A

PROJECT REPORT ON
STUDY OF MUTUAL
FUNDS IN
INDIABULLS
YEAR 2010-12
SUBMITTED TO
PUNJAB TECHNICAL UNIVERSITY, JALANDHAR

PROJECT GUIDE:SUBMITTEDBY:Mrs. Manisha Gupta

ASSISTANT PROFESSOR
P.I.M.T

Shallu Jindal
MBA (IV) Sem
ROL NO104982249551

PUNJAB INSTITUTE OF MANGEMENT &

TECHNOLOGY
By-GT Road, Mandi Gobindgarh, Punjab

ACKNOWLEDGEMENT
As

we

know

success

does

not

come

through

individual effort, behind a success of work there are some

hands that enable one to work hard and propel to be a
winner. Although this was the individual project but
during this project I have got some invisible hands which
helped me lots and without their help I cant think to
cross this milestone.
My heartfelt gratitude to my respected faculty guide
namely Mrs. Manisha Gupta Without their continuous
help the project would not have been materialized in the
present form. Their valuable suggestions helped us at
every step.
I also acknowledge my heartfelt gratitude for my Parents
and Friends for their moral support.

I am also grateful to our Institute PIMT for providing me a

platform and opportunity to do work in the field of
management.

Shallu
Certificate by the guide
This is to certify that Shallu jindal , a student of MBA,
has undertaken the project STUDY OF MUTUAL
FUNDS IN INDIABULLS for the partial fulfillment of the
degree course of MASTER OF BUSINESS
ADMINISTRATION.
This Project has not been submitted earlier for reward of
any degree/diploma of any other institution/university.

MS.MANISHA GUPTA

Declaration
I hereby declare that project work entitled MUTUAL
FUNDS. Is an authentic record of my own work carried
out as requirement of final research project report for the
award or MASTER OF BUSINESS ADMINISTRATION,
under the guidance of MRS. MANISHA GUPTA,
LECTURER OF PIMT, MANDIGOBINDGARH

TABLE OF CONTENT
CHAPTER SCHEME
1.EXECUTIVE SUMMARY
2.COMPANY PROFILE
3.LITERATURE STUDY
4.INTRODUCTION OF MUTUAL FUNDS
5.OBJECTIVE OF THE STUDY
6.RESEARCH METHODOLOGY
7.DATA ANALYSIS AND INTERPRETATION
8. FINDINGS
9. LIMITATIONS
10. SUGGESTIONS
11.QUESTIONNAIRE
12.BIBLIOGRAPHY

PAGE NO.

EXECUTIVE SUMMARY
Board of Directors
Mr.Sameer Gehlaut Chairman / Chair Person
Mr.Shamsher Singh

Director

Mr.Saurabh K Mittal

Director

Mr.Rajiv Rattan
Mr.Aishwarya Katoch
Mr.Karan Singh
Mr.Prem Prakash Mirdha

Director
Director
Director
Director

Mr.Gagan Banga

Director

Mr.Gagan Banga

Chief Executive

Officer
Mr.Amit Jain

Chief Executive

Officer

PROFILE

OF

INDIABULLS

SECURITIES

LIMITED

Securities

Open an
Account
Markets
Internet Trading

Consumer Finance

Personal Loans
Auto Loans
Commercial

Mortgages

Home Loans
Loans against
property

Real

Estate

Development

Commercial
Residential
Hotels

 Research

Vehicle Loan

INTRODUCTION

OF

THE

COMPANY
INDIABULLS SECURITIES LIMITED is part of the
Indiabulls group of companies. Indiabulls group is a leading
Financial Services and Real Estate player with all India presence
and an extensive client base. Indiabulls offers ease, convenience
and reliability in all their products ranging from securities trading
to consumer finance, mortgages to real estate development.
Indiabulls Securities Limited is Indias leading stock
brokerage house having a network of over 200 branches spread
across 70 cities and have a customer base of more than 6 lacs
satisfied customers. They are committed towards their goal of
Creating a world of smart investors. They offer state of the art
products and services to their customers. Indiabulls is the first

brokerage house to be accorded the CRISIL Highest Broker

Quality Grading BQ 1.
Indiabulls Group companies are listed in Indian and
overseas financial markets. The Net worth of the Group exceeds
USD 3 billion. Power Indiabulls, in-house trading platform, is one
of the fastest and most efficient trading platforms in the country.
Indiabulls has been conferred the status of a Business Super
brand by The Brand Council, Super brands India.
The products are selling in Indiabulls: Trading Platform for Equity and Derivatives
Depository Services
Commodities
Equity Analysis
IPO Financing
Loan Against Shares
Margin Trading

INDIABULLS HIGH GROWTH AREAS

Securities &
Derivatives
Broking

Commodities
Platform

INDIABULLS
New Business
Development
Real Estate,
Mining, etc

Secured &
Share
Financing

Financial
Products
Distribution

INTRODUCTION TO SECURITIES MARKET

The

money you earn is partly spent and the rest saved for

meeting future expenses. Instead of keeping the savings idle you

may like to use savings in order to get return on it in the future.
This is called investment and the security market provides you

the place for investment. Securities market is the place where

buyers and Sellers can enter into transactions to purchase and
sell shares, bonds, debentures etc. One can invest in various
securities i.e. Shares, Government Securities, Derivative products,
Unit of Mutual Funds etc.

Functions of the securities market:Security market helps the buyers and sellers of the securities
to enter into transactions to purchase and sell the shares, bonds,
debentures etc.
It enables the corporate, entrepreneurs to raise resources for their
companies and business ventures through public issues.
Securities markets provide channels for reallocation of savings to
investments and entrepreneurship.
Savings are linked to investments by a variety of intermediaries,
through a range of financial products, called securities.
The securities market is structured to provide liquidity and
marketability to the securities industry. It is a place where stock
certificates can be turned into cash at the prevailing price. This
kind of liquidity makes investing in stock attractive. It provides
the market quotation of shares, debentures and bonds, which is a
sort of buying and selling in the market.
To provide update rates for actual and potential investors.

SEGMENTS OF SECURITIES MARKET:

It has two interdependent segments:The primary (new issues) market and,
Secondary markets (stock exchanges).
The primary market provides the channel for sale of new
securities

while

the

secondary

market

deals

in

securities

previously issued and are listed on the stock exchange. Majority

of the trading is done in the secondary market, which comprises
of equity markets and debt markets.
Secondary market could either be dealer or auction market. While
stock exchange is the part of auction market, Over- the- Counter
(OTC) is a part of the dealer market.

INTRODUCTION TO STOCK EXCHANGE:

A stock exchange is a nervous system of the capital
market. The changes in the capital market are brought about by a
complex

set

of

factors,

all

operating

on

the

market

simultaneously.
A stock exchange is a key institution facilitating the issue
and sale of various types of securities. It is a pivot around which
every activity of the capital market revolves. In the absence of

stock exchange, the people with savings would hardly invest in

corporate securities for which there would be no liquidity (buying
and selling facility). Corporate investments from the general
public would have been thus lower.
A stock exchange is a place or a market where securities,
shares, debentures, bonds, mutual funds of Joint stock companies,
central and state government organizations, local bodies and
foreign government are bought and sold. A stock exchange is a
platform for the trade of already issued securities through primary
market.
It is the essential pillar of the private sector and corporate
economy. It is the open auction market where buyer and sellers
met and involve a competitive price for the securities. It reflects
hope aspirations and fears of people regarding the performance
of the economy.

MEANING OF THE STOCK EXCHANGE:

The Securities Contract (Regulation) Act, 1956 [SCRA] defines,
Stock Exchange as anybody of individuals, whether incorporated
or not, constituted for the purpose of assisting, regulating or
controlling
securities.

the

business

of

buying,

selling,

or

dealing

in

Point to be noted is that stock exchange could be a regional

stock exchange whose area of operation/ jurisdiction is specified
at the time of its recognition or national exchanges, which are
permitted to have nationwide trading since inception. LSE is a
regional stock exchange whose area of jurisdiction is J&K, Punjab,
Himachal Pradesh and NSE was incorporated as national stock
exchange.
HISTORY OF STOCK EXCHANGES IN INDIA:
In INDIA only registered stock exchanges can operate the
stock market activities and the
Recognition is governed under the provision of securities and
contract (Regulation) Act, 1956.
There are 24 Regional stock exchanges in INDIA. Bombay
Stock Exchange (BSE) and
National

Stock

Exchange

(NSE)

are

the

two

major

stock

exchanges of INDIA.
BSE is the oldest stock exchange in ASIA. It was established as
The Native Share & Stock
Brokers Association

in 1875. It is the first stock exchange in

India to obtain the permanent recognition in 1956 from the

government of India under the Securities Contract Regulation Act,
1956. BSE in 1986 came out with a stock index i.e. SENSEX that
subsequently became the barometer of the Indian stock market.
BSE played a pivotal role in the development of the Indian capital
market and its index, SENSEX, is tracked worldwide. The

exchange has the nationwide reach with a presence in 417 cities

and towns of India. It provides an efficient and transparent market
for trading in equity, debt instruments and derivatives.
NSE on the other hand was incorporated as a tax paying
company in 1992. In 1993 NSE was recognized as a stock
exchange under the Securities Contract Regulation Act, 1956 and
it commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994. The capital market equities segment
commenced operations in November 1994 and operations in
derivatives segment were started in June 2000. In October 1995,
NSE became the largest stock exchange in the country. NSE
launched S&P CNX Nifty in April 1996. NSE is one of the largest
interactive
VSAT based stock exchanges in the world. Presently, it supports
more than three 3000 VSATs.
The NSE network is the largest private wide area network in India
and first C- Band VSAT.
History of stock exchanges of Indian capital market can be date
back to the 18th century as follows:

HISTORY OF INDIAN CAPITAL MARKET AT

A GLANCE:

18th Century
1800-Trading of shares of East India Company in Kolkata and Mumbai
1850 -Joint stock companies came into existence
1860- Speculation and feverish dealing in securities
1875 -Formation of Stock exchange of Mumbai
1894 - Formation of Ahmedabad Stock Exchange
19th Century
1908 Formation of Calcutta Stock Exchange
1939 Formation of Lahore and Madras Stock Exchange
1940 - Formation of U.P. and Delhi Stock Exchange
1956- Securities Contract Regulation Act enacted
1957 Scam of Haridas Mundhra
1988 Securities and exchange board of India set up
1991 Scam of MS Shoes
1992 SEBI given power under SEBI Act, 1992
1993 - Formation of National Stock Exchange (NSE)
1995 HARSHAD MEHTA SCAM
1995 SESA GOA Scam
1997 CRB Scam
1998- BPL and Videocon Scam
20th Century
2000 Depositories came into existence (Electronic form, of Shares)
2001 Ketan Parikh Scam
2002 Start of rolling settlement and banning of BADLA Trading
2002 Introduction T + 3 Settlement in April.
2003- Introduction of T+2 Settlement in April
2005 BSE SENSEX touches all time high of 6954 in January 2005

2007BSE SENSEX touches all time high of 15000 in July 2007.

FEATURES

OF

THE

STOCK

EXCHANGE:
It provides the trading platform where buyers and sellers
meet to transact in securities.
The stock exchange in India is under the supervision of the
regulatory authority, the Securities and Exchange Board of India.
It is the place where sale and purchase of existing securities
is done.
It enables an investor to adjust his holdings of securities in
response to changes in assessment about risk and return.
It enables to meet the liquidity needs by providing market
for sale of securities.
Stock exchange is an association of individual members called
member brokers.
Stock exchanges are formed for the purpose of regulating
and facilitating the buying and selling of securities.

Stock exchange operate with due recognition from the govt.

under securities and contract regulation act 1956.
Stock exchange facilitates trading in securities of the public
sector companies as well as government securities.

TYPES

OF

STOCK

EXCHANGE
There are mainly two types of stock exchange in India
they are:1. BSE(BOMBAY STOCK EXCHANGE)

2. NSE(NATIONAL STOCK EXCHANGE)

BOMBAY STOCK
EXCHANGE
Bombay Stock Exchange
Mumba hare Bjr

Type

Stock Exchange

Location

Mumbai, India

Coordinates

18.929681N 72.833589E

Founded

1875

Owner

Bombay Stock Exchange Limited

Key people

Madhu Kannan (CEO & MD)

Currency
No. of listings

6.123

MarketCap

US$1.28 trillion (Feb, 2010)

Volume

US$980 billion (2006)

Indexes

BSE Sensex

Website

www.bseindia.com

THE BOMBAY STOCK EXCHANGE (BSE) (Mumba hear Bjr)

(formerly, The Stock Exchange, Mumbai) is the oldest stock
exchange in Asia and largest number of listed companies in the
world, with 4900 listed as of Feb 2010. It is located at Dalal
Street, Mumbai, India.
capitalization of

the

On

Feb,

2010,

companies

listed

the
on

equity market
the

BSE

was

US$1.28 trillion, making it the 4th largest stock exchange in

Asia and the 11th largest in the world.
With over 4900 Indian companies listed & over 7700 scrips on
the stock exchange, it has a significant trading volume. The BSE
SENSEX (SENSITIVE INDEX), also called the "BSE 30", is a widely
used market index in India and Asia. Though many other
exchanges exist, BSE and the National Stock Exchange of
India account for most of the trading in shares in India.

Hours of operation
Session

Timing

Beginning of the Day Session 8:00 - 9:00

Trading Session

9:00 - 15:30

Position Transfer Session

15:30 - 15:50

Closing Session

15:50 - 16:05

Option Exercise Session

16:05 - 16:35

Margin Session

16:35 - 16:50

Query Session

16:50 - 17:35

End of Day Session

17:30

The hours of operation for the BSE quoted above are stated
in terms of the local time (i.e. GMT +5:30) in Mumbai (Bombay),
India. BSE's normal trading sessions are on all days of the week
except

Saturdays,

Sundays

and

holidays

declared

by

the

Exchange in advance.
HISTORY:
The Bombay Stock Exchange is the oldest exchange in Asia. It
traces its history to the 1850s, when 4 Gujarati and 1 Parsi
stockbroker would gather under banyan trees in front of Mumbai's
Town Hall. The location of these meetings changed many times,
as the number of brokers constantly increased. The group

eventually moved to Dalal Street in 1874 and in 1875 became an

official organization known as 'The Native Share & Stock Brokers
Association'. In 1956, the BSE became the first stock exchange to
be recognized by the Indian Government under the Securities
Contracts Regulation Act. The Bombay Stock Exchange developed
the BSE Sensex in 1986, giving the BSE a means to measure
overall performance of the exchange. In 2000 the BSE used this
index to open its derivatives market, trading Sensex futures
contracts. The development of Sensex options along with equity
derivatives followed in 2001 and 2002, expanding the BSE's
trading platform. Historically an open outcry floor trading
exchange, the Bombay Stock Exchange switched to an electronic
trading system in 1995. It took the exchange only fifty days to
make this transition. This automated, screen-based trading
platform called BSE On-line trading (BOLT) currently has a
capacity of 80 lakh orders per day. The BSE has also introduced
the world's first centralized exchange-based internet trading
system, BSEWEBx.co.in to enable investors anywhere in the world
to trade on the BSE platform.

NATIONAL STOCK EXCHANGE

National Stock Exchange

Type

Stock Exchange

Location

Mumbai, India

Coordinates

19337N 725135E

Founded

1992

Owner

National Stock Exchange of India Limited

Key people

Mr.Ravi Narain - MD

Currency
No. of listings
MarketCap

1810
4,701,923 crore (US$ 1,020.32 billion)

(2009 August)
Indexes

S&P CNX Nifty

CNX Nifty Junior
S&P CNX 500

Website

www.nse-india.com

The National Stock Exchange (NSE) (Hindi: ) is

a stock exchange located at Mumbai, India. It is the largest stock
exchange in India in terms of daily turnover and number of trades,
for both equities and derivative trading. NSE has a market
capitalization of around Rs-47, 01,923 crore (7 August 2009) and
is expected to become the biggest stock exchange in India in
terms of market capitalization by 2009 end. Though a number of
other exchanges exist, NSE and the Bombay Stock Exchange are
the two most significant stock exchanges in India, and between
them are responsible for the vast majority of share transactions.
The NSE's key index is the S&P CNX Nifty, known as the
NSE NIFTY (National Stock Exchange Fifty), an index of fifty major
stocks weighted by market capitalization.
NSE is mutually-owned by a set of leading financial institutions,
banks, insurance companies and other financial intermediaries in
India but its ownership and management operate as separate
entities. There are at least 2 foreign investors NYSE Euro next and
Goldman Sachs who have taken a stake in the NSE. As of 2006,

the NSE VSAT terminals, 2799 in total, cover more than 1500
cities

across

India. In

October

the

companies

capitalization of

2007,
listed

the
on

equity market
the

NSE

was US$ 1.46 trillion, making it the second largest stock exchange
in South Asia. NSE is the third largest Stock Exchange in the world
in terms of the number of trades in equities. It is the second
fastest growing stock exchange in the world with a recorded
growth of 16.6%.

ORIGINS
The

National

Stock

Exchange

of

India

was

promoted

by

leading financial institutions at the behest of the Government of

India, and was incorporated in November 1992 as a tax-paying
company.

In

April

1993,

it

was

recognized

as

a stock

exchange under the Securities Contracts (Regulation) Act, 1956.

NSE commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994. The Capital market (Equities) segment of
the NSE commenced operations in November 1994, while
operations in the Derivatives segment commenced in June 2000.

MARKETS
Currently, NSE has the following major segments of the
capital market:

Equity

Futures and Options

Retail Debt Market

Wholesale Debt Market

Currency futures

MUTUAL FUND

STOCKS LENDING & BROWING

August 2008 Currency derivatives were introduced in

India with the launch of Currency Futures in USD INR by
NSE. Currently it has also launched currency futures in
EURO,

POUND

&

YEN.

Interest

Rate

Futures

was

introduced for the first time in India by NSE on 31 August

2009, exactly after one year of the launch of Currency
Futures.
NSE became the first stock exchange to get approval for
Interest

rate futures as recommended by SEBI-RBI

committee, on 31 August 2009, a futures contract based

on 7% 10 Year GOI bond (NOTIONAL) was launched with
quarterly maturities.

HOURS

NSE's normal trading sessions are conducted from 9:00

am India Time to 3:30 pm India Time on all days of the
week except Saturdays, Sundays and Official Holidays
declared by the Exchange (or by the Government of
India) in advance.The exchange, in association with BSE
(Bombay Stock Exchange Ltd.), is thinking of revising its
timings from 9.00 am India Time to 5.00 pm India Time.
There were System Testing going on and opinions,
suggestions or feedback on the New Proposed Timings
are being invited from the brokers across India. And
finally on 18 November 2009 regulator decided to drop
their ambitious goal of longest Asia Trading Hours due to
strong opposition from its members.
On 16 December 2009, NSE announced that it would prepone the market opening at 9am from 18 December
2009. So NSE trading hours will be from 9:00 am till 3:30
pm India Time.
However, on 17 December 2009, after strong protests
from brokers, the Exchange decided to postpone the
change in trading hours till 4 Jan 2010.
NSE new market timing from 4 Jan 2010 is 9:00 am till
3:30 pm India Time.

LITERATURE SURVEY
Research is generally an ongoing process, it
never ends because every research bring new
ideas and thinking for implementation. Research is
generally done to make the evolution of new
concept on that particularly field on which the
research is based.
It is very important that the every researcher
should know the literature of the research because
the research which is being on process should not
be same with the post literature researcher work.
Research work should be based on the thinking of
new ideas and should be different from the post
researcher.

Focus

should

be

based

on

the

dimension which has not been touched, research

project

give

researcher.

the

direction

and

effort

of

the

INTRODUCTION OF

MUTUAL FUNDS

INTRODUCTION
Different investment avenues are available to
investors. Mutual funds also offer good investment
opportunities to the investors. Like all investments,
they also carry certain risks. The investors compare
the risks and expected yields after adjustment of
tax on various instruments while taking investment
decisions. The investors may seek advice from
experts and consultants including agents and
distributors of mutual funds schemes while making
investment decisions. Mutual fund is a mechanism
for pooling the resources by issuing units to the
investors and investing funds in securities in

accordance with objectives as disclosed in offer

document.

Meaning
A Mutual fund is simply a financial intermediary
that allows a group of investors to pool their money
together with a pre-determined investment
objective. The mutual fund will have a fund
manager who is responsible for investing the
pooled money in to specific securities (usually
stocks or bonds). Every Mutual fund is managed by
a fund manager, who using his investment
management skills and necessary research works
ensures much better return than what an investor
can manage on his own. The capital appreciation
and other incomes earned from these investments
are passed on to the investors (also known as unit
holders) in proportion of the number of units they
own.
Investments in securities are spread across a wide
cross-section of industries and sectors and thus the
risk is reduced. Diversification reduces the risk
because all stocks may not move in the same
direction in the same proportion at the same time.
Mutual fund issues units to the investors in
accordance with quantum of money invested by
them. The profits and losses are shared by the
investors in proportion to their investments. A

mutual fund is required to be registered by the

investors in proportion to their investments. A
mutual fund to be registered with Securities and
Exchange Board of India (SEBI) which regulates
securities markets before it can collect funds from
the public.

CONCEPT OF MUTUAL FUND

1 .Many investors with common financial objective pool
their money
2. Investors, on a proportionate basis, get mutual fund
unit for the sum contributed to the pool
3. The money collected from the investors is invested in
shares, debenture & other securities by the fund manager
4. The fund manager realize gain or losses & collect
dividend or interest income
5. As capital gains or losses from such investment passed
on to the investors in proportionate of the number of
units held by them
When an investor subscribe for the units of a mutual fund
,he become part owner of the asset of the fund in the
same proportion as his contribution amount put up with
the corpus(the total amount of fund)
Any change in the value of the investments made in to
capital market instruments (such as shares, debenture,
etc) is reflected in the net asset value (NAV) of the
scheme NAV is defined as the market value of the mutual
fund scheme asset net of its liabilities.NAV of a scheme is
calculated by dividing the market value of schemes asset
by number of units issued to the investors

FOR EXAMPLES:
A. If the market value of the assets of a fund is Rs.
100000
B. The total no. of units issued to the investors is equal to
10000
C. Then the NAV of the scheme = (A) (B) i.e.
100000/10000or 10.00
D. Now if an investor X owns 5units of this scheme
E. Then his total contribution to the fund is Rs 50 (i.e. no
of units held multiplied by the NAV of the scheme)

Calculation of net asset value

The most important part of the calculation is the
valuation of the asset owned the fund. Once it is
calculated, the NAV is simply the net value of assets
divided by the number of the units outstanding .the
detailed methodology for the calculation of net value
asset is given below
NAV= Market value of investments + Current assets &
other assets +Accrued income Current liabilities
Accrued expenses

HISTORY AND GROWYH OF MUTUAL FUNDS IN

INDIA
The mutual fund industry in India started in 1963 with the formation of
Unit Trust of India, at the initiative of the Government of India and
Reserve Bank. The history of mutual funds in India can be broadly
divided into four distinct phases.
First Phase 1964-87
An Act of Parliament established Unit Trust of India (UTI) on 1963. It
was set up by the Reserve Bank of India and functioned under the
Regulatory and administrative control of the Reserve Bank of India. In
1978 UTI was de-linked from the RBI and the Industrial Development
Bank of India (IDBI) took over the regulatory and administrative control
in place of RBI. The first scheme launched by UTI was Unit Scheme
1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under
management.
Second Phase 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by
public sector banks and Life Insurance Corporation of India (LIC) and
General Insurance Corporation of India (GIC). SBI Mutual Fund was the
first non- UTI Mutual Fund established in June 1987 followed by Can
bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug
89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank
of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June
1989 while GIC had set up its mutual fund in December 1990. At the
end of 1993, the mutual fund industry had assets under management of
Rs.47, 004 crores.
Third Phase 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the
Indian mutual fund industry, giving the Indian investors a wider choice
of fund families. Also, 1993 was the year in which the first Mutual Fund
Regulations came into being, under which all mutual funds, except UTI
were to be registered and governed. The erstwhile Kothari Pioneer (now
merged with Franklin Templeton) was the first private sector mutual
fund registered in July 1993. The number of mutual fund houses went on
increasing, with many foreign mutual funds setting up funds in India and
also the industry has witnessed several mergers and acquisitions. As at
the end of January 2003, there were 33 mutual funds with total assets of
Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of
assets under management was way ahead of other mutual funds.
Fourth Phase since February 2003
In February 2003, following the repeal of the Unit Trust of India Act
1963 UTI was bifurcated into two separate entities. One is the Specified
Undertaking of the Unit Trust of India with assets under management of
Rs.29, 835 crores as at the end of January 2003, representing broadly,
the assets of US 64 scheme, assured return and certain other schemes.
The Specified Undertaking of Unit Trust of India, functioning under an
administrator and under the rules framed by Government of India and
does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB
and LIC. It is registered with SEBI and functions under the Mutual Fund
Regulations. With the bifurcation of the erstwhile UTI which had in
March 2000 more than Rs.76, 000 crores of assets under management
and with the setting up of a UTI Mutual Fund, conforming to the SEBI
Mutual Fund Regulations, and with recent mergers taking place among
different private sector funds, the mutual fund industry has entered its
current phase of consolidation and growth. As at the end of September,
2004, there were 29 funds, which manage assets of Rs.153108 crores
under 421 schemes. By the end of June 2005 the total assets of mutual
fund industry are Rs.164546 crores.

SET UP OF A MUTUAL FUND

A mutual fund is set up in the form of a trust, which has sponsor,
trustees, Asset Management Company (AMC) and custodian. The trust
is established by a sponsor or more than one sponsor who is like
promoter of a company. The trustees of the mutual fund hold its property
for the benefit of the unit holders. Asset Management Company (AMC)
approved by SEBI manages the funds by making investments in various
types of securities. Custodian, who is registered with SEBI, holds the
securities of various schemes of the fund in its custody. The trustees are
vested with the general power of superintendence and direction over
AMC. They monitor the performance and compliance of SEBI
Regulations by the mutual fund.
SEBI Regulations require that at least two thirds of the directors of
trustee company or board of trustees must be independent i.e. they
should not be associated with the sponsors. Also, 50% of the directors of
AMC must be independent. All mutual funds are required to be
registered with SEBI before they launch any scheme. However, Unit
Trust of India (UTI) is not registered with SEBI (as on January 15,
2002).

Mutual fund work

TYPES OF MUTUAL FUNDS

GENERAL CLASSIFICATION OF
MUTUAL FUND

Open-end Funds
Funds that can sell and purchase units at any point in
time are classified as Open-end Funds. The fund size
(corpus) of an open-end fund is variable (keeps changing)
because of continuous selling (to investors) and
repurchases (from the investors) by the fund. An openend fund is not required to keep selling new units to the
investors at all times but is required to always
repurchase, when an investor wants to sell his units. The
NAV of an open-end fund is calculated every day.

Closed-end Funds
Funds that can sell a fixed number of units only during
the New Fund Offer (NFO) period are known as Closedend Funds. The corpus of a Closed-end Fund remains
unchanged at all times. After the closure of the offer,
buying and redemption of units by the investors directly
from the Funds is not allowed. However, to protect the
interests of the investors, SEBI provides investors with
two avenues to liquidate their positions:

Closed-end Funds are listed on the stock exchanges

where investors can buy/sell units from/to each other. The
trading is generally done at a discount to the NAV of the
scheme. The NAV of a closed-end fund is computed on a
weekly basis (updated every Thursday).

Closed-end Funds may also offer "buy-back of units" to

the unit holders. In this case, the corpus of the Fund and
its outstanding units do get changed.

Load Funds
Mutual Funds incur various expenses on marketing,
distribution,
advertising,
portfolio
churning,
fund
manager's salary etc. Many funds recover these expenses
from the investors in the form of load. These funds are
known as Load Funds. A load fund may impose following
types of loads on the investors:
Entry Load - Also known as Front-end load, it refers to
the load charged to an investor at the time of his entry
into a scheme. Entry load is deducted from the investor's
contribution amount to the fund.
Exit Load - Also known as Back-end load, these charges
are imposed on an investor when he redeems his units
(exits from the scheme). Exit load is deducted from the
redemption proceeds to an outgoing investor.

No-load Funds

A non load fund is one that does not change for entery
or exit. It means the investors can enter the fund/scheme
at NAV and no additional charges are payable on
purchase or sale of units.
Tax-exempt Funds
Funds that invest in securities free from tax are known as
Tax-exempt Funds. All open-end equity oriented funds are
exempt from distribution tax (tax for distributing income
to investors). Long term capital gains and dividend
income in the hands of investors are tax-free.
Non-Tax-exempt Funds
Funds that invest in taxable securities are known as NonTax-exempt Funds. In India, all funds, except open-end
equity oriented funds are liable to pay tax on distribution
income. Profits arising out of sale of units by an investor
within 12 months of purchase are categorized as shortterm capital gains, which are taxable.

Equity Funds
Equity funds are considered to be the more risky funds as
compared to other fund types, but they also provide
higher returns than other funds. It is advisable that an
investor looking to invest in an equity fund should invest
for long term i.e. for 3 years or more. There are different
types of equity funds each falling into different risk
bracket. In the order of decreasing risk level, there are
following types of equity funds:
Aggressive Growth Funds - In Aggressive Growth
Funds, fund managers aspire for maximum capital
appreciation and invest in less researched shares of
speculative nature. Because of these speculative
investments Aggressive Growth Funds become more
volatile and thus, are prone to higher risk than other
equity funds.
Growth Funds - Growth Funds also invest for capital
appreciation (with time horizon of 3 to 5 years) but they
are different from Aggressive Growth Funds in the sense
that they invest in companies that are expected to
outperform the market in the future. Without entirely
adopting speculative strategies, Growth Funds invest in
those companies that are expected to post above
average earnings in the future.
Specialty Funds - Specialty Funds have stated criteria
for investments and their portfolio comprises of only
those companies that meet their criteria. Criteria for
some specialty funds could be to invest/not to invest in
particular regions/companies. Specialty funds are
concentrated and thus, are comparatively riskier than

diversified funds.. There are following types of specialty

funds:
Sector Funds: Equity funds that invest in a particular
sector/industry of the market are known as Sector Funds.
The exposure of these funds is limited to a particular
sector (say Information Technology, Auto, Banking,
Pharmaceuticals or Fast Moving Consumer Goods) which
is why they are more risky than equity funds that invest in
multiple sectors.
Foreign Securities Funds: Foreign Securities
Equity Funds have the option to invest in one or
more foreign companies. Foreign securities funds
achieve international diversification and hence they
are less risky than sector funds. However, foreign
securities funds are exposed to foreign exchange
rate risk and country risk.
Mid-Cap or Small-Cap Funds: Funds that invest
in companies having lower market capitalization
than large capitalization companies are called MidCap or Small-Cap Funds. Market capitalization of
Mid-Cap companies is less than that of big, blue
chip companies (less than Rs. 2500 crores but
more than Rs. 500 crores) and Small-Cap
companies have market capitalization of less than
Rs. 500 crores. Market Capitalization of a company
can be calculated by multiplying the market price
of the company's share by the total number of its
outstanding shares in the market. The shares of
Mid-Cap or Small-Cap Companies are not as liquid
as of Large-Cap Companies which gives rise to
volatility in share prices of these companies and

consequently, investment gets risky.

Option Income Funds*: While not yet available in
India, Option Income Funds write options on a large
fraction of their portfolio. Proper use of options can
help to reduce volatility, which is otherwise
considered as a risky instrument. These funds
invest in big, high dividend yielding companies,
and then sell options against their stock positions,
which generate stable income for investors.

Diversified Equity Funds - Except for a small portion

of investment in liquid money market, diversified equity
funds invest mainly in equities without any
concentration on a particular sector(s). These funds are
well diversified and reduce sector-specific or companyspecific risk. However, like all other funds diversified
equity funds too are exposed to equity market risk. One
prominent type of diversified equity fund in India is
Equity Linked Savings Schemes (ELSS). As per the
mandate, a minimum of 90% of investments by ELSS
should be in equities at all times. ELSS investors are
eligible to claim deduction from taxable income (up to
Rs 1 lakh) at the time of filing the income tax return.
ELSS usually has a lock-in period and in case of any
redemption by the investor before the expiry of the
lock-in period makes him liable to pay income tax on
such income(s) for which he may have received any tax
exemption(s) in the past.
Equity Index Funds - Equity Index Funds have the
objective to match the performance of a specific stock

market index. The portfolio of these funds comprises of

the same companies that form the index and is
constituted in the same proportion as the index. Equity
index funds that follow broad indices (like S&P CNX
Nifty, Sensex) are less risky than equity index funds
that follow narrow sect oral indices (like BSEBANKEX or
CNX Bank Index etc). Narrow indices are less diversified
and therefore, are more risky.
Value Funds - Value Funds invest in those companies
that have sound fundamentals and whose share prices
are currently under-valued. The portfolio of these funds
comprises of shares that are trading at a low Price to
Earnings Ratio (Market Price per Share / Earning per
Share) and a low Market to Book Value (Fundamental
Value) Ratio. Value Funds may select companies from
diversified sectors and are exposed to lower risk level
as compared to growth funds or specialty funds. Value
stocks are generally from cyclical industries (such as
cement, steel, sugar etc.) which make them volatile in
the short-term. Therefore, it is advisable to invest in
Value funds with a long-term time horizon as risk in the
long term, to a large extent, is reduced.
Equity Income or Dividend Yield Funds - The
objective of Equity Income or Dividend Yield Equity
Funds is to generate high recurring income and steady
capital appreciation for investors by investing in those
companies which issue high dividends (such as Power
or Utility companies whose share prices fluctuate
comparatively lesser than other companies' share
prices). Equity Income or Dividend Yield Equity Funds
are generally exposed to the lowest risk level as
compared to other equity funds.

Debt / Income Funds

Funds that invest in medium to long-term debt
instruments issued by private companies, banks, financial
institutions, governments and other entities belonging to
various sectors (like infrastructure companies etc.) are
known as Debt / Income Funds. Debt funds are low risk
profile funds that seek to generate fixed current income
(and not capital appreciation) to investors. In order to
ensure regular income to investors, debt (or income)
funds distribute large fraction of their surplus to
investors. Although debt securities are generally less
risky than equities, they are subject to credit risk (risk of
default) by the issuer at the time of interest or principal
payment. To minimize the risk of default, debt funds
usually invest in securities from issuers who are rated by
credit rating agencies and are considered to be of
"Investment Grade". Debt funds that target high returns
are more risky. Based on different investment objectives,
there can be following types of debt funds:

Diversified Debt Funds - Debt funds that invest in all

securities issued by entities belonging to all sectors of
the market are known as diversified debt funds. The
best feature of diversified debt funds is that
investments are properly diversified into all sectors
which results in risk reduction. Any loss incurred, on
account of default by a debt issuer, is shared by all
investors which further reduces risk for an individual

investor.
Focused Debt Funds* - Unlike diversified debt funds,
focused debt funds are narrow focus funds that are
confined to investments in selective debt securities,
issued by companies of a specific sector or industry or
origin. Some examples of focused debt funds are
sector, specialized and offshore debt funds, funds that
invest only in Tax Free Infrastructure or Municipal
Bonds. Because of their narrow orientation, focused
debt funds are more risky as compared to diversified
debt funds. Although not yet available in India, these
funds are conceivable and may be offered to investors
very soon.
High Yield Debt funds - As we now understand that
risk of default is present in all debt funds, and therefore,
debt funds generally try to minimize the risk of default
by investing in securities issued by only those
borrowers who are considered to be of "investment
grade". But, High Yield Debt Funds adopt a different
strategy and prefer securities issued by those issuers
who are considered to be of "below investment grade".
The motive behind adopting this sort of risky strategy is
to earn higher interest returns from these issuers.
These funds are more volatile and bear higher default
risk, although they may earn at times higher returns for
investors.

Assured Return Funds - Although it is not necessary

that a fund will meet its objectives or provide assured
returns to investors, but there can be funds that come

with a lock-in period and offer assurance of annual

returns to investors during the lock-in period. Any
shortfall in returns is suffered by the sponsors or the
Asset Management Companies (AMCs). These funds are
generally debt funds and provide investors with a lowrisk investment opportunity. However, the security of
investments depends upon the net worth of the
guarantor (whose name is specified in advance on the
offer document). To safeguard the interests of investors,
SEBI permits only those funds to offer assured return
schemes whose sponsors have adequate net-worth to
guarantee returns in the future. In the past, UTI had
offered assured return schemes (i.e. Monthly Income
Plans of UTI) that assured specified returns to investors
in the future. UTI was not able to fulfill its promises and
faced large shortfalls in returns. Eventually, government
had to intervene and took over UTI's payment
obligations on itself. Currently, no AMC in India offers
assured return schemes to investors, though possible.
Fixed Term Plan Series - Fixed Term Plan Series
usually are closed-end schemes having short term
maturity period (of less than one year) that offer a
series of plans and issue units to investors at regular
intervals. Unlike closed-end funds, fixed term plans are
not listed on the exchanges. Fixed term plan series
usually invest in debt / income schemes and target
short-term investors. The objective of fixed term plan
schemes is to gratify investors by generating some
expected returns in a short period.

Gilt Funds
Also known as Government Securities in India, Gilt Funds
invest in government papers (named dated securities)
having medium to long term maturity period. Issued by
the Government of India, these investments have little
credit risk (risk of default) and provide safety of principal
to the investors. However, like all debt funds, gilt funds
too are exposed to interest rate risk. Interest rates and
prices of debt securities are inversely related and any
change in the interest rates results in a change in the
NAV of debt/gilt funds in an opposite direction.
Money Market / Liquid Funds
Money market / liquid funds invest in short-term
(maturing within one year) interest bearing debt
instruments. These securities are highly liquid and
provide safety of investment, thus making money
market / liquid funds the safest investment option when
compared with other mutual fund types. However, even
money market / liquid funds are exposed to the interest
rate risk. The typical investment options for liquid funds
include Treasury Bills (issued by governments),
Commercial papers (issued by companies) and
Certificates of Deposit (issued by banks).
Hybrid Funds
As the name suggests, hybrid funds are those funds
whose portfolio includes a blend of equities, debts and
money market securities. Hybrid funds have an equal
proportion of debt and equity in their portfolio. There are
following types of hybrid funds in India:

Balanced Funds - The portfolio of balanced funds

include assets like debt securities, convertible securities,
and equity and preference shares held in a relatively
equal proportion. The objectives of balanced funds are to
reward investors with a regular income, moderate capital
appreciation and at the same time minimizing the risk of
capital erosion. Balanced funds are appropriate for
conservative investors having a long term investment
horizon.
Growth-and-Income Funds - Funds that combine
features of growth funds and income funds are known as
Growth-and-Income Funds. These funds invest in
companies having potential for capital appreciation and
those known for issuing high dividends. The level of risks
involved in these funds is lower than growth funds and
higher than income funds.
Asset Allocation Funds - Mutual funds may invest in
financial assets like equity, debt, money market or nonfinancial (physical) assets like real estate, commodities
etc.. Asset allocation funds adopt a variable asset
allocation strategy that allows fund managers to switch
over from one asset class to another at any time
depending upon their outlook for specific markets. In
other words, fund managers may switch over to equity if
they expect equity market to provide good returns and
switch over to debt if they expect debt market to provide
better returns. It should be noted that switching over from
one asset class to another is a decision taken by the fund
manager on the basis of his own judgment and

understanding of specific markets, and therefore, the

success of these funds depends upon the skill of a fund
manager in anticipating market trends.

Commodity Funds
Those funds that focus on investing in different
commodities (like metals, food grains, crude oil etc.) or
commodity companies or commodity futures contracts
are termed as Commodity Funds. A commodity fund that
invests in a single commodity or a group of commodities
is a specialized commodity fund and a commodity fund
that invests in all available commodities is a diversified
commodity fund and bears less risk than a specialized
commodity fund. "Precious Metals Fund" and Gold Funds
(that invest in gold, gold futures or shares of gold mines)
are common examples of commodity funds.
Real Estate Funds
Funds that invest directly in real estate or lend to real
estate developers or invest in shares/securitized assets of
housing finance companies, are known as Specialized
Real Estate Funds. The objective of these funds may be to
generate regular income for investors or capital
appreciation.
Exchange Traded Funds (ETF)
Exchange Traded Funds provide investors with combined
benefits of a closed-end and an open-end mutual fund.
Exchange Traded Funds follow stock market indices and

are traded on stock exchanges like a single stock at index

linked prices. The biggest advantage offered by these
funds is that they offer diversification, flexibility of
holding a single share (tradable at index linked prices) at
the same time. Recently introduced in India, these funds
are quite popular abroad.

Risk Hierarchy of Different Mutual Funds

Thus, different mutual fund schemes are exposed to
different levels of risk and investors should know the
level of risks associated with these schemes before
investing. The graphical representation hereunder
provides a clearer picture of the relationship between
mutual funds and levels of risk associated with these
funds:

ADVANTAGES OF MUTUAL FUND

1.

Portfolio Diversification

Mutual Funds invest in a well-diversified portfolio of

securities which enables investor to hold a diversified
investment portfolio (whether the amount of investment
is big or small).
2.

Professional Management

Fund manager undergoes through various research works

and has better investment management skills which
ensure higher returns to the investor than what he can
manage on his own.
3.

Less Risk

Investors acquire a diversified portfolio of securities even

with a small investment in a Mutual Fund. The risk in a
diversified portfolio is lesser than investing in merely 2 or
3 securities.
4.

Low Transaction Costs

Due to the economies of scale (benefits of larger

volumes), mutual funds pay lesser transaction costs.
These benefits are passed on to the investors.
5.

Liquidity

An investor may not be able to sell some of the shares

held by him very easily and quickly, whereas units of a
mutual fund are far more liquid.
6.

Choice of Schemes

Mutual funds provide investors with various schemes with

different investment objectives. Investors have the option
of investing in a scheme having a correlation between its
investment objectives and their own financial goals.
These schemes further have different plans/options

7.

Transparency

Funds provide investors with updated information

pertaining to the markets and the schemes. All material
facts are disclosed to investors as required by the
regulator.

8.

Flexibility

Investors also benefit from the convenience and flexibility

offered by Mutual Funds. Investors can switch their
holdings from a debt scheme to an equity scheme and
vice-versa. Option of systematic (at regular intervals)
investment and withdrawal is also offered to the investors
in most open-end schemes.
9.

Safety

Mutual Fund industry is part of a well-regulated

investment environment where the interests of the
investors are protected by the regulator. All funds are
registered with SEBI and complete transparency is forced.

DISADVANTAGES OF MUTUAL FUND

1.

Costs Control Not in the Hands of an Investor

Investor has to pay investment management fees and

fund distribution costs as a percentage of the value of his
investments (as long as he holds the units), irrespective
of the performance of the fund.
2.

No Customized Portfolios

The portfolio of securities in which a fund invests is a

decision taken by the fund manager. Investors have no
right to interfere in the decision making process of a fund
manager, which some investors find as a constraint in
achieving their financial objectives.

3.

Difficulty in Selecting a Suitable Fund Scheme

Many investors find it difficult to select one option from

the plethora of funds/schemes/plans available. For this,
they may have to take advice from financial planners in
order to invest in the right fund to achieve their
objectives.

SIP In Mutual fund

SIP is actually a Systematic Investment Plan of
investing in Mutual Fund. It is specially designed for
those who aim to build wealth over a long period and
want a better future for him and their dependants.
The investment in a Mutual fund can be done in two
ways. First way is onetime payment i.e. making
payment to a fund at once and gets the units of the
fund as per the Net Asset Value (NAV) of the fund on
that day.
A person wishes to invest in a fund Rs. 24,000/- . On
the day of Investment, the NAV of the fund was Rs.
10/-. He gets 2400 units @ Rs. 10/- per unit.
The other way of investment is making payment to the
fund periodically, which is termed as Mutual Fund SIP.
When you commit to invest a fixed amount monthly in
a fund, it is called as Systematic Investment.
It is actually beneficial for those investors who wish to

invest a large amount in a fund and wishes to create a

large chunk of wealth for long term but due to financial
constraints are able to do so.
The SIP provides them a way to invest in the fund of
their choice in installments.
Eg. A person wishes to invest Rs. 24000/- in a fund but
due to other obligations, it is not possible for him to
invest such an amount in a fund. He takes the SIP route
and contributes to the fund Rs. 2000/- monthly for a
year. At the end of the year, hell have invested Rs.
24,000/- in the fund. When the NAV is high, he will get
the fewer units and when the NAV is low, hell get the
more units. So, hell get the benefit of averaging
through the SIP route.
The NAV in the first month was Rs. 10/-, hell get 200
units in the first month
The NAV in the second month was Rs. 9.50/-, hell get
210.52 units in second month
The NAV for the following month was Rs. 10, hell get
200 units in the next month
So, at the end of the year he may get more units as
compared to the units hell get through single
investment.

Benefits of SIP
1. SIP can be started with a minimum investment of Rs.

500/- per month or Rs. 1000/- per month.

2. It is good and effective way of creating wealth for
long term.
3. ECS facility is available in case of Investment
through SIP.
4. A small withdrawal from the account doesnt affect
the bank balance of an individual as compared to a
hefty withdrawal.
5. It can be for a year, two years, three years etc. if a
person at any point of time couldnt be able to continue
its SIP, he may give instructions at least 25 days before
to the fund house. His SIP is discontinued.
6. All type of funds except Liquid funds, cash funds and
other funds who invest in very short fixed return
investments offers the facility of SIP.
7. Capital gains, if applicable, are taxed on a first-in
first-out basis.
8. As the investment made through SIP are not at one
time. Some units bought at high price and some at low
price, so chances of making gain through SIP is higher
than the one time investment.
In short, SIP is a simple and effective way to create
wealth but to create such wealth, one should think
about the investment in SIP for a period of at least for
time frame of three years because it pays to invest in a
longer run.

OBJECTIVES
To study the perception of general public towards the mutual
funds in INDIABULLS.
To know about the SYSTEMATIC INVESTMENT PLAN in
mutual funds.

Research Methodology

Research Methodology is a way to systematically solve

the problem. The Research Methodology includes the
various methods and techniques for conducting a
Research. Marketing Research is the systematic design,
collection, analysis and reporting of data and finding
relevant solution to a specific marketing situation or
problem. Research is thus, an original contribution to the
existing stock of knowledge making for its advancement.
The purpose of Research is to discover answers to the
questions through the application of scientific procedures.
Such framework is called Research Design. The
research process followed by us consists of following
steps:

RESEARCH DESIGN:Descriptive Research: - A type of conclusive research,

which has its major objective the description of
something usually market characteristics or functions. In
other words descriptive research is a research where in
researcher has no control over variable. It just presents
the picture, which has already studied.
Sample Design: - Sampling can be defined as the
section of some part of an aggregate or totality on the
basis of which judgment or an inference about aggregate
or totality is made. The sampling design helps in decision
making in the following areas:-

Sample frame Sample frame was Reliance money real

value.
Sample size-Sample size is the number of elements to
be included in a study. Keeping in mind all the constraints
100 respondents was selected.
Sample unit- Sampling unit is the basic unit containing
the elements of the universe to be sampled. The
sampling unit of our study is general public.
Sampling Techniques- The sampling used were
convenience techniques and simple random sampling
technique.

DATA ANALYSIS AND INTERPRETATION

1. Do you invest in mutual funds?
Yes
No

32%
68%

Interpretation :From the above graph we can conclude that majority of

people are not investing in Mutual Funds as 32% of the
total Mutual Funds and 68% of the people s
2. If yes, which funds do you prefer to invest?
EQUITY
DEBT
LIQUID

70%
25%
5%

Interpretation:Graph shows that the seventy percent of the people are

invested their money in equity, twenty five percent
people are investing in debt and just five percent are
investing in Liquid.

3. If no, what are the reasons for not investing in mutual funds?
Fear of loss
Less liquidity
No fixed returns
No awareness

45%
15%
12%
28%

Interpretation
Graph shows that the 45% of the people are invested their money
for the effect of fear of loss ,28% people are not investing in
mutual funds due to lack of knowledge, just 15% are not investing
due to less liquidity and 12 % of the people are not investing in
mutual funds.

4. What is your preference in mutual funds?

Equity
Balanced
Income
ELSS
SIP

23%
18%
25%
15%
19%

Interpretation:There are different types of mutual funds available in the market

according to the needs of the investors. There are Equity funds,
SIP, Income funds, Balanced funds, etc. The highest sought after
fund is the Income Fund which offers a regular income through
investments in the Govt. Bonds. The risk is also low in this. It was
followed by the Equity Fund which offers higher returns but it is
riskier also. Some people would like to have Equity Linked Saving
Schemes (ELSS). This provides some exemption in the tax also.
5. What is your preference in mutual funds?
Equity
Balanced
Income
ELSS
SIP

23%
18%
25%
15%
19%

Interpretation:There are different types of mutual funds available in the market

according to the needs of the investors. There are Equity funds,
SIP, Income funds, Balanced funds, etc. The highest sought after
fund is the Income Fund which offers a regular income through
investments in the Govt. Bonds. The risk is also low in this. It was
followed by the Equity Fund which offers higher returns but it is
riskier also. Some people would like to have Equity Linked Saving
Schemes (ELSS). This provides some exemption in the tax Also.
6. What are the other factor that mainly attracts you
towards mutual funds?
Diversificat
ion
Tax
Efficiency
Better
returns
Team of
experts

32 %
28 %
25 %
15 %

INERPRETATION:Graph shows that the twenty eight percent of the people

are invested their money due to tax efficiency , twenty
five percent through the effect of team of experts and
thirty two percent are invested for the effect of benefits
of diversification.
7. What is your basic purpose of making investment in
mutual funds?
Retirement
planning
Tax saving
Purchasing
a house

25%
63%
7%

INTERPRETATION:This graph shows that the, twenty five percent of people

consider retirement planning as factor while investing
,sixty three percent of the people see tax saving ,twelve
percent for house purpose.

8. Which factors do you consider, while selecting mutual fund?

Brand
name
Past
performan
ce
Consultanc
y

INTERPRETATION:-

36%
46%
18%

This graph shows that the ,thirty six percent of people

consider brand name as factor while investing, forty six
percent of the people see past performance in mutual
funds, eighteen percent are investing after consultancy.

9. Does a lot of fluctuations in stock market discourages you from

investing in mutual funds?
Yes
No

34%
66%

INTERPRETATION:Graph shows that thirty four percent of the people think

that fluctuation in stock market effect their investment,
sixty six percent people are think that there is no effect of
stock market in their investment.

10.
Mutual funds can manage the money in a better manner, as it
comprises of team of experts, researchers, analysts and specialists.
Do you agree with the statement?
Yes
No

72%
28%

INTERPRETATION:Graph shows that seventy two percent of the people

invested their money in mutual fund because they think

that it manage funds in better way. Twenty eight percent

people think that mutual fund not able to manage fund in
better way.

FINDINGS
The factors which attract people most towards mutual
funds are diversification and tax efficiency.

While selecting a mutual fund, the factor which people

consider the most is the past performance of the fund.

The main reason for not investing in mutual funds are

fear of loss and no fixed returns.

Most of the people think that mutual funds can managed

funds in a manner as it comprises of team of experts,
researchers, analysts and specialists.

Most of the person think that mutual funds give better

returns on their investments.

LIMITATIONS
Geographical area is confined to Mandi gobindgarh.
Our knowledge is limited as we are students and
doesnt have much experience.
People are hesitant to disclose information.

SUGGESTIONS
1. INDIABULLS should give booklets, pamphlets to the every

investor so that they can be aware of every type of scheme of

mutual fund because most of the investors were unaware about all
schemes offered to them.
2. INDIABULLS should do the lots of efforts on finding or
prospecting for m clients by direct mailing and more personal
calling in order to establish a
strong relationship with the
clients.

QUESTIONNAIRE
Q. 1

What is your mode of saving & investment?

Often

Fixed
deposits
Government
bonds&
securities
Insurance
policies
Commodity
(gold,etc)
Equity
market
Mutual funds
Real estate

Sometimes

Rarely

Q.2

What are your objectives for investment in

mutual funds?
High

Neutral

low

Saving and protecting

money
Wealth creation
Secure future of family
Buying property
Providing for future of
kids
Parking spare capital

Q.3

What %age of your total investment is

invested in mutual funds?

10% -20%
20% -30%
30% -40%
40% -50

Q.4 With which option (given below) in mutual

funds do you like to enter?
Growth
Dividend
Dividend reinvestment
Bonus option

Q5 Which is the most important factor for

investment in mutual fund?
A funds investment style
Performance of the fund
The fund managers judgment
None of the above

Q.6 Problems faced while investing in mutual

funds:
Factors
Inadequate
Information of
market forces
Risk Factor
Reliable
information
regarding company
performance
Late dividend
Reliability of Rating
Manipulation / misinformation by the
agent
Entry load/ Exist
load

Nev

Someti

Ofte

Frequ

er

mes

ently

Q.7 Do you have recourse to your agent in case of

any error or problem regarding the investments?
Yes
No

Q.8 How you access the performance of mutual

fund?
By comparing it with the performance of

other

mutual funds
By comparing it with the performance of the stock
market
By comparing it with the performance of other
financial products
By comparing it with the performance of
above

all of the

Q.9 Please indicate your agreement or

disagreement to these statements regarding
mutual funds:
Agree

Agre Indiffere

Strong e
ly

nt

Disagr

Disagre

ee

e
Strongl
y

Mutual funds
are safe
investments
I invest in
mutual funds
as they give
better returns
The brand
name is
important in

mutual funds
Private mutual
funds are
riskier than
public sector
mutual fund
companies
I will definitely
recommend
investing in
mutual funds
to my friends
Debt funds are
better than
equity funds
I dont like
funds with
lock in
periods

I invest in
mutual funds
because my
banker / broker
asks me to
You are ready
for sharp ups
and downs in
the short-term
value of your
investments in
return for longterm gains.
I use the SIP
route to invest
in mutual funds
I make the
choice of funds

myself
I invest on the
basis of views
of experts

Personal Profile of the Respondent:

Name

__________________________________________________________

Address

__________________________________________________________
Phone (m) :
__________________________________________________________
E mail

__________________________________________________________

Q10Specify your Age group?

Below 20 years
21 to 40 years

 41 to 60 year

Above

60

years

Thanks

BIBLIOGRAPHY
WEBSITES
1) WWW.FINANCE.INDIAMART.COM
http://finance.indiamart.com/india_business_information/t
ypes_of_schemes_mutual_funds.html
2) http://www.economywatch.com/mutual-funds/definition/
3) WWW.SCRIBD.COM
http://www.scribd.com/doc/20833030/Internship-ProjectReport-on-Reliance-Money