“A study on needs of financial advisors for

mutual fund investors”

Report submitted to
GEN Society’s,
GLOBAL BUSINESS SCHOOL, HUBLI
(Affiliated to Karnatak University, Dharwad & Recognized by AICTE, New Delhi)

By

Prasanna Belligatti
19MBA238

Under the guidance of

Prof. Sohil Nargundkar

(Assistant Professor)

July 2020

GLOBAL BUSINESS SCHOOL

HUBLI-580026
1
 GEN Society’s,

GLOBAL BUSINESS SCHOOL, HUBLI

(Affiliated to Karnatak University, Dharwad & Recognized by AICTE, New Delhi)

CERTIFICATE

This is to certify that the Summer Internship Project entitled “A study

on needs of financial advisors for mutual fund investors” is the

bonafide record of independent research work conducted by Mr.

Prasanna Belligatti (Reg.No: 19MBA238) under my supervision,

submitted to Karnatak University, Dharwad for the partial fulfillment

for the award of the Degree of Master of Business Administration

and that the project has not previously formed the basis for the award

of any degree, diploma, Associate ship, Fellowship or title.

Place: Hubli Prof. Sohil Nargundkar

Date: 27/07/2020 Institution Guide

DIRECTOR
Global Business School,
Hubli - 580026

2
 ACKNOWLEDGEMENT

I take this opportunity to sincerely thank Prof. Sohil Nargundkar who

guided me through out the project through his valuable suggestions, without
which the project would not have been successful.
My sincere thanks to Director and all faculties of global business school
Hubli who supported me and given encouragement through out whole project.
My sincere thanks to my friends who out of hard sweat were able to
help me at all time and given encouragement for successful completion of this
project.

3
 DECLARATION

I, Prasanna Belligatti (19MBA238) hereby declare that the Project titled

"A study on needs of financial advisors for mutual fund investors”

submitted by me in partial fulfillment of the requirement for the award of

the degree of “Master of Business Administration” by Karnatak

University, Dharwad; this is not submitted elsewhere for the award of any

other degree or diploma.

Date: 27/07/2020

Place: Hubli (Prasanna Belligatti)

4
 Executive Summary

This project has been a great learning experience for me. at the same
time it gave me enough scope to implement my analytical ability.

It is purely based on whatever I learned. One can have a brief

knowledge about mutual funds and all its basics through the project. Other than
that the real savings come when one moves ahead. Some of the most interesting
questions regarding mutual funds have been covered. Some of them are: why
has it become one of the largest financial intermediaries? How investors do
chose between funds? Performance Measures of Mutual Funds, All the topics
have been covered in a very systematic way. The language has been kept simple
so that even a layman could understand. All the data have been well analyzed
with the help of charts and graphs. It has also covered why people don’t want to
go for financial advisors? The advisors can take further steps to approach more
and more people and indulge them for taking their advices.

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 Table of Contents
1 INTRODUCTION
 Company Overview......................................................................... 7

2 LITERATURE REVIEW……………………………………………..19

3 THEORETICAL CONCEPTS………………………………………...22

4 RESEARCH METHODOLOGY
 Introduction .................................................................................... 33
 Title of the project .......................................................................... 33
 Objectives ...................................................................................... 34
 Study Area ..................................................................................... 34
 Data Collection Method: ................................................................ 34
 Primary Data (if any) : ................................................................... 34
 Secondary Data (if any): ................................................................ 34
 Sampling: ....................................................................................... 34
 Types of Statistical Tools............................................................... 35

5 DATA ANALYSIS & INTERPRETATION ....................................... 35

6 FINDINGS……………………………………………………………..48
7 SUGGESTION………………………………………………………...49
8 CONCLUSION………………………………………………………...50
9 ANNEXURES ………………………………………………………...51
a. Questionnaire

10 REFERENCES………………………………………………………..53

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 Nippon India Mutual Fund
(Overview)

Mutual fund : Nippon India Mutual Fund

Founded : 30 June 1995

Sponsors : Nippon Life Insurance Company

Trustee : Nippon Life India Assets Management Limited

(Formerly Known as Reliance Nippon Life Asset Management Limited)

CEO : Mr. Sundeep Sikka

CIO : Mr . Amit Tripati and Mr. Mr. Manish Gunwani

Investors Service : Mr. Bhalchandra Joshi

Officer

Compliance : Mr. Muneesh Sud

Officer

Nippon India Mutual Funds (formerly Reliance Mutual Fund) is one

of the leading asset management companies in India. It manages assets across
managed accounts, mutual funds, pension funds, alternative investments, and
offshore funds. Nippon India Mutual Fund’s (NIMF) asset manager is Nippon
Life India Asset Management Limited (NAM India). NAM India’s promoters
are Reliance Capital Limited and Nippon Life Insurance Company that hold
75.93% of its total issued and paid-up equity share capital.

Reliance Capital Limited is one of India’s topmost RBI registered

Non-Banking Finance Company and has its business interests in asset
management, life insurance, general insurance, stockbroking and other
activities in the financial sector.

7
 Nippon India Mutual Fund is one of India’s top Asset Management
Companies. Set up in June 1995 as Reliance Mutual Fund, it was a joint
venture between India's Reliance Capital and Japan's Nippon Life Insurance
company. In October 2019, Reliance's stake was bought by Nippon, and the
fund house was renamed as Nippon India Mutual Fund.

Nippon Mutual Funds manage assets worth Rs.2,07,288 crores.

Currently, the range of Nippon mutual funds schemes includes 52 equity, 266
debt, and 40 balanced funds. The company is led by its CEO Sundeep Sikka.
Nippon Life India Asset Management Limited works as an investment
management firm. The Company provides services like portfolio
management, mutual fund investment, financial planning, and advisory
services to individuals, institutions, trusts, and private funds.

Nippon Life Insurance Company (NLI) is Japan’s one of the leading

private life insurance company that offers a wide range of financial/traditional
insurance products. The asset management operations in Asia are carried out
by NLI, through its subsidiary Nissay Asset Management Corporation
(“Nissay”), which manages assets globally.

Top Fund Managers

Nippon India Mutual Fund has some of the best talents on board. Here are
some of the best-known names.

1. Mr. Ashwani Kumar

Mr. Kumar brings with him a long and rich experience in

wealth management. He has been a fund manager since 2003 and joined
Nippon India Mutual Funds (Earlier known as Nippon India Mutual Funds) at
a crucial juncture. Mr. Kumar graduated from the University of Pune (then

8
Poone) and also has an MBA in Finance Presently, he acts as the Senior Fund
Manager in Equity Investments at NIMF. He has worked previously at Zurich
Asset Management Co. Ltd. too. Mr. Kumar has brought in money
management techniques from outside India to make NIMF one of the leaders
in the Indian Mutual Funds sector.

2. Mr. Sailesh Raj Bhan

Mr. Bhan has been with NIMF for over 10 years now. He has also
worked for 15 years in Nippon India Nippon Life Asset Management Limited.
He has managed the Nippon India Multi Cap Fund that currently manages
around $1.5 billion. He is also Deputy CIO at NIMF. Mr. Bhan is a well-
known face in India’s wealth management scene. The executive has also been
tasked with managing the Nippon India Consumption Fund besides also being
tapped for advice on international markets.

3. Mr. Samir Rachh

Mr. Rachh has 29 years of experience in asset and capital

management. He is an alumnus of the University of Mumbai. He was
Assistant Editor of Capital Market Magazine and has also managed his own
firm. Called Anvicon Research, it was an advisory and research institution.
Before joining Nippon India Mutual Fund, he was at Hinduja Finance.

Mr. Rachh has now been with NIMF for the last 12 years. He is a renowned
expert in Mid Cap and Small Cap stocks.

4. Mr. Sanjay Parekh

Mr. Parekh is younger than many of his senior colleagues but comes
with 24 years of experience in both Equity Research and Fund Management.

9
Before he started working with Nippon India Nippon Life Asset Management,
he was a high-profile Senior Fund Manager at ICICI Prudential Asset
Management Company Ltd. From 2005 to 2008, he was Head of Investment
at the famous ASK Investment Managers Ltd.

Mr. Parekh joined NIMF as Senior Fund Manager in Equity Investments. He

is enormously influential in his business circles.

5. Ms. Meenakshi Dawar

Ms. Dawar has been with Nippon India Mutual Fund for about 10
years now. She is a B.Tech from IGIT-Delhi and has completed her PG in
Management from the Indian Institute of Management in Ahmedabad. With a
research background in Fund Management and Equity, she is now working
with Nippon India Value Fund and Nippon India Vision Fund and is a well-
respected professional. Ms. Dawar has had a pioneering career with multiple
product launches at IDFC where she worked before. She was previously an
Equity Research Analyst at ICICI Securities.

6. Mr. Manish Gunwani

Mr. Gunwani is currently the CIO of Equity Investments at Nippon

India Mutual Fund. He is an alumnus of IIT Chennai, where he completed his
B.Tech and also has a PGD in Management from IIM Bangalore.

With over 21 years of experience in work and research, mostly in Equity and
Fund management, Mr. Gunwani has added a new edge of dynamism at
NIMF. Before joining Nippon India, he managed two flagship funds at ICICI
Prudential AMC. During his stint there, one of his managed funds rose to
record levels- from half a billion to $3 billion.

10
Mr. Gunwani is a specialist in Small and Medium Caps, and has also worked
before at a portfolio management facility. He is an eminent name in equity
research and is well-traveled, attending seminars and conferences around the
world.

Mutual fund Schemes in Nippon India Mutual Funds

1. Nippon India Gilt Securities Fund Direct

Fund Performance: This fund has consistently performed above the

benchmark in Gilt segment. It has given a commendable 10.45% annual
returns in the last three years. In the previous year, it delivered 12.36%
returns.

2. Nippon Indian Arbitrage Fund Direct Growth

Fund Performance: This fund has consistently performed
above the benchmark in Arbitrage segment. It has given a
commendable 6.77% annual returns in the last three years. In the
previous year, it delivered 5.79% returns.

3. Nippon India Gilt Securities Fund Direct Defined

Maturity Date Growth

Fund Performance: This fund has consistently performed above the

benchmark in Long Term segment. It has given a commendable 10.45%
annual returns in the last three years. In the previous year, it delivered 12.36%
returns.

4. Nippon India Pharma Fund Direct Growth

11
 Fund Performance: This fund has consistently performed above the
benchmark in Sectoral/Thematic segment. It has given a commendable
14.89% annual returns in the last three years. In the previous year, it delivered
39.05% returns.

5. Nippon India Small Cap Fund Direct Growth

Fund Performance: This fund has consistently performed above

the benchmark in Small Cap segment. It has given a commendable -1.83%
annual returns in the last three years. In the previous year, it delivered -5.79%
returns

6. Nippon India Liquid Fund Direct Growth

Fund Performance: This fund has consistently performed above the

benchmark in Liquid segment. It has given a commendable 6.74% annual
returns in the last three years. In the previous year, it delivered 5.56% returns.

7. Nippon India Money Market Fund Direct Growth

Fund Performance: This fund has consistently performed above the

benchmark in Money Market segment. It has given a commendable 7.78%
annual returns in the last three years. In the previous year, it delivered 7.46%
returns

8. Nippon India Banking & PSU Debt Fund Direct

Growth

Fund Performance: This fund has consistently performed above the

benchmark in Banking & PSU segment. It has given a commendable 9.32%

12
annual returns in the last three years. In the previous year, it delivered 12.7%
returns.

9. Nippon India Index Fund Sensex Plan Direct

Growth

Fund Performance: This fund has consistently performed

above the benchmark in Index segment. It has given a commendable
5.84% annual returns in the last three years. In the previous year, it
delivered -4.49% returns.

10. Nippon india Income Fund Direct Growth

Fund Performance: This fund has consistently performed above

the benchmark in Medium to Long Duration segment. It has given a
commendable 9.2% annual returns in the last three years. In the
previous year, it delivered 11.52% returns.

11. Nippon India Value Fund Direct Growth

Fund Performance: This fund has consistently performed above

the benchmark in Value segment. It has given a commendable 0.76%
annual returns in the last three years. In the previous year, it delivered -
9.08% returns.

12. Nippon India Nivesh Lakshya Fund Direct

Growth

13
 Fund Performance: This fund has consistently performed above
the benchmark in Long Duration segment. In the previous year, it
delivered 11.02% returns.

13. Nippon India Short Term Fund Direct Growth

Fund Performance: This fund has consistently performed above the

benchmark in Short Duration segment. It has given a commendable 8.41%
annual returns in the last three years. In the previous year, it delivered 11.29%
returns.

14. Nippon India Floating Rate Fund Direct

Growth

Fund Performance: This fund has consistently performed above the

benchmark in Floater segment. It has given a commendable 8.69% annual
returns in the last three years. In the previous year, it delivered 12.13%
returns.

15. Nippon India Power & Infra Fund Direct

Growth

Fund Performance: This fund has consistently performed above the

benchmark in Sectoral/Thematic segment. It has given a commendable -
5.22% annual returns in the last three years. In the previous year, it delivered -
12.11% returns.

Why to invest these schemes

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 All funds has performed better than other funds in the same
category. The minimum SIP investment amount required to invest in this
scheme is ₹100. These funds are most notable debt Equity mutual funds in
India.

S.No Fund Name Category Risk Level One Rating Fund Size
Year (1-5) in Rupees
return (cr)

1. Nippon india gilt Debt Moderate 13% 5 1452

security fund

2. Nippon india Hybrid Moderately 5.8% 5 7847

arbitrage fund low

3. Nippon india gilt Gilt moderate 13% 5 1452

securities fund
direct defined
maturity date
growth

4. Nippon india Equity High 42.8% 5 3093

pharma fund

5. Nippon india Equity Moderately 0.5% 4 7898

small cap fund high

6. Nippon india Debt Low 5.5% 4 30604

liquid fund

7. Nippon india Debt Moderately 7.4% 4 4265

Money market low
fund

8. Nippon india Debt Moderately 12.8% 4 5211

banking &PSU low
debt fund

15
9. Nippon india Equity Moderately 1.7% 4 85
index fund sensex high
olan direct growth

10. Nippon india Debt Moderate 11.9% 4 428

income fund

11. Nippon india Equity Moderately -2.9% 3 2623

value fund low

12. Nippon india Debt Moderate 17.07% 4 1365

nivesh lakshya
fund direct growth

13. Nippon india Debt Moderately 11.3% 3 6825

short term fund low
direct growth

14. Nippon india Debt Moderately 12% 3 11636

floating rate fund low
direct growth

15. Nippon india Equity High -8.2% 3 1050

power & infra
fund

Vision Statement of Nippon india Mutual fund

To be a globally respected wealth creator with an emphasis on

customer care and a culture of good corporate governance.

Mission Statement Of Nippon india Mutual fund

To create and nurture a world-class, high performance environment

aimed at delighting our customers.

16
 The Main Objectives Of Nippon India Mutual Fund

To carryout the activities of Mutual Fund in India as permitted by

the Law by formulating schemes as per the investor's requirement not just
in India but also beyond borders.

To deployed funds thus raised so as help the unit holders earn

reasonable on their savings.

To take such steps as may be Necessary from time to time to

realise the effects without any limitations.

Leading competitors of Nippon India mutual fund

1. SBI Mutual Fund

2. ICICI Prudential Mutual fund

3. HDFC Mutual fund

4. Aditya Birla Sun Life Mutual Fund

5. Kotak Mutual funds

6. Tata Mutual Fund

SWOT Analysis

Strength

 Company with no Debt

17
  FII/FPP or institution increasing their share holdings

 Company with zero promote pledge

 MFs increased their share holding last quarter

Weakness

 Decline in revenue and profit

 Decline in net profit

 Decline in net profit with falling profit margin

 Promoters decreasing their share holding

 Declining in net cash flow company not able to generate net cash

 Insufficient use of share holders fund. ROE declining in last 2

years

Opportunities

 Brokers upgraded recommendation or target price in last 3

months

Threats

 Company with negative growth rate and promoters decreasing

share holding in past 6 months

 Stocks with expensive valuation

 Company with high market cap lower public share holding

 Recent broker downgrades in target price

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Literature Reviews
Literature Review 1

 Year: 2003
 Name of research paper: Evaluating mutual funds in an emerging
market factors that matter to financial advisors
 Journal: international journal of marketing
 Author: Bala Ramasamy, Matthew C.H Yeung
 Sample size: 75
 Statistical tools used: Graph, Frequency table
 Findings: Financial advisors looking for consistent growth of funds over
long period of time

Literature Review 2

 Year: 2018
 Name of research paper: Factors affecting the fund selection capability
of mutual fund advisor
 Journal: Asian Journal of management
 Author: Sharika Hasaan, Dr. Asif Iqbal Fazil, Asif Hammid
 Sample size: 100
 Statistical tools used: Bar Graph, frequency table
 Findings: The average performing funds which involve moderate level of
risk and are mostly debt oriented are recommended by financial advisor

Literature Review 3

 Year: 2017

19
  Name of research paper: A study on rloe of financial advisor and
investor behavior towards mutual fund industry in india
 Journal: Asian journal of management
 Author: Dheeraj Agarwal
 Sample size: 100
 Statistical tools used: Mean, Frequency table
 Hypothesis: Ho1:- There is significant difference between factors
affecting choice of a fund and investor demographics
 Ha1:- There is significant difference between factors
affecting choice of a fund and investor demographics
Ho2:- There is significant difference between role of
financial advisor and choice of fund
H4:- There is significant difference between role of
financial advisor and choice of fund
 Findings: Financial advisor in mutual fund industry plays an important
role because it is respective of the company financial advisor influence
the behavior of the investors by understanding their financial need and
providing them a solution brtter fits to their financial need.

Literature review 4

 Year: 2003
 Name of research paper: Financial advisor and multiple share class
mutual fund
 Journal: Journal of financial services review
 Author: MA Jones, VP Lesseig, TI Smythe
 Sample size: 3000
 Sample period: One Year

20
  Statistical tools used : Frequency calculation and Percentage
 Findings: The recommendation of specific share classes appears to be
related to the commission level for individual classes. Increasing the
commission for particular classes appears related to higher frequency for
that class.

Theoretical Concepts
Mutual funds: A mutual fund is a professionally-managed firm of
collective investments that pools money from many investors and invests it in
stocks, bonds, short-term money market instruments, and/or other securities. In
other words we can say that A Mutual Fund is a trust registered with the
Securities and Exchange Board of India (SEBI), which pools up the money
from individual / corporate investors and invests the same on behalf of the
investors /unit holders, in equity shares, Government securities, Bonds, Call
money markets etc., and distributes the profits.
The value of each unit of the mutual fund, known as the net asset value
(NAV), is mostly calculated daily based on the total value of the fund divided
by the number of shares currently issued and outstanding. The value of all the
securities in the portfolio in calculated daily.

1. Advantages of mutual funds

 Professional management and research to select quality securities.

 Spreading risk over a larger quantity of stock whereas the investor has
limited to buy only a hand full of stocks. The investor is not putting all
his eggs in one basket.
 Ability to add funds at set amounts and smaller quantities such as $100
per month.
 Ability to take advantage of the stock market which has generally
outperformed other investment in the long run.

21
  Fund manager are able to buy securities in large quantities thus reducing
brokerage fees.

2. Disadvantages of mutual funds

 The investor must rely on the integrity of the professional fund manager.
 Fund management fees may be unreasonable for the services rendered.
 The fund manager may not pass transaction savings to the investor.
 The fund manager is not liable for poor judgment when the investor's
fund loses value.
 There may be too many transactions in the fund resulting in higher
fee/cost to the investor - This is sometimes call "Churn and Earn".
 Prospectus and Annual report are hard to understand.
 Investor may feel a loss of control of his investment dollars.
 There may be restrictions on when and how an investor sells/redeems his
mutual fund shares.

3. History of the Indian mutual fund industry:

The mutual fund industry in India started in 1963 with the formation of
Unit Trust of India, at the initiative of the Government of India and Reserve
Bank. The history of mutual funds in India can be broadly divided into four
distinct phases.
First Phase – 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of
Parliament by the Reserve Bank of India and functioned under the Regulatory
and administrative control of the Reserve Bank of India. In 1978 UTI was de-
linked from the RBI and the Industrial Development Bank of India (IDBI) took
over the regulatory and administrative control in place of RBI. The first scheme
launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700
crores of assets under management.
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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 Canbank 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 crores.
Third Phase – 1993-2003 (Entry of Private Sector Funds)
1993 was the year in which the first Mutual Fund Regulations came into
being, under which all mutual funds, except UTI were to be registered and
governed. The erstwhile Kothari Pioneer (now merged with Franklin
Templeton) was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of
January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805
crores.
Fourth Phase – since February 2003
In February 2003, following the repeal of the Unit Trust of India Act
1963 UTI was bifurcated into two separate entities. One is the Specified
Undertaking of the Unit Trust of India with assets under management of Rs.29,
835 crores as at the end of January 2003, representing broadly, the assets of US
64 scheme, assured return and certain other schemes
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB
and LIC. It is registered with SEBI and functions under the Mutual Fund

23
Regulations consolidation and growth. As at the end of September, 2004, there
were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

4. Types of mutual funds

Most funds have a particular strategy they focus on when investing. For
instance, some invest only in Blue Chip companies that are more established
and are relatively low risk. On the other hand, some focus on high-risk start up
companies that have the potential for double and triple digit growth. Finding a
mutual fund that fits your investment criteria and style is important.

Categories of mutual funds:

Mutual funds can be classified as follows:

 Based on their structure:

24
  Open-ended funds: Investors can buy and sell the units from the fund, at
any point of time.

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

 Based on their investment objective:

 Equity funds: These funds invest in equities and equity related instruments.
With fluctuating share prices, such funds show volatile performance, even
losses. However, short term fluctuations in the market, generally smoothens
out in the long term, thereby offering higher returns at relatively lower
volatility. At the same time, such funds can yield great capital appreciation as,
historically, equities have outperformed all asset classes in the long term.
Hence, investment in equity funds should be considered for a period of at least
3-5 years. It can be further classified as:
 Index funds- In this case a key stock market index, like BSE Sensex or
Nifty is tracked. Their portfolio mirrors the benchmark index both in
terms of composition and individual stock weight age.
 Equity diversified funds- 100% of the capital is invested in equities
spreading across different sectors and stocks.
 Dividend yield funds- it is similar to the equity diversified funds except
that they invest in companies offering high dividend yields.

25
  Thematic funds- Invest 100% of the assets in sectors which are related
through some theme. e.g. -An infrastructure fund invests in power,
construction, cements sectors etc.
 Sector funds- Invest 100% of the capital in a specific sector. e.g. - A
banking sector fund will invest in banking stocks.
 ELSS- Equity Linked Saving Scheme provides tax benefit to the
investors.

 Balanced fund: Their investment portfolio includes both debt and equity.
As a result, on the risk-return ladder, they fall between equity and debt
funds. Balanced funds are the ideal mutual funds vehicle for investors who
prefer spreading their risk across various instruments. Following are
balanced funds classes:
 Debt-oriented funds -Investment below 65% in equities.
 Equity-oriented funds -Invest at least 65% in equities, remaining in
debt.

 Debt fund: They invest only in debt instruments, and are a good option for
investors averse to idea of taking risk associated with equities. Therefore,
they invest exclusively in fixed-income instruments like bonds, debentures,
Government of India securities; and money market instruments such as
certificates of deposit (CD), commercial paper (CP) and call money. Put
your money into any of these debt funds depending on your investment
horizon and needs.
 Liquid funds- These funds invest 100% in money market instruments,
a large portion being invested in call money market.
 Gilt funds ST- They invest 100% of their portfolio in government
securities of and T-bills.

26
  Floating rate funds - Invest in short-term debt papers. Floaters invest
in debt instruments which have variable coupon rate.
 Arbitrage fund- They generate income through arbitrage opportunities
due to miss-pricing between cash market and derivatives market. Funds
are allocated to equities, derivatives and money markets. Higher
proportion (around 75%) is put in money markets, in the absence of
arbitrage opportunities.
 Gilt funds LT- They invest 100% of their portfolio in long-term
government securities.
 Income funds LT- Typically such funds invest a major portion of the
portfolio in long-term debt papers.
 MIPs- Monthly Income Plans have an exposure of 70%-90% to debt
and an exposure of 10%-30% to equities.
 FMPs- fixed monthly plans invest in debt papers whose maturity is in
line with that of the fund.

5. Investment strategies:
1. Systematic Investment Plan: under this a fixed sum is invested each month
on a fixed date of a month. Payment is made through post dated cheques or
direct debit facilities. The investor gets fewer units when the NAV is high and
more units when the NAV is low. This is called as the benefit of Rupee Cost
Averaging (RCA)
2. Systematic Transfer Plan: under this an investor invest in debt oriented
fund and give instructions to transfer a fixed sum, at a fixed interval, to an
equity scheme of the same mutual fund.
3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual
fund then he can withdraw a fixed amount each month.

27
6. Risk v/s. return:

7. Working of a Mutual fund:

The entire mutual fund industry operates in a very organized way. The
investors, known as unit holders, handover their savings to the AMCs under
various schemes. The objective of the investment should match with the
objective of the fund to best suit the investors’ needs. The AMCs further invest
the funds into various securities according to the investment objective. The

28
return generated from the investments is passed on to the investors or reinvested
as mentioned in the offer document.
8. Regulatory Authorities:
To protect the interest of the investors, SEBI formulates policies and
regulates the mutual funds. It notified regulations in 1993 (fully revised in
1996) and issues guidelines from time to time. SEBI approved Asset
Management Company (AMC) manages the funds by making investments in
various types of securities. Custodian, registered with SEBI, holds the securities
of various schemes of the fund in its custody. According to SEBI Regulations,
two thirds of the directors of Trustee Company or board of trustees must be
independent.
The Association of Mutual Funds in India (AMFI) reassures the investors in
units of mutual funds that the mutual funds function within the strict regulatory
framework. Its objective is to increase public awareness of the mutual fund
industry. AMFI also is engaged in upgrading professional standards and in
promoting best industry practices in diverse areas such as valuation, disclosure,
transparency etc.

Documents Required for Mutual Fund Investment

Resident Indians:-

All customers intending to invest in mutual funds need to be KYC

compliants. Individual investors need to produce their proof of identity and
proof of address.

Documents acceptable as proof of identity:

 PAN card with photograph. This is a compulsory document except for

those who are specifically exempt from having a PAN

29
  Unique Identification Number (Aadhaar)/Passport /Driving license/Voter-
ID Card

Documents acceptable as proof of address:

 Unique Identification Number (Aadhaar)

 Passport
 Driving License
 Ration Card
 Voters Identity Card
 Registered Lease/Sale Agreement of Residence
 Flat Maintenance bill
 Utility bills like Gas bill, Telephone bill (only landline) or Electricity bill,
maximum 3 months old
 Insurance Copy
 Bank Account Statement/Passbook maximum 3 months old

Non-Resident Indians:-

They need to submit in addition to PAN, a certified true copy of their

passport as well as proof of overseas address and permanent address. The
documents need to be converted in English, if in any other language.

Offer document:
An offer document is issued when the AMCs make New Fund Offer
(NFO). It’s advisable to every investor to ask for the offer document and read it
before investing. An offer document consists of the following:
Standard Offer Document for Mutual Funds (SEBI Format)
 Summary Information
 Glossary of Defined Terms
 Risk Disclosures

30
  Legal and Regulatory Compliance
 Expenses
 Condensed Financial Information of Schemes
 Constitution of the Mutual Fund
 Investment Objectives and Policies
 Management of the Fund
 Offer Related Information.

Key Information Memorandum:

A key information memorandum, popularly known as KIM, is attached
along with the mutual fund form. And thus every investor gets to read it.
Its contents are:
1. Name of the fund.
2. Investment objective
3. Asset allocation pattern of the scheme.
4. Risk profile of the scheme
5. Plans & options
6. Minimum application amount/ no. of units
7. Benchmark index
8. Dividend policy
9. Name of the fund manager(s)
10. Expenses of the scheme: load structure, recurring expenses
11. Performance of the scheme (scheme return v/s. benchmark return)
12. year- wise return for the last 5 financial years.

Distribution channels:

31
 Mutual funds posses a very strong distribution channel so that the
ultimate customers doesn’t face any difficulty in the final procurement. The
various parties involved in distribution of mutual funds are:
 Direct marketing by the AMCs: the forms could be obtained from the
AMCs directly. The investors can approach to the AMCs for the forms.
some of the top AMCs of India are; Reliance ,Birla Sunlife, Tata, SBI
magnum, Kotak Mahindra, HDFC, Sundaram, ICICI, Mira Assets,
Canara Robeco, Lotus India, LIC, UTI etc. whereas foreign AMCs
include: Standard Chartered, Franklin Templeton, Fidelity, JP Morgan,
HSBC, DSP Merrill Lynch, etc.

Research Methodology
 Primary data
 Secondary data

Research is totally based on primary data and Secondary data can be used
only for the reference. Research has been done by primary data collection, and
primary data has been collected by filling a required format. The secondary data
has been collected through various journals and websites.

Title of the project

 A study on needs of financial advisor for mutual fund investors.
Objectives of study
 The main objective of this project is to collect the opinion of
people regarding mutual funds.
 To know the opinion of the investors about the services of financial
advisors.
 To know from where the investors purchase mutual funds.

32
  To know the most suitable stage to invest in mutual funds

Study Area
Needs of financial advisors for mutual fund investors
Data Collection method
Primary resource:
 Questionnaire
Secondary Resource
 Journals
 Articles
 Company Website Information

Sampling
The sample is selected in a random way, irrespective of them being
investor or not or availing the services or not. It was collected through filling
up the questionnaire prepare

Types of Statistical Tools

Sample statistical tool is used to analyzed and expresses in terms of
percentage. The information gathered from the primary source would be
analyzed by tabulating all information received. Conclusion and
interpretation of this study would then be made using various tools like
graphs, charts and tables.

Data analysis and Interpretation

1). Analysis on the basis of gender.
Gender Number of Respondents Percentage %

33
 Male 92 92%
Female 08 8%
TOTAL 100 100%

CLASSIFICATION ON THE BASIS OF GENDER

8%

Male

Female
92%

Analysis:
From the above table it is evident that 92% are male and 8% are female
respondents.

2). Analysis on the basis of Age.

Age group Number of Respondents Percentage %
Below 20 00 0%
20 – 30 92 92%
30 – 40 08 8%
40 & Above 00 0%
TOTAL 100 100%

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 CLASSIFICATION ON THE BASIS OF AGE GROUP

100% 92%
90%
80%
Below 20
70%
60% 20 – 30
50% 30 – 40
40% 40 & Above
30%
20% 8%
0%
10% 0%
0%

Analysis:
From the above table it is evident that were 92% responders were
between 20 to 30 years, 8% responders were between 30 to 40 years

3 : Analysis on the basis of Occupation.

Occupation Number of Percentage %
Respondents
Businessman 4 4%
Employee 36 36%
student 52 52%
others 08 8%
TOTAL 100 100%

35
 Classification on the basis of occupation

60% 52%

50%
36% Businessman
40%
Employee
30%
student
20% others
8%
10% 4%

0%
Businessman Employee student others

Analysis:
From the above table it is evident that 4% of responders were
Businessman, 36% of responders were Employee, 52% of responders were
student and 8% of responders were others.

4 : Analysis on the basis of Education.

Education Number of Percentage %
Respondents
Post Graduate 76 76%
Graduate 16 16%
PUC 04 4%
Below SSLC 04 4%
TOTAL 100 100%

36
 CLASSIFICATION ON THE BASIS OF EDUCATION
QUALIFICATION

4%
Post Graduate
4%
Graduate
16% PUC
Below SSLC
76%

0% 20% 40% 60% 80%

Analysis:
From the above table it is observed that 76% of responders are Post
Graduate holders, 16% of responders are Graduate holders, 4% of responders
are PUC holders and 4% of responders are Below SSLC.

5 : Analysis on the basis of Income (yr).

Income (yr) Number of Percentage %
Respondents
Below 50000 56 56%
50000-100000 34 34%
100000-500000 08 8%
above500000 02 2%
TOTAL 100 100%

37
 CLASSIFICATION ON THE BASIS OF INCOME LEVEL

56%
60%
50%
34%
40%
Below 50000
30%
50000-100000
20% 8%
10% 2% 100000-500000
0% above500000

Analysis:
From the above table it is clear that 56% of responders were having
below 50000 income, 34% % of responders were having 50000-100000 income,
8% of responders were having 100000-500000 income and 2% of responders
were having above500000 income.

6 : Where from do you purchase mutual funds?

Particulars Number of respondents Percentage %
Directly from the AMCs 24 24%
Brokers only 46 46%
Brokers/ sub-brokers 24 24%
Other sources 06 6%
TOTAL 100 100%

38
 Method of purchasing mutual funds

6%

24% Directly from the AMCs

Brokers only
46% Brokers/ sub-brokers
Other sources
24%

0% 20% 40% 60%

Analysis:
From the above table it is evident that 24% of responders were purchase
mutual funds from directly from the AMCs, 46% of responders were purchase
mutual funds from Brokers only, 24% of responders were purchase mutual
funds from Brokers/ sub-brokers and 6% of responders were purchase mutual
funds from other sources.

7 : According to you which is the most suitable stage to invest in mutual funds?
Particulars Number of respondents Percentage %
Young unmarried 78 78%
stage
Young Married with 18 18%
children stage
Pre-retirement stage 02 2%
Old age stage 02 2%
TOTAL 100 100%

39
 DIAGRAM SHOWING AGE GROUP FOR INVESTMENT

80%
Young unmarried stage
70%
60% Young Married with children
50% stage
40% 78% Pre-retirement stage
30%
20% Old age stage
10% 18%
2% 2%
0%

Analysis:
From the above table it is evident that 78% of responders said that
suitable stage to invest in mutual funds is at Young unmarried stage, 18% of
responders said that suitable stage to invest in mutual funds is at Young Married
with children stage, 2% of responders said that suitable stage to invest in mutual
funds is at Pre-retirement stage and 2% of responders said that suitable stage to
invest in mutual funds is at Old age stage.

8 : Which feature of the mutual funds influence you most?

Particulars Number of Percentage %
respondents
Diversification 38 38%
Professional management 22 22%
Reduction in risk and 16 16%
transaction cost
Helps in achieving long term 24 24%
goals
TOTAL 100 100%

40
 FEATURES OF THE MUTUAL FUNDS INFLUENCE THE
INVESTOR

24%

Diversification
16%

Professional management
22%
Reduction in risk and
transaction cost
38%
Helps in achieving long
term goals
0% 20% 40%

Analysis:
From the above table it is clear that 38% of responders said that the
feature of the mutual funds influence most is Diversification, 22% of responders
said that the feature of the mutual funds influence most is Professional
management, 16% of responders said that the feature of the mutual funds
influence most is Reduction in risk and transaction cost, and 24% of responders
said that the feature of the mutual funds influence most is helps in achieving
long term goals.

.9 : Where do you find yourself as a mutual fund investor?

Particulars Number of respondents Percentage %
Totally ignorant 10 10%
Partial knowledge of mutual 42 42%
funds
Aware only of any specific 34 34%
scheme in which you invested
Fully aware 14 14%
TOTAL 100 100%

41
 DIAGRAM SHOWS INVESTOR AWARENESS

45% 42%

40% Totally ignorant

34%
35%
30% Partial knowledge of mutual
funds
25%
Aware only of any specific
20%
14% scheme in which you invested
15% 10% Fully aware
10%
5%
0%

Analysis:
From the above table it is evident that 10% of responders said that they
find themselves as a mutual fund investor as totally ignorant, 42% of responders
said that they find themselves as a mutual fund investor have Partial knowledge
of mutual funds, 34% of responders said that they find themselves as a mutual
fund investor have Aware only of any specific scheme in which you invested
and 14% of responders said that they find themselves as a mutual fund investor
have fully aware.

10 : Are you availing the services of personal financial advisors?

Particulars Number of respondents Percentage %
Yes 82 82%
No 18 18%
TOTAL 100 100%

42
 NEED OF PERSONAL FINANCIAL ADVISORS

18%

Yes
No
82%

Analysis:
From the above table it is evident that 82% of responders said Yes and
18% of responders said No to avail the services of personal financial advisors.

11 : Which expertise of the personal financial advisor is demanded most?

Particulars Number of Percentage %
respondents
Portfolio review & investment 14 14%
recommendation
Planning to achieve specific financial 40 40%
goals
Managing assets in retirement 08 8%
Access to specialist in areas such as tax 38 38%
planning
TOTAL 100 100%

43
 EXPERTISE OF THE PERSONAL FINANCIAL
ADVISOR IS DEMANDED MOST

40%
38%
40% Portfolio review & investment
recommendation
30% Planning to achieve specific
financial goals
20% 14% Managing assets in retirement
8%
10% Access to specialist in areas
such as tax planning
0%

Analysis:
From the above table it is evident that 14% of responders said that
expertise of the personal financial advisor is demanded most is Portfolio review
& investment recommendation, 40% of responders said that expertise of the
personal financial advisor is demanded most is planning to achieve specific
financial goals, 8% of responders said that expertise of the personal financial
advisor is demanded most is Managing assets in retirement, and 38% of
responders said that expertise of the personal financial advisor is demanded
most is Access to specialist in areas such as tax planning.

12 : What is the major reason for using financial advisors?

Particulars Number of Percentage
respondents %
Want help with asset allocation 24 24%
Don’t have time to make my 16 16%
own investment decision
To explain various investment 26 26%
options
Want to make sure I am 34 34%
investing enough to meet my
financial goals

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 TOTAL 100 100%

Major reason foe using financial advisor

Want help with asset

34% allocation

Don’t have time to make

26% my own investment
decision
16% To explain various
investment options

24% Want to make sure I am

investing enough to meet
my financial goals
0% 10% 20% 30% 40%

Analysis:
From the above table it is clear that 24% of responders said that the major
reason for using financial advisors is that they Want help with asset allocation
16% of responders said that the major reason for using financial advisors is that
they Don’t have time to make my own investment decision, 26% of responders
said that the major reason for using financial advisors is that they want to
explain various investment options and 34% of responders said that the major
reason for using financial advisors is that they want to make sure I am investing
enough to meet my financial goals.

13: What is the major reason for not using financial advisor?
Particulars Number of respondents Percentage
%
Have access to all resources 24 24%
needed to invest on own
Advisors are too expensive 34 34%
Unsure how to find a 18 18%

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trustworthy advisor
Want to be in control of own 24 24%
investment
TOTAL 100 100%

MAJOR REASON FOR NOT USING FINANCIAL

ADVISOR

34%
35%
Have access to all resources
30% needed to invest on own
24% 24%
25% Advisors are too expensive
18%
20%
Unsure how to find a
15% trustworthy advisor
10% Want to be in control of own
5% investment
0%

Analysis:
From the above table it is clear that 24% of responders said that the major
reason for not using financial advisors is that they have access to all resources
needed to invest on own, 34% of responders said that the major reason for not
using financial advisors is that believe advisors are too expensive, 18% of
responders said that the major reason for not using financial advisors is that
Unsure how to find a trustworthy advisor and 24% of responders said that the
major reason for not using financial advisors is that want to be in control of own
investment.

46
 Findings
1. Investors knowledge about various mutual funds schemes:
Out of the 100 persons who already have invested in
mutual funds/ are interested to invest, only 14% have sound knowledge of
Mutual funds, 34% people are aware of only the schemes in which they
have invested. 42% possess partial knowledge whereas 10% stands now
here in knowledge about Mutual fund

2. Method of purchase of mutual funds:

24% participants buy forms directly from the AMCs, 46%
from brokers only, 24% from brokers and sub-brokers even then 6%
people buy from other sources. The brokers have the maximum reach so
they should try to make those investors aware of the happenings, even the
AMCs should follow it.

3. Factors that influence investors go for mutual funds:

When asked about the most alluring feature of mutual funds,
most of them opted for diversification, followed by reduction in risk,
helps in achieving long term goals and helps in achieving long term goals
respectively.

4. Most preferred time of investors to invest in mutual fund:

Most of the investor preferred to invest at a young
unmarried stage. Even 18% persons were ready to invest at a stage of
young married with children, person with older age investing due to profit
there grandson. But again the number rise to 2% at pre-retirement stage.

47
 5. Availing the services of financial advisors:
Out of 100 responders, 82% were already availing the services
of financial advisors whereas 18% do not availing the services of
financial advisors.

6. The major reason for availing the service of financial advisors:

24% participants regarded asset allocation as the major reason
for going for financial advisors. 26% of them needed them to explain
them the various investment options available. 34% of them wanted to
make sure that they were saving enough to meet their financial goals.
While just 16% gave the reason- lack of time.

7. The major reason investors are not availing the service of financial
advisors:
 When asked about one reason for not availing the services of financial
advisors, 34% of them pointed the advisors as expensive. 24% of them
wished to be in control of their own assets.18% of them said that they
find it difficult to get trustworthy advisors. Whereas 24% of them said
they have access to all the necessary resources required.

Suggestions
Problem spotted is ignorance. Investors should be made aware of the
benefits. Nobody will invest until and unless he is fully convinced. Investors
should be made to realize that ignorance is no longer and what they are losing
by not investing. Mutual funds offer a lot of benefit which no other single
option could offer. But most of the people are not even aware of what actually a
mutual fund is? They only see it as just another investment option.

48
Reduce cost of service charges:
 Now the most important reason for not availing the services of advisors
was spotted was being expensive. The advisors should try to charge a
nominal fee at the beginning. But if not possible then they could go for
offering more services and benefits at the existing rate. They should also
maintain their code of ethics so that the investors could trust upon them.
 Thus the advisors should try to attract more and more persons and turn
them into investors and finally their clients

Preferences to young investors:

 The advisors should try to change their mindsets. The advisors should
target for more and more young investors. Young investors as well as
persons at the height of their career would like to go for advisors due to
lack of expertise and time.

Conclusion
We can find the market flooded with a variety of investment options
which includes mutual funds, equities, bonds, corporate debentures, bank
deposits and etc., Mutual Fund industry today, with about 34 players and more
than five hundred schemes, it is one of the most preferred investment avenues in
India. Mutual Fund Advisors give emphasis on mutual funds than other
investment options. Investment is the stepping stone to achieving one's financial
dreams. Mutual funds offer an opportune way to long-term wealth creation.
However, with more and more funds flooding the market, the task of selecting
the most suitable scheme gets even more complicated.

49
Annexures
Questionnaire
1. Name: ……………………………….
1. Address: ……………………………
……………………………
3. Sex:
a) Male [ ] b) Female [ ]
4. Age:
a) Below 20 [ ] b) 20 – 30 [ ]
c) 30-40 [ ] d) 40 & above[ ]
5. Education:
a) Post Graduate [ ] b) Under Graduate [ ]
c) PUC [ ] d) Below SSLC [ ]
6. Occupation:
a) Businessman [ ] b) Employee [ ]
c) student [ ] d) others ……………………
7. Maritial Status:
a) Married [ ] b) Unmarried [ ]
8. Income (yr):
a) Below 50000 [ ] b) 50000-100000 [ ]
c) 100000-500000 [ ] d) above 500000 [ ]

9. Have you invested /are you interested to invest in mutual funds?

a) Yes [ ] b) No [ ]

10. If no what is the most important reason for not investing in mutual funds?
a) Lack of knowledge about mutual funds [ ]
b) Enjoys investing in other options [ ]

50
 c) Its benefits are not enough to drive you for investment [ ]
d) No trust over the fund managers [ ]

11. Where from do you purchase mutual funds?

a) Directly from the AMCs [ ]
b) Brokers only [ ]
c) Brokers/ sub-brokers [ ]
d) Other sources [ ]

12. According to you which is the most suitable stage to invest in mutual funds?
a) Young unmarried stage [ ]
b) Young Married with children stage [ ]
c) Pre-retirement stage [ ]
d) Old age stage [ ]

13. Which feature of the mutual funds influence you most?

a) Diversification [ ]
b) Professional management [ ]
c) Reduction in risk and transaction cost [ ]
d) Helps in achieving long term goals [ ]

14. Where do you find yourself as a mutual fund investor?

a) Totally ignorant [ ]
b) Partial knowledge of mutual funds [ ]
c) Aware only of any specific scheme in which you invested [ ]
d) Fully aware [ ]

15. Are you availing the services of personal financial advisors?

a) Yes [ ] b) No [ ]

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16. Which expertise of the personal financial advisor is demanded most?
a) Portfolio review & investment recommendation [ ]
b) Planning to achieve specific financial goals [ ]
c) Managing assets in retirement [ ]
d) Access to specialist in areas such as tax planning [ ]

17. What is the major reason for using financial advisors?

a) Want help with asset allocation [ ]
b) Don’t have time to make my own investment decision [ ]
c) To explain various investment options [ ]
d) Want to make sure I am investing enough to meet my financial goal [ ]

18. What is the major reason for not using financial advisor?
a) Have access to all resources needed to invest on own [ ]
b) Believe advisors are too expensive [ ]
c) Unsure how to find a trustworthy advisor [ ]
d) Want to be in control of own investment [ ]

References
 John A Haslem
The Journal of Investing Winter 2008, 17 (4) 91-94; DOI: https://joi.pm-
research.com/content/17/4/91/tab-pdf-trialist

 Fisher, Kenneth L; Statman, Meir.

Journal of Portfolio Management; London Vol. 24, Iss. 1,
https://www.proquest.com/openview/02aa216f0788c4829d8bee9495f8157d/1?pq-
origsite=gscholar&cbl=49137

 Jason West : Journal of Financial Services Marketing volume 17, pages50–66 (2012)

https://link.springer.com/article/10.1057/fsm.2012.4

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  https://groww.in/mutual-funds/amc/reliance-mutual-funds
 https://www.nipponindiamf.com/
 https://www.mutualfundindia.com/
 https://www.moneycontrol.com/

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