Madhukr

Executive Summary After completing three trimesters of Post Graduation Diploma in Insurance and Business Management, I joined Kotak Mahindra Old Mutual Life Insurance Company Ltd. for my summer internship project for 2 months where I was expected to report Mr. Mukesh Purohit who was my mentor in the company. The title of my project is “Comparative study of Unit Linked Insurance Plans and Mutual Funds”. This project can be bifurcated in to two parts. First part is a study based that takes in to account the various parameters about ULIPs and Mutual Funds that a investor would like to know before investing in either of the two investment instruments. The second part involves a survey which is done for different occupation and age groups in order to find out their investment patterns their portfolios, their investment concerns, perceptions about different investment schemes, return from the investments. Survey also aimed at finding out the popularity and acceptability of ULIPs and Mutual Funds and also to analyze which set of customers should invest in these two. The first part of the project was study based for which secondary data was sufficient. This data was collected from different websites as these were the main source. Second part i.e. survey needed primary data which was collected with the help of questionnaire. The sample size of the survey was 93.The questionnaire was filled from the people of different age groups and occupation. The survey revealed that 80 % of the respondents were from service and 20% were in to different business. In business class the investment is done by 72% with high insurance cover with 83%.The main investment was in FD and shares, the main requirement for them is high returns and high liquidity. This class is little aware about ULIPs and Mutual funds. Service class people have lower percentage of investment (68%) and life cover (64%) as compared to business class. For this class risk tolerance is low and main investment is in FD and Mutual funds. In the different age groups the group between age 18-25 is least interested in investment(54%) and taking life cover(42%).For this group high return is an important factor with the majority of investment in Mutual funds and shares. In the age group 25-35 the main concern was on building cash reserve. There investment percentage and life insurance cover is fairly high (70%). The main investment is in ULIPs and FD. In the age group 35-45 the main concern was the same as the previous group of building cash reserve and saving for their children. The investment is quite high (87%) with high insurance cover (90%).Their main investment is in ULIP and Mutual funds. In the age group 45 and above the people of this group have high investment and life insurance percentage. The main concern for this group is to build cash and prime concern is safety. This group is well aware of ULIP and mutual funds.

CONTENTS

-1-

Chapter 1

Acknowledgement

1

Chapter 2

Executive Summary

2

Chapter 3

Introduction

4

Chapter 4

ULIP

7

Chapter 5

Mutual Funds

14

Chapter 6

ULIP vs. Mutual funds

17

Chapter 7

Where to invest

26

Chapter 9

Survey

27

Chapter 10 Analysis

29

Chapter 11

Annexure

35

Chapter 12

Bibliography

Company Profile KOTAK’S VISION -2-

To be • • •

A globally Indian financial services brand. The most trusted financial services company. The most preferred employer in financial services.

Its business driver is “Value creation rather than size alone”.

The Kotak Mahindra Group Kotak Mahindra is one of India's leading financial conglomerates, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporate. The group has a net worth of over Rs. 5,824 crore, employs around 20,000 people in its various businesses and has a distribution network of branches, franchisees, representative offices and satellite offices across 370 cities and towns in India and offices in New York, London, San Francisco, Dubai, Mauritius and Singapore. The Group services around 4.4 million customer accounts. The Kotak Mahindra Group was born in 1985 as Kotak Capital Management Finance Limited. This company was promoted by Uday Kotak, Sidney A. A. Pinto and Kotak & Company. Industrialists Harish Mahindra and Anand Mahindra took a stake in 1986, and that's when the company changed its name to Kotak Mahindra Finance Limited. Since then it's been a steady and confident journey to growth and success. 1986 Kotak Mahindra Finance Limited starts the activity of Bill Discounting 1987

Kotak Mahindra Finance Limited enters the Lease and Hire Purchase market

1990

The Auto Finance division is started

1991

The Investment Banking Division is started. Takes over FICOM, one of India's largest financial retail marketing networks

1992

Enters the Funds Syndication sector

1995

Brokerage and Distribution businesses incorporated into a separate company Kotak Securities. Investment Banking division incorporated into a separate company - Kotak Mahindra Capital Company

1996

The Auto Finance Business is hived off into a separate company - Kotak Mahindra Prime Limited (formerly known as Kotak Mahindra Primus Limited). Kotak Mahindra takes a significant stake in Ford Credit Kotak Mahindra Limited, for financing Ford vehicles. The launch of Matrix Information Services Limited marks the Group's entry into information distribution.

1998

Enters the mutual fund market with the launch of Kotak Mahindra Asset Management Company.

2000

Kotak Mahindra ties up with Old Mutual plc. for the Life Insurance business. Kotak Securities launches its on-line broking site (now www.kotaksecurities.com). Commencement of private equity activity through -3-

setting up of Kotak Mahindra Venture Capital Fund. 2001

Matrix sold to Friday Corporation Launches Insurance Services

2003

Kotak Mahindra Finance Ltd. converts to a commercial bank – the first Indian company to do so.

2004

Launches India Growth Fund, a private equity fund.

2005

Kotak Group realigns joint venture in Ford Credit; Buys Kotak Mahindra Prime (formerly known as Kotak Mahindra Primus Limited) and sells Ford credit Kotak Mahindra. Launches a real estate fund

2006

Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital Company and Kotak Securities

Its Corporate Identity

KOTAK’S VISION To be • • •

A globally Indian financial services brand. The most trusted financial services company. The most preferred employer in financial services.

Its business driver is “Value creation rather than size alone”.

KOTAK’S VISION To be • • •

A globally Indian financial services brand. The most trusted financial services company. The most preferred employer in financial services.

Its business driver is “Value creation rather than size alone”.

-4-

KOTAK’S VISION To be • • •

A globally Indian financial services brand. The most trusted financial services company. The most preferred employer in financial services.

Its business driver is “Value creation rather than size alone”.

KOTAK’S VISION To be • • •

A globally Indian financial services brand. The most trusted financial services company. The most preferred employer in financial services.

Its business driver is “Value creation rather than size alone”.

KOTAK’S VISION To be • • •

A globally Indian financial services brand. The most trusted financial services company. The most preferred employer in financial services.

Its business driver is “Value creation rather than size alone”.

KOTAK’S VISION To be • • •

A globally Indian financial services brand. The most trusted financial services company. The most preferred employer in financial services.

Its business driver is “Value creation rather than size alone”.

KOTAK’S VISION To be

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• • •

A globally Indian financial services brand. The most trusted financial services company. The most preferred employer in financial services.

Its business driver is “Value creation rather than size alone”.

KOTAK’S VISION To be • • •

A globally Indian financial services brand. The most trusted financial services company. The most preferred employer in financial services.

Its business driver is “Value creation rather than size alone”.

KOTAK’S VISION To be • • •

A globally Indian financial services brand. The most trusted financial services company. The most preferred employer in financial services.

Its business driver is “Value creation rather than size alone”.

KOTAK’S VISION To be • • •

A globally Indian financial services brand. The most trusted financial services company. The most preferred employer in financial services.

Its business driver is “Value creation rather than size alone”.

KOTAK LIFE INSURANCE Kotak Mahindra bank ltd. (74%)

+

Old Mutual PLC (26%)

GEOGRAPHY: Present in 30 cities (including 21 out of the top 40 cities), with 41 branches.

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CAPABILITY 1200+ Employees 6800 life advisors Established systems and processes adequate for existing scale of business.

PRODUCTS: A complete range of individual products (10) to cater to varying needs of customers.

BRANDING Fourth most recalled brand as per ORG MARG survey. Third most recalled brand in Mumbai and Delhi.

ULIP (Unit Linked Insurance Plan) -7-

INTRODUCTION: A Unit Link Insurance Policy (ULIP) is one in which the customer is provided with a life insurance cover and the premium paid is invested in either debt or equity products or a combination of the two. In other words, it enables the buyer to secure some protection for his family in the event of his untimely death and at the same time provides him an opportunity to earn a return on his premium paid. In the event of the insured person's untimely death, his nominees would normally receive an amount that is the higher of the sum assured or the value of the units (investments). To put it simply, ULIP attempts to fulfill investment needs of an investor with protection/insurance needs of an insurance seeker. It saves the investor/insurance-seeker the hassles of managing and tracking a portfolio or products. A ULIP, as the name suggests, is a market-linked insurance plan. The main difference between a ULIP and other insurance plans is the way in which the premium money is invested. Premium from, say, an endowment plan, is invested primarily in risk-free instruments like government securities (gsecs) and AAA rated corporate paper, while ULIP premiums can be invested in stock markets in addition to corporate bonds and gsecs. ULIPs offer a variety of options to the individual depending on his risk profile. For instance, an individual with an above-average risk appetite can choose a ULIP option that invests upto 60% of premium in equities. Likewise, an individual with a lower risk appetite can select a ULIP that invests upto 20% of premium in equities.

ULIP VS TRADITIONAL INSURANCE PLAN It wasn't too long back, when the good old endowment plan was the preferred way to insure oneself against an eventuality and to set aside some savings to meet one's financial bjectives. Then insurance was thrown open to the private sector. The result was the launch of a wide variety of insurance plans, including the ULIPs.

-8-

Two factors were responsible for the advent of ULIPs on the domestic insurance horizon. First was the arrival of private insurance companies on the domestic scene. ULIPs were one of the most significant innovations introduced by private insurers. The other factor that saw investors take to ULIPs was the decline of assured return endowment plans. Of course, the regulator -- IRDA (Insurance and Regulatory Development Authority) was instrumental in signaling the end of assured return plans. Today, there is just one insurance plan from LIC (Life Insurance Corporation) -- Komal Jeevan -- that assures return to the policyholder. These were the two factors most instrumental in marking the arrival of ULIPs, but another factor that has helped their cause is a booming stock market. While this now appears as one of the primary reasons for their popularity, we believe ULIPs have some fundamental positives like enhanced flexibility and merging of investment and insurance in a single entity that have really endeared them to individuals. SUM ASSURED Perhaps the most fundamental difference between ULIPs and traditional endowment plans is in the concept of premium and sum assured. When you want to take a traditional endowment plan, the question your agent will ask you are -- how much insurance cover do you need? Or in other words, what is the sum assured you are looking for? The premium is calculated based on the number you give your agent. With a ULIP it works in reverse. When you opt for a ULIP, you will have to answer the question -- how much premium can you pay? Depending on the premium amount you state, you are offered a sum assured as a multiple of the premium. For instance, if you are comfortable paying Rs 10,000 annual premium on your ULIP, the insurance company will offer you a sum assured of say 5 to 20 times the premium amount.

-9-

In the case of LIC's ULIP, the sum assured--premium relationship works the traditional way. So you need to state how much sum assured you are looking for and your premium is calculated as 1/10th the sum assured. If you have opted for a sum assured of Rs 100,000, your annual premium will be Rs 10,000. INVESTMENTS Traditionally, endowment plans have invested in government securities, corporate bonds and the money market. They have shirked from investing in the stock markets, although there is a provision for the same. However, for some time now, endowment plans have discarded their traditional outlook on investing and allocate about 10%-15% of monies to stocks. This percentage varies across life insurance companies. ULIPs have no such constraints on their choice of investments. They invest across the board in stocks, government securities, corporate bonds and money market instruments. Of course, within a ULIP there are options wherein equity investments are capped. EXPENSES ULIPs are considered to be very expensive when compared to traditional endowment plans. This notion is rooted more in perception than reality. Sale of a traditional endowment plan fetches a commission of about 30% (of premium) in the first year and 60% (of premium) over the first five years. Then there is ongoing commission in the region of 5%. Sale of a ULIP fetches a relatively lower commission ranging from as low as 5% to 30% of premium (depending on the insurance company) in the first 1-3 years. After the initial years, it stabilises at 1-3%. Unlike endowment plans, there are no IRDA regulations on ULIP commissions.

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Mortality expenses for ULIPs and traditional endowment plans remain the same as also the administration charges. One area where ULIPs prove to be more expensive than traditional endowment is in fund management. Since ULIPs have an equity component that needs to be managed actively, they incur fund management charges. These charges fluctuate in the 0.80%-1.50% (of premium) range. FLEXIBILITY As we mentioned, one aspect that gives ULIPs an edge over traditional endowment is flexibility. ULIPs offer a host of options to the individual based on his risk profile. There are insurance companies that offer as many as five options within a ULIP with the equity component varying from zero to a maximum of 100%. You can select an option that best fits your objectives and risk-taking capacity. Having selected an option, you still have the flexibility to switch to another option. Most insurance companies allow a number of free 'switches' in a year. Another innovative feature with ULIPs is the 'top-up' facility. A top-up is a one-time additional investment in the ULIP over and above the annual premium. This feature works well when you have a surplus that you are looking to invest in a market-linked avenue, rather than stash away in a savings account or a fixed deposit. ULIPs also have a facility that allows you to skip premiums after regular payment in the initial years. For instance, if you have paid your premiums religiously over the first three years, you can skip the fourth year's premium. The insurance company will make the necessary adjustments from your investment surplus to ensure the policy does not lapse. With traditional endowment, there are no investment options. You select the only option you have and must remain with it till maturity. There is also no concept of a top-up facility.

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Your premium amount cannot be enhanced on a one-time basis and skipped premiums will result in your policy lapsing. TRANSPARENCY ULIPs are also more transparent than traditional endowment plans. Since they are market-linked, there is a price per unit. This is the net asset value (NAV) that is declared on a daily basis. A simple calculation can tell you the value of your ULIP investments. Over time you know exactly how your ULIP has performed. ULIPs also disclose their portfolios regularly. This gives you an idea of how your money is being managed. It also tells you whether or not your mutual fund and/or stock investments coincide with your ULIP investments. If they are, then you have the opportunity to do a rethink on your investment strategy across the board so as to ensure you are well diversified across investment avenues at all times. With traditional endowment, there is no concept of a NAV. However, insurers do send you an annual statement of bonus declared during the year, which gives you an idea of how your insurance plan is performing. Traditional endowment also does not have the practice of disclosing portfolios. But given that there are provisions that ensure a large chunk of the endowment portfolio is in high quality (AAA/sovereign rating) debt paper, disclosure of portfolios is likely to evoke little investor interest. LIQUIDITY Another flexibility that ULIPs offer the individual is liquidity. Since ULIP investments are NAV-based it is possible to withdraw a portion of your investments before maturity. Of course, there is an initial lock-in period (3 years) after which the withdrawal is possible. Traditional endowment has no provision for pre-mature withdrawal. You can surrender your policy, but you won't get everything you have earned on your policy in terms of - 12 -

premiums paid and bonuses earned. If you are clear that you will need money at regular intervals then it is recommended that you opt for money-back endowment. TAX BENEFITS Taxation is one area where there is common ground between ULIPs and traditional endowment. Premiums in ULIPs as well as traditional endowment plans are eligible for tax benefits under Section 80C subject to a maximum limit of Rs 100,000. On the same lines, monies received on maturity on ULIPs and traditional endowment are tax-free under Section 10.

ULIP - KEY FEATURES (IN GENERAL): 1. Premiums paid can be single, regular or variable. The payment period too can be regular or variable. The risk cover can be increased or decreased.

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2. As in all insurance policies, the risk charge (mortality rate) varies with age. 3. The maturity benefit is not typically a fixed amount and the maturity period can be advanced or extended. 4. Investments can be made in gilt funds, balanced funds, money market funds, growth funds or bonds. 5. The policyholder can switch between schemes, for instance, balanced to debt or gilt to equity, etc. 6. The maturity benefit is the net asset value of the units. 7. The costs in ULIP are higher because there is a life insurance component in it as well, in addition to the investment component. 8. Insurance companies have the discretion to decide on their investment portfolios. 9. They are simple, clear, and easy to understand. 10. Being transparent the policyholder gets the entire episode on the performance of his fund. 11. Lead to an efficient utilization of capital. 12. ULIP products are exempted from tax and they provide life insurance. 13. Provides capital appreciation. 14. Investor gets an option to choose among debt, balanced and equity funds.

MUTUAL FUNDS

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A mutual fund is a pool of money, collected from investors, and is invested according to certain investment objectives. A mutual fund is created when investors put their money together. It is therefore a pool of investors’ funds. The most important characteristic of a mutual fund is that the contributors and the beneficiaries of the fund are the same class of people, namely the investors.

ADVANTAGES OF INVESTING IN MUTUAL FUNDS: 1. Portfolio diversification 2. Professional management 3. Reduction in risk 4. Reduction of transaction costs 5. Liquidity 6. Convenience and flexibility

DISADVANTAGES OF INVESTING IN MUTUAL FUNDS: 1. No control over costs: Since investors do not directly, monitor the fund’s operations they cannot control the costs effectively. Regulators therefore usually limit the expenses of mutual funds. 2. No tailor made portfolios: Mutual fund portfolios are created and marketed by AMCs into which investors invest. They cannot create tailor made portfolios. 3. Managing a portfolio of funds: As the numbers of mutual funds increase, in order to tailor a portfolio for him, an investor may be holding a portfolio of funds, with the costs of monitoring them and using them, being incurred by him.

TYPES OF MUTUAL FUNDS

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•

By Structure o Open - Ended Schemes o Close - Ended Schemes o Interval Schemes

•

By Investment Objective o Growth Schemes o Income Schemes o Balanced Schemes o Money Market Schemes

•

Other Schemes o Tax Saving Schemes o Special Schemes  Index Schemes  Sector Specific Scheme

MUTUAL FUNDS – ORGANIZATION

Organization of a Mutal Fund

MUTUAL FUND COMPANIES IN INDIA

- 16 -

The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987 marked the existence of only one mutual fund company in India with Rs. 67bn assets under management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By the end of the 80s decade, few other mutual fund companies in India took their position in mutual fund market. The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund. The succeeding decade showed a new horizon in Indian mutual fund industry. By the end of 1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds started penetrating the fund families. In the same year the first Mutual Fund Regulations came into existance with re-registering all mutual funds except UTI. The regulations were further given a revised shape in 1996. Kothari Pioneer was the first private sector mutual fund company in India which has now merged with Franklin Templeton. Just after ten years with private sector players penetration, the total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund companies in India.

ULIP V/S MUTUAL FUNDS

- 17 -

Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mutual funds in terms of their structure and functioning. As is the case with mutual funds, investors in ULIPs is allotted units by the insurance company and a net asset value (NAV) is declared for the same on a daily basis. Similarly ULIP investors have the option of investing across various schemes similar to the ones found in the mutual funds domain, i.e. diversified equity funds, balanced funds and debt funds to name a few. Generally speaking, ULIPs can be termed as mutual fund schemes with an insurance component. However it should not be construed that barring the insurance element there is nothing differentiating mutual funds from ULIPs.Despite the seemingly comparable structures there are various factors wherein the two differ. 1. MODE OF INVESTMENT/ INVESTMENT AMOUNTS Mutual fund investors have the option of either making lump sum investments or investing using the systematic investment plan (SIP) route which entails commitments over longer time horizons. The minimum investment amounts are laid out by the fund house. ULIP investors also have the choice of investing in a lump sum (single premium) or using the conventional route, i.e. making premium payments on an annual, half-yearly, quarterly or monthly basis. In ULIPs, determining the premium paid is often the starting point for the investment activity. This is in stark contrast to conventional insurance plans where the sum assured is the starting point and premiums to be paid are determined thereafter. ULIP investors also have the flexibility to alter the premium amounts during the policy's tenure. For example an individual with access to surplus funds can enhance the contribution thereby ensuring that his surplus funds are gainfully invested; conversely an

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individual faced with a liquidity crunch has the option of paying a lower amount (the difference being adjusted in the accumulated value of his ULIP). The freedom to modify premium payments at one's convenience clearly gives ULIP investors an edge over their mutual fund counterparts. 2. EXPENSES In mutual fund investments, expenses charged for various activities like fund management, sales and marketing, administration among others are subject to predetermined upper limits as prescribed by the Securities and Exchange Board of India. For example equity-oriented funds can charge their investors a maximum of 2.5% per annum on a recurring basis for all their expenses; any expense above the prescribed limit is borne by the fund house and not the investors. Similarly funds also charge their investors entry and exit loads (in most cases, either is applicable). Entry loads are charged at the timing of making an investment while the exit load is charged at the time of sale. Insurance companies have a free hand in levying expenses on their ULIP products with no upper limits being prescribed by the regulator, i.e. the Insurance Regulatory and Development Authority. This explains the complex and at times 'unwieldy' expense structures on ULIP offerings. The only restraint placed is that insurers are required to notify the regulator of all the expenses that will be charged on their ULIP offerings. Expenses can have far-reaching consequences on investors since higher expenses translate into lower amounts being invested and a smaller corpus being accumulated.

ULIPS scheme Flexi plan Safe investment plan ll

charge in first year 73% for 15+ year term 22

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Privileged assurance plan Head start assure wealth\future protect Retirement plan with\withoutcover Retirement plan single premium Platinum advantage Easy growth 1.25\5 times Smart advantage

7 37 for 15year +,annual prem15000-25000 27 4 10 3.5 3.2 for premium<36000

MUTUAL FUNDS description

gilt saving

Total Annual Recurring 1.65 Expenses (Estimated) LOAD ENTRY LOAD Nil EXIT LOAD Nil

gilt investment regular 1.65

gilt investment provident and trust fund 1.65

Nil Nil

Nil Nil

description

bond (deposit plan) Total Annual Recurring 2.25 Expenses (Estimated) LOAD ENTRY LOAD Nil EXIT LOAD For investments upto 10 lakhs .5%if redeemed within 6 months For investment above 10 lakh nil

description oppourtunities Total Annual 2.5% Recurring Expenses (Estimated) LOAD ## ENTRY LOAD

bond regular plan 1.65

bond short term plan

Nil Nil

Nil Nil

midcap 2.5%

contra 2.5%

##

##

flexi debt scheme 2.25%

Nil

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1.5

EXIT LOAD

description

0.1 % if redeemed within 7 days from the date of purchase.

liquid regular plan Annual 1

Total Recurring Expenses (Estimated) LOAD

ENTRY LOAD EXIT LOAD

Nil Nil

description

income plus

liquid institutional plan .75

liquid institutional premium plan .65

flotter short term plan

Nil Nil

Nil Nil

Nil Nil

2.25 Total Annual Recurring Expenses (Estimated) LOAD ENTRY LOAD Nil EXIT LOAD • For investments less than or equal to Rs. 25 Lacs : 1%, if redeemed within 1 year • For investment above Rs. 25 lacs : Nil

flotter long term 2.25

Nil For investments upto Rs. 10 Lacs: 0.50% if redeemed within six months; For investments above Rs. 10 Lacs: Nil

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2.25

equity arbiterage 2.25

Nil For Investments <= Rs. 50 lacs: a. If redeemed within 3 months from the date of allotment of units: 0.60% b. If redeemed after 3 months, within 6 months from the date of allotment of units: 0.50% c. If redeemed after 6 months from the date of allotment of units: Nil d . Where investments is

made by Fund of Funds as defined under SEBI regulations: Nil e. Where units are allotted upon reinvestment of Dividends: Nil For Investments > Rs. 50 a. If redeemed on or before 30 days from the date allotment of units: 0.50% . If redeemed after 30 days from the date of allotment of units: Nil c. Where investments is made by Fund of Funds as defined under SEBI Regulations: Nil . Where units are allotted upon reinvestment of Dividends: Nil

description kotak 30 2.5 Total Annual Recurring Expenses (Estimated LOAD ## ENTRY LOAD EXIT LOAD

balance 2.5

mnc 2.25

tech 2.5

global india 2.5

##

##

##

##

description kotak lifestyle 2.5 Total Annual Recurring Expenses - 22 -

(Estimated LOAD ENTRY LOAD EXIT LOAD ## LOAD ENTRY LOAD

##

a) No entry load shall be charged on: i) For “all direct” applications received by AMC i.e. applications received through internet facility offered (www.kotakmutual.com), on application forms that are not routed through any distributor/agent/broker and submitted to AMC office or collection centre / investment service centre. ii) On additional purchases done directly by the investor under the same folio and switch-in to the scheme from other scheme if such transaction is done directly by the investor: iii) Where the purchase amount/switch in amount is equal to or more than Rs. 5 crores iv) Where the switch in is from an Equity/Balanced/Equity FOF Scheme to an Equity/Balanced/ Equity FOF Scheme v) Where switch in is from a close ended scheme (excluding Fixed Maturity Plans and Interval Plans) during the pre-defined liquidity window of the scheme as defined in the respective offer documents or on maturity to an Equity/ Balanced/Equity FOF Schemes: vi) Where the switch in is from any other scheme apart from point iv and v above to an Equity/ Balanced/Equity FOF Scheme vii) Where investments is made by Fund of Funds as defined under SEBI Regulations viii) Where units are allotted upon reinvestment of Dividends b) Cases not covered above: 2.25%

EXIT LOAD

For exit within 6 months from the date of allotment of units for investments of less than Rs. 5 crores: 1% For exit after 6 months upto 1 year from the date of allotment of units for investments of less than Rs. 5 crores: 0.50% Where investments is made by Fund of Funds as defined under SEBI Regulations: Nil

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Where units are allotted upon reinvestment of Dividends: Nil Cases not covered above: Nil

3. PORTFOLIO DISCLOSURE Mutual fund houses are required to statutorily declare their portfolios on a quarterly basis, albeit most fund houses do so on a monthly basis. Investors get the opportunity to see where their monies are being invested and how they have been managed by studying the portfolio. There is lack of consensus on whether ULIPs are required to disclose their portfolios. During our interactions with leading insurers we came across divergent views on this issue. While one school of thought believes that disclosing portfolios on a quarterly basis is mandatory, the other believes that there is no legal obligation to do so and that insurers are required to disclose their portfolios only on demand. Some insurance companies do declare their portfolios on a monthly/quarterly basis. However the lack of transparency in ULIP investments could be a cause for concern considering that the amount invested in insurance policies is essentially meant to provide for contingencies and for long-term needs like retirement; regular portfolio disclosures on the other hand can enable investors to make timely investment decisions. 4. FLEXIBILITY IN ALTERING THE ASSET ALLOCATION As was stated earlier, offerings in both the mutual funds segment and ULIPs segment are largely comparable. For example plans that invest their entire corpus in equities (diversified equity funds), a 60:40 allotment in equity and debt instruments (balanced funds) and those investing only in debt instruments (debt funds) can be found in both ULIPs and mutual funds. If a mutual fund investor in a diversified equity fund wishes to shift his corpus into a debt from the same fund house, he could have to bear an exit load and/or entry load. On the other hand most insurance companies permit their ULIP inventors to shift investments across various plans/asset classes either at a nominal or no cost (usually, a

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couple of switches are allowed free of charge every year and a cost has to be borne for additional switches). Effectively the ULIP investor is given the option to invest across asset classes as per his convenience in a cost-effective manner. This can prove to be very useful for investors, for example in a bull market when the ULIP investor's equity component has appreciated, he can book profits by simply transferring the requisite amount to a debt-oriented plan. 5. TAX BENEFITS ULIP investments qualify for deductions under Section 80C of the Income Tax Act. This holds good, irrespective of the nature of the plan chosen by the investor. On the other hand in the mutual funds domain, only investments in tax-saving funds (also referred to as equity-linked savings schemes) are eligible for Section 80C benefits. Maturity proceeds from ULIPs are tax free. In case of equity-oriented funds (for example diversified equity funds, balanced funds), if the investments are held for a period over 12 months, the gains are tax free; conversely investments sold within a 12-month period attract short-term capital gains tax @ 10%. Similarly, debt-oriented funds attract a long-term capital gains tax @ 10%, while a shortterm capital gain is taxed at the investor's marginal tax rate.Despite the seemingly similar structures evidently both mutual funds and ULIPs have their unique set of advantages to offer. As always, it is vital for investors to be aware of the nuances in both offerings and make informed decisions.

IN A NUTSHELL:

Investment amounts

Expenses Portfolio disclosure

ULIPs

Mutual Funds

Determined by the investor and can be modified as well No upper limits, expenses determined by the insurance company

Minimum investment amounts are determined by the fund house Upper limits for expenses chargeable to investors have been set by the regulator

Not mandatory*

Quarterly disclosures are mandatory - 25 -

Modifying asset Generally permitted for free Entry/exit loads have to be borne by allocation or at a nominal cost the investor

Tax benefits

Section 80C benefits are available on all ULIP investments

Section 80C benefits are available only on investments in tax-saving funds

WHERE TO INVEST Whether to invest in ULIP or to invest in MUTUAL FUND depends upon customer’s future financial goals & present investments. 1. If an investor is looking for an insurance policy and is ready to take moderate risks, he must opt for the ULIP plan. A term of 10 years or less is advisable only when one needs an insurance cover, otherwise if a customer wants to enter a horizon of 11-30 years, then ULIP scores handsomely over Mutual funds. - 26 -

2. ULIP is not meant for an irregular investor, as under a ULIP policy an investor has to make compulsory savings. An investor has to save regularly and invest through the highs and lows in the market. So, for the investors who generally do not save regularly and invest only when market is high and disinvest when the market is low, mutual funds are the best option. 3. The investors who want to invest only to enjoy short term gains and want to switch and withdraw their amounts frequently are not advised to invest in ULIP as there is usually a lock in period of 3 or 4 years involved in ULIP.Such investors should go in for Mutual funds where they can switch anytime they want to. 4. For low risk taking investors mutual funds can be the best option as the risk can be diversified as there exists huge variety of specialized schemes under mutual funds which can be tailored according to all the possible requirements and the needs of the investor. Such options are not available under the ULIP scheme. 5. The service charges such as fund management charges etc. are usually low in the case of ULIP as compared to mutual funds. Though the initial charges under ULIP are high but still the cumulative effect comes out to be less than that of Mutual funds, thus an investor who doesn’t want to shell out more on the expenses and wants safe investment should opt for ULIP as compared to Mutual funds.

SURVEY As a part of our project, in order to know the perceptions of the investors about the investment schemes basically ULIP and MUTUAL FUNDS, a survey was being conducted by us in Udaipur region.

OBJECTIVE OF THE SURVEY: •

To know the existing investment pattern among different age groups and different occupations.

- 27 -

•

To know the present portfolio of the investors, their perceptions about different investment schemes, their investment concerns, their present returns, and their future expectations from different investment schemes.

•

To know the popularity and acceptability of the two products i.e. ULIP and MUTUAL FUNDS among the above mentioned categories.

•

To know the potential customers for the investment schemes: ULIP and Mutual fund.

•

To analyze which set of customers should invest in ULIP and Mutual Funds as per their needs identified.

DATA COLLECTION METHOD The basic objective of the project was to compare investment behavior especially in ULIP and Mutual Funds. Both primary and secondary data has been used in order to analyze these products. The primary data was obtained through observation, direct communication with the people and filling up of questionnaires. The secondary data was collected through the •

Internet

•

Journals and newspapers

DATA COLLECTION INSTRUMENT A semi structured kind of questionnaire was designed which contained both open- ended and multiple choice questions.The questionnaire designed was to provide dual information sharing type, it is seriously undertaken that anyone who is undergoing the process, should find his interest or else he might show disinterest towards the programme. The questionnaire was equally important both to the customers as well as to the company to draw out its prospects.

- 28 -

The questionnaire was designed to meet all the objectives of the survey fully and helped us in knowing the needs of the customers and the market value and image of the company .Moreover, it helped us to give suggestions to the company so as to cater customers’ needs in a much better way and hence broaden its customer base.

RESEARCH METHODOLOGY The survey process involved two phases: First phase included identification and selection of the target audience to be studied and to determine the parameters on which respondents will justify their preferences. The audience were targeted and analyzed basically on the basis of two important parameters: Age and Occupations. Demographical information was also taken in order to know the investment patterns according to the location, age, gender etc. A questionnaire was designed to collect the needed information from the respondents. (See the annexure) In the second phase data was collected through questionnaire from more than 100 respondents within Udaipur region. Results were viewed cautiously as sample was from a specific population. The responses that were generated during this exercise were converted in the form of percentages to have a comparative outlook, as the numbers itself cannot explain the true picture. These percentages were then represented through the simple tools like bar graphs, pie charts.

ANALYSIS FINDINGS: OCCUPATION To begin with the nature of occupation was divided broadly into 2 categories: 1. Business

- 29 -

2. Services The study shows: •

Almost 80% of people were into service and 20% were into business, either proprietorship or partnership.

BUSINESS The sample consisted of 50 % having income between Rs. 2 lakh to Rs. 5 lakh. 33% had income greater than Rs. 5 lakh. It can be seen that a large amount of people in business are investing (72%) and are insured (83%). But the investments are basically in fixed deposits and share markets. There is some lack of awareness of the products like ULIP and Mutual funds as can be seen that only 16% of people are holding ULIP policy and 19 % are having Mutual Funds. The prime concern of this segment for investing is to build cash reserves and purchase assets. This class (79%) considers High Returns as very important investment factor while only 20 % Liquidity with the same importance. In the ULIPs we find LIC to be dominating with 50 % of the market share, ICICI is second most preferred company with 17 % share. 83% of the people investing in ULIP invest in Equity Type Fund, indicating their preference for high returns as well as well as Risk Tolerance. In Mutual Funds we find that of the 19 % people investing in Mutual Funds, 34 % have invested with Reliance with ICICI as second preference.

SERVICE The sample consisted of 61 % having income between Rs. 2 lakh to Rs. 5 lakh. 28% had income greater than Rs. 5 lakh. It can be seen that 68 % people in services are investing and only 64% people are having their life insured. In this segment the main concern of investing is to build cash reserves. The majority of their portfolio consists of Mutual Funds (23%) & Fixed Deposits - 30 -

(23%). This segment is comparatively better aware of ULIPs.This Risk Tolerance is also low as only 18% invest in share markets. This class (60%) considers High Returns as very important investment factor while only 20 % Tax free proceeds with the same importance. In the ULIPs we find LIC & ICICI to be dominating the market with 36% share each. Bajaj Allianz has 14 % presence. We find the preference for Equity Type Fund declines to 54 % & for balanced increase to 34 % when compared with Business class. 14 % people also invest in cash fund, indicating their preference for low Risk Tolerance. In Mutual Funds we find that of the 23 % people investing in Mutual Funds, 23 % have invested with Kotak. ICICI & Reliance with 16 % each come as second preference.

AGE The analysis was also done on the basis of age which was being broadly classified into 4 categories: 1. 18-25 years 2. 25-35 years

- 31 -

3. 35-45 years 4. 45 and above The study shows:

AGE 18-25 The sample consisted of 58 % people having income between Rs. 2 lakh to Rs. 5 lakh. 25% had income greater than Rs. 5 lakh. Majority (74%) belonged to salaried class. It can be seen that only 54% people are investing. We find that majority of people of this age group (58%) do not have Life Insurance cover. The investments are basically in Mutual funds (35%) & share markets (24%). This indicates high Risk Tolerance for this age group. The prime concern of this segment for investing is to purchase assets. This class considers High Returns (79%) & Flexibility (60%) as very important investment factors while only 21 % consider Tax Free proceeds with the same importance. In the ULIPs we find ICICI to be dominating with 50 % of the market share, LIC is second most preferred company. Almost all investing in ULIP invest in Equity Type Fund, indicating their preference for high returns as well as well as Risk Tolerance. In Mutual Funds we find that of the 35% people investing in Mutual Funds, Reliance & Kotak are their common choice.[No. of observations:24]

AGE 25-35 The sample consisted of 55 % people having income between Rs. 2 lakh to Rs. 5 lakh. 31% had income greater than Rs. 5 lakh. Majority (70%) belonged to salaried class. It can be seen that majority (70%) people are investing with Building Cash reserves & Funding for children being their main concerns. We find that majority of people of this age group (71%) have Life Insurance cover. The investments are basically in ULIP (27%) & Fixed Deposits (23%).

- 32 -

This class considers High Returns, Safety & Liquidity as important investment factors with less importance given to Tax Free proceeds & Flexibility. In the ULIPs we find LIC (33 %) & ICICI (29%) to be dominating with Bajaj Allianz having 19% market share. Majority (60%) of people investing in ULIP invest in Equity Type Fund, indicating their preference for high returns as well as well as Risk Tolerance. In Mutual Funds we find that of the 21% people investing in Mutual Funds, Reliance & Fidelity are their common choice.[No. of observations:35]

AGE 35-45 The sample consisted of 60 % people having income between Rs. 2 lakh to Rs. 5 lakh. 30% had income greater than Rs. 5 lakh. Majority (60%) belonged to salaried class. It can be seen that 87% people are investing. We find that majority of people of this age group (90%) have Life Insurance cover. The investments are basically in Mutual funds (22%) & ULIP (31%). This indicates their high awareness regarding these two. The prime concern of this segment for investing is to build Cash reserves & Funding for their children. This class considers safety (70%) & High Returns (50%) as very important investment factors while only 10 % consider Flexibility with the same importance. In the ULIPs we find ICICI, UTI & LIC to be dominating the market. We find that there is a shift to Balanced fund from Equity fund indicating more preference for less risk as the age increases. In Mutual Funds we find, Reliance & ICICI to be the common choice.[No. of observations:10] AGE 45 AND ABOVE The sample consisted of 67 % people having income between Rs. 2 lakh to Rs. 5 lakh. 29% had income greater than Rs. 5 lakh. 33% worked in Government jobs & 29% belonged to salaried class. It can be seen that this is an investing segment and is mostly insurance covered. The investments are basically in Government securities & Fixed Deposits. The product ULIP also seems to be quite popular in this segment as quite a large number of people are

- 33 -

holding the ULIP policy. The prime concern of this segment for investing is to build Cash reserves. This class considers predominantly safety (82%) as very important investment factor while only 25 % consider Liquidity with the same importance. In the ULIPs we find, UTI & LIC to be dominating the market. We find that majority are investing in Balanced fund In Mutual Funds we find, presence of many companies. [No. of observations: 24]

RECOMMENDATIONS: OCCUPATION •

The business segment can be targeted for ULIP (as an investment product) and Mutual funds as these products are offering high returns and safety which is the major

- 34 -

concern of this segment. The need is to promote ULIP as a better product than the F.D’s and mutual fund can be promoted in lieu of the share markets. •

The service class can be a potential customer both for the ULIP and Mutual Funds. ULIP needs to be promoted as an insurance product and can be sold emphasizing the importance and need of insurance. This segment is already investing into Mutual funds, thus the bank needs to promote its mutual funds by promising the customers higher returns and safety than the others.

AGE •

The segment (18-25) can be a potential customer segment as most of the people are falling in the income group of Rs. 2-5 lakhs. The company can target this segment by offering its ULIP product both as an insurance and investment product, which can provide high returns as the investments and provide the insurance cover too, as a large segment doesn’t have an insurance cover. The return on investments (ULIP and Mutual funds) is mostly between the 10% -20% brackets so products offering returns higher than this band can be offered to this category as 24% of people under this category are looking for building cash reserves and earning higher returns. The need is to make this segment aware of the products like ULIP (which is promising return of 20-25% p.a.) and tap as many customers as possible.

•

In order to tap the 25-35 years segment ULIP can be promoted as an investment option rather than an insurance product. Mutual funds need to be promoted as only a small segment is investing in mutual funds. Mutual funds and ULIP both can be the best investment option for this segment as the basic reason for investment as can be seen from above is building Cash reserves and funding for children and both these products are offering high returns.

•

As the segment 35-45 years is an investing and risk taking segment, Mutual funds promising higher returns can be promoted in this segment. The product ULIP is also highly acceptable by this segment, so both of these products can be promoted as a best investment options promising high returns and low risks. - 35 -

•

Thus this segment can mainly be targeted for the Mutual funds as can be seen that very few people are investing M.Fs. this is because this segment consists of risk averters as this segment prefers Fixed Deposits and government securities than any other investment product as safety is the most important factor which is being considered while investing by this segment, thus product like ULIP and Mutual Funds need to be promoted as safe investments and better than F.D’s only then this segment can be tapped.

ANNEXURE AGE 18-25 Income above5 b/w 2-5

No. 6 14 - 36 -

As a % of total 25 58

below 2

4 24

17

INCOME

17%

25%

above5 b/w 2-5 below 2

58%

Life Insurance Cover Yes No

No.

As a % of total 42 58

10 14 24

LIFE INSURANCE COVER

42% 58%

Invest or Not Yes No

Yes No

No. 13 11 24

- 37 -

As a % of total 54 46

INVEST OR NOT

46%

Y es 54%

Reasons for Investment Asset Purchase Building Cash Reserves Retirement Others

No. 8 4 3 2 17

No

As a % of total 47.0588235 23.5294118 17.6470588 11.7647059

REASONS FOR INVESTMENTS Asset Purchase 12% 18%

46%

24%

Most Important High returns Safety Liquidity Tax free Proceeds Flexibility

Building Cash Reserves Retirement Others

No. 7 3 2 1

As a % of total 53 23 15 7

- 38 -

13

7 6 5 4 3 2 1 0 High Returns

Safety

Liquidity

PORTFOLIO Mutual Funds Fixed Deposits ULIP Share markets Others

tax

Flexibility

No. 10 5 4 7 3 29

As a % of total 34.4827586 17.2413793 13.7931034 24.137931 10.3448276

PORTFOLIO 10% 24% 14%

Mutual Funds Fixed Deposits

35%

ULIP Share markets Others

17%

ULIP Scheme

No.

As a % of total

ICICI LIC AVIVA

2 1 1 4

50 25 25

- 39 -

ULIP SCHEME

ICICI 25%

KOTAK KOTAK 50%

LIC 25%

LIC ICICI

M.F Co. Franklin ICICI Fidelity Reliance Others

No. 4 2 2 4 4 16

As a % of total 25 12.5 12.5 25 25

MUTUAL FUNDS Others 25%

Reliance 25%

Franklin 24%

Fidelity 13%

RETURNS ON M.F. 10%-20% 20%-30% above 30%

Franklin ICICI Fidelity Reliance Others

ICICI 13%

No. 5 3 2 10

- 40 -

As % of total 50 30 20

RETURNS ON M.F.

20% 50% 30%

10%-20% 20%-30% above 30%

AGE 25-35 Income above5 b/w 2-5 below 2

No.

As a % of total 11 19 5 35

- 41 -

31.4285714 54.2857143 14.2857143

Income

14%

31%

above5 b/ w 2-5 below 2

55%

Invest or Not Yes No

No.

As a % of total 26 9

74.285714 25.714286 0

35

INVEST OR NOT

26% Y es No 74%

Life Insurance Cover Yes No

No.

As a % of total 25 10 35

- 42 -

71.428571 28.571429 0

LIFE INSURANCE COVER

29% Y es 71%

Reasons for Investment IIncome replacement Asset Purchase Building Cash Reserves Retirement Funding for Children Others

No.

20% 16%

Most Important High returns Safety Liquidity Tax free Proceeds Flexibility

5%

As a % of total 4 6 16 7 9 2 44

REASONS FOR INVESTMENT

14%

36%

No

9.0909091 13.6363636 36.3636364 15.9090909 20.4545455 4.5454545

Income replacement Asset Purchase Building Cash Reserves Retirement Funding for Children Others

No. 9 5 3 5

As a % of total 34 19 11 19

4 26

15

- 43 -

10 8 6 4 2 0 High Returns

Safety

PORTFOLIO Mutual Funds Fixed Deposits ULIP Share markets Others

Liquidity

Tax

No.

Flexibility

As a % of total 13 14 16 10 8 61

21.3114754 22.9508197 26.2295082 16.3934426 13.1147541

PORTFOLIO

13%

Mutual Funds Fixed Deposits ULIP Share markets Others

21%

16% 23%

27%

ULIP Scheme I ICICI LIC Bajaj Allianz Others

No.

As a % of total 6 7 4 4 21

- 44 -

28.5714286 33.3333333 19.047619 19.047619

ULIP Scheme

19%

ICICI

29%

LIC Bajaj Allianz Others

19% 33%

Type of Fund Equity Balanced Cash

No.

As a % of Total 13 3 5 21

61.9047619 14.2857143 23.8095238

Type of Fund

24%

Equity

14%

Returns Below 10% 10%-20% 20%-30% Above 30%

62%

No.

Balanced Cash

As a % of Total 2 7 3 4 16

- 45 -

12.5 43.75 18.75 25

Returns

13%

25%

19%

Below 10% 10%-20% 20%-30% Above 30%

43%

M.F Co. Kotak I ICICI Fidelity Reliance HDFC Others

No.

As a % of total 3 3 5 5 3 7

11.5384615 11.5384615 19.2307692 19.2307692 11.5384615 26.9230769

M.F Co. 12%

26%

12%

12% 19%

19%

RETURNS ON M.F. 10%-20% 20%-30% Above 30%

Kotak ICICI Fidelity Reliance HDFC Others

No.

As % of total 3 4 6 13

- 46 -

23.0769231 30.7692308 46.1538462

RE TURNS ON M.F.

23%

10%-20%

46%

20%-30% above 30%

31%

AGE 35- 45 I Invest or Not Yes No

No.

As a % of total 7 1

- 47 -

87 13

8

Invest 13% No Y es 87%

Life Insurance Cover Yes No

No.

As a % of total 9 1

90 10

10

Life Insurance

10% No Y es 90%

Reasons for Investment I Income replacement Asset Purchase Building Cash Reserves Retirement Funding for Children

No.

As a % of total 2 2 6 2 4

- 48 -

12.5 12.5 37.5 12.5 25

16

Investment Reasons

13%

Asset Purchase Building Cash reserves

13%

Funding for children Income replacement Retirement

13% 37% 24%

PORTFOLIO Mutual Funds Fixed Deposits ULIP Share markets Government securities

As a % of total 25 35 20 15

1 20

5 Ta x fre e proce e ds

No. 5 7 4 3

Fle x ibility

Liquidity

Most Im porta nt

Sa fe ty

8 7 6 5 4 3 2 1 0

Hig h re turns

Most Important High returns Safety Liquidity Tax free Proceeds Flexibility

No.

As a % of total 5 1 7 3 3

- 49 -

Se rie s1

21.31 4.34 30.43 13.04 13.04

Bonds 23

Portfolio

13%

17%

4%

Government securities Mutual funds ULIP Share Markets

13%

22% Fixed Deposits 31%

ULIP SCHEME I ICICI LIC UTI Others

Bonds

No 2 3 2 0 7

As a % of total 28.57 42.85 28.57

ULIP SCHE ME

29%

0%

29%

ICICI LIC UTI Others

42%

Returns Below 10 % 10%-20% 20%-30% Above 30%

No. 1 4 1 1 7

As a % of total 14.28 57.14 14.28 14.28

- 50 -

Return in ULIP 14%

14%

Below 10% 10%-20%

14%

20%-30% Above 30 %

58%

Mutual Fund Co. Reliance I CICI HDFC SBI Kotak

No. 2 2 1 1 1 7

As a % of Total 28.56 28.56 14.28 14.28 14.28

Mutual Fund Co. 14%

Reliance ICICI HDFC SBI Kotak

29%

14% 14%

29%

45 AND ABOVE Life Insurance Cover Yes No

No.

As a % of total 20 4 10 - 51 -

83.33 16.66

Life Insurance 17% No Yes 83%

I Invest or Not Yes No

No.

As a % of total 17 7

70.83 29.17

24

Invest

29% No Yes 71%

Portfolio Government securities Mutual Funds ULIP Share Market Fixed Deposits Bonds

No 8 5 9 6 13 5 46

As a % of Total 17.39 10.80 19.56 13.04 28.26 10.80

- 52 -

Portfolio

11%

17% 11%

28%

20%

13%

I Investment Reasons Asset Purchase Building Cash Reserve Funding For Children IIncome Replacement Retirement

No. 3 11 6 1 5 26

Share Markets Fixed Deposits

As a % of Total 11.5 42.3 23.07 3.84 19.23

12%

4% 42%

23%

Most Important High Returns Safety Liquidity Tax Free Proceeds Flexibility

ULIP

Bonds

Investment Reasons

19%

Government securities Mutual funds

No. 12 16 6 10 6 50

Asset Purchase Building Cash reserves Funding for children Income replacement Retirement

As a % of Total 24 32 12 20 12

- 53 -

Flexibility

proceeds

Tax free

Liquidity

Safety

returns

20 15 10 5 0

High

Most Important

ULIP Scheme

No.

As a % of Total

IICICI LIC UTI Aviva

1 4 4 2 11

9.09 36.36 36.36 18.18

ULIP SCHEME

18%

9%

ICICI LIC UTI Aviva

37% 36%

Funds Equity Balanced Debt Cash

No. 2 7 0 0 9

As a % Of Total 22.22 77.78

- 54 -

Series1

FUNDS

0% 0% 22%

78%

Returns Below 10% 10%-20% Above 30%

No. 2 6 1 9

Equity Balanced Debt Cash

As a % of Total 22.22 66.67 11.11

Returns in ULIP 11%

22%

Below 10% 10%-20% Above 30 %

67%

Mutual Fund Co. Kotak ICICI HDFC Franklin Fidelity UTI IIDBI

No. 1 2 1 1 1 1 1

As a % of Total 12.5 25 12.5 12.5 12.5 12.5 12.5

- 55 -

8

Mutual Fund Co. 13% 13% 13% 13%

12% 24% 12%

Kotak ICICI HDFC Franklin Fidelity UTI IDBI

BUSINESS INCOME Below 2 b/w 2-5 Above 5

No.

- 56 -

As a % of Total 3 16.66 9 50 6 33.33 18

INCOME

33%

17%

Below 2 b/ w 2-5 Above 5

50%

Invest or Not Yes No

No.

As a % of Total 13 72.222 5 27.778 0 18

Invest or Not

28% Y es No 72%

Life Insurance Cover Yes No

No. 15 3 18

- 57 -

As a % of Total 83.333 16.667 0

Life Insurance Cover

17% Y es No 83%

Reasons for Investment Asset Purchase Building Cash Reserves Retirement Others

No.

As a % of total 7 26.923 8 30.769 3 11.538 8 30.769 26

Reasons for Investment Asset Purchase 27%

31%

12%

Most Important High returns Safety Liquidity Tax free Proceeds Flexibility

Building Cash Reserves Retirement

30%

Others

No. 10 8 3 6

As a % of total 31 25 9.3 18

5 32

15

- 58 -

10 8 6 4 2 0 High Returns

Safety

PORTFOLIO Mutual Funds Fixed Deposits ULIP Share markets Government Securities Others

Liquidity

Tax

Flexibility

As a % of total 6 18.75 7 21.875 5 15.625 7 21.875 5 15.625 2 6.25 32

No.

PORTFOLIO

16%

6%

Mutual Funds

19%

Fixed Deposits ULIP

22%

ULIP Scheme ICICI LIC Others

Share markets

21%

Government Securities

16%

Others

No.

As a % of total 1 3 2 6

- 59 -

16.667 50 33.333

ULIP Scheme

17%

33%

ICICI LIC Others

50%

M.F Co. Franklin I ICICI Reliance Others

No.

As a % of total 1 3 4 4 12

8.333 25 33.333 33.333

M.F Co. 8%

33%

25%

Franklin ICICI Reliance Others

34%

SERVICE Income above5 b/w 2-5 below 2

No.

As a % of total 15 28.3018868 32 60.3773585 6 11.3207547 53 - 60 -

Income

11%

28%

above5 b/ w 2-5 below 2

61%

Invest or Not Yes No

No.

As a % of total 36 17

67.9245283 32.0754717 0

53

Invest or Not

32% 68%

Life Insurance Cover Yes No

No.

As a % of total 34 19 53

- 61 -

Y es No

64.1509434 35.8490566 0

Life Insurance Cover

36%

Y es No

64%

Reasons for Investment I Income replacement Asset Purchase Building Cash Reserves Retirement Funding for Children Others

No.

As a % of total 2 9 22 9 9 4 55

3.63 16.36 40 16.36 16.36 72.72

Income replacement

Reasons for Investment

Asset Purchase

16%

7%

16%

Most Important High returns Safety Liquidity Tax free Proceeds Flexibility

4%

Building Cash Reserves Retirement

16%

Funding for Children Others

41%

No. 19 4 4 5

As a % of total 52 11 11 13

4 36

11

- 62 -

20 15 10 5 0 High Returns

Safety

PORTFOLIO Mutual Funds Fixed Deposits ULIP Share markets Government Securities Others

Liquidity

Tax

No.

Flexibility

As a % of total 19 19 18 15 6 7 84

PORTFOLIO

22.61 22.61 21.42 17.85 7.14 8.33

Mutual Funds Fixed Deposits

7% 8%

ULIP

23%

18% 21%

ULIP Scheme ICICI LIC Bajaj Allianz Others

23%

No.

- 63 -

Share markets Government Securities Others

As a % of total 8 36.36 8 36.36 3 13.63 3 13.63 22

ULIP Scheme

14% 14%

36%

36%

Returns on ULIP Below 10% 10%-20% 20%-30% Above 30%

ICICI LIC Bajaj Allianz Others

No. 4 11 4 3 22

As a % of Total 18.18 50 18.18 13.63

Returns on ULIP

14% 18%

18%

10%-20% 20%-30% 50%

M.F Co. Kotak IICCICI Fidelity Reliance Others

Below 10%

No.

Above 30%

As a % of total 7 22.58 4 12.90 5 16.12 5 16.12 10 32.25

- 64 -

31

M.F Co.

32% 16%

23% 13% 16%

Kotak ICICI Fidelity Reliance Others

MARKET SURVEY

Name: ______________ Contact No. ___________ Age: ______

- 65 -

1. Occupation: Government ____

Salaried

Business

Others (specify)

2. What is Your Family‘s Annual Income (Rs. Lakhs): Below 2 3. How many dependents you have? None 4. Do you have a Life Insurance Cover?

1 Yes

2

2 -5 More than 2

No

5. Do you invest? Yes No if yes, what is your investment concerns? Income replacement at death/disability Building Cash reserves Retirement Asset Purchase Funding for children Others_____________________ (If ‘No’ - proceed to Q.13) 5. Rate one of the following investment factors of your importance. High Return Safety Liquidity Tax Free Proceeds Flexibility 7. Your current portfolio consists of? Share Markets Fixed Deposits Government Securities Bonds ULIP Others (Please specify) ____________

Mutual Funds

Attempt (Q.8 – Q. 10) if you invest in ULIP schemes 8. With which company do you have the ULIP scheme? LIC

KOTAK

ICICI PRUDENTIAL

BAJAJ ALLIANZ

OTHERS _________ 9. Which type of fund you invest in? Equity

Debt

Balanced

Cash

10. How much returns are you getting on your ULIP investments annually (approximately)? Below 10% 10% - 20 % 20%-30% above 30% Attempt (Q.11 – Q. 12) if you invest in Mutual Funds 11. Which mutual funds are you investing in presently? _______________________ 12. How much returns are you getting on your investments annually (approximately)? Below 10% 10% - 20 % 20%-30% above 30%

- 66 -

above 5

13. Kotak Group is offering an opportunity to participate in investment schemes generating high returns, would you like to avail it? Yes No THANK YOU!!!!!

Bibliography www.irdaindia.org www.amfiindia.com www.kotaklifeinsurance.com www.kotakmutual.com - 67 -

www.wikipedia.com

- 68 -