1 INTRODUCTION:

Meaning of Mutual Funds

A mutual fund is a pool of funds that is divided into units of equal value and sold to
the investing public and the funds so collected are utilized for collective investment in
various capital and money market instruments. Investment is a commitment of a
person’s funds to derive future income in the form of interest, dividends, rent,
premiums, pension benefits, or the appreciation of the value of their principal capital.
Investments have a return but there can be no return without risk.

Mutual funds are ideal for investors who either lack large sums for investment or for
those who neither have the inclination nor the time to research the market, yet want to
grow their wealth. The money collected in mutual funds is invested by professional
fund managers in line with the scheme’s stated objective.

Definitions

Different persons in different words have defined mutual funds.

The SEBI (MF) Regulations, 1993 defines a mutual fund as “A fund established in
the form of a trust by a sponsor to raise money by the trustees through the sale of units
to the public under one or more schemes for investing in securities by these
regulations.”

Investment is the allocation of monetary resources to assets that are expected

to yield some gain or positive return over a given period. These assets range from safe
investments to risky investments. Investments in this form are also called ‘Financial
Investments.

1
Fig.1.1 Concept of Mutual Fund Industry

When an investor subscribes to the units of a mutual fund, he becomes part

owner of the assets of the fund in the same proportion as his contribution amount put
up with the corpus (the total amount of the fund). A Mutual Fund investor is also
known as a mutual fund shareholder or a unit holder. Any change in the value of the
investments made into capital market instruments (such as shares, debentures, etc.) is
reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market
value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is
calculated by dividing the market value of the scheme's assets by the total number of
units issued to the investors.

2
CONSTITUENTS OF MUTUAL FUND

There are many entities involved and the diagram below illustrates the constitut
ion of a mutual fund:

Fig.1.2 Constituents of Mutual Fund Industry

The formation process starts with the sponsor {the investment advisor or the
manager}. Sponsor selects & and appoints the Board of Trustees.

Trustees again hire or contract a separate AMC that is run by professional managers.
The AMC conducts the necessary research & based on it, manages the fund or
portfolio. It is responsible for floating, managing, and redeeming the schemes; it also
handles the administrative charges. It receives the fees for the services rendered by it.
The custodian is responsible for coordination with brokers, the actual transfer & and
storage of stocks, & and handling the property of the trust.

Finally, the unit holders are investors from whom a pool of money is collected & and
invested according to the stated investment objectives. Mutual fund investors are like
shareholders & and they own the fund. They are neither lenders nor deposit holders in
the fund. Unlike a holder of stock in the company, unit holders have no voting rights.

3
1.3 A comparison of different investment options concerning their Performance
is shown in the following table.

Returns Safety Volatility Liquidity Convenience

Options
Equity High Low High High/Low Moderate
FI Bond Moderate High Moderate Moderate High
Debentures Moderate Moderate Moderate Low Low
Company FD Moderate Low Low Low Moderate
PPF Moderate High Low Moderate High
LIC Low High Low Low Moderate
Gold Moderate High Moderate Moderate Low
Real Estate High Moderate High Low Low
Mutual Fund High High Moderate High High
Bank Deposit Low High Low High High

LEGAL & REGULATORY FRAMEWORK:

Mutual funds are regulated by the SEBI (Mutual Fund) Regulations 1996. SEBI is the
regulator of all funds except off-share funds. Whereas Bank-sponsored mutual funds
are jointly regulated by SEBI & and RBI.

RBI also regulates the money market and government. Securities Markets, in which
mutual funds invest. Since the AMC & Trustee Company is Companies, they are
regulated by the Department of Company Affairs. They must send periodic reports to
the Registrar of the Company (ROC) & and the Company Law Board (CLB). These
institutions regulate the Indian financial system. The major regulatory arms of the
Government of India are —

 Reserve Bank of India (RBI)

 Securities Exchange Board of India (SEBI) and
 Association of Mutual Fund Industry (AMFI)

4
Fig.1.4. The Structure of Mutual Fund Industry

Regulatory Bodies

SEBI RBI AMFI

Mutual Funds

Sponsor Trustee AMC Custodian Investor

Public Sector Funds Private Sector Funds

UTI Bank Financial Institutions

Sponsored Sponsored

Schemes

Domestic Offshore

Open ended Closed ended

I
Growth Income Balanced Sect oral Special purpose Tax saving
Funds Funds Funds Funds Funds Funds

5
NDIAN MUTUAL FUND INDUSTRY

Structure Of the Indian Mutual Fund Industry

Structure The mutual fund Industry can be classified into three categories:

Unit Trust of India

The Indian Mutual Fund industry is dominated by the Unit Trust of India, which has a
total corpus of Rs.51,100 crore collected from over 20 million investors. The UTI has
many funds/ schemes in all categories i.e. Equity, Balanced, Debt, Money Market,
etc. With some being open-ended and some being closed-ended. The Unit Scheme
1964 commonly referred to as US 64, which is a balanced fund, is the biggest scheme
with a corpus of about 10,000 crores.

Public Sector Mutual Funds

The second largest categories of mutual funds are the ones floated by nationalized
banks. Canara Bank asset management floated by Canara Bank and SBI Funds
Management floated by State Bank of India are the largest of these. GIC AMC floated
by General Insurance Corporation and Jeevan Bima Saha Yog AMC floated by the
LIC are some of the other prominent ones. The aggregate corpus of the funds
managed by this category of AMC is around Rs. 8,300 crore.

Private Sector Mutual fund

The third largest categories of mutual funds are the ones floated by the Private Sector
Domestic Mutual funds and the Private Sector Foreign Mutual Funds. The largest of
these in Private Sector Domestic Mutual funds are Cholamandalam Asset
Management Co.Ltd., J.M Capital Management Co. Ltd., Escort Asset Management
Ltd., Birla Sun Life Asset Management Pvt.Ltd., and in Private Sector Foreign
Mutual Funds are Alliance Capital Asset Management Pvt.Ltd., Prudential ICICI
Management Co. Ltd. The aggregate corpus of the assets managed by this category of
AMC’s is about Rs. 42,200 crores.

6
History of the Indian Mutual Fund Industry

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 the Reserve Bank. The history
of mutual funds in India can be broadly divided into four distinct phases:

First Phase – 1964-87

An Act of Parliament established the Unit Trust of India (UTI) in 1963. 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 the
Unit Scheme in 1964. At the end of 1988, UTI had Rs.6, 700 crores of assets under
management.

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

1987 marked the entry of non-TI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non-UTI Mutual Fund
established in June 1987 followed by Can Bank Mutual Fund (Dec 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of
India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund
in June 1989 while GIC had set up its mutual fund in December 1990. At the end of
1993, the mutual fund industry had assets under management of Rs.47, 004 crores.

7
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 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 of the
end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805
crores. 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 was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit
Trust of India with assets under management of Rs.29,835 crores as of the end of
January 2003, representing broadly, the assets of the US 64 scheme, assured return,
and certain other schemes. The Specified Undertaking of Unit Trust of India,
functioning under an administrator and the rules framed by the Government of India
does not come under the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB, and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores

8
of assets under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking
place among different private sector funds, the mutual fund industry has entered its
current phase of consolidation and growth. As of the end of October 31, 2003, there
were 31 funds, which manage assets of Rs.126726 crores under 386 schemes.

9
ADVANTAGES OF MUTUAL FUNDS: -

If mutual funds are emerging as the favorite investment vehicle, it is because of the
many advantages they have over other forms and avenues of investing, particularly
for the investor who has limited resources available in terms of capital and the ability
to carry out detailed research and market monitoring. The following are the major
advantages offered by mutual funds to all investors:

 Portfolio diversification:

Mutual Funds normally invest in a well-diversified portfolio or securities.

Each investor in a fund is a part owner of all of the fund’s assets. This enables
him to hold a diversified investment portfolio even with a small amount of
investment that would otherwise require big capital.

 Professional Management:

Even if an investor has a large amount of capital available to him, he benefits

from the professional management skills brought by the management of the
investor’s portfolio. The investment management skills, along with the needed
research into available investment options, ensure a much better return than
what an investor can manage on his own. Few investors have the skills and
resources of their own to succeed in today’s fast-moving, global, and
sophisticated markets.

 Reduction/Diversification of Risk:

An investor in a mutual fund acquires a diversified portfolio, no matter how

small his investment is. Diversification reduces the risk of loss, as compared to
investing directly in one or two shares’ debentures, or other instruments.
When an investor invests directly, all in the pool of funds with other investors,
any loss on one or two securities is also shared with other investors. This risk
reduction is one of the most important benefits of a collective investment
vehicle like a mutual fund.

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  Reduction of transaction cost:

What is true of risk is also true of the transaction costs. A direct investor bears
all the costs of investing such as brokerage or custody of securities. When
going through a fund. He has the benefit of economies of scale; the funds pay
lesser costs because of larger volumes, a benefit passed on to its investors.

 Liquidity:

Often, investors hold shares or bonds they cannot directly, easily, and quickly
sell. Investment in a mutual fund, on the other hand, is more liquid. An
investor can liquidate the investment, by selling the units to the fund if open-
end or selling them in the market if the fund is closed-end, and collect funds at
the end of a period specified by the mutual fund or the stock market.

 Convenience and Flexibility:

Mutual Fund management companies offer many investor services that a

direct market investor cannot get. Investors can easily transfer their holdings
from one scheme to the other; get updated market information, and so on.

RISK FACTORS ASSOCIATED WITH MUTUAL FUNDS

 Mutual funds & and securities investments are subject to market risks
and there is no assurance or guarantee that the objectives of the
Scheme will be achieved.
 The past performance of the Sponsor or that of existing Schemes of the
Fund does not indicate the future performance of the Schemes.
 As with any securities investment, the NAV of the Units issued under
the scheme can go up or down depending on the factors and forces
affecting the capital and money market.
 Tax laws may change, affecting the return on investment in Units.

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TYPES OF MUTUAL FUND SCHEMES

I. Schemes according to Maturity Period:

A mutual fund scheme can be classified into an open-ended scheme or a close-

ended scheme depending on its maturity period.

i. Open-ended Fund/ Scheme

An open-ended fund or scheme is available for subscription and repurchase

continuously. These schemes do not have a fixed maturity period. Investors
can conveniently buy and sell units at Net Asset Value (NAV) related prices
which are declared daily. The key feature of open-end schemes is liquidity.

ii. Close-ended Fund/ Scheme

A close-ended fund or scheme has 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 in the scheme at the time of the
initial public issue and thereafter they can buy or sell the units of the scheme
on the stock exchanges where the units are listed. To provide an exit route to
the investors, some close-ended funds give an option of selling back the units
to the mutual fund's NAV-related prices. SEBI Regulations stipulate that at
least one of 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 every week.

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 II. Schemes according to Investment Objective:

A scheme can also be classified as a growth scheme, income scheme, or

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

i. Growth / Equity Oriented Scheme

Growth funds aim to provide capital appreciation over the medium to long
term. Such schemes normally invest a major 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 the
investors may choose an option depending on their preferences. The investors
must indicate the option in the application form. The mutual funds also allow
the investors to change their options at a later date. Growth schemes are good
for investors having a long-term outlook seeking appreciation over some time.

ii. Income / Debt-Oriented Scheme

The income funds aim to provide regular and steady investors. Such scheme
generally invests in fixed-income securities such as bonds, corporate
debentures, Government securities, and money market instruments. Such
funds are less risky compared to equity schemes. These funds are not affected
because of fluctuations in equity markets. The NAVs of such funds are
affected because of changes in interest rates in the country.

13
iii. Balance Fund

Balance funds aim to provide both growth and regular income as such
schemes invest both in equities and fixed-income securities in the proportion
indicated in their offer documents. These are appropriate for investors looking
for moderate growth. They generally invest 40-60% in equity and debt
instruments. These funds are also affected because of fluctuations in share
prices in the stock markets. However, NAVs of such funds are likely to be less
volatile compared to pure equity funds.

iv. Gilt Fund

These funds invest exclusively in government securities. Government

securities have no default risk. NAVs of these schemes also fluctuate due to
changes in interest rates and other economic factors as is the case with income
or debt-oriented schemes.

v. Index Funds

Index Funds replicate the portfolio of a particular index such as the BSE
Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in
securities in the same weightage comprising of an index. NAVs of such
schemes would rise or fall by the rise or fall in the index, though not exactly
by the same percentage due to some factors known as “tracking error” in
technical terms.

14
vi. Money-Market Mutual Funds

These funds invest in highly liquid and safe securities like commercial paper,
banker’s acceptances, and certificates of deposits. Treasury bills… etc., which
are called money market instruments.

vii. Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions of
the Indian Income Tax laws as the Government. Offers tax incentives for
investment in specified avenues. Investments made in Equity Linked Saving
Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the
Income Tax Act 1961.

15
2.1 OBJECTIVES OF THE STUDY

1. To track investor’s attitudes, performance, and behavior concerning

financial institutions and financial products.

2. To find new and more effective ways of ensuring investor satisfaction

and to find efficient ways of communicating it.

3. To conduct the study with references to Kotak Mahindra products and

the competitive scenario in which Kotak Mahindra operates.

4. To study the structure of investment opportunities.

2.2 SCOPE OF THE STUDY

The study includes investors, financial institutions, investors who are interested in
Kotak Mahindra Asset Management Company’s mutual fund, and also individuals
who are interested in investing in the mutual fund. The individuals without investment
are also included in the scope of the study.

2.3 STATEMENT OF THE PROBLEM

The investment objective of Kotak Mahindra Asset Management Co is “to generate

capital appreciation from a diversified portfolio of predominantly equity and equity
related securities or securities issued by central and state government”. Despite this
objective, reasons like mutual fund investments are subject to market risk, there is no
assurance or guarantee that the objective of the scheme can be achieved and also the
Net Asset Value (NAV) of the units can go up or down depending on factors affecting
the capital and money market, many of the investors tend not to invest in the mutual
fund investment.

16
2.5 RESEARCH METHODOLOGY

Primary Analytical Research Method was used for the study. The questionnaire was
prepared and used for collecting the data about individual investors’ preferences
towards various investment avenues, and their portfolio behaviors. The research
required primary and secondary sources of data. The primary data is obtained through
structured questionnaires which were collected from Investors in Jayanagar Banks and
Brokerage Offices such as Axis Bank, Reliance Money, Bajaj Capital, etc., Secondary
Data are the one which is collected from the website of Kotak Mahindra, investors,
and company records.

Sampling Design

The Sampling technique used in this research is the Convenient Judgment Sampling
Method. Judgment Random Sampling, which by using the available information,
concerning the population, attempts to design a more efficient sample. The study
includes investors, financial institutions, investors who are interested in Kotak
Mahindra Asset Management Company’s mutual fund, and individuals who are
interested in investing in the mutual fund. The individuals without investment are also
included in the study.

Sample Size

A sample size of 100 people was selected for the study. The sample for data collection
was within the geographical boundaries of Mumbai.

Sources of Data

Primary data was collected by

 Questionnaires
 Question schedules
 Interviews

17
Secondary data was collected from

 Fact Sheets of the Company

 Websites, newspapers, and journals

2.6 LIMITATIONS OF THE STUDY

1. A descriptive research was undertaken for the project. However descriptive

research has its limitations regarding the selection of sample size of sample units.

2. Some of the data gathered from the mutual fund holders may not be reliable.

3. The time limit was also a constraint while conducting the study. So, the study does
not give a picture of the whole market.

4. The time factor, as a period of one month, for gathering data is inadequate as the
gamut of information needs to be synchronized to give a much more comprehensive
view of the problems and prospects.

5. Detailed and in-depth research was not conducted due to financial factors.

6. The study curtails comparison as it was done only in one city i.e. Bangalore.

7. The information provided by the organizations was limited to a fair extent due to
drawbacks like competition.

18
  4.1 ANALYSIS AND INTERPRETATION

TABLE NO 2.1 – TO SEE THE RESPONDENT IS AN INCOME TAX ASSESSEE.

Sl. No. Attributes No. of respondents Percentage

1 Yes 15 76
2 No 24 24
Total 100 100

80 76
Percentage

70
60
50
40
30 24
20
10
0
Yes No

Attributes

GRAPH NO.1 – TO SEE THE RESPONDENT IS AN INCOME TAX ASSESSEE.

Interpretation:

It is clear from the table that out of 100 respondents, 76% of respondents say that they
are income tax assesses and the rest 24% say that they are not.

19
TABLE NO 2.2. TO SEE WHETHER RESPONDENTS INVEST FOR TAX
EXEMPTION OR TAX SAVINGS

Sl. No. Attributes No. of respondents Percentage

1 Yes 70 70
2 No 30 30
Total 100 100

GRAPH NO 2. TO SEE WHETHER RESPONDENTS INVEST FOR TAX

EXEMPTION OR TAX SAVINGS

80
70
70
Percentage

60
50
40
30
30
20
10
0
Yes No

Attributes

Interpretation:

It is clear from the table that out of 100 respondents, 70% of the respondents say that
they invest for tax exemption and the rest 30% say that they do not.

20
TABLE NO 2.3. INVESTMENT PREFERENCE OF RESPONDENTS

Sl. No. Attributes No. of respondents Percentage

1 Fixed Deposits 33 33
2 Real Estate 27 27
3 Insurance 21 21
4 Mutual Fund 9 9
5 Gold 9 9
Total 100 100

GRAPH NO 3. INVESTMENT PREFERENCE OF RESPONDENTS

40
33
30 27
Percentage

21
20
9 9
10
0

Attributes

Interpretation:

It is clear from the table that out of 100 respondents, 33% of respondents invest in
fixed deposits, 27% invest in Real Estate, 21% in Insurance, 9% in Mutual Funds and
the rest 9% say that they invest in gold.

21
TABLE NO 2.4 REASONS OF INVESTMENT PREFERENCE OF
RESPONDENTS

Sl. No. Attributes No. of respondents Percentage

1 Less Risk 28 28
2 Good Returns 21 21
3 Liquidity 12 12
4 Assured Returns 36 36
5 Other Reasons 3 3
Total 100 100

GRAPH NO 4. REASONS OF INVESTMENT PREFERENCE OF

RESPONDENTS

40 36
35
30 28
Percentage

25 21
20
15 12
10
5 3
0
Less Risk Good Re- Liquidity Assured Re- Other
turns turns Reasons

Attribute

Interpretation:

It is clear from the table that out of 100 respondents, 28% of the respondents prefer
investment due to less risk, 21% due to good returns, 12% due to liquidity, 36% due
to assured returns, and the rest 3% do it due to other reasons

22
TABLE NO 2.5. CURRENT INVESTMENT PORTFOLIO OF RESPONDENTS

Sl. No. Attributes No. of respondents Percentage

1 Govt securities and bonds 61 61
2 Mutual funds & company FD’s 18 18
3 Equity Shares 21 21
Total 100 100

GRAPH NO 5. CURRENT INVESTMENT PORTFOLIO OF RESPONDENTS

70
61
60
50
Percentage

40
30
21
20 18

10
0
Govt securities and Mutual funds & Equity Shares
bonds company FD’s

Attributes

Interpretation:

It is clear from the table that out of 100 respondents, 61% of the respondents invest in
Govt securities and bonds, 18% in Mutual funds and company fixed deposits, and the
rest 21% in equity shares.

23
TABLE NO 2.6. NATURE OF INVESTMENT THAT THE RESPONDENTS LIKE

Sl. No. Attributes No. of respondents Percentage

1 Steadily 61 61
2 At average rate 27 27
3 Fast 12 12
Total 100 100

80
61
Percentage

60

40
27
20 12
0
Steadily At average rate Fast

Attributes

GRAPH NO 6. NATURE OF INVESTMENT THAT THE RESPONDENTS LIKE

Interpretation:

It is clear from the table that out of 100 respondents, 61% of respondents like their
investment to grow steadily, 27% at an average rate, and the rest 12% at a fast rate.

24
TABLE NO 2.7 PERCENTAGE OF INCOME THAT THE RESPONDENTS
INVEST

Sl. No. Attributes No. of respondents Percentage

1 5% 24 24
2 5% - 10% 37 37
3 More than 10% 39 39
Total 100 100

GRAPH NO 7. PERCENTAGE OF INCOME THAT THE RESPONDENTS

INVEST

45
40 39
37
35
30
Percentage

25 24
20
15
10
5
0
5% 5% - 10% More than
10%
Attribute

Interpretation:

It is clear from the table that out of 100 respondents, 24% of the respondents invest
5% of their total income, 37% invest 5-10% and the rest 39% invest more than 10%.

25
TABLE NO 2.8 TO SEE WHETHER THE RESPONDENT IS AN INVESTOR OF
MUTUAL FUND

Sl. No. Attributes No. of respondents Percentage

1 Yes 27 27
2 No 73 73
Total 100 100

Interpretation:

It is clear from the table that out of 100 respondents, only 27% of the respondents are
investors in mutual funds and the rest 73% are not.

This is illustrated in the following graph.

26
GRAPH NO 8. TO SEE WHETHER THE RESPONDENT IS AN INVESTOR OF
MUTUAL FUND

80
73
70
60
50
40
Percentage

30 27

20
10
0
Yes No

Attribute

Source: Table: 2.8.

TABLE NO 2.9 REASONS FOR NOT INVESTING IN MUTUAL FUNDS

27
Sl. No. Attributes No. of respondents Percentage
1 Awareness 15 15
2 Risky 58 58
3 Returns not assured 27 27
Total 100 100

Source: Primary Data

Interpretation:

It is clear from the table that out of 100 respondents, 15% of the respondents do not
invest in mutual funds because of lack of awareness, 58% as it is risky, and the rest
27% as the returns are not assured.

This is illustrated in the following graph.

28
GRAPH NO 9. REASONS FOR NOT INVESTING IN MUTUAL FUNDS

70
60 58

50
40
Percentage

30 27

20 15
10
0
Awareness Risky Returns not
assured

Attribute

Source: Table No: 2.9

29
TABLE NO 2.10 REASONS FOR INVESTING IN MUTUAL FUNDS

Sl. No. Attributes No. of respondents Percentage

1 Less Risky 21 21
2 Liquidity 30 30
3 Professional Mgmt 24 24
4 Fast Appreciation 25 25
Total 100 100

Source: Primary Data

Interpretation:

It is clear from the table that out of 100 respondents, 21% of the respondents feel that
investing in mutual funds is less risky, and hence they invest, 30% invest due to
liquidity, 24% due to Professional management, and the rest 25% due to fast
appreciation.

This is illustrated in the following graph.

30
GRAPH NO 10. REASONS FOR INVESTING IN MUTUAL FUNDS

35 30
30 25
24
25 21
Percentage

20
15
10
5
0
y t
sk dity gm t io
n
i i ia
R i qu al
M
ec
ess L n p r
L i o p
ss A
of
e
ast
P r F

Attribute

Source: Table No: 2.10

31
TABLE NO 2.11 KIND OF MUTUAL FUND THAT THE RESPONDENTS
PREFER

Sl. No. Attributes No. of respondents Percentage

1 Open-ended 57 57
2 Closed-ended 43 43
Total 100 100

Source: Primary Data

Interpretation:

It is clear from the table that out of 100 respondents, 57% of the respondents prefer
open-ended mutual funds, and the rest 43% closed-ended.

This is illustrated in the following graph.

32
GRAPH NO 11. KIND OF MUTUAL FUND THAT THE RESPONDENTS
PREFER

60 57

50
43
40
Percentage

30

20

10

0
Open-ended Closed-ended

Attributes

Source: Table No: 2.11

33
TABLE NO 2.12 TYPE OF SCHEME THE RESPONDENTS PREFER

Sl. No. Attributes No. of respondents Percentage

1 Equity 49 49
2 Debit 42 42
3 Balance 9 9
Total 100 100

Source: Primary Data

Interpretation:

It is clear from the table that out of 100 respondents, 49% of the respondents prefer
equity type of scheme, 42% prefer debit type of scheme, and the rest 9% due to
balance type of scheme.

This is illustrated in the following graph.

34
GRAPH NO 12. TYPE OF SCHEME THE RESPONDENTS PREFER

60

50 49

42
40

30
Percentage

20

10 9

0
Equity Debit Balance

Attributes

Source: Table No: 2.12

35
TABLE NO 2.13. THE PREFERENCE AMONG DIFFERENT MUTUAL FUNDS

Sl. No. Attributes No. of respondents Percentage

1 UTI 25 25
2 Kotak 15 15
3 HDFC 23 23
4 Birla Sun Life 20 20
5 LIC 17 17
Total 100 100

Source: Primary Data

Interpretation:

It is clear from the table that out of 100 respondents, 15% of the respondents prefer
UTI mutual funds, 15% prefer Kotak, 30% prefer HDFC, 19% Templeton, and the
rest 21% prefer LIC.

This is illustrated in the following graph.

36
GRAPH NO 13. THE PREFERENCE AMONG DIFFERENT MUTUAL FUNDS

30
25
25 23
20
20
17
15
15
Percentage

10

0
UTI Kotak HDFC Birla LIC
Sun life

Attributes

Source: Table No: 2.13

37
TABLE NO 2.14 ANALYSES WHETHER THE RESPONDENT SEES THE
BRAND NAME WHILE INVESTING

Sl. No. Attributes No. of respondents Percentage

1 Yes 94 94
2 No 06 06
Total 100 100

Source: Primary Data

Interpretation:

It is clear from the table that out of 100 respondents, 94% of the respondents see
brand names while investing, and the rest 6% are not.

This is illustrated in the following graph

38
GRAPH NO 14. TO ANALYSE WHETHER THE RESPONDENT SEES THE
BRAND NAME WHILE INVESTING

100 94
90
80
70
60
Percentage

50
40
30
20
10 6
0
Yes No

Attribute

Source: Table: 2.14

39
TABLE NO 2.15 IMMEDIATE REACTIONS IN CASE OF SUDDEN DIP IN
STOCK MARKET

Sl. No. Attributes No. of respondents Percentage

1 Would withdraw the investment 39 39
2 Would wait and watch 55 55
3 Would invest more in it 6 6
Total 100 100

Source: Primary Data

Interpretation:

It is clear from the table that out of 100 respondents, 39% of the respondents would
withdraw the investment, 55% would wait and watch the show and the rest 6% say
that they would invest more.

40
This is illustrated in the following graph.

GRAPH NO 15. IMMEDIATE REACTION IN CASE OF A SUDDEN DIP IN THE

STOCK MARKET

60
55

50

39
40
Percentage

30

20

10 6

0
Would withdraw the Would wait and Would invest more
investment watch in it

Attributes

Source: Table No: 2.15

41
TABLE NO 2.16 TO KNOW THAT THE RESPONDENTS HAVE HEARD OF
KOTAK MUTUAL FUND

Sl. No. Attributes No. of respondents Percentage

1 Yes 100 100
2 No 00 00
Total 100 100

Source: Primary Data

Interpretation:

It is clear from the table that out of 100 respondents, all 100 respondents have heard
of Kotak Mutual Fund.

42
This is illustrated in the following graph.

GRAPH NO 16. TO KNOW THAT THE RESPONDENTS HAVE HEARD OF

KOTAK MUTUAL FUND

120
100
100

80
Percentage

60

40 100

20
0
0
Yes No

Attribute

Source: Table: 2.16

43
TABLE NO 2.17 VIEWS ON KOTAK MF AND ITS SCHEMES

Sl. No. Attributes No. of respondents Percentage

1 Good 25 25
2 Moderate 49 49
3 Not aware 26 26
Total 100 100

Source: Primary Data

Interpretation:

It is clear from the table that out of 100 respondents, 15% of respondents view Kotak
MF as good, 36% feel that it is moderate and the rest 49% say that they are not aware.

This is illustrated in the following graph.

44
GRAPH NO 17. VIEWS ON KOTAK MF AND ITS SCHEMES

60

50 49

40

30
Percentage

25 26

20

10

0
Good Moderate Not aware

Attributes

Source: Table No: 2.17

5.1 FINDINGS

45
 Most of the respondents are income tax assesses and invest for Tax
exemption or savings.
 Most of the respondents prefer to invest in Fixed Deposits, Real
Estate, and Insurance because of less risk and assured returns.
 The investment portfolio of most of the respondents is in govt
securities and bonds.
 Though mutual funds exist in the market, the number of people
who tend to invest in them is very low compared to other
investments. The reason behind this is the high-risk factor involved
with Mutual Funds.
 Most of the people prefer an open-ended equity scheme.
 Most Investors prefer the brand name of the company and then
invest in their schemes so UTI has gained more investors as the
risk is less and there is an assured return.
 If there is a sudden dip most Investors do not withdraw their money
instead wait for some time.
 Among the surveyed Investors everyone has heard of Kotak
Mutual Fund and most of them have rated Kotak Mutual Fund
schemes as Moderate.

46
5.3 SUGGESTIONS

1. Proper care should be taken to give the correct guidance to the investors so
that they will invest more.

2. Good campaigns can be arranged so that people will know more about Mutual
Funds and will tend to invest in them.

3. Nice advertisements can be entertained so that people will get interested in

Mutual Funds.

4. Kotak can come up with good, attractive schemes for its investors.

5. Nowadays Indian Mutual fund Industry is attracting more and more retail
investors because of economic stability and increasing growth rate, which leads to a
gradual increase in the stock market indices.

6. Interest rates are falling gradually and the mutual fund industry is booming
because of this reason investors can move from Bank deposits to mutual funds so
mutual fund organizations should bring new schemes to satisfy the investors.

7. Mutual fund schemes have not gained importance as there is a lack of

awareness about Mutual fund schemes so the executives of the organization should
take certain steps to educate the investors.

47
5.4 CONCLUSION

The study “Investors Preferences Towards Mutual Funds” was carried out on behalf
of Mutual Funds of Kotak Mahindra Asset Management Company Ltd. The data was
collected from various sources and through tools like questionnaires and relevant
interactions with concerned persons. The needs were identified in the form of findings
and suitable suggestions were put forth in the form of recommendations to the
concerned authorities for further discussions. A few recommendations have been
considered for implementation.

 Mutual fund schemes are subject to market risk.

 Based on the above statements it has been proved higher the risk
higher the return and the lower the risk lower the return.
 Nowadays Mutual Fund schemes are increasing because of falling
interest rates so the organization can provide further new schemes and
attract new customers.
 Investment in Mutual fund schemes gives a diversified portfolio to
investors.
 Nowadays Indian Mutual Fund industry is attracting more and more
retail investors because of economic stability and increasing growth
rate, which leads to a gradual increase in the stock market Indices.

48
 CHAPTER-6
BIBLIOGRAPHY

Books

Author Book

Ronald J Jordan Management

V K Bhalla Investment Management

By I.M. Pandey Financial Management 7th Edition

L M Bhole Financial Institutions and Markets

Preethi Singh Portfolio Management

Journals and Newspapers

Business World

Mint

Financial Express

Websites

www.kotakmutual.com

www.sebi.com

www.mutualfundsindia.com

www.amfiindia.com

49
 CHAPTER-7
ANNEXURE-QUESTIONNAIRE

1. Are you an Income Tax assessor?

Yes
No

2. Are you investing for tax exemption or tax savings?

Yes
No

3. What kind of investment options do you prefer?

Fixed Deposit
Real Estate
Insurance
Mutual Fund
Gold

4. Why do you prefer the above option?

Less Risk
Good Returns
Liquidity
Assured Returns
Other Reasons

5. Your current investment portfolio includes the majority of

Govt. securities and Bonds
Mutual funds & and company fixed deposits
Equity shares

6. You would like your investment to grow

Steadily
At average rate
Fast

50
7. What percentage of your income do you invest?
Up to 5 %
5%--- 10%
More than 10%

8. Are you an investor in a mutual fund?

Yes
No

9. If the answer is No, why you are not investing in a mutual fund?
Awareness
Risky
Returns not assured

10. If the answer is Yes, why do you prefer mutual funds?

Less risky
Liquidity
Professional mgt.
Fast appreciation

11. What kind of mutual fund do you prefer?

Open-ended
Closed-ended

12. What type of scheme do you prefer?

Equity
Debt
Balance

13. If you are an investor in MF, which Company do you prefer?

UTI
Kotak
HDFC
Birla Sun Life

51
 LIC
14. While buying a Mutual Fund scheme do you see brand name?
Yes
No

15. How would you react if the Stock Market immediately dips?
I would withdraw my money
I would wait & and watch
I would invest more in it.

16. Have you heard of Kotak mutual fund and its scheme?
Yes
No

17. Your views on Kotak mutual fund and its scheme?

Good
Moderate
Not aware

52
53