Mutual fund and

Customer perception.

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TABLE OF CONTENTS

S.NO. Page no.

1. INTRODUCTION 7

2. HISTORY OF MUTUALFUND 9

3. TYPES OF MUTUAL FUND 13

4. ADVANTAGES OF MUTUAL FUND 19

5. LIMITATION OF MUTUALFUND 22

6. INDIAN MUTUAL FUND INDUSTRY 24

7. TRANDS IN MUTUAL FUND INDUSTRY 25

8. ASSOSIATION OF MUTUAL FUND IN INDIA 26

9. MUTUAL FUND WITH NEW FACES 30

10. QUESTIONNAIRE 59

11. BIBLOGRAPHY 60

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CERTIFICATE

This is to certify that Mr. LAVSH SHINDE is pursuing Master of Business Administration [MBA] at INDORE MANAGEMENT INSTITUTE Indore.He has undergone a Major Research Project on “Mutual fund and Customer perception” as a part of course curriculum and has been evaluated by us.

The work has been found satisfactory and the objectives have been met.

(Faculty, IMI)

SEP,2010

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ACKNOWLEDGEMENT

I would like to express my sincere gratitude to my project guide Dr. GAURAV PANDEY for his guidance, suggestions and help during the entire period of my project work, without the feasibility of this project was impossible.

I am also thankful to my parents for providing me all the courage and support needed for the completion of my project.

I would like to thank my entire faculty and friends who were directly or indirectly involved in this study, for their support, assistance and encouragement.

LAVESH SHINDE

[ MBA] II Sem IMI, Indore

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DECLARATION

I lavesh shinde student of Master of Business Administration (MBA) INDORE MANGEMENT INSTITUTE , Indore hereby declare that I have completed this project on “ Mutual fund and customer perception” In the academic year SEP. 2010.

The information submitted is true and original to the best of my knowledge.

LAVESH SHINDE

(MBA) Il Sem IMI, Indore

INTRODUCTION

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Mutual Fund, form of management-investment company that combines the money of its shareholders and invests those funds in a wide variety of stocks, bonds, and so-called money market instruments. The latter include short-term investments such as United States Treasury bills and other federal securities, commercial paper, and bank certificates of deposit. Mutual funds provide the investor with professional management of funds and diversification of investment among the securities offered by leading corporations, federal and state governments, and other entities.

DEFINITION

A mutual fund is pool of commingle funds invested by different investor . who haveno connected with each other . A mutual fund are conceived as institution for providing small investor with avenue of investment in the capital market .since small investor generally so not have adequate time knowledge experience and resources for directly accessing the capital market , they have to relay on the an intermediary which under takes the informed investment decision and provide the consequential benefit of professional expertise . the of mutual fund is their ability to bring down the transaction cost the advantages for the investor is reduction in the risk. Expert professionals management, diversified portfolios, liquidity of investment and tax benefits.

A mutual fund is financial intermediaries , which collect the savings of investor and invest them in a large and well diversified

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portfolio of securities such as money market instrument , corporate and government bond and equity shares of joint stock company.

By pooling their assets through mutual fund , investors achieves economy of scale . The of the investor are protected by the SABI, which acts as watchdog . mutual fund are governed by the SEBI (Mutual Funds) regulations, 1993.

HISTORY OF THE MUTUAL FUND INDUSTRY

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The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI player enterd the industry.

In the past decade, Indian mutual fund industry had seen dramatic improvements, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase, the Assets Under Management (AUM) was Rs. 67bn. The private sector entry to the fund family rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it reached the height of 1,540 bn.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking.industry. The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling.

The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under.

First Phase –(1964-87)

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Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management.

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

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed 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 in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets under management.

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.

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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. 1,21,805 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

This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

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TYPES OF MUTUAL FUNDS

Mutual fund schemes may be classified on the basis of its structure and its investment objective.

BY STRUCTURE

Open-ended Funds

An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity.

Top three open-end schemes are:

Reliance banking fund 79.197

Birla sun life comm. Equity GPMP-RP 12.435

Religare gold ETF 1740.750

Closed-ended Funds

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. 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 they are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor.

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The top three close-ended funds are:

Kotek PSU bank ETF 368.973

ING C.U.B. fund G 16.360

Reliance ELFS –serise1G 13.237

Interval Funds

Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.

By Investment Objective

Growth Funds

The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time.

Magnum Equity Fund 25.84

Income Funds

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income.

The top three income funds are:

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DWS twin advantage fund G 150815

Birla SL monthly income 34.509

Tata MIP Plus Fund G 15.278

Balanced Funds

The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth.

The top three balanced funds are:

DSP-BR Balanced fund G 60.827

Birla sun life 95 fund G 282.030

Escorts Opportunity fund G 27.122

Money Market Funds

The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for

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Corporate and individual investors as a means to park their surplus funds for short periods.

Load Funds

A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history.

No-Load Funds

A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work. 

OTHER SCHEMES

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 Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds.

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Special Schemes

Industry Specific Schemes

Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like InfoTech, FMCG, and Pharmaceuticals etc.

Index Schemes

Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50.

Sectoral Schemes

Sectoral Funds are those, which invest exclusively in a specified industry or a group of industries or various segments such as 'A' Group shares or initial public offerings.

Various sectoral schemes are:

Pharma sector schemes FMCG sector schemes Service sector schemes Infrastructural sector schemes.

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THE THREE BASIC FEATURES OF MUTUAL FUNDS

a) All mutual funds charge expenses. Whether they be marketing, management or brokerage fees, fund expenses are generally passed back to the investors.

b) Investors exercise no control over what securities the fund buys or sells.

c) The buying and selling of securities within the mutual fund portfolio generates capital gains and losses which are passed back to investors even if they have not sold any of their mutual fund shares.

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ADVANTAGES OF MUTUAL FUND

Professional Management

The idea behind a mutual fund is that individual investors generally lack the time, the inclination or the skills to manage their own investment. Thus mutual funds hire professional managers to manage the investments for the benefit of their investors in return for a management fee.

The organization that manages the investment is the Asset Management Company (AMC). Employees of the AMC who perform this role of managing investments are the fund managers.

Diversification

The best mutual funds design their portfolios so individual investments will react differently to the same economic conditions. For example, economic conditions like a rise in interest rates may cause certain securities in a diversified portfolio to decrease in value. Other securities in the portfolio will respond to the same economic conditions by increasing in value. When a portfolio is balanced in this way, the value of the overall portfolio should gradually increase over time, even if some securities lose value.

Convenient Administration

Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient.

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Low cost

Mutual fund expenses are often no more than 1.5 percent of your investment. Expenses for Index Funds are less than that, because index funds are not actively managed. Instead, they automatically buy stock in companies that are listed on a specific index.

Choice of Schemes

A mutual fund can, and typically does have several schemes to cater to different investors preferences. The individual could choose to hire a professional manager to manage his money as per his investment and risk preferences. Such personal treatment often referred to as Portfolio Management Scheme (PMS).

Legal Framework

Since the investors are often not so well qualified to invest, the mutual fund business is highly regulated. Broadly the existing regulations are:

1. Pre-requisitions to start a mutual fund;2. Permissible schemes and investments;3. Control over marketing process;4. Checks and balances in the legal structure;5. Valuation of securities;6. Level of operational flexibility to the professional investors.

Tax Benefits

Dividend income from mutual fund units will be exempt from income tax with effect from July 1, 1999. Further, investors can get rebate from tax under section 88 of Income Tax Act, 1961 by investing in Equity Linked Saving Schemes of mutual funds. Further benefits are also available under section 54EA and 54EB

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with regard to relief from long term capital gains tax in certain specified schemes.

Return Potential

Mutual funds allow you to allocate investments assets across different fund categories to achieve a variety of risk/reward objectives thereby reducing overall portfolio risk. In other words, the right way to benefit from Mutual funds is to balance the risk as well as the potential to earn.

Liquidity

Open-end schemes offer liquidity through on-going sale and re-purchase facility. Thus, the investor does not have to worry about finding a buyer for his investment –a risk normally associated with direct investment in the securities market.

Transparency

You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook.

Flexibility

Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience.

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LIMITATIONS OF MUTUAL FUNDS

No Guarantees

No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money.

Fees and commissions

All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund. Taxes

During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made.

Management risk

When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you

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expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers.

Dilution

It's possible to have too much diversification. Because funds have small holdings in so many different companies, high returns from a few investments often don't make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money.

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INDIAN MUTUAL FUND INDUSTRY: A PROSPECTIVE

The Indian mutual fund industry is dominated by the Unit Trust of India which has a total corpus of Rs700bn collected from more than 20 million investors. The UTI has many funds/schemes in all categories i.e. equity, balanced, income 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 Rs200bn. UTI was floated by financial institutions and is governed by a special act of Parliament. Most of its investors believe that the UTI is government owned and controlled, which, while legally incorrect, is true for all practical purposes.

The second largest category of mutual funds is the ones floated by nationalized banks. Can bank Asset Management floated by Canara Bank and SBI Funds Management floated by the State Bank of India are the largest of these. GIC AMC floated by General Insurance Corporation and Jeevan Bima Sahayog AMC floated by the LIC are some of the other prominent ones. The aggregate corpus of funds managed by this category of AMCs is about Rs150bn.The third largest categories of mutual funds are the ones floated by the private sector and by foreign asset management companies. The largest of these are Prudential ICICI AMC and Birla Sun Life AMC. The aggregate corpus of assets managed by this category of AMCs is in excess of Rs250bn.

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TRENDS IN MUTUAL FUND INDUSTRY

The most important trend in the mutual fund industry is the aggressive expansion of the foreign owned mutual fund companies and the decline of the companies floated by nationalized banks and smaller private sector players. Many nationalized banks got into the mutual fund business in the early nineties and got off to a good start due to the stock market boom prevailing then. These banks did not really understand the mutual fund business and they just viewed it as another kind of banking activity. Few hired specialized staff and generally chose to transfer staff from the parent organizations.

The performance of most of the schemes floated by these funds was not good. Some schemes had offered guaranteed returns and their parent organizations had to bail out these AMCs by paying large amounts of money as the difference between the guaranteed and actual returns. The service levels were also very bad. Most of these AMCs have not been able to retain staff, float new schemes etc. and it is doubtful whether, barring a few exceptions, they have serious plans of continuing the activity in a major way.

The experience of some of the AMCs floated by private sector Indian companies was also very similar. They quickly realized that the AMC business is a business, which makes money in the long term and requires deep-pocketed support in the intermediate years. Some have sold out to foreign owned companies, some have merged with others and there is general restructuring going on.

The foreign owned companies have deep pockets and have come in here with the expectation of a long haul. They can be credited with introducing many new practices such as new product innovation, sharp improvement in service standards and disclosure, usage of technology,

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broker education and support etc. In fact, they have forced the industry to upgrade itself and service levels of organizations like UTI have improved dramatically in the last few years in response to the competition provided by these.

Association of Mutual Funds in India (AMFI)

With the increase in mutual fund players in India, a need for mutual fund association in India was generated to function as a non-profit organization. Association of Mutual Funds in India (AMFI) was incorporated on 22nd August, 1995.

AMFI is an apex body of all Asset Management Companies (AMC) which has been registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members. It functions under the supervision and guidelines of its Board of Directors.

Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. It follows the principle of both protecting and promoting the interests of mutual funds as well as their unit holders.

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THE OBJECTIVES OF ASSOCIATION OF MUTUAL FUNDS.IN.INDIA

The AMFI works with 30 registered AMCs of the country. It has certain defined objectives which juxtaposes the guidelines of its Board of Directors. The objectives are as follows:

This mutual fund association of India maintains a high professional and ethical standard in all areas of operation of the industry. It also recommends and promotes the top class business practices and code of conduct which is followed by members and related people engaged in the activities of mutual fund and asset management. The agencies who are by any means connected or involved in the field of capital markets and financial services also involved in this code of conduct of the association.

AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund industry. AMFI does represent the Government of India, the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry. It develops a team of well qualified and trained Agent distributors. It implements a programme of training and certification for all intermediaries and other engaged in the mutual fund industry.

AMFI undertakes all India awareness programme for investors in order to promote proper understanding of the concept and working of mutual funds.

At last but not the least association of mutual fund of India also disseminate informations on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies.

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THE SPONSOR OF ASSOCIATION OF MUTUAL FUNDS IN INDIA

Bank Sponsored SBI Fund Management Ltd. BOB Asset Management Co. Ltd. Canbank Investment Management Services Ltd. UTI Asset Management Company Pvt. Ltd.

Institutions GIC Asset Management Co. Ltd. Jeevan Bima Sahayog Asset Management Co. Ltd.

Private Sector

Indian:- BenchMark Asset Management Co. Pvt. Ltd. Cholamandalam Asset Management Co. Ltd. Credit Capital Asset Management Co. Ltd. Escorts Asset Management Ltd. JM Financial Mutual Fund Kotak Mahindra Asset Management Co. Ltd. Reliance Capital Asset Management Ltd. Sahara Asset Management Co. Pvt. Ltd Sundaram Asset Management Company Ltd. Tata Asset Management Private Ltd.

Predominantly India Joint Ventures:- Birla Sun Life Asset Management Co. Ltd. DSP Merrill Lynch Fund Managers Limited HDFC Asset Management Company Ltd.

Predominantly Foreign Joint Ventures:- ABN AMRO Asset Management (I) Ltd. Alliance Capital Asset Management (India) Pvt. Ltd.

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Deutsche Asset Management (India) Pvt. Ltd. Fidelity Fund Management Private Limited Franklin Templeton Asset Mgmt. (India) Pvt. Ltd. HSBC Asset Management (India) Private Ltd. ING Investment Management (India) Pvt. Ltd. Morgan Stanley Investment Management Pvt. Ltd. Principal Asset Management Co. Pvt. Ltd. Prudential ICICI Asset Management Co. Ltd. Standard Chartered Asset Mgmt Co. Pvt. Ltd.

MUTUAL FUND WITH NEW FACES

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1) Reliance Capital Asset Management Company Limited (RCAM)

Reliance Capital Asset Management Limited (RCAM), a company registered under the Companies Act, 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund.

Reliance Capital Asset Management Limited is a wholly owned subsidiary of Reliance Capital Limited, the sponsor. The entire paid-up capital (100%) of Reliance Capital Asset Management Limited is held by Reliance Capital Limited.

Reliance Capital Asset Management Limited was approved as the Asset Management Company for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June 30, 1995. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this IMA, RCAM is authorized to act as Investment Manager of Reliance Mutual Fund. The net worth of the Asset Management Company including preference shares as on March 31, 2005 is Rs.30.13 crores. Reliance Mutual Fund has launched twenty five Schemes till date, namely: Reliance Vision Fund (September 1995), Reliance Growth Fund (September 1995) Reliance Income Fund (December 1997), Reliance Liquid Fund (March 1998), Reliance Medium Term Fund (August 2000), Reliance Short Term Fund (December 2002), Reliance Fixed Term Scheme (March 2003), Reliance Banking Fund (May 2003), Reliance Gilt Securities Fund (July 2003), Reliance Monthly Income Plan (December 2003), Reliance Diversified Power Sector Fund (March 2004) Reliance Pharma Fund ( May 2004), Reliance Floating Rate Fund (August 2004), Reliance Media & Entertainment Fund (September 2004), Reliance NRI Equity Fund (October 2004), Reliance NRI Income Fund (October 2004),

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Reliance Index Fund (January 2005), Reliance Equity Opportunities Fund (February 2005), Reliance Fixed Maturity Fund - Series I (March 2005), Reliance Fixed Maturity Fund - Series II (April 2005), Reliance Regular Saving Fund (May 2005), Reliance Liquidity Fund (June 2005), Reliance Tax Saver (ELSS) Fund (July 2005), Reliance Fixed Tenor Fund (November 2005) and Reliance Equity Fund (Feb 2006).

RCAM has been registered as portfolio managers vide SEBI Registration No. INP000000423 and renewed effective 1st August, 2003.RCAM has commenced these activities. It has been ensured that key personnel of the AMC, the systems, back office, bank and securities accounts are segregated activity wise and there exists systems to prohibit access to inside information of various activities. As per SEBI Regulations, it will further ensure that AMC meets the capital adequacy requirements, if any, separately for each such activity.

RCAM has been appointed as the Investment Manager of "Reliance India Power Fund", a Venture Capital Fund registered with SEBI vide Registration no.IN/VCF/05-06/062 dated June 16, 2005 but this activity is yet to commence.

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2) Birla Sun Life Asset Management Company Limited (BSLAMC)

Birla Sun Life Asset Management Company Ltd. (BSLAMC), the investment managers of Birla Mutual Fund, is a joint venture between the Aditya Birla Group and the Sun Life Financial Services Inc. of Canada. The joint venture brings together the Aditya Birla Groups' experience in the Indian market and Sun Life's global experience.

Since its inception in 1994, Birla Mutual Fund has emerged as one of India's leading Mutual Funds with over Rs. 16,500 crores * of assets under management and an investor base in excess of 8 lakhs. The fund offers a range of investment options, which include diversified and sector specific equity schemes, fund of fund schemes, hybrid and monthly income funds, a wide range of debt and treasury products and offshore funds.

BSLAMC is the first asset management company in India to be awarded the coveted ISO 9001:2000 certification by DNV, Netherlands. BSLAMC also provides private Wealth Management services.

BSLAMC follows a long-term, fundamental research based approach to investment. The approach is to identify companies, which have excellent growth prospects and strong fundamentals. The fundamentals include the quality of the company’s management, sustainability of its business model and its competitive position, amongst other factors. Birla Sun Life Asset Management Company has one of the largest team of research analysts in the industry, dedicated to tracking down the best companies to invest in.

Birla Sun Life AMC strives to provide transparent, ethical and research-based investments and wealth management services.

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VisionTo be the most trusted name in investment and wealth management, to be the preferred employer in the industry and to be a catalyst for growth and excellence of the asset management business in India.

MissionTo consistently pursue investor's wealth optimization by:

Achieving superior and consistent investment results. Creating a conducive environment to hone and retain talent. Providing customer delight. Institutionalizing system-approach in all aspects of

functioning. Upholding highest standards of ethical values at all times.

Values

Integrity Commitment Passion Seamlessness Speed

3) Sundaram Newton Asset Management Company

Sundaram BNP Paribas Mutual has assets under management to the tune of more than USD 1 billion helps investors to reach their financial goals by delivering consistent performance through judicious investment practices.

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Vision

To be a significant player in the Indian asset management space and be one of the top ten asset managers.

Mission

To provide people the best experience in accessing financial markets.

Philosophy

- To take the least cost and most effective solution - Never ever take short-cuts - Admit and share mistakes - internally - Take necessary steps to avoid repetition of work - Respect others, their needs, religion and sentiments - Be on time always - Communicate freely and maintain confidentiality - Develop and maintain trust - Work as a coherent team

4) Kotak Mahindra Asset Management Company Limited (KMAMC)

Kotak Mahindra Mutual Fund (KMMF) is managed by Kotak Mahindra Asset Management Company Ltd., a wholly owned subsidiary of Kotak Mahindra Bank Ltd.  Kotak Mahindra Mutual Fund launched its Schemes in December 1998 and  today manages over  Rs.13,635.83 crores of assets from close to 4,34,622 investors in various schemes.

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Kotak Mahindra is one of India's leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporates.

The group has a net worth of over Rs. 2,500 crore, employs around 6,700 people in its various businesses and has a distribution network of branches, franchisees, representative offices and satellite offices across 250 cities and towns in India and offices in New York, London, Dubai and Mauritius. The Group services over 1.6 million customer accounts.

Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly owned subsidiary of KMBL, is the asset manager for Kotak Mahindra Mutual Fund (KMMF). KMAMC started operations in December 1998 and has close to 4, 27,450 investors in various schemes. KMMF offers schemes catering to investors with varying risk - return profiles and was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities.

5) ING Investment Asset Management Company Private Limited (INGIM)

ING Group is a global financial services company of Dutch origin with 150 years of experience, providing a wide array of banking, insurance and asset management services in over 50 countries. Our 114,000 employees work daily to satisfy a broad customer base: individuals, families, small businesses, large corporations, institutions and governments. Based on market capitalization, ING

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is one of the 20 largest financial institutions worldwide and in the top-10 in Europe.

Mission

We strive to deliver our financial products and services in the way our customers expect with exemplary service, maximum convenience and at competitive rates. This is reflected in our mission statement: To set the standard in helping our customers manage their financial future.

Stakeholders

ING conducts its business on the basis of clearly defined business principles. In all our activities we carefully weigh the interests of our stakeholders: customers, employees, shareholders, business partners and society at large. ING strives to be a good corporate citizen.

ING Investment Management Limited (INGIM) is part of the specialist investment network of ING Group. INGIM employs around 2,300 staff in 29 countries across three broad geographic regions: Europe, the Americas and Asia Pacific. Its global assets under management total more than a$563 billion as at 30 September 2005.

Combining rigorous research and integrated risk management, INGIM’s team of investment professionals is expert in managing investments across all major asset classes, including Australian shares, international shares, property securities and fixed interest.

INGIM’s investment approach

INGIM’s investment philosophy maintains that markets have inefficiencies and active portfolio management should generate

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superior long-term investment returns. INGIM aims to deliver consistently attractive returns for investors over the long term at acceptable levels of risk.

INGIM believes that investment markets are ultimately driven by trends in the economic cycle, and a particular asset class tends to perform differently to other asset classes at any given point in the cycle.

INGIM’s active portfolio management aims to take advantage of asset class trends, adding value and managing risk.

INGIM’s multi sector and international share funds have exposure to foreign currency. Foreign currency is actively managed with a view to increasing the return available in Australian dollars for the benefit of the total portfolio. Active currency management means buying undervalued currencies and selling overvalued currencies.

6) TATA Asset Management Company

Tata Asset Management is one of India's fastest-growing fund management companies, with over Rs 6,200 crore of assets under management from over 350,000 investors. Established in 1995, it is also one of the oldest fund management companies in the Indian private sector.

Tata Asset Management is focused on identifying investment avenues to generate medium term returns for corporate investors.

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The company uses the latest and the best fund management processes and techniques to service its organizational clients through 16 branches across the country, associates in seven other cities in India and 57 investor servicing centers.

The company offers a wide range of investment products for institutional investors, with schemes which include equity / debt and balanced options across the risk-return spectrum. Among these are:

Tata Pure Equity Fund (invested in fundamentally undervalued companies with a medium-term horizon.

Tata Equity Opportunities Fund (aimed to capitalizing on opportunities in the equity market).

Tata Life Sciences and Technology Fund (invested mainly in fast-growing, intellectual property-driven, new-economy sectors).

Tata Select Equity Fund (invested predominantly in growing basic sectors).

Tata Growth Fund (invested in growth-oriented companies). Tata Equity P/E Fund (invested predominantly in

undervalued companies). Tata Dividend Yield Fund (invested predominantly in stocks

with high dividend yields). Tata Tax Saving Fund (equity-linked tax-saving scheme). Tata Balanced Fund (balanced exposure to both equities and

debt). Tata Income Fund (invested in high-quality fixed-income

securities). Tata Gilt Securities Fund (invested exclusively in

government securities). Tata Short Term Bond Fund (invested mainly in short-term,

fixed-income and money-market securities). Tata Income Plus Fund (invested in high-quality debt

securities).

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Tata Dynamic Bond Fund (invested across asset and maturity segments).

7) State Bank of India Funds Management Limited Banks

The greater sophistication and diversity of investors' asset management needs requires investment management firms to offer, in a timely manner, products that meet the needs of a wide range of investors.

SBI Asset Management leverages its position as an independent management company, and utilizes domestic and overseas resources, to offer investors not just conventional financial products, such as domestic and overseas stocks and bonds, but alternative investment products as well, including unlisted stocks and hedge funds.Investing in Promising Unlisted Stocks.

Very few asset management companies offer investors a chance to invest in unlisted stocks through public subscription investment trust, because this requires sophisticated know-how that differs from conventional listed stock investing.

SBI Asset Management leverages the know-how it has accumulated through years of experience in the SBI Group discovering promising new companies, carrying out due diligence, following up on business trends to offer investors an opportunity to invest in unlisted stocks through mutual funds.

HOW RETAIL INVESTER SHOULD INVEST IN MUTUAL FUND

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Step One - Identify your Investment needs Your financial goals will vary, based on your age, lifestyle, financial independence, family commitments, and level of income and expenses among many other factors. Therefore, the first step is to assess your needs. You can begin by defining your investment objectives and needs which could be regular income, buying a home or finance a wedding or educate your children or a combination of all these needs, the quantum of risk you are willing to take and your cash flow requirements. Here are few things that might help them;Retirement – in how many years ?How much money will be needed?How long will it need for ?Daughter’s/ son’s wedding –when and how much?Daughter’s/ son’s education –when and how much?Purchases of big ticket items e,g. House ,car etc. when and how much?

Step Two – Choose the right Mutual Fund

The important thing is to choose the right mutual fund scheme which suits your requirements. The offer document of the scheme tells you its objectives and provides supplementary details like the track record of other schemes managed by the same Fund Manager. Some factors to evaluate before choosing a particular Mutual Fund are the track record of the performance of the fund over the last few years in relation to the appropriate yardstick and similar funds in the same category. Other factors could be the portfolio allocation, the dividend yield and the degree of transparency as reflected in the frequency and quality of their

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communications for selecting the right scheme as per your specific requirements.

Step Three - Select the ideal mix of Schemes

Investing in just one Mutual Fund scheme may not meet all your investment needs. You may consider investing in a combination of schemes to achieve your specific goals.

eg.

Step Four - Invest regularly

The best approach is to invest a fixed amount at specific intervals, say every month. By investing a fixed sum each month, you buy fewer units when the price is higher and more units when the price is low, thus bringing down your average cost per unit. This is called rupee cost averaging and is a disciplined investment strategy followed by investors all over the world. You can also avail the systematic investment plan facility offered by many open end funds.

Step Five- Start early

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It is desirable to start investing early and stick to a regular investment plan. If you start now, you will make more than if you wait and invest later. The power of compounding lets you earn income on income and your money multiplies at a compounded rate of return.

Step Six - The final step

All you need to do now is to click for online application forms of various mutual fund schemes and start investing. You may reap the rewards in the years to come. Mutual Funds are suitable for every kind of investor - whether starting a career or retiring, conservative or risk taking, growth oriented or income seeking.

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Research Problem

Possibly the most challenging concept in every field is to deals with understanding why customer do and what do . but such knowledge is critical for companies since having the strong understanding of customer will help shed lighting on what is important to the customer and also suggested the important influence on decision making . using this information , companies can create mutual fund programs that they believe will be of interest to customer .

As you might guess, factors affecting how customer make decision are extremely complex . customer behavior is deeply rooted in psychology with dashes of sociology thrown in just to make things more interesting . since every person in the world is different , it is impossible to have simple rules that explain how buying decision are made . but those who have spent many year analyzing customer activity have presented us with useful ” guidelines ” in how some one decides whether or not to make a purchase.

OBJECTIVE OF THE STUDY

1. Understand deeply about the “Mutual Funds” .2. Understand the major factor influencing customer behavior

while investing in Mutual funds .3. Know and recognize the type of the investing decision

behavior.4. know about the various available Mutual funds and Mutual

fund companies.

REARCH METHODOLOGY

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One of the primary concern of this research is to identify the important factor which is affecting the Consumer’s perception about the mutual fund. To determine this factor , a questioner survey was conducted . the questioner consist of two parts one for the personal detail and second is consist of the 11 question about mutual fund and customer perception about mutual funds.

RESERCH TYPE We use exploratory research design in our studies exploratory research is also known as the Formulate research . this research is provides the insight into and comprehension of an issue and or situation . it should draw definitive conclusion only with extremely caution . Exploratory research is a type of research conducted because a problem has not been clearly define . exploratory research helps determining the best research design ,data collection method and selection of the subject . given its fundamental nature exploratory research often conclude that a perceived problem dose not actually exist .exploratory research is used when problem is in a preliminary stage. It is used when the topic and the issue is new and when data is diffcult to collect.Here we also try to find out the main cause why there is the perceptual blocking of the Indian customer towards mutual funds .the method involve range from the survey which describe the status quo ,the correlation study which investigate the relationship between variable , to the development studies which seek to determine changes over time .

DATA COLLECTION

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PRIMARY DATA : structured questioner.

SCONDARY DATA ; online data base ,journals ,surveys

SAMPLING We have used convenience sampling technique .it is also called haphazard or accidental sampling .member of the population are chosen based on their relative ease of access. To sample friends ,co-worker , or shopper , are all example of convenience sampling . sometimes called grab or opportunity sampling . this is the method of the choosing item arbitrarily and in an unstructured manner from the frame . through almost impossible to treat rigorously. It is the method most commonly employed in many practical situation.

Sample technique : Convenient sampling .

Sample size : 100

TOOLS

Statistical : using SPPA 16.0

Technique : Principal Component factor analysis

Tabulation of data : Excel sheet.

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LIMITATIONS

1. Time constraints.2. Budgetary Constraints.3. The lack of time consumer to fill Questionnaire.4. As the area is very wide and area in which survey has

been done is not big so the difference may occure in the perception of consumer’s.

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FINDINGS AND ANALISIS

The collected data is subjected to principal component factor analysis ,using SPSS 16.0 to have an insight into the responces collected .after filling up the 10 column and 100 row of SPSS data we get the table of the responses of the 100 respondent’s perception about our 10 statements . First the factor analysis is used to remove the radiant variable from the survey data and to reduce the number of variable into the definite number of dimension .the application is done using the SPSS16.0. the factor analysis is performed using the principal component extraction method with vary max rotation . this analysis reduces the number of variable from 10 to 5 this are those variable on which we can conclude the result of our research to reiterate ,we are extracting factor that account for less and less variance to simplify the matter we usually start with the correlation matrix where the variance of all variable are equal to 1.0. therefore the total variance in the matrix is equal to the number of variable .each with the variance of one then the total of variability that can potentially be extract is equal to 10 times 1.

EXAMPLES

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Mona & Joydeep Sengupta (Age: 21-25)

Financial Goals

Planning to purchase a House in the next ten years.

Creating long term wealth for retirement / house.

Investment Strategy

Aggressive growth portfolio.

Stock

short-term

Bonds

short term 10%

Bonds 15 %

stock 75%

Sheela & Shekhar mathur with Varun(13 year) (Age 32-40 years)

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Financial GoalsProviding for children’s education. (5-8 year)Planning for child’s wedding(15-20 year)Planning for retirement

Investment strategy

Balanced portfolio.

Stock

short-term

Bonds

short term 20%

Bonds 30 %

stock 50%

Meera & akash Chaudhry (Age 55-60 year)

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Financial Goals

Planning for retirement (5-10)

Investment strategy

Conservative portfolio

Stock

Bank deposits

Bonds

Bank deposits 40%

Bonds 40 % stock 20%

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Mutual fund vs Bank deposits

Bank deposits are for that segment of the investor class that looks for safety and accept a relatively lower return .A bank deposit is guaranteed by the bank for repayment of principal and interest . any risk associated with the investment of the investor fund , have to be borne by bank to pay.

A Mutual fund, on the other hand , invest on the risk of the investor .hence there is no contractual gurantee for the payment of principal or interest to the investor

The bank deposit dose not directly hold the bank portfolio of investment , as he does in case of fund . the investor need to assess the risk in terms of the credit rating of the bank ,which provides an indication of the financial soundness of the bank .a debt fund is not rated by any agency .the investor has to assess the risk on the portfolio held by the fund . the investor need to know whether the fund invests in high quality assets or lower rated debt. Unlike in case of deposit , therefore the investor needs to know his on investment objective and risk before investing in debt fund.

With declining rates , bank deposits are no longer as attractive to risk averse investors as before .Further ,as mutual fund don’t assure return, some investor may still find banks a safer heaven for short-term deposit and will be willing to settle for lower returns. but in real sense investing money with bank is giving negative return because of the factor like inflation.

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Graphs Based on survey

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Age group

20-25

26-40

41-60

60-80

28%

16% 31%

25%

People check their investment

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Ones

Twice

Thrice

<Three

18%

6%16%

60%

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People who Affects The investment decision

0%

10%

20%

30%

40%

50%

60%

Family Friends Advisors Others

Series1

7%

18%

57%

18%

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Reasons for investing

0% 5% 10% 15% 20% 25% 30% 35% 40%

Saftey

Diversification

Returns

Others

Series1

17%

15%

30%

38%

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Why People doesn’t invest ?

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

High risk Fixed return Bad experience Others

Series125%25%

45%

5%

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Questionnaire

Me being student of the management ,have under taken the research project on “mutual fund and customer perception” . I will be grateful to you ,if you fill the questionnaire.

(A) personal

1. Name2. Age 3. Occupation 4. Income group

(B) Mutual funds

1. Are you aware of mutual funds ?

[ ] Yes [ ] No

2. Are they private or Public? [ ] Private [ ] Public [ ] Both

3. Do you have any investment in mutual fund ?

[ ] Yes [ ] No

4. Which option ?

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[ ] Growth [ ] Dividend

5.What is the Amount of your investment ?

[ ] Above 100000 [ ] below 100000

6.Who are the people who affect the investment decision ?

[ ] Family [ ] Friends [ ] Advisors [ ] Other

7. Do you know about the making investment in MF through SIP?

[ ] Yes [ ] NO

8.With in how much duration in a year you evaluate your investment?

[ ] ones [ ] twice [ ] thrice

9. You invest through ?

[ ] Bank [ ] Distributor [ ] internet

10. Why do you invest in mutual funds?

[ ] Safety [ ] Diversification [ ] Returns

BIBLOGRAPHY

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http;//economictimes.indiatimes.com/

www.valuereserchonline.com

http;/www.moneycontrol.com

www.myiris.com/mutual/schem

www.amfiindia.com

http;//www.nse-india.com

http/content.icicidirect.com/mutualfund

www.hdfcfund.com

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