A SUMMER TRAINING PROJECT REPORT

ON

AWERNESS OF MUTAL FUND AND ITS

SCOPE IN INDIA
Submitted in the partial fulfillment for the award of
Degree of Bachelor in
Business Administration 2011-

UNDER THE GUIDANCE:

SUBMITTED BY:

Ms. Poonam Khurana

KULDEEP

FACULTY (Management), CPJCHS

11021501711

ENROLLMENT No.
BATCH

NO. 2011-14

College

CHANDERPRABHU JAIN COLLEGE OF HIGHER STUDIES & SCHOOL OF

LAW
An ISO 9001:2008 Certified Institute (Approved by the Govt of NCT of
Delhi
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Affiliated to Guru Gobind Singh Indraprastha University, Delhi)

Plot No OCF Sector A-8, Narela New Delhi -40

Declaration
This is to certify that Thesis/Report entitled Mall Management which is
submitted by me in partial fulfillment of the requirement for the award of degree
B.B.A. to GGSIP University, Dwarka, Delhi comprises only my original work and
due acknowledgement has been made in the text to all other material used.

KULDEEP

Name of
Student

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PROJECT COMPLETION CERTIFICATE

This is to certify that Mr.KULDEEP HAS satisfactorily completed the project work titled,
AWARENESS OF MUTUAL FUNDS AND ITS SCOPE IN INDIA under my guidance during JuneJuly, 2013 at Prudent Corporate Advisory Services Ltd., New Delhi. Based on the declaration made by
the candidate and my association as a guide for carrying out this work, I recommend this project
report for evaluation as a partial requirement of the BBA Programme of CHANDER PRABHU
JAIN COLLEGE OF HIGHER STUDIES

_________________________
Vishal Kumar
Branch Manager
Prudent Corporate Advisory Services Ltd.
New Delhi

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ACKNOWLEDGEMENT
Chanderprabhu Jain
College of Higher Studies & School of Law , GGSIP University, New
. I offer my sincere thanks and humble regards to

Delhi for imparting us very valuable professional training in BBA.

.
I pay my gratitude and sincere regards to VISHAL KUMAR, my project Guide for
giving me the cream of his knowledge. I am thankful to him as he has been a
constant source of advice, motivation and inspiration. I am also thankful to him
for giving his suggestions and encouragement throughout the project work.

I take the opportunity to express my gratitude and thanks to our computer Lab
staff and library staff for providing me opportunity to utilize their resources for
the completion of the project.

I am also thankful to my family and friends for constantly motivating me to

complete the project and providing me an environment which enhanced my
knowledge

KULDEEP
Students Signature

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EXECUTIVE SUMMERY
Mutual Funds have gained popularity as an investment vehicle over the past two years. Though
technically, must have been in India since 1964 through Unit Trust of India , the industry has only
recently after new private sector funds and funds backed by global investment houses set up shop in
India.
Mutual Funds have often been associated with equity\stock markets. While that is industry, the debt or
fixed income side has also gained prominence in the recent past. In fact, now mutual funds offer
instruments! schemes for all types of investors from -the risk averse to high risk takers.
The advantages of mutual funds are professional management, diversification, economies of scale,
simplicity, and liquidity.

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The disadvantages of mutual fund are high costs, over-diversification, possible tax consequences, and
the inability of management to guarantee a superior return.
The biggest problems with mutual funds are their costs and fees it include Purchase fee, Redemption
fee, Exchange fee, Management fee, Account fee & Transaction Costs. There are some loads which
add to the cost of mutual fund. Load is a type of commission depending on the type of funds.
Mutual funds are easy to buy and sell. You can either buy them directly from the fund company or
through a third party. Before investing in any funds one should consider some factor like objective,
risk, Fund Managers and scheme track record, Cost factor etc.
There are many, many types of mutual funds. You can classify funds based Structure (open-ended &
close-ended), Nature (equity, debt, balanced), Investment objective (growth, income, money market)
etc.
Choosing a mutual fund to invest in requires investor to look at many factor such as time, appetite for
risk; purpose of investment such as if one wants to invest in growth funds, income fund or balanced
fund. These factors vary from person to person.
The project lays a great stress on investor education. The primary objective is to explain in clear and
simple language, the benefits and pitfalls of investing in mutual funds. There is a gap in the market
about quality information on Mutual Funds. Most of the information is either inadequate or biased
towards a particular scheme/fund or a particular category. This project attempts to look at the subject
from the point of view of an ordinary investor who has little time or inclination to get into the
technical details of Mutual Funds.
The first portion of the project explains the basics of a Mutual Fund including the history and
evolution of the history. Then it highlights the types of Mutual Funds and the recent trends in the
industry. A section follows this on how to choose the right fund for you which covers all things one
should look at before investing in a fund.

For this report a survey has also been conducted and analyzed to know the perception of common man
towards mutual funds.
Based on the findings a conclusion has been drawn about what we can do next to accelerate the
growth of mutual funds and their positive impact for the benefit of people.
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CONTENT

SL. NO.

LIST OF CONTENT

PG.NO.

Acknowledgement

Executive summery

5-6

Chapter 1: Introduction to mutual fund

8-44

Chapter 2: About the company

44-48

Chapter 3: Research methodology

49-52

Chapter 4: Data analysis and Findings

53-73

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Chapter 5: Suggestion & Conclusion

74-77

References

78-80

Annexure

81-84

CHAPTER 1
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Introduction to Mutual
Funds

Introduction
What is a Mutual fund'?
Mutual fund is an investment company that pools money from shareholders and invests in a variety of
securities, such as stocks, bonds and money market instruments. Most open-end Mutual funds stand
ready to buy back (redeem) its shares at their current net asset value, which depends on the total
market value of the fund's investment portfolio at the time of redemption. Most open-end Mutual
funds continuously offer new shares to investors. Also known as an openend investment company, to
differentiate it from a closed-end investment company. Mutual funds invest pooled cash of many
investors to meet the fund's stated investment objective. Mutual funds stand ready to sell and redeem
their shares at any time at the fund's current net asset value: total fund assets divided by shares
outstanding.
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In Simple Words, Mutual fund is a mechanism for pooling the resources by issuing units to the
investors and investing funds in securities in accordance with objectives as disclosed in offer
document. Investments in securities are spread across a wide cross-section of industries and sectors
and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the
same direction in the same proportion at the same time. Mutual fund issues units to the investors in
accordance with quantum of money invested by them. Investors of Mutual funds are known as unit
holders. The profits or losses are shared by the investors in proportion to their investments. The
Mutual funds normally come out with a number of schemes with different investment objectives
which are launched from time to time. In India, A Mutual fund is required to be registered with
Securities and Exchange Board of India (SEBI) which regulates securities markets before it can
collect funds from the public. In Short, a Mutual fund is a common pool of money in to which
investors with common investment objective place their contributions that are to be invested in
accordance with the stated investment objective of the scheme. The investment manager would invest
the money collected from the investor in to assets that are defined! permitted by the stated objective
of the scheme. For example, an equity fund would invest equity and equity related instruments and a
debt fund would invest in bonds, debentures, gilts etc. Mutual fund is a suitable investment for the
common man as it offers an opportunity to invest in a diversified, professionally managed basket of
securities at a relatively low cost
Concept of the mutual fund
A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such as shares,
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debentures and other securities. The income earned through these investments and the capital
appreciations realized are shared by its unit holders in proportion to 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 basket of securities at a relatively low
cost. The flow chart below describes broadly the working of a mutual fund:
History of mutual funds in india
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 history of mutual funds in India can be
broadly divided into four distinct phases-

FIRST PHASE 1964-87:

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

SECOND PHASE 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS):

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

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.
The number of mutual fund houses went on increasing, with many foreign mutual funds setting up
funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of
January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of
India with Rs.44,541 crores of assets under management was way ahead of other mutual funds.
FOURTH PHASE SINCE FEBRUARY 2003:
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into
two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under
management of Rs.29,835 crores as 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.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with
SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI
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which had in March 2000 more than Rs.76,000 crores of assets under management and with the
setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent
mergers taking place among different private sector funds, the mutual fund industry has entered its
current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds,
which manage assets of Rs.153108 crores under 421 schemes.

ORGANIZATION OF MUTUAL FUND

THE STRUCTURE CONSISTS OF

SPONSOR
Sponsor is the person who acting alone or in combination with another body corporate establishes a
mutual fund. Sponsor must contribute at least 40% of the net worth of the Investment managed and
meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual
Fund) Regulations, 1996. The sponsor is not responsible or liable for any loss or shortfall resulting
from the operation of the Schemes beyond the initial contribution made by it towards setting up of the
Mutual Fund.
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TRUST
The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act,
1882 by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908. TRUSTEE
Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The main
responsibility of the Trustee is to safeguard the interest of the unit holders and ensure that the AMC
functions in the interest of investors and in accordance with the Securities and Exchange Board of
India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of
the respective Schemes. At least 2I3rd directors of the Trustee are independent directors who are not
associated with the Sponsor in any manner.
ASSET MANAGEMENT COMPANY (AMC)
The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The AMC is
required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset
management company of the Mutual Fund. At least 50"10 of the directors of the AMC are independent
directors who are not associated with the Sponsor in any manner. The AMC must have a net worth of
at least 10 cores at all times.
REGISTRAR AND TRANSFER AGENT
The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual
Fund. The Registrar processes the application form, redemption requests and dispatches account
statements to the unit holders. The Registrar and Tmnsfer agent also handles communi cations with
investors and updates investor records.

TYPES OF MUTUAL FUNDS SCHEMES IN INDIA

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk
tolerance and return expectations etc. thus mutual funds has Variety of flavours, Being a collection of
many stocks, an investors can go for picking a mutual fund might be easy. There are over hundreds of
mutual funds scheme to choose from. It is easier to think of mutual funds in categories, mentioned
below:

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Fig. 2 Types of mutual funds

A). BY STRUCTURE
1. Open - Ended Schemes:
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.

2. Close - Ended Schemes:

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.
3. Interval Schemes:

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Interval Schemes are that scheme, which combines the features of open-ended and close- ended
schemes. The units may be traded on the stock exchange or may be open for sale or redemption
during pre-determined intervals at NAV related prices.

B). BY NATURE
1. Equity Fund:
These funds invest a maximum part of their corpus into equities holdings. The structure of the fund
may vary different for different schemes and the fund managers outlook on different stocks. The
Equity Funds are sub-classified depending upon their investment objective, as follows:
Diversified Equity Funds
Mid-Cap Funds
Sector Specific Funds
Tax Savings Funds (ELSS)
Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk-return
matrix.
2. Debt Funds:
The objective of these Funds is to invest in debt papers. Government authorities, private companies,
banks and financial institutions are some of the major issuers of debt papers. By investing in debt
instruments, these funds ensure low risk and provide stable income to the investors. Debt funds are
further classified as:
Gilt Funds: Invest their corpus in securities issued by Government, popularly known as
Government of India debt papers. These Funds carry zero Default risk but are associated with
Interest Rate risk. These schemes are safer as they invest in papers backed by Government.
Income Funds: Invest a major portion into various debt instruments such as bonds, corporate
debentures and Government securities.

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 MIPs: Invests maximum of their total corpus in debt instruments while they take minimum
exposure in equities. It gets benefit of both equity and debt market. These scheme ranks slightly
high on the risk-return matrix when compared with other debt schemes.
Short Term Plans (STPs):
Meant for investment horizon for three to six months. These funds primarily invest in short term
papers like Certificate of Deposits (CDs) and Commercial Papers (CPs). Some portion of the
corpus is also invested in corporate debentures.
Liquid Funds:
Also known as Money Market Schemes, These funds provides easy liquidity and preservation of
capital. These schemes invest in short-term instruments like Treasury Bills, inter-bank call money
market, CPs and CDs. These funds are meant for short-term cash management of corporate houses
and are meant for an investment horizon of 1day to 3 months. These schemes rank low on riskreturn matrix and are considered to be the safest amongst all categories of mutual funds.
3. Balanced Funds:
As the name suggest they, are a mix of both equity and debt funds. They invest in both equities and
fixed income securities, which are in line with pre-defined investment objective of the scheme. These
schemes aim to provide investors with the best of both the worlds. Equity part provides growth and
the debt part provides stability in returns.

Further the mutual funds can be broadly classified on the basis of investment parameter viz,
Each category of funds is backed by an investment philosophy, which is pre-defined in the objectives
of the fund. The investor can align his own investment needs with the funds objective and invest
accordingly.
C). BY INVESTMENT OBJECTIVE:
Growth Schemes:
Growth Schemes are also known as equity schemes. The aim of these schemes is to provide capital
appreciation over medium to long term. These schemes normally invest a major part of their fund in
equities and are willing to bear short-term decline in value for possible future appreciation.
Income Schemes:
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Income Schemes are also known as debt schemes. The aim of these schemes is to provide regular and
steady income to investors. These schemes generally invest in fixed income securities such as bonds
and corporate debentures. Capital appreciation in such schemes may be limited.
Balanced Schemes:
Balanced Schemes aim to provide both growth and income by periodically distributing a part of the
income and capital gains they earn. These schemes invest in both shares and fixed income securities,
in the proportion indicated in their offer documents (normally 50:50).
Money Market Schemes:
Money Market Schemes aim 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.
Load Funds:
A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell
units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%.
It could be worth paying the load, if the fund has a good performance history.
No-Load Funds:
A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is
payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire
corpus is put to work.
OTHER SCHEMES:
Tax Saving Schemes:
Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to time.
Under Sec.80C of the Income Tax Act, contributions made to any Equity Linked Savings Scheme
(ELSS) are eligible for rebate.
Index Schemes:
Index schemes attempt to replicate the performance of a particular index such as the BSE Sensex
or the NSE 50. The portfolio of these schemes will consist of only those stocks that constitute the
index. The percentage of each stock to the total holding will be identical to the stocks index weight
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age. And hence, the returns from such schemes would be more or less equivalent to those of the
Index.
Sector Specific Schemes:
These are the funds/schemes which invest in the securities of only those sectors or industries as
specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods
(FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of
the respective sectors/industries. While these funds may give higher returns, they are more risky
compared to diversified funds. Investors need to keep a watch on the performance of those
sectors/industries and must exit at an appropriate time.

Why Select Mutual Fund?

The risk return trade-off indicates that if investor is willing to take higher risk then correspondingly
he can expect higher returns and vice versa if he pertains to lower risk instruments, which would
be satisfied by lower returns. For example, if an investors opt for bank FD, which provide
moderate return with minimal risk. But as he moves ahead to invest in capital protected funds and
the profit-bonds that give out more return which is slightly higher as compared to the bank deposits
but the risk involved also increases in the same proportion.
Thus investors choose mutual funds as their primary means of investing, as Mutual funds provide
professional management, diversification, convenience and liquidity. That doesnt mean mutual
fund investments risk free.
This is because the money that is pooled in are not invested only in debts funds which are less
riskier but are also invested in the stock markets which involves a higher risk but can expect higher
returns. Hedge fund involves a very high risk since it is mostly traded in the derivatives market
which is considered very volatile.

Growth in assets under management

The graph indicates the growth of assets under management over the years.

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Fig. 3 AUM growth

ADVANTAGES OF MUTUAL FUNDS
If mutual funds are emerging as the favourite investment vehicle, it is because of the many advantages
they have over other forms and the avenues of investing, particularly for the investor who has limited
resources available in terms of capital and the ability to carry out detailed research and market
monitoring. The following are the major advantages offered by mutual funds to all investors:
1. Portfolio Diversification:
Each investor in the fund is a part owner of all the funds assets, thus enabling him to hold a
diversified investment portfolio even with a small amount of investment that would otherwise require
big capital.
2. Professional Management:

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Even if an investor has a big amount of capital available to him, he benefits from the professional
management skills brought in by the fund in the management of the investors portfolio. The
investment management skills, along with the needed research into available investment options,
ensure a much better return than what an investor can manage on his own. Few investors have the
skill and resources of their own to succeed in todays fast moving, global and sophisticated markets.
3. Reduction/Diversification Of Risk:
When an investor invests directly, all the risk of potential loss is his own, whether he places a deposit
with a company or a bank, or he buys a share or debenture on his own or in any other from. While
investing in the pool of funds with investors, the potential losses are also shared with other investors.
The risk reduction is one of the most important benefits of a collective investment vehicle like the
mutual fund.
4. Reduction Of Transaction Costs:
What is true of risk as also true of the transaction costs. The investor bears all the costs of investing
such as brokerage or custody of securities. When going through a fund, he has the benefit of
economies of scale; the funds pay lesser costs because of larger volumes, a benefit passed on to its
investors.
5. Liquidity:
Often, investors hold shares or bonds they cannot directly, easily and quickly sell. When they invest in
the units of a fund, they can generally cash their investments any time, by selling their units to the
fund if open-ended, or selling them in the market if the fund is close-end. Liquidity of investment is
clearly a big benefit.
6. Convenience and Flexibility:
Mutual fund management companies offer many investor services that a direct market investor cannot
get. Investors can easily transfer their holding from one scheme to the other; get updated market
information and so on.
7. Tax Benefits:
When an equity fund (a scheme that has at least 65% of its money in equities) delivers 10% in one
year, you take home 10% returns on redemption as there is no tax on long-term capital gains earned
on mutual funds.
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But when a non-equity fund, say an income fund, delivers 10% in a year, you have to pay tax on the
capital gains on redemption at 20% after indexation or 10% without indexation, whichever is lower.
That makes many go with funds that are "tax-free" after a year of investment to ensure they take home
maximum returns.
8. Choice of Schemes:
Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
9. Well Regulated:
All Mutual Funds are registered with SEBI and they function within the provisions of strict
regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly
monitored by SEBI.
10. Transparency:
You get regular information on the value of your investment in addition to disclosure on the specific
investments made by your scheme, the proportion invested in each class of assets and the fund
manager's investment strategy and outlook.

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Equity Oriented Mutual Fund Schemes

These are the schemes in which at least 65% of the asset is invested in the shares of domestic
companies. Investment in these schemes is subjected to STT and the rates applicable are described in
the table below for individual investors. Additional to this the mutual fund house also pays STT when
it buys/sells stocks in the stock market for its portfolio.

Product

Transaction

STT rate

Equity Oriented Mutual Fund Unit Purchase

0.125%

Equity Oriented Mutual Fund Unit Sell

0.125%

Equity Oriented Mutual Fund Unit Repurchase

0.25%

Debt Oriented Mutual Fund Schemes

Taxes are levied on the dividend distributed by debt oriented mutual fund schemes. Rates for dividend
distribution tax (DDT) for individuals and corporate are shown in the table below.

Dividend

Distribution

Individuals / HUF

Corporate/Others

Equity Schemes

NIL

NIL

Debt Schemes

12.5%+Surcharge+ Education Cess 30%+Surcharge+ Education Cess

Liquid Schemes

25%+Surcharge+ Education Cess

Tax

30%+Surcharge+ Education Cess

STT is not applicable in the case of debt oriented schemes.

Capital Gain Tax

Additional to the above taxes mutual fund profits are also subject to capital gain tax. Capital gain is
the difference between the sale price and the acquisition price of the asset. Tax treatment is different
for different holding period (long term or short term). Tax details are given in the table below.
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Capital Gains Tax

Long Term Capital
Gain Tax
Short Term Capital
Gain Tax

Equity
Schemes
NIL

15%

Non-Equity Schemes
Lesser of 10% without indexation or 20% with indexation +
surcharge and education cess
Added to total income and taxed as per the slab

In case of capital loss

In case of capital losses incurred on once investment these losses can be set off against other capital
gains leading to lesser tax outgo. However there are some limitations to this rule so as to restrict
fraudulent tax avoidance. Various capital losses and the head against which you can set it off are
described in the table below.

Capital Loss

Set Off Against

Short Term

Long Term / Short Term Gain

Long Term (Debt Oriented)

Long Term Gain (Debt)

Long Term (Equity Oriented) Cannot be Set Off

Mutual fund investments: Gain from double indexation, reduce tax liability
It's a method that helps you cut on your tax liability significantly if you stretch your investments over
three financial years.
The long-term capital gains earned from non-equity mutual funds are taxed at 10.3% if you don't avail
of the indexation benefit, but if you opt for this route, your gains are taxed at 20.6%. Despite the
higher rate, the indexation facility is beneficial, especially if the inflation is at high levels.
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Every financial year, the Income Tax Department declares the cost inflation index (CII). For 2012-13,
it is 852, while for 2011-12, it was 785. So, the indexation benefit over the two years works out to
8.535%. As is evident from the graphic, the tax liability is significantly lower if you choose
indexation.
The advantage of this strategy is multiplied if you stretch your investments over three financial years
and avail of the double indexation facility. Consider that you had invested in a mutual fund on 26
March 2011 (that is, in financial year 2010-11) and redeemed it on 5 April 2012 (that is, in financial
year 2012-13). As the CII for 2010-11 was 711 and that for 2012-13 is 852, the indexation benefit will
be calculated on the basis of growth between 711 and 852, a whopping 19.83%. As is clear from the
chart , the strategy of stretching the investment to three financial years actually helps you book longterm capital loss, even though your investment has grown.

DRAWBACKS OF INVESTING THROUGH MUTUAL FUNDS:

1. No Control over Costs: An investor in a mutual fund has no control of the overall costs of
investing. The investor pays investment management fees as long as he remains with the fund, albeit
in return for the professional management and research. Fees are payable even if the value of his
investments is declining. A mutual fund investor also pays fund distribution costs, which he would not

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incur in direct investing. However, this shortcoming only means that there is a cost to obtain the
mutual fund services.
2. No Tailor-Made Portfolio: Investors who invest on their own can build their own portfolios of
shares and bonds and other securities. Investing through fund means he delegates this decision to the
fund managers. The very-high-net-worth individuals or large corporate investors may find this to be a
constraint in achieving their objectives. However, most mutual fund managers help investors
overcome this constraint by offering families of funds- a large number of different schemes- within
their own management company. An investor can choose from different investment plans and
constructs a portfolio to his choice.
3. Managing a Portfolio of Funds:
Availability of a large number of 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 individual shares or bonds to select.
4. The Wisdom of Professional Management:
That's right, this is not an advantage. The average mutual fund manager is no better at picking stocks
than the average nonprofessional, but charges fees.
5. No Control:
Unlike picking your individual stocks, a mutual fund puts you in the passenger seat of somebody
else's car.
6. Dilution:
Mutual funds generally have small holdings of so many different stocks that insanely great
performance by a fund's top holdings still doesn't make much of a difference in a mutual fund's total
performance.

7. Buried Costs:
Many mutual funds specialize in burying their costs and in hiring salesmen who do not make those
costs clear to their clients.

Selection parameters for mutual fund

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Investors objective:
The first point to note before investing in a fund is to find out whether your objective matches with
the scheme. It is necessary, as any conflict would directly affect your prospective returns. Similarly,
you should pick schemes that meet your specific needs. Examples: pension plans, childrens plans,
sector-specific schemes, etc.
Investors risk capacity and capability:
This dictates the choice of schemes. Those with no risk tolerance should go for debt schemes, as they
are relatively safer. Aggressive investors can go for equity investments. Investors that are even more
aggressive can try schemes that invest in specific industry or sectors.
Fund Managers and scheme track record:
Since you are giving your hard earned money to someone to manage it, it is imperative that he
manages it well. It is also essential that the fund house you choose has excellent track record. It also
should be professional and maintain high transparency in operations. Look at the performance of the
scheme against relevant market benchmarks and its competitors. Look at the performance of a longer
period, as it will give you how the scheme fared in different market conditions.
Cost factor:
Though the AMC fee is regulated, you should look at the expense ratio of the fund before investing.
This is because the money is deducted from your investments. A higher entry load or exit load also
will eat into your returns. A higher expense ratio can be justified only by superlative returns. It is very
crucial in a debt fund, as it will devour a few percentages from your modest returns.
Also, Morningstar rates mutual funds. Each year end, many financial publications list the years best
performing mutual funds. Naturally, very eager investors will rush out to purchase shares of last year's
top performers. That's a big mistake. Remember, changing market conditions make it rare that last
year's top performer repeats that ranking for the current year. Mutual fund investors would be well
advised to consider the fund prospectus, the fund manager, and the current market conditions. Never
rely on last year's top performers.

How to invest in mutual funds or where to buy?

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With entry loads abolished by SEBI and with so many technological advances, we have
different ways of investing in mutual funds .This article explains the different ways of investing
in mutual funds: through agents, AMCs, demat, and web portals etc.
Through an Agent
This is the oldest and one of the most convenient ways of investing in mutual funds. Since
the abolition of entry loads, you now have to compensate the agent for his services, and pay him
commission on the amount invested. Agents can charge anywhere from 1-2% of the amount to
be invested.
You should go with this way of investing only if you want convenience and comfort takes more
precedence. Click on AMFI Agent Search Link to search for mutual funds agents in your city.
Direct Investing through an AMC
There are many mutual funds who provide online facilities for investing. To do so though, you
need to have a folio number, which you get only after investing in a particular mutual fund,
which means that you have to go physically to the AMC office to invest for the first time. Next
time onwards, you can invest in that mutual fund, online through their website. Using this
method, makes sure that your entire amount, e.g. Rs 100/- gets invested and there are no
charges here.
Investing through a Demat Account
This is one of the most convenient methods of investing in mutual funds. If you have a demat
account, you can browse through all the mutual funds on the site, and just with a few clicks of a
mouse, you can invest in a fund of your choice.
For eg., ICICI Bank charges Rs 30 or 1.5% per SIP, whichever is lower and HDFC charges Rs
100 per quarter irrespective of the amount invested. The biggest advantage of buying and
selling through a demat account, is that you control everything from one place.
Some of the players in online mutual funds selling are :
5 paisa
Geojit Securities
HDFC Securities
ICICI Direct
India Bulls
InvestSmart Online

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Investmentz.com

Kotak Street

Motilal Oswal

Sharekhan

Investing Through Web Portals

FundsIndia.com : FundsIndia is an online portal which allows you to comfortably invest in
Mutual funds and other kind of financial instruments. You just open an account with them,
and they will send all the documents to your home. You dont have to pay a single paisa, out
of your pocket . They support SIP, STP, NRI customers, & VIP Investing. FundsIndia offers
different ways of payment too. Overall they can be very helpful if your requirement is
convenience and value added services. FundsIndia makes money from commissions earned
through the AMCs. The AMC pays a small commission to agents
FundsSuperMart : FundsSupermart are a strong player in other Asian countries like Hong
Kong, Singapore etc., but they are new to India. As of now, they do not offer a lot of services
& products, like FundsIndia, but you should be able to invest in mutual funds at least, with
them too.
Visit your bank
A number of banks are mutual fund agents. Just walk into your branch and ask if they are
selling any funds. See if they have a tie-up with the fund house you want to invest in.

WHAT IS THE PROCEDURE FOR REGESTRING A MUTUAL FUND WITH SEBI

An applicant proposing to sponsor a Mutual fund in India must submit an application in Form A along
with a fee of Rs.20, 000. The application is examined and once the sponsor satisfies certain conditions
such as being in the financial services business and possessing positive net worth for the last five
years, having net profit in three out of the last five years and possessing the general reputation of
fairness and integrity in all business transactions, it is required to complete the remaining formalities
for setting up a Mutual fund. These include inter alia, executing the trust deed and investment
management agreement, setting up a trustee company board of trustees comprising two- thirds
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independent trustees, incorporating the asset management company (AMC), contributing to at least
40% of the net worth of the AMC and appointing a custodian. Upon satisfying these conditions, the
registration certificate is issued subject to the payment of registration fees of Rs.20.00 lacs for details;
see the SEBI (Mutual funds) Regulations, 1996.

WORKING OF MUTUAL FUNDS

Fig. 4- Working of mutual fund

The mutual fund collects money directly or through brokers from investors. The money is invested in
various instruments depending on the objective of the scheme. The income generated by selling
securities or capital appreciation of these securities is passed on to the investors in proportion to their
investment in the scheme. The investments are divided into units and the value of the units will be
reflected in Net Asset Value or NAV of the unit. NAV is the market value of the assets of the scheme
minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of
units outstanding on the valuation date. Mutual fund companies provide daily net asset value of their
schemes to their investors. NAV is important, as it will determine the price at which you buy or
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redeem the units of a scheme. Depending on the load structure of the scheme, you have to pay entry or
exit load.
Structure of a mutual fund:
India has a legal framework within which Mutual Fund have to be constituted. In India open and
close-end funds operate under the same regulatory structure i.e. as unit Trusts. A Mutual Fund in India
is allowed to issue open-end and close-end schemes under a common legal structure. The structure
that is required to be followed by any Mutual Fund in India is laid down under SEBI (Mutual Fund)
Regulations, 1996.

Fig. 5 Structure of mutual funds

The Fund Sponsor:

Sponsor is defined under SEBI regulations as any person who, acting alone or in combination of
another corporate body establishes a Mutual Fund. The sponsor of the fund is akin to the promoter of
a company as he gets the fund registered with SEBI. The sponsor forms a trust and appoints a Board
of Trustees. The sponsor also appoints the Asset Management Company as fund managers. The
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sponsor either directly or acting through the trustees will also appoint a custodian to hold funds assets.
All these are made in accordance with the regulation and guidelines of SEBI.
As per the SEBI regulations, for the person to qualify as a sponsor, he must contribute at least 40% of
the net worth of the Asset Management Company and possesses a sound financial track record over 5
years prior to registration.

Mutual Funds as Trusts:

A Mutual Fund in India is constituted in the form of Public trust Act, 1882. The Fund sponsor acts as
a settler of the Trust, contributing to its initial capital and appoints a trustee to hold the assets of the
trust for the benefit of the unit-holders, who are the beneficiaries of the trust. The fund then invites
investors to contribute their money in common pool, by scribing to units issued by various schemes
established by the Trusts as evidence of their beneficial interest in the fund.
It should be understood that the fund should be just a pass through vehicle. Under the Indian Trusts
Act, the trust of the fund has no independent legal capacity itself, rather it is the Trustee or the
Trustees who have the legal capacity and therefore all acts in relation to the trusts are taken on its
behalf by the Trustees. In legal parlance the investors or the unit-holders are the beneficial owners of
the investment held by the Trusts, even as these investments are held in the name of the Trustees on a
day-to-day basis. Being public trusts, Mutual Fund can invite any number of investors as beneficial
owners in their investment schemes.
Trustees:
A Trust is created through a document called the Trust Deed that is executed by the fund sponsor in
favour of the trustees. The Trust- the Mutual Fund may be managed by a board of trustees- a body
of individuals, or a trust company- a corporate body. Most of the funds in India are managed by
Boards of Trustees. While the boards of trustees are governed by the Indian Trusts Act, where the
trusts are a corporate body, it would also require to comply with the Companies Act, 1956. The Board
or the Trust company as an independent body, acts as a protector of the of the unit-holders interests.
The Trustees do not directly manage the portfolio of securities. For this specialist function, the
appoint an Asset Management Company. They ensure that the Fund is managed by ht AMC as per the
defined objectives and in accordance with the trusts deeds and SEBI regulations.

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The Asset Management Companies:

The role of an Asset Management Company (AMC) is to act as the investment manager of the Trust
under the board supervision and the guidance of the Trustees. The AMC is required to be approved
and registered with SEBI as an AMC. The AMC of a Mutual Fund must have a net worth of at least
Rs. 10 Crores at all times. Directors of the AMC, both independent and non- independent, should have
adequate professional expertise in financial services and should be individuals of high morale
standing, a condition also applicable to other key personnel of the AMC. The AMC cannot act as a
Trustee of any other Mutual Fund. Besides its role as a fund manager, it may undertake specified
activities such as advisory services and financial consulting, provided these activities are run
independent of one another and the AMCs resources (such as personnel, systems etc.) are properly
segregated by the activity. The AMC must always act in the interest of the unit-holders and reports to
the trustees with respect to its activities.

Custodian and Depositories:

Mutual Fund is in the business of buying and selling of securities in large volumes. Handling these
securities in terms of physical delivery and eventual safekeeping is a specialized activity. The
custodian is appointed by the Board of Trustees for safekeeping of securities or participating in any
clearance system through approved depository companies on behalf of the Mutual Fund and it must
fulfil its responsibilities in accordance with its agreement with the Mutual Fund. The custodian should
be an entity independent of the sponsors and is required to be registered with SEBI. With the
introduction of the concept of dematerialization of shares the dematerialized shares are kept with the
Depository participant while the custodian holds the physical securities. Thus, deliveries of a funds
securities are given or received by a custodian or a depository participant, at the instructions of the
AMC, although under the overall direction and responsibilities of the Trustees.

Bankers:
A Funds activities involve dealing in money on a continuous basis primarily with respect to buying
and selling units, paying for investment made, receiving the proceeds from sale of the investments and
discharging its obligations towards operating expenses. Thus the Funds banker plays an important
role to determine quality of service that the fund gives in timely delivery of remittances etc.
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Transfer Agents:
Transfer agents are responsible for issuing and redeeming units of the Mutual Fund and provide other
related services such as preparation of transfer documents and updating investor records. A fund may
choose to carry out its activity in-house and charge the scheme for the service at a competitive market
rate. Where an outside Transfer agent is used, the fund investor will find the agent to be an important
interface to deal with, since all of the investor services that a fund provides are going to be dependent
on the transfer agent.

NET ASSET VALUE (NAV)

Since each owner is a part owner of a mutual fund, it is necessary to establish the value of his part. In
other words, each share or unit that an investor holds needs to be assigned a value. Since the units
held by investor evidence the ownership of the funds assets, the value of the total assets of the fund
when divided by the total number of units issued by the mutual fund gives us the value of one unit.
This is generally called the Net Asset Value (NAV) of one unit or one share. The value of an investors
part ownership is thus determined by the NAV of the number of units held.
Calculation of NAV:
Let us see an example. If the value of a funds assets stands at Rs. 100 and it has 10 investors who
have bought 10 units each, the total numbers of units issued are 100, and the value of one unit is Rs.
10.00 (1000/100). If a single investor in fact owns 3 units, the value of his ownership of the fund will
be Rs. 30.00 (1000/100*3). Note that the value of the funds investments will keep fluctuating with
the market-price movements, causing the Net Asset Value also to fluctuate.
For example, if the value of our funds asset increased from Rs. 1000 to 1200, the value of our
investors holding of 3 units will now be (1200/100*3) Rs. 36. The investment value can go up or
down, depending on the markets value of the funds assets.

Types of Returns on Mutual Fund:

There are three ways, where the total returns provided by mutual funds can be enjoyed by investors:
36 | P a g e

 Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all income
it receives over the year to fund owners in the form of a distribution.
If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also
pass on these gains to investors in a distribution. If fund holdings increase in price but are not sold by
the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for a
profit.
Funds will also usually give you a choice either to receive a check for distributions or to reinvest the
earnings and get more shares.
RISK FACTORS OF MUTUAL FUNDS:
1.

The Risk-Return Trade-Off:

Fig. 6 Risk-return trade-off graph

The most important relationship to understand is the risk-return trade-off. Higher the risk greater the
returns / loss and lower the risk lesser the returns/loss.

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Hence it is up to you, the investor to decide how much risk you are willing to take. In order to do this
you must first be aware of the different types of risks involved with your investment decision.
2.

Market Risk:
Sometimes prices and yields of all securities rise and fall. Broad outside influences affecting the
market in general lead to this. This is true, may it be big corporations or smaller mid-sized companies.
This is known as Market Risk. A Systematic Investment Plan (SIP) that works on the concept of
Rupee Cost Averaging (RCA) might help mitigate this risk.

3.

Credit Risk:
The debt servicing ability (may it be interest payments or repayment of principal) of a company
through its cash flows determines the Credit Risk faced by you. This credit risk is measured by
independent rating agencies like CRISIL who rate companies and their paper. A AAA rating is
considered the safest whereas a D rating is considered poor credit quality. A well-diversified
portfolio might help mitigate this risk.

4.

Inflation Risk:
The root cause, Inflation. Inflation is the loss of purchasing power over time. A lot of times people
make conservative investment decisions to protect their capital but end up with a sum of money that
can buy less than what the principal could at the time of the investment. This happen when inflation
grows faster than the return on your investment. A well-diversified portfolio with some investment in
equities might help mitigate this risk.

5.

Interest Rate Risk:

In a free market economy interest rates are difficult if not impossible to predict. Changes in interest
rates affect the prices of bonds as well as equities. If interest rates rise the prices of bonds fall and vice
versa. Equity might be negatively affected as well in a rising interest rate environment. A welldiversified portfolio might help mitigate this risk.

6. Political / Government Policy Risk:

Changes in government policy and political decision can change the investment Environment. They
can create a favourable environment for investment or vice versa.
7. Liquidity Risk:
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Liquidity risk arises when it becomes difficult to sell the securities that one has purchased. Liquidity
Risk can be partly mitigated by diversification, staggering of maturities as well as internal risk
controls that lean towards purchase of liquid securities.

REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA:

The structure of mutual funds in India is guided by the SEBI. Regulations, 1996.These regulations
make it mandatory for mutual fund to have three structures of sponsor trustee and asset Management
Company. The sponsor of the mutual fund and appoints the trustees. The trustees are responsible to
the investors in mutual fund and appoint the AMC for managing the investment portfolio. The AMC is
the business face of the mutual fund, as it manages all the affairs of the mutual fund. The AMC and
the mutual fund have to be registered with SEBI.

SEBI REGULATIONS:

As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to
protect the interest of the investors.
SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by
private sector entities were allowed to enter the capital market.
The regulations were fully revised in 1996 and have been amended thereafter from time to time.
SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of
investors.
All mutual funds whether promoted by public sector or private sector entities including those
promoted by foreign entities are governed by the same set of Regulations. The risks associated with
the schemes launched by the mutual funds sponsored by these entities are of similar type. There is no
distinction in regulatory requirements for these mutual funds and all are subject to monitoring and
inspections by SEBI.
SEBI Regulations require that at least two thirds of the directors of trustee company or board of
trustees must be independent i.e. they should not be associated with the sponsors.

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 Also, 50% of the directors of AMC must be independent. All mutual funds are required to be
registered with SEBI before they launch any scheme.
Further SEBI Regulations, inter-alia, stipulate that MFs cannot guarantee returns in any scheme and
that each scheme is subject to 20 : 25 condition [I.e. minimum 20 investors per scheme and one
investor can hold more than 25% stake in the corpus in that one scheme].
Also SEBI has permitted MFs to launch schemes overseas subject various restrictions and also to
launch schemes linked to Real Estate, Options and Futures, Commodities, etc.
ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI)
With the increase in mutual fund players in India, a need for mutual fund association in India was
generated to function as a non-profit organisation. Association of Mutual Funds in India (AMFI) was
incorporated on 22nd August, 1995.
AMFI is an apex body of all Asset Management Companies (AMC) which has been registered with
Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional SEBI. Till
date all the AMCs are that have launched mutual fund schemes are its members. It functions under the
supervision and guidelines of its Board of Directors. Association of and healthy market with ethical
lines enhancing and maintaining standards. It follows the principle of both protecting and promoting
the interests of mutual funds as well as their unit holders.
The Objectives of Association of Mutual Funds in India: The Association of Mutual Funds of India
works with registered AMCs of the country. It has certain defined objectives which juxtaposes the
guidelines of its Board of Directors. The objectives are as follows:
This mutual fund association of India maintains high professional and ethical standards in all areas of
operation of the industry.
It also recommends and promotes the top class business practices and code of conduct which is
followed by members and related people engaged in the activities of mutual fund and asset
management. The agencies who are by any means connected or involved in the field of capital
markets and financial services also involved in this code of conduct of the association.
AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund industry.
Association of Mutual Fund of India do represent the Government of India, the Reserve Bank of
India and other related bodies on matters relating to the Mutual Fund Industry.
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 It develops a team of well qualified and trained Agent distributors. It implements a programme of
training and certification for all intermediaries and other engaged in the mutual fund industry.
AMFI undertakes all India awareness programme for investors in order to promote proper
understanding of the concept and working of mutual funds.
At last but not the least association of mutual fund of India also disseminate information on Mutual
Fund Industry and undertakes studies and research either directly or in association with other bodies.
AMFI Publications:
AMFI publish mainly two types of bulletin. One is on the monthly basis and the other is quarterly.
These publications are of great support for the investors to get intimation of the knowhow of their
parked money.

Mutual fund companies in India

The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987
marked the existence of only one mutual fund company in India with Rs. 67bn assets under
management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By the end of the
80s decade, few other mutual fund companies in India took their position in mutual fund market.
The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank Mutual Fund,
Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund.
The succeeding decade showed a new horizon in Indian mutual fund industry. By the end of 1993, the
total AUM of the industry was Rs. 470.04 bn. The private sector funds started penetrating the fund
families. In the same year the first Mutual Fund Regulations came into existence with re-registering
all mutual funds except UTI. The regulations were further given a revised shape in 1996.
Kothari Pioneer was the first private sector mutual fund company in India which has now merged
with Franklin Templeton. Just after ten years with private sector players penetration, the total assets
rose up to Rs. 1218.05 bn. Today there are more than 45 mutual fund companies in India.
Major Mutual Fund Companies in India:
ABN AMRO Mutual Fund

LIC Mutual Fund,

GIC Mutual Fund.

AEGON Mutual Fund

Zurich Mutual Fund

BOI AXA Mutual Fund

UTI Mutual Fund

AXIS bank Mutual Fund

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 Standard Chartered Mutual Fund

Religare Invesco Mutual Fund

Shinsei Mutual Fund

Baroda Pioneer Mutual Fund

Benchmark Mutual Fund

Chola Mutual Fund,

Birla Sun Life Mutual Fund,

Can bank Mutual Fund,

Bank of Baroda Mutual Fund,

HDFC Mutual Fund,

HSBC Mutual Fund,

ING Vysya Mutual Fund,

Prudential ICICI Mutual Fund,

State Bank of India Mutual Fund,
Tata Mutual Fund,
Unit Trust of India Mutual Fund,
Reliance Mutual Fund,
Standard Chartered Mutual Fund,
Franklin Templeton India Mutual Fund,
Morgan Stanley Mutual Fund India,
Escorts Mutual Fund,
Alliance Capital Mutual Fund,

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Future of Mutual Funds in India

When we consider marketing, we have to see the issues in totality, because we cannot judge an
elephant by its trunk or by its tail but we have to see it in its totality. When we say marketing of
mutual funds, it means, includes and encompasses the following aspects:

Assessing of investors needs and market research

Responding to investors needs;

Product designing;

Studying the macro environment;

Timing of the launch of the product

Choosing the distribution network;

Preparing offer documents and other literature

Getting feedback about sales;

Studying performance indicators about fund performance like N A V

Sending certificates in time and other after fia1es services

Honoring the commitments made for redemptions and repurchase

Paying dividends and other entitlements

Creating positive image about the fund and changing the nature of the market itself. The above are the
aspects of marketing of mutual funds, in totality. Even if there is a single weak-link among the factors,
which are mentioned above, no mutual fund can successfully market its funds. Although several
macroeconomic and demographic factors affect the growth of the industry, the key underlying driver
for all the categories of funds is the key economic indicator the GDP growth rate.

Future of mutual funds in India is undoubtedly very bright. Currently, the Indian economy is mostly
under tapped. With more and more investors financial awareness it is poised to grow at a very fast
pace. Indias increasing working population will also play its significant role in growth of mutual fund
industry in coming years.
We need to overcome challenges which continue to persist are
There are continuing concerns that the industry has been grappling with over a
considerable period of time.
43 | P a g e

1. Under-penetrated population
2. Inaccessibility in smaller towns and cities due to lack of an efficient distribution
3. Heavy reliance on institutional sales
4. Low financial literacy level
5. Cost pressures emanating as a result of inefficiencies in system

Some of the older public and private sector players will either close shop or be taken over. Out often
public sector players five will sell out, close down or merge with stronger players in three to four
years. In the private sector this trend has already started with two mergers and one takeover. Here too
some of them will down their shutters in the near future to come.
The market will witness a flurry of new players entering the arena. There will be a large number of
offers from various asset management companies in the time to come. Some big names like fidelity,
Principal, Old Mutual etc. arc looking at Indian market seriously. One important reason for it is that
most major players already have presence here and hence these big names would hardly like to get left
behind.

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CHAPTER 2
About the Company

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Introduction
Prudent CAS (Corporate Advisory Services) Ltd, Incorporated in year 2000 with a clear
vision of providing professional services in the area of personal and corporate investments. It has
created a niche segment over a period to time with an excellent quality client base. Over the past few
years Prudent Corporate Advisory Services has created in-house capabilities of analyzing funds on
various parameters before suggesting them to clients.
The team approach worked wonders and in the short-span of just one decade, the Prudent Group
expanded its horizon by offering specialized services in the areas of Personal and Corporate
Investment Planning through Mutual Funds, Equities, Derivatives, Third Party Products, Fixed
Income Products, Life/General Insurance and Real Estate through various companies listed below.
This helps us to provide our clients an optional basket of funds rather than selling the typical available
funds. This approach lets us set our focus on the quality work rather than the just the quantity.

Products in which Prudent has an expertise:

1) Mutual Funds
2) Investment Consultancy
3) Equity and Derivatives broking
4) RBI Relief funds
5) Infrastructure Bonds
5) Life Insurance
6) Real Estate
Prudent Corporate Advisory Services Ltd.
As the flagship company, Prudent Corporate Advisory Services remains the primary arm of the
Prudent Group. It offers specialized services in the area of Personal and Corporate Investment
Planning through Mutual Funds, Debt and Third party products.
Besides having a large pool of their own clients, the company also manages its geographically-spread
business operations through a unique platform for independent financial advisors(IFA) which helps

46 | P a g e

them to grow and expand their services & support through sales and marketing, technology,
operations, back- office support, training & consultation.

Prudent Products
Prudent Channel since its inception has a strong hold in the market through its Direct Force. It also
has strong hold on the corporate channel - it now wants to have a greater reach to its clients which it
has already developed through its 2000+ certified brokers just the beginning of the force that will
grow in leaps and bounds.
know more than how much money you need to retire - or how much you should save for your future
expenses. It is about determining short-term and long-term objectives. Prudent CAS Ltd serves you
with array of financial planning.
If financial models were food, then we could cook up anything nourishing on the menu, from soup to
steak to nuts. If financial models were clothing, we could help produce any outfit, from making
original sketches to stitching together skirts to inventorying racks of gowns.

About Prudent
Prudence (prdns): the exercise of good judgment, common sense, and caution, especially in the
conduct of practical matters
Incorporated in year 2000 with a clear vision of providing professional services in the area of personal
and corporate investments. It has created a niche segment over a period to time with an excellent
quality client base. Over the past few years Prudent Corporate Advisory Services has created in-house
capabilities of analyzing funds on various parameters before suggesting them to clients.
The team approach worked wonders and in the short-span of just one decade, the Prudent Group
expanded its horizon by offering specialized services in the areas of Personal and Corporate
Investment Planning through Mutual Funds, Equities, Derivatives, Third Party Products, Fixed
Income Products, Life/General Insurance and Real Estate through various companies listed below.

Prudent Corporate Advisory Services Ltd.

As the flagship company, Prudent Corporate Advisory Services remains the primary arm of the
Prudent Group. It offers specialized services in the area of Personal and Corporate Investment
47 | P a g e

Planning through Mutual Funds, Debt and Third party products.

Besides having a large pool of their own clients, the company also manages its geographically-spread
business operations through a unique platform for independent financial advisors(IFA) which helps
them to grow and expand their services & support through sales and marketing, technology,
operations, back- office support, training & consultation.
Prudent Broking Services Pvt. Ltd.
Incorporated in 2004, Prudent Broking Services Pvt. Ltd is a Stock Broking and Depository
Participant service provider. Company is a member with Bombay Stock Exchange (BSE) & National
Stock exchange (NSE) & Central depository services (India) Limited (CDSL). Company is in the
process of creating its national presence by opening offices in various parts of the country.
Prudent Properties.
The Property sector is an important part of the asset class, but the effort and paperwork involved in
purchasing the same can be intimidating. Prudent Property provides real estate solutions not only in
creating an asset class but is also helping the customers in buying their dream realty, whether it be
homes or offices.

Team Prudent
Team Prudent is uniquely positioned to be a part of the client's inner trust-circle and consult
them to arrive at independent investment decisions.

The team Prudent consists of certified professionals and Industry experts. This includes top
notch investment advisors, research teams and client servicing teams. Our all branches are
self sufficient and fully equipped to service their clients.Our investment advisors are trained
rigorously to our exacting standards, to understand an investors needs and accordingly make
suggestions to them.

Our Back Bone - IT, RESEARCH AND WEB

We have harnessed the potential of information technology for excellent research and
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48 | P a g e

information and generates error-free reports.

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We constantly endeavor to achieve optimum client & partner satisfaction and confidence
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Apart from our own reports, we make available reports of leading research houses on various
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Prudent Channel Partners offers comprehensive financial planning services to help you answer the
toughest questions about your financial future. Though attaining your financial goals can never be
guaranteed, proper planning can greatly increase your odds of success. In order to build successful
client relationships, Prudent Channel Partner strives to help each client succeed. But unlike most
financial advisors, our definition of success is not just financial. To us, success can only be achieved
when all of a client's goals are met - whether the goals are related to family, marriage, charity, civic
organization, or anything else.

49 | P a g e

CHAPTER 3
Research Methodology

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Research Design
The aim of this evaluation study is to gather information and critically analyze the synergy between
the investment needs of individuals. This study is done with the purpose to find out whether planning
is done as per the need and proper matching of mutual funds are utilized to get the financial goals.

Need for the study

For retail investor who does not have the time and expertise to analyze and invest in stocks and bonds,
mutual funds offer a viable investment alternative. This is because mutual funds provide the benefit of
cheap access to expensive stocks. Mutual funds diversify the risk of the investor by investing in a
basket of assets. A team of professional fund managers manages them with in-depth research inputs
from investment analysts. Being institutions with good bargaining power in markets, mutual funds
have access to crucial corporate information which individual investors cannot access. So the present
study has taken up to know the extent of awareness about mutual funds and to analyze the investors
perception towards mutual funds

Scope of study
The research was limited to the New Delhi .The first stage included gathering information about
personal investment pattern.
The second stage comprised determining the objective of the study and drafting the questionnaire.
The questionnaire was designed keeping in mind the objective of the study. It was designed with due
guidance of the project guide.

Research questions
Creating a research question is a task. Good research questions are formed and worked on, and are
rarely simply found. You start with what interests you, and you refine it until it is workable. The
question sets out what you hope to learn about the topic. This question, together with your approach,
will guide and structure the choice of data to be collected and analysed.
There is no recipe for the perfect research question. The following guidelines highlight some of the
51 | P a g e

features of good questions.

Good questions are:
Relevant.
Manageable in terms of research and in terms of your own academic abilities.
Substantial and with original dimensions.
Consistent with the requirements of the assessment.
Clear and simple.
Interesting.

Research objective:

Specific research objectives included the following:

To know about the extent of awareness about mutual funds

To give a brief idea about the benefits available from Mutual Fund investment.

To know about the preferences of investors towards mutual funds

To discuss about the market trends of Mutual Fund investment.

To know about the perceptions of investors towards mutual funds

Observe the fund management process of mutual funds.

To give an idea about the regulations of mutual funds.

To know about the extent of satisfaction of investors towards mutual funds

Research methodology:
Research Design selected for this research is descriptive design and the Universe is New Delhi. Data
was collected in two ways, i.e., Primary data and Secondary data. The data collection method used for
collection of primary data was survey method and the data collection instrument used is structured
questionnaire. The sampling technique used is non-probability convenience sampling. Sample size is
50 respondents and sampling units include businessmen, Government servants, professional and
retired Individuals.
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The secondary data was collected through journals, magazines, books, company manuals,
Websites, etc.

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Qualitative analysis
The qualitative analysis part include the mapping of needs with planning and finding gap in the
selection of proper instruments.

Universe & sample of study Sample:

Part of population selected to investigate the properties of the population. Due to scarcity of research
sample of 50 questionnaires were selected.
Convenient Sampling methods were used to save cost and time.

Universe:
The universe for our survey was the people in New Delhi and the sample were places chosen to visit

and get the responses of questions from there.

Limitation
1. Sample size was limited to 50 because of limited time which is small to represent the
whole population.
2. The research was limited to New Delhi city only and if the same research would have been carried
in another city, the results may vary.
3. Sometimes the respondents because of their business didnt able to concentrate while filling up the
questions. However the researcher tried her level best to overcome the limitation by explaining the
importance of research.

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CHAPTER 4
Data Analysis and
Findings

Introduction:
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In this chapter the main aim of this evaluation study is to gather information and critically analyse the
data received during my survey.
As i was limited to do my survey on the adjoining areas surrounding New Delhi due to time and
proximity factors. I collected data from this area only.
During my survey i came across wide number of peoples from different age groups with different
perception and other varied demographic fields.
The analysis on the Sample size Surveyed is been as follows:

TABLE 4.1 The age and gender of the respondent

Gender of the
Age of the respondent
N

Valid
Missing

respondent

50

50

TABLE 4.2 Age of the respondent

Cumulative
Frequency
Valid

Percent

Valid Percent

Percent

18 -25

10

20.0

20.0

20.0

26-35

16

32.0

32.0

52.0

36-50

10

20.0

20.0

72.0

51-65

14.0

14.0

86.0

66 & above

14.0

14.0

100.0

50

100.0

100.0

Total

56 | P a g e

PIE CHART 4.1 Age of the respondent

Analysis:
The above pie chart shows the demographic profile of the selected sample. The profile is
spread in age range of 18 years to 66 years and above. The sample comprised mostly the
persons of age group 26 35 years with the maximum frequency of 16 samples, whereas the
second most sample was present in age group of 36 50 years with frequency of 10.

TABLE 4.3 Gender of the respondent

Cumulative
Frequency
Valid

Percent

Valid Percent

Percent

Male

36

72.0

72.0

72.0

Female

14

28.0

28.0

100.0

Total

50

100.0

100.0

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PIE CHART 4.2 Gender of the respondent

Analysis:
The gender category represented an unequal distribution between the number of males and
females. It can be said that the survey was male biased but due to the limited time, the
respondents were chosen as first come first serve basis.

TABLE 4.4 Work status of the respondent

Cumulative
Frequency
Valid

Student

Percent

Valid Percent

Percent

16.0

16.0

16.0

Business

13

26.0

26.0

42.0

Employed

16

32.0

32.0

74.0

Others

13

26.0

26.0

100.0

Total

50

100.0

100.0

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PIE CHART 4.3 Work status of the respondent

Analysis:
The above chart shows that people mostly were employed and secondly were the business man, least
were the students.

What factor do you consider for investing?

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TABLE 4.5 Frequency distribution of the factors considered for investment

Frequency Percent Valid Percent
Valid

Cumulative Percent

safety

16

32.0

32.0

32.0

liquidity

13

26.0

26.0

58.0

high return

16.0

16.0

74.0

tax benefits

12.0

12.0

86.0

14.0

14.0

100.0

50

100.0

100.0

guaranteed
return
Total

PIE CHART 4.4 Representation of factors considered for investing.

Analysis:
This was the most important question of the entire questionnaire. This question clearly indicates the
psyche of investors in making the investment decision. We can see that most of the investors made
their decisions on direct regard to safety & liquidity, whereas the other investors wanted a guaranteed
return as the motivation to invest. This shows the traditional thought of saving and penetration of
banking industry in the psyche of consumers.

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What investment opportunities do you seek for investing?

TABLE 4.6 Frequency distribution of various investment opportunities

Cumulative
Frequency
Valid

Percent

Valid Percent

Percent

Bank Deposits

11

22.0

22.0

22.0

Post Office/ PPF

10

20.0

20.0

42.0

Stock/ PMS

10.0

10.0

52.0

Mutual Funds

18.0

18.0

70.0

Insurance

16.0

16.0

86.0

Gold (Holding)

8.0

8.0

94.0

Real Estates

6.0

6.0

100.0

50

100.0

100.0

Total

PIE CHART 4.5 Representation of various investment opportunities.

Analysis:
It can be seen from pie chart that mostly investors go for investment with a bank or a post
office. More than 40% of the investment are with them. On the other hand rest 60%
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comprises of insurance, mutual funds, real estates, gold & stocks. It can be seen that
investment in stocks & mutual funds have been increased over the past years.

TABLE 4.7 Awareness about MF :

Cumulative
Frequency
Valid

Percent

Valid Percent

Percent

Yes

18

36.0

36.0

36.0

No

32

64.0

64.0

100.0

Total

50

100.0

100.0

PIE CHART 4.6 Representation of Awareness about MF

Analysis:
Most of the people are unaware about mutual funds. About 64% people dont know anything about
mutual fund

TABLE 4.8 Reason of unawareness about MF

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Cumulative
Frequency
Valid

Valid Percent

Percent

Not intrested

17

34.0

45.9

45.9

Lack of information

11

22.0

29.7

75.7

18.0

24.3

100.0

Total

37

74.0

100.0

System

13

26.0

50

100.0

Other reasons

Missing

Percent

Total

PIE CHART 4.7 Reason of unawareness about MF

Analysis:
The above pie chart shows the reason behind not knowing about mutual fund is that most of the
people are really not at all intrested in mutual fund and other who are intrested dint get sufficient
information about it.

TABLE 4.9 Reason why dont want to invest in mutual fund

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Cumulative
Frequency
Valid

HIgh Risk

Missing

Percent

Valid Percent

Percent

14

28.0

41.2

41.2

No guarantee

14.0

20.6

61.8

Difficulty in selecting options

6.0

8.8

70.6

Lack of Awareness

10.0

14.7

85.3

Past experience

10.0

14.7

100.0

Total

34

68.0

100.0

System

16

32.0

50

100.0

Total

PIE CHART 4.8 Reason why dont want to invest in mutual fund
Analysis:
The above pie chart shows the factors that have stopped people to invest in mutual funds. From the
range of options people said that high risk was the reason behind it. Other factors included prior
experience, no guarantee, lack of awareness & difficulty in selecting options. It can be clearly seen
that a perception of loss of money i.e. high risk is associated for mutual funds in eyes of consumers.

TABLE 4.10 Safest option for investing

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Cumulative
Frequency
Valid

Bank Deposits

Valid Percent

Percent

28

56.0

63.6

63.6

Post Office/ PPF

14.0

15.9

79.5

Stock/ PMS

2.0

2.3

81.8

Insurance

4.0

4.5

86.4

Real Estates

12.0

13.6

100.0

44

88.0

100.0

12.0

50

100.0

Total
Missing

Percent

System

Total

PIE CHART 4.9 Representing safest option for investing

Analysis :
Analysis shows that the safest option considered for investing is preferred to be bank and post
office.

What return you receive from your investment?

TABLE 4.11 Frequency of data for various rate of return.
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Cumulative
Frequency
Valid

Valid Percent

Percent

4-6 %

17

34.0

38.6

38.6

6-7 %

10

20.0

22.7

61.4

7-9 %

12

24.0

27.3

88.6

10.0

11.4

100.0

44

88.0

100.0

12.0

50

100.0

9 % & above
Total
Missing

Percent

System

Total

PIE CHART 4.10 Showing the rate of return.

Analysis:
The respondents were then asked to state their earnings from the sources other than that of mutual
funds. From the responses it can be seen that most of the investors received a return in range of 4 6
% in their investment, whereas this went high till 9 %.

TABLE 4.12 Features of Mutual Funds.

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Cumulative
Frequency
Valid

Missing

Percent

Valid Percent

Percent

Flexibility

6.0

15.0

15.0

High return

2.0

5.0

20.0

Diversification of Funds

8.0

20.0

40.0

Tax Benefits

10.0

25.0

65.0

Professional Management

6.0

15.0

80.0

Regular Income

8.0

20.0

100.0

Total

20

40.0

100.0

System

30

60.0

50

100.0

Total

PIE CHART 4.11 Features of mutual funds.

Analysis:
The above chart shows the salient features of mutual funds that attracts customers towards investment.
The factors were flexibility, high return, diversification of funds, the tax benefits that mutual funds
provide professional management behind mutual funds, the regular income. Among these factors tax
benefits that mutual fund provide is the most appealing factor to consumers. The maximum responses
were recorded for tax benefits that mutual funds provide. The high return was also one of the factors
affecting the decision making process of the consumers.
67 | P a g e

TABLE 4.13 Sources of knowledge about Mutual Funds.

Cumulative
Frequency
Valid

Missing

Percent

Valid Percent

Percent

Print Media

12.0

28.6

28.6

Internet

14.0

33.3

61.9

TV/ Radio

4.0

9.5

71.4

Friends/ Relatives (WOM)

8.0

19.0

90.5

Advisors

4.0

9.5

100.0

Total

21

42.0

100.0

System

29

58.0

50

100.0

Total

PIE CHART 4.12 Sources of knowledge about Mutual Funds.

Analysis :
More than 50% respondent skipped this question and the who answered relied mostly on internet and
print media

TABLE 4.14 where from you purchase Mutual Funds.

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Cumulative
Frequency
Valid

Missing

Percent

Valid Percent

Percent

Banks

16.0

44.4

44.4

Brokers/ Distributors

14.0

38.9

83.3

Online/ AMCs

2.0

5.6

88.9

Others

4.0

11.1

100.0

Total

18

36.0

100.0

System

32

64.0

50

100.0

Total

PIE CHART 4.13 Where from you purchase Mutual Funds.

Analysis :
Most of the respondent purchased mutual fund from bank and brokers very less of them relis on the
other sources.

TABLE 4.15 Mode of Payment adopted

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Cumulative
Frequency
Valid

Missing

Lumpsum/ One Time

Percent

Valid Percent

Percent

10.0

25.0

25.0

Recurring

15

30.0

75.0

100.0

Total

20

40.0

100.0

System

30

60.0

50

100.0

Total

PIE CHART 4.14 Mode of Payment adopted.

Analysis:
The above pie chart shows the mode of payment adopted for investment. The respondents
mostly belonged to service class thus they preferred a recurring deposit over a lump sum
payment of funds. This systematic investment scheme has grown a significant importance
over the period of time, which is only to promote the habit of investment for the investor.

TABLE 4.16 Time for holding mutual funds.

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Cumulative
Frequency
Valid

Missing

Percent

Valid Percent

Percent

Upto 1 yr

12.0

33.3

33.3

1 - 3 yrs

16.0

44.4

77.8

4 - 8 yrs

4.0

11.1

88.9

9 - 15 yrs

4.0

11.1

100.0

Total

18

36.0

100.0

System

32

64.0

50

100.0

Total

PIE CHART 4.15 Time for holding mutual funds.

Analysis:
Most of the respondent hold mutual fund for less than 3 years, there were about 75% of such
respondent.

TABLE 4.17 Mutual Fund mostly preferred

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Cumulative
Frequency
Valid

Missing

Percent

Valid Percent

Percent

Equity Funds

10.0

25.0

25.0

Balanced funds

18.0

45.0

70.0

Growth funds

8.0

20.0

90.0

Others

4.0

10.0

100.0

Total

20

40.0

100.0

System

30

60.0

50

100.0

Total

PIE CHART 4.16 Representation of Mutual Fund mostly preferred

Analysis:
Out of total 50 respondent only 20 responded to this question. And out of that 20 most people choose
balanced fund followed by equity, only 2 respondent preferred growth fund.

TABLE 4.18 satisfaction level of respondent towards level of return.

72 | P a g e

Cumulative
Frequency
Valid

Highly satisfied

Percent

Valid Percent

Percent

8.0

8.0

8.0

satisfied

13

26.0

26.0

34.0

neutral

16

32.0

32.0

66.0

dissatisfied

14

28.0

28.0

94.0

6.0

6.0

100.0

50

100.0

100.0

highly dissatisfied
Total

PIE CHART 4.17 Satisfaction level of respondent towards level of return.

Analysis:
Most of the response came out to be neutral followed by dissatisfied and satisfied,overall there is
same level of satisfaction and dissatisfaction among the people about mutual fund.

TABLE 4.19 Awareness program interested.

73 | P a g e

Cumulative
Frequency
Valid

MF

Percent

Valid Percent

Percent

14.0

14.0

14.0

Insurance

13

26.0

26.0

40.0

stock market

19

38.0

38.0

78.0

Any other

11

22.0

22.0

100.0

Total

50

100.0

100.0

PIE CHART 4.18 Awareness program interested.

Analysis :
Most of the people are interested in awareness about stock market to learn more about it.Which is
followed by insurance and last one is the mutual fund about which respondent wanted awareness
programs to be conducted.

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CHAPTER 5
Suggestion &Conclusion

75 | P a g e

Suggestions
Even though the mutual funds are good source of income, the people lack awareness and information
towards mutual funds. So the following suggestions were made in order to increase the awareness
among the people especially the rural people.
1. Increase awareness among investors: Many investors are still restricting their choices to the nongovernmental options like gold and fixed deposits even the market is flooded with countless
investment opportunities. This is because of lack of awareness about mutual funds which makes many
investors restrict their choice to traditional options like gold and fixed deposits. So awareness relating
to mutual funds must be increased among the investors to encourage them to invest in mutual funds.
2. Provide complete information relating to mutual funds: Even among the investors who invest in
mutual funds are unclear about how they function and how to manage them. So proper information
must be provided to the investors in order to increase the loyalty among the investors.
3. Investors fee must be reduced by reducing paper work: Investors fee includes management fee,
distribution fee, distribution fee, and administrative costs, etc., which are generally deducted from the
asset value. This can be possible if the investment is made without agent and if the paper work is
reduced.
4. Better commission should be paid to Asset Management Companies: From the past 4-5 years the
trust of investors on mutual funds is reduced because of the poor performance of mutual funds in
these years. So if better commission is paid to Asset Management Companies which are highly
knowledgeable and by motivating them we can improve the distribution system of mutual funds.
5. Subsidized Investments to rural investors: Because of the issue of commercial viability, mutual
funds were limited to major cities only. So if mutual funds are offered to rural and semi urban
investors at subsidized rates like agricultural loans, the demand for mutual funds increases in rural and
semi urban areas also.
6. Advertising campaigns must be conducted in rural areas to increase awareness among rural
investors.

Conclusion
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Mutual funds are good source of returns for majority of households and it is particularly useful for the
people who are at the age of retirement. However, average investors are still restricting their choices
to conventional options like gold and fixed deposits when the market is flooded with countless
investment opportunities, with mutual funds. This is because of lack of information about how mutual
funds work, which makes many investors hesitant towards mutual fund investments. In fact, many a
times, people investing in mutual funds too are unclear about how they function and how one can
manage them. So the organizations which are offering mutual funds have to provide complete
information to the prospective investors relating to mutual funds. The government also has to take
some measures to encourage people to invest in mutual funds even though it is offering schemes

Mutual funds provide a range of products for investment in both short term and long term. It offers a
wide variety of combination of equity and debt instruments. One of the several factors people make
decisions on the basis of the past performance, the risk associated & guarantee of return.
Hence, we need to make financially aware both partners and customers, so that they can understand
each other and based on need of individual customer appropriate mutual funds can be offered to
customers. This need of customer must be understood by mutual fund seller as we can see a
relationship between highly educated class people and riskier investment options. Majority of the
people wants higher return in short period of time that is why they prefer to invest in stock markets
and mutual funds rather than any other form of investments.
People must be made aware of the benefits of starting early in their life, saving regularly, investing in
the right asset class, the power of compounding, the systematic investment plan and more. These must
be in sync with their future needs may be 25-30 years ahead.
From survey, it is clear that people are inclined to invest in less beneficial but fixed return avenues
such as Banks, Post offices, PPFs.
Mutual Funds now represent perhaps most appropriate investment opportunity for most investors. As
financial markets become more sophisticated and complex, investors need a financial intermediary
who provides the required knowledge and professional expertise on successful investing. As the
investor always try to maximize the returns and minimize the risk.
Mutual fund satisfies these requirements by providing attractive returns with affordable risks. The
fund industry has already overtaken the banking industry, more funds being under mutual fund
management than deposited with banks. With the emergence of tough competition in this sector
mutual funds are launching a variety of schemes which caters to the requirement of the particular
77 | P a g e

class of investors. Risk takers for getting capital appreciation should invest in growth, equity schemes.
Investors who are in need of regular income should invest in income plans.
Majority of the respondents are not aware of mutual funds, so By conducting more consumer
awareness creating programmes the company can give more information about the mutual funds and
the mutual funds company .

78 | P a g e

References

Websites:

http://www.moneycontrol.com

http://www.amfiindia.com

http://www.5paise.com

http://www.indiainfoline.com

http://www.nseindia.com

http://www.sebi.gov.in/sebiweb/

http://www.prudentcorporate.com/

79 | P a g e

http://www.prudentcorporate.com/mutualfundindustry.aspx

http://www.prudentcorporate.com/Archives.aspx

http://www.tflguide.com/2011/12/mutual-fund-taxation-in-india.html

http://articles.economictimes.indiatimes.com/2013-03-25/news/38010413_1_balanced-fundsequityfund-hybrid-funds

http://www.moneycontrol.com/mutual-funds/amc-assets-monitor

http://www.investopedia.com/articles/mutualfund/112002.asp

http://www.google.com
http://www.wikipedia.com
http://www.sharemaketbasics.com
http://www.sharemarket.com
David F, Swenson. 2005. Unconventional Success. A fundamental Approach to Personal Investment

Ansal, lalit k.(1996), Mutual Funds Management and Working, Deep & Deep Publication, New Delhi.

Frazzini Andrea, Dumb Money: Mutual Fund flows as the cross-section of stock returns, NCFMs
AMFI Material on mutual funds (workbook)

Frazzini Andrea, Dumb Money: Mutual Fund flows as the cross-section of stock returns, NCFMs
AMFI Material on mutual funds (workbook)

Nalini Prabha Tripathy, Market Timing Abilities and Mutual Fund Performance- An Empirical
Investigation into Equity Linked Saving Schemes (2012) XIMB Journal of management, Vilakshan,
April 2012, pp 6-8

Panwar Sharad and Madhumathi R Characteristics and Performance of selected mutual funds in
India.,(2013)

Prasanna Chandra, Investment Analysis and Portfolio Management sixth reprint2013, Tata
Mcgraw-Hill Publication company limited, New Delhi.

Riter,Jay,R2008, The buying and selling behavior of individual investors at the turn of the
year, journal of finance 43, 701-717.

D.C. Anjaria. Dhaivat Anjaria. 2001 AMFI's Mutual Fund Testing Program.

80 | P a g e

81 | P a g e

Annexure
(Questionnaire)

A Study on Awareness of Mutual Funds and its scope in India

1.

Age of the respondent (in years)

a) 18-25

b) 26-35

c)36-50

2.

Gender:

a) Male

b) Female

3.

Occupation
a) Student b) Business

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c) Employed

d)51-65

e) 66 & above

d) Others..

4.

Monthly income (from all sources)

a) Up to 5000

b) 5001-15000

c) 15001-25000

5.

Do you currently have any investment?

6.

What are the important Factors Considering before an investment?

a) Safety b) Liquidity

7.

c) High Return

b) No

d) Tax Benefits

e) Guaranteed return

What type of investment do you process?

a) Bank Deposits b) Post Office/ PPF
f) Gold (Holding)

8.

a) Yes

d) 25001 & above

c) Stock/PMS

d) Mutual Funds

e) Insurance

g) Real Estate

Are you aware of mutual fund?

a) Yes

b) No

9. If not, What Reason do you possess?

a) Not interested b) Lack of information c) other reasons
10. Are you interested in knowing about mutual funds?

11.

a) yes

b) no

If not, then factors that stop you from investing in Mutual Funds?
a) High Risk

b) No Guarantee

c) Difficulty in Selection of options

d) Lack of Awareness

e) Past experience
12.

Which options among the following, you consider to be the safest?

a) Bank Deposits b) Post Office/ PPF
f) Gold (Holding)

c) Stock/PMS

d) Mutual Funds

g) Real Estate

13. What amount of return (% p.a.) do you earn from the investments you do?
a) 4-6 %
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b) 6-7%

c) 7- 9%

d) 9% & above

e) Insurance

14. features of Mutual Funds that attract you for investment?

a) Flexibility

b) High return

e) Professional Management

c) Diversification of funds

d) Tax Benefits

f) Regular Income

15. Source of knowledge?

a) Print Media

b) Internet

c) TV/ Radio

d) Friends/ Relatives (WOM)

e) Advisors

16. From where do you purchase Mutual Funds?

a) Banks

b) Brokers/ Distributors

c) Online/ AMCs

d) Others

17. Preferred Mode of Payment:

a) One time/ Lump sum

b) Recurring

18. How long do you like to hold Mutual Funds investments?

a) Up to 1 Yr

b) 1 3 yrs

c) 4 8 yrs

d) 9 15 yrs

e) 16 yrs & above

19. Which type of fund do you prefer mostly?

a) Equity Funds

b) Balanced Funds

c) Growth Funds

d) Others

20. What is your level of satisfaction towards the current level of the returns?
a) Highly Satisfied b) Satisfied c) Neutral d) Dissatisfied e) Highly Dissatisfied
21. Are you interested in any kind of investor awareness programmes on financial product?
a) M.F b) Insurance c) Stock Market

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d) Any other