Introduction

An investment is the choice by the individual, after thorough analysis, to place or lend money in a vehicle (e.g. property, stock securities, bonds etc.) that has sufficiently low risk and provides the possibility of generating returns over a period of time. Investing is the active redirection of resources: from being consumed today, to creating benefits in the future; the use of assets to earn income or profit. As stated earlier the main motive of investment is to earn profit which is also known as the return of investment. There are a large number of investment instruments available to the investors. These investment instruments perform different tasks. The insurance is mainly used to provide risk cover to the individuals; property investments are usually for long term gains; bank FDs and government securities are used mainly for secure returns on investments while equity investment and Mutual Funds are used for wealth creation as they give very high returns. Though they give very good returns to the investors the risk associated with these instruments is also higher. As a result it is likely that the investors also lose their money while investing in these instruments. Mutual fund is a professionally managed collective investment scheme where a number of investors pool their money and this money is turn invested in different instruments including equity, government bonds, commodities, debt market etc. Mutual Funds have a tiered with a sponsor, who is the promoter of the fund, on top. Under the sponsor is the trust which holds the unit holders money. Under the trust is the AMC or Asset Management Company which manages the fund of the investors, the registrar which processes the applications and the custodian who is the guardian of the funds and assets of the investors. Mutual funds can be classified based on structure, investment objectives and the types of schemes. They may be classified as open ended or close ended, equity funds, debt funds, balanced funds or money market funds, or based on schemes as ELSS, Fixed Term Plan or SIP etc.

It is generally seen that many people are not aware about the diverse modes of investments available and it is necessary to spread this awareness before marketing the various products to the people. The purpose of the research was to make people aware about various and new investment opportunities. HDFC MUTUAL FUND HDFC Asset Management Company Ltd HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000. HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers namely Housing Development Finance Corporation Limited and Standard Life Investments Limited. The Standard Life Assurance Company was established in 1825 and has considerable experience in global financial markets. In 1998, Standard Life Investments Limited became the dedicated investment management company of the Standard Life Group and is owned 100% by The Standard Life Assurance Company. With global assets under management of approximately US$126 billion as at May 15, 2003, Standard Life Investments Limited is one of the world's major investment companies and is responsible for investing money on behalf of five million retail and institutional clients worldwide. The Trustee Company of HDFC Mutual Fund is HDFC Trustee Company Limited and AMC is HDFC Asset Management Company Limited, incorporated with the SEBI on December 10, 1999. The products of HDFC Mutual Fund are as follows: y Equity Funds y Balance Funds y Debt Funds Apart from this it also provides the following value added services: y SIP (Systematic Investment Plan)

y y

STP (Systematic Transfer Plan) SWAP (Systematic Withdrawal Advantage Plan)

The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai - 400 020. In terms of the Investment Management Agreement, the Trustee has appointed the HDFC Asset Management Company Limited to manage the Mutual Fund. The paid up capital of the AMC is Rs. 25.169 crore. The present equity shareholding pattern of the AMC is as follows : Particulars % of the paid up equity capital Housing Development Finance Corporation 59.98 Limited Standard Life Investments Limited 39.99 Other Shareholders (shares issued on exercise of 0.03 Stock Options) Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following a review of its overall strategy, had decided to divest its Asset Management business in India. The AMC had entered into an agreement with ZIC to acquire the said business, subject to necessary regulatory approvals. On obtaining the regulatory approvals, the following Schemes of Zurich India Mutual Fund have migrated to HDFC Mutual Fund on June 19, 2003. These Schemes have been renamed as follows: Former Name New Name Zurich India Equity Fund HDFC Equity Fund Zurich India Prudence Fund HDFC Prudence Fund Zurich India Capital Builder Fund HDFC Capital Builder Fund Zurich India TaxSaver Fund HDFC TaxSaver Zurich India Top 200 Fund HDFC Top 200 Fund Zurich India High Interest Fund HDFC High Interest Fund

Zurich India Liquidity Fund HDFC Cash Management Fund Zurich India Sovereign Gilt Fund HDFC Sovereign Gilt Fund* HDFC Sovereign Gilt Fund has been wound up in March 2006 The AMC is also providing portfolio management / advisory services and such activities are not in conflict with the activities of the Mutual Fund. The AMC has renewed its registration from SEBI vide Registration No. - PM / INP000000506 dated December 21, 2009 to act as a Portfolio Manager under the SEBI (Portfolio Managers) Regulations, 1993. The Certificate of Registration is valid from January 1, 2010 to December 31, 2012. Objectives of the study The following were the objectives of the study:1) Check the level of awareness about investment instruments like shares, mutual fund among the people 2) Which factors are considered by the people before they invest the money in any instrument 3) What are the expectations of the of the people when they invest the money 4) Checking the level of awareness of the benefits in investing in Mutual Fund schemes.

Literature Review

Any research builds on the research carried out previously on the given subject. The purpose of the literature review is to review what has previously been done on the subject and analyse it in the present context so that an effective understanding can be established. Before conducting this project I have consulted some work which has been done previously on the subject of the awareness about and preference of the investment opportunities among the investors. This has helped me greatly in building up a framework for my own project. A review of the work is presented below. Consumer behaviour during investment gold purchase in comparison to other investment instruments This is a study carried out by Janna Lisette Lutter of Tallin University. The goal is to study consumer behaviour regarding investment decisions, compare physical investment gold purchasing to other instruments, and to suggest suitable marketing steps for investment gold promotion. The author tried to study investment from the consumers perspective and understand the steps that the consumers go through before making their investment decision. The author conducted empirical research both through questionnaires as well as in-depth interviews. The respondents for the research were people from Estonia where the author was based. There were a total of 159 respondents. Research showed that the main motive to investing comes from the factor that more money is left over from other expenses and one wants to preserve its worth for the future in the situation where inflation is growing. Investors go through a very long and thorough information search and evaluation period before making the investment decision.
Comparison between direct investment in equity and investment through Mutual Funds

This study was carried out by Anurag. The goal of the study was to compare direct equity investment to Mutual Funds and find out which was preferr ed by the investors. The research also tried to study select Mutual Funds schemes with the point of attractiveness to investors. The author conducted empirical research by distributing a questionnaire among 50 respondents in Delhi. The target population was administered with a questionnaire which had both structured as well as unstructured questions. The research showed the average returns for the equity diversified funds were 19.84% while the average return after investing in individual stocks was 21.87%. On the other hand, the average risk for individual stocks is much higher than the equity diversified funds and market standard deviation as well. This indicates that investing in direct equity is f ar more risky than equity diversified funds. According to survey people prefer to invest into Mutual Funds than investing directly into stocks. 46 % of the respondents feel that mutual funds reduce their risk in investing in the market as it gives diversification to their portfolio. 17% respondents said that it give them the benefit of professional management. Just 14% said it give them liquidity irrespective of market conditions. And also lack of time was cited as the reason by 23% of the respondents. Out of those who said that they prefer to directly invest in stock market, majority gave high weightage to high risk and high returns game. 33% said that they want to be their own fund managers. Also, over 48% agreed that they prefer to book profit as they reach their profit target. They do believe in churning and enjoy making higher returns. Neilson Life 2008 survey The Neilson Life 2008 survey was conducted by Neilson a well known market research company. The goal of the study was to study the investment scenario in India and find out which investment instruments were popular with the Indian public. This subject has a close correlation with the research subject of the present project. The survey was conducted by distributing questionnaires and interviewing people from all over the country. Working men and women from SEC A, B, and C in the age group 22-50 years were interviewed. The study involved 12,760 respondents.The survey indicated that for Indian investors insurance was the most popular form of investment with 44% people investing in it. Bank Fixed

Deposits which has 35 percent votes. Gold (33%) and Property (23%) are the other favourites among locals. The current financial turmoil makes it a tough case for equity markets. Life Insurance topped the list of future investment instruments with 30 percent respondents agreeing to consider it as a future investment option, followed by Bank Fixed Deposits (11%), Gold and Property (both 7%), and Life Insurance Child Plans (6% ). This was attributed to the fact that due to the financial crisis the people were increasingly looking forward to safer investment options.The survey also studied the marketing of the investment options and found that Agents are the main source of information on insurance policies. Friends/ peer group emerge as a significant source of information (58%). Media also plays an important role in spreading awareness about various insurance policies, which includes Television advertisement. Evaluating mutual fund performance in financial crisis The purpose of this paper involves evaluating mutual fund performance in light of the severe financial crisis the world has faced since 2008. Smart Money, The Wall Street Journal Magazine, in its February 2009 issue identifies 100 mutual funds that are supposed to be great funds for tough times. The research project focuses on evaluating performance of these mutual funds to determine what commonalities they possess to help investors weather the financial storm we are currently dealing with in the investment arena. This research topic fits in the finance category of agency theory. Risk-adjusted measure of portfolio performance Michael C. Jensen (1967) derived a risk-adjusted measure of portfolio performance (Jensens alpha) that estimates how much a managers forecasting ability contributes to funds returns. As indicated by Statman (2000), the e SDAR of a fund portfolio is the excess return of the portfolio over the return of the benchmark index, where the portfolio is leveraged to have the benchmark indexs standard deviation. Zakri Y.Bello (2005) matched a sample of socially responsible stock mutual funds matched to randomly selected conventional funds of similar net assets to investigate differences in characteristics of assets held, degree of portfolio diversification and variable effects of diversification on investment performance. The study found that socially responsible funds do not differ significantly from conventional funds in terms of any of these attributes. Moreover, the effect of

diversification on investment performance is not different between the two groups. Both groups underperformed the Domini 400 Social Index and S & P 500 during the study period.

Mutual funds
Mutual fund is a professionally managed collective investment scheme where a number of investors pool their money and this money is turn invested in different instruments including equity, government bonds, commodities, debt market etc. The investors invest the money in various types of schemes brought by the AMCs or Asset Management Companies who in turn invest this money in various instrument to give the best possible returns of investment to the investors.

Structure of mutual fund

Structure of Mutual Funds: In India the mutual funds are regulated by the guidelines of SEBI or Securities and Exchange Board of India. AMFI or Association of Mutual Funds in India also sets some rules governing the mutual fund companies in India. The structure of mutual fund is as shown below.

Sponsor Trust Custodian AMC Registrar

Fig. Structure of Mutual Fund

A. Sponsor Sponsor of the Mutual Fund is the promoter of the Mutual Fund. It establishes the Mutual Fund and registers the same with SEBI. The sponsor can be a bank like SBI, PNB ICICI etc., a financial institution like Fidelity, Franklin Templeton etc. or a corporate like Reliance, Tata, Birla etc. According to SEBI regulation the sponsor must have a 5 year experience in the financial services market and should have been profitable for at least 3 years. This is done to ensure that the fund is promoted by an experienced entity with which the public will have faith in handling their money. The sponsor appoints the AMC, trustees and the custodians with prior approval of SEBI. It also contributes at least 40% of the net worth of the AMC. B. Trust According to SEBI regulation the Mutual Funds in India is a trust established under the Indian Trust Act 1982. The trust is managed by a board of trustees or by a trustee company. There are at least 4 members in the board of trustees and 2/3rd of the board is independent. The trustees hold the unit holders money in a fiduciary capacity. The trustees also appoint the AMC in consultation with the sponsor and according to the SEBI regulation. C. AMCs The Asset Management companies are the public face of the Mutual Fund. They are appointed by the sponsors and the trust under the guidelines of SEBI. The AMC should have the net worth of minimum Rs. 10 Crore. Half of the members of the board of the AMC should be independent. The main job of the AMC is to manage the funds of the investors. It researches the best investment options to put the money in so that the investors get the maximum return on their investment. There is a fund manager and his team which carries out the research. The AMC floats a number of schemes for the investors to invest their money based on their investment objectives and risk appetite. These varied schemes help attract the public to the company. Some of the AMCs in India are reliance Mutual Fund, HDFC Bank Mutual Fund, ICICI Prudential Mutual Fund etc. D. Registrar The registrar processes the applications and records the details of the investors. They process the dividend payouts to the investors and send information to them. Thus they maintain the backend operations of the Mutual

Fund E. Custodian it is the guardian of the funds and the assets of the investor. It is appointed by the board of trustees and is responsible for the securities held in the Mutual Funds portfolio. It is also regulated by the SEBI.
Classification of Funds Mutual Funds can be classified in a variety of ways. In this report the classification of Mutual fund on basis of structure, investment objectives and scheme wise classification.

Amount subscribed is redeemed if the minimum subscription amount is not reached by the fund. The corpus of the Open Ended scheme changes every day and the unit capital is not fixed. Close Ended Fund A Close Ended Fund is a fund wherein an investor can invest only during a fixed period of time. This investment is for a fixed duration as specified in the offer document of the fund. The close ended funds are listed in the stock exchange. If an investor wishes to invest in the fund after the time period of the fund he will have to buy the units of the fund from the stock market. The prices at which the units are sold or redeemed depends on the market prices which are linked to the NAV. The number of units of the fund and the unit capital remains unchanged in case of a Close Ended Fund. The minimum subscription amount of the fund is Rs. 20 Crore. The amount subscribed is redeemed if the minimum subscription amount is not reached by the fund. Investment Objective A Mutual fund can also be classified based on the investment objectives of the fund. These investment objectives are based on the risk appetite of the investors and the returns that they expect from the funds. The classification based on the investment objectives of the fund is whether the fund invests in Equity Market, Debt Market or the Money Market. A. Equity Funds The Equity Funds are those funds which invest primarily in the Equity Market. The money of the investors is invested in the shares of the various companies. These companies are chosen based on the objectives of the fund as stated in the offer documents. Thus they can be large-cap or mid-cap companies or they can be companies in a particular sector of the

economy like infrastructure or power. Some funds which are index funds may invest in companies which form the part of the index the fund considers as a base for example the B.S.E. 30 or Nifty 50 etc. The equity funds usually have growth and dividend options. In growth option the customer is not given any dividend but in the dividend option the customer has the choice of either getting the dividend or reinvesting it in the shares of the companies. The equity funds are characterized by high risk and high returns. Over a period of 5-7 years equity funds give a CAGR of more than 18-20% and they generally outperform the share market. These returns are one of the highest returns generated by the various investment instruments. Equity based Mutual Funds outperform the stock market mainly because the fund managers not only invest in the stocks of major companies in the stock market but also in the stocks of smaller companies also which are likely to give good returns. B. Debt Funds The debt funds are those funds that invest primarily in the debt market. These funds invest in the government securities and corporate bonds. Within debt funds there are a lot of type of funds depending on which instruments they invest in. Some of the funds invest in AAA and AA commercial papers. Others like Gilt funds invest only in the government securities. The level of risk and returns in the case of Debt Funds depend on the instruments that the funds have invested in but are overall less risky than equity based funs. At the same time these funds can t match the level of returns that are generated by the equity based funds. These are recommended for people with no fixed level of earnings and a low risk appetite like retirees who want a source of investment for their savings but don t want to involve in the vagaries of the stock market. C. Balanced Funds These funds are a combination of Equity Funds and Debt funds with some portion of the fund invested in the share market while other is invested in the government securities and corporate bonds. They offer the best of both Equity and Debt funds as they have manageable amount of risks and also give good returns. Some funds like the ICICI Prudential Target Returns Fund invest initially in the Equity market and then after getting the profit invest the same in the Debt Market thus giving the investors best of both worlds. D. Money Market The Money Market or Liquid Funds are those funds which are invested in the short term or money market. These are invested in the instruments with maturity period of less than 1 year like treasury bills,

commercial papers, certificates of debt etc. The investment portfolio is very liquid and enables the investors to hold their investments for very short horizons of a day or more. These funds have zero risk and they also give good returns to their investors. They are mainly offered to people who have excess money to invest over a short period of time only. Scheme Wise Mutual Funds can also be classified based on the various types of the schemes that are offered to the public. These schemes help the public in managing their investments based on the investment objectives of the different investors. The flexibility of investing in different types of schemes is a highly attractive feature of Mutual Funds. Some of the major types of schemes available to the investors are described below. A. ELSS The ELSS or Equity Linked Saving Scheme is a very popular scheme of Mutual Funds for the purpose of tax saving. As the name suggest the Mutual Fund under ELSS invests at least 90% of the fund in the stock market. The fund usually has a 3 year lock in period. It can be an open ended or a close ended fund. Investments made under ELSS are used to save tax. Under the section 80C of income tax investment of up to Rs 1 Lac in ELSS is tax deductible. The dividends earned under this scheme are also tax free. The investors also benefit in terms of the long term capital gain taxation. Thus financial planners strongly advise their clients to invest in this fund during tax planning. period. It can be an open ended or a close ended fund. Investments made under ELSS are used to save tax. Under the section 80C of income tax investment of up to Rs 1 Lac in ELSS is tax deductible. The dividends earned under this scheme are also tax free. The investors also benefit in terms of the long term capital gain taxation. Thus financial planners strongly advise their clients to invest in this fund during tax planning. B. Fixed Term Plan FTP or Fixed Term Plan schemes are special schemes of Mutual Funds. These are short term close ended schemes. The AMCs issue a fixed number of units for each series only once and then the issue is closed after the initial offering period. These units are not listed in the stock market. FTPs are generally offered in money market funds. They can be considered as an alternative to investing in the corporate deposits or bank deposits as

they give a higher rate of return. C. SIP One of the best schemes of Mutual Funds is considered to be SIP or Systematic Investment Plan. The basic funda of SIP is to encourage the people to invest a small amount on a regular basis. Under SIP one can invest as little as Rs 100 per month in mutual funds. This regular investment over a large period of time gives fantastic returns to the individuals. The major reason for high returns of SIP investments as compared to others is the concept of Rupee Cost Averaging. When the market is booming the value of the units bought by the investors have increased while in the bearish market when the NAV of the funds fall then the number of units allotted is more. The value of these higher numbers of units increases when the Bull Run begins again. Thus the investors set to gain both when the market is up or down. This coupled with the small amount needed to invest has led to SIP being one of the most popular Mutual Fund schemes.

Marketing of Mutual Funds

One of the primary job as a trainee in HDFC Mutual Fund was to market the various schemes of Mutual Funds to various clients. HDFC Mutual Fund is a distribution house which distributes Mutual Funds to the general public via its network of agents and partners. The trainees are assigned to a partner and they have to pitch the schemes of Mutual funds to the clients of the partners. Details about mutual Funds and the various schemes available have been discussed in the previous chapter and this chapter will focus on the marketing

aspect of Mutual Funds. Occupation Education Market structure: Before marketing of any product we must Less 5-9 than 4 School Some study the structure ofIlliterate yrs of yrs in certificate college Graduate Postgradua the market. This structure school school will determine where we should market the product so that it gets theSkilled E2 E1 D C C B2 B2best response from the public. To study the market structure we must first Unskilled E2 E2 E1 D D D D divide the market into Shop owner D D C B2 B2 A2 A2 different segments then Petty trader E2 D D C C B2 B2choose our target segment. This is because no product can be pitched to every person in the population. We have to then position the product so that the public is attracted to it. Thus Segmentation Targeting and Positioning are extremely important before the marketing of the product. Segmentation: The purpose of segmentation is to divide the whole market into smaller segments so as to better understand the market and pitch your product to the right segment of the population. There is no product which can be marketed to the entire population and if one tries to market it to the entire population then it is a waste of the resources. To ensure the optimum utilization of the resources we have to divide the market into smaller segments and concentrate on the segment which will be most receptive of the product. Mutual Funds are a financial product and so it is imperative that one of the basis of segmentation will be income. For mutual funds first we will use the Socio Economic Classification or SEC to segment the market. SEC is a system that combines social and economic factors through intelligent use of the demographics of occupation and education. It is considered to be an alternate to pure income based classification. The SEC classification is as shown in the table below. Occupation Education

executive C C C B2 B1 A2 A

Employer ofAbove 10 persons B1 B1 A2 A2 A1 A1 A1 Below 10 persons C B2 B2 B1 A2 A1 A1 None D C B2 B1 A2 A1 A1 Clerk D D D C B2 B1 B1 Supervisor D D C C B2 B1 A2 Professional D D D B2 B1 A2 A1 SEC Indian Senior executive B1 B1 B1 B1 A2 A1 A1Classification of the Consumer Market Source

Another criterion for segmentation of the market in case of mutual Funds can be the age of the potential investors. This is because the risk appetite of the investors varies with age. At the start of the car eer the investor has higher propensity to take the risk as they have stable income source. As the age advances the risk taking ability reduces. After retirement when there is no stable source of income and so the risk taking ability is reduced. As per the age criterion we can define the segment of the market as being below 35, 35 60 and more than 60.

Targeting: After the market segments have been decided we have to look at which particular segment of the market are we going to target. This is because no product can be marketed to all the segments of the society. In case of Mutual Funds we have to target the segments based on the different types of Mutual Fund schemes. Using the SEC segmentation as a substitute for income based segmentation we can target the A, B and C segments of the market. These are the segments which have a good source of income to be able to invest in the mutual Funds. They are also educated and as a result can easily understand the benefits of investing the money. Among the A, B, C segments we can offer the C segment only SIP schemes. They don t have that high a disposable income to be able to invest a large amount at one time but can invest a small amount regularly. Many Mutual Fund companies have brought out various schemes targeting this particular segment. For example Reliance Mutual Funds has SIP schemes wherein the investors can start an SIP of only Rs. 100 a month. The ELSS schemes can be marketed to A segment of the people because they are the taxpayers and the schemes which help them in tax planning are going to be attractive to them. As discussed earlier the risk appetite of the investors changes with age. So we can market equity based funds to the people below the age of 35. These people have high risk appetite and so a fund which gives high risk and high returns will be considered to be a good investment option. For people between the ages of 35 to 60 we can offer a Balanced Fund which gives the best of Equity and Income Schemes and has an acceptable level of risk while giving a good return on the investment. In case of people over the age of 60 who have retired and so don t have a steady income source we can offer Income Funds and Money Market Funds to them as they have less risk and give guaranteed returns. Thus it is seen that targeting the different schemes of the funds to different segments based on the income and age is very helpful as one is able to

identify the financial requirements of the investor and guide him or her in a very effective manner. Positioning: Apart from segmenting a market and targeting a particular segment it is also essential to position your product in a correct manner so that the customers receive it successfully. Mutual Fund is basically a wealth creation product unlike insurance which is to be used for Risk Cover. Many people have the belief that as they already have insurance they have invested in a good product. The need is to tell the people that undoubtedly a great product but it can t be used as a substitute for wealth creation. Apart from positioning Mutual Funds as a wealth creation product we have to position the various schemes of the Mutual Fund based on their function. Thus the SIP should be positioned as a low cost investment option which even a person with low income can avail of while ELSS should be positioned as a scheme that gives the investors tax benefits. The Income Funds and Money Market funds should be positioned as low risk investment opportunities. Good positioning of a product makes it more attractive to the potential consumer and he is able to make an informed choice about the product. Ps of Marketing: In marketing management there is a concept of 4 P s of marketing. It is essential to understand the 4 P s of marketing which are Product, Price Place and promotion befor e trying to market any product or service. The knowledge of the 4 P s of marketing will help us in understanding the product and in successfully convincing the customers to buy the product. The 4 P s of marketing in case of Mutual Fund can be described as follows. Product: The product that we are trying to market to the consumers is Mutual Fund which is a financial product created for the purpose of investment and wealth creation. We must be able to explain the product to the customers. We should tell them that how they can invest the money in mutual funds and get a good return on their investment. We should explain the advantages of investment in the Mutual Funds. In times of slowdown as being witnessed recently the investor confidence is very low. We have to convince

the investors that though the stock market has crashed and many investors have lost their money the markets are now on an upswing and the pr ospects of a stable government in the centre will give a further boost to the markets. Thus this is the best time to invest in Mutual Funds as an investment product. We have to explain to the investors that though there are always risks associated with the Mutual Fund investment these risks are negligible in the long run where it is seen that investments give good returns which even beat the stock market. We have to sit with the investors and analyse carefully what are their requirements and do a detailed financial planning session with them. This allows us to select the best schemes from the basket of schemes available to get the investors the best possible return on their investments. Thus it is seen that we must have the thorough knowledge of the product while at the same time we must be able to convey this to the customers so that they are interested in buying our product. Price: One of the major factors in the marketing of any product is its price. The customers want to know what price they are paying for the product or service and whether the price is justified and the product or service is Value for Money . In case of Mutual Funds there are two components of the price. The first is the minimum amount that can be invested in a particular scheme. This amount sets the base price for the scheme. The investor if he or she so chooses can invest a higher amount than the minimum depending on his own income and financial position. There is generally no upper limit in the amount to be invested. The next component is the Entry/Exit load that the AMCs charge for various schemes. These are generally 2-3% of the amount that has been invested but they differ from scheme to scheme. Some schemes may have no entry/exit load for investment. The financial planner must explain the prices of investing in the fund to the investor so that he is kept knowledgeable about how his investments are going to work. In the highly competitive Mutual fund industry the AMCs generally keep the price low so that the investors are attracted to

invest in their schemes. It is seen that the minimum amount to be invested is lower in case of SIPs as compared to other schemes because the investors have to invest that amount on a regular basis. This is also done to attract the small investors for whom the main source of investment is the saving bank account. Reliance Mutual Fund has the main source of investment is the saving bank account. Reliance Mutual Fund has revolutionized low cost SIPs by allowing investors to start SIPs for as low as Rs. 100 per month. Place: The place where we sell the product also plays an important role in the marketing of the product or service. The place is usually decided by the nature of the product or service that is being marketed. In case of Mutual Funds the place of marketing is very important. The AMCs have enabled the investors to directly buy the Mutual Funds from their own offices in the cities or through their websites. They also have setup a wide network of distribution houses and agents to bring their products to the investors. Many of the agents and financial planners have their own offices either at a market place or at home. It is cheaper to have your of fices at home as the rent is lower and you can easily connect to many potential clients who live in your neighbourhood. Selling of Mutual Funds does not need an elaborate office setup and only needs a computer with net connection. Many people do not like to go to a market place to do their investments and generally prefer to go to the offices in their neighbourhood. A large number of people dont have the time or inclination to go to any office. The Mutual fund agents contact them directly via telephone and set up the appointments either at the offices or homes of the potential investors. The agents also prefer this because this gives them a chance to attract other potential investors to the product and explain the benefits of investing in Mutual Funds. Thus we can see that the place for selling the Mutual Fund ranges from the websites and offices of the AMCs to the homes and offices of the investors and the agents. Thus the basic idea is to bring the Mutual Funds as close to the investors as possible.

Promotion: Marketing of a product or service is incomplete without an effective promotional strategy. Without promotion the general public will not know about the product or service in question and thus will not buy it. Thus promotion is essential to spread the word about the product or service. In case of Mutual Funds the AMCs spend a lot of money in promoting the various schemes. They take out advertisements in various media like newspapers, television internet etc. When a new scheme is launched the different agents are invited to attend seminars wher e the details about the product are presented. This is because the agents are the people who come in direct contact with the public and promote the products. The agents are also given promotional materials like brochures posters mailers etc to be displayed in the offices or sent out to potential clients. The distribution houses like N.J. India Invest also give a lot of promotional materials to the agents who are associated with them. Apart from the materials the employees of the distribution houses and AMCs also go with the agents on joint calls where a large number of potential investors are addressed at the same time. Cold calling and emailing are also promotional tools which are extensively used and the agents hire telecallers to give calls to potential clients to set up appointments and sell the various services. Some agents also make use of canopies which are put up in public places to attract the customers to invest in the various schemes.

Source of data collection

Awareness for new investors about investment instruments

Mutual Funds: The Mutual funds are another highly popular investment instruments used by the people but only 38% of the people claim to have good knowledge or expertise in the field of Mutual Fund. This shows that we need to spread the awareness level more. The people need to know that investing their money in mutual Funds is a good investment both for themselves as well as for the economy. The people can get good returns on their investments and many companies in the economy will benefit because Mutual Funds will in turn invest the people s money in these companies which may not be conventionally called as Blue Chip An income wise awareness level for Mutual funds is shown below.

Rs. 0-200,000

Rs.200, 000-500,000

Rs. >500,000 Relationship between Income Level and Awareness for Mutual Funds As is clear from the figure as the income level increases the awareness level also increases. This is shown in the increase in percentage of people who have good knowledge or expertise in Mutual Fund with increase in income level. This also shows that the Mutual Fund Companies have to focus on the segment just entering employment so as to further spread awareness about their product which will result in greater sales of Mutual Funds.

Insurance: Insurance is a popular mode of investing for the purpose of risk cover for the individuals. In India many people associate insurance especially life insurance with LIC or Life Insurance Corporation of India, a government owned insurance company. The awareness among the people regarding insurance is largely due to the efforts of LIC which remains the primary insurance company of India though many private players like Tata AIG life, Reliance, ING Vaisya etc. are also now active. The awareness of the people regarding insurance is as shown in the graph below.

Level of awareness about Insurance As shown in the graph most people (about 45%) claim to have a good knowledge or expertise about insurance as an investment option. This is mainly because of the sustained marketing efforts and awareness campaigns of the insurance companies led by LIC. Savings Bank a/c:The savings bank account is one of the first modes of investment used by the people. It is not a good investment instrument in terms of the returns which are lower than others but it is popular because of the liquidity and the hassle free handling of cash that it offers. The level of awareness for savings bank account among the users is as shown below.

Level of awareness for Savings Bank Account As can be seen in the figure most people have a good knowledge about savings bank account. This level of awareness is due to the reason that people deposit their money primarily in the saving bank and the operations of this are not very difficult. The savings banks in India are busy in attracting the customers towards themselves by offering better services to the customers. The customers in turn trust the savings bank accounts to handle their money. Fixed Deposits: If people have some excess cash which they don t require immediately then they can deposit the same as a fixed deposit in a bank. The banks pay a return of 8-10% depending on the period of deposits. The level of awareness among the respondents for fixed deposits is as shown in the graph below.

Level of awareness for Fixed Deposits As can be seen from the graph the people generally have good knowledge of the Fixed Deposits. 40% of the respondents claimed that they have a good knowledge of Fixed Deposits while 35% were somewhat aware. Gold and other commodities: The level of awareness for investment in gold and other commodities is as shown in the graph below.

Level of awareness for Gold and other commodities As can be seen most of the respondents (42%) say that they are only somewhat aware of investments in the gold and other commodities. From ancient times gold has been used as a standard for money but the mechanism for investing in Gold is not familiar to many people Commodity exchanges like MCDEX are new in India and the awareness for these products is bound to grow in the future.

Risk and Return

In every investment decision one has to take into account both the returns that the investment is likely to generate and the risks associated with the investment. The amount of returns that the investment is likely to generate is calculated in form of CAGR or Compounded Annual growth Rate of the principle amount. The risk associated with the investment is calculated in form of Beta. The primary purpose of investing in any instrument is to make your money grow. For many people the ability of the instrument to do that is the primary factor in selecting the investment option. The return of the instrument is not free from the risk element. The risk element gives the probability of generating the level of return. Generally instruments are high risk high

return or low risk low return. Some people look at the risk associated with the investment while doing the investment. Some people look at both risks and returns.
People looks at both risk and return because the people realise thatconsidering

risk or return independently may not give the true picture. For example the returns in the stock market are generally very high but they also carry a high risk of losses. Similarly if we look at government securities which are considered risk free then we should also be content with a low return on our investment. The people who look at only risks or only returns are evenly distributed and are in a minority This shows that the people give serious consideration to risks and returns before investing in instrument. Investment is a high involvement product and people don t do it at spur of a moment.