mutual funds for individual investors in india

A

PROJECT REPORT ON

MUTUAL FUNDS FOR INDIVIDUAL INVESTORS IN INDIA

CONDUCTED FOR

METLIFE INDIA INSURANCE CO. LTD

SUBMITTED IN

PARTIAL FULLFILLMENT OF

MASTER IN MARKETING MANAGEMENT

SUBMITTED BY

RAJESH B. SURASE

MMM-1

NEVILLE WADIA INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH

PUNE-411 001(2010-11)

Neville Wadia Institute of Management Studies and Research , Pune - 411001

ACKNOWLEDGEMENT

I take immense pleasure in completing this project and submitting the summer project

report. The last 90 days with Metlife India Insurance Co.Ltd. has been full of learning

and sense of contribution toward the organization. I would like to thank Metlife India

Insurance Co.Ltd. for giving me an opportunity of learning and contributing through

this project. I also take this opportunity to thank all those people that made this

experience a memorable one.

A successful project can never be prepared by the single effort of the person to whom

project is assigned, but it also demand the help and guardianship of some conversant

person who helped the undersigned actively or passively in the completion of

successful project.

In this context as a student of Neville Wadia Institute of Management Studies and

Research. I would first of all like to express my gratitude to Mr.Santosh Dastane

(Director) Prof. Vikas Dole, Pro. Radha Dogra (Co-ordinator). Who provide me good

opportunity to work with Metlife India Insurance Co.Ltd.

During the actual project work, Mr. Sohan Singh (Sales Manager) has been a source of

inspiration through his constant guidance; personal interest; encouragement and help. I

convey my sincere thanks to him. In spite of his busy schedule he always finds time to

guide me through the project. I am also grateful to Mr. Nitin Baviskar (AM) for

reposing confidence in my abilities and giving me the freedom to work on my project.

Last but not least, I would like to thanks all of my friends and well wishers for giving

me their support during this project knowingly or unknowingly.

RAJESH SURASE

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017 2

INDEX

CHAPTER NO. CONTENTSPAGE

NO.I Introduction

I.I What is Mutual Fund? 12I.II Growth of Mutual Fund. 13I.III Phases of growth. 13I.IV Types of Mutual Fund. 15I.V Mutual Fund In India. 19I.VI How long to keep Investment. 20I.VII Return Expected. 21I.VIII Advantage of Mutual Fund. 22I.IX Drawbacks of Mutual Funds. 24I.X Association of Mutual Fund. 25I.XI Future of Mutual Fund. 27I.XII Regulatory aspects 29I.XIII How to judge Mutual Fund. 33I.VIX History of Mutual Fund. 35I.XV Structure of Mutual Fund. 36I.XVI AMC’s operating currently. 37

II Problem Statements and Objectives of Study.II.I Problem Statements. 40II.II Objectives of Study. 41

III Research Methodology.III.I Methodology of Study. 43III.II Research Methodology. 43III.III Assumptions. 43III.VI Literature Survey. 44III.V Probability Sampling. 44III.VI Sampling Size. 45III.VII Execution of Project. 45

IV Limitations.IV.I Limitations. 47

V Analysis of Mutual Fund.


V.I Analysis on the basis of Schemes. 49V.II Comparison between Bank and MF Industry. 50

VI Data collectionVI.I Questionnaire 53VI.II Personal Visits. 54VI.III Telephonic Information. 54

VII Interpretation of Data.

VII.IPercentage of Investment to Total Income.

56

VII.II Investment in Financial Product in Percentage. 57VII.III Awareness of Mutual Fund. 58VII.IV Perception of Mutual Fund. 59VII.V Comparison between Risk Investment and Returns. 60VII.VI Identification of Mutual Fund Industry. 61VII.VII Comparison on the basis of place. 62VII.VIII Risk taken ability by different Age Groups. 63VII.VIX Percentage of total Income Invest in Mutual Fund. 64

VIII Project Findings and Recommendations.VIII.I Project Findings. 66VIII.II Recommendations. 66

IX Bibliography. 67

EXECUTIVE SUMMARY:-


The project titled “MUTUAL FUNDS FOR INDIVIDUAL INVESTORS IN

INDIA” being carried out for METLIFE INDIA INSURANCE CO. LTD.

Metlife operates in various financial products and services like, Consultancy, Mutual

Fund, Registrar and Transfer Agent, Research, Mapin etc.

The evaluation of financial planning has been increased through decades, which is best

seen in customer rise. Now a day’s investment of saving has assumed great importance.

According to the study of the markets, it is being observed that markets are doing well

in Mutual fund. In near future a proper financial planning is required to invest money in

all type of financial product because there is good potential in market to invest.

In this project the great emphasis is given to the investor’s mind in respect to

investment in Mutual Fund .The needs and wants of the client is taken into

consideration.

I hope Metlife, Pune will recognize this as well as take more references from this

project report.

The main objective of this project is to know the Mutual Funds for individual investors

in India and also to know the investing pattern of people in different Financial Project.

IT sector has been given more emphasis for the study of the project because it is the

only sector where all type of Age group, Income class and different level of people are

represented.

After analyzing the feedback the conclusion has been made that the Indian financial

market is having lots of potential customer the only thing is to give a proper guidance to

the prospective customers.


COMPANY PROFILE


COMPANY PROFILE

MetLife Inc. is a leading provider of insurance and other financial services to

millions of individual and institutional customers throughout the United States.

Through its subsidiaries and affiliates, MetLife Inc. offers life Insurance, annuities,

automobile and homeowner’s insurance and retail banking services to individuals, as

well as group insurance, reinsurance and retirement and savings products and services

to corporations and other institutions. Outside the U.S., the MetLife Companies have

direct insurance operations in Asia Pacific, Latin America and Europe.

MetLife is one of the largest insurance and financial services companies in the

U.S. The company’s unparalleled franchises and brand names uniquely position it to be

the pre eminent provider of protection and savings and investment products in the U.S.

In addition, MetLife’s international operations are focused on emerging markets where

the demand for insurance and savings and investment products is expected to grow

rapidly in the future.

MetLife’s well recognized brand names, leading market positions, competitive

and innovative product offerings and financial strength and expertise will help drive

future growth and enhance shareholders value, building on a long history of tradition

and integrity.


Their services are widely networked across India. Their services have

increasingly offered customer oriented convenience, which they provide to a spectrum

of investors, high-net worth or otherwise, with equal dedication and competence.

But true to their spirit, this success is not their final destination, but just a

platform to launch further enhanced quality services to provide investors the latest in

convenient, customer-friendly products.

Over the years they have ensured that the trust of their customers is their biggest

returns. Factors such as their success in the Electronic custody business has helped

build on their tradition of trust even more. Consequentially their retail client base

expanded very fast.

To empower the investor further they have made serious efforts to ensure that

their research calls are disseminated systematically to all their clients through various

delivery channels like email, chat, SMS, phone calls etc.

In the future, their focus will be on the emerging businesses and to meet this

objective, they have enhanced their manpower and revitalized their knowledge base

with enhances focus on Futures and Options as well as the commodities business.


CHAPTER:-I

INTRODUCTION:-


INTRODUCTION

Financial planning is the process of identifying one’s wealth accumulation and

protection goals and developing a coordinated plan to help priorities one’s future

financial decision. Financial planning should be taken as seriously as a medical

prescription, as it deals with ones financial health. It should be seen not just as a means

of achieving financial security, but as making a vital contribution to one’s overall

happiness and peace of mind.

Financial planning can be manageable or overwhelming depending upon how one

approaches it. Without guidance; it’s hard to know what one needs and when one needs

it. With right information, tools and timeline, the choices become much easier.

In fact too many people are investing in MUTUAL FUNDS. After all it’s common

knowledge that investing in mutual fund is {or at least should be} better than simply

letting your cash waste in a saving account, but for most people that’s where the

understanding of funds end. It doesn’t help that mutual fund sale people speak a strange

language that, that sounding sort of English, is interspersed with jargon like NAV,

load/no-load, etc.

Originally MUTUAL FUNDS were heralded as a way for the little guy to get a piece of

a market. Instead of spending all the free time buried in the financial pages of

ECONOMIC TIMES all one has to do is buy a mutual funds and be set on his way to

financial freedom. But it’s not that easy. MUTUAL FUNDS are in excellent idea in

theory but in reality they haven’t always delivered. Not all mutual funds are created Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017 10

equal, and investing in mutual fund isn’t easy as throughing one’s money at the first

sales person who solicits business.

I.I WHAT ARE MUTUAL FUNDS:-

Needs for capital growth, income and/or income preservation. And a mutual fund

brings the benefit of diversification and money management to the individual investors,

providing an opportunity The popularity of MUTUAL FUNDS over the past few years

has soared. The reasons MUTUAL FUNDS make it easy and less costly for investors to

satisfy therefore financial success that was once available only to the very rich.

A MUTUAL FUND is a body corporate registered with the Securities and Exchange

Board of India (SEBI) that pools up the money from individual/ corporate investors and

invests the same on behalf of the investors / unit holders in equity shares, govt.

securities, Bonds call money market etc. and distributes the profits. In other words a

mutual fund allows an investor to indirectly take a position in a basket of asset.

UNIT TRUST OF INDIA is the first mutual fund set up under a separate Act, UTI Act

in 1963 and started its operation in 1964 with the issue of unit under the scheme US-64.

Currently public sector banks like SBI, Canara bank, Bank of India, and Institution like

IDBI, GIC, and LIC HDFC Foreign institution like Alliance Morgan Stanley,

Templeton, Principle HSBC and private financial Co. like first India mutual fund DSP

Merrill Lynch, Sundaram, Kotak etc.have floated their own mutual funds.

Presently there are 33 mutual funds in India and close to 400 mutual fund schemes.

Currently the total fund under the mutual fund management in India are a little over Rs.

1,39,000 crores. The private funds account for around 77 percent.


ONE CAN MAKE MONEY FROM MUTUAL FUND IN THREE WAYS:-

Income is earned from dividends and interest on bonds. A fund pays out nearly

all income it receives over the year to fund owners in the form of a distribution.

If the fund sell securities that have increased in price, the fund have a capital

gain most fund also pass on this gain to investor in a distribution.

If fund holding increases in price but are not sold by the fund manager, the fund

shares increase in price. One can sell then this mutual fund shares the profit.

I.II GROWTH OF MUTUAL FUNDS: -

The Mutual Fund industry in India has been on a roll as the Asset under Management

continues to see strong spurt in growth. The asset under management swelled to Rs.

1,67,978 cr. by May 31st 2005 from Rs 1,01,565 cr. in January 2000. This apart the

industry has also seen a spurt in the number of schemes on offer, which amount to 460

at present, catering to varied needs of investors.

A booming economy, soaring stock market, and a conductive regulatory environment,

amongst a slew of other factor have added to the growth of the industry.

Given a huge opportunity in sub-urban and ruler markets, which lie hitherto untapped,

and growing income level in the country, the industries future looks bright.

I.III THE PHASES OF GROWTH: -

The Indian Mutual Fund industry has come a long way since the inception of UTI in

1963. According to AMFI the evolution of industry can be broadly divided into four

phases, which mark its transaction from the period when UTI ruled the roost to a period

of competition and increased awareness among investors.

FIRST PHASE (1964-87)


UTI remained the only Mutual Funds player in the country till 1987. UTI started its

operation in July 1964 with a view to encouraging savings and investments and

participation in the income, profits and gains accruing to the cooperation from the

Acquisition, holding, management and disposal of securities. UTI witnessed a slow and

steady growth over the 1970s and 1980s and by the end of 1988 it had an AUM of Rs.

67bn. It still continues to be the largest player in the Domestic Mutual Fund industry

with a AUM of Rs.23500 cr. as on March 31st, 2005.

SECOND PHASE (1987-93)

Public Sector Mutual Funds set up by public sector banks, Life Insurance Corporation

of India and the General Insurance Corporation of India entered the market in 1987.The

first known UTI mutual fund was the SBI mutual fund established in June 1987,

followed by Canara Bank mutual fund in December 1987, Punjab National bank mutual

fund in August 1989,Indian Bank mutual fund in November 1989,Bank of India mutual

fund in June 1990 and Bank of Baroda mutual fund in October 1992.LIC set up its

mutual fund in June 1989 while GIC established its mutual fund in December 1990.

During this period, the total asset of the industry grew to about Rs.610 bn with the total

No. of schemes increasing to about 167 by the end of 1994.

THIRD PHASE (1993-2003)

This phase marked the entry of private sector funds. The phase also signaled the

intensification of the competition. Both domestic and foreign players entered the

market, offering a wide variety of schemes to investors. Kothari Pioneer Mutual Fund

was the first private sector fund to be established in association with the foreign funds.

The opening up of the market to private players saw the international players like

Morgan Stanley, Jar dine Fleming, JP Morgan, George Soros and Capital International

entering the market.


FOURTH PHASE (SINCE FEB 2003)

In February 2003 the Unit Trust of India Act 1963 was repealed and UTI was bifurcated

into two separate entities: Specified undertaking of the Unit Trust of India, which is still

under the government of India, and the UTI Mutual Fund Limited. This was done in the

wake of the severe payment crisis that the UTI suffered on account of its assured return

schemes of US – 64 that finally resulted in an adverse impact on the Indian capital

markets .US - 64 was the first scheme launched by UTI with the significant equity

exposure and the returns of which are not linked to the market.

I.IV TYPES OF MUTUAL FUNDS : -

Mutual Funds have specific investment objectives such as growth of capital, safety of

principal current income or tax exempt income, one can select one fund or any number

of different funds to help one meets ones specific goals. In general mutual fund fall

under 3 general categories : -

Equity fund invest in shares of common stocks.

Fixed income funds invest in government or corporate securities which offer

fixed rate of returns.

Balanced fund invest in a combination of both stocks and bonds.

AGGRESSIVE GROWTH FUNDS :-

These funds seek to provide maximum growth of capital with secondary emphasis on

dividend or interest income. They invest in common stocks with a high potential for

rapid growth and capital appreciation.

Aggressive growth funds are suitable for those investors who can afford to assume the

risk of potential loss in value of their investment in the hope of achieving substantial


and rapid gains. They are not suitable for investors who must conserve their principal or

who must maximize their current income.

GROWTH FUNDS:-

Like aggressive growth funds, growth fund generally invests in stocks for growth rather

than income. They are considered more conservative in their approach because they

usually invest in established companies to achieve long-term growth. Growth fund

provides low current income but the investor principal is more stable then it would be in

an aggressive growth fund. While the growth potential may be less over the short term,

many growth funds have superior long-term performance records.

These funds are suitable for growth oriented investors but not investors who are unable

to assume risk or who are dependent on maximizing current income from there

investments.

GROWTH AND INCOME FUNDS:-

Growth and income funds seek long-term growth of capital as well as current income.

The investments strategies use to reach these goals vary among funds.

Growth and income funds have low to moderate stability of principal and moderate

potential for current income and growth. They are suitable for investors who can

assume some risk to achieve growth of capital but want to maintain a moderate level of

current income.

FIXED INCOME FUNDS:-

The goal of fixed income fund is to provide high current income consistent with the

level of capital. Growth of capital is of secondary importance.

Fixed income funds offer a higher level of current income than money market funds,

but a lower stability of principal. Fixed income funds are suitable for investors who


want to maximize current income and who can assume a degree of capital risk in order

to do so.

EQUITY FUNDS:-

Funds that invest in stocks represent the largest category of mutual fund. Generally the

investment objective of this class of fund is long-term capital growth with some

income. There are however many type of equity funds.

BALANCED FUNDS :-

The Balanced funds aims to provide both growth and income. These funds invest in

both shares and fixed income securities in the proportion indicated in their offer

documents. It is an idea for investors who are looking for the combinations of income

and moderate growth.

MONEY MARKET FUNDS/ LIQUID FUNDS:-

For the cautious investors these funds provide a very high stability of principal while

seeking a moderate to high current income. They invest in highly liquid; virtually risk

free, short-term debt securities of agencies of the Indian government, banks and

corporation and treasury bills. Because of their short-term investments, money market

mutual funds are able to keep a virtually constant unit price; only the yield fluctuates.

Money market funds are suitable for those investors who want high stability of

principal and current income with immediate liquidity.

SPECIALITY / SECTOR FUNDS:-These funds invest in securities of a specific industry or sector of the economy such as

health care, technology, leisure, utilities or precious metals. The funds enable investor

to diversify holding among many companies within an industry, a more conservative

approach than investing directly in one particular company.


Sector funds offer a opportunity for sharp capital gains in cases where the fund’s

industry is “in favor” but also entail the risk of capital losses when the industry is out of

favor. While sectors funds restrict holdings to a particular industry, other specialty

funds such as index funds gives investors a broadly diversified portfolio and attempt to

mirror the performance of various market averages.

OPEN ENDED SCHEMES:-

Open-ended schemes do not have a fixed maturity period. Investors can buy or sell

units at NAV- related prices from and to the mutual fund on any business day. These

schemes have unlimited capitalization, open-ended schemes do not have a fixed

maturity, there is no cap on the amount you can buy from the fund and the unit capital

keep growing. These funds are not generally listed on any exchange.

Open-ended schemes are preferred for their liquidity. Such funds can issue and redeem

units any time during the life of schemes. Hence unit capital of open-ended funds can

fluctuate on a daily basis. The advantages of open ended schemes are: -

1. Any time exit option

2. Any time enter option.

CLOSE ENDED SCHEMES:-

Close-ended schemes have fixed maturity periods. Investors can buy into these funds

during the period when these funds are open in the initial issue. After that such scheme

cannot issue new units except in case of bonus or right issue. However after the initial

issue you can buy or sell units of the schemes on the stock exchange where they are

listed. The market price of the unit could vary from the NAV of the schemes due to

demand and supply factor


I.V MUTUAL FUNDS IN INDIA:-

Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

Mutual Funds in India

UTI Private sector Public

JV’s with foreignPartners

Foreign Houses Indian Houses

Birla Capital Prudential ICICIAlliance CapitalKothari Pioneer

TempletonAllianceMorgan Stanley

TATA JM

BanksSBICANARAPNBBOI etc.

InstitutionsGICLIC etc.

18

I.VI HOW LONG TO KEEP INVESTMENT TO GET MAXIMUM RETURNS:-

Get desired returns technically open-ended funds you can withdraw your investments

even within a week, but to positive time frame is required are:

Funds Time Period

Equity Funds 3 Years (plus)

Balanced Funds 18 months to 3 Years

MIP’s 1 Year (plus)

Income Funds 6 months to 1 Year

Liquid Funds few days to 6 months

I.VII WHAT RETURNS CAN I EXPECT IF I KEEP MY MONEY FOR SUGGESTED TIME FRAMES:-

Funds Returns

Sector funds 22% to 25% p.a

Balance funds 15% to 18% p.a

MIP’s Pension Plans 12% to 15% p.a

Income Funds 10% to 12% p.a

Liquid Funds 7% to 9% p.a

The above-mentioned returns in the table are indicative and not assured. All

investments in MUTUAL FUNDS are securities and are subject to market risk and the

NAVs of the schemes may go up and down depending upon the factors and forces

affecting the security market including the fluctuations in the internal rates .The past

performance of the MUTUAL FUNDS is not indicative of future performance.


THE RISK RETURN GRAPHS FOR VARIOUS FUNDS:-

The above Graph shows the Risk and Returns generated by different Funds. Liquid

Funds are less Risky and also generate less Returns where as Sector Funds are more

Risky but generate more Returns by the example of above two Funds it is clear that

Risk and Returns are directly proportional to each other. Other Funds like Equity

Funds, Balanced Funds and Income Funds are also gives the same percentage of

Returns as the Risk involved.


Liquid Funds

Income Funds

Balanced Funds

Equity Funds

Sector Funds

RISKS

RETURNS

20

I.VIII ADVANTAGE OF MUTUAL FUND:-

The advantages of investing in a Mutual Fund are:

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.

Professional Management: Most mutual funds pay topflight professionals to

manage their investments. These managers decide what securities the fund will

buy and sell.

Regulatory oversight: Mutual funds are subject to many government regulations

that protect investors from fraud.

Liquidity: It's easy to get your money out of a mutual fund. Write a check, make

a call, and you've got the cash.

Convenience: You can usually buy mutual fund shares by mail, phone, or over

the Internet.

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.

Transparency: Mutual Fund schemes are said to be Transparent because they

show the clear allocation of Funds to Investors.

Flexibility: Mutual funds are flexible because they change time to time and also

if an Investors wants his money back before the maturity of the Fund He/she can

easily redeem it.


I.IX DRAWBACKS OF MUTUAL FUNDS:-

Mutual funds have their drawbacks and may not be for everyone:


No Guarantees:

No investment is risk free. If the entire stock market declines in value, the value of

mutual funds 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 expected. Of course, if you invest in Index Funds, you forego management risk,

because these funds do not employ managers.

I.X ASSOCIATION OF MUTUAL FUNDS IN INDIA:-


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 holder

The objectives of Association of Mutual Funds in India :-

The Association of Mutual Funds of India 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 high professional and ethical

standards gin 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 that 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.

Association of Mutual Fund in India do 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 programmer of training and certification for all intermediaries and other

engaged in the mutual fund industry.

AMFI undertakes all India awareness programmed for investor’s in order to

promote Proper understanding of the concepts and working of mutual funds.

At last but not the least association of mutual fund of India also disseminate

Information’s on Mutual Fund Industry and undertakes studies and research

either directly or in association with other bodies.

I.XI FUTURE OF MUTUAL FUND IN INDIA:-

By December 2004, Indian mutual fund industry reached Rs 1,50,537 crore. It is

estimated that by 2010 March-end, the total assets of all scheduled commercial banks

should be Rs 40,90,000 crores.


The annual composite rate of growth is expected 13.4% during the rest of the decade. In

the last 5 years we have seen annual growth rate of 9%. According to the current

growth rate, by year 2010 the asset will be double.

Let us discuss the following table:

Aggregate deposits of Scheduled Com Banks in India (Rs.Crore)

Month/Year Mar-98 Mar-00 Mar-01 Mar-02 Mar-03Mar-04

Sep-04 4-Dec

Deposits 605410 851593 989141 1131188 1280853 - 1567251 1622579

Change in % over last yr

- 15 14 13 12 - 18 3

Source – RBI

Mutual Fund AUM’s Growth

Month/YearMar-98

Mar-00

Mar-01

Mar-02

Mar-03

Mar-04 Sep-04 4-Dec

MF AUM's 68984 93717 83131 94017 75306 137626 151141 149300

Change in % over last yr

- 26 13 12 25 45 9 1

Source - AMFI

Some facts for the growth of mutual funds in India :-

100% growth in the last 6 years.

Number of foreign AMC's are in the queue to enter the Indian markets like Fidelity


Investments, US based, with over US$1trillion assets under management worldwide.

Our saving rate is over 23%, highest in the world. Only channelizing these savings in

mutual funds sector is required.

We have approximately 29 mutual funds which is much less than US having more than

800. There is a big scope for expansion.

'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are

concentrating on the 'A' class cities. Soon they will find scope in the growing cities.

Mutual fund can penetrate rural like the Indian insurance industry with simple and

Limited products.

SEBI allowing the MF's to launch commodity mutual funds.

Emphasis on better corporate governance.

Trying to curb the late trading practices.

Introduction of Financial Planners who can provide need based advice.

I.XII REGULATORY ASPECT :-

Schemes of mutual funds:-

The Asset management company shall launch no schemes unless the trustees

approve such scheme and a copy of the offer has been filed with the Board.

Every mutual fund shall along with the offer documents of each scheme pay

filing fees.


The offer document shall contain disclosures which are adequate in order to

enable the investors to make informed investment decision including the

disclosure non maximum investments proposed to be made by the scheme in the

listed securities of the group companies of the sponsor. A close-ended scheme

shall be fully redeemed at the end of the maturity period. “Unless a majority of

the unit holders otherwise decide for its rollover by passing a resolution”.

The mutual fund and asset management company shall be liable to refund the

application money to the applicants:-

If the mutual fund fails to receive the minimum subscription amount referred to

in clause (i) of sub- regulation.

If the moneys received from the applicants for units are in excess of subscription

as referred to in clause (ii) of sub-regulation.

o The asset management company shall issue to the applicant whose

application has been accepted, unit certificates or a statement of accounts

specifying the number of units allotted to the applicant as soon as possible

but not later than six weeks from the date of closure of the initial

subscription list and or from the date of receipt of the request from the unit

Holders in any open ended scheme.

Rules Regarding Advertisement:-

The offer document and advertisement materials shall not be misleading or

contain any statement or opinion, which are incorrect or false.


Investment objectives and valuation policies:-

The price at which the units may be subscribed or sold the price at which such

unit may at any time be repurchased by the mutual fund shall be made available

to the investors.

General Obligation:-

Every asset management company for each scheme shall keep and maintain

proper book of accounts, records and document, for each scheme so as to explain

its transaction and to disclose at any point of time the financial position of each

scheme and in particular give a true and fair view of the state of affairs of the

fund and intimate to the board the place where such books of accounts, records

and documents are maintained.

The financial year for all the scheme shall end as of March 31 of each year.

Every mutual fund or the asset management company shall prepare in respect of

each financial year an annual report and annual statement of accounts of the

schemes and the fund as specified in Eleventh Schedule.

Every mutual fund shall have the annual statement of accounts audited by an

auditor who is not in any way associated with the auditor of the asset

management comp

Procedure for Action In Case Of Default:-

On and from the date of the suspension of the certificate or the approval, as the

case may be, the mutual fund, trustees or asset management company, during the


period of suspension and shall be subject to the direction of the Board with

regard to any records, documents, or securities that may be in its custody or

control relating to its activities as mutual funds, trustees or the asset management

company.

Restrictions on Investments:

A mutual fund scheme shall not invest more than 15% of its NAV in debt

instrument issued by a single issuer, which are rated not below investment grade

by a credit rating agency authorize to carry out such activity under the act. Such

investment limit may be extended to 20% of the NAV of the scheme with the

prior approval of the Board of Trustees and the Board of Asset Management

Company.

A mutual fund Scheme shall not invest more than 10% of its NAV in unrated

debt instrument issued by a single issuer and the total investment in such

instruments shall not exceed 25% of the NAV of the Board of Trustees and the

Board of Asset management.

No mutual funds under all its schemes should own more than 10% of any

company’s paid up capital carrying voting rights.

Such transfers are done at the prevailing market price for quoted instrument on

spot basis.

The securities so transferred shall be in conformity with the investment

objectives of the scheme to which such transfer has been made.

A scheme may invest in another scheme under the same asset management

company or any other mutual fund without charging any fees, provided that

aggregated intercourse inter scheme investment made by all schemes under the

same management or in schemes under the management of any other asset

management company shall not exceed 5% of the net asset value of the mutual


fund. The initial issue expenses in respect of any scheme may not exceed 6% of

the funds raised under that scheme.

Every mutual fund shall buy and sell securities on the basis of deliveries and

shall in all cases of purchases, take delivery of relative securities and in all cases

of sale, deliver the securities and shall in no case put itself in a position whereby

it has to make short sale or carry forward transaction or engage in Badla finance.

Every mutual fund shall get the securities purchased or transferred in the name

of the mutual fund on account of the concerned scheme, wherever investments

are intended to be of long-term nature.

Pending deployment of funds of a scheme a mutual fund can invest the funds of

the scheme in short term deposits of scheduled commercial banks.

No mutual fund scheme shall make any investment in ;

o Any unlisted security of an associate or group company of the sponsor or

o Any security issued by way of private placement by an associate or group

company of the sponsor.

The listed securities of group companies of the sponsor which is in excess of 30% of

the net assets (of all the schemes of a mutual fund)

No mutual fund scheme shall invest more than 105 of its NAV in the equity

shares or equity related instrument of any company. Provided that, the limit of

10 percent shall not be applicable for investments in index fund or sector or

industry specific schemes.

A Mutual fund scheme shall not invest more than 5% of its NAV in the equity

shares or equity related investments in case of open-ended schemes and 10 % of

its NAV in case of close ended schemes.

I.XIII HOW TO JUDGE A MUTUAL FUND:-


Consider this – The Indian mutual fund (MF) industry reached Rs. 1,50,537 crore in

December 2004. The industry witnessed a 100% growth in the last six years. By year

2010, MF assets are expected to double. India has 29 MF’s compared to 800 in the US.

In the last one year, the number of retail investors in India has increased steadily. The

big question is how to judge a MF before investing? It is important for an investor to

consider a fund's performance over several years. Different fund managers adopt

different strategies to improve performance. While one fund manager may have played

it cautious by investing in good quality stocks over the years and given a return of 30%

over a five-six year period, another one who invested in speculative stocks may have

struck gold in that year, thereby outperforming tits counterpart by a long way. Thus it is

important to look at consistency of returns over a period of time rather than going by

absolute returns generated in the short term.

Let us look at the advantages of investing in a MF. To begin with, you don't have to

make your investment decisions. Your money is handled by top professionals hired by

fund houses who decide what securities the fund will buy and sell. Moreover, MF

industry is highly regulated, thus, protecting investors from fraud. Regulators block

funds from having more than a certain percentage of the fund in any one firm. This

prevents from over exposure in one particular industry or stock. It's easy to get your

money out of a MF. It is very convenient to buy a MF unit over phone or Internet.

An investor should consider certain drawbacks before investing in MF. Unlike a fixed

deposit, MF does not give any guarantee on returns. If the entire stock market declines

in value, the value of MF shares will go down as well. An investor has to shell out an

entry and exit load.

When you invest in a MF, you depend on the fund's managers to make the right

decisions regarding the fund's portfolio. If the manager does not perform well, you

might not make as much money on you investment as you expected. The short-term

focus of money managers and pressure from unit holders for immediate performance

are obstacles to long-term growth.Most funds lack the cash reserves to pay off the


massive redemptions which will follow a market panic. Fund managers can change

without notice.

I.XIV THE HISTORY OF MUTUAL FUNDS:-

THE INDIAN TIMELINE:-

1963: UTI is India’s first mutual fund.


1964: UTI launches US-64.

1971: UTI’s ULIP (Unit-Linked Insurance Plan) is second scheme to be

launched.

1986: UTI Mastershare, India’s first true ‘mutual fund’ scheme, launched.

1987: PSU banks and insurers allowed to float mutual funds; State Bank of

India (SBI) first off the blocks.

1992: The Harshad Mehta-fuelled bull market arouses middle-class interest

in shares and mutual funds.

1993: Private sector and foreign players allowed; Kothari Pioneer first private

fund house to start operations; SEBI set up to regulate industry.

1994: Morgan Stanley is the first foreign player.

1996: Sebi’s mutual fund rules and regulations, which forms the basis of most

current laws, come into force.

1998: UTI Master Index Fund is the country’s first index fund.

1999: The takeover of 20th Century AMC by Zurich Mutual Fund is the first

acquisition in the mutual fund industry.

2000: The industry’s assets under management crosses Rs 1,00,000 crore.

2001: US-64 scam leads to UTI overhaul.

2002: UTI bifurcated, comes under SEBI purview; mutual fund distributors

banned from giving commissions to investors; floating rate funds and

Foreign debt funds debut.

2003: AMFI certification made compulsory for new agents; fund of funds launched.

I.XV STRUCTURE OF MUTUAL FUND IN INDIA:-

The Indian mutual fund industry is dominated by the Unit Trust of India which has a

total corpus of Rs.700bn 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 close ended . The unit schemes 1964 commonly

referred to as US 64 , which is a Balanced fund is a biggest schemes with a corpus of

about Rs. 200 billion UTI was floated by financial institution and is governed by a

special act of parliament . Most of its investors believe that 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 Nationalize Banks.

Canbank Asset Management floated by Canera Bank and SBI Funds Management

floated by State Bank of India are the largest of it. GIC AMC floated by General

Insurance Corporation and Jeevan Bema Sahayog AMC floated by LIC are some of the

other prominent ones. The aggregate corpus of funds managed by this category of

AMCs is about 150bn.

The third largest category of mutual fund is the ones floated by the private sector and

by foreign Asset Management Company . The largest of these are Prudential ICICI

AMC and Birla Sunlife AMC. The aggregate corpus of asset managed by this category

of AMCs is in excess of Rs. 250bn.

I.XVI Some of AMCs operating currently are:-

NAME OF AMC OWNERSHIPAlliance capital asset management (I)Pvt. Ltd

Private foreign


Birla Sunlife Asset Management Company ltd. Private IndianBank of Baroda Asset management Company LTD

BankBank of India Asset Management Company Ltd

BankCanbank Investment Management Services Ltd

BankCholamandalam Cazenove Asset Management Company Ltd. Private foreignDundee Asset Management Company Ltd

Private foreign

DSP Merrill Lynch ASSET Management Company Ltd Private foreignEscorts Asset management ltd

Private IndianFirst India Asset Management Ltd

Private IndianGIC Asset Management Company Ltd.

InstitutionIDBI Investment Management Company Ltd

InstitutionIndfund Management Ltd

Bank

ING Investment Asset Management Company Pvt. Ltd Private foreignJ M Capital Management limited

Private IndianJardine Fleming Asset Management ltd

Private foreignKotak Mahindra Asset Management Company

Private IndianKothari Pioneer Asset Management Company

Private Indian

Morgan Stanley Asset Management Company Pvt Ltd Private foreignPunjab National Bank Asset Management Company Ltd Bank

Reliance Capital Asset Management Company Private IndianState Bank of India Funds Management ltd.

BankShriram Asset Management Company Ltd.

Private IndianSun F and C Asset Management Company Ltd.

Private foreignSundaram Newton Asset Management Company ltd Private foreign


Tara Asset Management Company Ltd.Private Indian

Credit Capital Asset Management Company LtdPrivate Indian

Templeton Asset Management Company LtdPrivate foreign

Unit Trust Of IndiaInstitution

CHAPTER:- II


PROBLEM STATEMENT AND OBJECTIVE OF THE

STUDY:-

II.I PROBLEM STATEMENT:-

Due to the falling Rate of Interest on Bank deposits, it is obvious that Investment in

Mutual Fund will grow in year to come. However lack of knowledge of Mutual

Funds is a hindering factor in expected growth of Mutual Funds Business. Under

noted problems are envisaged in this area:

Difficulty in convincing people for investment.

Difficulty to change mind of the investor according to age and

Profession.

Difficulty to make an approach to investors.


Difficulty to take an appointment with professional people.

Difficulty to get the documents required for formalities from investors

Difficulty to overcome an impassionate person who wants return in less time.

Difficulty in follow up the people whose names are being stored in a data.

Difficulty to remove the fear of risk from the minds of investors.

II.II OBJECTIVE OF STUDY:-

In view of the problem cited above, the study aims at analyzing the following major issues: MUTUAL FUNDS FOR INDIVIDUAL INVESTORS IN INDIA.

To know the different Asset management companies involve in MUTUAL FUND.

To know the different aspects of MUTUAL FUND according to different age,

profession etc.

To see the interest of people in investing in MUTUAL FUNDS.

To know the future of MUTUAL FUNDS in India.


To know the different attitudes of people regarding risk, rate of return, period of

investment etc.

To study the diversification of mutual fund.


CHAPTER :- III

RESERCH METHODOLOGY:

III.I METHODOLOGY OF STUDY:-

Research can be defined as systemized effort to gain new knowledge. A research is

carried out by different methodologies which have their own pros and cons. Research

methodology is a way to solve research in studying and solving research problem along

with logic behind them are defined through research methodology. Thus while talking

about research methodology we are not only talking of research methods but also

considered the logic behind the methods. We are in context of our research studies and


explain why it is being used a particular method or technique and why the others are not

used. So that research result is capable of being evaluated either by researcher himself

or by others

III.II Research Methodology:-

Research has its special significance in solving various operational and planning

problem of business and industry. Research methodology is the way to systematically

solve the research problem.

III.III ASSUMPTIONS:-

1. It has been assumed that sample of 100 respondents represents the whole

population.

2. The information given by the customer is unbiased

III.IV Literature Survey:-

The project is based on pure findings of facts. Development of Working Hypothesis:-

The Hypothesis could be developed by discussing with the concerning department

heads and guides about this exploratory research and reached to the conclusion that the

data is to be collected by personal interaction with the customers, asking them about the

services and the improvement required. First of all they are aware of mutual funds or

not and then analyzing the findings to reach to the objectives of research.


Collection of Data:-There was secondary data available for the study and also primary

data collected by carrying out by the survey which has been carried out to through

personal interviews of the customers. The sample size was roughly 100.

a. Sampling methods: - A sample is the representative of the population which

will predict the behavior of the whole universe.

b. The sampling size put under two categories: Probability sampling and non

probability sampling.

III.V Probability sampling:-

This is the process of selecting the elements or group of elements from as well defined

population by such procedure which gives every element in the population an equal

chance of being selected for observation. The sampling method use for this survey is

the area sampling which is a sub type of probability sampling.

III.VI Sampling size:-

Large sample gives reliable result than small sample. However, it is not feasible to

target entire population or even a substantial portion to achieve a reliable result. So, in

this aspect selecting the sample to study is known as sample size. Hence, for my project

my sample size was 100.The Sample Size of 100 is not enough to draw a conclusion but

as per the time assigned it was difficult to take a sample size more than 100.The Sample


Size consist of both the Professional and Business class people. IT peoples, Doctors,

Jewelers, Timber Merchants & Real estate Agents are taken as Sample .

III.VII Execution of the project:-

It is the very important step in the research process accuracy findings depends on how

systematically the study has been carried out in time so that it can make some sense

when required. I have executed the project after prior discussion with the guide and

structured in following steps:

a. Preparation of questionnaire.

b. Collection of list of some of the clients interview of the customer so that

more interaction is impossible and the variety of responses can be registered

to have a good data for analysis.

c. Visiting the corporate and asking about their feedback on the mutual funds

services they are availing. Try to find out their satisfaction level with the

existing mutual fund.


CHAPTER :- IV

LIMITATIONS:

IV.I Limitations:-

Every work has its own limitation. Limitations are extent to which the process should

not exceed. Limitations of this project are:-

1. Duration of Project was not enough to make a conclusion on such a vast subject

time constraint has become a big limitation.

2. The Sample Size being taken for drawing a conclusion was too small to get an

accurate result.


3. Changing the Mentality of people for investing in a particular Financial Product

is a very difficult task.

All the above mentioned statements are the limitations of the project. Time, Sample

Size & Mentality of investor are the main limitations of the project. The study is

being done by taking and keeping all the limitations in mind. The project is

completed in prescribed time. To find the Awareness of Mutual Fund the Sample

Size is not at all enough because the population size is much bigger than the sample

size and the last limitation was to change the mentality of the investor to invest in a

particular type of the Investment Product. As the Indian Market is having a large

number of potential customers to draw a conclusion in such a small size may not be

reliable.

CHAPTER:- V Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017 46

ANALYSIS OF MUTUAL FUNDS:-

V.I ANALYSIS OF MUTUAL FUNDS ON THE BASIS OF SCHEMES:-

The schemes have been divided into 10 different categories for the purpose of

meaningful comparison. The categories are as follows:

1. Equity diversified Funds.

2. Equity ELSS Funds.

3. Equity sectoral Funds.

4. Balanced Funds.

5. Income Funds.

6. Liquid Funds.


7 .Gilt Funds.

8. MIPS (Monthly income plans)

9. Index Funds.

10. Hybrid Funds.

There are many asset management companies being involved in mutual fund but people

invest thing reputed mutual fund like ICICI PRUDENTIAL, FRANKLIN

TEMPLETON, HSBC, KOTAK, HDFC etc. All the companies have different mutual

fund schemes vary from different needs of a customer. Like in the month of June the

IPO of Kotak contra has been issued with different concept and also being accepted by

the investors. Where as, the IPO of SBI comma is been introduced in the July and till

now being appreciated by the investors. The mutual fund is been described by its

NAVs.

In this table as on 15/07/05 HDFC TAX SAVER is having highest NAV as compared

to FRANKLIN, SUNDARAM, UTI etc. These are the top eight best equity linked

saving schemes in the mid of July.


Sr No. SCHEME NAMENAV AS ON

15/06/091 HDFC TAX SAVER 85.7

2 FRANKLIN TAX SHIELD 78.25

3 SUNDARAM TAX SAVER 15.34

4 UTI EQUITY TAX SAVING 20.59

5 PRINCIPAL TAX SAVER 122.2ALLIANCE CAPITAL TAX RELIEF

6 96 141.14

7 PRU ICICI TAX PLAN 57.94

8 BIRLA EQUITY PLAN 43.08

48

V.II COMPARISAN BETWEEN BANKS AND MUTUAL FUNDS IN DIFFERENT ASPECTS:-

BANKS MUTUAL FUNDSReturns Low BetterAdministrative exp. High LowRisk Low ModerateInvestment option Less MoreNetwork High Penetration Low but improvingLiquidity At a cost BetterQuality of asset Not Transparent Transparent

Interest calculationMin. Balance between 10th and 31st of month. Everyday

Guarantee Max. Rs. 1Lakh on Deposit None

In the above table the Comparison is made between Banks and Mutual Funds with

different aspects. Now a day due to low Rate of interest people prefer to invest in those

products which give more Returns in less time without Risk. Now a days also nearly

40% of people keep there money in Banks because they are less Risky (reference with

chart 8.2). The Returns expected in Mutual Funds are high where as in bank it is low

but the Guarantee of money back is more than Mutual fund. Thus both Bank and

Mutual Fund are good enough in themselves. It is depend on the Investor what type of

investment they want to do.


CHAPTER :- VI

DATA COLLECTION:


DATA COLLECTION:

Proceeding further after determines the Methodology and limitation of the study the

next step is to analyze the Data being collected for the study. Data is being collected

from various sources like:-

Questionnaire

Personal visit

Telephonic Information etc.

VI.I QUESTIONAIRE:-

Questionnaire is a written form being given to the prospective investor to give

feedback about the services provided to them and also to find the satisfaction

level of the investor for a particular investment product. After filling up of form

the next step is to evaluate the form in different dimensions and draw a

conclusion.


It is difficult to get a Questionnaire filled by corporate because of time they don’t

have time to fill the Questionnaire so at the time of meeting them personally or

after that the Questionnaire is filled by us.

The Sample size taken for this study is 100 which is not enough to draw a conclusion

but due to time limitation only this much size has been taken into consideration. After

analyzing the Questionnaire the following evaluation has been done:-

CATEGORY OF INVESTORS

TOTAL INCOME

RISK RETURN

IT PEOPLE HIGH LOW HIGHDOCTORS HIGH LOW HIGHTIMBER MERCHANTS HIGH HIGH HIGHJEWELLERS HIGH HIGH HIGH REAL ESTATE AGENTS HIGH HIGH HIGH

After analyzing the above table the conclusion was made that the business people

are more Risk taker while professional people are less Risk taker where the return

expected in both the case are high.

VI.II PERSONAL VISIT:-

The second way of collecting data is Personal Visits to the Corporates personally by

fixing an appointment. Personal Visit gives a clear picture of the conclusion drawn

in Questionnaire It gives a clear view of the client Awareness about the

product .Some of the difficulties in making Personal Visits are:-

To take a time or appointment from the corporates.

To convenes investor to invest in a particular product.

Personal Visit gives a clear picture about the Investment areas of both the categories

PROFESSIONAL PEOPLE BUSINESS PEOPLEPPF LANDKISAN VIKAS PATR GOLDBANK ACCOUNT STOCKS INSURANCE INSURANCEFURTHER STUDIES etc. VEHICLES etc.


From the above table it is clear that the Professional people invest in the Value

Added items where as Business people they invest in Future Prospect assets like

land, gold etc.

VI.III TELEPHONIC INFORMATION:-

The further source of collecting data is telephonic information with the existing

customer and the prospective investors. It is very difficult to reveal the data of

investors from the company itself because it has been kept as a secret document.

After getting a data some problems too come in the way. Some are:-

People are not ready to listen.

People ask question like from where did you get the number?

From this source not much of the Information is drawn.

Few respondents where not happy with the level of customer services

endured by

Angel broking pvt. Ltd. Particularly about the delays in replying or not

replying the queries raised by them.


CHAPTER :- VII


INTERPRETATION AND ANALYSIS OF DATA:-

CHART:- VII.IFrom the data collected through the questioner, observation made during the personal

visits the data revealed following information :-

PERCENTAGE OF INVESTMENT TO TOTAL INCOMEThe following table and pie chart throw the light on the percentage of saving out of

income.


Percentage in Income People Invest

1% 5%

56%

38%

Over 50% 30-50% 10-30% Below 10%

In the above chat it has been observed that people invest mostly between 10% to

30% of their income as the moderate level of income is in the range of rupees 30,000

to 40,000. There are very few people who invest above 50% of their Income as their

income level is too high say above Rs 10,000,00. Investors are having different

responsibilities toward the society and family due to which they are not able to invest

more money in Financial product .There are many people who invest only 10% of

there income according to total Sample Size.

CHART:-VII.II

INVESTMENT IN FINANCIAL PRODUCTS Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017

INCOMENO. of PEOPLE PERCENTAGE

Over 50% 1 1%30%-50% 5 5%10%-30% 56 56%10% & below 38 38%

56

FINANCIAL INSTRUMENTS % OF INVESTMENTINSURANCE 28%MUTUAL FUNDS 25%SHARE 13%REAL ESTATES 9%PPF 19%BONDS 6%

These are many Financial Instrument in Indian Market. People in early days kept their

money in Bank. They think Bank is the only place where the money is safe till today

also 40% of people feel the same but many of them have started investing in other

Financial Products like Insurance, Stock Markets etc. The Post Office savings are less

preferred by the Investors due to the less Returns in more Time. Businessmen mostly

invest in tangible assets like land, building, gold etc.

market came into existence only from early 90s that’s why the percentage

investment in stocks is low as In this chart it is clear that people mainly invest

and keep their money in banks .Stock compared to banks. People generally

invest in risk free financial product like PPF, NSC etc. as they get tax exemption.

Investment in Insurance is also preferred by people because it is not a risky

instrument.

CHART:-VII.III


AWARENESS OF MUTUAL FUNDS OUT OF 100 PEOPLE:-

Awareness of Mutual Funds

93%

7%

Yes

No

In chart VII.III the awareness of mutual fund is determined in the percentage terms

only 7% of the total population are not aware of MUTUAL FUNDS. As Mutual

Funds of India are growing rapidly the awareness of Mutual Funds is increasing

among the Investors although & every Investor knows about Mutual Funds by its

nomenclature. They are not really aware of the concept.


CHART :- VII.IV

PERCEPTION ABOUT MUTUAL FUND

Safe 10%

Risky 28%

Other 62%

Perception of Investors

10%

28%

62%

Safe

Risky

Others

From the above pie chart it is clear that people perceive mutual fund as an risky product

whereas 62% of investors believe that mutual fund gives high returns.

Only 10 % of people feel that it is safe. Out of 100 sample size it is very difficult to

determine the exact perception of investors. Due to continuous increase in mutual fund

industries the perception of people are changing slowly.


CHART :-VII. VCOMPARITIVE STUDY OF RISK , INVESTMENT AND RETURN .

AGE GROUP RISK RETURN INVESTMENT25-35 60% 35% 45%35-45 25% 15% 15%45-60 10% 20% 10%

60& ABOVE 5% 30% 30%

0%

10%

20%

30%

40%

50%

60%

25-35 45-60

Risk Return and Investment Chart according to different age group

RISK

RETURN

INVESTMENT

In chart VII.V above it is determined that people of the age group 25-30 yrs are

more risk takers as compared to other age groups. However they are able to invest

less because they do not have any responsibility toward the society and family.

They also invest less because they don’t get proper guidance. As the age increases

the saving percentage decrease but the people above 55 are keener to invest because

they become free from all the responsibilities of the family and society. At this stage

they need continuous flow of income.

Middle age people of the age group of 35-45 yrs. are not investing much because

they are bound to many responsibilities towards family and society.


CHART:- VII.VI

IDENTIFICATION OF MUTUAL FUND COMPANIES

ASPECTS PERCENTAGEBrand Name 39

Good Services 24High Yield 15

Advertisement 10Any other reason 12

0

5

10

15

20

25

30

35

40

Percentage

Brand Name GoodServices

High Yeild Advertisement Any otherreason

Aspects

Series1

Series2

From the above chart it is clear that Brand Name plays an important role for attracting

investors. Secondly, good services are also expected by an investor from the companies.

In other reasons investors generally pointed out the identification of the companies

known by their friends or relatives. Advertisements and high yield are the secondary

aspects of identifying the mutual fund industries.


CHART :- VII.VII

COMPARISON ON THE BASIS OF PLACE:-

In chart VII.VII it is clear that the people staying in small town are less aware of

MUTUAL FUNDS as compared to big cities. The approximate population of Pune is 7

times more than Bhilai . Investors of small place like Bhilai are less aware of the

Mutual Fund & they feel it as a risky Financial Product where as the investors of Pune

are fully Aware of the concept of the Mutual Fund and evince interest in investing in

new IPO’s etc.


Awareness in Mutual Fund out of 100 people

70

30

0

20

40

60

80

Pune Bhilai

Place

No

of

Peo

ple

Series1

CHART :- VII.VIII

RISK TAKEN BY DIFFERENT AGE GROUP :-

AGE GROUP

RISK TAKEN IN PERCENTAGE

25-35 6035-45 2045-60 1760 &

above 3

RISK TAKEN IN PERCENTAGE

60%20%

17%

3%

25-35

35-45

45-60

60 & above

In chart VII.VIII the risk taking ability are being depicted. The person of younger

age are willing to take more risk as compared to the elder age group people. The

middle age people do not take much risk because of much responsibility toward

family and society With reference to this chart only 17% of income of middle age

people is being invested in risk prone securities.


CHART :- VII.IX

PERCENTAGE OF TOTAL INCOME INVEST IN MUTUAL FUND:-

INVESTORS CATEGORY

% OF TOTAL INCOME INVEST IN MUTUAL FUNDS

IT SECTOR PEOPLE 50%DOCTORS 30%TIMBER MERCHANTS 7%JEWELLERS 3%REALESTATE AGENTS 10%

PERCENTAGE OF TOTAL INCOME INVEST IN MUTUAL FUND

50%

30%

7%

3%10% IT SECTOR

PEOPLE

DOCTORS

TIMBERMERCHANTS

JEWELLERS

REALESTATEAGENTS

In the Pie chart above it is clear that professional people are more indented to invest in

comparison with business people who are high risk takers. Business people are more in

dined to invest in real estate, land etc. This is because business people want money in


less time as and when required while Professional people believe in continuous flow of

money.


CHAPTER :- VIII

PROJECT FINDINGS AND RECOMMENDATIONS:-


VIII.I PROJECT FINDINGS:-

There is a great potential for investment in Mutual Funds as people wants to save

for various future obligation.

Since Rate of Interest on Bank deposit is falling people will be attracted towards

investments in Mutual Funds because of high rate of returns.( with reference to

VII.IV)

Comparatively people of small towns are less aware of other investment avenues

viz Mutual Fund.( with reference to VII.VII).

People of young age group are ready to take risk and they can be targeted for

investment in Mutual Fund. (with reference to VII.VIII).

Some of the people who were personally contacted showed reservation about

dealing with MetLife India Insurance Co. Ltd. (with reference to VI.III)

VIII.II RECOMMENDATION:-

It is seen that MetLife brand is not seen enough in the market place and

hence the brand is invisible to the naked eyes of the consumer and hence

MetLife should beef up its publicity campaigns and promotional activities

so that MetLife becomes an easily recognizable brand.

For creating a brand image in our country MetLife should go for a brand ambassador.

In MetLife, they should provide training to its employees in the field of Insurance, Stock broking, Mutual fund etc.

MetLife should conduct more surveys in order to interact with customer to know their preferences for improving its services.


CHAPTER:-IX

BIBLIOGRAPHY:-


IX.I REFERENCES:-

1.www.njindiainvest.com

2.http://mutualfunds.about.com

3.www.shcil.com

4.I. M Panday

5.Fact Sheet of various Mutual Funds.

6. C.R.Kothari Research methodology


IX.II QUESTIONAIRE:-

1.WHAT PERCENTAGE OF INCOME DO YOU INVEST?

OVER 50% 30% TO 50% 10% TO 30% Below 10%

2.WHAT ARE THE VARIOUS INVESTMENT SCHEMES IN WHICH YOU HAVE INVESTED?

Insurance Mutual funds Shares Real Estate PPF (Public provident Funds) Bonds

3.WHAT ARE THE BREAK UP IN PERCENTAGE TERMS TO YOUR INVESTMENT?

TYPE OF INVESTMENT PERCENTAGEINSURANCEMUTUAL FUNDSSHAREREAL ESTATEPPFBONDS

4.ARE YOU AWARE OF MetLife?

Yes No

5.WHAT IS YOUR PERCEPTION ABOUT MUTUAL FUNDS? Dr. D. Y. PATIL CENTER FOR MANAGEMENT & RESEARCH. CHIKHALI. PUNE- 411017 70

Safe Risky Others

6. WHAT ARE DIFFERENT TYPES OF MUTUAL FUNDS ARE YOU AWARE OF?

Growth schemes.(provide appreciation of capital over medium to long term)

Income schemes.(provide regular and continuous income to investor) Balance schemes.(provide both growth and income) Money market and Liquid Schemes.(provide easy liquidity preservation

of capital and moderate income). Tax saving schemes.(offer tax rebates under tax laws) Guilt funds(generating returns by investing in securities created and issued

by a central gov. or state gov.)

7. WHICH OF THEM DO YOU PREFER?

Growth schemes Income schemes Balance schemes Money Market and Liquid schemes Tax saving schemes Guilt Funds

8. DO YOU THINK THE MUTUAL FUNDS ARE NOT AS POPULAR IN INDIA AS IN OTHER COUNTRIES?

Risk involved as returns are not assured. Any other reason please specify…………………………………………

9.HOW DO YOU LOOK MUTUAL FUND COMPANIES?

Brand Name Good Service High Yield Advertisement Any Other Reason……………………………...........................................


10.NAME

11.AGE

25-35 35-45 45-60 60 & above


mutual funds for individual investors in india

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