government securities, Bonds, Call money markets etc., and distributes the profits. The value of each unit of the mutual fund, known as the net asset value (NAV), is mostly calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding. The value of all the securities in the portfolio in calculated daily. From this, all expenses are deducted and the resultant value divided by the number of units in the fund is the fund’s NAV. NAV= Total value of the fund ________________________________________ No. of shares currently issued and outstanding M U T U A Invest in L Variety of Invest their M Stocks/ Money A F Bonds R U K N E D T S C H 11 E M E S

Profit/Loss from Individual Investment s

Profit/Loss from portfolio of Investments


4.2 HISTORY OF INDIAN MUTUAL FUND INDUSTRY The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank. The history of mutual funds in India can be broadly divided into four distinct phases. First Phase – 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management. Second Phase – 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.At the 12

end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores. Third Phase – 1993-2003 (Entry of Private Sector Funds) 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. Fourth Phase – since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29, 835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. Consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.


4.3 CURRENT STATE The Indian mutual fund industry has evolved from a single player monopoly in 1964 to a fast growing, competitive market on the back of a strong regulatory framework. AUM Growth The Assets under Management (AUM) have grown at a rapid pace over the past few years, at a CAGR of 35 percent for the fiveyear period from 31 March 2005 to 31 March 2009. Over the 10year period from 1999 to 2009 encompassing varied economic cycles, the industry due to the grew at 22 percent bubble burst, CAGR. This growth in was 2008 despite two falls in the AUM - the first being after the year 2001 dotcom and the second consequent to the global economic crisis (the first fall in AUM in March 2003 arising from the UTI split. AUM Base and Growth Relative to the Global Industry India mutual to has been (as of amongst 2004; December) the in the 14 fastest Indian growing markets for 2004 industry funds since the five-year period from


mutual fund

grew 4



percent Over of the likes

CAGR the


against and France in the

the global fund at China grew

average industry 4 and

of in

percent3. some the


period, US

the mutual viz. Indian

mature while


percent, Brazil

emerging markets


growth witnessed

market. However,

despite clocking growth rates that are amongst the highest in the world, the Indian mutual fund industry continues to be a very small market; comprising 0.32 percent share of the global AUM of USD 18.97 trillion as of December 20084. Share of Mutual Funds in Household Financial Savings Investment in mutual funds in India comprised 7.7 percent of the gross household increase in fixed than of the India in financial 1.2 to with continue currency the household time 61 savings percent hold FY banks, 18 in in FY 2008, FY 2004. of the funds than 2008, in in a The their UK as UK bank significant households savings and had a had 10 in from

55 percent percent 2008,

deposits thrice



as of

2008. In

more in

investments into savings (26 of the



total same held

percent), December savings


period. As


percent of


deposits, 11.6 percent in equities and 1 percent in bonds. Profitability The increase in fund growth CAGR industry in in the the of of revenue and profitability has last period AMCs the AUM not 5 been years. from The is AUM 2005 from in the Indian mutual with the at 35 PBT in FY while as AUM the a 2004 grew percent commensurate

March which declined

to 2009, 24 bps

profitability percentage

defined as

to 14 bps in FY 2008.

During FY 2004 and FY 2008, the 15

investment management was bps being 2004 spend in the in FY range 2006) mix at bps of

fee 55 to to

as 58

a the

percent bps (small low industry


average increase focus to on

AUM 64 the

due the in FY

underlying asset targeted a to on 113 AMC expenses, as

comprising of 2008


margin 41 the and

products operating in FY


segment. The to


AUM, rose from largely due


increased expenses decline in players of the


distribution and cost entry the The

administrative plans in an of global

impacting profitability eyeing by a

margins. Rising presence. that


have impacted

an Indian decline

growth a

AUM on

accompanied the growth

in profitability

necessitates have


underlying characteristics


and profitability of the Indian mutual fund industry.

4.4 THE INDIAN MUTUAL FUND INDUSRTY KEY- KEY CHARACTERISTICS Customers The Indian mutual from 96.86 of at the the 82 fund in industry number lower than of AUM 1.15 in as India billion, has significantly high ownership comprising 37 in of was to percent the a US total fund lower 42 be March institutional total investors. terms held as the at the as at retail Retail investors approximately the end of participation 2008. Out of 2008 an


industry AUM


significantly percent of actual

December of 31

population investor (the as

total number March is the





of investors folios). In

estimated US,


hold multiple 16

estimated In the


million individual few years, the

investors retail



funds in

out of a total population of 305 million in 2008. last investor participation, particular, in Tier 2 and Tier 3 towns, has been on the rise aided by the buoyant equity markets. Products The stage fixed 10,349 mix Indian in mutual terms with of fund of its industry product by was of the As offered is in a relatively nascent and tends the to total to as providing offerings,

compete number


the Government 2008, in 1,002 total

guaranteed mutual funds


of December products

fund schemes US. Debt percent 49

comparison the AUM

in the



and comprised and 99 22


of FY 200915, percent comprised product ETFs,

while the equity and liquid funds comprised 26 percent of the respectively. total industry Traded Open-ended funds AUM as Funds of March percent

2009. While traditional vanilla products dominate in India, new categories Capital viz. Exchange and (ETFs), Gold Protection Overseas Funds have gradually

been gaining popularity 2008. Markets While metro tap total growth the and 2 mutual urban and has fund centric, Tier The 3 industry the towns as in a India funds continues to of be to to 92 their mutual are beginning 10 cities


vital component Top

strategy. AUM


of the


declined from


percent in 2005 to approximately 80 percent currently. Distribution Channels 17





the as

mutual The


industry to


92,499 Advisors and of

registered million (IFAs) or

distributors Individual comprised general, in with


approximately 2.5 employees respectively


agents. 73,

Independent Financial 6 and percent the

distributors, corporate 21 and banks

corporates Banks sector Regional IFAs The in

the total distributor base. foreign over 57 30 leading the new private mutual fund and with 2007. on banks particular, (including percent banks dominate AUM total


percent of the

share. National AUM as of

Distributors sector

broker and dealers) together enhancing focus

comprised public

are gradually

mutual fund distribution to boost their fee income. Industry Structure The The Indian that of industry players Public mutual have has fund been sector industry given a shift 11 currently has as consists approval of of 38 in players favour sector sector. The regulatory by SEBI. public

witnessed from mutual

changed drastically the number to 5 21 in



reduced sector fund

in 2001

2009. The percent of and

public sector has gradually ceded market share to the private funds comprised on product of the AUM in 2009 as against 72 percent AUM share in 2001. mutual houses the based portfolio distribution • The strategy, key elements competitive strategy, across all product

can be segmented into three categories: market leaders having presence segments • Players having dominant focus on a single product segment - debt or equity


• The for mix

Players market a more that

having leaders

niche have



an across



category or distribution channels. focused base low a product categories product the low fund and the wide size. Although given a into and mutual diversified maintain has AUM with an equitable


consistent AUM to venture local brand



relatively required of

entry barriers

minimum business,

networth existence

a strong

deep distribution footprint are the key differentiators. Operations The Indian mutual fund industry while on a high growth path needs as to address efficiency and and customer centricity. Agents mutual (R&T) funds as have registrar that and can AMCs more focus product been and cash have successfully been using outsourced service providers such custodians, Registrar aspects are of Transfer so that recently, fund on core outsourced transfer development accountants,


business Functions investor and to ensuring be of

such services,

and distribution. custody aimed at

services, fund costs


servicing and

management. However, operations

Managing is

investor satisfaction for optimizing and

continue to be the key goals for all mutual funds today. there costs likely scope rising given the trend administrative

associated costs as a percentage of AUM. Regulatory Framework The Indian mutual is believed (SEBI), has fund to industry match up in to terms the and of most several regulatory developed Board regulatory framework markets of India

globally. The regulator,



consistently introduced 19

measures of the growth Money in and of of

and small the

amendments investor that industry. The (PMLA) as part

aimed augurs

at protecting well latest for of

the the

interests long term of issued The of

implementation of to the (AML) cover and ambit


Laundering 2008, is Money (CFT)

Rules, the gain


December Anti

risk management and two


procedures Terrorism

expected measures (KYC)

further momentum. main aspects



Combating Financing transaction dwell of on a the

Know Your The range players and to

Customer and

‘suspicious seeks to

monitoring and reporting’. regulatory of to compliance the issues including ensure resilience financial capability through

and sustainability norms the


in minimum net worth and capital adequacy, investor protection education investors, more and through disclosure in for more information aimed system at by and mutual will be distribution related gap of in in the regulations distribution for between the mechanism relatively a the robust the fittest its march supporting

introducing reducing distributors, fund

transparency by in improving India, that that

the information success further ensures

investors nascent


remuneration. The industry on contingent compliance of


evolving only

regulatory and growth and the needs most


the industry

prudent players survive.


4.5 ADVANTAGES OF MUTUAL FUND Diversification of Risk Helps diversifying risk by investing money in a Basket of Assets. Diversification reduces risk of loss, as compared to investing directly in one or two shares or debentures or other instruments. When an investor invests directly, all the risk of potential loss is his own. This risk reduction is one of the most important benefits of a collective investment vehicle like mutual fund. Reduction of Transaction Cost Mutual Funds provide the benefit of cheap access to expensive stocks. A direct investor bears all the cost of investing such as brokerage and custody of security. When going through a fund, he has the benefits of economies of scale; the funds pay a lesser costs because of larger volumes, benefits passed on to its investors. Convenience and Flexibility Being institutions with good bargaining power in markets, mutual funds have access to crucial corporate information, which individual investors cannot access. Mutual fund management companies offer many investor services that a direct market investor cannot get. Investors can easily transfer their holdings from one scheme to the other; get updated market information, and so on. Liquidity An investor can liquidate the investment, by selling the units to the fund if open-end, or selling them in the market if the fund is close-end, and collect funds at the end of each period specified by the mutual fund or the stock market. Choice of Schemes The Investor gets choice from varied Funds in accordance to his Needs and Objectives. 21

Lucidity You get regular information on the value of your investment in addition to disclosure on the specific investments made by the mutual fund scheme. Professional Management Most mutual funds pay topflight professionals to manage their investments. These managers decide what securities the fund will buy and sell. Regulatory Over-sight Mutual funds are subject to many government regulations that protect investors from fraud. Securities Exchange Board of India (“SEBI”), the mutual funds regulator has clearly defined rules, which govern mutual funds. These rules relate to the formation, administration and management of mutual funds and also prescribe disclosure and accounting requirements. Such a high level of regulation seeks to protect the interest of investors.


4.6 DISADVANTAGES OF MUTUAL FUND No Guarantees No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money. Fees and commissions All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund. Taxes During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit 34 on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made. Management risk When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course,


if you invest in Index Funds, you forego management risk, because these funds do not employ managers. Dilution It’s possible to have too much diversification. Because funds have small holdings in so many different companies, high returns from a few investments often don’t make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money. 4.7 RISKS ASSOCIATED WITH MUTUAL FUNDS Market Risk Market risk relates to the market value of a security in the future. Market prices fluctuate and are susceptible to economic and financial trends, supply and demand, and many other factors that cannot be precisely predicted or controlled. Political Risks Changes in the tax laws, trade regulations, administered prices, etc are some of the many political factors that create market risk. Although collectively, as citizens, we have indirect control through the power of our vote individually, as investors, we have virtually no control. Inflation Risk Interest rate risk relates to future changes in interest rates. For instance, if an investor invests in a long-term debt Mutual Fund scheme and interest rates increase, the NAV of the scheme will fall because the scheme will be end up holding debt offering lower interest rates.


Business Risk Business risk is the uncertainty concerning the future existence, stability, and profitability of the issuer of the security. Business risk is inherent in all business ventures. The future financial stability of a company cannot be predicted or guaranteed, nor can the price of its securities. Adverse changes in business circumstances will reduce the market price of the company’s equity resulting in proportionate fall in the NAV of the Mutual Fund scheme, which has invested in the equity of such a company.

Economic Risk Economic risk involves uncertainty in the economy, which, in turn, can have an adverse effect on a company’s business. For instance, if monsoons fail in a year, equity stocks of agriculture-based companies will fall and NAVs of Mutual Funds, which have invested in such stocks, will fall proportionately.



Mutual funds can be classified as follow: Based on their structure


Open-ended funds: Investors can buy and sell the units from the fund, at any point of time. Close-ended funds: These funds raise money from investors only once. Therefore, after the offer period, fresh investments can not be made into the fund. If the fund is listed on a stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly. Redemption of units can be made during specified intervals. Therefore, such funds have relatively low liquidity.

Based on their investment objective:

Equity funds: These funds invest in equities and equity related instruments. With fluctuating share prices, such funds show volatile performance, even losses. However, short term fluctuations in the market, generally smoothens out in the long term, thereby offering higher returns at relatively lower volatility. At the same time, such funds can yield great capital appreciation as, historically, equities have outperformed all asset classes in the long term.

Balanced fund: Their investment portfolio includes both

debt and equity. As a result, on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. Following are balanced funds classes: 27

Debt-oriented funds -Investment below 65% in equities. Equity-oriented funds -Invest at least 65% in equities, remaining in debt. • Debt fund: They invest only in debt instruments, and are a

good option for investors averse to idea of taking risk associated with equities. Therefore, they invest exclusively in fixed-income instruments like bonds, debentures, Government of India securities; and money market instruments such as certificates of deposit (CD), commercial paper (CP) and call money. Put your money into any of these debt funds depending on your investment horizon and needs. – Liquid funds These funds invest 100% in money market instruments, a large portion being invested in call money market. – Gilt funds ST They – invest 100% of their portfolio in government securities of and T-bills. Floating rate funds Invest in short-term debt papers. Floaters invest in debt instruments which have variable coupon rate. – Arbitrage fund They generate income through arbitrage opportunities due to mis-pricing between cash market and derivatives market. Funds are allocated to equities, derivatives and money markets. Higher proportion (around 75%) is put in money markets, in the absence of arbitrage opportunities. – Gilt funds LT They invest 100% of their portfolio in long-term

government securities. 28

Income funds LT Typically; such funds invest a major portion of the portfolio in long-term debt papers.

MIPs Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities.

FMPs Fixed monthly plan invest in debt papers whose maturity is in line with that of the fund.

4.9 SNAPSHOT OF MUTUAL FUND SCHEMES The following table summarizes different types of mutual fund schemes, their objective, where do they invest and their suitability Mutual Fund Type Money Market Objective Liquidity + Moderate Income + Reservatio n of Capital Risk Negligible Investme nt Portfolio Treasury Bills, Certificate of Deposits, Commerci al Papers, Call Money Who should invest Those who park their funds in current accounts or shortterm bank deposits Investme nt horizon 2 days - 3 weeks


Shortterm Funds (Floating - shortterm)

Liquidity + Moderate Income

Little Interest Rate

Bond Funds (Floating - Longterm)

Regular Income

Credit Risk & Interest Rate Risk

Gilt Funds Equity Funds

Security & Income Long-term Capital Appreciatio n

Interest Rate Risk High Risk

Call Money, Commerci al Papers, Treasury Bills, CDs, Short-term Governme nt securities. Predomina ntly Debenture s, Governme nt securities, Corporate Bonds Governme nt securities Stocks

Those with surplus short-term funds

3 weeks 3 months

Salaried & conservati ve investors

More than 9 - 12 months

Salaried & 1 year and conservati more ve investors Aggressive > 3 years investors with long term outlook

Index Funds

To generate returns that are commensu rate with returns of respective indices

NAV varies with index performan ce

Portfolio indices like BSE, NIFTY etc

Aggressive investors

> 3 years


Balanced Funds

Growth & Regular Income

Capital Market Risk and Interest Rate Risk

Balanced ratio of equity and debt funds to ensure igher returns at lower risk

Moderate & Aggressive

> 2 years

4.10 RISK HEIRARCHY OF DIFFERENT FUNDS Thus, different mutual fund schemes are exposed to different levels of risk and investors should know the level of risks associated with these schemes before investing. The graphical representation hereunder provides a clearer picture of the relationship between mutual funds and levels of risk associated with these funds



VISION “To be a dominant Player in the Mutual Fund space recognized for its higher levels of ethical and professional conduct and a commitment towards enhancing Investor Interests”. HDFC Asset Management Company Ltd. has a vision of being a leading player in the Mutual Fund business and has achieved 32

significant success and visibility in the market. Growth and visibility is adhered to Good Conduct in the marketplace. At HDFC AMC, the implementation and observance of ethical processes and policies has helped them to stand up to the scrutiny of the domestic and international investors. MANAGEMENT The management at HDFC AMC is committed to good Corporate Governance, which includes transparency and timely dissemination of information to its investors and unit holders. The HDFC AMC Limited Board is a professional Independent body, including well-experienced Audit and knowledgeable the company. HDFC MF HDFC Mutual Fund is one of the largest mutual funds and wellestablished fund house in the country with consistent and above average fund performance across categories since its incorporation on December 10, 1999. While our past experience does make us a veteran, but when it comes to investments, we have never believed that the experience is enough. HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter dated June 30, 2000. Directors. Regular Committee

meetings are conducted to review the operations and performance of

In terms of the Investment Management Agreement, the Trustee has appointed the HDFC Asset Management Company Limited to manage


the Mutual Fund. The paid up capital of the AMC is Rs. 25.161 crore. INVESTMENT PHILOSOPHY The single most important factor that drives HDFC Mutual Fund is its belief to give the investor the chance to profitably invest in the financial market, without constantly worrying about the market swings. To realize this belief, HDFC Mutual Fund has set up the infrastructure required to conduct all the fundamental research and back it up with effective analysis. HDFC lays strong emphasis on managing and controlling portfolio risk avoids chasing the latest “fads” and trends. OFFERINGS HDFC believes, that, by giving the investor long-term benefits, they have to constantly review the markets for new trends, to identify new growth sectors and share this knowledge with their investors in the form of product offerings. They have come up with various products across asset and risk categories to enable investors to invest in line with their investment objectives and risk taking capacity. Besides, they also offer Portfolio Management Services.

ACHIEVEMENTS HDFC Asset Management Company (AMC) is the first AMC in India to have been assigned the ‘CRISIL Fund House Level – 1’ rating. This is its highest Fund Governance and Process Quality Rating which reflects the highest governance levels and fund management practices at HDFC AMC. It is the only fund house to have been assigned this rating for third year in succession. Over the past, HDFC has won a number of awards and accolades for their performance.


Equity/ Growth Fund – – – – – – – – – – – – – – – – – HDFC mid Cap Opportunities Fund. HDFC Prudence Fund. HDFC Index Fund- Nifty Plan. HDFC Capital builder Fund. HDFC Infrastructure Fund. HDFC Long term advantage Fund. HDFC Index Fund- Sensex plus Plan. HDFC Core and Satellite Fund. HDFC Growth Fund. HDFC top 200 Fund. HDFC Index Fund- Sensex plan. HDFC Balanced Fund. HDFC Long term Equity Fund. HDFC Equity Fund. HDFC Premiere Multi-cap Fund. HDFC Arbitrage Fund. HDFC Tax saver (ELSS).

Children’s Gift Fund – – – – – – – HDFC Children’s Gift Fund Savings Plan. HDFC Children’s Gift Fund Investment Plan.

HDFC Liquid Fund HDFC Cash Management Fund- Savings Plan. HDFC Liquid Fund Premier Plus Plan. HDFC Liquid Plan. HDFC Cash Management Fund- Call Plan. HDFC Liquid Fund Premier Plan. – – HDFC Floating rate Income Fund- Long term Plan. HDFC High Interest Fund- Short term Plan. 35

Debt/Income Funds

– – Fund. – – – – – – – –

HDFC Multiple Yield Fund- Plan 2005. HDFC Cash Management Fund- Treasury Advantage HDFC Gilt Fund- Short term Plan. HDFC Income Fund. HDFC Multiple Yield Fund. HDFC Short term Plan. HDFC Floating rate Income Plan- Short term Plan. HDFC MF Monthly Income Plan- Long term Plan. HDFC High Interest Fund. HDFC Gilt Fund- Long term Plan.

HDFC Quarterly Income Fund HDFC Fixed Maturity Fund

MEASURING AND EVALUATING PERFORMANCE Every investor investing in the mutual funds is driven by the motto of either wealth creation or wealth increment or both. Therefore it’s very 36

necessary to continuously evaluate the funds’ performance with the help of factsheets and newsletters, websites, newspapers and professional advisors. If the investors ignore the evaluation of funds’ performance then he can loose hold of it any time. In this everchanging industry, he can face any of the following problems: – – – – – Variation in the funds’ performance due to change in its management/ objective. The funds’ performance can slip in comparison to similar funds. There may be an increase in the various costs associated with the fund. The funds’ ratings may go down in the various lists published by independent rating agencies. It can merge into another fund or could be acquired by another fund house. Performance measures Equity funds- The performance of equity funds can be measured on the basis of: NAV Growth, Total Return; Total Return with Reinvestment at NAV, Annualized Returns and Distributions, Computing Total Return (Per Share Income and Expenses, Per Share Capital Changes, Ratios, Shares Outstanding), the Expense Ratio, Portfolio Turnover Rate, Fund Size, Transaction Costs, Cash Flow, Leverage. Debt fund- The performance of debt funds can be measured on the basis of: Peer Group Comparisons, The Income Ratio, Industry Exposures and Concentrations, NPAs, besides NAV Growth, Total Return and Expense Ratio.


Liquid funds- The performance of the highly volatile liquid funds can be measured on the basis of: Fund Yield, besides NAV Growth, Total Return and Expense Ratio. DISTRIBUTION CHANNELS Mutual funds posses a very strong distribution channel so that the ultimate customers doesn’t face any difficulty in the final procurement. The various parties involved in distribution of mutual funds are: Direct marketing by the AMCs: The forms could be obtained from the AMCs directly. The investors can approach to the AMCs for the forms. Some of the top AMCs of India are; Reliance ,Birla Sun life, Tata, SBI magnum, Kotak Mahindra, HDFC, IDFC, ICICI, LIC, AXIS etc. whereas foreign AMCs include: Standard Chartered, Franklin Templeton, Fidelity, JP Morgan, HSBC, DSP Merill Lynch, etc. Broker/ sub broker arrangements: The AMCs can simultaneously go for broker/sub-broker to popularize their funds. AMCs can enjoy the advantage of large network of these brokers and sub brokers. Individual agents, Banks, NBFC: Investors can procure the funds through individual agents, independent brokers, banks and several non- banking financial corporations too, whichever he finds convenient for him.


COSTS ASSOCIATED Expenses AMCs charge an annual fee, or expense ratio that covers administrative expenses, salaries, advertising expenses, brokerage fee, etc. A 1.5% expense ratio means the AMC charges Rs1.50 for every Rs100 in assets under management. A fund's expense ratio is typically to the size of the funds under management and not to the returns earned. Normally, the costs of running a fund grow slower than the growth in the fund size - so, the more assets in the fund, the lower should be its expense ratio Loads Entry Load/Front-End Load (0-2.25%) - It’s the commission charged at the time of buying the fund to cover the cost of selling, processing etc however the RBI has waived off this charge w.e.f 1 Aug 2009. Exit Load/Back- End Load (0.25-2.25%) -It is the commission or charged paid when an investor exits from a mutual fund; it is imposed to discourage withdrawals. It may reduce to zero with increase in holding period.


WHY HAS IT BECOME THE LARGEST AND ATTRACTIVE INVESTMENET INSTRUMENT? If we take a look at the recent scenario in the Indian financial market then we can find the market flooded with a variety of investment options which includes mutual funds, equities, fixed income bonds, corporate debentures, company fixed deposits, bank deposits, PPF, life insurance, gold, real estate etc. All these investment options could be judged on the basis of various parameters such as- return, safety convenience, volatility and liquidity. Measuring these investment options on the basis of the mentioned parameters, we get this in a tabular form: Return Equity Bonds Co. Debentures Co. FDs Bank Deposits PPF Life Insurance Gold Real Estate Mutual Funds High Moderate Moderate Moderate Low Moderate Low Moderate High High Safety Low High Moderate Low High High High High Moderate High Volatility High Moderate Moderate Low Low Low Low Moderate High Moderate Liquidity High Moderate Low Low High Moderate Low Moderate Low High Convenienc e Moderate High Low Moderate High High Moderate Gold Low High


We can very well see that mutual funds outperform every other investment option. On three parameters: – It scores high whereas it’s moderate at one. – Comparing it with the other options, we find that equities gives us high returns with high liquidity but its volatility too is high with low safety which doesn’t makes it favorite among persons who have low risk- appetite. – Even the convenience involved with investing in equities is just moderate. Now looking at bank deposits, it scores better than equities at all fronts but lags badly in the parameter of utmost important i.e.; it scores low on return , so it’s not an appropriate option for person who can afford to take risks for higher return. The other option offering high return is real estate but that even comes with high volatility and moderate safety level, even the liquidity and convenience involved are too low. Gold have always been a favorite among Indians but when we look at it as an investment option then it definitely doesn’t gives a very bright picture. Although it ensures high safety but the returns generated and liquidity are moderate. Similarly the other investment options are not at par with mutual funds and serve the needs of only a specific customer group. for this being: Mutual funds combine the advantage of each of the investment products Mutual fund is one such option which can invest in all other investment options. Its principle of diversification allows the investors to taste all the fruits in one plate. Just by investing in it, the investor can enjoy the best investment option as per the investment objective. 41 Straightforward, we can say that mutual fund emerges as a clear winner among all the options available. The reasons

Dispense the shortcomings of the other options Every other investment option has more or les some shortcomings. Such as if some are good at return then they are not safe, if some are safe then either they have low liquidity or low safety or both, likewise, there exists no single option which can fit to the need of everybody. But mutual funds have definitely sorted out this problem. Now everybody can choose their fund according to their investment objectives. Returns get adjusted for the market movements As the mutual funds are managed by experts so they are ready to switch to the profitable option along with the market movement. Suppose they predict that market is going to fall then they can sell some of their shares and book profit and can reinvest the amount again in money market instruments. Flexibility of invested amount Other then the above mentioned reasons, there exists one more reason which has established mutual funds as one of the largest financial intermediary and that is the flexibility that mutual funds offer regarding the investment amount. One can start investing in mutual funds with amount as low as Rs. 500 through SIPs and even Rs. 100 in some cases.





6.1 Introduction The project consisted of working mainly two Banking Channels HDFC Bank and DBS Bank in Pune, chosen for the survey. The reason for choosing these two particular Banking Channel is that they have lot of potential and were amongst the highest revenue generator for HDFC AMC. It consisted of three stages: Stage 1: Gathering data from the company and plan schedule to meet the concerned person. Stage 2: Collecting the data by survey method, on the basis of questionnaire. Stage 3: Analyzing and interpreting the primary data collected. 6.2 Review of Literature Study Literature given from the company was studied in order to gain an insight of past market and future prospects of mutual fund industry. Also the requirements of various concepts were understood using the help of internet and various other books. 6.3 Type of Research It is a framework or blueprint for conducting the marketing research project. The research design used here is Descriptive Research Design which is used for description of something. Here it is used to describe the characteristics of Existent and Potential Customers with respect to the services expected HDFC AMC. 6.4 Data Collection Technique The survey method of collecting data is based on the questioning of respondents. They were asked variety of questions regarding their behavior, intensions, attitude, awareness and motivations. In Structured data collection, a formal Questionnaire is prepared thus the process is direct. The questionnaire designed for this project consists of questions based on various parameters which a relationship manager 45

would consider before selling a mutual fund. Each question is based on different variables like investment decisions, selling decisions, company policies, serving issues etc. 6.5 Scope of the study The research was carried on in the Pune Region of Maharashtra. It is restricted to Pune where it has got its head office at Shivaji Nagar and operates or sells its products through a large network of Distribution Channels. I have visited people randomly while pitching for products and also existing customers of HDFC and DBS (Development Bank of Singapore). 6.6 Data sources Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by interacting with various people. The secondary data has been collected through various journals and websites and some special publications of HDFC AMC.

6.7 Sampling procedure The sample is selected in a random way, irrespective of them being investor or not or availing the services or not. It was collected through mails personal visits to the known persons, by formal and informal talks at HDFC Bank and DBS Bank and through filling up the questionnaire prepared. The data has been analyzed by using the measures of central tendencies like mean, median, mode. The group has been selected and the analysis has been done on the basis statistical tools available.

6.8 Sample size The sample sizes of my project is limited to 100 only and have got 46

questionnaires filled only with the ones who invest in various other and HDFC AMC’s however have taken different opinions as to why certain people or respondents are not Investing in the current Market Scenario.

6.9 Technique of analysis Percentage analysis was used to analyze the data collected. 6.10 Statistical tools used for Data presentation Data has been presented with the help of bar graph, pie charts, line graphs etc.

6.11 Limitations – – – – – size. Time limitation. Research has been done only at Pune. Some of the persons were not so responsive. Possibility of error in data collection. Possibility of error in analysis of data due to small sample


7. DATA ANALYSIS 7.1 Have you ever invested/ interested to invest in mutual funds? YES NO 100 0


Graph 7.1 DATA INTERPRETATION Analysis is carried on only for those respondents who are already Investing in Mutual Funds and the reasons for not Investing( Non Investors)
citied while filling or while interacting with the respondents were

• • • •

Lack of Knowledge about Mutual Funds. Enjoy Investing in other financial instruments. Its benefits are not that lucrative or better than other instruments. No trust over the schemes. 48

• • • •

No trust over the Fund manager or AMC. Current Market scenario. Complex KYC procedure. PAN Card a Mandate.

7.2 In which of the following type funds you have invested? Equity Debt Balanced ELSS Gilt 18 23 29 30 0

Graph 7.2 DATA INTERPRETATION 18% of the respondents have Invested in Equity Funds, 23% have invested in Debt Schemes while 29% and 30% have invested in Balanced and ELSS schemes respectively. FINDINGS Respondents in the Current market scenario have Invested mostly in 49

Balanced schemes which give leverage to their investments and have switched their investments to balances or debt schemes in the recession period because it helps them to accumulate more Units as the NAV’s are low. Respondents who have invested in Tax saving schemes have a Lock in period of 3 years so they still are continuing to invest in Recession period as it gives them leeway in terms of saving Tax over a period of time.


7.3 Preferred Investment Period? Less than 1 Year 1 to 3 years 3 to 5 years More than 5 years 2 42 41 15

Graph7.3 DATA INTERPRETATION 42% prefer to stay invested for a period of 1-3 years, while 41% for the period of 3-5 years and 15 % for more than 5 years and only 2% stay invested for less than a year. FINDINGS It was found out that most Respondents have either invested for a time spam of 1 to 3 years or more than 5 years. Investment period purely and solely depends on the Investment Objective and the Schemes thus chosen. Respondents who have invested in Equity diversified funds have invested for a time spam of 1-3 years and Debt schemes customer 51

usually invest for a period of 3 to 5 years and ELSS customers have to invest in a lock in period of 3 years so they opt for 3 year Investment strategy. 7.4 AMC in which money is Invested? Kotak Reliance HDFC SBI DSP Black Rock DSP M Lynch ICICI Religare IDFC 6 8 36 16 5 6 15 6 2

Graph 7.4 DATA INTERPRETATION 36% have Invested with HDFC AMC, 16% with SBI and 15% with ICICI Securities, 8% have invested with Reliance AMC and the rest 6%, 5%, 6% and 2% have invested with other AMC’s such as DSP, Kotak, Religare, IDFC etc.


FINDINGS It was found out that Respondents have not invested in a particular AMC or their Portfolio is managed by single AMC. They have simultaneously invested in two AMC’s and the ones which are popular are HDFC and ICICI and the others have got place in the reckoning.


7.5 Which according to you are the factors important while investing in Mutual Funds? Risk factor Returns Tax savings Performance if the particular Fund NAV AMC Safety Ratings of a particular fund Portfolio of the Fund Profile of the Fund Manager 8 9 9 9 10 10 11 11 11 12


Graph 7.5 DATA INTERPRETATION 12% say that profile of Fund manager is an important element, 11% prefer safety, portfolio and Ratings of the fund to be an Important factor,while 10% say services by the AMC and the NAV value play an Important role and rest of them prefer investing to safe tax and look at returns over a short period of time. FINDINGS Different Investors have different needs for Investment purposes. However people if Investing in Equtiy Instruments would look for better returns in a short spam of time as it carries equal risk. And other factors which are considerate with the investement purposes would be Performance or Rating of a Particular Fund and Fund manager also plays a important role as generally people invest in funds keeping 55

in mind the profile of the Fund Manager and for Instance Prashant Jain who is a pass out of IIT and has done is MBA from IIM having over 14 years of experience in Equity research market has lot of funds in his Kitty to manage.

7.6 Preferred Channels through which Investments are made? Directly through AMC Through Distributor Broker/ Sub Broker 27 40 33


Graph 7.6

DATA INTERPRETATION 27% dodge entry load and prefer to invest directly through AMC, while 33% prefer to Invest through a Sub- broker who can manage their portfolio’s and 40% invest it through authorized Distributors.

FINDINGS It was found out that most Investors usually invest through Brokers or Distributors because they get the advantage of having statements on timely basis and also switching or redeeming of funds becomes an ease as they are just a phone call away. They can easily review they portfolio and seek Investment

recommendation in order to suffice their short term needs and also to manage their assets.


However all of this comes with a charge which is usually known as Commission charged in the form of Entry Load which is usually between 0-2.5% for retail customers and there are few who manage their own portfolio and invest directly through the AMC’s and the entry load or the commission charge is weaved off for those Investors.


7.7 Have you invested in the current Recession period?


38 62


Graph 7.7 DATA INTERPRETATION 62% say no that they rather prefer to stay out the stock markets during Recession and 38% want to enjoy the benefit of Rupee cost averaging that’s why they haven’t redeemed their Units. FINDINGS It was observed that people are not investing the current market scenario as it is hard of them to believe that the market is facing a U shaped recovery mode where in the positivity will be reflected in the Market over the period of time as per the new Changes and Amendments bought in by the new UPA Govt. However Existing customers have also redeemed or switched their funds as they lost a lot of money in the year 2008. However there are some Investors who are positive about the Market and have Switched to Balanced funds because that helps them fetch more units as the NAV is low and have Invested money in the NFO’s that were out in the market for e.g. Reliance Infrastructure fund and DSP Black Rock World Energy Fund.


7.8 In the recession period which type of funds are the best option? Equity Diversified Debt Balanced Tax Saving Schemes 61 4 8 60 28

Graph 7.8 DATA INTERPRETATION In recession period 60% of the respondents prefer to stay invested with Balanced schemes while 28% are with ELSS schemes and 8% have invested in Debt Schemes while only 4% have Invested in Equity schemes. FINDINGS It is observed that most of the Investors during the recession period have taken a step back in terms of Investments in Mutual Funds as the share market saw an Impeccable down fall last year and had lost a lot of money last year. However what is more promising is the confidence amongst these Investors who are betting on an attitude that shows a sign of recovery for the market right now and have kept their fingers crossed in terms of Promises by the Congress. So either balanced schemes are the one’s for a safe bet right now or else tax saving schemes have always given investors a leeway under Section 80©. 62


7.9 Other Financial Instruments that are a safe bet right now? Bank FD’s NBFC’s PPF NSC’s ULIP 14 17 19 21 29


Graph 7.9 DATA INTERPRETATION 14% prefer to park their money with FD’s, 29% prefer to stay connected with ULIP’s as that gives them benefit of saving tax and 21% prefer to invest in NSC’s and 19% and 17% prefer to Invest with PPF’s and NBFC’s. FINDINGS Bank FD’s are one of the means for the different banks to get NTB’s and helps investors to park their money for a spam of 1-2 years in attractive FD’s thus offered. However after maturity is the main Game Plan through which Banks anticipate to invest the same in the Equity markets after they take a respectable position. It scores better than equities at all fronts but lags badly in the parameter of utmost important i.e.; it scores low on returns. ULIP schemes have sustainably taken a peek in the recession period where in they not only provide leverage to one’s investment in debt and equity market but also insurance for a life time.





At the survey conducted upon approx 100 people, most of them are already mutual fund investors or are interested to invest in future and the remaining are not interested in it. So there is enough scope for the advisors to convert those leads into potential investors through their offerings and services.

Now, when people were asked about the reason for not investing in mutual funds, then most of the people held their ignorance responsible for that. They lacked knowledge and information about the mutual funds. Whereas just few people enjoyed investing in other option. For few people, the benefits arousing from these investments were not enough to drive them for investment in MFs and few of them expressed no trust over the fund managers’ decision. Again the financial advisors can tap upon these people by educating them about mutual funds.

Out of the people who already have invested in mutual funds/ are interested to invest, only few have sound knowledge of MFs, and few have a sound knowledge of the mutual funds and its operations and thereby prefer to Invest it directly through the AMC’s and maintain their own Portfolio’s. However it is important to realize that a lot of investors are aware of the schemes and the operations of the Indian Market but prefer a Financial Advisor to cater to their Investment Objectives as they are well versed with the markets and are qualified advisors to recommend them









responding to the portfolio managed.

When asked about the most alluring feature of MFs during the current market conditions, most of them opted for diversification, followed by reduction in risk, helps in achieving long term goals and helps in achieving long term goals respectively and also helps them in terms of Tax saving benefits.

The other financial instruments that are a lucrative option for the Investors in the recession are ULIP plans, NSC’s, Bank FD’s however are not in the same reckoning of Mutual funds in terms of returns.


The most vital problem spotted is of ignorance. Investors should be made aware of the benefits and the current status of Economy. Nobody will invest until and unless he is fully convinced of the future of one’s Investments. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing.

Mutual funds offer a lot of benefit which no other single option could offer. But most of the people are not even aware of what actually a mutual fund is? They only see it as just another investment option. So the advisors should try to change their mindsets. The advisors should target for more and more young investors. Young investors as well as persons at the height of their career would like to go for advisors due to lack of expertise and time.

The advisors may try to highlight some of the value added benefits of MFs such as tax benefit, rupee cost averaging, and systematic transfer plan, rebalancing etc. These benefits are not offered by other options single handedly. So these are enough to 70

drive the investors towards mutual funds. Investors could also try to increase the spectrum of services offered. • Now the most important reason for not availing the services of Banking Channel; was being expensive. The advisors should try to charge a nominal fee at the beginning. But if not possible then they could go for offering more services and benefits at the existing rate. They should also maintain their Banking Channels should try to attract more and more persons and turn them into investors and finally their clients. • With the globalize economy and immense competition among countries for faster development of their respective economies, the significance of Mutual Funds and Foreign investment has taken manifold. With a buoyant vibrant and experienced stock market, India today is looking ahead to surpass China in terms of foreign Investment and growth prospects. Stock exchange being the barometer of the economy plays a vital role in showcasing growth of an economy and luring investment. • While studying the role of Mutual fund and FIIs in Stock Market, I discussed with a few persons who are into stock broking business. And the information they have provided shows that though the investment and participation of domestic investors are rising, still, they have not been able to prove themselves to be as influential as mutual funds and FIIs. • Importance and the role of Mutual funds and FIIs play in the Indian stock market can be seen from the fact that the recent surge in Sensex and NIFTY is attributed to the active Participation of FIIs in the Stock Market. Despite being aware of the Asian economic crisis where FIIs role was of a major concern, the importance of foreign capital in the development of economy can not be undermined in anyway so the people more emphasis on mutual fund to earn more return increasing our benefit . 71



Exhibit 1 QUESTIONNAIRE 1. Have you ever invested in mutual funds? a. Yes b. No

2. In which of the following type funds you have invested? a. EQUITY b. DEBT c. BALANCED d. GILT 73


3. What is your preferred investment period? a. Less than 1 yr b. 1 yr—3yr c. 3 yr—5yr d. more than 5 yr

4. Which AMC you have invested in? Please specify

5. Rank according to importance the factor you look for while investing in MF (1 being the most important and 5 the least important)
a. Risk factor b. Return c. Tax saving d. Performance e. NAV f.


g. Safety h. Ratings of the fund i. j.

portfolio of fund Profile of the Fund manager


6. How have you invested in MF? a. Directly b. Through Distributor
c. Through Sub-brokers/Brokers.

7. Have you invested or would you like to invest in the current period? a. Yes b. No

8. If yes then rank in 1-5 (with 1 being best and 4 being worst) of the following options
a. Mutual funds are no doubt the best investment option in

spite of the current economic slowdown
b. I am getting more units as NAV is low, so I will definitely

earn profit when market goes up.
c. Mutual fund are still giving better return for longer

period( 5yrs) than other investment option
d. Despite all the slowdown, I will prefer MF as it gives me tax


9. If yes in which kind of fund you will prefer to invest now? a. Equity b. Debt c. Balanced d. Tax savers 75

e. ETFs


Which is your preferred mood of investment in mutual fund? a. Lump sum Plan) b. SIP (Systematic Investment

11. Rank the option which u think best describe your views ( 1 being the best & 5 being worst)

I will better invest in FDs of Banks in this condition as it is the safest I will invest in FDs of NBFC as they give better interest I will go for PPF I will invest in NSC I will put my money in ULIPs because it will give me insurance cover.

ii. iii. iv. v.

Bibliography Websites www.the-finapolis.com www.mutualfundsindia.com www.valueresearchonline.com www.moneycontrol.com www.morningstar.com www.yahoofinance.com www.theeconomictimes.com www.rediffmoney.com www.bseindia.com www.nseindia.com www.investopedia.com Journals & other references HDFC AMC manual The Economic Times 76

Business Standard The Telegraph Business India Fact sheet and statements of various fund houses


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