A Project Report

on
Investors Perceptions Towards
Investment in Mutual Funds
Submitted for partial fulfilment of award of
MASTR I! "#SI!SS A$MI!ISTRATI%!
In
FI!A!&
"'
RIS(A"( )#PTA
#!I*+ R%,, !%+ --./012/.34
!ame of )uide
Prof+ Maninder 5aur
6#ST I!F%S7S8 FR%9)A!$(I MAR5T8 ,#$(IA!A
AFFI,,IAT$ T% P#!:A" T&(!I&A, #!I*RSIT78
:A,A!$(AR
;./-.<./-2=
-
A&5!%>,$)M!T
The project report concept in M.B.A. curriculum is of immense utility to the
students, project helps to assess the students ability to individually
conceive, conceptualize, execute and present a life-lie project by main!
use of the sills ac"uired durin! the course of study.
My #roject could not have been fruitful $ithout the able !uidance of
Mrs+ Maninder 5aur+ % extend my deepest !ratitude to all the persons $ho
!ave me full support durin! the project.
&espite serious constraints of time and recourse, the study $as
executed $ith sincerity and commitment. The report is characterized by its
strai!ht for$ard, to the point approach, $ith bare minimal reproduction of
the theory of finance research. A deliberate effort has been made to introduce
novelty in the report.

Ris?ab? )upta
--./012/.34
.
&RTIFI&AT
This is certifyin! that the project $or on 'Investors Perceptions towards
Investment in Mutual Funds is based on the vie$s of the students. This
project is submitted by Ris?ab? )upta a student of M+"+A. in 6uest
Infos's8 ,#$(IA!A under my supervision.
%t is further certified that this is benefited $or of the candidate and
matter embedded in this project has not been submitted to any other
university earlier for the a$ard of nay de!ree to the best of my no$led!e.
The data source has been duly acno$led!ed.
Mrs+ Maninder 5aur
;Project )uide=
2
$&,ARATI%!
%, Ris?ab? )upta student of 6uest Infos's8 ,ud?iana here by state that the
(esearch (eport entitled Investors Perception Towards Investment in
Mutual Fund submitted in partial fulfillment for the re"uirement of de!ree of Master
of Business Administration. %t is the ori!inal $or done by me and the information
provided in the study is authentic to the best of my no$led!e. This study report has not
been submitted to any other institution or university for the a$ard of any other de!ree.
Ris?ab? )upta
M"A 0
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Sem+
6uest Infos's8 ,ud?iana
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3
1
,hapter--
Introduction
M#T#A, F#!$S
I!TR%$#&TI%!
*f late, mutual funds have become a hot favourite of millions of people all over
the $orld. The drivin! force of mutual funds is the Csafety of the principal !uaranteed,
plus the added advanta!e of capital appreciation to!ether $ith the income earned in the
form of interest or dividend. #eople prefer Mutual 2unds to ban deposits, life insurance
and even bonds because $ith a little money, they can !et into the investment !ame. *ne
can o$n a strin! of blue chips lie %T,, T%7,*, (eliance etc., throu!h mutual funds.
Thus mutual funds act as a !ate$ay to enter into bi! companies hitherto inaccessible to
an ordinary investor $ith his small investment.
MA!I!)
A mutual fund collects the savin!s from small investors, invest them in
;overnment and other corporate securities and earn income throu!h interest and
dividends, besides capital !ains. %t $ors on the principle of Bsmall drops of water maCe
a biD ocean. 2or instance, if one has (s.-??? to invest, it may not fetch very much on its
o$n. But, $hen it is pooled $ith (s.-??? each from a lot of other people, then, one could
create a Cbi! fund lar!e enou!h to invest in a $ide varieties of shares and debentures on a
commandin! scale and thus, to enjoy the economies of lar!e-scale operations. :ence, a
mutual fund is nothin! but a form of collective investment. %t is formed by the comin!
to!ether of a number of investors $ho transfer their surplus funds to a professionally
"ualified or!anization to mana!e it. To !et the surplus funds from the investors, the fund
adopts a simple techni"ue. /ach fund is divided into a small fraction called 'unitsD of
e"ual value. /ach investor is allocated units in the proportion to the size of his
investment. Thus, every investor, $hether bi! or small, $ill have a stae in the fund and
can enjoy the $ide portfolio of the investment held by the fund. :ence, mutual funds
enable millions of small and lar!e investors to participate in and derive the benefit of the
@
capital maret !ro$th. %t has emer!ed as a popular vehicle of creation of $ealth due to
hi!h return, lo$er cost and diversified ris.
T?e Securities and Ec?anDe "oard of India ;Mutual Funds= ReDulations8
-442 defines a mutual fund as a fund establis?ed in t?e form of a trust b' a
sponsor8 to raise mone' b' t?e trustees t?rouD? t?e sale of units to t?e public8 under
one or more sc?emes8 for investinD in securities in accordance wit? t?ese
reDulations+
A
%RI)I! %F T( F#!$

The ori!in of the concept of mutual fund dates bac to the very da$n of
commercial history. %t is said that /!yptians and #hoenicians sold their shares in vessels
and caravans $ith a vie$ to spreadin! the ris attached $ith these risy ventures.
:o$ever, the real credit of introducin! the modern concept of mutual fund !oes to the
2orei!n and ,olonial ;overnment Trust of 3ondon /stablished in -=8=. Thereafter, a
lar!e number of close-ended mutual funds $ere formed in the +.7.A. in -B.?s follo$ed
by many countries in /urope, the 2ar /ast and 3atin America. %n most of the countries,
both open and close-ended types $ere popular. %n %ndia, it !ained momentum only in
-B=?, thou!h it be!an in the year -B8> $ith the +nit Trust of %ndia launchin! its first
fund, the +nit 7cheme -B8>.
%n %ndia only mutual fund operatin! for a lon! time since -B8> $as the +T%. %t is
an open-ended mutual fund, $hose units can be sold and repurchased at any time. %t is in
the public sector, enjoyin! a monopoly position and some uni"ue tax benefits such as
exemption from income-tax of its entire income. Althou!h the +T% has operated a
number of schemes lined to insurance and !ifts, and some tax benefits, income declared
by it to unit holders is not subject to any tax deduction at source and is exempt from
income tax up to a limit. +T% $as alone in the field until -B=9. 7ince -BB5-B8, there is a
T&7, if the annual income is more than (s. -?,???.
Mutual 2unds have been set up since -B=9 by the public sector bans follo$in!
an amendment to the Banin! (e!ulation Act in -B=., $hich empo$ered the (B% to
permit the bans to carry on non-banin! business such as leasin!, mutual funds, etc.
under section 8 of this act. 7ince then, the 7B%, ,anara Ban, #unjab )ational Ban and
some other nationalized bans have to set up their o$n mutual funds. The business of
mutual funds has cau!ht the ima!ination of the financial community and is !ro$in! at a
rapid pace in %ndia. These funds cater mainly to individual investors and small savers
4
(IST%R7 %F T( I!$IA! M#T#A, F#!$ I!$#STR7
The mutual fund industry in %ndia started in -B8. $ith the formation of +nit Trust
of %ndia, at the initiative of the ;overnment of %ndia and (eserve Ban. The history of
mutual funds in %ndia can be broadly divided into four distinct phases
First P?aseF -410<A@ ;#TI=
+nit Trust of %ndia E+T%F $as established on -B8. by an Act of #arliament. %t $as set
up by the (eserve Ban of %ndia and functioned under the (e!ulatory and administrative
control of the (eserve Ban of %ndia. %n -B9=, +T% $as de-lined from the (B% and the
%ndustrial &evelopment Ban of %ndia E%&B%F too over the re!ulatory and administrative
control in place of (B%. The first scheme launched by +T% $as +nit 7cheme -B8>. %t $as
follo$ed by +3%# in -B9-, ,;;A in -B=8 and Master share in -B=9.
Second P?ase F -4A@<-442 ;ntr' of Public Sector Funds=
-B=9 mared the entry of non- +T%, public sector mutual funds set up by public
sector bans and 3ife %nsurance ,orporation of %ndia E3%,F and ;eneral %nsurance
,orporation of %ndia E;%,F. 7B% Mutual 2und $as the first non- +T% Mutual 2und
established in 6une -B=9. 3%, established its mutual fund in 6une -B=B $hile ;%, had set
up its mutual fund in &ecember -BB?.
T?ird P?aseF -442<.//2 ;ntr' of Private Sector Funds=
1ith the entry of private sector funds in -BB., a ne$ era started in the %ndian mutual
fund industry, !ivin! the %ndian investors a $ider choice of fund families. Also, -BB. $as
the year in $hich the first Mutual 2und (e!ulations came into bein!, under $hich all
mutual funds, except +T% $ere to be re!istered and !overned. The erst$hile Gothari
#ioneer Eno$ mer!ed $ith 2ranlin TempletonF $as the first private sector mutual fund
re!istered in 6uly -BB.. The number of mutual fund houses $ent on increasin!, $ith
many forei!n mutual funds settin! up funds in %ndia and also the industry has $itnessed
several mer!ers and ac"uisitions.
-/
Fourt? P?ase F since Februar' .//2
%n 2ebruary 4??., follo$in! the repeal of the +nit Trust of %ndia Act -B8. +T% $as
bifurcated into t$o separate entities. *ne is the 7pecified +ndertain! of the +nit Trust
of %ndia $ith assets under mana!ement of (s.4B, =.5 crores as at the end of 6anuary
4??., representin! broadly, the assets of +7 8> scheme, assured return and certain other
schemes. The 7pecified +ndertain! of +nit Trust of %ndia, functionin! under an
administrator and under the rules framed by ;overnment of %ndia and does not come
under the purvie$ of the Mutual 2und (e!ulations.
The second is the +T% Mutual 2und 3td, sponsored by 7B%, #)B, B*B and 3%,. %t is
re!istered $ith 7/B% and functions under the Mutual 2und (e!ulations. 1ith the
bifurcation of the erst$hile +T% $hich had in March 4??? more than (s.98, ??? crores of
assets under mana!ement and $ith the settin! up of a +T% Mutual 2und, conformin! to
the 7/B% Mutual 2und (e!ulations, and $ith recent mer!ers tain! place amon! different
private sector funds, the mutual fund industry has entered its current phase of
consolidation and !ro$th. As at the end of 7eptember, 4??>, there $ere 4B funds, $hich
mana!e assets of (s.-5.-?= crores under >4- schemes.
--
)R%>T( I! ASSTS #!$R MA!A)M!T
-.
%rDaniGation of Mutual Fund
There are many entities involved and the dia!ram belo$ illustrates the or!anizatio
nal set up of a mutual fundH
-+ SponsorsF
%t refers to any body corporate $hich initiates the launchin! of a mutual fund it is this
a!ency $hich of its o$n if eli!ible or in collaboration $ith other body corporate complies
the formalities of establishin! a mutual fund.
The sponsor should have a sound trac record and experience in the relevant field
of financial services for a minimum period of 5 years.
7/B% ensures that sponsors should have professional competence, financial
soundness and !eneral reputation.
/very mutual fund shall be re!istered under the said re!ulations and it is the
sponsor $ho files an application.
.+ TrusteesF
A trustee is a person $ho holds the property of mutual fund in trust for the
benefits of the unit holders. *nce the mutual fund trust is formed, the role of sponsor
virtually becomes nil. The trustees are to perform the follo$in! dutiesH
To mana!e the mutual fund in accordance $ith the la$s, re!ulations, directions
and !uidelines issued by 7/B%, 7toc /xchan!es and other !overnmental and
re!ulatory a!encies.
To collect income due to be paid in respect of the schemes of mutual fund.
2+ Assets ManaDement &ompan';AM&=F
Assets Mana!ement ,ompany is a body en!a!ed to run the sho$ of mutual fund. %t is
body corporate $hose Memorandum and Articles of Associations are to be approved by
-2
the 7/B%. The sponsor or the trustees appoint AM, to mana!e the affairs of the mutual
fund. The AM, performs the follo$in! functionsH
To tae reasonable steps and exercise due dili!ence to ensure that investments of
scheme are as per the provisions of the re!ulations.
To submit re!ular returns to the trustees re!ularly.
To appoint the custodian.
To appoint re!istrar and share transfer a!ents.
0+ &ustodiansF
%n a mutual fund dependin! upon its size there is a substantial $or involved for
mana!in! the scrips bou!ht from the maret. 7/B% re"uires that each mutual fund shall
have a custodian $ho is responsible for such a $or. To sum up the assi!nments of
custodian areH
/nsurin! delivery of scrips only on receipt of payment and payment only upon
receipt of scrips.
(e!ular reconciliation of assets to accountin! records.
Timely resolution on discrepancies and failures.
;ettin! property re!istered or recorded.
3+ Transfer ADentF
The transfer a!ent handles sales and redemptions of fund shares, maintains
shareholder records, computes the )A0 daily, and handles dividend and capital !ains
distributions. The transfer a!ent is usually a ban or trust company.
-0
>orCinD of a Mutual fund
-3
The fund mana!ers throu!h AM,s collect money from investors and invests in securities
in various stoc exchan!es, as a result they returns and this benefit !enerated is passed
bac to the investors.
RisC Return MatriE
-1
T7PS %F M#T#A, F#!$ S&(MS
%n the investment maret, one can find a variety of investors $ith different needs,
objectives and ris tain! capacities. 2or instance, a youn! businessman $ould lie to !et
more capital appreciation for his funds and he $ould be prepared to tae !reater ris then
a person $ho is just on the ver!e of his retirin! a!e. 7o, it is very difficult to offer one
fund to satisfy all the re"uirements of investors. 6ust as one shoe is not suitable for all
le!s, one fund is not suitable to meet the vast re"uirement of all investors. Therefore,
many types of funds are available to the investor. %t is completely left to the discretion of
the investor to choose any one of them dependin! upon his re"uirement and his ris
tain! capacity.
Mutual 2und schemes can broadly be classified into many types as !iven belo$H
"7 STR#&T#RF
-+ &lose<ended Funds
+nder this scheme the corpus of the fund and its duration are prefixed. %n other
$ords, the corpus of the fund and the number of units are determined in advance. *nce
the subscription reaches the pre-determined level, the entry of the investors is closed.
After the expiry of the fixed period, the entire corpus is disinvested and the proceeds are
distributed to the various unit holders in proportion to their holdin!.
2eaturesH
These units are publicly traded throu!h stoc exchan!e Eas stocs areF and
!enerallyI there is no repurchase facility by the fund.
The main objective of this fund is capital appreciation.
The $hole fund is available for the entire duration of the scheme and there $ill
not be any redemption demands before its maturity.
:ence, the fund mana!er can mana!e the investments efficiently and profitably
$ithout the necessity of maintainin! and li"uidity.
-@
.+ %pen<ended Funds
%t is just the opposite of close-ended funds. +nder this scheme, the size of the fund
andJor the period of the fund is not pre-determined. The investors are free to buy and sell
any number of units at any point of time. 2or instance, the unit scheme E-B8>F of the +nit
Trust of %ndia is an open-ended one, both in terms of period and tar!et amount. Anybody
can purchase this unit at any time and sell it also at any time at his discretion.
2eaturesH
There is complete flexibility $ith re!ard to ones investment or disinvestment.
These units are not publicly traded but, the 2und is ready to repurchase them
and resell them at any time.
The main aim of this fund is income !eneration
The fund mana!er has to be very careful in mana!in! the investments because
he has to meet the redemption demands at any time made durin! the life of the
scheme.
"7 I!*SM!T %":&TI*F
2+ )rowt? Funds
+nlie the income funds, ;ro$th 2unds concentrate mainly on lon! run !ains i.e.
capital appreciation. They do not offer re!ular income and they aim at capital
appreciation in the lon! run. :ence, they have been described as ')est /!!sD
investments.
2eaturesH
The investment strate!y conforms to the 2und objective by investin! the funds
predominantly on e"uities $ith hi!h !ro$th potential.
The fund tries to !et capital appreciation by tain! much riss and investin!
on ris bearin! e"uities and hi!h !ro$th e"uity shares.
-A
This is best suited to salaried and business people $ho have hi!h ris bearin!
capacity.
0+ Income Funds
As the very name su!!ests, this fund aims at !eneratin! and distributin! re!ular
income to the members on a periodical basis. %t concentrates more on the distribution of
re!ular income and it also sees that the avera!e return is hi!her than that of the income
from ban deposits.
2eaturesH
The investor is assured of re!ular income at periodic intervals, say half
yearly or yearly and so on.
The pattern of investment is oriented to$ards hi!h and fixed income yieldin!
securities lie debentures, bonds etc.
This is best suited to the old and retired people $ho may not have any
re!ular income.
3+ "alanced Funds
This is other$ise called 'income-cum-!ro$thD fund. %t is nothin! but a combination
of both income and !ro$th funds. %t aims at distributin! re!ular income as $ell as capital
appreciation. This is achieved by balancin! the investments bet$een the hi!h !ro$th
e"uity shares and also the fixed income earnin! securities.
1+ Mone' MarCet Funds
The aim of Money Maret 2unds is to provide easy li"uidity, preservation of capital
and moderate income. These schemes !enerally invest in safer short-term instruments
such as Treasury Bills, ,ertificates of &eposit, ,ommercial #aper and %nter-Ban ,all
Money. (eturns on these schemes may fluctuate dependin! upon the interest rates
prevailin! in the maret. These are ideal for corporate and individual investors as a means
to par their surplus funds for short periods
-4
%T(R S&(MSF
A+ TaE SavinD Sc?eme
These schemes offer tax rebates to the investors under specific provisions of the
%ndian %ncome Tax la$s as the ;overnment offers tax incentives for investment in
specified avenues. %nvestments made in /"uity 3ined 7avin!s 7chemes E/377F and
#ension 7chemes are allo$ed as deduction under 7ection == of the %ndian %ncome Tax
Act, -B8-. An investor is entitled to !et 4?K rebate in %ncome Tax for investments made
under this fund subject to a maximum investment of (s. -?,??? p.a.
4+ IndeE Funds
%ndex funds refer to those funds $here the portfolios are desi!ned in such a $ay that
they reflect the composition of some broad based maret index. This is done by holdin!
securities in the same proportion as the index itself. The value of these index-lined funds
$ill automatically !o up $henever the maret index !oes up and vice versa.
-/+ Sectoral Sc?emes
7ectoral 2unds are those $hich invest exclusively in a specified sectorEsF such as
2M,;, %nfoTech, #harmaceuticals, etc. These schemes carry hi!her ris as compared to
!eneral e"uity schemes as the portfolio is less diversified, i.e. restricted to sector J
industry.
./
--+ ,everaDed Funds
These funds are also called borro$ed funds since they are used primarily to increase
the size of the value of the portfolio of a mutual fund. 1hen the value increases, the
earnin! capacity of the fund also increases.
-.+ $ual Funds
This is special ind of closed end fund. %t provides a sin!le investment opportunity
for t$o different types of investors. 2or this purpose, it sells t$o types of investment
stocs i.e. income shares and capital shares.
-.+ "ond Funds
These funds have portfolios consistin! mainly of fixed income securities lie
bonds. The main thrust of these funds is mostly on income rather than capital !ains.
.-
IMP%RTA!& %F M#T#A, F#!$S
The mutual fund industry has !ro$n at a phenomenal rate in the recent past. *ne can
$itness a revolution in the mutual fund industry in vie$ of its importance to the investors
in !eneral and the countrys economy at lar!e. The follo$in! are some of the important
advanta!es of mutual fundsH
-+ &?annelisinD SavinDs for InvestmentF

Mutual funds act as a vehicle in !alvanizin! the savin!s of the people by offerin!
various schemes suitable to the various classes of customers for the development of the
economy as $hole. %n the absence of Mfs, these savin!s $ould have remained idle. Thus,
the $hole economy benefits due to the cost efficient and optimum use and allocation of
scarce financial and real resources in the economy for its development.
.+ %fferinD >ide Portfolio InvestmentF
%nvestors can enjoy the $ide portfolio of the investment held by mutual fund. The
fund diversifies its riss by investin! on a lar!e variety of shares and bonds, $hich cannot
be done by small and medium investors. This is in accordance $ith the maxim Cnot to la'
all eDDs in one basCet. Thus Mfs provide instantaneous portfolio diversification. The
ris diversification $hich a pool of savin!s throu!h mutual funds can achieve cannot be
attained by a sin!le investors savin!s.
2+ ProvidinD "etter 7ieldsF
The poolin! of funds from a lar!e number of customers enables the fund to have lar!e
funds at its disposal. &ue to these lar!e funds, mutual funds are able to buy cheaper and
sell dearer than the small and medium investors. Thus they are able to command better
maret rates and lo$er rates of broera!e. 7o they provide better yields to their
customers.
..
0+ RenderinD Epertise Investment Service at ,ow &ostF
The mana!ement of fund is !enerally assi!ned to professionals $ho are $ell trained
and have ade"uate experience in the field of investment. The investment decisions of
these professionals are al$ays baced by informed jud!ment and experience.
1+ ProvidinD Researc? ServiceF
A mutual fund is able to command vast resources and hence it is possible for it to
have an in depth study and carry out research on corporate securities. /ach fund
maintains a lar!e research team $hich constantly analyzes the companies and the
industries and recommends the fund to buy or sell a particular share. Thus investments
are made purely on the basis of a throu!h research.
@+ %fferinD TaE "enefitsF
,ertain funds offer tax benefits to its customers. Thus apart from dividends, interest
and capital appreciation, investors also stand to !et the benefit of tax concession. Mutual
funds themselves are totally exempt from tax on all income on their investments.
@+ IntroducinD FleEible Investment Sc?eduleF
7ome mutual funds have permitted the investors to exchan!e their units from one
scheme to another scheme and this flexibility is a !reater boom to investors. %ncome units
can be exchan!ed for !ro$th units dependin! upon the performance of the funds. *ne
cannot derive such flexibility in any other investments.
A+ ProvidinD )reater Affordabilit' and ,iHuidit'F
/ven a very small investor can afford to invest in mutual funds. They provide an
attractive and cost effective alternative to direct purchase of share. %n the absence of Mfs,
.2
small investors cannot thin of participatin! in a number of investments $ith such a
mea!re sum. There is !reater li"uidity. +nits can be sold to the fund at any time at the net
asset value and thus "uic access to li"uid cash is assured.
4+ Simplified Record 5eepinDF
An investor $ith just an investment in 5?? shares or so in . or > companies has to
eep proper records of dividend payments, bonus issues, price movements, purchase or
sale instruction, broera!e and other related items. %t is very tedious and consumes a lot
of time. Thus record eepin! is the bi!!est problem for investors. The investor has to
eep a record of only one deal $ith the mutual fund. The M2s sends statements very
often to the investor.
-/+ SupportinD &apital MarCetF
Mutual funds play a vital role in supportin! the development of capital marets. The
mutual funds mae the capital maret active by means of providin! a sustainable
domestic source of demand for capital maret instruments. %n other $ords, the savin!s of
the people are directed to$ards investments in capital marets throu!h these mutual
funds.
--+ PromotinD Industrial $evelopmentF
The economic development of any nation depends upon its industrial advancement
and a!ricultural development. All industrial units have to raise their funds by resortin! to
the capital maret by the issue of shares and debentures. The mutual fund not only create
a demand for these capital maret instruments but also supply a lar!e source of funds to
the maret, and thus, the industries are assured of their capital re"uirements.
.0
-.+ ActinD as substitute for Initial Public %fferinDs ;IP%s=F
%n most cases investors are not able to !et allotment in %#*s of companies because
they are often oversubscribed many time. Moreover, they have to apply for a minimum of
5?? shares, $hich is very difficult particularly for small investors. But, in mutual funds,
allotment is more or less !uaranteed mutual funds are also !uaranteed a certain
percenta!e of %#*s by companies.
-2+ ReducinD t?e MarCetinD &ost of !ew IssuesF
Moreover the mutual funds help to reduce the maretin! cost of ne$ issues. The
promoters used to allot a major share of the %nitial #ublic *fferin! to the mutual funds
and thus they are saved from the maretin! cost of such issues.
-0+ 5eepinD t?e Mone' MarCet ActiveF

An individual investor cannot have any access to money maret instruments since the
minimum amount of investment is out of his reach. *n the other hand mutual funds eep
the money maret active by investin! money on the money maret instruments.
.3
Important terms associated wit? Mutual funds
!T ASST *A,# ;!A*=
The repurchase price is al$ays lied to the )et #resent 0alue E)A0F. The )A0 is
nothin! but the maret price of each unit of a particular scheme in relation to all the
assets of the scheme. %t can other$ise be called 'the intrinsic valueD of each unit. This
value is a true indicator of the performance of the fund. %f the )A0 is more then the face
value of the unit, it clearly indicates that the money invested on that unit has appreciated
and the fund has performed $ell.
Illustration
2or instance, 2ortune Mutual 2und has introduced a scheme called Millionaire
7cheme. The scheme size is -?? crores. The value each unit is (s. -?J-. %t has invested all
the funds in shares and debentures and the maret value of the investment comes to (s.
4?? crores.
!A*L Maret 0alue of Assets - 3iabilities
+nits *utstandin!
4?? crores
)o$ )A0 L -------------- x 0alue of each unit
-?? crores
L 4 x -? L 4?
Thus, the value of each unit of (s. -?J- is $orth (s. 4?.
:ence the )A0 L (s.4?
This )A0 forms the basis for fixin! the repurchase price and reissue price. The investor
can call up the fund any time to find out the )A0. 7ome M2s publish the )A0 $eely in
t$o or three leadin! daily ne$spapers.
.1
,oad
%t is a char!e collected by a mutual fund $hen it sells units. %t can be either front-end
loadJentry load Ei.e., the char!e is collected $hen an investor buys the unitsF or bac-end
loadJexit load Ei.e, the char!e collected $hen the investor sells bac the unitsF. 7ome
schemes do not char!e any load and are called )o 3oad 7chemes.
&ontinDent deferred sales c?arDe ;&$S&=
A bac-end load that is imposed upon an investor if he exits from the fund before a
predetermined period Esay . monthsF.The char!es decline as lon! as the investor stays in
the fund.
Portfolio
A portfolio comprises of investments in a variety of securities and asset classes. This
diversification reduces the overall ris. The portfolio ris depends on the nature of each
investment in the portfolio and the overall impact Efavourable or unfavourableF of the
various ris factors on each security. A mutual fund scheme states the ind of portfolio it
sees to construct as $ell as the riss involved under each asset class.
Funds net assets
The total value of a fundMs cash and securities less its liabilities or obli!ations.
ReDistrar
A (e!istrar holds and maintains the details of the transactions carried out by each +nit
holder in a Mutual 2und scheme. :e is appointed by the AM, to serve the +nit holder
for the purchases, sales or s$itchin! of +nits that he may carry out. The dividend
distribution, recordin! of nominations or transfers is some other services rendered by the
(e!istrar. :e may also have %nvestor 7ervice ,entres in various cities, $here an investor
can !et over-the-counter service.
.@
Epense ratio
The expense ratio for a fund is the annual expenses of a fund Eat the end of the financial
yearF, includin! the mana!ement fee, administrative costs, divided by the number of units
on that day.
Statement of account
%t is the statement sho$in! the complete portfolio of an investor re!ardin! investment in
the mutual fund scheme. %t also sho$s its current $orth of holdin!s.
Sales Price
The price or )A0 a +nit holder is char!ed $hile investin! in an open-ended scheme is
called sales price. %t may include sales load, if applicable.
Repurc?aseIRedemption price
(epurchase or redemption price is the price or )A0 at $hich an open-ended scheme
purchases or redeems its units from the +nit holder. %t may include exit load, if
applicable.
RisCs eEposed to w?ile investinD in Mutual Funds
MarCet risC - %f the overall stoc or bond marets fall on account of macro
economic factors, the value of stoc or bond holdin!s in the fundMs portfolio can
drop thereby impactin! the )A0.
!on<marCet risC < Bad ne$s about an individual company can pull do$n its
stoc price, $hich can affect, ne!atively, funds holdin! a lar!e "uantity of that
stoc. This ris can be reduced by havin! diversified portfolio that consists of a
$ide variety of stocs dra$n from different industries.
Interest rate risC - Bond prices and interest rates move in opposite directions.
1hen interest rates rise, bond prices fall and this decline in underlyin! securities
.A
affects the )A0 ne!atively. The extent of the ne!ative impact is dependant on
factors such as maturity profile, li"uidity etc.
&redit risC - Bonds are debt obli!ations. 7o $hen the funds invest in corporate
bonds, they run the ris of the corporates defaultin! on their interest payment and
the principal payment obli!ations and $hen that ris crystallises it leads to a fall
in the value of the bond causin! the )A0 of the fund to tae a beatin!.
RI)(TS AS A M#T#A, F#!$ #!IT (%,$R
+nit holders are entitled toH
(eceive unit certificates or statements of accounts confirmin! title $ithin thirty
days from the date of closure of the subscription under open-end schemes or
$ithin 8 $ees from the date of re"uest for a unit certificate is received by the
mutual fund.
(eceive information about the investment policies, investment objectives,
financial position and !eneral affairs of the scheme.
(eceive dividend $ithin .? days of their declaration and receive the redemption
or repurchase proceeds $ithin -? days from the date of redemption or repurchase.
0ote in accordance $ith the re!ulations toH
-. ,han!e the Asset Mana!ement ,ompanyI
4. 1ind up the scheme.
To receive communication from the Trustees about chan!e in the fundamental
attributes of any scheme or any other chan!es $hich $ould modify the scheme
and affect the interest of the unit holders and to have a option to exit at prevailin!
)et Asset 0alue $ithout any exit load in such cases.
%nspect the documents of the mutual funds specified in the schemes offer
document.
.4
,iHuidit'
%f $e find ourselves in need of money in a short amount of time, mutual funds are
hi!hly li"uid. 7imply put in our order durin! the day and $hen the maret closes a chec
$ill be sent to us or $e can have it $ired to a ban account. 7tocs can be much more
difficult dependin! on $hat inds of stocs $e are invested in. ,&Ms offer no li"uidity
Enot $ithout a hefty feeF and bonds can be difficult, too. 7ome mutual funds also carry
chec-$ritin! privile!es, $hich means $e can actually $rite checs from the account,
similar to our checin! account at the ban.
&ost
Mutual funds are excellent for the ne$ investors because $e can invest small
amounts of money and $e can invest at re!ular intervals $ith no tradin! costs. 7toc
investin!, ho$ever, carries hi!h transaction fees main! it difficult for the small investor
to mae money. %f an investor $anted to put in N-?? a month into stocs and the broer
char!ed N-5 per transaction, their investment is automatically do$n -5 percent every
time they invest. That is not a !ood $ay to start offO
RisC
%n !eneral, mutual funds carry much lo$er ris than stocs. This is primarily due to
diversification. ,ertain mutual funds can be risier than individual stocs. 1ith stocs,
one $orry is that the company $e are investin! in !oes banrupt. 1ith mutual funds,
that chance is next to nil. 7ince mutual funds typically hold any$here from 45-5???
companies, all of the companies that it holds $ould have to !o banrupt.
2/
,IMITATI%!S %F M#T#A, F#!$S
Funds are not risC<freeF %t is possible that $e could lose money.
$istributions are taEableF $e $ill o$e taxes on any dividend or capital !ain
distributions from the fund portfolio in the year they are received, even if the
distribution is reinvested.
Fees and eEpenses are involvedF 7ome fund companies can impose loads Ethese
are sales char!esF or other char!es, lie redemption fees, -4b-- fees Ean
advertisin! and distribution feeF, lo$ balance account fees or custodial ban fees.
T?e >isdom of Professional ManaDement+ The avera!e mutual fund mana!er
is no better at picin! stocs than the avera!e non-professional.
!o &ontrol+ +nlie picin! individual stocs, a mutual fund puts in the
passen!er seat of somebody elseMs car.
$ilution+ Mutual funds !enerally have such small holdin!s of so many different
stocs that insanely !reat performance by a fundMs top holdin!s still doesnMt mae
much of a difference in a mutual fundMs total performance.
"uried &osts+ Many mutual funds specialize in buryin! their costs and in hirin!
salesmen $ho do not mae those costs clear to their clients.
2-
RIS5S
Mutual funds are not free from riss. %t is so because basically the mutual funds also
invest their funds in the stoc maret on shares, $hich are volatile in nature and are not
ris free. :ence, the follo$in! riss are inherent in their dealin!sH
-+ MarCet RisCsF
%n !eneral, there are certain riss associated $ith every ind of investment on shares.
They are called maret riss. These maret riss can be reduced, but cannot be
completely eliminated even by a !ood investment mana!ement. The prices of shares are
subject to $ide price fluctuations dependin! upon maret conditions over $hich no body
has a control. Moreover, every economy has to pass throu!h a cycle- boom, recession,
slump and recovery. The phase of the business cycle affects the maret conditions to
lar!er extent.
.+ Sc?eme RisCsF
There are certain riss inherent in the scheme itself. %t all depends upon the nature of
the scheme. 2or instance, in a pure !ro$th scheme, riss are !reater. %t is obvious because
if one expects more returns as in the case of a !ro$th scheme, one has to tae more riss.
2+ Investment RisCsF
1hether the mutual fund maes money in shares or loses depends upon the
investment expertise of the Asset Mana!ement ,ompany EAM,F. %f the investment
advice !oes $ron!, the fund has to suffer a lot. The investment expertise of various funds
is different and it is reflected on the returns $hich they offer to investors.
0+ "usiness RisCsF
The corpus of the mutual fund mi!ht have been invested in a companys shares. %f the
business of that company suffers any set bac, it cannot declare any dividend. %t may
2.
even !o to the extent of $idin! up its business. Thou!h the mutual fund can $ithstand
such a ris, its income payin! capacity is affected.
3+ Political RisCsF
7uccessive ;overnments brin! $ith them fancy ne$ economic ideolo!ies and
policies. %t is often said that many economic decisions are politically motivated. ,han!es
in ;overnment brin! in the ris of uncertainty $hich every player in the financial service
industry has to face. 7o mutual funds are no exception to it.
22
F#T#R %F M#T#A, F#!$ I!$#STR7
There $ill be a lot of product innovationI customization and a lot of hed!in!
products $ill come.
(etail participation $ill increase but that $ill be throu!h pension and insurance
assets comin! in.
There $ill be !reater transparencyI technolo!y $ill drive do$n cost and the speed
of the transaction.
The a$areness of mutual fund products amon! the investin! public has
considerably increased.
The ey objective $hile sellin! products has to be focused on riss rather than on
returns.
;ro$th for the fund houses depends on their capacity to spread out and maret
their schemes at urban and semi-urban places. 7o more consideration has been
!iven to solicit subscriptions from small investors.
There $ill be the advent of more sophisticated products in various asset classes in
the times to come. ,ompetition $ill stay and $ill !ro$ stron!er $ith time.
*n the overall returns front, the dominant asset class is still debt. 7o, the debt
maret may !ro$ at 5-8K. The total debt maret covered by mutual funds cannot
!ro$ beyond 5-8K.
(eal !ro$th can be there in the e"uity sector but that is subject to political and
maret situations. Most e"uity funds have !iven a 9?-B?K return and some may
be even -??K in the last one year.
20
(eturns are related to the state of the financial marets. %nvestors have also started
realizin! that a mutual fund $ill be doin! a !ood job so lon! as it !ives maret-
related rates of return.
23
I!*ST%RS PR&PTI%!
Theres an interestin! analo!y bet$een the $ay people drive and the $ay they
invest money.
%mpatient drivers in traffic jams often pay lots of attention to $hat lane they are in
and ho$ the other traffic lanes are doin! compared to theirs. %f the other lane loos lie it
is movin! faster, they often $ill s$erve over to cut in front of somebody else. 7ome
people do this repeatedly, tain! every openin! they can find to !et any sli!ht advanta!e
for themselves. Those drivers may indeed !ain a fe$ seconds. But in the process, they
escalate the levels of dan!er and annoyance to them and everybody around them. %n
investment terms, they tae on much more ris in return for uncertain !ains.
;reatest road bloc to successful lon!-term investin! is impatience, and this
applies e"ually to buy-and-hold investors as $ell as those $ho use maret timin!.
%mpatient investors $atch the maret from day to day lie a ha$. %n their zeal to al$ays
be Pon top,P these people rarely !ive any investment or strate!y enou!h time to perform
ade"uately. A tradition for many investors is looin! up their stocs and funds every
sin!le day. 7ome supposedly lon!-term investors even call their broers or loo up stoc
prices electronically several times each tradin! dayO This added information really does
lon!-term investors no !ood and it maes it much harder to stic to a lon!-term focus.
#atient investors $ho mae investments and stic $ith them for years or decades,
$ith or $ithout maret timin!, arenMt liely to have excitin! anecdotes to share at parties.
But they are more liely to retire comfortably. And they are more liely to sleep $ell
alon! the $ay and be able to devote their attention to other thin!s in life. These people
may seem unexcitin!. As investors $e can choose every day from thousands of mutual
funds, thousands of mana!ers, thousands of individual stocs and thousands of other
products and plans.
21
2@
&?apter< .
Review of
,iterature
R*I> %F ,ITRAT#R
(esearch in Mutual fund industry has !ro$n to a considerable extent. A number of ey
#apers has been $ritten explorin! the different aspects but still some areas are under
study such as ho$ to rate the different Assest Mana!ement ,ompanies, ho$ to desi!n
assured return products, ho$ the investors main! investment in mutual 2unds, 1hat are
the moderatin! variables in customers decision main! re!ardin! Mutual fundQ Are
these factors have become factors for investors. This part revie$s precedin! $ors
attemptin! to ans$er these issues.
Most research on mutual funds has employed t$o explanatory variables, namely ,ris and
return. This approach implicitly places no value on other potentially important attributes
of mutual fund investment decision. %n eepin! $ith this strictly economic frame, several
scholars have investi!ated $hether or not mutual funds outperform the maret.
ReviewsF
&?andel J 5umar J et al ;.//4=8 %n their study of #nderstandinD RisC And
Returns In Mutual Funds Investments examined the performance of mutual funds in
terms of different measure viz .ris and return, beta, 6ensens alpha, 7harp index,
coefficient values and t-values the performance of e"uity fund scheme has revealed that
Birla 7un 3ife and 2ranlin %ndia is sho$in! more return in net asset value, as compared
to avera!e return in %,%,% #rudential and 7B% Ma!num.
5umar J S?arma ;.//4=,%n their of Mutual FundF< EpandinD (oriGon study the
trend prevailin! in %ndia mutual fund industry @ study the effect off 2%%s@ mutual fund
on 7ensex @ found the conclusion that 2%% affect the sensex si!nificantly due to lar!e
number of 2%%s and hu!e amount of investment by them 1here as mutual funds is less
si!nificant due to small numbers and small amount of investment compared of 2%%s.
PaniDra?i J PraCas? ;.//4= %n their study of 'Investors c?oices of Mutual Funds
and t?eir sc?emes K a stud' of inter fund variations in returns found the importance
2A
of different factors on $hich investors choices of Mutual 2unds depends. They also find
in their study that the returns of public and private funds, taen to!ether as $ell as
separately differ si!nificantly and there is no set patten of rise and fall of returns of either
public or private funds.
Arc?ana +R J Salma S?aja?an;.//A= %n their study of A stud' on Factors
influencinD t?e investment on Mutual Fund found that the safe ,ris and hi!h return
li"uidity , tax benefit, are sound to be the major factor influencin! the investment
decision in mutual fund ,onsistent return and availability of fund are the other important
factors that investors loo in funds.
"anarjee J&?aCrabarti et al;.//A= %n their study of Persistence in performance of
Indian eHuit' mutual fundsF< An empirical investiDation evaluated the relative
performance of e"uity mutual funds in %ndia $ith respect to three performance indicators,
namely, ra$ returns, the tracin! errors they !enerate over their benchmars , and the
information ratios they attain.
&?ander;.//A= %n this study of 'mpirical vidence on Indian Fund ManaDers
MarCet TiminD and StocC Selection Abilities discovered insatances of performance
variability on maret timin!s as $ell as stoc selection across the measurement criteria.
These findin!s have $ider ramification for the capital maret theory as $ell for the
maret participants.
&?oud?ar'8 ;.//A= %n his study of 'T?e components of investment performance of
fund manaDers<vidence from Indian capital marCet examined the components of
investment performance of investment mana!ers, maret timin! stoc selection,ris
bearin! and diversification, in %ndia durin! the period 6anuary -BB= to &ecember 4??5 by
employin! te Treynor and Mazuya E-B88F and 2ama E-B94F performance measures.
5umar JSudalaimut?u ;.//A= '%n their study of Investors perception towards
mutual funds investment effectively analyzed the perception of investors to$ards
24
mutual fund investments effectively tain! into account the investors reference to$ards
mutual fund sector, schemes type, investors opinion on factors influenced to invest in
mutual funds, investors satisfaction level to$ards various motivatin! factors source of
a$areness of mutual fund scheme and type of paln held by investors.
Mittal J *'as ;.//A= , %n their study of '$oes investors psc'c?oloD' affect
investment decision found that the over and above the objective and constraints os
investors behavioral aspect of investin! paly an inte!ral role in an individual perception
of ris.The research found that the investors became ris seein! and avoid sellin!
securities $hen faced $ith a loss, they place investment into separate mental accounts
and their decision adversely affected by !reed and fear.
Pande'8 ;.//A= %n his study of Performance appraisal of s?are ?oldinD in mutual
fund industr' in india found that the behavior of savin! in india durin! the reform
period proved to be an improvement in financial savin!, $hich provide an opportunity for
diversification across financial assests and emer!ence of maretable return
$evasenat?ipati J Saleendran et al ;.//@= , %n their study of Awareness and
Perception of people towards Mutual Funds at a &oimbatore &it' found the various
factors affectin! investors behavior to$ards investment in mutual funds and satisfaction
level of investors from different factors related to mutual fund investment lie rate of
return, tax consideration factors, safety.
SinD? J SinDla ;-44A= %n their study of $eterminants of mutual fund performance8
a factor anal'sis approac? used different factors such as correlation matrix analysis,
fundamental factor, maret performance factor , #rofitability factor @ !ro$th factor to
study the variation in different mutual funds performance over a specific period of time
0/
0-
,hapter- .
%bjectives
%":&TI*S
-. To study the investor a$areness to$ards mutual fund.
4. To no$ the factors considered by investors $hile investin! in a mutual fund.
.. To assess the satisfaction level of mutual fund investors and reasons for their
dissatisfaction.
>. To no$ the comparative preference of investors to$ards mutual funds and
investment in stoc maret directly.
5. To explore the prospect of mutual funds in %ndia.
0.
02
,hapter->
Researc?
Met?odoloD'
RSAR&( MT(%$%,%)7
Researc? $esiDn
(esearch &esi!n is a series of advanced decisions that taen to!ether comprise a
master plan or model for the conduct of an investi!ation. 7o research desi!n provides a
frame$or of plan for study $hich !uides the collection, measurement, analysis and
interpretation of the data.
The desi!n in my project is descriptive.
$ata collection Met?od
Source of data collection
Both primary and secondary data has been used. #rimary source of data includes
personal intervie$s as $ell as structured "uestionnaire.
7econdary source of data included the use of boos, journals, brouchers and
internet services.
#niverse
The universe for the survey included all the investors investin! in Mutual 2unds in
Ludhiana ,ity.
SamplinD Plan
SamplinD unit
The tar!et population included Business class, 7ervice class, #rofessionals $ho had
invested in Mutual 2unds.
Sample SiGe
The sample size has been -// respondents.
00
SamplinD Tec?niHue
The samplin! techni"ue $as non-probability convenience samplin! techni"ue
$ata Anal'sis and Interpretation
The data has been processed and analyzed by tabulation interpretation so that the
findin!s can be communicated and can be easily understood. The findin!s are presented
in the best possible $ay. Tables and !raphs have been used for illustration of principal
findin!s of the research.
03
,IMITATI%!S %F T( ST#$7
The paucity of time and resources $as the major constraints.
The sample size $as limited.
The sample $as taen from the population residin! in 3udhiana only, so the
results are not applicable to $hole of %ndia.
)on co-operation of some respondents has also affected the research results.
Bein! an opinion survey a lot of subjectivity is involved in the study.
The possibility of respondents bein! biased cannot be ruled out.

01
0@
,hapter- 5
$ata Anal'sis J
Interpretation
$ATA A!A,7SIS A!$ I!TRPRTATI%!
-+ To Cnow t?e investors CnowledDe about t?e Mutual Fund+
Table 3+-F 5nowledDe about t?e Mutual Fund
@L
..L
13L
3L -L
Very Good
Good
Average
Poor
Very Poor
)rap? 3+-F 5nowledDe about t?e Mutual Fund
InferenceF %t $as attempted to understand from the investors their no$led!e of Mutual
2unds. %t $as found that 85K of the investors said that they ran their understandin!
about Mutual 2unds as avera!e. 1hile 9K of the investors rated their understandin! as
very !ood.
.+ To Cnow t?e percentaDe of investors w?o ?ave also invested in
0A
5nowledDe LaDe of Respondents
0ery ;ood 9K
;ood 44K
Avera!e 85K
#oor 5K
0ery #oor -K
StocCs
Table 3+.F Investment in stocCs
14L
2-L
Yes
No
)rap? 3+.F Investment in stocCs
InferenceF 2rom the above data it is clear that 8BK of the investors have invested in
stocs as $ell as in Mutual 2unds. %t implies that the investors have retained their numero
uno position by investin! directly in shares also.
04
Response LaDe of Respondents
<es 8BK
)o .-K
2+ To Cnow t?e confidence level in terms of maCinD investments in
StocCs and Mutual Funds+
Table 3+2 ;a=F &onfidence level in terms of maCinD investment in stocCs
18%
66%
16%
High
Moderate
Low
)rap? 3+2 ;a=F &onfidence level in terms of maCinD investment in stocCs
InferenceF it $as attempted to no$ the level of confidence an investor has in Mutual
2unds and the stoc maret. 88K of the total investors demonstrated moderate
confidence level in main! investments in stoc maret. *nly -=K of the investors
demonstrated hi!h level of confidence in optin! for stoc maret. %t implies that the
investors have retained moderate level of confidence in stocs and the hi!h return they
expect from their portfolios.
3/
,evel of &onfidence LaDe of Respondents
:i!h -=K
Moderate 88K
3o$ -8K
Table 3+2 ;b=F &onfidence level in terms of maCinD investment in Mutual Funds
./L
@-L
4L
High
Moderate
Low
)rap? 3+2 ;b=F &onfidence level in terms of maCinD investment in Mutual Funds
InferenceF (e!ardin! mutual funds, 9-K of the investors said that they have moderate
confidence level in terms of main! investments in mutual funds. 1hile only 4?K of the
investors demonstrated hi!h level of confidence in optin! for mutual funds. %t implies that
even in mutual funds they are ready to par their money $hich promise hi!h returns.
3-
,evel of &onfidence LaDe of Respondents
:i!h 4?K
Moderate 9-K
3o$ BK
0+ To Cnow t?e percentaDe of Mutual Fund investment out of t?e
total investment of t?e respondents+
Table 3+0F PercentaDe of Mutual Fund investment out of t?e total investment
of t?e respondents
-/L
3L
22L
.@L
-@L
AL
Less than 10%
10%-20%
20%-0%
0%-!0%
!0%-"0%
A#ove "0%
)rap? 3+0F PercentaDe of Mutual Fund investment out of t?e total investment
of t?e respondents
3.
Amount ;Rs+= LaDe of Respondents
3ess than -?K -?K
-?K-4?K 5K
4?K-.?K ..K
.?K->?K 49K
>?K-5?K -9K
Above 5?K =K
InferenceF The above data sho$s that mutual fund investment comprises 4?K->?K of
the total investment for 8?K of the investors. %t implies that it is becomin! a substantial
part of the total investment of the investors.
3+ To Cnow t?e time ?oriGon to Ceep investment in Mutual Fund+

Table 3+3F Time ?oriGon to Ceep investment in Mutual Fund
2%
"!%
16%
$%
%& to 1 Year
1Year-Years
years-"Years
A#ove "years
)rap? 3+3F Time ?oriGon to Ceep investment in Mutual Fund
InferenceF As this "uestion aimed at !ettin! the information re!ardin! the time horizon
for $hich the people are investin! their money in mutual funds, $e can see that 5>K of
the investors said that they $ould prefer to eep their investment in mutual funds for --.
years $hile 4.K preferred to par their money in mutual funds for a period of - year.
1hile only 9K are interested for a period above 5 years. -8K investors preferred for a
32
Time (oriGon LaDe of Respondents
+p to - <ear 4.K
-<ear - .<ears 5>K
.<ears - 5<ears -8K
Above 5 <ears 9K
period of . to 5 years. %t implies that investors are interested to eep investment for an
avera!e period in mutual funds.
1+ To Cnow t?e micro factors8 influencinD t?e Mutual Fund
investment+

Table 3+1F Micro factors influencinD t?e Mutual Fund Investment
./L
22L
.1L
.-L '(nd Managers
'riends)*e+atives
'inan,ia+
Advisors)-A
Persona+
Ana+ysis)Per,e&tion
)rap? 3+1F Micro factors influencinD t?e Mutual Fund Investment
InferenceF The above data sho$s that micro factors influenced by friends and relatives
had major influence $ith ..K of the investors preferrin! to invest at recommendations
made by their friends and relatives, $hile 48K of the investors depended on the
30
Factors LaDe of Respondents
2und Mana!ers 4?K
2riendsJ(elatives ..K
2inancial AdvisorsJ,A 48K
#ersonal AnalysisJ#erception 4-K
recommendations of their financial advisors. 4-K of the investors !ave more importance
to their o$n analysis and perception and 4?K of the investors thou!ht that fund
mana!ers ima!e has !ot a major role to play $hile main! mutual fund investment
@+ To Cnow t?e macro factors influencinD Mutual Fund Investment+
Table 3+@F Macro factors influencinD Mutual Fund investment
)rap? 3+@F Macro factors influencinD Mutual Fund investment
33
FactorIRanC - . 2 0
(eturn 54K 4BK -9K 4K
7afety of %nvestment 4=K .?K -4K .?K
Tax Benefits -.K 4>K -BK >>K
3i"uidity 9K -9K 54K 4>K
InferenceF The above data sho$s that investors !ive maximum importance to return and
safety $hile main! investment in mutual funds. Tax benefits and li"uidity are the factors
that do not mae much influence on the investors decision.
A+ To Cnow t?e sc?emes in w?ic? respondents ?ave invested+
Table 3+AF Sc?emes in w?ic? respondents ?ave invested
.0L
2@L
-0L
./L
3L
.n,o/e 0,he/e
Growth 0,he/e
1a+an,ed 0,he/e
Month+y .n,o/e
P+an
Any 2ther
)rap? 3+AF Sc?emes in w?ic? respondents ?ave invested
31
Sc?emes LaDe of Respondents
%ncome 7cheme 4>K
;ro$th 7cheme .9K
Balanced 7cheme ->K
Monthly %ncome #lan 4?K
Any *ther 5K
InferenceF The above data sho$s that maximum investors i.e. .9K are investin! in
!ro$th schemes. This is because investors $ant to !et maximum returns by tain! benefit
of the present share maret boom. %ncome schemes and monthly income plans are very
popular amon! the old a!e investors and ris averters.
4+ To Cnow t?e freHuenc' of monitorinD fund performance+
Table 3+4F FreHuenc' of monitorinD fund performance
3@
FreHuenc' LaDe of Respondents
&aily -4K
1eely 4BK
2ortni!htly 44K
Monthly .-K
)one 8K
)rap? 3+4F FreHuenc' of monitorinD fund performance
InferenceF The fre"uency of monitorin! the investment in funds is a representative of the
a$areness level of the investors. The above data sho$s that the 4BK of the investors
monitor their investments on $eely basis. 44K of the investors monitor at fortni!htly
basis and -4K monitor it on the daily basis.
-/+ To Cnow t?e media t?rouD? w?ic? t?e respondents Det t?e
information about new sc?emes+
Table 3+-/F Media t?rouD? w?ic? t?e respondents Det t?e information about
!ew sc?emes
31L
.@L
--L
1L
Print Media)Latest
News
3+e,dtroni, Media
Pa/&h+ets
Hoardings)1i++#oards
3A
Media LaDe of Respondents
#rint MediaJ3atest )e$s 58K
/lectronic Media 49K
#amphlets --K
:oardin!sJBillboards 8K
)rap? 3+-/F Media t?rouD? w?ic? t?e respondents Det t?e information about new
sc?emes
InferenceF The above data sho$s that 58K of the respondents said that the print media is
the major influencin! factor. /lectronic media $as second $ith only 49K of the investors
callin! it an influencin! a!ent.
--+ To Cnow t?e satisfaction level of Mutual Fund investors and
reasons for t?eir dissatisfaction+
Table 3+-- ;a=F Satisfaction level of Mutual Fund investors
A2L
-@L
Yes
No
)rap? 3+-- ;a=F Satisfaction level of Mutual Fund investors
34
Response LaDe of Respondents
<es =.K
)o -9K
InferenceF 2rom the above data it is very clear that only -9K respondents are not
satisfied $ith their investments $hile =.K respondents feel contented $ith their
decision of investin! in mutual funds.
Table 3+-- ;b=F Reasons for t?e dissatisfaction amonD t?e Mutual Fund investors
0
2
4
6
0
Low .n,o/e
Longer *ede/&tion
Period
Poor A5ter 0a+es 0ervi,e
1etter Paying Aven(es
.n the Mar6et
Attit(de o5 the 1ro6er
1/
Response LaDe of Respondents
3o$ %ncome ?
3on!er (edemption #eriod 4K
#oor After 7ales 7ervice BK
Better #ayin! Avenues in the Maret 8K
Attitude of the Broer ?
)rap? 3+-- ;b=F Reasons for t?e dissatisfaction amonD t?e Mutual Fund investors
InferenceF 2rom the above data it is clear that there is no investor $ho is dissatisfied due
to lo$ income or the attitude of the broer. But 4K investors are dissatisfied due to
lon!er redemption period, BK due to poor after sales service and 8K feel that there are
other better payin! avenues in the maret.
-.+ To Cnow ?ow t?e respondents Drade Mutual Fund investment as
compared to investment in StocC MarCet directl'+
Table 3+-.F )radinD t?e Mutual Fund investment as compared to
investment in
StocC
MarCet
directl'
1-
FactorI)rade (iD? Moderate ,ow
(eturn 5?K -=K .4K
(is >.K 4BK 4=K
3i"uidity 9K 5.K >?K
)rap? 3+-.F )radinD t?e Mutual Fund investment as compared to investment in
StocC MarCet directl'
InferenceF The above data sho$s that most of the investors believe that mutual funds
fetch more returns as compared to investment in stoc maret directly. But
investment is sli!htly risy. Mutual funds also ensure sufficient li"uidity, as most of
the schemes are open-ended.
-2+ To Cnow t?e potential for Mutual Fund MarCet in future+
Table 3+-2F Potential for Mutual Fund marCet in future
$6%
2!%
Yes
No
)rap? 3+-2F Potential for Mutual Fund marCet in future
1.
Response LaDe of Respondents
<es 98K
)o 4>K
InferenceF 2rom the above data it is clear that 98K of the present investors are $illin! to
invest in the mutual funds in the future also and 4>K of them are not $illin! to invest in
future.
-0+ To Cnow t?e perception reDardinD t?e future of Mutual Funds+
Table 3+-0F Perception reDardinD t?e future of Mutual Funds
!8%
$%
11%
4%
"%
20%
1right
0+ow Growth
La,6 o5
Awareness
*is6y Aven(e
7ar6
No *es&onse
12
Response LaDe of Respondents
Bri!ht >=K
7lo$ ;ro$th 9K
3ac of A$areness --K
(isy Avenue BK
&ar 5K
)o (esponse 4?K
)rap? 3+-0F Perception reDardinD t?e future of Mutual Funds
InferenceF As the "uestion aims to no$ the future of mutual fund industry, so from the
analysis $e can interpret that there are >=K respondents that believe the future of this
industry is bri!ht. 9K feel that it is !ro$in! slo$ly, and 5K believe it to be dar. BK feel
it is a risy avenue and --K respondents said that most of the people are not a$are about
the functionin! of mutual funds. 7o some steps must be taen to mae the people more
a$are about these funds so that these funds can have a bri!ht future.
Personal ProfileF
;a= %ccupation of t?e Respondents
Table 3;a=F %ccupation of Respondents
)rap? 3;a=F %ccupation
of Respondents
InferenceF .>K of the respondents are of business class, 5?K of service class, -8K are
professionals.
;b= ADe of Respondents
10
%ccupation LaDe of Respondents
Businessman .>K
7erviceman 5?K
#rofessional -8K
*thers -
Table 3;b=F ADe of Respondents
6%
0%
!0%
20%
!%
1e+ow 2"Years
2"-!0Years
!0-"0Years
"0-60Years
60 and a#ove
)rap? 3;b=F ADe of Respondents
InferenceF 4?K respondents are less than the a!e of 45 years, .?K of the respondents fall
bet$een the a!e of 45->? years, >?K of the respondents fall bet$een the a!e of >?-5?
years, 4?K of the respondents fall bet$een the a!e of 5?-8? years, and >K of the
respondents are above 8? years.
;c= Mont?l' Income of t?e Respondents

13
ADe )roup LaDe of Respondents
Belo$ 45 <ears 8K
45 R >? <ears .?K
>? R 5? <ears >?K
5? R 8? <ears 4?K
8? and above >K
Table 3;c=F Mont?l' Income of Respondents
0%
28%
0%
26%
16%
1e+ow 108000
108000-2"8000
2"8000-!08000
!08000-"08000
"08000 and
a#ove
)rap? 3;c=F Mont?l' Income of Respondents
InferenceF )one of the respondents earns belo$ -?,???, 4=K of the respondents fall
bet$een the income !roup -?,???->?,???, .?K of the respondents fall bet$een the
income !roup 45,???->?,???, 48K of the respondents fall bet$een the income !roup
>?,???-5?,???, and -8K of the respondents earn 5?,??? and above.
FI!$I!)S
11
Mont?l' Income LaDe of Respondents
Belo$ -?,??? -
-?,??? R 45,??? 4=K
45,??? R >?,??? .?K
>?,??? R 5?,??? 48K
5?,??? and above -8K
The no$led!e of the investor about the mutual fund is avera!e.
8BK of the investors have retained their numero uno position by investin! directly
in shares also.
The investors confidence level in stocs and mutual funds is almost the same.
8?K of the investors invest more than 4?K of their total investment in mutual
funds.
Most of the people lie to stay invested for - to . years.
2riends and relatives act as the major influencers in mutual fund investin!.
*ver 5?K of the investors invest to maximize their returns.
;ro$th scheme is the most preferred for investment because investors $ant to !et
maximum returns by tain! benefit of the present share maret boom.
#rint media have the maximum impact on the investors as over 55K consider
them as the influencin! a!ents.
Mostly investors are satisfied $ith their investment and poor after sales service is
the main factor for their dissatisfaction.
More than half of the mutual fund investors are $illin! to invest in these funds in
future $hich means that the mutual fund industry has a !ro$th potential.
1@
R&%MM!$ATI%!S
1A
,hapter- 8
&onclusion J
Recommendations
The shift in investor preference to$ards mutual funds should be facilitated by
increasin! returns from debt mutual fund investments due to the decline in interest
rates.
A funds past performance is no !uarantee of its future performance. %nvestors
should al$ays tae into consideration the funds investment objective as $ell as
its style.
%nvestors should consider their o$n investment needs, both short term as $ell as
lon! term and their investment horizon, that is the period for $hich they can
invest in a fund.
%nvestors should remember the old maxim that one should not put all his e!!s in
one baset. %nvestors should spread or diversify their investment related ris.
%nvestors could achieve diversification by spreadin! their investment across
different mutual fund schemes.
%ncome funds are still a !ood option by investin! in $hich the investor can avail
the benefit of re!ular income.
The investors should eep in mind that they should not compare apples $ith
oran!es. That is a fund must be compared $ith another fund $hich belon!s to the
same cate!ory. 2or example, an e"uity-diversified fund should be compared only
$ith e"uity-diversified funds and not $ith debt or balanced funds.
&%!&,#SI%!
14
#eople have the traditional mindset of investin! in bans, post- offices and
!overnment securities. 1ith declinin! interest rates, the time has come $hen investors
are realizin! the need to loo at other avenues and the first and foremost avenue that
comes to mind is mutual funds.
The mutual fund industry has come a lon! $ay since the days of the +T% in %ndia.
The number of mutual funds has increased over the years. Mutual funds are seen as an
avenue for the investor to enter the stoc marets and bonds. They provide the
professional competence to the investors. Mutual 2unds in %ndia provide safety, li"uidity
and !ro$th to investors. They are safe and readily available conduits for channelisin!
savin!s into investments yieldin! income and !ro$th. The funds provide stability to
share prices, safety to investors and resources to promoter entrepreneurs.
The major factor that is pushin! the industrys !ro$th today is the a$areness level
on mutual funds amon! the investors. There is a need for further improvin! a$areness in
a bi! $ay.
@/
"I",I%)RAP(7
@-
Biblio!raphy
Banerjee, ,harabarti @ &eb E4??=F, '#ersistence %n #erformance of /"uity Mutual
2unds H- An /mpirical %nvesti!ationD , %%MB Mana!ement (evie$ , 0ol .-, p! -9---=8
,hander,(ameshE4??=F, '/mpirical /vidences *n %ndian 2und Man!ersD maret Timin!
And 7toc 7election Abilities,D 0ol.- , no.- ,p! .---

,handel, (ana @ umar E4??=F, 'understandin! (is And (eturn %n Mutual 2und
%nvestmentsD, Apeejay 6ournal of Mana!ement And Technolo!y , 0ol.>,)o.- ,p! 9B-=B
,houdharyE4??=F, 'The ,omponents of %nvestments performance *f 2und Mana!ersH
/vidence 2rom %ndian ,apital MaretD , The ;lobal 6ournal *f 2inanceD , 0ol. 5, )o.-
p! -- -9
&evasenathipathi, 7aleendran,7anmu!asundaram E4??9F, 'A$areness and #erception of
people to$ards mutual funds in 3udhiana cityD ,0ol.4 , p! .--.8
Gumar @ 7harma E4??BF, 'Mutual 2undsH /xpandin! :orizonsD , 7,M7 journal of
%ndian Mana!ementD , #! -?? ---9
Gumar @ 7udalaimuthu E4??=F, 'A 7tudy of %nvestors #erception To$ards Murual 2und
%nvestments,D Mana!ement Trends,0olH5,)o .-,p! -?8 ---9
Mittal @ 0yas E4??=F, '&oes investors #sycholo!y affect investment decision Ha
literature revie$D, ';lobal mana!ement revie$D , 0ol..E-F , p! -B -4=
#andey E4??=F,#erformance appraisal of shareholdin! in mutual fund industry in %ndiaD
'%ndian mana!ement studies journalD , 0ol.4 ,)o -4 p!.--5--4.

@.
#ani!rahi,#raash, E4??BF, '%nvestors ,hoices *f Mutual funds And Their 7chmes R A
7tudy *f %nter 2und 0ariation in (eturnsD , ;lobal Mana!ement (evie$D 0ol.., )o. 4
p! -> ->4
7alma 7hajahan @ Archana.( E4??=F ,DA 7tudy *n factor %nfluencin! The %nvestments
%n Mutual fundsD , ;lobal Mana!ement (evie$D , 0ol.4, )o.4, p! .B->.
7in!h @ 7i!la E-BB=F &eterminants *f mutual fund performance H A factor analysis
approachD , 3udhiana journal of mana!ement associationD , 0ol. - , p! . >= -5.
1ebsitesH-
httpHJJ$$$.moneycontrol.comJ
$$$.iloveindia.comJfinance Jmutual-fundsJindex.html
httpHJJfinance.indiamart.comJindiaSbusinessSinformationJmutual SfundsSconcept.html
$$$.dance$ith shado$s.comJbusinessJmutual-fund-scheme.asp
httpHJJbusiness.mapsofindia.comJmutual-fundsJfuture.html
httpHJJprofit.ndtv.comJMutual2und
httpHJJ$$$.scribd.comJdocJ9>?5?>=
httpHJJ$$$.scribd.comJdocJ9>?5?>=JMutual-funds
httpHJJ$$$.mutualfundsindia.comJmfbasic.aspTreturn
httpHJJfinance.yahoo.comJfunds
httpHJJ$$$.investopedia.comJuniversityJmutualfundsJmutualfunds>.asp
httpHJJ$$$.fool.comJMutual2undsJ;lossary.htm
httpHJJen.$iipedia.or!J$iiJMutualSfund
@2
@0
Annexure
6#STI%!!AIR
-+ >?at is 'our CnowledDe about t?e Mutual FundM
EaF 0ery !ood U EbF ;ood U
EcF Avera!e U EdF #oor U
EeF 0ery poor U
.+ (ave 'ou ever invested in StocCsM
EaF <es U EbF )o U
2+ >?at is 'our confidence level in terms of maCinD investments in StocCs and
Mutual FundsM
:i!h Moderate 3o$
EaF 7toc Maret U U U
EbF Mutual funds U U U
0+ >?at is t?e percentaDe of Mutual Fund investment out of 'our total investmentM
EaF 3ess than -?K U EbF -?K - 4?K U
EcF 4?K - .?K U EdF .?K - >?K U
EeF >?K - 5?K U EfF Above 5?K U
3+ >?at is 'our time ?oriGon to Ceep investment in Mutual FundM
EaF +p to - <ear U EbF -<ear R .<ears U
EcF . <ears R 5 <ears U EdF Above 5 <ears U
1+ >?ic? micro factors ?ave influenced 'ou to invest in t?e Mutual FundsM
@3
;TicC one=
EaF 2und Mana!ers U EbF 2riendsJ(elatives U
EcF 2inancial AdvisorsJ,.A. U EdF #ersonal AnalysisJ#erception U
@+ >?at macro factors do 'ou consider w?ile investinD in a Mutual FundM
;RanC t?em=
EaF (eturn U
EbF 7afety of %nvestment U
EcF Tax Benefits U
EdF 3i"uidity U
A+ >?ic? sc?eme 'ou ?ave invested inM
EaF %ncome 7cheme U EbF ;ro$th 7cheme U
EcF Balanced 2und U EeF Monthly %ncome #lan U
EeF Any other U
4+ >?at is t?e freHuenc' of monitorinD fund performanceM
EaF &aily U EbF 1eely U
EcF 2ortni!htly U EdF Monthly U
EdF )one U
-/+ >?at is t?e media t?rouD? w?ic? 'ou Det t?e information about new sc?emesM
EaF #rint media J3atest ne$s U
EbF /lectronic media U
EcF #amphlets U
EdF :oardin!sJBillboards U
@1
--+ Are 'ou satisfied wit? Mutual Fund investmentM
EaF <es U EbF )o U
%f no, $hyQ
3o$ income U
3on!er redemption period U
#oor after sales services U
Better payin! avenues in the maret U
Attitude of the broer U
-.+ (ow do 'ou Drade Mutual Fund investment as compared to investment in StocC
MarCet directl'M
:i!h Moderate 3o$
(eturn U U U
(is U U U
3i"uidity U U U
-2+ >ould 'ou liCe to invest in Mutual Funds in futureM
EaF <es U EbF )o U

-0+ >?at is 'our perception reDardinD t?e future of Mutual FundsM
EaF Bri!ht U EbF 7lo$ !ro$th U
EcF 3ac of a$areness U EdF (isy avenue U
EeF &ar U EfF )o response U

@@
PRS%!A, $TAI,SF
!AMF -----------------------------
A$$RSSF
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

------------------------------------------------
&%!TA&T !%F <<<<<<<<<<<<<<<<<
%&&#PATI%!F "usinessman U Serviceman U Professional U %t?ers U

A)F "elow .3 7ears U
.3 K 0/ 7ears U
0/ K 3/ 7ears U
3/ K 1/ 7ears U
1/ and above U
IncomeF "elow -/8/// U
;p+m+= -/8///<.38/// U
.38///<0/8/// U
0/8///<3/8/// U
3/8/// and above U

@A