EXECUTIVE SUMMARY

In few years Mutual Fund has emerged as a tool for ensuring one’s financial well being.

Mutual Funds have not only contributed to the India growth story but have also helped

families tap into the success of Indian Industry. As information and awareness is rising

more and more people are enjoying the benefits of investing in mutual funds. The main

reason the number of retail mutual fund investors remains small is that nine in ten

people with incomes in India do not know that mutual funds exist. But once people are

aware of mutual fund investment opportunities, the number who decide to invest in

mutual funds increases to as many as one in five people. The trick for converting a

person with no knowledge of mutual funds to a new Mutual Fund customer is to

understand which of the potential investors are more likely to buy mutual funds and to

use the right arguments in the sales process that customers will accept as important and

relevant to their decision.

This Project gave me a great learning experience and at the same time it gave me

enough scope to implement my analytical ability. The analysis and advice presented in

this Project Report is based on market research on the saving and investment practices

of the investors and preferences of the investors for investment in Mutual Funds. This

Report will help to know about the investors’ Preferences in Mutual Fund means Are

they prefer any particular Asset Management Company (AMC), which type of Product

they prefer, Which Option (Growth or Dividend) they prefer or Which Investment

Strategy they follow (Systematic Investment Plan or One time Plan). This Project as a

whole can be divided into two parts.

1
The first part gives an insight about Mutual Fund and its various aspects, the Company

Profile, Objectives of the study, Research Methodology. One can have a brief

knowledge about Mutual Fund and its basics through the Project.

The second part of the Project consists of data and its analysis collected through survey

done on 200 people. For the collection of Primary data I made a questionnaire and

surveyed of 200 people. I also taken interview of many People those who were coming

at the SBI Branch where I done my Project. I visited other AMCs in Dehradoon to get

some knowledge related to my topic. I studied about the products and strategies of other

AMCs in Dehradoon to know why people prefer to invest in those AMCs. This Project

covers the topic “Analysis on Mutual Fund Investment "at Investor First

Information & Consultancy Services. The data collected has been well organized and

presented. I hope the research findings and conclusion will be of use.

2
 OBJECTIVES OF THE STUDY

1. To find out the Preferences of the investors for Asset Management

Company.

2. To know the Preferences for the portfolios.

3. To know why one has invested or not invested in Mutual fund

4. To find out the most preferred channel.

5. To find out what should do to boost Mutual Fund Industry.

3
 ACKNOWLEDGEMENT

With regard to my Project with Mutual Fund I would like to thank each and every one

who offered help, guideline and support whenever required.

First and foremost I would like to express gratitude to Founder Vinay

Sharma of Investor First Information & Consultancy Services and other staffs for their

support and guidance in the Project work.. I am extremely grateful to my guide, CA

Sharad Chauhan for their valuable guidance and timely suggestions. I would like to

thank all faculty members of Uttam Sugar Mills Limited for the valuable guidance&

support.

I would also like to extend my thanks to my members and friends for their

support specially .MCA Anuj Panday officer I.T.Uttam Sugar Mills Limited Sharanpur

& Mr. Rajeev Goyal consultant, Sales tax, income tax .And lastly, I would like to

express my gratefulness to the parent’s for seeing me through it all.

Sanjay Yadav

4
5
INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS

ASPECTS:

Mutual fund is a trust that pools the savings of a number of investors who share a

common financial goal. This pool of money is invested in accordance with a stated

objective. The joint ownership of the fund is thus “Mutual”, i.e. the fund belongs to all

investors. The money thus collected is then invested in capital market instruments such

as shares, debentures and other securities. The income earned through these

investments and the capital appreciations realized are shared by its unit holders in

proportion the number of units owned by them. Thus a Mutual Fund is the most

suitable investment for the common man as it offers an opportunity to invest in a

diversified, professionally managed basket of securities at a relatively low cost. A

Mutual Fund is an investment tool that allows small investors access to a well-

diversified portfolio of equities, bonds and other securities. Each shareholder

participates in the gain or loss of the fund. Units are issued and can be redeemed as

needed. The funds Net Asset value (NAV) is determined each day.

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. Investors of mutual funds are known as unit holders.

6
When an investor subscribes for the units of a mutual fund, he becomes part owner of

the assets of the fund in the same proportion as his contribution amount put up with the

corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual

fund shareholder or a unit holder.

Any change in the value of the investments made into capital market instruments (such

as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme.

NAV is defined as the market value of the Mutual Fund scheme's assets net of its

liabilities. NAV of a scheme is calculated by dividing the market value of scheme's

assets by the total number of units issued to the investors.

7
 ADVANTAGES OF MUTUAL FUND

• Portfolio Diversification

• Professional management

• Reduction / Diversification of Risk

• Liquidity

• Flexibility & Convenience

• Reduction in Transaction cost

• Safety of regulated environment

• Choice of schemes

• Transparency

DISADVANTAGE OF MUTUAL FUND

• No control over Cost in the Hands of an Investor

• No tailor-made Portfolios

• Managing a Portfolio Funds

• Difficulty in selecting a Suitable Fund Scheme

8
HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

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. Though the

growth was slow, but it accelerated from the year 1987 when non-UTI players entered

the Industry.

In the past decade, Indian mutual fund industry had seen a dramatic improvement, both

qualities wise as well as quantity wise. Before, the monopoly of the market had seen an

ending phase; the Assets Under Management (AUM) was Rs67 billion. The private

sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till

April 2004; it reached the height if Rs. 1540 billion.

The Mutual Fund Industry is obviously growing at a tremendous space with the mutual

fund industry can be broadly put into four phases according to the development of the

sector. Each phase is briefly described as under.

First Phase – 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament 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

9
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 Canbank 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)

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 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive

and revised Mutual Fund Regulations in 1996. The industry now functions under the

SEBI (Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33

mutual funds with total assets of Rs. 1,21,805 crores.

10
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 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. consolidation

and growth. As at the end of September, 2004, there were 29 funds, which manage

assets of Rs.153108 crores under 421 schemes.

11
CATEGORIES OF MUTUAL FUND:

Mutual funds can be classified as follow:

12
  Based on their structure:

• Open-ended funds: Investors can buy and sell the units from the fund, at any

point of time.

• Close-ended funds: These funds raise money from investors only once. Therefore,

after the offer period, fresh investments can not be made into the fund. If the fund is listed on a

stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund).

Recently, most of the New Fund Offers of close-ended funds provided liquidity window on a

periodic basis such as monthly or weekly. Redemption of units can be made during specified

intervals. Therefore, such funds have relatively low liquidity.

 Based on their investment objective:

Equity funds: These funds invest in equities and equity related instruments. With

fluctuating share prices, such funds show volatile performance, even losses. However,

short term fluctuations in the market, generally smoothens out in the long term, thereby

offering higher returns at relatively lower volatility. At the same time, such funds can

yield great capital appreciation as, historically, equities have outperformed all asset

classes in the long term. Hence, investment in equity funds should be considered for a

period of at least 3-5 years. It can be further classified as:

i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is

tracked. Their portfolio mirrors the benchmark index both in terms of composition

and individual stock weightages.

13
ii) Equity diversified funds- 100% of the capital is invested in equities spreading

across different sectors and stocks.

iii|) Dividend yield funds- it is similar to the equity diversified funds except that they

invest in companies offering high dividend yields.

iv) Thematic funds- Invest 100% of the assets in sectors which are related through

some theme.

e.g. -An infrastructure fund invests in power, construction, cements sectors etc.

v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector

fund will invest in banking stocks.

vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.

Balanced fund: Their investment portfolio includes both debt and equity. As a result, on
the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal

mutual funds vehicle for investors who prefer spreading their risk across various instruments.

Following are balanced funds classes:

i) Debt-oriented funds -Investment below 65% in equities.

ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

Debt fund: They invest only in debt instruments, and are a good option for investors

averse to idea of taking risk associated with equities. Therefore, they invest exclusively

in fixed-income instruments like bonds, debentures, Government of India securities;

and money market instruments such as certificates of deposit (CD), commercial paper

14
(CP) and call money. Put your money into any of these debt funds depending on your

investment horizon and needs.

i) Liquid funds- These funds invest 100% in money market instruments, a large

portion being invested in call money market.

ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and

T-bills.

iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt

instruments which have variable coupon rate.

iv) Arbitrage fund- They generate income through arbitrage opportunities due to mis-

pricing between cash market and derivatives market. Funds are allocated to equities,

derivatives and money markets. Higher proportion (around 75%) is put in money

markets, in the absence of arbitrage opportunities.

v) Gilt funds LT- They invest 100% of their portfolio in long-term government

securities.

vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in

long-term debt papers.

vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an

exposure of 10%-30% to equities.

15
viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with

that of the fund.

INVESTMENT STRATEGIES

1. Systematic Investment Plan: under this a fixed sum is invested each month on a

fixed date of a month. Payment is made through post dated cheques or direct debit

facilities. The investor gets fewer units when the NAV is high and more units when the

NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA)
16
2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and

give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the

same mutual fund.

3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund

then he can withdraw a fixed amount each month.

RISK V/S. RETURN:

17
 Working of Mutual Funds

Mutual Funds

Before we understand what is mutual fund, it’s very important to know the area in which
mutual funds works, the basic understanding of stocks and bonds.

18
Stocks: Stocks represent shares of ownership in a public company. Examples of public companies
include Reliance, ONGC and Infosys. Stocks are considered to be the most common owned
investment traded on the market.

Bonds: Bonds are basically the money which you lend to the government or a company, and in return
you can receive interest on your invested amount, which is back over predetermined amounts of time.
Bonds are considered to be the most common lending investment traded on the market. There are
many other types of investments other than stocks and bonds (including annuities, real estate, and
precious metals), but the majority of mutual funds invest in stocks and/or bonds.

What Is Mutual Fund

A mutual fund is just the connecting bridge or a financial intermediary that allows a group of
investors to pool their money together with a predetermined investment objective. The mutual fund
will have a fund manager who is responsible for investing the gathered money into specific securities
(stocks or bonds). When you invest in a mutual fund, you are buying units or portions of the mutual
fund and thus on investing becomes a shareholder or unit holder of the fund.

Mutual funds are considered as one of the best available investments as compare to others they
are very cost efficient and also easy to invest in, thus by pooling money together in a mutual fund,
investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on
their own. But the biggest advantage to mutual funds is diversification, by minimizing risk &
maximizing returns.

Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to
invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow
chart below describes broadly the working of a mutual fund

19
20
Overview of existing schemes existed in mutual fund category
21
 Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position,
risk tolerance and return expectations etc. The table below gives an overview into the existing types of
schemes in the Industry.

Type of Mutual Fund Schemes

22
BY STRUCTURE

Open Ended Schemes

An open-end fund is one that is available for subscription all through the year. These do not have a
fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related
prices. The key feature of open-end schemes is liquidity.

Close Ended Schemes

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years.
The fund is open for subscription only during a specified period. Investors can invest in the scheme at
the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the
stock exchanges where they are listed. In order to provide an exit route to the investors, some close-
ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at
NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to
the investor.

Interval Schemes

Interval Schemes are that scheme, which combines the features of open-ended and close-ended
schemes. The units may be traded on the stock exchange or may be open for sale or redemption during
pre-determined intervals at NAV related prices.

BY NATURE

Under this the mutual fund is categorized on the basis of Investment Objective. By nature the mutual
fund is categorized as follow:
23
1. Equity fund:

24
 These funds invest a maximum part of their corpus into equities holdings. The structure of the
fund may vary different for different schemes and the fund manager’s outlook on different stocks. The
Equity Funds are sub-classified depending upon their investment objective, as follows:

• Diversified Equity Funds

• Mid-Cap Funds
• Sector Specific Funds
• Tax Savings Funds (ELSS)

Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk-
return matrix.

2. Debt funds:

The objective of these Funds is to invest in debt papers. Government authorities, private companies,
banks and financial institutions are some of the major issuers of debt papers. By investing in debt
instruments, these funds ensure low risk and provide stable income to the investors. Debt funds are
further classified as:

• Gilt Funds: Invest their corpus in securities issued by Government, popularly known as
Government of India debt papers. These Funds carry zero Default risk but are associated with
Interest Rate risk. These schemes are safer as they invest in papers backed by Government.

• Income Funds: Invest a major portion into various debt instruments such as bonds, corporate
debentures and Government securities.

• MIPs: Invests maximum of their total corpus in debt instruments while they take minimum
exposure in equities. It gets benefit of both equity and debt market. These scheme ranks
slightly high on the risk-return matrix when compared with other debt schemes.

• Short Term Plans (STPs): Meant for investment horizon for three to six months. These funds
primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial Papers
(CPs). Some portion of the corpus is also invested in corporate debentures.

• Liquid Funds: Also known as Money Market Schemes, These funds provides easy liquidity
and preservation of capital. These schemes invest in short-term instruments like Treasury Bills,
inter-bank call money market, CPs and CDs. These funds are meant for short-term cash

25
 management of corporate houses and are meant for an investment horizon of 1day to 3 months.
These schemes rank low on risk-return matrix and are considered to be the safest amongst all
categories of mutual funds.

3. Balanced funds: As the name suggest they, are a mix of both equity and debt funds. They invest
in both equities and fixed income securities, which are in line with pre-defined investment objective of
the scheme. These schemes aim to provide investors with the best of both the worlds. Equity part
provides growth and the debt part provides stability in returns.

Guidelines of the SEBI for Mutual Fund Companies :

26
To protect the interest of the investors, SEBI formulates policies and regulates the mutual funds. It
notified regulations in 1993 (fully revised in 1996) and issues guidelines from time to time.

SEBI approved Asset Management Company (AMC) manages the funds by making investments in
various types of securities. Custodian, registered with SEBI, holds the securities of various schemes of
the fund in its custody.
According to SEBI Regulations, two thirds of the directors of Trustee Company or board of trustees
must be independent.
The Association of Mutual Funds in India (AMFI) reassures the investors in units of mutual funds that
the mutual funds function within the strict regulatory framework. Its objective is to increase public
awareness of the mutual fund industry. AMFI also is engaged in upgrading professional standards and
in promoting best industry practices in diverse areas such as valuation, disclosure, transparency etc.

Documents required (PAN mandatory):

Proof of identity :

1. Photo PAN card

2. In case of non-photo PAN card in addition to copy of PAN card any one of the following: driving
license/passport copy/ voter id/ bank photo pass book.
Proof of address (any of the following ) :latest telephone bill, latest electricity bill, Passport, latest
bank passbook/bank account statement, latest Demat account statement, voter id, driving license,
ration card, rent agreement.

Offer document: An offer document is issued when the AMCs make New Fund Offer (NFO). It’s
advisable to every investor to ask for the offer document and read it before investing. An offer
document consists of the following:
Standard Offer Document for Mutual Funds (SEBI Format)
27
  Summary Information
 Glossary of Defined Terms
 Risk Disclosures
 Legal and Regulatory Compliance
 Expenses
 Condensed Financial Information of Schemes
 Constitution of the Mutual Fund
 Investment Objectives and Policies
 Management of the Fund
 Offer Related Information.

Key Information Memorandum: a key information memorandum, popularly known as KIM, is

attached along with the mutual fund form. And thus every investor get to read it. Its contents are:
1 Name of the fund.
2. Iestment objective
3. Asset allocation pattern of the scheme.
4. Risk profile of the scheme
5. Plans & options
6. Minimum application amount/ no. of units
7. Benchmark index
8. Dividend policy
9. Name of the fund manager(s)
10. Expenses of the scheme: load structure, recurring expenses
11. Performance of the scheme (scheme return v/s. benchmark return)
12. Year- wise return for the last 5 financial years.

Distribution channels:

28
Mutual funds posses a very strong distribution channel so that the ultimate customers doesn’t face any
difficulty in the final procurement. The various parties involved in distribution of mutual funds are:

1. Direct marketing by the AMCs: the forms could be obtained from the AMCs directly. The investors
can approach to the AMCs for the forms. some of the top AMCs of India are; Reliance ,Birla Sunlife,
Tata, SBI magnum, Kotak Mahindra, HDFC, Sundaram, ICICI, Mirae Assets, Canara Robeco, Lotus
India, LIC, UTI etc. whereas foreign AMCs include: Standard Chartered, Franklin Templeton,
Fidelity, JP Morgan, HSBC, DSP Merill Lynch, etc.

2 .Broker/ sub broker arrangements: the AMCs can simultaneously go for broker/sub-broker to
popularize their funds. AMCs can enjoy the advantage of large network of these brokers and sub
brokers.eg: SBI being the top financial intermediary of India has the greatest network. So the AMCs
dealing through SBI has access to most of the investors.

3. Individual agents, Banks, NBFC: investors can procure the funds through individual agents,
independent brokers, banks and several non- banking financial corporations too, whichever he finds
convenient for him.

Costs associated:

Expenses:
AMCs charge an annual fee, or expense ratio that covers administrative expenses, salaries, advertising
expenses, brokerage fee, etc. A 1.5% expense ratio means the AMC charges Rs1.50 for every Rs100
29
in assets under management. A fund's expense ratio is typically to the size of the funds under
management and not to the returns earned. Normally, the costs of running a fund grow slower than the
growth in the fund size - so, the more assets in the fund, the lower should be its expense ratio.
Loads:

Entry Load/Front-End Load (0-2.25%) - its the commission charged at the time of buying the fund
to cover the cost of selling, processing etc.

Exit Load/Back- End Load (0.25-2.25%)- it is the commission or charged paid when an investor
exits from a mutual fund, it is imposed to discourage withdrawals. It may reduce to zero with increase
in holding period

Literature Review

Mutual funds are investment companies that pool money from investors at large and

offer to sell and buy back its shares on a continuous basis and use the capital thus raised

to invest in securities of different companies.

30
Mutual fund is a trust that pools the savings of a number of investors who share a

common financial goal. This pool of money is invested in accordance with a stated

objective. The joint ownership of the fund is thus “Mutual”, i.e. the fund belongs to all

investors. The money thus collected is then invested in capital market instruments such

as shares, debentures and other securities. The income earned through these

investments and the capital appreciations realized are shared by its unit holders in

proportion the number of units owned by them. Thus a Mutual Fund is the most

suitable investment for the common man as it offers an opportunity to invest in a

diversified, professionally managed basket of securities at a relatively low cost. A

Mutual Fund is an investment tool that allows small investors access to a well-

diversified portfolio of equities, bonds and other securities. Each shareholder

participates in the gain or loss of the fund. Units are issued and can be redeemed as

needed. The funds Net Asset value (NAV) is determined each day.

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. Investors of mutual funds are known as unit holders.

When an investor subscribes for the units of a mutual fund, he becomes part owner of
the assets of the fund in the same proportion as his contribution amount put up with the
corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual
fund shareholder or a unit holder.
Any change in the value of the investments made into capital market instruments (such
as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme.
NAV is defined as the market value of the Mutual Fund scheme's assets net of its

31
 liabilities. NAV of a scheme is calculated by dividing the market value of scheme's
assets by the total number of units issued to the investors.

ADVANTAGES OF MUTUAL FUND

• Portfolio Diversification

• Professional management

• Reduction / Diversification of Risk

• Liquidity

• Flexibility & Convenience

• Reduction in Transaction cost

• Safety of regulated environment

• Choice of schemes

• Transparency

DISADVANTAGE OF MUTUAL FUND

• No control over Cost in the Hands of an Investor

• No tailor-made Portfolios

• Managing a Portfolio Funds

• Difficulty in selecting a Suitable Fund Scheme

32
Working of Mutual Funds

Mutual funds can be either or both of open ended and closed ended investment companies depending
on their fund management pattern. An open-end fund offers to sell its shares (units) continuously to
investors either in retail or in bulk without a limit on the number as opposed to a closed-end fund.
Closed end funds have limited number of shares.

Mutual funds have diversified investments spread in calculated proportions amongst securities of
various economic sectors. Mutual funds get their earnings in two ways. First is the most organic way,
which is the dividend they get on the securities they hold. Second is by the redemption of their shares
by investors will be at a discount to the current NAVs (net asset values).

33
Company Profile

34
Introduction Investor First Information & Consultancy Services

Company Name : Investor first – Information & Consultancy Services.

Web Address : www.ruaninvestor.com

Industry : Financial Planning Consultancy / Wealth Management

Vision : To be the most respected Company in its industry

Mission : To Integrate and encourage informed decision making in the field of Personal
Finance

Investor First Information & Consultancy Services is a fee-only financial planning and Registered

Investment Advisory firm located in India, Gurgaon. We specialize in providing hourly, as-

needed financial planning advice to individuals and families, regardless of your net worth or how

much money you make. Being fee-only means we work solely for our clients. You pay only for the

help you need when you need it. We sell no products. We accept no commissions from any source.

We are not affiliated with any bank, brokerage or insurance company. We work only for our clients.

You do not have to sign a long-term contract or turn over your assets for management. If you just

need a little advice, we can help. If you would like a complete plan we can do that too.

Your financial health is a lot like your physical health, it requires periodic monitoring. As a fee-only

planner, We practice works much like your doctor's office. You can call to schedule a check-up or to

discuss a problem or concern. The financial planning process is not about our ideas as much as it is

about the lives of our clients and how our ideas might fit into that life.

As you have heard before, you don’t have to have a fortune to start building one. The most important

thing is to just get started. Whether you are saving for the future — or seeking to protect, enjoy and

35
pass on wealth you may already have — Investor First Information & Consultancy Services can help

you along the way..

Your financial objectives may include:

• Planning for retirement

• Saving for a child's education
• Getting financially organized
• Reviewing your current investments
• Getting a handle on your spending
• Being more financially educated
• Feeling in control of your finances

Our Mission, Aims & Objectives

36
 Mission:
To Integrate and encourage informed decision making in the field of Personal Finance

Our Aims

• To serve our clients with utmost dedication and integrity so that we exceed their expectations
and build enduring relationships.
• To offer unparalleled quality of service through complete knowledge of products, constant
innovation in services and use of the latest technology.
• To always give honest and unbiased financial advice and earn our cilents' everlasting trust.
• To serve the community by educating individuals on the merits of Financial Planning and in
turn help shape a financially strong society.
• To create value for all stake holders by ensuring profitable growth.
• To build an amicable environment that accords respect to every individual and permits their
personal growth.
• To utilise the power of teamwork to function as a family and build a seamless organization.

Our Network of Investment Centres

We have two Investment Centre

1. Gurgaon
2. Chandigarh
3. Delhi
4. Mohali

Investor First Information & Consultancy Services includes:

• Risk Profiling

37
 • Asset Allocation and Portfolio Construction
• Creation and Accumulation of Wealth through Systematic Investment Plans (SIP)
• Regular review of progress and Portfolio Rebalancing

Essentially, Investment Planning involves identifying your financial goals throughout your
life, and prioritizing them. Investment Planning is important because it helps you to derive the
maximum benefit from your investments.

Your success as an investor depends upon your ability to choose the right investment options.
This, in turn, depends on your requirements, needs and goals. For most investors, however, the
three prime criteria of evaluating any investment option are liquidity, safety and return.

Investment Planning also helps you to decide upon the right investment strategy. Besides your
individual requirement, your investment strategy would also depend upon your age, personal
circumstances and your risk appetite. These aspects are typically taken care of during
investment planning.

Investment Planning also helps you to strike a balance between risk and returns. By prudent
planning, it is possible to arrive at an optimal mix of risk and returns that suits your particular
needs and requirements.

PRODUCTS OF INVESTOR FIRST INFORMATION & CONSULTANCY

SERVICES INCLUDE:

• Investment Planning
38
 • Retirement Planning
• Cash Flow Analysis/ Budgeting Help
• College Funding Advice
• Portfolio Asset Allocation
• Second Opinion on Investments or Current Financial Plan
• Asset Allocation

A COMPETITOR OF INVESTOR FIRST INFORMATION &

CONSULTANCY SERVICES INCLUDES :

Some of the main competitors of SBI Mutual Fund in Dehradoon are as Follows:

i. Itrust.in

ii. Bajaj Capital

iii. Apnapaisa.com

iv. Farms&villas.com

v.

RESEARCH METHODOLOGY

This report is based on primary as well secondary data, however primary data

collection was given more importance since it is overhearing factor in attitude studies.

One of the most important users of research methodology is that it helps in identifying

39
the problem, collecting, analyzing the required information data and providing an

alternative solution to the problem .It also helps in collecting the vital information that

is required by the top management to assist them for the better decision making both

day to day decision and critical ones.

Data sources:

Research is totally based on primary data. Secondary data can be used only for the

reference. Research has been done by primary data collection, and primary data has

been collected by interacting with various people. The secondary data has been

collected through various journals and websites.

Duration of Study:

The study was carried out for a period of two months.

Sampling:

 Sampling procedure:

40
The sample was selected of them who are the customers/visitors of Investor first

information & Consultancy Services, Gurgaon Branch, irrespective of them being

investors or not or availing the services or not. It was also collected through personal

visits to persons, by formal and informal talks and through filling up the questionnaire

prepared. The data has been analyzed by using mathematical/Statistical tool.

 Sample size:

The sample size of my project is limited to 200 people only. Out of which only 120

people had invested in Mutual Fund. Other 80 people did not have invested in Mutual

Fund.

 Sample design:

Data has been presented with the help of bar graph, pie charts, line graphs etc.

ANALYSIS & INTERPRETATION OF THE DATA

1. (a) Age distribution of the Investors of Dehradoon

41
 Age Group <= 30 31-35 36-40 41-45 46-50 >50

No. of 12 18 30 24 20 16
Investors

35
Investors invested in Mutual Fund

30

25

20

15 30
24
10 18 20
16
5 12

0
<=30 31-35 36-40 41-45 46-50 >50
Age group of the Investors

Interpretation:

According to this chart out of 120 Mutual Fund investors of Dehradoon the most are in

the age group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of

41-45yrs i.e. 20% and the least investors are in the age group of below 30 yrs.

(b). Educational Qualification of investors of Dehradoon

Educational Qualification Number of Investors

Graduate/ Post Graduate 88

Under Graduate 25

Others 7

42
 Total 120

6%
23%

71%

Graduate/Post Graduate Under Graduate Others

Interpretation:

Out of 120 Mutual Fund investors 71% of the investors in Dehradoon are Graduate/Post

Graduate, 23% are Under Graduate and 6% are others (under HSC).

43
 c). Occupation of the investors of Dehradoon

Occupation No. of Investors

Govt. Service 30
Pvt. Service 45
Business 35
Agriculture 4
Others 6

50
No. of Investors

40
30
20 45
35 30
10
4 6
0
Govt. Pvt. Business Agriculture Others
Service Service
Occupation of the customers

Interpretation:

In Occupation group out of 120 investors, 38% are Pvt. Employees, 25% are

Businessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are in

44
others.

(d). Monthly Family Income of the Investors of Dehradoon.

Income Group No. of Investors

<=10,000 5
10,001-15,000 12
15,001-20,000 28
20,001-30,000 43
>30,000 32

50
45
40
No. of Investors

35
30
25
20 43
15 32
28
10
5 12
5
0
<=10 10-15 15-20 20-30 >30
Income Group of the Investorsn (Rs. in Th.)

Interpretation:

In the Income Group of the investors of Dehradoon, out of 120 investors, 36%

investors that is the maximum investors are in the monthly income group Rs.

20,001 to Rs. 30,000, Second one i.e. 27% investors are in the monthly

income group of more than Rs. 30,000 and the minimum investors i.e. 4%

are in the monthly income group of below Rs. 10,000

45
(2) Investors invested in different kind of investments.

Kind of Investments No. of Respondents

Saving A/C 195
Fixed deposits 148
Insurance 152
Mutual Fund 120
Post office (NSC) 75
Shares/Debentures 50
Gold/Silver 30
Real Estate 65

65
Kinds of Investment

30
50
r
ve
NS /Sil

75
d
ol

C)

120
G

152
ce(

148
ffi

ce
O

an

195
st

ur
Po

c
In

A/

0 50 100 150 200 250

g n
vi
Sa

No.of Respondents

Interpretation: From the above graph it can be inferred that out of 200 people,

97.5% people have invested in Saving A/c, 76% in Insurance, 74% in Fixed Deposits,

60% in Mutual Fund, 37.5% in Post Office, 25% in Shares or Debentures, 15% in

Gold/Silver and 32.5% in Real Estate.

3. Preference of factors while investing

46
 Factors (a) Liquidity (b) Low Risk (c) High Return (d) Trust

No. of 40 60 64 36

Respondents

18% 20%

32% 30%

Liquidity Low Risk High Return Trust

Interpretation:

Out of 200 People, 32% People prefer to invest where there is High Return, 30% prefer

to invest where there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust

4. Awareness about Mutual Fund and its Operations

Response Yes No
No. of Respondents 135 65
47
 33%

67%

Yes No

Interpretation:

From the above chart it is inferred that 67% People are aware of Mutual Fund and its

operations and 33% are not aware of Mutual Fund and its operations.

5. Source of information for customers about Mutual Fund

Source of information No. of Respondents

Advertisement 18
Peer Group 25
Bank 30
48
 Financial Advisors 62

70
Respondents 60
50
No. of

40
30 62
20
25 30
10 18
0
AdvertisementPeer Group Bank Financial
Advisors
Source of Information

Interpretation:

From the above chart it can be inferred that the Financial Advisor is the most

important source of information about Mutual Fund. Out of 135 Respondents, 46%

know about Mutual fund Through Financial Advisor, 22% through Bank, 19%

through Peer Group and 13% through Advertisement.

6. Investors invested in Mutual Fund

Response No. of Respondents

YES 120
NO 80
Total 200

49
 No
40%

Yes
60%

Interpretation:

Out of 200 People, 60% have invested in Mutual Fund and 40% do not have invested in

Mutual Fund.

7. Reason for not invested in Mutual Fund

Reason No. of Respondents

Not Aware 65
Higher Risk 5
Not any Specific Reason 10

50
 6%
13%

81%
Not Aware Higher Risk Not Any

Interpretation:

Out of 80 people, who have not invested in Mutual Fund, 81% are not aware of Mutual

Fund, 13% said there is likely to be higher risk and 6% do not have any specific reason.

8. Investors invested in different Assets Management Co. (AMC)

Name of AMC No. of Investors

SBIMF 55
UTI 75
HDFC 30
Reliance 75
ICICI Prudential 56
Kotak 45
Others 70

51
 Others
70
HDFC
30
Name of AMC Kotak 45
SBIMF
55
ICICI
56
Reliance
75
UTI 75

0 20 40 60 80
No. of Investors

Interpretation:

In Dehradoon most of the Investors preferred UTI and Reliance Mutual Fund. Out of

120 Investors 62.5% have invested in each of them, only 46% have invested in SBIMF,

47% in ICICI Prudential, 37.5% in Kotak and 25% in HDFC.

9. Reason for invested in SBIMF

Reason No. of Respondents

Associated with SBI 35
Better Return 5
Agents Advice 15

52
 27%

9% 64%

Associated with SBI Better Return Agents Advice

Interpretation:

Out of 55 investors of SBIMF 64% have invested because of its association with Brand

SBI, 27% invested on Agent’s Advice, 9% invested because of better return.

10. Reason for not invested in SBIMF

Reason No. of Respondents

Not Aware 25
Less Return 18
Agent’s Advice 22

53
 34%
38%

28%
Not Aware Less Return Agent's Advice

Interpretation:

Out of 65 people who have not invested in SBIMF, 38% were not aware with SBIMF,

28% do not have invested due to less return and 34% due to Agent’s Advice.

11. Preference of Investors for future investment in Mutual Fund

Name of AMC No. of Investors

SBIMF 76
UTI 45
HDFC 35
Reliance 82
ICICI Prudential 80
Kotak 60
Others 75

54
 Others 75

Kotak 60
Name of AMC

ICICI Prudential 80

Reliance 82

HDFC 35

UTI 45

SBIMF 76

0 20 40 60 80 100

No. of Investors

Interpretation:

Out of 120 investors, 68% prefer to invest in Reliance, 67% in ICICI Prudential, 63%

in SBIMF, 62.5% in Others, 50% in Kotak, 37.5% in UTI and 29% in HDFC Mutual

Fund.

12. Channel Preferred by the Investors for Mutual Fund Investment

Channel Financial Advisor Bank AMC

No. of Respondents 72 18 30

55
 25%

60%
15%

Financial Advisor Bank AMC

Interpretation:

Out of 120 Investors 60% preferred to invest through Financial Advisors, 25% through

AMC and 15% through Bank.

13. Mode of Investment Preferred by the Investors

Mode of Investment One time Investment Systematic Investment Plan (SIP)

No. of Respondents 78 42

56
 35%

65%

One time Investment SIP

Interpretation:

Out of 120 Investors 65% preferred One time Investment and 35 % Preferred through

Systematic Investment Plan.

14. Preferred Portfolios by the Investors

Portfolio No. of Investors

Equity 56
Debt 20
Balanced 44

57
 37%
46%

17%

Equity Debt Balance

Interpretation:

From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and 17%

preferred Debt portfolio

15. Option for getting Return Preferred by the Investors

Option Dividend Payout Dividend Growth

Reinvestment
No. of Respondents 25 10 85

58
 21%

8%

71%

Dividend Payout Dividend Reinvestment Growth

Interpretation:

From the above graph 71% preferred Growth Option, 21% preferred Dividend Payout

and 8% preferred Dividend Reinvestment Option.

16. Preference of Investors whether to invest in Sectoral Funds

Response No. of Respondents

Yes 25
No 95

59
 21%

79%
Yes No

Interpretation:

Out of 120 investors, 79% investors do not prefer to invest in Sectoral Fund because

there is maximum risk and 21% prefer to invest in Sectoral Fund.

Findings

 In Gurgaon in the Age Group of 36-40 years were more in numbers. The second most

Investors were in the age group of 41-45 years and the least were in the age group of below 30

years.

 In Gurgaon most of the Investors were Graduate or Post Graduate and below HSC there

were very few in numbers.

60
 In Occupation group most of the Investors were Govt. employees, the second most

Investors were Private employees and the least were associated with Agriculture.

 In family Income group, between Rs. 50,001- 80,000 were more in numbers, the second

most were in the Income group of more than Rs.30,000 and the least were in the group of below

Rs. 10,000.

 About all the Respondents had a Saving A/c in Bank, 76% Invested in Fixed Deposits,

Only 60% Respondents invested in Mutual fund.

 Mostly Respondents preferred High Return while investment, the second most preferred

Low Risk then liquidity and the least preferred Trust.

 Only 67% Respondents were aware about Mutual fund and its operations and 33% were

not.

 Among 200 Respondents only 60% had invested in Mutual Fund and 40% did not have

invested in Mutual fund.

 Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told there is not any

specific reason for not invested in Mutual Fund and 6% told there is likely to be higher risk in

Mutual Fund.

 Most of the Investors had invested in Reliance or UTI Mutual Fund, ICICI Prudential

has also good Brand Position among investors, SBIMF places after ICICI Prudential according

to the Respondents.

 Out of 55 investors of SBIMF 64% have invested due to its association with the Brand

SBI, 27% Invested because of Advisor’s Advice and 9% due to better return.

 Most of the investors who did not invested in SBIMF due to not Aware of SBIMF, the

second most due to Agent’s advice and rest due to Less Return.

61
 60% Investors preferred to Invest through Financial Advisors, 25% through AMC

(means Direct Investment) and 15% through Bank.

 65% preferred One Time Investment and 35% preferred SIP out of both type of Mode

of Investment.

 The most preferred Portfolio was Equity, the second most was Balance (mixture of both

equity and debt), and the least preferred Portfolio was Debt portfolio.

 Maximum Number of Investors Preferred Growth Option for returns, the second most

preferred Dividend Payout and then Dividend Reinvestment.

 Most of the Investors did not want to invest in Sectoral Fund, only 21% wanted to invest

in Sectoral Fund.

Conclusion

Running a successful Mutual Fund requires complete understanding of the peculiarities of the

Indian Stock Market and also the psyche of the small investors. This study has made an attempt

to understand the financial behavior of Mutual Fund investors in connection with the preferences

of Brand (AMC), Products, Channels etc. I observed that many of people have fear of Mutual

Fund. They think their money will not be secure in Mutual Fund. They need the knowledge of

Mutual Fund and its related terms. Many of people do not have invested in mutual fund due to

62
lack of awareness although they have money to invest. As the awareness and income is growing

the number of mutual fund investors are also growing.

“Brand” plays important role for the investment. People invest in those Companies where they

have faith or they are well known with them. There are many AMCs in Dehradoon but only

some are performing well due to Brand awareness. Some AMCs are not performing well

although some of the schemes of them are giving good return because of not awareness about

Brand. Reliance, UTI, SBIMF, ICICI Prudential etc. they are well known Brand, they are

performing well and their Assets Under Management is larger than others whose Brand name

are not well known like Principle, Sunderam, etc.

Distribution channels are also important for the investment in mutual fund. Financial Advisors

are the most preferred channel for the investment in mutual fund. They can change investors’

mind from one investment option to others. Many of investors directly invest their money

through AMC because they do not have to pay entry load. Only those people invest directly who

know well about mutual fund and its operations and those have time.

Suggestions and Recommendations

 The most vital problem spotted is of ignorance. Investors should be made aware of the

benefits. Nobody will invest until and unless he is fully convinced. Investors should be made to

realize that ignorance is no longer bliss and what they are losing by not investing.

 Mutual funds offer a lot of benefit which no other single option could offer. But most of

the people are not even aware of what actually a mutual fund is? They only see it as just another

investment option. So the advisors should try to change their mindsets. The advisors should

63
target for more and more young investors. Young investors as well as persons at the height of

their career would like to go for advisors due to lack of expertise and time.

 Mutual Fund Company needs to give the training of the Individual Financial Advisors

about the Fund/Scheme and its objective, because they are the main source to influence the

investors.

 Before making any investment Financial Advisors should first enquire about the

risk tolerance of the investors/customers, their need and time (how long they want to invest). By

considering these three things they can take the customers into consideration.

 Younger people aged under 35 will be a key new customer group into the future, so

making greater efforts with younger customers who show some interest in investing should pay

off.

 Customers with graduate level education are easier to sell to and there is a large

untapped market there. To succeed however, advisors must provide sound advice and high

quality.

 Systematic Investment Plan (SIP) is one the innovative products launched by Assets

Management companies very recently in the industry. SIP is easy for monthly salaried person as

it provides the facility of do the investment in EMI. Though most of the prospects and potential

investors are not aware about the SIP. There is a large scope for the companies to tap the

salaried persons.

64
Limitation:

 Some of the persons were not so responsive.

 Possibility of error in data collection because many of investors may have not

given actual answers of my questionnaire.

 Sample size is limited to 200 visitors of State Bank of India , Boring Canal Road

Branch, Dehradoon out of these only 120 had invested in Mutual Fund. The
sample size may not adequately represent the whole market.

 Some respondents were reluctant to divulge personal information which can

affect the validity of all responses.

 The research is confined to a certain part of Dehradoon.

65
 BIBLIOGRAPHY

• NEWS PAPERS

• OUTLOOK MONEY

• TELEVISION CHANNEL (CNBC AAWAJ)

• MUTUAL FUND HAND BOOK

• FACT SHEET AND STATEMENT

• WWW.SBIMF.COM

• WWW.MONEYCONTROL.COM

• WWW.AMFIINDIA.COM

• WWW.ONLINERESEARCHONLINE.COM

• WWW. MUTUALFUNDSINDIA.COM

• WWW.RUANINVESTOR.COM

66
 QUESTIONNAIRE

A study of preferences of the investors for investment in mutual funds.

1. Personal Details:

(a). Name:-

(b). Add: - Phone:-

(c). Age:-

(d). Qualification:-

Graduation/PG Under Graduate Others

(e). Occupation. Pl tick (√)

Govt. Ser Pvt. Ser Business Agriculture Others

(g). What is your monthly family income approximately? Pl tick (√).

Up to Rs. 10,001 to Rs. 15,001 to Rs. 30,001 to Rs. 50,001

67
 Rs.10,000 15000 30,000 30,000 and above

2. What kind of investments you have made so far? Pl tick (√). All applicable.

a. Saving account b. Fixed deposits c. Insurance d. Mutual Fund

e. Post Office-NSC, f. g. Gold/ Silver h. Real Estate
etc Shares/Debentures

3. While investing your money, which factor will you prefer?

.
(a) Liquidity (b) Low Risk (c) High Return (d) Trust

4. Are you aware about Mutual Funds and their operations? Pl tick (√). Yes No

5. If yes, how did you know about Mutual Fund?

a. Advertisement b. Peer Group c. Banks d. Financial Advisors

6. Have you ever invested in Mutual Fund? Pl tick (√). Yes No

7. If not invested in Mutual Fund then why?

(a) Not aware of MF (b) Higher risk (c) Not any specific reason

8. If yes, in which Mutual Fund you have invested? Pl. tick (√). All applicable.

a. SBIMF b. UTI c. d. Reliance e. Kotak f. Other. specify

HDFC

9. If invested in SBIMF, you do so because (Pl. tick (√), all applicable).

a. SBIMF is associated with State Bank of India.

b. They have a record of giving good returns year after year.

68
 c. Agent’ Advice

10. If NOT invested in SBIMF, you do so because (Pl. tick (√) all applicable).

a. You are not aware of SBIMF.

b. SBIMF gives less return compared to the others.
c. Agent’ Advice

11. When you plan to invest your money in asset management co. which AMC will you prefer?

Assets Management Co.

a. SBIMF
b. UTI
c. Reliance
d. HDFC
e. Kotak
f. ICICI

12. Which Channel will you prefer while investing in Mutual Fund?

(a) Financial Advisor (b) Bank (c) AMC

13. When you invest in Mutual Funds which mode of investment will you prefer? Pl. tick (√).

a. One Time Investment b. Systematic Investment Plan (SIP)

14. When you want to invest which type of funds would you choose?

a. Having only debt b. Having debt & equity c. Only equity portfolio.
portfolio portfolio.

15. How would you like to receive the returns every year? Pl. tick (√).

a. Dividend payout b. Dividend re- c. Growth in NAV

investment

69
16. Instead of general Mutual Funds, would you like to invest in sectorial funds?
Please tick (√). Yes No

70