A

Summer Training Report

On
A Study onConsumer Behavior Analysis of ULIPS and
MUTUAL FUNDS
Submitted as an internship report at Nest keys Infratech Pvt.Ltd.
Submitted in partial fulfillment for the
Award of degree of

Bachelor of Business Administration

Under the Guidance of: Submitted By:

Dr. Vikrant Agarwal Ayushma Murali

(Associate Professor) Enrollment no.:40419301715

(Department of Management)
KRCHE

Batch : 2015-18

Kasturi Ram College Of Higher Education

Affiliated to Guru Gobind Singh Indraprastha University, Delhi
Narela, Delhi-110040
 Acknowledgement

I have completed the Summer Training Project Report on “A Study onConsumer

behavior analysis of ULIPS and MUTUAL FUNDS”that it is a genuine piece
ofwork which is done by me under the guidance of “Dr.Vikrant Agarwal”
Associate Professor (Department of Management ,KRCHE)in the partial
fullfillment for the award of Degree of Bachelor of Business Administration at
Kasturi Ram College of Higher Education Delhi.

I also declare that this summer training project report is original and is not
submitted to any other Organization.

Date: (Signature)

Place: AYUSHMA MURALI

4041930715
 CERTIFICATE FROM THE GUIDE

This is certify that the summer project “A Study on Consumer behavior analysis
of ULIPS and MUTUAL FUNDS.” is an academic work done by “Ayushma
Murali” submitted in the partial fulfillment of the requirement for the award of the
degree of Bachelor of Business Administration at Kasturi Ram College of Higher
Education, Delhi, under my guidance & direction.

To the best of my knowledge and belief the data & information Presented By her
in the project has not been submitted earlier.

Dr. Vikrant Agarwal

Associate Professor
(Department of Management)
KRCHE
 INDEX
Chapter Description Page No.
No.

1 Introduction to Insurance Industry

 Insurance in India
 History of insurance in India
 Insurance penetration in India
 Market size
 Road ahead

2 Company Profile

3 Research & Methodology

 OBJECTIVE OF STUDY
 SCOPE OF STUDY
 RESEARCH METHODOLOGY
 RESEARCH PROCESS
 STEPS OF RESEARCH DESIGN

4 Project Profile
 Introduction to topic
 Definition
 Concept
 Comprehensive Detail
 Mutual Funds
 ULIPS
 ULIP vs. Mutual Funds

5 Data Analysis & Interpretation

6 Conclusion
7 Findings
8 Recommendations and Suggestion
9 Limitations
Annexure
Bibliography
PREFACE

Under-Graduation in Bachelor of Business Administration programme is a flagship

bachelor course in the field of management. This course includes both theoretical
and practical aspects of business and management. The summer training report is
considered as an integral part of “Bachelor of Business Administration
”programme of "kasturi ram college of higher education".

The summer training helps the students to get to know the various nuances of the
business and the corporate field. Each student of Bachelor course is required to
undergo summer training in any business organization after the completion of
his/her fourth semester examination in the summer vacations.

The training programs are comprehensively designed to provide in-depth

knowledge of corporate work culture. These training programs are simulated
exercises which equip the prospective managers with the required skills which are
needed to perform various business functions in the corporate organizations in the
future.

The project report which is discussed here is a result of my sincere hardwork and
devotion. This project helped me a lot in learning and working in Insurance
sector.
EXECUTIVE SUMMARY
Total investment scenario is changing, in past people were not interested in
investment because there were no good options available for investment. Now as
people are getting educated and income levels are going up, people are going for
investment in different financial products like Insurance, Mutual Fund, Equity
market, Real estate, etc. Today people want more services and more return on
their investment with the safety of their principle. So, most of the insurance
companies are providing more value-added services with the basic insurance
operation. Another option for investment available is Mutual Fund. Mutual Funds
are providing good returns. So, while investing people tend towards Mutual Fund
as they have low cost and high liquidity and good returns. Mutual Funds are a tool
of risk hedging also. As income of the people increases, people tend to move
towards ULIP policies. The major purpose of investment is to get returns followed
by savings.According to my study, most number of people have invested in Mutual
Funds and investments are more in the government sector. High return and safety
of principle are the major parameters which people consider before investing.
Brokers and agents influence people’s decision making regarding investment the
most.On the basis of diversification, professional management and flexibility,
people prefer ULIPS over Mutual Funds. People are expecting return from both the
instruments in the range of 11-15% and 15-20%. From the long term perspective
(7-10years), people are going for ULIPS and for short- term (3-5 years) and mid-
term (5-7 years) people are going for Mutual Funds. From the point of view of
future investments, 40% people will consider ULIPS whereas 55% will go for
Mutual funds but trend towards ULIPS are increasing so heavy investment towards
ULIPS can’t be ruled out as income of the people increases and 5% will invest in
both the instruments. Awareness about Mutual Funds and ULIPS are quite
significant in the working population of Gurugram region. Salaried class people
prefer Mutual Funds whereas business people are investing both in the ULIP and
Mutual Funds. Most number of surveyed people fall in the income bracket of 2 lac-
6 Lac and 6 Lac- 8 Lac. On the basis of tax benefit, people consider ULIPS over
Mutual Funds. Overall both Mutual Funds and ULIPS are preferred investment
avenue and have individual benefits on different parameters. But still large number
of surveyed people are from salary class and have invested in Mutual Funds but the
future of the ULIPS are very bright because it will be on the investment menu of
the investors in future as their liability and salary increases.
 Chapter-1

Introduction
INDUSTRY PROFILE
Insurance in India:
Insurance is a federal subject in India and its history dates back to 1818. Life and general
insurance in India is having a huge potential for various global as well as domestic players with
life insurance premiums accounting to 2.5% and general Insurance premium to 0.65% of India’s
GDP. The insurance sector in India has gone through a number of phases and changes,
particularly in the recent years when the Govt. of India in 1999 opened up the insurance sector
by allowing private companies to solicit insurance and also allowing FDI up to 26%. Ever since,
the Indian insurance sector is considered as a booming market with every other global insurance
company wanting to have a lion’s share. Currently, the largest life insurance company in India is
still owned by the government.

History of insurance in India:

Insurance in India has its history dates back to 1818, when oriental Life Insurance Company was
started by Europeans in Kolkata to cater to the needs of European community. Pre-independent
era in India saw discrimination among the life of foreigners and Indians with higher premiums
being charged for the latter. It was only in the year 1870, Bombay Mutual Life Assurance
Society, the first Indian insurance company covered Indian lives at normal rates.

At the dawn of the twentieth century, insurance company started mushrooming up. In the year
1912, the Life Insurance Company’s Act and the Provident Fund Act were passed to regulate the
insurance business. The Life insurance companies Act,1912 made it necessary that the premium
rate tables and periodical valuations of companies should be certified by an actuary. However the
disparage still existed as discrimination between Indian and foreign companies. The oldest
existing insurance company in India is National Insurance Company ltd. which was founded in
1906 and its doing business even today. The insurance industry earlier consisted of only two
state insurers: Life insurers i.e. Life Insurancecorporation of India (LIC) and General insurers
i.e. General Insurance Corporation of India (GIC). GIC had four subsidiary companies.

Insurance penetration in India

The insurance industry of India consists of 53 insurance companies of which 24 are
In life insurance business and 29 are non-life insurers. Among the life insurers,
Life Insurance Corporation (LIC) is the sole public sector company. Apart from
that, among the non-life insurers there are six public sector insurers. In addition to
these, there is sole national re-insurer, namely, General Insurance Corporation of
India (GIC Re). Other stakeholders in Indian Insurance market include agents
(individual and corporate), brokers, surveyors and third party administrators
servicing health insurance claims.
Out of 29 non-life insurance companies, five private sector insurers are registered
to underwrite policies exclusively in health, personal accident and travel insurance
segments. They are Star Health and AlliedInsurance Company Ltd, Apollo
Munich Health Insurance Company Ltd, Max Bupa Health Insurance Company
Ltd, Religare Health Insurance Company Ltdand Cigna TTK Health Insurance
Company Ltd. There are two more specialized insurers belonging to public sector,
namely, Export Credit Guarantee Corporation of India for Credit Insurance and
AgricultureInsurance Company Ltd. for crop insurance.

MARKET SIZE
Government's policy of insuring the uninsured has gradually pushed insurance penetration in the
country and proliferation of insurance schemes are expected to
catapult this key ratio beyond 4 per cent mark by the end of this year, reveals
the ASSOCHAM latest paper.
The number of lives covered under Health Insurance policies during 2015-16 was
36 crore which is approximately 30 per cent of India's total population. The
number has seen an increase every subsequent year as 28.80 crore people had the
policy in the previous fiscal.
During April 2015 to March 2016 period, the life insurance industry recorded a
new premium income of Rs 1.38 trillion (US$ 20.54 billion), indicating a growth
rate of 22.5 per cent. The general insurance industry recorded 12 per cent growth
in gross direct premium underwritten in April 2016 at Rs 105.25 billion
(US$ 1.55 billion).

India’s life insurance sector is the biggest in the world with about 360 million
policies which are expected to increase at a Compound Annual Growth Rate
(CAGR) of 12-15 per cent over the next five years. The insurance industry plans to
hike penetration levels to five per cent by 2020.
The country’s insurance market is expected to quadruple in size over the next 10
years from its current size of US$ 60 billion. During this period, the life insurance
market is slated to cross US$ 160 billion.
The general insurance business in India is currently at Rs 78,000 crore (US$ 11.44
billion) premium per annum industry and is growing at a healthy rate of 17 per cent.
The Indian insurance market is a huge business opportunity waiting to be
harnessed. India currently accounts for less than 1.5 per cent of the world’s total
insurance premiums and about 2 per cent of the world’s life insurance premiums
despite being the second most populous nation. The country is the fifteenth largest
insurance market in the world in terms of premium volume, and has the potential to
grow exponentially in the coming years.

Road Ahead
India’s insurable population is anticipated to touch 750 million in 2020, with life
Expectancy reaching 74 years. Furthermore, life insurance is projected to comprise
35 per cent of total savings by the end of this decade, as against 26 per cent in 2009-10.
The future looks promising for the life insurance industry with several changes in
regulatory framework which will lead to further change in the way the industry
conducts its business and engages with its customers.
Demographic factors such as growing middle class, young insurable population
and growing awareness of the need for protection and retirement planning will
support the growth of Indian life insurance.
Chapter-2

Company
Profile
ORGANIZATIONAL PROFILE

NESTKEYS INFRATECH PVT LTD.

Nest keys – Nurtured with an idea to shake up the unorganized property market to

a need based Property Solutions Specialist with team of business associates in this

ever changing dynamic, non regulated property space and to help them manage

Customer’s investments grow with right knowledge and skills.

Our philosophy is based on nurturing the right talent with imparting them the

adequate knowledge to deliver the right investment /property solutions to

customer. The core team having 40 plus years of professional experience in

understanding the Indian environment and setting up new distribution channel and

mentoring the associates with innovative investment solutions, technology,

operations and customer service management assistance to entrepreneurs entering

into property space and helping them managing their clients in a structured

approach.

We truly believe in providing property solutions and a great customer experience,

we as a team feel that it’s right time to combine technology, great product and

customer delights to give India a Solution Specialist Teams. We are passionately

driven by our Vision to being the Top Real Estate Franchisee Provider, and a

trusted brand.
CORE VALUES

NESTKEYS - hold our associates, customers, employees, as well as our community in the
highest regard, where we incorporate both the needs of our company, as well as the needs of our
ever-changing world into our culture. Our core values are the backbone to our company which
resonate with our vision:-
People
We must be caring, show respect, compassion and humanity for our colleagues, associates and
customers around the world, and always work for the benefit of the communities we serve.
Integrity
Conducting our operationswith integrity and with the respect for the each people, business
associate whom we touch in different juncture of our business journey.
Customer Delight
We are committed to foster customer centric culture where our processes, services and
innovations are aligned around customer/franchisee/business associate expectations.
Excellence
We must constantly strive to achieve the highest possible standards in our execution and in the
quality of the services we provide at affordable cost and need based solutions.
Trust
We as team believe that the trust is the foundation of our relationship with our associates,
franchisee, customer and employees and we cultivate it every day by being accountable of every
single property transaction we offer.

VISION

Genesis: Nurtured with an idea to provide Need Based Property / Financial

Solution to its customers in the prevailing highly unorganized real estate / financial sector.

Teamwork: Team up with specialist business associates to help them manage their
customer’s investment and to deliver high return to the customers.

Market Dynamics: Ever changing volatile and un-regulated property/financial space.

Philosophy: Nurturing Talent with adequate knowledge to deliver the right property solutions.

Core Team:Has deep understanding of the Indian Market and Financial Products
Collectively has over 40 years of professional experience distribution and professional
mentorship.
Our Belief: We truly believe in providing property solutions and a great customer experience by
leveraging technology, great products and customer delight to give India a Solution Specialist
Teams.

Our vision: To be the top investment solution provider and a trusted brand.
BUSINESS OF THE ORGANIZATION

Background :Since 1997, Mr. Amit Arora postcompleting his education gainedemployment
experience as sales officer at Godrej Group, as manager at Hutchison Max Telecom Limited,
chief manager at ICICI Bank Limited, as zonal manager at ICICI Prudential Limited and as
country head at Aviva Life Insurance Limited in Gurugram.
Since 1999, Mr. Abhinav Agarwal post completing his education gained employment
experience as business development manager at HDFC Life Insurance Limited and Sharif
Shipping Agency in Gurugram and Dubai respectively.
Since 2003, Mr. Kshitij Mehta post completing his education gained
employment experience as financial adviser at ICICI Life Insurance Limited and as manager at
DSF Refractories and Minerals Limited in Gurugram.
In 2014, Mr. Amit Arora along with Mr. Abhinav Agarwal and Mr. Kshitij Mehta
incorporated Nestkeys Infratech Private Limited to render services pertaining to real estate
consulting / broking, financial services.

Organization Structure : No. of Employees: 60

Reporting Structure: Centralised
MAJOR FINANCIAL BUSINESS PARTNER
 FUTURE GENERALI INDIA LIFE INSURANCE COMPANY
LTD.:

COMPANY OVERVIEW:

Future Generali India Life Insurance Company Limited is a joint

venture between three leading groups: Future Group – A leading retailer in India, Generali
Group- A global insurance group that features among top 50 largest companies in the world and
Industrial Investment Trust Limited (IITL) – A leading investment company.
At Future Generali India Life Insurance Company Limited, our mission is to actively protect and
enhance peoples’ lives. With operations spread across more than 75 branches and a complete
range of simplified solutions for the financial security of customers and enterprises, we aim to
become the first choice by delivering relevant and accessible insurance solutions.
1. Future Group
The Future Group has pioneered the growth story of the Indian retail industry. Established 25
years ago, it operates some of India's most popular retail chains like:-

In addition to allied businesses in Life and General Insurance, the Group has presence in logistics
infrastructure, supply chain and brand development domains.

The Future Group's core value is 'Indianness'. Indian ideas, Indian insights, and trends of Indian
consumer expectations form the cornerstones of the Group's businesses.

The Group aims to build novel delivery formats and profitable retail realty. Affordability for all
segments and quality-consciousness are its mainstays. With this foundation, the Group works
towards bringing about a transformation in the Indian business sectors.

2.Generali Group
Generali is an independent, Italian Group, with a strong international presence. Established in
1831, it is among the world’s leading insurers and it is present in over 60 countries with total
premium income exceeding €70 billion in 2016. With over 74,000 employees in the world, and
55 million clients, the Group has a leading position in Western Europe and an increasingly
significant presence in the markets of Central and Eastern Europe and in Asia. In 2017
GeneraliGroup was included among the most sustainable companies in the world by the
Corporate Knights ranking.

3. About IITL
Industrial Investment Trust Limited (IITL) is an investment company incorporated in 1933. In
2000, it was registered as a Non-Banking Financial Company (non-deposit taking) with the
Reserve Bank of India (RBI). IITL is a listed company on the BSE (Bombay Stock Exchange)
and the NSE (National Stock Exchange).

The company has four subsidiaries in areas of real estate & infrastructure (IITL Projects
Limited), media & entertainment (IIT Media and Entertainment Private Limited), stock broking
(IIT Investrust Limited) and insurance broking (IIT Insurance Broking and Risk Management
Private Limited). The company also has an Associate Company under it, namely World Resorts
Limited, in which it holds 25% stake.
  PNB MetLife

PNB MetLife India Insurance Company Limited (PNB

MetLife) is one of the leading life insurance companies in India. PNB MetLife has as its
shareholders MetLife International Holdings LLC (MIHL), Punjab National Bank Limited
(PNB), Jammu & Kashmir Bank Limited (JKB), M. Pallonji and Company Private Limited and
other private investors, MIHL and PNB being the majority shareholders. PNB MetLife has been
present in India since 2001.

PNB MetLife brings together the financial strength of a leading global life insurance provider,
MetLife, Inc., and the credibility and reliability of PNB, one of India's oldest and leading
nationalized banks. The vast distribution reach of PNB together with the global insurance
expertise and product range of MetLife makes PNB MetLife a strong and trusted insurance
provider.

PNB MetLife is present in over 115 locations across the country and serves over 100 million
customers in more than 8,700 locations through its strong bank partnerships with PNB, JKB and
KBL.

PNB MetLife provides a wide range of protection and retirement products through its Agency
sales of over 10,000 financial advisors and multiple bank partners, and provides access to
Employee Benefit plans for over 800+ corporate clients in India. The company continues to be
consistently profitable and has declared profits for last five Financial Years.
Highlights / Milestones:-

 History: PNB MetLife incorporates in India in 2001 and establishes a pan-Indian footprint
within 16 years of operations.

 Robust Distribution:Multi-channel distribution with strong Agency and Bancassurance

business; with a presence in more than 700 distinct cities through a bank branch network
of over 8,700 branches and access to over 105 million customers.

 Solid Bancassurance Partners: Tie-ups with the Jammu & Kashmir Bank Limited (JKB),
Karnataka Bank Limited (KBL) and Punjab National Bank (PNB), which is one of the
leading nationalized banks in India with around 6,900 domestic outlets and over 103
million customers.

 Profitable Growth: Among the few profitable life insurance companies operating in
India, consistently profitable for the last 6 Financial Years.

 PNB MetLife Circle of Trust: To inculcate the culture of need based selling, PNB
MetLife has developed an exciting campaign with its partners. The campaign addresses the
four financial needs of a customer - Family Protection, Wealth Management, Child
Education and Retirement.

 Building of brand through Badminton: PNB MetLife believes in nurturing talent from
grass root level with an aim to reach out to young talent across the country. To promote
badminton on-ground, the company has successfully launched its third season of the
annual property - Junior Badminton Championship (JBC 3) in April this year. JBC is
proud to have hosted more than 15000+ young badminton players across India with
concluding of all three seasons.
PROJECT PROFILE
INTRODUCTION TO TOPIC

DEFINITION:

Mutual fund is the pool up savings of small investors to raise funds called mutual funds.
Mutual funds are invested in diversified portfolio to spread risk. While it opens an investment
channel to small investors, it reduces risks, improves liquidity and results in stable returns and
better capital appreciation in the long run.

CONCEPT

A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such as
shares, debentures and other securities. The income earned through these investments and the
capital appreciation realized is 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.

Mutual fund is a trust that pools money from a group of investors (sharing common financial
goals) and invest the money thus collected into asset classes that match the stated investment
objectives of the scheme. Since the stated investment objective of a mutual fund scheme
generally forms the basis for an investor's decision to contribute money to the pool, a mutual
fund can not deviate from its stated objectives at any point of time.

Every Mutual Fund is managed by a fund manager, who using his investment management skills
and necessary research works ensures much better return than what an investor can manage on
his own. The capital appreciation and other incomes earned from these investments are passed on
to the investors (also known as unit holders) in proportion of the number of units they own.
UNIT LINKED INSURANCE PLANS

Unit Linked Insurance (ULIP) plans are designed to help you meet your financial
goals by ensuring you the value of your investments, or your nominee sum assured, which is the
life cover of your policy. To make sure that your ULIP is truly working to assure your goal, you
should choose a life cover that provides your family with adequate finances and hence security
even in your absence, so that important life goals of your family are always secured.

Let us take the example of a 35-year-old man with 2 young children. He could begin with a sum
assured of Rs 5 lakh. As the children grow and thereby the financial liabilities increase, he might
want to increase the level of protection, which can be done by increasing his sum assured.

When you decide the amount of premium to be paid and the amount of life cover you want from
the ULIP, the insurer deducts some portion of the ULIP premium upfront. This portion is known
as the Premium Allocation charge, and varies from product to product. The rest of the premium
is invested in the fund or mixture of funds chosen by you. Mortality charges and ULIP
administration charges are thereafter deducted on a periodic (mostly monthly) basis by
cancellation of units, whereas the ULIP fund management charges are adjusted from NAV on a
daily basis.
Since the fund of your choice has an underlying investment – either in equity or debt or a
combination of the two – your fund value will reflect the performance of the underlying asset
classes. At the time of maturity of your plan, you are entitled to receive the fund value as at the
time of maturity.
Comprehensive Detail: -Mutual Funds

A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such as
shares, debentures and other securities. The income earned through these investments and the
capital appreciation realized is 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 Mutualfunds.

Figure 1.1

Mutual fund is a mechanism for pooling the resources by issuing units to the investors and
investing funds in securities in accordance with objectives as disclosed in offer document.

Investments in securities are spread across a wide cross-section of industries and sectors and thus
the risk is reduced. Diversification reduces the risk because all stocks may not move in the same
direction in the same proportion at the same time. Mutual fund issues units to the investors in
accordance with quantum of money invested by them. Investors of mutual funds are known as
unit holders.
The investors in proportion to their investments share the profits or losses.

The mutual funds normally come out with a number of schemes with different investment
objectives that are launched from time to time. A mutual fund is required to be registered with
Securities and Exchange Board of India (SEBI), which regulates securities markets before it can
collect funds from the public.
Different investment avenues are available to investors. Mutual funds also offer good investment
opportunities to the investors. Like all investments, they also carry certain risks. The investors
should compare the risks and expected yields after adjustment of tax on various instruments
while taking investment decisions.

History of the Indian Mutual Fund

The Indian mutual fund industry is dominated by the Unit Trust of India, which has a total
corpus of Rs700bn collected from more than 20 million investors. The UTI has many
funds/schemes in all categories i.e. equity, balanced, income etc with some being open-ended
and some being closed-ended. The Unit Scheme 1964 commonly referred to as US 64, which is a
balanced fund, is the biggest scheme with a corpus of about Rs200bn. Most of its investors
believe that the UTI is government owned and controlled, which, while legally incorrect, is true
for all practical purposes.

The second largest category of mutual funds is the ones floated by nationalized banks. Can bank
Asset Management floated by Canara Bank and SBI Funds Management floated by the State
Bank of India are the largest of these. GIC AMC floated by General Insurance Corporation and
JeevanBimaSahayog AMC floated by the LIC are some of the other prominent ones. 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

An Act of Parliament established Unit Trust of India (UTI) on 1963. It was set up 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 end
of 1993, the mutual fund industry had assets under management of Rs.47, 004 cores.
Third Phase – 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 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.

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 Specified Undertaking of
Unit Trust of India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund Regulations.

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. With the bifurcation of the
erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of assets under
management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector funds, the
mutual fund industry has entered its current phase of consolidation and growth. As at the end of
September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421
schemes.

STRUCTURE OF MUTUAL FUND

There are many entities involved and the diagram below illustrates the structure

Figure 1.2
SEBI:-

The regulation of mutual funds operating in India falls under the preview of authority of the
“Securities and Exchange Board of India” (SEBI). Any person proposing to set up a mutual
fund in India is required under the SEBI (Mutual Funds) Regulations, 1996 to be registered with
the SEBI.

TYPES OF MUTUAL FUND SCHEMES

In India, there are many companies, both public and private that are engaged in the trading of
mutual funds. Wide varieties of Mutual Fund Schemes exist to cater to the needs such as
financial position, risk tolerance and return expectations etc. Investment can be made either in
the debt Securities or equity .The table below gives an overview into the existing types of
schemes in the Industry.
 Figure 1.3

1. Equity Funds:-
Equity funds are considered to be the more risky funds as compared to other fund types,
but they also provide higher returns than other funds. It is advisable that an investor
looking to invest in an equity fund should invest for long term i.e. for 3 years or more.
There are different types of equity funds each falling into different risk bracket. In the
order of decreasing risk level, there are following types of equity funds:-

a. Aggressive Growth Funds- In Aggressive Growth Funds, fund managers aspire for
maximum capital appreciation and invest in less researched shares of speculative nature.
Because of these speculative investments Aggressive Growth Funds become more
volatile and thus, are prone to higher risk than other equity funds.

b. Growth Funds- Growth Funds also invest for capital appreciation (with time horizon of
3 to 5 years) but they are different from Aggressive Growth Funds in the sense that they
invest in companies that are expected to outperform the market in the future. Without
 entirely adopting speculative strategies, Growth Funds invest in those companies that are
expected to post above average earnings in the future.

c. Specialty Funds- Specialty Funds have stated criteria for investments and their portfolio
comprises of only those companies that meet their criteria. Criteria for some specialty
funds could be to invest/not to invest in particular regions/companies. Specialty funds are
concentrated and thus, are comparatively riskier than diversified funds.. There are
following types of specialty funds:-

i. Sector Funds: - Equity funds that invest in a particular sector/industry of the

market are known as Sector Funds. The exposure of these funds is limited to a
particular sector (say Information Technology, Auto, Banking, Pharmaceuticals or
Fast Moving Consumer Goods) which is why they are more risky than equity
funds that invest in multiple sectors.

ii. Foreign Securities Funds: - Foreign Securities Equity Funds have the option to
invest in one or more foreign companies. Foreign securities funds achieve
international diversification and hence they are less risky than sector funds.
However, foreign securities funds are exposed to foreign exchange rate risk and
country risk.

iii. Mid-Cap or Small-Cap Funds: - Funds that invest in companies having lower
market capitalization than large capitalization companies are called Mid-Cap or
Small-Cap Funds. Market capitalization of Mid-Cap companies is less than that of
big, blue chip companies (less than Rs. 2500crores but more than Rs.500 crores) -
and Small-Cap companies have market capitalization of less than Rs. 500crores.
Market Capitalization of a company can be calculated by multiplying the market
price of the company's share by the total number of its outstanding shares in the
market. The shares of Mid-Cap or Small-Cap Companies are not as liquid as of
Large-Cap Companies whichgives rise to volatility in share prices of these
companies and consequently, investment gets risky.

iv. Option Income Funds*:- While not yet available in India, Option Income Funds
write options on a large fraction of their portfolio. Proper use of options can help
to reduce volatility, which is otherwise considered as a risky instrument. These
funds invest in big, high dividend yielding companies, and then sell options
against their stock positions, which generate stable income for investors.

d. Diversified Equity Funds:- Except for a small portion of

investment in liquid money market, diversified equity funds invest mainly in equities
without any concentration on a particular sector(s). These funds are well diversified and
reduce sector-specific or company-specific risk. However, like all other funds diversified
equity funds too are exposed to equity market risk. One prominent type of diversified
equity fund in India is Equity Linked Savings Schemes (ELSS). As per the mandate, a
minimum of 90% of investments by ELSS should be in equities at all times. ELSS
investors are eligible to claim deduction from taxable income (up to Rs 1 lakh) at the time
of filing the income tax return. ELSS usually has a lock-in period and in case of any
redemption by the investor before the expiry of the lock-in period makes him liable to
pay income tax on such income(s) for which he may have received any tax exemption(s)
in the past.
e. Equity Index Funds:- Equity Index Funds have the objective to match the performance
of a specific stock market index. The portfolio of these funds comprises of the same
companies that form the index and is constituted in the same proportion as the index.
Equity index funds that follow broad indices (like S&P CNX Nifty, Sensex) are less risky
than equity index funds that follow narrow sectored indices (like BSE BANKEX or CNX
Bank Index etc). Narrow indices are less diversified and therefore, are more risky.
f. Value Funds: - Value Funds invest in those companies that have sound fundamentals and
whose share prices are currently under-valued. The portfolio of these funds comprises of
shares that are trading at a low Price to Earnings Ratio (Market Price per Share / Earning
per Share) and a low Market to Book Value (Fundamental Value) Ratio. Value Funds
may select companies from diversified sectors and are exposed to lower risk level as
compared to growth funds or specialty funds. Value stocks are generally from cyclical
industries (such as cement, steel, sugar etc.) which make them volatile in the short-
term.Therefore, it is advisable to invest in Value funds with a long-term time horizon as
risk in the long term, to a large extent, is reduced.

g. Equity Income or Dividend Yield Funds: - The objective of Equity Income or Dividend
Yield Equity Funds is to generate high recurring income and steady capital appreciation
for investors by investing in those companies which issue high dividends(such as Power
or Utility companies whose share prices fluctuate comparatively lesser than other
companies' share prices). Equity Income or Dividend Yield Equity Funds are generally
exposed to the lowest risk level as compared to other equity funds.

2. Debt / Income Funds:-

Funds that invest in medium to long-term debt instruments issued by private companies,
banks, financial institutions, governments and other entities belonging to various sectors
(like infrastructure companies etc.) are known as Debt / Income Funds. Debt funds are
low risk profile funds that seek to generate fixed current income (and not capital
appreciation) to investors. In order to ensure regular income to investors, debt (or
income) funds distribute large fraction of their surplus to investors. Although debt
securities are generally less risky than equities, they are subject to credit risk (risk of
default) by the issuer at the time of interest or principal payment. To minimize the risk of
default, debt funds usually invest in securities from issuers who are rated by credit rating
agencies and are considered to be of "Investment Grade". Debt funds that target high
returns are more risky. Based on different investment objectives, there can be following
types of debt funds:-

a. Diversified Debt Funds:-

Debt funds that invest in all securities issued by entities belonging to all sectors of the
market are known as diversified debt funds. The best feature of diversified debt funds is
that investments are properly diversified into all sectors which results in risk reduction.
 Any loss incurred, on account of default by a debt issuer, is shared by all investors which
further reduces risk for an individual investor.

b. Focused Debt Funds*:- Unlike diversified debt funds, focused debt funds are narrow
focus funds that are confined to investments in selective debt securities, issued by
companies of a specific sector or industry or origin. Some examples of focused debt
funds are sector, specialized and offshore debt funds, funds that invest only in Tax Free
Infrastructure or Municipal Bonds. Because of their narrow orientation, focused debt
funds are more risky as compared to diversified debt funds. Although not yet available in
India, these funds are conceivable and may be offered to investors very soon.

c. High Yield Debt funds: - As we now understand that risk of default is present in all debt
funds, and therefore, debt funds generally try to minimize the risk of default by investing
in securities issued by only those borrowers who are considered to be of "investment
grade". But, High Yield Debt Funds adopt a different strategy and prefer securities issued
by those issuers who are considered to be of "below investment grade". The motive
behind adopting this sort of risky strategy is to earn higher interest returns from these
issuers. These funds are more volatile and bear higher default risk, although they may
earn at times higher returns for investors.

d. Assured Return Funds:- Although it is not necessary that a fund will meet its objectives
or provide assured returns to investors, but there can be funds that come with a lock-in
period and offer assurance of annual returns to investorsduring the lock-in period. Any
shortfall in returns is suffered by the sponsors or the Asset Management Companies
(AMCs). These funds are generally debt funds and provide investors with a low-risk
investment opportunity. However, the security of investments depends upon the net
worth of the guarantor (whose name is specified in advance on the offer document). To
safeguard the interests of investors, SEBI permits only those funds to offer assured return
schemes whose sponsors have adequate net-worth to guarantee returns in the future. In
the past, UTI had offered assured return schemes (i.e. Monthly Income Plans of UTI) that
assured specified returns to investors in the future. UTI was not able to fulfill its promises
and faced large shortfalls in returns. Eventually, government had to intervene and took
over UTI's payment obligations on itself. Currently, no AMC in India offers assured
return schemes to investors, though possible.

e. Fixed Term Plan Series:- Fixed Term Plan Series usually are closed-end schemes
having short term maturity period (of less than one year) that offer a series of plans and
issue units to investors at regular intervals. Unlike closed-end funds, fixed term plans are
not listed on the exchanges. Fixed term plan series usually invest in debt / income
schemes and target shot term investors. The objective of fixed term plan schemes is to
gratify investors by generating some expected returns in a short period.

3. Gilt Funds: Also known as Government Securities in India, government papers

(named dated securities) having medium to long term maturity period. Issued by the
Government of India, these investments have little credit risk (risk of default) and provide
safety of principal to the investors. However, like all debt funds, gilt funds too are
exposed to interest rate risk. Interest rates and prices of debt securities are inversely
related and any change in the interest rates results in a change in the NAV of debt/gilt
 funds in an opposite direction .

4. Money Market / Liquid Funds: - Money market/ liquid funds invest in short
term(maturing within one year) interest bearing debt instruments.
These instruments are highly liquid and provide safety of investment, thus
making money market/ liquid funds the safest investment options.

5. Hybrid Funds:- As the name suggests, hybrid funds are those funds whose
Portfolio includes a blend of equities, money market securities and debts.

a. Balanced Funds: - The portfolio of balanced funds includes assets like debt securities,
convertible securities, and equity and preference shares held in a relatively equal
proportion. The objectives of balanced funds are to reward investors with a regular
income, moderate capital appreciation and at the same time minimizing the risk of capital
erosion. Balanced funds are appropriate for conservative investors having a long term
investment horizon.

b. Growth-and-Income Funds: -

Funds that combine features of growth funds and income funds are known as Growth-
and-Income Funds. These funds invest in companies having potential for capital
appreciation and those known for issuing high dividends. The level of risks involved in
these funds is lower than growth funds and higher than income funds.

c. Asset Allocation Funds:-Asset allocation funds adopt a variable asset allocation strategy
that allows fund managers to switch over from one asset class to another at any time
depending upon their outlook for specific markets. In other words, fund managers may
switch over to equity if they expect equity market to provide good returns and switch
over to debt if they expect debt market to provide better returns.

6. OTHERS:-

a. Commodity Funds:-
Those funds that focus on investing in different commodities (like metals, food grains,
crude oil etc.) or commodity companies or commodity futures contracts are termed as
Commodity Funds. A commodity fund that invests in a single commodity or a group of
commodities is a specialized commodity fund and a commodity fund that invests in all
available commodities is a diversified commodity fund and bears less risk than a
 specialized commodity fund. "Precious Metals Fund" and Gold Funds (that invest in
gold, gold futures or shares of gold mines) are common examples of commodity funds.

b. Real Estate Funds: - Funds that invest directly in real estate or lend to the real
Estate developers or invest in shares/securitized assets of housing finance
Finance companies are known as specialized real-estate funds.

c. Exchange Traded Funds (ETF)

Exchange Traded Funds provide investors with combined benefits of a closed-end and an open-
end mutual fund. Exchange Traded Funds follow stock market indices and are traded on stock
exchanges like a single stock at index linked prices. The biggest advantage offered by these
funds is that they offer diversification, flexibility of holding a single share (tradable at index
linked prices) at the same time. Recently introduced in India, these funds are quite popular
abroad.

d. Fund of Funds

Mutual funds that do not invest in financial or physical assets, but do invest in other mutual fund
schemes offered by different AMCs, are known as Fund of Funds. Fund of Funds maintain a
portfolio comprising of units of other mutual fund schemes, just like conventional mutual funds
maintain a portfolio comprising of equity/debt/money market instruments or non financial assets.
Fund of Funds provide investors with an added advantage of diversifying into different mutual
fund schemes with even a small amount of investment, which further helps in diversification of
risks. However, the expenses of Fund of Funds are quite high on account of compounding
expenses of investments into different mutual fund schemes.
Risk Hierarchy of Different Mutual 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:-

. Figure 1.4
INTRODUCTION OF ULIPS

ULIP is an abbreviation for Unit Linked Insurance Policy. A ULIP is a life insurance policy
which provides a combination of risk cover and investment. The dynamics of the capital market
have a direct bearing on the performance of the ULIPs. REMEMBER THAT IN A UNIT
LINKED POLICY; THE INVESTMENT RISK IS GENERALLY BORNE BY THE
INVESTOR.

Unit linked insurance plan (ULIP) is life insurance solution that provides for the benefits
of risk protection and flexibility in investment. The investment is denoted as units and is
represented by the value that it has attained called as Net Asset Value (NAV). The policy
value at any time varies according to the value of the underlying assets at the time.

In a ULIP, the invested amount of the premiums after deducting for all the charges and
premium for risk cover under all policies in a particular fund as chosen by the policy
holders are pooled together to form a Unit fund. A Unit is the component of the Fund in a
Unit Linked Insurance Policy.

The returns in a ULIP depend upon the performance of the fund in the capital market.
ULIP investors have the option of investing across various schemes, i.e., diversified equity
funds, balanced funds, debt funds etc. It is important to remember that in a ULIP, the
investment risk is generally borne by the investor.

In a ULIP, investors have the choice of investing in a lump sum (single premium) or
making premium payments on an annual, half-yearly, quarterly or monthly basis. Investors
also have the flexibility to alter the premium amounts during the policy's tenure. For
example, if an individual has surplus funds, he can enhance the contribution in ULIP.
Conversely an individual faced with a liquidity crunch has the option of paying a lower
amount (the difference being adjusted in the accumulated value of his ULIP). ULIP
investors can shift their investments across various plans/asset classes.

The returns in a ULIP depend upon the performance of the fund in the capital market.
ULIP investors have the option of investing across various schemes, i.e., diversified equity
funds, balanced funds, debt funds etc. It is important to remember that in a ULIP, the
investment risk is generally borne by the investor.

In a ULIP, investors have the choice of investing in a lump sum (single premium) or making
premium payments on an annual, half-yearly, quarterly or monthly basis. Investors also have the
flexibility to alter the premium amounts during the policy's tenure. For example, if an individual
has surplus funds, he can enhance the contribution in ULIP. Conversely an individual faced with
a liquidity crunch has the option of paying a lower amount (the difference being adjusted in the
accumulated value of his ULIP). ULIP investors can shift their investments across various
plans/asset classes (diversified equity funds, balanced funds, debt funds) either at a nominal or
no cost.
 TYPES OF ULIPS

One of the big advantages that a ULIP offers is that whatever be your specific financial
objective, chances are that there is a ULIP which is just right for you. The figure below gives a
general guide to the different goals that people have at various age-groups and thus, various life-
stages. Depending on your specific life-stage and the corresponding goal, there is a ULIP which
can help you plan for it.

Type I and Type II Ulips

ULIPS are life insurance policies where the insurance cover is bundled with investment. Unlike
traditional insurance-cum-investment policies such as endowment and money-back policies
which offer very low returns, Ulips offer market-linked returns. There are 2 types of ULIP plans.
Type 1 is a ULIP where Sum Assured or Fund Value whichever is higher is paid. In case of Type
2 of a ULIP, both Sum Assured and Fund Value are paid. However, to derive the full benefit of
such plans, an investor needs to compare important points like structure, costs and benefits.
Below is a brief comparison for the same.

TYPES OF FUNDS IN ULIPS

When you will buy any ULIP, the insurer will give you various options of investment funds and
will also allow some free swaps between these funds within a year. Generally there are four
types of funds, each insurer gives the name differently to them, you can check out with you
insurer before investing. The basic four type of funds in which ULIP’s invest are:-

GENERAL NATURE OF INVESTMENT RISK

DISCRIPTION CATEGORY
Equity Funds Primarily invested in company stocks with Medium to High
the general aim of capital appreciation
Debt Funds Invested in pure debt market Low

Money market Invested in Money market and govt. Low

Fund institutions

Balanced Funds Combining equity investment with fixed Medium

interest instruments
Figure 1.5

Equity Funds: In this type the investment component of your premium is invested into a pure
equity fund. As the fund invests only in equity the risk is high but if markets perform well the
returns are outstanding. As ULIP’s are a long term instrument you can safely invest into equity
funds as it has been proved that over a long term equities give best returns than any other
investment instrument.

Balanced Funds: In this type the investment is made in a mix of equity and debt. The ratio of
investment will be available with the insurer. A person who is not willing to take much risk but
still wants decent returns can opt for this type.

Debt Funds: This type of fund invests in pure debt instruments. The risk is very low and so are
returns from such funds.

Money Market Funds: Few insurers provide this kind of fund. These funds generally invest
into money market which is a short term debt market mainly governed by institutions. Apart
from these insurers can mix and provide other types of funds for Ulips. With taking into interest
your risk appetite and the goal for which you want to invest you can opt the right fund.

ULIPS VS MUTUAL FUNDS:-

ULIPs Mutual Funds

Minimum investment
Investment Determined by the investor and can be amounts are determined
amounts modified as well by the fund house

Upper limits for

expenses chargeable to
No upper limits, expenses determined by the investors have been set
Expenses insurance company by the regulator

Portfolio Quarterly disclosures

disclosure Not mandatory* are mandatory

Modifying asset Generally permitted for free or at a nominal Entry/exit loads have to
allocation cost be borne by the investor
 Section 80C benefits are
available only on
Section 80C benefits are available on all ULIP investments in tax-
Tax benefits investments saving funds

Figure 1.6

OBJECTIVES OF STUDY:-
 To study the behavior of the investors whether they prefer mutual funds or ULIPs.
 Conduct market survey on a sample selected from the population and derived opinion on
that research.

SCOPE OF THE STUDY:-

 Subject matter is related to the investor’s approach towards mutual funds and Ulips.
 People of age between 18 to 40 and above i.e. the range is wide.
 Area limited to Gurugram(Haryana).
 Demographics include names, age, qualification, occupation and annual income.

RESEARCH METHODOLGY

Research always starts with a question or a problem. Its purpose is to question through the
application of the scientific method. It is a systematic and intensive study directed towards a
more complete knowledge of the subject studied. Research specifies the information required to
address the issues, designs, and the method for collecting information, manage and implement
the data collection process, analyses the results and communicate the findings and their
implication. I have prepared our project as descriptive type, as the objective of the study
demands the answers of the question related to find the potentiality of Mutual Funds and Ulips in
Gurugram. How much potential is there in Gurugram?
RESEARCH PROCESS:-

As marketing research is a systemic and formalized process, it follows a certain sequence of

research action. The marketing research process has the following steps:-

 Formulating the problems.

 Developing objectives of the research.
 Designing an effective research plan.
 Data collection techniques.
 Evaluating the data and preparing a research report.

STEPS OF RESEARCH DESIGN:

 Define the information needed: -This first step states that what the information that is
actually required is. Information in this case we require is that what is the approach of
investors while investing their money in mutual funds and Ulips e.g. what do they
consider while deciding as to invest in which of the two i.e. Mutual funds or Ulips.
Also, it studies the extent to which the investors are aware of the various costs that one
bears while making any investment. So, the information sought and information
generated is only possible after defining the information needed.

 Design the research: - A research design is a framework or blueprint for conducting the
research project. It details the procedures necessary for obtaining the information needed
to solve research problems. In this project, the research design is explorative in nature.

 Specify the scaling procedures: - Scaling involves creating a continuum on which

measured objects are located. Both nominal and interval scales have been used for this
purpose.

 Construct and pretest a questionnaire: - A questionnaire is a formalized set of

questions for obtaining information from respondents. Where presetting refers to the
testing of the questionnaire on a small sample of respondents in order to identify and
eliminate potential problems.
 Sample Unit: - Salaried Class and Business people.
 Sample Size: -This study involves 100 respondents.
.
 Sampling Technique: -The sample size has been taken by convenience sampling
technique.

 Data Collection: After the research methodology, research problem in marketing has
been identified and selected; the next step is to collect the requisite data. There are two
 types of data collection method – primary data and secondary data. In our live project;
we decided primary data collection method because our study nature does not permit to
apply observational method. In survey approach we had selected a questionnaire method
for taking a customer view because it is feasible from the point of view of our subject &
survey purpose. Data has been collected both from primary as well as secondary sources
as described below:

There are two types of data collection method use in my project report.

 Primary data
 Secondary data.

For my project, I decided on primary data collection method and approaching respondents
directly in the field to know their perception and investment pattern in ULIP and Mutual fund
and also made questionnaire for creating database of business and salaried employees in
Gurugram city. I also used Secondarydata collection method by referring to various websites,
books, magazines, journals and daily newspapers for collecting information regarding project
under study.

Primary sources-
Primary data was obtained through questionnaires filled by people and through direct
communication with respondents in the form of Interview.

Secondary sources-
The secondary sources of data were taken from the various websites, books, journals reports,
articles etc. This mainly provided information about the mutual fund and ULIPs industry in
India.

 Plan for data analysis: - Analysis of data is planned with the help of Percentage
analysis.
DATA ANALYSIS PROCESS:-
For the analysis, questionnaire is being used as a source of primary data to know people’s
perception about their investment choices towards two financial instruments i.e. ULIPS and
Mutual Funds. Depending upon the responses given by the respondents, the questionnaires are
given the graphical form in the excel sheets for the proper analysis of the collected data. On the
basis of in-depth analysis from the graphs, findings, conclusion, recommendation are drawn
which are explained in the end of the project report. Graphical and Pie-Chart analysis are being
used.
DATA ANALYSIS:-

 Percentage of People who have invested in ULIPS, Mutual Fund and in both the
instruments?

By the analysis of the responses, I came to know that there are 51% people who have invested in
Mutual Funds followed by 30% in ULIPS and 19% in both the financial instruments.

 In which sector do you prefer to invest money?

Mostly people are investing in the Government sector followed by Private sector and
some people are also investing in both the sectors.
 Factors considered by investors before investing in ULIPS and Mutual Funds?
 42
39

12

Safety of Principle High Return Maturity Terms and condition

Whether it is Mutual Fund or ULIP, people are considering Return on their investment
(ROI)&Safety of Principle as the two major decision making parameters while investing here in
Gurugram region of Haryana.

 Information sources helpful to the investors in making investment decisions?

66

21

5 5 3

Journals Reference group Television Brokers and Newspapers

agents

People’s exposure to the brokers and agents are influencing them most while making financial
decision regarding investment in ULIPS or Mutual Funds.

 Investment preference on the basis of following parameters?

 ULIP Mutual Fund

30

10 11 10
7 8 7
5 6 6

Diversification Professional Low cost Liquidity Flexibility

management

On the basis of Diversification, Professional management, and Flexibility, people prefer

ULIPS whereas on the basis of Low cost and Liquidity, people prefer Mutual Funds.

 Expected return from both ULIPS and Mutual Fund?

ULIP Mutual Fund

22
20
18
15

8
6 6
5

Less than 10% 11%-15% 15%-20% 20%-25%

The response regarding expected return from ULIP and Mutual Fund are mixed and a
thin line of difference exists between the expected rates ofreturn. According to people,
both ULIP and Mutual Fund are neck to neck in giving return in the range of 11-15%
and 15-20%.

 Preferred tenure of investment for ULIPS and Mutual Funds?

 ULIP Mutual Fund

35

21

9 10 10
7
5
3

3-5 years 5-7 years 7-10 years 10-20 years

From the long term perspective, people are going for ULIPS but for the short term and
midterm, people preferMutual Funds.

 Preferred Investment Avenue in future?

Mutual Fund ULIP Both

40
55

55% people are considering Mutual Funds as their future investment avenue whereas40%
individuals are considering ULIPS as their future investment option and 5% are considering both
for their investment in the financial products.

 Awareness about ULIPS and Mutual Fund?

 ULIP Mutual Fund Both

5%
10%

85%

Knowledge about both the financial product is quite good among the people amounting to
85%. Only 10% people are there who have knowledge only about Mutual Funds and
there are only 5% people who have the knowledge about ULIPS only.

 Investment Ranking?

When given different investment options like Mutual Funds, Gold, Insurance/ULIP,
Fixed Deposit and Real-estate/Property, people opted for Mutual fund the most
followed by ULIPS, Fixed Deposits, Gold and at the end for Real-estate/ Property.
 Occupation wise investment?
As far as investment on the basis of occupation wise, business people are investing equally in
ULIP and Mutual Fund but if we see salaried employees, mostly they are investing in Mutual
Funds followed by ULIPS.

 Annual income of the investors?

In the income bracket of 2 Lac- 6 Lac, people are investing heavily in the Mutual Funds
whereas in the income bracket of 6 Lac- 8 Lac, people are investing heavily in ULIPS
and in the high income bracket of 8 Lac and above people are investing in both the
ULIPS and the Mutual Funds.
  Purpose of investment in the ULIP and Mutual Fund?

ULIP Mutual Fund

44
42

4 5
3 2

Saving Return Both

The basic purpose of investment is the return followed by saving. There are some miniscule
amounts of people who are investing in both the instruments for saving as well as for return.

 For the purpose of tax benefit which of the following instrument is best?

Tax Benefit

87

10
3

ULIP Mutual Fund Both

ULIPS are considered best for the tax benefit purpose.

RESEARCH FINDINGS:-
 Most number of people invested in Mutual funds followed byULIP.

 People are investing more in government sector accounting for 54% followed by 35 %
in the private sector and 11% in both government and private sector.

 People are giving significant consideration to Return on Investment (ROI) followed by

Safety of principle while investing in the financial products i.e. ULIP&Mutual Fund.

 Broker and agents are playing major role in influencing people’s decision making
regarding investment in ULIPS and Mutual Funds.

 Regarding expected rate of return (ROI) both ULIP and Mutual Fund are neck to neck
in giving return in the range of 11-15% and 15-20%.But Mutual Funds are slightly
ahead in giving return than ULIPS according to the respondents.

 From the long term perspective, people are going for ULIPS and for short term &
medium term, Mutual Funds are preferred.

 Awareness among the people about the two main financial products which are under
study i.e. ULIPS and Mutual Funds are quite good which amounts to 85% for both the
products and 10% only for Mutual Funds and 5% for ULIPS only.

 When given different investment options, people are preferring investment in Mutual
Funds followed by Insurance/ULIPS, Fixed Deposits, Gold and at last in the Real-
estate/Property.

 If we talk about the future investment avenue then the responses are quite mixed and are
not at all heavily tilting towards any of the product. 55% people will go for the Mutual
Funds and 40% people will go for the ULIPS. So, there exist a very thin line of
difference between the investment decision regarding ULIPS and Mutual Funds and
5% will go for both the products.
 Business people are investing equally in ULIP and Mutual Fund but if we see salaried
employees, mostly they are investing in Mutual Funds followed by ULIPS.

 People in the income bracket of 2-6 Lac are investing heavily in the Mutual Funds
whereas people in the income bracket of 6-8 Lacs are investing heavily in the ULIPS and
in the end, people in the income bracket of 8 Lacs and above are investing in both the
financial instruments i.e. ULIPS and Mutual Funds.

 Highest number of investors comes from the salaried class.

 Highest number of investors comes from the age group of 25-35.

 On the basis of Diversification, Professional management, and Flexibility, people

prefer ULIPS whereas on the basis of Low cost and Liquidity, people prefer Mutual
Funds.

 The basic purpose of investment is the return followed by saving. There are some
miniscule amount of people who are investing in both the instruments for saving as well
as for return.

 For the purpose of tax benefit, people consider ULIPS better than Mutual Funds.
CONCLUSION:-

A Mutual Fund is the ideal investment vehicle for today’s complex and modern financial
scenario. Markets for equity shares, bonds and other fixed income instruments, real estate,
derivatives and other assets have become mature and information driven. Today each and every
person is fully aware of every kind of investmentproposal especially in the areas like Gurugram
which is highly urban and a business hub. Everybody wants to invest money where risk is
minimum, returns are high and redemption of capital is easy. In my opinion before investing
in mutual funds, one should be fully aware of each and everything.
At the same time ULIPSas an investment avenue is good for people who have interest in staying
for a longer period of time, that is around 10 years and above. Also in the coming times, ULIPS
will grow faster. It is good for people who were investing in ULIP policies of insurance
companies as their investments earn them a better return than the other policies.

 Investors who want to invest money after detailed study of equity market should
go ahead for Mutual Funds.

 If you prefer to get life insurance cover along with good returns on investment
then ULIPS would be good.

 It is observed during the study that most people do not want to take risk and give
high importance to the safety of principle only secondary to the return on
investment (ROI).

Salaried class employees are investing in the financial products which are under study depending
upon their income. As the income is increasing, people are moving towards ULIP plan for the
investment as well as for insurance purpose. Employees who are getting salary in the range of 2-
6 Lacs are investing heavily in the Mutual Funds and who are earning in the range of 6-8 Lacs
are investing heavily in ULIPS and those who are earning above 8 Lacs are investing in both the
instruments. So, investment in the financial products depends majorly upon the income level of
the individuals. The basic purpose of investment in the product is for return followed by savings.
Mutual Funds are among the favorite investment avenue among the surveyed people
followed by ULIPS. The future prospect of the ULIPS is very bright as people will prefer
ULIPS because of their investment and insurance benefits as income level increases. The
awareness regarding the financial instrument understudy is well documented and found during
the study and analysis in Gurugram region.
RECOMMENDATION:-

 The people do not want to take risk. The asset management companies should launch
more diversified funds so that the risk gets minimize. This will lure more and more
people to invest in Mutual Funds and ULIPS.

 The expectation of the people from the Mutual Funds is high. So, the portfolio of the
fund should be prepared taking into consideration the expectations of the people.

 Companies should reduce fund charges, administration charges and other charges which
help to invest more funds in the security market and earn good returns.

 ULIPS is good for those who prefer investment plus insurance.

 Companies should give regular dividends as it depicts profitability.

LIMITATIONS:-
 Data is mix of Primary and Secondary one.
 To collect the primary data from the people is difficult task and any false facts if provided
by the respondent or if any information is not revealed cannot be ruled out.
 The financial product is restricted to only ULIP and Mutual Fund.
 The collected primary data is only from the Gurugram region of the state of Haryana and
covering only 100 respondents working in Spaze IT Parkand nearby Sohna region.
 REFERENCES

WEBSITES
 https://www.pnbmetlife.com/about-us/pnb-metlife-india.html

 https://life.futuregenerali.in/about-us

 http://www.nestkeys.com/about-us

 http://www.Indianmirror.com

 http://www.irdai.gov.in

BOOKS & JOURNALS

 Media Reports, Press Releases, Press Information Bureau, Union Budget

2017-18, Insurance Regulatory and Development Authority of India
(IRDA).

(Note: # - as per Assocham Report 2016)

 Sri Krishna, Justice B. N. (2013):Financial Sector

Legislative Reforms Commission, vol. I and vol. II.

 C.R. Kothari (2009) “ Research Methodology: Methods & Techniques”

(Second Revised Edition), New Age International Publishers, New Delhi.

NEWSPAPERS

 The Hindu
 The Economic Times
 The Times of India
 The Business Standard
 The Business Line
ANNEXURE

(QUESTIONNAIRE)

I am Ayushma Murali, student of kasturi ram college of higher education, Delhi

doing a project on “Comparative Analysis of Mutual Funds and ULIPS” and
this questionnaire is a part of the project and the information collected through this
questionnaire would be used for academic purpose only and will be strictly
confidential.

Q1.Name------------------------------

Q2. Age---------------------------------

Q3. Gender – Male--------------------, Female--------------------

Q4. What is your Occupation?

1. Service
2. Businessmen
3. Professional
4. Other

Q5. What is your annual income?

1. Below 2 Lacs
2. 2 Lacs-6 Lacs
3. 6 Lacs- 8 Lacs
4. Above 8 Lacs

Q6. In which of the following financial instrument you have invested?

1. Mutual Fund
2. ULIP
3. Both
4. None

Q7. In which sector do you prefer to invest money?

1. Government sector
2. Private sector
3. Both
Q8. Which of the following factors considered by you before investing in Mutual
Funds or ULIPS?

1. Safety of Principle
2. High Return
3. Maturity
4. Terms and conditions

Q9. Which of the following information source is considered by you before

investing in financial products like Mutual Funds and ULIPS?

1. Journals
2. Reference groups
3. Television
4. Brokers and agents
5. Newspapers

Q10. Which of the following parameter is considered by you the most while
investing in Mutual Funds or ULIPS?

1. Diversification
2. Professional Management
3. Low cost
4. Liquidity
5. Flexibility

Q11. What is your expected return from bothULIPSandMutual Fund?

1. Less than 10%

2. 11%- 15%
3. 15%- 20%
4. 20%- 25%

Q12. What is your preferred tenure of investment forULIPSandMutual Funds?

1. 3- 5 years
2. 5-7 years
3. 7-10 years
 4. 10-20 years

Q13.What will be your preferred investment avenue for the future?

1. Mutual Funds
2. ULIPS
3. Both

Q14. Do you have proper awareness about ULIPS and Mutual Funds?

1. Yes
2. No

Q15. What is your preferred investment ranking for the following financial
products?

Financial instrument Ranks

Mutual Funds
Insurance/ULIPS
Fixed Deposits
Gold
Real-estate/Property

Q16. For which of the following purpose you invest in ULIPS and Mutual
Funds?

1. Saving
2. Return
3. Both

Q17. For Tax benefit which of the following instrument is best?

1. ULIP
2. Mutual Fund
3. Both
THANK YOU