STUDY ON “CUSTOMER PERCEPTION TOWARDS MUTUAL FUNDS”
Research report submitted to Entrepreneurship Development Institute of India in partial fulfillment of the requirements for the award of
Post Graduate Diploma In Business Management
Submitted by: Bhushan Prasad Yadav
under the guidance of
Prof. Nisha Shankar
Entrepreneurship Development Institute of India Ahmedabad 2010
I, Bhushan Yadav student of PGDBM program at EDII. I hereby declare that all the information ,facts and figures produce in this report are based on my own experience and study during my study on “Customer perception towards mutual fund” at Dimapur submitted to Entrepreneurship Development Institute of India in partial fulfillment of the requirements for the award of PGDBM under the supervision and guidance of Prof. Nisha Shankar SBMJ-CME, Bangalore.
The matter embodied in this project report has not been submitted to any other University or Institution for the award of degree.
Introduction…..……………………………………………………….... Background……..………………………………………………………. Objectives of the study………………………………………………..... Mutual fund for whom………………………………………………….. Why mutual fund……………………………………………………….. Types of investors………………………………………………………. Marketing strategies…………………………………………………….. Research Methodology………………………………………………….. Findings…………………………………………………………………. Data Analysis & interpretation………..………………………………… Conclusion………………………………………………………………. Recommendation………………………………………………………... Bibliography…………………………………………………………….. Questionnaire……………..……………………………………………..
experience and resources for directly accessing the capital market. investors achieve economies of scale. which undertakes informed investment decisions and provides consequential benefits of professional expertise. knowledge. corporate and government bonds and equity shares of joint stock companies. which collect the savings of investors and invest them in a large and well-diversified portfolio of securities such as money market instruments. The interests of the investors are protected by the SEBI. A mutual fund is a pool of common funds invested by different investors. and liquidity of investment and tax benefits. Mutual funds are an excellent way to invest in stocks. Transaction costs are often lower than what you would pay if you invested in individual securities (the mutual fund buys and sells large amounts of securities at a time). Mutual funds are governed by the SEBI (Mutual Funds) Regulations. expert professional management. so most of the investment research is done. The advantages for the investors are reduction in risk.
. Since small investors generally do not have adequate time. which acts as a watchdog.)
You diversify your investment risk by owning shares in a mutual fund. They are a good choice of investment because:
They are managed by professional money managers. bonds and other securities. (Most investors don’t have the time or know-how to do all the necessary research. diversified portfolios. 1993.INTRODUCTION
Mutual funds are financial intermediaries. Mutual funds are conceived as institutions for providing small investors with avenues of investments in the capital market. instead of buying individual stocks or bonds directly. who have no contact with each other. By pooling their assets through mutual funds. they have to rely on an intermediary.
high yield profits.
. others look for the long term profit. While some mutual funds aim to produce short term. Individuals are then able to invest small amounts of money into the fund for making a reasonable profit.MUTUAL FUND OPERATIONS FLOW CHART
The flow chart below describes broadly the working of a Mutual Fund:
The simplest mutual funds definition is that they are an investment group set up by professional investors and headed by an investment manager. There are an incredibly large number of mutual funds. Mutual funds are seemingly the easiest and least stressful way to invest in the stock market.
But that is what any successful investor attempts to do. The benefits on offer are many with good post-tax returns and reasonable safety being the hallmark that we normally associate with them. Balance Funds cater to the investors having an appetite for risk greater than the debt funds but less than the equity funds. companies. The manger usually diversifies in a manner such that the net average earning is expected to be considerably positive.Briefly put. gilt funds and many others that cater to the different needs of the investor. Some of the other major benefits of investing in them are: Number of available options Mutual funds invest according to the underlying investment objective as specified at the time of launching a scheme. So. debt funds offer the kind of security that is aimed for at the time of making investments. and other organizations. While equity funds can be as risky as the stock markets themselves. One can achieve this diversification through a Mutual Fund with far less money than one can on his own.
. So. The availability of these options makes them a good option. There will be a fund manager hired to invest this cash with a primary goal that depends upon the type of fund. Diversification Investments are spread across a wide cross-section of industries and sectors and so the risk is reduced. we have equity funds. a mutual fund is a pool of money contributed to by individual investors. Diversification reduces the risk because all stocks don’t move in the same direction at the same time. while equity funds are a good bet for a long term. debt funds. Money market funds offer the liquidity that is desired by big investors who wish to park surplus funds for very short-term periods. they may not find favour with corporates or High Net worth Individuals (HNIs) who have short-term needs. and anyone with a similar approach can be expected to make the same earnings.
People can pick their investment horizon and stay put in the chosen fund for the duration. The investors can withdraw or redeem money at the Net Asset Value related prices in the open-end schemes. This means that the money can be withdrawn anytime. Some mutual funds however. The debt funds too will outperform other options such as banks. Potential of Returns Returns in the mutual funds are generally better than any other option in any other avenue over a reasonable period of time. the units can be transacted at the prevailing market price on a stock exchange. charge exit loads for withdrawal within a period linked to. The market prices of these schemes are dependent on the NAVs of funds and may trade at more than NAV (known as Premium) or less than NAV (known as Discount) depending on the expected future trend of NAV which in turn is linked to general market conditions.Professional Management Mutual Funds employ the services of skilled professionals who have years of experience to back them up. They use intensive research techniques to analyze each investment option for the potential of returns along with their risk levels to come up with the figures for performance that determine the suitability of any potential investment. Bullish market may result in schemes trading at Premium while in bearish markets the funds usually trade at Discount.
. without much reduction in yield. In closed-end schemes. Mutual funds also provide the facility of direct repurchase at NAV related prices. the returns generated are more as they pick securities with different duration that have different yields and so are able to increase the overall returns from the portfolio. Equity funds can outperform most other investments over long periods by placing long-term calls on fundamentally good stocks. Liquidity Fixed deposits with companies or in banks are usually not withdrawn premature because there is a penal clause attached to it. Though they are affected by the interest rate risk in general.
All investments have to be accounted for. who could otherwise not enter stock markets with low investible funds. This means that the investment strategy. mutual funds have to disclose their holdings. Transparency Being under a regulatory framework. The fee in terms of brokerages. decisions judiciously taken. The regulations. regular withdrawal plans and dividend reinvestment plans enabling systematic investment or withdrawal of funds. Even the investors. designed to protect the investors’ interests are also implemented effectively. This is unlike any other investment option in India where the investor knows nothing as nothing is disclosed.Well Regulated Unlike the company fixed deposits. Investment in mutual funds also offers a lot of flexibility with features such as regular investment plans.
. where there is little control with the investment being considered as unsecured debt from the legal point of view. Affordable and a Low Cost affair Mutual Funds offer a relatively less expensive way to invest when compared to other avenues such as capital market operations. the Mutual Fund industry is very well regulated. can benefit from a portfolio comprising of high-priced stocks because they are purchased from pooled funds. outlooks of the market and scheme related details are disclosed with reasonable frequency to ensure that transparency exists in the system. SEBI acts as a true watchdog in this case and can impose penalties on the AMCs at fault. before all investors. investment pattern and all the information that can be considered as material. custodial fees and other management fees are substantially lower than other options and are directly linked to the performance of the scheme.
the more money an investor can gain (or lose!) in a short time. Your money increase at an even greater rate. and in that way you may also make money therefore the value of shares you hold in mutual fund will increase in value when the holdings increases in value capital gains and income or dividend payments are best reinvested for younger investors. In referring to mutual funds. There are several thousand mutual funds with different investments strategies and goals to be chosen from. which differ because of the fund’s goals fund manager. and investment style. volatility (Standard Deviation) is the measure of the degree to which a fund's return varies on a day-to-day or month-to-month basis. there is that the controllers may over-diversify. Retired often seek the income from dividend distribution to augment their income with reinvestment of dividends and capital distribution. It is usually expressed as a percentage and computed as the annualized standard deviation of the percentage change in daily price. Choosing one can be over whelming. Diversification is definitely a good approach when it comes to successful investing by a reasonable investor. But with mutual funds. The fund itself will still increase in value. Diversification minimizes the inherent risks of stock trading by spreading out the capital over many stocks.
THE GOAL OF MUTUAL FUND
The goal of a mutual fund is to provide an individual to make money.It all depends really on the overall investment climate and the sectors in which funds are flowing in. The more volatile a stock or market. When you redeem your shares what you receive is the value of the share. even though it need not be different mutual funds have different risks. But over-diversification is again a bad thing. Volatility is a measurement of the change in price (fluctuations) over a given time period.
ORGANISATION OF A MUTUAL FUND
There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund:
Indian Bank Mutual Fund (Nov 89).UTI. giving the Indian investors a wider choice of fund families. The 1993
. 004 crores. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. at the initiative of the Government of India and Reserve Bank.700 crores of assets under management. Bank of India (Jun 90). Third Phase – 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993. At the end of 1988 UTI had Rs. SBI Mutual Fund was the first non. LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. under which all mutual funds. The first scheme launched by UTI was Unit Scheme 1964.47.6.BACKGROUND
HISTORY AND STRUCTURE OF INDIAN MUTUAL FUND INDUSTRY The mutual fund industry in India started in 1963 with the formation of Unit Trust of India. the mutual fund industry had assets under management of Rs. public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. Punjab National Bank Mutual Fund (Aug 89). 1993 was the year in which the first Mutual Fund Regulations came into being. 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. Bank of Baroda Mutual Fund (Oct 92). a new era started in the Indian mutual fund industry. Also. except UTI were to be registered and governed. Second Phase – 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non. At the end of 1993. 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.UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87).
44. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. and with recent mergers taking place among different private sector funds. 2004. sponsored by SBI. 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. 21. The number of mutual fund houses went on increasing. 835 crores as at the end of January 2003. PNB.805 crores. As at the end of September. BOB and LIC. The second is the UTI Mutual Fund Ltd. which manage assets of Rs. It is registered with SEBI and functions under the Mutual Fund Regulations.
. there were 29 funds. 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. The Specified Undertaking of Unit Trust of India.SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. conforming to the SEBI Mutual Fund Regulations. representing broadly.76. 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. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.153108 crores under 421 schemes. 000 crores of assets under management and with the setting up of a UTI Mutual Fund. The Unit Trust of India with Rs. the assets of US 64 scheme. assured return and certain other schemes. 1. with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. the mutual fund industry has entered its current phase of consolidation and growth.29.
To enhance our knowledge about the subject. 5. To study the consumer awareness regarding Mutual Funds To study the preferences of the distributors for Mutual Funds.
2. To have a vivid picture of major players in Mutual Fund Industry in India How effectively they are reaching their customers. 7.
Evaluate Perception towards risk involved in mutual funds in comparison to other financial avenues. To study the pattern of consumer behavior within the available investment options and to test awareness among the consumer about the various mutual fund houses. 4. To study the marketing of Mutual Fund products in India. 6. 8.
.Objectives of Study:
The reason is that investors can any time approach mutual fund for sale of such units. On this basis the simplest way to categorize schemes would be to group these into two broad classifications: OPERATIONAL CLASSIFICATION AND PORTFOLIO CLASSIFICATION. Further. the management of such funds becomes more tedious as managers
. it will not be possible to calculate NAV. No minute to minute fluctuations in rates haunt the investors. Moreover. Such fund stands ready to buy or sell its securities at any time. No intermediaries are required. To achieve these objectives mutual funds adopt different strategies and accordingly offer different schemes of investments. Moreover. In such funds. option to reinvest its dividend is also available. i.e.e. Since there is always a possibility of withdrawals. the shares or units are normally not traded on the stock exchange but are repurchased by the fund at announced rates. which are actively traded in the market. the realizable amount is certain since repurchase is at a price based on declared net asset value (NAV). The portfolio mix of such schemes has to be investments. open-ended and closeended which are offered by the mutual funds. desiring frequently traded securities.CLASSIFICATION OF MUTUAL FUND SCHEMES:
Any mutual fund has an objective of earning income for the investors and/ or getting increased value of their investments. Operational Classification: (A) Open Ended Schemes: As the name implies the size of the scheme (Fund) is open – i. Open-ended schemes have comparatively better liquidity despite the fact that these are not listed.. open-ended schemes hardly have in their portfolio shares of comparatively new and smaller companies since these are not generally traded. not specified or pre-determined. Otherwise. Operational classification highlights the two main types of schemes. It implies that the capitalization of the fund is constantly changing as investors sell or buy their shares. Portfolio classification projects the combination of investment instruments and investment avenues available to mutual funds to manage their funds. This is the reason that generally open-ended schemes are equity based.. Entry to the fund is always open to the investor who can subscribe at any time. Any portfolio scheme can be either open ended or close ended.
(B) Close Ended Schemes: Such schemes have a definite period after which their shares/ units are redeemed. (A) Return based classification: To meet the diversified needs of the investors. Crisis may be on two fronts. Further. which may be offered. Whatever premium exists that may exist only on account of speculative activities. i. He could very well have to sell his most liquid assets. i.e. If one takes into account the issue expenses. the mutual fund schemes are made to enjoy a good return.e. (D) Leverage and (E) Others. success of the openended schemes to a great extent depends on the efficiency of the capital market and the selection and quality of the portfolio.have to work from crisis to crisis.e. i.. Their price is determined on the basis of demand and supply in the market. Returns expected are in form of regular dividends or capital appreciation or a combination of these two. Their price is free to deviate from NAV.. Portfolio Classification of Funds: Following are the portfolio classification of funds. cannot exceed the sum of the prices of the investments constituting the package. one is. there is every possibility that the market price may be above or below its NAV. conceptually close ended fund units cannot be traded at a premium or over NAV because the price of a package of investments. that unexpected withdrawals require funds to maintain a high level of cash available every time implying thereby idle cash. by virtue of this situation such funds may fail to grab favourable opportunities.. This classification may be on the basis of (A) Return. to match quick cash payments. Fund managers have to face questions like ‘what to sell’. Unlike open-ended funds. Close ended fund units trade among the investors in the secondary market since these are to be quoted on the stock exchanges. In India as per SEBI (MF) Regulations every mutual fund is free to launch any or both types of schemes. their corpus normally does not change throughout its life period. Their liquidity depends on the efficiency and understanding of the engaged broker. Thus.
. funds cannot have matching realization from their portfolio due to intricacies of the stock market. Second. these funds have fixed capitalization. (B) Investment Pattern. (C) Specialised sector of investment.
the higher the potential risk of the investment. 2. Such funds which offer a blend of immediate average return and reasonable capital appreciation are known as “middle of the road” funds. Their objective is to maximize current income. Such funds are clearly expected to outdo other funds in rising market. even with the use of leverage. Obviously. Such funds divide their portfolio in common stocks and bonds in a way to achieve the desired objectives. it is renaming the subcategories of return based classification. they have a higher degree of risk. unestablished companies. invest most of their investible shares in equity shares of companies and undertake the risk associated with the investment in equity shares. Growth Funds: Such funds aim to achieve increase in the value of the underlying investments through capital appreciation. Naturally. Equity Fund: Such funds. 1. Such funds distribute periodically the income earned by them. (ii) To protect the value of investment and. 3. because these have almost all their capital in equity. These funds can further be splitted up into categories: those that stress constant income at relatively low risk and those that attempt to achieve maximum income possible. Basically. the higher the expected returns. Such funds invest in growth oriented securities which can appreciate through the expansion production facilities in long run. An investor who selects such funds should be able to assume a higher than normal degree of risk. Equity funds again can be of different categories varying from those that invest exclusively in high quality ‘blue chip companies to those that invest solely in the new. Conservative Funds: The fund with a philosophy of “all things to all” issue offer document announcing objectives as: (i) To provide a reasonable rate of return. The strength of these funds is the expected capital appreciation. (iii) To achieve capital appreciation consistent with the fulfillment of the first two objectives. (B) Investment Based Classification: Mutual funds may also be classified on the basis of securities in which they invest. as the name implies.1.
. Income Funds: For investors who are more curious for returns. Such funds have been most popular and appeal to the investors who want both growth and income. Income funds are floated.
While such funds do have the disadvantage of low diversification by putting all their all eggs in one basket. the policy of specializing has the advantage of developing in the fund managers an intensive knowledge of the specific sector in which they are investing. Obviously risk is low in such funds.2. Sector based funds are aggressive growth funds which make investments on the basis of assessed bright future for a particular sector. this type of fund is expected to be very secure with a steady income and little or no chance of capital appreciation. are known as balanced funds. which have in their portfolio a reasonable mix of equity and bonds. debentures. The emphasis is on liquidity and is associated with lower risks and low returns. Bond Funds: such funds have their portfolio consisted of bonds. 3. These funds are characterized by high viability.
. Such funds will put more emphasis on equity share investments when the outlook is bright and will tend to switch to debentures when the future is expected to be poor for shares. In this category we may come across the funds called ‘Liquid Funds’ which specialize in investing short-term money market instruments. hence more risky. etc. (C) Sector Based Funds: There are number of funds that invest in a specified sector of economy. Balanced Fund: The funds.
investors have to engage share brokers who are the members of stock
exchange and have to pay their brokerage. Lack of professional knowledge associated with investment business unable investors to
operate gainfully in the market. It is difficult for them to know the development taking place in share market and
corporate sector. (g) Firm allotments are not possible for small investors on when there is a trend of over
subscription to public issues.MUTUAL FUNDS FOR WHOM?
These funds can survive and thrive only if they can live up to the hopes and trusts of their individual members.
. (b) (c) Lack of funds forbids investors to have a balanced and diversified portfolio. Small investors can hardly afford to have ex-pensive investment consultations. These hopes and trusts echo the peculiarities which support the emergence and growth of such insecurity of such investors who come to the rescue of such investors who face following constraints while making direct investments: (a) Limited resources in the hands of investors quite often take them away from stock market
transactions. (d) To buy shares. (e) (f) They hardly have access to price sensitive information in time.
is what attracts investors to opt for mutual funds. The primary objectives of an investment proposal would fit into one or combination of the two broad categories. Majority of people consider diversification as the major strength of mutual funds.WHY MUTUAL FUNDS?
Mutual Funds are becoming a very popular form of investment characterized by many advantages that they share with other forms of investments and what they possess uniquely themselves. of course. So they hardly have a professional attitude towards their investment. Expertise Supervision: Making investments is not a full time assignment of investors. By investing in many companies the mutual funds can protect themselves from unexpected drop in values of some shares. The professional fund managers who supervise fund’s portfolio take desirable decisions viz. what investments are to be sold and more appropriate decision as to timings of such buy and sell. can spend full time to investigate and can give the fund a constant supervision.e.
. Securities and Exchange Board of India (SEBI) requires the mutual funds in India have to ensure liquidity. For open-ended schemes investors can always approach the fund for repurchase at net asset value (NAV) of the scheme. The small investors can achieve wide diversification on his own because of many reasons. an essential benefit one acquires is expert management of the money he puts in the fund.
Liquidity of Investment: A distinct advantage of a mutual fund over other investments is
that there is always a market for its unit/ shares. Diversification: A proven principle of sound investment is that of diversification. Mutual fund route offers several important advantages. How mutual fund is expected to be over and above an individual in achieving the two said objectives. Such repurchase price and NAV is advertised in newspaper for the convenience of investors. They have extensive research facilities at their disposal. pool funds of lakhs of investors and thus can participate in a large basket of shares of many different companies. When investors buy mutual fund scheme.
A. i. The performance of mutual fund schemes. mainly funds at his disposal. what scrip’s are to be bought. Income and Capital gains. depends on the quality of fund managers employed. which is the idea of not putting all your eggs in one basket. Mutual funds units can either be sold in the share market as SEBI has made it obligatory for closed-ended schemes to list themselves on stock exchanges. Mutual funds on the other hand. Moreover...
per the Union Budget-2003.
Tax Shelter: Depending on the scheme of mutual funds.
D. The expert supervision.
legislation in a country (like SEBI in India) also provides for the safety of investments. Investing in securities through mutual funds has many advantages like – option to reinvest dividends.
. diversification and liquidity of units ensured in mutual funds reduces the risks. regular returns. if they invest in mutual funds. Mutual funds are also relevant in national interest. Investors are no longer expected to come to grief by falling prey to misleading and motivating ‘headline’ leads and tips.
Reduced risks: Risk in investment is as to recovery of the principal amount and as to
return on it. strong possibility of capital appreciation.B. The test of their economic efficiency as financial intermediary lies in the extent to which they are able to mobilize additional savings and channeling to more productive sectors of the economy.
Safety of Investment: Besides depending on the expert supervision of fund managers. etc.
Minimize Operating Costs: Mutual funds having large invisible funds at their disposal
avail economies of scale. The brokerage fee or trading commission may be reduced substantially. income earned through dividends from mutual funds is 100% taxfree at the hands of the investors. tax shelter is also available.
E. SEBI acts as a watchdog and attempts whole heatedly to safeguard investor’s interests. Mutual fund investments on both fronts provide a comfortable situation for investors. Mutual funds have to broadly follow the laid down provisions for their regulations. The reduced operating costs obviously increase the income available for investors.
Also. This classification is based on the attitudes of investors towards secondary market investments. CAVALIERS: As high as 49% of the small retail equity investors are ‘cavaliers’. they will also invest in
. The ‘intellectuals’ are unaffected by short–term fluctuations and prefer long–term investments. mostly in volatile sectors in order to make big gains. ‘cavaliers’. The survey shows that there are five different kinds of retail investors: ‘intellectuals’. And as they invest for the long term. they are not concerned with short term losses. they invest aggressively into equities. Many questions are raised about the behaviour of the small investor under different circumstances. ‘opportunists’. low–gain guaranteed return avenues as passé. Giving proof of their intelligence. These investors are self reliant good stock pickers and try to monetize market knowledge. Therefore. individualist approach to investment planning and a well-defined and deliberate strategy for stock investment.Types of Retail Investors
The ET survey on retail equity investors in the secondary market has identified different categories of investors based on their characteristics. Asset allocation and seek the right mix of stability and reliability of returns. and ‘gamblers’. As such. much of their investments are driven by the desire to recover past losses and make profits in the future. INTELLECTUALS: This retail investor group forms around 17% of the total retail investment class. The answer to many of these questions and similar others is not difficult to interpret once we identify the different types of retail investors in the stock markets. However. Let’s explain each type of investor and understand their investment psyche and behavioral patterns. they consider low-risk. they believe in and work towards a well-planned. They are the intelligent investors who follow an intelligent. They manager their money themselves and understand the industry/sector before investing. They are those who have lost money in ‘fly-by –night ‘schemes. Moreover. they are disciplined enough to observe profit targets which they have set for themselves. ‘reactivists’.
As they lack in confidence. The opportunists‘choice of investments as they find fixed income options a reassuring way of safe bets. They get tempted to speculate in the secondary market and once in a while. The cavaliers try to gather all available information and compare it with opinions from experts in the media. They are very sceptical and believe that small declines can lead to larger losses if not reacted upon immediately. They invest into equities by imitating larger trends rather than with their individual analysis and consider equity investment as a gamble. the reactivists constantly seek new information about stocks in which they are currently invested in. They believe that dynamic and ad hoc investments will result in better profits and are prompted to act on popular opinion rather than systematic planning. their investments apart from equities are solely for tax-saving purposes. These investors basically shortterm investors. But before investing into equities. As they have a low risk tolerance. including equities. This investor
. are impulsive info addicts who are vulnerable to external influences and as such. they constantly rely on advice from in the know people such as brokers and analysts. they have no specific investment patterns. to ensure a feeling of security. Opportunists need positive price movements to encourage their investments into equities and they will not hunt for bargains of invest on price declines. they actually speculate but with smaller amounts. This category is defensively pessimistic and prefers to take only familiar risks. They are extremely anxious about price fluctuations or short-term declines. but will trust their own judgment before making decisions. experience and expertise. Therefore. They want to be in the black all the time and as such. Moreover. The opportunist’s choice of investment is biased towards well known and previously owned securities. They prefer to build a critical mass of fixed income instruments as they find fixed income options a reassuring way of safe bets.FDs and insurance as a precautionary measure. REACTIVISTS: About 5% of the retail equity investors fall under this category. they are wary of volatility in the equity market. prefer popular stocks with immediate profit potential.
OPPORTUNISTS: This class of investors account for 10% of the retail equity investor universe.
if you have not invested in the current market. They do not trust brokers.class is wary of investing into equities when the market has moved up too high too soon. they know completely about the risk factors and therefore. mostly driven by instinct and self confidence. They ascertain fair value of stocks on gut feeling rather than any financial analysis and use sudden downward fluctuations as buying opportunities. This class perceives all securities as tradable commodities to be bought and sold in the short term. but will secretly verify their suggestions for fear of missing an opportunity. However. you are probably an ‘opportunist’. So. have a tendency to invest only as much as they are willing to lose.’ They are the typical thrill seeking traders who link profitability to personal achievement. They experiment a lot.
. as such their stock selection is more a random exercise that lacks rationale. As a part. of the game and this does not act as a hindrance for future investments. But gamblers. GAMBLERS: 19% the retail investor population is made up of not actual investors.
professional directory etc. The conversion rate in this mode of selling is in between 30% . Once the appointment is fixed.40%. Direct mail: This one of the most common method followed by all mutual funds. The CSO calls on the people to whom the literature was mailed. The follow up starts after 3 – 4 days of mailing the literature. Telemarketing: In this case the emphasis is to inform the people about the fund.MARKETING STRATEGIES ADOPTED BY THE MUTUAL FUNDS The present marketing strategies of mutual funds can be divided into three main headings: Direct marketing Selling through intermediaries. It is then the job of BDA to try his best to convert that prospect into a customer. business directory. Joint Calls Direct Marketing: This constitutes 20 percent of the total sales of mutual funds. Some fund houses have their database of investors and they cross sell their other products. The names and phone numbers of the people are picked at random from telephone directory. The customer support officer (CSO) then mails the literature of the schemes offered by the fund. Addresses of people are picked at random from telephone directory. Generally the conversion rate in this form of marketing is 15% . Sometimes people belonging to a particular profession are also contacted through phone and are then informed about the fund. the branch officer also called Business Development Associate (BDA) in some funds then meets the prospect and gives him all details about the various schemes being offered by his fund. Answers their queries and is generally successful in taking appointments with those people.
. Some of the important tools used in this type of selling are: Personal Selling: In this case the customer support officer or Relationship Manager of the fund at a particular branch takes appointment from the potential prospect.20%.
Advertisement in TV/FM Channel: The funds are aggressively giving their advertisements in TV and FM Channels to promote their funds. The objective is to hear their complaints regarding service aspects from funds side and other queries related to the market situation. Customers prefer to work with those intermediaries who give them right information about the fund and keep them abreast with the latest changes taking place in the market especially if they have any bearing on the fund in which they have invested. Hoardings and Banners: In this case the hoardings and banners of the fund are put at important locations of the city where the movement of the people is very high. A lot depends on the after sale services offered by the intermediary to the customer. what the competitors are doing and what they can do to increase the sales of the fund.
. Training involves giving details about the products of the fund. Most of these intermediaries are also involved in selling shares and other investment instruments. The conversion rate is very high in this situation. Regular Meetings with distributors: Most of the funds conduct monthly/bi-monthly meetings with their distributors.Advertisements in newspapers and magazines: The funds regularly advertise in business newspapers and magazines besides in leading national dailies. These are the people/ distributors who are in direct touch with the investors. They do a commendable job in convincing investors to invest in mutual funds. Sometimes. They perform an important role in attracting new customers. The hoarding and banner generally contains information either about one particular scheme or brief information about all schemes of fund. special training programmes are also conducted for the new agents/ distributors. Selling through intermediaries: Intermediaries contribute towards 80% of the total sales of mutual funds. their present performance in the market. Joint Calls: This is generally done when the prospect seems to be a high net worth investor. The BDA and the agent (who is located close to the HNI’s residence or area of operation) together visit the prospect and brief him about the fund. The purpose to keep investors aware about the schemes offered by the fund and their performance in recent past.
around 60%. Timing of the launch of the product. because we cannot judge an elephant by its trunk or by its tail but we have to see it in its totality. Paying dividends and other entitlements.
. Both the fund and the agent provide even after sale services in this particular case. Studying the macro environment. Getting feedback about sales. Choosing the distribution network. Honoring the commitments made for redemptions and repurchase. Responding to investors needs. Preparing offer documents and other literature. Finalizing strategies for publicity and advertisement. Product designing. Whenever a top official visits a particular branch office.generally. This generally develops a faith among the HNI’s towards the fund. we have to see the issues in totality. Meetings with HNI’s: This is a special feature of all the funds. Sending certificates in time and other after sales activities. When we say marketing of mutual funds. includes and encompasses the following aspects: Assessing of investors needs and market research. Studying performance indicators about fund performance like NAV. he devotes at least one to two hours in meeting with the HNI’s of that particular area. it means. MARKETING OF FUNDS: CHALLENGES AND OPPORTUNITIES When we consider marketing.
Almost 80% of the funds are mobilized from less than 10 centers in the country. the first priority is that the geographic spread has to be widened and the market has to be deepened. but also outside the country. The above are the aspects of marketing of mutual funds. Consider the geographical spread of the investors in the mutual fund industry. School teachers. having a population of about one lakhs. translate that awareness into increased fund mobilization. the mutual funds must try to spread their wings not only within the country. Creating positive image about the fund and changing the nature of the market itself. It would therefore be more expensive to market mutual funds in such markets than marketing in the cities. Considering the vast nature of this country. It is also important to utilize the services of local intermediaries like Gram Sevaks. broadening and deepening of the market for the mutual fund products. and educational films. Rural marketing. more emphasis has to be given to the electronic media and other forms of publicity such as wall paintings. hoardings. unlike the marketing of mutual funds in the metros and urban areas. and different means of communication to the target customer.AMFI can coordinate
. The mutual fund industry can collectively undertake this job of creating awareness among the rural population about the mutual funds as a new form of savings. Widening. which account for almost 95% of the funds mobilized. Secondly. Broadening and Deepening the Markets There are certain issues that are directly linked with the marketing of mutual funds. Markets in Rural and Semi-Urban Areas There exists a large investor base in rural and semi-urban areas. Agricultural Co-operative Societies and Rural Banks. investors in the rural and semi-urban areas are not well educated and are inadequately exposed to the capital market mechanisms. in totality. Therefore. Collective Advertisements can be released . no mutual fund can successfully market its funds. In fact there are only around 35 centers in the country. the first of which is widening. This is the single largest untapped market for mutual funds in India. Postmasters. Even if there is a single weak-link among the factors which are mentioned above. would require a completely different strategy. which normally has access to only post office savings and bank deposits. A. Typically.
should help develop these markets. NRI’s are willing to invest in Indian mutual funds. and distinguishes one fund from another. By concentrating on these areas. The retail distribution network. he understands more by emotions and sentiments rather than a quantitative comparison of funds’
. or plain vanilla funds. He is not interested in frequently changing his portfolio. the investor base will get more broad based. visits by mobile vans with some audio visual aids and the like. In other words. it will naturally give the much needed stability to the market. will play an important role in mobilizing and retaining these funds. efficient collection and remittance mechanism. It is necessary that the common investor understands very clearly and loudly the salient features of funds. not entirely relying upon the investors in the 35 odd cities of the country. Overseas Markets The second aspect with respect to the widening and deepening the market is expanding the overseas investor base. comprising of the district representatives and the collection centers can be best utilized to create such awareness and expand the market. The Indian investor is essentially risk averse and is more passive than active. The funds that are being launched today are more or less look-alikes. group meetings in these semi-urban and rural areas. B.this task on behalf of the various Mutual Fund houses. A target group with large potential. which can be tapped is non-resident Indians. which translates into sustained mobilization of funds. coupled with prompt and timely service. the untapped markets in the country should ideally be the first thing that the mutual funds in India should Endeavour to tap. Simplification of literature in regional languages.
PRODUCT INNOVATION AND VARIETY
A. Importantly. The expansion of the distribution network and quick dissemination of information. If offered after sales services of international standard. Once the semi urban population gets acquainted with the concept of mutual funds. because that generates trust and confidence. reasonable return and easy access to information. and not necessarily designed to take into account the investors’ varying needs. Investor Preferences The challenge for the mutual funds is in the tailoring the right products that will help mobilizing savings by targeting investors’ needs. NRI’s will also require a continuous presence in their market. but is satisfied with safety and reasonable returns.
mutual funds can pool their resources together and try to mobilize funds to meet some of the social needs of the society. Life Insurance Corporation with its dedicated sales force is offering insurance products. index funds. provided there is a purpose attached to it which is linked to his social needs and therefore appeals to his sentiments and emotions. The industry can also design separate funds to attract semi-urban and rural investors. Retail through agents
. mutual funds are tapping the investors who require steady income with safety. Mere growth prospects. He prefers one bird in the hand to two in bush. Product Innovations With the debt market now getting developed. shares – provided the market is moving favourably – also attract direct investments from retail investors. sowing seasons. by floating funds that are designed to primarily have debt instruments in their portfolio. In a country where social security and social insurance are conspicuous more by their absence. It is against this background that the merits and demerits of the alternative methods of distribution have to be studied.performance with respect to an index. DISTRIBUTION NETWORK Among the competitors to the mutual fund industry. That purpose may be his child’s education and career development. etc. health care after retirement. banks with their friendly neighbourhood presence offer the advantage of extensive network. sectoral funds. are not attractive to him. The expectations of a typical investor. The investor is ready to invest his money over a long period. keeping their seasonal requirements in mind for harvest seasons. The other area where mutual funds are concentrating is the money market mutual funds. in order of preference are the safety of funds. festival seasons. or the need for steady and sure income after retirement. finance companies with their hefty upfront incentives offer higher returns. reasonable return and liquidity. in an uncertain market. medical expenses. and is happy if assured a rate of reasonable return that he will get on his investment. B. gilt funds besides equity funds.
Most of the mutual fund advertisements look similar. The experience of UTI has been that. Different kinds of advertising and sales promotion exercises are required to serve the needs of different classes of investors. publicity literature and offer documents. returns and incentives. informer and educator.
. retail distribution through the agents is a preferred alternative for distributing mutual fund products. if necessary motivation and incentive is provided to the retailer agents. in contrast with ‘pull’ marketing strategies for the wholesale market. which deserve attention. Building a team of agents and other distribution network such as distribution and collecting agents and franchise offices. where investors are not adequately aware of the product and do not have specialized skill in financial market. is much higher than in the retail agency system.The alternative distribution channels that are available are selling. they are likely to be more successful than the lead managers. ADVERTISING AND SALES PROMOTION By their very nature. Statistics reveal that the wastage ratio of application forms in the lead manager concept. An investor exposed to the increasing number of mutual fund products finds that all the available brands are rather identical. The reduced cost benefit will ultimately accrue to the investor in the form of higher returns. one achieves brand loyalty through continuous interaction between agents and investors. an aggressive ‘push’ marketing strategy is required for retail markets. For instance. as the target of communication is restricted to a few group of individuals. there is a sense of loyalty amongst agents. In such a system. focusing on scheme features. mutual funds require higher advertisement and sales promotion expenses than any consumer product offering measurable performance. Savings in advertisement and publicity expenses is also affected. or using lead managers and brokers along with sub-brokers. This is because. will provide the investor the opportunity of having continuous interaction and contact with the mutual fund. Therefore. and cannot appreciate any distinction. for selling units. since the agent will function as a facilitator. There are certain issues with reference to advertisement. in anticipation of getting continuous business throughout the year. and the trust and credibility that has been generated or will be generated by being loyal to one institution.
. and will certainly improve the situation. given that the performance cannot be promised. Immediately thereafter.The present form of application. One of the limiting factors is the regulatory framework governing advertisements of mutual fund products. They may also consider an option of conducting a service audit for controlling and improving the quality of service. which normally takes about 2 months’ time. and Ø Continuous reporting of investment performance. cumbersome and at times complicated leading to higher emphasis on advertisement. When the investor sends his application. Another hurdle is the statutory disclaimer required to be carried along with every advertisement. perhaps the situation may so change. It is with this attribute along with procedural simplicity. it is not only an application. if satisfied. but it also contains vital information. Mutual funds have to provide risk factors. Some more relaxation’s in these may facilitate bringing more novelty in advertisements. MARKET RESEARCH Investment in mutual fund is not a one-time activity. a period of one month has been provided. In the regulation itself. without luring investors through false promises. the first risk factor that has to be mentioned is that there is no certainty whether the objectives of the fund will be achieved or not. Most of this information if tabulated and analyzed would provide important insights into investor needs. mutual funds are required to mention the fund objectives in clear terms. The requirement for getting approval. The quality of services is broadly categorized as: Ø Timely services after the sale of the units. within a broad framework. a prior approval by SEBI is a must before a mutual fund can launch its fund. Mutual fund managers must give due attention and evaluate their performance on each front. It is a continuous activity. in the offer documents. brochures and other literature is generally lengthy. that the fund gradually builds its brand and its class of loyal investors. will come to the fund again and again. defeats the purpose for which the fund was designed also. that the timing of launch gets affected. QUALITY OF SERVICE This industry primarily sells quality of services. But in a month’s time. The same investor. Under the present mutual fund regulations. For instance.
Dividend or interest income. 1) Retail Segment
. Different investment attributes an investor expects in a financial product are:
Liquidity. On the basis of these attributes the mutual fund market may be broadly segmented into five main segments as under. Tax treatment. in a particular segment also there could be different sub-segments asking for yet different risk-return attributes. Unlike the consumer goods industry. Market Segmentation Different segments of the market have different risk-return criteria.preferences and behavior and enables us to target customers need more accurately. it is not possible for mutual fund industry to test market and have pilot projects before launch. and differential preference for various investments attributes of financial product. and share the information for appropriate use. deeper loyalty and reduced costs. can help reduce network. Very little research on investor preference is available. Not only that. on the basis of which they take investment decisions. to achieve better penetration. Time period for investment. It is in this context that direct marketing will assume increased importance. Regulatory restrictions. but the industry can collectively have a data bank. Safety of principal. etc. Knowing the customer thoroughly is of utmost importance. can help reduce issue expenses and ultimately translate into higher returns for the investor. focusing and concentrating on a particular geographic area where the fund has a strong presence and proven marketing network. Capital appreciation. At the same time.
educational trust. social environment. social trust. provides a niche to the fund managers in this segment. such as banks. Businessmen and firms having occasional surpluses. charitable trusts. and regular income more than capital appreciation. It consists of individuals. 2) Institutional Segment This segment characterizes less number of participants. Similarly.This segment characterizes large number of participants but low individual volumes. It may be further sub-divided into: i. financial institutions. foreign institutional investors. and firms. Salaried class people. each with
. high volumes segment. the investment preferences for urban and rural prospects would differ and therefore the strategies for tapping this segment would differ on the basis of differential life style. It has been observed that prospects in different classes of income levels have different patterns of preferences of investment. etc. It requires more of a personalized and direct marketing to sustain and increase volumes. 3) Trusts This is a highly regulated. The tax features and regulatory restrictions are the vital considerations in their investment decisions. family trust. insurance corporations. It consists of banks. iv. Retired people. provident and pension funds. value and ethics. namely. Hindu Undivided Families. and nature of work. It consists of various types of trusts. and large individual volumes. Each class of participants. ii. religious trust. This class normally looks for more specialized professional investment skills of the fund managers and expects a structured product than a ready-made product. liquidity. public sector units. These may be further classified on the basis of their income levels. this class requires security of the principal. The marketing strategy involving indirect selling through agency network and creating awareness through appropriate media would be more effective in this segment. Broadly. It lacks specialized investment skills in financial markets and highly susceptible to mob behavior. iii. media habits. HUF’s for long term investment purpose.
“We are intensifying our efforts at tapping NRI money. Marketing to this segment requires special kind of products for groups of foreign countries depending upon the provisions of tax treaties. The latest flavour in the mutual fund industry is exclusive schemes for non-resident Indians (NRI’s). To begin with.16-17 crores. regular income and hedge against inflation rather than liquidity and capital appreciation. Sanjay Santhanam. which typically become due for the payment
.SBI MF has already launched an exclusive scheme for NRI’s. This class offers vast potential to the fund managers. They normally prefer easy exit with repatriation of income and principal. The MF industry is also looking to tap the vast NRI funds of about $5 billion that were transferred to the local banks as FCNR and NRE deposits on the redemption of the Resurgent India Bonds in October. 4) Non-Resident Indians This segment consists of very risk sensitive participants.” 5) Corporates Generally. They also hold a strategic importance as they bring in crucial foreign exchange – a crucial input for developing country like ours. Alternatively. we are looking at a representative office and a distribution network in Dubai. 2003.NRI are used to seeing low interest rates so their return expectations are different from domestic investors. Sundaram and HDFC MF are currently in the process of strengthening distribution net-works overseas. Then we will work out specialized products and asset allocation models. Vice President Marketing &Sales of Sundaram MF says. HDFC was one of the first to launch a fixed maturity plan to NRI’s after the RIB redemption . The large South Indian population in the Middle East will surely connect with the Sundaram brand. The range of suitable products is required to design to divert the funds flowing into bank accounts. the investment need of this segment is to park their occasional surplus funds that earn returns more than what they have to pay on account of holding them. Its basic investment need would be safety of the principal. they also get surplus fund due to the seasonality of the business.different objectives. ICICI Prudential and JM Mutual are in process of finalizing details and some more funds have also confirmed that they are planning such schemes. especially in the Middle East. at times referred as ‘fair weather friends.The scheme had collected Rs.’ They need the highest cover against political and exchange risk. if the regulators relax guidelines and allow the trusts to invest freely in mutual funds.
the products are also required to be marketed through appropriately different marketing strategies. MF’s has rationale for stepping up marketing spends because the brand is an important part of the consumer’s decision to invest in a category that is not yet clearly understood by people. each segment and sub-segment has their own risk return preferences forming niches in the market. since more open-ended schemes are now available.
. This can be attributed to private sector funds (given the data available with the Association of Mutual Funds of India) seeing an increase share of net inflows relative to the bank-sponsored counterparts in the public sector. fund managers are expected design products to this segment. Besides. Mutual funds. Clearly advertising types have something to cheer about. Not only those. Thus. Given the relaxation in the regulatory guidelines.What’s interesting is that in this period the share of the private sector mutual funds in the category’s total media spending has surged from 20 percent to 52 percent. “ The industry has discovered that advertising in the changed climate today.within a year or quarter or even a month. private sector ones in particular. This segment offers a vast potential to specialized money market managers. can perk up sales by anywhere between 20-40 percent. They need short term parking place for their fund. AD’S THE WAY Increasing sales have given mutual fund promoters the budget to spend more on advertising. who had written off advertising as the “ultimate waste of money” have nearly tripled their press media spend . which has further boosted sales The Atheists are turning believers. some form of ongoing support to keep sales booming has been deemed necessary by the funds. advertising helps bring recall when consumers are looking at investment opportunities. when investors are most receptive to mutual funds. According to the mutual fund marketers. But what’s caused this sudden attitudinal shift towards advertising? According to experts. Mutual funds managers have to analyze in detail the intrinsic needs of the prospects and design a variety of suitable products for them.. funds are being pushed into advertising more by intermediaries like banks who are reluctant to sell a product whose name is unfamiliar to investor.
Educational seminars are the final leg in the marketing and communication process. Besides the low costs of advertising in these newsletters. But what mode of advertising do these funds choose? “To sell the category. Direct mail is another medium. advertising then. which some funds have successfully used. most marketers feel that a combination of leading mainline and financial newspapers complemented by finance/ business magazines.” Mutual Fund marketers feel that since the category is ‘information – centric’. But why is advertising suddenly working for mutual funds when it doesn’t seem to have made a difference earlier? A sustained marketing strategy instead of a few. Another very successful media niche. But rather than sending out mailers to all and sundry. Advertising content by most of the funds too has undergone a marked change from conceptselling ads dispelling myths. Within the print media. similarly funds need to take a long-term approach to brand building. “Since the distributor wasn’t ready in earlier years.
. these publications circulate to those who are looking for investment opportunities and thus represent an extremely lucrative target segment. is intermediary magazines and newsletters. didn’t work.Advertising backed by an integrated marketing and communication campaign designed to attract investors with long term prospective has helped the fund post a redemption-to-sales ratio of just about five percent as compared to 20-30 percent for the industry on an average. Attractive point of purchase (POP) material can also help. there is a need for appropriate targeting. with relevant thematic appeal and editorial content are the perfect mix. Advertising serves as a reminder complementing a sales push by the distributor. scrappy ads is now seen to be the key to investor demand. Just like mutual funds advocate that investors take a long-term approach to investing. Brand building. press is the best medium to get across one’s message. to selling specific schemes that meet defined objectives/ goals.” answer is “mass media is more effective because one needs to target a large segment of the population. which has been exploited to the hilt by funds. investors conditioned by advertising and hooked by an interesting mailer can have lingering doubts clarified. is a long-term exercise. In these.”.
According to them. pharmaceuticals and consumer goods stocks . All the fund chiefs were unanimous that performance. healthcare and even in internet business. They need to build brands that strike a chord with investors by relating to their concerns rather than selling flavourof-the-month style. On the state of market in general. The winning formula as industry watchers put it is the troika of performance. Significantly. new opportunities are opening up in areas like retail. when small savings account s too began moving into mutual funds. thanks to technology and increased awareness.
Inspired Marketing will help Mutual Funds walk away with the bank Deposits Bankers better watch out! The Indian mutual fund industry will soon start relieving the banking system of its prized deposits. service and support were all imperative for growth. They were of the view that. will drive the industry growth. Funds need to focus on sustainable communication. transparency. an important contributor to many mutual fund schemes. fund chiefs attempted to allay fears that an overvalued market may pose hurdles to stock picking. marketing and aggressive concept selling will drive savings into the lap of the Indian Mutual Fund industry in the next millennium. Fund chiefs predicted that ease of transactions. while investors may feel that information technology. they said. The day was not far. service and trust for meeting long term needs or goals. caution against the danger of selling the product for the wrong reasons. Fund chiefs also made a case for the code to prevent mutual funds from projecting short-term gains in an attempt to attract investors into their schemes.or the BSE Sensex for that matter – might have peaked. “Mutual
. “Performance. transparency and after sales service and genuine retail investor interest as opposed to hot corporate money. would lead to more investors putting their money into mutual funds. fund chiefs were unanimous that the credibility gap which the industry suffered for the past few years did not exist anymore. Innovative distribution.Fund marketers and industry observers however. an important contributor to many mutual fund schemes. after sales customer service and genuine retail investor interest are opposed to hot corporate money. will drive the industry growth. “Performance.
METHOD USED IN COLLECTION OF DATA
LIST OF INFORMATION REQUIRED Primary Data: Primary data are generated when a particular problem and hand is investigated by the researcher employing mail questionnaire. telephone survey. information has been collected from interacting with different investors and from various magazines. websites. observations. and bulletins. and experiments. personal interviews.”
Research Design Research Instrument Sample Method Sample Size Sampling Design Sources of Data Primary Data Secondary Data : : Structured Non-Disguised Questionnaire Reference from distributors & banks. over a longer period. un-disguised Non-Probability Sampling 70 Convenience Sampling
The whole study is based upon primary and secondary data. journals. The industry as a whole should standardize its performance. : : : : : Descriptive Research Structured. Therefore.Funds have to agree to present performances in an annualized fashion.
1. prospective respondents are telephoned. Personal interviews may be conducted on a door-to-door basis or in public places such as shopping centers. The cost per completed interview is relatively higher as compared to other methods. It requires relatively shorter period of time to complete.
Personal Interview: In personal interview. Advantages
Advantages a. c.
Disadvantages a. the investigator questions the respondents in a face-to-face meeting.
2. The usual approach for the interviewer is to identify himself to a potential respondent and attempt to secure the respondent's cooperation in answering a list of predetermined questions. The investigator may have to face relatively more difficulties in administering the interview schedule. The investigators themselves may involve in cheating which is very difficult to detect. b. c. These answers may be taperecorded or written down by the interviewer. The amount of information procured on each aspects is larger. Researcher can procure many different types of information. This form of the survey technique has become more popular in recent years in advanced countries more people are having telephones at their houses. d.
Telephone Survey: In telephone survey. and asked to answer a series of questions over the telephone. The results can be projected to the relevant universe with a greater degree of accuracy. usually
c. While few analysts would find credibility in conclusions from such extreme cases.
It can be conducted at a lower cost as compared with personal interviews. TYPE OF SAMPLING USED I used non-probability type of sampling. it is often found that the response given by "convenient" items in a universe differ significantly from the
. the chance of any particular unit in the population being selected is unknown. the inappropriateness of using convenience sampling to estimate universe values is not widely recognized. speed is the most significant advantage. Thus. But this does not mean that the findings obtained from non-probability sampling are of questionable value. b.g. a convenience sample is one chosen purely for expedience (e. Visual aids cannot be used. In non-probability sampling.. It is difficult to keep respondents on the phone for any length of time if the survey is not of keen interest to them. The interviews can be completed very quickly. If properly conducted their findings can be as accurate as those obtained from probability sampling.
Disadvantages a. items are selected because they are easy or cheap to find and measure. Since randomness is not involved in the selection process. In practice. The major problem with this (and other non-probability method) is that one is unable to draw objective inference about a rigorously defined universe. Convenience Sampling As the name implies.a. an estimate of the sampling error cannot be made. The information on each aspect can be obtained to a limited extent. b.
As a result.
OCCUPATION OF PERSONS
6% 24% 50% 20%
Governm ent em ployee Private em ployee Businessm en Retired
.responses given by universe items that are less accessible.There are 76% people who are investing & in this 76% there are 50% people in government service. unless one is dealing with a known highly homogeneous universe (virtually all items responding alike). Convenience sampling method was used in this study because of the constraints like cost and time. convenience sampling should not be used to estimate universe values. 20% in private job & 24% people are businessmen & 6% are retired.The area selected is Dimapur (Nagaland) and its surrounding area. Sample Size The sample size taken in the project work is 100.
When I have analyze the project then I found that in out of total people 24% people are not investing & 76% people are investing.
.There are 48% people in age group 40-60 years and 46% of people in 20-40 years and rest 6% are Above 60 years.AGE GROUP
6% 46% 48%
Above 60 years
From the survey I found 92% of people are satisfied with their investment and 8% are not satisfied with their investment.In this finding some people were interested in two area of investment.FINDINGS: .
.In area of investment 32% people interest in fixed deposit and 31% people interested in property & 7% in share and same in Mutual funds & 23% investing in insurance.
The survey shows 46% people are interested to buy SBI mutual fund and 19% people to invest in reliance.
.From the investments 72% people expected return between 10% to 30% and 18% people expect less than 10% return and remaining 10% people expected above 30% return. 16% in ICICI mutual fund and 7% in UTI and 12% interested in investing in different mutual funds.
FINDINGS: .FINDINGS: .
The survey shows that 64% of people invested between Rs 5000 to 25000 and 26% people invested above Rs 25000 only 10% people invested only Rs 5000.
.In risk factor 76% people are taking minimum risk in investment and 16% people are taking moderate risk only 8% people take high risk for more return on investment.FINDINGS: .
.The survey shows that 50% investors are interest in 1 to 3 years of investment and 42% are interested in more than 3 years of investment only 8% investors are interested in short term investment.
.FINDINGS:.From the survey I found 75% investors think that investment is safe and 25% think that it is not safe.
FINDINGS:- From the survey I found 89% investors think that mutual fund can give higher return and 11% think that mutual fund cannot give higher return it can give only normal returns of 15- 20%.
FINDINGS:- The survey shows that 81% investor think that future of mutual fund will be good and 19% think that future of mutual fund will not be as such good as it is.
Analysis & Interpretation
PEOPLE CONSIDERS VARIOUS FACTORS WHILE INVESTING IN MUTUAL FUND
SL. NO 1 2 3 4
Options Returns Tax saving Liquidity Risk free
Responses 49 26 16 9
Percentages (%) 49 26 16 9
PEOPLE CONSIDER VARIOUS BASES FOR INVESTING IN ANY PARTICULAR FUND
OPTIONS 1.Past performance of fund 2.Portfolio of fund
RESPONSES 64 36
RESPONSES IN % 64 36
PREFERENCE OF VARIOUS MUTUAL FUNDS OF DIFFERENT PEOPLES SL. NO 1 2 3 4 5 6 Options Franklin Templeton HDFC Reliance ICICI SBI Any other Responses 17 19 11 18 29 8 Responses in % 17 19 11 18 29 8
No 1 2 3 4
Options 10-20% 20-30% 50% More than 50%
Responses 46 33 15 6
Responses in % 46 33 15 6
.PEOPLE INVEST THE DIFFERENT % OF SAVING IN MUTUAL FUNDS
PEOPLE EXPECTATIONS OF RETURN FROM DIFFERENT FUNDS Sr.no 1 2 3 4 Options 10-20% 20-30% 50% More than 50% Responses 32 45 9 4 Responses in % 32 45 9 4
PREFERED MODE OF INVESTMENT Sr.no 1 2 3 4 5 Options Mutual Funds Bank FD’s Direct Equity Market Insurance Others Responses (%) 48 45 38 35 72
no 1 2 3 4
Options Debt Fund Balanced Fund Equity Fund ELSS Fund
Responses 12% 20% 50% 18%
.PREFERED SCHEMES OF MUTUAL FUNDS
SOURCE OF INFORMATION ABOUT MUTUAL FUNDS
Sr.no 1 2 3
Options Print Media Internet Television
Responses 40% 22% 38%
no 1 2 3 Options SIP STP Consolidated amount Responses 50% 20% 30%
.PREFERED OPTION WHILE MAKING INVESTMENT Sr.
Investors opinion is still divided .
The investors should be given the option of attending investor’s education programme once in a month.
. Mutual Funds (MF) have become one of the most attractive ways for the average person to invest his money.
3. or Government securities in order to provide high relative safety and returns.
To provide some kind of curriculum at the school/college level to create awareness regarding Mutual Fund. Various respondents were not aware of the mutual fund products and the type of mutual fund schemes and the risk associated with mutual fund products.
To create the awareness about the different products of Mutual Fund and not about the generic product.
1. Also generate leads of the prospective investors in Mutual Funds for the Asset Management Company (AMC) There are many improvements pending in the field and it has to happen as soon as possible so as to call the MF industry as an Organized and well-developed sector. Most of the Mutual Funds are operating in the metros and big cities as per their present branch office locations.while some are for the mutual funds others are against it. If they have to increase their market size they have to open more distribution centers at the various urban and semi-urban markets. bonds.CONCLUSION
The ride through these 47 years is not been smooth .
Tapping the upcoming market .Semi Urban Market as there is a lot of opportunity. A Mutual Fund pools resources from thousands of investors and then diversifies its investment into many different holdings such as stocks. It is said that Bank investment is the first priority of people to invest their savings and the second place is for investment in Mutual Funds and other avenues. .
The information about the products should be revealed exactly to the investors. Kothari
Website: www. The investors should be given all the information regarding their investment and the benefits or the drawbacks of the investments. Providing proper reports revealing all the information related to the investment have to be sent to the investors regularly and this can change the general attitude towards mutual funds. 10. 7.sebi.in www. 9. R.
Research Methodology C. Portfolio of the securities should be kept under check so as to increase the growth of funds.com www. which in turn will increase the satisfaction of the investors.5.com
. 6. Investors can take their own steps in analyzing the market conditions and can be advised to make a portfolio and investment analysis on their investment.gov.the-finapolis.
The returns cannot be guaranteed by the concern but then the brand image can help the concern to overcome this problem. and they should be advised on the risks attached to them.
Mobile no.5 to 3 lakh Between 3 to 5 lakh Above 5 lakh
Name of customer Address City Telephone no.5 lakh Between 1. E-mail address 1) Occupation : : : Government Employee Private Employee Businessmen Retired : : :
2) Age Group
20-40 years 40-60 years Above 60 years
3) Annual house hold income
Less than 1.
4) You are interested in investment
5) Do you have any existing investment
If Yes in which area
6) Where do you make investment
Fixed Deposit Property Mutual Funds Insurance Shares
7) You are satisfied with our investment
If No. why? Reason
8) You want to invest for
Children Education Retirement House Vacation Abroad Any Other
9) For which company’s mutual fund or Banks mutual fund you are interested UTI Reliance Mutual Fund SBI Mutual Fund ICICI Prudential Mutual Fund Other mention here 10) What is your expected return Less than 10% Between 10% to 30% Above 30% 11) How much risk you can take Minimum Risk Moderate Risk High Risk
12) How much money you can invest
5000 5000-25000 Above 25000
13) How long you can invest
Less than 1 year Between 1 to 3 year More than 3 year
15) Are investment in mutual fund units safe?
16) What do you think mutual fund can give a higher return?
17) What is the future of mutual fund it will perform good or not? Yes No
18) Which is more profitable FD or mutual fund?
FD Mutual fund
.14) Why investment in mutual fund is good? Give reason.