Dessertation Mutual Fund..pdf

CHAPTER I INTRODUCTION

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A Mutual Fund is promoted by a sponsor and run by a trust that pools the savings of a number of retail investors who share a common financial goal. The money collected by selling units of mutual funds is invested by the fund manager in different types of securities depending according to the objective of the scheme. These could range from shares to debentures to money market instruments. For an individual investors a Mutual Fund offers diversified, professionally managed portfolio at a relatively low cost. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and strategy.

From its inception the growth of Indian mutual funds industry was very slow and it took really long years to evolve the modern day mutual funds. Primary motive behind mutual fund investments is to deliver a form of diversified investment solution. Over the years the idea developed and people received more and more choices of diversified investment portfolio through the mutual funds.

Mutual funds mobilize savings from a large number of investors and invest these funds in shares and other securities. The concept of mutual funds was conceived to pool resources of the small investors and deploys the same in the capital market through participation in the equity and other debt instrument.

Mutual fund offer investors a diversified portfolio and also professional management at low cost. Over the past decade, mutual funds have increasingly become the investor‟s vehicle of choice for long-term investment. Indian economy as a whole undergoing complete reforms in terms of RBI‟s interest rate cut and regulating the bank transactions through Permanent Account Number besides the bad signs like volatile exchange prices, changes in oil prices. Due to all of the above reasons, financial market inadvertently facing slowdown.

Obviously, mutual fund performances are subject to the market performance. In this given situation, this study aims to analyze and evaluate the performance of HDFC and ICICI prudential mutual fund and also to find out which fund do the investors prefer.

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The major private sector mutual funds include ICICI Prudential Mutual Fund, Birla Sun Life Mutual Fund, HDFC Mutual Fund, Tata Mutual Fund, Reliance Mutual Fund and BNP Paribas Mutual Fund to name a few.

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

Many individuals own mutual funds today. Indeed, the mutual fund industry which reached $3.64 trillion in assets by2009,comprises the bulk of many investors financial assets, whether for retirement or taxable savings purposes .To a large extent, mutual funds are the investment vehicle for the majority of households in the India. In this study I have considered the role of mutual fund in today‟s investing environment, learn just how popular mutual funds have become and consider why investors have chosen to put so much money into funds. Clearly, mutual funds are a major financial asset for numerous investors, and in many ways they play the dominant role in today‟s investing world for millions of households.

The basics of mutual funds, defining terms and discussing the mechanics about how funds work have been explained. The main focus of the study is which company‟s mutual investments are mostly preferable by investors. Today investors are becoming rational & they see all the parameters before investing. The overall objective of my study on this project is to know which company provides better investment opportunities from HDFC & ICICI and make the investors to be able to take better decisions. The goal of a mutual fund is to provide an individual to make money. There are several thousand mutual funds with different investments strategies and goals to chosen from. Choosing one can be

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over whelming, even though it need not be different mutual funds have different risks, which differ because of the fund s goals fund manager, and investment style. The fund itself will still increase in value, and in that way you may also make money therefore the value of shares you hold in mutual fund will increase in value when the holdings increases in value capital gains and income or dividend payments are best reinvested for younger investors Retires often seek the income from dividend distribution to augment their income with reinvestment of dividends and capital distribution your money increase at an even greater rate. When you redeem your shares what you receive is the value of the share.

Need and Significance of study:

State the advantages and disadvantages to invest in mutual fund.

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To give idea about the regulation of mutual fund

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To study about mutual fund schemes

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This study will help companies to customize and improve, according to the investor‟s need.

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This study will also help the companies to understand the experience and expectations of the existing investors.

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CHAPTER II RESEARCH METHODOLOGY

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2.1 Objectives of the Study:-

 To study the concept and various types of mutual fund.  To study various factors considered by Mutual fund investors investing in HDFC/ ICICI Prudential Mutual fund.  To study the investor‟s preference for a specific type of Mutual fund scheme with reference to HDFC/ ICICI Prudential Mutual fund.

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2.2

RESEARCH METHODOLOGY:-

Research is an intellectual activity. It is responsible for bringing to light new knowledge. It is also responsible for correcting the present mistakes, removing existing misconceptions and adding new learning to the existing fund of knowledge. Researchers are considered as a combination of those activities which are removed from day to day life and are pursued by those persons who are gifted in intellect and sincere in pursuit of knowledge.

Research Methodology is a way to find out the result of a given problem on a specific matter or problem that is also referred as research problem. In Methodology, researcher uses different criteria for solving/searching the given research problem. Different sources use different type of methods for solving the problem. The process used to collect information and data for the purpose of making business decisions. The methodology may include publication research, interviews, surveys and other research techniques, and could include both present and historical information. A researcher requires many data gathering tools or techniques. Tests are the tools of measurement and it guides the researcher in data collection and also in evaluation. Tools may vary in complexity, interpretation, design and administration. Each tool is suitable for the collection of certain type of information.

One has to select from the available tools those which will provide data he seeks for testing hypothesis. It may happen that existing research tools do not suit the purpose in some situation, so researcher should modify them or construct his own.

Different tools used for data collection may be:-

1. Questionnaires 2. Interviews 3. Schedules 4. Observation Techniques 5. Rating Scales

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Research framework: This study is based on the data about HDFC Mutual fund and ICICI prudential fund for a comparative analysis between the two fund houses. Types of data which used to prepare this report: PRIMARY DATA: - I have used questionnaire as primary source for collecting data

for

my study. 

Sampling: - It represents the whole population. It is a process of choosing samples from whole populations. I have chosen some people who have invested in HDFC and ICICI Mutual fund House.



Sampling Size: - It represents how many candidates you have chosen to fill up your questionnaire. I had chosen sample of 50 candidates.

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Sampling Technique: - Questionnaire sampling is something that is sent to the candidates who invest in mutual funds. By Questionnaire you can understand peoples taste & preferences so it is easy to convince.

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Data Interpretation: - Data Interpretation is that in which we analyses the whole collected data & try to give it in simple words that is understandable.

SECONDARY DATA: - The secondary data which was already prepared so these data was only used to reach the aims and objectives of this project. I have collected secondary data from various mutual funds books, from various mutual fund websites.

How the data was collected: The source of collecting the primary data was through interviews and questionnaire. It was collected from the discussion and interaction with the investors; however the secondary one was collected from the websites and published journals and books.

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2.3LIMITATIONS OF THE STUDY:-

There are some limitations of my study, those are as Following:-

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Sample limitation: - The sample taken by me is very small in size to compare mutual fund of two companies.

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Only two Mutual found houses are taken for comparison and the sample consists of respondents who are investing in scheme of such mutual fund house.

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Parameters: - All the parameters have not been taken.

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Awareness: - Investors chosen for study are not fully aware of all the terms and conditions related to mutual fund .So, it is very difficult to construct right information from them.

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CHAPTER III REVIEW OF LITERATURE AND THEORETICAL BACKGROUND OF THE STUDY

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REVIEW OF LITERATURE

1) Name of the Research Paper:-Comparative study of mutual funds of select Indian companies

Author: - Mr. Sunil M. Adhav / Dr Pratap M Chauhan Abstract: - India‟s mutual fund market has witnessed phenomenal growth over the last decade. The consistency in the performance of mutual funds has been a major factor that has attracted many investors. The present research is an attempt to study comparative performance of mutual funds of selected Indian companies. The study focus on mutual fund schemes of selected Indian companies comprising Equity, Debt and Hybrid Schemes. The total of 390 schemes comprising of 178 equity mutual funds, 138 debt schemes and 74 hybrid schemes are selected for the study. The performance of selected Indian companies‟ mutual fund is analyzed with the help of Return, risk. Selected Mutual Fund are compared with their respective bench mark.

2) Name of the Research Paper:-A Study of Mutual Funds in India Author: - MS Shalini Goyal / MS Dauli Bansal Abstract: - This paper helps us to understand the study of the mutual funds in India. This paper also says where and how we should invest mutual fund 7 why it dangerous to directly invest in stock market as you might have to face loss. Investing in mutual funds helps you to diversify your risk .This study was conducted to analyse and compare different types of mutual funds in India.

3) Name of the Research Paper:-A Study of Mutual Funds in India Author: - MS Shalini Goyal / MS Dauli Bansal Abstract: - This paper helps us to understand the study of the mutual funds in India. This paper also says where and how we should invest mutual fund 7 why it dangerous to directly invest in stock market as you might have to face loss. Investing in mutual funds helps you to diversify your risk .This study was conducted to analyse and compare different types of mutual funds in India. 11

4) Name of the Research Paper:- Investor’s preferences towards Mutual Fund and Future Investments

Author: - Y Prabhavathi, N T Krishna Kishore Abstract: - The advent of Mutual Funds changed the way the world invested their money. The start of Mutual Funds gave an opportunity to the common man to hope of high returns from their investments when compared to other traditional sources of investment. The main focus of the study is to understand the attitude, awareness and preferences of mutual fund investors. Most of the respondents prefer systematic investment plans and got their source of information primarily from banks and financial advisors. Investors preferred mutual funds mainly for professional fund management and better returns and assessed funds mainly through Net Asset Values and past performance.

5) Name of the Research paper: - Investor awareness and Perception about mutual Funds. Author: - Simran Saini / DR Bimal Anjum Abstract: - Indian Mutual Fund has gained popularity in last few years. The present study analyses the mutual fund investments in relation to investor‟s behavior. Investors‟ opinion and perception has been studied relating to various issues like type of mutual fund scheme, main objective behind investing in mutual fund scheme, role of financial advisors and brokers, investors‟ opinion relating to factors that attract them to invest in mutual funds, sources of information, deficiencies in the services provided by the mutual fund managers, challenges before the Indian mutual fund industry.

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3.1 The Concept of Mutual Fund A Mutual Fund 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 appreciations realized are shared by its unit holders in proportion to the number of units owned by them.

A mutual fund is a common pool of money into which investors place their contributions that are to be invested in accordance with a stated objective. The ownership of the fund is thus „joint‟ and „mutual‟; the fund belongs to all investors.

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3.2 A BRIEF OF MUTUAL FUNDS 

A mutual fund is an investment company that creates a bridge between individual investors or retail investors & corporate giants. Mutual funds provide an investment options for retail investors or individual investors those who are not aware about stock market still they want to invest their funds in stock market with a small amount of money. A mutual fund is a pure intermediary which performs basic function of buying & selling security on behalf of its investors or unit holders.

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Mutual funds mobilize saving from a large number investors & invest these funds in share and other securities mutual funds are sine qua non for the development of the capital markets & the creation of the equity cult in an economy.

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A Mutual Fund is a trust that pools the savings of a number of investors who Share a common financial goal. The money thus collected is invested by the fund manager in different types of securities, capital market instruments such as shares, debentures and other securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments.

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The income earned through these investments and the capital appreciations realized by the scheme are shared by its unit holders in proportion to the number of units owned by them.

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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 portfolio at a relatively low cost. The small savings of all the investors are put together to increase the buying power and hire a professional manager to invest and monitor the money. Anybody with an ingestible surplus of as little as a few thousand rupees can invest in Mutual Funds.

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Mutual funds offer several schemes to cater to the needs of different types of investors. The objective of the scheme is announced at the time of the launch of the scheme. Investors can decide to invest in only schemes that offer them the kind of financial market exposure that they are looking for. 14

3.3 History of mutual fund in India The mutual fund industry in India started in 1963 with the formation of Unit Trust of India (UTI) at the initiative of the RBI & Government of India. The objective then was to attract small investors and introduce them to market investments. Since then, the history of mutual funds in India can be broadly divided into six distinct phases. Phase I (1964-87): Growth of UTI:In 1963, UTI was established by an Act of Parliament and was the only entity offering mutual funds in India. The first scheme was Unit Scheme 1964 followed by many others. The first Indian offshore fund, India Fund was launched in August 1986.

Phase II (1987-93): Entry of Public Sector Funds: The year 1987 marked the entry of other public sector mutual funds. With the opening up of the economy, many public sector banks and institutions were allowed to establish mutual funds. The State Bank of India established the first non-UTI Mutual Fund, SBI Mutual Fund in November 1987. Phase III (1993-96): Emergence of Private Funds: A new era in the mutual fund industry began in 1993 with the permission granted for the entry of private sector funds. This gave the Indian investors a broader choice of 'fund families' and increasing competition to the existing public sector funds. Quite significantly foreign fund management companies were also allowed to operate mutual funds, most of them coming into India through their joint ventures with Indian promoters. The private funds have brought in with them latest product innovations, investment management techniques and investor-servicing technologies. During the year 199394, five private sector fund houses launched their schemes followed by six others in 1994-95. Phase IV (1996-99): Growth And SEBI Regulation: Since 1996, the industry scaled newer heights in terms of mobilization of funds and number of players. Deregulation and liberalization of the Indian economy had introduced competition and provided impetus to the growth of the industry. A comprehensive set of regulations for all mutual funds operating in India was introduced with SEBI (Mutual Fund) Regulations, 1996. These regulations set uniform standards for all funds.

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Phase V (1999-2004):Emergence of a Large and Uniform Industry: The year 1999 marked the beginning of a new phase in the history of the mutual fund industry in India, a phase of significant growth in terms of both amount mobilized from investors and assets under management. In February 2003, the UTI Act was repealed and it adopted the same structure as any other fund in India. The emergence of a uniform industry with the same structure, operations and regulations make it easier for distributors and investors to deal with any fund house. Between 1999 and 2005 the size of the industry has doubled in terms of AUM which have gone from above Rs 68,000 crores to over Rs 1,50,000corers. Phase VI (From 2004 Onwards):Consolidation and Growth: The industry has lately witnessed many of mergers and acquisitions. At the same time, more international players continue to enter India while new domestic players have also entered the market. Sebi has in recent times introduced many significant regulations in the industry for monitoring the same and protecting investor interests.

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3.4 Mutual Funds: Multiple Roles 

Besides helping investors build their wealth through investment in financial markets, mutual funds perform several other roles:The money mobilised from investors are translated into productive capital for various business entities in which the schemes invest.

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As large investors, mutual funds are able to monitor the activities of the controlling shareholders and management of the companies they invest in.

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The money that goes into new projects or expansion of existing projects, boosts overall economic activity and employment in the country.

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The mutual fund industry itself provides employment or a source of livelihood to lakhs of people who are associated with the industry. This includes mutual fund employees, distributors and employees of various service providers.

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Some schemes invest in government securities, thus channelling money for the various activities of the government.

3.5 Mutual fund operations. Mutual funds announce the investment objective for every scheme they float, and seek investments from the public. When a scheme is open for investment for a limited period, initially, it is called a New Fund Offer (NFO).

Depending on how it is structured, the scheme may be open to accept money from investors only during the NFO (closed-end scheme), or it may accept money post-NFO too (open-end scheme).

The monetary investment that an investor makes in a scheme is translated into certain number of „Units‟ in the scheme. Thus, an investor in a scheme is issued units of the scheme. For example, if an investor has invested Rs. 1,000 in units issued at Rs. 10, he will be entitled to Rs. 1,000 ÷ Rs. 10 i.e. 100 units.

The purchase of units by the investor from the scheme is also called subscription. Refund of money to the investor by the scheme is called redemption. 17

Each unit of a mutual fund typically has a face value of Rs. 10. (However, older schemes in the market may have a different face value). The face value is relevant from an accounting perspective. The number of units multiplied by its face value (Rs. 10) is the capital of the scheme – its Unit Capital. The scheme earns interest income or dividend income on the investments it holds. Further, when it purchases and sells investments, it earns capital gains or incurs capital losses. These are called realized capital gains or realized capital losses as the case may be. Running the scheme entails costs viz. scheme running expenses. The expenses pull down the profits of the scheme and the NAV of the units. This brings down the returns for the investors. Therefore, SEBI has restricted the expenses that can be charged to mutual fund schemes. This has helped in positioning mutual funds among the lowest cost investment products in India.

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3.6 Legal structure of Mutual Funds. Mutual funds are closely regulated by the Securities and Exchange Board of India (SEBI) with a view to protect investors. SEBI (Mutual Funds) Regulations, 1996 sets out the regulatory framework for mutual funds. Association of Mutual Funds in India (AMFI) is an industry body constituted by mutual funds in the country. It works closely with SEBI to address various mutual funds related regulatory issues, and ensures smooth functioning of the industry.

The SEBI (Mutual Funds) Regulations, 1996 has laid down the structure for mutual funds in India as follows: 

Any mutual fund in India needs to be constituted in the form of a Trust.

 The mutual fund trust is created by one or more Sponsors, who are the main persons behind the mutual fund business. 

Every trust has beneficiaries. The beneficiaries, in the case of a mutual fund trust, are the investors who invest in various schemes of the mutual fund.

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The operations of the mutual fund trust are governed by a Trust Deed, which is executed by the sponsors. SEBI has laid down various clauses that need to be part of the Trust Deed.

 The Trust acts through its trustees. Therefore, the role of protecting the interests of the beneficiaries (investors) is that of the trustees. The first trustees are named in the Trust Deed, which also prescribes the procedure for change in trustees. 

In order to perform the trusteeship role, either individuals may be appointed as trustees or a Trustee company may be appointed. When individuals are appointed as trustees, they are jointly referred to as Board of Trustees. A trustee company functions through its Board of Directors.



Day to day management of the schemes is handled by an Asset Management Company

(AMC). The AMC is appointed by the sponsor or the Trustees.  The trustees execute an investment management agreement with the AMC, setting out

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its responsibilities. 

The

AMC

arranges

for

the

requisite

offices

and

infrastructure,

engages

employees, provides for the requisite software, handles advertising and sales promotion, and interacts with regulators and various service providers.  The AMC has to take all reasonable steps and exercise due diligence to ensure that the investment of funds pertaining to any scheme is not contrary to the provisions of the SEBI regulations and the trust deed. Further, it has to exercise due diligence and care in all its investment decisions. 

Mutual funds schemes in India are permitted to invest in securities (including equity shares and bonds / debentures), gold or gold related instruments and real estate assets.

 Although the AMC manages the schemes, custody of the assets of the scheme (securities, gold, gold-related instruments & real estate assets) is with a Custodian, who is appointed by the trustees.  Investors invest in various schemes of the mutual fund. The record of investors and their unit-holding may be maintained by the AMC itself, or it can appoint a Registrar & Transfer Agent (RTA).

Thus, the legal structure of mutual funds in India provides for various checks and balances to protect the investors.

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Advantages of Mutual Funds

Number of available options Diversification

Professional Management

Potential of Returns

Liquidity

Well Regulated

Transparency

Tax Benefits

Flexible, Affordable

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

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Diversification Investments are spread across a wide cross-section of industries and sectors and so the risk is reduced. Diversification reduces the risk because all stocks don‟t move in the same direction at the same time. One can achieve this diversify through a Mutual Fund with far less money than one can on his own.

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Professional Management: Mutual funds offer investors the opportunity to earn an income or build their wealth through professional management of their investible funds. There are several aspects to such professional management viz. investing in line with the investment objective, investing based on adequate research, and ensuring that prudent investment processes are followed.

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Liquidity: At times, investors in financial markets are stuck with a security for which they can‟t find a buyer; worse, at times they can‟t find the company they invested in. Such investments, whose value the investor cannot easily realise in the market, are technically called illiquid investments and may result in losses for the investor. Investors in a mutual fund scheme can recover the value of the moneys invested, from the mutual fund itself. Depending on the structure of the mutual fund scheme, this would be possible, either at any time (open-end schemes), or during specific intervals (interval fund), or only on closure of the scheme (closed-end schemes).

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Convenient Options: The options offered under a scheme viz. growth and dividend, allow investors to structure their investments in line with their liquidity preference and tax position.

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Regulatory Comfort: SEBI has mandated strict checks and balances in the structure of mutual funds and their activities. Mutual fund investors benefit from such protection.

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Drawbacks of Mutual Funds

Choice Overload Fees and commissions

No Control over Costs for the investor

Management risk Choice Overload: Over 1933 mutual fund schemes offered by 42 mutual funds – and multiple options within those schemes – make it difficult for investors to choose between them.

Greater dissemination of industry information through various media and

availability of professional advisors in the market should help investors handle this overload. In order to overcome this choice overload, SEBI introduced the categorisation of mutual funds to ensure uniformity in characteristics of similar type of schemes launched by different mutual funds. This will help investors to evaluate the different options available before making informed decision to invest.

No Control over Costs for the investor: All the investor's moneys are pooled together in a scheme. Costs incurred for managing the scheme are shared by all the Unit-holders in proportion to their holding of Units in the scheme. Therefore, an individual investor has no control over the costs in a scheme. SEBI has however imposed certain limits on the expenses that can be charged to any scheme. These limits vary with the size of assets and the nature of the scheme.

Fees and commissions: All funds charge administrative fees to cover their day-to- day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund.

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3.8 Types of Mutual Funds

A) BY STRUCTURE 

Open-Ended - This scheme allows investors to buy or sell units at any point in time. This does not have a fixed maturity date. Investors can conveniently buy & sell units at Net Asset Value related Prices. The key feature of Open Ended scheme is liquidity.



Closed-Ended - A closed-end fund has a fixed number of shares outstanding and operates for a fixed duration (generally ranging from 3 to 15 years). The fund would be open for subscription only during a specified period and there is an even balance of buyers and sellers, so someone would have to be selling in order for you to be able to buy it. Closed-end funds are also listed on the stock exchange so it is traded just like other stocks on an exchange or over the counter. Usually the redemption is also

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specified which means that they terminate on specified dates when the investors can redeem their units.

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Interval – Interval schemes combine the features of open-ended and close-ended funds. The units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV-related prices. Fixed maturity plans, or, FMPs are examples of these types of schemes.

B) BY NATURE



Equity Fund - Equities are a popular mutual fund category amongst retail investors. They invest the funds into Equity holdings. The structure of the fund may vary different for different schemes and the fund manager‟s outlook on different stocks. These funds are sub- classified depending on Investment objective such as a) Diversified Equity Funds b) Mid-Cap Funds c) Sector Specific Funds d) Tax Savings Funds (ELSS)

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Debt Funds - Debt funds are mutual funds that invest in fixed income securities like bonds and treasury bills. Gilt fund, monthly income plans (MIPs), short term plans (STPs), liquid funds, and fixed maturity plans (FMPs) are some of the investment options in debt funds. Apart from these categories, debt funds include various funds investing in short term, medium term and long term bonds.

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Balanced Funds - This scheme allows investors to enjoy growth and income at regular intervals. Funds are invested in both equities and fixed income securities; the proportion is pre-determined and disclosed in the scheme related offer document. These are ideal for the cautiously aggressive investors.

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C) BY INVESTMENT OBJECTIVE

 Growth Schemes - Growth Schemes are also known as equity schemes. The aim of these schemes is to provide capital appreciation over medium to long term. These schemes normally invest a major part of funds in Equities & look for capital appreciation. Income Scheme - Income Scheme are also known as debt schemes. The aim of the scheme is to provide regular and steady income to the investor. These Schemes invest in fixed income securities such as bonds & corporate debentures. In such schemes capital appreciation may be limited.

 Balance Scheme - This scheme allows investors to enjoy growth and income at regular intervals. Funds are invested in both equities and fixed income securities; the proportion is pre-determined and disclosed in the scheme related offer document. These are ideal for the cautiously aggressive investors.

 Money Market scheme - This is ideal for investors looking to utilize their surplus funds in short term instruments while awaiting better options. These schemes invest in short-term instruments such as treasury bills, certificate of Deposit, commercial paper & Intercompany call money and seek to provide reasonable returns for the investors.

D) OTHER SCHEMES

 Tax Saving Schemes – As the name suggests, this scheme offers tax benefits to its investors. The funds are invested in equities thereby offering long-term growth opportunities. Tax saving mutual funds (called Equity Linked Savings Schemes) has a 3-year lock-in period.

 Index Schemes - - Index schemes is a widely popular concept in the west. These follow a passive investment strategy where your investments replicate the movements of benchmark indices like Nifty, Sensex, etc.

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

Sector Specific Schemes –Sectoral funds are invested in a specific

sectors like infrastructure, IT, pharmaceuticals, etc. or segments of the capital market like large caps, mid-caps, etc. This scheme provides a relatively high risk-high return opportunity within the equity space.

Mutual Funds in India The mutual fund industry in India began in 1963 with the formation of the Unit Trust of India (UTI) as an initiative of the Government of India and the Reserve Bank of India. Much later, in 1987, SBI Mutual Fund became the first non-UTI mutual fund in India. The year 1963 heralded a new era of Mutual funds in India. His was marked by the entry of private companies in the sector. After the Securities and Exchange Board of India (SEBI) Act was passed in 1992, the SEBI Mutual Fund Regulations came into being in 1996. Since then, the Mutual fund companies have continued to grow exponentially with foreign institutions setting shop in India, through joint ventures and acquisitions. As the industry expanded, a non-profit organization, the Association of Mutual Funds in India (AMFI), was established on 1995. Its objective is to promote healthy and ethical marketing practices in the Indian mutual fund Industry. SEBI has made AMFI certification mandatory for all those engaged in selling or marketing mutual fund products.

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Top 10 Mutual fund Houses in India AUM wise.

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CHAPTER IV COMPANY PROFILE

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HDFC Mutual Fund HDFC GROUP: The housing development finance corporation (HDFC) was amongst the first to receive an 'in principle' approval from the R e s e r v e B a n k o f In d i a ( R B I) t o s e t u p a b a n k i n t h e p r i v a t e sector, as part of the RBI's liberalization of the Indian Banking Industry in1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995.

HDFC Mu tual Fund:

HDFC Mutual Fund is one of the largest mutual funds and well-established fund house in the country with focus on delivering consistent fund performance across categories since the launch of the first scheme(s) in July 2000.

HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers namely Housing D e v e l o p m e n t F i n a n c e C o r p o r a t i o n L i m i t e d a n d S t a n d a r d L i f e Investments Limited. The Standard Life Assurance Company w as

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e s t a b l i s h e d i n 1 8 2 5 a n d h a s c o n s i d e r a b l e experience in global financial markets. In 1998, Standard Life Investments Limited became the dedicated investment management company of the Standard Life Group and is owned100% by The Standard Life Assurance Company. With global assets under management of approximately US$126 billion as at May 15, 2003, Standard Life Investments Limited is one of the world's major investment companies .

The Trustee Company of

HDFC Mutual Fund is HDFC Trustee Company Limited and AMC is HDFC Asset Management Company Limited, incorporated with the SEBI on December 10, 1999.

HDFC AMC details. Mutual Fund

HDFC Mutual Fund

Setup Date

Jun-30-2000

Incorporation Date

Dec-10-1999

Sponsor

Housing Development Finance Corporation Ltd. / Standard Life Investments Ltd.

Trustee

HDFC Trustee Company Limited

Chairman

N.A

CEO / MD

Mr. Milind Barve

CIO

Mr. Prashant Jain

Compliance Officer

Mr. Yezdi Khariwala

Investor Service Officer

Mr. John Mathew

Assets Managed

Rs. 334964.10 crore (Dec-31-2018)

Custodian

HDFC Bank

Total number of Schemes

141

Number of Outperformers

19

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Why HDFC Mutual Fund? HDFC Mutual Fund is one of the largest mutual funds and well -established fund house in the c o u n t r y w i t h c o n s i s t e n t a n d a b o v e a v e r a g e f u n d p e r f o r m a n c e a c r o s s c a t e go r i e s s i n c e i t s incorporation on December 10, 1999. While our past experience does make us a veteran, but when it comes to investments, we have never believed that the experience is enough.

Our Investment Philosophy The single most important factor that drives HDFC Mutual Fund is its belief to give the investor the chance to profitably invest in the financial market, without constantly worrying about the market swings. To realize this belief, HDFC Mutual Fund has set up the infrastructure required t o c o n d u c t a l l t h e f u n d a m e n t a l r e s e a r c h a n d b a c k i t u p w i t h e f f e c t i v e a n a l ys i s . O u r s t r o n g emphasis on managing and controlling portfolio risk avoids chasing the latest “fads” and trends.

We Offer We believe, that, by giving the investor long-term benefits, we have to constantly review the m a r k e t s f o r n e w t r e n d s , t o i d e n t i f y n e w gr o w t h s e c t o r s a n d s h a r e t h i s k n o w l e d g e w i t h o u r investors in the form of product offerings. We have come up with various products across asset and risk categories to enable investors to invest in line with their investment objectives and risk taking capacity. Besides, we also offer Portfolio Management Services.

Our Achievements HDFC Asset Management Company (AMC) is the first AMC in India to have been assigned the „CRISIL Fund House Level – 1‟ rating. This is its highest Fund Governance and Process Quality Rating which reflects the highest governance levels and fund management practices

32

at HDFC AMC. It is the only fund house to have been assigned this rating for two years in succession. Over the past, we have won a number of awards and accolades for our performance.

Awards & Accolades

CNBC - TV 18 - CRISIL Mutual Fund of the Year Awards 2008: (3 awards)

1.HDFC Prudence Fund was the only scheme that won the CNBC - TV 18 - CRISIL Mutual Fund of the Year Award 2008 in the Most Consistent Balanced Fund under CRISIL ~ CPR for the calendar year 2007 (from amongst 3 schemes).

2. HDFC Cash Management Fund - Savings Plan was the only scheme that won the CNBC TV18 - CRISIL Mutual Fund of the Year Award 2008 in the Most Consistent Liquid Fund under CRISIL ~ CPR for the calendar year 2007 (from amongst 5 schemes).

3.HDFC Cash Management Fund - Savings Plan was the only scheme that won the CNBC TV18 - CRISIL Mutual Fund of the Year Award 2008 in the Liquid Scheme – Retail Category for the calendar year 2007 (from amongst 19 schemes).

ICRA Mutual Fund Awards 2008: (3 awards)

1. HDFC MF Monthly Income Plan-Long Term Plan- Ranked a Seven Star Fund and has been awarded the Gold Award for "Best Performance" in the category of "Open Ended Marginal Equity" for the three year period ending December 31, 2007 (from amongst 27 schemes)

2. HDFC High Interest Fund - Short Term Plan- Ranked a Five Star Fund Indicating performance among the top 10% in the category of "Open Ended Debt - Short Term" for one year period ending December 31, 2007 (from amongst 20 schemes).

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3.HDFC Prudence Fund- Ranked a Five Star Fund indicating performance among the top 10%in the category of "Open Ended Balanced" for the three year period ending December 31, 2007(from amongst 16 schemes).

Lipper Fund Awards 2008: 1. HDFC Equity Fund – Growth has been awarded the 'Best Fund over Ten Years' in the 'Equity India Category' at the Lipper Fund Awards 2008(form amongst 23 schemes). It was awarded the Best Fund over ten years in 2006 and 2007 as well. 2008 makes it three in a row.

SPONSORS

Housing Developme nt Finance Co rporation Limited (HDFC ). H D F C w a s incorporated in 1977 as the first specialized Mortgage C o m p a n y i n In d i a . H D F C p r o v i d e s financial assistance to individuals, corporate and developers for the purchase or construction of residential housing. It also provides property related services (e.g. property identification, sales services and valuation), training and consultancy. Of these activities, housing finance remains t h e d o m i n a n t a c t i v i t y . HDFC has a client base of around 12 lac borrowers, around 8 lac depositors, over 1.08 lac shareholders and 50,000 deposit age nts, as at March 31, 2008. HDFC h a s r a i s e d f u n d s f r o m i n t e r n a t i o n a l a g e n c i e s s u c h a s t h e W o r l d B a n k , IF C ( W a s h i n gt o n ) , USAID, DEG, ADB and KfW, international syndicated loans, domestic term loans from banks and insurance companies, bonds and deposits. HDFC has received the highest rating for its bonds a n d d e p o s i t s p r o gr a m f o r t h e t h i r t e e n t h ye a r i n s u c c e s s i o n . H D F C S t a n d a r d Li f e In s u r a n c e Company Limited,

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promoted by HDFC was the first life insurance company in the private sector to be granted a Certificate of Registration (on October 23, 2000) by the Insurance Regulatory and Development Authority to transact life insurance business in India.

Standard Life Investments Li mit ed . T h e S t a n d a r d Li f e A s s u r a n c e C o m p a n y w a s established in 1825 and has considerable experience in global financial markets. The company was present in the Indian life insurance market from 1847 to 1938 when agencies were set up in Kolkata and Mumbai. The company re-entered the Indian market in 1995, when an agreement was signed with HDFC to launch an insurance joint venture. On April 2006, the Board of The Standard Life Assurance Company recommended that it should demutualise and Standard Life p l c f l o a t o n t h e Lo n d o n S t o c k E x c h a n g e . A t a S p e c i a l G e n e r a l M e e t i n g h e l d i n M a y v o t i n g members overwhelmingly voted in favour of this. The Court of Session in Scotland approved this in June and Standard Life plc floated on the London Stock Exchange on 10th July 2006.Standard Life Investments is a leading asset management company, with approximately US$ 267 billion as at March 31, 2008, of assets under management. The company operates in the UK, Canada, Hong Kong, China, Korea, Ireland, Paris, Sydney and the USA to ensure it is able to form a truly global investment view. In order to meet the different needs and risk profiles of its clients, Standard Life Investments Limited manages a diverse portfolio covering all of the major markets worldwide, which includes a range of private and public equities, government and company bonds, property investments and various derivative instruments

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TRUSTEE HDFC Trustee Company Limited, a company incorporated under the Companies Act, 1956 is the Trustee to HDFC Mutual Fund vide the Trust deed dated June 8, 2000, as amended from time to time. HDFC Trustee Company Ltd is wholly owned subsidiary of HDFC.

The Board of Directors of HDFC Trustee company Limited consists of the following eminent persons:Mr. Anil Kumar Hirjee (Chairman) Mr. Ranjan Sanghi (Director) Mr. V. Srinivasa Rangan(Director) Mr. Vimal Bhandari(Additional Director)

PRODUCTS OF HDFC MUTUAL FUND

The products of HDFC Mutual Fund are as follows: •Equity Funds •Balance Funds •Debt Funds

Apart from this it also provides the following value added services: •SIP (Systematic Investment Plan) •STP (Systematic Transfer Plan) •SWAP (Systematic Withdrawal Advantage Plan)

36

37

ICICI Prudential Mutual Fund ICICI Prudential Asset Management Company Ltd. is a leading asset management company (AMC) in the country focused on bridging the gap between savings & investments and creating long term wealth for investors through a range of simple and relevant investment solutions....

The AMC is a joint venture between ICICI Bank, a well-known and trusted name in financial services in India and Prudential Plc, one of UK‟s largest players in the financial services sectors. Throughout these years of the joint venture, the company has forged a position of pre-eminence in the Indian Mutual Fund industry.

The AMC manages significant Assets under Management (AUM) in the mutual fund segment. The AMC also caters to Portfolio Management Services for investors, spread across the country, along with International Advisory Mandates for clients across international markets in asset classes like Debt, Equity and Real Estate.

The AMC has witnessed substantial growth in scale; from 2 locations and 6 employees at the inception of the joint venture in 1998, to a current strength of 2125 employees with a reach across over 300 locations reaching out to an investor base of more than 4 million investors (As

38

on December 31, 2018). The company‟s growth momentum has been exponential and it has always focused on increasing accessibility for its investors.

Driven by an entirely investor centric approach, the organization today is a suitable mix of investment expertise, resource bandwidth and process orientation. The AMC endeavors to simplify its investor‟s journey to meet their financial goals, and give a good investor experience through innovation, consistency and sustained risk adjusted performance. ICICI Prudential Mutual Fund (the Fund) offers a wide range of retail and corporate investment solutions across various asset classes - Equity, Fixed Income and Gold.

The Fund House has continuously aimed to provide investors with financial solutions to aid them in achieving their lifecycle objectives. It has constantly been on the forefront of innovation and has introduced various products aligned to meet customer needs, leading to a well-diversified portfolio of around 47 mutual fund products, across equity and debt. The success of the various endeavors is evident in the mutual fund investor base which has witnessed tremendous growth over the years. As of March 31, 2018, the investor base for the AMC stood at 3 million customers. ICICI Prudential Mutual Fund gained investor trust by managing funds as per its investment objectives and have been able to deliver superior risk adjusted returns. The consistent long term performance was achieved on the strength of fundamentals, process driven investment approach with enough flexibility for the fund managers to manage their funds in their respective unique style and insight.

The fund house over the last 20 years has emerged as a leading investment solution provider in India and has always aimed to fulfill its fiduciary responsibility of managing investor's wealth with prudence and due diligence.

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ICICI Prudential Mutual fund AMC details.

Mutual Fund

ICICI Prudential Mutual Fund Oct-13-1993

Setup Date Jun-22-1993 Incorporation Date Prudential Plc and ICICI Bank Ltd. Sponsor ICICI Prudential Trust Ltd. Trustee Ms. Chanda Kochhar Chairman Mr. Nimesh Shah CEO / MD Mr. S Naren CIO Ms. Supriya Sapre Compliance Officer Mr. Yatin Suvarna Investor Service Officer Rs. 307735.44 crore (Dec-31-2018) Assets Managed

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Sponsors 

ICICI Bank ICICI Bank is India's largest private sector bank with total consolidated assets of Rs. 11,369.42 billion (US$ 156.9 billion) at 30 September 2018 and consolidated profit after tax of Rs. 46.76 billion (US$ 645 million) for the half year ended 30 September 2018. ICICI Bank currently has a network of 4,867 Branches and 14,417 ATMs across India, as on 30 September 2018.



Prudential Prudential plc is an international financial services group with significant operations in Asia, US and the UK. The company serves more than 26 million insurance customers and has £664 billion of assets under management (as at 30 June 2018).



Prudential Corporation Asia Prudential is a leading life insurer that spans 12 markets in Asia, covering Cambodia, China, Hong Kong, India, Indonesia, Laos, Malaysia, the Philippines, Singapore, Taiwan, Thailand and Vietnam. Prudential has a robust multi-channel distribution platform providing a comprehensive range of savings, investment and protection products. Eastspring Investments manages investments across Asia on behalf of a wide range of retail and institutional investors, with about half of its assets sourced from life and pension products sold by Prudential plc. It is one of the region‟s largest asset managers with a presence in 10 major Asian markets as well as distribution offices in the US and Europe. It has USD 195 billion in assets under management (as at 30 September 2018), managing funds across a range of asset classes including equities and fixed income.



Jackson National Life Insurance Company Jackson is one of the largest life insurance companies in the US, providing retirement products and income strategies aimed at the approximately 75 million baby boomers in the United States. Jackson is also one of the top three providers of variable annuities in the US. Founded over 50 years ago, Jackson has a long and successful record of providing advisers with the products, tools and support to design effective retirement solutions for their clients.

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

M&G Prudential M&G is Prudential's UK and European fund management business with total assets under management in excess of £342 bn (as at 30 June 2018). M&G has been investing money for individual and institutional clients for over 80 years. Today it is one of Europe's largest active investment managers as well as being a powerhouse in fixed income.

Why investors choose ICICI Prudential mutual fund? Key reasons for choosing in ICICI Prudential mutual funds are: 1.ICICI Prudential AMC is one of the leading asset management companies in India. 2.Their mutual fund schemes are driven by an entirely investor-centric approach, the organization today is a suitable mix of investment expertise, resource bandwidth and process orientation. 3.ICICI Prudential mutual fund schemes, endeavors to simplify its investor‟s journey to meet their financial goals, and give a good investor experience through innovation, consistency and sustained risk-adjusted performance. 4.ICICI Prudential Mutual Fund has gained investor trust by managing funds as per its investment objectives and has been able to deliver superior risk-adjusted return. 5. This fund house over the last 20 years has emerged as a leading investment solution provider in India and has always aimed to fulfill its fiduciary responsibility of managing investor‟s wealth with prudence and due diligence.

Different types of fund offered by ICICI Prudential Mutual fund. Equity Funds / Growth Funds Funds that invest in equity shares are called equity funds. They carry the principal objective of capital appreciation of the investment over a medium to long-term investment horizon. Equity Funds are high risk funds and their returns are linked to the stock markets. They are best suited

42

for investors who are seeking long term growth. There are different types of equity funds such as Diversified funds, Sector specific funds and Index based funds.

Debt Fund / Fixed Income Funds These Funds invest predominantly in rated debt / fixed income securities like corporate bonds, debentures, government securities, commercial papers and other money market instruments. They are best suited for the medium to long-term investors who are averse to risk and seeking regular and steady income. Debt Funds are less risky when compared with equity funds.

Balanced Funds These funds invest both in equity shares and debt (fixed income) instruments and strive to provide both growth and regular income. They are ideal for medium- to long-term investors willing to take moderate risks.

Index Funds These funds invest in the same pattern as popular stock market indices like CNX Nifty Index and S&P BSE Sensex. The value of the index fund varies in proportion to the benchmark index. NAV of such schemes rise and fall in accordance with the rise and fall in the index. This would vary as compared with the benchmark owing to a factor known as “tracking error”.

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44

Chapter V: Data Analysis And Interpretation

45

Q1. Age

Age

Respondents

18-25

37

25-40

9

40-60

4

60 and above

0

Total

50

N.0 of respondents

AGE 40 35 30 25 20 15 10 5 0

37

9 18-25

4

25-40

40-60

0 60 and above

Age

Interpretation: 

The above table classified the respondents according to their age group.



The majority of the respondents belong to the age group 18 to 25 years with 74% and the second age group is 25 to 40 years with 18%, followed by 40 to 60 years with 8%, greater than 60 being 0 %.



The age spans of all respondents well lay above 18 years as indicated in the table.



This data shows many investors are of young age and less investors of middle/old age in mutual funds.

46

Q2. Gender

Gender No. of Respondents Male

24

Female

26

Total

50

GENDER N.0 of respondents

30

25 20 15 10

24

26

Male

Female

5 0

Gender

Interpretation: 

The above table shows that 52% of the total number of respondents were female and the rest 48% were male respondents.



The data obtained show that majority of the respondent were female. It is also inferred that the interest of the respondents is known mostly from the Female respondents.



Gender wise classification helps significantly in better understanding people‟s awareness and interest towards investment options.

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Q3. Marital Status Marital Status

No. of Respondents

Single

43

Married

7

Others

0

Total

50

Marital Status N.0 of respondents

50 40 30 20

43

10 7

0 Single

Married Marital Status

Marital Status 14% Single Married

86%

48

Interpretation: 

The marital status is a limiting and influencing factor of the people towards making their investments. Due to family constraints and needs the people want to make their investments.



Among the total 50 respondents 43 respondents (86 %) are unmarried and bachelors; 7 respondents (14 %) are married and family people.



It is inferred and concluded that out of the total 50 respondents 43 respondents (86 %) are unmarried and bachelors. This shows their personal interest for the social status and investments with HDFC/ ICICI Mutual Fund house.



So majority of the respondents are single and very few of them are married. This means almost all of the respondents are independent and hence, they can easily understand the importance of mutual fund in their own career.

49

Q4. Occupation Occupation No. of Respondents Salaried

12

Professional

3

Business

7

Student

27

Housewife

1

Total

50

Occupation N.0 of respondents

30 25 20 15

27

10 5

12

7

3

0 Salaried

Professional

1 Business

Student

Housewife

Occupation

Interpretation: 

Among the total 50 respondents, 12 respondents are doing salaried works; 7 respondents are doing their own business; 3 respondents are professionals in different fields; 27 respondents are student; 1 respondent is housewives.



This shows that the respondents were from different occupational back ground.

 It is inferred that the maximum of 27 respondents of the total are students and are following academics in different fields.

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Q5.What is your Annual Income? Annual Income

No. of Respondents

Less than 1 Lakh

20

1 – 3 Lakh

9

3 – 5 Lakh

6

5– 10 Lakh

9

More than 10 Lakh

6

Total

50

Annual Income 12% Less than 1 Lakh 40%

18%

1 – 3 Lakh 3 – 5 Lakh 5– 10 Lakh

12%

More than 10 Lakh 18%

Interpretation:      

The income of the people is an essential factor that influences and motivates them for making their investments. The highest no. of respondents (40%) are earning less than 1 lakh they are either studying or housewives. These are mostly people who are single, females and are students. Then comes respondents with 18% i.e. people who are earning between 1 – 3 Lakhs. These are mostly salaried people. Next are the respondents who earn between 3 – 5 lakhs with 12%. These are also people who have salaried work or profession. The respondents (11%) are earning between 5 – 10 Lakhs. These respondents have salaried work. Next are the respondents who earn more than 10 Lakhs with 12%. They are people who mostly run their own business.

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Q6. What Percentage of your annual income do you save? Percentage Saving

No. of Respondents

0-10 10-25

27 13

25-40 40 & More Total

7 3 50

Percentage Saving N.0 of respondents

30 25 20 15

27

10 13

5

7

0 0-10%

10-25%

25-40%

3 40 and above%

Percentage Saving

Interpretation: 

About 27 of the respondents save between 0- 10% from their annual income.



These are mostly the respondents who are student, single and are between the ages 18 – 25 years, which means it‟s just the start of their career.



Then, 13 respondents save between 10 – 25% from their annual income. Mostly, females and students have chosen this category.



Next are the 7 respondents who save between 25 – 40%. These respondents have a salaried job and a professional work. The marital status of the respondents of this category is single.



And lastly, 3 respondents save above 40% of their income. These are salaried and single respondents.

52

Q7. What Percentage of your investible fund do you invest in mutual fund? Percentage investible fund

No. of Respondents

Less than 20 20-40

32 10

40-60 60 & More Total

6 2 50

Percentage investible fund N.0 of respondents

35 30 25

20 15

32

10 5

10

6

0 less than 20

20-40

40-60

2 60and above

Percentage investible fund

Interpretation: 

The income earning capacity of every individual is a direct component to decide about their savings. The savings of the individuals are rated on their total earnings of income. In this way, the rate of income towards the investment is presented above.



Out of the total 50 respondents, 32 respondents said that they invest less than 20% of their income, 10 respondents have said that they invest 20 to 40% of their income, 6 respondents have said that they invest 40 to 60% of their income and only 2 respondents have said that they invest 60%and above of their income.



The respondents who invest less than 20% in mutual fund are unmarried, have their income less than 3 lakh and their saving is less than 10%.



Hence, it is concluded that the majority of 32 respondents of the total have said that they invest <20% of their income.

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Q8. In which mutual fund house have you invested?

Mutual fund house

No. of Respondents

HDFC Mutual Fund ICICI Prudential Mutual Fund Total

37 13 50

N.0 of respondents

Mutual fund house 40 35 30 25 20 15 10 5 0

37 13 HDFC Mutual Fund

ICICI Prudential Mutual Fund

Mutual fund house

Interpretation: 

Out of the total 50 respondents, 37 investors have invested their money with HDFC Mutual fund whereas it was found that only 13 investors have invested with ICICI Prudential Mutual Fund.



The majority of respondents (74%) have invested with HDFC Mutual fund.

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Q9. Which mode of investment do you prefer in mutual fund?

Mode of investment

No. of Respondents

One time investment (lump sum) Systematic investment plan (SIP) Total

16 34 50

N.0 of respondents

Mode of investment 40 35 30 25 20 15 10 5 0

34 16

One time investment (lump sum)

Systematic investment plan (SIP)

Mode of investment

Interpretation: 

From the survey it was found that out of 50 respondents, 34 respondents have selected Systematic investment plan (SIP) as their mode of investment in Mutual fund. The respondents who have chosen this category are single females, less than the age 25. These are mostly students and salaried having income less than 3 lakh. 

An SIP allows an investor to invest a fixed amount of money at regular intervals. It also gives the advantage of averaging the cost of units besides providing benefits of compounding. It has been selected mainly by the students and salaried people.



16 respondents have selected their mode of investment to be one time investment (lump sum). It is majorly done by people who have their own business and having income more than 5 lakh.

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Q10. Which category of Funds do you prefer to invest in? (5 being highly preferred and 1 being least preferred)

Category of funds.

a)

Highly Preferable. RATE-5

Large cap.

Preferable RATE–4

12

14

Somewhat Not very Not at all Public Preferable Preferable Preferable Preference using weighted RATE–3 RATE–2 RATE–1 average on 5 point rating 17 7 3.62

b)

Small cap.

7

17

16

9

1

3.4

c)

Mid cap.

12

15

20

3

-

3.72

d)

Multi cap.

10

12

15

11

2

3.3

3.8 3.7

3.72 3.62

3.6 3.5 3.4

3.4 3.3 3.3 3.2 3.1 3 Large cap.

Small cap.

Mid cap.

Multi cap.

Public Preference using weighted average on 5 point rating

Interpretation: 

On the basis of public preference using weighted average on a point 5 rating scale, mid cap category of funds are highly preferred with 3.72 rating followed by the large cap funds.



The least preferred category of funds is small and multi cap funds with the rating of 3.4 and 3.3 respectively.

56

Q11. Did you take advice of any financial expert before deciding to invest in mutual fund?

Financial expert advice

No. of Respondents

Yes

30

No

20

Total

50

Financial expert advice Yes

No

40%

60%

Interpretation: 

From the survey it was found that out of 50 respondents, 30 respondents have selected a yes i.e. they have taken advice from a financial expert.



20 respondents have selected a No i.e. they haven‟t taken any advice from the financial expert.



It can be inferred that majority of the respondents have taken the financial expert advice before investing in Mutual funds.

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Q12. What sources did you used to collect information about mutual fund?

Sources of information

Count

Percentage (%)

Advertisement Peer group Banks MF Company office Financial Advisor Others

16 14 11 8 30 4

19.27 16.86 13.25 9.63 36.14 4.81

Sources of information 5%

Advertisement

19%

Peer group Banks

36% 17%

MF Company office

Financial Advisor 10%

13%

others

Interpretation: 

Among the 50 total respondents, 16 respondents (19%) got the information from Advertisement; 14 respondents (17%) got the information from peer group; 11 respondents (13%) got the information from the banks; 8 respondents (10%) got the information from the Mutual fund company office; 30 respondents (36%) got the information from the financial advisor; and the rest got the information from the other sources.



It is inferred that majority of the respondents came to know about mutual funds by the financial advisor followed by advertisements and banks.

58

Q13. Why did you choose HDFC/ICICI?

Parameters

Count

Percentage

Liquidity.

16

14.67

Low risk.

14

12.84

High Returns.

31

28.44

Brand Image/Reputation.

23

21.10

Service Quality

9

8.25

Existing customer of the group company Proximity to my office / residence

7.33

8

7.33

8

Reasons to choose AMC 7%

Liquidity.

15%

7%

Low risk. High Returns.

8% 13%

Brand Image/Reputation. Service Quality 21%

Existing customer of the group company 29%

Proximity to my office / residence

59

Interpretation: 

The investors are often choosing a particular mutual fund company due to several reasons. This may be happening due to service quality, liquidity, low risk etc.



Out of the total respondents, 31 respondents (29%) opined that the high returns by the mutual fund house influenced them for choosing; these people are single student or salaried, between the age group of 18-25 years.



21% respondents opined that the reason for choosing the mutual fund house was Brand Image/Reputation ;



15% respondents opined that the liquidity is the reason for choosing;



13% respondents chose the mutual fund house because of low risk involved in it; and the reason for rest of the respondents was service quality, Existing customer of the Group Company and Proximity to my office / residence



It is then concluded that the maximum importance is given to high returns, brand image and liquidity.

60

Q14. Which of the following TYPES mutual funds scheme have you opted for investment?

Parameters

Count

Percentage (%)

Growth schemes.

31

37

Balanced schemes.

16

19

Income schemes.

14

17

Tax savings schemes.

14

17

Money market schemes.

6

7

Index schemes.

3

3

Type of mtual fund scheme 7%

3% Growth schemes. 37%

17%

Balanced schemes. Income schemes. Tax savings schemes. Money market schemes.

17%

Index schemes. 19%

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Interpretation: 

The investors will make their investments in mutual funds scheme according to their interest and capacity. They would like to choose the type of fund scheme that fetch the maximum revenue to them.



In this regard, the chosen respondents companies were questioned about their fund type and choice.



Majority of the respondents have chosen growth schemes for investment. These people are male, students and have salaried work, less than the age of 25 years which means they are just starting with their career and want capital appreciation.



Next is the balanced scheme that is chosen by mainly female respondents for investment, followed by the income and tax saving schemes.



Income schemes are majorly chosen by people who are single and between the age group of 18-25 so that they can have regular and steady flow of income.



The scheme that is least used for investment by the respondents are money market and index schemes.

62

Q15. Which of the following scheme of mutual funds suits you the most for making an investment?

Mutual Fund Scheme

No. of Respondents

Open ended scheme

35

Close ended scheme

10

Interval Scheme Total

5 50

Mutual Fund Scheme 40 35 30 25 20 15

35

10

5

10

5

0 Open ended scheme

Close ended scheme

Interval Scheme

Interpretation: 

Every investor in the Mutual Fund market has a particular preference in class of funds after they had chosen the avenue, plan and schemes of funds.



In this regard, Out of the total 50 respondents, 35 respondents consider the open ended type of funds suitable for making an investment; 10 respondents prefer to invest in closed ended type of funds and 5 respondents would prefer the class of interval scheme.



Hence, it is concluded that the most of 35 respondents (70%) of the total prefer to invest in the open ended funds; followed by the closed ended funds which is preferred by a percentage (20%) of respondents numbering 10.

63

Q16. Where do you find yourself as a mutual fund investor?

Knowledge of the Mutual Totally Fund ignorant.

Various Mutual Fund Companies

Partial Aware only of Fully knowledge of specific aware. funds. schemes in which you invested. 12 19 9

10 4

25

14

7

8

10

25

7

Portfolio details of scheme invested Scheme portfolio manager

30 25

25

25 19

20

12 10

5

Partial knowledge of funds

14

15 10

Totally ignorant.

10

9 7

8

7

Aware only of specific schemes in which you invested. Fully aware.

4

0 Various Mutual Portfolio details of Scheme portfolio Fund Companies scheme invested manager

64

Interpretation: 

Every individual investor has a sufficient knowledge of investment. They have had adequate information on the Mutual fund companies, Portfolio details of scheme etc.



While considering the knowledge about various Mutual fund companies 19 respondents knew the companies only in which they had their investment done while 10 respondents were totally ignorant.



In respect of Portfolio details of scheme invested out of 50 respondents 25 of them have partial knowledge of it and only 4 respondents are totally ignorant.



About the scheme portfolio manager 25 respondents are aware only of schemes they have invested in.



It is noted that all the investors are not fully aware as investor of mutual funds.

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Q17. Which of the following factors would influence you most in taking an investment decision in Mutual funds? (Please RATE the following factors according to your preference. RATE5 is most favorable and RATE1 is not at all favorable)

Financial assets

Highly Favorable RATE-5

Favorable

Somewhat favorable RATE–3

Not very favorable RATE–2

Not at all favorable RATE–1

23

5

1

1

Public Preference on 5 point rating 4.2

a)Safety of capital b)Liquidity

20 14

24

10

2

0

4

c)Flexibility

13

24

12

1

0

3.98

d)Past Good Return

14

29

5

1

1

4.08

e)Higher returns

25

20

4

0

1

4.36

f)Professional

16

22

11

0

1

RATE–4

4.04

Management g)Tax Benefit

14

19

14

3

0

3.88

h)Low Risk

9

26

11

3

1

3.78

i)Reputation of the sponsor

10

19

16

3

2

3.64

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5 4.5 4.2 4 3.5 3 2.5 2 1.5 1 0.5 0

4

3.98

4.08

4.36

4.04

3.88

3.78

3.64

Interpretation: 

Interpreting the above table and graph it has been observed that a higher return is the factor that influences the investment decision. It has been rated 4.36 on the scale of 5.



The second factor that is important is the safety of capital (secured investment). Investors want to ensure safety of their initial investments. It has been given a rate of 4.2 on the scale of 5.



The next factor is Past good returns or the past performance .This is quite telling as we can presume that investors give adequate significance to the trends of past returns while deciding on the investment.



The fourth factor Professionalism has been given rating of 4.04 on the scale of 5.



It i s agreed by investors that professionalism of AMC is relevant in taking investment decision.



The respondents consider liquidity as an important factor for investment decision. Investors want the independency to redeem units of mutual funds.



The factor that is not much considered by the investors is the reputation of the sponsor.

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Q18. Rate your services of HDFC/ ICICI according to your experience? ( 5 being highly satisfied and 1 being least satisfied )

Services

Highly Satisfied RATE-5 17

Satisfied

B) Convenience facility.

11

29

9

-

1

3.98

c)Website usage

12

27

10

-

1

3.98

d)App Services

9

29

9

2

1

3.86

e)User interface

14

23

11

-

2

3.94

a)Advisory services.

4.1

Somewhat Satisfied RATE–3 10

RATE–4 22

Not very Satisfied RATE–2 -

Not at all Satisfied RATE–1 1

Public Preference on 5 point rating 4.08

4.08

4.05

4

3.98

3.98 3.94

3.95

3.9 3.86 3.85

3.8

3.75 Advisory services.

Convenience facility.

Website usage

68

App Services

User interface

Interpretation: 

Every Asset Management Company must provide facilities and benefits to individual investors. The cliental approach and service to the best among others are equally important.



The respondents are highly satisfied with advisory services of the mutual fund house. They have been ranked 4.08 on the scale of 5.



Followed by this is the convenience facility and website usage. Respondents are satisfied with both these services of AMC and are rated 3.98 on a scale of 5.



Next are the app services and the user interface for which the respondents have given a rating of 3.86 and 3.94 respectively.

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Chapter VI FINDINGS & CONCLUSIONS

70

FINDINGS 

Majority of the respondents have the annual income less than 1 lakh and saving is less than 20% of such income. Such respondents are single, student and of age group 18-25 years.



Very few respondents invest more than 20% of the investible fund in mutual fund and these people mainly have their own business or profession.



Majority of the respondents invest with HDFC Mutual fund due to higher returns, brand image/reputation and liquidity.



Systematic investment plan (SIP) is the preferred mode of investment for single females, students and those whose are less than 25 years of age.



Mid cap and large cap funds are highly preferred for investment as compared to small cap and multi cap funds.



Investor‟s give adequate significance to higher returns, safety of capital and past performance of AMC while taking the investment decision.



Respondents are getting advice from the financial advisor for mutual fund investment followed by advertisement and peer groups.



Respondents are highly satisfied with the advisory services of the AMC.



Study found significant difference in the opinion of male and female in case of growth and balanced scheme. The study reveals, female investors prefer balanced schemes whereas male counterparts prefer Growth Schemes.

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CONCLUSION Mutual Fund Industry now represents perhaps most appropriate opportunity for most Investors. The financial market is most sophisticated and complex. Investors need required knowledge to invest in the mutual fund industry. Mutual fund industry also gives good returns if the markets are high and you can also suffer losses if the market does not do well or while investing fund manager makes some mistakes during investment of Mutual Funds.

Mutual Fund Returns are compared on the basis of performance of the stock market. If the stock market do well than the fund in which you have invested will also do well. As the markets are diversified the loss is minimal.

In my above research I had taken HDFC Mutual fund and ICICI Prudential Mutual fund house for comparison. HDFC mutual fund is preferred more by the respondents due to higher returns, brand image and liquidity.

It is widely believed that mutual fund is a retail product designed to target individual investors, who are intimidated by the stock market but, like to take advantage of stock market investing. Hence, an appropriate crafting of a mutual fund product and expecting a good response from the investors is the need of the hour. A successful fund manager should study investor saving and investment behavior based on the demographic profile and understands their needs and expectations, to gear up the performance to meet investor requirements.

72

CHAPTER VII SUGGESTIONS / RECOMMENDATIONS

73

SUGGESTIONS As per analysis:

Understand the purpose of investment: The first point to analyze before investing in a fund is to find out whether objective matches with the scheme. If t here is a mismatch in the scheme the investors would be affected with the probable returns. For example the schemes that invest in large cap stocks are not suitable for conservative Investors. He should first try to invest in small and mid cap funds.



Low Risk Tolerance:-The Investors with low risk tolerance should invest in small& mid cap schemes as they are relatively safer when compared to schemes like equity. Aggressive investors can go for equity investments.



Taxing Saving Funds:-When markets are up it is advisable to invest in tax saver, Which are giving good returns compared too many other schemes.

As per respondents:

There should be improvement in the user interface provided by the AMC.



There should be more focus on customer relationship management.



A telephonic reminder should be given to the respondents for their investment.



More Risk and return stability should be there.



To have briefing of portfolio as often as twice a year for better understanding of the financial position in a certain scheme.



Active portfolio management.



AMC should come up with new innovative plans.

74

BIBLIOGRAPHY

75



Books referred:

1) A Guide to Indian Mutual Fund Investment (Author: Dr. Susanta Kumar

Mishra)



Other sources:

1) News Paper 2) Magazines 3) Internet websites



Websites Referred:



https://www.hdfcfund.com/our-products



https://www.hdfcfund.com/about-us



www.amfiindia.com



https://www.icicipruamc.com/OurFunds.aspx



https://economictimes.indiatimes.com



https://www.icicipruamc.com/AboutUs/CorporateProfile.aspx

76

Questionnaire 1) Personal details.  Name: Email:- (Optional)  Age:-

18-25Yrs

25-40Yrs

40-60Yrs

Above 60Yrs

 Gender:Male- ( )

Female- ( )

2) Marital Status. Single- ( )

Married- ( )

Other- ( )

3) Occupation. Salaries () Profession- ( ) Housewife- ( )

Business- ( )

Student- ( )

4) What is your annual income? ( In lakhs)

<1

1-3

3-5

77

5-10

>10

5) What Percentage of your annual income do you save?

<10%

10-25%

25-40%

>40%

6) How much percentage of your investible fund you invest in mutual funds per year?

<20 %

20-40%

40-60%

> 60%

7) In which Mutual fund have you invested? HDFC Mutual fund- ( )

ICICI Prudential fund- ( )

8) Which mode of investment do you prefer in mutual fund? One time investment- ( )

Systematic investment plan (SIP) - ( )

9) Which category of Funds do you prefer to invest in?

Category of funds.

Highly Preferable Preferable. RANK–4 RANK-5

a) Large cap. b)Mid

cap.

c)Small

cap.

d)Multi

cap.

78

Somewhat Preferable RANK–3

Not very Preferable RANK–2

Not at all Preferable RANK–1

10) Did you took advice of any financial expert before deciding to invest in mutual fund? Yes - ( ) No- ( ) 11) What sources did you used to collect information about mutual fund? a) b) c) d) e) f)

Advertisement ( ) Peer group ( ) Banks ( ) MF Company office ( ) Financial Advisor ( ) Other Source _____

12) Why did you choose HDFC/ICICI?(checkbox) a) Liquidity. ( ) b) Low risk. ( ) c) High Returns. ( ) d) Brand Image/Reputation. ( ) e) Service Quality ( ) f) Existing customer of the group company ( ) g) Proximity to my office / residence ( ) 13) Which of the following TYPES mutual funds scheme have you opted for investment? a) b) c) d) e) f)

Growth schemes. ( ) Balanced schemes. ( ) Income schemes. ( ) Tax savings schemes. ( ) Money market schemes. ( ) Index schemes. ( )

79

14) Which following scheme of mutual funds suits you the most for making an investment? a) Open ended schemes. ( ) b) Close ended schemes. ( ) c) Interval schemes. ( ) 15) Where do you find yourself as a mutual fund investor? Knowledge of the Mutual Totally Fund ignorant.

Partial Aware only of Fully knowledge of specific aware. funds. schemes in which you invested.

Various Mutual Fund Companies Portfolio details of scheme invested Scheme portfolio manager

16) Whichofthefollowingfactorswouldinfluenceyoumostintakingan investment decision in Mutual funds? Please rank the following factors according to your preference. Rank5 is most favourable and rank1 is not at all favorable Financial assets

Highly Favourable Somewhat Not very Not at all Favourable favourable favourable favourable RANK-5 RANK–4 RANK–3 RANK–2 RANK–1

a)Safety of capital b)Liquidity c)Flexibility d)Past Good Return e)Higher returns

80

f)Professional Management g)Tax Benefit h)Low Risk i)Reputation of the sponsor

17)

Rate your services of HDFC/ ICICI according to your experience? Services

Highly Satisfied RANK-5

Satisfied RANK–4

Somewhat Satisfied RANK–3

Not very Satisfied RANK–2

Not at all Satisfied RANK–1

a)Advisory services. B) Convenience facility. c)Website usage d)App Services e)User interface

18) What is the thing that you like the most about HDFC / ICICI (post purchase?)

19) What is the thing that you like the to suggest to HDFC / ICICI (post purchase)

81