About Mutual Funds Lakshmi Sharma

A case study of consumers awareness towards Mutual fund in Bhilai Durg city
CHAPTER -1:- ABOUT MUTUAL FUNDS

1.1 What is a Mutual Fund?
A mutual fund is a common pool of money in to which investors with common investment objective place their contributions that are to be invested in accordance with the stated investment objective of the scheme. The investment manager would invest the money collected from the investor in to assets that are defined/ permitted by the stated objective of the scheme. For example, an equity fund would invest equity and equity related instruments and a debt fund would invest in bonds, debentures, gilts etc. Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Like all investments, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions.
With an objective to make the investors aware of functioning of mutual funds, an attempt has been made to provide information in question-answer format which may help the investors in taking investment decisions. Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in
RCET Page 1
A case study of consumers awareness towards Mutual fund in Bhilai Durg city the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders. The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.
1.2 Mutual Funds in India and role of SEBI in mutual funds industry .
Unit Trust of India was the first mutual fund set up in India in the year 1963. In early 1990s, Government allowed public sector banks and institutions to set up mutual funds. In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The objectives of SEBI are to protect the interest of investors in securities and to promote the development of and to regulate the securities market As far as mutual funds are concerned, SEBI formulates policies and regulate the mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of investors. All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of Regulations. There is no distinction in regulatory requirements for these
RCET
Page 2
A case study of consumers awareness towards Mutual fund in Bhilai Durg city mutual funds and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type. It may be mentioned here that Unit Trust of India (UTI) is not registered with SEBI as a mutual fund (as on January 15, 2002).
1.3 How is a mutual fund set up
A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset Management Company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unitholders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund. SEBI Regulations require that at least two thirds should not be associated with the sponsors. Also, 50% of the directors of AMC must be of the directors of trustee company or board of trustees must be independent i.e. they independent. All mutual funds are required to be registered with SEBI before they launch any scheme. However, Unit Trust of India (UTI) is not registered with SEBI (as on January 15, 2002).
1.4 Concept of Net Asset Value (NAV) of a scheme
RCET
Page 3
A case study of consumers awareness towards Mutual fund in Bhilai Durg city The performance of a particular scheme of a mutual fund is denoted by Net Asset Value(NAV). Mutual funds invest the money collected from the investors in securities markets. In simple words, Net Asset Value is the market value of the securities held by the scheme. Since market value of securities changes every day, NAV of a scheme also varies on day to day basis. The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. For example, if the market value of securities of a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per unit of the fund is Rs.20. NAV is required to be disclosed by the mutual funds on a regular basis - daily or weekly - depending on the type of scheme.
1.5 Types of mutual fund schemes

Schemes according to Maturity Period A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period.
1.51 Open-ended Fund/ Scheme
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.
RCET
Page 4
1.52Close-ended Fund/ Scheme
A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 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 i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.
1.6 Schemes according to 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: 1.61 Growth / Equity Oriented Scheme The aim of growth funds is to provide capital appreciation over the medium to longterm. 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
RCET Page 5
A case study of consumers awareness towards Mutual fund in Bhilai Durg city 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. 1.62 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. 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.
1.63 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% 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.
1.64 Money Market or Liquid Fund
RCET
Page 6
A case study of consumers awareness towards Mutual fund in Bhilai Durg city 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 interbank 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.
1.65 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. 1.66 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. 1.67 Sector specific funds/scheme
RCET
Page 7
A case study of consumers awareness towards Mutual fund in Bhilai Durg city These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert. 1.68 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. e.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest predominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme.
1.7 Concept of Load or no-load Fund A Load Fund is one that charges a percentage of NAV for entry or exit. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing and distribution expenses. Suppose the NAV per unit is Rs.10. If the entry as well as exit load charged is 1%, then the investors who buy would
RCET
Page 8
A case study of consumers awareness towards Mutual fund in Bhilai Durg city be required to pay Rs.10.10 and those who offer their units for repurchase to the mutual fund will get only Rs.9.90 per unit. The investors should take the loads into consideration while making investment as these affect their yields/returns. However, the investors should also consider the performance track record and service standards of the mutual fund which are more important. Efficient funds may give higher returns in spite of loads. A no-load fund is one that does not charge for entry or exit. It means the investors can enter the fund/scheme at NAV and no additional charges are payable on purchase or sale of units.
1.8 Know the performance of a mutual fund scheme The performance of a scheme is reflected in its net asset value (NAV) which is disclosed on daily basis in case of open-ended schemes and on weekly basis in case of close-ended schemes. The NAVs of mutual funds are required to be published in newspapers. The NAVs are also available on the web sites of mutual funds. All mutual funds are also required to put their NAVs on the web site of Association of Mutual Funds in India (AMFI) http://www.amfiindia.com/ and thus the investors can access NAVs of all mutual funds at one place. The mutual funds are also required to publish their performance in the form of half-yearly results which also include their returns/yields over a period of time i.e. last six months, 1 year, 3 years, 5 years and since inception of schemes. The mutual funds are also required to send annual report or abridged annual report to the unit holders at the Various studies on mutual fund schemes including yields of different schemes are being published by the end of the year financial newspapers on a
RCET
Page 9
A case study of consumers awareness towards Mutual fund in Bhilai Durg city weekly basis. Apart from these, many research agencies also publish research reports on performance of mutual funds including the ranking of various schemes in terms of their performance. Investors should study these reports and keep themselves informed about the .Investors can compare the performance of their schemes with those of other mutual funds under the same category. They can also compare the performance of equity oriented schemes with the benchmarks like BSE Sensitive Index, S&P CNX Nifty, etc. On the basis of performance of the mutual funds, the investors should decide when to enter or exit from a mutual fund scheme. 1.9 Benefits of Mutual Fund There are numerous benefits of investing in mutual funds and one of the key reasons for its phenomenal success in the developed markets like US and UK is the range of benefits they offer, which are unmatched by most other investment avenues. We have explained the key benefits in this section. The benefits have been broadly split into universal benefits, applicable to all schemes, and benefits applicable specifically to open-ended schemes.
1.91Universal Benefits 1.91-a Affordability A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. depending upon the investment objective of the scheme. An investor can buy in to a portfolio of equities,
RCET Page 10
A case study of consumers awareness towards Mutual fund in Bhilai Durg city which would otherwise be extremely expensive. Each unit holder thus gets an exposure to such portfolios with an investment as modest as Rs.500/-. This amount today would get you less than quarter of an Infosys share! Thus it would be affordable for an investor to build a portfolio of investments through a mutual fund rather than investing directly in the stock market. 1.91-b Diversification The nuclear weapon in your arsenal for your fight against Risk. It simply means that you must spread your investment across different securities (stocks, bonds, money market instruments, real estate, fixed deposits etc.) and different sectors (auto, textile, information technology etc.). This kind of a diversification may add to the stability of your returns, for example during one period of time equities might underperform but bonds and money market instruments might do well enough to offset the effect of a slump in the equity markets. Similarly the information technology sector might be faring poorly but the auto and textile sectors might do well and may protect your principal investment as well as help you meet your return objectives. 1.91-c Variety MFs offer a tremendous variety of schemes. This variety is beneficial in two ways: first, it offers different types of schemes to investors with different needs and risk appetites; secondly, it offers an opportunity to an investor to invest sums across a variety of schemes, both debt and equity. For example, an investor can invest his money in a Growth Fund (equity scheme) and Income Fund (debt scheme) depending on his risk
RCET
Page 11
A case study of consumers awareness towards Mutual fund in Bhilai Durg city appetite and thus create a balanced portfolio easily or simply just buy a Balanced Scheme. 1.91 d Professional Management Qualified investment professionals who seek to maximize returns and minimize risk monitor investor's money. When you buy in to a mutual fund, you are handing your money to an investment professional who has experience in making investment decisions. It is the Fund Manager's job to (a) find the best securities for the fund, given the fund's stated investment objectives; and (b) keep track of investments and changes in market conditions and adjust the mix of the portfolio, as and when required. 1.91-e Tax Benefits Any income distributed after March 31, 2002 will be subject to tax in the assessment of all Unit holders. However, as a measure of concession to Unit holders of open-ended equity-oriented funds, income distributions for the year ending March 31, 2003, will be taxed at a concessional rate of 10.5.In case of Individuals and Hindu Undivided Families a deduction up to Rs. 9,000 from the Total Income will be admissible in respect of income from investments specified in Section 80L, including income from Units of the Mutual Fund. Units of the schemes are not subject to Wealth-Tax and Gift-Tax. 1.91-f Regulations Securities Exchange Board of India (SEBI), the mutual funds regulator has clearly defined rules, which govern mutual funds. These rules relate to the formation, administration and management of mutual funds and also prescribe disclosure and
RCET
Page 12
A case study of consumers awareness towards Mutual fund in Bhilai Durg city accounting requirements. Such a high level of regulation seeks to protect the interest of investors.
1.92 Benefits of Open-ended Schemes 1.92-a Liquidity; -In open-ended mutual funds, you can redeem all or part of your units any time you wish. Some schemes do have a lock-in period where an investor cannot return the units until the completion of such a lock-in period. ]1.92 b ConvenienceAn investor can purchase or sell fund units directly from a fund, through a broker or a financial planner. The investor may opt for a Systematic Investment Plan (SIP) or a Systematic Withdrawal Advantage Plan (SWAP). In addition to this an investor receives account statements and portfolios of the schemes.
1.92-c Flexibility Mutual Funds offering multiple schemes allow investors to switch easily between various schemes. This flexibility gives the investor a convenient way to change the mix of his portfolio over time. 1.92 d Transparency Open-ended mutual funds disclose their Net Asset Value (NAV) daily and the entire portfolio monthly. This level of transparency, where the investor himself sees the
RCET Page 13
A case study of consumers awareness towards Mutual fund in Bhilai Durg city underlying assets bought with his money, is unmatched by any other financial instrument. Thus the investor is in the know of the quality of the portfolio and can invest further or redeem depending on the kind of the portfolio that has been constructed by the investment manager. 1.93 The structure consists of MFs
Fig 1.1 Structure of MFs 1.93-a Sponsor Sponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net worth of the Investment Managed and meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund.
RCET Page 14
A case study of consumers awareness towards Mutual fund in Bhilai Durg city 1.93 b Trust The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908. 1.93-c Trustee Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The main responsibility of the Trustee is to safeguard the interest of the unit holders and inter alia ensure that the AMC functions in the interest of investors and in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of the respective Schemes. At least 2/3rd directors of the Trustee are independent directors who are not associated with the Sponsor in any manner. 1.93 d Asset Management Company (AMC) The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset management company of the Mutual Fund. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner. The AMC must have a net worth of at least 10 crore at all times. 1.94-e Registrar and Transfer Agent The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund. The Registrar processes the application form, redemption requests
RCET Page 15
A case study of consumers awareness towards Mutual fund in Bhilai Durg city and dispatches account statements to the unit holders. The Registrar and Transfer agent also handles communications with investors and updates investor records. 1.95 Investment Objective Schemes can be classified by way of their stated investment objective such as Growth Fund, Balanced Fund, Income Fund etc. 1.95-a Equity Oriented Schemes These schemes, also commonly called Growth
Schemes, seek to invest a majority of their funds in equities and a small portion in money market instruments. Such schemes have the potential to deliver superior returns over the long term. However, because they invest in equities, these schemes are exposed to fluctuations in value especially in the short term.Equity schemes are hence not suitable for investors seeking regular income or needing to use their investments in the short-term. They are ideal for investors who have a long-term investment horizon. The NAV prices of equity fund fluctuates with market value of the underlying stock which are influenced by external factors such as social, political as well as economic .HDFC Growth Fund, HDFC Tax Plan 2000 and HDFC Index Fund are examples of equity schemes.
RCET
Page 16
A case study of consumers awareness towards Mutual fund in Bhilai Durg city Fig1.2 RISK/RETURN ON FUNDS
Fig 1.3 LEVEL OF RISK
1.95 b General Purpose The investment objectives of general-purpose equity schemes do not restrict them to invest in specific industries or sectors. They thus have a diversified portfolio of companies across a large spectrum of industries. While they are exposed to equity price risks, diversified general-purpose equity funds seek to reduce the sector or stock specific risks through iversification. They mainly have market risk exposure. HDFC Growth Fund is a general-purpose equity scheme. 1.95-c Sector Specific These schemes restrict their investing to one or more pre-defined sectors, e.g. technology sector. Since they depend upon the performance of select sectors only, these schemes are
RCET Page 17
A case study of consumers awareness towards Mutual fund in Bhilai Durg city inherently more risky than general-purpose schemes. They are suited for informed investors who wish to take a view and risk on the concerned sector. 1.95-d Real Estate funds Specialized real estate funds would invest in real estates directly, or may fund real estate developers or lend to them directly or buy shares of housing finance companies or may even buy their securitized assets. Debt Based Schemes
Fig 1.4 Debt Based Schemes
RCET
Page 18
A case study of consumers awareness towards Mutual fund in Bhilai Durg city Fig 1.5 Risk/Return level of Debt Based Schemes 1.95-e. Hybrid Schemes These schemes are commonly known as balanced schemes. These schemes invest in both equities as well as debt. By investing in a mix of this nature, balanced schemes seek to attain the objective of income and moderate capital appreciation and are ideal for investors with a conservative, long-term orientation. HDFC Balanced Fund and HDFC Childrens Gift Fund are examples of hybrid schemes. 1.95-f. Constitution Schemes can be classified as Closed-ended or Open-ended depending upon whether they give the investor the option to redeem at any time (open-ended) or whether the investor has to wait till maturity of the scheme. 1.95-g. Interval Schemes These schemes combine the features of open-ended and closed-ended schemes. They may be traded on the stock exchange or may be open for sale or redemption during predetermined intervals at NAV based prices
RCET
Page 19
A case study of consumers awareness towards Mutual fund in Bhilai Durg city 1.96 Risks in Mutual Funds 1.96a. the Risk-Return Trade-off The most important relationship to understand is the risk-return trade-off. Higher the risk greater the returns/loss and lower the risk lesser the returns/loss. Hence it is upto you, the investor to decide how much risk you are willing to take. In order to do this you must first be aware of the different types of risks involved with your investment decision. 1.96 Market Risk Sometimes prices and yields of all securities rise and fall. Broad outside influences affecting the market in general lead to this. This is true, may it be big corporations or smaller mid-sized companies. This is known as Market Risk. A Systematic Investment Plan (SIP) that works on the concept of Rupee Cost Averaging (RCA) might help mitigate this risk.
1.96b. Credit Risk The debt servicing ability (may it be interest payments or repayment of principal) of a company through its cash flows determines the Credit Risk faced by you. This credit risk is measured by independent rating agencies like CRISIL who rate companies and their paper. A AAA rating is considered the safest whereas a D rating is considered poor credit quality. A well-diversified portfolio might help mitigate this risk. 1.96c. Inflation Risk
RCET
Page 20
A case study of consumers awareness towards Mutual fund in Bhilai Durg city The root cause, Inflation. Inflation is the loss of purchasing power over time. A lot of times people make conservative investment decisions to protect their capital but end up with a sum of money that can buy less than what the principal could at the time of the investment. This happens when inflation grows faster than the return on your investment. A well-diversified portfolio with some investment in equities might help mitigate this risk.
1.96d. Interest Rate Risk In a free market economy interest rates are difficult if not impossible to predict. Changes in interest rates affect the prices of bonds as well as equities. If interest rates rise the prices of bonds fall and vice versa. Equity might be negatively affected as well in a rising interest rate environment. A well-diversified portfolio might help mitigate this risk.
1.96e. Political/Government Policy Risk Changes in government policy and political decision can change the investment environment. They can create a favorable environment for investment or vice versa. 1.96f. Liquidity Risk
RCET
Page 21
A case study of consumers awareness towards Mutual fund in Bhilai Durg city Liquidity risk arises when it becomes difficult to sell the securities that one has purchased. Liquidity Risk can be partly mitigated by diversification, staggering of maturities as well as internal risk controls that lean towards purchase of liquid securities.
1.96 Financial Planning 1.96.a Investors Goals! The first and most important step in your life as an investor is to define your goals at the onset of your investing activity. This will map the road ahead for you in terms of time, amount, type of asset and risk. At this point of time you must also decide how much you are willing to save. When you look at defining your goals think carefully and try to include all your requirements, here are a few things that might help you:

Retirement In how many years? How much money will you need? How long will you need it for? Daughters/Sons wedding When and how much? Daughters/Sons education When and how much? Purchase of big ticket items e.g. House, Car etc. Again, when and how much? 1.96b.Financial Planning
RCET
Page 22
Fig 1.6 Financial Planning 1.97c.Meeting your Goals Considerations Time The principal of time value of money (TVM) applies here. Let us start with an example first. Two friends, Ajay, and Mustafa are 20 years old. Ajay decides that he wants to start investing his money early to build himself a secure future and decides to save Rs. 5,000 monthly (i.e. Rs. 60,000 per annum) at the age of 20. Mustafa feel that he is young and wants to enjoy his money for the time being. Mustafa wakes up late and decides to invest at the age of 35 years and decides to save Rs. 10,000 per month (i.e. Rs. 1,20,000 per annum). At the age of 60 years when they want to retire, using an interest rate of 7% per annum, Ajay who had invested Rs. 5,000 monthly for 25 years has Rs. 1.15 cr. and Mustafa who had invested Rs. 10,000 monthly for the same amount of time has Rs. 57 lacs.
RCET
Page 23
Ajay
(7%):
Mustafa
(7%):
Diversification The nuclear weapon in your arsenal for your fight against Risk. It simply means that you must spread your investment across different securities (stocks, bonds, money market instruments, real estate, fixed deposits etc.) and different sectors (auto, textile, information technology etc.). This kind of a diversification may add to the stability of your returns, for example during one period of time equities might underperform but bonds and money market instruments might do well enough to offset the effect of a slump in the equity markets. Similarly the information technology sector might be faring
RCET
Page 24
A case study of consumers awareness towards Mutual fund in Bhilai Durg city poorly but the auto and textile sectors might do well and may protect you principal investment as well as help you meet your return objectives. Inflation Do not invest too conservatively Inflation. Inflation is the loss of purchasing power over time. A lot of times people make conservative investment decisions to protect their capital but end up with a sum of money that can buy less than what the principal could at the time of the investment. This happens when inflation grows faster than the return on your investment. A welldiversified portfolio with some investment in equities might help mitigate this risk. Day Trading / Tips etc. More often than not we find investors buying stocks in companies suggest by their friends, while not knowing what the company does or how it is performing. The aim - to make a quick buck. The result they may probably lose their money. We believe in buying value, it is imperative that you either do your homework or hire a professional financial advisor to do it for you. Buying and holding undervalued securities is the probably the best way to beat the market. Liquidity This depends on your cash requirements. If you feel that you might need the funds that your are investing say sometime in the near future you might consider investing in liquid assets or plan your cashflows accordingly. Higher liquidity translates into lower returns and consequently lower risk.
RCET
Page 25
A case study of consumers awareness towards Mutual fund in Bhilai Durg city Rupee Cost Averaging
* Rs. 10.00 is the average sales price achieved by taking an average of all of the sales prices. Rs. 9.80 is the average cost per unit arrived to by dividing the total amount invested by the number of units bought. As you see from the example above that even though you buy units at the higher prices of Rs.11 and Rs. 12 per unit your average cost per unit still remains at Rs. 9.80 per unit since you have the chance to buy addition units at lower prices as well. The amount invested per month has to be the same for this to work since you end up buying more units when the price is low and fewer units when the price is high, only then will your average cost per unit (Rs. 9.80) remain below your average sale price (Rs. 10). Please note that Rupee Cost Averaging does not protect against loss in a declining market scenario.
The Right Asset Allocation for You There are three major asset classes that you can put your money into, namely equities, fixed income and money market instruments. In order to decide how much of your money goes into which investment class you must first consider a few important factors (most of these will be tackled by you during your goal definition phase):

Return expected on your investment Amount you will be able to save (present as well as future) Cash outflows you might have at certain points of time in the future Risk appetite
RCET Page 26

Amount you will require for your retirement Liquidity Your Age Hence due to the variable nature of the investors finances and requirements there are no set strategies used by financial consultants. But we can provide you with broad strategies that you can adapt to meet you own needs.But first please take a look at the chart below to see which category you broadly fall into. Investment protection leads to safer interest generating asset allocations where as Investment Growth leads to higher volatility assets, that may tend to grow over a period of time.
AGGRESSIVE PORTFOLIO
FIG 1.7 AGGRESSIVE PORTFOLIO
MODERATE PORTFOLIO
RCET
Page 27
FIG 1.8 MODERATE PORTFOLIO
CONSERVATIVE PORTFOLIO
FIG 1.9 CONSERVATIVE PORTFOLIO
Another way to ascertain the right asset allocation is by looking at your life cycle. The basis of this theory lies in the simple maxim that younger people with secure jobs will normally opt for higher returns and take higher risks compared to older retired people. One must remember that these are only indicative strategies and will probably have to be fine-tuned to meet your individual needs.
RCET
Page 28
A case study of consumers awareness towards Mutual fund in Bhilai Durg city 1.97 Investment Avenues
Apart from illiquid avenues like real estate, jewellery there are four major investment avenues available to you, namely:

Debt Instruments Equity Money Market Instruments Mutual Funds
1.97.a.Debt Instruments Traditionally debt instruments are known for generating a predetermined income for a given period of time, other than in cases of default. Hence they are also known as fixed income instruments. Some examples include:

NBFC Deposits Company Deposits Bonds Debentures Bank Deposits (FDs and savings accounts) Government Small Savings Schemes (E.g. PPF)
The introduction of Floating Rate securities moves away from the concept of receiving a fixed rate of interest but suggests a variable rate of interest based on an underlying factor such as London Interbank Offer Rate (LIBOR) or Mumbai Interbank Offer Rate (MIBOR). An example of such a security is a Floating Rate Bond whose interest rate is MIBOR plus 50 basis points, where MIBOR is variable. A preference share is a hybrid
RCET
Page 29
A case study of consumers awareness towards Mutual fund in Bhilai Durg city instrument, which can be categorized as a fixed income instrument since the investors receive a fixed dividend before the regular equity holders receive their dividend 1.97. b. Equity Is a share in the ownership of a companys assets and earnings? Companies usually issue equity when they require addition capital to fund their existing business or expand. At this point of time the company sells part of the ownership of the company to the public. Listed equities are generally highly liquid since they are traded in the stock exchange. An investor makes money from equity through dividends paid out by the company (from its profits) on a periodic basis as well as capital appreciation as reflected in the stock price, which fluctuates in the market. Hence an investors return are directly related to the performance of the companys business. Equities do not offer any assured returns, but historically promise the highest return in the long run, as depicted by the graph below. Investment Returns (CAGR 1980 2003)
Fig 1.10 Investment Returns
1.97. c. Money Market Instruments

RCET Page 30
A case study of consumers awareness towards Mutual fund in Bhilai Durg city These are the short-term version of debt instruments, which typically have a maturity of less than one year. Yields are slightly above that of the savings account rate in the Banks. These usually tend to preserve the investors initial investment and are usually the least risky asset class from the four described here.
LAST YEAR PERFORMANCE (NAVs) OFDIFFERENT MUTUAL FUND SCHEMES
ICRA ONLINE METHODOLOGY FOR RANKING MUTUAL FUND SCHEMES
ICRA ONLINE Mutual Fund (MF) Rankings seek to inform investors and MF intermediaries of the category-wise relative performance of MF schemes. The rankings, covering the two time horizons of one and three years, have been arrived at following an in-depth analysis of critical parameters, including: risk-adjusted performance; portfolio concentration characteristics; liquidity; corpus size; average maturity; and portfolio turnover.
Eligibility Criteria for Ranking The Net Asset Value (NAV) of the MF scheme should have been disclosed daily during the period covered by the ranking. In the case of one-year ranking, complete disclosure of monthly portfolio should have been made for the past one year. In the case of three-year ranking, complete disclosure of quarterly portfolios should have been made for the past three years. The schemes corpus size should be at least 5% of the average fund size of
RCET Page 31
A case study of consumers awareness towards Mutual fund in Bhilai Durg city the category. The average fund size of the category is calculated after classifying all schemes into various categories on the basis of asset allocation.Any category should have a minimum of five schemes to be included for the ranking exercise.Only growth option, if available, of the open ended category has been taken for the ranking. The categories for ranking are:
o o o o o o o o o o
Diversified Equity Schemes-Defensive Diversified Equity Schemes-Aggressive Sector Schemes (Only Technology Funds considered) Index Funds (Nifty) ELSS Balanced Schemes Marginal Equity Schemes/Monthly Income Plans Income Schemes-Long Term and Short Term Gilt Schemes-Long Term and Short Term
Liquid Schemes
Classification of Schemes The classification of MF schemes has been done on the basis of the asset allocation and investment pattern of the schemes concerned. This is different from the traditional offer document-based scheme classification. The classification on the basis of asset allocation and investment pattern holds more relevance as these two factors determine the risk level of MF schemes. MF schemes with equity exposure have been classified as Marginal Equity, Balanced, and Equity, on the basis of the extent of the equity exposure.
RCET Page 32
A case study of consumers awareness towards Mutual fund in Bhilai Durg city Then they have been sub-classified as DiversifiedDefensive, Diversified-Aggressive, and Sector schemes on the basis of their sectoral concentration. Debt-based MF schemes have been categorised on the basis of their average allocation to Gilt securities. Then they have been sub-classified as Debt-Short Term and Debt-Long Term schemes, depending on their average portfolio maturity over the ranking period. The Ranking Parameters 1. Return Analysis : Risk adjusted return has been calculated on the basis of "Investor Expectation Ratio (IE Ratio)" that is defined as the ratio of excess return and risk. The excess return is the average daily active return of the scheme calculated for the ranking period over the average peer group return. Downside deviation of the Semi-standard deviation schemes' return from the expected return of the peer group calculated for the period covered, has been taken as the surrogate of risk. Here average peer group return has been taken as the proxy for the expected return. Higher the risk premium per unit risk, better it is. In the case of Index Schemes, the Return Analysis has been done on the basis of Tracking Error. Lower the tracking error, better it is. 2. Portfolio Concentration Analysis :
MF schemes that do not have an adequately diversified portfolio carry a higher risk than well-diversified schemes. While for equity schemes, company concentration has been considered, sector concentration has been evaluated for debt schemes. Company
RCET
Page 33
A case study of consumers awareness towards Mutual fund in Bhilai Durg city concentration has been judged taking NSE NIFTY as the benchmark to decide the overexposure in any of the scrips in the portfolio. For debt schemes, the sectors that have been considered are Gilt; Non-Banking Financial Companies; Manufacturing Companies; Banks/Financial Institutions/Development Institutions; and Non-Financial/Non-
Manufacturing Companies. Overexposure to any of these sectors has been penalized. 3. Liquidity : Liquidity analysis has been done only for equity schemes. In this case the liquidity coefficient for a scheme was calculated as the weighted average of the liquidity coefficients of all scrips in the portfolio. The liquidity coefficient of a scrip is calculated as the total number of shares in the portfolio of the scheme divided by the total daily turnover of the scrip. Schemes with higher liquidity have beenpreferred.
4. Corpus Size: Since a larger size of the scheme's corpus lends stability to an MF scheme during periods of high redemption pressure, preference has been accorded to large-size schemes. 5. Average Maturity: Average maturity has been considered in the case of Debt, Gilt and Liquid categories. Schemes with higher average maturity carry higher interest rate risks as compared with schemes with lower average maturity. Lower average maturity has been preferred. 6. Portfolio Turnover: Schemes with low portfolio turnover have been preferred
over ones with higher portfolio turnover.
RCET
Page 34
Equity Sector
NAVs SCHEME NAME (Rs) 5 Day 1 Mth 3 Mth
6 1 Yr Mth
Alliance New Millennium DSPML Fund Franklin FMCG Fund Technology.com
13.66
-0.07
-2.08 14.69 15.67 48.96
16.07
-0.80
-0.86 19.48 30.76 54.22
32.14
0.56
3.41
21.51 27.59 70.14
Franklin Infotech Fund Franklin Pharma Fund
38.84 28.02
-1.30 4.20
-1.89 18.13 29.08 45.85 4.71 27.25 23.06 43.25
JM Auto Sector Fund JM Basic Fund
18.72 14.53
0.75 0.90
-1.21 18.11 21.40 48.45 6.68 28.93 30.78 31.37
JM Healthcare Sector Fund Kotak Mahindra K
16.88
5.37
4.91
26.82 21.53 38.59
7.73 Technology Scheme FMCG 34.59
-0.99
-3.95 17.18 25.25 36.80
Prudential
ICICI
1.44
4.53
25.65 36.29 101.34
RCET
Page 35
Fund Prudential ICICI Technology 10.53 Fund 1.45 1.45 23.88 25.06 58.58
Reliance Banking Fund Reliance Pharma SBI Magnum Sector Funds -
30.68 19.21
-2.82 3.51
-6.55 4.89 4.46
-0.23 26.00
35.44 30.16 52.32
19.97 FMCG Fund SBI Magnum Sector Funds 17.92 IT Fund SBI Magnum Sector Funds 19.97 FMCG Fund SBI Magnum Sector Funds 17.92 IT Fund
0.96
6.39
17.96 18.10 49.59
-1.65
-1.81 23.16 34.33 68.90
0.96
6.39
17.96 18.10 49.59
-1.65
-1.81 23.16 34.33 68.90
RCET
Page 36
A case study Income (Debt) of consumers awareness towards Mutual fund in Bhilai Durg city
SCHEME NAME
NAVs (Rs) 5 Day 1 Mth
3 Mth 6 Mth 1 Yr
Alliance Income
23.89
0.10
0.07
0.76
1.68
4.34
Birla Bond Index Birla Income Plus
11.03 28.81
0.09 0.14
-0.16 -0.03
0.40 0.63
1.57 1.74
4.26 4.00
BoB Income Fund
12.44
0.12 0.09
0.51 0.39
1.49 1.14
2.80 1.95
5.40 3.72
BoB NRI Long-term Plan 10.51
Canbank - CanIncome Chola Triple Ace DSPML Fund Escorts Income Plan Grindlays SSI MediumBond Retail
12.58 11.02
0.08 0.10
0.36 0.03
1.05 0.48
2.09 1.46
9.28 2.90
23.79
0.08
0.01
0.58
1.35
4.53
21.56
0.11
0.08
0.97
2.05
4.50
11.04 term Grindlays Super Saver Income - Investment Plan 16.02 ANZINCG IN
0.08
0.34
0.95
2.17
5.03
0.09
-0.13
0.18
1.07
3.91
RCET
Page 37
HDFC Income Fund HSBC Income Fund 11.75 Investment plan 0.07 0.06 0.55 1.40 4.25 16.22 0.10 -0.32 0.16 0.96 3.45
ING Vysya Income Fund 17.40 ING Vysya MIP Plan A 10.98
0.08 0.08
-0.13 0.35
0.31 0.56
1.41 1.54
3.47 4.53
Kotak Flexi Debt Fund LICMF Bond Fund PRINCIPAL Future
10.71 19.03
0.11 0.14
0.46 0.41
1.41 1.38
2.78 2.78
5.91 5.10
Goals Series - Income 16.29 Fund Principal Money Value 19.31 Bond Fund Principal PNB Debt Fund 19.66 Principal Trust Benefit 12.19 Fund Prudential ICICI Advisor 11.08 Series Very Cautious Plan Prudential ICICI Income 20.40 Plan
0.13
-0.02
0.41
1.51
4.65
0.07
-0.06
0.39
1.38
4.40
0.08
-0.01
0.46
1.49
4.33
0.09
0.01
0.56
1.70
4.48
0.12
0.43
1.30
2.56
5.27
0.23
-0.02
0.58
1.86
4.34
RCET
Page 38
Prudential ICICI Income 14.51 plan - Long-term Reliance Income Fund Reliance Medium Term 14.69 Fund Reliance NRI Income 10.53 0.09 0.26 1.16 2.11 4.13 -0.23 -0.22 0.05 0.99 3.35 21.94 0.02 0.14 0.81 1.61 5.12 0.28 0.40 1.30 2.41 8.28
Sahara Income SBI Magnum NRI
12.16
0.20
-0.03
0.65
1.90
4.18
Investment Fund - Long 10.35 Term Bond Plan Sundaram Bond Saver 21.86
0.02
-0.33
-0.55
0.55
2.37
0.16
-0.02
0.38
1.10
2.98
Tata Income Tata Income Plus
0.00 11.85
0.00 0.08
0.00 0.09
0.00 0.86
0.00 1.53
0.00 6.22
Taurus Libra Bond Fund 12.90 Templeton India Income 24.54 Templeton India Income 23.98 Builder
0.00 0.04
0.01 -0.34
-0.31 0.02
-0.62 1.05
-0.88 3.84
0.12
-0.43
-0.11
0.70
3.44
RCET
Page 39
Money Market
SCHEME NAME
NAVs (Rs) 5 Day 1 Mth
3 Mth 6 Mth
1 Yr
ABN Regular
AMRO
Cash 10.70 0.10 0.40 1.25 2.47 5.01
Alliance Cash Manager Birla Cash Plus Sweep
17.06 18.67
0.11 0.11
0.49 0.49
1.44 1.47
2.71 2.75
5.26 5.36
RCET
Page 40
BoB Liquid Fund 12.44 0.12 0.51 1.49 2.80 5.40
Canliquid Retail Chola Liquid Fund Chola Liquid Fund
10.04 14.03
0.00 0.11
0.00 0.49
0.00 1.50
0.00 2.85
0.00 5.60
0.00 Institutional Plan - DD Deutsche Insta Cash Plus 11.64 Fund HDFC Cash Mgmt Fund 10.43 Call plan ]= HDFC Cash Mgmt 14.44 Fund - Savings plan HDFC Cash Mgmt Fund 10.02 Saving Plus plan HDFC Liquid Fund 13.77
0.00
0.00
0.00
0.00
0.00
0.12
0.49
1.43
2.72
5.41
0.00
0.00
0.00
0.00
0.00
0.11
0.49
1.47
2.80
5.53
-0.01
0.04
0.07
0.04
0.06
0.11
0.47
1.44
2.74
5.42
HSBC Cash Fund ING Vysya Liquid Fund
11.70 14.73
0.11 0.10
0.46 0.43
1.40 1.37
2.66 2.63
5.26 5.29
JM High Liquidity Fund Kotak Liquid Regular
19.11 13.78
0.10 0.10
0.43 0.44
1.32 1.33
2.51 2.54
4.98 5.01
RCET
Page 41
Kotak Liquid Sweep 14.75 1.57 4.43 24.61 30.29 0.00
LICMF Liquid Fund Liquid Benchmark ETS Magnum (Cash) Principal Liquid Prudential ICICI Liquid Cash Mgt InstaCash
10.94 1,000.00
0.01 0.00
0.06 -0.00
0.19 0.00
0.43 -0.00
0.77 -0.00
15.58
0.11
0.48
1.44
2.77
5.45
13.66
0.11
0.47
1.38
2.63
5.21
17.03 plan Prudential ICICI Sweep 11.78 Plan
0.11
0.46
1.39
2.65
5.27
0.10
0.42
1.23
2.22
4.31
Reliance Liquid Cash Sahara Liquid Standard Chartered
0.00 1,023.88
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.02
12.87 Grindlays Cash Fund Sundaram Money 14.59
0.10
0.45
1.40
2.64
5.17
0.11
0.48
1.44
2.74
5.39
Tata Liquid Templeton India Liquid
1,607.07
0.11
0.46
1.39
2.68
5.28
0.00 Plus
0.00
0.00
0.00
0.00
0.00
RCET
Page 42
Templeton India MMA 1.00 0.00 0.00 0.00 0.00 0.00
Templeton India TMA
1,729.14
0.09
0.42
1.31
2.56
5.14
Gilt SCHEME NAME NAVs (Rs) 5 Day 0.34 1 Mth -0.39 3 Mth 6 Mth 1 Yr 0.48 1.52 3.99
Alliance GSF Long-term 18.91
Alliance GSF Short-term 14.82 Birla Gilt Plus Liquid 10.64
0.09 -0.00
0.35 0.17
0.87 -0.19
1.58
3.51
-0.27 0.20
RCET
Page 43
BoB Gilt Fund 10.62 0.04 -0.54 0.38 1.19 3.85
Canbank Cangilt (PGS) Chola Gilt PF Plan Chola Plan DSPML Duration DSPML Duration GSF Shorter GSF Longer Gilt-Investment
17.69 10.41
0.20 0.09
-0.36 0.36
0.81 1.14
1.56 1.94
4.52 3.01
18.42
0.32
-0.37
0.42
1.39
3.05
22.23
0.19
0.02
1.21
1.95
6.59
15.89
0.11
0.45
1.31
2.58
5.14
Escorts Gilt Plan Grindlays term Plan HDFC Gilt Fund - LongGSF Short-
14.21
0.13
0.02
0.90
2.24
4.13
10.02
0.09
0.03
0.07
0.03
0.66
11.55 term plan HDFC Gilt Fund - Short12.98 term plan HDFC India Sovereign Gilt Fund - Investment 15.59 Plan
0.10
0.45
1.36
2.65
5.36
0.12
0.03
0.81
1.66
3.94
0.21
-0.56
0.63
1.61
4.10
RCET
Page 44
HDFC India Sovereign 17.62 Gilt Fund - Provident Plan 0.19 -0.29 0.87 1.87 4.77
OBJECTIVE & METHODOLOGY OF STUDY Objective of study

Objective of project to the MFs and study awareness level regarding dif- dif aspect of MFs among selected MFs in India bhilai & durg area. 1) Awareness regarding mutual funds in bhilai & durg area. 2) To identify the Objective of the investors for investing in a mutual funds. 3) To study behavior of customer or investor in bhilai & durg area about mutual funds. 4) To study investor about mutual funds in bhilai & durg area why not popular as compare Post office saving & other investment instruments. 5) To study Respondent perceptions about time horizon and tax sensitivity aspect of investing in mutual funds. 6) To identify the investment patterns of investors. 7) To find out the risk tolerance factors of the investor
Scope of the study

To identify the investors awareness regarding of mutual funds as investment alternative in bhilai & durg area . The investor Objectives behinds investing in a mutual funds.
RCET
Page 45
A case study of consumers awareness towards Mutual fund in Bhilai Durg city The risk tolerance Factor of the investor. The underlying tax factor for investing in mutual funds. The Awareness of mutual funds.
CHAPTER-2 2.1 RESEARCH METHODOLOGY

RESEARCH METHODOLOGY Descriptive research gives an account of frequency or the characteristics of some of the variables where casual research help in determined cause and effective relationships. The study seeks to find out the investors aware about Mutual funds in bhilai & durg area. DESCRIPTIVE DESIGN In the research process, descriptive research is used. The descriptive research deign focus on how to collect the primary data. As pointed out earlier, there ere two fundamental approaches for collecting Primary data, observation and asking questions. Although these approaches are used in any type of research design (Exploratory, Descriptive, Casuals), descriptive design more frequently used data collection procedures that heavily emphasize asking the respondents set of standardized, structure questions about what they think situations. There are different approaches referred to as survey methods that can use engage a person in this question/answer protocol process.
RCET
Page 46
A case study of consumers awareness towards Mutual fund in Bhilai Durg city Over time descriptive research has to come to be viewed and acknowledged as the different survey method available to marketing researches for collective quantitative primary data from large group of people though the question/answer protocol process.
Method of Data Collection. There are two types of data collection methods.
Secondary data collection method. Primary data collection method.
SECONDARY DATA COLLECTION METHOD The secondary data those, which are already collected by someone for some purpose and available for the present study. Secondary data are collected from http://www.myiris.com/mutual . some magazine related to Mutual funds .
Primary Data Collection Method
RCET
Page 47
A case study of consumers awareness towards Mutual fund in Bhilai Durg city Primary Data are those, which are collected for the first, and they are original in character himself to study a particular problem. There are two type of primary data collection method. Observation Method. Questionnaire Method
In observation method observing some action or the Respondent collects the data. Number of question is asked in data collection. Interview of Respondents and collected data .The action or Behavior of the Respondents are watched personally.The questionnaire is medium of communication the Investigator and the respondent .The success of an investigation depends on the framing of the questionnaire. In addition, it requires skill, wisdom, efficiency and experience. APPROACH AND METHODOLOGY The study involved survey of 150 investors in bhilai & durg area as per the break up below. Bhilai area Bhilai town(sector area) Vashali nagar(shanti nagar) Nehru nagar
Durg area
RCET
Page 48
A case study of consumers awareness towards Mutual fund in Bhilai Durg city o Deepak nagar o Ganjpara o Padmanapur
RCET
Page 49
RCET
Page 50
RCET
Page 51
2.2 LIMITATIONS OF THE STUDY

Our project was carried out on the subject AWARENESS REGARDING MUTUAL FUNDS IN BHILAI & DURG AREA. During our project we carried out survey for the same and we faced following hurdles that have been stated as under
No Response Error - Some of the participants were not willing to fill up the questionnaire. Respondent Bias not give proper answers of our question. Small sample size (hardly 0.1% of total population) because of time and cost constraints and therefore study findings may be distorted
Only teachers & Educational poeples were covered as per the survey and therefore, the study findings pertain only to this class of the population and do not pertain to people belonging to other occupations.
CHAPTER;- 3 DATA ANALYSIS AND INTERPRETATION
INVESTER PROFILES Sex profile of Respondents
RCET
Page 52
Sex profile of Respondents Female 21%
Male 79% Male Female
79% respondents are male 21% respondents are female
Age profile of Respondent: (Years)
Age profile of Invester 50-above 17% 41-50 24%
20-30 34%
31-40 25% 31-40 41-50 50-above
20-30
RCET
Page 53
60% respondents age between 20 year to 40 year. 26% respondents age more than 50 year
Income profile of Investor
Income (monthlt household) profile of Respondent
15-20 11% 10--15 36%
20-above 7%
5--10 46%
5--10
10--15
15-20
20-above
80% respondents income(p.m) is between 5000 to 15000 only 7% respondent who earn more than 20000 (p.m)
Occupation profile of Respondent
RCET
Page 54
O ccupation profile of Respondent Service Holder 35% Farmer 21% Bussinessm an 12% Proffesional 19% Teacher 13%
Bussinessman Farmer Service Holder Proffesional Teacher
21% respondents are farmer 48% respondents are service holder & teacher 19% respondents are professional
Awareness regarding Mutual Funds Mutual Fund is a relatively new concept and it faces awareness problems in awareness, which need to be addressed to ensure faster acceptance.
RCET
Page 55
He ard about MFs
No 25% Ye s No Ye s 75%
1) 75% respondents are some knowledge about mutual fund in Bhilai & Durg area. 2) Most of Nehru Nagar(Bhilai) respondents are good Aware about mutual funds. 3) 25% respondents donot have knowledge about mutual funds in Shanti nagar area. 4) Most of Sector area respondent are not aware mutual funds.
Important factors right investment
SAFETY
RCET
Page 56
Safety (Imp Factor for Right Investment)
Important 20% Cant say 4% Not Important 13% Least Important 13%
Completely Important 50%
Least Important Not Important Cant say Important Completely Important
1) 70% respondent said that safety most Imp factor for investment. 2) 26% respondent said Safety is not Imp factor for investment. 3) 4% respondent not gave any answered.
RETURN
Returns (Imp factor of right Investment) Not Important 8% Cant say Least Important 6% 7% Completely Important 19%
Important 60%
79% respondents said that Return is Imp Factor for Investment.
RCET
Page 57
15% respondents said that Return is mot or least Imp Factor for Investment
LIQUIDITY
Liquidity ( Imp factor right Invesment) Completely Important 13%
Least Important 19% Not Important 23% Cant say 11%
Important 34%
47% respondents said that Liquidity is Imp Factor for Investment.
42% respondents said that Liquidity is mot or least Imp Factor for Investment
Tax-Benefits
RCET
Page 58
Tax Benefit (Imp factor right Investment)
Least Important 4% Not Important 17% Cant say Important 3% 18%
76% respondents said that Tax Benefit is Imp Factor for Investment.
21% respondents said that Tax Benefit is mot or least Imp Factor for Investment
BRAND NAME
RCET
Page 59
Brand name(Imp factor right Investment)
Least Important 11%
Important Cant say 16% 4%
Not Important 38%
47% respondents said that Brand Name is Imp Factor for Investment.
49% respondents said that Brand Name is mot or least Imp Factor for Investment
Imp factor for Investment

9.00 8.00 7.00
Importance Level
6.00 5.00 4.00 3.00 2.00 1.00 0.00 Safety Returns Liquidity Investment Objectives Tax Benefit Brand name
RCET
Page 60
In respondent or Investors mind Tax-benefit or Return most Imp factor. Liquidity less Imp of all the factor.
Safety factor as Objective of investment
Safety (Objective of Investment)
Not Important Least Important 7% 23%
Cant say 3% Important 22% Least Important Not Important Cant say Important
Completely Important
67% respondent said that safety Imp or most Imp for objective of investment. 30% respondent said that safety not or least Imp for objective of investment 3% respondent not gave any answered.
Return factor as Objective of investment
RCET
Page 61
Returns ( Objective of investm ent)
5%
16% 3% 9%
Least Important Not Important Cant say
67%
Important Completely Important
67% respondent said that Return Imp or most Imp for objective of investment. 30% respondent said that Return not or least Imp for objective of investment 3% respondent not gave any answered.
Liquidity factor as Objective of investment
Liquidity ( objective of investment)

Least Important Not Important Cant say
Cant say 12% Not Important 21%Least Important 11%
Important 29%
Important Completely Important
RCET
Page 62
56% respondent said that Liquidity Imp or most Imp for objective of investment. 32% respondent said that Liquidity not or least Imp for objective of investment 12% respondent not gave any answered.
Brand
name
factor
as
Objective
of
investment
Brand name( objective of investment) Completely Important 46% Important 36% Cant say Not Least 1% Important Important 6% 11% Least Important Not Important Cant say Important Completely Important
82% respondent said that Brand name Imp or most Imp for objective of investment. 17% respondent said that Brand name not or least Imp for objective of investment 1% respondent not gave any answered.
Mean of All Objectives factor
RCET
Page 63
Imp factor for Investment

9.00 8.00 7.00
Importance Level
6.00 5.00 4.00 3.00 2.00 1.00 0.00 Safety Returns Liquidity Investment Objectives Tax Benefit Brand name
Brand name & Return both are main factor
Mutual Funds Performance criteria for mutual fund.
RCET
Page 64
Perfrmance of Mutal Fund

9.00 8.00 7.00
Importance Level
6.00 5.00 4.00 3.00 2.00 1.00 0.00 Safety Returns Liquidity Tax Benefit Brand name Performance criteria for Mutual Fund
Safety as performance criteria for MFs
Re sponde nt vie w about Safe ty as pe rformance MFs crite ria
Exce lle nt 37%
Poor 10%
Avg. 19%
Ve ry Good 21%
Good 13%
Poor
Avg.
Good
Ve ry Good
Exce lle nt
71% respondent said that safety most very good criteria for investment in mutual Fund. RCET Page 65
19% respondent said Safety is Avg criteria for investment in mutual Fund 10% respondent said Safety is Poor criteria for investment in mutual Fund
Safety as performance criteria for MFs
Re sponde nt vie w about Safe ty as pe rformance MFs crite ria
Exce lle nt 37%
Poor 10%
Avg. 19%
Ve ry Good 21%
Good 13%
Poor
Avg.
Good
Ve ry Good
Exce lle nt
71% respondent said that safety most very good criteria for investment in mutual Fund. 19% respondent said Safety is Avg criteria for investment in mutual Fund 10% respondent said Safety is Poor criteria for investment in mutual Fund
Return as performance criteria for MFs
RCET
Page 66
Re sponde nt vie w about Re turns as pe rfomance MFs crite ria
Poor 1%Avg. 10% Exce lle nt 46% Good 23%
Ve ry Good 20% Poor Avg. Good Ve ry Good Exce lle nt
89% respondent said that Return most very good criteria for investment in mutual Fund. 10% respondent said Return is Avg criteria for investment in mutual Fund 1% respondent said Return is Poor criteria for investment in mutual Fund
Liquidity as performance criteria for MFs
Re sponde nt vie w about Liquidity as pe rformance MFs crite ria
Poor Avg. 3% 4% Exce lle nt 48%
Good 18%
Ve ry Good 27%
Poor
Avg.
Good
Ve ry Good
Exce lle nt
RCET
Page 67
71% respondent said that Liquidity most very good criteria for investment in mutual Fund. 19% respondent said Liquidity is Avg criteria for investment in mutual Fund 10% respondent said Liquidity is Poor criteria for investment in mutual Fund
Tax benefit as performance criteria for MFs
Respondent view about Tax Benefit as performance MFs criteria
Excellent 23%
Poor 9%
Avg. 14%
Very Good 28%
Good 26%
Poor
Avg.
Good
Very Good
Excellent
71% respondent said that Tax benefit most very good criteria for investment in mutual Fund. 19% respondent said Tax benefit is Avg criteria for investment in mutual Fund 10% respondent said Tax benefit is Poor criteria for investment in mutual Fund
Knowledge about AMC name
RCET
Page 68
Popurality of M utual Funds company in Invester mind

UTI HDFC, 94 HCBC, 83 ICICI PRO, 106 SBI, 110 FEDILITY, 82 REL, 108 DSP, 79 BIRLA SUNLIFE, 86 BOB , 97 CAN , 53 UTI, 122 REL FEDILITY SBI ICICI PRO HCBC HDFC DSP BIRLA SUNLIFE BOB CAN
Most of respondents are Aware about UTI mutual funds as per 122 out of 150 Respondents are said that he know name of UTI.
REL ,SBI , ICICI mutual funds are well know AMC.
Expected rate of Return on their investment p.a
Expe cte d Re turn on the ir inve stme nt
24% Above 13% 18% -24% 23%
6%-9% 3% 9% - 12% 35%
12%-18% 26%
6%-9%
9% - 12%
12%-18%
18% -24%
24% Above
RCET
Page 69
Most of respondents are to expect more than 10% or more than 10% return. 13 % of respondents are to expect 24 % and more return. 59% of respondents are expected 12 % to 24% returns. Only 3% respondents are expected only 6 % to 9% return.
Investment
Pattern
of
respondents
investmest prefer by inveser G-sec. 14% Bank savings 23% Share market Bank savings Bond 12%
Share market 10% Mutual fund 16%
Post office 25% Mutual fund G-sec.
Post office Bond
Shanti nagar area people most respondents are prefer Invests his money in Post office & Bank Saving.
Nehru nagar people aware about investment alternative so they are investments of their money in suitable instruments.
Padmanapur people no more knowledge about Stock market so they not to ready Invest their money in Stock market.
Ready invest their money in MF
RCET
Page 70
Respondent interested in investment in MFs
S.Agree 37%
S.Dis Agree 11% Disagree 20% Cant say 6%
Agree 26% S.Dis Agree Disagree Cant say
Agree
S.Agree
63% respondent ware ready to invest money in MFs. 31% respondents were not ready to invest their money in MFs.
Mutual fund offer periodic investment
yes no
CHAPTER 5 -KEY FINDING
RCET
Page 71
Key Finding
The survey revealed the following board findings which were arrived at based on the relationship between the all India trends and trends observed in various area across in Bhilai & Durg .
Majority of the investors (over 60%) fall in the 20-40 age group. Over 54% of the investors fall in annual income of above lakhs per annum.
Most of investors invest to have a secure future though regular returns. From the macro perspective the company image of AMC acts a major deciding factor for buying mutual funds.
Most of respondent are doing job. (Around 48%) 63% respondents are like to invest their money in mutual funds. Majority of investors like to a moderate risk and moderate rerun on investment. 62% respondents expected rate of return is more than 12% p.a. UTI, ICICI, SBI. RELIANCE mutual funds score highest on brand in respondents mind. 75% respondents are aware regarding name of mutual funds. Most of Shanti nagar area respondents not aware name & schemes of mutual funds. Respondents are prefer safety for his investment (50% respondents prefer safety).
RCET
Page 72
A case study of consumers awareness towards Mutual fund in Bhilai Durg city Most of respondents invest to maximize their returns and they ready to take moderate risks in their investment portfolios.. Most of respondents prefer tax benefits & return on their investments. In Sector area area respondents recent invests their money in Bank-saving & Post office (around 60%). Most of respondent believe that mutual fund investments are going to perform better than stock. Most of respondents invest their money in Growth Scheme. Most of Service holder & Teacher invest their money for Regular income but other side Businessman & Professional are invests money for Capital gain.
RCET
Page 73
CHAPTER 6; - SOME RECOMMENDATION & CONCLUSION OF STUDY RECCOMENDATIONS

To give more advertisement in local news paper, outlet and to give sponsorship banner in shanti & deepak nagar area so Assets Management companies to get more business in shanti & deepak nagar area. To held many seminar in this area and give information about mutual funds. To Asset Management Company open more branch in near of sector area town or ganjpara area . Asset Management company provide good facility as home collection. or provide info on telephone so it helps to AMC increase new business. To appointment more Broker and sub Broker in this area so collection atomically increase this area.
CONCLUSION
RCET
Page 74
ANNEXTURE
QUESTIONNAIRE FOR
A case study of consumers awareness towards Mutual fund
in Bhilai Durg city.
Q-1) Name of Respondent: _____________________________________
Q-2) Sex
[ ] Male
] Female
Q-3) Age of Respondent: (Years)
] 20-30
] 31-40
] 41-50
] Above 50
Q-4) Income of Respondent Monthly household income in (Rs.)
] 5,000-10,000
] 10,000- 15,000 ] Above 20,000
] 15,000-20,000
Q-5) Occupation of the consumers (Rs.)
RCET
Page 75
A case study of consumers awareness towards Mutual fund in Bhilai Durg city [ ] Businessman [ ] Farmer
] Serviceholder
] professionals
] Teachers
Q-6) Have you are heard about Mutual Funds?
[ ]
Yes
[ ] No
Q-6) what according to you one of the important factors right investment?
[ ] Safety
] Liquidity
[ ] Returns
] Tax benefit
Q-7) what is your objective of investment?
[ ] Safety
] Liquidity
] Returns
] Tax benefit
[ ]Income generation
Q- 8) which companies name come to your mind when we talk about Mutual
Funds?
] UTI
] ICICI
] SBI
] BOB
[
RCET
] SUN BIRLA
] HDFC
[ ] Any other
Page 76
A case study of consumers awareness towards Mutual fund in Bhilai Durg city Q-9) How much percentage Return do you expect from investment in your money (p.a)?
] 6%-9%
] 9% - 12%
] 12%-18%
] 18% -24%
] 24% Above
Q-10) Have invested your money in other instrument now? Rank in terms of amount invested.
[ [
] Share market ] Bank savings
[ [ ] G-sec.
Mutual fund [ ] Bond
] Post office
Q-11)Do mutual funds offer a periodic investment plan?
[ ] Yes
[ ] No
Q-12) Do any mutual funds invest in both stocks and bonds?
]Yes
]No
Q-13)How do you evaluate mutual funds performance?
]Poor
[ ]Average
[ ] Good
[ ]Very good
[ ]Excellent
Q-14) Ideally how many different schemes should one invest in?
RCET
Page 77
A case study of consumers awareness towards Mutual fund in Bhilai Durg city [ ]
Q-15) Do any mutual funds invest in both stocks and bonds?
] Yes
] No
Q-16) What is the ratio of mutual funds invest in both stocks and bonds?
] 80:20
[ ]60:40
]50:50
[ ]40:60
CHAPTER-8 BIBLIOGRAPHY
1. Search bellow websites www.myiris.com www.mutualfundsindia.com www.valueresearch.com www.hdfcmf.com
RCET
Page 78
www.karvymfs.com www.indiainfo.com www.sebi.com www.amcindia.com
2. Following Book Refers G.C.Beri- Marketing Research,3ed Edition, Tata McGraw-Hill.New Delhi
3. Following Magazines Refers CHARTERED FINANCIAL ANALIST-March-2007 ICFAI.Uni 4. Following article refer Das Ranjan,Raveendra.c,(2006) Strategic choices in Mutual Fund Business in Business Standard
RCET
Page 79
RCET
Page 80
RCET
Page 81
RCET
Page 82
RCET
Page 83

About Mutual Funds Lakshmi Sharma

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

About Mutual Funds Lakshmi Sharma

Uploaded by

Copyright:

Available Formats

A case study of consumers awareness towards Mutual fund in Bhilai Durg city

CHAPTER -1:- ABOUT MUTUAL FUNDS

1.3 How is a mutual fund set up

1.4 Concept of Net Asset Value (NAV) of a scheme

1.5 Types of mutual fund schemes

1.52Close-ended Fund/ Scheme

1.6 Schemes according to Investment Objective

Fig 1.3 LEVEL OF RISK

Fig 1.4 Debt Based Schemes

FIG 1.7 AGGRESSIVE PORTFOLIO

FIG 1.8 MODERATE PORTFOLIO

FIG 1.9 CONSERVATIVE PORTFOLIO

Debt Instruments Equity Money Market Instruments Mutual Funds

Fig 1.10 Investment Returns

1.97. c. Money Market Instruments

LAST YEAR PERFORMANCE (NAVs) OFDIFFERENT MUTUAL FUND SCHEMES

ICRA ONLINE METHODOLOGY FOR RANKING MUTUAL FUND SCHEMES

over ones with higher portfolio turnover.

NAVs SCHEME NAME (Rs) 5 Day 1 Mth 3 Mth

Alliance New Millennium DSPML Fund Franklin FMCG Fund Technology.com

-2.08 14.69 15.67 48.96

-0.86 19.48 30.76 54.22

21.51 27.59 70.14

Franklin Infotech Fund Franklin Pharma Fund

-1.89 18.13 29.08 45.85 4.71 27.25 23.06 43.25

JM Auto Sector Fund JM Basic Fund

-1.21 18.11 21.40 48.45 6.68 28.93 30.78 31.37

JM Healthcare Sector Fund Kotak Mahindra K

26.82 21.53 38.59

7.73 Technology Scheme FMCG 34.59

-3.95 17.18 25.25 36.80

25.65 36.29 101.34

Reliance Banking Fund Reliance Pharma SBI Magnum Sector Funds -

-6.55 4.89 4.46

35.44 30.16 52.32

17.96 18.10 49.59

-1.81 23.16 34.33 68.90

17.96 18.10 49.59

-1.81 23.16 34.33 68.90

NAVs (Rs) 5 Day 1 Mth

Birla Bond Index Birla Income Plus

BoB Income Fund

BoB NRI Long-term Plan 10.51

Kotak Flexi Debt Fund LICMF Bond Fund PRINCIPAL Future

Sahara Income SBI Magnum NRI

Tata Income Tata Income Plus

NAVs (Rs) 5 Day 1 Mth

Cash 10.70 0.10 0.40 1.25 2.47 5.01

Alliance Cash Manager Birla Cash Plus Sweep

Canliquid Retail Chola Liquid Fund Chola Liquid Fund

HSBC Cash Fund ING Vysya Liquid Fund

JM High Liquidity Fund Kotak Liquid Regular

17.03 plan Prudential ICICI Sweep 11.78 Plan

Reliance Liquid Cash Sahara Liquid Standard Chartered

12.87 Grindlays Cash Fund Sundaram Money 14.59

Tata Liquid Templeton India Liquid

Templeton India TMA

Alliance GSF Long-term 18.91

Alliance GSF Short-term 14.82 Birla Gilt Plus Liquid 10.64

OBJECTIVE & METHODOLOGY OF STUDY Objective of study

Scope of the study

CHAPTER-2 2.1 RESEARCH METHODOLOGY

Secondary data collection method. Primary data collection method.