A Study On Investors Perception Towards Mutual Fund

A Study on Investors Perception Towards Mutual Fund in Bangalore with reference to
HDFC & ICICI Prudential
INTRODUCTION
In today’s market people invest money to gain higher return. Therefore, they
mostly look out for Investment Company where they can get more income.
When we talk about the investment options, investors have various options to
invest in various reputed companies; Investors mainly look for minimizing tax, risk
and maximizing returns, and normally, look out for some investments which can help
them in doing so. When it comes to minimizing tax, risk and maximizing profits,
investors mainly look for mutual funds.
The SEBI Mutual fund Regulations, 1993 defines mutual fund as “A fund
established in the form of a trust by a sponsor to raise monies by the trustees through
the sale of units to the public under one or more schemes for investing in securities in
accordance with these regulations.”
1.1 Meaning Of Mutual Funds
Mutual fund is a non-depository, non-banking financial intermediary that acts
as an important vehicle for bringing wealth holders and deficit units together
indirectly. (Pierce, James. L).
Mutual fund is a pool of funds which is divided into units of equal value and
sold to investing public and the funds so collected are utilized for collective
investment in various capital and money market instrument.
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Al-Ameen Institute of Management Studies
1.2 History Of Mutual Funds In India
Mutual funds entered Indian Market in 1963. Unit trust of India was set up
under the UTI Act, 1963. It operates both as a Financial Institution and as an
Investment Trust.
Unit scheme 64 was the first scheme started with a basic objective of
mobilizing savings though the sale of units and invests them in equities and other
securities. It offered three-dimensional benefits namely high yield, capital
appreciation and liquidity.
The history of mutual fund in India till the mid 80’s in virtually synonymous
with the history of UTI. In 1986, the UTI launched first growth scheme. Master shares
which was listed and treated in stock exchanges.
The monopoly of the UTI was broken in 1987. Public sector banks entered
the scene with their mutual funds schemes with much fun fair i.e. in 1987, five banks
 State Bank of India
 Canara Bank
 Bank of India
 Indian Bank
 Punjab National Bank
 Along with LIC and GIC came out with their mutual funds.
Mutual funds sponsored by the banks and other public sector financial
institutions became popular on account of
 Wide network of collection centers of the bank and other sponsoring
organizations.
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 Guaranteed returns.
 Trust in the ability and reliability of the sponsors.
 Accessibility and familiarity with the sponsor bank/ organizations.
Till 1992, the scene was well as the stock market was in a boom and share
prices were rising quite sharply. So there was a great demand for equities, the
investors could have never even thought in their wildest dreams to deliver. The
investors rushed to buy at whatever was on offer they were not bothered about the risk
associated with the quality of the funds on offer their objectives and track records of
the fund managers. This irrational action on the part of the investors cost them
heavily, when the bubble of Securities Scam burst in 1992, as the rise in the prices of
the stock were not because of the business performance but because of handiwork of
few brokers it was destined to meet its logical tragic end. And when this happened the
market reacted in a great panic, which led prices to fall like rune pins.
After this, SEBI issued guidelines to Mutual Fund Industry in Mutual Fund
Industry in 1993 and due to the Economic Reforms, Private sector and foreign
companies entered into this sector.
The reasons for private mutual fund to enter maybe:-
1. Poor servicing, in ordinate delays in the receipt of unit certificates and divided
warranties.
2. Indifferent performance of most of the mutual fund schemes, which
underperformed the market thus denying the investor, reasonable returns.
3. Absence of adequate disclosure norms.
4. Lack of an investor friendly approach in general.
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Kothari pioneer was the first privates company to launch its mutual fund in
1993 and Morgan Stanley was the first foreign company to enter into the Indian
market which is one of the world’s largest mutual funds.
Briefly the categories of players can be divided into four types, viz
 UTI
 Public sector banks
 Insurance companies / All India financial institutions.
 Private sector- inclusive of foreign companies and joint ventures.
Private sector funds are performing well in the market. A fund mobilized by
private sector is more than UTI and public sector.
The Indian Mutual fund industry is at a point of strategic inflection. It was
founded with the establishment of UTI in 1964. The private sector Mutual fund
entered the Scene in early 1990s and introduced better service standards and wider
product choices. The Indian Mutual fund industry has not performed up to the mark in
gaining investor confidence. The assets have been garnered based on performance
rather than confidence of investor.
Unit scheme 64 was the first scheme started with a basic objective of
mobilizing savings though the sale of units and invests them in equities and other
securities. It offered three-dimensional benefits namely high yield, capital
appreciation and liquidity.
The history of mutual fund in India till the mid 80’s was virtually synonymous
with the history of UTI. In 1986, the UTI launched first growth scheme namely
Master shares which was listed and treated in stock exchanges.
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1.3 Characteristics Of Mutual Fund
 A mutual fund actually belongs to the investors who have pooled their funds.
The ownership of the Mutual Fund is in the hands of the investors.
 A mutual fund is managed by investment professionals and other service
providers, who earn a fee for their services from the fund.
 The pool of funds is invested in a portfolio of marketable investment. The
value of the portfolio is updated every day.
 The investor’s share in the fund is denominated by units. The value of the
units changes with change in the portfolio’s value, every day. The value of one
unit of investment is called as the net assets value.
 The investment portfolio of the Mutual fund is vested according to the slated
Investment objectives of the fund
1.4 Meaning Of Investment
The use of money for the purpose of making more money to gain income
increase capital or both.
1.5 Definition Of Investment
Physical investment is the current product set aside during a given period to be
used for future production.
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THE FLOW CHART BELOW DESCRIBES BROADLY THE WORKING OF
A MUTUAL FUND
1.6 Types Of Mutual Fund Schemes
Wide variety of Mutual Fund Schemes exists to cater to the needs such as
financial position, risk tolerance and return expectations etc. The figure below gives
an overview into the existing types of schemes in the Industry.
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A.OPEN ENDED MUTUAL FUNDS
It is a scheme in which a investor can buy and sell units on daily basis, where
in the scheme have perpectual existence and a flexible ever changing corpus.
Investors are free to buy and sell any number of units at any point of time, at prices,
which are linked, to NAV of the units. As the NAV changes with time, so do the
prices at which the investors can buy and sell these units it gives complete flexibility
to the investor as he can invest or dies-invest at any time. The fund is not listed in the
stock market.
The investor can buy and sell these units form and to the mutual fund. In
accordance with the recent changes, the fund manager has the option to list the fund in
the stock market in addition to repurchase and resale.
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B.CLOSE ENDED MUTUAL FUND
It is a fund where in it has a fixed corpus and operates for fixed duration at the
end of which the entire corpus is disinvested and proceeds are distributed to the
various unit holders in proportion of their holdings. The fund can also make interim
payments if it so decides. Thus it ceases the exits after final distribution. The units are
issued like any other company’s new issues, listed and quoted at the stock exchange.
The units of close-ended funds are not always redeemable at their NAV. Market
prices are determined by demand and supply and not solely by NAV. If the fund
manager so chooses, he can offer repurchase facility. So also he can resume resale to
the extent of repurchase.
All the schemes discussed below are either open ended or close ended.
PORTFOLIO CLASSIFICATION
Mutual funds differ with reference to the type of instruments in which the
money can be invested. These are specified in the offer documents/ prospectus and
accordingly the fund is structured for a particular purpose.
A. BOND FUNDS
They provide fixed returns for those who desire safety and steady income. The
Fund is invested in Government securities and Bonds. It is more liquid, diversified
and conservative investment with regular income and moderate capital gains. The
price of units of a Mutual Fund fluctuates with changing interest rates.
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B. STOCK FUNDS
They are mainly those who are willing to accept risk in the hope of a high
Return. These are called Common Stock Fund. They are of two types – Growth Funds
and Go-Go Funds. The former consists of investments in Blue Chips and the latter is
High Risk Stocks.
C. INCOME FUNDS
They are mainly to maximize the current income of investors. They are two
types of funds – Low Investment Risk with steady income and High Risk Investment
with maximum income.
Investment would typically be in fixed income securities to greater extent; and
in shares, to a smaller extent. Capital appreciation in such schemes may be limited. It
is ideal for retired people and others with a need for capital stability and regular
income, and investors who need some income to supplement their earnings. As most
of Investors prefer income Funds, the sales of this fund had dominated the other types
of funds.
D. MONEY MARKET MUTUAL FUNDS
Investments are predominantly in Money Market Instruments like, Certificate
of Deposits, Commercial Paper, and Treasury Bills etc. They are short term in tenure,
highly liquid with high safety. This fund is an alternative to saving account of high
bracket savers. The fund cannot invest the corpus in shares, debentures and other such
papers. Returns on these schemes may fluctuate depending upon the interest rates
prevailing in the market.
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E. SPECIALISED FUNDS
These funds invest in securities of certain industries/ specific set of or specific
income producing securities. They carry more risk due to lack of diversification.
F. LEVERAGE FUNDS
The funds borrow money in order to increase the size of the corpus and
thereby increase the benefit to the Unit Holders by operating with a larger corpus than
the money collected. Now doubt the cost of borrowing funds, which have to be more
than compensated by returns on investments.
G. BALANCE FUNDS
Here the assets are made up of a judicious mixture of industries, Stock and
Bonds. To secure reasonable rate of return, the funds are employed in high-grade
common stock and conservative fixed income securities like debentures, bonds and
preference shares. In a rising stock market, the NAV of these schemes may not
normally keep pace or fall equally when the market falls. It is ideal for investor’s
looking for a combination of income and moderate growth.
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1.7 Organisation Of A Mutual Fund
SPONSOR
 Approval by SEBI
 Sound track record
 Experience in Financial Services
 Professional Competence, Financial Soundness, Reputation, etc
 Contribution to AMC Capital 40% minimum.
TRUSTEE
 Names to be approved by SEBI
 Legally responsible for administering the Trust and Compliance
 with Regulations
 Norms for Trustees
 Experience in Financial Services
 Minimum 4 members on the board and 50% of the members not to be
connected with the sponsor
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ASSET MANAGEMENT COMPANY (AMC)
 Launching schemes
 Managing funds for schemes
 Performing Accounting Function
 All day-to-day affairs of the Mutual Funds
Income of an AMC/ AM fee
 1.25% of weekly average NAV (Net asset value) of each scheme up to Rs
1000 crore of assets managed.
 1.00% greater than 100 crore
 Infrastructure expenses to be borne by the AMC
CUSTODIAN
 Safe keeping of the assets held by the Fund
 Receives and Delivers Securities for payment
 Follow up on Corporate benefits
 Provide an independent means of control
TRANSFER AGENTS
 Issue of Account Statements to Investors
 Arranges payment to Investors when they redeem
 Takes care of non commercial transactions like change of address, loss of
account statement etc.
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REGISTRAR
The registrar maintains the investment account of the Unit holders and also
handles the complaints and grievances from the investors relating to dividend,
purchase and sale of units.
1.8 Regulation Of Mutual Funds And Asset Management
Companies:-
All mutual funds are regulated by the securities and exchange board of India
(SEBI), which has issued detailed guidelines for their setting up and operation. The
highlights are:
1. Mutual funds are to be established in the form of a trust under the India Trusts
Act and operated by Asset Management Companies (AMC).
2. They have to set up a board of trustees and trustee companies and constitute
their board of directors.
3. Asset Management Companies (AMC’s) must have a minimum net worth of
Rs 5 crores
4. Asset Management Companies (AMC’s) and Trustees are to be two separate
legal entities and an arm’s length relationship must be maintained between the
two.
5. An Asset Management Companies (AMC’s) or its affiliate cannot act as a
manager in any other fund.
6. Asset Management Companies (AMC’s) are required to furnish SEBI their
respective Memorandum and Articles of Association for approval.
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7. Mutual funds dealing exclusively with money market instruments (like
certificates of deposit, commercial paper, bill discounting, etc.) are to be
regulated by the Reserve Bank of India (RBI).
8. All schemes floated by mutual funds are to be registered with SEBI.
9. Mutual funds are required to distribute at least ninety per cent of their profits
every year among their investors.
Besides, there are detailed guidelines governing the investment strategy,
disclosure norms and advertising code for mutual funds. In the interest of investor
protection, SEBI has been given wide ranging powers to oversee the constitution as
well as the operations of mutual fund. It is also empowered to impose penalty on
mutual funds should they fail to comply with its guidelines.
The premier mutual fund UTI, however, remained outside the purview of
SEBI’s regulations till March 1994 claiming special status conferred on it by the UTI
Act, 1963.
There was a long drawn battle between two but finally the Ministry of Finance
directed UTI to submit itself to SEBI’s guidance and control. However, in view of the
special nature of UTI-being both a financial institution and a mutual fund- the
modalities are still being worked out in detail. In the meantime the company law
board decided in its order on 16th June 1994 that the statute, namely UTI act 1963,
which cannot be separated by delegated powers under which government asked UTI
to submit itself to SEBI’s superintendence, governs UTI. It, however, rejected UTI’s
plea that it was not a mutual fund.
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1.9 Benefits Of Mutual Funds
Professional Management
Availing of the services of experienced and skill professionals who are backed
by a dedicated investment research team which analyses the performance and
prospectus of Companies and select suitable investments to achieve the objectives of
the Scheme.
Diversification
Mutual Funds invest in a number of companies across, aboard cross section of
industries and sectors. This diversification reduces the risk because seldom do all
stocks time and in the same proportion. Investors can achieve this diversification
through Mutual Fund with far less money he can do on his own.
Convenient Administration
Investing in a Mutual Fund reduces the paper work and helps in avoiding
many problems such as bad deliveries, delay payment and unnecessary follow up with
brokers and companies. Mutual; Fund save time and make investing easy and
convenient.
Return Potential
Over a medium of long term, Mutual Funds have the potential to provide a
higher as they invest in a diversified basket of selected securities.
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Low Cost
Mutual Funds are a relatively less expensive way to invest, compared to
directly investing in the Capital Market, because the benefits of scale in brokerage,
custodian and other fees translate into lower costs for investors.
Liquidity
In open-ended schemes, one can get their money back promptly at Net Asset
Value related prices from the Mutual Fund itself. Close ended schemes units can be
sold in a Stock Exchange at the prevailing market price or avail the facility of direct
repurchase at NAV related prices which some close ended and interval schemes offer.
Transparency
Investor can get regular income information on the value of their investment
in addition to disclosure on the specific investment made by the scheme, the
proportion invested in each class of assets and the fund managers investment strategy
and outlook.
Choice Of Scheme
Mutual Funds offer a family of schemes to suit the varying needs of different
types of investors.
Flexibility
Through features such as regular investment plans, regular withdrawal plans
and dividend reinvestment plans one can systematically invest or withdraw according
to their needs and convenience.
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Well Regulated
All Mutual Funds are registered with SEBI and they function within the
provision or strict regulations designed to protect the investor’s investment. The
operations of Mutual Funds are regularly monitored by SEBI.
Managing Risk
While risk cannot be eliminated. Skillful management can minimize risk.
Mutual funds help to reduce risk through diversification and professional
management. The experience and expertise of Mutual Fund managers in selecting
fundamentally sound securities and timing their purchases and sales help them to
build a diversified portfolio that minimizes risk and maximizes returns.
Tax Benefit
At present investment in mutual fund schemes enjoy the following tax
benefits
1. Since, April 1, 2003, all dividends declared by debt-based mutual funds are
tax-free in the hands of the investor. A dividend distribution tax of 12.5%
(including surcharge) is be paid by the mutual fund on the dividends declared
by the fund.
2. Investors in ELSS (equity-linked savings schemes) can avail rebate under
Section 88 of the Income Tax Act, 1961 on investment up to Rs 10,000 subject
to the various conditions laid down in the said Section.
3. Under Section 10(38) of the Act, long-term capital gains arising from transfer
of a unit of mutual fund is exempt from tax if the said transaction is
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undertaken after October 1, 2004 and the securities transaction tax is paid to
the appropriate authority.
4. Under Section 111A of the Act, short-term capital gains arising from transfer
of a unit of mutual fund is chargeable to tax @ 10% (plus applicable
surcharge) if the said transaction is undertaken after October 1, 2004 and the
securities transaction tax is paid.
1.10 Problems Faced By Mutual Funds
Volatility in Indian economy: Shares prices in Indian stock changes frequently. Thus
a fund manager has to change the portfolio according to the changes of share prices.
Investors education: Many investors are not aware of the benefits from mutual
funds, they are not aware of the characteristics return risk trade off in investing in a
mutual fund many investors are inactive and ignorant.
Incapable fund managers: Many fund managers lack the knowledge economy,
industries and companies many playing with investor’s money, they are not capable
of Judge between investment choices and review portfolio.
Non operation between organizational committee: Sponsors, custodians, fund
managers are not working hand in hand.
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Transparency: SEBI guidelines say mutual fund has to maintain transparency in its
operations, but many funds are not transparent to its investors, government and
public.
Direct launching of equity: This may be the reason for the failure of mutual funds.
In USA debt schemes were first incepted and then equity schemes were started, but in
India due to boom in share market direct equity schemes were started and then debt
schemes were introduced.
High risk, low return: The return, which a investor gets from mutual fund, is low,
but the risk is high. Return earned from fund has to be distributed among the unit
holders only after deduction for maintenance of the fund, thus the return will be low.
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2.1 Introduction
In today’s market people invest money to gain higher return. Therefore, they
mostly look out for Investment Company where they can get more income.
When we talk about the investment options, investors have various options to
invest in various reputed companies; Investors mainly look for minimizing tax, risk
and maximizing returns, and normally, look out for some investments which can help
them in doing so. When it comes to minimizing tax, risk and maximizing profits,
investors mainly look for mutual funds.
2.2 Review of literature:-
2.2.1. International Journal of Multidisciplinary Management Studies Vol.2
Issue 3, March 2012, ISSN 2249 8834 Online available at
http://zenithresearch.org.in/ www.zenithresearch.org.in
MUTUAL FUND FINANCIAL PERFORMANCE ANALYSIS- A
COMPARATIVE STUDY ON EQUITY DIVERSIFIED SCHEMES AND
EQUITY MID-CAP SCHEMES. DR.B.NIMALATHASAN*; MR.R.KUMAR
GANDHI** *Department of Accounting, Faculty of Management Studies &
Commerce, University of Jaffna, Jaffna, Sri Lanka. **A.P (Sr.G), SRM School of
Management, Tamil Nadu, India.
This article focused on the financial performance analysis of mutual fund
schemes (equity diversified schemes and equity mid-cap schemes) of selected banks
(State Bank of India, Canara Bank- Public Bank, ICICI Bank, HDFC Bank-Private
Bank).The objectives of this research work is to analysis the financial performance of
selected mutual fund schemes through the statistical parameters (Standard Deviation,
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Beta and Alpha) and ratio analysis (Sharpe Ratio, Treynor Ratio, Jenson Ratio).The
results of the research work concern among the Open ended – Tax Saving schemes,
Canara Robeco Equity Diversified is the preferred and ranked top most, at the same
time among the Open ended – Midcap schemes, HDFC Capital Builder is the
preferred and ranked top through various tools. These research findings useful to the
investors in terms of understanding the financial performance of the mutual fund
schemes. Also this research finding is useful to the Mutual Fund Company in terms of
Behavioral aspects of mutual funds.
The Research “Performance Evaluation of Franklin Templeton Mutual Funds”
was done by R.Nithya in the IFMR Chennai (2004). The objective of the study is to
analyse the performance of all the schemes available in the Franklin Templeton
Mutual funds and Emphasize the values of mutual funds to the target people by
identifying Asset Management Company that is performing well and identifying the
top schemes in the category such as equity,balanced,Monthly Income Plan(MIP) &
Income in the AMC. The AMC chosen was Franklin Templeton Mutual funds and it
performed well and met the expectations.
The Research “A study on Analysis of the performance of mutual fund with
reference to HDFC” was done by Prasath.R.H in Anna University (2009) . The study
is trying to emphasize the core values of mutual fund investment, benefits of mutual
funds, types of mutual funds, etc., The study is going to conducted by taking the NAV
values of different types of HDFC mutual fund.
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2.2.2 International Journal of Multidisciplinary Management Studies Vol.2 Issue
3, March 2012, ISSN 2249 8834 Online available at http://zenithresearch.org.in/
www.zenithresearch.org.in
The research “Investors' Preference for Investment in Mutual Funds: An
Empirical Evidence” is done by Jaspal Singh and Subhash Chander in the University
Guru Nanak Dev University , Punjab (2006).The results show that the investors
consider gold to be the most preferred form of investment, followed by NSC and Post
Office schemes. Hence, the basic psyche of an Indian investor, who still prefers to
keep his savings in the form of yellow metal, is indicated. Investors
2.2.3 International Journal of Multidisciplinary Management Studies Vol.2 Issue
3, March 2012, ISSN 2249 8834 Online available at http://zenithresearch.org.in/
ANALYSIS - 1
PERFORMANCE ANALYSIS BASED ON STATISTICS PARAMETERS
EQUITY DIVERSIFIED SCHEMES Beta(β) Alpha (α) Standard Deviation(σ)
Name of the Fund
SBI Magnum Equity Fund 0.679 0.02 3.177
Canara Robeco Equity Diversified 0.88 0.06 3.02
HDFC Equity Fund 0.7488 0.0325 2.9086
ICICI Prudential Growth Plan 0.888 -0.002 3.018
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2.2.4 European Journal of Economics, Finance and Administrative Sciences
ISSN 1450-2275 Issue 41 (2011)
© EuroJournals, Inc. 2011
http://www.eurojournals.com
An Analysis of Investors' Attitude towards Tax Saving Mutual Funds in India
N. S. Santhi.
Assistant Professor, Department of Business Administration KSR College of
Engineering, Tiruchengode – 637 215, Tamil Nadu, India
Tel: 9500466527
E-mail: ns.santhi2005@gmail.com
K. Balanaga Gurunathan
Professor, Department of Management Studies KSR College of Technology,
Tiruchengode – 637 215, Tamil Nadu, India
Tel: 9486595663
E-mail: balanagagurunathan@yahoo.com
Investment is saving of money and engaging them with the expectation of
earning profit in future. Mutual fund is supposed to be a better avenue for the
individual investor. Tax saving mutual funds is also known as Equity Linked Saving
tax saving mutual funds which provides all the benefits along with tax exemption on
their investment. This study makes an attempt to analyze the investor’s attitude
towards their investment on Tax saving mutual funds. The study finds that the
participation of investors in Tax saving mutual funds is comparatively less than other
safer investment areas like Insurance, Postal Deposit Schemes and Fixed Deposits.
The dynamic relationship between investors’ biographical information and their
behavior has been examined by using relevant statistical techniques.
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The investors’ Knowledge and satisfaction on Tax saving mutual funds and
awareness on regulating bodies also has been analyzed. The study finds that majority
of the investor doesn’t have the knowledge on schemes and awareness on controlling
authorities and they are satisfied with the overall benefits on Tax saving mutual funds.
For the purpose of research, Primary data have been collected from the Tax saving
Mutual fund Investors’ in Tamil Nadu, India through well structured questionnaire
schedule.
India’s economy is fast developing. The development has taken place due to
the growth in the financial system. Financial system provides the background to
various investors regarding varied options to invest. Thus, development of the
economy depends on how these investors invest for the well being in long run. As
financial markets become more sophisticated and complex, investors need a financial
intermediary who provides the required knowledge and professional expertise on
successful investing. Mutual Funds represent perhaps the most appropriate investment
opportunity for investors.
2.2.5 ANALYSIS OF PERCEPTIONS OF INVESTORS TOWARDS MUTUAL
FUNDS: AN EMPIRICAL INVESTIGATION
DR. S. O. JUNARE
PROFESSOR, HEAD & DEAN TECHNICAL CAMPUS
NATIONAL INSTITUTE OF COOPERATIVE MANAGEMENT
GANDHINAGAR.
FRENA PATEL
ASST. PROFESSOR & RESEARCH SCHOLAR
V. M. PATEL COLLEGE OF MANAGEMENT STUDIES
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GANPAT UNIVERSITY
KHERVA
This research attempts to study the investors’ preference and performance
level of Mutual Funds in the present market. A survey has been used to collect
primary data, 246 questionnaires were used to interpret the result. The study is based
on survey conducted in Ahmedabad and Gandhinagar in month of September –
November 2011. Questionnaire items were developed through a two stage process
involving a review of literature and two pilot study of focus group to identify the
attributes for assessing mutual fund industry. SPSS and Microsoft Excel have been
used to analyze and interpret the data. It is concluded from the finding of the research
that the awareness level regarding mutual funds is very less in area covered for study.
The people are not aware of the advantage that they can get by investing in mutual
funds nor are they aware of the basic functioning of mutual funds.
2.2.6 “Measuring Risk - Adjusted Mutual Fund Performance: A Study of Select
Sector Funds In India”, Prerana - Journal of Management Thought and
Practice, Vol. 2, No. 1, pp. 21-34.
RETURN - BASED PERFORMANCE ANALYSIS OF SELECTED EQUITY
MUTUAL FUNDS SCHEMES IN INDIA – AN EMPIRICAL STUDY
DR. R. SHANMUGHAM
MEMBER, SOCIETY OF CAPITAL MARKET RESEARCH & DEVELOPMENT,
NEW DELHI
PROFESSOR
SCHOOL OF MANAGEMENT BHARATHIAR UNIVERSITY COIMBATORE –
641 046
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ZABIULLA
SENIOR LECTURER (FINANCE & CONTROL) DEPARTMENT OF
MANAGEMENT STUDIES SAMBHRAM ACADEMY OF MANAGEMENT
STUDIES BANGALORE – 560 097
Risk and return plays a key role in most individual investors’ decision making
process. Every investor wants to avoid risk and maximize return.
Investment decisions, therefore, involve a tradeoff between risk and return, which is
considered to be central to the investment decision making.
In today’s environment, it is prudent for a rational investor to look into the real
interest on an investment as the inflation is moving out of the gear. While investors
like return they abhor risk. This necessitates for optimization of risk and reward.
Mutual fund is considered to be the most suitable investment option for the common
man as it offers the opportunity to invest in a diversified, professional managed basket
of securities at a relatively low cost. Mutual funds provide investment opportunities
depending on investor’s risk, return expectations. The present paper address the
financial performance of mutual funds in the framework of risk – return dimensions.
In order to achieve the objectives set, investment performance measures, cluster
analysis and correlation analysis are used.
Treynor (1965) developed a methodology for evaluating the fund performance
called reward to volatility measure. In his path breaking study,
Sharpe (1966) developed reward to variability measure and found 11 funds
reported superior performance out of 34 funds to that of DJIA.
Jensen’s (1968) devised a measure based on CAPM and reported that mutual
funds did not appear to achieve abnormal performance when transactions cost were
considered. Fama (1972) developed a methodology for evaluating investment
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performance of managed portfolios. He suggested that overall performance could be
broken down into several components.
Gupta (1974) evaluated the performance of select mutual funds categorized in
terms of their broad investment objectives for the period 1962- 71.He reported that all
fund types outperformed the market irrespective of choice of market index and
performance measure.
Jayadev (1996) evaluated the performance of two growth -oriented mutual
funds on the basis of monthly returns compared to benchmark returns over a study
period of 21 months (June 1992 to March 1994). He employed risk- adjusted
performance, measures suggested by Jensen, Treynor and Sharpe for evaluation. He
found that both the funds were poor in earning better returns either adopting market
timing strategy or in selecting under – priced securities. Further, the study concluded
that the two growth -oriented funds have not performed better in terms of total risk
and were not offering advantages of diversification and professionalism to the
investors.
www.amfiindiacom
www.mutualfundsindia.com
www.nseindia.com
www.rbi.org
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2.2.7 A Study of Information Needs of Mutual Funds Investors & Implications
for Web Based Marketing of Mutual Fund Products
D. N. Rao
Kings University
Sharda
Affiliation not provided to SSRN November 4, 2010. Mutual funds are one of
the most important financial service vehicles for investments. Over the past 46 years,
the Indian mutual fund industry had witnessed impressive growth in Assets Under
Management (AUM), investor base and product offerings. The industry registered
Compounded Annual Growth Rates (CAGR) of 26% since its beginning and 32%
over the last six years.
Currently, 37 Asset Management Companies (AMCs) comprise the industry
and collectively they manage assets Rs 7945 billion (approximately US Dollars 172
billion). As at the end of December 2009, the total number of mutual fund schemes
available for investment was 819. The mutual fund industry in India presents an
interesting scenario of 48 million investors, a large variety of product offerings and
coexistence of private, public and foreign AMCs.
In India, the Asset Management Companies market their investment products
largely through AMFI Certified Agents, Service Centres and company’s web portals.
There is little promotion in print media and in the recent times AMCs have begun
outdoor advertising through large size Bill Boards/Hoardings. Investors require
certain types of information for making conscientious and informed decisions for their
financial security. Not many studies have been conducted about the extent to which
the information provided in the advertisements/web portals facilitates informed
decision making. The study aims at identifying the information needs of retail
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investors for making informed decisions with regard to investment in mutual fund
products and its implications for online marketing of mutual fund products in India.
The study had the following four objectives:
(a) To identify the information needs of retail investors of mutual fund products for
informed decision making.
(b) To examine the extent to which the information made available on the web portals
meets the information needs of the retail investors as per (a) above.
(c) To examine the nature and extent to which the information available on the web
portals complies with the requirements of the Securities Exchange Board of India
(SEBI), the regulator of Mutual Funds in India.
(d) To analyse the implications of the information needs for marketing of mutual fund
products by Asset Management Companies in India.
2.3 Statement Of The Problem
Retail & small investors put their funds in investment companies (Mutual
funds) to gain capital appreciation from a diversified portfolio of equity and equity
related securities or government securities. This objective is hard to achieve for the
reasons like mutual fund investments are subject to market risk. There is no assurance
or guarantee that the objective of the scheme can be achieved and also the Net Asset
Value (NAV) of the units can go up or down depending on factors affecting the
capital and money market
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2.4 Scope Of The Study
The scope of the study includes investors, two mutual fund companies namely
HDFC & ICICI Prudential and also the individuals who are interested in the
investment on the mutual fund. The study also focuses on the growth and prospects of
mutual fund industry.
2.5 Objectives Of The Study
 To track investor’s attitude, performance and behavior with respect to
financial institutions and financial products.
 To find new and more effective ways of ensuring customer satisfaction and to
find efficient ways of communicating it.
 To identify investment patterns of investors.
 To study Mutual Fund investment schemes offered by HDFC & ICICI
Prudential.
 To study the investor’s general perception towards Mutual Funds
 To identify the factors influence the investor’s perception towards Mutual
Fund.
2.6 Sampling Design
SAMPLE UNIT: Investors
SAMPLE SIZE: 100
SAMPLING METHOD: Simple random sampling.
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2.7 Research Methodology
A research design is a plan of action to be carried out in connection with the
research project. The research design, which was carried out for the study, was
Descriptive study. It involves the collection of data from both the sources viz. Primary
and secondary sources. The data so collected was subjected to analysis by using the
necessary tools that are relevant and idealistic.
Methodology Of Data Collection
In due course of data collection for covering the above stated objectives, the
study methodologies followed are:
 Direct interview with unit holders.
 Discussion with persons who have knowledge about mutual funds.
 Discussion with investors who invested in mutual fund.
 In-depth study of various books on mutual funds, magazines, journals and
newspapers.
Sources of data
Primary data
 Questionnaire
 Discussion with persons who have knowledge about this subject.
 Discussion with investors
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Secondary data
 Magazines, journals and newspapers.
 Websites
2.8 Plan Of Analysis
This study was conducted at Bangalore city. This study is focused on
Secondary Market. The collected data is compiled, classified, tabulated and then
analyzed using financial techniques and statistical tools. The tools are average,
percentage and compound Growth rate.
2.9 Limitations Of The Study
Efforts were made to see that the data collected and analyzed were as accurate
as possible. In spite of all precautions taken, certain limitations of the study can be
observed.
 The sample size taken for research may not give exact figure or may not cover
the entire population artificially or that the respondent may be biased.
 The respondent may skip some questions. Also they may not respond to every
question correctly.
 The important constrain is the time limit. Since the study had to be conducted
in a short span of time, the accuracy may be affected.
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2.10 CHAPTER SCHEME
Chapter 1: Introduction
Chapter 2: Review of Literature & Research Design
Chapter 3: Industry Profile of Mutual fund.
Chapter 4: Results, Analysis and Discussions
Chapter 5: Summary of findings, Conclusions, Suggestions and Scope for
further study.
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3.1 Global Trends In Mutual Fund
Mutual Funds have emerged as the chief vehicle of individual savings and
investments the world over. In the U.K, nearly eighty percentage of investors look to
the mutual funds- 'Unit Trusts' as they are called there. In the U.S an individual with
even $1 million of investable funds takes the mutual fund route to investing in equity,
instead of resorting to direct participation. This is so even though he has access to a
mass of information like Standard and Poor’s 500 and Dow Jones Index to guide him
in taking his own investment decisions. Presently in the U.S there are nearly 5000
mutual fund schemes with asset of $1.6 trillion invested by 75 million unit-holders.
By the turn of the century, the total assets are likely to touch $4 trillion. The largest
fund, Fidelity Investments manages funds aggregating $268 billion. This has to be
appraised in the context of total market capitalization of all the stocks listed in
Bombay Stock Exchange standing at a mere$115 billion.
In the U.S the mutual fund business is growing at an annual rate of twenty to
twenty-five per cent. According to a review conducted by Gold man Sachs, a leading
U.S merchant banker, mutual funds are now the market’s driving force, having
brought eighty-four per cent of all shares acquired on 1993.
The great diversity if mutual fund schemes in the U.S is illustrated by the
Amana funds, the first and apparently the only U.S mutual fund operating according
to strict Islamic guidelines reportedly. Since Islamic law prohibits a guaranteed return
on investment, the fund holds no bond or preferred stock, and keeps its cash in
checking accounts, which pay no interest. Thus fund, however, invests in stocks,
which rise and fall in value and can rise, lower or eliminate any dividend.
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In all of Europe, too, the trend is similar. The major stock exchange at
Luxembourg which has developed specialized skills in euro-issues had 67 mutual
funds, ‘funds commons’ as they are known, listed in 1984 with net assets of LUF
24,690 billion. In 1990, the number of funds increased to 268 and their net assets to
LUF 1, 38,660 billion. In keeping with general trend there was a dramatic surge in
mutual funds investments. Obviously with such a large choice, the western investors
has a wide variety of options and doesn’t have to rely on the same stereotyped
schemes popularly known as ‘plain vanilla’ schemes.
3.2 Mutual Funds In India
Mutual funds first made their entry in India in 1964 with the Unit Scheme 64
launched by the Unit Trust of India (UTI). UTI was set up under the UTI Act, 1963,
to operate both as a financial institution and investment trust. Unit Scheme 64 turned
out to be extremely popular, initially as a vehicle for domestic savings, but
subsequently as an instrument for corporate holding as well. By 1964, the investable
funds in this scheme had crossed Rs. 12,000 crores.
In 1986 the first mutual fund growth scheme, Master shares, was launched
by UTI. This was successfully listed and traded in the stock exchange. Encouraged by
this venture, other players emerged. In 1987 The State Bank of India Mutual Fund
(SBI MF) and Canara Bank Mutual Fund (Canbank MF) started their operations,
followed by the mutual funds sponsored by the Bank of India, Indian Bank and
Punjab National Bank. Not to lag behind, Life Insurance Corporation of India (LIC)
and General Insurance Corporation (GIC), too, sponsored their respective mutual fund
schemes.
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Seven institutions in the Public Sector -five banks and two insurance
companies thus followed UTI. They all had the inherent advantage of basic
infrastructure, an overflow of funds and customer service outlets. By the end of
March 93, the total corpus of the big eight was approximately Rs 50,000 crores. With
UTI alone, accounting for Rs 40,000 crores.
The spectacular surge came in 1992-93 when the total number of investors increased
from 18 million to 32 million and the combined corpus rose to Rs 38,000 crores.
Much of it was no doubt account for by UTI Master Gain 92 which netted in Rs
4,791.79crore winning for itself a place in Guinness book of records. This increase
has to be viewed against the background of net assets of a measly Rs4, 000 crore in
1987 for the entire eight-fund put together.
3.3 Phase Of Development Of Mutual Fund In India
The mutual fund industry in India started in 1963 with the formation of Unit
Trust of India, at the initiative of the Government of India and Reserve Bank. The
history of mutual funds in India can be broadly divided into four distinct phases.
First Phase – 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It
was set up by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from
the RBI and the Industrial Development Bank of India (IDBI) took over the
regulatory and administrative control in place of RBI. The first scheme launched by
UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets
under management
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Second Phase – 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by
public sector banks and Life Insurance Corporation of India (LIC) and General
Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI
Mutual Fund established in June 1987 followed by Canara bank Mutual Fund (Dec
87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov
89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established
its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990
At the end of 1993, the mutual fund industry had assets under management of
Rs.47,004 crores.
Third Phase – 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund families.
Also, 1993 was the year in which the first Mutual Fund Regulations came into being,
under which all mutual funds, except UTI were to be registered and governed. The
erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private
sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996
The number of mutual fund houses went on increasing, with many foreign
mutual funds setting up funds in India and also the industry has witnessed several
mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds
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with total assets of Rs. 1,21,805 crores. The Unit Trust of India withRs.44,541 crores
of assets under management was way ahead of other mutual funds.
Fourth Phase – since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963
UTI was bifurcated into two separate entities. One is the Specified Undertaking of the
Unit Trust of India with assets under management of Rs.29,835 crores as at the end of
January 2003, representing broadly, the assets of US 64 scheme, assured return and
certain other schemes. The Specified Undertaking of Unit Trust of India, functioning
under an administrator and under the rules framed by Government of India and does
not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and
LIC. It is registered with SEBI and functions under the Mutual Fund Regulations.
With the bifurcation of the erstwhile UTI which had in March 2000 more than
Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual
Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers
taking place among different private sector funds, the mutual fund industry has
entered its current phase of consolidation and growth. As at the end of September,
2004, there were 29 funds, which manage assets of Rs.153108 crores under 421
schemes
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3.4 Private Mutual Funds
However, the monopoly of the big eight was ended by the new economic
policy spearheaded by Dr. Manmohan Singh from 1991. The process of liberalization
threw the doors open to players in the private sector to provide the much-needed
competitive edge and a wider scope of options to the investors. The existing mutual
funds, it was felt, had failed to live up to the expectations of common investors due to:
(a) Poor servicing, inordinate delays in the receipt of unit certificates and dividend
warrants;
(b) Indifferent performance of most of the mutual fund schemes which under-
performed the market thus denying the investors a reasonable return;
(c) Absence of adequate disclosure norms; and
(d) Lack of an investor-friendly approach in general.
Hence the securities and Exchange Board of India (SEBI) accorded approval
to a number of players in the private sector to sponsor mutual funds. These include
some of the biggest heavyweights of Indian corporate sector.
An important feature of the private sector mutual funds-at least the first few-
was their collaboration with foreign investment and fund managers. Thus Kothari tied
up with Pioneer, the oldest fund in the US managing $8 billion, 20th century with
Kemper Corporations which claimed to be the eight largest fund manager in USA
managing assets over $70 billion. Credit capital asset managers inc. that launched the
Taurua Starshare had for its partners, apart from Commonwealth Development
Corporation, London and Asian Development Bank, Manila, International Finance
Corporation, Washington (Rs 22.50 crore), and Edinburgh Fund Managers, U.K (Rs
24 crores).
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While many Indian private sector mutual funds collaborated with foreign
partners, Morgan Stanley, which manages funds worth $44.2 billion, chose to go it
alone. Its issue was a runaway success. There was serious controversy and the apex
court had to intervene. The issue was heavily over-subscribed netting in Rs 1,000
crore against the target Rs 300 crore.
The vital aspect of a strong research capability of foreign collaborators had
been recognized and the public sector GIC Mutual Fund, too, reacted to the winds of
change and tied up with the U.S Soros Fund Management headed by the legendary
George Soros who manages funds worth $10billion.
ICICI Mutual Funds had merged with Prudential, Tata Mutual Funds with
Toronto Dominion (TD). Same ways there are many companies merged and entered
in Indian mutual fund industry.
3.5 Corporate Profile of icici prudential
ICICI Prudential Asset Management Company Ltd. is a joint venture between
ICICI Bank, India’s second largest commercial bank & a well-known and trusted
name in the financial services in India, & Prudential Plc, one of the United Kingdom’s
largest players in the financial services sectors.
In a span of over 18 years since inception and just over 13 years of the Joint
Venture, the company has forged a position of preeminence as one of the largest
Asset Management Company’s in the country, contributing significantly towards the
growth of the Indian mutual fund industry.
The company manages significant Mutual Fund Assets under Management
(AUM), in addition to our Portfolio Management Services (PMS) and International
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Advisory Mandates for clients across international markets in asset classes like Debt,
Equity and Real Estate with primary focus on risk adjusted returns.
As an Asset Management Company, we have over 18 years of experience and
are currently managing a comprehensive range of schemes of more than 46 Mutual
fund schemes and a wide range of PMS Products for our investors spread across the
country. We service this investor base with our own branch network of around 168
branches and a distribution reach of over 42,000 channel partners.
Sponsors
ICICI Bank
ICICI Bank is India's second-largest bank with total assets of Rs. 4,062.34
billion (US$ 91 billion) at March 31, 2011 and profit after tax Rs. 51.51 billion (US$
1,155 million) for the year ended March 31, 2011. The Bank has a network of 2,538
branches and about 6,810 ATMs in India, and has a presence in 19 countries,
including India.
ICICI Bank offers a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery channels and through its
specialized subsidiaries in the areas of investment banking, life and non-life
insurance, venture capital and asset management.
The Bank currently has subsidiaries in the United Kingdom, Russia and
Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar
and Dubai International Finance Center and representative offices in United Arab
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Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our
UK subsidiary has established branches in Belgium and Germany.
ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and
the National Stock Exchange of India Limited and its American Depositary Receipts
(ADRs) are listed on the New York Stock Exchange (NYSE).
Prudential Plc (formerly known as Prudential Corporation plc)
Prudential plc is an international financial services group with significant
operations in Asia, the US and the UK. They serve approximately, 25 million
customers and have £290 billion in assets under management. They are among the
leading capitalized insurers in the world with an Insurance Groups Directive (IGD)
capital surplus estimated at £3.4 billion (as at 31 December 2009).
The Group is structured around four main business units:
Prudential Corporation Asia (PCA)
PCA is a leading life insurer in Asia with presence in 12 markets and a top
three position in seven key locations: Hong Kong, India, Indonesia, Malaysia,
Philippines, Singapore, and Vietnam. PCA provides a comprehensive range of
savings, protection and investment products that are specifically designed to meet the
needs of customers in each of its local markets. PCA’s asset management business in
Asia has retail operations in 10 markets and it independently manages assets on behalf
of a wide range of retail and institutional investors across the region.
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Jackson National Life Insurance Company
Jackson is one of the largest life insurance companies in the US, providing
retirement savings and income solutions to more than 2.8 million customers. It is also
one of the top five providers of variable and fixed index annuities in the US. Founded
nearly 50 years ago, Jackson has a long and successful record of providing effective
retirement solutions for their clients.
Prudential UK & Europe (PUE)
PUE is a leading life and pension’s provider to approximately 7 million
customers in the UK. It has a number of major competitive advantages including
significant longevity experience, multi-asset investment capabilities, a strong
investment track record, a highly respected brand and financial strength. PUE
continues to focus on its core strengths including its annuities, pensions and
investment products where it can maximize the advantage it has in offering with-
profits and other multi-asset investment funds.
M&G
M&G is Prudential’s UK and European fund management business with total
assets under management of £174 billion (as at December 31, 2009).M&G has been
investing money for individual and institutional clients for nearly 80 years. Today it is
among the largest investors in the UK stock market, as well as being a powerhouse in
fixed-income investments.
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Management Team
Management
Mr.Nimesh Shah- Managing Director & Chief Executive Officer
Nimesh Shah joined ICICI Prudential AMC as its Managing Director in July
2007.
Nimesh has completed his Chartered Accountancy. Prior to joining ICICI Prudential
AMC, Nimesh was Senior General Manager at ICICI Bank and has over 18 years
experience in banking and financial services. At ICICI Group, he has handled many
responsibilities including project finance, corporate banking and international
banking.
He was associated with one of the first batches of senior managers selected to
lead the foray of ICICI Bank into the international arena. He led ICICI Bank’s foray
into the Middle-Eastern region and Africa.
Our Business
ICICI Prudential Asset Management Company Ltd. offers an array of
investment options ranging from Diversified to Sector specific Equity Schemes,
Balanced and Fixed Income Funds to Portfolio Management Services and Advisory
Services.
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ICICI Prudential Mutual Fund offers a wide range of retail and corporate
investment solutions across different asset. classes like Equity, Fixed Income, Real
Estate and Gold.
It has been voted as the ‘Most Trusted Mutual Fund Brand’ in by Brand
Equity (in their 2009 Most Trusted Brand Survey (Conducted by The Economic
Times Intelligence Group and The Nielsen Company).
Year after year, the Fund has been consistently winning many awards in the
industry at the Fund House and Scheme Levels, the most recent ones being:
 ‘India Debt Fund House’ for 2009 by Morningstar
 The CNBC TV18 - CRISIL Mutual Fund of the Year Award 2009 in the
Category – Debt Mutual Fund House of the Year
The organization today is an ideal mix of investment expertise, resource
bandwidth & process orientation and endeavors is to bridge the gap between savings
& investments, to help create long term wealth and value for investors through
innovation, consistency and sustained risk adjusted performance.
The International Advisory Business Division of ICICI Prudential Asset
Management Company Ltd.
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ICICI Prudential Portfolio Management Services provides solutions for the
investment needs of select clientele, through focused portfolios.
ICICI Prudential AMC was the first institutional participant to offer Portfolio
Management Services to HNIs and Institutions in India, in the year 2000. We have a
successful track record of over 10 years of experience in offering Portfolio
Management Services and today our strong base of over 7,000 PMS clients stands
testament to the quality and value of our services..
Our aim is to create a portfolio that suits your requirements; therefore we will
first seek to understand a client’s needs and investment objectives, and on that basis
offer a portfolio that best suits these needs and objectives.
Our Funds
From identifying the right fund that suits your investment objective, to
comparing performances of different funds, this section will tell you all you need to
know about ICICI Prudential Mutual Funds, before investing.
Equity schemes endeavor to provide potential for high growth and returns with
a moderate to high risk by investing in shares. Such schemes are either actively or
passively (replicate indices) managed, and are best suited for investors with a long
term investment horizon.
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Hybrid Schemes or balanced schemes bridge the gap between equity and debt
schemes.
Fixed Income Schemes primarily invests in bonds and other debt instruments,
and will suit investors who want to optimize current income assuming low to
moderate level of risk.
Advisory Series is an open ended asset allocation fund, in the nature of a Fund
of Funds. Its five investment plans have been specifically designed to suit the varying
needs of different investor categories based on their risk profiles, return expectations
and investment goals. By investing in the specified Plans under the Fund, an investor
can balance investments across a mix of three asset classes viz., Equity, Debt and
Gold and take advantage of the benefits of diversification.
Exchange Traded Funds (ETFs) are instruments that track an index, a
commodity or a basket of assets as closely as possible, but trade like shares on an
exchange. They are backed by physical holdings of the commodity, and invest in
stocks of companies, precious metals or currencies. ETFs give you the flexibility to
buy and sell units throughout the day, on an exchange
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3.6 HDFC Asset Management Company Limited (AMC)
HDFC Asset Management Company Ltd (AMC) was incorporated under the
Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset
Management Company for the HDFC Mutual Fund by SEBI vide its letter dated
July3,2000.
The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T.
Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai - 400 020.
In terms of the Investment Management Agreement, the Trustee has appointed the
HDFC Asset Management Company Limited to manage the Mutual Fund. The paid
up capital of the AMC is Rs. 25.169 crore.
The present equity shareholding pattern of the AMC is as follows :
% of the paid up equity

Particulars
capital
Housing Development Finance Corporation Limited 59.98
Standard Life Investments Limited 39.99
Other Shareholders (shares issued on exercise of Stock

0.03
Options)
Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund,
following a review of its overall strategy, had decided to divest its Asset Management
business in India. The AMC had entered into an agreement with ZIC to acquire the
said business, subject to necessary regulatory approvals.
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On obtaining the regulatory approvals, the following Schemes of Zurich India
Mutual Fund have migrated to HDFC Mutual Fund on June 19, 2003. These Schemes
have been renamed as follows:
Former Name New Name
Zurich India Equity Fund HDFC Equity Fund
Zurich India Prudence Fund HDFC Prudence Fund
Zurich India Capital Builder Fund HDFC Capital Builder Fund
Zurich India TaxSaver Fund HDFC TaxSaver
Zurich India Top 200 Fund HDFC Top 200 Fund
Zurich India High Interest Fund HDFC High Interest Fund
Zurich India Liquidity Fund HDFC Cash Management Fund
Zurich India Sovereign Gilt Fund HDFC Sovereign Gilt Fund*
*HDFC Sovereign Gilt Fund has been wound up in March 2006
The AMC is also providing portfolio management / advisory services and such
activities are not in conflict with the activities of the Mutual Fund. The AMC has
renewed its registration from SEBI vide Registration No. - PM / INP000000506 dated
December 21, 2009 to act as a Portfolio Manager under the SEBI (Portfolio
Managers) Regulations, 1993. The Certificate of Registration is valid from January 1,
2010 to December 31, 2012.
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Products :-
Fund of Fund Schemes

Children's Gift Fund
Invests primarily in other
Children's Gift Fund
scheme(s) of the same
Debt/ Income Fund
mutual fund or other
Invest in money market and
mutual funds
debt instruments and
Fixed Maturity Plan
provide optimum balance of
Invest primarily in Debt /
yield.
Money Market Instruments
Equity / Growth Fund
and Government Securities.
Invest primarily in equity
Liquid Funds
and equity related Provide high level of liquidity by
instruments. investing in money market and
Exchange Traded Funds debt instruments.
Quarterly Interval Fund

Invest primarily in equity
Generate regular income through
and equity related
investments in Debt
instruments. MoneyMarket Instruments..
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Vision Statement
3.7 Major Players In Mutual Funds Industry
PRUDENTIAL ICICI MUTUAL FUND
The mutual fund of ICICI is a joint venture with Prudential Plc. of America,
one of the largest life insurance companies in the US of A. Prudential ICICI Mutual
Fund was setup on 13th of October, 1993 with two sponsors, Prudential Plc. and
ICICI Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC
is Prudential ICICI Asset Management Company Limited incorporated on 22nd of
June, 1993.
HDFC MUTUAL FUND
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HDFC Mutual Fund was setup on June 30, 2000 with two sponsor namely
Housing Development Finance Corporation Limited and Standard Life Investments
Limited.
BIRLA SUN LIFE MUTUAL FUND
Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun
Life Financial. Sun Life Financial is a global organization evolved in 1871 and is
being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda
apart from India. Birla Sun Life Mutual Fund follows a conservative long-term
approach to investment. Recently it crossed AUM of Rs.10,000 Crores.
STATE BANK OF INDIA MUTUAL FUND
State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to
launch offshore fund, the India Magnum Fund with a corpus of Rs. 225 cr.
approximately. Today it is the largest Bank sponsored Mutual Fund in India. They
have already launched 35 Schemes out of which 15 have already yielded handsome
returns to investors. State Bank of India Mutual Fund has more than Rs. 5,500 Crores
as AUM. Now it has an investor base of over 8 Lakhs spread over 18 schemes.
BANK OF BARODA MUTUAL FUND (BOB MUTUAL FUND)
Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30,
1992 under the sponsorship of Bank of Baroda. BOB Asset Management Company
Limited is the AMC of BOB Mutual Fund and was incorporated on November 5,
1992. Deutsche Bank AG is the custodian.
HSBC MUTUAL FUND
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HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and
Capital Markets (India) Private Limited as the sponsor. The Board of Trustees, HSBC
Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.
ING VYSYA MUTUAL FUND
ING Vysya Mutual Fund was setup on February 11, 1999 with the same
named Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING
Investment Management (India) Pvt. Ltd. was incorporated on April 6, 1998.
ABN AMRO MUTUAL FUND
ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO
Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset
Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A
G is the custodian of ABN AMRO Mutual Fund.
KOTAK MAHINDRA MUTUAL FUND
Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of
KMBL. It is presently having more than 1,99,818 investors in its various schemes.
KMAMC started its operations in December 1998. Kotak Mahindra Mutual Fund
offers schemes catering to investors with varying risk - return profiles. It was the first
company to launch dedicated gilt scheme investing only in government securities.
Debt
Kotak Bond
Kotak Dynamic Income
Kotak Floater Short Term
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Kotak Floater Long Term
Kotak Gilt
Kotak Income Plus
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Balance
Kotak Balance
Equity
Kotak Equity FOF
Kotak Global India
UNIT TRUST OF INDIA MUTUAL FUND
UTI Asset Management Company Private Limited, established in Jan 14, 2003,
manages the UTI Mutual Fund with the support of UTI Trustee Company Private
Limited. UTI Asset Management Company presently manages a corpus of over
Rs.20000 Crore. The sponsors of UTI Mutual Fund are Bank of Baroda (BOB),
Punjab National Bank (PNB), State Bank of India (SBI), and Life Insurance
Corporation of India (LIC).
RELIANCE MUTUAL FUND
Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act,
1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee
Co. Limited is the Trustee. It was registered on June 30, 1995 as Reliance Capital
Mutual Fund which was changed on March 11, 2004. Reliance Mutual Fund was
formed for launching of various schemes under which units are issued to the Public
with a view to contribute to the capital market and to provide investors the
opportunities to make investments in diversified securities.
1
DEBT SCHEMES
Reliance Monthly Income Plan
Reliance Income Fund
Reliance Medium Term Fund
Reliance Liquid Fund
Reliance Short Term Fund
Reliance Gilt Securities Fund
Reliance Fixed Term Scheme
Reliance Floating Rate Fund
EQUITY SCHEMES
Reliance Growth Fund
Reliance Vision Fund
LIC MUTUAL FUND
Life Insurance Corporation of India set up LIC Mutual Fund on 19th June
1989. It contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund
was constituted as a Trust in accordance with the provisions of the Indian Trust Act,
1882. . The Company started its business on 29th April 1994. The Trustees of LIC
Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company Ltd
as the Investment Managers for LIC Mutual Fund.
1
FRANKLIN TEMPLETON INDIA MUTUAL FUND
The group, Franklin Templeton Investments is a California (USA) based
company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the
largest financial services groups in the world. Investors can buy or sell the Mutual
Fund through their financial advisor or through mail or through their website. They
have Open end Diversified Equity schemes, Open end Sector Equity schemes, Open
end Hybrid schemes, Open end Tax Saving schemes, Open end Income and Liquid
schemes, Closed end Income schemes and Open end Fund of Funds schemes to offer.
1
TABLE N0-1
TABLE SHOWING AGE PROFILE OF THE RESPONDENTS
No of
Age Respondents Percentage
20-25 20 20
26-35 36 36
36-45 25 25
Above 45 19 19
Total 100 100
ANALYSIS:
This table is designed to measure the Age Profile of the respondents.
36% of the respondents are of 26-35 age groups. 25% of the respondents are of 36-45
years. 20% of the respondents are of 20-25 age groups. Remaining 19% belong to 45
& above age groups.
1
Graph No-01
GRAPH SHOWING AGE PROFILE OF THE RESPONDENTS
INTERPRETATION
From the Age Profile of the respondents, it is clear that people are investing
once they earn a regular income. 80% are above 26 years which means people invest
once they are settled.
TABLE NO 2
1
TABLE SHOWING OCCUPATION PROFILE OF THE RESPONDENTS
Occupation No. Of respondents Percentage
Business 24 24
Profession 22 22
House wife 10 10
Service 32 32
Others 12 12
Total 100 100
ANALYSIS
Out of 100 respondents 24% of respondents are business people and
22% of respondents are professionals, 32% of respondents are in services and 10% of
respondents are housewife and 12% of respondents are others.
Chart No-02
1
CHART SHOWING OCCUPATION PROFILE OF THE RESPONDENTS
INTERPRETATION
Majority of service category of respondents are aware of mutual funds and
invested in it, whereas, in case of others (student) and housewives investment is
lesser. Thus this implies that respondents from professional, business and services
category are good contributors to mutual funds.
TABLE NO 3
1
TABLE SHOWING MONTHLY INCOME PROFILE OF THE RESPONDENTS
Income No. Of respondents Percentage
Below 10000 4 4
10000 to 15000 12 12
16000 to 25000 38 38
26000 to 35000 28 28
36000 and above 18 18
Total 100 100
ANALYSIS
It is clear from the table that 38% of investors fall in the income bracket of
16000-25000. 28% of the investors have income of 26000-35000; where as 18% of
the investors have income of 36000 and above. 12% of the investors fall in the income
bracket of 10000-15000, and remaining of 4% of respondent have income below
10000.
1
Graph No-03
GRAPH SHOWING MONTHLY INCOME PROFILE OF THE
RESPONDENTS
INTERPRETATION
84% of the respondents earn Rs.16000/- or above month. The more they earn
the more they can invest and vice versa. People earning less can invest in small
amounts, whereas people earning more can go for higher investments and take higher
risks for higher returns.
1
TABLE NO-4
TABLE SHOWING BEST INVESTMENT OPTION AMONG RESPONDENTS
Investment Option No. Of respondents aware Percentage
Insurance 22 24
Gold 08 6
Real Estate 05 12
Stock 18 13
Mutual Fund 42 30
Pension plans 03 9
gratuity 02 6
Total 100 100
ANALYSIS
22% of respondents said it is best to invest in insurance as it gives security and
returns whereas 42% of respondents said mutual fund is best option to invest is it
covers risk and maximize returns. Whereas only few respondents prefer gold, stock,
gratuity, Real estate and pension plans.
1
Chart No-4
CHART SHOWING BEST INVESTMENT OPTION AMONG
RESPONDENTS
INTERPRETATION
This table gives you idea about best investment options among all the
respondents. Here it is indicated that mutual fund is popular, second only to
insurance. This study is conducted for mutual fund investors. Mutual funds are not as
old as insurance in India. From this table it is clear that 42 % of respondents said
mutual funds are best investment option.
1
TABLE NO 5
TABLE SHOWING ANNUAL INVESTMENT OF THE
RESPONDENTS
ANNUAL INVESTMENT NO OF RESPONDENTS PERCENTAGE
Less than 5,000 08 08
6,000-10,000 22 22
10,000-15,000 38 38
Above 15,000 32 32
Total 100 100
ANALYSIS
38% of the respondents have investment above 10000, 32% of respondents have
investments above 15000, only few respondents have invested below 5000, and 22%
of respondents have investments between Rs 6000 to 10000.
1
Graph No-5
GRAPH SHOWING ANNUAL INVESTMENT OF THE RESPONDENTS
INTERPRETATION
As many respondents have yearly income above 120,000 have invested in
mutual fund, only few respondents have invested in mutual fund whose income is
below 10000, and respondents feel it is good to save money for future
1
TABLE NO 6
TABLE SHOWING FACTORS TAKEN INTO CONSIDERATION WHILE
INVESTING
Factors Respondent percentage
Assured Return 24 24
Risk Cover 12 12
Government Guarantee 17 17
High Return 32 32
Liquidity 15 15
Total 100 100
ANALYSIS
This table is designed to study the most important factors taken in to
consideration while investing,32% of investors take in consideration factors such as
high returns & 24%of investors take in consideration factors such as assured return
and risk associated with it . Whereas as some respondents see for liquidity and
government guarantee.
1
Graph No-06
GRAPH SHOWING FACTORS TAKEN INTO CONSIDERATION WHILE
INVESTING
INTERPRETATION
Returns are the most sought after criteria for investment. In other words,
returns are the key for investments. The investors are not worried about the risk
involved. Mutual funds are high risk areas with high returns. People are ready to take
more risks for more returns.
1
Table No-7
TABLE SHOWING THE PREFERENCE OF HDFC AND ICICI
PRUDENTIAL MUTUAL FUND TO INVEST
Influence No. Of respondents Percentage
LOW RISK 37 37
HIGH RETURN 43 43
OTHERS 20 20
TOTAL 100 100
ANALYSIS
43% of the respondents think that there will be high returns where as 37% of
the respondents believe that there will be low Risk and few respondents think the
other reasons.
1
Graph No-07
GRAPH SHOWING THE PREFERENCE OF HDFC AND ICICI
PRUDENTIAL MUTUAL FUND TO INVEST
INTERPRETATION
The graph shows that 43% of the respondents considered high returns while
investing in HDFC and ICICI Prudential where as 37% of the respondents considered
Low risk.
Table No-8
1
TABLE SHOWING INFLUENCE OF BRAND AMONG RESPONDENTS
WHILE INVESTING IN MUTUAL FUND
Influence No. Of respondents Percentage
Yes 72 72
No 28 28
Total 100 100
ANALYSIS
In 100 respondents 72% of respondents have consider brand name while
investing in mutual funds brand name. It gives investor confidence, whereas
remaining 28% of respondents do not consider brand name while investing may be
they look some other feature of mutual funds such as returns, and tax benefits.
1
Graph No-08
GRAPH SHOWING INFLUENCE OF BRAND AMONG RESPONDENTS
WHILE INVESTING IN MUTUAL FUND
INTERPRETATION
Brand name comes along with experience, quality, and trustworthiness and
most importantly by advertisements. A company acquiring all the above features will
have a good brand name. In Mutual funds, investors look for the brand before
investing as 72% said. Therefore if the company has to be in the top, creating a brand
name is very important.
TABLE NO 9
1
TABLE SHOWING OPINION OF RESPONDENTS REGARDING RETURNS
IN MUTUAL FUND IS BETTER THAN SHARES
Opinion No. Of respondents Percentage
Yes 69 69
No 31 31
Total 100 100
ANALYSIS
Among 100 respondents 69% have made investments in mutual fund, said
mutual fund are better compare to shares while remaining 31% said shares are better
than mutual funds
1
Graph No-09
GRAPH SHOWING OPINION OF RESPONDENTS REGARDING RETURNS
IN MUTUAL FUND IS BETTER THAN SHARES
INTERPRETATION
Mutual funds as well as share have good returns, mutual funds seem to have
good impression in the mind of respondents as they think consistency of returns is
more where as in shares fluctuations is much more.
1
Table No-10
TABLE SHOWING BETTER PERFORMANCE FUNDS ACCORDING TO
RESPONDENTS
Funds No. Of respondents Percentage
Equity 16 16
Debt 22 22
Balanced 20 20
Gilt 42 42
Total 100 100
ANALYSIS
This data analysis says that which fund is performing better at present. It is
clear from the response that Gilt, Debt funds & balanced funds are performing better,
where as Equity fund schemes got less preference.
Graph No-10
1
GRAPH SHOWING BETTER PERFORMANCE FUNDS ACCORDING TO
RESPONDENTS
INTERPRETATION
The data says usually investor prefers Gilt fund and debt fund because it gives
security and consistency in returns where as few respondents prefer Balanced fund
and few prefer equity.
Table No-11
1
TABLE SHOWING INVESTMENT OPINION OF RESPONDENTS IF THE
RETURNS ARE BETWEEN 15% TO 25% AND ABOVE
Opinion No. Of respondents Percentage
Consider 62 62
Ignore 38 38
Total 100 100
ANALYSIS
This table is constructed to know the opinion of the respondents if the returns
are between 15% to 25%. In Mutual Fund, then 62% of the respondents say that they
may consider investing in mutual funds. Whereas 38% of them say they ignore.
Chart No-11
1
CHART SHOWING INVESTMENT OPINION OF RESPONDENTS IF THE
RETURNS ARE BETWEEN 15% TO 25% AND ABOVE
INTERPRETATION
From this chart it is clear that investors care primarily about one thing only –
Returns. If they are assured of a certain return, people who usually don’t invest are
also ready to invest. So return is the buzz word for investments. A company who can
provide consistent returns can attract more number of investors.
TABLE NO 12
1
TABLE SHOWING MUTUAL FUND INVESTMENT FIRM’S
TRANSPARENT IN RECENT TIMES COMPARE TO PREVIOUS YEARS
Transparency No. of respondents Percentage
Yes 58 58
No 42 42
Total 100 100
ANALYSIS
As far as transparency of mutual fund investment firms are concerned the
survey says that 58% of the respondents/investors say that firms are transparent
presently and 42% say that firms are not transparent as compared to earlier times.
Graph No-12
1
GRAPH SHOWING MUTUAL FUND INVESTMENT FIRM’S
TRANSPARENT IN RECENT TIMES COMPARE TO PREVIOUS YEARS
INTERPRETATION
People now days want everything to be revealed. A hidden agenda makes
them conspicuous. So in the best interest of the firm it’s better to have transparencies
in their transactions.
Table No-13
1
TABLE SHOWING DURATION OF INVESTMENT MADE IN MUTUAL
FUNDS BY RESPONDENTS
YEARS NO OF RESPONDENTS PERCENTAGE
UP TO 1 year 21 21
1-5 years 43 43
5-10 years 36 36
Total 100 100
ANALYSIS
43% of the respondents have made investments in mutual funds for a period
ranging from 1 to 5 years, & 36% of respondents have made investments in mutual
funds for a period ranging from 5-10 years whereas only21 % of respondents have
made investment for the period up to 1 year .
Graph No-13
1
GRAPH SHOWING DURATION OF INVESTMENT MADE IN MUTUAL
FUNDS BY RESPONDENTS
INTERPRETATION
Majority of respondents have made investment for a longer period as it gives
more returns 43% of respondent have made investment 1 to 5 years whereas only
few respondents have made investment in mutual funds for period of 1 year, if the
investment in mutual fund is for the period less than one year it will yield less returns.
5.1 Findings
1
 32% of the investors belongs to service who invest more in mutual fund
 38% of the investors who invested in mutual fund their income lie in between
16000 to 25000.
 The next finding shows that 42% of the investors invested in mutual funds.
 From investors point, the popular mutual fund companies are ICICI prudential,
and HDFC mutual fund.
 Investors have ranked High Return, Assured Return, Government Guarantee,
Liquidity, & Risk Cover as the important factors for investments respectively.
Tax benefit, surprisingly, doesn’t find place in the top five.
 The transparency in functioning of mutual funds companies is very essential,
every customers is eager to know the functioning of the company,
 From existing Mutual Fund investors it is found that the Gilt funds and debt
funds are performing better.Next finding is that the brand name of investment
firm is very important to gain or attract customers. 72% of respondents said
that brand name is required. Only 28% of respondents said that brand name is
not required while investing in mutual funds. They consider other factors of
mutual funds such as returns and Tax benefits.
 ICICI Prudential gives more return when compare to HDFC Mutual fund. The
study shows that 43% of the investors invest in mutual fund for a period of 1-5
years.
1
5.2 Conclusion
In most cases the decision by an investor to pursue mutual fund investment is
a wise one, mutual fund brings together a group of people to invest their money in
stocks, bonds and other securities. The advantages of mutual funds are higher returns,
liquidity, tax benefits, the disadvantages of mutual funds are some time they are
subject to market risk, benefits of mutual funds are more than disadvantages, so
investors are ready to take some risk for high returns
Investors are willing to invest in only those mutual fund companies where
there is transparency and disclosures. HDFC & ICICI Prudential mutual fund houses
come out with a fund fact sheet for each scheme every month, the fact sheet gives a
kind of confidence to the investors as the investors will get to know Market value of
investments, NAV, returns repurchase and sale price of the schemes,
1
5.3 Suggestions
 Proper care should be taken to give the correct guidance to the investors so
that they will invest more in Mutual Funds.
 Mutual Fund companies should be more transparent while declaring their
dividends, Net Asset Value, administration charges and their accounting
norms.
 Adopting the Marketing strategies like improving Brand name of mutual
fund investment firm is very important to gain or attract customers. Mutual
Fund companies should make their advertisements more insistently, so that
the common public should come to know about their product features and
their position in the market.
 This analysis shows that Mutual fund returns are better than shares. So the
existing investors are satisfied with their returns, so the Mutual Fund
companies should make efforts to retain the existing investors.
 The launching up of new schemes by Mutual Fund companies has
increased the number of investors. More and more schemes, both attractive
as well as effective need to be introduced on a frequent basis so as to
increase the investor base.
1
5.4 The Scope for further study:
The study relates to only two mutual fund companies Viz, HDFC & ICICI
Prudential. There are other mutual funds who have launched diversified schemes and
a study with a wider base may provide further information for companies.
1
BIBLIOGRAPHY
BOOKS
 Evaluating Mutual Fund Performance S.P.kothari &J.B.Warner [ 2 nd
edition]
 Investment Analysis & Portfolio Mgt Prasanna Chandra [3rd edition] [2010]
SEARCH ENGINE
 www.google.com
WEBSITES
 www.morningstar.com
 www.amfi.com
 www.icicipruamc.com
 licnomura.cmlinks.co.in
 www.mutualfundsindia.com
 www.hdfc mutual fund .com
 www.eurojournals.com
MAGAZINES
 Mutual Funds [ January 2011]
 Capital Market [ march 2012 ]
 Business World [ February 2012]
 Business Week [January 2012]
1
JOURNALS
 International Journal of Multidisciplinary Management Studies Vol.2 Issue 3,
March 2012, ISSN 2249 8834 Online available at http://zenithresearch.org.in/
 European Journal of Economics, Finance and Administrative Sciences
 ISSN 1450-2275 Issue 41 (2011)
© EuroJournals, Inc. 2011
 Prerana - Journal of Management Thought and Practice, Vol. 2, No. 1, pp. 21-
34.
1
QUESTIONNAIRE
Dear Sir\Madam
I would like to introduce myself Fayaz khan as a MBA student, AL-Ameen
Institute of Management Studies, Bangalore, doing a project on the topic “A
STUDY ON INVESTOR’S PERCEPTION TOWARDS MUTUAL FUND IN
BANGALORE WITH REFERENCE TO HDFC & ICICI PRUDENTIAL. This
project has to be submitted to the Bangalore University. Hence, I request you to
kindly spend some time to answering this questionnaire.
I assure that your answers will be kept confidential and will be used for the
academic purpose only.
1) Name:
2) Age:
a) 20 to 25 [ ] b) 26 to 35 [ ]
c) 36 to 45 [ ] d) Above 45 [ ]
3) Occupation:
a) Business [ ] b) Profession [ ]
c) House wife [ ] d) Service [ ]
e) Others [ ]
1
4) Income:
a) Below10000 [ ] b) 10000 to 15000 [ ]
c) 16000 to 25000 [ ] d) 26000 to 35000 [ ]
e) 36000 & above [ ]
5) Which is a best investment option?
a) Insurance [ ] b) Gold [ ]
c) Real Estate [ ] d) Stock [ ]
e) Mutual Funds [ ] f) Pension plans [ ]
g) Gratuity [ ]
6) How much do you invest annually?
a) Less than 5000 [ ] b) 6000 – 10000 [ ]
c) 10000 – 15000 [ ] d) Above 15000 [ ]
7) Which factor you will consider while investing
a) Assured return [ ]
b) Risk cover [ ]
c) Government guarantee [ ]
d) High return [ ]
e) Liquidity [ ]
1
8) Why you preferred HDFC or ICICI PRUDENTIAL mutual fund company to
invest?
a) Low risk [ ] b) High return [ ]
c) Other [ ]
9) Do you consider that Brand name is important while investing in any Mutual
Funds?
a) Yes [ ]
b) No [ ]
10) Do you think Mutual Fund return is better than Shares?
a) Yes [ ]
b) No [ ]
11) Which of the Funds (Allocation) are performing better this year?
a) Equity Funds [ ]
b) Debt Funds [ ]
c) Balanced Funds [ ]
d) Gilt Funds [ ]
12) If Mutual fund gives return between 15 to 25% and more respect to market risk,
what would you do?
a) Consider [ ]
b) Ignore [ ]
1
14) Do you think that present day mutual funds investment firms are more
transparent than earlier?
a) Yes [ ]
b) No [ ]
15) Duration of your mutual fund scheme in which you have made investments?
a) Up to 1 year [ ]
b) 1 - 5 years [ ]
c) 5 – 10 years [ ]
16) Any suggestions.
Thank You for Sparing Your Valuable Time!
1

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A Study on Investors Perception Towards Mutual Fund in Bangalore with reference to

HDFC & ICICI Prudential

investors mainly look for mutual funds.

accordance with these regulations.”

1.1 Meaning Of Mutual Funds

Mutual fund is a non-depository, non-banking financial intermediary that acts

indirectly. (Pierce, James. L).

investment in various capital and money market instrument.

1.2 History Of Mutual Funds In India

securities. It offered three-dimensional benefits namely high yield, capital

appreciation and liquidity.

which was listed and treated in stock exchanges.

 State Bank of India

 Punjab National Bank

institutions became popular on account of

 Wide network of collection centers of the bank and other sponsoring

 Trust in the ability and reliability of the sponsors.

 Accessibility and familiarity with the sponsor bank/ organizations.

companies entered into this sector.

The reasons for private mutual fund to enter maybe:-

2. Indifferent performance of most of the mutual fund schemes, which

underperformed the market thus denying the investor, reasonable returns.

3. Absence of adequate disclosure norms.

4. Lack of an investor friendly approach in general.

market which is one of the world’s largest mutual funds.

 Public sector banks

 Insurance companies / All India financial institutions.

 Private sector- inclusive of foreign companies and joint ventures.

private sector is more than UTI and public sector.

The Indian Mutual fund industry is at a point of strategic inflection. It was

rather than confidence of investor.

securities. It offered three-dimensional benefits namely high yield, capital

appreciation and liquidity.

Master shares which was listed and treated in stock exchanges.

1.3 Characteristics Of Mutual Fund

The ownership of the Mutual Fund is in the hands of the investors.

 A mutual fund is managed by investment professionals and other service

 The pool of funds is invested in a portfolio of marketable investment. The

value of the portfolio is updated every day.

unit of investment is called as the net assets value.

Investment objectives of the fund

1.4 Meaning Of Investment

increase capital or both.

1.5 Definition Of Investment

used for future production.

THE FLOW CHART BELOW DESCRIBES BROADLY THE WORKING OF

1.6 Types Of Mutual Fund Schemes

an overview into the existing types of schemes in the Industry.

A.OPEN ENDED MUTUAL FUNDS

the stock market in addition to repurchase and resale.

B.CLOSE ENDED MUTUAL FUND

the extent of repurchase.

accordingly the fund is structured for a particular purpose.

Fund is invested in Government securities and Bonds. It is more liquid, diversified

price of units of a Mutual Fund fluctuates with changing interest rates.

High Risk Stocks.

with maximum income.

Investment would typically be in fixed income securities to greater extent; and

in shares, to a smaller extent. Capital appreciation in such schemes may be limited. It

D. MONEY MARKET MUTUAL FUNDS

Investments are predominantly in Money Market Instruments like, Certificate

prevailing in the market.

These funds invest in securities of certain industries/ specific set of or specific