A

PROJECT REPORT

ON

“ A STUDY OF CUSTOMER PREFERENCE AND SATISFACTION LEVEL

TOWADS MUTUAL FUND IN HSBC BANK AT PATNA”
For

HSBC Mutual Fund , Patna

Submitted by
NISHANT KUMAR

UNDER THE GUIDANCE OF

Gaurav Dixit

In partial fulfillment of the requirement for the degree

Of

MASTER IN MARKETING MANAGEMENT

Submitted to
UNIVERSITY OF PUNE

SINGHAD INSTITUTE OF MANAGEMENT AND COMPUTER APPLICATION

Pune Maharashtra

2010-12

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 DECLARATION

I, the undersigned, hereby declare that the Project Report entitled “a study of customer
preference and satisfaction level towards mutual fund in HSBC bank at Patna” written and
submitted by me to the University of Pune, Pune in partial fulfilment of the requirements for
the award of degree of Master in Marketing Management under the guidance of Master in
Marketing Management is my original work and the conclusions drawn therein are based on
the material collected by myself.

Place : Pune Nishant kumar

Date: Research Student

GUIDE’S CERTIFICATE

CERTIFICATE

This is to certify that the Project Report entitled “a study of customer preference and
satisfaction level towards Mutual Fund in HSBC bank in Patna” which is being submitted
herewith for the award of the degree of Master in Marketing Management of University of
Pune, Pune is the result of the original research work completed by Mr Nishant Kumar under
my supervision and guidance and to the best of my knowledge and belief the work embodied
in this Project Report has not formed earlier the basis for the award of any degree or similar
title of this or any other University or examining body.

Director Project Guide

Mr. NIKHIL SHARMA

Dr. Apoorva Palkar

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 ACKNOWLEDGEMENTS

It gives me great pleasure to submit this project to the University of Pune as a part of curriculum
of my MMM course. I take this opportunity with great pleasure to present before you this project
on “A STUDY OF CUSTOMER PREFERENCE AND SATISFACTION LEVL
TOWARDS MUTUAL FUND IN HSBC BANK AT PATNA" which is a result of co-
operation, hard work and good wishes of many people. The most pleasant part of any project is
to express the gratitude towards all those who have contributed to the success of the project.

First of all I would like to thank Mr. Nikhil Sharma for his valuable guidance & kind co-
operation during the project and also, I would like to thanks Mr.Sarvesh Kumar for his kind
of co-operation. I would like to thank to Prof.Gaurav Dixit who has been my mentor for this
project. And It was only through their excellence assistance and good suggestions that I have
been able to complete this project.

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 Content

Chapter Page
No. Particulars No.
1. Acknowledgment

2. List of tables

3. List of figures

4. Introduction 5
1.1 History of Mutual Fund industry 5
1.2 Introduction of Mutual Fund 13
 Benefits of Mutual Fund
 Behind the Mutual Fund
 Principle of Mutual fund
 Classification of Mutual Fund
 Importance of Mutual Fund
1.3 Need of the study 27
1.4 Objective of the study 28
1.5 Scope of the study 29
5. Profile of the HSBC Mutual Fund 31
2.1 History of HSBC Mutual Fund 31
2.2 HSBC Mutual Fund in India 33
2.3 Overview of HSBC Mutual Fund 33
6. Research Methodology 36
7. Analysis and interpretation 40-59

8. Findings 61
9. Limitations 62

10. Suggestions 62

11. Bibliography 64
12. References 65

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 13. Annexure (Graphs, tables etc) 66

LIST OF TABLE

LIST OF TABLE

Table No. Title of the Table Page No.

Table No1.1 Age of the investors

Table No 1.2 Profession of the investors

Table No 1.3 Income of the investors

Table No 1.4 Amount invest in Mutual Fund

Table No 1.5 Preference of selecting Mutual Fund Company

Table No 1.6 Types of scheme selected by investors

Table No 1.7 Investment in different type of fund

Table No 1.8 Investors knowledge towards Mutual Fund

Table No 1.9 Investment Analysis

Table No 1.10 Portfolio Analysis

Table No 1.12 Preference of investors towards SIP

Table No 1.13 Preferred of option by investors for the

investment

Table No 1.14 Ranking the objective of the scheme

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 Table No 1.15 Level of Satisfaction

Table No 1.16

LIST OF FIGURES

LIST OF FIGGURES

Figure No. Title of the Figure Page No.

Figure No 1.1 Age of the investors

Figure No1.2 Profession of the investors

Figure No1.3 Income of the investors

Figure No1.4 Amount invest in Mutual Fund

Figure No1.5 Preference of selecting Mutual Fund Company

Figure No1.6 Types of scheme selected by investors

Figure No1.7 Investment in different type of fund

Figure No1.8 Investors knowledge towards Mutual Fund

Figure No1.9 Investment Analysis

Figure No1.10 Portfolio Analysis

Figure No1.12 Preference of investors towards SIP

Figure No1.13 Preferred of option by investors for the

investment

Figure No1.14 Ranking the objective of the scheme

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Figure No1.15 Level of Satisfaction

Figure No1.16

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 CHAPTER I
INTRODUCTION
1.1 HISTORY OF THE MUTUAL FUND INDUSTRY

MUTUAL FUNDS INDUSTRY IN INDIA

The origin of mutual fund industry in India is with the introduction of the concept of mutual fund
by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987
when non-UTI players entered the industry. In the past decade, Indian mutual fund industry had
seen a dramatic improvement, both quality wise as well as quantity wise. Before, the monopoly
of the market had seen an ending phase, the Assets Under Management (AUM) was Rs. 67bn.
The private sector entry to the fund family rose the AUM to Rs. 470 bn in March 1993 and till
April 2004, it reached the height of 1,540 bn.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is
less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the
Indian banking industry.

The mutual fund industry is a lot like the film star of the finance business. Though it is perhaps
the smallest segment of the industry, it is also the most glamorous – in that it is a young industry
where there are changes in the rules of the game every day, and there are constant shifts and
upheavals. The mutual fund is structured around a fairly simple concept, the mitigation of risk
through the spreading of investments across multiple entities, which is achieved by the pooling
of a number of small investments into a large bucket. Yet it has been the subject of perhaps the
most elaborate and prolonged regulatory effort in the history of the country.

The main reason of its poor growth is that the mutual fund industry in India is new in the
country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it

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is the prime responsibility of all mutual fund companies, to market the product correctly abreast
of selling.

Mutual funds are an excellent way to invest in stocks, bonds and other securities. They are a
good choice of investment because:

 They are managed by professional money managers, so most of the investment research
is done for you. (Most investors don’t have the time or know-how to do all the necessary
research.)
 You diversify your investment risk by owning shares in a mutual fund, instead of buying
individual stocks or bonds directly.
 Transaction costs are often lower than what you would pay if you invested in individual
securities (the mutual fund buys and sells large amounts of securities at a time).For those
who are not adept at understanding the stock market, the task of generating superior
returns at similar levels of risk is arduous to say the least. This is where Mutual Funds
come into picture.

Mutual Funds are essentially investment vehicles where people with similar investment objective
come together to pool their money and then invest accordingly. Each unit of any scheme
represents the proportion of pool owned by the unit holder (investor). Appreciation or reduction
in value of investments is reflected in net asset value (NAV) of the concerned scheme, which is
declared by the fund from time to time. Mutual fund schemes are managed by respective Asset
Management Companies (AMC). Different business groups/ financial institutions/ banks have
sponsored these AMCs, either alone or in collaboration with reputed international firms. Several
international funds like Alliance and Templeton are also operating independently in India. Many
more international Mutual Fund giants are expected to come into Indian markets in the near
future.

The Evolution

The formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in
the year 1963. The primary objective at that time was to attract the small investors and it was
made possible through the collective efforts of the Government of India and the Reserve Bank of

9
India. The history of mutual fund industry in India can be better understood divided into
following phases:

Phase 1. Establishment and Growth of Unit Trust of India - 1964-87

Unit Trust of India enjoyed complete monopoly when it was established in the year 1963 by an
act of Parliament. UTI was set up by the Reserve Bank of India and it continued to operate under
the regulatory control of the RBI until the two were de-linked in 1978 and the entire control was
transferred in the hands of Industrial Development Bank of India (IDBI). UTI launched its first
scheme in 1964, named as Unit Scheme 1964 (US-64), which attracted the largest number of
investors in any single investment scheme over the years.

UTI launched more innovative schemes in 1970s and 80s to suit the needs of different investors.
It launched ULIP in 1971, six more schemes between 1981-84, Children's Gift Growth Fund and
India Fund (India's first offshore fund) in 1986, Mastershare (Inida's first equity diversified
scheme) in 1987 and Monthly Income Schemes (offering assured returns) during 1990s. By the
end of 1987, UTI's assets under management grew ten times to Rs 6700 crores.

Phase II. Entry of Public Sector Funds - 1987-1993

The Indian mutual fund industry witnessed a number of public sector players entering the market
in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of India became the
first non-UTI mutual fund in India. SBI Mutual Fund was later followed by Canbank Mutual
Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual
Fund and PNB Mutual Fund. By 1993, the assets under management of the industry increased
seven times to Rs. 47,004 crores. However, UTI remained to be the leader with about 80%
market share.

1992-93 Amount Assets Under Mobilization as % of

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 Mobilized Management gross Domestic Savings

UTI 11,057 38,247 5.2%

Public Sector 1,964 8,757 0.9%

Total 13,021 47,004 6.1%

Phase III. Emergence of Private Sector Funds - 1993-96

The permission given to private sector funds including foreign fund management companies
(most of them entering through joint ventures with Indian promoters) to enter the mutal fund
industry in 1993, provided a wide range of choice to investors and more competition in the
industry. Private funds introduced innovative products, investment techniques and investor-
servicing technology. By 1994-95, about 11 private sector funds had launched their schemes.

Phase IV. Growth and SEBI Regulation - 1996-2004

The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after the
year 1996.The mobilisation of funds and the number of players operating in the industry reached
new heights as investors started showing more interest in mutual funds.

Investors' interests were safeguarded by SEBI and the Government offered tax benefits to
the investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was
introduced by SEBI that set uniform standards for all mutual funds in India. The Union Budget
in 1999 exempted all dividend incomes in the hands of investors from income tax. Various
Investor Awareness Programmes were launched during this phase, both by SEBI and AMFI,
with an objective to educate investors and make them informed about the mutual fund industry.

In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal status as a
trust formed by an Act of Parliament. The primary objective behind this was to bring all mutual
fund players on the same level.

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UTI was re-organised into two parts:

1. The Specified Undertaking,

2. The UTI Mutual Fund

Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past schemes
(like US-64,Assured Return Schemes) are being gradually wound up. However, UTI Mutual
Fund is still the largest player in the industry.

In 1999, there was a significant growth in mobilisation of funds from investors and assets under
management which is supported by the following data:

GROSS FUND MOBILISATION (RS. CRORES)

PUBLIC PRIVATE
FROM TO UTI TOTAL
SECTOR SECTOR

01-April-98 31-March-99 11,679 1,732 7,966 21,377

01-April-99 31-March-00 13,536 4,039 42,173 59,748

01-April-00 31-March-01 12,413 6,192 74,352 92,957

01-April-01 31-March-02 4,643 13,613 1,46,267 1,64,523

01-April-02 31-Jan-03 5,505 22,923 2,20,551 2,48,979

01-Feb.-03 31-March-03 * 7,259* 58,435 65,694

01-April-03 31-March-04 - 68,558 5,21,632 5,90,190

01-April-04 31-March-05 - 1,03,246 7,36,416 8,39,662

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 01-April-05 31-March-06 - 1,83,446 9,14,712 10,98,158

ASSETS UNDER MANAGEMENT (RS. CRORES)

AS ON UTI PUBLIC SECTOR PRIVATE SECTOR TOTAL

31-March-99 53,320 8,292 6,860 68,472

GROWTH IN ASSETS UNDER MANAGEMENT

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Phase V. Growth and Consolidation - 2004 Onwards

The industry has also witnessed several mergers and acquisitions recently, examples of which are
acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund and
PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international mutual fund
players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There were 29
funds as at the end of March 2006. This is a continuing phase of growth of the industry through
consolidation and entry of new international and private sector players.

Indian mutual fund industry reached Rs 1,50,537 crore by March 2004. It is estimated that by
2010 March-end, the total assets of all scheduled commercial banks should be Rs 40,90,000
crore. The annual composite rate of growth is expected 13.4% during the rest of the decade. In
the last 5 years there is an annual growth rate of 9%. According to the current growth rate, by
year 2010, Mutual fund India assets will be double

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 1.2 INTRODUCTION OF MUTUAL FUND

Concept

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

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 Mutual Fund Operation Flow Chart

The simplest mutual funds definition is that ‘Mutual funds are investment product that
operates on the principle of ‘strength in numbers’. They collect money from a large group
of investors. Pull it together and invest in a various securities, in line with their objective’.
Individuals are then able to invest small amounts of money into the fund for making a reasonable
profit. There are an incredibly large number of mutual funds. While some mutual funds aim to
produce short term, high yield profits, others look for the long term profit.

Mutual funds are seemingly the easiest and least stressful way to invest in the stock
market. Quite a large amount of new money has been put into mutual funds during the past few
years.

But that is what any successful investor attempts to do, and anyone with a similar approach can
be expected to make the same earnings.

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The benefits on offer are many with good post-tax returns and reasonable safety being the
hallmark that we normally associate with them. Some of the other major benefits of investing in
them are:

Benefits of Mutual Fund.

 Number of available options

Mutual funds invest according to the underlying investment objective as specified at the
time of launching a scheme. So, we have equity funds, debt funds, sector funds ,growth funds,
income funds and many others that cater to the different needs of the investor. The availability of
these options makes them a good option. While equity funds can be as risky as the stock markets
themselves, debt funds offer the kind of security that is aimed for at the time of making
investments. Money market funds offer the liquidity that is desired by big investors who wish to

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park surplus funds for very short-term periods. Balance Funds cater to the investors having an
appetite for risk greater than the debt funds but less than the equity funds.

The only pertinent factor here is that the fund has to be selected keeping the risk profile
of the investor in mind because the products listed above have different risks associated with
them.

So, while equity funds are a good bet for a long term, they may not find favour with
corporates or High Net worth Individuals (HNIs) who have short-term needs.

 Diversification

Investments are spread across a wide cross-section of industries and sectors and so the
risk is reduced. Diversification reduces the risk because all stocks don’t move in the same
direction at the same time. One can achieve this diversification through a Mutual Fund with far
less money than one can on his own.

 Professional Management

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

 Potential of Returns

Returns in the mutual funds are generally better than any other option in any other avenue
over a reasonable period of time. People can pick their investment horizon and stay put in the
chosen fund for the duration. Equity funds can outperform most other investments over long
periods by placing long-term calls on fundamentally good stocks. The debt funds too will
outperform other options such as banks. Though they are affected by the interest rate risk in
general, the returns generated are more as they pick securities with different duration that have
different yields and so are able to increase the overall returns from the portfolio.

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  Liquidity

Fixed deposits with companies or in banks are usually not withdrawn premature because
there is a penal clause attached to it. The investors can withdraw or redeem money at the Net
Asset Value related prices in the open-end schemes. In closed-end schemes, the units can be
transacted at the prevailing market price on a stock exchange. Mutual funds also provide the
facility of direct repurchase at NAV related prices.

The market prices of these schemes are dependent on the NAVs of funds and may trade
at more than NAV (known as Premium) or less than NAV (known as Discount) depending on the
expected future trend of NAV which in turn is linked to general market conditions. Bullish
market may result in schemes trading at Premium while in bearish markets the funds usually
trade at Discount. This means that the money can be withdrawn anytime, without much reduction
in yield. Some mutual funds however, charge exit loads for withdrawal within a period linked to

 Well Regulated

Unlike the company fixed deposits, where there is little control with the investment being
considered as unsecured debt from the legal point of view, the Mutual Fund industry is very well
regulated. All investments have to be accounted for, decisions judiciously taken. SEBI acts as a
true watchdog in this case and can impose penalties on the AMCs at fault. The regulations,
designed to protect the investors’ interests are also implemented effectively.

 Transparency

Being under a regulatory framework, mutual funds have to disclose their holdings,
investment pattern and all the information that can be considered as material, before all investors.
This means that the investment strategy, outlooks of the market and scheme related details are
disclosed with reasonable frequency to ensure that transparency exists in the system. This is
unlike any other investment option in India where the investor knows nothing as nothing is
disclosed.

 Flexible, Affordable and a Low Cost affair

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 Mutual Funds offer a relatively less expensive way to invest when compared to other
avenues such as capital market operations. The fee in terms of brokerages, custodial fees and
other management fees are substantially lower than other options and are directly linked to the
performance of the scheme.

Investment in mutual funds also offers a lot of flexibility with features such as regular
investment plans, regular withdrawal plans and dividend reinvestment plans enabling systematic
investment or withdrawal of funds. Even the investors, who could otherwise not enter stock
markets with low investible funds, can benefit from a portfolio comprising of high-priced stocks
because they are purchased from pooled funds.

It all depends really on the overall investment climate and the sectors in which funds are
flowing in. Diversification is definitely a good approach when it comes to successful investing
by a reasonable investor. But with mutual funds, there is that the controllers may over-diversify.

Diversification minimizes the inherent risks of stock trading by spreading out the capital
over many stocks. But over-diversification is again a bad thing.

Volatility is a measurement of the change in price (fluctuations) over a given time period.
It is usually expressed as a percentage and computed as the annualized standard deviation of the
percentage change in daily price.

The more volatile a stock or market, the more money an investor can gain (or lose!) in a
short time. In referring to mutual funds, volatility (Standard Deviation) is the measure of the
degree to which a fund's return varies on a day-to-day or month-to-month basis.

Tax benefits on Mutual Funds

1) 100% Income Tax exemption on all Mutual Fund dividends

2) Equity Funds - Short term capital gains is taxed at 15%. Long term capital gains is not
applicable.

3)Debt Funds - Short term capital gains is taxed as per the slab rates applicable to you. Long
term capital gains tax to be lower of - 10% on the capital gains without factoring indexation
benefit and 20% on the capital gains after factoring indexation benefit.

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3) Open-end funds with equity exposure of more than 65% (Revised from 50% to 65% in Budget
2006) are exempt from the payment of dividend tax for a period of 3 years from 1999-2000.

The researcher has made a study of the preference and satisfaction level of customer towards
Mutual Funds and has analyzed the relevance of different publications and information provided
to investors. The research was conducted with 100 samples and was restricted to the town
‘Patna’ city which is in the Bihar.

Behind Mutual Fund.

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A mutual fund is the sum total of many parts, each of which is designed to perform a specific
function. Sebi, the market regulator, has clearly outlined the role and responsibility of each
entity.

Mutual
Fund

AMC Trustees

Custodian Sponsors Resistrar

 Sponsor
What a promoter is to accompany ,a sponsor is to mutual fund. The sponsor initiate the idea to
set up a mutual fund. It could be a financial services company, a bank or a financial institution. It
could do it alone or through a joint venture. In order to run a mutual fund in India, the sponsor
has obtain a license from Sebi. For this it h to satisfied ascertain condition such as capital and
profit, track record (at least five year financial service), default free dealing and general
reputation for fairness.

 Assts Management Company(AMC)

An AMC is the legal entity formed by sponsor to run a mutual fund .it is the AMC that employ
fund manager and analysts, and other personal. It handle the all operational matters of a mutual
fund from launching scheme to managing them to interacting with investors.

 Trustees

Trustees are as like a internal regulators in mutual fund, and their job is to protect the interest of
unit holders .Trustees are appoint by sponsors, and can be either individual or corporate body . in
order to insure that they are impartial and fair ,sebi rule mandate that at least the two third party

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of the trustees be independent, that is not have any association with the sponsor.
 Custodian
A custodian handles the investment back office of a mutual fund. Its responsibility include
receipt and delivery of securities, collation of income ,distribution of dividend and segregation of
assets of scheme.

For ex JP Morgan is the custodian of HSBC Mutual fund

 Registrar

Registrar also known as transfer agent, handle all investor related service ,this include issuing
and redeeming unit ,sending fact sheet and annual report.

Principle of Mutual Fund

.
 Open- ended/Close-ended schemes

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1) Open-Ended schemes
At any time during the scheme period, investors can enter and exit the fund scheme (by buying/
selling fund units) at its NAV (net of any load charge). Increasingly, AMCs are issuing mostly
open-ended funds.

2) Close-Ended schemes
Redemption can take place only after the period of the scheme is over. However, close-ended
funds are listed on the stock exchanges and investors can buy/ sell units in the secondary market
(there is no load).

 Unit

A unit is the currency of a fund. What share is to a company ,a unit is to be a found .Mutual
Fund issue ‘units’ against investor’s investment.

 Net Asset Value or NAV

NAV is the total asset value (net of expenses) per unit of the fund and is calculated by the AMC
at the end of every business day.

 How is NAV calculated?

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.

 Expense Ratio
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.

 Load

Some AMCs have sales charges, or loads, on their funds (entry load and/or exit load) to
compensate for distribution costs. Funds that can be purchased without a sales charge are called
no-load funds

 Redemption
Investors can sell their funds, partly or fully ,whenever you want. Although it is a sle from any point of
time

24
Classification of Mutual Fund/scheme.

 Open-ended fund/scheme

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An open-ended fund or scheme is one that is available for subscription and repurchase on a
continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently
buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis.
The key feature of open-end schemes is liquidity.

 Close-ended fund/scheme
A close-ended fund or scheme has a stipulated maturity period eg five and seven years. The fund
is open for subscription only during a specified period at the time of launch of the scheme.
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. In order to
provide an exit route to the investors, 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 ie either repurchase
facility or through listing on stock exchanges. These mutual funds schemes disclose NAV
generally on weekly basis.

Categorization by investment objective

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

 Growth/Equity oriented schemes

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

 Income/Debt oriented scheme

The aim of income funds is to provide regular and steady income to investors. Such schemes
generally invest in fixed income securities such as bonds, corporate debentures, Government
securities and money market instruments. Such funds are less risky compared to equity schemes.

26
These funds are not affected because of fluctuations in equity markets. However, opportunities
of capital appreciation are also limited in such funds. The NAVs of such funds are affected
because of change in interest rates in the country. If the interest rates fall, NAVs of such funds
are likely to increase in the short run and vice versa. However, long term investors may not
bother about these fluctuations.

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

 Money Market or Liquid fund

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

 Gilt fund
These funds invest exclusively in government securities. Government securities have no default
risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic
factors as is the case with income or debt oriented schemes.

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

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  Sector specific funds/schemes
These are the funds/schemes which invest in the securities of only those sectors or industries as
specified in the offer documents. Eg 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. Investors need to keep a watch on the performance of those
sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.

 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. Eg 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 fund

A load fund is one that charges a percentage of NAV for exit. That is, each time one sells units in
the fund, a charge will be payable. This charge is used by the mutual fund for marketing and
distribution expenses.
A no-load fund is one that does not charge for exit. It means the investors can exit the
fund/scheme at no additional charges are payable on sale of units.
In accordance with the SEBI circular no. SEBI/IMD/CIR No.4/168230/09 dated June 30, 2009,
no entry load will be charged for purchase / additional purchase / switch-in accepted by the Fund
with effect from August 1, 2009. Similarly, no entry load will be charged with respect to
applications for registrations under Systematic Investment Plan/ Systematic Transfer Plan /
Systematic Investment Plan Plus accepted by the Fund with effect from August 1, 2009.

 Assured return scheme

Assured return schemes are those schemes that assure a specific return to the unitholders
irrespective of performance of the scheme.
A scheme cannot promise returns unless such returns are fully guaranteed by the sponsor or
AMC and this is required to be disclosed in the offer document.

28
Investors should carefully read the offer document whether return is assured for the entire period
of the scheme or only for a certain period. Some schemes assure returns one year at a time and
they review and change it at the beginning of the next year.

Importance of Mutual Funds.

 Channelizing saving for investment.

 Offering wide portfolio.
 Providing better yield.

29
 Rendering experience investment at low cost.
 Providing research service.
 Offering tax benefits.
 Providing greater affordability.
 Simplified record keeping.
 Promoting industrials development.

30
NEED OF THE STUDY

 TO study the investors intention with regard to the product in Mutual Fund and their
feature.
 To study awareness level of customer.
 To study preference and satisfaction level of investors.
 To apprehend Mutual Fund in the market.
 To analyze how it benefited to investors with the awareness that is increasing day by day
regarding investing in secondary market and speculation, the comfort and flexibility the
customers seeking, there is a definite requirement to study, in the fast growing
competitive market scenario it is a always required to have an idea of change that are
taking place in the market from time to time. Without which one cannot serve their
customer properly.

31
1.2 OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVES:

 Find out the preference of customers towards mutual Funds.

 Find out the satisfaction level of customer towards HSBC mutual Fund\
 Find out the investor’s knowledge towards mutual fund.
 Find out the proportion of various schemes and fund invested in HSBC mutual
Funds.

SECONDARY OBJECTIVE:

 Find out the main objective of investors, for which they invest their money in
mutual fund.

32
1.3 SCOPE OF THE STUDY

The research study undertaken does not probe too much about whether the
respondents have a very fine insight into mutual funds. The research involves only a general
study related to the preference and satisfaction level of investors towards mutual funds. The
research would reveal results regarding the preference and satisfaction level of various investors
towards mutual funds and thus in turn helps the organization to identify the preference and
satisfaction level of various investors and to improve the marketing of mutual funds.

The study has helped the researcher to gain real time experience by interacting with the
investors and has helped to analyse “The preference and satisfaction level of the investors
towards Mutual Funds”.

The study will help the concern to work on the areas of importance for further planning.

The study has been done with a motive to change the preference of the investors and also
satisfy the investors and help them gain more knowledge on their investment.

33
 Chapter 2
Profile of the Organization

2.1Company history - A global pedigree

HSBC Global Asset Management draws upon a long history of serving clients by the
HSBC Group, tracing its roots back to the foundation of the Hongkong and Shanghai Banking
Corporation in 1865. The HSBC Group has identified asset management as a key constituent of
the HSBC Group’s wealth management strategy and at HSBC Global Asset Management, we
have been dedicated to managing assets on behalf of our clients for more than 30 years.

 In 1994 the HSBC Group recognised the increasingly global nature of financial markets
would create the need for a credible global asset management organisation to ensure
delivery of the best possible solutions for clients. In response, the separate regional asset
management businesses of HSBC were unified to create a single powerful investment
manager aimed at delivering global investment capabilities combined with significant
local expertise.

 In 2001, following the integration of CCF and its investment businesses into HSBC, a
new global strategy was launched for asset management. The strategy aimed to create a
core proprietary global investment management business – HSBC Asset Management,
operating alongside a series of specialist investment businesses, namely: Sinopia for
quantitative and structured products, HSBC Specialist Investments for property and
infrastructure investments, HSBC Multimanager for best-in-class ‘open architecture’
investments and HSBC Alternative Investments for single-manager hedge fund strategies.

 In 2004, following a strong period of growth in HSBC’s investment businesses, a new

strategy was announced for these businesses. The strategy was intended to position
HSBC for market leadership in providing investment solutions that meet client needs and
involved a reorganisation of HSBC’s investment businesses including HSBC Asset
Management and HSBC Investment Management, leading to the creation of HSBC
Investments.

 In 2008, HSBC Investments was renamed to HSBC Global Asset Management. The
name change was to more closely align it with Global Banking and Markets (the new
name for Corporate, Investment Banking and Markets).

34
A concise history
 1973 - HSBC forms Hong Kong-based Wardley as a wholly owned merchant
banking subsidiary
 1986 - The European arm of HSBC Asset Management is conceived with the
purchase of James Capel, a leading and well established international securities
company
 The addition of New York-based Marinvest establishes the US arm of HSBC Asset
Management
 1992 - Consolidation in Europe with the acquisition of the Midland Bank Group
 1994 - Regional companies are brought together under the name HSBC Asset
Management, a single investment manager offering global investment capability
combined with significant local expertise
 2000 - HSBC Group purchases CCF Bank, France - CCF Capital Management in
Paris joins HSBC Asset Management
 2001 - The market for asset management solutions has grown rapidly and investors’
requirements have become more sophisticated. In response to this, the asset
management business of HSBC was reorganised at the end of 2001 to provide a full
range of sophisticated services under the name Asset Management Services,
comprising the core business, HSBC Asset Management and several specialist
companies offering complementary investment management services
 In August, HSBC Asset Management completed its acquisition of China Securities
Investment Trust Corporation, Taiwan's premier asset management company
 HSBC Asset Management (India) Private Limited is incorporated in December 2001
 2002 - New investment and marketing office established in India. Cooperation with
HSBC Trinkaus Capital Management and its parent HSBC Trinkaus & Burkhardt
 HSBC Asset Management (India) Private Limited , the Investment Manager to
HSBC Mutual Fund launches its first four schemes in December 2002
 2003 - Integration of Bital's fund management business in Mexico following its
purchase by HSBC

35
 2004 - Integration and development of investment management activity in Bermuda
following the acquisition of Bank of Bermuda
 2004 - On 1 December HSBC announces a reorganisation of its investment
management businesses as part of a new strategy designed to drive further growth
 2005 - HSBC Asset Management is replaced by HSBC Investments and HSBC
Halbis Partners during 2005 (subject to local legal and regulatory approvals in all
jurisdictions)
 2006 - HSBC receives approval for joint venture fund management company in
China. HSBC Halbis Partners is renamed Halbis Capital Management
 2008 - HSBC Investments is renamed to HSBC Global Asset Management (subject
to local legal and regulatory approvals in all jurisdictions)

36
2.2HSBC Global Asset Management in India

HSBC Asset Management (India) Private Limited is the Investment Manager to HSBC
Mutual Fund, set up locally by the HSBC Group. HSBC Mutual Fund is the brand name adopted
by HSBC Asset Management (India) Private Limited. The business is working on ambitious
plans to position itself as one of the leading Private Sector Fund Managers in the Indian financial
market - one of the most promising markets in Asia. It also aims to expand its customer base by
extending its product range to include a wide variety of investment products and enhance its
reputation in India of being a provider of international quality investment products and service

2.3HSBC overview

The HSBC Group is one of the largest banking and financial services organisations in the
world. The Group has around 8,000 offices in 87 countries and territories in Europe, the
Asia-Pacific region, the Americas, the Middle East and Africa, serves over 100 million
customers and has assets of USD 2,418 billion as on 30 June 2010.

Important information

Mutual Fund HSBC Mutual Fund

Setup Date May-27-2002

Incorporation Date Dec-12-2001

Sponsor HSBC Securities and Capital Markets (India) Private

Limited

Trustee Board of Trustees, HSBC Mutual Fund

Chairman Naina Lal Kidwai

CEO / MD Puneet Chaddha

37
 CIO Tushar Pradhan

Compliance Officer Denny Thomas

Investor Service Officer N.A

Assets Managed Rs. 4855.36 crore (Jun-30-2011)

Other information

Auditors HSBC Asset Mgmt. (I) Pvt. Ltd - BSR &

Co., HSBC MF - Price Waterhouse

Custodians JP Morgan Chase Bank

Registrars Computer Age Management Services (P)
Ltd
Address 314, D N Road, Fort, Mumbai 400 001
E-mail hsbcmf@hsbc.co.in

Different benefits

No. of schemes 22
No. of schemes including options 84
Equity Schemes 16
Debt Schemes 50
Debt Schemes 11
Equity & Debt 0
Money Market 0
Gilt Fund 3

 Fund Managers

Ruchir Parekh , Aditya Khemani , Jitendra Sriram, Kedar Karnik , Niren Parekh , Sanjay Shah ,
Shailendra Jhingan .

38
HSBC Mutual Fund product details
Investment needs of an individual vary over time and depend on his/her investment objectives and
financial goals. Defining your investment objectives and identifying financial goals is the key to
financial security and wealth.
Once investment objectives have been identified, you now need to plan meticulously to achieve
them. Investment experts around the world advise instruments like equity funds and stocks for
long-term (more than 5 years), income funds for medium-term and liquid funds for short-term
needs.

The investment matrix above depicts a broad variety of available investment options in mutual
funds. These are categorised by risk/return levels. Those at the top provide for a greater
opportunity for long-term capital growth with a higher risk level while those at the bottom take

39
care of current income and conservation of capital with a lower risk level. HSBC Mutual Fund
offers products at both ends to cater to your individual needs.

Equity Product

 HSBC Equity Fund

 HSBC India Opportunities Fund
 HSBC Midcap Equity Fund
 HSBC Progressive Themes Fund
 HSBC Dynamic Fund
 HSBC Emerging Markets Fund
 HSBC Small Cap Fund
 HSBC Brazil Fund

Debt Product

 HSBC MIP
 HSBC Gilt Fund
 HSBC Income Fund
 HSBC Floating Rate Fund
 HSBC Cash Fund
 HSBC Fixed Term Series
 HSBC Ultra Short Term Bond Fund
 HSBC Flexi Debt Fund

Product Add-on

 HSBC Systematic Investment Plan (HSBC SIP)

 HSBC Systematic Transfer Plan (HSBC STP)

40
HSBC India OpportunitiesFund (HIOF), EQUITY FUND
The HSBC India Opportunities Fund an actively managed, flexi-cap equity fund that invests in
an assortment of large, mid and small cap stocks to suit every market condition. While it’s
primarily an equity fund, it offers you the flexibility to invest in debt markets (in case the fund
manager considers equity markets to be unfavourable).
Investment objective
Seeks long term capital growth through investments across all market capitalisations, including
small, mid and large cap stocks. It aims to be predominantly invested in equity and equity related
securities. However it could move a significant portion of its assets towards fixed income
securities if the fund manager becomes negative on equity markets.

NAV (/ Unit) 34.8331

Allotment Date 24 Feb, 2004
Average AUM (in crores) 177.01
Benchmark Index BSE 500
Min. Investment Amount (`) 10,000
Fund Manager Jitendra Sriram
Overseas Fund Manager Niren Parekh
Exit Load (including SIP/STP 1% - if redeemed/ switched out within 1 year from
date of investment; otherwise Nil
Systematic investment plan Monthly/Quarterly plan
Monthly - a minimum of 12 cheques of Rs 1,000
each
Quarterly - a minimum of 4 cheques of Rs 3,000
each
Assets allocation
65-100 per cent equity and equity related securities, 0-35 per cent money market instruments
(including cash, money at call).

41
Assets Allocation(%)
Equity Debt Cash & Equivalent
88.64 7.56 3.80

Sectors

Top 10 Sector of (HIOF)

Top 10 Sector
Banks
Software
17% Auto Ancillaries
27%
Petrolium Product
11%
Finance
9% Construction
3% 7% Consumer Non Durables
5%
4% 5% 7%
Industrial Capital Goods
5%
Oil
Telecom-Service
Others

Absolute Returns (in %)

Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Annual

2011 -4.8 -0.6 - - -
2010 -1.8 2.2 13.9 -1.1 14.6
2009 -3.6 35.1 13.9 4.3 57.9
2008 -30.6 -9.2 -6 -20.7 -55
2007 -10.5 20.9 8.2 29.4 48.4
2006 18.8 -9.5 13.8 20.5 51.4

42
HSBC Income Fund (HIF), DEBT FUND
HSBC Income Fund (HIF) seeks to generate regular returns by investing in bonds, debentures,
government securities and short-term instruments like commercial papers, reports etc. If you
have a time horizon greater than a year and seek regular returns, you can invest in the Investment
Plan of HSBC Income Fund. Alternatively if your time horizon is one to six months, we have a
Short Term Plan which you can invest in.
Investment objective
Aims to provide reasonable income through a diversified portfolio of fixed income securities.
The AMC's view of interest rate trends and the nature of the plans will be reflected in the type
and maturities of securities in which Short Term and Investment Plans are invested.

Fund Type Open-Ended

Plans
Options
Minimum application amount
Asset Size (Rs cr)
Load structure (including SIP/STP
where applicable)
Short Term Plan - Regular, Institutional and
Institutional Plus
Investment Plan - Regular and Institutional
Regular, Institutional and Institutional Plus Options
with Dividend (Payout/Reinvestment) and Growth for
Short Term Plan and Investment Plan
Short Term Plan - Regular - Rs 100,000
Short Term Plan - Institutional - Rs 1 crores
Short Term Plan - Institutional Plus - Rs 5 crore
Investment Plan - Regular - Rs 10,000
Investment Plan - Institutional - Rs 5,000,000
223.64 (Jun-30-2011)
Short Term Plan Entry Load (Nil)
Exit Load- 0.50% (if redeemed/switched out within 6
months from date of allotment, including SIP/STP).
Investment Plan Entry Load (Nil)

43
 Exit Load- 0.5% in Regular and Institutional Option,( if
redeemed/switched out within 6 months from date of
investments.)

Systematic investment plan Monthly/Quarterly plan

Monthly - a minimum of 12 cheques of RS 1,000 each
Quarterly - a minimum of 4 cheques of RS 3,000 each

Performance

Absolute Returns (in %)

Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Annual

2011 2.2 2.0 - - -
2010 0.8 1.0 0.8 1.4 4.3
2009 2.3 2.2 0.7 0.9 6.7
2008 1.9 2.3 2.1 2.2 9.0
2007 - 2.7 2.5 2.1 7.6
2006 1.1 1.6 1.8 1.3 6.0

World-class investment solutions backed by the strength of the HSBC Group HSBC Global
Asset Management in India are part of the core global investment management business of the
HSBC Group. With dedicated investment professionals across Europe, Africa, Asia-Pacific and
the Americas, HSBC Global Asset Management has strong global investment capabilities that
are delivered to clients locally. For institutions, corporates and financial intermediaries, a
comprehensive range of investment management solutions are offered. For high net worth
individuals, HSBC Global Asset Management works with relationship managers to provide
bespoke portfolio management services.

We have been dedicated to managing global assets on behalf of clients for more than 25 years.
As far back as 1994, it was recognised that in an increasingly global economy, the
internationalisation of assets would need a credible global organisation to ensure that the best
possible solutions could be delivered to clients. The Group responded by uniting its separate
regional businesses under the HSBC banner to create a single powerful investment manager
aimed at delivering global investment capability combined with significant local expertise.

44
HSBC Global Asset Management has funds under management of USD416.3 billion as on 30
September 2009.

45
 CHAPTER 3
RESEARCH METHODOLOGY

Research is an original contribution to the existing stock of knowledge making for its
advancement. It is the pursuit of truth with the help of study, observation, comparison and
experiment. In short, the search for knowledge through objective and systematic method of
finding solution to a problem is research.

A research method refers to the methods the researchers use in performing research
operations. Research Methodology is a way to systematically solve the research problem. By
research methodology not only the research methods are considered but also the logic behind the
methods used in the context of the research study and explanations are given on why a particular
technique is used.

The researcher has discussed the following:

3.1 Research Design

3.2 Sampling Design

3.2.1 Population

3.2.2 Sampling Technique

3.2.3 Sampling Size

3.2.4 Sample Unit

3.2.5 Sources Of Data

3.2.6 Statistical Tools

46
3.1 RESEARCH DESIGN

 The research design that is adopted in this study is descriptive design.

Descriptive research is used to obtain information concerning the current status of
the phenomena to describe, "What exists" with respect to variables or conditions in
a situation. The focus of this study was on self-reported decisions made by various
investors regarding the investment patterns in mutual funds. Thus it involves
Statement of the problem, Identification of information needed to solve the problem,
Selection or development of instruments for gathering the information,
Identification of target population and determination of sampling procedure, Design
of procedure for information collection, Collection of information, Analysis of
information, Generalizations and/or predictions.

3.2 SAMPLING DESIGN

3.2.1POPULATION:
 The population for this study is investors of mutual funds in ‘Patna’ Bihar state.

3.2.2SAMPLING TECHNIQUE:
 Judgmental sampling is more commonly known as purposive sampling. In this type
of sampling, subjects are chosen to be part of the sample with a specific purpose in
mind. With judgmental sampling, the researcher believes that some subjects are
more fit for the research compared to other individuals. This is the reason why they
are purposively chosen as subjects.

 The sample frame for this study is the company’s database of ‘Patna’ city. From
the obtained database cheque number was selected as the primary key. Then

47
 primary key is compared with random numbers and if the primary key and random
numbers are matching those numbers are picked up. Such picked up random
numbers were the sample respondents from whom the questionnaires were
collected.

3.2.3SAMPLE SIZE:
The sample size for this study is 100 investors of UTI mutual funds in Coonoor city out
of entire population 2000 which consists of 5% of the population. Random numbers were
generated and using random number tables 100 investors were selected.
3.2.4SAMPLE UNIT:
Individuals, families, corporates, partnership firms and sole proprietors were the target respondent
groups from which the data were collected.

 3.2.5 SOURCES OF DATA:
Data were collected through both primary and secondary data sources.Primary data was
collected through questionnaires. The research was done in the form of direct personal
interviews.

4.2.5.1 PRIMARY DATA;

 A primary data is a data, which is collected afresh and for the first time, and thus
happen to be original in character. The primary data with the help of questionnaire
were collected from various investors.

4.2.5.1.1 QUESTIONNAIRE DESIGN

 Proper care has been taken to ensure that the information needed match the
objectives, which in turn match the data collected through the questionnaire. The
basic cardinal rules of Questionnaire design like using simple and clear words, the
logical and sequential arrangement of questions has been taken care of.

48
4.2.5.2 SECONDARY DATA
 Secondary data consist of information that already exists somewhere, have
been collected. Secondary data is collected from company websites, other websites,
company fact sheets, magazines and brochures.
4.2.6 STATISTICAL TOOLS

 The statistical tools used for this analysis are:

 Simple Percentage analysis:
 Percentages are calculated and in certain cases percentages along with cross
tabulation has been calculated.

 Mean Score Values:

Mean score values has been calculated for the different scales used to find the perception and
satisfaction level of investors.

49
 CHAPTER 5

ANALYSIS AND INTERPRETATION

The term analysis refers to the computation of certain measures along with searching for patterns
of relationship that exist among data groups. Thus, “in the process of analysis, relationships or
differences supporting or conflicting with original or new hypotheses should be subjected to
statistical tests of significance to determine with what validity data can be said to indicate any
conclusions.”

Interpretation refers to the task of drawing inferences from the collected facts after an analytical
and /or experimental study.

The factors are analyzed under the following broad phases:

PHASE I: Personal Factors

PHASE II: Investment Factors

PHASE I: Personal Factors:

This phase includes the personal details of the investors. The factors considered are age, gender,
and work status.

PHASE II :Investment Factors:

50
In this particular phase the responses for the various investment related factors that have been
considered in the questionnaire have been analysed. The investors’ preference and satisfaction
related factors have been analysed in this phase.

PHASE I: PERSONAL FACTORS

AGE OF THE INVESTORS
The age of individual indirectly represents the amount of service the individual possesses.
Normally individuals who are aged tend to be more mature in their thoughts and try to be
committed in whatever work they do. As they have the experience they will be in a position to
adjudge how the investment would help in the future.
TABLE 4.1
Age distribution of investors in Mutual Funds
Age No of investors Percentage

20-30 12 13

31-40 33 37

>41 45 60

Total 90 100

Chart 4.1

51
 Age distribution of Investors
70

60

50
No of Investors

40

30 20

20

10

0
20-30 31-40 >40
Age in year

From the table it is found that almost 60% of the investors of Mutual Funds are above the age of
41 years, 37% of the investors belong to the age group of 31-40 years and only 13% belong to
the age group of 20-30 years. Thus, there are more of above middle-aged investors who can
easily follow the investment and the market movements.

GENDER OF INVESTORS

A gender is defined as a set of perceived behavioral norms associated particularly with males or
females, in a given social group or system. It is a focus of analysis in the social sciences and
humanities. Gender role refers to the attitudes and behaviors that class a person’s stereotypical
identity. Gender has an influence on the mentality towards investing in Mutual funds as mutual
funds involve risk.
TABLE 4.2
GENDER DISTRIBUTION OF INVESTORS

Gender No of Investors Percentage

Male 61 68

52
 Female 29 32

Total 90 100

There are about 68% of male investors, whereas only 32% of female investors invest in Mutual
Funds.

Chart 4.2

Gender Of Investors

32%

Male
68% Female

PROFESSION OF INVESTORS

53
 The Qualification of investors is an important aspect related to Investments in Mutual
Funds.

Table 4.3
PROFESSION STANDARD OF INVESTORS

Profession No. of investors Percentage

Student 9 10

Employee 45 50

Self Employed 36 40

Total 90 100

Nearly 10% of the investors are under student, whereas 50% of the investor’s are employees,
40% are self employees.

Chart No 4.3

Profession of Investors
50
45
No of Investors

40
35
30
25
20 Series 1
15
10
5
0
Student Employed Self Employed

Profession

54
INCOME OF INVESTORS
The income level of investors is an important factor for investment, when an investor has
sufficient income he will like to invest in many plans, as a measure to earn from the investment.
Table 4.4
INCOME OF THE INVESTORS
Income per month No of investors Percentage

<15,000 10 10

15,000-50,000 60 67

>50,000 20 23

Total 90 100

10% of investor’s have a income less than 15,000 per month, 67% of investor’s have a income
between Rs.15,000 – 50,000 per month, 20% have a income of above 50,000 per month.
Chart 4.4

70
Income of the investors

60
No of Investors

50

40

30
Series 2
20

10

0
<15,000 15,000-50,000 >50,000

Amount in Rupee

55
Phase 2

AMOUNT INVESTED IN MUTUAL FUNDS

Investors like to invest certain sum of money for future benefits. Such amount may be a small
sum or a large sum according to the interest of the investors
Table 4.5
AMOUNT OF MONEY INVESTED IN MUTUAL FUNDS

Amount Invested No of investors Percentage

<100000 69 76

>100000 21 24

Total 90 100

Chart No 4.5

Amount invested by investor

24%

<1,00,000
>1,00,000
76%

76% investors have invested less than Rs.100000 in Mutual funds whereas 24% have invested
more than Rs.100000 in Mutual funds.

56
REASONS FOR PREFERENCE OF SELECTING MUTUAL FUND COMPANY
Investors select any mutual fund company for any specific reason ,it could be reputation ,provide
good return ,expert advice or something else.

Table 4.6
REASON FOR SELECTING MUTUAL FUND COMPANY
Factor No of investors Percentage

Reputation 40 45

Provide good return 23 26

Expert advice 12 12

Other 15 17

Total 90 100

Chart No 4.6

Reason for selecting MF Com.

45
40
No of investor

35
30
25
20
15 Series 1
10
5
0
Reputation Provide good Expert advice other
return

Reason

57
Nearly 45% of investor select any mutual fund company because of reputation ,where as 26% of
investor select because of provide good return ,12% of investors select of it for expert advice and
remain 17% for other.

TYPE OF SCHEMES SELECTED BY INVESTORS

Mutual funds schemes are classified into two. Among which two of them open – ended and close
ended schemes are more popular in different mutual funds, depending on the maturity periods of
the schemes.
TABLE 4.7
TYPE OF SCHEMES SELECTED BY INVESTORS
Scheme selected No. of Investors Percentage

Open ended 73 81

Close ended 17 19

Chart NO 4.7

Types of Schemes

19%

Open ended
Close ended
81%

Most of the investors prefer an Open ended scheme which nears up to 81% whereas the rest 19%
prefer only Close ended schemes.

58
INVESTMENT IN DIFFERENT TYPES OF FUNDS

A Mutual Fund Company has different types of funds in which one can invest. There are 7 main
types of funds available in mutual fund industry. Such type of fund has its own benefits which
are preferred by investor’s in accordance to such benefits.
TABLE 4.8
INVESTMENT IN DIFFERENT TYPES OF FUNDS
Type of funds No. of investors Percentage

Equity 30 33

Income 12 13

Index 9 10

Debt 7 8

Balanced 10 11

Asset 9 10

Liquid 13 15

Total 90 100

Investors invest mainly in Equity funds as shown in the above table as the numbers of investors
are 30 in number. And the next preferred type of fund is the Liquid fund with a response from 13
investors, 12 investors have invested in income funds, 9 investors in index funds, 7 investors in
debt funds,10 investors in balanced funds and 9 investors in assets funds.

Chart No 4.8

59
 Fund invested by Investors
35

30

25
Nof Investors

20

15
Series 1
10

0
Equity Income Index Debt Balanced Asset Liquid
Different Funds

Investor’s knowledge towards mutual fund

In the current scenario investors has full knowledge about mutual fund or not.

Knowledge towards MF No of Investors Percentage

Yes 59 66

Not fully 31 34

Not at all 0 0

Total 90 100

From the above table it is inferred that 66% of investors are aware towards Mutual Fund,
while 34% are aware only to an extent not fully.

60
 Chart No 4.9

INvestor's knowladge towards MF

0%

34%

Yes

66% Not fully

Not at all

INVESTMENT AND PORTFOLIO ANALYSIS

An investment analysis is very important to an investment. Such analysis helps the investor how
the performance of the investment is as necessary as an investment analysis, as the portfolio of
the shares or stocks have a greater impact on the return from the investment.
TABLE 4.10
INVESTMENT AND PORTFOLIO ANALYSIS

Investment Analysis No. of Investors Percentage

34
Yes 31
66
No 59
100
Total 90

61
 Portfolio Analysis No. of investors

Yes 27

No 63

Total 90

Chart No 4.10

Investment Analysis

34%

Yes
66%
No

34% of investors make an Investment analysis and 27% make a Portfolio analysis.

Chart No 4.11

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 Portfolio Analysis

30%

Yes
70% No

OPTIONS PREFERRED ON INVESTMENT

Mutual Fund investments provide certain options for investment according to the schemes. UTI
offers two options, growth option and dividend options which help investors to either let their
investment grow with the fund or withdraw dividend as the investment matures.

TABLE 4.11
PREFERRED OPTIONS BY INVESTORS FOR THEIR INVESTMENT
Options preferred No. of investors Percentage

Growth 74 82

Dividend 16 18

Total 90 100

81% of investors prefer their investment with a Growth option while the rest 18% prefer the
Dividend option.

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 Chart No4.12

Option prefered by investors

18%

Growth
Dividend
82%

PREFERENCE OF INVESTORS TOWARDS SIP

Systematic Investment Plan (SIP) is a smart way to invest in mutual funds. It is truly small on
savings and big on returns. It doesn’t demand lump sum investment. Hence SIP’s are preferred
by many investors now-a-days.

TABLE 4.12
PREFERENCE OF INVESTORS TOWARDS SIP
Preference of SIP No. of investors Percentage

Yes 34 38

No 56 62

Total 90 100

64
From the above table it is inferred that 38% of investors prefer SIP’s whereas 62% do not prefer
them.

Reasons For preference:

All the investors have pointed out that Small investment amount is the main reason for the
preference towards SIP’s.

Chart No12

Preference towards SIP

38%

Yes
62%
No

PAYMENT OPTIONS PROVIDED TO INVESTORS

Investors are generally provided with different payment options. With the developments in
technology the payment options have also increased. These options help the investor make their
payments on a timely basis in an efficient manner.

TABLE 4.12

PAYMENT OPTIONS PROVIDED TO INVESTORS

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 Payment Options No. of investors Percentage

Direct Payment 14 16

14
Cheque 12

Internet 20 22

Executives at door 44 48

Total 90 100

48% of investors prefer executives at the door for payments, while 20% prefer internet and 14%
prefer direct payment option.

Chart No 4.13

Payment option prefer by invesyors

50
45
No of Investors

40
35
30
25
20
15 Series 1
10
5
0
Direct Payment Cheque Internet Executives at
door

Payment Option

RANKING THE OBJECTIVES OF THE SCHEMES

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Every scheme of the investment has its own objective. The investors would analyse the
investment objective with the schemes objective and would then invest.

TABLE 4.23
RANKING THE OBJECTIVES OF THE SCHEMES
Objectives Total Weightage Rank

Savings 345 I

Tax benefits 292 IV

Portfolio 230 V

Balanced risks 313 III

Potential returns 320 II

The main objective that the investors consider for investment is Savings. The other objectives
that are considered are Potential Returns, Balanced risk, Tax benefits and Portfolio.

Ranking the objective of the scheme

400

350

300
Total Weight

250

200

150 Series 1
100

50

0
Savings Tax Benefits Portfolio Balanced Risk Potential
Return

Objective

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LEVEL OF SATISFACTION
The investor’s satisfaction in the fulfillment or gratification of a desire, need or appetite of the
investment they have made. Only if investors are satisfied they would make an efficient
investment and would continue to be loyal to the investment.
TABLE 4.24
LEVEL OF SATISFACTION
Extremely Extremely
Level Of satisfaction satisfied Satisfied Neutral Unsatisfied Unsatisfied

Return earned
13 25 37 14 21
Timeliness in annual
reports 11 55 31 3 0
Timeliness in dealings
57 43 0 0 0
Rights of unitholders
28 56 16 0 0
Grievance handling
23 52 25 0 0
Information
availability 25 59 16 0 0
Options available
23 62 15 0 0
Performance of the
Fund 12 36 13 26 13
Choice Of Schemes
2 16 72 0 0
Payment Options
13 69 28 0 0
Tax Benefits
14 35 40 11 0
Risks
0 21 32 45 2
Diversification
7 49 32 12 0
Returns Potential
0 14 54 18 14

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 Liquidity
9 29 62 0 0
Expert Guidance
14 36 10 25 15

Expert Guidance

Liquidity

Returns Potential

Diversification

Risks

Tax Benefits

Payment Options
Extremely satisfied
Axis Title

Choice Of Schemes
Satisfied
Performance of the Fund Neutral

Options available
Unsatisfied
Extremely Unsatisfied
Information availability

Grievance handling

Rights of unitholders

Timeliness in dealings

Timeliness in annual reports

Return earned

0 20 40 60 80 100
Axis Title

OVERALL MSV=3.565

69
The satisfaction level for the timeliness in dealings, rights of unit holders, payment options,
information availability and options available for the investment are high whereas the other
factors are not very satisfactory.

70
Chapter 5

Findings and Suggestion

FINDINGS

 Majority of the investors are above 41 years.

 There are more male investors in Mutual Funds.
 Most of the investors have invested less than Rs.100000 in mutual funds.
 Majority of the investors are graduates.
 Returns earned on Mutual Funds are the cause for many investors to invest in Mutual
Fund.
 Open-ended schemes are preferred more than the closed-ended schemes.
 Equity Funds are preferred more than the other schemes.
 It is clear that most of the investors do not make either investment analysis or Portfolio
analysis.
 Awareness towards the risk related to the scheme and products is le
 It is clear that savings is the main reason for preference towards Mutual Funds.
 Most of the investors are provided with the option of executives at door for their
payments.
 The overall satisfaction level of the investors is neutral as the overall mean score value is
3.57.

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SUGGESTIONS

 The investors should be given the option of attending investor’s education programme
once in a month.
 The information about the products should be revealed exactly to the investors, and they
should be advised on the risks attached to them.
 Programmes creating awareness towards the various products of Mutual Funds should be
conducted especially in the Villages.
 Portfolio of the securities should be kept under check so as to increase the growth of
funds, which in turn will increase the satisfaction of the investors.
 Providing proper reports revealing all the information related to the investment have to be
sent to the investors regularly and this can change the general attitude towards mutual
funds.
 The returns cannot be guaranteed by the concern but then the brand image can help the
concern to overcome this problem.
 Investors can take their own steps in analyzing the market conditions and can be advised
to make a portfolio and investment analysis on their investment.
 The investors should be given all the information regarding their investment and the
benefits or the drawbacks of the investments.

72
 CONCLUSION

In any Mutual Fund Industry investors awareness plays an important role. With the increasing
number of Mutual Fund organisations, there is a need for every company to educate investors
and the general public on various aspects concerned with the mutual fund investments which in
turn reveals their attitude towards such investments.

From the study on “Investors attitude towards HSBC Mutual funds”, it is found that the
majorities of the investors prefers Mutual Funds for the returns and feel that it is a safe measure
of investment. The investors select the schemes considering the returns earned from them. The
preferred schemes and funds are the Equity schemes and Open ended funds.

The investors are satisfied with their investment in HSBC Mutual Funds. The investors
also feel that the annual reports and other publications of the concern help them analyse the
performance of their investment. The organisation can educate its investors on the risk and return
in order to make their investments more effective. The investor’s education programme can be
conducted by the organization in order to educate the investors.

The study has helped the researcher gain real time knowledge and has helped to use her
analytical skills to analyse the preference and satisfaction level of the investors.

73
6. LIMITATIONS OF THE STUDY

 The project done is restricted to Mutual funds in Patna and its surroundings only.

 As the survey was pertaining to investment preference and satisfaction level of

investors, biased information may restrict validity of inference possible.
 The study was constrained by limitations of time.
 The raw data was collected with the help of structured questionnaire technique.
 Therefore study is bounded by the limitation of this technique.

74
 BIBLIOGRAPHY

BOOKS

 Outlook money book ‘A lay man guide to mutual fund

 Ambika Prased Dash, Security Analysis and Portfolio Management, I.K.International
Publishing House Pvt. Ltd., 2008
 Bhalla V.K., Investment Management, S.Chand & Company Ltd., Eleventh Edition, 2009
 Emmett J.Vaughan, Therese Vaughan, Fundamemtals of Risk and Insurance, Willey
India Pvt. Ltd., Ninth Edition, 2009
 Kothari C.R., “Research Methodology-methods and Techniques”, K.K Gupta for New
Age International private ltd, 2006.
 Preeti Singh, Investment Management Security Analysis and Portfolio Management,
Himalaya Publishing House, Eleventh Edition, 2006, Pp[‘. 1
 Prasanna Chandra, Investment Analysis and Portfolio Management, TataMcGraw-Hill
Publishing Company Limited, Third Edition, 2008

JOURNALS

75
WEBSITES

 http://www.assetsmanagmenthsbc.com/
 http://economictimes.indiatimes.com/Mutual_funds.
 http://www.moneycontrol.com
 http://www.amfiindia.com/navreport.aspx
 http://www.indiastudychannel.com/projects/666-A-STUDY-ON-MUTUAL-FUNDS-IN-
INDIA.aspx
 http://www.scribd.com/doc/13246827/PROJECT-ON-MUTUAL-FUND-AKHILESH-
MISHRA

 Read more: http://www.experiment-resources.com/non-probability-

sampling.html#ixzz1YTbI06eJ

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