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back to 1963 when the Unit Trust of India (UTI) came into existence at the initiative of the Government of India and the Reserve Bank of India. 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. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management. Second Phase – 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by 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) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except 1
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. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual funds. Fourth Phase – since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth.
The graph indicates the growth of assets over the years.
Note: Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified Undertaking of the Unit Trust of India effective from February 2003. The Assets under management of the Specified Undertaking of the Unit Trust of India has therefore been excluded from the total assets of the industry as a whole from February 2003 onwards. Source: www.amfiindia.com
Concept A mutual fund is a professionally managed, collective investment scheme that pools money from many investors and invests typically in investment securities. Mutual fund is a trust that manages the pool of money collected from various investors and it is managed by a team of professional fund managers. The money thus collected is invested in accordance with the stated investment objectives in stocks, bonds, short-term money market instruments, other mutual funds, other securities, and/or commodities such as precious metals. Mutual Fund companies are known as Asset Management Companies (AMC). They offer a variety of diversified schemes. They pool the savings of investors and invest them in a welldiversified portfolio of sound investments. 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. The current value of such investments is calculated on daily basis and the same is reflected in the Net Asset Value (NAV) declared by the funds from time to time. This NAV keeps on changing with the changes in the equity and bond market. Therefore, the investments in Mutual Funds is not risk free, but a good managed Fund can give you regular and higher returns than when you can get from fixed deposits of a bank etc. A Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
Mutual Fund Operation Passed back to Pool their money with Generates Invest in Investor pool in their money and invests in Mutual Fund. 6 . Any Capital gains & losses from such investments are passed on to the investors in proportion of the number of units held by them. The Mutual Fund Manager invests the so collected money in various securities in accordance with the investment objective of the fund.
Any person proposing to set up a mutual fund in India is required under the SEBI (Mutual Funds) Regulations. 7 .Organisation of Mutual Fund Source: www. SEBI The regulation of mutual funds operating in India falls under the preview of authority of the “Securities and Exchange Board of India” (SEBI). 1996 to be registered with the SEBI. They are ultimate beneficiary of the income earned by the mutual funds.amfiindia.com Unit Holders They are the parties to whom the mutual fund is sold.
Sponsor The sponsor should contribute at least 40% to the net worth of the AMC. However. to appoint a custodian to carry out the custodial services for the schemes of the fund. have been appointed prior to the launch of any scheme. Custodian The mutual fund is required. Trustee The mutual fund is required to have an independent Board of Trustees. Transfer Agent The transfer agent is contracted by the AMC and is responsible for maintaining the register of investors / unit holders and every day settlements of purchases and redemption of units. two third of the trustees should be independent persons who are not associated with the sponsors in any manner. 8 .inter alia – ensuring that the AMC has all its systems in place. service capability in terms of computerization and other infrastructure facilities are approved to act as custodians. all key personnel. This structure mitigates the risk of dishonest activity by separating the fund managers from the physical securities and investor records. An AMC or any of its officers or employees are not eligible to act as a trustee of any mutual fund. if any person holds 40% or more of the net worth of an AMC shall be deemed to be a sponsor and will be required to fulfill the eligibility criteria in the Mutual Fund Regulations. The Registrar and Transfer agent also handles communications with investors and updates investor records. The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund. The trustees are responsible for . registrar etc. Only institutions with substantial organizational strength. under the Mutual Fund Regulations.e. The custodian must be totally delinked from the AMC and must be registered with SEBI. auditors. i. The role of a transfer agent is to collect data from distributors relating to daily purchases and redemption of units.
They collect money from investors by way of floating various mutual fund schemes. The diversification of portfolio is done by investing in such securities which are inversely correlated to each other. An Asset Management Company (AMC) is an investment management firm that invests the pooled funds of investors in securities in line with the stated investment objectives. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner.Asset Management Company (AMC) The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The names of all the AMCs operating in India are given below: 9 . At present there are 38 AMCs operating in India. The AMC must have a net worth of at least 10 crores at all times. The chairman of the AMC is not a trustee of any mutual fund.
Sahara Asset Management Co. Ltd. Ltd. Bharti AXA Investment Managers Private Ltd. Ltd. UTI Asset Management Company Ltd. Ltd. Ltd.M. Benchmark Asset Management Co. Private Ltd. ICICI Prudential Asset Management Co. Shinsei Asset Management (India) Pvt. Pvt. Ltd. Ltd. Ltd. Reliance Capital Asset Management Ltd. Ltd. Ltd. DSP BlackRock Investment Managers Pvt. Ltd. Ltd Quantum Asset Management Co. Tata Asset Management Ltd. Ltd. JPMorgan Asset Management (India) Pvt. Ltd. Financial Asset Management Private Ltd. Deutsche Asset Management (India) Pvt. Taurus Asset Management Co. Ltd. Peerless Funds Management Co.Asset Management Companies in India AIG Global AMC (India) Pvt. Religare Asset Management Company Pvt. HSBC Asset Management (India) Private Ltd. Ltd. IDFC Asset Management Company Pvt. Fortis Investment Management (India) Pvt. Pvt. Kotak Mahindra Asset Management Co. SBI Funds Management Private Ltd. Baroda Pioneer Asset Management Co. Ltd. Edelweiss Asset Management Limited Escorts Asset Management Ltd. Sundaram BNP Paribas Asset Management Co. Mirae Asset Global Investments (India) Pvt. Canara Robeco Asset Management Co. FIL Fund Management Private Ltd. 10 . Axis Asset Management Company Ltd. Ltd. Ltd. Principal Pnb Asset Management Co. Ltd. Morgan Stanley Investment Management Pvt. Private Ltd. Ltd. Birla Sun Life Asset Management Co. ING Investment Management (India) Pvt. L&T Investment Management Limited LIC Mutual Fund Asset Management Co. Ltd. J. Franklin Templeton Asset Management (India) Pvt. Ltd. HDFC Asset Management Co.
such as the Bombay Stock Exchange (BSE) or National Stock Exchange (NSE). they sell them back to the fund or to broker acting for the fund at their Net Asset Value (NAV). Whether any particular feature is an advantage for you will depend on your unique circumstances. risk profile and investment objectives. The value of the portfolio is updated every day. This means that when mutual fund investors want to sell their fund units. The value of one unit of investment is called as the Net Asset Value or NAV. Mutual fund units are “redeemable”. Investors purchase mutual funds because they do not have the time or the expertise to manage their own portfolio. But it's important to remember that features and benefits that matter to one investor may not be important to you. • • • The pool of funds is invested in a portfolio of marketable investments.Characteristics of a Mutual Fund Some of the traditional & distinguishing characteristics of mutual funds are given below: • The investors share in the fund is denoted by “units”. A mutual fund is a relatively 11 . • Investors purchase mutual fund units from the fund itself or through a broker for the fund. For some investors. Advantages of Mutual Fund to the investors Every investment tool has some advantages and disadvantages. The value of the units changes every day with change in the portfolio’s value. but are not able to purchase the units from other investors on a secondary market. The investment portfolio of the mutual fund is created according to the stated investment objectives of the fund. mutual funds provide an attractive investment choice because they generally offer the following benefits: • Professional Management: The primary advantage of funds is the professional management of your money.
The reduced transaction costs obviously increases the income available for investors. There are thousands of funds. and each has its own objectives and focus.g. diversification. Moreover. and liquidity of units ensured in mutual funds minimize the risks.inexpensive way for a small investor to get a full-time manager to make and monitor investments. • Portfolio Diversification: A proven principle of sound investment is that of diversification. Majority of people consider diversification as the major strength of mutual funds. energy funds). Securities & Exchange Board of India requires that mutual funds in India have to ensure liquidity. The brokerage fee or trading commission may be reduced substantially. • Reduction of Risk: Risk in investment is as to recovery of the principal amount and as to return on it. The key is for you to find the mutual funds that most closely match your own particular investment objectives 12 . the mutual funds protect themselves from drop in value of shares. • Economies of Scale: Mutual funds having large funds at their disposal avail economies of scale. there is always a market for its units/shares. Some mutual funds invest exclusively in a particular sector (e. • Choice: Mutual funds come in a wide variety of types. Mutual funds. while others might target growth opportunities in general. By investing in many companies. • Liquidity: A distinct advantage of mutual fund over other investments is that. on both fronts provide a comfortable situation for investors. The expert supervision.
• Convenience: When you own a mutual fund. Disadvantages of Mutual Fund to the investors: • No Insurance: Mutual funds. losses can occur. • Inefficiency of Cash Reserves: Mutual funds usually maintain large cash reserves as protection against a large number of simultaneous withdrawals. Although this provides 13 . although regulated by the government are not insured against losses. By holding a large number of different investments. • Dilution: Although diversification reduces the amount of risk involved in investing in mutual funds. • Systematic investment plans: A specific amount is invested for a continuous period at regular intervals under this plan. The returns from the mutual funds are also eligible for favorable tax treatment. tax shelter is also available under section 80C. the mutual fund itself would not double in value because that security is only one small part of the fund's holdings. 500 per month. it can also be a disadvantage due to dilution. and it is possible (although extremely unlikely) that you could even lose your entire investment. if a single security held by a mutual fund doubles in value. rather. all you need to do is to keep track of the fund's performance. you don't need to worry about tracking the dozens of different securities in which the fund invests. mutual funds tend to do neither exceptionally well nor exceptionally poorly. The investor decides the amount and also the mutual fund scheme. For example. • Tax Shelter: Depending on the schemes of mutual funds. The amount to be invested could be as low as Rs. That means that despite the risk-reducing diversification benefits provided by mutual funds.
it means that some of the fund's money is invested in cash instead of assets. which tends to lower the investor's potential return. • Trading Limitations: Although mutual funds are highly liquid in general. 14 . after they've calculated the current value of their holdings.investors with liquidity. You can only buy and sell them at the end of the day. most mutual funds cannot be bought or sold in the middle of the trading day.
Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position. Different mutual funds may also be subject to different risks. bond funds. and more.Types of Mutual Funds: Mutual funds come in many varieties. Each of these may have a different investment objective and strategy and a different investment portfolio. and fees and expenses. For example. stock funds. risk tolerance and return expectations etc. The table below gives an overview into the existing types of schemes in the Industry: 15 . there are index funds. money market funds. volatility.
Such schemes normally invest a majority of their corpus in equities. The fund is open for subscription only during a specified period. The key feature of open – ended schemes is liquidity. Investors can invest in the scheme at the same time of the initial public issue and thereafter they can buy and sell the units of the scheme on the stock exchanges where they are listed. some close – ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices BY INVESTMENT OBJECTIVES • Growth Schemes: The aim of growth funds is to provide capital appreciation over the medium to long term. • Close – ended Schemes: A close – ended fund has a stipulated maturity period which generally ranging from 3 to 15 years. Growth schemes are ideal for investors having a long term outlook seeking growth over a period of time. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices. It has been proven that returns from stocks are much better than the other investments had over the long term. 16 .BY STRUCTURE • Open – ended Schemes: An open – ended fund is one that is available for subscription all through the year. In order to provide an exit route to the investors. These do not have a fixed maturity.
This proportion affects the risks and the returns associated with the balanced fund . Capital appreciation in such funds may be limited. corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income. Such schemes generally invest in fixed income securities such as bonds. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents.in case equities are allocated a higher proportion. 17 . Balanced funds with equal allocation to equities and fixed income securities are ideal for investors looking for a combination of income and moderate growth. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. • Money Market Schemes: The aim of Money Market Funds is to provide easy liquidity.• Income Schemes: The aim of Income Funds is to provide regular and steady income to investors. Certificates of Deposit. though risks are typically lower than that in a growth fund. These are ideal for corporate and individual investors as a means to park their surplus funds for short periods. Commercial Paper and Inter-Bank Call Money. • Balanced Schemes: The aim of Balanced Funds is to provide both growth and regular income. preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as Treasury Bills. investors would be exposed to risks similar to that of the equity market.
which could approximately be the same as that of Nifty.OTHER SCHEMES • Tax Saving Schemes: These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws. 18 . 1961. The various sectors in which the Sector . and pharmaceuticals. power. petroleum stocks. • Special Schemes: o Index Schemes: Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE S&P CNX 50. o Sector Specific Schemes: Sector – specific funds are those Funds which make investments in those sectors that have been specified in the prospectus of the funds.Specific Funds in India make investments are software.The objective of Nifty Plan is to replicate the composition of the Nifty. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction under Section 80C of the Indian Income Tax Act. with a view to endeavor to generate returns. as the Government offers tax incentives for investment in specified avenues.
CHAPTER 2 LITERATURE REVIEW 19 .
KPMG & CII) This report highlighted the following findings. Customer awareness is the pre-requisite for the achievement of the industry growth potential. AMFI in association with Price Waterhouse LLP/FIRE Project funded by USAID and Ogilvy & Mather. Nomura Capital Market Review. profitable growth.Indian Mutual Fund Industry – The Future in a Dynamic Environment (June 2009. fund houses have shown limited focus on increasing retail penetration and building retail AUM. Financial & Business Communications) This guide on the concept.3 trillion rupees (Rs 3. financing and executing initiatives aimed at increasing financial literacy and enhancing investor education across the country through a sustained collaborative effort across all stakeholders. going forward. who are prospective investors in mutual funds. Further. which is expected to result in a massive increase in mutual fund penetration. there is a need for planning. India’s Mutual Fund Industry (Tetsuya Kamiyama. The main aim of this guide was to spread awareness among investors regarding their rights as mutual fund unitholders. its advantages and risks associated with the mutual funds. operations and advantages of mutual funds and the rights of mutual fund unitholders was produced by AMFI to promote financial literacy among public regarding Indian Mutual fund Industry.3 trillion) as of the end of March 2007. has been growing. This guide explains the concept of mutual fund. 10. cost management and robust governance and regulatory framework – all aimed at enabling the industry to achieve sustained. Low customer awareness levels and financial literacy pose the biggest challenge to channelizing household savings into mutual funds. Vol. No. Distributors and the mutual fund houses have exhibited limited interest in continuously engaging with customers post closure of sale as the commissions and incentives have been largely in the form of upfront fees from product sales. and we expect to see further growth in 20 . Making Mutual Fund Work for You (June 2008. and had totaled 3. 4. The next phase in the industry is likely to be characterized by a stronger focus on customer centricity. India's middle class. Winter 2007) The assets managed by India's mutual funds have shown impressive growth.
particularly the later. but these two models. Overall the analysis shows that the Indian equity mutual funds have exhibited considerable downside risk in terms of VaR measures. The Fall and Rise of Mutual Funds in India (Kaushal Shah & Associates. the researcher first provides an overview of the assets managed within India's mutual fund market. Back testing of the models suggest that the ‘random walk’ and the ‘moving average’ models suffer from a downward bias and err by underestimating the VaR frequently. 2009) The current study attempts to highlight the importance of VaR as a measure of ‘downside risk’ for Indian equity mutual funds. and of the legal framework for mutual funds. and then discuss the current situation and recent trends in financial products. equities and derivatives) and demand conditions (household and institutional investors) in India’s capital markets. Issue 23. In this paper. its fall & rise throughout all these years and tried to predict what the future may hold for the mutual fund investors in the long run. The EWMA and historical simulation models are free from that bias. India’s Capital Markets: Unlocking the door to future growth (Deutsche Bank Research. show tendency of providing too conservative estimates of VaR. followed by an 21 . Some stylised facts regarding India’s capital market infrastructure and corporate governance are first presented. 2007) This article take the reader through the entire journey of mutual fund industry in India. The study used three parametric models and one non parametric model and weekly returns of a sample of equity mutual fund schemes in India. its origin. both now and in the past. distribution channels and asset management companies. Downside Risk Analysis of Indian Equity Mutual Funds: A Value at Risk Approach (Soumya Guha Deb & Ashok Banerjee.the mutual fund market moving forward. International Research Journal of Finance & Economics. to predict their weekly VaR on a ‘rolling’ basis and also tested the robustness and predictive ability of the models by employing two popular ‘back testing’ approaches. Feb 2007) The paper follows an analysis of supply (bonds. an aspect which is completely ignored for performance reporting in Indian mutual fund industry.
some brief comments regarding the link between economic growth and capital markets reform conclude the paper. Finally. the paper discusses the classes of investors in India’s markets and the constraints they face in optimising the risk/return objectives of their portfolios. 22 . equity and derivatives markets.analysis of its fixed income. Later.
CHAPTER 3 RESEARCH METHEDOLOGY 23 .
In the present project regarding mutual funds I have tried to unrevealed the perception and attitudes of the investors across different sections of the society. I have also tried to learn about the relationship between income. Keeping these objectives and in mind I have conducted the research on mutual fund. concepts or ideas as they relate to a particular discipline or field of inquiry. The survey is conducted with help of a structured questionnaire. RESEARCH PROBLEM I conducted a market research project to examine the perception of investors towards mutual funds as an investment option. “I conducted a survey of 50 people over a two-week period and subjected the results to statistical analysis”. age and risk taking capacity of the investors. which are subject to peer review. and coherence in their methodologies. OBJECTIVE OF THE RESEARCH The objective of carrying out the research is to access the: “Investors Perception towards mutual funds and its performance” 24 . logic. Methodology refers to more than a simple set of method.INTRODUCTION Methodology includes a philosophically coherent collection of theories. it might explain what the researchers’ views are. This is why scholarly literature often includes a section on the methodology of the researchers.The study will reveal about the different important aspects of Investors perception towards mutual funds.). Researchers acknowledge the need for rigor. etc. This section does more than outline the researchers’ methods (as in. The analysis of this study is done using software known as SPSS and complied using MS Word . The judgment is based upon the survey conducted by me at various locations in Delhi. rather it refers to the rationale and the philosophical assumptions that underlie a particular study relative to the scientific method.
Based on the analysis done in SPSS I have drawn conclusion 25 . In this market research project for mutual funds I have firstly prepared a questionnaire which comprises of 14 questions enquiring about the perception of numerous investors towards mutual funds. The structured questionnaire will then be analyzed with the help of SPSS.RESEARCH DESIGN Research design is a plan outlining how the information is to be gathered for an assessment or evaluation that includes identifying data gathering methods. instruments to be used and how the information will be organized and analyzed. Furthermore a research design also includes timely completion of the study and also keeping cost within the budgeted levels.
CHAPTER 4 DATA COLLECTION 26 .
2. In the present research I have used questionnaires as my research instrument. SECONDARY DATA In the project I have collected the information from different sources about mutual funds that are from: 1. Although they are often designed for statistical analysis of the responses. especially for the 27 . SAMPLING Sampling is that part of statistical practice concerned with the selection of individual observations intended to yield some knowledge about a population of concern. 3. mainly Delhi by administering questionnaires.TECHNIQUES OF DATA COLLECTION PRIMARY DATA In this project I have analyzed data from a sample size of 50 people from. Questionnaire A questionnaire is a research instrument consisting of a series of questions and other prompts for the purpose of gathering information from respondents. Internet: Books: Newspaper RESEARCH INSTRUMENTS The kind of research instruments one uses greatly helps in realizing the reliability and validity of a research. this is not always the case.
cleaning. and modeling data with the goal of highlighting useful information. 3. 2. and supporting decision making.Probability Sampling method which is Sample size: the sample size is 50. Data analysis has multiple facets and approaches.purposes of statistical inference. Target Population: The target population used for sample selection here is the people Geographical Spread of the target population (Sampling Frame): The area of research is above the age of 18 years who are the potential investors in mutual funds. suggesting conclusions. science. 4. Convenience Sampling. in different business. transforming. Delhi. and social science domains. DATA ANALYSIS TECHNIQUES USED Analysis of data is a process of inspecting. encompassing diverse techniques under a variety of names. Results from probability theory and statistical theory are employed to guide practice. Sampling Method Used: I have used the Non. Sampling is useful for a researcher as it saves time. Statistical Package for the Social Sciences) Microsoft office 28 . The various data analysis used in the present research is as follows: Descriptive Data Analysis Crosstab Data Analysis SOFTWARE USED SPSS (originally. effort and money. In this research on “mutual funds” I have followed the following steps: 1.
CHAPTER 5 DATA INTERPRETATION & ANALYSIS 29 .
DESCRIPTIVE ANALYSIS OF QUESTIONAIRE (1) What products/services you are currently using from your bank? What products/services you are currently using from your bank? Savings A/C Current A/C Life Insurance Fixed Deposits Mutual Funds Loans Lockers Frequency 50 14 25 24 10 14 10 As we can observe from the above analysis. 30 . all the respondents used “Savings A/C” from their bank and “Life Insurance” & “Fixed Deposits” being other most used services availed by most of the respondents.
most of the respondents preferred to invest in “Life Insurance” & “Fixed Deposits”.(2) In what modes do you invest your money? In what modes do you invest your money? Fixed Deposits Equity Debt Life Insurance Mutual Funds Gold Government Bonds Other Frequency 29 10 5 30 18 20 5 8 As we can observe from the above analysis. whereas “Government Bonds” & “Debt” were the least preferred investment options by the respondents. 31 .
most of respondents wanted to protect their invested capital and Capital growth being the secondary investment objective. 32 .(3) What is your investment objective? What is your investment objective? Capital Growth Capital protection Regular income Children Education & Marriage Retirement Frequency 22 27 14 12 9 As we can observe from the above analysis.
33 .” there were very few “High Risk Takers”.(4) What type of risk profile do you belong to? What type of risk profile do you belong to? High Risk taker Medium Risk taker Low Risk Taker Frequency 7 27 16 As we can observe from the above analysis. most of the respondents belonged to the “Medium Risk Takers.
so we can say that people are aware of mutual funds as an investment option. how often had you heard of Mutual Funds? I’ve never heard of Mutual Funds before I’ve heard of Mutual Funds a few times I’ve heard of Mutual Funds frequently Frequency 0 21 29 As we can observe from the above analysis. there is no respondent who has not heard of mutual funds. and majority of respondents said that they have heard of it frequently.(5) Before this survey. 34 . how often had you heard of Mutual Funds? Before this survey.
35 .(6) How did you come to know about Mutual Funds? How did you come to know about Mutual Funds? Bank Newspaper Radio Agents Television Word of Mouth Frequency 19 37 3 18 26 26 As we can observe from the above analysis. most of the respondents have heard of mutual funds through “Newspapers”. “Television” and through “word of mouth”.
(7) What are your general impressions of Returns associated with Mutual Fund? What are your general impressions of Returns associated with Mutual Fund? High returns Average returns Low returns Frequency 8 39 3 As we can observe from the above analysis. majority of the respondents perceived that the returns generated from mutual funds were average. 36 .
most of the respondents perceived that there is average risk involved with mutual funds.(8) What are your general impressions of Risk associated with Mutual Fund? What are your general impressions of Risk associated with Mutual Fund? High Risk Average Risk Low Risk Frequency 13 30 7 As we can observe from the above analysis. 37 .
(9) Have you ever invested in Mutual Funds? Have you ever invested in Mutual Funds? Yes No Frequency 18 32 As we can observe from the above analysis. majority of respondents did not invest in mutual funds. 38 .
how do you invest? Lumpsum Investment Through systematic investment plans (SIP) Both lumpsum & systematic investment plans Frequency 3 6 9 As we can observe from the above analysis.(10) If you do invest in Mutual funds. most of the respondents who invested in mutual funds preferred to invest in it through both Lumpsum investment & Systematic investment plans (SIP). how do you invest? If you do invest in Mutual funds. 39 .
1.999 and not one of the respondent invested above Rs.000 Frequency 4 12 2 0 As we can observe from the above analysis. 40 .000 to Rs.000 – 49.999 Above 1. most of the respondents who invested in mutual funds preferred to invest between Rs.000.000 10.00.(11) How much do you usually invest in Mutual Funds in a year? How much do you usually invest in Mutual Funds in a year? Below 10. 49.999 50.000 – 99.00. 10.
41 .(12) If you invest in mutual funds. would you like your portfolio to be managed & controlled at a single point rather than being done at various points? If you invest in mutual funds. whereas very few were against this idea. would you like your portfolio to be managed & controlled at a single point rather than being done at various points? Yes No Don’t Matter Frequency 8 3 7 As we can observe from the above analysis. most of the respondents who invested in mutual funds wanted their portfolio to be managed at one single point so that they can keep a track of their investments & returns.
250.(13) Which Income group do you fall in? Which Income group do you fall in? Below 2.000.000 Frequency 12 28 10 As we can observe from the above analysis. most of the respondents income ranged from Rs.000 – 5.00.000 to Rs.000 Above 5.50.500.000 2. 42 .50.00.
most of the respondents were aged between 26 years to 60 years and there was no respondent above the age of 60 years.(14) Which age group do you fall in? Which age group do you fall in? 18 – 25 years 26 – 45 years 46 – 60 years Above 60 Frequency 11 19 20 0 As we can observe from the above analysis. 43 .
000 3 5 2 As we can observe from the above analysis.50.50.250. most of the respondents below the income of Rs.000 were also medium risk takers.000 to Rs.00. while respondents between the income of Rs.000 were medium risk takers and majority of respondents above the income of Rs.250.500.000 2.500. 44 .000 were low risk takers.00.000 – 5.CROSS TABULATION ANALYSIS OF QUESTIONAIRE Cross Tab between Q13 & Q4 Which Income group do you fall in? * what type of risk profile do you belong to? What type of risk profile do you belong to? High Medium Risk Risk Low Risk taker taker Taker 1 5 6 3 17 8 Which Income group do you fall in Below 2.000 Above 5.
most of the respondents between the age of 18 years to 25 years are medium risk takers. Majority of respondents between the age of 26 years to 45 years are also medium risk takers.Cross Tab between Q14 & Q4 Which age group do you fall in? * What type of risk profile do you belong to? What type of risk profile do you belong to? High Risk taker Which age group do you fall in? 18 – 25 years 26 – 45 years 46 – 60 years Medium Risk taker 0 8 5 2 9 10 Low Risk Taker 3 5 8 As we can observe from the above analysis. Respondents between the age of 46 years to 60 years are also medium risk takers which were closely followed by low risk takers. 45 .
000 4 6 0 As we can observe from the above analysis.50.00.000 – 5.Cross Tab between Q13 & Q7 Which Income group do you fall in * What are your general impressions of Returns associated with Mutual Fund? What are your general impressions of Returns associated with Mutual Fund? High Returns 2 2 Average Returns 10 23 Low Returns 0 3 Which Income group do you fall in Below 2. majority of respondents in all the income groups perceived that mutual funds have average returns.000 2. 46 .000 Above 5.00.50.
most of the respondents below the income of Rs250.Cross Tab between Q13 & Q8 Which Income group do you fall in * What are your general impressions of Risk associated with Mutual Fund? What are your general impressions of Risk associated with Mutual Fund? High Risk Which Income group do you fall in Below 2.000 2.00.50.000 7 6 Average Risk 4 20 Low Risk 1 2 0 6 4 As we can observe from the above analysis. 47 . While most of the respondents in other income groups perceived mutual funds as average risk investments.000 Above 5.000 perceived mutual funds as high risk investments.50.00.000 – 5.
48 .Cross Tab between Q14 & Q7 Which age group do you fall in? * What are your general impressions of Returns associated with Mutual Fund? What are your general impressions of Returns associated with Mutual Fund? High Returns 1 6 1 Average Returns 9 13 17 Low Returns 1 0 2 Which age group do you fall in? 18 – 25 years 26 – 45 years 46 – 60 years As we can observe from the above analysis. majority of respondents in all the income groups perceived that mutual funds have average returns.
49 . However in the income group of 46 years to 60 years about 30% of respondents perceived mutual funds have high risk. majority of respondents in all the income groups perceived mutual funds have average risk.Cross Tab between Q14 & Q8 Which age group do you fall in? * What are your general impressions of Risk associated with Mutual Fund? What are your general impressions of Risk associated with Mutual Fund? High Risk Which age group do you fall in? 18 – 25 years 26 – 45 years 46 – 60 years 4 3 6 Average Risk 7 11 12 Low Risk 0 5 2 As we can observe from the above analysis.
CHAPTER 6 SUGGESTIONS. RECOMMENDATIONS & CONCLUSIONS 50 .
as we can notice from the analysis that only 10% of the respondents between the age of 46-60 years were high risk takers whereas 26. lower the age higher is the risk taking capacity of an investor.were high risk takers. Higher the income higher is the risk taking capacity of an investor. advantages and risks associated with the mutual funds that would have enabled them to make a sound investment decision. I came across the following findings: • Most of the respondents were average risk takers i. • Systematic Investment Plans are simple and time honored investment strategy for accumulation of wealth in a disciplined manner over long term period.000/.FINDINGS From the above descriptive and crosstab analysis. • Income and Risk Profile of an respondent is positively related.250.33% of the respondents below the income of Rs.31% of the respondents between the age of 26-45 years were high risk takers.000/.500. they wanted that their capital invested should remain protected even if they have to tradeoff returns for the protection of their investments. • Most of the respondents believed that the mutual funds have Average Returns and Average Risks however if look at the performance tables of the various mutual funds we find that the annualized returns provided by majority of mutual funds was above 20%. They help the retail investors in overcoming the decision of ‘when to time the market?’ 51 . • Respondents had heard about mutual funds as an investment option however. • Age and Risk Profile of a respondent is inversely related. as we can notice from the analysis that 30% of the respondents above the income of Rs.e. they were not financially literate to know about the various features.were high risk takers whereas only 8.
they should take necessary steps to ensure that the distributors and fund houses interact with the investors even after the sale is made. they should also bring in stricter rules and regulations to stop miss-selling of funds. • Systematic Investment Plans should be promoted as they help the retail investors to accumulate wealth in a disciplined manner over long term period. • SEBI and AMFI could bring in more investor friendly rules and regulations to increase the investments in mutual funds. • SEBI and AMFI should ensure that the investor is not forgotten once the sale is made.SUGGESTIONS AND RECOMMENDATIONS • SEBI and AMFI should spread awareness about mutual funds. they help to overcome the dilemma of when to enter the market? • An investor should be explained about various risks associated with their investment in mutual funds as this would enable them to weigh the investment options rationally. 52 . They can conduct various seminars and workshops were general public could be informed about various features of mutual funds.
they want to safeguard their investment even if they have to tradeoff returns for it. Mutual Funds is an investment option that reduces investors risk while providing the investor with an good possibility of making greater returns than other investment options like Fixed Deposits. Age of the investor and risk profile of an investor are inversely related. which play crucial role in an economy by mobilizing savings and investing them in the capital market. Investors above the age of 55 years should normally have 70% of their investment in debt as it provides them liquidity and capital protection option. • Mutual funds should be the part of portfolio of every investor as it enables an investor to diversify into various securities which he may not be able to otherwise. 53 . SIP enables an investor to overcome the dilemma of ‘when to enter the market?’ • We can also conclude from the above analysis that an investor should give consideration to his risk profile before opting for a particular investment tool.CONCLUSION From the above analysis I can conclude the following points: • Mutual Funds are dynamic financial institutions. • Majority of investors are average risk takers i. • Systematic Investment Plan provided by mutual funds is a great investment opportunity especially for the retail investor as is a simple and time honored investment strategy for accumulation of wealth in a disciplined manner over long term period.e. for these types of investors mutual fund provides a great opportunity to earn good returns while reducing the risk through diversification and professional management.
moneycontrol.valueresearchonline.com www.com 54 .amfiindia.com www.www.