PROJECT

ON

A STUDY ON “AWARENESS OF MUTUAL FUND IN INDIA’’ in ICICI Prudential

Submitted in Partial Fulfilment of the Requirement

Of the Degree of
MASTER OF MANAGEMENT STUDIES (MMS)
Submitted By
MR. UBAID ABDUL LATIF DHANSAY
Registration No. (2102022077)
Under the Guidance of
PROF. MR. AWESH BHORNYA
2021-22

1
 CERTIFICATE

This is to certify that MR. UBAID ABDUL LATIF DHANSAY (MMS 1 year in specialization of
Finance) who I the student of ANJUMAN-I-ISLAM ALLANA INSTITUTE OF MANAGEMENT
STUDIES has worked on project titled A STUDY ON ‘AWARENESS OF MUTUAL FUND IN
INIDA” in ICICI Prudential and has successfully completed the project work in partial fulfillment
of award of degree of MASTERS OF MANAGEMENT STUDIES (MMS) this report is the record
of the student’s own effort’s under supervision and guidance’s

Signature of Student

Name of Student

Certified By,

----------------

Prof. Awesh Bhornya

Project Guide

AIAIMS

----------------

Dr. Bernadette D’ Silva Mam

Director of AIAIMS

Date:

2
 DECLARATION
I, UBAID ABDUL LATIF DHANSAY declare that this written submission of my MMS 1 year
dissertation project represents my ideas in my own words, and where other’s ideas or words have
been included, I have been adequately cited and referenced the original sources. I also declared that
I have adhered to all principles of academic honesty and integrity and have not misrepresented or
fabricated or falsified any idea/data/facts/source in my submission.

I also declare that I have not taken any material/ content from copyrighted sources. I understand that
any violation of the above will be cause for disciplinary action by the Institute or University of
Mumbai as per the existing law and can also evoke penal action from the sources which have thus
not been properly cited or from whom proper permission has not been taken when needed.

(Signature)

----------------------------

Name of Student

Date

3
 ACKNOWLEDGEMENT

It gives me immense pleasure to present this project report on “Awareness of mutual fund in India”
in ICICI prudential. No work could be carried out without the help and guidance of various persons.

I am grateful to ALLANA INSTITUTE OF MAMAGEMENT STUDIED (AIAIMS) for giving me

an opportunity to work on this project. I wish to thank Dr. Bernadette D’Silva Mam the Director
of ALLANA INSTITUTE OF MANAGEMENT STUDIES, who has been a perpetual source of
inspiration and offered valuable suggestion to improve this project work.

I would fail in my duty if I do not express my deep sense of gratitude towards Prof. AWESH
BHORNYA Without his guidance it wouldn’t have been possible for me to complete this project.

I would like to express my gratitude towards my parents for their kind cooperation and
encouragement which overall helped me in completion of this project.

4
 INDEX

SR.NO TOPIC PAGE

NO.

1 Executive Summary 06
2 Introduction 07-11
3 Company Profile 12-15
4 Research Objective 16
5 Literature Review 29-32
6 Research Methodology 33
7 Analysis and Interpretation 34-37
8 Finding 38
9 Suggestion and Recommendation 39
10 Conclusion 40
11 References 41

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 EXECUTIVE SUMMARY

Mutual funds have arisen in recent years as a tool for safeguarding one's financial well-being.
Mutual funds have not only contributed to India's growth story, but have also assisted families in
capitalizing on the success of Indian industry. As knowledge and awareness of mutual funds grows,
more people are reaping the benefits of investing in them. The main reason for the low number of
retail mutual fund investors in India is that nine out of ten people with income in India are unaware
that mutual funds exist. However, once people are aware of mutual fund investment opportunities,
the number of people who choose to invest in mutual funds rises to one out of every five.

Understanding which potential investors are more likely to buy mutual funds and using the right
arguments in the sales process that customers will accept as important and relevant to their decision
are the keys to converting a person who has no knowledge of mutual funds into a new Mutual Fund
Customer.

This project provided me with a fantastic learning opportunity while also allowing me to put my
analytical skills to use. The analyses and recommendations offered in this project report are based
on market research into investors' saving and investment habits, as well as their preferences for
Mutual Fund investments.

A mutual fund is a type of investment company that pools money from a large number of people
and invests it in a wide range of securities. The company then manages the money for both
individuals and businesses on an ongoing basis. For three reasons, mutual funds are a good option
to invest in stocks, bonds, and other securities:

6
 INTRODUCTION
A mutual fund is an investment company that pools money from investors and invests it in various
securities such as stocks, bonds, and money market instruments. Most open-end mutual funds have
shares available to buy back (redeem) at their current net asset value, which is determined by the
fund's investment portfolio's total market value at the time of redemption. To separate themselves
from closed-end investment companies, most open-end mutual funds, also known as open-end
investment companies, distribute new shares to investors on a regular basis. Mutual funds pool the
money of a large number of investors in order to fulfil the fund's stated investment objective.
Mutual funds can sell and redeem their shares at any time at their current net asset value, which is
calculated by dividing the total fund assets by the number of existing shares. A mutual fund, in
layman's terms, is a vehicle for pooling resources by issuing units to investors and investing those
funds in assets that meet the objectives mentioned in the offer document. Securities investments are
spread across a wide range of companies and industries, reducing risk. Diversification is important
since all stocks may not move in the same direction or in the same proportion at the same time.
Mutual funds issue units to investors based on the amount of money they have invested. Unit
holders are people who invest in mutual funds. The investors share the earnings or losses in
proportion to their investments.

Mutual funds usually have a variety of schemes with various investment objectives that are
launched on a regular basis. Before a mutual fund may collect funds from the public in India, it
must be registered with the Securities and Exchange Board of India (SEBI), which supervises
securities markets. In a nutshell, a mutual fund is a shared pool of money into which individuals
with similar investment objectives contribute money to be invested according to the scheme's
declared investment objective.

The investment manager would invest the money collected from the investor in assets that are
defined/permitted under the scheme's stated goal. For example, an equity fund would invest in
stocks and other equity-related instruments, whereas a debt fund would, among other things, invest
in bonds, debentures, and gilts. For the typical person, a mutual fund is an ideal investment since it
allows them to invest in a diversified, professionally managed basket of securities at a reasonable
cost.

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India's mutual fund business is one of the country's burgeoning industries. There are 40 mutual fund
companies in India now. The number of players in the public sector has decreased from 11 to 5. The
government has increasingly faded into the background, ceding a significant portion of the market
to private sector actors. The Association of Mutual Funds in India (AMFI) is a trade association
established to help the Indian mutual fund business expand.

It takes the initiative in identifying initiatives that must be made to protect investors and promote
the mutual fund industry. It's worth noting that AMFI isn't a self-regulatory organization (SRO) and
that its recommendations aren't enforceable by industry players. AMFI serves as an advisor or
counsellor in the mutual fund sector by its very nature. Its suggestions become obligatory only if
and when the Securities and Exchange Board of India (SEBI) implements them into the mutual fund
regulatory framework.

8
 Concept of Mutual Fund
Many investors with common financial objectives

Pool their money

Investors, on a proportionate basis get mutual fund

Units for the sum contributed to the pool

The money collected from investors is invested

Into shares, debentures and other securities by the

Fund manager

The fund manager realizes gains or losses, and

Collects dividend or interest income

Any capital gains or losses from such investments

Are passed on to the investors in proportion of the

Number of units held by them

When an investor buys mutual fund units, he becomes a part owner of the fund.

The fund's assets in proportion to his contribution amount put up with the Corpus (the fund's
total amount) Mutual Fund investor is also known as a mutual fund investor.

A wit holder or a fund shareholder.

Any change in the value of investments made in capital market instruments (such as stocks,
bonds, and mutual funds)

The scheme's Net Asset Value (NAV) reflects the value of its shares, debentures, and other
assets.

The net asset value (NAV) of a mutual fund scheme is the market value of its assets minus its
expenses.

Liabilities. The NAV of a scheme is derived by dividing the market value of the scheme by the
number of units in the plan.

Assets divided by the number of units sold to investors

9
HISTORY OF THE MUTUAL FUND INDUSTRY IN INDIA
On the initiative of the Government of India and the Reserve Bank, the mutual fund business in
India began in 1963 with the founding of Unit Trust of India. Regardless,

Growth was modest at first, but it picked up speed as non-UTI players entered the market in 1987.

The Indian mutual fund business has improved dramatically in the last decade, both in terms of
quality and quantity. Both in terms of number and quality. Previously, the marker's monopoly had
witnessed a decline.

The Assets Under Management (AUM) reached Rs67 billion at the end of the phase. The personal
In March 1993, when the sector joined the fund family, the Aum had risen to Rs. 470 billion, and it
had remained there till now.

It reached a peak of Rs. 1540 billion in April 2004.The mutual fund industry is clearly expanding at
a rapid speed, and it may be divided into four phases based on the sector's development. The
following is a quick description of each phase.

The first phase lasted from 1964 until 1987.

Unit Trust of India (UTI) was created in 1963 by an Act of Parliament. The Reserve Bank of India
established it, and it operated under the RBI's regulatory and administrative jurisdiction. UTI was
delinked from RBI in 1978, and the IDBI assumed regulatory and administrative responsibility in
its place. UTI's initial scheme was the Unit Scheme, which was launched in 1964. UTI had Rs. 6700
crores in AUM by the end of 1988.

The Second Phase lasted from 1987 to 1993. (Entry of Public Sector Funds)

Non-UTI, public sector mutual funds set up by public sector banks and the Life Insurance
Corporation of India (LIC) and General Insurance Corporation of India (GICI) made their debut
in 1987. (GIC). In June 1987, SBI Mutual Fund became the first non-UTI Mutual Fund.

Third Phase: 1993 – 2003 (Entry of Private Sector Funds)

With the advent of private sector funds into the Indian mutual fund industry in 1993, a new era
began, providing investors with a greater range of fund families. In addition, the first Mutual Fund
Regulations, which required all mutual funds, excluding UTI, to be registered and supervised, were
enacted in 1993. In July 1993, the former Kothari Pioneer (since merged with Franklin Templeton)
became the first private sector mutual fund to be registered. The industry is now governed by the
SEBI Regulations of 1996. There were 33 mutual funds with a total asset value of Rs. 121805
crores at the end of January 2003. Other mutual funds were well behind UTI, which had an AUM of
Rs. 44,541 crores.

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 Fourth Phase – Since February 2003

Following the abolition of the Unit Trust of India Act 1963 in February 2003, UTI was split
into two different corporations. One is the Unit Trust of India's Specified Undertaking, which
had Rs.29, 835 crores in assets under management at the end of January 2003, representing the
assets of the US 64 plan, assured return, and various other schemes.

11
 COMPANY PROFILE:

ICICI Prudential Life Insurance company Limited is an Indian life insurance company that was
created as a joint venture by ICICI Bank and Prudential plc. ICICI Prudential is a life insurance and
asset management firm based in India. The firm is situated in Mumbai and specializes in long-term
life insurance. The company was the first insurance company in India to be listed on the stock
exchanges in 2016.

ICICI Prudential Life Insurance Company Limited is a joint venture between ICICI Bank Limited
and Prudential Corporation Holdings Limited (ICICI Prudential Life).
ICICI Prudential Life began operations in the fiscal year 2001. Based on retail weighted received
premiums, it has consistently placed among the top enterprises in the Indian life insurance sector
(RWRP). We had $2,231.71 billion in assets under management at the end of June 2021. (AUM).
At ICICI Prudential Life, customer-centricity is at the center of all we do. We offer long-term
savings and protection products to meet the needs of our customers at different phases of life. We've
developed and implemented a variety of initiatives to provide cost-effective solutions, high-quality
services, consistent fund performance, and a smooth claim settlement procedure for our consumers.

In FY 2015, ICICI Prudential Life became the first private life insurer to manage $1 trillion in
assets. ICICI Prudential Life is India's first insurance company to be listed on both the NSE and the
BSE (National Stock Exchange and Bombay Stock Exchange) (BSE)

12
 ICICI Prudential Life Insurance Company
Limited

Type Public

Traded as • BSE: 540133

• NSE: ICICIPRULI

Industry Financial services

Founded 2000

Headquarters Mumbai, India

Key people Narayanan Srinivasa Kannan MD[1]

Products Life insurance

Revenue ₹2,652 crore (US$370 million)

(2020)[2]

Operating income ₹1,067 crore (US$150 million)

(2020)[2]

Net income ₹1,066 crore (US$150 million)

(2020)[2]

Total assets ₹156,030 crore (US$22 billion)

(2020)[2]

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 Total equity ₹5,842 crore (US$820 million)
(2020)[2]

Number of 14,630
employees

Parent ICICI Bank

Website www.iciciprulife.com

HISTORY

In 2001, ICICI Prudential Life Insurance began operations. With assets under management (AUM)
of around 100 crores (US$14 million), the life insurance arm was formed as a joint venture between
ICICI Bank and Prudential Corporation Holdings Limited.

The firm's assets under management had reached 50,000 crores (US$7.0 billion) in 2010. (AUM).

In 2015, the firm's assets under management (AUM) surpassed $1 trillion (US$14 billion), making
it the first insurance company in the industry to benchmark in AUM.

With a market capitalization of 5,000 crore (US$700 million), ICICI Prudential became the first
insurance company to be listed on the Indian stock exchanges, namely the Bombay Stock Exchange
and the National Stock Exchange. The IPO, in which the parent company ICICI Bank offloaded
12.65 percent of its shares, was dubbed the biggest in the Indian market since 2010. Other notable
shareholders include Temasek Holdings, Premji Invest, and the Singapore government.

In 2017, ICICI Prudential was asked by the regulator IRDA to take over Sahara Life's insurance
business in order to manage the issue at Sahara's life insurance subsidiary. Securities Appeal later
revoked the merger.
ICICI Prudential's assets under management will have surpassed 2 trillion (US$28 billion) by 2020.
(AUM). The overall premium income was 32,000 crores (US$4.5 billion), with 12,000 crores
(US$1.7 billion) coming from new business premiums and 21,000 crores (US$2.9 billion) coming
from renewal premiums.

14
 Key People

• Amit Palta - Chief Distribution Officer

• Judhajit Das - Chief Human Resource Officer

• Satyan Jambunathan - Chief Financial Officer (CFO)

• Ganessan Soundiram - Chief Technology

• Manish Dubey - Chief Marketing Officer

Product

Individuals and groups can get life, pension, and health insurance from the company, which
operates in participating, non-participating, and unit linked lines of business and for segments
like par life, par pension, non-par, annuity non-par, health, linked life, linked pension, linked
health, and linked group. The company offers a variety of products on retail, mortgage, and
group platforms, including the following:

• ICICI Prudential Guaranteed Income for Tomorrow (GIFT) - a long-term savings plan that
offers guaranteed income as well as life insurance.

• ICICI Prudential Signature is a Unit Linked Insurance Plan (ULIP) that combines insurance
and investment.

• ICICI Prudential I Protect Smart plan Is a protective term insurance policy with a life cover
and an optional critical illness cover from ICICI Prudential.

• ICICI Prudential Precious Life is a product launched by ICICI Prudential in November 2019
for persons who are unable to obtain life insurance due to pre-existing medical issues.

• ICICI Prudential Guaranteed Pension Plan - a retirement plan that guarantees a steady stream
of income once you retire.

Partnership

• In December 2019, the company partnered with Pay tm to provide subscribers with the Protect
Smart plan's advantages.
• In January 2021, the firm partnered with Phone to provide people term life insurance through
the app without the need for medical exams or paperwork.

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 RESEARCH OBJECTIVE

❖ To investigate the various types of mutual fund plans available in

India.

❖ To investigate the types of risk with mutual funds

❖ To investigate the Advantages and Disadvantages of mutual funds.

❖ To investigate the mutual fund structure.

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TYPES OF MUTUAL FUND SCHEMES
1. BY STUCTURE

• Open – ended Scheme

• Close – ended Scheme

• Interval Schemes

2 OBJECTIVES OF INVESTMENT

• Growth Schemes

• Income schemes

• Balanced Schemes

3. OTHER SCHEMES

• Tax savings schemes.

• Special schemes

o Index Schemes

o Sector-Specific schemes.

1 OPEN – ENDED SCHEMES:

These schemes' units are available for sale and buyback at NAV-based prices on any business
day. As a result, the schemes' unit capital fluctuates on a daily basis. As a result, these schemes
provide investors with a lot of liquidity and are growing increasingly popular in India. Please
keep in mind that an open-ended fund is not obligated to maintain selling/issuing new units at
all times, and may decide to cease accepting new subscriptions. An open-ended fund, on the
other hand, rarely denies an investor the ability to redeem existing units.

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2. CLOSED – ENDED SCHEMES

A close-ended product's unit capital is fixed because it sells a fixed number of units just once.
The units in these schemes are fully redeemed at NAV linked prices following an initial public
offering (IPO) with a specified maturity period. Investors can buy and sell units on the stock
exchanges where they are listed in the meantime. Closed-ended schemes, unlike open-ended
schemes, normally maintain the same unit capital. The programmes may offer direct repurchase
to investors after an initial closed period. Closed-ended funds are typically less liquid than
open-ended funds, and so trade at a discount to the NAV. This discount is skewed to the right.

3. INTERVAL STRATEGIES

Open-ended and closed-ended elements are combined in these schemes. They may be traded on
a stock exchange or be available for sale or redemption at NAV-based prices at pre-determined
intervals.

4. GROWTH STRATEGIES

These funds, also known as Equity Schemes, aim to invest the majority of their assets in stocks
and only a minor amount in money market instruments. Such methods have the potential to
provide higher long-term profits. However, because they invest in stocks, these plans are
subject to price volatility, particularly in the near term.

5. INCOME SCHEMES
These funds, which are also known as Debt Funds, invest in debt instruments such as corporate
bonds, debentures, and government bonds. When compared to equity plans, the prices of these
schemes are more stable, and the majority of the rewards to investors come from dividends or
consistent capital appreciation. These plans are suitable for cautious investors or those who are
unable to face higher stock risks, such as retirees. However, as compared to money market
schemes, they have a higher price fluctuation risk and a higher credit risk than a Gilt fund.

6. BALANCED SCHEMES
Hybrid schemes are the name given to these types of systems. These funds invest in both
equities and bonds. Balanced schemes strive to achieve the goal of income and moderate capital
appreciation by investing in a combination of these types of assets, and are appropriate for
investors with a cautious, long-term mindset.

7. TAX SAVING SCHEMES

A tax credit is being offered to investors who participate in equity markets through the Equity
Linked Savings Scheme ("ELSS"). Units acquired cannot be assigned, transferred, pledged,
18
 redeemed, or switched out until three years have passed since the date of allotment. The
Scheme is governed by the Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996, as well as ELSS notifications issued by the Ministry of Finance (Department
of Economic Affairs). Subject to the terms and conditions set forth in Section 88 of the Income
Tax Act of 1961.

8. INDEX SCHEMES
The fundamental function of an Index is to act as a measure of the market's overall
performance, or the performance of a specific market sector. An index can also be used as a
useful benchmark for evaluating mutual fund performance. Some investors choose to put their
money into the market as a whole rather than a single fund. Such investors are ecstatic to obtain
the market's profits. Because it is impractical to invest in each and every stock in the market in
proportion to its size, some investors choose to put their money into a fund that they believe
represents the entire market well. For these investors, index funds are created and managed.

9. SECTOR SPECIFIC SCHEMES

Sector Specific Schemes invest money in specific industries, for example, “Real Estate.”
Specialized real estate funds may invest directly in real estate, fund real estate developers, lend
directly to them, buy shares of housing finance businesses, or even buy securitized assets from
them.

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TYPES OF RISKS
Every investment entails some level of risk. Even a bank account that is insured faces the risk
of inflation outpacing your earnings, leaving you with less real purchasing power than when
you started (Rs. 1000 gets you less than it got your father when he was your age). When
choosing an investment, keep these main categories of risk in mind and weigh them against the
potential rewards.

• Market Risk

Due to broad outside forces, the prices or yields of all the assets in a specific market may rise or
fall at times. When this happens, the stock values of both a well-established and prosperous
company as well as a start-up company may be affected. This price fluctuation is due to "market
risk."

• The Risk of Inflation

It's also known as "loss of purchasing power." When inflation outpaces your investment's gains,
you face the risk of being able to buy less rather than more. When prices rise faster than your
returns, you're at risk of inflation.

• Credit hazard

In other words, how secure is the organization or entity to which you lend money while
investing? How confident are you that it will be able to pay you the promised interest or repay
your principle when your investment matures?

• The Risk of Interest Rates

Interest rate changes have a variety of effects on both stocks and bonds. Investors are reminded
that "predicting" the direction of interest rates is extremely difficult. A well-diversified portfolio
can assist to mitigate the effects of these shifts.

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• Exchange Rate Risk

A number of businesses earn money in foreign currencies and may have investments or
expenses in international currencies as well. Changes in currency rates may thus have a
favorable or negative influence on businesses, which will have an impact on the fund's
investment.

• Investing Danger
The sectoral fund schemes would invest primarily in stocks of select corporations in specific
industries. As a result, the schemes' NAV is tied to the stock performance of these companies
and may be more volatile than a more diversified stock portfolio.

• Policy shifts in the government

Changes in government policy, particularly in reference to tax benefits, may have an impact on
the companies' business prospects, as well as the fund's investments.

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 ADVANTAGES OF MUTUAL FUND

❖ Liquidity

Unless you opt for closed-end mutual funds, purchasing and selling a mutual fund plan is rather
straightforward. You can profitably sell your open-ended equities mutual fund units when the stock
market is high. Keep an eye on the exit load and expense ratio of the mutual fund.

❖ Diversification

Equity mutual funds have their own set of dangers because their success is dependent on stock
market fluctuations. As a result, the fund management spreads your investment across equities from
various industries and sectors, so diversifying your investment. When one asset class
underperforms, other sectors can compensate to protect investors.

❖ Expert management

A mutual fund is a realistic solution for investors who don't have the time or ability to do their own
research and asset allocation. A fund manager is in charge of everything and takes investment
decisions on your behalf. The fund's management and research team select the appropriate
securities, such as equities, debt, or a combination of both, based on the fund's investment
objectives. The fund's management also decides how long the securities will be held.

When choosing a mutual fund, you should think about the reputation and track record of the fund
manager. The cost-to-income ratio (which, according to SEBI, cannot exceed 2.25 percent
annualized of daily net assets)
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 ❖ Bulk transactions have a lower cost.

You've probably noticed how the price drops as the quantity purchased increases. For example, if a
100g tube of toothpaste costs Rs 10, a 500g tube might cost Rs 40. The same logic holds true for
mutual fund units. When you acquire numerous mutual fund units at once, the processing fees and
other commission costs are lower than if you buy one at a time.

❖ Invest in smaller denominations

By investing in smaller amounts of as little as Rs 500 per SIP instalment, you can stagger your
mutual fund contributions over time. Because you disperse your money between lows and highs in
the stock market, this decreases the average cost of investment. Regular (monthly or quarterly)
investments, rather than lump sum investments, allow for rupee cost averaging.is in line with your
financial goals

There are a wide range of mutual funds accessible in India to cater to the demands of investors from
all walks of life. Regardless of your income, you must make it a habit to set aside some money
(however small) for investment. Finding a mutual fund that meets your income, time horizon, and
investing goals is a difficult task.

❖ Cost-efficiency

You can compare the expense ratios of various mutual funds and pick the one with the lowest. The
cost ratio is the fee that you pay to have your mutual fund managed.

❖ Quick and hassle-free process

Begin by investing in one mutual fund and progressively expand your portfolio to include more
funds. It's much easier to choose from a list of carefully selected funds that fit your financial
objectives and risk tolerance. Keeping track of mutual funds will be simple. With the help of his
staff, the fund manager will decide when, where, and how to invest in assets based on the
investment objectives. In a word, their goal is to consistently exceed the benchmark index and offer
investors with the highest possible returns.

❖ Tax-efficiency

ELSS mutual funds are tax-saving mutual funds that are eligible for a tax deduction of up to Rs 1.5
lakh per year under Section 80C of the Income Tax Act, 1961. Even though Long-Term Capital
Gains (LTCG) over Rs 1 lakh are taxed at 10%, they have consistently outperformed other tax-
saving products in recent years.

Payments that are paid on a regular basis

SIPs or investments are frequently postponed for a variety of reasons. You can opt for paperless
automation by ordering your bank account to automatically deduct SIP amounts when they are due
by sending a SIP mandate to your fund house or agent. Thanks to timely email and SMS, you'll stay
on track with mutual funds.

23
 ❖ Safety

Mutual funds are often thought to be less safe than bank products. This is a misconception because
fund houses are regulated by statutory government entities such as SEBI and AMFI. The credentials
of the fund company and asset manager can be easily verified by SEBI. They also provide an
unbiased mechanism for resolving grievances that works in the best interests of investors.

❖ Systematic or one-time investment

You can invest in mutual funds according to your budget and convenience. For example, starting a
SIP (Systematic Investment Plan) in an equities fund on a monthly or quarterly basis is ideal for
investors with limited funds. If you have a surplus, though, consider a one-time lump sum
investment in debt funds.

DISADVANTAGE OF MUTUAL FUND

❖ Expenses associated with operating a mutual fund

Investors cover the salaries of market analysts and fund managers, as well as the fund's operational
costs. One of the first aspects to consider when choosing a mutual fund is the overall fund
management expenses. Increased management fees aren't always indicative of better fund
performance.

24
 ❖ Exit Load is a term used to describe the process of exiting a building.

When you sell a mutual fund, asset management firms (AMCs) charge you an exit load. It keeps
investors from redeeming their holdings for a while. It also aids fund management in collecting the
cash required to purchase eligible securities at the right price and at the right time.

❖ Dilution
Diversification lowers your risk of losing money while also diluting your gains. As a result,
investing in a significant number of mutual funds at once is not recommended. As you've just read,
if you make informed judgments, the advantages of mutual funds can easily outweigh the
disadvantages. Investors, on the other hand, may be short on time, knowledge, or patience when it
comes to researching and analyzing different mutual funds. Investing with Clear Tax can help you
avoid this problem because we've already done the legwork for you by handpicking the highest-
rated funds from the best fund houses in the country.

25
 MUTUAL FUND STUCTURE:
We've looked at a lot of different areas of mutual funds, including their performance, portfolio,
how to choose them, and how to compare them. We'll look at the structure of mutual funds in
India in this piece. The Securities and Exchange Board of India regulates mutual funds in India
(SEBI). Because running a mutual fund entails managing the money of investors, SEBI
establishes a comprehensive set of requirements for MF operation in the "SEBI MF regulations
1996." According to these rules, a mutual fund must be a three-tired structure that includes:

1. A Sponsor
2. A Trustee
3. An asset management company (AMC)

While the above-mentioned play the most essential responsibilities in the creation and
operation of a fund house, the registrar and transfer agent (RTA), the custodian, the
auditors, and the fund accountants all contribute to the mutual fund's successful
operation.

Sponsor -

26
The Sponsor is the principal organisation that creates Mutual Funds. A firm promoter might be
compared to the Sponsor. The sponsor's responsibilities include choosing trustees with SEBI's
approval and forming an Asset Management Company under the Companies Act 1956, as well as
registering the trust with SEBI. Because sponsors are so important to the operation of a mutual
fund, SEBI has established a set of severe standards for sponsor eligibility. The sponsor should have
an excellent track record of conducting business in the financial services area for at least 5-7 years,
to name a few. A Sponsor must also have made money in at least three of the five years.

It is also necessary for the sponsor to have a positive net worth throughout the same time period.
It should be contributing at least 40% of the AMC's net worth. It's also crucial that the sponsor has
a solid track record of honesty and integrity in all of its dealings. ICICI Bank and Prudential Plc, for
example, are sponsors of the ICICI Mutual Fund. Aditya Birla Financial Services and Sun Life (India)
AMC Investments Inc. are the sponsors of the Birla Sun Life Mutual Fund.

Trustee –

The primary duty of a trustee in the structure of mutual funds is to ensure that the unit holders'
interests are protected while ensuring that the mutual fund complies with all SEBI requirements.
The sponsor can either choose four trustees or form a trustee company with at least four
independent directors. Furthermore, at least two-thirds of the trustees or directors should be
unaffiliated with the sponsor in any way.

One of the trustees' most significant obligations is to engage into an investment management
contract with the AMC to establish how it will operate. Trustees must also ensure that the AMC has
all of the essential policies, processes, and systems in place, as well as that all-important personnel,
such as the CIO, CEO, fund managers, and analysts, are carefully chosen. The trustees must
approve all of the AMC's schemes before they can be launched. The trustees also review all the
transactions of the AMC on a quarterly basis whilst filing reports to SEBI, generally on a half
yearly basis.

Asset Management Company (AMC) –

The trust's investment manager is an AMC. They are in charge of the mutual fund's day-to-day
operations as well as the money of the investors. After receiving SEBI clearance, the AMC is
selected by either the Sponsor or the Trustee. The Asset Management Company is made up of the
Chief Investment Officer, analytics, and fund managers, who are all in charge of overseeing the
many schemes that have been launched. The compliance officer ensures that all of the AMC's
actions are compliant with SEBI's laws and regulations. Axis AMC, for example, is Axis Mutual
Fund's asset management company.

Custodian -

He is the custodian of all of the AMC's stock and other investments. All securities must be kept in
safe custody by the custodian. The custodian is responsible for managing the mutual fund's
investment account.

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Registrar and Transfer Agent (RTA) –

It keeps track of and updates all of the investor's information. Investor servicing is the
company's core function, which it performs through its headquarters and numerous
locations. Its responsibilities include the processing of investor applications, as well
as the history of buy and redemption transactions by investors in various fund
schemes and plans.

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 LITERATURE REVIEW:

Author: Dr. Prabhuram Tripathy and Dr. Pramod Kumar Patjoshi

Topic: Study on awareness of mutual fund in India

Published date: 17 February 2020

Published on: Gedrag and organisatie review – ISSN 0921-5077

Mutual Fund is suitable to put resources into a differentiated and most appropriate
way for the investors, as it offers a chance to manage professionally at a minimal effort. As
Mutual funds is apparently the simplest and minimum risky approach to put resources in the
stock. Due to this suitability, investors are ready to put little measures of cash into the reserve
for making a sensible benefit in future. Investments in different Mutual Funds schemes provide
a chance to the investors to expect a higher return through lesser risk as associate to other types
of investment avenues. Mutual Funds companies mobilizes the funds from various investors
and invest in different financial securities in the stock market, thus investment in Mutual Funds
are subjected to market risk. Therefore, this research study is mainly emphasis to examine the
perception as well as awareness of mutual fund among various investors.

Findings:
In the active financial situation, there are many investment avenues can be accessible
to the investors in the security markets. Investors can invest in shares, bonds, debentures, gold,
bank deposits where variability in risk is there. Currently investors favor to diversify of their
risks in addition to the returns should be high. From the analysis, it found that the mutual funds
industry is still in its phase of growth and as most of the respondent are not fully aware of
mutual funds. The research approves that various demographic variables like education and age
have a significant impact on investor’s awareness. The significant bases of information for them
are that of bankers and Friend & relatives. The company has to conduct the regular customers’
awareness programmers for safe guarding their customers and influences them to invest in
mutual funds as they aware about the mutual funds.

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Author: R Padmaja

Topic: A Study on awareness of mutual fund in India in ICICI Prudential

Published date: 2 April 2013

Published: International Journal of Management Research and Business Strategy

In India mutual funds are divided in to balanced funds, Income fund, Growth
funds, Sector funds, etc. Equity funds mainly consist of common shares and stocks of
companies listed in the stock exchanges. They are considered risky but are likely to give higher
return in the longer run. Fixed income funds: Also known as low risk funds, these funds mainly
invest in government and corporate securities (debentures) with fixed amount of returns, which
are generally moderate. Balanced funds are basically a combination of both bonds and stocks,
which involves moderate to little risk. . Mutual funds have advantages compared to direct
investing in individual securities. These include increased diversification, daily liquidity,
professional investment management, ability to participate in investments that may be available
only to larger investors, service and convenience, government oversight and ease of
comparison. Mutual funds have disadvantages as well, which include fees, less control over
timing of recognition of gains, less predictable income and no opportunity to customize. Top 10
mutual funds in India are ICICI Prudential.

Findings:
Mutual funds are good source of returns for majority of households and it is
particularly useful for the people who are at the age of retirement. However, average investors
are still restricting their choices to conventional options like gold and fixed deposits when the
market is flooded with countless investment opportunities, with mutual funds. This is because
of lack of information about how mutual funds work, which makes many investors hesitant
towards mutual fund investments. In fact, many a times, people investing in mutual funds too
are unclear about how they function and how one can manage them. So the organizations which
are offering mutual funds have to provide complete information to the prospective investors
relating to mutual funds. The government also has to take some measures to encourage people
to invest in mutual funds even though it is offering schemes like Rajiv Gandhi Equity Savings
Scheme to the investors. It is believed that some of these measures could lift the morale of the
mutual fund industry which has been crippled for the last three years.

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Author: Dr. Vedala Naga Sailaja

Topic: Awareness of mutual fund in INDIA

Published Date: 3 March 2018

Published on: International journal of civil Engineering and technology

The scientist did the review with intend to quantify the awareness towards mutual
fund. It centers its consideration towards the conceivable outcomes of measuring the desires
and fulfillment level of more shared reserve items. It additionally intends to recommend
strategies to enhance the present level of recognition. Mutual fund is an investment instrument
which mobilizes the savings of millions of small and retail consumers into huge capital
formation. The basic objective behind investment in mutual fund is good return with relative
risk. There are expert available in market, which are in constant touch with micro and macro
aggregates or the economy.

Findings:
Distribution channels are also important for the investment in mutual fund.
Financial advisors are the most preferred channels for the investment in mutual fund. They can
change investors mind from one investment option to others. Many of investors directly invest
their money through AMC because they do not have to pay entry load. Only those people invest
directly who know well about mutual fund and its operations and those have time. Sometimes
due to lack of detailed awareness about mutual fund schemes the investors seek advice of
distributors. People will not accept the entry load if the company would any such type loads
during NFO because during NFO the investors were not sure whether the given scheme can
really give them better return or not.

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 Author: Sonali senapati and Shaila Srivastava

Topic: Awareness about the investment in mutual funds.

Published date: 05 December 2018

Published on: The Empirical Economics Letters, 17(special issue) ISSN 1681
8997

The mutual fund industry in India has a vast untapped market, the objectives of
this study are to analyze the overall growth of mutual fund in India and also to understand the extent
of awareness about mutual fund. With the growth story of India both per capita as well as the
disposable income has gone up. Some of the popular asset classes are investments in equity, bond
and debentures, gold and real estate. But there are retail investor who are not much aware of the
dynamics of these asset classes, this has resulted in emergence of mutual funds companies. The
mutual fund industry in India has a vest untapped market. According to SEBI annual report (2017-
2018) the average asset under management of mutual fund industry for the year 2017-18 was 21.46
lakh crore.

Findings:
The result suggests that the growth of investment in mutual fund has
increased significantly between 2000 and 2018. Majority of the respondents save less than 20%
of their income and maximum respondents prefer investing in mutual funds. The reason given
for their preference for mutual fund was high returns, diversified portfolio and 58% of their
income and maximum respondents prefer investing mutual funds. Most of the respondents get
information about mutual funds from news paper/internet while mostly respondents get it from
financial institutions. Very few studies have been conducted on the awareness about mutual
funds. The findings of the study are useful for fund managers in the industry.

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 RESEARCH METHODOLOGY:

A research technique is a method for solving a research problem in a methodical

manner. The many methods and approaches for doing a research marketing
research is the systemic design, collecting, analysis, and reporting of data, as well
as the filling of appropriate solution.

This project is based on secondary sources of information.

Magazines, newspapers, company material, and websites were used to gather

secondary data. Each question received an analysis code. After that, the papers are
written and analysed.

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 ANALYZING AND INTERPRETATION:

❖ Reason for not invested in mutual fund:

Reason No. of Respondents

Not aware 65
Higher risk 5
Not any specific reason 10

Not aware
Higher risk
Not any specific reason

Interpretation:

Out of 80 people, who have not invested in mutual fund, 81% are not aware of
mutual fund, 13% said there is likely to be higher risk and 6% do not have any
specific reason

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 ❖ Reason for invested in ICICI

Reason No. of Respondents

ICICI Prudential 35
Better Return 5
Agents advice 15

Sales

Associated with ICICI

Better return
Agents Advice

Interpretation:

Out of 55 investors of ICICI 64% have invested because of its association with brand
ICICI, 27% invested on agent advisors, 9% invested because of better return.
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 ❖ Source of information for customers about Mutual Fund

Source of information No. of respondents

Advertisement 18
Peer Group 25
Bank 30
Financial Advisors 62

Advertisement
Peer Group
Bank
Financial Advisors

Interpretation:

From the above chart it can be inferred that the Financial Advisor is the most important

source of information about Mutual Fund. Out of 135 Respondents, 46% know about

Mutual fund Through Financial Advisor, 22% through Bank, 19% through Peer Group

13% through Advertisement.

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 ❖ Which types of funds would you like to prefer for your investment in mutual fund?

Investment preference No. of respondents

Equity fund 65
Debt fund 11
Balance fund 24
Total 100

Equity fund
Debt fund
balance Fund

Interpretation:

We observe that 65% of all the respondents prefer investment in equity fund, 11% of all the
respondents prefer investment in Debt fund, and remaining 24% of all the respondents prefer
investment in balanced fund.

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 FINDINGS

❖ Out of 80 Respondents 81% were not aware of mutual fund, 13% told there is not any
specific reason for not invested in mutual fund and 6% told there is likely to be higher risk

❖ Out of 55 investors of ICICIMF 64% have invested because of its association with
brand ICICI, 27% invested on agent advisors, 9% invested because of better
return.

❖ Out of 135 Respondents, 46% know about Mutual fund Through Financial Advisor, 22%
through Bank, 19% through Peer Group 13% through Advertisement.

❖ We observe that 65% of all the respondents prefer investment in equity fund, 11% of all the
respondents prefer investment in Debt fund, and remaining 24% of all the respondents prefer
investment in balanced fund.

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 SUGGESTION AND RECOMMENDATION

There is need to build awareness of the new funds among the investors with constantly being in
contact with them.

Some of investors have asked for periodical market report about stock market so that they can get
the knowledge properly

ICICI must try to locate hard working distributors who are providing good business in their
respective geographical area.

The company should advertise their tax saving plan more so that they can gain more customers

The most vital problem spotted is of ignorance. Investors should be made aware of benefits.
Nobody will invest until and unless he is fully convinced. Investors should be realize that ignorance
is no longer bliss and what they are losing by not investing

Mutual funds offer lot of benefits which no other single option could offer. But most of the people
are not even aware of what actually a mutual fund is? They only see it s just another investment
option. So the advisors should try to change their mindset. The advisors should target for more and
more young investor. Young investors as well as person at the height of their career would like to
go for advisors due to lack of expertise and time.

Before making any investment financial advisors should first enquire about the risk tolerance of the
investors/customers, their need and time (how long they want to invest). By considering these three
things they can take the customers into consideration.

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 COCLUSIONS
Mutual funds are good source of returns for majority of households and it is particularly useful for
the people who are at the age of retirement. However, average investors are still restricting their
choices to conventional options like gold and fixed deposits when the market is flooded with
countless investment opportunities, with mutual funds. This is because of lack of information about
how mutual funds work, which makes many investors hesitant towards mutual fund investments

Mutual funds are a popular investment option among investors because they are simple to invest in
and provide higher returns than other traditional asset classes such as fixed-income securities or
savings bank accounts. Make your mutual fund investments as soon as possible if you haven't
already. Investors in mutual funds prefer equities funds because they expect a higher return on their
investment. They avoid debt funds since they can earn the same amount of money from their banks
without incurring any risks. During NFO, most consumers prefer to invest in mutual funds rather
than watch the performance of mutual fund schemes. Investors frequently seek the assistance of
distributors due to a lack of specific knowledge regarding mutual fund schemes.

Mutual fund distribution channels are also significant for mutual fund investment. The most popular
way to invest in mutual funds is through financial counsellors. They have the ability to persuade
investors to switch from one investment option to another. Because they do not have to pay an entry
load, many investors prefer to invest their money immediately through an AMC. Only those with a
thorough understanding of mutual funds and their operations, as well as time, should invest directly.
A mutual fund is a collection of people who pool their money and invest it in stocks, bonds, and
other securities. The advantages of mutual are professional management, diversification, and
economies of scale, simplicity and liquidity. The biggest problems with Mutual Funds are their
costs and fees.

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 REFERENCES

❖ Economic times Newspaper

❖ https://www.icicipruamc.com/

❖ http://www.ijstr.org/final-print/jan2020/A-Study-On-The-Awareness-Of-
Mutual-Funds-Investment-In-India.pdf

❖ https://cleartax.in/s/advantages-disadvantages-mutual-funds

❖ https://cleartax.in/s/mutual-fund-types

❖ https://www.valueresearchonline.com/

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