Capstone Project 2021-23

Phase 1 Report
Sem II

Title of the Project:

"A STUDY OF AWARENESS AND INVESTORS PERCEPTION

REGARDING MUTUAL FUND AND ITS FUTURE"

Submitted by:

Name of Faculty Name of the

Guide: Student:-
Designation: Roll No.
Program:
Batch:
Semester: III

Institute for Technology and Management

Plot No. 25 / 26, Institutional Area,

Sector-4, KHARGHR, NAVI MUMBAI

 CERTIFICATE FROM THE FACULTY GUIDE

This is to certify that the Project Work titled "A STUDY OF AWARENESS AND INVESTORS
PERCEPTION REGARDING MUTUAL FUND AND ITS FUTURE” is a bonafide work carried
out by

Ms. JAGRITI SINGH

Roll No 020730021026, a student of PGDM p r o g r a m

2020 – 2022 of the Institute for Technology & Management, Kharghar, Navi Mumbai under

my supervision & guidance.

Signature of Guide :

Name of Guide : Dr PINKY AGARWAL

Designation : Assistant Professor, ITM Kharghar

Date: 05-04-2022 Place: Kharghar, Navi Mumbai

 ACKNOWLEDGEMENT

Execution of a project of this nature is impossible without active support from the faculty
guide and professors at the Institute. I would like to express my sincere gratitude to my
guide Dr. PINKY AGARWAL for his/ her guidance during the entire project duration.

I also extend my sincere thanks to all those who directly and indirectly helped me to
complete the project

Name of the Student- JAGRITI SINGH Signature of the Student

 INDEX
Content Page No.

Front Cover Page (Standard Format) I

Certificate from the Faculty Guide (Standard Format) II

Acknowledgement (Sample Format) III

Table of Contents (Standard Format) IV

Table of Contents

Chapter 1 Introduction

1.1General overview of the sector 6-7

1.2 Sectoral growth last few years – Industry Trend 8

1.3 Govt Policies/Regulation of the Sector 9-10

1.4 Contribution to GDP 11-12

1.5 Overview of the Company 13-16

1.6 Organizational structure, product services, manpower 17-19

1.7 SWOT Analysis, BCG Matrix 20-22

1.8 Problem on hand 23

1.9 Importance of the problem 23-24

25-26
1.10 Historical perspective
27
1.12 Scope of the study
Chapter 2
Literature Review
28-30
2.1 Collection of relevant literature and quote the source of each
material
2.2 Research gap identification 31

2.4 Research questions 31

32
2.5 Objective of the study
32
2.6 Hypothesis
Chapter 3
Research Methodology
33
3.1 Research Design
34
3.2 Data Source
34
3.4 Sample size
35-38
References
 CHAPTER- 1
INTRODUCTON
1.1 GENERAL OVERVIEW OF THE SECTOR
The financial sector is made up of businesses and institutions that provide financial services
to both commercial and retail consumers. This industry includes a diverse range of businesses
such as banks, investment firms, insurance firms, and real estate corporations. Mortgages and
loans, which gain value as interest rates fall, account for a substantial amount of this sector's
revenue. The financial sector's strength determines the economy's health in great part. The
economy will be healthier if it is stronger. A poor financial sector usually indicates a weaker
economy. Under this sector financial products play a vital role in booming the economy of
the country. Financial products can assist us in increasing the amount of money we have in
order to achieve various financial objectives such as retirement, children's education,
marriage, and so on. The financial sector improves the Financial System's four pillars:
efficiency, stability, openness, and inclusiveness. In this evolution, mutual fund investing
plays a significant role. They pool the resources of small investors and increase involvement
in the financial markets as a result. Next, mutual funds assist small investors in making well-
informed judgments. For these tiny investors, such extensive services and analysis serve to
reduce the risk factor. As a result, it makes it easier for investors to reinvest in mutual funds.
Over the previous decade, our mutual fund sector has grown at a robust rate of over 20% each
year.

In this research paper we will be discussing about the MUTUAL FUNDS as a financial
product, its contribution in the Indian economy.

A mutual fund is a form of financial vehicle that invests in securities such as stocks, bonds,
money market instruments, and other assets by pooling money from multiple investors.
Professional money managers manage mutual funds, allocating assets and attempting to
generate capital gains or income for the fund's investors. The portfolio of a mutual fund is
built and managed to meet the investment objectives indicated in the prospectus. SEBI has a
database of all mutual funds. They operate under the confines of rigorous regulations
designed to safeguard the investor's interests.

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Mutual funds provide access to professionally managed portfolios of shares, bonds, and
other securities to small and individual investors. As a result, each stakeholder shares in the
fund's gains and losses proportionally. Mutual funds invest in a wide range of assets, and
their performance is typically measured by the change in the fund's total market
capitalization, which is calculated by combining the performance of the underlying
investments. The most significant benefit of investing in a mutual fund is that it provides
small investors with access to professionally managed, diversified portfolios of shares, bonds,
and other securities, which would be difficult to generate with a small amount of money.

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1.2 GROWTH IN LAST FEW YEARS

Investors
1.8 1.6
1.6
NO. OF INVESTORS(CR)

1.4
1.13
1.2
1 0.81
0.72
0.8 0.64 0.59
0.6
0.4
0.2
0
20 - 21 19 - 20 18 - 19 17- 18 16 - 17 15 - 16
YEARS

FIG 1(Industry trend)

According to data from the Association of Mutual Funds in India, the mutual fund industry
added more than 81 lakh investor accounts in 2020-21, 72.89 lakh in 2019-20, 1.13 crore
accounts in 2018-19, and 1.6 crore accounts in 2017-18. In 2016-17, approximately 67 lakh
folios were added to the mutual fund space, compared to 59 lakhs in 2015-16.

With investor awareness programmes, groundwork done by mutual funds, financial advisors,
and distributors in educating and shepherding investors through their investing journey,
mutual fund investing has become more popular in recent years.

As we can see from the above graph that number of investors are falling after the year 2017-
2018 because of the Covid -19 virus but again the line chart investors are increasing from the
year 2019-20 to 2020-21 by 8.11 lakhs.

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1.3 GOVERNMENT POLICIES

The Securities and Exchange Board of India (SEBI) sets regulations relating to mutual fund

regulation under section 30 of the Securities and Exchange Board of India Act, 1992, with

prior permission from the Central Government. Under SEBI regulations, the Ministry of

Finance serves as a supervisor of the RBI and SEBI, as well as an appellate authority. The

Association of Mutual Funds in India (AMFI) was formed to grow the Indian Mutual Fund

Industry on professional and ethical lines, as well as to improve and maintain standards in all

areas in order to safeguard and promote mutual funds and their unitholders' interests. The

regulations are as follows that need to be followed by Mutual Fund India

1. Formation- Certain structural changes have also been made in the mutual fund industry, as

part of which mutual funds are required to set up asset management companies with fifty

percent independent directors, separate board of trustee companies, consisting of a

minimum fifty percent of independent trustees and to appoint independent custodians.

2. Documents- The offer documents for mutual fund schemes, as well as the plan particulars,

must be reviewed by SEBI. Mutual fund prospectuses are being formatted in a standard way.

3. Code of advertising - Mutual funds are expected to follow a code of advertising.

4. Assurance of returns - The Securities Control and Regulations Act, which governs

mutual funds, has been amended by SEBI. Mutual funds were no longer allowed to

make any guarantees about the type of returns they would provide. However, in

response to mutual fund criticism, SEBI changed the standards to allow return

assurances subject to specific conditions.

5. Underwriting - SEBI allowed mutual funds to engage in primary issue underwriting as

part of their investment activity in July 1994. This measure could help mutual funds

diversify their operations

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SOME GUIDELINES OF SEBI AND AMFI TO MUTUAL FUND
INVESTOR SHOULD KNOW

An AMC is not allowed to act as a trustee for a mutual fund. The company will not invest in
any of its schemes unless it has given a complete disclosure of its investment intention in the
offer documents. They must report to the trustees on their operations and compliance with
these regulations on a quarterly basis. An AMC's key workers should have a spotless record
(not convicted of any economic offence such as fraud or insider trading). The Chairman of
the AMC must not be a mutual fund trustee. The AMC's net worth should be less than Rs 10
crores. AMCs must produce reports to the trustees in accordance with SEBI requirements.

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1.4 CONTRIBUTION TO GDP

India's mutual fund penetration is 15% of the country's total GDP in the year 2021. India's
AUM to GDP ratio is comparable to China's, however it lags well behind western nations.
Despite the country's rapid growth, India's mutual fund AUM to GDP ratio remains low at
15%, compared to a global average of 75%. Similarly, the equity AUM to market cap ratio
was 5%, compared to a global average of 30%.

25 23.8
21.4

20 17.5
RUPEES(TRILLION)

15
12.3
10.8
10 8.3

0
FY 1 4 FY 15 FY 16 FY 17 FY 18 FY 19
FINANCIAL YEAR

Contribution of AUM to GDP in India

FIG 2

Contribution of mutual fund has been tripled from the financial year 14 to financial year 19
The data was taken on January 14, 2020. Its ben increased by 13.1 trillion by end of financial
year 2019.

Mutual fund is a term that refers to a group of people who come together to invest in When it
comes to the development of the Indian economy, investing plays a crucial role. In the early
1980s and 1990s, the Indian financial market underwent significant changes. Investment in
mutual funds has served as a bridge between the supply and demand for funds in the financial
markets. The Financial Sector has been steadily increasing since 2003. The mutual fund
industry has taken a leading role in helping the Indian economy.

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 AUM AS A% TO GDP
11% 11%
26%
30%
101%
49%
76%
54%

57% 65%
59% 62%

USA FRANCE CANADA WORLD AVERAGE

BRAZIL UK GERMANY SOUTH AFRICA
JAPAN SOUTH KOREA CHINA INDIA

FIG 3

The data shows the contribution of asset management companies to the GDP of the different
countries. We can analyse from the above-mentioned data that Indian AUM contributes the
lowest among all the other countries of the world.

After seeing to the both the charts we can say that AUM is increasing year by year and its
contribution in Indian GDP but when its compares to the global average it is very low
amongst contribution of different countries.

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1.5 OVERVIEW OF THE COMPANY

A mutual fund is a form of financial vehicle that invests in securities such as stocks, bonds,
money market instruments, and other assets by pooling money from multiple investors.
Professional money managers manage mutual funds, allocating assets and attempting to
generate capital gains or income for the fund's investors. The portfolio of a mutual fund is
built and managed to meet the investment objectives indicated in the prospectus. SEBI has a
database of all mutual funds. They operate under the confines of rigorous regulations
designed to safeguard the investor's interests.

Mutual funds provide access to professionally managed portfolios of shares, bonds, and
other securities to small and individual investors. As a result, each stakeholder shares in the
fund's gains and losses proportionally. Mutual funds invest in a wide range of assets, and
their performance is typically measured by the change in the fund's total market
capitalization, which is calculated by combining the performance of the underlying
investments. The most significant benefit of investing in a mutual fund is that it provides
small investors with access to professionally managed, diversified portfolios of shares, bonds,
and other securities, which would be difficult to generate with a small amount of money.

ASSET MANAGEMENT COMPANIES

An asset management company (AMC) is a corporation that pools client assets

and invests them in a variety of investments such as stocks, bonds, real estate,
master limited partnerships, and other vehicles. AMCs manage hedge funds and
pension plans, as well as pooled structures like mutual funds, index funds, and
exchange-traded funds (ETFs), which they can manage in a single consolidated
portfolio to better serve smaller investors.

AMCs are also known as money managers or money management organisations

informally. Investment firms and mutual fund companies are both terms for
companies that offer public mutual funds or ETFs.

HOW AMC MANAGED MUTUAL FUNDS

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The firm is primarily in charge of managing the mutual fund and making decisions that
benefit investors. It invests the money in accordance with the scheme's investment objectives,
under the direction of a fund manager.

1. Allocation of Assets - Mutual funds have a specific investing objective, which aids
the fund manager in determining which assets to invest in. Most debt-oriented funds,
for example, manage a significant percentage of their assets in bonds and other fixed-
income products. Most balanced funds, for example, invest in a combination of stocks
and fixed-income securities.
2. Analyses and research - The fund's portfolio is heavily reliant on research and
analysis of asset class performance. Experts examine market, micro, and
macroeconomic factors and submit their findings to the fund manager, who then
makes investment decisions based on the fund's goals.
3. Building a Portfolio - An AMC often employs a staff of researchers and analysts who
report to the fund manager on market discoveries and trends. The fund manager then
picks which securities to buy or sell based on these results and the fund's investing
objectives. This is how a corporation constructs a portfolio, which is heavily reliant
on the fund manager's knowledge and competence.
4. Review of Performance - AMCs are required to provide unitholders with information
that directly affects their mutual fund investments. It must also provide investors with
regular updates on sales and repurchases, NAV, portfolio information, and so on. In
plain terms, AMCs must answer to mutual fund investors and protect their interests.
Furthermore, they must address client complaints about their mutual fund plans.

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 AVERAGE ASSET UNDER MANAGEMENT
40 37.92

35
30.96
RUPEES(TRILLION) 30
25
20
15
10 6.46
5 3.48

0
1 2
YEAR

FIG 4

The bar charts show how Average Asset Under Management increases within the year of
2020 and 2021 in the month of December.

ADVANTAGES OF MUTUAL FUND

1. Advanced Portfolio Management

When pay a management fee as part of your cost ratio when you buy a mutual fund, which is
used to engage a professional portfolio manager who buys and sells stocks, bonds, and other
securities.

2. Reinvesting Dividends

As the fund's dividends and other interest income sources are announced, they can be
utilised to buy more mutual fund shares, allowing your investment to expand.

3. Reduction of risk (Safety)

Diversification helps to reduce portfolio risk, as most mutual funds would invest in
anywhere from 50 to 200 different securities, depending on the focus. Several mutual
funds that invest in stock indexes have 1,000 or more individual stock investments.

DISADVANTAGE OF MUTUAL FUNDS

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 1. High Expense Ratios and Sales Charges

Mutual fund expense ratios and sales charges can quickly spiral out of control if you don't
pay attention. Investing in funds with expense ratios greater than 1.50 percent should be
done with caution, as they are considered to be on the higher end of the cost spectrum.

2. Ineffective taxation

When it comes to capital gains distributions in mutual funds, investors have little choice.
Investors often get distributions from the fund that are an uncontrollable tax event due to
turnover, redemptions, gains, and losses in security holdings throughout the course of the
year.

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1.6 ORGANIZATIONAL STRUCTURE AND PRODUCTS
AND SERVICES

ORGANIZATIONAL STRUCTURE OF MUTUAL FUNDS

FIG 5

CONSTITUENTS OF MUTUAL FUNDS

1. Sponsors: Any person or institution that can set up a mutual fund scheme to
generate money through fund management is referred to as a sponsor. The sponsor is
the first layer of the Indian mutual fund industry's three-tier structure. The sponsor
must apply to SEBI to have a mutual fund scheme approved.
2. Trust and Trustees: The second tier of the mutual fund system is trust and
trustees. The fund sponsor employs trustees, who are also known as the fund's
protectors. As the name implies, they play a critical role in maintaining investor
confidence and overseeing the fund's growth. SEBI requires the trustees to submit a
report on the fund and the AMC's operations every six months.

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 3. Asset Management Companies: In the structure of mutual funds, an AMC is
the third working layer. According to the needs of investors and the nature of the
market, an AMC floats numerous mutual fund schemes in the market. They, along
with the trustee and the sponsor, create mutual funds and subsequently manage their
development.
4. Registrar and transfer agent: RTAs serve as a vital interface between investors
and fund managers. They help fund managers by keeping them up to date on investor
information, and they help investors by delivering the fund's benefits to them.
5. Custodian: A Custodian is a company that is in charge of the safekeeping of
securities. SEBI-registered custodians are in charge of the transfer and delivery of
units and securities. Custodians also help investors keep track of their investments by
allowing them to update their holdings at a certain point in time.

PRODUCTS OFFERD BY MUTUAL FUNDS

Mutual Funds offers various types of schemes, they are broadly classified into various
categories as follows: -

1. By Structure
a) OPEN ENDED
Open-Ended Schemes do not have a defined maturity due to their structure. For your
investments and redemptions, you interact with the Mutual Fund. Liquidity is the
most important feature. At any moment, you can effortlessly buy and sell your units at
Net Asset Value (NAV)-related prices. Investors can re-purchase their units from the
scheme at the re-purchase price, which is tied to the scheme's NAV.
b) CLOSE ENDED
Closed-Ended Schemes are those that have a predetermined maturity period. You can
invest in the plan at the time of its initial offering, and then buy or sell the scheme's
units on the stock exchanges where they are listed.
c) INTERVEL FUNDS
It combines the advantages of open-ended and closed-ended schemes in one package.
The time when an interval scheme becomes open-ended is referred to as "transaction
periods," and the time between the closing of one transaction period and the start of

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 the next is referred to as "interval period." The transaction period must be at least 2
days long, and the interval period must be at least 15 days long.
2. Actively Managed Funds and Passive Fund
a) Actively managed funds are those in which the fund manager has the freedom to
choose the investment portfolio while staying within the general parameters of the
scheme's investment objective. Because the fund manager's role is expanded, the
fund's operating costs rise. Actively managed funds are expected to outperform
the market, according to investors.
b) Passive funds invest according to a predetermined index, aiming to match its
performance. As a result, a passive fund tracking the S&P BSE Sensex would
only acquire shares that are included in the S&P BSE Sensex's composition. The
weightage applied to each share in the computation of the S&P BSE Sensex
would also be the same proportion of each share in the scheme's portfolio. As a
result, the performance of these funds tends to resemble that of the underlying
index. They aren't built to outperform the competition.
c) ETFs are passive funds that have a portfolio that replicates an index or
benchmark, such as an equity market index or a commodity index. The units are
distributed to investors through a new fund offer (NFO), after which they can be
sold and bought on a stock exchange. Units are credited to the investor's demat
account, and post-NFO transactions are conducted through the stock exchange's
trading and settlement platforms.

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1.7 SWOT ANALYSIS

(Dr.S.M.Alagappan)

STRENGTH

1. With minimal deposits, mutual funds allow investors to receive the benefits of a
portfolio diversified across a wide range of companies. Without the help of expert
fund management, such a spread would not have been achievable.
2. When the stock market is down, investors might transfer to a different scheme that is
more appropriate for their investment. Mutual funds, like individual stocks, assist
investors in liquidating their positions in the market without suffering any difficulties.
3. Mutual funds are less expensive than other financial vehicles, and they can be
conveniently monitored by investors.
4. Mutual funds give investors with updates on the value of their investments on a
regular basis. They also provide a full portfolio disclosure of the investments made by
various schemes, as well as the percentage of each asset type invested.
5. Mutual funds operate under well-known brand names in order for mutual fund
operators to appeal to a wide range of consumer sectors. Mutual fund operators can
continuously increase the distribution of their products by using on-line and internet-
based access, which offers a mix of outstanding growth potential.

WEAKNESS

1. Investors do not pay enough attention to some of the plans launched by mutual funds.
Some mutual funds' performance is insufficiently dynamic to take advantage of
market opportunities. As a result, utilising their little mutual fund knowledge,
investors can choose up some of the accessible schemes on the market.
2. Unlike many other financial market investment products, mutual funds do not
guarantee a return to investors.
3. Administrative fees and sales commissions are charged by all funds to pay day-to-day
expenditures and to compensate brokers and financial consultants.
4. If the investors' fund makes a profit on its sales, the investors must pay taxes on their
earnings. When it comes to mutual funds, investors should put their trust in the fund
management to make the best decisions possible.

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 OPPORTUNITIES

1. Job prospects are increasing as multinational corporations enter our industry through
partnerships with Indian mutual funds. Investment in mutual funds will allow us to
build infrastructure for our country's industries.
2. In India, total assets under management account for only 8% of GDP and 6.7 percent
of households. As a result, mutual funds should create innovative schemes that appeal
to a large number of investors in order to increase their proportion of GDP and
household wealth.
3. Currently, mutual funds are not permitted to invest in real estate. The government
should take the necessary steps to enable mutual funds to invest in real estate. There is
a sizable untapped market that can be tapped into through the funds' various plans.

THREATS

1. Mutual fund companies are in fierce competition with one another. Multinational
Corporation's presence also poses a significant threat to mutual fund operations. Mutual funds
are unfamiliar to most retail investors.
2. It will be difficult to offer mutual fund products to investors due to a lack of awareness
among distributors and a lack of disclosures from distributors. Rural areas are difficult to
enter for mutual fund companies.
3. The mutual fund industry's expansion is being stifled by a lack of confidence and knowledge
about the concept of mutual funds among rural and semi-urban investors.
RETURN RISK MATRIX

Fig 6

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As we can see from above Matrix that venture capital gives higher risk and moderate return
whereas equity gives higher risk higher return in comparison to Bank FD gives lower risk and
lower return and Mutual Funds gives lower risk and higher return. Amongst all the sources of
investment we can say that mutual fund is good to invest.

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1.8 PROBLEMS ON HAND
A) Low level of customer awareness
B) Limited Focus beyond the Top 20 Cities (tier 1)
C) Limited Innovations in product offerings
D) Limited customer engagement

1.9 IMPORTANCE OF RESEARCH PROBLEM

A research problem can assist you in putting that sequence together. The research problem
also aids you in avoiding superfluous research steps. The first stage in conducting a research
study is to identify a research problem. A research challenge can help you better comprehend
the research process. In reality, the function of the research problem is to identify the
research's objective and purpose. The research problem that you choose should be original
and distinct. A useful review of the literature can assist you in determining whether the
problem has already been addressed in research with your specific sample. The research
problem should have a huge positive impact on the field in which it was done. It can be
practical in the sense that it is directly applied in research findings, where the effort advances
the field by filling a knowledge gap. The development of a dissertation research problem is a
crucial step to take, but it adds a lot of value to the research process. Look into what themes
are being covered in the area's current periodicals. Examine calls from discipline groups that
are relevant. The scientific method is used to address research difficulties, which indicates
that the research ability or feasibility of the problem is more essential than all of the other
features. A study's core problem is the research challenge. It directs the research questions
and establishes a framework for comprehending the findings.

A research problem could be a condition that needs to be addressed, a challenge or deficit

that needs to be solved, a knowledge gap in the academic literature that needs to be filled, or
a theory that needs to be understood. It could also be a corpus of knowledge or viewpoints
held in a different clime that needs to be validated or confirmed for local use. The
significance of the research problem cannot be overstated, as it serves as the cornerstone of a
research effort, and the success or failure of the research endeavour is dependent on the
suitability of the research topic's selection, formulation, and development. The significance of
the research problem stems from the fact that the entire research effort, which began with the

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articulation and formulation of the research problem from the research topic, led to the
further development of the research problem into questions, objectives, and hypotheses,
which were tested to eventually arrive at results and findings, which, when compared to the
research (study) objectives, provide the foundation for conclusions and recommendations.

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1.10 HISTORICAL PERSPECTIVE

A developed economy requires a strong financial market with widespread involvement. With
this broad goal in mind, India's first mutual fund, Unit Trust of India (UTI), was established
in 1963 on the initiative of the Government of India and the Reserve Bank of India, "with a
view to encouraging saving and investment and participation in the Corporation's income,
profits, and gains arising from the acquisition, holding, management, and disposal of
securities.

The MF industry has risen tremendously in recent years. In India, the history of mutual funds
can be divided into five major phases as follows:

FIRST PHASE (1964-1987)

The mutual fund sector in India began in 1963, when an Act of Parliament established UTI,
which operated under the regulatory and administrative jurisdiction of the Reserve Bank of
India (RBI). UTI was de-linked from the Reserve Bank of India (RBI) in 1978, and the
Industrial Development Bank of India (IDBI) took over regulatory and administrative
authority in its place. UTI's first programme, Unit Scheme 1964 (US '64), was introduced in
1964. UTI had 6,700 crores of assets under management by the end of 1988. (AUM).

SECOND PHASE (1987-1983) ENTRY OF PUBLIC SECTOR MUTUAL FUND

In 1987, public sector mutual funds established by public sector banks, the Life Insurance
Corporation of India (LIC), and the General Insurance Corporation of India (GICI) made
their debut (GIC). In June 1987, SBI Mutual Fund became the first 'non-UTI' mutual fund,
followed by Canbank Mutual Fund in December 1987, Punjab National Bank Mutual Fund in
August 1989, Indian Bank Mutual Fund in November 1989, Bank of India in June 1990, and
Bank of Baroda Mutual Fund in November 1990. (Oct. 1992). GIC launched its mutual fund
in December 1990, while LIC launched its mutual fund in June 1989. The mutual fund sector
had 47,004 crores in assets under administration at the end of 1993.

THIRD PHASE (1993-2003) ENTRY OF PRIVATE SECTOR MUTUAL FUND

With the foundation of SEBI in April 1992 to protect the rights of investors in the securities
market, as well as to support the development and regulation of the securities market, the
Indian securities market gained increased prominence. Except for UTI, all mutual funds were

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subject to the first set of SEBI Mutual Fund Regulations in 1993. In July 1993, Kothari
Pioneer (now Franklin Templeton MF) became the first private sector mutual fund to be
registered. With the introduction of private sector funds in 1993, a new era in the Indian
mutual fund business began, providing Indian investors with a broader range of MF products.
In 1996, the initial SEBI MF Regulations were updated and replaced with a complete set of
regulations known as the SEBI (Mutual Fund) Regulations, 1996, which is still in effect
today.

FOURTH PHASE- SINCE FEBRUARY 2003- APRIL 2014

UTI was split into two different businesses in February 2003, following the repeal of the Unit
Trust of India Act 1963, namely the Specified Undertaking of the Unit Trust of India
(SUUTI) and the UTI Mutual Fund, which operates under the SEBI MF Regulations. The MF
business entered its fourth phase of consolidation with the breakup of the former UTI and
various mergers among several private sector funds. Following the global financial crisis of
2009, stock markets all around the world collapsed, including in India. Most investors who
had entered the market at its peak had lost money, and their faith in mutual funds had been
severely undermined.

FIFITH (CURRENT) PHASE- SINCE MAY 2014

SEBI introduced several progressive measures in September 2012 to "re-energize" the Indian
Mutual Fund industry and increase MF penetration, recognising the lack of MF penetration,
particularly in tier II and tier III cities, and the need for greater alignment of the interests of
various stakeholders. The measures eventually succeeded in reversing the downward trend
that had set in following the global meltdown, and the situation dramatically improved after
the new government was constituted at the centre. Since May 2014, the industry has seen
consistent inflows as well as a growth in AUM and the number of investor folios (accounts).

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1.11 SCOPE OF STUDY

Since the first stone was laid in 1964 with the foundation of Unit Trust of India, the mutual
fund sector has come a long way. After 44 years, the industry now has more than 34
participants, the majority of whom are from the private sector. Furthermore, the number of
players is rapidly growing, with many newcomers from India and outside seeking
authorisation to enter the fray. Not only has the sector grown in terms of the number of
competitors, but it has also grown in terms of the assets it manages and the types of products
it has to offer to investors.

The scope of the study, also known as the scope of research, refers to the parameters within
which your research project will be carried out. To determine the study's scope, you must first
identify all of the elements that will be considered in your research project. It's also crucial to
state clearly what components of the study will not be covered, i.e., what is not within the
study's scope.

Before any data collection or experimental activity begins, the scope of the study is always
considered and agreed upon in the early stages of the project. This is significant because it
narrows the scope of the planned study to what can be accomplished in a reasonable amount
of time. A clearly defined research or study scope allows a researcher to define the study
outcomes to be studied. It explains why certain data points have been captured while others
have been left out.

The scope of this research is to identify where the financial product i.e mutual funds how it
started from and where it is now .Many people got aware about the mutual funds and people
started investing in mutual funds. Though the percentage of people are quite few because of
less awareness about the mutual funds where to invest, where not to. Limited customer
engagement in mutual funds can also be a reason for a fall in mutual fund. The main focus is
on metropolitan cities. We should focus on rural areas, small villages to literate them about
the mutual funds. Mutual Fund company should keep on changing and come up with
different products and services for the customer. In this research we study on the people of
population size of one hundred and fifty to understand the response and see the reason behind
the fall in the mutual fund.

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 CHAPTER 2

LITERATURE REVIEW

(Dr. Joity Tomer, Prof. Nisar Ahmad Khan) - PROBLEMS AND PROSPECTS
OF MUTUAL FUNDS IN INDIA

The mutual fund industry's success is largely determined on investor awareness. Low investor
awareness/information and financial literacy have been the greatest challenge to the mutual
fund business in India, preventing family money from being channelled into mutual funds. In
semi-urban and rural locations, a lack of understanding of mutual fund products is more
prevalent. The majority of residents in these areas have trouble distinguishing between
mutual funds and direct stock market investments. Risk-return, asset allocation, and portfolio
diversification are all concepts that many retail investors are unfamiliar with. While
marketing the schemes, mutual fund company agents and sales personnel promise higher
returns to investors and present a rosy picture of the mutual funds.

Any business environment, including the Indian mutual fund industry, needs a solid
regulatory framework to succeed. The industry's level of competition has been steadily
increasing. As a result, it must play a more dynamic and lively function in order to stand the
test of time.

(Rajesh Chakrabarti, Sarat Malik, Sudhakar Khairnar, Aadhaar Verma) -

Penetration of Mutual Funds in India: Opportunities and Challenges.

The Indian mutual fund business is operating in an economic environment that has changed
dramatically in the last three years. The lack of healthy engagement from a huge portion of
the country is one of the mutual fund industry's main issues. To demonstrate the absence of
engagement, we first tallied the AUMs generated in each Indian district.

(Prof. Naila Iqbal) - CHALLENGES AND ISSUES FACED BY INDIAN MUTUAL FUND INDUSTRY

Low customer knowledge and financial literacy have been the major obstacles for the mutual
fund industry, making it difficult to channel household money into mutual funds. Low
awareness of SIP plans and people invest in lumpsum.

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(K. Lashmana Rao) used a structured questionnaire to collect primary data for this
investigation. The study included a sample of 350 respondents from the city of
Visakhapatnam. Percentages, crosstabulation, and Chi-Square tests were utilised as simple
statistical methods. According to the findings of this study, SEBI, AMFI, and IRDA should
take steps to improve investor awareness, allowing them to make more precise decisions.

According to Saxena and Sheikh (2019), gender has no impact on mutual fund investment
intention, however middle-aged investors, high-income investors, and investors with finance-
related education are quite optimistic about mutual fund investments. The data was analysed
using a one-way ANOVA and an independent sample T-test.

According to Tripathi & Japee (2020), the majority of mutual funds are performing well.
The researcher chose 15 mutual fund schemes and divided them into three categories: large-
cap, mid-cap, and small-cap. For the research, they used financial ratios.

According to Singh and Jha (2009), "Awareness and Acceptability of Mutual Funds,"
individuals are more interested in investing in mutual funds than in the stock market since
mutual funds have a low-risk nature, liquidity, high return on investment, and diverse
portfolios. They also discovered that SIPs (Systematic Investment Plans) are not well-known.
Other aspects that investors evaluated before investing in mutual funds were also investigated
by the researchers. In mutual funds, the banking industry also plays a significant role in
understanding investor perceptions.

MitalBhayani (2017) The latest trends in the Indian mutual fund business are described in
this study. Mutual funds have become a significant element of investment possibilities, it has
been observed. In India's investment industry, there have been numerous changes, including a
rapid speed of reinventions, as well as changes in monetary and political regulations. In a
similar vein, the analysis pinpoints the most significant shifts.

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In this study, Grinblatt M and Kelohraju (2000) look at the extent to which prior data
influences buying and selling decisions. It has also looked into how sophisticated investors
are when it comes to different types of investments.

Ms. T.R. Rajeswari (2000) Mutual funds are a type of investment that is targeted at small
investors, such as salaried individuals, who are unfamiliar with the benefits of investing in the
stock market. Investors at the retail level are divided into several distinct groups. Schemes are
created. A survey of 350 mutual fund investors in ten urban and semi-urban cities was
performed to investigate the factors that influence the funds. Retail investors' decision-
making process when it comes to schemes

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2.2 RESEARCH GAP IDENTIFICATION

The research gap of this studies is why in India there is low level of literacy on financial

products. People don’t know where to invest, they only know about the fixed deposits,

recuring deposits etc. There are many other investing projects in which they can invest.

One of the problems of the is low level of customer awareness in India. The focused is only

on the metropolitan cities, the people of remote areas and rural areas don’t have knowledge

about the mutual funds. The mutual funds companies should innovate the schemes which

attracts the mutual fund investors. Mutual fund company should do research on what are

customer wants (how much risk they can hold, how much return they want)

2.4 RESEARCH QUESTION

A research question is a specific question to which the study aims to respond. It is at the heart
of systematic investigation and aids in the clear definition of a research route. The that arises
in this research are:

1. Do you know about the mutual funds? what are they?

2. How much amount do you spent in mutual funds of your income?

3. What is the factor to which you give the most priority on the basis of risk and return?

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 2.5 OBJECTIVE OF THE STUDIES

1. Gauge the level of awareness of account holders and investors towards mutual funds.

2. Analyse the factors which encourage or discourage mutual funds investment in India

(stock market fluctuations, frauds, savings, liquidity, returns, risk etc)

3. Analyse the other factors effecting the decision of people for opting or not opting

mutual funds.

4. To get insight knowledge about mutual funds.

5. To study and analyse awareness of investors regarding mutual funds.

2.6 HYPOTHESIS OF THE STUDY

Based upon the objectives the following hypothesis has developed the following:

H1: Investing in mutual funds provides modest returns.

(Here, the returns on mutual funds are contrasted to those on bank deposits and
fixed deposits.)

H2: The majority of investors put their money into mutual funds to save money
on taxes.

H3: The age of the investor, the size of his or her family, and his or her personal
income all have a part in the mutual fund's investing decisions.

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 CHAPTER 3

RESEARCH METHODOLOGY

3.1 RESEARCH DESIGN

Designing framework to carry out research is called research design that includes out line of
data collection, measurement of data, application of financial and statistical techniques and
analysis of data. Research design comprises researcher’s course of actions from formulation
of hypothesis, and functional feasibility to data analysis. Research design deal with what,
when how much and by what extant an inquiry will set up it further deal with collection of
data that serve research objective with economy. In research design researcher identify the
variables and variable further defined as independent and dependent variable.

A survey was undertaken to gather information from diverse sources for this study. In order
to gather information, both primary and secondary data were used. The "A STUDY OF
AWARENESS AND INVESTORS PERCEPTION REGARDING MUTUAL FUND
AND ITS FUTURE" is the study's main goal.

STATEMENT OF PROBLEM

A mutual fund is an investment vehicle that pools funds from a variety of participants in
order to invest in stocks, bonds, money market instruments, and other similar assets. Mutual
funds have established various financial instruments depending on investor preferences,
changes in profile, and even stock market changes in order to ensure the safety of the
principal amount invested, as well as continuing returns and growth potential.

Mutual funds are a relatively new concept. Some people have profited from it, while others
are completely unaware of it. With their limited knowledge of this mode, some investors
participate in it expecting larger returns than those offered by time deposits in commercial
banks; however, when the projected yield does not materialise and instead backfires, they exit
the mode, discouraging new investors from entering. The purpose of this study is to
determine the extent to which investors are aware of mutual funds and to take initiatives to
familiarise them with potential investors.

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3.2 DATA SOURCE

Primary Research: The collection and organisation of any primary data is usually a
difficult undertaking, especially for a single researcher. Although gathering such data
takes longer, it is more likely to produce a more accurate picture than a study based on
secondary data. Personal observations and questionnaires were used to acquire primary
data.

Secondary Research: Secondary research (also known as desk research) involves

the summary, collation or synthesis of existing research rather than primary research,
where data is collected from, for example, research subjects or experiments.

This project report is based on literature and exploratory based research design.
Therefore, the data collected will be secondary research like internet, reports, journals,
news articles, analysis etc. All the data will be based on either of the platforms.

LIMITATIONS OF THE STUDY

Although the report has been made on the relevant facts and figures, but certain
problems have been faced, which are as follows: -

1. Sample size taken is small (150) and may not be sufficient to predict the results with
100% accuracy.
2. The sample size is restricted to responses because to a lack of time, money, and
resources, which may lead to bias in the results.
3. When answering the questions, the respondents were occasionally biased.
4. In some situations, respondents were slackers who carelessly filled out the form.

3.3 SAMPLE SIZE

The sample size of the population is 150 which includes students, professionals,
businessman those who are earning some income

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