EXECUTIVE SUMMARY

Financial investments include shares, other equity investment, as well as bonds which are the
different type of invest preferred now a days. These financial assets are then expected to
provide income or positive future cash flows, as well as may increase or decrease in value
giving the investor/depositor capital gains or losses. My topic for the study is “A study of
investor preferences towards investment in mutual funds”.

Most investor/depositors as well as advisors pay an excellent deal of one time understanding
the deserves of the thousands of investments obtainable in India. very little time, however, is
spent understanding the wants of the capitalist as well as guaranteeing that the foremost
acceptable investments are chosen for him. Most investor/depositors invest for the long term
to fulfill the inflation as well as for the capital appreciation. Success as an investor/depositor
depends upon his investment in right instrument in right time as well as for the right period.
This, in turn, depends on the requirements, needs as well as goals. For most
investor/depositors, however, the three prime criteria of evaluating any investment option are
liquidity, safety as well as level of return.

In this study my objectives are to find out the Preferences of the investors for Asset
Management Company and to know the Preferences for the portfolios. Other To find out the
most preferred channel. For the research about the topic we have used the primary data
collected by the questionnaire. The limitation of the study is the time constraint as well as the
sample size. The result is that the people want to invest more in secure investment.

In few years Mutual Fund has emerged as a tool for ensuring one’s financial well being.
Mutual Funds have not only contributed to the India growth story but have also helped
families tap into the success of Indian Industry.

Mutual fund is a trust that pools the savings of a number of investors who share a common
financial goal. This pool of money is invested in accordance with a stated objective. The joint
ownership of the fund is thus “Mutual”, i.e. the fund belongs to all investors. The money thus
collected is then invested in capital market instruments such as shares, debentures and other
securities. When an investor subscribes for the units of a mutual fund, he becomes part owner
of the assets of the fund in the same proportion as his contribution amount put up with the
corpus.

1
Mutual Funds have been a significant source of investment in both government and corporate
securities. It has been for the decades the monopoly of the state with UTI being the key
player with invested funds exceeding Rs. 300 bn. (US $ 10 bn.). The state owned insurance
companies also hold a portfolio of stocks. Presently, numerous mutual funds exist, including
private and foreign companies. Banks - mainly state owned too have established Mutual
Funds (MFs). Foreign participation in mutual funds and asset management companies
permitted on a case-by-case basis.

The Indian mutual fund industry is dominated by the Unit Trust of India, which has a total
corpus of Rs700bn collected from more than 20 million investors. The UTI has many
funds/schemes in all categories i.e. equity, balanced, income etc with some being open-ended
and some being closed-ended. The Unit Scheme 1964 commonly referred to as US 64, which
is a balanced fund, is the biggest scheme with a corpus of about Rs200bn. Most of its
investors believe that the UTI is government owned and controlled, which, while legally
incorrect, is true for all practical purposes. Running a successful Mutual Fund requires
complete understanding of the peculiarities of the Indian Stock Market and also the psyche of
the small investors. This study has made an attempt to understand the financial behavior of
Mutual Fund investors in connection with the preferences of Brand (AMC), Products,
Channel etc. I observed that many of people have fear of Mutual Fund. They think their
money will not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its
related terms. Many of people do not have invested in mutual fund due to lack of awareness
although they have money to invest. As the awareness and income is growing the number of
mutual fund investors are also growing.

“Brand” plays important role for the investment. People invest in those Companies where
they have faith or they are well known with them. There are many AMCs but only some are
performing well due to Brand awareness. Some AMCs are not performing well although
some of the schemes of them are giving good return because of not awareness about Brand.
HDFC, Reliance, UTI, SBIMF, ICICI Prudential etc. they are well known Brand, they are
performing well and their Assets Under Management is larger than others whose Brand name
are not well known like Principle, Sunderam, etc.

Distribution channels are also important for the investment in mutual fund. Financial
Advisors are the most preferred channel for the investment in mutual fund. They can change
investors’ mind from one investment option to others. Many of investors directly invest their

2
money through AMC because they do not have to pay entry load. Only those people invest
directly who know well about mutual fund and its operations and those have time.

3
 Contents

1. Introduction

Industry Profile
Company’s profile
Structure of organisation

2. Major Learning

3. SWOT Analysis of Company

4. Recommendations

5. References

4
 INTRODUCTION TO THE TOPIC

In few years Mutual Fund has emerged as a tool for ensuring one’s financial well being.
Mutual Funds have not only contributed to the India growth story but have also helped
families tap into the success of Indian Industry. As information and awareness is rising more
and more people are enjoying the benefits of investing in mutual funds. The main reason the
number of retail mutual fund investors remains small is that nine in ten people with incomes
in India do not know that mutual funds exist. But once people are aware of mutual fund
investment opportunities, the number who decide to invest in mutual funds increases to as
many as one in five people. The trick for converting a person with no knowledge of mutual
funds to a new Mutual Fund customer is to understand which of the potential investors are
more likely to buy mutual funds and to use the right arguments in the sales process that
customers will accept as important and relevant to their decision.

This Project gave me a great learning experience and at the same time it gave me enough
scope to implement my analytical ability. The analysis and advice presented in this Project
Report is based on market research on the saving and investment practices of the investors
and preferences of the investors for investment in Mutual Funds. This Report will help to
know about the investors’ Preferences in Mutual Fund as an investment option means Are
they prefer any particular Asset Management Company (AMC), Which type of Product they
prefer, Which Option (Growth or Dividend) they prefer or Which Investment Strategy they
follow (Systematic Investment Plan or One time Plan). This Project as a whole can be divided
into two parts.

MEANING OF MUTUAL FUNDS

Mutual fund is a trust that pools the savings of a number of investors who share a common
financial goal. This pool of money is invested in accordance with a stated objective. The joint
ownership of the fund is thus “Mutual”, i.e. the fund belongs to all investors. The money thus
collected is then invested in capital market instruments such as shares, debentures and other
securities. The income earned through these investments and the capital appreciations
realized are shared by its unit holders in proportion 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. A Mutual Fund is an investment tool that allows small investors access to
a well-diversified portfolio of equities, bonds and other securities. Each shareholder

5
participates in the gain or loss of the fund. Units are issued and can be redeemed as needed.
The funds Net Asset value (NAV) is determined each day.

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.

MUTUAL FUND AS AN INVESTMENT OPTION

When an investor subscribes for the units of a mutual fund, he becomes part owner of the
assets of the fund in the same proportion as his contribution amount put up with the corpus
(the total amount of the fund). Mutual Fund investor is also known as a mutual fund
shareholder or a unit holder.
Any change in the value of the investments made into capital market instruments (such as
shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is
defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a
scheme is calculated by dividing the market value of scheme's assets by the total number of
units issued to the investors.

An investor normally prioritizes his investment needs before undertaking an investment.

Different goals will be allocated to different proportions of the total disposable amount.
Investments for specific goals normally find their way into the debt market as risk reduction
is of prime importance, this is the area for the risk-averse investors and here, Mutual Funds
are generally the best option. One can avail of the benefits of better returns with added
benefits of anytime liquidity by investing in open-ended debt funds at lower risk, this risk
of default by any company that one has chosen to invest in, can be minimized by investing
in Mutual Funds as the fund managers analyze the companies financials more minutely than
an individual can do as they have the expertise to do so.

Moving up the risk spectrum, there are people who would like to take some risk and invest
in equity funds/capital market. However, since their appetite for risk is also limited, they
would rather have some exposure to debt as well. For these investors, balanced funds

6
 provide an easy route of investment, armed with expertise of investment techniques, they
can invest in equity as well as good quality debt thereby reducing risks and providing the
investor with better returns than he could otherwise manage. Since they can reshuffle their
portfolio as per market conditions, they are likely to generate moderate returns even in
pessimistic market conditions.

Next comes the risk takers, risk takers by their nature, would not be averse to investing in
high-risk avenues. Capital markets find their fancy more often than not, because they have
historically generated better returns than any other avenue, provided, the money was
judiciously invested. Though the risk associated is generally on the higher side of the
spectrum, the return-potential compensates for the risk attached.

Theoretical Background

IMPORTANCE OF MUTUAL FUNDS

1. A Mutual Fund actually belongs to the investors who have pooled their Funds. The
ownership of the mutual fund is in the hands of the Investors.
2. A Mutual Fund is managed by investment professional and other Service providers, who
earns a fee for their services, from the funds.
3. The pool of Funds is invested in a portfolio of marketable investments. The value of the
portfolio is updated every day.
4. The investor’s share in the fund is denominated by “units”. The value of the units changes
with change in the portfolio value, every day. The value of one unit of investment is called
net asset value (NAV).
5. The investment portfolio of the mutual fund is created according to The stated Investment
objectives of the Fund.
NEED OF MUTUAL FUNDS

Here are some of the Advantages offered by Mutual Funds-:

Number of available options

Mutual funds invest according to the underlying investment objective as specified at the time
of launching a scheme. So, we have equity funds, debt funds, gilt funds and many others that
cater to the different needs of the investor. The availability of these options makes them a

7
good option. While equity funds can be as risky as the stock markets themselves, debt funds
offer the kind of security that is aimed for at the time of making investments. Money market
funds offer the liquidity that is desired by big investors who wish to park surplus funds for
very short-term periods. Balance Funds cater to the investors having an appetite for risk
greater than the debt funds but less than the equity funds.

Diversification

Investments are spread across a wide cross-section of industries and sectors and so the risk is
reduced. Diversification reduces the risk because all stocks don’t move in the same direction
at the same time. One can achieve this diversification through a Mutual Fund with far less
money than one can on his own.

Professional Management

Mutual Funds employ the services of skilled professionals who have years of experience to
back them up. They use intensive research techniques to analyze each investment option for
the potential of returns along with their risk levels to come up with the figures for
performance that determine the suitability of any potential investment.

Liquidity

Mutual Funds offer the benefit of liquidity which provides the investor with the option of
easy conversion to money. As in the case of fixed deposits, where the investor can get his
money back only on the completion of a fixed period, an investor can get his money back as
and when he wants. Investors can redeem their money at the prevailing NAV’s (Net Asset
Values). Mutual funds directly re-purchase at the current NAV.

Well Regulated
8
Unlike the company fixed deposits, where there is little control with the investment being
considered as unsecured debt from the legal point of view, the Mutual Fund industry is very
well regulated. All investments have to be accounted for, decisions judiciously taken. SEBI
acts as a true watchdog in this case and can impose penalties on the AMCs at fault. The
regulations, designed to protect the investors’ interests are also implemented effectively.

Transparency

Being under a regulatory framework, mutual funds have to disclose their holdings,
investment pattern and all the information that can be considered as material, before all
investors. This means that the investment strategy, outlooks of the market and scheme related
details are disclosed with reasonable frequency to ensure that transparency exists in the
system. On the other hand, the investor is totally clueless in case of the other investment
alternatives as nothing is disclosed.

Savings

Tax saving schemes of Mutual Funds offer investor a tax rebate under section 88 of the
Income Tax Act. Under this section, an investor can invest up to Rs.10,000 per Financial year
in a tax saving scheme. The rate of rebate under this section depends on the investor’s total
income

Flexible and Affordable

Mutual Funds offer a relatively less expensive way to invest when compared to other avenues
such as capital market operations. The fee in terms of brokerages, custodial fees and other
management fees are substantially lower than other options and are directly linked to the
performance of the scheme. Investment in mutual funds also offers a lot of flexibility with
features such as regular investment plans, regular withdrawal plans and dividend
reinvestment plans enabling systematic investment or withdrawal of funds. Even the
investors, who could otherwise not enter stock markets with low investible funds, can benefit
from a portfolio comprising of high-priced stocks because they are purchased from pooled
funds.

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 TYPES OF MUTUAL FUNDS

1. OPEN-ENDED MUTUAL FUNDS:-

The holders of the shares in the Fund can resell them to the issuing Mutual Fund company
at the time. They receive in turn the net assets value (NAV) of the shares at the time of re-
sale. Such Mutual Fund Companies place their funds in the secondary securities market.
They do not participate in new issue market as do pension funds or life insurance
companies. Thus they influence market price of corporate securities. Open-end investment
companies can sell an unlimited number of Shares and thus keep going larger. The open-
end Mutual Fund Company Buys or sells their shares. These companies sell new shares
NAV plus a Loading or management fees and redeem shares at NAV. In other words, the
target amount and the period both are indefinite in such funds.

2. CLOSED-ENDED MUTUAL FUNDS:-

A closed–end Fund is open for sale to investors for a specific period, after which further
sales are closed. Any further transaction for buying the units or repurchasing them, Happen
in the secondary markets, where closed end Funds are listed. Therefore new investors buy
from the existing investors, and existing investors can liquidate their units by selling them
to other willing buyers. In a closed end Funds, thus the pool of Funds can technically be
kept constant. The asset management company (AMC) however, can buy out the units from
the investors, in the secondary markets, thus reducing the amount of funds held by outside
investors. The price at which units can be sold or redeemed Depends on the market prices,
which are fundamentally linked to the NAV. Investors in closed end Funds receive either
certificates or Depository receipts, for their holdings in a closed end mutual Fund.

10
 INDUSTRY PROFILE

Mutual Funds have been a significant source of investment in both government and corporate
securities. It has been for the decades the monopoly of the state with UTI being the key
player with invested funds exceeding Rs. 300 bn. (US $ 10 bn.). The state owned insurance
companies also hold a portfolio of stocks. Presently, numerous mutual funds exist, including
private and foreign companies. Banks - mainly state owned too have established Mutual
Funds (MFs). Foreign participation in mutual funds and asset management companies
permitted on a case-by-case basis.

Structure of the Indian mutual fund industry

The Indian mutual fund industry is dominated by the Unit Trust of India, which has a total
corpus of Rs700bn collected from more than 20 million investors. The UTI has many
funds/schemes in all categories i.e. equity, balanced, income etc with some being open-ended
and some being closed-ended. The Unit Scheme 1964 commonly referred to as US 64, which
is a balanced fund, is the biggest scheme with a corpus of about Rs200bn. Most of its
investors believe that the UTI is government owned and controlled, which, while legally
incorrect, is true for all practical purposes.

The second largest category of mutual funds is the ones floated by nationalized banks. Can
bank Asset Management floated by Canara Bank and SBI Funds Management floated by the
State Bank of India are the largest of these. GIC AMC floated by General Insurance
Corporation and Jeevan Bima Sahayog AMC floated by the LIC are some of the other
prominent ones.

Some of the AMCs operating currently are:

Name of the AMC Nature of ownership

Alliance Capital Asset Management (I) Private Limited Private foreign
Birla Sun Life Asset Management Company Limited Private Indian
Bank of Baroda Asset Management Company Limited Banks
Bank of India Asset Management Company Limited Banks
Can bank Investment Management Services Limited Banks
Cholamandalam Cazenove Asset Management Company Limited Private foreign
Dundee Asset Management Company Limited Private foreign
DSP Merrill Lynch Asset Management Company Limited Private foreign

11
 Escorts Asset Management Limited Private Indian
First India Asset Management Limited Private Indian
GIC Asset Management Company Limited Institutions
IDBI Investment Management Company Limited Institutions
Indfund Management Limited Banks
ING Investment Asset Management Company Private Limited Private foreign
J M Capital Management Limited Private Indian
Jardine Fleming (I) Asset Management Limited Private foreign
Kotak Mahindra Asset Management Company Limited Private Indian
Kothari Pioneer Asset Management Company Limited Private Indian
Jeevan Bima Sahayog Asset Management Company Limited Institutions
Morgan Stanley Asset Management Company Private Limited Private foreign
Punjab National Bank Asset Management Company Limited Banks
Reliance Capital Asset Management Company Limited Private Indian
State Bank of India Funds Management Limited Banks
Shriram Asset Management Company Limited Private Indian
Sun F and C Asset Management (I) Private Limited Private foreign
Sundaram Newton Asset Management Company Limited Private foreign
Tata Asset Management Company Limited Private Indian
Credit Capital Asset Management Company Limited Private Indian
Templeton Asset Management (India) Private Limited Private foreign
Unit Trust of India Institutions
Zurich Asset Management Company (I) Limited Private foreign

Recent trends in mutual fund industry

The most important trend in the mutual fund industry is the aggressive expansion of the
foreign owned mutual fund companies and the decline of the companies floated by
nationalized banks and smaller private sector players.

Many nationalized banks got into the mutual fund business in the early nineties and got off to
a good start due to the stock market boom prevailing then. These banks did not really
understand the mutual fund business and they just viewed it as another kind of banking
activity. Few hired specialized staff and generally chose to transfer staff from the parent
organizations. The performance of most of the schemes floated by these funds was not good.
Some schemes had offered guaranteed returns and their parent organizations had to bail out
these AMCs by paying large amounts of money as the difference between the guaranteed and
actual returns. The service levels were also very bad. Most of these AMCs have not been able

12
to retain staff, float new schemes etc. and it is doubtful whether, barring a few exceptions,
they have serious plans of continuing the activity in a major way.

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

They can be credited with introducing many new practices such as new product innovation,
sharp improvement in service standards and disclosure, usage of technology, broker
education and support etc. In fact, they have forced the industry to upgrade itself and service
levels of organizations like UTI have improved dramatically in the last few years in response
to the competition provided by these.

Performance of Mutual Funds in India

Let us start the discussion of the performance of mutual funds in India from the day the
concept of mutual fund took birth in India. The year was 1963. Unit Trust of India invited
investors or rather to those who believed in savings, to park their money in UTI Mutual Fund.
The performance of mutual funds in India in the initial phase was not even closer to
satisfactory level. People rarely understood, and of course investing was out of question. But
yes, some 24 million shareholders were accustomed with guaranteed high returns by the
beginning of liberalization of the industry in 1992. This good record of UTI became
marketing tool for new entrants. The expectations of investors touched the sky in profitability
factor. However, people were miles away from the preparedness of risks factor after the
liberalization.

Market Trends

COMPARISION OF MUTUAL FUNDS WITH OTHER INSTRUMENT

A lone UTI with just one scheme in 1964 now competes with as many as 400 odd products
and 34 players in the market. In spite of the stiff competition and losing market share, Last
six years have been the most turbulent as well as exiting ones for the industry. New players

13
have come in, while others have decided to close shop by either selling off or merging with
others. Product innovation is now passé with the game shifting to performance delivery in
fund management as well as service. Those directly associated with the fund management
industry like distributors, registrars and transfer agents, and even the regulators have become
more mature and responsible.

The industry is also having a profound impact on financial markets. While UTI has always
been a dominant player on the bourses as well as the debt markets, the new generations of
private funds, which have gained substantial mass, are now flexing their muscles. Fund
managers, by their selection criteria for stocks have forced corporate governance on the
industry. Rewarding honest and transparent management with higher valuations has created a
system of risk-reward created where the corporate sector is more transparent then before.

Funds have shifted their focus to the recession free sectors like pharmaceuticals, FMCG and
technology sector. Funds performances are improving. Funds collection, which averaged at
less than Rs100bn per annum over five-year period spanning 1993-98 doubled to Rs210bn in
1998-99. In the current year mobilization till now have exceeded Rs300bn. Total collection
for the current financial year ending March 2000 is expected to reach Rs450bn.

What is particularly noteworthy is that bulk of the mobilization has been by the private sector
mutual funds rather than public sector mutual funds. Indeed private MFs saw a net inflow of
Rs. 7819.34 Crore during the first nine months of the year as against a net inflow of
Rs.604.40 Crore in the case of public sector funds

14
 COMPANY’S PROFILE

VISION & MISSION

VISION

To be a prominent destination to enhance the Prosperity of its Clients, Investors, Associates

and Employees, ALLways.

MISSION
To provide best value for money to clients through personalised service, innovative products,
best trading and investment strategies and state-of-the-art technologies. We at Swastika
believe that 'Our services combined with our investors' trust will lead to a prosperous
Swastika family

We are committed for :

 Integrity and transparency in all transactions,
 Providing investment solutions based on quality and unbiased research,

 Providing personalized services to all investors and business associates,

 Achieving success through client’s growth .

Equity

The lure of big money has always directed investors to the stock markets. However, making
money is not easy. It not only requires a lot of patience and discipline, but also a great deal of
research and a sound understanding of the market. The recent volatility in the market has
created a lot of confusion and apprehension in the investor community. There is a dilemma of
what to buy, sell or hold and when to take the action.

Swastika gives the perfect solution to stay profitable in the stock market with its market
experience, thorough research and analysis, trading solutions and personalized services.
15
DERIVATIVES

Derivatives enable the investor to earn greater returns (at greater risk) by leveraging your
position i.e. by a lower initial investment. Derivatives have the potential to benefit from both
rise and fall in the market and can also be used as a risk management tool by the investors.

Swastika aspires to make derivatives trading an easy and profitable venture for its investors.
Through our simple to understand and easy to implement research and advisory solutions,
traders can now efficiently take advantage of the derivatives market.

Offering
1. Online Trading
 Access to NSE and BSE
 Get a combined view of your trading account and balances

 Track your Portfolio

 Quick and easy trade execution and settlement

 Online cash Management

 Integrated support via NSE NOW, ODIN

2. Research
 Daily and Weekly Fundamental and Technical Research Reports
 Daily Research calls for intraday as well as positional trades via Software, Instant
Messaging and SMS

 Segment specific calls ( Cash, Futures, Options, Index,

Index Options)

 Option Strategies to make the most out of market volatility

 Dedicated Portfolio Management Services for investor

specific needs and financial goals

DATA ANALYSIS AND SERVICES

16
Successful investing in Capital Markets demands ever more time and expertise.
Investment Management is an art and a science in itself. Professional Investment
Management Services are no longer the privilege of only large institutional
investors. Portfolio Management Services (PMS) is one such service that is fast
gaining eminence as an investment avenue of choice for High Net worth
Investors like you. PMS is a sophisticated investment vehicle that offers a range of
specialized investment strategies to capitalize on opportunities in the market. The
Portfolio Management Service
combined with competent fund management, dedicated research and technology,
ensures a rewarding experience for its clients.
Swatika Investmart PMS brings with it years of experience, expertise, research and the
backing of India's leading stock broking house. At Swatika Investmart, experienced
portfolio management is the difference. You will enjoy a relationship with a portfolio
manager equipped to design and implement a portfolio around your unique needs. We
will advise you on a suitable product based on factors such as your investment horizon
return expectations and risk tolerance. By entrusting the management of your
Portfolios to Swatika Investmart, you can enjoy convenience without compromising on
quality.

 PRIVATE CLIENT GROUP:-

Swatika Investmart offers personalized advisory services to affluent HNI investors and
actively assists them in managing their portfolio. PCG can seek guidance on specific
stocks in their portfolio and can get active advice for timely exit and fresh investments.
Here we also design customized products and services for our clients based on there risk
profile, returns need and time horizon. Our experienced research team in-depth analysis
and customized value added products and services give us an immense advantage in
assisting you to generate wealth on a longer and consistent basis.

 INVESTMENT ADVISORY:-

17
To derive optimum returns from equity as an asset class requires professional guidance
and advice. Professional assistance will always be beneficial in wealth creation.
Investment decisions without expert advice would be like treating ailment without the
help of a doctor.

Strong research has always been our forte. Our investment advisory department is backed
by an experience research team. This team comprises of 12 sector special analysts

and a Research Head. Their vast experience and expertise in spotting great investments
opportunities has always been beneficial for our clients.

( A ) Expert Advice:-

Our expert investment advisors are based at various branches across India to
provide assistance in designing and monitoring portfolios.

( B ) Timely Entry & Exit:-

Our advisors will regularly monitor your investments and will guide you to book timely
profits. They will also guide you in adopting switching techniques from one stock to
another during various market conditions.

( C ) De-Risking Portfolio:-

A diversified portfolio of stocks is always better than concentration in a single

stock. Based on our research, we diversify the portfolio in growth oriented sectors and
stocks to minimize the risk and optimize the returns.

 DEPOSITORY SERVICES:-

You must be aware that Swatika Investmart Broking Ltd has started its depository
services by registering with CDSL. There are various benefits of holding your demat

18
account with us but the biggest advantage is that you shall be ensured of a risk free, prompt
and efficient depository process.

DIFFERENCE BETWEEN ANGLE DEPOSITORY SERVICES & OTHER

DEPOSITORY SERVICES.

Since our association is slated for a long time, we are in a much better position to know
your requirement regarding your holding and transfer of securities.
No physical instructions are required for your sell obligations. We also offer to our clients
the automated pay in facility for trade done through Swatika Investmart Broking Ltd /
Swatika Investmart Capital and Dept Market Ltd. The transaction charges that are being
levied by us are the lowest in the industry as we believe in providing quality services at
the most affordable costs.

You have an option of choosing the products offered by CDSL:-

( A ) Easy facility :-

You can view, download and print the updated holding of your demat account along with
valuation of holding.

( B ) Easiest facility :-

You can, by using this facility, submit your own delivery instructions on the internet
without the intervention of your DP. This is in addition to all the facilities provided under
the 'Easy' facility. We would like you to know that the state of art technology being
arranged for you is the best in the industry and all this is done so that you have
convenience of accessing information from any desired location.

 MUTUAL FUND:-

The Swatika Investmart Mutual Fund distribution and advisory division offers you the
opportunity to diversify your investment portfolio. By offering a choice of investment

19
schemes from all major mutual fund providers we have taken our 100% retail-focused
philosophy a step further. Swatika Investmart Mutual Fund offers options catering to
investors with varying risk-return profiles. We also help investors to choose the best mutual
fund, based on their investment needs.

EMOTIONS

( A ) SELF DISCIPLINE:-
The greatest cause of loss in trading commodities is lack of self-discipline – lack
of self-discipline to follow your game plan; lack of self-discipline to be patient; lack of
self-discipline to take a loss or profit, lack of discipline to follow money management
concepts. "Luck might play a part in the short-run, but in the end, only those players who
play the game better will triumph. Acting in a disciplined manner is essential for success. "

( B ) TAKE PROFITS:-

Tremendous amounts of money can and are being made in the commodities
markets. Profits are there for the making, but the real key to trading commodities is not
making money; it is keeping it. It is not basking in the elation of success; it is taking your
profits and looking over your shoulder.

( C ) BALANCE:-

Trading commodities is a game of psychology. It is a game of balance. Emotional

extremes create an imbalance. In your elation at being successful, you will make mistakes of
greed. In your reluctance to take a loss, you will make mistakes of fear. The
tremendous emotional release one feels after closing out a big losing position is amazing.

Fighting the market, yet knowing it was going to go against us, but wanting it to go in
our direction - pushing it, hoping for it, worrying about it. After a few days or a few weeks
of that, it felt as though the weight of the world was taken off our shoulders when we
finally take the loss.

( D ) PROFIT & LOSS CYCLES:-

20
 Most often, meeting a margin call will only increase your loss. A margin call
means you are wrong in the market and your position should be closed out. Margin calls are
met because people do not want to admit being wrong and take a loss; because they hope
the market will eventually go in their direction. Avoid meeting margin calls.

( E ) FEAR & GREED:-

With the tremendous leverage commodities offer, you as a commodity trader, are
frequently exposed to the basic emotions of fear and greed. At certain times in your trading
career these emotions can make you completely and absolutely irrational, oblivious
to what is really happening. It can make you rely on hope; hope that the market will do
what you want it to do because it must! Otherwise, you will lose all of your risk capital
and sometimes much more. Not surprisingly, that doesn't matter to the markets.

GUIDELINE FOR RISK MANAGEMENT

" Risk control is an essential part of trading successfully. Effective risk management
requires not only the careful monitoring of risk exposure, but a strategy to minimize
losses as well. Understanding how to control risk exposure allows the trader, beginner or
veteran, to continue trading even when the inevitable losses occur. While every trade
involves a degree of risk, some general principles of risk management, if applied,
reduce the potential for loss. A few of the generally accepted market axioms for controlling
risk are noted below and are applicable to anyone who has ever traded or ever
considered trading”.

 Trade with the trend:-

You will be less likely to incur a loss if you are following the market trend. The direction
of the market does not matter as long as you are positioned for the trend that occurs. If you
are not well positioned, then systematically reduce your risk exposure.

 Diversify:-

21
Portfolio risk is reduced through diversification. Don't bet everything on one trade.
Diversify your risk exposure by trading no more than 1% to 5% of your capital on any
one position. (Contracts on different maturities of the same

commodity count as one position.) To be effective diversification must involve

commodities that are not highly correlated (that is, that do not move in the same direction at
the same time). High positive correlation reduces the benefits of diversification.
Predetermined stop orders limit your risk exposure and will cut your losses in fast
moving markets. Adopt a rigid stop-loss rule (for example, get out of a trade quickly if it
loses 5-7%)

 Don't overtrade:-

Reduce your risk exposure by cutting down on the number of trades you make and keeping
your bets small. Be selective about the risks you take. Restrict your trades to the ones that are
the most attractive. This forces you to do your homework and reduces impulsive and
emotional trades. Because there will be fewer trades, you will have to be much more patient.

Risk management basically involves four essential steps:-

- Fully understanding the risks of the trade.

- Eliminating unnecessary risks where possible.

- Being selective about which risks to take.

- Acting quickly to reduce risk exposure if the market moves against you.

 Common mistakes made by traders:-

( A ) Lack of a Game Plan:-

One of the most important moves a futures trader can make is to develop a game plan
consisting of basic guidelines.

( B ) Meeting Margin Calls:-

22
Most often, meeting a margin call will only increase your loss. A margin call means
you are wrong in the market and your position should be closed out. Margin calls are
met because people do not want to admit being wrong and take a loss; because they hope
the market will eventually go in their direction. Avoid meeting margin calls.

( C ) Lack of Money Management:-

Good money management means you know your profit objective and the odds of
being right or wrong, and control your risk with stops. You are better off with a trade
where you might lose 1000 if you are wrong, or make 1000 if you are right, that would
work six times out of ten, than to take a trade where you would make 1500 if you are right
and lose only 500 if you are wrong, but works only one time out of three.

( D ) Increasing Your Commitment With Success:-

One of the most dangerous mistakes you can make in trading commodities is to
increase your exposure, as you become more successful. Just by being successful you will
risk more per trade because you have more money. But, because you have more
money (and confidence) when successful, you are also likely to take larger percentage
risks. Not surprisingly, this ruins more futures traders than a series of small losses. You can
overcome this mistake by not allowing your percentage commitment to increase as you
realize profits and by maintaining your stop/loss discipline.

23
PRODUCT

 SWATIKA INVESTMART OUTSTER FUND:-

The objective of the scheme is wealth generation by delivering superior returns

over long term through investments in equities.

Investment strategy:-

( A ) To generate wealth on consistent basic rather out

performed by taking higher risk.
( B ) logic work well and thus will be given weightage along with financials.
( C ) early identification of stocks to ride through the entire investment cycle.
( D) Timing of investment is important to generate superior returns.

24
PERAMETER DRIVING INVESTMENT DECISION:-

( A ) Blend of growth and value stocks.

( B )Investments in companies regardless of market capitalization.

( C )Keen selection of stocks based on potential for value unlocking based on key events.

( D )Focus on companies which display:-

- Scalable business potential.

- Large market opportunity.

- Beneficiary of favorable economic cycle.

- Valuation at steep discount to asset value.

 SWATIKA INVESTMART:-

The objective of the scheme is to generate capital appreciation in the medium to

long term through investments in equities and equity related instruments comprising
predominantly large cap companies.
Investment strategy:-

( A ) overweight on large cap stocks. However Quality mid cap stocks may also be
considered for investment.

( B ) the portfolio will however be overweight on large cap companies.

( C ) combination of top down and bottom up approaches. Portfolio. To comprise of a

combination of growth and value stocks.

D ) the portfolio strivers to insulate an investor from cyclical themes by investing in

sector offering secular growth outlook.

Parameters Driving Investment Decision:-

( A ) The portfolio strives at all times to achieve an 70% allocation to large cap
companies.

25
( B ) The portfolio strives to limit the exposure to any sector to less than 25% of the portfolio
size.

( C ) The portfolio strives to limit the exposure to any sector to less than 10% of the portfolio
size.

SWATIKA INVESTMART GROWTH FUND:-

The objective of the scheme is to generate capital appreciation in the medium to

long term through investments in equities and equity related instruments comprising of
predominantly Mid-Cap and Small-Cap companies.
Investment strategy:-
( A ) focus on growth themes such as Infrastructure, services, manufacturing and
domestic Consumption.
( B ) overweigh on mid cap and small cap stocks. However Quality large cap stock may
also be considered for Investment depending on market condition.
( C ) Combination of top down and bottom up approaches. Portfolio to comprise of a
combination of growth and Value stocks.
Parameter driving investment decision:-
( A ) The portfolio strives to limit the exposure to any sector To less then 25% of the
portfolio size.
( B ) The portfolio strives to limit the exposure to any Stock To less then 10% of the
portfolio size.
EQUITIES AND DERIVATIVES:-

( A ) To generate moderate returns by deployment into Equity assets and partially

hedging the portfolio using options and futures & achieving this with a margin of safety.

( B ) Additionally the funds lying idle would be deployed in arbitrage between cash and
future and /or place in low maturity debt funds and low risk F&O Strategies.

26
 ORGANISATIONAL STRUCTURE

Chair man

General Manager

Accounts service Marketing

Departmen Departme
nt Departme
ts
nt

Manages Manages Manages

Assistant Assistant Assistant

Manages Manages Manages

Offices Offices Supervisor

Assistant Assistant Skilled

Labors

Helpers

27
28
 MAJOR LEARNING

RESEARCH DESIGN

Research in common parlance refers to a search for knowledge. The advanced learner’s
dictionary of current English lays down the meaning of research as “a careful investigation of
enquiry especially through search for new facts in any branch of knowledge.”

The systematic approach concerning generalization and the formulation of a theory is also
research. The purpose of research is to discover answers to questions through the application
of scientific procedures.

OBJECTIVES OF THE STUDY

1. To find out the Preferences of the investors for Asset Management Company.
2. To know the Preferences for the portfolios.
3. To know why one has invested or not invested in Swatika Investmart
4. To find out the most preferred channel.
5. To find out what should do to boost Mutual Fund Industry.

METHODOLOGY

“A research design is the arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in procedure.”

- JOHN.W.BEST

Research may be defined as “any organized inquiry designed and carried out to provide
information for solving a problem”.

- EMORY

“Research is essentially an investigation, a recording and an analysis of evidence for the

purpose of gaining knowledge”.

- ROBERT ROSS

29
 DESCRIPTIVE RESEARCH DESIGN

Descriptive research design studies are those studies, which are concerned with describing
the character of a group.

Data sources:

Research is totally based on primary data. Secondary data can be used only for the reference.
Research has been done by primary data collection, and primary data has been collected by
interacting with various people. The secondary data has been collected through various
journals and websites and some special publications of MUTUAL FUND COMPANY.

Sampling:

 Sampling procedure:
The sample is selected in a random way, irrespective of them being investor or not or availing
the services or not. It was collected through mails and personal visits to the known persons,
by formal and informal talks and through filling up the questionnaire prepared. The data has
been analyzed by using the measures of central tendencies like mean, median, mode. The
group has been selected and the analysis has been done on the basis statistical tools available.

Sample size:

The sample size of my project is limited to 200 only. Out of which only 135 people attempted
all the questions. Other 65 not investing in MFs attempted only 2 questions.

 Sample design:
Data has been presented with the help of bar graph, pie charts, line graphs etc.

RESEARCH INSTRUMENT

 Questionnaire
“A questionnaire is simply a set of questions designed to generate the data necessary for
accomplishing a research project’s objectives” (Parasuraman, 1991, p.363).

SAMPLE DESIGN:

POPULATION

30
 It covers the 120 unit of population.

SAMPLE PROCEDURES

In this study convenient sampling method was adopted. First each organization was divided
into different departments like Operations, Customer Services, Human Resources, Internet
Marketing and under writing departments. From this department, the respondents were
selected on the basis of convenience.

INTERVEIW SCHEDULE

 The interview schedule has been used to collect the data. Information can be
gathered even when the respondents happen to be literate or illiterate.

TABULATION

 It is the arrangement of classified data in an orderly manner. This involves

creating table for recording the filled in interview schedule. These tables are of immense help
to analysis by using the statistics tools help to analysis by using the statistical tools.

TOOLS USED FOR ANALYSIS

Simple percentage analysis

 It is simple analysis tool. In this method, based on the opinions of the

respondents, percentage and bar chart is calculated for the respective scales of each factor.

Formula:

Simple percentage = No of Respondents x 100

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 Total No of Sample Size

LIMITATION OF THE STUDY

 Time limitation.
 Research has been done only in one city.
 Some of the persons were not so responsive.
 Possibility of error in data collection.
 Possibility of error in analysis of data due to small sample size.

DATA COLLECTION

The study was based on questionnaire method.

There are two types of data collection:

1. Primary data
2. Secondary data

Primary data

The primary data are those, which are collected a fresh and for the first time happen to
be original in character. It has been collected through a Questionnaire and personal interview.
Only the primary data is not the sufficient to get information about the complete topic so both
primary and secondary data is collected.

Secondary data

Secondary data are those which have already been collected by someone else and
which have already been passed through the stratified process. It has collected through the
books, journals & Internet.

32
 ANALYSIS AND INTERPRETATION

Questionnaire on investor's preferences towards mutual funds with references to

swastika mutual funds.

Kindly fill up the following questionnaire.

Name of the person:_______________ Phone Number:_________________

Gender:____________________ Occupation___________________

1. Are you investing for tax exemption or tax savings?

options percentage

1. Yes 70%

2. No 30%

2. What kind of invest option you prefer?

options percentage

1. Post office savings 10

33
2. bank deposited 15

3. life insurance 35

4. mutual funds 15

5. gold equity 5

6. company fixed 2
deposited

7. real estate 18

8. other(please specify) 0

34
3. Are you investor in mutual funds?

options percentage

1. Yes 98%

2. No 2%

35
4. If answer is yes, why do you prefer mutual funds?

options percentage

1. Less risky 22

2. Liquidity 38

3. Professionally managed 15

4. Fast appreciation of Money 25

36
5. What kind of mutual funds prefer?

options percentage

1. open-ended 45

2. closed-ended 55

37
6. Which option do you prefer for your investment?

options percentage

1. Dividend 42

2. Growth 58

38
7. High return involves risks do you agree?

options percentage

1. Agree 46

2. Partially 24

3. Disagree 30

39
8. If you are an investor of Mutual funds, which company you prefer?

options percentage

1. UTI 10

2. Kotak 10

3. Swastika Invest mart 20

4. HDFC 20

5. Birla Sun Life 20

6. LIC 20

40
9. What is the reason for you to select this Mutual funds Company?

options percentage

1. Reputation 22

2. Provides good return 28

3. Expert's advice 40

4. Other (Please Specify) 10

41
10. If yes, then in which product/services of you have invested?

options percentage

1. Equity 33

2. Commodity 37

3. Debt. 20

4. Forex 10

42
 SUGGESTIONS AND CONCLUSION

Running a successful Mutual Fund requires complete understanding of the peculiarities of the
Indian Stock Market and also the psyche of the small investors. This study has made an
attempt to understand the financial behavior of Mutual Fund investors in connection with the
preferences of Brand (AMC), Products, Channel etc. I observed that many of people have
fear of Mutual Fund. They think their money will not be secure in Mutual Fund. They need
the knowledge of Mutual Fund and its related terms. Many of people do not have invested in
mutual fund due to lack of awareness although they have money to invest. As the awareness
and income is growing the number of mutual fund investors are also growing.

“Brand” plays important role for the investment. People invest in those Companies where
they have faith or they are well known with them. There are many AMCs in BHOPAL but
only some are performing well due to Brand awareness. Some AMCs are not performing well
although some of the schemes of them are giving good return because of not awareness about
Brand. HDFC, Reliance, UTI, SBIMF, ICICI Prudential etc. they are well known Brand, they
are performing well and their Assets Under Management is larger than others whose Brand
name are not well known like Principle, Sunderam, etc.

Distribution channels are also important for the investment in mutual fund. Financial
Advisors are the most preferred channel for the investment in mutual fund. They can change
investors’ mind from one investment option to others. Many of investors directly invest their
money through AMC because they do not have to pay entry load. Only those people invest
directly who know well about mutual fund and its operations and those have time.

43
 SWOT ANALYSIS

The SWOT analysis is an extremely useful tool for understanding and decision-
making for all sorts of situations in business and organizations. SWOT is an acronym
for Strengths, Weaknesses, Opportunities, Threats.

SWATIKA INVESTMART SWOT ANALYSIS:-

STRENGHTS
 Financial resources.
 Product skill.

 Swatika Investmart team is experienced in the trading.

WEAKNESSES
 Swatika Investmart staff is exceptional.

OPPORTUNITIES
 Several additional client groups.

 Faster market growth.

 Entry into new market.

THREATS
 Other trading company.

44
Recommendation

45
 Recommendation

The following suggestions are the outcome of the research and applications of these
suggestions are not necessary:

 The company should come up with innovative ways of service at their door steps this
may be a costly affair but will surely give positive results in the long run.
 The company should take the initiative of Study the advisors about the new funds
from time to time which also makes the advisors connected to the company. This also
improves the liaison between company customers and advisors.
 The company should also emphasis on the monitoring of funds which directly relates
to the returns of a specific fund.
 The company should use brand ambassadors for example the CEO’s of major
companies where the company allocate the funds. This will probably ensure proper
results.
 The company should focus on the advertising strategy and also the marketing of the
product.
 The company should emphasis on creating an awareness about the SIP options which
is always preferable when the market is volatile.
 The company doesn’t have enough tax saving plans or appropriate plans for tax so
which they should come up with.

46
 REFERENCES

BOOKS

 Bhalla V.K (2001), Investment Management, Tata McGraw hill, New Delhi .
 Pandian Punithavathy (2003), Security Analysis and Portfolio Management, Vikas
publication.
 Kothari (2001), Research Methodology
 Fisher E Donald(2003), Security Analysis and Portfolio Management, sixth edition
 Sharma ansd Gupta, Financial management, sahitya Bhawan publication,2008
 I. M. PANDEY, FINANCIAL MANAGEMENT,
 Kothari C R, Research methodology,
 Gupta S.P., mgt Accounting, Sanitya haw an peed, 2002.
 Shashi. K. Gupta & R.K. Sharma, Financial Management- Theory and practice, Kalyani
Publishers,Third Edition – 2000.

WEBSITES

 www.moneycontrol.com
 www.investopedia.com
 www.nse-india.com
 www.stockchart.com
 www.wikipedia.com

JOURNALS


International Research Journal of Finance and Economics

Indian Journal of Finance

47
 Questionnaire on Investor’s Preferences towards Mutual Funds with References to
Swastika Mutual Funds.

Dear Sir/Madam,

I kindly request you to fill the following questionnaire. The information provided by you will
be used for academic purpose only & will be kept confidential.

Kindly fill up the following questionnaire.

NAME OF THE PERSON: …………………………..PHONE NUMBER:

…………………………..

GENDER: ………………………….

Education level occupation

 Graduation Private sector employee

 Post-graduation Self-employed
 Professional Retire
 Other (please specify)……………… Other (please specify)………………..
Annual income & investment:

Annual income Annual investment

 Less than 1 lakh Less than 25000

 2-3.5 lakh 25001-5000
 3.5-5 lakh 50001-100000
 More than 5 lakh 100001-200000
200001-above
None

1. Are you an income Tax Assesses?

 Yes
 No
2. Are you investing for Tax exemption or Tax savings?
 Yes
 No

3. What kind of invest option you prefer?

 Post office savings
 Bank Deposited
 Life Insurance
 Mutual funds
 Gold equity
 Company fixed deposited
 Real estate
 Other (please specify)………………….

4. Are you investor in mutual funds?

48
  Yes
 No

5. If answer is YES, Why do you prefer mutual funds?

 less risky
 liquidity
 professionally managed
 fast appreciation of money

6. What kind of mutual funds prefer?

 Open – ended
 Closed – ended
 Interval

7. Which option do you prefer for your investment?

 Dividend
 Growth

8. ‘High return involves high risks’ Do you agree?

 Agree
 Partially
 Disagree

9. If you are an investor of MUTUAL FUNDS, Which company you prefer?

 UTI
 Kotak
 Swastika Invest mart
 HDFC
 Birla sun life
 LIC

10. What is the reason for you to select this mutual funds company?
 Reputation
 Provides good return
 Experts’ advice
 Other (please specify)…………………..

11. If yes, then in which product/service of you have invested?

 Equity
 Commodity
 Debt.
 forex

49