Free Essay

Mutual Fund

In: Business and Management

Submitted By guptasalil11
Words 9973
Pages 40



(Enroll No. : 08BS0001652)


Contract/Project/Job Number________________

A Report


“Consumer Behaviour Regarding Mutual Fund, Types Of Mutual Fund And Investment Process”

Manoj Kumar
(Enroll No.:08BS0001652)

Sundaram Finance Ltd.

Date of Submission : May 2009

This is to certify that the internship project report titled “Consumer Behavior Regarding Mutual Fund, Types of Mutual Fund and Investment Process” is a bonafide work of Manoj Kumar in original. This report has been prepared under constant supervision in partial fulfillment of the requirement of IBS for the award of MBA Degree for the period of three months (Feb 2009 to May 2009).

This project report neither full nor parts has ever before been submitted for awarding of any degree by this B-School or any other B-School.

Prof. Puja Aggarwal Mr. Satyapal
Faculty IBS Noida Territory Manager-
General Insurance Sundaram Finance Ltd. 605-606, Sixth Floor,
Ashoka Estate,
24 Barakhamba Road,
New Delhi
Date : Date :


This is to certify that Mr. Manoj Kumar has successfully completed the Summer Internship Programme in Sundaram Finance Ltd. for the duration of 3 months (February 09 to May 09) under the supervision of Mr. Satyapal, Territory Manager–General Insurance, Sundaram Finance Ltd.

________________________ _________________________ (Signature of Faculty Guide) (Signature of Company Guide)


My summer internship experience at Sundaram Finance Ltd., has been enriching and memorable due to cooperation of colleagues, friends, both my project guides and the entire office staff.

I Express my sincere gratitude to my organizational guide Mr. Satyapal (Territory Manager - General Insurance, Sundaram Finance Ltd.) who inspite of being in a such a high pressure job and always being pressured for time devoted his valuable time and guidance for the internship.

I also would like to thank Mr. Shreyas Kasa (Marketing Manager Sundaram Finance Ltd.) who guided me in preparing the questionnaire of the study and giving his invaluable knowledge and insights about the industry.

I also express my gratitude to the entire staff of Sundaram Finance Ltd. for not only their cooperation and friendly treatment but also for helping me to adjust in the company and the work that I did during the internship period.

Special Thanks to my faculty guide Prof. Puja Aggarwal for being in regular touch and also to provide me the guidance, remarkable suggestions, constant encouragement and keen interest that helped me to learn and enabled me to complete this report efficiently.

Authorisation i Certificate of Completion of Internship Program ii
Acknowledgement iii
Abstract iv-v 1. Introduction 1-4 * Purpose of the Project 2 * Methodology 3 * Limitation 4

2. About the Company 5-6 * Products Offered 5 * Other Companies of Sundaram Finance Ltd. 6

3. About Mutual Fund Industries 7-8 * Inception 7 * Definition 7 * Short History 7-8 * Conception and Performance in India 8

4. Working of Mutual Funds 9-16 * Why invest in Mutual Fund 12-13 * Selection Parameters 13-14 * Purchasing of Mutual Fund 14-15 * Income from Mutual Fund 15 * Selling of Mutual Fund 16 5. Tracking Mutual Fund’s Performance 17 6. Major Mutual Fund Companies in India 18-24 7. About the Consumer Behaviour Regarding MFs 25 8. Findings of the Study 26-34 9. Factors Influencing Fund Selection by
Individual Investors 35-38 10. Conclusion 39 11. Recommendation 40-41 12. Annexure – I 42-49 * Questionnaire 43-49 13. Annexure – II 50 14. References 51 15. Glossary 52


This project emphasizes on mutual fund. The project is mainly done with an objective to know about the investors/consumers behavior regarding the mutual fund, types of mutual funds and investment process. The investment habit of the investors has undergone a sea change. With the reforms of industrial policy, public sector, financial sector and the many developments in the Indian money market and capital market, Mutual Funds which has become an important portal for the small investors, is also influenced by their financial behaviour. Hence, this study has made an attempt to examine the related aspects of the fund selection behaviour of individual investors towards Mutual funds.

It is a known fact that development of various mutual fund products in Indian capital market has proved to be one of the most catalytic instruments in generating momentous investment growth in the capital market. There is a substantial growth in the mutual fund market due to a high level of precision in the design and marketing of variety of mutual fund products by banks and other financial institution providing growth, liquidity and return. In this context, prioritization, preference building and close monitoring of mutual funds are essentials for fund managers to make this the strongest and most preferred instrument in Indian capital market for the coming years. With the decline in the bank interest rates, frequent fluctuations in the secondary market and the inherent attitude of Indian small investors to avoid risk, it is important on the part of fund managers and mutual fund product designers to combine various elements of liquidity, return and security in making mutual fund products the best possible alternative for the small investors in Indian market.
Also increasing number of players from public as well as private sectors has entered into the market with innovative schemes to cater to the requirements of the investors in India and abroad. For all investors, particularly the small investors, mutual funds have provided a better alternative to obtain benefits. Hence through this project an attempt has been made to study various need expectations of small investors from different types of mutual funds available in Indian market and identify the risk return perception with the purchase of mutual funds. Since the investors do not evaluate all possible product attributes while making a choice therefore this study aims at tracking investor’s preferences and priorities towards different types of mutual fund products.


The Indian capital market has been growing tremendously with the reforms of the industrial policy, reforms of public sector and financial sector and new economic policies of liberalization, deregulation and restructuring. The Indian economy has opened up and many developments have been taking place in the Indian capital market and money market with the help of financial system and financial Institutions or intermediaries which foster savings and channels them to their most efficient use. One such financial intermediary who has played a significant role in the development and growth of capital markets is Mutual Fund (MF).

The concept of Mutual Funds has been on the financial landscape for long in a primitive form. The story of mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank. Mutual funds have opened new vistas to millions of small investors by virtually taking investment to their doorstep. In India, a small investor generally goes for bank deposits, which do not provide hedge against inflation and often have negative real returns. He has limited access to price sensitive information and if available, may not be able to comprehend publicly available information couched in technical and legal jargons. He finds himself to be an odd man out in the investment game. Mutual funds have come, as a much needed help to these investors. Mutual Funds are looked upon by individual investors as financial intermediaries/portfolio managers who process information, identify investment opportunities, formulate investment strategies, invest funds and monitor progress at a very low cost. Thus the success of Mutual Funds is essentially the result of the combined efforts of competent fund managers and alert investors. A competent fund manager should analyze investor behaviour and understand their needs and expectations, to gear up the performance to meet investor requirements.

It should be noted that the expectations of investors play a vital role in the financial markets. They influence the price of the securities, the volume traded and various other financial operations in actual practice. These expectations of investors are influenced by their perception and humans generally relate perception to action.

The main purpose of doing this project is not only to know about mutual fund and its functioning but also to examine the related aspects of the fund selection behaviour of individual investors towards mutual funds so that the organization (Sundaram bnp paribas) could develop a well defined mutual fund asset allocation strategy that provides effective diversification i.e., the dispersion of assets over diverse and distinct fund categories to maximize its investor/consumer base. The aforesaid objective also includes:

* The fund/ scheme preference of investors. * Identification of the information sources influencing the scheme selection decision of investors. * Identify the most popular Mutual Funds among individual investors. * To assess the MF conceptual awareness level of individual investors. * To establish a relationship between types of investors and MF qualities that influence MF/Scheme selection.

The study mainly deals with the financial behaviour of Individual Investors towards Mutual funds. The required data was collected through a questionnaire administered on a combination of simple random and judgment sample of 200 educated individual investors. Judgment sample selection is due to the time and financial constraints. Respondents were screened and inclusion was purely on the basis of their knowledge about Financial Markets, Mutual Funds in particular. This was necessary, because the questionnaire presumed awareness of some basic terminology about Mutual Funds. The purpose of the survey was to understand the behavioural aspects of individual investors, mainly their fund selection behaviour, various factors influencing this behaviour and also the conceptual awareness level among individual investors. The survey was conducted among 200 educated, geographically dispersed individual investors of Delhi city. Sample of the questionnaire is given in Annex I and distribution of individual investors by demographic factors is given in Annex II. The aforesaid methodology includes:

* Studying the product * Developing Survey Instruments * Getting questionnaire filled through interacting with different age groups, sex, monthly income and occupation. * Final step includes summary of the interpreted data and recommendations.

LIMITATIONS OF THE PROJECT * Sample size is limited to 200 educated individual investors in the city of Delhi. The sample size may not adequately represent the national market. * Simple Random and judgment sampling techniques is due to time constraints. * Also the lack of information sources for the analysis part proves to be a limitation.

Sundaram Finance Ltd. was incorporated in 1954, with the objective to finances the purchase of commercial vehicles and passenger cars. The company was started with a paid-up capital of Rs.2.00 Lakhs and later went public in 1972. The Company's shares were listed in the Madras Stock Exchange in 1972 and in the National Stock Exchange in January 1998.

Subsequently, the equity shares of the Company have been delisted from Madras Stock Exchange Limited (MSE) with effect from January 27, 2004, in accordance with SEBI (Delisting of Securities) Guidelines, 2003, for voluntary delisting.

Today, the activities of the sundaram finance group span commercial vehicle finance, Business Process Outsourcing, car finance, insurance, asset management, home loans, equipment finance, fleet card, infotech solutions, tyre finance and logistics services. Sundaram finance has a nation wide presence with over 150 branches, 0.65 million depositors and nearly 100,000 commercial vehicle and car finance customers.

PRODUCT/SERVICES OFFERED * Deposits : Fixed, cumulative and NRI deposits * Car Finance * Commercial Vehicle Finance * Equipment Finance * Fleet Card * Tyre Finance * Asset Management

OTHER COMPANIES OF SUNDARAM FINANCE LTD * SUNDARAM BNP Paribas Asset Management * Sundaram Home Finance Limited * Royal Sundaram * Sundaram Finance Distribution Limited(SFDL) * Infreight Technologies India Ltd. * Sundaram Infotech Solutions

The concept of mutual funds was introduced in India with the formation of Unit Trust of India in 1963. The first scheme launched by UTI was the now infamous Unit Scheme 64 in 1964. UTI continued to be the sole mutual fund until 1987, when some public sector banks and Life Insurance Corporation of India and General Insurance Corporation of India set up mutual funds. It was only in 1993 that private players were allowed to open shops in the country. Today, 32 mutual funds collectively manage Rs 6713575.19 cr under hundreds of schemes.

A mutual fund is a trust that pools the savings of a number of investors with common financial goals. The collected money is invested in various instruments like debentures, shares, etc. The income generated from these instruments and the capital appreciation is shared by the investors in proportion to the number of units owned by them.

Short history
The government of India set up Unit Trust of India in 1963 by an act on parliament. UTI functioned under the regulatory and administrative control of the Reserve Bank of India till 1978. The Industrial Development Bank of India took over the regulatory and administrative control that year. The first scheme launched by UTI was Unit Scheme 1964 or the infamous Unit 64. The second phase of the mutual fund industry began with the public sector banks and Life Insurance Corporation of India and General Insurance Corporation of India setting up their own mutual funds in 1987. Finally, in 1993 Kothari Pioneer (now merged with Franklin Templeton) became the first private sector mutual fund to start operations in the country. A host of private sector as well as foreign funds set up shop after that. In 1996, a comprehensive and revised Mutual Fund regulation was put in place. The industry now functions under Sebi (Mutual Fund) regulations, 1996.

Conception and performance in India
The industry has steadily grown over the decade. For example, before the public sector mutual fund’s entry, UTI was managing around Rs 6,700 crore on its own. Public sector mutual funds also helped accelerate the growth of assets under management. UTI and its public sector counterparts were managing around Rs 47,000 crore when Kothari Pioneer, the first private sector mutual fund, set up shop in 1993. Before the US 64 fiasco, there were 33 mutual funds with total assets of Rs 1,21,805 crore as on January 2003. The UTI was way ahead of other mutual funds with Rs 44,541 crore assets under management. The industry overall has performed well over the years. Of course, there were a few funds houses, which disappointed investors. However, overall performance has been good. However, lack of awareness still impedes the growth of the mutual fund industry. Unlike developed countries, most of the household savings still go to bank deposits in India.

A mutual fund is set up by a sponsor. However, the sponsor cannot run the fund directly. He has to set up two arms: a trust and Asset Management Company. The trust is expected to assure fair business practice, while the AMC manages the money. The mutual fund collects money directly or through brokers from investors. The money is invested in various instruments depending on the objective of the scheme. The income generated by selling securities or capital appreciation of these securities is passed on to the investors in proportion to their investment in the scheme. The investments are divided into units and the value of the units will be reflected in Net Asset Value or NAV of the unit. NAV is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the valuation date. Mutual fund companies provide daily net asset value of their schemes to their investors. NAV is important, as it will determine the price at which you buy or redeem the units of a scheme. Depending on the load structure of the scheme, you have to pay entry or exit load.

Various Mutual Fund schemes and their implications
Mutual fund schemes are classified on the basis of its structure and investment objective.

By Structure * Open ended funds: Investors can buy and sell units of open-ended funds at NAV-related price every day. Open-end funds do not have a fixed maturity and it is available for subscription every day of the year. Open-end funds also offer liquidity to investments, as one can sell units whenever there is a need for money.

* Close-ended funds: These funds have a stipulated maturity period, which may vary from three to 15 years. They are open for subscription only during a specified period. Investors have the option of investing in the scheme during initial public offer period or buy or sell units of the scheme on the stock exchanges. Some close-ended funds repurchase the units at NAV-related prices periodically to provide an exit route to the investors.

* Interval Funds: These funds combine the features of both open and close-ended funds. They are open for sale and repurchase at a predetermined period.

By Investment objective * Growth funds: They normally invest most of their corpus in equities, as their objective is to provide capital appreciation over the medium-to-long term. Growth schemes are ideal for investors with risk appetite.

* Income funds: As the name suggests, the aim of these funds is to provide regular and steady income to investors. They generally invest their corpus in fixed income securities like bonds, corporate debentures, and government securities. Income funds are ideal for those looking for capital stability and regular income.

* Balanced funds: The objective of balanced funds is to provide growth along with regular income. They invest their corpus in both equities and fixed income securities as indicated in the offer documents. Balanced funds are ideal for those looking for income and moderate growth.

* Money market funds: These funds strive to provide easy liquidity, preservation of capital and modest income. MMFs generally invest the corpus in safer short-term instruments like treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes hinges on the interest rates prevailing in the market. MMFs are ideal for corporate and individual investors looking to park funds for short periods.

Other schemes * Tax saving schemes: Tax saving schemes or equity-linked savings schemes offer tax rebates to investors under section 88 of the Income Tax Act. They generally have a lock-in period of three years. They are ideal for investors looking to exploit tax rebates as well as growth in investments.

* Special schemes: These schemes invest only in the industries specified in the offer document. Examples are Infotech funds, FMCG funds, pharma funds, etc. These schemes are meant for aggressive and well-informed investors.

* Index funds: Index Funds invest their corpus on the specified index such as BSE Sensex, NSE index, etc. as mentioned in the offer document. They try to mimic the composition of the index in their portfolio. Not only the shares, even their weightage is replicated. Index funds are a passive investment strategy and the fund manager has a limited role to play here. The NAVs of these funds move along with the index they are trying to mimic save for a few points here and there. This difference is called tracking error.

* Sector specific schemes: These funds invest only in specified sectors like an industry or a group of industries.

Why invest through a Mutual Fund * Affordability: Mutual funds allow you to start with small investments. For example, if you want to buy a portfolio of blue chips of modest size, you should at least have a few lakhs of rupees. A mutual fund gives you the same portfolio for meager investment of Rs 1,000-5,000. A mutual fund can do that because it collects money from many people and it has a large corpus.

* Professional management: The major advantage of investing in a mutual fund is that you get a professional money manager for a small fee. You can leave the investment decisions to him and only have to monitor the performance of the fund at regular intervals.

* Diversification: Considered the essential tool in risk management, mutual funds makes it possible for even small investors to diversify their portfolio. A mutual fund can effectively diversify its portfolio because of the large corpus. However, a small investor cannot have a well-diversified portfolio because it calls for large investment. For example, a modest portfolio of 10 blue-chip stocks calls for a few a few thousands.

* Convenience: Mutual funds offer tailor-made solutions like systematic investment plans and systematic withdrawal plans to investors, which is very convenient to investors. Investors also do not have to worry about the investment decisions or they do not have to deal with their brokerage or depository, etc. for buying or selling of securities. Mutual funds also offer specialized schemes like retirement plan, children’s plan, industry specific schemes, etc. to suit personal preference of investors. These schemes also help small investors with asset allocation of their corpus. It also saves a lot of paper work.

* Cost effectiveness: A small investor will find that a mutual fund route is a cost effective method. AMC fee is normally 2.5% and they also save a lot of transaction costs as they get concession from brokerages. Also, they get the service of a financial professional for a very small fee. If they were to seek a financial advisor's help directly, they may end up pay more. Also, the size of the corpus should be large to get the service of investment experts, who offer portfolio management.

* Liquidity: You can liquidate your investments anytime you want. Most mutual funds dispatch checks for redemption proceeds within two or three working days. You also do not have to pay any penal interest in most cases. However, some schemes charge an exit load.

* Tax breaks: You do not have to pay any taxes on dividends issued by mutual funds. You also have the advantage of capital gains taxation. Tax-saving schemes and pension schemes give you the added advantage of benefits under Section 88. Investments up to Rs 10,000 in them qualify for tax rebate.

* Transparency: Mutual funds offer daily NAVs of schemes, which help you to monitor your investments on a regular basis. They also send quarterly newsletters, which give details of the portfolio, performance of schemes against various benchmarks, etc. They are also well regulated and Sebi monitors their actions closely.

Selection parameters of a Mutual Fund * Your objective: The first point to note before investing in a fund is to find out whether your objective matches with the scheme. It is necessary, as any conflict would directly affect your prospective returns. For example, a scheme that invests heavily in mid-cap stocks is not suited for a conservative equity investor. He should be better off in a scheme, which invests mainly in blue chips. Similarly, you should pick schemes that meet your specific needs. Examples: pension plans, children’s plans, sector-specific schemes, etc.

* Your risk capacity and capability: This dictates the choice of schemes. Those with no risk tolerance should go for debt schemes, as they are relatively safer. Aggressive investors can go for equity investments. Investors that are even more aggressive can try schemes that invest in specific industry or sectors.

* Fund Manager’s and scheme track record: Since you are giving your hard earned money to someone to manage it, it is imperative that he manages it well. It is also essential that the fund house you choose has excellent track record. It also should be professional and maintain high transparency in operations. Look at the performance of the scheme against relevant market benchmarks and its competitors. Look at the performance of a longer period, as it will give you how the scheme fared in different market conditions.

* Cost factor: Though the AMC fee is regulated, you should look at the expense ratio of the fund before investing. This is because the money is deducted from your investments. A higher entry load or exit load also will eat into your returns. A higher expense ratio can be justified only by superlative returns. It is very crucial in a debt fund, as it will devour a few percentages from your modest returns.

Purchasing mutual funds * Purchasing during IPO: Like companies, even mutual funds offer initial public offering. It is when they launch the scheme for the first time. You can buy units at par on this occasion. However, it is not always advantageous to buy a mutual fund during IPO. You can always wait and see the performance before investing in it.

* Purchasing existing mutual fund units: You can buy units of an open-end scheme anytime at NAV-related price. Most mutual funds charge an entry load of up to 2%. That means you have to pay an additional 2% of the NAV to get into the scheme. You can buy the plan directly from the mutual fund or brokerage. You can even buy them via Internet.

Income from mutual funds
Mutual funds offer three methods of receiving income: * Growth Plan : In this plan, dividend is neither declared nor paid out to the investor but is built into the value of the NAV. In other words, NAV increases over time due to such incomes and the investor realizes only the capital appreciation on redemption of his investment.

* Income Plan : In this case, dividends are paid out to the investor. Here the NAV only reflects the capital appreciation or depreciation in the market price.

* Dividend Re- Investment Plan : In this case, dividend is declared but not paid out to the investor, instead, it is reinvested back into the scheme at the then prevailing NAV. In other words, the investor is given additional units and not cash as dividend.

Selling mutual funds
You can sell or redeem units very easily. As per Sebi guidelines, a mutual fund unit holder has the right to receive redemption or repurchase proceeds within 10 days of the redemption or repurchase. Most funds do not charge an exit load these days.

When should you sell a mutual fund unit is a crucial question. Ideally, you should sell it when you have met your target profit. The other reason is that you need the money or your profile has changed due to some changes in your life. Other than this, you should sell the units if you find that the fund has been taken over by another fund, which you do not approve of. Any major changes in the objective of the fund or a sharp rise in expenses could also be valid reasons to redeem units. Following a favorite fund manager is also a usual practice. However, it need not be always rewarding.

Objective parameters
The NAV of the scheme will reflect the performance of the scheme. The fund will also give you returns for various periods such as one month, three months, six months, one year, three years, since inception, etc. This will give you an idea about the performance of the fund. Funds also provide comparison with relevant benchmarks. This should tell you whether the fund manager has performed better than the benchmark. However, financial experts believe that these returns do not give the complete picture. They believe that the return should be risk-adjusted. Various publications and Internet sites provide such returns. The computation is complicated and they use various formulas for this purpose.

Subjective parameters
The performance alone does not make a fund house a winner. Equally important is the service standards and transparency in actions. It is also essential that the fund offer speedy solutions to grievances of investors. The reputation of the fund house among its investors and public at large indicates how well the fund scores on this front.

ABN AMRO Mutual Fund
ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund.

Birla Sun Life Mutual Fund
Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial. Sun Life Financial is a Global Organisation evolved in 1871 and is being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment. Recently it crossed AUM of Rs. 10,000 crores.

Bank of Baroda Mutual Fund (BOB Mutual Fund)
Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the AMC of BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank AG is the custodian.

HDFC Mutual Fund
HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers mainly Housing Development Finance Corporation Limited and Standard Life Investments Limited.

HSBC Mutual Fund
HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital Markets (India) Private Limited as the sponsor. Board of Trustees, HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.

ING Vysya Mutual Fund
ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING Investment Management (India) Pvt. Ltd. was incorporated on April 6, 1998.

Prudential ICICI Mutual Fund
The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup on 13th of October, 1993 with two sponsorers, Prudential Plc. and ICICI Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset Management Company Limited incorporated on 22nd of June, 1993.

Sahara Mutual Fund
Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial Corporation Ltd. as the sponsor. Sahara Asset Management Company Private Limited incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid-up capital of the AMC stands at Rs 25.8 crore.

State Bank of India Mutual Fund
State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshore fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today it is the largest Bank sponsored Mutual Fund in India. They have already launched 35 Schemes out of which 15 have already yielded handsome returns to investors. State Bank of India Mutual Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread over 18 schemes.

Tata Mutual Fund
Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The investment manager is Tata Asset Management Limited and its Tata Trustee Company Pvt. Limited.

Kotak Mahindra Mutual Fund
Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is presently having more than 1,99,818 investors in its various schemes. KMAMC started its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to investors with varying risk - return profiles. It was the first company to launch dedicated gilt scheme investing only in government securities.

Unit Trust of India Mutual Fund
UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the UTI Mutual Fund with the support of UTI Trustee Company Private Limited. UTI Asset Management Company presently manages a corpus of over Rs.20000 Crore. The sponsorers of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank (PNB), State Bank of India (SBI), and Life Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund are Liquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity Funds.

Reliance Mutual Fund
Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which was changed on March 11, 2004. Reliance Mutual Fund was formed for launching of various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities.

Standard Chartered Mutual Fund
Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated with SEBI on December 20,1999.

Franklin Templeton India Mutual Fund
It is one of the largest financial services groups in the world. Investors can buy or sell the Mutual Fund through their financial advisor or through mail or through their website. They have Open end Diversified Equity schemes, Open end Sector Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes, Open end Income and Liquid schemes, Closed end Income schemes and Open end Fund of Funds schemes to offer.
Morgan Stanley Mutual Fund India
Morgan Stanley is a worldwide financial services company and its leading in the market in securities, investment management and credit services. Morgan Stanley Investment Management (MISM) was established in the year 1975. It provides customized asset management services and products to governments, corporations, pension funds and non-profit organisations. Its services are also extended to high net worth individuals and retail investors. In India it is known as Morgan Stanley Investment Management Private Limited (MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF). This is the first close end diversified equity scheme serving the needs of Indian retail investors focusing on a long-term capital appreciation.

Escorts Mutual Fund
Escorts Mutual Fund was setup on April 15, 1996 with Escorts Finance Limited as its sponsor. The Trustee Company is Escorts Investment Trust Limited. Its AMC was incorporated on December 1, 1995 with the name Escorts Asset Management Limited.

Alliance Capital Mutual Fund
Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital Management Corp. of Delaware (USA) as sponsorer. The Trustee is ACAM Trust Company Pvt. Ltd. and AMC, the Alliance Capital Asset Management India (Pvt) Ltd. with the corporate office in Mumbai.

Benchmark Mutual Fund
Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt. Ltd. as the sponsorer and Benchmark Trustee Company Pvt. Ltd. as the Trustee Company. Incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark Asset Management Company Pvt. Ltd. is the AMC.

Canbank Mutual Fund
Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the sponsor. Canbank Investment Management Services Ltd. incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC is in Mumbai.

Chola Mutual Fund
Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC Limited.

LIC Mutual Fund
Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. . The Company started its business on 29th April 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the Investment Managers for LIC Mutual Fund.

GIC Mutual Fund
GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a Government of India undertaking and the four Public Sector General Insurance Companies, viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII) and is constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882.

Sundaram BNP Paribas
It is one of the largest and well established fund houses in the country. The fund house is sponsored by two giants of the financial services industry – Sundaram Finance Group and BNP Paribas Asset Management

The investment manager for the fund is SUNDARAM BNP Paribas Asset Management Company. The AMC was Started in 1996 as a joint venture between sundaram finance(61%) and Newton investment Management(39%).Subsequent to acquisition of Newton by US-based Mellon Financial Corporation, Sundaram Finance ,in 2002, acquired the 39% stake of Newton in the AMC.


Every asset class has different characteristics. Stocks have the potential to provide high total returns with proportionate level of risk, while bonds may provide lower risks along with regular income. The behavior of every individual investor may be influenced by their investment goals, risk tolerance, time horizon, personal circumstances or performance aspect of the asset class.
One of the studies done by Madhusudhan V. Jambodekar (1996) to know the awareness of Mutual Funds among investors, to identify the information sources influencing the buyer decision and the factors influencing the choice of a particular fund revealed that the income schemes and open-ended schemes are preferred over growth schemes and close-ended schemes during the prevalent market conditions. Investors also look for Safety of Principal, Liquidity and Capital Appreciation in order of importance; Newspapers and Magazines are the first source of information through which investors get to know about Mutual Funds and the investor service is the major differentiating factor in the selection of Mutual Funds.Investors, while taking their investment decisions use unique internal characteristics (influenced by their cognitive domain) and also yield to the environmental pressures of the external financial markets. ‘ Awareness’ belongs to the cognitive domain. Hence, it is essential for the AMCs to know the level of awareness about Mutual Funds among the investing public. This will enable them to create an external environment that can influence investment decisions of investors.

A survey was conducted among 200 educated, geographically dispersed individual investors in Delhi city. Sample of the questionnaire is given in Annex I and distribution of individual investors by demographic factors is given in Annex II.

The survey conducted in Delhi, to capture investor behavior pattern in selection of Mutual Funds, reveals the following about:
Savings Objective of Individual Investors
Savings Objective of the majority of Individual Investors is ‘ to provide for Retirement’ , thus throwing light on the nature of risk averse investors. AMC can attract a pool of investors by designing products for Risk-Averse investors.

Savings Instrument Preference among Individual Investors
Asset preference pattern of investors provides an insight into the investment attitude of investors, which will influence the policy formation for garnering the individual savings. The study reveals that ‘ Pension and Provident Fund’ are the most popular savings instrument among individual investors of Delhi, as it is one of the few financial products, which enable an average salaried person to get reasonable and regular returns, along with safety of capital.

Mutual Fund Investment Preference in Future
The study reveals that, there is a fair opportunity for MF investments in future as 39% of the respondents have voted towards ‘ Yes’ . However, 21% have voted ‘ No’ and 40% as ‘ Not Sure’ as their preference in future MF investment. However, the ‘ No’ and ‘ Not Sure’ category should be matter of concern to the AMCs. There must be ample reasons for 61% (21 + 40; No and Not Sure category) of the investors to have posed a negative approach towards Mutual Funds. Firstly, AMCs should take steps and see that funds are not virtually at the mercy of institutional investors. Mutual Funds should not indulge in unethical practices and launch schemes that benefit institutional investors at the cost of retail investors. The main task at hand for the AMCs is to tackle investor sentiments with greater transparency and credibility in the functioning.

Mutual Fund Scheme Preference among Individual Investor
Investors have a plethora of options ranging from Growth schemes to Fixed Income schemes. These days investors are not offered just plain vanilla schemes but an assorted basket to tune with their risk appetite. MF scheme preference for majority of investors is ‘ Growth Scheme’ . The preference for growth or any other scheme is also influenced by stock market conditions prevailing at the time of investment decision. The prevailing market conditions have prompted investors to look for growth schemes and income schemes have become unattractive due to dropping interest rates. This further indicates the growing alertness of investors.

Scheme Preference by Operation among Individual Investors
Analysis of scheme preference by nature of operation reveals the popularity of open- Ended scheme. In India majority of schemes are Open- Ended as investors can buy or sell units at NAV related prices. The preference to Open- Ended scheme has also given due importance to Liquidity . On the other hand, only 20% of the respondents have voted for Interval Schemes which shows lack of awareness with regard to this feature.

Preferential Feature in Mutual Funds among Individual Investors
The study also shows the investor’s need for Good Return is highest among other features, followed by Safety, Liquidity, Tax Benefit, Capital Appreciation, Professional Management and Diversification Benefits.

Preferred Mode of Communication in Mutual Fund Investing Among Individual Investors
The survey reveals that, 29% of the respondents of Delhi city use Internet facility to know more about Mutual Funds. Another 29% of respondents prefer to get routine or special information like NAV, dividend, bonus, change in asset mix etc. by personally visiting the office. While 30% of the respondents prefer to telephone the office and 12% in the survey have no preferences. The results of the study show that almost equal importance is given to all modes of communication.

Preference of Mutual Fund Investing Over Equity Investing
The emergence of an array of savings and investment options and the dramatic increase in the popularity of Mutual Funds, in the recent years in India, has opened up an entirely new area for value creation and management.

The truth of the matter is that average Indian investor is a greenhorn when it comes to financial markets. The causes are many; lack of opportunity, lack of conceptual understanding and the influence of fixed income orientation in the Indian culture.

The study too revealed that 48% of the small investors of Delhi preferred to invest in Mutual Funds .The theory behind this is that, by pooling together a huge aggregation of individual savings and investing them, using the professional judgment of the fund manager, one spreads risk, takes advantage of volume buying and scientific data analysis, expertise and so on. This seems to be an ideal option for the individual who does not have the time, knowledge and expertise to make a succession of judgments involving hard earned savings. The study reveals yet another category of respondents, ‘ Do Not Know’ , which sums up to 21%. This category may include people who either have a low awareness level about MF industry or still do not completely believe that Mutual Funds can get the same return like that of Equity shares. This calls for an extensive and comprehensive education programme among the people.

Mutual Fund Conceptual Awareness Level of Individual Investors
The study reveals that the general awareness level among individual investors of the concept and functioning of Mutual Funds is good. The number of respondents who have good awareness level of Mutual Funds results to 53%. This could be attributed to the wide publicity given to MF industry by the media for varied reasons. Agent training programmes and investor education programmes organized by AMFI at regional levels could also have contributed to this level of awareness .However, this study was based in the city of Delhi where the awareness level may be considerably high. But the challenge would be to educate these investors about the advantages of investing in mutual funds compared to traditional saving instruments.

Preferable Route to Mutual Fund Investing Among Individual Investors

Investors may use some sources to gain awareness regarding investing in Mutual Funds. The sources in the present study are confined to Reference groups, Newspapers – General & Business, Financial Magazines, Television, Brokers/ Agents, E-Mail and Stores Display. Findings of the study reveal that investors attach high priority to published information, thereby preferring Newspapers – General & Business and Financial Magazines. This throws light on the possibility that MF investors spend time analyzing and examining relevant information before taking any crucial decision.

Factors Influencing Fund Selection by Individual Investors
A set of 25 statements, sub grouped into Fund related factors, Sponsor related factors and Investor service related factors, were used to assess the scheme selection behaviour of investors.


Intrinsic Fund Qualities(F-1A) | A1. Fund performance record | | A2. Fund’ s reputation or brand name | | A3. Scheme’ s expense ratio | | A4. Scheme’ s portfolio of investment | | A5. Entry and exit load | Credibility of Image(F-2A) | A6. Reputation of fund managers/scheme | | A7. Favourable rating by a rating agency | | A8. Innovativeness of the scheme | Flexible Investment Facilities (F-3A) | A9. Withdrawal facilities | | A10. Products with tax benefits | | A11. Minimum initial investment | B.) SPONSOR RELATED FACTORS

Reputation(F-1B) | B1. Reputation of sponsoring firm | | B2. Sponsor has a recognised brand name | | B3. Sponsor has a well developed agency and network | Competent Performance(F-2B) | B4. Sponsor’ s expertise in managing money | | B5. Sponsor has a well developed research and infrastructure | | B6. Sponsor’ s past performance in terms of risk and return |


Transparent Disclosure(F-1C) | C1.Disclosure of investment objective | | C2. Disclosure of periodicity of valuation | | C3. Disclosure of the method and periodicity of the schemes sales and repurchases | | C4. Disclosure of NAV on every trading day | | C5. Disclosure of deviation of investments from the original pattern | | C6. Mutual Fund’s investor’s grievance redressal machinery | Tangibles/ Fringe Benefits(F-2C) | C7. Fringe benefits | | C8. Prefer MF to avoid problems of bad deliveries and follow up with brokers and companies |

Hence, the aforesaid factors could be associated with three different kind of investors i.e., Professional Investors, Image Conscious Investors & Cautious Investors.

Professional Investors: This type of investors have had some training to invest in financial investments, indicating his confidence that he wouldn’t lose more money than he would gain. Hence, Professional Investors are those who demand “Intrinsic fund qualities” as their primary requirement before investing in MF/scheme. Fund performance & reputation, expense ratio, portfolio of investment & load factors are their core concerns.

Professional Investors F - 1A F – 1B

F – 1C

Image Conscious Investors: They define those types of investors who attach importance to reputation and brand name. Reputation of fund manager credibility & rating by agencies are fund qualities they would look forward to.

Professional Investors F – 2A F – 2B

F – 2C Cautious Investors: These types of investors are generally risk averse and would prefer flexibility in investment patterns which would further reduce his risk profile. Factors like withdrawal facilities & minimum initial investment are their primary choice. Sometimes he may look for innovative schemes, which may appease his risk appetite.

Professional Investors

F – 3A

Mutual Fund industry in India has a large untapped market in urban areas besides the virgin markets in semi-urban and rural areas. This market potential can be tapped by scrutinizing investor behaviour to identify their expectations and articulate investor's own situation and risk preference and then apply to an investment strategy that combines the usual four: cash and equivalents, Government-backed bonds, debt, and equity. Presently, more and more funds are entering the industry and their survival depends on strategic marketing choices of mutual fund companies, to survive and thrive in this highly promising industry, in the face of such cutthroat competition. In addition, the availability of more savings instruments with varied risk-return combination would make the investors more alert and choosy. Running a successful Mutual Fund requires complete understanding of the peculiarities of the Indian Stock Market and also the psyche of the small investor. Under such a situation, the present exploratory study is an attempt to understand the financial behaviour of Mutual Fund investors in connection with scheme preference and selection. Studies similar to this, if conducted on a large scale at regular intervals by organizations like AMFI/SEBI, will help capture the changing perceptions and responses of these groups, and thus provide early warning signals to enable implementation of timely corrective measures. It is hoped that the survey findings of the study will have some useful managerial implications for the organization in their product designing and marketing of the fund.


* Since the investors need for liquidity is found to be high, we suggest that more of the new schemes opening for subscription be Open-ended.

* AMCs should continuously design suitable schemes to meet the three major needs i.e. adequate returns, safety and liquidity in a balanced proportion and develop infrastructure to reach to the investors. They should also simplify the operational environment. AMCs should open more investor service branches or arrange with other banks to provide over-the-counter redemption facility across the country through their banking network.

* Mutual fund companies should segment their target customers and position their various products based on the target segment they propose to address. The target segment can be broadly divided into institutional segment and individual investor segment. The institutional segment consisted of treasury departments of Corporate, Trusts. The individual investor can be in turn divided into various segments such as Young Families with small or no children, Middle-aged People saving for retirement and Retired People looking for steady income. Suitable products such as Growth and Balanced schemes for young families and Income schemes with sure and steady returns for retired people can be marketed. By proper segmentation and by targeting the right product to the right customer, Mutual Fund companies can hope to win the confidence of their customers and 'own' them for a lifetime.

* The average projected life span of an Indian after retirement (that is, after 60) is expected to go up from 15 years to 20 years. And the number of the elderly (those over 60) is expected to increase significantly from 6.8 per cent of the population in 1991 to 8.9 per cent in 2016 and further to 13.3 per cent by 2026. One of the key recommendations of the expert committee of Project OASIS (Old Age Social and Income Security) constituted by the government on pension reforms in 1999 is the creation of a privately managed, individual choice based, voluntary Pension system. Pension funds are likely to be a big driver for the MF industry.

* AMC/AMFI/Sponsors should effectively convey the message that among the multitude of investment options available, Mutual Funds are better geared to offer the balanced mix of return, safety and liquidity to the investors. Negative perceptions about Mutual Funds require to be tackled through appropriate investor education measures.

* Employers can influence the investment decision of the employees by providing financial education as a benefit to employees. Employers can be objective in hiring an independent financial advisor to conduct an education programme on long-term investment strategies. Employers have ready access to employees and the cost can be spread over many employees.

* Advisory services are becoming more critical to investors and independent financial advisors and planners are gaining ground. An entirely new distribution channel can be created consisting of professional advisors who will exert substantial influence on what products investors will buy.

* AMCs should establish friendlier and easily accessible Automated Response Systems. These systems should not only effectively convey information on products and services but also efficiently redress investor grievances.


Dear Sir / Madam,

Mutual funds have opened new vistas to millions of small investors by virtually taking investment to their very doorstep. The scientific investment approach and investor oriented benefits has made the industry grow immensely.

I am currently engaged in a study on Investors attitude towards Mutual Funds. In this connection I request you to read the following items carefully and answer them. The answers your give will be held confidential and used purely for academic purpose. Please put a tick mark in the square corresponding your choice. I thank you for your time.

PART A: Personal Data

1.1) Name :

1.2) Sex : Male  Female 

1.3) Age in completed years:

Below 30  31 – 40 41 – 50 Above 50 

1.4) Academic Qualifications:

School Final  Graduate 
Post – Graduate  Professional Degree 

1.5) Marital Status:

Married  Unmarried 
Widow  Widower 
Divorced 

1.6) Occupation:

Professional  Business 
Salaried  Retired 

1.7) Annual Income in Rs:

Below Rs 1, 00, 000  Rs1, 00,001 – 3, 00,000 
Rs 3, 00,001–5, 00,000  Above Rs 5, 00,000 

1.8) How much do you save annually (in Rs. Approx)

Less than Rs 50,000  Rs 50,001 to Rs 100000 
Above Rs 100000 

1.9) Objectives of your savings are :

To provide for Retirement For tax reduction 
To meet contingencies  For children’ s education 
For purchase of assets 

1.10)What is your current preference of savings avenue? (Rank from 1 first preference to 10 last preference)

Currency  Bank Deposit 
Life Insurance  Pension & Provident Fund 
Shares  Units of UTI & Mutual funds 
Postal Savings  Chits 
Real Estate  Gold 

PART B: Please read the following and give your views:

2.1) What is your current attitude towards the following Financial Instruments, in the Indian Capital Market?

High Favourable Some What Not Very Not At All Favourable Favourable Favourable Favourable | a) Shares       | b) Debentures       | c) Mutual Funds      | d) Bonds      | 2.2) Do you prefer investment in Mutual funds to other savings avenue in future? Yes No Not Sure 2.3) Generally you prefer (Please Rank from 1 first preference to 6 last preference) Growth schemes Income Schemes  Balanced Schemes Money Market Schemes  Tax saving Schemes Index Schemes 2.4) You prefer: Open ended Schemes Close Ended Schemes  Interval Schemes 2.5) You prefer investment in Mutual funds due to (Rank from 1 to 8 down) Safety  Liquidity  Flexibility  Good Return  Capital appreciation Tax Benefit  Professional Management  Diversification Benefit 2.6) There are many qualities that could affect your selection of Mutual funds and Specific Schemes. Please indicate importance of the following in your decision. Highly Important Some what Not very Not Important Important Important Important | I. Fund Related Qualities | a) Fund performance record      | b) Funds reputation or brand     name | c) Scheme’ s expense ratio      | d) Scheme’ s portfolio of      investment | e) Reputation of the Fund      Manager/ Scheme | f) Withdrawal facilities      | g) Favourable rating by a      rating agency | h) Innovativeness of the     scheme | i) Products with tax benefits      | j) Entry & Exit load      | k) Minimum initial investment      | II Fund Sponsor Qualities | a) Reputation of sponsoring      firm | b) Sponsor has a recognized      brand name | c) Sponsor has a well      developed agency & network | d) Sponsor’ s expertise in     managing money | e) Sponsor has a well   developed research & infrastructure | f) Sponsor’ s past performance     in terms of risk and return | III Investor Related Services | a) Disclosure of investment      objective in the advertisement | b) Disclosure of periodicity of     valuation in the advertisement | c) Disclosure of the method      and the periodicity of the schemes sales and repurchases in the offer documents | d) Disclosure of NAV on every     trading day | e) Disclosure of deviation of      investments from the original pattern | f) MF’ s Investor’ s grievance   redressal machinery | g) Fringe benefits i.e., free      insurance, credit cards, loans on collateral, tax benefits etc. | h) Preferred MF to avoid      problems, i.e., bad deliveries, and unnecessary follow up with brokers and companies |
2.7) How did you come to know about Mutual fund investment schemes?Reference groups ---------------Newspapers (general) ---------------Newspapers (business) ---------------Financial Magazines ---------------Television ---------------Brokers / Agents ---------------Mail ---------------Stores Display ---------------2.8) While contacting the fund or trying to get routine / special information would you rather communicate with a computerized automated response system or a person. (Please tick one response).I prefer automated response I prefer to personally visit the office I prefer to telephone the office I have no preferences 2.9) Do you think Mutual fund investing is a best alternative to equity investing?Yes  No  Do not know 2.10) Name a few Mutual funds existing in the Indian capital Market at present, you know1)2)3)4) |

PART C: Please read the following statements and indicate your views by putting a tick mark in the appropriate square

Do Not Yes No Know

3.1) Investment in M F helps you realize the    benefits of stock Market investing.

3.2) M F investing gives a definite positive return.   

3.3) Return of the Principal amount invested in    any MF is assured.

3.4) MF returns and Principal are fully protected    and guaranteed by Association of Mutual funds.

3.5) Bank sponsored Mutual funds give a definite    positive return which is greater than Bank fixed deposits rate for a similar period.

3.6) Entry and exit out of Mutual funds is easy.   

3.7) Due to professional investment, a good    return can be expected of Mutual fund.

3.8) Ups and downs of stock Market will not    affect the return from MF.

3.9) There are many MF schemes to meet the    varied needs of investors.

3.10) AMFI protects the interests of MF industry    and the unit holders.

Thank you very much for your kind co-operation and for taking time to complete this Questionnaire.

Table A 2.1
Distribution of Individual Investors by Demographic Factor Investors Particulars | Number of Respondents | | Total(200) (%) | Sex | Male | 168 84 | | Female | 32 16 | Age | Below 30 | 54 27 | | 30-45 | 54 27 | | 45-55 | 40 20 | | Above 55 | 52 26 | AcademicQualification | School | 22 11 | | Graduate | 74 37 | | Post Graduate | 40 20 | | Professional | 64 32 | Marital Status | Married | 154 77 | | Unmarried | 46 23 | Occupation | Professional | 24 12 | | Business | 6 3 | | Salaried | 154 77 | | Retired | 16 8 | Annual Income | Below Rs.100000 | 14 7 | | Rs.100000Rs.300000 | 100 50 | | Rs.300000-Rs.500000 | 56 28 | | Above 500000 | 30 15 | Annual Savings | Less than Rs. 50000 | 80 40 | | Rs.50001-Rs.100000 | 86 43 | | Above Rs.100000 | 34 17 |

Gupta, L.C., Mutual Funds and Asset Preference, Society for Capital Market Research and Development, Delhi, 1993.

Madhusudan V. Jambodekar, Marketing Strategies of Mutual Funds – Current Practices and Future Directions, Centre for Capital Markets Education and Research, Bangalore,1996.

“AMFI-Mutual fund industry”,
<, [Accessed 13 March 2009]

“ Investor Home- Psychology and Behavioural Finance”, Investor Home Online <, [Accessed 28 April 2009]

“Fund Report Card-Value Research Online”,
<http:// , [Accessed 04 April 2009]

“Sundaram Finance Group-Group Companies”,
<http://, [Accessed 04 April 2009]


NAV: NAV is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units.

Sale price: The price you pay when you invest in a scheme. It is also called offer price.

Repurchase price: The price at which a close-ended scheme repurchases its units. It is also called bid price.

Redemption price: The price at which open-ended schemes repurchase their units and close-ended schemes redeem their units on maturity. This price is NAV related.

Entry load: The extra amount you pay when you invest in a scheme. It is also called front-end load or sales load.

Exit load: Amount collected when you are selling or redeeming units.…...

Similar Documents

Premium Essay

Mutual Funds mutual fund & fund Manager? Ans.: A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments and other securities. Fund manager Textbook Definition- Person who manages the money on behalf of the investors by buying/selling stock, bonds etc. Internet Definition-The person(s) responsible for implementing a fund's investing strategy and managing its portfolio trading activities. A fund can be managed by one person, by two people as co-managers and by a team of three or more people. Fund managers are paid a fee for their work, which is a percentage of the fund's average assets under management. 2. How can a common man benefit from the Mutual Fund investment? Ans: Mutual fund investment gives common man opportunity to invest in different class of assets. It also includes investing in money market funds, bond or fixed income funds, stock or equity funds and hybrid funds. It gives diversified portfolio where different asset classes have different level of risk where risk can be covered. As it is managed by professional common man just have to invest. It gives high returns as compare to investing in only one asset class. Thus, instead of investing in particular money market or bond market investment mutual fund is better option to enjoy investment in different assets class and higher returns. 3. Which are the different Asset Classes Mutual......

Words: 1544 - Pages: 7

Premium Essay

Mutual Funds

...Mutual funds: The first mutual funds were established in Europe. One researcher credits a Dutch merchant with creating the first mutual fund in 1774.[5] The first mutual fund outside the Netherlands was the Foreign & Colonial Government Trust, which was established in London in 1868. It is now the Foreign & Colonial Investment Trust and trades on the London stock exchange.[6] Mutual funds were introduced into the United States in the 1890s.[7] They became popular during the 1920s. These early funds were generally of the closed-end type with a fixed number of shares which often traded at prices above the value of the portfolio.[8] The first open-end mutual fund with redeemable shares was established on March 21, 1924. This fund, the Massachusetts Investors Trust, is now part of the MFS family of funds. However, closed-end funds remained more popular than open-end funds throughout the 1920s. By 1929, open-end funds accounted for only 5% of the industry's $27 billion in total assets.[9] After the stock market crash of 1929, Congress passed a series of acts regulating the securities markets in general and mutual funds in particular. The Securities Act of 1933 requires that all investments sold to the public, including mutual funds, be registered with the Securities and Exchange Commission and that they provide prospective investors with a prospectus that discloses essential facts about the investment. The Securities and Exchange Act of 1934 requires that issuers of......

Words: 683 - Pages: 3

Premium Essay

Mutual Fund

...Lect . Mrs. Pooja Aparajita. I express my sincere thanks to the above stated person for their utmost support during my project. The immense scope of this project has helped me to understand many facts of marketing in Indian industry. (Nitin Rathore) LIST OF TABLES LIST OF TABLES Table No. Title of the Table Page No. Table No. 2.1 Transactional Handling 19 LIST OF FIGURES LIST OF FIGURES Figure No. Title of the Figure Page No. Figure No. 1.1 Objective of study 05 Figure No. 2.1 Mutual fund concept 09 Figure No. 2.2 Organization structure 13 Figure No. 2.3 Types of Mutual Fund Schemes 18 Chapter 1 1.1 Executive Summary India is one of the countries which is concentrating towards its share market & investment sector. Because a countries growth is totally dependent upon its educated people. So with the changing economical environment its effect can be easily being seen in this field also. The project “Market Research on Various Schemes of SBI Mutual Fund” analyses the future market and assists in understanding upcoming competition specifies about the future numbers, characteristics, and trends in markets of Bhilai & Durg region and trying to analyze the factors affecting customer expectations. The main aim of this project is to find out the future prospect for Share market & investment by the people in the market of Bhilai. The research will also help to understand about the various viewpoints of the customers by which the company can......

Words: 5504 - Pages: 23

Premium Essay

Mutual Funds

...The Mutual Fund At a basic level, mutual funds are nothing more than a collection of stocks and bonds. A mutual fund primarily focuses on bringing groups of people together to invest their money into bonds, stocks, and other different securities. It’s important to know that each of these gathered investors owns shares that ultimately make up a portion of the holdings in the total fund. Once a person invests into these stocks, bonds, or securities through the mutual fund they can make money in three different ways. One being if the fund sells a security that increases in price then it has a capital gain. If a capital gain occurs then most funds forward these gains to investors in a distribution. Another way investors make money through mutual funds is if fund holdings’ price rises but is not sold by the fund manager. The fund’s shares increase and one can sell their mutual fund shares for a profit. The third way an investor can make a profit is when income is earned from the interest on bonds and from the dividend on stocks. The fund pays out almost all of the income it receives throughout the year to fund owners in a distribution. Mutual funds not only have great benefits on a profitable level but also have many other perks to them. Most importantly, mutual funds provide professional management of the investors’ money. Most investors purchase funds because they either don’t have the time or the expertise to thoroughly manage their own portfolios. This is a great way for...

Words: 1506 - Pages: 7

Premium Essay

Mutual Funds

...ReseaRch PaPeR Commerce Volume : 3 | Issue : 1 | January 2013 | ISSN - 2249-555X A Study About Awareness of Mutual Funds Among the Investors of Navsari District Keywords Mutual Funds, Investment alternatives, Investors’ perception. Dr. M. P. Desai Head, Department of Accountancy,Udhna Citizen Commerce College, Surat. Residence: 50,Niral Nivas, Ashapuri society,Vijalpore road, Navsari,396445, Gujarat. Mr. Mayur K Joshi Asst. Prof., Department of Accountancy,Udhna Citizen Commerce College, Surat. Residence: Vinay readymade, 7, shopping center,Dudhiya talav, Navsari,396445, Gujarat. ABSTRACT The financial securities include ownership securities (like shares, mutual fund units) and creditorship securities (like debentures, bonds). Ownership securities are more risky than creditorship securities. Investment decisions relating to ownership securities involve planning of investment strategies according to the extent of diversification desired by individuals. Investors can reduce risk and maximize returns by way of mutual fund investments, enjoying the expertise of professional fund management. In India, Mutual fund industry is an organised financial system, accessible to individual investors having varied needs and options. In order to identify awareness of mutual funds among the investors of Navsari District, a careful collection of primary data through questionnaire was made. Introduction Financial system comprises financial institutions, services, market and...

Words: 1751 - Pages: 8

Premium Essay

Mutual Fund

...Visit for more PROJECT REPORT ON Mutual Fund Industry In India BY MBAHOTSPOT.COM Brought to you by [] Visit for more projects THIIS PROJECT IS MADE BY TEAM OF MBAHOTSPOT.COM, FOR YOUR COSTOM PROJECT YOU CAN MAIL US AT or we will make available for you. For your personalize project report emails us at: or 1 Visit for more For your personalize project report emails us at: or 2 Visit for more INTRODUCTION OF MUTUAL FUNDS Mutual funds have become a very popular way to take some of the risk out of investing in individual stocks by investors. Mutual funds are a collection of stocks selected by mutual fund seller and sold to investors as shares in a fund. There are several types of funds that you can invest in. Some of the more popular types are technology funds, growth funds, security funds, and income funds. Mutual funds are very popular because they allow you to invest in a numbers of stocks therefore greatly reducing the risks associated with putting you money in an individual stock. Mutual funds have become one of the most attractive ways for the average person to invest their money. A mutual fund pools resources from thousands of investors and then diversifies its investment into many different holdings such as stocks, bonds,......

Words: 13286 - Pages: 54

Premium Essay

Mutual Fund

...CHAPTER 1 INTRODUCTION INTRODUCTION Much of the empirical research on mutual funds has not given any significant contribution for the mutual fund investor. Unfortunately many mutual fund investor have probably never heard about these research results or their implications. They have heard some rules of thumb guidelines from their brokers or peers about how to select a particular fund. The purpose of this present study is to identify the selection criteria, investors seem to use in selecting a mutual fund institution that suits the investors investment objective and also to identify the factors that are responsible for the selection of schemes floated by these organisations. Further it attempts to identify the reactions from the respondents' namely mutual fund unit holders of Mysore towards the performance of the different schemes. The researcher has employed interview schedule for the collection of data to elicit views of the Mutual Fund investors. Individuals from all walks of life have been showing increasing participation in the stock market, a place where one can see their money doubling in a period of time or disappearing depending on how they play the game. With the stupendous growth in the capital market, direct investment in the stock market has definitely become next to impossible. And yet investors undertake investments with minimal risks of the working of stock exchanges. But in order that investments prove profitable;......

Words: 6628 - Pages: 27

Premium Essay

Mutual Funds

...MUTUAL FUND 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 the investor’s funds. The most important characteristic of the Mutual fund is that the contributories and the beneficiaries are the same class of people, namely the investors. The term mutual means that the investors contribute to the pool, and also benefit from the pool. There are no other claimants to the funds. The pool of funds held mutually by investors is the mutual fund. A Mutual fund business is to invest the funds thus collected, according to the wishes of the investors who created the pool. Usually the investors appoint professional investment managers, to manage their funds. The same objective is achieved when professional investment managers create a ‘product’ and offer it for investments to the investors. The product represents a share in the pool and pre states investment objectives. FEATURES AND CHARACTERISTICS OF MUTUAL FUND A mutual fund is a financial intermediary and works as an investment company. It has distinct features and characteristics which differentiate it from other financial intermediaries. Some of the features of mutual fund are:  Mutual fund is a pool of financial resources. Investors bring their individual funds together. Sometimes the funds which otherwise may not come for investment in the......

Words: 7224 - Pages: 29

Premium Essay

Mutual Fund

...Performance Evaluation of Mutual Funds in Pakistan S. M. AAMIR SHAH and SYED TAHIR HIJAZI* INTRODUCTION In Pakistan Mutual Funds were introduced in 1962, when the public offering of National Investment (Unit) Trust (NIT) was introduced which is an open-end mutual fund. In 1966 another fund that is Investment Corporation of Pakistan (ICP) was establishment. ICP subsequently offered a series of closed-end mutual funds. Up to early 1990s, twenty six (26) closed-end ICP mutual funds had been floated by Investment Corporation of Pakistan. After considering the option of restructuring the corporation, government decided to wind up ICP in June, 2000. In 2002, the Government started Privatisation of the Investment Corporation of Pakistan. 25 Out of 26 closed-end funds of ICP were split into two lots. There had been a competitive bidding for the privatisation of funds. Management Right of Lot-A comprising 12 funds was acquired by ABAMCO Limited. Out of these 12, the first 9 funds were merged into a single closed-end fund and that was named as ABAMCO Capital Fund, except 4th ICP mutual fund as the certificate holders of the 4th ICP fund had not approved the scheme of arrangement of Amalgamation into ABAMCO capital fund in their extra ordinary general meeting held on December 20, 2003. The fund has therefore been reorganised as a separate closedend trust and named as ABAMCO Growth Fund. Rest of the three funds were merged into another single and named as ABAMCO Stock Market Fund. So......

Words: 5043 - Pages: 21

Premium Essay

Mutual Funds

...Article: What are the most popular mutual funds that invest primarily in the insurance sector? Website: Investopedia Link : This is an article about 3 popular mutual funds that invest in insurance sector. Why would they target insurance sector? As per the article the insurance sector is predicted to grow in few years. There is an expectation that in future interest rates are going to go up and that would strength financial services industry. So there is an opportunity if you wish to grow your money. One of the 3 mutual funds is Fidelity Select Insurance Portfolio. This portfolio invest minimum of 80% of its assets in equity securities of companies operating in insurance business. The 2nd fund is T. Rowe Price Financial Services Fund; it invests in common shares of companies operating within financial service industry. This will grow your assets through long term capital appreciation and making income through yearly dividends. The 3rd one is John Hancock Financial Industries fund which invest same like T. Rowe Price Financial services funds invest into, in equity securities. Not like Fidelity funds, these funds are diversified among foreign and domestic companies. However it carries 1.29% expense ratio. | Fidelity ..funds | T. Rowe..funds | John Hancock.. funds | Over years | 11.3% | 9.5% | 2% | Over 3 years | 19.5% | 17.8% | 16.9% | Over 5......

Words: 316 - Pages: 2

Premium Essay

Mutual Fund

...The Definition A mutual fund is nothing more than a collection of stocks and/or bonds. You can think of a mutual fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund. You can make money from a mutual fund in three ways: 1) Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all of the income it receives over the year to fund owners in the form of a distribution. 2) If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to investors in a distribution. 3) If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for a profit. Funds will also usually give you a choice either to receive a check for distributions or to reinvest the earnings and get more shares. Advantages of Mutual Funds • Professional Management - The primary advantage of funds is the professional management of your money. Investors purchase funds because they do not have the time or the expertise to manage their own portfolios. A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor investments. • Diversification - By owning shares in a mutual fund instead of owning individual stocks or......

Words: 2651 - Pages: 11

Premium Essay

Mutual Funds

...Chapter 23 1. Mutual funds are attractive to small investors because they are able to diversify their portfolio for a minimum investment of $250 to $2,500 (p. 609). The investors must rely on the fund’s portfolio manager to make the investment decisions though. Mutual funds generate returns in three ways: through dividend payments to shareholders, distribute capital gains resulting from the sale of securities within the fund, and through mutual fund share price appreciation (p. 611). 2. Open-end mutual funds differ in the fact that they are open to investors which means they will sell shares to investors at any time (p. 609). They also allow investors to sell the shares back to the fund at any time which closed-end cannot (p. 609). 3. Load funds are promoted by registered representatives of brokerage firm, who earn a sales charge upon the investments in the fund between 3 and 8.5 percent (p. 615). No-load funds are promoted strictly by the mutual fund of concern, thereby avoiding an intermediary (p.615). 6. The ideal mutual fund for investors who wish to generate tax-free income and a low degree of risk would be a short-term municipal bond fund (p.620). 9. If the mutual fund distributes at least 90 percent of its income to its shareholders, the fund itself is exempt from federal taxation (p.625). 11. Money market funds differ from other types of mutual funds based on the composition, maturity, and risk of their assets (p. 625). The most common money market funds are......

Words: 507 - Pages: 3

Premium Essay

Mutual Funds

...the efficient frontier is to do so parametrically on expected portfolio return RTw. This version of the problem requires that we minimize wTΣw subject to RTw = μ for parameter μ. This problem is easily solved using a Lagrange multiplier. [edit] The two mutual fund theorem One key result of the above analysis is the two mutual fund theorem.[6] This theorem states that any portfolio on the efficient frontier can be generated by holding a combination of any two given portfolios on the frontier; the latter two given portfolios are the "mutual funds" in the theorem's name. So in the absence of a risk-free asset, an investor can achieve any desired efficient portfolio even if all that is accessible is a pair of efficient mutual funds. If the location of the desired portfolio on the frontier is between the locations of the two mutual funds, both mutual funds will be held in positive quantities. If the desired portfolio is outside the range spanned by the two mutual funds, then one of the mutual funds must be sold short (held in negative quantity) while the size of the investment in the other mutual fund must be greater than the amount available for investment (the excess being funded by the borrowing from the other fund). [edit] The risk-free asset and the capital allocation line Main article: Capital allocation line The risk-free asset is the (hypothetical) asset which pays a risk-free rate. In practice, short-term government securities (such as US treasury bills) are......

Words: 13234 - Pages: 53

Premium Essay

Mutual Funds

...Paper topic: Mutual Funds vs ETFs: historical data, argumentative analysis and position. Introduction Mutual Fund is a term, meaning joint venture. As the human minds evolve more civilized, it also has undergone many evolutionary postures. Formerly it was practiced as close ended mutual fund in which combined investment had limits. Simply in those funds a restricted number of investors were allowed to play. As a result they used to have limited profit. While following the same pattern some innovative thoughts were put together along with the basic ingredients of the recipe of mutual funds to make it more reproductive. The consequences resulted in the body of open ended mutual funds. These open ended funds are still hailing the demanding curse of present age. Using the mutual fund scheme was more beneficial for the investors and was less fruitful for the manager or the body managing and investing the funds. Therefore to make more money from limited funds a newer system was stemmed into the fabric of trade. That system was to engage poor into this business by investing money in the form of blocks. This trick helped the managing body to withdraw more money out of the flow in the form of commission. On the contrary it involved less investment share which was easy to contribute by an average investors. Hence it had the characteristics of close ended mutual fund accompanied by replication of index. This system was easy to manipulate and friendly to the......

Words: 3826 - Pages: 16

Premium Essay

Mutual Fund

... Background of the study: Mutual fund industry in India attaining maturity Even though the capital market attracts people there are several problems associated with it. While investing directly in to capital market one to be careful to judge the valuation of the stock and understand the complexities involved in the stock price fluctuations. So, a person with moderate knowledge of capital market generally prefers to invest in mutual funds. In recent times mutual fund industry in India is growing rapidly and is undergoing tremendous changes. The Indian mutual fund industry has witnessed several structural and regulatory reforms. Different Investment Avenue are available to investors. Mutual fund also offers good investment opportunities to the investors. Like all investment, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while investment decisions. An objective to make the investors aware of functioning of mutual funds, an attempt has been made to provide information in question-answers format which may help the investors in taking investment decisions. Meaning of mutual fund: Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with......

Words: 4625 - Pages: 19