A

RPR

On

“A STUDY ON CONSUMER ATTITUDE TOWARDS INVESTING IN

MUTUAL FUNDS ”

Submitted to

Dr. A.P.J. Abdul Kalam Technical University, Lucknow

For the partial fulfillment of

MASTER OF BUSINESS ADMINISTRATION

Batch 2020-22

SUBMITTED TO SUBMITTED BY

DR.ISHA BHARADWAJ ABHAY SRIVASTAVA

ABES ENGINEERING COLLEGE GHAZIABAD

Campus 1,19th KM Stone NH 24, Ghaziabad-201009,UP.
 DECLARATION

I ‘Raman Kumar' hereby declare that the project work titled “A study on consumer attitude

towards investing in mutual funds ” is original work done by me and submitted to the Dr.

A.P.J. Abdul Kalam Technical University, Lucknow for the fulfillment of requirement for the

award of Master of Business Administration (MBA) 4th semester under the guidance of Dr. ISHA

BHARADWAJ.

ABHAY SRIVASTAVA

MBA - 2nd Year

Roll no.2000320700002
 ACKNOWLEDGEMENT

I would like to sincerely acknowledge the contribution of all these people who have , directly or

indirectly , been instrumental in helping me to complete this project . Also we thank our institute

Ajay Kumar Garg Institute Of Management for the support that we got during this report . I take

this opportunity to thank them and all the well – wishes for their relentless encouragement and

whole – hearted support . I would also like to extend our special thanks to my faculty guide Dr.

ISHA BHARADWAJ, ABES EC , Ghaziabad for her constant cooperation & guidance at every

step . Her teachings in the field of questionnaire design , research structuring and analyzing have

helped us by leaps and bound . Last but not the least ; I think our parents for being our pillars of

support constantly through the tiring times . Their motivation has constantly boosted our

endeavors to work harder and achieve more each time.

ABHAY SRIVASTAVA
 ACKNOWLEDGEMENT

I would like to sincerely acknowledge the contribution of all these people who have , directly or

indirectly , been instrumental in helping me to complete this project . Also we thank our institute

ABES ENGINEERING COLLEGE GHAZIABAD for the support that we got during this report

. I take this opportunity to thank them and all the well – wishes for their relentless

encouragement and whole – hearted support . I would also like to extend our special thanks to

my faculty guide Dr. ISHA BHARADWAJ, ABES EC , Ghaziabad for her constant cooperation

& guidance at every step . Her teachings in the field of questionnaire design , research

structuring and analyzing have helped us by leaps and bound . Last but not the least ; I think our

parents for being our pillars of support constantly through the tiring times . Their motivation has

constantly boosted our endeavors to work harder and achieve more each time.

ABHAY SRIVASTAVA
 TO WHOM SO EVER IT MAY CONCERN

This is to certify that work entitled “A Study On Consumer Attitude Towards Investing In Mutual

Funds” is a Summer Training Project Report work done by “ABHAY SRIVASTAVA” bearing Roll

No. 2000320700002” Under my supervision for partial fulfillment of Master of Business

Administration (MBA) at ABES ENGINEERING COLLEGE GHAZIABAD, affiliated to Dr. A.P.J.

Abdul Kalam Technical University, U.P., Lucknow (Formerly Uttar Pradesh Technical University).

I wish him/her all the best for the future endeavors.

DR. ISHA BHARADWAJ

(ASST. PROFESSOR)

ABES EC, Ghaziabad

 TABLE OF CONTENT

CHAPETER PARTICULAR PAGE NO.

NO.
1 EXECUTIVE SUMMMARY

2 INTRODUCTION OF MUTUAL FUND

3 INTRODUCTION ABOUT PROJECT

4 LITERATURE REVIEW

5 RESEARCH OBJECTIVES

6 RESEARCH METHODOLOGY

7 DATA ANALYSIS & INTERPRETATION

8 FINDINGS

9 CONCLUSION

10 RECOMMENDATION

11 LIMITATION OF THE STUDY

12 BIBLIOGRAPHY
13 ANNEXURE
 List of Data Collection's table

TOPIC
Table no. 1 50
Table no. 2 51

Table no. 3 52

Table no. 4 53

Table no. 5 54

Table no. 6 55

Table no. 7 56

Table no. 8 57

Table no. 9 58

Table no. 10 59

Table no. 11 60

Table no. 12 61

Table no. 13 62

Table no. 14 63
Table no. 15 64
List of Data collection' s Figure

TOPIC Pg. No.

Figure No. 1 50

Figure No.2 51

Figure No.3 52

Figure No. 4 53

Figure No. 5 54

Figure No. 6 55

Figure No. 7 56

Figure No. 8 57

Figure No. 9 58

Figure No. 10 59

Figure No. 11 60

Figure No. 12 61

Figure No. 13 62

Figure No. 14 63

Figure No. 15 64
 EXECUTIVE SUMMARY

Mutual Fund is one of the most effective instruments for the small & medium investors for investment

and offers opportunity to them to participate in capital market with low level of risk. It also provides

the facility of diversification i.e. investors can invest across different types of schemes. Indian Mutual

Fund has achieved a lot of popularity since last two decades. For a long time UTI enjoyed the

monopoly in mutual fund industry. But with the passage of time many new players came in the

market and industry faces a lot of competition. Now a days this industry has become the

major player of the financial system.

The study provided a brief view on investors attitude towards investing in mutual funds by

focusing on their responsiveness and liking ,and also a view on the factors that influence

investors to invest in mutual funds and also a brief about their satisfaction level. The sources

of data are primary data and secondary data. The primary data is collected by taking the

objectives into consideration and questionnaire has been prepared.

 INTRODUCTION

A mutual fund is a type of financial vehicle made up of a pool of money collected from many

investors to invest in securities like stocks, bonds, money market instruments, and other

assets. Mutual funds are operated by professional money managers, who allocate the fund's

assets and attempt to produce capital gains or income for the fund's investors. A mutual

fund's portfolio is structured and maintained to match the investment objectives stated in its

prospectus.

Mutual funds give small or individual investors access to professionally managed portfolios

of equities, bonds, and other securities. Each shareholder, therefore, participates

proportionally in the gains or losses of the fund. Mutual funds invest in a vast number of

securities, and performance is usually tracked as the change in the total market cap of the

fund—derived by the aggregating performance of the underlying investments.

Mutual funds pool money from the investing public and use that money to buy other

securities, usually stocks and bonds. The value of the mutual fund company depends on the

performance of the securities it decides to buy. So, when you buy a unit or share of a mutual

fund, you are buying the performance of its portfolio or, more precisely, a part of the

portfolio's value. Investing in a share of a mutual fund is different from investing in shares of

stock. Unlike stock, mutual fund shares do not give its holders any voting rights. A share of a

mutual fund represents investments in many different stocks (or other securities) instead of

just one holding.

That's why the price of a mutual fund share is referred to as the net asset value (NAV) per
share, sometimes expressed as NAVPS. A fund's NAV is derived by dividing the total value
of the securities in the portfolio by the total amount of shares outstanding. Outstanding shares
are those

held by all shareholders, institutional investors, and company officers or insiders. Mutual

fund shares can typically be purchased or redeemed as needed at the fund's current NAV,

which—unlike a stock price—doesn't fluctuate during market hours, but it is settled at the

end of each trading day. Ergo, the price of a mutual fund is also updated when the NAVPS is

settled.

The average mutual fund holds over a hundred different securities, which means mutual fund

shareholders gain important diversification at a low price. Consider an investor who buys

only Google stock before the company has a bad quarter. He stands to lose a great deal of

value because all of his dollars are tied to one company. On the other hand, a different

investor may buy shares of a mutual fund that happens to own some Google stock. When

Google has a bad quarter, she loses significantly less because Google is just a small part of

the fund's portfolio.

How Mutual Funds Work

A mutual fund is both an investment and an actual company. This dual nature may seem

strange, but it is no different from how a share of AAPL is a representation of Apple Inc.

When an investor buys Apple stock, he is buying partial ownership of the company and its

assets. Similarly, a mutual fund investor is buying partial ownership of the mutual fund

company and its assets. The difference is that Apple is in the business of making innovative

devices and tablets, while a mutual fund company is in the business of making investments.

Investors typically earn a return from a mutual fund in three ways:

Income is earned from dividends on stocks and interest on bonds held in the fund's portfolio.

A fund pays out nearly all of the income it receives over the year to fund owners in the form

of a distribution. Funds often give investors a choice either to receive a check for

distributions or to reinvest the earnings and get more shares.

If the fund sells securities that have increased in price, the fund has a capital gain. Most funds

also pass on these gains to investors in a distribution.

If fund holdings increase in price but are not sold by the fund manager, the fund's shares

increase in price. You can then sell your mutual fund shares for a profit in the market.

If a mutual fund is construed as a virtual company, its CEO is the fund manager, sometimes

called its investment adviser. The fund manager is hired by a board of directors and is legally

obligated to work in the best interest of mutual fund shareholders. Most fund managers are

also owners of the fund. There are very few other employees in a mutual fund company. The

investment adviser or fund manager may employ some analysts to help pick investments or

perform market research. A fund accountant is kept on staff to calculate the fund's NAV, the

daily value of the portfolio that determines if share prices go up or down. Mutual funds need

to have a compliance officer or two, and probably an attorney, to keep up with government

regulations.

Most mutual funds are part of a much larger investment company; the biggest have hundreds

of separate mutual funds. Some of these fund companies are names familiar to the general

public, such as Fidelity Investments, The Vanguard Group, T. Rowe Price, and Oppenheimer.

ORIGIN OF MUTUAL FUND INIDIA

The history of mutual funds dates backs to 19th century when it was introduced in Europe, in
particular, Great Britain. Robert Fleming set up in 1968 the first investment trust called
Foreign and Colonial Investment Trust which promised to manage the finances of the
moneyed classes of Scotland by spreading the investment over a number of different stocks.
This investment trust and other investments trusts which were subsequently set up in Britain
and the US, resembled today's close - ended mutual funds. The first mutual in the U.S.,
Massachusetts investor's Trust, was set

up in March 1924. This was the open ended mutual fund. The stock market crash in 1929, the

Great Depression, and the outbreak of the Second World War slackened the pace of mutual

fund industry, innovations in products and services increased the popularity of mutual funds

in the 1990s and 1960s. The first international stock mutual fund was introduced in the U.S.

in 1940. In 1976, the first tax-exempt municipal bond funds emerged and in 1979, the first

money market mutual funds were created. The latest additions are the international bond fund

in 1986 and arm funds in 1990. This industry witnessed substantial growth in the eighties and

nineties when there was a significant increase in the number of mutual funds, schemes,

assets, and shareholders. In the US, the mutual fund industry registered a ten fold growth the

eighties. Since 1996, mutual fund assets have exceeded bank deposits. The mutual fund

industry and the banking industry virtually rival each other in size.

Role of SEBI

A index fund scheme' means a mutual fund scheme that invests in securities in the same

proportion as an index of securities;" A mutual fund may lend and borrow securities in

accordance with the framework relating to short selling and securities lending and borrowing

specified by the Board."A mutual fund may enter into short selling transactions on a

recognized stock exchange, subject to the framework relating to short selling and securities

lending and borrowing specified by the Board." "Provided that in case of an index 13 fund
scheme, the investment and advisory fees shall not exceed three fourths of one percent

(0.75%) of the weekly average net assets."

Provided further that in case of an index fund scheme, the total expenses of the scheme
including the investment and advisory fees shall not exceed one and one half percent (1.5%)
of the weekly average net assets." Every mutual fund shall buy and sell securities on the basis
of deliveries and

shall in all cases of purchases, take delivery of relevant securities and in all cases of sale,

deliver the securities: Provided that a mutual fund may engage in short selling of securities in

accordance with the framework relating to short selling and securities lending and borrowing

specified by the Board: Provided further that a mutual fund may enter into derivatives

transactions in a recognized stock exchange, subject to the framework specified by the

Board."

Role of AMEL (Association Mutual Fund in India)

The Association of Mutual Funds in India (AMFI) is dedicated to developing the Indian

Mutual Fund Industry on professional, healthy and ethical lines and to enhance and maintain

standards in all areas with a view to protecting and promoting the interests of mutual funds

and their unit holders. AMFI working group on Best Practices for sales and marketing of

Mutual Funds under the Chaimanship of Shri B. G. Daga, Former Executive Director of Unit

Trust of India with Shri Vivek Reddy of Pioneer ITI, Shri Alok Vajpeyi of DSP Merrill

Lynch, Shri Nikhil Khattau of Sun F & C and Shri Chandrashekhar Sathe, Formerly of Kotak

Mahindra Mutual Fund has suggested formulation of guidelines and code of conduct for

intemediaries and this work has been ably done by a sub-group consisting of Shri B. G. Daga

and Shri Vivek Reddy.

HISTORY OF MUTUAL FUNDS IN INDIA

The mutual fund industry is a lot like the film star of the finance business. Though it
isperhaps the smallest segment of the industry, it is also the most glamorous – in that it is
ayoung industry where there are changes in the rules of the game everyday, and there
areconstant shifts and upheavals.The mutual fund is structured around a fairly simple
concept, the mitigation of risk through the spreading of investments across multiple entities,
which is achieved by the pooling of a number of small investments into a large bucket. Yet it
has been the subject of perhaps the most elaborate

and prolonged regulatory effort in the history of the country. The mutual fund industry started

in India in a small way with the UTI Act creating what was effectively a small savings

division within the RBI. Over a period of 25 years this grew fairly successfully and gave

investors a good return, and therefore in 1989, as the next logical step, public sector banks

and financial institutions were allowed to float mutual funds and their success emboldened

the government to allow the private sector to foray into this area. The initial years of the

industry also saw the emerging years of the Indian equity market, when a number of mistakes

were made and hence the mutual fund schemes, which invested in lesser-known stocks and at

very high levels, became loss leaders for retail investors. From those days to today the retail

investor for whom the mutual fund is actually intended, has not yet returned to the industry in

a big way. But to be fair, the industry too has focused on brining in the large investor, so that

it can create a significant base corpus, which can make the retail investor feel more secure.

A Retrospect :

The last year was extremely eventful for mutual funds. The aggressive competition in the
business took its toll and two more mutual funds bit the dust. Alliance decided to remain in
the ring after a highly public bidding war did not yield an acceptable price, while Zurich has
been sold to HDFC Mutual. The growth of the industry continued to be corporate focus
barring a few initiatives by mutual funds to expand the retail base. Large money brought with
it the problems of low retention and consequently low profitability, which is one of the
problems plaguing the business. But at the same time, the industry did see spectacular growth
in assets, particularly among the private sector players, on the back of the continuing debt
bull run. Equity did not find favor with investors since the market was lack-luster and
performances of funds, barring a few, were quite disappointing for investors. The other aspect
of this issue is that institutional investors do not usually favor equity.

It is largely a retail segment product and without retail depth, most mutual funds have been

unable to tap this market. The tables given below are a snapshot of the AUM story, for the

industry as a whole and for debt and equity separately.

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at

the initiative of the Government of India and Reserve Bank of India. The history of mutual

funds in India can be broadly divided into four distinct phases,

First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by

the Reserve Bank of India and functioned under the Regulatory and administrative control of

the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial

Development Bank of India (IDBI) took over the regulatory and administrative control in

place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of

1988UTI had Rs. 6,700 crores of assets under management.

Second Phase 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector bank
sand Life Insurance Corporation of India (LIC) and General Insurance Corporation of
India(GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June
1987followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug
89),Indian Bank Mutual Fund

(Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund(Oct 92). LIC established its

mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end

of 1993, the mutual fund industry had assets under management of Rs. 47,004 crores.

Third Phase 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund

industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year

in which the first Mutual Fund Regulations came into being, under which all mutual funds,

except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged

with Franklin Templeton) was the first private sector mutual fund registered in July 1993.The

1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and

revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI

(Mutual Fund) Regulations 1996.The number of mutual fund houses went on increasing, with

many foreign mutual funds setting up funds in India and also the industry has witnessed

several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds

with total assets of Rs. 1,21,805crores. The Unit Trust of India with Rs. 44,541 crores of

assets under management was way ahead of other mutual funds.

Fourth Phase since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI wasbifurcated
into two separate entities. One is the Specified Undertaking of the Unit Trust ofIndia with
assets under management of Rs. 29,835 crores as at the end of January 2003,representing
broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified
Undertaking of Unit Trust

of India, functioning under an administrator and under the rules framed by Government of

India and does not come under the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is registered

with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the

erstwhile UTI which had in March 2000 more than Rs. 76,000 crores of assets under

management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual

Fund Regulations, and with recent mergers taking place among different private sector funds,

the mutual fund industry has entered its current phase of consolidation and growth. The

following graph indicates the growth of assets over the years.

Advantages of Mutual Funds

There are a variety of reasons that mutual funds have been the retail investor's vehicle of

choice for decades. The overwhelming majority of money in employer-sponsored retirement

plans goes into mutual funds. Multiple mergers have equated to mutual funds over time.

Diversification

Diversification, or the mixing of investments and assets within a portfolio to reduce risk, is
one of the advantages of investing in mutual funds. Experts advocate diversification as a way
of enhancing a portfolio's returns, while reducing its risk. Buying individual company stocks
and offsetting them with industrial sector stocks, for example, offers some diversification.
However, a truly diversified portfolio has securities with different capitalizations and
industries and bonds with varying maturities and issuers. Buying a mutual fund can achieve
diversification cheaper and faster than by buying individual securities. Large mutual funds
typically own hundreds of different

stocks in many different industries. It wouldn't be practical for an investor to build this kind

of a portfolio with a small amount of money.

Easy Access

Trading on the major stock exchanges, mutual funds can be bought and sold with relative

ease, making them highly liquid investments. Also, when it comes to certain types of assets,

like foreign equities or exotic commodities, mutual funds are often the most feasible way—in

fact, sometimes the only way—for individual investors to participate.

Economies of Scale

Mutual funds also provide economies of scale. Buying one spares the investor of the

numerous commission charges needed to create a diversified portfolio. Buying only one

security at a time leads to large transaction fees, which will eat up a good chunk of the

investment. Also, the $100 to $200 an individual investor might be able to afford is usually

not enough to buy a round lot of the stock, but it will purchase many mutual fund shares. The

smaller denominations of mutual funds allow investors to take advantage of dollar cost

averaging.

Because a mutual fund buys and sells large amounts of securities at a time, its transaction

costs are lower than what an individual would pay for securities transactions. Moreover, a
mutual fund, since it pools money from many smaller investors, can invest in certain assets or

take larger positions than a smaller investor could. For example, the fund may have access to

IPO placements or certain structured products only available to institutional investors.

Professional Management