PROJECT REPORT

ON

A study on investors awareness level on mutual

fund & promotion of sip plan
A training report submitted in partial fulfillment of the requirement for the degree of

BACHELOR OF BUSINESS ADMINISTRATION

(2014-2017)

6th semester

Submitted by:
Name: Kashav kumar

Class: BBA
Roll no. 6206

Govt. Rajindra College

Bathinda
2017

1
 ACKNOWLEDGEMENT

I have prepared this project with the help of the many persons working in the organization. I

collected primary data from the personnel department but secondary and supporting data was

provided by many others.

A project work is never the work of a one person; rather it is a combination of ideas, suggestions,

views & contribution involving various folks.

I want to thank several people for their professional assistance. They devoted their precious time

and rendered generous support for my research and writing.

I also want to thank all the person of the personnel department who gave their full support in

completing my project. All the persons mentioned above not only helped me but also provided

guidance for completing the project by their vast experience and professional attitude.

I shall ever remain thankful to them and express my sincere gratitude

2
 Kashav kumar

DECLARATION

I undersigned here by declare that the summer training project report submitted to my college

Govt Rajindra College, Bathinda. In partial fulfillment for the degree of master of business

administration on study on investors awareness level on mutual fund & promotion of sip

plan, BATHINDA is a result of my own work under continous guidance and kind co-

operation of our college faculty member I have not submitted this training report to any other

university for the award of degree.

Kashav kumar

3
 TABLE OF CONTENTS

1. DECLARATION 1-3
2. EXECUTIVE SUMMARY 4-5
3 . INTRODUCTION TO THE COMPANY 6-21

3. INTRODUCTION TO THE 22-50

PROJECT
4.OBJECTIVE OF THE 50-54

STUDY
5.RESEARCH 55-60

METHODOLOGY
6. DATA INTEPERETATION 61-72

AND ANALYSIS
7. FINDINGS & 74-76

SUGGESTIONS
8. CONSCLUSION 76-77
9.ANNEXTURE 78-81
10. BIBLOGRAPHY 82-83

4
 EXECUTIVE SUMMARY

The commencement of E-Trading and Demat has transformed the capital market in India. With
the help of Demat and Trading account, buying and selling of shares has become a much faster
and even process than trading with the assistance of physical broker. It provides for the
assimilation of bank, broker, stock exchange and Depository Participants. This helps to get rid of
the painstaking procedure of investing in stock exchange. Today, if one wants to invest in stock
market, he has to contact a broker on phone or meet him personally to place order. A broker
generally gives such importance and additional service only to high net worth customers. But the
introduction of internet trading, even a common or a small investor gets an opportunity to avail
the service at an affordable price which is much lesser than what is charged by a physical broker
over the phone. Online trading has given customer a real time access to account information,
stock quotes elaborated market research and interactive trading. The prerequisites of internet
trading are a computer, a modem and a telephone connection, registration with broker, a bank
account and depository account. The introduction of depository service is considered as the

5
beginning of the trading of stocks @click. This means that you can arrange delivery of scrips
sold anytime, anywhere to anyone by click of a mouse. Dematerialization facilities to keep the
securities in electronic form instead of paper form. It offers more advantageous than the physical
certificate form. Despite the advantages of Dematerialization, the awareness levels among the
investors relating to Demat account is not adequate because of numerous reasons. The investors
are not sufficiently responsive of the concept of Demat account and the various financial
institutions providing such services. This study involves understanding the various concepts of
Demat and analyzing the investment pattern of individuals in India and a study on Analysis of
awareness among investors regarding online trading and Dematerialization.

6
 CHAPTER-1
INTRODUCTION
TO THE COMPANY

COMPANY PROFILE

KARVY is a premier integrated financial services provider, and ranked among the top

five in the country in all its business segments, services over 20 million individual

investors in various capacities and provides investor services to over 300 corporate,

comprising the whos who of corporate India. KARVY covers the entire spectrum of

7
financial services such as Stock broking, Depository participants, Distribution of

financial products like mutual funds, bonds, fixed deposit, merchant banking & Corporate

Finance, insurance broking, commodities broking, realty services, personal Finance

advisory services, placement of equity, IPOs, among others. KARVY has a professional

management team and ranks among the best in technology, operations, and more

importantly, in research of various industrial segments.

KARVY EARLY DAYS

The birth of KARVY was on a modest scale in 1981. It began with the vision and

enterprise of a small group of practicing charted Accountants who founded the flagship

company KARVY Consultants limited. We started with consulting and financial

accounting automation, and carved

Inroads into the field of registry and share accounting by 1985. Since then, we have

utilized our services, to provide new ones, to innovate, diversify and in the process,

evolved KARVY as one of Indias premier integrated financial service enterprise. Thus

over the last 20 years KARVY has traveled the success route, towards building a

reputation as an integrated financial services provider, offering a wide spectrum of

services. And we have made this journey by taking the route of quality service, path

breaking innovations in service, versatility in service and finallytotality in service.

8
Our highly qualified manpower, cutting-edge technology, comprehensive infrastructure

and total customer-focus has secured for us the position of an emerging financial services

giant enjoying the confidence and support of an enviable clientele across diverse fields in

the financial world.

Our values and vision of attaining total competence in our servicing has served as the

building blocks for creating a great financial enterprise, which stands solid on our

fortresses of financial strength-our various companies with the experience of years of

holistic financial servicing behind us and years of complete expertise in the industry to

look forward to, we have now emerged as a premier integrated financial services

provider.

And today, we can look with pride at the fruits of our mastery and experience

comprehensive financial services that are completely segregated to service and manage a

diverse range of customer requirements.

KARVY STOCK BROKING LIMITED

Stock Broking Services | Distribution of Financial Products | Depository Participants |

Advisory Services | Research | Private Client Group

9
Member- National Stock Exchange (NSE), The Bombay Stock Exchange (BSE) and The

Hyderabad Stock Exchange (HSE).

KARVY Stock Broking limited, one of the cornerstones of the KARVY edifice, flows

freely towards attaining diverse goals of the customer through varied services. Creating a

plethora of opportunities for the customer by opening up investment vistas backed by

research based advisory services. Here, growth knows no limits and success recognizes

no boundaries. Helping the customer create waves in his portfolio and empowering the

investor completely is the ultimate goal.

STOCK BROKING SERVICES

It is undisputed fact that the stock market is unpredictable and yet enjoys a high success

rate as a wealth accumulated option. The difference between unpredictability and a safety

anchor in the market is provided by in-depth knowledge of market functioning and

changing trends, planning with foresight and choosing one& rsquo; s with care. This is

what we provide in our stock broking services.

10
We offer services that are beyond just a medium for buying and selling stocks and shares.

Instead we provide services which are multi dimensional and multi focused in their

scope. There are several advantages in utilizing our stock broking services which are the

reasons why it is one the best in the country.

We offer trading on a vast platform: national stock exchange, Bombay stock exchange

and Hyderabad stock exchange. More importantly, we make trading safe to the maximum

possible extent by accounting for several risk factors and planning accordingly. We are

assisted in this task by our in depth research, constant feedback and sound advisory

facilities. Our highly skilled research team, comprising of technical analyst as well as

fundamental specialists, secure result-oriented information on market trends, market

analysis and market predictions.

This crucial information is given as a constant feedback to our customers, through daily

reports delivered thrice daily; the Pre-session report, where market scenario for the day is

predicted, the mid-session Report, timed to arrive during lunch break, where the market

forecast for the rest of the day is given and The post-session report, the final report for the

day, where the market and the report itself is reviewed.

To add to this repository of information, we publish a monthly magazine “ karvy;

The Finapolis&rdquo, which analyze the latest stock market trends and take a close look

11
at the various investment options, and product available in the market. While a weekly

report called &idquo, karvy Bazaar Baatein&rdquo, keeps you more informed on the

immediate trends in the stock market. In addition our specific industry reports give

comprehensive information on the various industries. Besides this we also offer special

portfolio analysis packages that provide daily technical advice on scrip for successful

portfolio management and provide customized advisory services to help you make the

right financial moves that are specification suites to your portfolio.

Our Stock broking services are widely networked across India, with the number of our

trading terminals providing retail stock broking facilities. Our services have increasingly

offered customer oriented convenience, which we provide to a spectrum of investors,

high-net worth or otherwise with equal dedication and competence. But true to our spirit.

This success is not our final destination. But just a platform to launch further enhanced

quality services to provide you the latest in convenient, customer-friendly stock

management.

Over the year we have ensured that the trust of our customers is our biggest returns.

Factors such as our success in electronic custody business has helped build on our

tradition of trust even more. Consequently our retail client through various delivery

channels like email, chat, SMS, phone calls etc. Our foray into commodities broking has

been path breaking and we are in the process of converting existing traders in

commodities into the more organized mainstream of trading in commodity futures, both

as a trading and risk hedging mechanism.

12
In the future, our focus will be on the emerging businesses and to meet this objective, we

have enhanced our manpower and revitalized our knowledge base with enhances focus on

futures and Option as well as the commodities business.

KARVY INVESTORS SERVICES LIMITED

MERCHANT BANKING

Recognized as a leading merchant banker in the country. We are registered with SEBI as

a category 1 merchant banker. This reputation was build by capitalizing on opportunities

in corporate consolidations, mergers and acquisitions and corporate restructuring which

have earned us the reputation of a merchant banker. Raising resources for corporate or

government undertaking successfully over the past two decades have given us the

confidence to renew our focus in this sector.

Our quality professional team and our work-oriented dedication have propelled us to

offer value-added corporate financial services and as a professional navigation for long

term growth of our client who include leading corporate, state government, foreign

institutional investors, public and private sector companies and banks, in Indian and

global markets.

13
We have also emerged as a trailblazer in the area of relationships, both at the customer

and trade levels because of our unshakable integrity, seamless service and innovative

solutions that are turned to meet varied needs. Our team of committed industry

specialists, having extensive experience in capital market, further nurtures this

relationship.

Our financial advice and assistance in restructuring, divestitures, acquisitions, de-

mergers, spin-offs, joint ventures, privatization and takeover defense mechanisms have

elevated our relationship with the client to one based on unshakable trust and confidence.

KARVY COMPUTERSHARE PVT LIMITED

Mutual Fund Services | Issue Registry | Corporate Shareholder Services.

We have Traversed wide spaces to tie with the worlds largest transfer agent. The leading

Australian Company. Computershare Limited. The company that services more than 75

million shareholders across 7000 corporate clients and makes its presence felt in over 12

countries across 5 countries has entered into a 50-50 joint venture with us.

14
With our management team completely transferred to this new entity. We will aim to

enrich the financial services industry than before. The future holds new arenas of client

servicing and contemporary and relevant technologies as well as geared to deliver better

value and foster bigger investment in the business.

The worldwide network of Computershare will hold us in good stead as we expect to

adopt international standards in addition to leveraging the best of technologies from

around the world. Excellence has to be the order of the day when two companies with

such similar ideologies of growth, vision and competence get together.

MUTUAL FUND SERVICES

We have attained a position of immense strength as a provider of across the board transfer

agency services to AMCs Distributors and investors.

Nearly 40% of the top-notch AMCs including prestigious clients like deutsche AMC and

UTI swear by the quality and range of services that we offer. Besides providing the entire

15
back office processing. We provide link between various mutual fund and the investor

including services to the distributor. The prime channel in this operation.

Carrying the limitless ideology forward. We have explored new dimension in every

aspect of mutual fund servicing right from volume management, Cost effective pricing.

Delivery in the least turnaround time. Efficient back office and front office operations to

customized service. We have been which AMCs every step of the way, helping them their

investor better by offering them a diverse and customized range of services. The first to

market approach that is our anthem has earned us the reputation of an innovative service

provides which a visionary bent of mind.

Our services enhancement such a karvy converz. A full fledged call center. A top line

website (www.karvymfs.com). The m-investor and many more. Creating a galaxy of

customer advantages.

ISSUE REGISTRY

In our voyage towards becoming the largest transaction-processing house in the Indian

corporate segment. We have mobilized funds for numerous corporate. Karvy has emerged

has the largest transaction-processing house for the Indian corporate sector. With an

experience of handling over 700 issues. Karvy today has the able to execute voluminous

transaction and hardcore expertise in technology application has gained us the No. 1 slot

16
in the business. Karvy is the first Registry Company to receive ISO 9002 certification in

India that stands testimony to its stature.

Karvy has the backing of skilled human resources complemented by requisite

technological packages to ensure a faster capability. Karvy has the benefit of a good

synergy between depositories and registry that enables faster resolution to related

customer queries. Apart from it unique investor servicing preserce` in all the phases of a

public issue, it is actively coordinating with both the main depositories to develop special

models to enable the customer to access depository (NSDL,CDSL) services during an

IPO.

Our trust-worthy reputation, competent manpower and high-end technology and

infrastructure are the solid foundations on which our success is built.

CORPORATE SHAREHOLDER SERVICES

Karvy has been a customer centric company since its inception. Karvy offers a single

platform servicing multiple financial instruments in its bid to offer complete financial

17
solutions to the varying needs of both corporate and retail investors where an extensive

range of services are provided with great volume-management capability.

Today Karvy is recognized as a company that can exceed customer expectations which is

the reason for the loyalty of customers towards karvy for all his financial needs. An

opinion poll commissioned by the merchant banker Update and Conducted by the

reputed market research agency, MARG revealed that karvy was considered the Most

Admired in the registrar category among financial services companies.

We have grown from being a pure transaction processing business to one of complete

shareholder solution. The specialist business process outsourcing unit of Karvy Group.

The legacy of expertise and experience in financial services of the Karvy Group serves as

well as enter the global area with the confidence of being able to deliver and deliver well.

Here we offer several delivery models on the understanding that business needs are

unique and there fore only customized services could possibly fit the bill. Pure service

matrix has permutations and combinations the create several options to choose from. Be

it in re-engineering and managing processes or delivering new efficiencies. Our service

meets up to the most stringent of international standards. Our outstanding models are

designed for the global customer and are backed by sound corporate and operations

philosophies and domain expertise. Providing productivity improvements, operational

18
cost control, cost saving, improved accountability and a whole gamut of other

advantages.

We operate in the core market segments that have emerging requirement for specialized

services. Our wide vertical market coverage including banking, Financial and insurance

services (BFIS), retail and Merchandising, Leisure and entertainment, energy and utility

and healthcare.

Our horizontal offering do justice to our stance as a comprehensive BPO unit and include

a variety of services in finance and accounting outsourcing operations, human Resource

Outsourcing Operations, Research and analytics outsourcing operation and insurance

back office outsourcing operations.

KARVY COMTRDAE LIMITED

At Karvy Commodities. We are focused on taking commodities trading to new

dimensions of reliability and profitability. We have made commodities trading. An

19
essentially age-old practice into a sophisticated and scientific investment option. Here we

enable trade in all goods and products of agriculture and mineral origin that include

lucrative commodities like gold and silver and popular items like oil, pulses and cotton

through a well-systematized trading platform.

Our technological and infrastructure strengths and especially our street-smart skills make

us an ideal broker. Our services matrix is holistic with a gamut of advantages. The first

and foremost being our legacy of human resources. Technology and infrastructure that

comes from being part of the Karvy group.

Our wide national network. Spanning the length and breadth of India. Further supports

these advantages. Regular trading workshops and seminars are conducted to hone trading

strategies to perfection. Every move made is a calculated one based on reliable research

that is converted into valuable information through daily, weekly and monthly

newsletters, calls and intraday alerts.

KARVY STOCK BROKING LIMITED

Board of Directors

Mr. C Parthasarathy

20
Director

Mr. M yuganghar

Director

Mr. M S Ramakrishna

Director

Mr. Akash Mehta

Director

Mr. Peter wing Hung So

ACHIEVEMENTS

Among the top 5 stock brokers in India (4% of NSE volumes)

21
Indias No. 1 registrar & securities transfer agents

Among the top 3 Depository Participants

Largest Network of Business & Business Association

ISO 9002 certified operations by DNV

Among top 10 investment bankers

Largest distributor of financial product

Adjudged as one of the top 50 IT uses in India by MIS Asia

Full Fledged IT driven operation.

22
 CHAPTER-2
INTRODUCTION TO
PROJECT

MUTUAL FUNDS

1.1 INTRODUCTION

23
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 instrume nts and other securities. Mutual funds have a

fund manager who invests the money on beha lf of the investors by buying / selling

stocks, bonds etc. Currently, the worldwide value of all mutual funds totals more

than $US 26 trillion.

There are various investment avenues available to an investor such as real estate,

bank deposits, post office deposits, shares, debentures, bonds etc. A mutual fund

is one more type of investment avenue available to investors. There are many

reasons why investors prefer mutual funds. Buying shares directly from the market

is one way of investing. But this requires spending time to find out the

performance of the company whose share is being purchased, understanding the

future business prospects of the company, finding out the track record of the

promoters and the dividend, bonus issue history of the company etc. An informed

investor needs to do research before investing. However, many investors find it

cumbersome and time consuming to pore over so much of information, get access

to so much of details before investing in the shares. Investors therefore prefer the

mutual fund route. They invest in a mutual fund scheme which in turn takes the

responsibility of investing in stocks and shares after due analysis and research.

The investor need not bother with researching hundreds of stocks. It leaves it

to the mutual fund and its professional fund management team. Another reason

why investors prefer mutual funds is because mutual funds offer diversification.

24
An investors money is invested by the mutual fund in a variety of shares,

bonds and other securities thus diversifying the investors portfolio across different

companies and sectors . This diversification helps in reducing the overall risk of

the portfolio. It is also less expensive to invest in a mutual fund since the

minimum investment amount in mutual fund units is fairly low (Rs. 500 or so).

With Rs. 500 an investor may be able to buy only a few stocks and not get the

desired diversification. These are some of the reasons why mutual funds have

gained in popularity over the years.

Indians have been traditionally savers and invested money in traditional

savings instruments such as bank deposits. Against this background, if we look

at approximately Rs. 7 lakh crores 1 which Indian Mutual Funds are

managing, then it is no mean an achievement. A country traditionally putting

money in safe, risk-free investments like Bank FDs, Post Office and Life Insurance,

has started to invest in stocks, bonds and shares thanks to the mutual fund

industry.

However, there is still a lot to be done. The Rs. 7 Lakh crores stated above,

includes investments by the corporate sector as well. Going by various

reports, not more than 5% of household savings are chanellised into the markets,

either directly or through the mutual fund route. Not all parts of the country are

25
contributing equally into the mutual fund corpus. 8 cities account for over 60% of

the total assets under management in mutual funds. These are issues which need

to be addressed jointly by all concerned with the mutual fund industry. Market

dynamics are making industry players to look at smaller cities to increase

penetration. Competition is ensuring that costs incurred in managing the funds

are kept low and fund houses are trying to give more value for money by

increasing operational efficiencies and cutting expenses. As of today there are

around 40 Mutual Funds in the country. Together they offer around 1051

schemes 2 to the investor. Many more mutual funds are expected to enter India

in the next few years.

All these developments will lead to far more participation by the retail

investor and ample of job opportunities for young Indians in the mutual fund

industry. This module is designed to meet the requirements of both the investor

as well as the industry professionals, mainly those proposing to enter the mutual

fund industry and therefore require a foundation in the subject. Investors need to

understand the nuances of mutual funds, the workings of various schemes before

they invest, since their money is being invested in risky assets like stocks/ bonds

(bonds also carry risk). The language of the module is kept simple and the

explanation is peppered with concept clarifiers and examples.

Let us now try and understand the characteristics of mutual funds in India and

the different types of mutual fund schemes available in the market.

26
WHO MANAGES INVESTORS MONEY?

This is the role of the Asset Management Company (the Third tier).

Trustees appoint the Asset Management Company (AMC), to manage

investors money. The AMC in return charges a fee for the services provided and

this fee is borne by the investors as it is deducted from the money collected

from them. The AMCs Board of Directors must have at least 50% of Directors

who are independent directors. The AMC has to be approved by SEBI. The

AMC functions under the supervision of its Board of Directors, and also under the

direction of the Trustees and SEBI. It is the AMC, which in the name of the Trust,

floats new schemes and manage these schemes by buying and selling securities. In

order to do this the AMC needs to follow all rules and regulations prescribed by

SEBI and as per the Investment Management Agreement it signs with the Trustees.

If any fund manager, analyst intends to buy/ sell some securities, the

permission of the Compliance Officer is a must. A compliance Officer is one of the

most important persons in the AMC. Whenever the fund intends to launch a new

scheme, the AMC has to submit a Draft Offer Document to SEBI. This draft

offer document, after getting SEBI approval becomes the offer document

of the scheme. The Offer Document (OD) is a legal document and investors rely

upon the information provided in the OD for investing in the mutual fund

scheme. The Compliance Officer has to sign the Due Diligence Certificate in the

OD. This certificate says that all the information provided inside the OD is true

27
and correct. This ensures that there is accountability and somebody is responsible

for the OD. In case there is no compliance officer, then senior executives like

CEO, Chairman of the AMC has to sign the due diligence certificate. The certificate

ensures that the AMC takes responsibility of the OD and its contents.

1.4 WHO IS A CUSTODIAN?

A custodians role is safe keeping of physical securities and also keeping a tab on

the corporate actions like rights, bonus and dividends declared by the companies in

which the fund has invested. The Custodian is appointed by the Board of Trustees.

The custodian also participates in a clearing and settlement system through

approved depository companies on behalf of mutual funds, in case of

dematerialized securities. In India today, securities (and units of mutual funds) are

no longer held in physical form but mostly in dematerialized form with the

Depositories. The holdings are held in the Depository through Depository

Participants (DPs). Only the physical securities are held by the Custodian. The

deliveries and receipt of units of a mutual fund are done by the custodian or a

depository participant at the instruction of the AMC and under the overall direction

and responsibility of the Trustees. Regulations provide that the Sponsor and the

Custodian must be separate entities.

1.5 WHAT IS THE ROLE OF THE AMC?

The role of the AMC is to manage investors money on a day to day basis. Thus

it is imperative that people with the highest integrity are involved with this

28
activity. The AMC cannot deal with a single broker beyond a certain limit of

transactions. The AMC cannot act as a Trustee for some other Mutual Fund. The

responsibility of preparing the OD lies with the AMC. Appointments of

intermediaries like independent financial advisors (IFAs), national and

regional distributors, banks, etc. is also done by the AMC. Finally, it is the

AMC which is responsible for the acts of its employees and service providers.

As can be seen, it is the AMC that does all the operations. All activities by the AMC

are done under the name of the Trust, i.e. the mutual fund. The AMC charges a fee

for providing its services. SEBI has prescribed limits for this. This fee is borne

by the investor as the fee is charged to the scheme, in fact, the fee is charged as a

percentage of the schemes net assets. An important point to note here is that

this fee is included in the overall expenses permitted by SEBI. There is a

maximum limit to the amount that can be charged as expense to the scheme,

and this fee has to be within that limit. Thus regulations ensure that beyond a

certain limit, inv estors money is not used for meeting expenses.

1.6 WHAT IS AN NFO?

Once the 3 tier structure is in place, the AMC launches new schemes, under the

name of the Trust, after getting approval from the Trustees and SEBI. The

29
launch of a new scheme is known as a New Fund Offer (NFO). We see NFOs

hitting markets regularly. It is like an invitation to the investors to put their money

into the mutual fund scheme by subscribing to it s units. When a scheme is

launched, the distributors talk to potential investors and collect money from

them by way of cheques or demand drafts. Mutual funds cannot accept cash.

(Mutual funds units can also be purchased on-line through a number of

intermediaries who offer on-line purchase / redemption facilities). Before

investing, it is expected that the investor reads the Offer Document (OD)

carefully to understand the risks associated with the scheme.

MUTUAL FUND PRODUCTS AND FEATURES EQUITY FUNDS

A variety of schemes are offered by mutual funds. It is critical for investors to know

the features of these products, before money is invested in them. Let us first

understand what are Open Ended and Close Ended funds.

2.1 WHAT ARE OPEN ENDED AND CLOSE ENDED FUNDS?

Equity Funds (or any Mutual Fund sc heme for that matter) can either be open

ended or close ended. An open ended scheme allows the investor to enter and

exit at his convenience, anytime (except under certain conditions) whereas a close

ended scheme restricts the freedom of entry and exit. Whenever a new fund is

launched by an AMC, it is known as New Fund Offer (NFO). Units are offered to

investors at the par value of Rs. 10/ unit. In case of open ended schemes,

investors can buy the units even after the NFO period is over. Thus, when the

30
fund sells units, the investor buys the units from the fund and when the investor

wishes to redeem the units, the fund repurchases the units from the investor. This

can be done even after the NFO has closed. The buy / sell of units takes place at

the Net Asset Value (NAV) declared by the fund. The freedom to invest after the

NFO period is over is not there in close ended schemes. Investors have to invest

only during the NFO period; i.e. as long as the NFO is on or the scheme is

open for subscription. Once the NFO closes, new investors cannot enter, nor

can existing investors exit, till the term of the scheme comes to an end. However, in

order to provide entry and exit option, close ended mutual funds list their schemes

on stock exchanges. This provides an opportunity for investors to buy and sell

the units from each other. This is just like buying / selling shares on the stock

exchange. This is done through a stock broker. The outstanding units of the fund

does not increase in this case since the fund is itself not selling any units.

Sometimes, close ended funds also offer buy -back of fund shares / units, thus

offering another avenue for investors to exit the fund. Therefore, regulations drafted

in India permit investors in close ended funds to exit even before the term is over.

2.2 WHAT ARE EQUITY FUNDS?

2.2.1 Salient Features

31
These are by far the most widely known category of funds though they

account for broadly 40% of the industrys assets, while the remaining 60% is

contributed by debt oriented funds. Equity funds essentially invest the

investors money in equity shares of companies. Fund managers try and

identify companies with good future prospects and invest in the shares of such

companies. They generally are considered as having the highest levels of risks

(equity share prices can fluctuate a lot), and hence, they also offer the probability

of maximum returns. However, High Risk, High Return should not be understood

as If I take high risk I will get high returns. Nobody is guaranteeing higher

returns if one takes high risk by investing in equity funds, hence it must be

understood that If I take high risk, I may get high returns or I may also incur

losses. This concept of Higher the Risk, Higher the Returns must be clearly

understood before investing in Equity Funds, as it is one of the important

characteristic s of Equity fund investing.

2.2.2 Equity Fund Definition

Equity Funds are defined as those funds which have at least 65% of their Average

Weekly Net Assets invested in Indian Equities. This is important from taxation point

of view, as funds investing 100% in international equities are also equity funds

from the investors asset allocation point of view, but the tax laws do not

recognise these funds as Equity Funds and hence investors have to pay tax on the

Long Term Capital Gains made from such investments (which they do not have to in

32
case of equity funds which have at least 65% of their Average Weekly Net Assets

invested in Indian Equities).

Equity Funds come in various flavours and the industry keeps innovating to make

products available for all types of investors. Relatively safer types of Equity

Funds include Index Funds and diversified Large Cap Funds, while the riskier

varieties are the Sector Funds. However, since equities as an asset c lass are

risky, there is no guaranteeing returns for any type of fund. International

Funds, Gold Funds (not to be confused with Gold ETF) and Fund of Funds are

some of the different types of funds, which are designed for different types of

investor preferences. These funds are explained later.

Equity Funds can be classified on the basis of market capitalisation of the

stocks they invest in namely Large Cap Funds, Mid Cap Funds or Small Cap

Funds or on the basis of investment strategy the scheme intends to have

like Index Funds, Infrastructure Fund, Power Sector Fund, Quant Fund,

Arbitrage Fund, Natural Resources Fund, etc. These funds are explained later.

2.3 WHAT IS AN INDEX FUND?

33
Equity Schemes come in many variants and thus can be segregated according to

their risk levels. At the lowest end of the equity funds risk return matrix come

the index funds while at the highest end come the sectoral schemes or specialty

schemes. These schemes are the riskiest amongst all types schemes as well.

However, s ince equities as an asset class are risky, there is no guaranteeing returns

for any type of fund.

Index Funds invest in stocks comprising indices, such as the Nifty 50, which is a

broad based index comprising 50 stocks . There can be funds on other indices

which have a large number of stocks such as the CNX Midcap 100 or S&P CNX

500. Here the investment is spread across a large number of stocks. In India today

we find many index funds based on the Nifty 50 index, which comprises large,

liquid and blue chip 50 stocks .

The objective of a typical Index Fund states This Fund will invest in stocks

comprising the Nifty and in the same proportion as in the index. The fund

manager will not indulge in research and stock selection, but passively invest in

the Nifty 50 scrips only, i.e. 50 stocks which form part of Nifty 50, in

proportion to their market capitalisation. Due to this, index funds are known as

passively managed funds. Such passive approach also translates into lower costs as

well as returns which clo sely tracks the benchmark index return (i.e. Nifty 50 for

an index fund based on Nifty 50). Index funds never attempt to beat the index

returns, their objective is always to mirror the index returns as closely as possible.

34
The difference between the returns generated by the benchmark index and the

Index Fund is known as tracking error. By definition, Tracking Error is the variance

between the daily returns of the underlying index and the NAV of the scheme over

any given period.

Concept Clarifier Tracking Error

Tracking Error is the Standard Deviation of the difference between daily returns

of the index and the NAV of the scheme (index fund). This can be easily

calculated on a standard MS office spreadsheet, by taking the daily returns of

the Index, the daily returns of the NAV of the scheme, finding the difference

between the two for each day and then calculating the standard deviation of

difference by using the excel formula for standard deviation . In simple terms it

is the difference between the returns delivered by the underlying index and

those delivered by the scheme. The fund manager may buy/ sell securities anytime

during the day, whereas the underlying index will be calculated on the basis of

closing prices of the Nifty 50 stocks . Thus there will be a difference between the

returns of the scheme and the index. There may be a difference in returns due to

cash position held by the fund manager. This will lead to investors money not being

allocated exactly as per the index but only very close to the index. If the indexs

portfolio composition changes, it will require some time for the fund manager to

exit the earlier stock and replace it with the new entrant in the index. These and

35
other reasons like dividend accrued but not distributed, accrued expenses etc. all

result in returns of the scheme being different from those delivered by the

underlying index.

This difference is captured by Tracking Error. As is obvious, this should be as low

as possible.

The fund with the least Tracking Error will be the one which investors would

prefer since it is the fund tracking the index closely. Tracking Error is also function

of the scheme expenses. Lower the expenses, lower the Tracking Error. Hence

an index fund with low expense ratio, generally has a low Tracking Error.

2.4 WHAT ARE DIVERSIFIED LARGE CAP FUNDS?

Another category of equity funds is the diversified large cap funds. These are funds

which restrict their stock selection to the large cap stocks typically the top 100

or 200 stocks with highest market capitalization and liquidity. It is generally

perceived that large cap stocks are those which have sound businesses, strong

management, globally competitive products and are quick to respond to market

dynamics. Therefore, diversified large cap funds are considered as stable and safe.

However, since equities as an asset class are risky, there is no guaranteeing returns

for any type of fund. These funds are actively managed funds unlike the index

funds which are passively managed, In an actively managed fund the fund

36
manager pores over data and information, researches the company, the

economy, analyses market trends,

takes into account government policies on different sectors and then selects the

stock to invest. This is called as active management.

A point to be noted here is that anything other than an index funds are

actively managed funds and they generally have higher expenses as

compared to index funds. In this case, the fund manager has the choice to invest

in stocks beyond the index. Thus, active decision making comes in. Any scheme

which is involved in active decision making is incurring higher expenses and may

also be assuming higher risks. This is mainly because as the stock selection

universe increases from index stocks to largecaps to midcaps and finally to

smallcaps, the risk levels associated with each category increases above the previous

category. The logical conclusion from this is that actively managed funds should

also deliver higher returns than the index, as investors must be compensated for

higher risks. But this is not always so. Studies have shown that a majority of

actively managed funds are unable to beat the index returns on a consistent basis

year after year. Secondly, there is no guaranteeing which actively managed fund

will beat the index in a given year. Index funds therefore have grown

exponentially in some countries due to the inconsistency of returns of actively

managed funds.

37
2.5 WHAT ARE MIDCAP FUNDS?

After largecap funds come the midcap funds, which invest in stocks belonging to

the mid cap segment of the market. Many of these midcaps are said to be the

emerging bluechips or tomorrows largecaps. There can be actively managed

or passively managed mid cap funds. There are indices such as the CNX Midcap

index whic h tracks the midcap segment of the markets and there are some

passively managed index funds investing in the CNX Midcap companies.

2.6 WHAT ARE SECTORAL FUNDS?

Funds that invest in stocks from a single sector or related sectors are called

Sectoral funds. Examples of such funds are IT Funds, Pharma Funds, Infrastructure

Funds, etc. Regulations do not permit funds to invest over 10% of their Net Asset

Value in a single company. This is to ensure that schemes are diversified enough

and investors are not subje cted to undue risk. This regulation is relaxed for

sectoral funds and index funds.

38
There are many other types of schemes available in our country, and there are

still many products and variants that have yet to enter our markets. While it is

beyond the scope of this curriculum to discuss all types in detail,

there is one emerging type of scheme, namely Exchange Traded Funds or

ETFs, which is discussed in detail in the next section.

2.7 OTHER EQUITY SCHEMES :

2.7.1 Arbitrage Funds

These invest simultaneously in the cash and the derivatives market and take

advantage of the price differential of a stock and derivatives by taking

opposite positions in the two markets (for e.g. stock and stock futures).

2.7.2 Multicap Funds

These funds can, theoretically, have a smallcap portfolio today and a largecap

portfolio tomorrow. The fund manager has total freedom to invest in any stock

from any sector.

2.7.3 Quant Funds

39
A typical description of this type of scheme is that The system is the fund manager,

i.e. there are some predefined conditions based upon rigorous backtesting entered into

the system and as and when the system throws buy and sell calls, the scheme

enters, and/ or exits those stocks.

2.7.4 P/ E Ratio Fund

A fund which invests in stocks based upon their P/E ratios. Thus when a stock is

trading at a historically low P/E multiple, the fund will buy the stock, and when

the P/E ratio is at the upper end of the band, the scheme will sell.

Concept Clarifier P/ E Ratio

P/ E Ratio stands for Price Earnings Ratio. It is also known as Price Earnings multiple.

This is a ratio of the current market price (CMP) of a share to its earning per share

(EPS). Thus if a company has issued 100 cr. shares and the profit after tax; i.e. the net

profit of the company is Rs . 2000 cr., then the EPS for this company will be 2000/ 100

= Rs. 20.

If this companys shares CMP is Rs. 200, then the P/ E ratio will be 200/ 20 = 10x.

The unit of P/E Ratio is times. In the above example we say that the P/E Ratio is 10

times; i.e. the price (CMP) of the companys share is 10 times its EPS.

40
2.7.5 International Equities Fund

This is a type of fund which invests in stocks of companies outside India. This can

be a Fund of Fund, whereby, we invest in one fund, which acts as a

feeder fund for some other fund(s), i.e invests in other mutual funds, or it can

be a fund which directly invests in overseas equities. These may be further

designed as International Commodities Securities Fund or World Real Estate

and Bank Fund etc.

2.7.6 Growth Schemes

Growth schemes invest in those stocks of those companies whose profits are

expected to grow at a higher than average rate. For example, telecom sector is a

growth sector because many people in India still do not own a phone so as they

buy more and more cell phones, the profits of telecom companies will increase.

Similarly, infrastructure; we do not have well connected roads all over the

country, neither do we have best of ports or airports. For our country to move

forward, this infrastructure has to be of world class. Hence companies in these

sectors may potentially grow at a relatively faster pace. Growth schemes will

invest in stocks of such companies.

41
 Concept Clarifier Growth and Value Investing

Investment approaches can be broadly classified into Growth based and Value Based.

While Growth investing refers to investing in fast growing companies, Value investing

approach is based upon the premise that a stock/ sector is currently undervalued and the

market will eventually realize its true value. So, a value investor will buy such a

stock/ sector today and wait for the price to move up. When that happens, the Value

investor will exit and search for another undervalued opportunity. Hence in Growth

investing, it is the growth momentum that the investor looks for, whereas in Value

investing, the investor looks for the mismatch between the current market price and the

true value of the investment.

Contra Funds can be said to be following a Value investing approach.

For example, when interest rates rise, people defer their purchases as the cost of

borrowing increases. This affects banks, housing and auto sectors and the stocks of

these companies come down. A Value fund manager will opine that as and when

interest rates come down these stocks will go up again; hence he will buy these stocks

today, when nobody wants to own them. Th us he will be taking a contrarian call. The

risk in Growth investing is that if growth momentum of the company goes down

slightly, then the stocks price can go down rather fast, while in Value investing, the

risk is that the investor may have to wait for a really long time before the market

values the investment correctly.

42
2.7.7 ELSS

Equity Linked Savings Schemes (ELSS) are equity schemes, where investors get

tax benefit upto Rs. 1 Lakh under section 80C of the Income Tax Act. These

are open ended schemes but have a lock in period of 3 years. These schemes

serve the dual purpose of equity investing as well as tax planning for the investor;

however it must be noted that investors cannot , under any circumstances, get

their money back before 3 years are over from the date of investment.

2.7.8 Fund of Funds

These are funds which do not directly invest in stocks and shares but invest in units of

other mutual funds which they feel will perform well and give high returns. In fact

such funds are relying on the judgment of other fund managers.

Let us now look at the internal workings of an equity fund and what must an

investor know to make an informed decision.

43
 Concept Clarifier AUM

Assets Under Management (AUM) represents the money which is managed by a

mutual fund in a scheme. Adding AUMs for all schemes of a fund house gives

the AUM of that fund house and the figure arrived at by adding AUMs of all fund

houses represents the industry AUM.

AUM is calculated by multiplying the Net Asset Value (NAV explained in

detail later) of a scheme by the number of units issued by that scheme.

A change in AUM can happen either because of fall in NAV or redemptions. In

case of sharp market falls, the NAVs move down, because of which the AUMs

may reduce.

WHAT IS A SYSTEMATIC INVESTMENT PLAN (SIP)?

Systematic investment plan (SIP) is a smart financial planning tools that helps you to

create wealth by investing small sums of money every month over a period of time.

Systematic Investment Plan(SIP)is a planned approach to investments and an investment

technique that allows you to provide for the future by investing small amounts of money

in mutual fund schemes of your choice.

44
A SIP is a method of investing in mutual funds by investing a fixed sum at a regular

frequency to buy units of a mutual fund schemes. It is quite similar to a recurring

deposiot of a bank or post office.

70.00

NAV & Units

160.00

60.00

140.00

45
50.00

120.00

100.00

40.00

Rs.

Units

80.00

30.00

60.00

20.00

40.00

46
10.00

20.00

0.00

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

0.00

Month

U nits NAV

47
The above chart shows how the NAV of a scheme has moved in a given year. There

was no way the investor could have known that in May the peak will be formed,

after which the NAV will slide for the rest of the year. The investor, by deciding

to invest Rs. 5000 regularly each month automatically got the benefit of the

swings. As can be seen, he got least number of units in the months of Mar, Apr

and May, whereas w hen the NAV continued its downward journey subsequently ,

he accumulated higher number of units.

This is the benefit of disciplined investing. Many a times it is seen that in bear

markets, when the NAVs are at their rock bottom, investor are gripped by panic

and either stop their SIPs or worse, sell their units at a loss. Due to the

in-built mechanism of SIP, investors average cost reduces as can be seen from

the chart below :

160.00

NAV & Units Bought/ Month

48
 140.00

120.00

100.00

Rs.

80.00

60.00

40.00

20.00

Nov Dec

0.00

Jan Feb Mar Apr May Jun

49
Month

Jul Aug Sep Oct

NAV Avg. Cost

Averaging works both ways. Thus, when the NAV moves sharply in either direction,

the impact of averaging is clearly witnessed as the change in average cost for

the investor is only marginal.

Here it can be seen that although the NAV has swung in a range of Rs. 80 to Rs.

140, the average cost for the investor has remained in the narrow range of Rs. 100

to Rs. 120. This is the impact of averaging.

As can be seen, SIP helps in averaging cost of acquiring units, however STP

can prove to be even better than SIP.

50
WHAT IS PORTFOLIO TURNOVER?

Fund managers keep churning their portfolio depending upon their outlook for the

market, sector or company. This churning can be done very frequently or may be

done after sufficient time gaps. There is no rule which governs this and it is the

mandate of the scheme and the fund managers outlook and style that determine

the churning. However, what is important to understand is that a very high

churning frequency will lead to higher trading and transaction costs, which

may eat into investor returns.

51
 CHAPTER-3
OBJECTIVE OF THE STUDY

52
 PURPOSE/OBJECTIVES OF THE PROJECT

The present study has been undertaken with the objective of examining, analyzing and

interpreting under the title

A study on investors' awareness level on mutual fund & promotion of sip plan

The specific objective can be enumerated as following-

To know the awareness level of investors on mutual fund & promotion of sip

plan..

To know the interest of customers regarding investment in mutual fund & SIP..

To develop the understanding of various funds available in the market.

Needs & Importance of Mutual Fund

Small investors face a lot of problems in the share-market, limited resources,

lack of professional advice, lack of information etc. Mutual funds

53
have come as a much needed help to these investors. It is a special type of

institutional device or an investment vehicle through which the investors

pool their savings which are to be invested under the guidance of a team of

experts in wide variety of portfolios of Corporate securities in such a way,

so as to minimise risk, while ensuring safety and steady return on investment.

It forms an important part of the capital market, providing the benefits

of a diversified portfolio and expert fund management to a large number,

particularly small investors. Now a days, mutual fund is gaining its popularity

due to the following reasons :

l. With the emphasis on increase in domestic savings and improvement in

deployment of investment through markets, the need and scope for mutual

fund operation has increased tremendously.

2. An ordinary investor who applies for share in a public issue of any

company is not assured of any firm allotment. But mutual funds who

subscribe to the capital issue made by companies get firm allotment of

shares. Mutual fund latter sell these shares in the same market and to

the Promoters of the company at a much higher price. Hence, mutual

fund creates the investors confidence.

3. As mutual funds are managed by professionals, they are considered to

have a better knowledge of market behaviours. Besides, they bring a

certain competence to their job. They also maximise gains by proper

selection and timing of investment.

54
5. Another important thing is that the dividends and capital gains are reinvested

automatically in mutual funds and hence are not fritted away.

The automatic reinvestment feature of a mutual fund is a form of forced

saving and can make a big difference in the long run.

6. The mutual fund operation provides a reasonable protection to investors.

55
 CHAPTER-4
RESEARCH METHODLOGY

RESEARCH METHODOLOGY

RESEARCH

Research refers to a search for knowledge. Research is scientific and systematic search

for pertinent information on specific topic.

56
Research methodology is a way to systematically solve the research problem.

Research Methodology in a way is a written game plan for conducting research. Research

methodology may have dimensions. It includes research methods and also considers the

logic behind the methods used in the context of the study.

Therefore in order to solve a research problem it is necessary to design a research

methodology for the easy and accurate solution of the problem.

Types of marketing research

Marketing research, as a sub-set aspect of marketing activities, can be divided into the

following parts:

Primary research (also known as field research), which involves the conduction

and compilation of research for the purpose it was intended.

Secondary research (also referred to as desk research), is initially conducted for

one purpose, but often used to support another purpose or end goal.

By these definitions, an example of primary research would be market research

conducted into health foods, which is used solely to ascertain the needs/wants of the

target market for health foods. Secondary research, again according to the above

definition, would be research pertaining to health foods, but used by a firm wishing to

develop an unrelated product.

Primary research is often expensive to prepare, collect and interpret from data to

information. Nonetheless, while secondary research is relatively inexpensive, it often can

become outdated and outmoded, given it is used for a purpose other than for which is was

57
intended. Primary research can also be broken down into quantitative research and

qualitative research, which as the labels suggest, pertain to numerical and non-numerical

research methods, techniques. The appropriateness of each mode of research depends on

whether data can be quantified (quantitative research), or whether subjective, non-

numeric or abstract concepts are required to be studied (qualitative research).

There also exist additional modes of marketing research, which are:

Exploratory research, pertaining to research that investigates an assumption.

Descriptive research, which as the label suggests, describes "what is".

Predictive research, meaning research conducted to predict a future occurrence.

Conclusive research, for the purpose of deriving a conclusion via a research

process

The research methodology that I undertook for the purpose of this study is

EXPLORATORY RESEARCH. Exploratory research is a primary study of subject

matter or investigation of the phenomena. It is not specific in nature but aims at

understanding the broad contours of the subject. It is usually preliminary or pilot study

and is followed by descriptive, experimental research. It does not have a formal and rigid

design and as the research may have a formal and rigid design and as the research may

have to change his focus or direction, depending on the availability of new ideas, new

hypothesis, increasing the familiarity with the problem, assessing the feasibility of further

studies etc.

SAMPLING AND SAMPLING DESIGN

58
SAMPLING: Sampling can be defined as the selection of some part of an aggregate or

totality on the basis of which a judgment or inference about the aggregate or totality is

made. In other words it is the process of obtaining information about an entire population

by examining only a part of it.

ADVANTAGES

Sampling saves time and money. It is usually less expensive and produces results

at faster speed.

It provides more accurate information.

SAMPLING DESIGN: A sample design is a definite plan for obtaining a sample from a

given population. It refers to the technique or the procedure that is adopted in selecting

the sampling units from which inferences about the population is drawn. Sampling design

is determined before the collection of the data.

Steps in developing a Sampling Design:

Type of universe-The first step in developing any sample design is to clearly

define the set of objects, technically called Universe, to be studied.

Sampling Unit-A decision has to be taken concerning a sampling unit before

selecting sample. Sampling unit may be

Geographical one such as state, village, district etc

Social unit such as family, club etc.

Construction unit such a flat, house etc.

Source list-It contains the names of all items of a universe.

59
 Size of sample: It refers to the number of items to be selected from the universe

to constitute a sample.

Parameters of interest: Specific population parameters which are of interest

must be considered in determining the sample design

Budgetary constraint

Sampling procedure

SAMPLING METHOD: CONVENIENCE SAMPLING

SAMPLE SIZE: 100 RESPONDENTS

SAMPLE AREA: Bathinda

LIMITATIONS OF THE STUDY

It is said Nothing is Perfect and if the quite is true, I am sure the there would be few

short comings in this project also. Sincere efforts have been made to eliminate

discrepancies as far as possible but few would have reminded due to limitations of study.

These are as given below:-

60
 No response of some surveyed people was the main limitation of study.

The universe of my study was limited to people of karvy only.

The time is another limitation of my project.

Subjectvity due to personal biasness cannot be ignored

61
 CHAPTER-5
DATA ANALYSIS
&
INTERPERTATION

DATA ANALYSIS & INTERPRETATION

Q1 . Rank the following investment instruments according your preference ?

Instruments Total of Ranks Ranks

62
 Bonds/Debentur 126 5

Mutual funds 59 1

Bank deposits 86 3

Equity shares 82 2

Insurance 97 4

140 126
120
97
100 86 82
80
59 Total of ranks
60
Ranks
40
20 5 1 3 2 1
0
Bonds?debenture Bank deposits insurance

In above table, showing that 126% pupils give preference to bonds/debentures for

investment whereas 59% respondents gave preference to mutual fund whereas 86%

respondents preferences is bank deposit as compared to 82% pupils assumed that equity

shares are best investment instrument whereas 97% respondents preference is insurance

investment.

2. What is your primary Objective for Investing In Mutual Fund

Options No of responses

Growth 15

Liquidity 12

Safety 19

63
 Tax saving 33

Immediate gains 13

Periodical returns 8

No. of res.
35
30
25
20
15 33
10 19 No. of res.
5 15 12 13 8
0

In above table, 15% respondents primary Objective for Investing In Mutual Fund is

growth whereas 12% respondents assumed that liquidity whereas 19% respondents

objective for investment is safety whereas 33% pupils assumed tax saving in mutual fund

whereas 13% peoples saying that there is immediate gains whereas 8% respondents

primary Objective for Investing In Mutual Fund is periodical returns.

3. Since how much time you are making Investment ?

Options No of responses

Less than 1 year 4

Between 1 to 2 years 18

Between 2 to 3 years 15

More than 3 years 63

64
 70
60
50
40
30
20 No. of Res.
10 Series 2
0 Series 3

As above table showing that 4% respondents are assuming that they are making

Investment since less than 1 year whereas 18% respondents assumed that they are

making Investment since between 1 to 2 years whereas 15% peoples making

investment since between 2 to 3 years whereas more than 63% peoples investment

since more than 3 years.

4. In which sector you prefer to invest in mutual fund ?

Sectors No of respondents

Public sector funds 43

Private sector funds 57

65
 No. of res.

60
50
No. of rezs.
40
57
30 43
20
10
0
Public sector funds praivate sec. funds

As in above table, 43% respondents preference to invest in public sector funds whereas 57%

respondents are liked investment in private sector funds.

5. Which type of mutual fund to Prefer to invest ?

Options No of responses

Equity 22

Debt 19

Balanced 39

Gilt 12

Sect oral 8

66
 No. of Res.
45
39
40
35
30
No. of Res.
25 22
19
20
15 12
10 8
5
0
Equity Debt Balanced Gilt Sect oral

In above, 22% respondents Prefer to invest in equity whereas 19% peoples Prefer to

invest in debt whereas 19% peoples Prefer to invest in balanced whereas 12% pupils

Prefer to invest in gilt as compared to 8% peoples like investment in sect oral.

6. Which is the most dominant factor which effect purchasing behavior in mutual

fund ?

Options No of respondents

Prospectus/self analysis 20

Newspaper 7

Investment advisor 58

TV Channel 5

Friends/Relatives 10

67
 NO. of Res.
70 58
60
50
40
30 20
20 7 5 10 NO. of Res.
10
0

In this, 20% respondents assumed that prospectus/self analysis is the most dominant

factor which effect purchasing behavior in mutual fund 7% peoples assumed that

newspaper is the most dominant factor whereas 58% pupils assumed investment

advisor is the factor whereas 5% respondents assumed TV channel is the dominant

factor whereas 10% respondents assumed the factor is friends/relatives.

7. What is Criterion for you selecting a particular mutual fund

Options No of respondents

Past performance 55

Service 15

Promoters background 28

Any other 2

68
 No. of res.
60
55
50

40
No. of res.
30 28
20
15
10

0 2
Category 1 Service Promoters's back Any other

In above, 55% respondents assumed that they see past performance that is the criterion

for selecting a particular mutual fund whereas 15% peoples notice service whereas

28% peoples notice promoters background whereas 2% respondents see any other

options.

8. Which is the most ?

Options No of responses

U TI Mutual funds 8

LIC Mutual funds 19

SBI Mutual funds 15

HDFC Mutual funds 10

ICICI Prudential Mutual funds 12

69
HSBC Mutual funds 6

Principal PNB Mutual funds 16

Reliance mutual fund 7

Birla Sun Life Mutual fund 4

Stan. Chartered Mutual fund 3

No. of Res
19
20
18 15 16
16
14 12
12 10
10 8 7
8 6
6 4 3
4
2 No. of Res
0

In this, 8% respondents like UTI mutual funds whereas 19% peoples like LIC funds

whereas 15% like SBI funds whereas 10% like HDFC funds whereas 12% promote ICICI

prudential funds whereas 6% pupils like HSBC funds whereas 16% peoples like principle

70
PNB funds whereas 7% peoples like reliance mutual funds whereas 4% respondents

preference is Birla sun life mutual fund whereas 3% peoples like Stan. Charted mutual

funds

Q9 . How much aware are you about SIP ?

Completely aware 65
Aware 20
Not at all aware 15

aware % age
20
20
15
15 15

aware % age
10

0
Completely Aware
Aware
Not at all aware

71
In above, 65% peoples assumed that they are completely aware about SIP whereas 20%

respondents saying that they are aware about SIP whereas 15% respondents are assuming

that they do not at all aware about SIP.

Q10 Will you make investment in SIP plan of Karvy in future ?

Closed ended 25
Open ended 75

SIP plan
75
80
60 SIP plan
25
40
20
0
Close ended
open ended

72
In this, 25% respondents assumed that they make open ended investment in SIP plan

of Karvy in future whereas 75% respondents assumed that they make closed ended

investment in SIP plan of Karvy in future.

CHAPTER-6
FINDINGS & SUGGESTIONS

73
 FINDINGS & LIMITATIONS

FINDINGS OF THE STUDY

Following are the finding obtained from the above analysis

Most of the people prefer Mutual funds instead of depositing the money into bank or

investing it into share market. Because it is safer and give them more returns.

Private Sector is the booming sector as per Mutual Fund business is concerned.

People have more faith on ICICI Prudential Mutual Funds as it is the NO.1 Company

in the country.

People consider the past performance of the company as well as the type of fund in

which they are going to invest their money

Equity and Debt Mutual fund are most preferred type of schemes in Mutual Fund.

Investment Advisor is the best source of information before Investing.

74
 SUGGESTION

SUGGESTIONS

The latest information relating to share market should be easily available to the

investors.

There should be transparency in the share market.

There should be more powerful regulation or strict regulation to control scandals.

.The number of brokers is to be reduced.

Grievance redresses machinery should be more efficient.

Reduce political interference in markets.

75
 CONCLUSION

1. Half of my respondents are investing their money in mutual funds more than 2 years

and they are loyal to it

2. Most of the mutual fund companies are private limited companies so I can except that

most of my respondents who are having mutual fund they get from private limited

companies same is the results I get from my respondents after filling questionnaire.

3. There are several types of mutual funds available in the market. Most of my

respondents are having equity mutual fund followed by debt and then balanced mutual

funds.

4. I tried to find out that what are the factors which affect the purchasing behavior of the

investors. Investment advisor affects the purchasing behavior most followed by self

analysis.

76
ANNEXTURE

77
 APPENDICES

QUESTIONNAIRE

1. Rank the following investment instruments according your preference

Bonds/Debenture

Mutual funds

Bank deposits

Equity shares

Insurance

2. What is your primary Objective for Investing In Mutual Fund

Growth

Liquidity

Safety

Tax saving

Immediate gains

Periodical returns

3. Since how much time you are making Investment ?Less than 1 year

Between 1 to 2 years

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 Between 2 to 3 years

More than 3 years

4. In which sector you prefer to invest in mutual fund ?

1. Public sector funds

2. Private sector funds

5. Which type of mutual fund to Prefer to invest ?

Debt

Balanced

Gilt

Sectoral

6. Which is the most dominant factor which effect purchasing behavior in mutual

fund ?

Prospectus/self analysis

Newspaper

Investment advisor

TV Channel

Friends/Relatives

7. What is Criterion for you selecting a particular mutual fund

Past performance

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 Service

Promoters background

Any other

8. Which is the most ?

UTI Mutual funds

LIC Mutual funds

SBI Mutual funds

HDFC Mutual funds

ICICI Prudential Mutual funds

HSBC Mutual funds

Principal PNB Mutual funds

Reliance mutual fund

Birla Sun Life Mutual fund

Stan. Chartered Mutual fund

9. How much aware are you about SIP ?

A) COMPLETELY AWARE

B) AWARE

C) NOT AT ALL AWARE

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10 Will you make investment in SIP plan of Karvy in future ?

BIBLIOGRAPHY

BOOKS

Mutual funds in India- by H Sadhak

Mutual Fund in India by V.A. Avdhani

WEBSITES

www.amfiindia.com

www.mutualfundsindia.com

www.karvy.com

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