A PROJECT REPORT ON A STUDY OF CUSTOMER PREFERENCE AND SATISFACTION LEVEL TOWADS MUTUAL FUND IN HSBC BANK AT PATNA

For

HSBC Mutual Fund , Patna

Submitted by NISHANT KUMAR

UNDER THE GUIDANCE OF

Gaurav Dixit In partial fulfillment of the requirement for the degree Of MASTER IN MARKETING MANAGEMENT Submitted to UNIVERSITY OF PUNE

SINGHAD INSTITUTE OF MANAGEMENT AND COMPUTER APPLICATION

Pune Maharashtra 2010-12

DECLARATION

I, the undersigned, hereby declare that the Project Report entitled a study of customer preference and satisfaction level towards mutual fund in HSBC bank at Patna written and submitted by me to the University of Pune, Pune in partial fulfilment of the requirements for the award of degree of Master in Marketing Management under the guidance of Master in Marketing Management is my original work and the conclusions drawn therein are based on the material collected by myself. Place : Pune Nishant kumar

Date:

Research Student

GUIDES CERTIFICATE

CERTIFICATE This is to certify that the Project Report entitled a study of customer preference and satisfaction level towards Mutual Fund in HSBC bank in Patna which is being submitted herewith for the award of the degree of Master in Marketing Management of University of Pune, Pune is the result of the original research work completed by Mr Nishant Kumar under my supervision and guidance and to the best of my knowledge and belief the work embodied in this Project Report has not formed earlier the basis for the award of any degree or similar title of this or any other University or examining body.

Director

Project Guide Mr. NIKHIL SHARMA

Dr. Apoorva Palkar

ACKNOWLEDGEMENTS
It gives me great pleasure to submit this project to the University of Pune as a part of curriculum of my MMM course. I take this opportunity with great pleasure to present before you this project on A STUDY OF CUSTOMER PREFERENCE AND SATISFACTION LEVL TOWARDS MUTUAL FUND IN HSBC BANK AT PATNA" which is a result of cooperation, hard work and good wishes of many people. The most pleasant part of any project is to express the gratitude towards all those who have contributed to the success of the project. First of all I would like to thank Mr. Nikhil Sharma for his valuable guidance & kind cooperation during the project and also, I would like to thanks Mr.Sarvesh Kumar for his kind of co-operation. I would like to thank to Prof.Gaurav Dixit who has been my mentor for this project. And It was only through their excellence assistance and good suggestions that I have been able to complete this project.

Content Chapter No. 1. 2. 3.

4. Acknowledgment List of tables List of figures Introduction 1.1 History of Mutual Fund industry 1.2 Introduction of Mutual Fund Benefits of Mutual Fund Behind the Mutual Fund Principle of Mutual fund Classification of Mutual Fund Importance of Mutual Fund 27 28 29 31 31 33 33 36 40-59 61 62 62 64 65 5 5 13

Page Particulars No.

1.3 Need of the study 1.4 Objective of the study 1.5 Scope of the study 5. Profile of the HSBC Mutual Fund 2.1 History of HSBC Mutual Fund 2.2 HSBC Mutual Fund in India 2.3 Overview of HSBC Mutual Fund 6. 7. 8. 9. 10. 11. 12. Research Methodology Analysis and interpretation Findings Limitations Suggestions Bibliography References

13.

Annexure (Graphs, tables etc)

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LIST OF TABLE
LIST OF TABLE Table No. Table No1.1 Table No 1.2 Table No 1.3 Table No 1.4 Table No 1.5 Table No 1.6 Table No 1.7 Table No 1.8 Table No 1.9 Table No 1.10 Table No 1.12 Table No 1.13 Title of the Table Age of the investors Profession of the investors Income of the investors Amount invest in Mutual Fund Preference of selecting Mutual Fund Company Types of scheme selected by investors Investment in different type of fund Investors knowledge towards Mutual Fund Investment Analysis Portfolio Analysis Preference of investors towards SIP Preferred of option by investors for the investment Table No 1.14 Ranking the objective of the scheme Page No.

Table No 1.15 Table No 1.16

Level of Satisfaction

LIST OF FIGURES
LIST OF FIGGURES Figure No. Figure No 1.1 Figure No1.2 Figure No1.3 Figure No1.4 Figure No1.5 Figure No1.6 Figure No1.7 Figure No1.8 Figure No1.9 Figure No1.10 Figure No1.12 Figure No1.13 Title of the Figure Age of the investors Profession of the investors Income of the investors Amount invest in Mutual Fund Preference of selecting Mutual Fund Company Types of scheme selected by investors Investment in different type of fund Investors knowledge towards Mutual Fund Investment Analysis Portfolio Analysis Preference of investors towards SIP Preferred of option by investors for the investment Figure No1.14 Ranking the objective of the scheme Page No.

Figure No1.15 Figure No1.16

Level of Satisfaction

CHAPTER I INTRODUCTION 1.1 HISTORY OF THE MUTUAL FUND INDUSTRY

MUTUAL FUNDS INDUSTRY IN INDIA The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry. In the past decade, Indian mutual fund industry had seen a dramatic improvement, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase, the Assets Under Management (AUM) was Rs. 67bn. The private sector entry to the fund family rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it reached the height of 1,540 bn. Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry. The mutual fund industry is a lot like the film star of the finance business. Though it is perhaps the smallest segment of the industry, it is also the most glamorous in that it is a young industry where there are changes in the rules of the game every day, and there are constant shifts and upheavals. The mutual fund is structured around a fairly simple concept, the mitigation of risk through the spreading of investments across multiple entities, which is achieved by the pooling of a number of small investments into a large bucket. Yet it has been the subject of perhaps the most elaborate and prolonged regulatory effort in the history of the country. The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it

is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling. Mutual funds are an excellent way to invest in stocks, bonds and other securities. They are a good choice of investment because:

They are managed by professional money managers, so most of the investment research is done for you. (Most investors dont have the time or know-how to do all the necessary research.)

You diversify your investment risk by owning shares in a mutual fund, instead of buying individual stocks or bonds directly.

Transaction costs are often lower than what you would pay if you invested in individual securities (the mutual fund buys and sells large amounts of securities at a time).For those who are not adept at understanding the stock market, the task of generating superior returns at similar levels of risk is arduous to say the least. This is where Mutual Funds come into picture.

Mutual Funds are essentially investment vehicles where people with similar investment objective come together to pool their money and then invest accordingly. Each unit of any scheme represents the proportion of pool owned by the unit holder (investor). Appreciation or reduction in value of investments is reflected in net asset value (NAV) of the concerned scheme, which is declared by the fund from time to time. Mutual fund schemes are managed by respective Asset Management Companies (AMC). Different business groups/ financial institutions/ banks have sponsored these AMCs, either alone or in collaboration with reputed international firms. Several international funds like Alliance and Templeton are also operating independently in India. Many more international Mutual Fund giants are expected to come into Indian markets in the near future. The Evolution The formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in the year 1963. The primary objective at that time was to attract the small investors and it was made possible through the collective efforts of the Government of India and the Reserve Bank of

India. The history of mutual fund industry in India can be better understood divided into following phases:

Phase 1. Establishment and Growth of Unit Trust of India - 1964-87 Unit Trust of India enjoyed complete monopoly when it was established in the year 1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and it continued to operate under the regulatory control of the RBI until the two were de-linked in 1978 and the entire control was transferred in the hands of Industrial Development Bank of India (IDBI). UTI launched its first scheme in 1964, named as Unit Scheme 1964 (US-64), which attracted the largest number of investors in any single investment scheme over the years. UTI launched more innovative schemes in 1970s and 80s to suit the needs of different investors. It launched ULIP in 1971, six more schemes between 1981-84, Children's Gift Growth Fund and India Fund (India's first offshore fund) in 1986, Mastershare (Inida's first equity diversified scheme) in 1987 and Monthly Income Schemes (offering assured returns) during 1990s. By the end of 1987, UTI's assets under management grew ten times to Rs 6700 crores. Phase II. Entry of Public Sector Funds - 1987-1993 The Indian mutual fund industry witnessed a number of public sector players entering the market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of India became the first non-UTI mutual fund in India. SBI Mutual Fund was later followed by Canbank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets under management of the industry increased seven times to Rs. 47,004 crores. However, UTI remained to be the leader with about 80% market share. 1992-93

Amount

Assets Under

Mobilization as % of

10

Mobilized
UTI 11,057

Management
38,247

gross Domestic Savings

5.2%

Public Sector

1,964

8,757

0.9%

Total

13,021

47,004

6.1%

Phase III. Emergence of Private Sector Funds - 1993-96 The permission given to private sector funds including foreign fund management companies (most of them entering through joint ventures with Indian promoters) to enter the mutal fund industry in 1993, provided a wide range of choice to investors and more competition in the industry. Private funds introduced innovative products, investment techniques and investorservicing technology. By 1994-95, about 11 private sector funds had launched their schemes. Phase IV. Growth and SEBI Regulation - 1996-2004 The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after the year 1996.The mobilisation of funds and the number of players operating in the industry reached new heights as investors started showing more interest in mutual funds.

Investors' interests were safeguarded by SEBI and the Government offered tax benefits to the investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced by SEBI that set uniform standards for all mutual funds in India. The Union Budget in 1999 exempted all dividend incomes in the hands of investors from income tax. Various Investor Awareness Programmes were launched during this phase, both by SEBI and AMFI, with an objective to educate investors and make them informed about the mutual fund industry. In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal status as a trust formed by an Act of Parliament. The primary objective behind this was to bring all mutual fund players on the same level.

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UTI was re-organised into two parts: 1. The Specified Undertaking, 2. The UTI Mutual Fund Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past schemes (like US-64,Assured Return Schemes) are being gradually wound up. However, UTI Mutual Fund is still the largest player in the industry. In 1999, there was a significant growth in mobilisation of funds from investors and assets under management which is supported by the following data: GROSS FUND MOBILISATION (RS. CRORES) PUBLIC SECTOR 1,732 4,039 6,192 13,613 22,923 7,259* 68,558 1,03,246 PRIVATE SECTOR 7,966 42,173 74,352 1,46,267 2,20,551 58,435 5,21,632 7,36,416

FROM

TO

UTI

TOTAL

01-April-98 01-April-99 01-April-00 01-April-01 01-April-02 01-Feb.-03 01-April-03 01-April-04

31-March-99 31-March-00 31-March-01 31-March-02 31-Jan-03 31-March-03 31-March-04 31-March-05

11,679 13,536 12,413 4,643 5,505 * -

21,377 59,748 92,957 1,64,523 2,48,979 65,694 5,90,190 8,39,662

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01-April-05

31-March-06

1,83,446

9,14,712

10,98,158

ASSETS UNDER MANAGEMENT (RS. CRORES) AS ON UTI PUBLIC SECTOR PRIVATE SECTOR TOTAL

31-March-99

53,320

8,292

6,860

68,472

GROWTH IN ASSETS UNDER MANAGEMENT

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Phase V. Growth and Consolidation - 2004 Onwards The industry has also witnessed several mergers and acquisitions recently, examples of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international mutual fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing phase of growth of the industry through consolidation and entry of new international and private sector players. Indian mutual fund industry reached Rs 1,50,537 crore by March 2004. It is estimated that by 2010 March-end, the total assets of all scheduled commercial banks should be Rs 40,90,000 crore. The annual composite rate of growth is expected 13.4% during the rest of the decade. In the last 5 years there is an annual growth rate of 9%. According to the current growth rate, by year 2010, Mutual fund India assets will be double

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1.2 INTRODUCTION OF MUTUAL FUND Concept 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, debentures and other securities. The income earned through these investments and the capital appreciation 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:

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Mutual Fund Operation Flow Chart

The simplest mutual funds definition is that Mutual funds are investment product that operates on the principle of strength in numbers. They collect money from a large group of investors. Pull it together and invest in a various securities, in line with their objective. Individuals are then able to invest small amounts of money into the fund for making a reasonable profit. There are an incredibly large number of mutual funds. While some mutual funds aim to produce short term, high yield profits, others look for the long term profit. Mutual funds are seemingly the easiest and least stressful way to invest in the stock market. Quite a large amount of new money has been put into mutual funds during the past few years. But that is what any successful investor attempts to do, and anyone with a similar approach can be expected to make the same earnings.

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The benefits on offer are many with good post-tax returns and reasonable safety being the hallmark that we normally associate with them. Some of the other major benefits of investing in them are:

Benefits of Mutual Fund.

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, sector funds ,growth funds, income funds and many others that cater to the different needs of the investor. The availability of these options makes them a 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

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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. The only pertinent factor here is that the fund has to be selected keeping the risk profile of the investor in mind because the products listed above have different risks associated with them. So, while equity funds are a good bet for a long term, they may not find favour with corporates or High Net worth Individuals (HNIs) who have short-term needs. 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 dont 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. Potential of Returns Returns in the mutual funds are generally better than any other option in any other avenue over a reasonable period of time. People can pick their investment horizon and stay put in the chosen fund for the duration. Equity funds can outperform most other investments over long periods by placing long-term calls on fundamentally good stocks. The debt funds too will outperform other options such as banks. Though they are affected by the interest rate risk in general, the returns generated are more as they pick securities with different duration that have different yields and so are able to increase the overall returns from the portfolio.

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 Liquidity Fixed deposits with companies or in banks are usually not withdrawn premature because there is a penal clause attached to it. The investors can withdraw or redeem money at the Net Asset Value related prices in the open-end schemes. In closed-end schemes, the units can be transacted at the prevailing market price on a stock exchange. Mutual funds also provide the facility of direct repurchase at NAV related prices. The market prices of these schemes are dependent on the NAVs of funds and may trade at more than NAV (known as Premium) or less than NAV (known as Discount) depending on the expected future trend of NAV which in turn is linked to general market conditions. Bullish market may result in schemes trading at Premium while in bearish markets the funds usually trade at Discount. This means that the money can be withdrawn anytime, without much reduction in yield. Some mutual funds however, charge exit loads for withdrawal within a period linked to Well Regulated 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. This is unlike any other investment option in India where the investor knows nothing as nothing is disclosed. Flexible, Affordable and a Low Cost affair

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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. It all depends really on the overall investment climate and the sectors in which funds are flowing in. Diversification is definitely a good approach when it comes to successful investing by a reasonable investor. But with mutual funds, there is that the controllers may over-diversify. Diversification minimizes the inherent risks of stock trading by spreading out the capital over many stocks. But over-diversification is again a bad thing. Volatility is a measurement of the change in price (fluctuations) over a given time period. It is usually expressed as a percentage and computed as the annualized standard deviation of the percentage change in daily price. The more volatile a stock or market, the more money an investor can gain (or lose!) in a short time. In referring to mutual funds, volatility (Standard Deviation) is the measure of the degree to which a fund's return varies on a day-to-day or month-to-month basis. Tax benefits on Mutual Funds 1) 100% Income Tax exemption on all Mutual Fund dividends 2) Equity Funds - Short term capital gains is taxed at 15%. Long term capital gains is not applicable. 3)Debt Funds - Short term capital gains is taxed as per the slab rates applicable to you. Long term capital gains tax to be lower of - 10% on the capital gains without factoring indexation benefit and 20% on the capital gains after factoring indexation benefit.

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3) Open-end funds with equity exposure of more than 65% (Revised from 50% to 65% in Budget 2006) are exempt from the payment of dividend tax for a period of 3 years from 1999-2000.

The researcher has made a study of the preference and satisfaction level of customer towards Mutual Funds and has analyzed the relevance of different publications and information provided to investors. The research was conducted with 100 samples and was restricted to the town Patna city which is in the Bihar.

Behind Mutual Fund.

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A mutual fund is the sum total of many parts, each of which is designed to perform a specific function. Sebi, the market regulator, has clearly outlined the role and responsibility of each entity.

Mutual Fund AMC Custodian

Sponsor What a promoter is to accompany ,a sponsor is to mutual fund. The sponsor initiate the idea to set up a mutual fund. It could be a financial services company, a bank or a financial institution. It could do it alone or through a joint venture. In order to run a mutual fund in India, the sponsor has obtain a license from Sebi. For this it h to satisfied ascertain condition such as capital and profit, track record (at least five year financial service), default free dealing and general reputation for fairness. Assts Management Company(AMC) An AMC is the legal entity formed by sponsor to run a mutual fund .it is the AMC that employ fund manager and analysts, and other personal. It handle the all operational matters of a mutual fund from launching scheme to managing them to interacting with investors. Trustees Trustees are as like a internal regulators in mutual fund, and their job is to protect the interest of unit holders .Trustees are appoint by sponsors, and can be either individual or corporate body . in order to insure that they are impartial and fair ,sebi rule mandate that at least the two third party

Trustees Resistrar

Sponsors

22

of the trustees be independent, that is not have any association with the sponsor. Custodian A custodian handles the investment back office of a mutual fund. Its responsibility include receipt and delivery of securities, collation of income ,distribution of dividend and segregation of assets of scheme. For ex JP Morgan is the custodian of HSBC Mutual fund Registrar Registrar also known as transfer agent, handle all investor related service ,this include issuing and redeeming unit ,sending fact sheet and annual report.

Principle of Mutual Fund

.

Open- ended/Close-ended schemes

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1) Open-Ended schemes At any time during the scheme period, investors can enter and exit the fund scheme (by buying/ selling fund units) at its NAV (net of any load charge). Increasingly, AMCs are issuing mostly open-ended funds. 2) Close-Ended schemes Redemption can take place only after the period of the scheme is over. However, close-ended funds are listed on the stock exchanges and investors can buy/ sell units in the secondary market (there is no load). Unit A unit is the currency of a fund. What share is to a company ,a unit is to be a found .Mutual Fund issue units against investors investment. Net Asset Value or NAV NAV is the total asset value (net of expenses) per unit of the fund and is calculated by the AMC at the end of every business day. How is NAV calculated? The value of all the securities in the portfolio in calculated daily. From this, all expenses are deducted and the resultant value divided by the number of units in the fund is the funds NAV. Expense Ratio AMCs charge an annual fee, or expense ratio that covers administrative expenses, salaries, advertising expenses, brokerage fee, etc. A 1.5% expense ratio means the AMC charges Rs1.50 for every Rs100 in assets under management. A fund's expense ratio is typically to the size of the funds under management and not to the returns earned. Normally, the costs of running a fund grow slower than the growth in the fund size - so, the more assets in the fund, the lower should be its expense ratio. Load Some AMCs have sales charges, or loads, on their funds (entry load and/or exit load) to compensate for distribution costs. Funds that can be purchased without a sales charge are called no-load funds Redemption
Investors can sell their funds, partly or fully ,whenever you want. Although it is a sle from any point of time

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Classification of Mutual Fund/scheme.

Open-ended fund/scheme

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An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. The key feature of open-end schemes is liquidity. Close-ended fund/scheme A close-ended fund or scheme has a stipulated maturity period eg five and seven years. The fund is open for subscription only during a specified period at the time of launch of the scheme. 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 the units 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 ie either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis. Categorization by investment objective A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows:

Growth/Equity oriented schemes The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

Income/Debt oriented scheme The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes.

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These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations. Balanced fund The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60 per cent in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds. Money Market or Liquid fund These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. Gilt fund These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes. Index funds Index funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc These schemes invest in the securities in the same weightage comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges.

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 Sector specific funds/schemes These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. Eg 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. They may also seek advice of an expert.

Tax saving schemes These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues. Eg Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest pre-dominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme. Load or no-load fund A load fund is one that charges a percentage of NAV for exit. That is, each time one sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing and distribution expenses. A no-load fund is one that does not charge for exit. It means the investors can exit the fund/scheme at no additional charges are payable on sale of units. In accordance with the SEBI circular no. SEBI/IMD/CIR No.4/168230/09 dated June 30, 2009, no entry load will be charged for purchase / additional purchase / switch-in accepted by the Fund with effect from August 1, 2009. Similarly, no entry load will be charged with respect to applications for registrations under Systematic Investment Plan/ Systematic Transfer Plan / Systematic Investment Plan Plus accepted by the Fund with effect from August 1, 2009.

Assured return scheme Assured return schemes are those schemes that assure a specific return to the unitholders irrespective of performance of the scheme. A scheme cannot promise returns unless such returns are fully guaranteed by the sponsor or AMC and this is required to be disclosed in the offer document.

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Investors should carefully read the offer document whether return is assured for the entire period of the scheme or only for a certain period. Some schemes assure returns one year at a time and they review and change it at the beginning of the next year.

Importance of Mutual Funds.

Channelizing saving for investment. Offering wide portfolio. Providing better yield.

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 Rendering experience investment at low cost. Providing research service. Offering tax benefits. Providing greater affordability. Simplified record keeping. Promoting industrials development.

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NEED OF THE STUDY

TO study the investors intention with regard to the product in Mutual Fund and their feature. To study awareness level of customer. To study preference and satisfaction level of investors. To apprehend Mutual Fund in the market. To analyze how it benefited to investors with the awareness that is increasing day by day regarding investing in secondary market and speculation, the comfort and flexibility the customers seeking, there is a definite requirement to study, in the fast growing competitive market scenario it is a always required to have an idea of change that are taking place in the market from time to time. Without which one cannot serve their customer properly.

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1.2 OBJECTIVES OF THE STUDY PRIMARY OBJECTIVES: Find out the preference of customers towards mutual Funds. Find out the satisfaction level of customer towards HSBC mutual Fund\ Find out the investors knowledge towards mutual fund. Find out the proportion of various schemes and fund invested in HSBC mutual Funds.

SECONDARY OBJECTIVE: Find out the main objective of investors, for which they invest their money in mutual fund.

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1.3 SCOPE OF THE STUDY The research study undertaken does not probe too much about whether the respondents have a very fine insight into mutual funds. The research involves only a general study related to the preference and satisfaction level of investors towards mutual funds. The research would reveal results regarding the preference and satisfaction level of various investors towards mutual funds and thus in turn helps the organization to identify the preference and satisfaction level of various investors and to improve the marketing of mutual funds. The study has helped the researcher to gain real time experience by interacting with the investors and has helped to analyse The preference and satisfaction level of the investors towards Mutual Funds. The study will help the concern to work on the areas of importance for further planning. The study has been done with a motive to change the preference of the investors and also satisfy the investors and help them gain more knowledge on their investment.

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Chapter 2 Profile of the Organization

2.1Company history - A global pedigree

HSBC Global Asset Management draws upon a long history of serving clients by the HSBC Group, tracing its roots back to the foundation of the Hongkong and Shanghai Banking Corporation in 1865. The HSBC Group has identified asset management as a key constituent of the HSBC Groups wealth management strategy and at HSBC Global Asset Management, we have been dedicated to managing assets on behalf of our clients for more than 30 years. In 1994 the HSBC Group recognised the increasingly global nature of financial markets would create the need for a credible global asset management organisation to ensure delivery of the best possible solutions for clients. In response, the separate regional asset management businesses of HSBC were unified to create a single powerful investment manager aimed at delivering global investment capabilities combined with significant local expertise. In 2001, following the integration of CCF and its investment businesses into HSBC, a new global strategy was launched for asset management. The strategy aimed to create a core proprietary global investment management business HSBC Asset Management, operating alongside a series of specialist investment businesses, namely: Sinopia for quantitative and structured products, HSBC Specialist Investments for property and infrastructure investments, HSBC Multimanager for best-in-class open architecture investments and HSBC Alternative Investments for single-manager hedge fund strategies. In 2004, following a strong period of growth in HSBCs investment businesses, a new strategy was announced for these businesses. The strategy was intended to position HSBC for market leadership in providing investment solutions that meet client needs and involved a reorganisation of HSBCs investment businesses including HSBC Asset Management and HSBC Investment Management, leading to the creation of HSBC Investments. In 2008, HSBC Investments was renamed to HSBC Global Asset Management. The name change was to more closely align it with Global Banking and Markets (the new name for Corporate, Investment Banking and Markets).

34

A concise history
1973 - HSBC forms Hong Kong-based Wardley as a wholly owned merchant banking subsidiary 1986 - The European arm of HSBC Asset Management is conceived with the purchase of James Capel, a leading and well established international securities company The addition of New York-based Marinvest establishes the US arm of HSBC Asset Management 1992 - Consolidation in Europe with the acquisition of the Midland Bank Group 1994 - Regional companies are brought together under the name HSBC Asset Management, a single investment manager offering global investment capability combined with significant local expertise 2000 - HSBC Group purchases CCF Bank, France - CCF Capital Management in Paris joins HSBC Asset Management 2001 - The market for asset management solutions has grown rapidly and investors requirements have become more sophisticated. In response to this, the asset management business of HSBC was reorganised at the end of 2001 to provide a full range of sophisticated services under the name Asset Management Services, comprising the core business, HSBC Asset Management and several specialist companies offering complementary investment management services In August, HSBC Asset Management completed its acquisition of China Securities Investment Trust Corporation, Taiwan's premier asset management company HSBC Asset Management (India) Private Limited is incorporated in December 2001 2002 - New investment and marketing office established in India. Cooperation with HSBC Trinkaus Capital Management and its parent HSBC Trinkaus & Burkhardt HSBC Asset Management (India) Private Limited , the Investment Manager to HSBC Mutual Fund launches its first four schemes in December 2002 2003 - Integration of Bital's fund management business in Mexico following its purchase by HSBC

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 2004 - Integration and development of investment management activity in Bermuda following the acquisition of Bank of Bermuda 2004 - On 1 December HSBC announces a reorganisation of its investment management businesses as part of a new strategy designed to drive further growth 2005 - HSBC Asset Management is replaced by HSBC Investments and HSBC Halbis Partners during 2005 (subject to local legal and regulatory approvals in all jurisdictions) 2006 - HSBC receives approval for joint venture fund management company in China. HSBC Halbis Partners is renamed Halbis Capital Management 2008 - HSBC Investments is renamed to HSBC Global Asset Management (subject to local legal and regulatory approvals in all jurisdictions)

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2.2HSBC Global Asset Management in India

HSBC Asset Management (India) Private Limited is the Investment Manager to HSBC Mutual Fund, set up locally by the HSBC Group. HSBC Mutual Fund is the brand name adopted by HSBC Asset Management (India) Private Limited. The business is working on ambitious plans to position itself as one of the leading Private Sector Fund Managers in the Indian financial market - one of the most promising markets in Asia. It also aims to expand its customer base by extending its product range to include a wide variety of investment products and enhance its reputation in India of being a provider of international quality investment products and service

2.3HSBC overview
The HSBC Group is one of the largest banking and financial services organisations in the world. The Group has around 8,000 offices in 87 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa, serves over 100 million customers and has assets of USD 2,418 billion as on 30 June 2010. Important information Mutual Fund Setup Date Incorporation Date Sponsor Trustee Chairman CEO / MD HSBC Mutual Fund May-27-2002 Dec-12-2001 HSBC Securities and Capital Markets (India) Private Limited Board of Trustees, HSBC Mutual Fund Naina Lal Kidwai Puneet Chaddha

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CIO Compliance Officer Investor Service Officer Assets Managed Other information Auditors

Tushar Pradhan Denny Thomas N.A Rs. 4855.36 crore (Jun-30-2011)

HSBC Asset Mgmt. (I) Pvt. Ltd - BSR & Co., HSBC MF - Price Waterhouse JP Morgan Chase Bank Computer Age Management Services (P) Ltd 314, D N Road, Fort, Mumbai 400 001 hsbcmf@hsbc.co.in

Custodians Registrars Address E-mail

Different benefits No. of schemes No. of schemes including options Equity Schemes Debt Schemes Debt Schemes Equity & Debt Money Market Gilt Fund 22 84 16 50 11 0 0 3

Fund Managers Ruchir Parekh , Aditya Khemani , Jitendra Sriram, Kedar Karnik , Niren Parekh , Sanjay Shah , Shailendra Jhingan .

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HSBC Mutual Fund product details

Investment needs of an individual vary over time and depend on his/her investment objectives and financial goals. Defining your investment objectives and identifying financial goals is the key to financial security and wealth. Once investment objectives have been identified, you now need to plan meticulously to achieve them. Investment experts around the world advise instruments like equity funds and stocks for long-term (more than 5 years), income funds for medium-term and liquid funds for short-term needs.

The investment matrix above depicts a broad variety of available investment options in mutual funds. These are categorised by risk/return levels. Those at the top provide for a greater opportunity for long-term capital growth with a higher risk level while those at the bottom take

39

care of current income and conservation of capital with a lower risk level. HSBC Mutual Fund offers products at both ends to cater to your individual needs.

Equity Product
HSBC Equity Fund HSBC India Opportunities Fund

HSBC Midcap Equity Fund HSBC Progressive Themes Fund

HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Small Cap Fund HSBC Brazil Fund

Debt Product
HSBC MIP

HSBC Gilt Fund

HSBC Income Fund HSBC Floating Rate Fund HSBC Cash Fund HSBC Fixed Term Series HSBC Ultra Short Term Bond Fund HSBC Flexi Debt Fund

Product Add-on HSBC Systematic Investment Plan (HSBC SIP)

HSBC Systematic Transfer Plan (HSBC STP)

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HSBC India OpportunitiesFund (HIOF), EQUITY FUND

The HSBC India Opportunities Fund an actively managed, flexi-cap equity fund that invests in an assortment of large, mid and small cap stocks to suit every market condition. While its primarily an equity fund, it offers you the flexibility to invest in debt markets (in case the fund manager considers equity markets to be unfavourable).

Investment objective
Seeks long term capital growth through investments across all market capitalisations, including small, mid and large cap stocks. It aims to be predominantly invested in equity and equity related securities. However it could move a significant portion of its assets towards fixed income securities if the fund manager becomes negative on equity markets.

NAV (/ Unit) Allotment Date Average AUM (in crores) Benchmark Index Min. Investment Fund Manager Overseas Fund Manager Exit Load (including SIP/STP Systematic investment plan

34.8331 24 Feb, 2004 177.01 BSE 500 Amount (`) 10,000 Jitendra Sriram Niren Parekh 1% - if redeemed/ switched out within 1 year from date of investment; otherwise Nil Monthly/Quarterly plan Monthly - a minimum of 12 cheques of Rs 1,000 each Quarterly - a minimum of 4 cheques of Rs 3,000 each

Assets allocation
65-100 per cent equity and equity related securities, 0-35 per cent money market instruments (including cash, money at call).

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Assets Allocation(%) Equity 88.64

Sectors

Debt 7.56

Cash & Equivalent 3.80

Top 10 Sector of (HIOF)

Top 10 Sector
Banks Software 27% 17% 11% 9% 5% 5% 5% 7% 7% Auto Ancillaries Petrolium Product Finance Construction Consumer Non Durables Industrial Capital Goods Oil Telecom-Service Others

3% 4%

Absolute Returns (in %)

Year 2011 2010 2009 2008 2007 2006 Qtr 1 -4.8 -1.8 -3.6 -30.6 -10.5 18.8 Qtr 2 -0.6 2.2 35.1 -9.2 20.9 -9.5 Qtr 3 13.9 13.9 -6 8.2 13.8 Qtr 4 -1.1 4.3 -20.7 29.4 20.5 Annual 14.6 57.9 -55 48.4 51.4

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HSBC Income Fund (HIF), DEBT FUND

HSBC Income Fund (HIF) seeks to generate regular returns by investing in bonds, debentures, government securities and short-term instruments like commercial papers, reports etc. If you have a time horizon greater than a year and seek regular returns, you can invest in the Investment Plan of HSBC Income Fund. Alternatively if your time horizon is one to six months, we have a Short Term Plan which you can invest in.

Investment objective
Aims to provide reasonable income through a diversified portfolio of fixed income securities. The AMC's view of interest rate trends and the nature of the plans will be reflected in the type and maturities of securities in which Short Term and Investment Plans are invested.

Fund Type Plans

Open-Ended Short Term Plan - Regular, Institutional and Institutional Plus Investment Plan - Regular and Institutional Regular, Institutional and Institutional Plus Options with Dividend (Payout/Reinvestment) and Growth for Short Term Plan and Investment Plan Short Term Plan - Regular - Rs 100,000 Short Term Plan - Institutional - Rs 1 crores Short Term Plan - Institutional Plus - Rs 5 crore Investment Plan - Regular - Rs 10,000 Investment Plan - Institutional - Rs 5,000,000 223.64 (Jun-30-2011) Short Term Plan Entry Load (Nil) Exit Load- 0.50% (if redeemed/switched out within 6 months from date of allotment, including SIP/STP). Investment Plan Entry Load (Nil)

Options

Minimum application amount

Asset Size (Rs cr) Load structure (including SIP/STP where applicable)

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Exit Load- 0.5% in Regular and Institutional Option,( if redeemed/switched out within 6 months from date of investments.)

Systematic investment plan

Monthly/Quarterly plan Monthly - a minimum of 12 cheques of RS 1,000 each Quarterly - a minimum of 4 cheques of RS 3,000 each

Performance
Absolute Returns (in %) Year 2011 2010 2009 2008 2007 2006 Qtr 1 2.2 0.8 2.3 1.9 1.1 Qtr 2 2.0 1.0 2.2 2.3 2.7 1.6 Qtr 3 0.8 0.7 2.1 2.5 1.8 Qtr 4 1.4 0.9 2.2 2.1 1.3 Annual 4.3 6.7 9.0 7.6 6.0

World-class investment solutions backed by the strength of the HSBC Group HSBC Global Asset Management in India are part of the core global investment management business of the HSBC Group. With dedicated investment professionals across Europe, Africa, Asia-Pacific and the Americas, HSBC Global Asset Management has strong global investment capabilities that are delivered to clients locally. For institutions, corporates and financial intermediaries, a comprehensive range of investment management solutions are offered. For high net worth individuals, HSBC Global Asset Management works with relationship managers to provide bespoke portfolio management services. We have been dedicated to managing global assets on behalf of clients for more than 25 years. As far back as 1994, it was recognised that in an increasingly global economy, the internationalisation of assets would need a credible global organisation to ensure that the best possible solutions could be delivered to clients. The Group responded by uniting its separate regional businesses under the HSBC banner to create a single powerful investment manager aimed at delivering global investment capability combined with significant local expertise.

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HSBC Global Asset Management has funds under management of USD416.3 billion as on 30 September 2009.

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CHAPTER 3 RESEARCH METHODOLOGY Research is an original contribution to the existing stock of knowledge making for its advancement. It is the pursuit of truth with the help of study, observation, comparison and experiment. In short, the search for knowledge through objective and systematic method of finding solution to a problem is research. A research method refers to the methods the researchers use in performing research operations. Research Methodology is a way to systematically solve the research problem. By research methodology not only the research methods are considered but also the logic behind the methods used in the context of the research study and explanations are given on why a particular technique is used. The researcher has discussed the following: 3.1 Research Design 3.2 Sampling Design 3.2.1 Population 3.2.2 Sampling Technique 3.2.3 Sampling Size 3.2.4 Sample Unit 3.2.5 Sources Of Data 3.2.6 Statistical Tools

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3.1 RESEARCH DESIGN The research design that is adopted in this study is descriptive design. Descriptive research is used to obtain information concerning the current status of the phenomena to describe, "What exists" with respect to variables or conditions in a situation. The focus of this study was on self-reported decisions made by various investors regarding the investment patterns in mutual funds. Thus it involves Statement of the problem, Identification of information needed to solve the problem, Selection or development of instruments for gathering the information, Identification of target population and determination of sampling procedure, Design of procedure for information collection, Collection of information, Analysis of information, Generalizations and/or predictions.

3.2 SAMPLING DESIGN

3.2.1POPULATION: The population for this study is investors of mutual funds in Patna Bihar state. 3.2.2SAMPLING TECHNIQUE: Judgmental sampling is more commonly known as purposive sampling. In this type of sampling, subjects are chosen to be part of the sample with a specific purpose in mind. With judgmental sampling, the researcher believes that some subjects are more fit for the research compared to other individuals. This is the reason why they are purposively chosen as subjects. The sample frame for this study is the companys database of Patna city. From the obtained database cheque number was selected as the primary key. Then

47

primary key is compared with random numbers and if the primary key and random numbers are matching those numbers are picked up. Such picked up random numbers were the sample respondents from whom the questionnaires were collected. 3.2.3SAMPLE SIZE: The sample size for this study is 100 investors of UTI mutual funds in Coonoor city out of entire population 2000 which consists of 5% of the population. Random numbers were generated and using random number tables 100 investors were selected. 3.2.4SAMPLE UNIT:
Individuals, families, corporates, partnership firms and sole proprietors were the target respondent groups from which the data were collected.

3.2.5 SOURCES OF DATA: Data were collected through both primary and secondary data sources.Primary data was collected through questionnaires. The research was done in the form of direct personal interviews. 4.2.5.1 PRIMARY DATA; A primary data is a data, which is collected afresh and for the first time, and thus happen to be original in character. The primary data with the help of questionnaire were collected from various investors. 4.2.5.1.1 QUESTIONNAIRE DESIGN Proper care has been taken to ensure that the information needed match the objectives, which in turn match the data collected through the questionnaire. The basic cardinal rules of Questionnaire design like using simple and clear words, the logical and sequential arrangement of questions has been taken care of.

48

4.2.5.2 SECONDARY DATA Secondary data consist of information that already exists somewhere, have been collected. Secondary data is collected from company websites, other websites, company fact sheets, magazines and brochures. 4.2.6 STATISTICAL TOOLS The statistical tools used for this analysis are:

Simple Percentage analysis: Percentages are calculated and in certain cases percentages along with cross tabulation has been calculated. Mean Score Values: Mean score values has been calculated for the different scales used to find the perception and satisfaction level of investors.

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CHAPTER 5 ANALYSIS AND INTERPRETATION The term analysis refers to the computation of certain measures along with searching for patterns of relationship that exist among data groups. Thus, in the process of analysis, relationships or differences supporting or conflicting with original or new hypotheses should be subjected to statistical tests of significance to determine with what validity data can be said to indicate any conclusions. Interpretation refers to the task of drawing inferences from the collected facts after an analytical and /or experimental study. The factors are analyzed under the following broad phases: PHASE I: Personal Factors PHASE II: Investment Factors PHASE I: Personal Factors: This phase includes the personal details of the investors. The factors considered are age, gender, and work status. PHASE II :Investment Factors:

50

In this particular phase the responses for the various investment related factors that have been considered in the questionnaire have been analysed. The investors preference and satisfaction related factors have been analysed in this phase.

PHASE I: PERSONAL FACTORS AGE OF THE INVESTORS The age of individual indirectly represents the amount of service the individual possesses. Normally individuals who are aged tend to be more mature in their thoughts and try to be committed in whatever work they do. As they have the experience they will be in a position to adjudge how the investment would help in the future.
TABLE 4.1 Age distribution of investors in Mutual Funds

Age 20-30 31-40 >41 Total

No of investors
12 33 45 90

Percentage
13 37 60 100

Chart 4.1

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Age distribution of Investors

70 60 No of Investors 50 40 30 20 10 0 20-30 31-40 Age in year >40 20

From the table it is found that almost 60% of the investors of Mutual Funds are above the age of 41 years, 37% of the investors belong to the age group of 31-40 years and only 13% belong to the age group of 20-30 years. Thus, there are more of above middle-aged investors who can easily follow the investment and the market movements.

GENDER OF INVESTORS A gender is defined as a set of perceived behavioral norms associated particularly with males or females, in a given social group or system. It is a focus of analysis in the social sciences and humanities. Gender role refers to the attitudes and behaviors that class a persons stereotypical identity. Gender has an influence on the mentality towards investing in Mutual funds as mutual funds involve risk. TABLE 4.2 GENDER DISTRIBUTION OF INVESTORS Gender Male No of Investors
61

Percentage
68

52

Female Total

29

32

90

100

There are about 68% of male investors, whereas only 32% of female investors invest in Mutual Funds.

Chart 4.2

Gender Of Investors

32%

Male 68% Female

PROFESSION OF INVESTORS

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The Qualification of investors is an important aspect related to Investments in Mutual Funds.

Table 4.3 PROFESSION STANDARD OF INVESTORS

Profession Student Employee Self Employed Total

No. of investors
9 45 36 90

Percentage
10 50 40 100

Nearly 10% of the investors are under student, whereas 50% of the investors are employees, 40% are self employees.
Chart No 4.3

Profession of Investors
50

No of Investors

45 40 35 30 25 20 15 10 5 0 Student Employed Self Employed Series 1

Profession

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INCOME OF INVESTORS The income level of investors is an important factor for investment, when an investor has sufficient income he will like to invest in many plans, as a measure to earn from the investment. Table 4.4 INCOME OF THE INVESTORS Income per month <15,000 15,000-50,000 >50,000 Total No of investors
10 60 20 90

Percentage
10 67 23 100

10% of investors have a income less than 15,000 per month, 67% of investors have a income between Rs.15,000 50,000 per month, 20% have a income of above 50,000 per month. Chart 4.4

70 60

Income of the investors

No of Investors

50 40 30 20 10 0 <15,000 15,000-50,000 >50,000

Series 2

Amount in Rupee

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Phase 2
AMOUNT INVESTED IN MUTUAL FUNDS Investors like to invest certain sum of money for future benefits. Such amount may be a small sum or a large sum according to the interest of the investors Table 4.5 AMOUNT OF MONEY INVESTED IN MUTUAL FUNDS Amount Invested <100000 >100000 Total No of investors
69 21 90

Percentage
76 24 100

Chart No 4.5

Amount invested by investor

24%

<1,00,000 76% >1,00,000

76% investors have invested less than Rs.100000 in Mutual funds whereas 24% have invested more than Rs.100000 in Mutual funds.

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REASONS FOR PREFERENCE OF SELECTING MUTUAL FUND COMPANY Investors select any mutual fund company for any specific reason ,it could be reputation ,provide good return ,expert advice or something else. Table 4.6 REASON FOR SELECTING MUTUAL FUND COMPANY
Factor Reputation Provide good return Expert advice Other Total No of investors 40 23 12 15 90 Percentage 45 26 12 17 100

Chart No 4.6

Reason for selecting MF Com.

45 40

No of investor

35 30 25 20 15 10 5 0 Reputation Provide good return Expert advice other Series 1

Reason

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Nearly 45% of investor select any mutual fund company because of reputation ,where as 26% of investor select because of provide good return ,12% of investors select of it for expert advice and remain 17% for other. TYPE OF SCHEMES SELECTED BY INVESTORS Mutual funds schemes are classified into two. Among which two of them open ended and close ended schemes are more popular in different mutual funds, depending on the maturity periods of the schemes. TABLE 4.7 TYPE OF SCHEMES SELECTED BY INVESTORS
Scheme selected Open ended Close ended No. of Investors 73 17 Percentage 81 19

Chart NO 4.7

Types of Schemes
19%

Open ended Close ended 81%

Most of the investors prefer an Open ended scheme which nears up to 81% whereas the rest 19% prefer only Close ended schemes.

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INVESTMENT IN DIFFERENT TYPES OF FUNDS A Mutual Fund Company has different types of funds in which one can invest. There are 7 main types of funds available in mutual fund industry. Such type of fund has its own benefits which are preferred by investors in accordance to such benefits. TABLE 4.8 INVESTMENT IN DIFFERENT TYPES OF FUNDS Type of funds No. of investors
Equity Income Index Debt Balanced Asset Liquid Total 30 12 9 7 10 9 13 90

Percentage
33 13 10 8 11 10 15 100

Investors invest mainly in Equity funds as shown in the above table as the numbers of investors are 30 in number. And the next preferred type of fund is the Liquid fund with a response from 13 investors, 12 investors have invested in income funds, 9 investors in index funds, 7 investors in debt funds,10 investors in balanced funds and 9 investors in assets funds. Chart No 4.8

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Fund invested by Investors

35 30 Nof Investors 25 20 15 10 5 0 Equity Income Index Debt Balanced Asset Different Funds Liquid Series 1

Investors knowledge towards mutual fund In the current scenario investors has full knowledge about mutual fund or not. Knowledge towards MF
Yes Not fully Not at all Total

No of Investors
59 31 0 90

Percentage
66 34 0 100

From the above table it is inferred that 66% of investors are aware towards Mutual Fund, while 34% are aware only to an extent not fully.

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Chart No 4.9

INvestor's knowladge towards MF

0% 34%

Yes 66% Not fully Not at all

INVESTMENT AND PORTFOLIO ANALYSIS An investment analysis is very important to an investment. Such analysis helps the investor how the performance of the investment is as necessary as an investment analysis, as the portfolio of the shares or stocks have a greater impact on the return from the investment.
TABLE 4.10 INVESTMENT AND PORTFOLIO ANALYSIS

Investment Analysis
Yes No Total

No. of Investors
31 59 90

Percentage
34 66 100

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Portfolio Analysis
Yes No Total

No. of investors
27 63 90

Chart No 4.10

Investment Analysis

34%

Yes 66% No

34% of investors make an Investment analysis and 27% make a Portfolio analysis.
Chart No 4.11

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Portfolio Analysis
30%

Yes 70% No

OPTIONS PREFERRED ON INVESTMENT Mutual Fund investments provide certain options for investment according to the schemes. UTI offers two options, growth option and dividend options which help investors to either let their investment grow with the fund or withdraw dividend as the investment matures.
TABLE 4.11 PREFERRED OPTIONS BY INVESTORS FOR THEIR INVESTMENT

Options preferred Growth Dividend Total

No. of investors
74 16 90

Percentage
82 18 100

81% of investors prefer their investment with a Growth option while the rest 18% prefer the Dividend option.

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Chart No4.12

Option prefered by investors

18%

Growth Dividend 82%

PREFERENCE OF INVESTORS TOWARDS SIP Systematic Investment Plan (SIP) is a smart way to invest in mutual funds. It is truly small on savings and big on returns. It doesnt demand lump sum investment. Hence SIPs are preferred by many investors now-a-days. TABLE 4.12 PREFERENCE OF INVESTORS TOWARDS SIP Preference of SIP Yes No Total No. of investors
34 56 90

Percentage
38 62 100

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From the above table it is inferred that 38% of investors prefer SIPs whereas 62% do not prefer them. Reasons For preference: All the investors have pointed out that Small investment amount is the main reason for the preference towards SIPs. Chart No12

Preference towards SIP

38%

62%

Yes No

PAYMENT OPTIONS PROVIDED TO INVESTORS Investors are generally provided with different payment options. With the developments in technology the payment options have also increased. These options help the investor make their payments on a timely basis in an efficient manner.
TABLE 4.12 PAYMENT OPTIONS PROVIDED TO INVESTORS

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Payment Options Direct Payment Cheque Internet Executives at door Total

No. of investors
14

Percentage
16 14

12 20 44 90 22 48 100

48% of investors prefer executives at the door for payments, while 20% prefer internet and 14% prefer direct payment option. Chart No 4.13

Payment option prefer by invesyors

50 45 40 35 30 25 20 15 10 5 0 Direct Payment Cheque Internet Executives at door

No of Investors

Series 1

Payment Option

RANKING THE OBJECTIVES OF THE SCHEMES

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Every scheme of the investment has its own objective. The investors would analyse the investment objective with the schemes objective and would then invest.
TABLE 4.23 RANKING THE OBJECTIVES OF THE SCHEMES Objectives Savings Tax benefits Portfolio Balanced risks Potential returns Total Weightage 345 292 230 313 320 Rank I IV V III II

The main objective that the investors consider for investment is Savings. The other objectives that are considered are Potential Returns, Balanced risk, Tax benefits and Portfolio.

Ranking the objective of the scheme

400 350

Total Weight

300 250 200 150 100 50 0 Savings Tax Benefits Portfolio Balanced Risk Potential Return Series 1

Objective

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LEVEL OF SATISFACTION The investors satisfaction in the fulfillment or gratification of a desire, need or appetite of the investment they have made. Only if investors are satisfied they would make an efficient investment and would continue to be loyal to the investment.
TABLE 4.24 LEVEL OF SATISFACTION

Level Of satisfaction Return earned

Extremely satisfied
13

Satisfied
25

Neutral
37

Unsatisfied
14

Extremely Unsatisfied
21

Timeliness in annual reports Timeliness in dealings

11 57

55 43 56 52 59 62 36 16 69 35 21 49 14

31 0 16 25 16 15 13 72 28 40 32 32 54

3 0 0 0 0 0 26 0 0 11 45 12 18

0 0 0 0 0 0 13 0 0 0 2 0 14

Rights of unitholders
28

Grievance handling
23

Information availability Options available Performance of the Fund Choice Of Schemes Payment Options

25 23 12 2 13

Tax Benefits
14

Risks
0

Diversification
7

Returns Potential
0

68

Liquidity
9 29 36 62 10 0 25 0 15

Expert Guidance
14

Expert Guidance Liquidity Returns Potential Diversification Risks Tax Benefits Payment Options Axis Title Choice Of Schemes Performance of the Fund Options available Information availability Grievance handling Rights of unitholders Timeliness in dealings Timeliness in annual reports Return earned 0 20 40 60 80 100

Extremely satisfied Satisfied Neutral Unsatisfied Extremely Unsatisfied

Axis Title

OVERALL MSV=3.565

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The satisfaction level for the timeliness in dealings, rights of unit holders, payment options, information availability and options available for the investment are high whereas the other factors are not very satisfactory.

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Chapter 5 Findings and Suggestion FINDINGS Majority of the investors are above 41 years. There are more male investors in Mutual Funds. Most of the investors have invested less than Rs.100000 in mutual funds. Majority of the investors are graduates. Returns earned on Mutual Funds are the cause for many investors to invest in Mutual Fund. Open-ended schemes are preferred more than the closed-ended schemes. Equity Funds are preferred more than the other schemes. It is clear that most of the investors do not make either investment analysis or Portfolio analysis. Awareness towards the risk related to the scheme and products is le It is clear that savings is the main reason for preference towards Mutual Funds. Most of the investors are provided with the option of executives at door for their payments. The overall satisfaction level of the investors is neutral as the overall mean score value is 3.57.

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SUGGESTIONS The investors should be given the option of attending investors education programme once in a month. The information about the products should be revealed exactly to the investors, and they should be advised on the risks attached to them. Programmes creating awareness towards the various products of Mutual Funds should be conducted especially in the Villages. Portfolio of the securities should be kept under check so as to increase the growth of funds, which in turn will increase the satisfaction of the investors. Providing proper reports revealing all the information related to the investment have to be sent to the investors regularly and this can change the general attitude towards mutual funds. The returns cannot be guaranteed by the concern but then the brand image can help the concern to overcome this problem. Investors can take their own steps in analyzing the market conditions and can be advised to make a portfolio and investment analysis on their investment. The investors should be given all the information regarding their investment and the benefits or the drawbacks of the investments.

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CONCLUSION In any Mutual Fund Industry investors awareness plays an important role. With the increasing number of Mutual Fund organisations, there is a need for every company to educate investors and the general public on various aspects concerned with the mutual fund investments which in turn reveals their attitude towards such investments. From the study on Investors attitude towards HSBC Mutual funds, it is found that the majorities of the investors prefers Mutual Funds for the returns and feel that it is a safe measure of investment. The investors select the schemes considering the returns earned from them. The preferred schemes and funds are the Equity schemes and Open ended funds. The investors are satisfied with their investment in HSBC Mutual Funds. The investors also feel that the annual reports and other publications of the concern help them analyse the performance of their investment. The organisation can educate its investors on the risk and return in order to make their investments more effective. The investors education programme can be conducted by the organization in order to educate the investors. The study has helped the researcher gain real time knowledge and has helped to use her analytical skills to analyse the preference and satisfaction level of the investors.

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6. LIMITATIONS OF THE STUDY

The project done is restricted to Mutual funds in Patna and its surroundings only. As the survey was pertaining to investment preference and satisfaction level of investors, biased information may restrict validity of inference possible. The study was constrained by limitations of time. The raw data was collected with the help of structured questionnaire technique. Therefore study is bounded by the limitation of this technique.

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BIBLIOGRAPHY BOOKS Outlook money book A lay man guide to mutual fund Ambika Prased Dash, Security Analysis and Portfolio Management, I.K.International Publishing House Pvt. Ltd., 2008 Bhalla V.K., Investment Management, S.Chand & Company Ltd., Eleventh Edition, 2009 Emmett J.Vaughan, Therese Vaughan, Fundamemtals of Risk and Insurance, Willey India Pvt. Ltd., Ninth Edition, 2009 Kothari C.R., Research Methodology-methods and Techniques, K.K Gupta for New Age International private ltd, 2006. Preeti Singh, Investment Management Security Analysis and Portfolio Management, Himalaya Publishing House, Eleventh Edition, 2006, Pp[. 1 Prasanna Chandra, Investment Analysis and Portfolio Management, TataMcGraw-Hill Publishing Company Limited, Third Edition, 2008

JOURNALS

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WEBSITES http://www.assetsmanagmenthsbc.com/ http://economictimes.indiatimes.com/Mutual_funds. http://www.moneycontrol.com http://www.amfiindia.com/navreport.aspx http://www.indiastudychannel.com/projects/666-A-STUDY-ON-MUTUAL-FUNDS-ININDIA.aspx http://www.scribd.com/doc/13246827/PROJECT-ON-MUTUAL-FUND-AKHILESHMISHRA

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