Vivekanand Education Society’s College of Arts

Science and Commerce Sindhi Society,

Chembur, Mumbai -400071.
COMPARATIVE ANALYSIS OF DIFFERENT
INVESTMENT AVENUE
BACHERLOR OF COMMERCE FINANCIAL MARKET
SEMESTER -VI
ACADEMIC YEAR
2023-24
SUMITTED BY
KRISHNA YADAV
ROLL NO - 66
 CERTIFICATE

This is to certify that this project Report A STUDY ON INVESTOR ATTITUDE

TOWARDSMUTUAL FUND AS INVESTMENT OPTION is bonafide work of
MANNU CHAUDHARI in part of BACHELOR OF COMMERCE (FINANCIAL
MARKET) and has been done under my guidance.

The project is in nature of original work that has not so far been submitted for any
other course in this institute or any other institute.

Reference of work and relative source of information have been given at the end the
project.

Signature of co-ordinator Signature of the Guide

(PROF. VAISHNAVI BAGHUL)
Signature of the Candidate
KRISHNA YADAV
Abstract

This study analysisthe investment portfolio of the individual and the various Risks and
Returns calculation are made for the various avenues in order to suggest the suitable
portfolio forthe individual based on the risk appetite of the person. Themethodology
used is descriptive and exploratory research. The data were collected from 70
respondents using questionnaires. Most of the respondents were qualified and income
group people.
It is shown from the analysis that the majority of the respondents feels that the risk and
the return are more important factor in the investment and also in the insurance plan
they prefer, accumulation plan, and in the case of mutual find they prefer Regular &
Capital appreciation.
Statistical test shows that the occupation of the respondents have directly influence in
the choice of the investment avenues and the ANOVA proves the risk and return are
most important factor and the rank co-relation show that the investment Porto folio
doesn’t suit the scientific portfolio.
Finally it has been suggested a that insurance should be viewed has a risk cover not an
investment avenues,50 % should be in guaranteed addition, 30 % in mutualfund and
20% in stocks.
Recent Trends
As the Covid19 pandemic was getting severe and the returns started to surge and the
market become highly volatile to invest and majority of the investment avenues started
giving poor returns. COVID 19 has a significant impact on the equity fund as
compared to the debt funds. Many investors considered shifting to debt fund or hybrid
fund to invest their money into as Debt funds grow the wealth with little to no risk.

In Debt mutual funds the funds are collected from the public and major portion of this
amount is invested in Government bonds, RBI Bonds and other fixed income securities.
Whereas in Equity Mutual funds major portion is invested in the stock market. The
returns of debt mutual fund increased where as in equity mutual fund it has decreased
and it should be considered that the returns of the Equity mutual fund are on the total
AUM.

In reality many investors who invested in equity mutual fund before the pandemic
faced huge losses but debt mutual fund had the benefit of safety on the funds invested.
It is clear that debt funds are a safe haven. In spite of the global pandemic which has
adversely affected the entire world, debt funds have still given more than 5% returns
during the pandemic. In contradiction, equity funds have been significantly hit due to
COVID 19. All of them have given negative returns with as high as – 8% by HDFC
Equity Fund. This fund also has the highest NAV amongst the funds studied. There is a
steep downfall in the Sensex and Nifty charts which are the base funds for most of the
mutual funds since the beginning of March 2020 due to COVID 19.

Such a decline leads to a negative impact on investors regarding the stock market and
mutual funds and investors consider shifting to safer investment avenues. Investors
have turned to gold as the COVID-19 Pandemic started to affect other investment
avenue and underpinned its status as a safe haven. The Metal is getting support from a
long list of factors like geopolitical tensions are rising, dollar becoming weaker and
government and central banks worldwide have unleashed vast stimulus and relief funds
to try and boost economies.

Fixed deposits are ideal for investors with very low risk appetite and are looking for
assured returns; usually the rate of interest is higher than what is offered for a savings
bank account. Currently also RBI reduced the lending rates due to COVID-19
pandemic and due to that some of the FD interest rates came below saving bank
account interest rates.

Introduction
An investment is a sacrifice of current money or other resources for future benefits. A
sacrifice takes place now and it is certain but the benefits is expected in the future and
tends to be uncertain. In the investment the risk elements and the time elements places
a major role.

Investment avenues are classified as show below:

 Non-Marketable Equity Shares
 Financial Assets
 Bonds
 Money Market Instruments
 Mutual Funds
 Life Insurance Policies
 Real Estates
 Precious Objects
 Financial Derivatives

Almost every one has a portfolio of investments; the portfolio islikely to comprise
financial assets and real assets. This project will bemainly focused on the financial
assets such as insurance, stock, mutual fund, bonds etc.
Risks Involved With Investing

The most important relationship to know is that the risk-return trade-off. Higher risk
greater the rewards and lower risk lesser the rewards. Hence, investor has got to make
a choice about his willingness to require risk factor. Investor should remember of all
the danger factor before taking investment decision.
MARKET RISK:
Sometimes prices & yields of all securities rise and fall. Broad outside influences
affecting the market normally cause this. this can be true, may or not it’s big
corporations or smaller mid-sized companies. this can be referred to as Market Risk. A
scientific Investment Plan-SIP that works on the concept of Rupee Cost Averaging
might help mitigates this risk.
CREDIT RISK:
The debt servicing ability (may it’s interest payments or repayment of principal) of a
corporation through its cash flows determines the Credit Risk faced by you. This credit
risk is measured by independent rating agencies like CRISIL who rate companies and
their paper. A ‘AAA’ rating is taken into account the safest whereas a ‘D’ rating is
taken into account poor credit quality. A well- diversified portfolio may help to
mitigate this risk.
INFLATION RISK
The root cause of Inflation, Inflation is that the loss of buying power over time. lots of
times people make conservative investment decisions to protect their capital but find
yourself with a sum of cash which will buy but what the principal could at the time of
the investment. This happens when inflation grows faster than the return on your
investment. A well-diversified portfolio with some investment in equities might help
mitigate this risk.

INTEREST RATE RISK:

In a free enterprise interest rates are difficult if not impossible to predict. Changes in
interest rates affect the costs of bonds similarly as equities. If interest rates rise the
costs of bonds fall and the other way around. Equity could be negatively affected
likewise in an exceedingly rising rate of interest environment. A well-diversified
portfolio might help mitigate this risk. POLITICAL/GOVERNMENT POLICY RISK:
Changes in government policy and political decision can change the investment
environment. They will create a good environment for investment or contrariwise Can
insurance be an investment avenue?Can insurance be an investment avenue? Life is
uncertain. But the perils faced by human life are certain. Death may remove a
individual but disability is that the worst. The scientific principles upon which
insurance is predicated upon are as follows.
 1. Shared Risk
 2. Law of Large3
 3. Predictable Mortality
 4.Invested Assets
 5.Fair and accurate Risk selection.
The concept of life assurance has evolved over a period of your time to fulfill the
various needs of the customers. The two basic needs that
are common for individual are (a) Risk Coverage and (b) Future savings. Risk here
means Death. the most common kinds of insurance are: 1. Term Insurance 2. life
insurance

POLITICAL/GOVERNMENT POLICY RISK:

Changes in government policy and political decision can change the investment
environment. They will create a good environment for investment or contrariwise Can
insurance be an investment avenue?Can insurance be an investment avenue? Life is
uncertain. But the perils faced by human life are certain. Death may remove a
individual but disability is that the worst. The scientific principles upon which
insurance is predicated upon are as follows.
 1. Shared Risk
 2. Law of Large3
 3. Predictable Mortality
 4.Invested Assets
 5.Fair and accurate Risk selection.
The concept of life assurance has evolved over a period of your time to fulfill the
various needs of the customers. The two basic needs that are common for individual are
(a) Risk Coverage and (b) Future savings. Risk here means Death. the most common
kinds of insurance are: 1. Term Insurance 2. life insurance
Types of Policies
Term Insurance:
This type of policy covers risk i.e., death. The person gets the Sum Assured given that
death occurs and also the money is paid to his nominee. Generally the amount of
coverage varies from 1,5,10,15 or 20 years. The advantage during this style of insurance
is that the low cost involved. The insured can renew the policy after expiry if such a n
option is out there within the policy. The policy may also be converted into a savings
policy if that option is additionally available. Generally the businesses don’t implement
a medical test for renewal.
ENDOWMENT INSURANCE:
In this type of insurance the insured can enjoy the sum assured whether or not he
survives the policy term. It covers the family on the death of the insured. it’s a sound
plan for all form of customers. It may be utilized to accumulate a fund in order to
managed the future events . The endowment plans have the selection of participating
within the profits of the corporate that the next premium is charged. Another
endowment plan variation is ‘Money Back Policy’ which is additionally popular among
parents who have children, as they get the cash at regular intervals. Another version of
this policy is ‘Joint Life policy’ where both the husband and wife’s life is covered.
Another version is ‘Unit Linked Insurance Plan’ where the premium paid consists of
two parts (a) Risk premium and (b) Investment premium. risk premium takes care of
providing security to the family and also the second part is invested in three different
modes supported the selection of the insured as follows:
 Secured Fund: Not less than 10% in EQUITY, Not less than 80% in DEBT,
LIQUID – Not less than 20%
 Balanced Fund: Not less than 30% in EQUITY, Not less than 80% in DEBT,
LIQUID – Not less than 20%
 Risk Fund: Not less than 50% in EQUITY, Not less than 75% in DEBT, LIQUID
– Not less than 25%
Another sort of insurance product is that the ‘Whole Life Insurance’. There are two
variations to the present policy. the primary one is Pure whole Life where the
premiums are continuously payable under the throughout the lifetime of the insured till
death. The other is that the Limited Payment Whole insurance where premiums are
payable for a limited and shorter period at the choice of the insured or till death,
whichever is earlier. The advantage of this policy is that the danger coverage is there
till the tip of the policy.
Concept of investment company
Mutual fund could be a mechanism for pooling the resources by issuing units to the
investors and investing funds in securities in accordance with objectives as disclosed in
offer document.Investments in securities are spread across a large cross-section of
industries and sectors and thus risk is reduced. Diversification reduces risk because all
stocks might not move within the same direction within the same proportion at the
identical time. investment firm issues units to the investors in accordance with quantum
of cash invested by them. Investors of mutual funds are referred to as unit holders.

The profits or losses are shared by the investors in proportion to their investments. The
mutual funds normally set out with variety of schemes with different investment
objectives, which are launched from time to time. A fund is required to be registered
with Securities and Exchange Board of India (SEBI) which regulates securities markets
before it can collect funds from the general public./p>

DIFFERENT Types of open-end fund – SCHEMES SCHEMES in line with

MATURITY PERIOD.

A investment company scheme are often classified into open-ended scheme or close-
ended scheme betting on its maturity period.

OPEN-ENDED FUND/ SCHEME :

An open-ended fund or scheme is one that’s available for subscription and repurchase
on an eternal basis. These schemes don’t have a set maturity period. Investors can
conveniently buy and sell units at Net Asset Value (NAV) related prices which are
declared on a commonplace. The key feature of open-end schemes is liquidity.
CLOSE-ENDED FUND/ SCHEME:

A close-ended fund or scheme incorporates a stipulated maturity period e.g. 5-7

years. The fund is open for subscription only during a specified period at the time
of launch of the scheme. Investors can invest within the scheme at the time of the
initial public issue and thereafter they will buy or sell the units of the scheme on
the stock exchanges where the units are listed. so as to produce an exit route to
the investors, some close-ended funds give an option of selling back the units to
the investment company through periodic repurchase at NAV related prices.
SEBI Regulations stipulate that a minimum of one among the two exit routes is
provided to the investor i.e. either repurchase facility or through listing on stock
exchanges. These mutual funds schemes disclose NAV generally on weekly basis.

SCHEMES in step with INVESTMENT OBJECTIVE:

A scheme may be classified as growth scheme, income scheme, or balanced

scheme considering its investment objective. Such schemes could also be open-
ended or close-ended schemes as described earlier. Such schemes could also be
classified mainly as follows:

GROWTH/EQUITYORIENTEDSCHEME:

The aim of growth funds is to supply capital appreciation over the medium to
longterm. Such schemes normally invest a serious a part of their corpus in
equities. Such funds have comparatively high risks. These schemes provide
different options to the investors like dividend option, capital appreciation, etc.
and also the investors may choose an option counting on their preferences. The
investors must indicate the option within the form. The mutual funds also allow
the investors to vary the choices at a later date. Growth schemes are good for
investors having a long-term outlook seeking appreciation over a period of your
time.
Balance Fund
The aim of balanced funds is to supply both growth and regular income per schemes
invest both in equities and fixed income securities within the proportion indicated in
their offer documents. These are appropriate for investors trying to find moderate
growth. they typically invest 40-60% in equity and debt instruments. These funds also
are affected due to fluctuations in share prices within the stock markets. However,
NAVs of such funds are likely to be less volatile compared to pure equity funds.

MONEY MARKET OR LIQUID FUND:

These funds also are income funds and their aim is to supply easy liquidity,
preservation of capital and moderate income. These schemes invest exclusively in safer
short-term instruments like treasury bills, certificates of deposit, cash equivalent and
inter-bank call money, government securities, etc. Returns on these schemes fluctuate
much less compared to other funds. These funds are appropriate for corporate and
individual investors as a way to park their surplus funds for brief periods.

GILT FUND:

These funds invest exclusively in government securities. Government securities haven’t

any default risk. NAVs of those schemes also fluctuate because of change in interest
rates and other economic factors as is that the case with income or debt oriented
schemes.

Index Funds:

Index Funds replicate the portfolio of a specific index like the BSE Sensitive index, S&P
NSE 50 index (Nifty), etc these schemes invest within the securities within the same
weight age comprising of an index. NAVs of such schemes would rise or fall in
accordance with the increase or fall within the index, though not exactly by the
identical percentage because of some factors called “tracking error” in technical terms.
Necessary disclosures during this regard are made within the offer document of the
fund scheme.

There are exchange traded index funds launched by the mutual funds, which are
traded on the stock exchanges.
FEATURES/ROLE/BENEFITS
MOBILISING SMALL SAVINGS:

Mutual funds mobilize funds by selling their own shares, referred to as units to an investor a unit in
investment company means ownership of a proportional share of securities within the portfolio of a
fund. this offers benefit of convenience and also the satisfaction of owning shares in many industries.
thus, mutual funds are primarily investment intermediaries to accumulate individual investments and
pass away the returns to small fund investors.

INVESTMENT AVENUE

One of the fundamental characteristics of a investment firm is that it provides as Ideal Avenue for
investment for persons of small means, and enables them to earn reasonable returns.

An investment may be a sacrifice of current money or other resources for future benefits. Numerous
avenue of investments are available today. The two key aspects of any investment are time and risk.
Mutual funds also offer good investment opportunities to the investors. Like all investments, they also
carry certain risks. The investors should compare the risks and expected yields after adjustment of
tax on various instruments while taking investment decisions. The investors may seek advice from
experts and consultants including agents and distributors of mutual funds schemes while making
investment decisions.

PROFESSIONAL MANAGEMENT:

It is possible for the small investors to possess the good thing about professional and expert
management of their funds. Mutual funds employ professional experts who manage the investment
portfolios efficiently and profitably. Investors are relieved of the emotional stress involved in buying
or selling securities since mutual be sure of this function. With their professional knowledge and
experience, they act scientifically with the correct timing to purchase for and sell for his or her clients.
Moreover, automatic reinvestment of dividends and capital gains provides relief to the members of
mutualfunds. Expertise available selection and timing is created available to investors in order that
the invested funds generate returns.

DIVERSIFIED INVESTMENT:

Mutual funds have the advantage of diversified investment of funds in various industry segments
spread across the country. this can be advantageous to small investors who cannot afford having the
shares of highly established corporate due to high market value. Thus, mutual funds allow
uncountable investors to own investment during a sort of securities of the many different companies.
Small investors therefore share the advantages of an efficiently managed portfolio and are freed from
the matter of keeping track of share certificates etc of various companies, tax rules, etc.
 Types of investments
There are different types of investment in the market, and we have bifurcated them
into three main categories. They are
 Fixed income investments: These investments give guaranteed returns in
the form of interest. These are low-risk investments. Below is a list of few of
the best fixed-income investments.
 Market linked investments: Market linked investments are those investments
that do not guarantee returns and their returns are dependent on the market
movements. These are considered high-risk investments. However, the
returns from these investments are also high when the market rallies. Below is
the list of the best market-linked investment options.
 Other investment: Investments that do not come under fixed income or
market-linked investments are other investments. These are also called
alternative investments. Below is the list of the most popular alternative
investment products.
1. Fixed deposits
Fixed deposits or popularly known as FDs are usually offered by banks and financial
institutions. FDs offer guaranteed returns and hence are the most popular investment
type in India. They have a tenure ranging between 7 days and ten years. Fixed deposit
interest rates range between 3%-7%. Moreover, senior citizens are offered additional
interest on their FD investments. The FD interest rates are higher than the savings
account interest rate. The interest payments are made monthly, quarterly, half-yearly,
annually or at the time of maturity as per investor’s choice.
Investment in tax-saving FDs qualifies for tax benefits under Section 80C of the Income
Tax Act, 1961. Moreover, the interest income is taxable as per the individual investor’s
income tax slab rates. If the interest income exceeds INR 40,000 per annum (INR
50,000 for senior citizens), then the bank levies a TDS of 10% (20% if PAN Card are
not disclosed).

2. Bonds
Bonds are fixed-income instruments that offer a fixed rate of interest to the investors
against the money invested. The investors lend money to the Government and
corporations and get regular income in the form of interest. Bond issuers are the
borrowers who raise money publicly or privately for funding various projects. A bond is
an instrument that includes information on the interest, due date, maturity date, and
bond terms. Investors of bonds are paid the entire amount after the bond expires (upon
maturity). Investors can also sell the bond before maturity in the secondary market at
higher prices and get profits.
Bonds are considered low-risk investments. However, there are certain risks attached
to them. The most common risk is the default risk. Bond issuers can default on interest
and principal repayment. However, investors can assess the risk in the bond before
investing. They can do so by checking the credit rating of the bond. Bonds with higher
credit rating are less likely to default on the payments than bonds with low credit rating.
Bonds with AAA rating are considered the safest. Having bonds in one’s portfolio helps
investors diversify their investment risk.

3. Public Provident Fund (PPF)

The Public Provident Fund is one of the post office savings schemes launched by the
National Savings Institute. However, some private and nationalised banks are
authorised to accept PPF investments. Returns from the scheme are guaranteed as the
Government of India backs it. Hence are considered as low-risk investments.
Furthermore, the PPF investments come with a 15 years lock-in period. Also, in case
the investor wishes to extend the scheme, they can do so in blocks of 5 years.
Furthermore, for the purpose of tax savings, one can invest in PPF.
The PPF interest rates are announced every quarter. The current rate is 7.10% for (Jan
– March 2021). Also, the interest payments are made every year on the 31st of March.
However, the interest is calculated monthly on the minimum PPF balance between the
5th and 30th each month.
Investment up to INR 1,50,000 per annum, qualifies for tax exemption under Section
80C of the Income Tax Act 1961.
4. Stocks
Investment in stocks is known as an equity investment. Buying stocks or shares would
give investors a part of the ownership of that company. Investors invest in stocks with a
motive to earn regular income in the form of dividends and also gain from capital
appreciation. When the stock prices rise, investors can benefit from selling the shares.
Returns from stocks are market-linked and hence is considered the riskiest investment
type. Share prices fluctuate based on market demand and supply and market
sentiments. A bullish sentiment will lead to an unexpected rally of the market, while a
bearish sentiment will lead to a drop in share prices.
Investing in the share market should be done with a long term investment horizon. In
the short term, the market will fluctuate, which might lead to unexpected losses.
Investors need to be patient while investing inequities.
To invest in shares, investors need to have a demat and trading account. A demat
account will hold the shares while a trading account will facilitate the purchase and sale
of shares. Short term capital gains from stock investing (below one year) are taxable at
15%. At the same time, long term capital gains are taxable at 10%, if the gains are
above INR 1,00,000 per annum.

5. Mutual funds
Mutual funds are investment vehicles that pool money from investors to invest in assets
like equity and debt. A mutual fund invests in shares, government bonds, corporate
bonds, and other assets strategically. The fund house appoints a portfolio manager or
fund manager manages the mutual fund.
Every mutual fund has an investment objective, and the fund’s investments revolve
around this. Mutual funds can be of several types based on the assets. For example,
equity funds, debt funds and hybrid funds are three types of mutual funds based on the
asset class. Similarly, funds can also be categorised based on their strategy, structure
and investment option. There are also mutual funds that offer tax benefits. These are
called Equity Linked Savings Scheme. or ELSS funds. Investment in these funds
qualifies for tax deduction under Section 80C of the Income Tax Act, 1961.
Returns from mutual funds are taxable as per the investment holding period. Short term
capital gains are subject to short term capital gains tax (STCG tax). At the same time,
the long term capital gains are subject to long term capital gains tax (LTCG tax).
Furthermore, tax rates vary for equity and debt mutual funds.

7. Exchange-Traded Funds (ETF)

The exchange-traded fund is a passive investment option that usually replicates the
underlying index. In other words, ETFs portfolio matches the composition of an Index in
the same proportion. An exchange-traded fund mimics and tracks the performance of
the index. Hence ETFs are not actively managed by a portfolio manager. Furthermore,
exchange-traded funds do not attempt to outperform their respective index.
There are different types of ETFs, for example, equity ETFs, bond ETFs, currency ETF,
commodity ETFs, etc. Also, one can easily buy or sell them on the stock market.
8. National Pension Scheme (NPS)
National Pension Scheme (NPS) is a scheme suitable for retirement. Investors who
wish for regular income post their retirement and also save tax can invest in NPS. The
Central Government backs them and hence are considered as low-risk investments.
An investor can invest during the period of their employment at regular intervals. The
scheme allows the investor to withdraw a percentage of the accumulated amount post-
retirement. Also, the investor receives the remaining amount monthly as a pension
post-retirement.
NPS has two types of accounts, namely NPS Tier I Account and NPS Tier II Account.
Tier I account is a default account, while the Tier II account is a voluntary account.
NPS investments up to INR 1,50,000 qualify for tax benefits under Section 80C of the
Income Tax Act, 1961. Furthermore, an additional INR 50,000 is eligible for tax
deduction under Section 80CCD of the Income Tax Act, 1961.

9. Gold
Gold has always been a go-to asset or investment for Indians. It is also an asset with
great emotional and social value. Buying gold coins, bars, biscuits, and jewellery on
auspicious days has been a tradition in India for ages now. An asset with such
sentimental value has also become popular in different forms. For example, gold bonds
and gold ETFs are gaining popularity recently.
Gold is used as a hedge to protect one’s portfolio against potential market risk.
Investing in gold doesn’t provide any regular income in the form of dividends and
interest. However, it is a relatively liquid asset and can offer inflation-beating returns. 

10. Real Estate

Investing in real estate involves purchase, ownership and management of the physical
property. In other words, any investment in land, building, plant, property, etc. is
considered as real estate investment. Investors main aim of investing in real estate is to
sell the asset at a higher price in the future or generate regular income by way of rent.
Real estate investing best suits investors with a long term investment horizon. The
prices of land and property do not fluctuate a lot in the short term. Hence investors with
long term goals should look at investing in real estate. Before investing in real estate,
investors have to be prudent and do their research about the market prices and get the
papers provided by the seller authenticated by legal experts.
Real estate investing in India has shifted from owning physical property to owning a
part of the property with low investment. This is possible through REITs or Real Estate
Investment Trusts. Real Estate Investment Trusts (REIT) is an instrument with real
estate properties as its underlying assets and investors can buy a share of REIT to
earn steady income in the form of dividends. These dividends are paid from the rental
income from the underlying properties.
Things to keep in mind while investing
Investing isn’t just about parking money in an instrument. Shortlisting the right asset
is utmost important. Also, one should consider multiple aspects before investing in
an asset. Following are some of the important things to keep in mind while investing:

Investment Objective
Every asset has a unique investment objective. Therefore, it is very important to
align one’s investment objective with that of the assets they wish to invest. All
investment types do not meet the requirements of all the investors. What may be a
good investment option for one investor doesn’t necessarily be the best for another.
Hence, carefully aligning the financial plan and investment objective with the
financial goal is important. For long term goals such as a child’s education,
marriage, and retirement planning one can invest in equities. While for short term
goals, one can consider investing in FDs, money market instruments, and other
fixed-income investments.

Investment Horizon
Different types of investment options are suitable for different investment horizons.
For example, a fixed deposit has a lock-in period of five years. Similarly, a PPF
account has a lock-in period of 15 years. On the other hand, though mutual funds
and equity investments do not have a lock-in period, it is advised to stay invested for
at least three to five years. Therefore, depending on the investor’s financial goal, it is
wise to choose a suitable investment option with the right investment horizon.

Risk
Risk translates to volatility in an investment scheme. In other words, it is the
measure of price fluctuations of an asset in response to the change in market
dynamics. For example, shares or equity investments are subject to high price
volatility. While fixed deposits and other government-backed schemes offer
guaranteed returns. Not all investors have an understanding of risk. Therefore, it is
important to invest in assets with the volatility that one can absorb.

Returns
No investment offers the same returns. Few investments offer high returns;
however, have significant risk associated with them. While, some investments offer
guaranteed returns. All investors invest with an expectation of generating significant
returns. Therefore, it is vital to understand the asset’s historical returns and
performance. Historic returns do not guarantee future returns. However, it is always
a good parameter to analyse the asset’s performance across different market
cycles.
Costs and Expense
Every investment has certain cost or expense associated. For example, investing in
shares attracts transaction cost. Mutual funds charge fund management cost, exit
load, etc. Furthermore, few investments charge a penalty in case of premature
withdrawals. Therefore, while shortlisting an investment, it is also important to
consider the cost and expenses attached to them. It is always wise to invest in the
scheme with low cost and expense.

Liquidity
It is important to invest in assets that offer good liquidity. Liquidity is important to
address any unforeseen events. For example, mutual fund investments and stock
market investments are highly liquid. One can easily sell their holdings and convert
to cash. On the other hand, real estate investments are not highly liquid. An investor
may not be able to liquidate the asset as soon as they have a need for money.
Therefore, it is important to hold assets with good liquidity in one’s portfolio.

Lock-in period
Some investments have a lock-in period. Lock-in period is the minimum duration for
which the investor has to hold the investment. For example, PPF has a 15 year lock-
in period, FDs too have a lock-in period of 5 years. Investment with lock-in period
usually does not allow premature or partial withdrawals. However, in case of
emergencies, one can withdraw with some penalty. Therefore, before investing, it is
important to be aware that the funds would not be available for the duration of the
lock-in period.

Taxation
Returns from investments are taxable. For example, returns from mutual fund
investments are subject to tax on the basis of their holding period and type of fund.
While on the other hand, PPF investments are eligible for a tax deduction and the
returns are completely tax-free. Hence, it is essential to know the tax obligation on
the returns from an investment. One can use an income tax calculator to estimate
their tax liability.
BETTER LIQUIDITY:

Mutual funds have the distinct advantage of offering to its investors the advantage of
better liquidity of investment. There is always a ready market available for the mutual
funds units. In addition to this, there’s also an obligation imposed by SEBI guidelines.
for example, in the case of openended fund units, it’s possible for theinvestor to divest
holdings any time during the year at the net Asset Value.

REDUCED RISKS:

There is only a minimum risk attached to the principal amount and return for the
investments made in investment firm schemes. this is often usually made possible by
expert supervision, diversification and liquidity of units. Mutual funds provide small
investors the access to a reduced investment risk resulting from diversification,
economies of scale in transaction cost and professional finance management.

INVESTMENT PROTECTION:

Mutual funds in India are largely regulated by guidelines and legislative provisions put
in place by regulatory agencies like the SEBI. The Securities Exchange Commission
(SEC) within the USA allows for the availability of safety of investments. In order to
protect the investor interest, it’s obligatory part of mutual funds to broadly follow the
provisions laid down during this regard.

SWITCHING FACILITY:

Mutual funds provide investors with flexible investment opportunities, whereby it’s
possible to modify from one scheme to a different. This flexibility enables investors to
shift from income scheme to growth schemes, or the other way around, or from a close-
ended scheme to an open-ended scheme, all at will.

EQUITY SHARES

Equity Share represents ownership capital. As a Equity share holder, you’ve got a
ownership stake within the company. This significantly implies that you have a residual
interest in income and wealth. The Share movements are reflected within the various
index points: Bombay Stock Exchanges Sensitive Index, S&P Nifty Index

BOMBAY STOCK EXCHANGES SENSITIVE INDEX:

Perhaps most generally followed stock market exchange index in India, Bombay stock
exchange Index, Popularly called sensex reflects the movements of 30 sensitive share
from specified and non-specified groups.

S&P Nifty Index:

Arguably the foremost rigorously constructed securities market index in India, the
nifty index reflects the worth movements of fifty stocks selected on the bases of
capitalization and liquidity.

STATEMENT OF PROBLEM

Based on the definition of problem, it’s clearly understandable that a problem doesn’t
necessarily mean that something is seriously wrong with a current situation that has to
be rectified immediately. But a “Problem” could simply indicate an interest in a
difficulty where findings the correct answers might help to boost an existing situation.

In this scenario the investment portfolio should be mainly focused on availability of

correct quantity of cash at the correct time to the correct person may be called as an
efficient portfolio.“Here the problem of the study is mainly focused on looking for
efficient portfolio of the individuals supported risk appetite of the person”
REVIEW OF LITERATURE
Palanivelu K. Chandrakumar (2013) This analysis separates the investment avenues
into various parts such as debt with a higher risk and rate of return. Debt which has a
fixed amount of rate of interest on investment, Fixed deposits are only with the bank ,
insurance, public fund, with very less rate of return on investment, and safe. Data that
analysis revealed 60% of responses like to invest their amount in insurance , 20% of
responses like to invest their money in banks in term or fixed deposits, 30% of people
invest in metals such as Gold, property and silver.

N. Panda J. K. Panda (2012) The study analyses the categories in the discrimination of
investing people in the suggestion of investing their money based on their gender and
age. There are various types of investment options that are analyzed in this research
paper like Debentures, Life Insurance, Bonds, Debts, Pension, Property, Metal etc.
investment suggestions are taken by the investing peoples only and the company has to
wait to see the result of it, while some investors are best in investing their money with
best investment avenues.

Srividhya S. Visalakshi (2013) The research paper analyzed that there are different
types of schemes of investment avenues like fixed deposit,bonds,government deposits,
real estate, post office deposit, Mediclaim’s, equity, mutual fund etc. The analysis is
done by the private colleges and government colleges which says that maximum
teachers of college save below 1 lakh. Most of the Investors investing in Fixed Deposit
for return also and not to take the risk.

Odoemene Met. al.(2013):-Investing in Investment avenues for the future returns. We

get the results after analysis that the policy which have made for the investors not
properly study and analysis and any proper saving schemes made for rural areas.
Because improper study and analysis is difficult for the farmers and low class category
people to make the decisions for Savings and investments. The motive of Saving and
Investments is to take care of families or fulfil the requirements in future uncertainty.

Prasanna Kumar (2014) Investment means getting benefits in later life. Investment
categories are such as Equity, Government deposit, dealing in property, shares, bonds,
etc. The responses of the analysis tell us that the various people select bank deposits
investment.

Ravi Vyas (2012) The analysis says that the various types of investing schemes are
preferred by the investors. People think that Mutual Funds investment is secured than
any other investment with good rate of return in future. Responses analyzed that most
people invest their money in metal such as Gold, Silver, etc. Mutual Funds investing
people are very moderate in the country. For better security, safety, liquidity, risky, tax
saving, and normal payback of Mutual funds have low scores among people.

Gauri Prabhu N.M. Vechalekar(2013):- Mutual funds are the place where investors can
invest their funds in the global capital market also. The huge amount of money is
collected in Mutual funds and then it is invested in shares, debentures, bonds, and other
securities which are available in the capital market. This paper analyzes the knowledge
and awareness about the mutual funds between the peoples. The study states that
between age 21 to age 40 are more active or interested in more investments. Private
sectors employees invest more rather than the Government sectors employees.

Priyanka Jain (2012):- The analysis states that there are various Investments avenues
and schemes are available in the market for Investments. It study that equity shares are
lower return, heavy capital, liquidity, risk, market, tax allowances. Debentures are
higher return than equity shares with 10% risk and marketability. Bank deposits give
moderate rates of return and also normal capital and risk, liquidity.

Gaurav Chhabra, Ankesh Mundra(2014):- The study indicates that there are various
Investment options and avenues available with the people in the market. In earlier
times, there was no knowledge of investments and banking because investors have so
much cash, gold jeweler, and unique and rare (prestige) stones as savings. Now the
people are investing in Mutual funds, pension funds, debts, equity schemes, medical
policies etc through banks and various clubs.
SCOPE OF THE STUDY
The Scope of the study is to probe among the investor of Chennai. The study was
conducted for the amount of three months carrying various places in Chennai. Primary
data was collected from the investors and Secondary data was collected from the
Journals, Magazines and computing machine.

Equity-oriented mutual funds displayed an adverse yield of around 25 percent during

March and April, because the extensive market witnessed observed symbolic downturn
amid coronavirus generated recession worries. The 44-player mutual fund industry is
not resistant to the economic setback of Covid-19, and moving forward, small and mid-
cap equity schemes might persevere persisting under stress in the short to medium
term as a results of unpredictable movements within the market.

E-gold is believed to be a secure investment option in times of political and financial

unpredictability. it’s considered a hedge against inflation and currency degradation. It
tends to achieve from extensive stimulus procedures. Gold is an asset that seems to be
able to grow in value even amid uncertain and difficult times. With domestic gold
prices at high record, analysts look at the upward movement lasting for the yellow
metal. During the Covid-19 outbreak, the BSE Sensex fell to 25,981 points in March
2020from its peak of 42,320 points. While BSE has since recovered considerably, it’s
still wanting its previous high. Gold, however, has surpassed all other asset classes,
having risen almost 20 percent from the lows in March, and 50 percent in the last one
year to touch the a historic high of Rs. 49,000 within domestic market.
RESEARCH METHODOLOGY
The present study used convenience sampling and followed the first survey method.
Respondents (male and female) were a group of investors who fell in the people 20 to
55.

SAMPLING DESIGN

While Developing a Sampling Design. The Researcher must listen to the subsequent
points.

SAMPLING FRAME: Sampling Frame is Representation of elements of target

population that incorporates an inventory or set of direction for identifying the target
population.

TYPE OF SAMPLING:

PROBABILITY SAMPLING:

Under this Sampling procedure, every item of the universe has an equal chance of
inclusion within the sample. the acceptable method for this study is probability
sampling, In probability sampling technique, Simple Random Technique has been
followed for this Study.

Research Design:

The research design chosen for the project has been descriptive in nature.

DESCRIPTIVE RESEARCH:

Descriptive research includes surveys and fact-finding enquiries of different kinds. The
major purpose of descriptive research is description of the state of affairs as it exists at
present. The questionnaires are used for collecting responses from the respondents.

Sources of Data:

There are two different methods for collection of information to conduct this
Descriptive Research study.

Primary Data Collection Method, Secondary Data Collection Method

In this study the primary data collection method have been used to collect data.
Primary Data Collection: Primary data are those which are collected a fresh and for
the primary time and thus happen to be original in character. Primary data collection
is nothing but the information that is directly collected from the people by the
researcher himself. Primary data may pertain to demographic / socio economic
characteristics or the customers, altitudes and opinions of individuals, their awareness
and knowledge and other similar aspects.

In this study Primary Data collection method has helped the researcher to an excellent
extent in arriving at the results.

METHODS OF PRIMARY DATA COLLECTION:

The method used for collecting Primary data is Survey.

SURVEY METHOD: Survey method is that the systematic gathering of information

from the respondents survey is that the most typically used method of primary data
this can be widely used because of its ease of use. The present study used convenience
sampling and followed the first survey method. Respondents (male and female) were a
bunch of investors who fell within the people 20 to 55.
Recent Trends
As the Covid19 pandemic was getting severe and the returns started to surge and the
market become highly volatile to invest and majority of the investment avenues started
giving poor returns. COVID 19 has a significant impact on the equity fund as
compared to the debt funds. Many investors considered shifting to debt fund or hybrid
fund to invest their money into as Debt funds grow the wealth with little to no risk.

In Debt mutual funds the funds are collected from the public and major portion of this
amount is invested in Government bonds, RBI Bonds and other fixed income securities.
Whereas in Equity Mutual funds major portion is invested in the stock market. The
returns of debt mutual fund increased where as in equity mutual fund it has decreased
and it should be considered that the returns of the Equity mutual fund are on the total
AUM.

In reality many investors who invested in equity mutual fund before the pandemic
faced huge losses but debt mutual fund had the benefit of safety on the funds invested.
It is clear that debt funds are a safe haven. In spite of the global pandemic which has
adversely affected the entire world, debt funds have still given more than 5% returns
during the pandemic. In contradiction, equity funds have been significantly hit due to
COVID 19. All of them have given negative returns with as high as – 8% by HDFC
Equity Fund. This fund also has the highest NAV amongst the funds studied. There is a
steep downfall in the Sensex and Nifty charts which are the base funds for most of the
mutual funds since the beginning of March 2020 due to COVID 19.

Such a decline leads to a negative impact on investors regarding the stock market and
mutual funds and investors consider shifting to safer investment avenues. Investors
have turned to gold as the COVID-19 Pandemic started to affect other investment
avenue and underpinned its status as a safe haven. The Metal is getting support from a
long list of factors like geopolitical tensions are rising, dollar becoming weaker and
government and central banks worldwide have unleashed vast stimulus and relief funds
to try and boost economies.

Fixed deposits are ideal for investors with very low risk appetite and are looking for
assured returns; usually the rate of interest is higher than what is offered for a savings
bank account. Currently also RBI reduced the lending rates due to COVID-19
pandemic and due to that some of the FD interest rates came below saving bank
account interest rates.