Analysis of Mutual Funds in India

8/2/2019 Analysis of Mutual Funds in India

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A PROJECT REPORT

ON

ANALYSIS OF MUTUAL FUNDS IN INDIA

SUBMITTED IN PARTIAL FULFILLMENT OF REQUIREMENT

OFPOST GRADUATE DIPLOMA IN MANAGEMENT ( P.G.D.M)

(A.I.C.T.E) APPROVED

SESSION 2006 - 2008

SUBMITTED BY: UNDER THE GUIDANCE OF:

JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL

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INDEX CONTENTS PAGE NO.

CHAPTER-1 INTRODUCTION TO THE TOPIC 1-MEANING OF MUTUAL FUND 2

-HISTORY OF INDIAN MUTUAL FUND 7

-OBJECTIVE OF THE STUDY 9-RESEARCH METHODOLOGY 10

CHAPTER-2 LITERATURE REVIEW

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-HOW DOES MUTUAL FUND WORK 12

-TYPES OF MUTUAL FUND 15-ADVATAGES AND DISADVANTAGES OF MUTUAL FUND 19

-RISKS IN MUTUAL FUND 23

CHAPTER-3 MARKET TRENDS 25

CHAPTER-4 MAJOR PLAYERS IN THE MUTUAL FUND INDUSTRY 29

-BANK V/S MUTUAL FUND 42

CHAPTER-5 REGULATORY ASPECT OF A MUTUAL FUND 43-

- REGULATORY ASPECTS 44-THE INTERNET AND THE MUTUAL FUND 49

CHAPTER-6 ANALYSIS OF QUESTIONNAIRE

46 -ANALYSIS OF QUESTIONNAIRE 47

CHAPTER-7 ANALYSIS OF QUESTIONNAIRE

51 -ANALYSIS OF QUESTIONNAIRE 52

CHAPTER-8 FINDINGS OF THE STUDY

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-CONCLUSION 65-RECCOMENDATIONS 67

CHAPTER-9 LIMITATIONS

68- LIMITATIONS 69

CHAPTER-10 ANNEXURE 70

BIBLIOGRAPHY 73

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ACKNOWLEDGEMENT

I express my heartiest gratitude to MS. ANANDITA DASfor giving me the opportunity of under going this project.

I am grateful to the Library and Computer Center staff

for all the help and cooperation extended to us.

Last but not the least I would like to thank almighty forhis blessings without which virtually this work would nothave been possible.

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CHAPTER - 1

INTRODUCTION

INTRODUCTION

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INTRODUCTION

What is a Mutual Fund.

A Mutual Fund is a trust that collects the savings of a number of

investors who share a common financial goal and pools it together

to create a larger resource of money. The money thus collected is

invested by the fund manager in different types of securities

depending upon the objective of the scheme. These could range

from shares to debentures to money market instruments.

The income earned through these investments and the capital

appreciation realized by the scheme are shared by its unit holders

proportionately i.e. on the basis of the number of units owned by

them.

Thus a Mutual Fund is the most suitable investment for the

common man as it offers an opportunity to invest in a diversified,

professionally managed portfolio at a relatively low cost. Anybody

with any surplus money that can be invested, even as little as a

few thousand rupees can invest in Mutual Funds. Each Mutual

Fund scheme has a defined investment objective and strategy.

The team undertakes this in the most professional manner. A

mutual fund is thus the ideal investment vehicle for todays

complex and modern financial scenario.

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Price changes in the assets are driven by global events occurring

every day, in-fact every minute in faraway places. It will be very

difficult, in-fact next to impossible for an ordinary individual to

have the knowledge, skills, inclination and time to keep track of

events, understand their implications and act speedily. An

individual also finds it difficult to keep track of ownership of his

assets, investments, brokerage dues and bank transactions etc. A

mutual fund is the answer to all these situations. It appoints

professionally qualified and experienced staff that manages each

of these functions on a full time basis. The costs of hiring these

professionals per investor are very low, as the pool of money

invested is large. In effect, the mutual fund vehicle exploits

economies of scale in all three areas - research, investments and

transaction processing.

Globally, there are thousands of firms offering tens of thousands

of mutual funds with different investment objectives. Today,

mutual funds collectively manage almost as much as or more

money as compared to banks.

SEBI defines mutual funds as Mutual funds means a fund

established in the form of a trust by a sponsor to raise

money by the Trustee through the sale of units to the public

under one or more schemes for investing in securities in

accordance with these regulations.

There are 3 entities operating in a mutual fund . They are :

1) An agency which mobilizes savings and gets a

commission

2) An investment agency which gets a prescribed rate of

commission

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3) A trustee institution, which is normally a Bank which

holds the stock of securities of the Mutual fund.

In India the Investment trusts are established under the

Companies Act.

There are difference between Mutual funds and investment

companies which can be as follows:

In terms of objective : In case of mutual funds the

mobilization of savings is from the investors, mostly

household whereas in case of investment companies it is

savings of household , corporate sector. Highest

investments belongs to the promoters of the company.

In terms of organisation : In case of Mutual funds it is as

per SEBI regulations 1993 and in case of UTI as per UTI Act

1963 whereas in case of investment companies it is as per

Companies Act 1956

In terms of Capital structure : For Mutual funds initial

capital would be provided by the sponsor. Scheme wise

capital is decided based on the nature of scheme . Units are

offered out of the scheme capital . No debt capital.

Whereas, investment companies, on par with industrial

companies . No scheme wise capital out of the equity

capital. Capital may be debt capital also and has the

advantage of gearing.

In terms of Liquidity : In Mutual funds it is close ended

scheme units are traded on the organized stock exchange .

Open ended schemes offer repurchase of facility and some

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ended schemes may also offer repurchase or premature

encashment. Whereas, in case of investment companies.

The company share is traded on stock exchange. No

repurchase of shares.

In terms of Name of the schemes Mutual funds

Either open ended or close ended with a wide variety of

investment objectives whereas in case investment

companies it is neither open ended or close ended.

Thus we have seen the difference between the mutual funds

and the investment companies. Let us now understand the

superiority of mutual funds over the other investment

options.

Mutual funds with the expertise and experienced

management cadre can be able to secure large varieties of

high yielding Blue chip securities and show better results

to the investing public. Thus Mutual funds are gaining

popularity due to the following reasons:

The basic purpose of reforms in financial sector was to

enhance the generation of domestic resources by reducing

dependence on outside funds. This calls for a market basedinstitution. . Mutual funds are best suited for this purpose.

Ordinarily investor in the market is not sure of getting share

in the normal procedure. Investing in MF by MF companies

get firm allotment. And later selling at a higher price. So

investing in MF yields higher returns to the investors.

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Better knowledge of market behavior maximise gains by

proper selection and timing of investments.

Dividends and capital gains are reinvested automatically in

MF and are not frittered away.

MF operation provide reasonable protection to investors

They create awareness about benefits of investment in

capital market and thus able to mop up large amounts

Foreign capital inflows are attracted and secures profitable

investment avenues abroad for domestic savings through

the opening up of off shore funds in various foreign

countries.

Disbursing funds in various industrial sectors in view of

booming trend has led the popularity of MF

Risk of loss due to ill informed and misinformed purchase /

sale is reduced. Risks are reduced due to diversification of

portfolios in terms of companies and industries.

They are controlled and regulated by SEBI and considered

safe.

Thus MF have many advantages even for an individual who

wants to put his savings in various places and not only earn

high yields but also safe landing later when he wants to

acquire the money back.

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HISTORY OF THE INDIAN MUTUAL FUND

INDUSTRY

The mutual fund industry in India started in 1963 with the

formation of Unit Trust of India, at the initiative of the Government

of India and Reserve Bank the. The history of mutual funds in India

can be broadly divided into four distinct phases

First Phase 1964-87

An Act of Parliament established Unit Trust of India (UTI) on 1963.

It was set up by the Reserve Bank of India and functioned under

the Regulatory and administrative control of the Reserve Bank of

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

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

administrative control in place of RBI. The first scheme launched

by UTI was Unit Scheme 1964.

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

1987 marked the entry of non- UTI, public sector mutual funds set

up by public sector banks and Life Insurance Corporation of India

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(LIC) and General Insurance Corporation of India (GIC). SBI Mutual

Fund was the first non- UTI Mutual Fund established in June 1987

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

established its mutual fund in June 1989 while GIC had set up its

mutual fund in December 1990.

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.

Fourth Phase since February 2003

In February 2003, following the repeal of the Unit Trust of India Act

1963 UTI was bifurcated into two separate entities. One is the

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Specified Undertaking of the Unit Trust of India with assets under

management of Rs.29,835 crores as at the end of January 2003,

representing broadly, the assets of US 64 scheme, assured return

and certain other schemes. The Specified Undertaking of Unit

Trust of India, functioning under an administrator and under the

rules framed by Government of India and does not come under

the purview of the Mutual Fund Regulations.

OBJECTIVE OF THE STUDYThis project Analysis of Mutual Funds In Indiahas been undertaken by me in order to:-

To study what kind of mutual funds are there.

To find whether the fund gives return or not.

To study market trends of the mutual funds.

To know whether people are interested ininvesting in mutual funds.

To know the regulatory framework of the funds.

To find what are the major players in theindustry.

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RESEARCH METHODOLOGY

This project started meetings different people in order

to get information about the mutual funds. Then I

thoroughly examined the various activities of mutual

funds.

Then I visited various websites of the mutual fund to

know the recent and upcoming trends of mutual funds.

I went forward collecting the data through primary

source such as a questionnaire.

I prepared the questionnaire. After the collection of the

responses, I drew conclusions with respect to the

effectiveness of the training program and the value of

particular training program in the eyes of trainers and

trainees.

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CHAPTER - 2

LITERATURE REVIEW

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HOW DOES MUTUAL FUND WORK

The working of Mutual Funds can be briefly stated in the form of

the points below: -

A draft offer document is prepared at the time of

launching the fund. Typically, it pre specifies the investment

objectives of the fund, the risk associated, the costs

involved in the process and the broad rules for entry into

and exit from the fund and other areas of operation. In India,

as in most countries, these sponsors need approval from a

regulator, SEBI (Securities exchange Board of India) in our

case. SEBI looks at track records of the sponsor and its

financial strength in granting approval to the fund for

commencing operations.

A sponsor then hires an asset management company

to invest the funds according to the investment objective.

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It also hires another entity to be the custodian of the

assets of the fund and perhaps a third one to handle registry

work for the unit holders (subscribers) of the fund.

In the Indian context, the sponsors promote the Asset

Management Company also, in which it holds a majority stake. In

many cases a sponsor can hold a 100% stake in the Asset

Management Company (AMC). E.g. Birla Global Finance is the

sponsor of the Birla Sun Life Asset Management Company Ltd.,which has floated different mutual funds schemes and also acts

as an asset manager for the funds collected under the schemes.

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ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below

illustrates the organizational set up of a mutual fund:

Organization of a Mutual Fund

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Types Of Mutual Funds

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.

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.

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.

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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.

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.

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.

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

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the interest rates prevailing in the market. These are ideal for

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.

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, provided the capital asset has been sold prior to April 1,

2005-06 and the amount is invested before September 30, 2005-

06.

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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.

Systematic Investment Plan (SIP)

Here the investor is given the option of preparing a pre-

determined number of post-dated cheques in favour of the fund.

He will get units on the date of the cheque at the existing NAV. For

instance, if on 10th May, he has given a post-dated cheque for

August 10th, he will get units on 10th August at existing NAV.

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ADVANTAGES OF MUTUAL FUND

Professional Management - The primary advantage of funds (at

least theoretically) is the professional management of your

money. Investors purchase funds because they do not have the

time or the expertise to manage their own portfolio. A mutual fund

is a relatively inexpensive way for a small investor to get a full-

time manager to make and monitor investments. Investors are

exposed to reduced investment risk due to portfolio

diversification, economies of scale in transaction cost and

professional management

Diversification - By owning shares in a mutual fund instead of

owning individual stocks or bonds, your risk is spread out. Theidea behind diversification is to invest in a large number of assets

so that a loss in any particular investment is minimized by gains in

others. In other words, the more stocks and bonds you own, the

less any one of them can hurt you (think about Enron). Large

mutual funds typically own hundreds of different stocks in many

different industries. It wouldn't be possible for an investor to build

this kind of a portfolio with a small amount of money. Small

investors can participate in larger basket of securities and share

the benefits of efficiently managed portfolio by experts, and are

freed from maintaining records of company share certificates, and

tracking tax rules. Mutual fund investments are less risky due to

portfolio diversification, which is possible mainly due to large

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funds available at their disposal. Small investors can never spread

their risks across such a wide portfolio, as can mutual funds.

Freedom from tracking investments Investors do not have to

track their investments regularly, as experts who buy and sell

securities for them do the tracking. Investors are only required to

track the performance of the mutual fund.

Economies of Scale

Because a mutual fund buys and sells large amounts of securities

at a time, its transaction costs are lower than you as an individual

would pay.

Liquidity

Just like an individual stock, a mutual fund allows you to request

that your shares be converted into cash at any time.

Simplicity

Buying a mutual fund is easy! Pretty well any bank has its own line

of mutual funds, and the minimum investment is small. Most

companies also have automatic purchase plans whereby as little

as $100 can be invested on a monthly basis.

Freedom from tracking investmentsInvestors do not have to track their investments regularly, as

experts who buy and sell securities for them do the tracking.

Investors are only required to track the performance of the mutual

fund.

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Professional management

Professionals run mutual funds, with experience in portfolio

management. Analysts employed by mutual funds analyze data

and information available in a manner that cannot be matched by

the lay investor.

Tax benefits

Income tax benefits are granted to investors in mutual funds,

making it more tax efficient as compared to other comparable

investment avenues.

Disadvantages of Mutual Funds

Professional Management- Did you notice how we qualified

the advantage of professional management with the word

"theoretically"? Many investors debate over whether or not the so-

calledprofessionals are any better than you or I at picking stocks.

Management is by no means infallible, and, even if the fund loses

money, the manager still takes his/her cut.

Costs - Mutual funds don't exist solely to make your life easier--

all funds are in it for a profit. The mutual fund industry is masterful

at burying costs under layers of jargon. These costs are so

complicated that in this tutorial we have devoted an entire section

to the subject.

Dilution - It's possible to have too much diversification. Because

funds have smallholdings in so many different companies, high

returns from a few investments often don't make much difference

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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.

Taxes - When making decisions about your money, fund

managers don't consider your personal tax situation. For example,

when a fund manager sells a security, a capital-gain tax is

triggered, which affects how profitable the individual is from the

sale. It might have been more advantageous for the individual to

defer the capital gains liability.

No tailor-made Portfolio: Investors who invest on their own can

build teir own portfolios shares, bonds and other securities.

Investing through funds means he delegates this decision to the

fund mangers. High-net-worth individuals or large corporate

investors may find this to be a constraint in achieving their

objectives. However, most mutual funds help investors overcome

this constraint by offering families of schemes-a large number of

different schemes within the same fund. In each scheme there are

various plans and options. An investor can choose from different

investment schemes/plan/options and construct an investment

portfolio that meets his investment objectives.

Managing a portfolio of funds: Availability of a large number

of options from mutual funds can actually mean too much choice

for the investor. He may again need advice on how to select a

fund to achieve his objectives, quite similar to the situation when

he has to select individual shares or bonds to invest in.

fortunately, India now has a large number of AMFI registered and

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tested fund distributors and financial planners who are capable of

guiding the investors.

TYPES OF RISKS

Consider these common types of risk and evaluate them against

potential rewards when you select an investment.

Managing Risk

At times the prices or yields of all the securities in a particular

market rise or fall due to broad outside influences. When this

happens, the stock prices of both an outstanding, highly profitable

company and a fledgling corporation may be affected. This change

in price is due to "market risk".

Inflation Risk

Sometimes referred to as "loss of purchasing power." Whenever

inflation sprints forward faster than the earnings on your

investment, you run the risk that you'll actually be able to buy

less, not more. Inflation risk also occurs when prices rise faster

than your returns. Changing interest rates affect both equities and

bonds in many ways. Investors are reminded that "predicting"

which way rates will go is rarely successful. A diversified portfolio

can help in offsetting these changes.

Credit Risk

In short, how stable is the company or entity to which you lend

your money when you invest? How certain are you that it will be

able to pay the interest you are promised, or repay your principal

when the investment matures?

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Effect of Loss of Key Professional

An industries' key asset is often the personnel who run the

business i.e. intellectual properties of the key employees of the

respective companies. Given the ever-changing complexion of few

industries and the high obsolescence levels, availability of

qualified, trained and motivated personnel is very critical for the

success of industries in few sectors. It is, therefore, necessary to

attract key personnel and also to retain them to meet the

changing environment and challenges the sector offers.

Failure or inability to attract/retain such qualified key personnel

may impact the prospects of the companies in the particular

sector in which the fund invests.

Exchange Risk

A number of companies generate revenues in foreign currencies

and may have investments or expenses also denominated in

foreign currencies. Changes in exchange rates may, therefore,

have a positive or negative impact on companies which in turn

would have an effect on the investment of the fund.

Inbvestment Risk

The sectoral fund schemes, investments will be predominantly in

equities of select companies in the particular sectors. Accordingly,

the NAV of the schemes are linked to the equity performance of

such companies and may be more volatile than a more diversified

portfolio of equities.

Changes In The Government policy

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Changes in Government policy especially in regard to the tax

benefits may impact the business prospects of the companies

leading to an impact on the investments made by the

CHAPTER - 3MARKET TREND

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MARKET TREND

MARKET TREN

A lone UTI with just one scheme in 1964 now competes

with as many as 400 odd products and 34 players in the

market. In spite of the stiff competition and losing market

share, UTI still remains a formidable force to reckon with.

Last six years have been the most turbulent as well as

exiting ones for the industry. New players have come in,

while others have decided to close shop by either selling

off or merging with others. Product innovation is now

passed with the game shifting to performance delivery in

fund management as well as service. Those directly

associated with the fund management industry like

distributors, registrars and transfer agents, and even the

regulators have become more mature and responsible.

The industry is also having a profound impact on financial

markets. While UTI has always been a dominant player

on the bourses as well as the debt markets, the new

generations of private funds which have gained

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substantial mass are now seen flexing their muscles.

Fund managers, by their selection criteria for stocks have

forced corporate governance on the industry. By

rewarding honest and transparent management with

higher valuations, a system of risk-reward has been

created where the corporate sector is more transparent

then before.

Funds have shifted their focus to the recession free

sectors like pharmaceuticals, FMCG and technology

sector. Funds performances are improving.

What is particularly noteworthy is that bulk of the

mobilization has been by the private sector mutual funds

rather than public sector mutual funds.

Mutual funds are now also competing with commercial

banks in the race for retail investors savings and

corporate float money. The power shift towards mutual

funds has become obvious. The coming few years will

show that the traditional saving avenues are losing out in

the current scenario. Many investors are realizing that

investments in savings accounts are as good as locking

up their deposits in a closet. The fund mobilization trend

by mutual funds in the current year indicates that money

is going to mutual funds in a big way.

India is at the first stage of a revolution that has already

peaked in the U.S. The U.S. boasts of an Asset base that

is much higher than its bank deposits. In India, mutual

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fund assets are not even 10% of the bank deposits, but

this trend is beginning to change. Recent figures indicate

that in the first quarter of the current fiscal year mutual

fund assets went up by 115% whereas bank deposits

rose by only 17%. (Source: Think tank, The Financial

Express September 99) This is forcing a large number of

banks to adopt the concept of narrow banking wherein

the deposits are kept in Gilts and some other assets,

which improves liquidity and reduces risk. The basic fact

lies that banks cannot be ignored and they will not close

down completely. Their role as intermediaries cannot be

ignored. It is just that Mutual Funds are going to change

the way banks do business in the future.

Many private players are also coming in the industry with

their own mutual fund such as Birla Sun Life, Reliance,

HDFC Mutual Fund etc.

Reliance now days is competing the market having a

better market share as compared to other players in the

industry.

SBI Mutual fund too also plays an important role in this

industry. Even today many people still like to invest in the

public sector undertaking in order to avoid risk.

HDFC Mutual Fund is also doing well with their ELSS

schemes, such as Long Term Advantage Fund, Tax Saver

Fund, etc.

When markets are down HDFC Funds normally gives better

returns as their return has always given average return at

the time when the market where at its peak.

Now HDFC are the first who are coming up with the Real

Estate Fund.

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Their NFO would come in the month of June or July 2008.

CHAPTER 4

MAJOR PLAYERS IN THE INDIAN MUTUAL FUND INDUSTRY

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MAJOR PLAYERS IN THE INDIAN MUTUAL FUND INDUSTRY

Morgan Stanley Asset Management (I) Pvt. Ltd.

Morgan Stanley Dean Witter & Co. is a preeminent global financial

services firm that provides a wide range of services to major

corporations, governments, financial institutions and high-net-

worth individuals worldwide. With approximately 50,000

employees in 24 countries, the Firm has a significant presence in

every financial market. Morgan Stanley Dean Witter (MSDW)

Investment Management is the institutional asset management

division of MSDW & Co. MSDW Investment Management was

established in 1975 to help governments, corporations, pension

funds and non-profit organizations meet their long-term

investment objectives. MSDW Investment Management manages

US$ 385 billion for institutional and individual investors.

MSDW Investment Management manages three major offshore

India funds, the India Magnum Fund (traded on the Dublin Stock

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Exchange), the India Investment AG (listed on the Zurich Stock

Exchange) and the India Investment Fund (traded on the New York

Stock Exchange).

The Morgan Stanley Growth Fund was launched in January 1994

and garnered an initial corpus of Rs. 981 crores. MSGF is listed on

the Mumbai, Delhi, Calcutta, Chennai and Ahmedabad Stock

Exchanges and is also traded on the National Stock Exchange. In

1997, MSGF units were placed as eligible securities with the

National Securities Depository Limited, which made it possible for

unit holders to hold units in electronic/dematerialized form.

DSP Merill Lynch Investment Managers

DSP Merrill Lynch Asset Management (India) Ltd., (a company

registered under the Companies Act, 1956) has been set up byDSPML and MLAM, to act as the Asset Management Company

(AMC) to the Fund. The AMC has been appointed as the

Investment Manager to the fund, MLAM holds 40% of the paid up

share capital of the AMC, while the balance 60% (approximately),

is held by DSPML. The Investment Manager was approved by SEBI

to act as the AMC for the Mutual Fund.

Merrill Lynch Investment Managers investment philosophy is

designed to seek consistent, long-term strategic performance

results. Its disciplined value oriented approach to managing its

clients portfolios has been with the primary objective of seeking

consistent returns over a long period.

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DSP Merrill Lynch Asset Management (India) Ltd. has been

changed its name to DSP Merrill Lynch Investment Managers Ltd.

w.e.f 20th July 2005-06.

No. of schemes 8

No. of schemes including options 13

Equity Schemes 3

Debt Schemes 2

Short term debt Schemes 2

Equity & Debt 2

Gilt Fund 4

Birla Sunlife Asset Management Company Ltd

Birla Sun Life AMC Ltd. is a joint venture between Sun Life

Assurance Company of Canada and the Aditya Birla Group, one of

Indian leading Industrial houses.

Sun Life Assurance Company of Canada is a leading financial

services organization, providing a diversified range of risk

management, wealth management and money management

products for individuals and corporations worldwide. Sun Life

commenced business in Canada in 1871, and is headquartered inToronto with major operations in Canada, United States, United

Kingdom and Asia Pacific. Sun Life has consistently earned ratings

that rank among the best in the North American financial services

sector. It has a major presence in the growing mutual fund

markets through MFS Investment Management in the U.S., and

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through Spectrum United Mutual Funds in Canada. It is also active

in the unit trust business in the U.K., and its near term plans

include consideration of mutual fund offerings in the Philippines.

The Aditya Birla group is a multinational group consisting of the

best known companies in India in a range of key sectors like

Textiles (GRASIM), Rayon (Indian Rayon), Aluminum (HINDALCO),

Petroleum (MRPL), Finance (BGFL), Fertilizers (Indo-Gulf). Birla

Mutual Fund offers investment Schemes which aim to cater to

every need of the investor. Drawing on the expertise of a

worldwide staff of over 10,000 people and a network of more than

65,000 agents and distributors, Sun Life is committed to providing

not just products and services, but solutions for clients financial

and risk management needs.

No. of schemes 10


Equity Schemes 8

Debt Schemes 2

Short term debt Schemes 2

Equity & Debt 2

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Kothari Pioneer Asset Management Company Ltd.

Kothari Pioneer Mutual Fund is sponsored by the Investment Trust

of India Ltd. of the H C Kothari Group and Pioneer Investment

Management Inc.(PIM) of The Pioneer Group Inc.,USA. KothariPioneer is one of India s first mutual fund in the private sector.

Today, it manages Rs.2700 crores in assets for over 650,000

investors across a range of growth, balanced, income, liquid and

tax saving funds.

The sponsors of the fund are Pioneer Investment Management

(PIM), USA and the Investment Trust of India, who together bring

more than 120 years of experience in financial services. PIM

currently manages over $24 billion in assets worldwide on behalf

of individual and institutional investors. Based in Boston, Pioneer

has financial services operations in Germany, Ireland, Poland,

Czech Republic, India and Russia. Its flagship fund, Pioneer Fund,

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was founded in 1928 and is the fourth oldest mutual fund in the

United States.

No. of schemes 21


Equity Schemes 18

Debt Schemes 12

Short-term debt Schemes 2

Equity & Debt 1

Money Market 1

Sun F & C Asset Management (India) Pvt. Ltd.

SUN F&C Asset Management (India) Pvt. Ltd. is an equal joint

venture between Foreign & Colonial Emerging Markets Ltd. U.K.

and SUN Securities (India) Pvt. Ltd. Foreign & Colonial, established

in 1868, is one of Europe s leading asset management groups.

F&C is a part of Hypo Bank, one of Germany s oldest and largest

banks and has been investing in the Indian stock markets since

1993. SSIL is an Indian subsidiary company of Sun Group. Its

activities consist of principal investment and investmentmanagement operations in emerging markets and technologies as

well as international commercial activities.

SUN F&C currently manages and advises India Performance Fund

(an offshore fund), SUN F&C Value Fund (a domestic fund) and

F&C sponsored Indian Investment Company SICAV (INDICO).

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SUN F&C launched its Indian operations by becoming the domestic

advisor to FCEMs INDICO fund. It has since then launched India

Performance Fund, an offshore fund, in 1996 and five domestic

schemes - Value Fund (1997), Money Value Fund (1998), Balanced

Fund (1999), Emerging Technologies Fund (2005-06), Monthly

Income Plan (2005-06) and Resurgent India Equity Fund (2005-

06). Over the last 5 years, the Company has built a strong track

record of managing asset classes, equity and debt. Today, Sun

F&C manages/advises a corpus of over Rs.1000 crore (US$230

mn), of which over 50% is equity. This corpus is spread over 8

schemes, 6 domestic and 2 offshore. A team of 56 people spread

over 8 location service almost 80,000 customers.

UNIT TRUST OF INDIA

Every year, millions of Indians entrust their savings to Unit Trust of

India to build up a financially secure future. This faith andconfidence of investors stem from UTI's commitment, as reflected

in its long track record to ensure its investors, safety, liquidity and

attractive yield on their investments.

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Set up in 1964, by an Act of Parliament, UTI Act 1963, UTI has

grown into one of the biggest players and carved out a special

position in the Indian capital market.

Today, UTI manages an aggregate portfolio of Rs. 72,698 Crore as

on 31/12/1999 and services 45 million investor accounts under 90

saving schemes catering to varying needs of different classes of

investors.

UTI has a servicing and distribution network of 53 branch offices,

320 District Representatives and about 87,000 agents. It provides

a complete range of services to its investors, at a low gross cost of

less than 1.01 percent of invisible funds and does not charge any

asset management fee.

UTIis a symbol of trust and confidence among Indian investors. In

the last seven years, the number of schemes managed by UTI

increased from 35 to 92, while the number of unit holding

accounts recorded a sevenfold increase from 65 lakhs to over 450

lakhs.

UTI's expanding product range cover a broad spectrum of

investment goals and includes open end and closed-end income

and capital accumulation funds. Among the most popular are Unit

Scheme 1964 and Master series equity schemes such as

Mastershare, Masterplus, Master Equity Plans, etc.

UTI also manages schemes aimed at meeting specific needs like

Low cost insurance cover (ULIP)

Monthly income needs of retired persons and women.

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http://var/www/apps/conversion/current/tmp/scratch17696/overview3.htm#mfihttp://var/www/apps/conversion/current/tmp/scratch17696/overview3.htm#mfi


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Income and liquidity needs of religious and charitable

institutions and trusts.

Building up funds to meet cost of higher education

and career plans for children.

Future wealth and income needs of girl child and

women.

Building savings to cover medical insurance at old

age.

Wealth accumulation to meet income needs after

retirement.

Individual household investors account for 99% of UTI's investor

accounts and about 65% of unit capital of UTI schemes. Products

are distributed through a marketing force of about 87,000

commission-based canvassing agents trained to explain the

products and provide related services support to investors.

Today, these agents are supervised by 320 Chief Representatives

who guide the investors, organize, train and motivate the agents

in their respective areas of operation (specified districts)

Investors under various schemes of UTI are now serviced through

53 UTI branches, 213 collection centers and offices of 6 Registrar

and Transfer Agencies appointed by UTI. Besides there are 52

franchises offices, which

accept applications and distribute certificates to unit holders. UTI

has set up its own associate company, UTI-Investor Services

Limited (UTIISL), to meet the growing needs of unit holder

servicing.

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UTI is also currently implementing a technology upgradation

program, involving networking of on-line computer systems at

UTI's offices, and offices of Registrars and Transfer Agencies. This

would enable UTI to improve service quality significantly.

UTI publishes weekly/daily NAVs for all its listed schemes and

offers a prospectus for every scheme. It also publishes half-yearly

results for all schemes and releases information on portfolio as

also largest shareholding for growth schemes and Unit Scheme

1964. UTI adheres to disclosure requirements specified by SEBI.

Equity Investing:

More than fifty percent of total funds of UTI Schemes are invested

in equity. UTI is the largest operator in the Indian equity market

with total investments worth Rs 35,007.83 crores at book value.

Its various funds collectively hold stocks in more than 1500 Indian

companies and account for over 8 percent of the market

capitalization of all listed scripts on the Bombay Stock Exchange.

Corporate debt:

UTI is one of the main providers of debt finance to the corporate sector.

Investment in corporate debt instruments account for 38 percent of the

total investible funds. Credit market operations cover a range of

instruments including publicly issued and privately placed debentures,

bonds and medium term notes. UTI's debt portfolio quality is represented

by 98 percent performing assets.

HDFC AMC (ASSET MANAGEMENT COMPANY)

HDFC Asset Management Company Ltd (AMC) was incorporated

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under the Companies Act, 1956, on December 10, 1999, and was

approved to act as an Asset Management Company for the HDFC

Mutual Fund by SEBI wide with its letter dated 30th june 2000.

The registered office of the AMC is situated at Ramon House, 3rd

Floor, H.T. Parekh Marg, 169, Backbay Reclamation, Churchgate,

Mumbai 400 020

In terms of the Investment Management Agreement, the Trustee

has appointed the AMC to manage the mutual fund.

As per the terms of the Investment Management Agreement, the

AMC will conduct the operations of the Mutual Fund and manage

assets of the schemes, including the schemes launched from time

to time

The single most important factor that drives HDFC Mutual Fund is

its belief to give the investor the chance to profitably invest in the

financial market, without constantly worrying about the market

swings. To realize this belief, HDFC Mutual Fund has set up the

infrastructure required to conduct all the fundamental research

and back it up with effective analysis. Our strong emphasis on

managing and controlling portfolio risk avoids chasing the latest

fads and trends.

HDFC Asset Management Company (AMC) is the first AMC in India

to have been assigned the CRISIL Fund House Level 1 rating.

This is its highest Fund Governance and Process Quality Rating

which reflects the highest governance levels and fund

management practices at HDFC AMC It is the only fund house to

have been assigned this rating for two years in succession. Over

the past, we have won a number of awards and accolades for our

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performance.

The AMC is managing 24 open-ended schemes of the Mutual

Fund viz. HDFC Growth Fund (HGF), HDFC Balanced Fund (HBF),

HDFC Income Fund (HIF), HDFC Liquid Fund (HLF), HDFC Long

Term Advantage Fund (HLTAF), HDFC Children's Gift Fund (HDFC

CGF), HDFC Gilt Fund (HGILT), HDFC Short Term Plan (HSTP),

HDFC Index Fund, HDFC Floating Rate Income Fund (HFRIF),

HDFC Equity Fund (HEF), HDFC Top 200 Fund (HT200), HDFC

Capital Builder Fund (HCBF), HDFC TaxSaver (HTS), HDFC

Prudence Fund (HPF), HDFC High Interest Fund (HHIF), HDFC

Cash Management Fund (HCMF), HDFC MF Monthly Income Plan

(HMIP), HDFC Core & Satellite Fund (HCSF), HDFC Multiple Yield

Fund (HMYF), HDFC Premier Multi-Cap Fund (HPMCF), HDFC

Multiple Yield Fund . Plan 2005 (HMYF-Plan 2005), HDFC

Quarterly Interval Fund (HQIF) and HDFC Arbitrage Fund.

The AMC is also managing 8 closed ended Schemes of the HDFC

Mutual Fund viz. HDFC Long Term Equity Fund, HDFC Mid-Cap

Opportunities Fund, HDFC Fixed Maturity Plans, HDFC Fixed

Maturity Plans - Series II, HDFC Fixed Maturity Plans - Series III,

HDFC Fixed Maturity Plans - Series IV, HDFC Fixed Maturity Plans

- Series V and HDFC Fixed Maturity Plans - Series VI.

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Banks v/s Mutual Funds

CHARACTERISTI

CS

BANKS MUTUAL

FUNDSReturns

LowBetter

Administrative

exp.

High Low

Risk Low ModerateInvestment

options

Less More

Network High penetration Low but

improvingLiquidity At a cost BetterQuality of assets Not transparent TransparentInterest

calculation

Minimum balance between

10th. & 30th. Of every

month

Everyday

Guarantee Maximum Rs.1 lakhs on

deposits

None

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CHAPTER- 5

REGULATORY ASPECT OF A MUTUAL FUND

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REGULATORY ASPECT OF A MUTUAL FUND

Schemes of a Mutual Fund

The asset management company shall launch no scheme

unless the trustees approve such scheme and a copy of the

offer document has been filed with the Board.

Every mutual fund shall along with the offer document 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 on maximum

investments proposed to be made by the scheme in the

listed securities of the group companies of the sponsor

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 (a) of sub-regulation (1)

If the moneys received from the applicants for units are in

excess of subscription as referred to in clause (b) of sub-

regulation (1).

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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 and

the price at which such units may at any time be

repurchased by the mutual fund shall be made available to

the investors.

General Obligations

Every asset management company for each scheme shall

keep and maintain proper books of accounts, records and

documents, for each scheme so as to explain its

transactions 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.

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The financial year for all the schemes shall end as of March

31 of each year.

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

company.

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, shall cease to carry on any

activity as a mutual fund, trustee or asset management

company, during the period of suspension, and shall be subject

to the directions 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 fund, trustees or asset

management company.

Restrictions on Investments

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

NAV in debt instruments issued by a single issuer, which are

rated not below investment grade by a credit rating agency

authorized 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.

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NAV in an rated debt instruments issued by a single issuer

and the total investment in such instruments shall not

exceed 25% of the NAV of the scheme. All such investments

shall be made with the prior approval of the Board of

Trustees and the Board of asset Management Company.

No mutual fund under all its schemes should own more than

ten per cent of any company's paid up capital carrying

voting rights.

Such transfers are done at the prevailing market price for

quoted instruments on spot basis.

The securities so transferred shall be in conformity with the

investment objective 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 aggregate 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 six per cent 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.

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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 in securities in

terms of investment objectives of the 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;

Any unlisted security of an associate or group company of

the sponsor; or

Any security issued by way of private placement by an

associate or group company of the sponsor; or

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 10 per cent

of its NAV in the equity shares or equity related instruments

of any company. Provided that, the limit of 10 per cent shall

not be applicable for investments in index fund or sector or

industry specific scheme.


NAV in the equity shares or equity related investments in

case of open-ended scheme and 10% of its NAV in case of

close-ended scheme.

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INTERNET AND THE MUTUAL FUND INDUSTRY

Here are some of the basic changes that have taken place since

the advent of the Net.

Lower Costs

Distribution of funds will fall in the online trading regime by

2005. Mutual funds could bring down their administrative costs

to 0.75% if trading is done online. As per SEBI regulations,

bond funds can charge a maximum of 2.25% and equity funds

can charge 2.5% as administrative fees. Therefore if the

administrative costs are low, the benefits are passed down and

hence Mutual Funds are able to attract mire investors and

increase their asset base.

Better advice

Mutual funds could provide better advice to their investors

through the Net rather than through the traditional investment

routes where there is an additional channel to deal with the

Brokers. Direct dealing with the fund could help the investor

with their financial planning. In India, brokers could get more

Net savvy than investors and could help the investors with the

knowledge through get from the Net.

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New investors would prefer online

Mutual funds can target investors who are young individuals

and who are Net savvy, since servicing them would be easier

on the Net. India has around 1.6 million net users who are

prime target for these funds and this could just be the

beginning. The Internet users are going to increase

dramatically and mutual funds are going to be the best

beneficiary. With smaller administrative costs more funds

would be mobilized .A fund manager must be ready to tackle

the volatility and will have to maintain sufficient amount of

investments which are high liquidity and low yielding

investments to honor redemption.

Net based advertisements

There will be more sites involved in ads and promotion of

mutual funds. In the U.S. sites like AOL offer detailed research

and financial details about the functioning of different funds

and their performance statistics. a is witnessing a genesis in

this area . There are many sites such as indiainfoline.com and

indiafn.com that are doing something similar and providing

advice to investors regarding their investments. In the U.S.

most mutual funds concentrate only on financial funds like

equity and debt. Some like real estate funds and commodity

funds also take an exposure to physical assets.

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CHAPTER 6

ANALYSIS OF QUESTIONNAIRE

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ANALYSIS OF QUESTIONNAIRE

Q1)Are you familiar with mutual funds?

1) Yes

2) No

No

35%

Yes

65%

Yes

No

Conclusion: Out of the total respondentsmost of the

people are aware of mutual funds and only few of

them are not aware of the funds.

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Q2) If yes, then which type of mutual fund do you invest.

1) Equity Fund

2) Debt Fund

3) Balanced Fund

Equity Fund

18%

Debt Fund

50%

Balanced

Fund

32%

Equity Fund

Debt Fund

Balanced Fund

Conclusion: Out of total respondents 50% people

invest in the debt fund as compared to 32% people

invest in the balanced fund and very few people are

ready to take the risk of equity fund.

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Q3) How much do you invest in mutual fund.

1) 50002) 5000 - 10000

3) 10000-20000

4) Above 20000

10000 To

20000

20%

5000 To 10000

35%

5000

30%Above 20000

15%5000

5000 To 10000

10000 To 20000

Above 20000

Conclusion: Out of the total respondents most of the

people normally invest around 5000 to 10000 and the

rest of them invest according to their own needs and

desire.

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Q4) For what purpose do you invest in mutual fund.

1) Security of money

2) Rate of Return

3) Profitability

4) Liquidity

Profitability

40%

Security

20%Liquidity

25%

Rate of

Return

15%

Security

Profitability

Rate of

Return

Liquidity

Conclusion: Most of the people invest in mutual fund to

earn profit as compared to have more security and

liquidity.

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Q5) Do you think it is expensive investing in mutual fund

1) Yes

2) No

No

35%

Yes

65%

Yes

No

Conclusion: Most of the people feel that investing in

mutual fund is bit expensive as compared to the other

investment schemes in bank deposits.

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Q6) Does your fund gives regular return

1) Yes

2) No

No

30%

Yes

70%

Yes No

Conclusion: Most of the people feel that their fund gives

them regular return whereas rest of them feels that their

fund sometimes gives negative return.

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Q7) How much do you invest in Bank Deposits.

1)


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Q8) What type of investment do you prefer.

1) Mutual Fund

2) Bank Saving Accounts

3) Fixed Deposits Schemes

Mutual Fund

21%

Fixed

Deposits

63%

Bank

Accounts

16%

Mutual Fund

Bank Accounts

Fixed Deposits

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Conclusion: Out of the total respondent most of them

prefer to invest in the fixed deposits scheme as

compared to the mutual funds and very few people

invests in the savings accounts.

Q9) How do you invest in mutual fund.

1) Agents2) Distribution Companies

3) AMCs

Agents

25%

AMC's

35%

Distribution

companies

40%

Agents

Distributioncompanies

AMC's

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Conclusion: Most of the people invest in mutual fund

through distribution companies as compared to direct

investments in asset management companies and very

few people invest through agents.

Q10) Of the following companies where do you prefer toinvest.

1) SBI mutual fund

2) Reliance mutual fund

3) HDFC mutual fund

4) Birla Sun Life

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Birla SunLife

20%

Reliance

mutualfund

30%

SBI mutual

fund

25%

HDFC

mutual

fund25%

SBI mutual fund

Reliance mutual

fund

HDFC mutual fund

Birla Sun Life

Conclusion: Out of the total respondent most of them

invest in reliance mutual fund as compared to the other

mutual fund companies.

Q11) If market falls, what do you do.

1) Redeem the amount.

2) Hold the investment.

3) Further invest.

4) Invest in some other kind of investment.

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Yes

65%

No

35%

Yes

No

Conclusion: Most of the people now days invest

systematically as very few people prefer to invest in

lump sum amount.

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CHAPTER 7

FINDINGS OF THE STUDY

CONCLUSION

At the end of the project the conclusion which can be

drawn is that the mutual fund industry is going to be one

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of the emerging avenues for the investors in the time to

come.

Most of the people show less interest in the mutual

funds.

Most of the respondents who were aware of the funds too

were not interested in investing their savings in the

Mutual Funds. They were not confident of the safety and

security of the investments in Mutual Funds.

People normally give preference to the bank deposits

schemes as compared to the mutual fund because of the

risk factor associated with it.

Most of the respondents are mainly look for the

profitability in the mutual funds which becomes difficult

for them because they normally invest their larger

proportion of their amount in debt instruments as

compared to equity which gives less return.

Many people also do not invest in mutual fund because of

the fact that the cost is high in mutual funds, as they

have to pay entry and exit load attached to the fund.

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People normally go through distribution companies while

investing in the mutual funds and hence can avoid any

fraud and flaws associated with the investments.

According to the survey many people prefer invest in the

Reliance mutual fund as compared to the other funds

available in the market.

The concept of SIP(systematic Investment plan) is some

thing which caters to both the return expectation and

security. And normally people are now likely to invest

through SIPs.

RECCOMENDATIONS

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After the complete study of the mutual funds and based upon

my experience and observations. The following suggestions are

made which may be beneficial for increasing the effectiveness of

the mutual funds.

People should be given more awareness about the

mutual fund in order to enhance the business

Regular and detailed information should be provided

to the investor and must be given all the details of the

new fund which ever comes in the market.

More emphasis should be given to the equity linkedschemes in mutual fund as compared to debt

schemes in order to gain more profit from equities.

The expenses of the fund should be reduced so that

the

investor can invest easily.

People should invest directly through AMC in order to

avoid expenses associated with the fund.

They should not stick to one fund only as it may notgive better return all the time, rather they shouldinvest in different securities.

Lastly people should invest through systematic

investment plans instead investing in lump sum.

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CHAPTER - 8

LIMITATIONS

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LIMITATION

1. Time Constraints

The time duration of conducting theresearch was less so a lot of factors were ignored.

A large sample could not be taken due to

same reason.

2. The survey was conducted during free hours. The

customers did not respond when they were

contacted in peak hours.

3. Most of the customers were ignorant and were not

willing to respond that leads to inaccuracy in data

collected.

4. As the data was based on customers perception,

it might be biased to certain extent.

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ANNEXURE

Q1)Are you familiar with mutual funds?

1)Yes2) No

Q2) If yes, then which type of mutual fund do you invest.

1) Equity Fund

2) Debt Fund

3) Balanced Fund

Q3) How much do you invest in mutual fund.

1) 5000

2) 5000 - 10000

3) 10000-20000

4) Above 20000

Q4) For what purpose do you invest in mutual fund.

1) Security of money

2) Rate of Return

3) Profitability

4) Liquidity

Q5) Do you think it is expensive investing in mutual fund

1) Yes

2) No

Q6) Does your fund gives regular return

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1) Yes

2) No

Q7) How much do you invest in Bank Deposits.

1)


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BIBLIOGRAPHY

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BIBLIOGRAPHY

The websites referred by me are:-

1) www.amfiindia.com2) www.hdfcfund.com3) www.mutualfundindia.com4) www.google.com5) www.valueresearch.com
http://www.amfiindia.com/http://www.hdfcfund.com/http://www.mutualfundindia.com/http://www.google.com/http://www.valueresearch.com/http://www.amfiindia.com/http://www.hdfcfund.com/http://www.mutualfundindia.com/http://www.google.com/http://www.valueresearch.com/

Documents

Analysis of Mutual Funds in India