A

Major Project Report

On

“ANALYSIS ON INVESTMENT IN MUTUAL FUND

THROUGH SYSTEMATIC INVESTMENT
PLANNING”
Submitted for partial fulfillment of requirement for the award of degree
Of
Master of Business Administration
Of
PUNJAB TECHNICAL UNIVERSITY (P.T.U.)
JALANDHAR (PUNJAB)

Session 2018-19

Supervision to: Submitted by:

Mr. Anmol Sharma Abhishek Raghuwanshi
Assistant Professor Roll No. 1729609
Faculty of Management MBA IV Semester

CHANDIGARH GROUP OF COLLEGES- TECHNICAL CAMPUS

JHANJERI, MOHALI (PUNJAB 140307)
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 DECLARATION

I the undersigned solemnly declare that the report of the project work entitled ANALYSIS
ON INVESTMENT IN MUTUAL FUND THROUGH SYSTEMATIC INVESTMENT
PLANNING is based on my own work carried out during the course of my study under the
supervision of Mr. Anmol Sharma.

I assert that the statements made and conclusions drawn are an outcome of the project work. I
further declare that to the best of my knowledge and belief that the project report does not
contain any part of any work which has been submitted for the award of any other
degree/diploma/certificate in this University or any other University.

(Signature of the Candidate)

Name – Abhishek Raghuwanshi

Roll No.:1729609

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 CERTIFICATE BY GUIDE

This to certify that the report of the project submitted is the outcome of the project work
entitled ANALYSIS ON INVESTMENT IN MUTUAL FUND THROUGH
SYSTEMATIC INVESTMENT PLANNING carried out by Abhishek Raghuwanshi
bearing Roll No: 1729609 & Enrollment No………….carried by under my guidance and
supervision for the award of Degree in Master of Business Administration of Punjab
Technical University (PTU), Jalandhar, India.

To the best of the my knowledge the report

i) Embodies the work of the candidate him/herself,

ii) Has duly been completed,
iii) Fulfils the requirement of the ordinance relating to the MBA degree of the
University and
iv) Is up to the desired standard for the purpose of which is submitted.

_______________________

(Signature of the Guide)

Name:

Designation:

Department:

Name & Address of the

Institute:

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 ACKNOWLEDGEMENT

Working on this project has presented with many insights and challenges. This project would
not have been the same without the dedicated guidance of my project guide, Mr. Anmol
Sharma Assistant Professor, Faculty of Management, CGCTC Jhanjeri, Mohali . I thank
him for his support and patience. This project is a synergistic product of many minds.
Therein, I take this Opportunity to express my profound appreciation to everyone who has
directly or indirectly helped me in the successful completion of this project.
The project would not been completed without their support and guidance. Thanking them is
a small gesture for the generosity theyshowed. It was a great learning experience to work on
such a project.

___________________
(Signature of the student)
Name: Abhishek Raghuwanshi

Roll No.: 1729609

MBA IV Semester

PREFACE
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“Experience is the best teacher.” This saying is very well applicable in everyone’s life.
Therefore as a student of management it must apply to me also. Then the question arises that
from where we can get this experience. Obviously we must undergo study on Mutual fund.
To serve this purpose I have done analysis on Mutual fund through the various sources
available and as an outcome I have prepared this

In today’s corporate and competitive world, I find that Mutual fund has
good growth and potential. Study of Mutual fund has given me the opportunity to work and
get experience in a highly competitive and enhancing sector.

The success story of good market share of different Mutual fund depends upon the returns of
the Mutual fund.

TABLE OF CONTENTS
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SR.NO. CHAPTERIZATION PAGE NO.

1. Introduction
1.1 Introduction to Mutual Funds
1.2-Advantages of Investing in a Mutual Fund
1.3-Procedure of Mutual Fund
1.4-Mutual Fund Schemes
1.5- Systematic Investment Plan
1.6- How to invest through SIP
1.7- Procedure to be followed for investing in SIP
1.8- Mode of payment
1.9- Different types of SIP

2. Literature Review
3. Research Methodology
3.1- Objectives Of The Study
3.2- Scope Of The Study
3.3- Limitations Of The Study
3.4- Data Collection
4. Data Interpretation and Analysis

5. Findings, Recommendations and Conclusions

5.1- Findings
5.2- Recommendations and Suggestions
5.3- Conclusion

6. Bibliography and Questionnaire

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 CHAPTER 1
INTRODUCTION

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 INTRODUCTION TO MUTUAL FUNDS

Over a long term horizon, equity investments have given returns which far exceed those
from the debt based instruments. They are probably the only investment option, which can
build large wealth. In short term, equities exhibit very sharp volatilities, which many of us
find difficult to stomach. Investment in equities requires one to be in constant touch with the
market and a lot of research.

Buying good scripts require one to invest fairly large amounts.

Systematic Investing in a Mutual Fund is the answer to preventing the pitfalls of equity
investment and still enjoying the high returns. And it makes all the more sense today when
the stock markets are booming.
Management of the fund by the professionals or experts is one of the key advantages of
investing through a mutual fund. They regularly carry out extensive research - on the
company, the industry and the economy – thus ensuring informed investment. Secondly,
they regularly track the market.

Thus for many of us who do not have the desired expertise and are too busy with our
vocation to devote sufficient time and effort to investing in equity, Mutual Funds offer an
attractive alternative.
Another advantage of investing through mutual funds is that even with small amounts we
are able to enjoy the benefits of diversification. Huge amounts would be required for an
individual to achieve the desired diversification, which would not be possible for many of
us. Diversification reduces the overall impact on the returns from a portfolio. 
The Mutual Funds industry is well regulated both by SEBI and AMFI. They have, over
the years, introduced regulations, which ensure smooth and transparent functioning of the
mutual funds industry. This makes it safer and convenient for investors to invest through
MutualFunds. 
One of the biggest difficulties in equity investing is WHEN to invest, apart from the other
big question WHERE to invest. While, investing in a mutual fund solves the issue of
‘where’ to invest, SIP helps us to overcome the problem of ‘when’. SIP is a disciplined
investing irrespective of the state of the market. It thus makes the market timing totally
irrelevant.

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 With the next 2-3 years looking good from Indian Economy point of view, one can expect
handsome returns through regular investing. 
Mutual Funds allow us to invest very small amounts (Rs 500 – Rs 1000) in SIP, as against
larger one-time investment required, if we were to buy directly from the market. This
makes investing easier as it does not strain our monthly finances. It, therefore, becomes
an ideal investment option for a small-time investor, who would otherwise not be able to
enjoy the benefits of investing in the equity market. 
In SIP we are investing a fixed amount regularly. Therefore, we end up buying more
number of units when the markets are down and NAV is low and less number of units
when the markets are up and the NAV is high. Generally, we would stay away from
buying when the markets are down. We generally tend to invest when the markets are
rising. SIP works as a good discipline as it forces us to buy even when the markets are
low, which actually is the best time to buy.

Mutual funds are investment companies that pool money from investors at large and offer
to sell and buy back its shares on a continuous basis and use the capital thus raised to
invest in securities of different companies. In this your amount is invested in different
companies according to percentage ratio. A Mutual Fund is not an alternative investment
option to stocks and bond; rather it pools the money of several investors and invests this
in stocks, bonds, money market instruments and other types of securities.

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 realised 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.
.

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ADVANTAGES OF INVESTING IN A MUTUAL FUND

 Small investments :

Mutual funds help you to reap the benefit of returns by a portfolio spread across a wide
spectrum of companies with small investments. Such a spread would not have been
possible without their assistance.

 Professional Fund Management:

Professionals having considerable expertise, experience and resources manage the pool of
money collected by a mutual fund. They thoroughly analyse the markets and economy to
pick good investment opportunities.

 Spreading Risk :

An investor with a limited amount of fund might be able to to invest in only one or two
stocks / bonds, thus increasing his or her risk. However, a mutual fund will spread its risk
by investing a number of sound stocks or bonds. A fund normally invests in companies
across a wide range of industries, so the risk is diversified at the same time taking
advantage of the position it holds. Also in cases of liquidity crisis where stocks are sold at
a distress, mutual funds have the advantage of the redemption option at the NAVs.

 Transparency and interactivity :

Mutual Funds regularly provide investors with information on the value of their
investments. Mutual Funds also provide complete portfolio disclosure of the investments
made by various schemes and also the proportion invested in each asset type. Mutual
Funds clearly layout their investment strategy to the investor.

 Liquidity :

Closed ended funds have their units listed at the stock exchange, thus they can be bought
and sold at their market value. Over and above this the units can be directly redeemed to the
Mutual Fund as and when they announce the repurchase.

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  Choice :

The large amount of Mutual Funds offer the investor a wide variety to choose from. An
investor can pick up a scheme depending upon his risk / return profile.

 Regulations :

All the mutual funds are registered with SEBI and they function within the provisions of
strict regulation designed to protect the interests of the investor.
PROCEDURE OF MUTUAL FUND
How to read a Mutual Fund Offer Document
 Many people today find that they are deluged with information about investing. News
programs provide updates on the stock market several times a day.
 Through the Internet, individuals can check on the performance of their investments
at the click of a mouse. But one of the key sources of investment information, and one
that some investors may be tempted to overlook, is the Mutual Fund Scheme
Information Document and Statement of Additional Information.
 A mutual fund scheme information document and statement of additional information
is a legal document that must adhere to standards set forth by the Securities Exchange
Board Of India (SEBI), the regulatory agency that oversees the Indian Mutual Fund
industry.
 The information contained in the prospectus is intended to help you understand what
types of securities a fund invests in and the investment philosophy that the Investment
Manager uses in selecting individual securities for the fund.
 The scheme information document and statement of additional information will also
provide information on the fund's income and expenses, a review of historical
performance, and information about your ability to purchase or redeem your units.
 In addition, the scheme information document and statement of additional information
will also outline any loads/sales charges that may apply to your investment
transactions.
By law, mutual fund companies are required to provide you with an scheme information
document and statement of additional information before you make an initial investment.
Before investing, take the time to read this important document.

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Questions to ask before mutual fund investing
A mutual fund scheme information document and statement of additional information can
help you answer the following questions:
I. In what does this scheme invest?
II. Is the scheme seeking income or capital growth?
III. What has been the rate of return?
IV. What are the options available in the scheme (Growth/ Dividend)?
V. Is the scheme an open ended / close ended scheme and if there is a lock-in period
applicable?

Key Elements of a Mutual Fund Scheme Information Document and Statement of

Additional Information
The information contained in a mutual fund scheme information document and statement of
additional information is presented in several sections. As you read through these sections,
you'll want to evaluate how well the fund matches your investment objectives. Here's a look
at key elements that are contained in an Scheme Information Document and Statement of
Additional Information.
 Date of issue - A prospectus must be updated at least once in two years.
 Minimum investment - Mutual funds differ both in the minimum initial investment
required and the minimum for subsequent investments.

 Investment objective - This section states the investment goal of the fund, from income
to long-term capital appreciation, and may state the types of investments that the scheme
invests in, such as government bonds or common stocks. Be sure the scheme's objective
matches your investment goal.
 Investment policies – An scheme information document and statement of additional
information will outline the general strategies the Investment Manager will use in
selecting individual securities. This section may provide further information about the
securities in which the scheme invests, such as ratings of bonds or the types of companies
considered appropriate for a fund.
 Risk factors - Every investment involves some level of risk. The scheme scheme
information document and statement of additional information will describe the risks
associated with investments in the scheme.

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 Fees and expenses - Sales and management fees associated with a mutual fund must be
clearly listed.
 Tax information - An Scheme Information Document and Statement of Additional
Information will include information on the tax treatment of dividend and capital gains,
including information on deduction of tax at source
 Investor services – Unit holders may have access to certain services, such as automatic
reinvestment of dividends, systematic investment plan (SIP), systematic withdrawal plans
(SWP) and systematic investment plan for corporate employees. This section of the
prospectus, usually near the back of the publication, will describe these services and how
you can take advantage of them.

A prospectus generally ranges from 20 to 30 pages and includes a table of contents. The
scheme information document and statement of additional information may be amended from
time to time and attaching an addendum which highlights the changes e.g. change in load
structure, introducing of a new facility etc. usually reflects this. It is therefore important for
investors to read the scheme information document and statement of additional information in
detail to be able to understand the features of the scheme and get the best out of the services
offered by the Investment Manager.

MUTUAL FUND SCHEMES

There are a wide variety of Mutual Fund schemes that cater to your needs, whatever your age,
financial position, risk tolerance and return expectations. Whether as the foundation of
your investment programme or as a supplement, Mutual Fund schemes can help you meet
your financial goals?

(A) By Structure. .
Closed-End and Open End schemes
Mutual fund schemes are of two broad types, viz.,
(a) closed-end and
(b) open-end.

A closed-end fund has a fixed number of units outstanding, just like shares of a company.
Such units are listed on stock exchanges and traded in the market at the prevailing market

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prices in the same way as shares of a company. The liquidity of such units depends on how
actively they are being traded. With just a few exceptions, most closed-end funds are not
actively traded but have a fixed tenure. At the end of such tenure, the fund is liquidated and
the money returned to the unit holders.

An open-end mutual fund has arrangement both to issue further units and also to repurchase
existing units from the holders. The sale and repurchase prices are both linked to the NAV.
The SEBI has laid down rules for regulating the maximum permissible spread between issue
and repurchase prices of open-end schemes.
A puzzle
In the case of closed-end schemes, it has been observed that their market price is often
significantly lower than the NAV (i.e., “at a discount to NAV”, in market parlance). This has
always been a puzzle because it looks illogical. In such a case, the unit holders will be better
off if the fund is liquidated and the money returned to the unit holders. If unit holders had
voting power, they could get the scheme liquidated.
Open-end schemes are better
From the investor’s viewpoint, open-end funds are preferable because they provide
immediate liquidity to the investor in case of need. They also keep the fund’s management on
its toes. If an open-end fund is poorly managed, the investors can walk out any time. This is
not so in the case of closed-end schemes which, in a sense, lock-in the existing investors. In
the case of actively traded closed-end funds, an existing investor can sell his holding in the
market but usually at a price which is significantly below the NAV.
(c) Interval Schemes. .
These combine the features of open-ended and close-ended schemes. They may be traded
on the stock exchange or may be open for sale or redemption during predetermined intervals
at NAV related prices.
(B) By Investment objective
Growth Schemes
Aim to provide capital appreciation over the medium to long term. These schemes
normally invest a majority of their funds in equities and are willing to bear short term decline
in value for possible future appreciation.
These schemes are not for investors seeking regular income or needing their money back in
the short term.

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Income Schemes/ Bond Schemes
Bond schemes, also known as income schemes, invest in government and corporate bonds of
medium and long duration. The bulk of their income arises from interest and some part from
trading of bonds.
Bonds are exposed to interest rate risk, if interest rates rise, the market value of the existing
portfolio of bonds will fall. Bonds of longer maturity will decline more than bonds of shorter
maturity. Two other risks in the case of bonds arise respectively from defaults by the issuers
and market illiquidity. Hence, bond schemes are not always as safe as they may appear to be.
Income Schemes Aim to provide regular and steady income to investors. These schemes
generally invest in fixed income securities such as bonds and corporate debentures. Capital
appreciation in such schemes may be limited.
Ideal for:

 Retired people and others with a need for capital stability and regular income.
 Investors who need some income to supplement their earnings.

Balanced schemes
Balanced schemes invest in both equity and bonds. For this purpose, limits are specified in
the form of percentage to be invested in equity and bonds respectively. The idea is to provide
a mix of equity and bonds in a single scheme to suit the somewhat conservative investor.
However, such schemes are not popular in India, an important reason being that they don’t
enjoy the tax advantage which equity schemes have.
Aim to provide both growth and income by periodically distributing a part of the income
and capital gains they earn. They invest in both shares and fixed income securities in
the proportion indicated in their offer documents.  In a rising stock market, the NAV of these
schemes may not normally keep pace or fall equally when the market falls.
Ideal for: Investors looking for a combination of income and moderate growth.
Money Market / Liquid Schemes
Money market or liquid schemes are a relatively recent phenomenon in India. They invest in
money market instruments which are of very short-term maturity and, therefore, do not
generally involve much interest-rate-risk. Such schemes compete with bank deposits as a
method of holding liquid balances.
Aim to provide easy liquidity, preservation of capital and moderate income. These
schemes generally invest in safer, short term instruments such as treasury bills, certificates of

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deposit, commercial paper and interbank call money. Returns on these schemes may
fluctuate, depending upon the interest rates prevailing in the market.
Ideal for: Corporates and individual investors as a means to park their surplus funds for
short periods or awaiting a more favourable investment alternative.
Tax Saving Schemes (Equity Linked Saving Scheme - ELSS)
These schemes offer tax incentives to the investors under tax laws as prescribed from time to
time and promote long term investments in equities through Mutual Funds. Eligible for
deduction under section 80C Lock in period three years
Idea for Investors seeking tax incentives.
Special Schemes
This category includes index schemes that attempt to replicate the performance of a particular
index such as the BSE Sensex, the NSE 50 (NIFTY) or sector specific schemes which invest
in specific sectors such as Technology, Infrastructure, Banking, Pharma etc. Besides, there
are also schemes which invest exclusively in certain segments of the capital market, such as
Large Caps, Mid Caps, Small Caps, Micro Caps, 'A' group shares, shares issued through
Initial Public Offerings (IPOs), etc.

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 INTRODUCTION

TO
SYSTEMATIC INVESTMENT PLAN

SYSTEMATIC INVESTMENT PLAN (SIP)

A systematic investment plan (SIP) commits the investor to invest a specified amount every
month (or every quarter) in the units of a fund’s equity scheme. The number of units bought
each month for the investor under the plan will depend on the ruling price: fewer units are
bought when the price is high, and more units are bought when price is low. This is a built-in
advantage of SIPs. It averages out investor’s buying price over the entire period of holding.
The SIP resolves a dilemma often facing investors due to ups and downs in the market price.
The investor finds it difficult to decide when to invest in the equity scheme.
The monthly or quarterly amount to be invested can be as small as Rs. 500 or Rs. 1000.
Mutual funds specify the schemes for which SIP is allowed by them. Some funds charge a
lower entry load under SIP than for one-time investment, but others don’t make any such
distinction. An exit load under SIP is charged if the investor leaves the scheme before a
specific period of time.

Why invest using SIP?

Investing through SIP in a mutual fund indubitably is the key solution in order to avoid or
prevent the loopholes of equity investment and yet, continually enjoy the high returns of
investment. Isn’t it great therefore to invest using this effective strategy of SIP? Obviously,
yes! And not only that, it makes all the more sense today when the stock markets are
booming and are tempting to really invest.

1. Tension free investment: Experts and other well versed people in this business who will
definitely manage the investor’s money and other forms of investment is one of the key
advantages of investing through a mutual fund. They regularly carry out extensive research –
on the company, the industry and the economy – thus ensuring informed investment. This
then is one big advantage in view of investing one’s hard earned money.
In addition to that, they regularly track the market. Thus, for many of us who do not have the
desired expertise and are too busy with our vocation to devote sufficient time and effort to
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investing in equity, mutual funds offer an attractive alternative. Therefore, indubitably this
type of business is indeed, a tension-free form of investment.

2. Putting eggs in different baskets: Another advantage of investing through mutual funds
is that, even with just small amounts we are able to enjoy the benefits of diversification. Huge
amounts would be required for an individual to achieve the desired diversification, which
would not be possible for many of us.

3. It’s all transparent and well-regulated: It is interesting to note that the mutual fund
industry is well regulated both by Sebi (Securities and Exchange Board of India) and AMFI
(Association of Mutual Funds in India). They have, over the years, introduced regulations,
which ensure smooth and transparent functioning of the mutual funds industry. Moreover,
the mutual fund can be changed time by time, switch in different mutual fund, this is one of
the big profit.

4. Does not affect one’s monthly budget: Furthermore, with SIP small amounts (Rs 500-Rs
1,000) can be invested periodically in Mutual funds as against larger one-time investment
required to buy directly from the market. In this way, an investment does not appear to be a
burden every month. On the other hand, to prevent losses in volatile markets, investing in
Sips is the best option as every month there may be an opportunity to buy at lower levels.

5. Rupee cost averaging: This is especially true for investments in equities. When you invest
the same amount in a fund at regular intervals over time, you buy more units when the price
is lower. Thus, you would reduce your average cost per share (or per unit) over time. This
strategy is called 'rupee cost averaging'. With a sensible and long-term investment approach,
rupee cost averaging can smoothen out the market's ups and downs and reduce the risks of
investing in volatile markets.

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People who invest through SIPs capture the lows as well as the highs of the market. In an SIP, your
average cost of investing comes down since you will go through all phases of the market, bull or bear

Investor Units Subscribed Investor Units Subscribed Unit

Month
A A B B Price
1 10000 1000 1000 100 10
2 0   1000 105.3 9.5
3 0   1000 113.6 8.8
4 0   1000 117.6 8.5
5 0   1000 111.1 9
6 0   1000 105.3 9.5
7 0   1000 103.1 9.7
8 0   1000 98 10.2
9 0   1000 95.2 10.5
10 0   1000 93.5 10.7
Total
10000 1000 10000 1042.7 9.6
Investment

Market Value 10700   11157.4    

6. Discipline: The cardinal rule of building the corpus is to stay focused, invest regularly and
maintain discipline in investing pattern. A few hundred’s set aside every month will not
affect the monthly disposable income. It will be easier to part with a few hundreds every
month, rather than set aside a large sum for investing in one shot.

7.  Power of compounding: Investment gurus always recommend that one must start

investing early in life. One of the main reasons for doing that is the benefit of compounding.

Let's explain this with an example.

Let’s assume two people A and B. They both decide to start a SIP of Rs. 1000/- per month
and invest in it till the age of 60.

A started investing Rs 1,000 per year at the age of 25 and B started investing the same amount every
month at the age of 35. Below is a table of how much their money grew to when they turned 60.

At Age Investment (in lacs) Wealth at 60 (in lacs)

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25 4.2 148.6
30 3.6 70.1
35 3 32.8
40 2.4 15.2
45 1.8 6.8
50 1.2 2.8

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At 60, A had built a corpus of Rs 148.6 lakh while person B's corpus was only Rs 32.8lakh.
For this example, we have taken a rate of return of 15% compounded. A difference of Rs 1,
20,000 as investment over a 10 year horizon between the two of them results in a huge
difference of Rs. 115.8 lakhs in their end-corpus. That difference is due to the effect of
compounding.

The longer the (compounding) period, the higher the returns.

Now, suppose A invested Rs 1,000 per month after every fifteen years, starting at the age of
45. The total amount invested, thus remains Rs 1.8 lakh. However, when he is 60, his corpus
will be Rs 15.2lakh. Again, he loses the advantage of compounding in the early years.

8. Helps to fulfill one’s dreams: Finally and the best part of all is the fact that with the use of
SIP, it will make one’s dreams come true. The investments that are made are ultimately for
some objectives such as to buy a house, children’s education, marriage etc. And many of
them require a huge one-time investment. As it would usually not be possible to raise such
large amounts at short notice, It would be necessary to build the corpus over a longer period
of time, through small but regular investments. This is what SIP is all about. Small
investments, over a period of time, result in large wealth and help fulfill one’s dreams &
aspirations.

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9. Convenience: This is a very convenient way of investing. The investor has to submit
cheques along with the filled up enrolment form. The mutual fund will deposit the cheques on
the requested date and credit the units to one's account and will send the confirmation for the
same.

10. Other advantages: There are no entry or exit loads on SIP investments. Capital gains,
wherever applicable, are taxed on a first-in, first-out basis.

HOW TO INVEST THROUGH SIP

 Mutual funds through SIP allow to periodically invest in them (lets say 5 investments
of Rs 20 each) on a weekly, monthly or quarterly basis.

 This will avoid the risk of locking in to one single valuation but get an 'average' of the
valuations on the various dates that we invest.

 SIP is very helpful in a volatile market. Since we invest a fixed amount, we buy more
of the security when its prices fall and less when it is more expensive.

 Mutual funds define the dates on which we can make the regular investments
(typically 1st/7th/15th/21st of every month). If we are a salaried employee, we will
realize that we have surplus monthly savings and hence this can become a preferred
option for us. We receive our salary on the 5th of the month and hence we can make
the investment every 7th of the month.

 We can fill the SIP application form and inform the mutual fund that we want to
invest on 7th every month.

 Almost all mutual funds provide an Electronic Clearing Scheme (ECS) with the major
banks: this means that we can sign an order to our bank that we allow the mutual fund
company to take a specified sum of money from our bank account on specified dates
for a specified period. This saves us the hassle of signing post dated cheques or of
sending cheques on a periodic basis to the mutual fund.

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How an SIP Works?
I. An SIP allows to take part in the stock market without trying to second-guess its
movements. It is also known as dollar cost averaging.
II. An SIP means committing yourself to investing a fixed amount every month.
III. E.g.  1,000 may be invested every month.When the Market price of shares fall, the
investor benefits by purchasing more units; and is protected by purchasing less
when the price rises.
IV. Thus the average cost of units is always closer to the lower end.) { NAV : Net
Asset Value, or the price of one unit of a fund can be computed as follows : NAV =
[ market value of all the investments in the fund + current assets + deposits -
liabilities ] divided by the number of units outstanding.}
V.

Date NAV Approx number of units investor will get at  1000

Jan 1 10 100

Feb 1 10.5 95.23

Mar 1 11 90.90

Apr 1 9.5 105.26

May 1 9 111.11

Jun 1 11.5 86.95

VI. Within six

months, the investor would have 589.45 units by investing just  1,000 every month.
Over the long run, he may make money or lose.

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 VII. Let's say a person invested in a Mutual Fund unit during the dotcom and tech boom.
Say he began with  1,000 and kept investing  1,000 every month. This would be the
result:

VIII. Investment period

 Mar 2000- Mar 2005

Monthly investment

 1,000

Total amount invested

 61,000

Value of investment of Mar 7, 2005

 1,09,315

Return on investment

 23.87%

IX. Had he bought the units on March 13, 2000 at  10.88 per unit (that was the NAV
then), he would have lost because the NAV was just 7.04 on March 7, 2005. But
because he spaced out his investment, he won.

X. Conversely if the market had trended higher from the day you decided to start
investing, you would lose out on an opportunity. This would happen as your
subsequent purchases will get you less number of units for the same amount.

Systematic Investment Plan can help you to be disciplined (if you need discipline) but not
solve your market timing issues. The Investment advisor or the Mutual Fund has a vested
interest in pitching this idea to you as once you invest all your future investment would also
accrue to them effortlessly.

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 PROCEDURE TO BE FOLLOWED FOR INVESTING IN SIP

Step 1 Visit the SIP Calculator tool to select your SIP amount.
Step 2 Select the mutual fund schemes that suit your investment objectives.
Step 3 Fill-up the Application form Online or download the same. (One application form for
every scheme)
Step 4 Submit the application form along with the first cheque at any of the branch
locations / CAMS (Computer Age Management Services) locations or to your nearest
distributor.

How SIP Scores

 It makes you disciplined in your savings. Every month you are forced to keep aside a
fixed amount. This could either be debited directly from your account or you could
give the mutual fund post-dated cheques.
 As you see above, it helps you make money over the long term. Since you get more
units when the NAV drops and fewer when it rises, the cost averages out over time.
So you tide over all the ups and downs of the market without any drastic losses.
 Also, a number of mutual funds do not charge an entry load if you opt for an SIP. This
fee is a percentage of the amount you are investing. And if you do not exit (sell your
units) within a year of buying the units, you do not have to pay an exit load (same as
an entry load, except this is charged when you sell your units).
 If, however, you do sell your units within a year, you would be charged an exit load.
So it pays to stay invested for the long-run. The best way to enter a mutual fund is via
an SIP. But to get the benefit of an SIP, think of at least a three-year time frame when
you won't touch your money.Of course you would lose money if your units lost value
over time.
 What most SIP Mutual funds don't tell you is that they recover their fees as monthly
charges by selling your units, so while you are buying more units when the market is
down, more of your units are also being sold to fund the monthly charges of the
Mutual fund. Also the Bid and Offer of the Mutual Fund is around 7% and this is the

Page | 25
 front load or expense you pay for buying the units each month. Also sometimes the
Mutual fund will have annual fee charges.
 In spite of the above drawbacks the retail investors' benefit in the long term horizon of
5–8 years is enormous. Only make sure that you can switch your funds from stock
market to money market at short notice when the markets are really in a correction
phase to safeguard the profits which you have made when the market was in a
booming phase. This is easier said than done.
 SIP will work best if markets trend lower after your investment. SIP performance
would be average if markets trade in a range. SIP will perform worst if markets trend
higher. Another Benefit of investing in mutual funds via SIP is you benefit from
Power of Compounding.
When SIP would be advantageous?
1. It cannot be claimed that the SIP is always more advantageous than a lump sum
investment. It all depends on the course of equity prices which form the basis for computing
the price of units.
2. If over the total period of holding, the prices have been generally declining, the SIP would
cause a loss: the redemption amount (based on NAV at the end) paid to the investor for the
accumulated units in his/her account would be less than the total cost. In the opposite case of
rising prices, the SIP would be advantageous.

Example
 Consider the following simplified example: Monthly investment is Rs. 1000 for the
next 12 months. The amount is invested each month immediately in units of an equity
scheme at the ruling price of units.
 Assumption-1 (Declining Prices): The price per unit is Rs.16 for first 8 months and Rs
10 per unit for last 4 months. (This is a simplification. The price for each month
would ordinarily be different.) Under this assumption, against Rs.1000 per month paid
by the investor, the number of units purchased will be 500 in the first 8 months and
400 in the last 4 months. Thus the total number of units purchased over 12 months
will be 900 at a cost of Rs. 12000. The redemption of the accumulated units is done
always at the closing NAV. As per our assumptions, the accumulated units are 900
and will fetch only Rs. 9000 at the closing NAV of Rs. 10 per unit. The investor
suffers a loss of Rs.3000 on the total amount invested (Rs. 12000 – 9000).

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  Assumption-2 (Rising Prices): The ruling prices of units are reversed, being Rs. 10 for
first 8 months and Rs. 16 for last 4 months. The number of units bought for the
investor will be 800 in the first 8 months and 250 in the last 4months. The total
number of units accumulated over the 12months will be 1050 for Rs. 12000. These
1050 units will fetch Rs. 16800 at the closing price of Rs. 16 per unit. There is a total
gain of Rs. 4800 for the investor (Rs. 16800 –12000).
3. The example given above brings out that the crucial factor show the ruling price behaves
over the period of SIP. In the real world, no one can predict the pattern of prices which will
prevail in the future over the next 12 months or a longer period of some years.
4. The most advantageous situation for the investor is when his/her over-all buying cost is the
least and the realisable price on completion of the investment plan is the highest.
5. An investor, who joins the SIP at a wrong time (i.e. when the equity prices are all-time
high), will be in an unfortunate situation unless the prices rise further in the future. Thus, we
see that the averaging of price over the period of SIP does not always insulate the small
investors against the market’s volatility.
6. In the case of SIP, the possibility of loss can be avoided by not starting at the wrong time
(i.e. when equity prices are too high). We should bear in mind the fact that the Indian stock
market is far more volatile than the developed markets, like U.S. and U.K. If we look at the
movements of BSE Sensex, significant fall or rise of 20-25% within a few months is fairly
common. The SIP provides a very imperfect solution to the problem posed by market’s high
volatility.

Caution needed
The investor should not take it for granted that SIP is always advantageous. The price level at
the starting point is particularly important, as illustrated above. The price level at the end of
the period chosen is also critical. The rigidity of most SIP schemes can be both inconvenient
and, disadvantageous to the investors. The investor should avoid a situation of forced
redemption of accumulated units at, unduly low price by building some flexibility in the
choice of redemption date.
When an SIP won’t deliver…
1. In rising markets
An SIP could fail to deliver on its proposition of lowering the average purchase cost, if equity
markets rise in a secular manner. Such a scenario is fairly possible over shorter time periods.

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As a result, investing via an SIP could prove to be more expensive vis-à-vis a lump sum
investment. Hence, the solution lies in opting for an SIP that runs over an appropriate
timeframe, say at least 12-24 months.
2. A directionless SIP
Here we are referring to an SIP that is not a part of an investment plan or an aimless SIP. It
should be understood that an SIP is not an ‘end’; instead, it is the ‘means’ to achieve an end.
Hence, the SIP should form part of an investment plan aimed at achieving a predetermined
objective.
3. An SIP in the wrong fund
Investing via the SIP mode doesn’t improve the prospects of a wrong fund. A poorly
managed fund stays that irrespective of the investment mode. An SIP will not eliminate its
shortcomings.
Hence the key lies in first selecting selecting a well-managed fund that is right for the
investor and then investing in it via an SIP.
As can be seen, the SIP mode of investing has a fair number of advantages to offer;
conversely, there can be instances when it may not deliver as expected. Investors on their part
should make well-informed investment decisions after acquainting themselves of both the
pros and cons.

MODE OF PAYMENT
There are two options here
1. Through Electronic Clearance Service (ECS):- In this option, Mutual Fund will debit
the stipulated amount from client’s account on monthly basis.
2. Post dated cheques –In this option, Investor can give post dated cheques. Mutual Fund
will deposit the cheques on the mentioned dates. The cheques should be issued with
date mentioned at regular interval. 

Note: - All the mutual fund schemes do not offer SIP. Equity funds, debt funds and balanced
funds belong to this category. Liquid funds, cash funds and floating rate debt funds also offer
SIP.

Checklist for Systematic Investment Plan

Mutual fund's Systematic Investment Plan is often advertised as the best investment
option for sustainable wealth creation. However, in reality not all SIPs work in favor of
the investor.

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Systematic Investment Plan (SIP) is often suggested as the best investment option for
sustainable wealth creation for retail investors. The arguments for investments into mutual
fund using SIP is often based on the fact that investors will be able to overcome vagaries of
stock market behavior using SIP. However, in reality not all SIPs work for investors. Many
investors complain that SIP started them some years back has failed to generate the kind of
return that  investments in stock market has either generated directly or schemes of other
mutual funds have given where SIP was used by other investors.

So, what is the lesson learnt. There are many a slip between returns and the SIP. As an
investor, you need to circumspect while investing through SIP. Take following steps to
ensure that investment made by you through SIP does not become a failure:
 Watch the performance of SIP periodically:  Though you can trust mutual fund
managers, you need to be circumspect about the investments made by you. Watch
your investments in SIP atleast once in six months. This does not mean that you
withdraw your investment from SIP if the fund is not performing. This process will
help you track something going substantially wrong with your fund. Suppose the
benchmark against which your fund operates has given 10% return, while your SIP
return is abysmally less, then it may be time to change your fund. A recent study by S
& P CRISIL (SPIVA ) shows that more than 50% of large cap funds have failed to
beat the benchmark index against which they operate.
 Do not start SIP in two similar types of schemes:  Investors put their money in
different schemes of one mutual fund or separate mutual funds. However, they end up
selecting almost same type of fund. This means that the exposure of the funds is
similar type of stocks. It is very common to find stocks like ITC, HDFC Bank etc. in
various schemes of mutual funds. The reasons are obvious. These stocks have been
star performer for long time. As an investor, you need to check if your fund has
significant exposure in similar stocks. This increases risk for you especially when the
stocks are not stable performers.
 Star funds may not be the star performers always: It is very common for the
mutual fund investors to look at star rating of the scheme of mutual funds. The star
rating generally comes from past performance and may not always return in good
future returns. Do not get swayed away by star rating. Even star rated schemes need to
be watched.

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  All my funds must have SIP: After an investor enters into the world of mutual fund,
SIP is recommended to him like Crocin is recommended for headache. It is important
to note that all your funds should not have SIP. Let some of your fund perform even
for the lump sum investment made by once. This means that for some of your funds
you can allow the investment to grow for one time investment made by you while for
others you can continue with SIP. Riskier schemes should you SIP route while stable
schemes can follow lump sum investment process.  Look at the Sharpe ratio of the
funds to identify the riskiness of mutual funds. Sharpe Ratio indicates the risk
adjusted return of schemes of mutual funds.In brief as an investor, you need to
watchful about your money when you have given the responsibility of handling it to
others.
DIFFERENT TYPES OF SIP IN MUTUAL FUNDS

 Monthly SIP
This is the most traditional way of doing a SIP in an equity mutual fund. This works well
mostly for salaried people, who get a monthly cash flow. Investors tend to opt for a date
between the 1st and 10th of the month, since for most of the people salaries get credited at
the end of the month. Most investors tend to avoid the last 10 days of the month, on fear of
exhausting their surplus money and not being able to meet their SIP commitment.

 Daily SIP
Compared to traditional investment in which money goes in on a monthly basis, here
money goes daily into the fund. Of late, some mutual funds have started offering a daily
SIP. Essentially, these products are meant for small traders or for the micro segment.
However, not everyone is a fan of daily SIP. Daily SIP is an overkill and not really needed.
Though it makes averaging consistent, it is cumbersome.

 Flexi-SIP
Traditional SIPs allow us to invest only a fixed amount every month or daily. However, a
flexi SIP enables investors to set up a range of amounts for the SIP investments and be
flexible about how much they want to invest every month. It is not available in the
conventional mode through mutual funds. It is offered by portals like fundsindia.com. It is
very difficult to alter your SIP using traditional methods. For a particular SIP, the amount or
Page | 30
the date just cannot be changed. Technically, an ECS mandate is registered for a particular
bank account for debiting a specific amount on a fixed date every month. If any of these
three change, one would have to stop and re-do the SIP. This is what has led to the concept
of flexi SIP. Using this facility, an investor can choose a range from Rs 1,000 to Rs 10,000
per month and depending on his or her cash flow, invest that amount every month.

 SIP Top-Up
HDFC Mutual Fund, SBI, ICICI Prudential, etc offer a SIP Top-Up. Here an investor who
wishes to enrol for SIP, has an option to increase the amount of the SIP instalment by a fixed
amount at pre-defined intervals. The SIP top-up amount should be filled in the enrolment
form itself.
For example: We choose to invest Rs 2,000 for the first six months and then prefer to invest
Rs 5,000 per month.

 Value Averaging Plan

This is offered by some mutual funds such as Benchmark and portals like fundsindia.com. It
is a strategy that uses mathematics and algorithms. It works like SIP in terms of steady
monthly contributions, but differs with regard to monthly contribution. Here the investor,
sets a target growth rate or amount on his or her asset base or portfolio each month, and then
adjusts the subsequent month’s contribution according to the relative gain or shortfall made
on the original asset base.
Suppose we want to add Rs 1,000 added to our equity mutual fund every month and we start
with investing Rs 1,000. Now at the end of first month the value of our fund becomes Rs
1,200. So now we need to invest only Rs 800 (1000-200) to make the investment worth Rs
2,000. In the following month, the value of investment reduces to Rs 1,900 due to correction
in the market, so we need to invest Rs 1,100 (3,000-1,900) so that the amount touches the
target amount of Rs 3,000. In other words, we buy more (units) when the prices are low and
we end up investing less (buying less units) when the markets peak.

How are the calculations made in SIP

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Systematic Investment Plan (SIP) Calculator
Systematic Investing in a Mutual Fund is the answer to preventing the pitfalls of equity
investment and still enjoying the high returns. This SIP Calculator will show you how small
investments made at regular intervals can yield much better returns over a long period of
time.

Use IRR to calculate returns from a SIP

Since returns from a SIP involve outflow of cash at different time periods, and then a large
inflow of cash at the end – you can use IRR to calculate the returns percentage from a SIP.

How to fill a Systematic Investment Plan (SIP) form

Let us see how to fill the SIP part of the Mutual Fund application form. You can use SIP
method of investing in most mutual fund schemes except the ones that have a short-term
focus.

Enrolling for SIP

 Get a sip enrolment form apart from the application form.

 Fill in the folio number if you are an exisiting customer else the application number
 “Frequency of SIP“ selection- monthly or quarterly.
 “Enrolment period“- how long you want to remain invested beginning with the month
the first cheque to this plan is dated.
 Mode of payment - cheque or auto debt facility.
 If you invest by cheque, number, data and amount.
 The first cheque may be dated any time but the remaining post dated cheque have to
follow specified dates and minimum amount that are stipulated by the mutual fund
company.
 Also there has to be a 30 days gap between 1st and 2nd cheque for monthly sip and a 3
month gap for quarterly SIPs

Other methods of Investing in Mutual Fund other than SIP

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 Lump sum investment:

This is the simplest manner of investing in a mutual fund. You have a certain sum of money
(lets say, Rs 100) and you want to invest it in one go. You approach the mutual fund
company with your cheque for the amount you want to invest. The main risk with this
investing strategy is that you are locked in to the valuations of the underlying security as on
a particular date.

If, for example, the prices were to go down from this point, you would lose money on the
entire investment. Similarly, if you have timed the investment right, you will see a good
rise on your entire investment.

 Systematic Transfer Plan (STP):

In the above example, if you had a lump sum of money and wanted to do an SIP, you
would have to park your extra money (i.e., Rs 80, which is Rs 100 minus the first
installment of Rs 20) somewhere. Mutual funds, realizing this issue, offer an STP. Here,
you can invest the entire sum of money (Rs 100) with the fund: you put in Rs 20 in the
equity fund, while putting the extra sum (Rs 80) in cash or debt funds. Over the next four
months, you can request the fund to transfer Rs 20 (plus the gains/losses) each month to the
equity fund. This saves you the hassle of creating a communication between your mutual
fund and your bank through ECS. Similarly, if you believe that you would gradually want
to move your exposure in IT to lets say, pharma, you can create an STP between your
investments in the IT fund and the pharma fund. This way you do not suddenly shift
exposure in one go, but do it gradually. If you are approaching a milestone, you can use this
instrument to move your exposure from equity to debt funds – so that you have more
certainty around the final figure that you will receive.

 Systematic Withdrawal Plan (SWP):

This is, as the name suggests, the reverse of the STP. Here you gradually withdraw money
from the mutual fund. Assume you need Rs 20 over the next 5 months and you have Rs 100
invested in a mutual fund. You can request the mutual fund to return 1/5th of your money
(including the gains/losses) every month for the next five months. If your bank account
details are provided, the fund will deposit the money directly in your bank account. This is
typically used when you are nearer to a milestone or during your retirement.

Page | 33
 Lock-in and capital gains tax: In
all systematic cases, you need to be careful about lock-ins and capital gains tax. Each date of
your investment is treated as the date when you made or divested the investment. The first
date of your SIP/STP is NOT considered as the investment date for all your subsequent
dates. Hence, if the mutual fund has a lock-in provision, then all different investments will
have different dates when the lock-in gets over.

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CHAPTER-2
LITERATURE
REVIEW

Page | 35
 LITERATURE REVIEW
Any research builds on the research carried out previously on the given subject. The purpose
of the literature review is to review what has previously been done on the subject and analyse
it in the present context so that an effective understanding can be established.

Before conducting this project I have gone through some work which has been done
previously on the subject which are given below:

1) Research paper-
Analysis of components of investment performance- An empirical study of Mutual
funds in India.
Authors- Dr.S.Anand-Assistant professor, Goa Institute of Management.
Dr. V.Murugaia- Reader, Kuvempu University.
2) Making Mutual funds work for you-
The investors concise guide
Author- Association of mutual funds in India (AMFI) in assistance with Ogilvy &
Mather
3) Perceptual study of Systematic Investment Plan (SIP) A case study of service class.
Author-Dr.B.S.Hundal, Saurabh Grover,Professor Department of commerce and
business management GNDU Amritsar

4) “Indian Capital Markets” Uma Shashikant & S. Arumugam Publication: TATA Mc-
Graw Hill.

5) “Capital Market – The Indian Financial Scene” N. Gopalsamy

Publication: MacMillan India Pvt. Ltd.

Page | 36
 CHAPTER-3
RESEARCH
METHODOLOGY

Page | 37
 RESEARCH METHODOLOGY

3.1 Objectives Of The Study

 To understand the concept of investment plan in mutual fund.

 To study the benefits of SIP.

 To find out the preference of the investors for Asset Management Company.

 To know the preference of the portfolios.

 To know why one has invested or not invested in mutual fund.

 To find out the preferred channels.

 To find out what should be done to boost the mutual fund industry.

3.2 Scope Of The Study

 The study will be basically focusing on Systematic Investment Plan which is a

popular method of investing in mutual funds, the conceptual framework and S.I.P
offered by different companies.
 In few years Mutual Fund has emerged as a tool for ensuring one’s financial well
being. Mutual Funds have not only contributed to the India growth story but have also
helped families tap into the success of Indian Industry.

 Therefore in this study an attempt is made to find out how to invest in Mutual Fund
safely and securely, the major players in the Mutual Fund Industry with special focus
on investing through SIPs online as in todays world everybody is too occupied so
investing from the comfort of their homes is most preferred today

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3.3 Limitations Of The Study

 a. Most people are aware about mutual funds in general but not many people know
about investing through SIPs so this can be a constraint.

 Many companies do not like to reveal actual data about the number of people
investing through SIPs and how popular the plan actually is, so the information
collected may not be accurate.
 Time limit is also a constraint in the completion of the project.

3.4 Data Collection

Primary Data: The primary data for the study was collected by conducting interviews and
questionnaires.

Secondary Data: The secondary data includes information obtained from various sources
which includes Books, Magazines, Newspapers, Journals and Websites etc.

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 CHAPTER - 4
DATA ANALYSIS
AND
INTERPRETATION

Page | 40
(1)What type of investment you prefer the most?

Savings- 26% Fixed deposits-29% Mutual funds-10%

Insurance-8% Gold/ Silver-20% Real estate-8%

Shares/ Debentures-2% Post Office-0% PPF-0%

INTERPRETATION

 The analysis shows that majority of the respondents still prefer to invest in fixed
deposits i.e 30% as they feel it is a safe investment for them .
 26% of respondents invest in savings account and this comprises a majority of
salaried people , Investors who prefer gold/silver purchases are 20% which is mostly
middle-aged people and women , Sadly even now only 10% of the respondents invest
in mutual funds which comprises of young people who are ready to take risks mostly
in the age group of 25 to 35.
 The other investment preferences are insurance 8% , real estate 8% ,
shares/debentures 2% and PPF 0% .

Page | 41
(2)While Investing your money, which factor you prefer the most?

Liquidity 42%

High return 30%

Low risk 25%

Company Reputation 3%

FACTOR PREFERENCE

INTERPRETATION
 The factors preferred the most are liquidity i.e 42% as people want to be prepared for
any crisis which may evolve during their life. Hence they prefer investing such that
they can withdraw the funds whenever the situation arises.
 The remaining 30% of the respondents would like to get high returns on their
investments.
 Around 25% of the respondents are not willing to take any risk in their investments,
they prefer safe investments.
 The remaining 3% of the respondents go for reputed companies as their preference.

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(3)Have you ever invested your money in Mutual Fund?

YES 63%

NO 28%

Earlier, now stopped 9%

INVESTMENT IN MUTUAL FUNDS

INTERPRETATION

 The major part of the sample taken has invested in the Mutual Funds. The percentage
of respondents investing in mutual funds are 63%, though they do prefer investing in
fixed deposits more than mutual funds yet they have agreed to take some risk.
 The demand for the mutual funds have increased in the past few years with many
Foreign players entering in the Indian market, Fidelity, Franklin Templeton, DSP
Meryll Lynch to name few.
 Still there are few who are not investing in MF.28% of the respondents do not invest
in mutual funds.
 9% of the respondents said they were investing in the past but have discontinued.

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 4)Which feature of Mutual Fund allure you most?
Diversification Better return and Reduction in Regular Tax Benefit
safety risk and Income
transaction cost

18% 33% 16% 18% 15%

FEATURE OF MUTUAL FUND

INTERPRETATION

 Majority of the respondents i.e. 33% look for better return and safety in a mutual
fund.
 18% invest in mutual fund for regular income and because of the diversified
investment in different stocks by the asset management company.
 16% due to reduction in risk and transaction cost and lastly, 15% invest in mutual
funds because of the tax exemptions and benefits which come with it.

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 (5) In which Mutual Fund have you invested?

UTI SBI MF Reliance Other ICICI HDFC JM MF

Prudential

36% 20% 18% 12% 8% 6% 0%

MONEY INVESTED IN

INTERPRETATION

 In investing in mutual fund people mostly preferred 36% in UTI.

 Most of the respondents go for online purchase of the fund because that saves a lot of
their time and they can conveniently do it on weekends when they are not working.
 The other investments made were 20% in SBI MF, 18% in RELIANCE , 12% in
OTHER , 8% ICICI PRUDENTIAL ,6% in HDFC and 0% in JM MUTUAL FUND.
Page | 45
6) When you invest in Mutual Funds which mode of investment will you prefer?

One Time Investment 18%

Systematic Investment 82%

MODE OF INVESTMENT PREFERENCE

INTERPRETATION

 The analysis shows that 82 % of investors prefer to opt for the systematic investment
plan and 18 % invest in one time investment plan.
 Most of the respondents feel that since they are salaried people they do not have to
worry much about setting aside just a small portion of their monthly salary for
investing in mutual fund.
 so for them systematic investment is a safe bet rather than the one-time investment
wherein they have to invest a lump sum amount and then they have to worry about
liquidity too for their expenditure.
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7) How much Risk are you willing to take?

Moderate 45%

Low 31%

High 24%

INTERPRETATION

“The higher the Risk, the more the Profits”. The people need to take the risk to enjoy the
benefits. Some investors were willing to take lower risk and this was the reason they gave for
investing in the MF.
Most of the people would like moderate level of risk in their investments.

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8) Over the long term what do you think is a realistic overall return on your investment in mutual
funds??

4%-6% 5%-7% 7%-9% More than 10%

10% 34% 36% 20%

INTERPRETATION

Investors prefer 36% in 7% - 9% , 34% in 5%-7% , 20% in more than 10% and 10% in 4%-
6%.

9) Which sector are you investing in Mutual Funds sectors?

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Banking funds-2% Power sector-2% Equity funds- General-24%
10%

Oil and petroleum-8% Debt funds-10% Real Estate-14% Gold funds-30%

INVESTMENT SECTORS

INTERPRETATION

Investors mostly prefer the following sector 30% in GOLD FUND , 24% in GENERAL , 14
% in REAL ESTATE , 10 % in DIVERCIFICATION IN EQUITY FUNDS and DEBT
FUNDS , 2 % in POWER SECTOR, 8% in OIL AND PETROLEUM and 2% in BANKING
FUNDS.

10) Which type of Mutual funds do you prefer?

Closed Ended Funds 56%

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Open Ended Funds 44%
INTERPRETATION

The schemes offered in the market are of two types,

closed ended and open ended. The more demand was for the Close ended funds with a
locking period of around 2-3 years. The exit load refrain the person from quitting earlier.

11) How much percentage of your income will you trade in Mutual Funds?

Don’t trade Less than 5% 5-10% More than 10%

9% 46% 34% 11%

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 PERCENTAGE INVESTED FROM INCOME

INTERPRETATION

 From the survey it was found that from their income the percentage that they invest
in mutual funds is 46 % invest Less than 5% , 34 % invest 5%-10% , 11% invest
more than 10% and 9% of the respondents don’t trade at all.
 Thus it was found that most of the people prefer making safe investment and so they
prefer investing in mutual fund rather than equities.
 The 9% who did not trade were of the opinion that it was not a safe option to invest
in the market instead they prefer investing in banks in the form of fixed deposits or
post office savings. People even now are skeptical to take any risks.

12) What is your primary investment purpose in Mutual fund?

Retirement Planning Future education of Building up a corpus Others

children charity

28% 28% 14% 30% Page | 51

 PRIMARY INVESTMENT PURPOSE

INTERPRETATION

The primary investment purpose of investors in mutual fund is like that they invest 30% in
Others ,28 % in Retirement Planning and Future Education Of Children and 14% in Building
up a Corpus Charity.

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13) How would you like to receive the returns every year?

Dividend Payout Dividend Reinvestment Growth in NAV

46% 36% 18%

WAY OF RETURNS PREFERENCE

INTERPRETATION

 Investors expected way of returns preference is 46% as Dividend Payout , 36 % as

Dividend Re-investment , and 18% as Growth in NAV.
 Majority of respondents wanted encashment of their dividend so that they can invest it
in other activities and so they refrained from re-investing it.
 However there are a good percentage of investors who would not want to withdraw
the dividend but invest it again in the same mutual fund.

14) What is your Average investment period?

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Less than 3 months 3-9 Months 9 months- 2 years More than 2 years

23% 10% 42% 25%

AVERAGE INVESTMENT PERIOD

INTERPRETATION

 The investment period is very important to increase the profits.

 The timing must be right enough to benefit from fluctuations.
 Thesmart investor decides it in advance for how much time he would be keeping his
money in the market and when he should leave squaring-up.
 Many people consider the investment for 9 months – 2 years as a right option.
 Still some want to be invested for over 2 years. The least responded to the 3-9 months
period.

15) How important are tax consideration in your investment strategy?

Not important Somewhat important Very Important Extremely Important
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 8% 48% 32% 12%

TAX CONSIDERATION

INTERPRETATION

Investors think in following way:

48% says tax considerations are somewhat important , 32% says very important , 12% says
Extremely important and 8 % says not important at all.

16) I plan to begin taking money from my investment in…..

a) 1 year b) 1-2 years
c) 3-5 years d) more than 5 years
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1 year 1-2 years 3-5 years More than 5 years

28% 42% 14% 16%

INTERPRETATION

The investor expects returns from his investment as 42% in 1-2 years , 28% in 1 year ,16% in
more than 5 year and 14 % in 3-5 years.

17) As I withdraw money from this investment I plan to spend it over a period of …….

2 years or less 3-5 years 6-10 years More than 10 years

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 14% 26% 18% 14%

INTERPRETATION

The investors plan to spend over a time period of 42% in period of 2 year or less, 26% in 3-5
years, 18% in 6-10 years and 14% in more than 10years.

18) Generally I prefer an investment with little ups and downs in value and I am willing to
accept the lower returns these investments make.

I Agree I Strongly Agree I Somewhat Agree I Strongly Disagree

30% 20% 40% 10%

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INTERPRETATION

Investors think in following ways 40% says I somewhat agree , 30% says I agree , 20% says I
strongly agree and 10 % says I strongly disagree.

19) When the market goes down I tend to sell some of my riskier investment and put the money in
safer investment?

I Agree I Strongly Agree I Somewhat Agree I Strongly Disagree

48% 16% 14% 22%

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 Sell Riskier Investment & Put In safer Investment
I Strongly Disagree I Som ewhat Agree I agree I Strongly Agree

16%
22%

14%

48%

INTERPRETATION

Investors mostly sell their riskier investment and put in safer investment ; 48% of investor
Agrees , 22% goes for I strongly disagree , 16% says I strongly Agree , and 14 % says I
somewhat agree.

20) Are you satisfied as a mutual Fund investor?

Yes 75%

No 25%

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INTERPRETATION

 The sample drawn on the probability basis shows that out of 100% of respondents
75% of the respondents approached were satisfied with the Mutual Fund investments
and 25% are dissatisfied with the investments
 As 75% of the respondents are satisfied with the mutual fund investments, it can be
concluded that the company has undertaken proper R&D in this aspect.

 The 25% of the respondents who have answered negatively are the companies who
may have not invested in mutual funds.

21) According to you which things attracts you more for investment in Mutual Funds?

Promotion (Ads) 5%

Plan Benefits 53%

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 Brand Name 42%

INTERPRETATION

From the Survey it was found that the Investors are more attracted towards Mutual Fund
because of Plan benefits. 53% Investors are attracted due to Plan Benefits whereas 42%
investors attracted due to Brand Name and only 5% investors attracted due to Promotion
Strategy of Company.

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 FINDINGS

 SIP is very helpful in a volatile market. The SIP resolves a dilemma often facing
investors due to ups and downs in the market price.

 Investing through SIP in a mutual fund indubitably is the key solution in order to
avoid or prevent the loopholes of equity investment and yet, continually enjoy the
high returns of investment.

 Majority of the respondents i.e. 30% of the respondents prefer to invest in fixed
deposits.

 Most preferred factor for investing is liquidity i.e 42% as people want to be
prepared for any crisis.

 Major part of the sample taken i.e. 63% of respondents has invested in mutual
funds while 9% have discontinued.

 36% people preferred investing in UTI and mostly they go for online purchase as
it saves a lot of their time.

 The analysis shows that 82% of investors prefer to opt for SIP and 18% invest in
one time investment plan.

 From the survey it was found that investors are more attracted towards mutual
fund because of plan benefits as 53% investors are attracted due to plan benefits.

 Out of 100% respondents 75% of respondents are satisfied with the mutual funds
investments so it can be concluded that the company has undertaken proper R&D
in this aspect.

 The investors expects 42% returns from his investment in 1-2 years, 28% in 1
year, 16% in more than 5 years and 14%in 3-5 years.

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 8% of the investors says tax considerations are not important at all and 32% says
it very important.

 Demand for close ended funds was more i.e 56% with a locking period of around
2-3 years.

 It was found that most of the people prefer making safe investment and so they
prefer investing in mutual fund rather than equities.

 The investment period is very important to increase the profits. The timing must
be right enough to benefit from fluctuations.

 Government should see that Mutual Fund companies follow corporate governance
regulations. All mutual fund investors want transparency.

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 RECOMMENDATION AND SUGGESTION

1. There is no such thing as an ideal mutual fund portfolio that can suit need and risk
appetite of each and every individual. While there is no dearth of good mutual funds
in the market today, building a portfolio depends on preferences and objectives of
each individual.
2. The factors that come into play include age of the investor , risk appetite , time at
hand to let investment grow, need for money- immediate or later – and more
importantly , the purpose of making such an investment. Broadly – we have
‘Aggressive’, ‘moderate’ and ‘Conservative’ portfolios where each of them
incorporates a different genre of mutual fund schemes to suit varying needs.

3. An individual should work towards building a stable portfolio which includes large
cap funds to provide your portfolio required stability, funds with proven track record
and maybe some aggressive funds to spice up your portfolio. Therefore it is advisable
for the investors to understand their risk profile and invest accordingly.

4. Mutual fund companies should dispatch their annual report in time to their investors
so that the investors are informed about the company’s financial position. This will
help the investor to know the status of their investment.

5. It is suggested that the investors should not consider only one or two factors for
investing in mutual fund but they should consider other factors such as higher return,
degree of transparency, efficient service, fund management and Reputation of mutual
fund in selection of mutual funds.

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 CONCLUSION

A Questionnaire was given to respondents. People save in Mutual Funds for different
purposes i.e. children education, house construction, retirement planning and tax planning,
investing in gold/silver, shares and debenture, fixed deposit, banking fund and real estate. it is
the need of hour in India to popularize the pension funds which have greater potential in the
years to come. Mutual funds companies should introduce new pension funds scheme for
investors. In case of the relationship between monthly income and purpose of savings, a
unique trend has emerged. As the income increases, priority is given to tax planning.
Majority of the respondents gave the first preference to children education followed by
retirement planning.
During the period of study, it was found that the majority of the investors invest their money
through the SIP plan scheme as they found it less burdensome and easy to keep aside a few
amount from their monthly salary. This indicates that more efforts have to be made by the
Mutual Funds to create awareness among the investors regarding the earnings potential of
other schemes. The influencing factors for selection of Mutual Fund scheme in India are High
Returns, Net Asset Value, Market Trends, Tax Policy, and Reputation of Mutual Fund in
their order of priority. Most of investors prefer to invest their money in open ended schemes
of Mutual Funds.
Government should see that Mutual Fund companies follow corporate governance
regulations. All mutual fund investors want transparency. Strict regulations should be
enforced by SEBI with regard to Corporate Governance. Thus mutual funds should build
investors confidence through schemes meeting the diversified needs of investors, speedy
disposal of information, improved transparency in operation, better customer service and
assured benefits of professionalism.

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 BIBLIOGRAPHY
Books and Journals:

 International journal of Business Economics and Management Research volume 2,

Issues 3 (March 2011)
 Security Analysis and Portfolio Management-Fischer & Gordon
 Investment Analysis and Portfolio Management- Prasanna Chandra
 A Comprehensive approach on Mutual Fund- Dr.Peeyush Ranjan Agarwal

Websites:

 http://amfiindia.com
 http://mutualfundindia.com
 http://valueresearchonline.com
 http://indianjournals.com
 http://www.theequitymarkets.com
 http://www.moneycontrol.com
 http://www.birlasunlife.com
 http://www.kotakmahindra.com
 http://www.iciciprudential.com
 http://www.hdfcmutualfund.com

Magazines and Newspapers:

 Newspapers(Economic Times, Mint paper, Business Standard)

 Magazines (Business World)

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 QUESTIONNAIRE

(1) Name:
(2) Gender?
a) Male
b) Female
(3) Age?
a) 18 to 25
b) 25 to 35
c) 35 and above
(4) Have you ever invested your money in Mutual Fund?
a) Yes b) No
(5) When you invest in Mutual Funds which mode of investment will you prefer?
a) One Time Investment b) Systematic Investment
(6) What is your Average investment period?
a) Less than 3 months b) 3 to 9 months
c) 9 months to 2 year d) more than 2 year
(7) What type of investment you prefer the most?
a) Savings a/c b) Fixed Deposit a/c c) Insurance
d) Mutual Funds e) Post Office f) Shares/ Debentures
g) Gold/ Silver h) Real Estate i) PPF
(8) How much Risk are you willing to take?
a) High b) Low c) Moderate
(9) Over the long term what do you think is a realistic overall return on your investment?
a) 4%-6% b) 5%-7%
c) 7%-9% d) more than 10%
(10) Which type of Mutual funds do you prefer?
a) Open Ended Schemes b) Closed Ended Schemes
(11) While Investing your money, which factor you prefer the most?
a) Liquidity b) Low Risk c) High Returns d) Company Reputation

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(12) Which feature of Mutual Fund allure you most?
a) Diversification b) Better Return and Safety c) Regular Income
d) Reduction in Risk and Transaction Cost e) Tax Benefit
(13) In which Mutual Fund have you invested?
a) SBIMF b) UTI c) HDFC d) Reliance
e) ICICI Prudential f) JM Mutual Funds g) Others
(14) From where do you purchase mutual funds?
a) Directly from the asset management company b) Brokers only
c) Brokers/ Sub Brokers d) Other Sources
(15) Which sector are you investing in Mutual Funds sectors?
a) General b) Oil & Petrolium c) Gold Funds
d) Diversification Equity Funds e) Power Sector f) Debt Funds
g) Banking Funds h) Real Estate
(16) How much percentage of your income will you trade in Mutual Funds?
a) Don’t Trade b) Less than 5% c) 5-10% d) More than 10%
(17) What is your primary investment purpose in Mutual fund?
a) Retirement Planning b) Building up a corpus charity
c) Future Education of Children d) Others
(18) How would you like to receive the returns every year?
a) Dividend Payout b) Dividend Re-investment c) Growth in NAV
(19) How important are tax consideration in your investment strategy?
a) Not Important at all b) Somewhat Important
c) Very Important d) Extremely important
(20 ) I plan to begin taking money from my investment in…..
a) 1 year b) 1-2 years
c) 3-5 years d) more than 5 years
(21) As I withdraw money from this investment I plan to spend it over a period of …….
a) 2 years or less b) 3-5 years c) 6-10 years
d) more than 10 years

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(22) Generally I prefer an investment with little ups and downs in value and I am willing to
accept the lower returns these investments make.
a) I Agree b) I Strongly Agree
c) I Somewhat Agree d) I Strongly Disagree
(23) When the market goes down I tend to sell some of my riskier investment and put the
money in safer investment?
a) I Agree b) I Strongly Agree
c) I Somewhat Agree d) I Strongly Disagree
(24) Are you satisfied as a mutual Fund investor?
a) Yes b) No
(25) According to you which things attracts you more for investment in Mutual Funds?
a) Brand Name b) Plan Benefits c) Promotion (Ads)

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