MUTUAL FUND ANALYSIS

INTRODUCTION
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks,bonds, short-term money market instrume nts and other securities. Mutualfunds have a fund manager who invests the money on behalf of the investorsby buying / selling stocks, bonds etc. Currently, the worldwide value of allmutual funds totals more than $US 26 trillion. The United States leads withthe number of mutual fund schemes. There are more than 8000 mutual fundschemes in the U.S.A. Comparatively, India has around 1000 mutual fundschemes, but this number has grown exponentially in the last few years. TheTotal Assets under Management in India of all Mutual funds put togethertouched a peak of Rs. 5,44,535 crs. at the end of August 2008.Indians have been traditionally savers and invested money in traditional savings instruments such as bank deposits. Against this background, if we look at approximately Rs. 5 lakh crores which Indian Mutual Funds are managing, then it is no mean an achievement. However, there is still a lot to be done. As of today there are 41 Mutual Funds in the country. Together they offer over 1000 schemes to the investor. Many more mutual funds are expected to enterIndia in the next few years. All these developments will lead to far more participation by the retail investor and ample of job opportunities for young Indians in the mutual fund industry. This module is designed to meet the requirements of both the investor as well as the industry professionals, mainly those proposing to enter the mutual fund industry .

Need for the study: Mutual funds are now booming sector and giving everything to the investor what he expecting from his investment. Especially what is the customer preference towards the mutual fund investment and what he is going to get from his investment and to know about the various funds offer by the asset management companies. To compete with this fast growing world financial institutions and financial intermediaries are most focusing on innovation in their products & services. Mutual fund companies are new innovation in finance industry and giving opportunity to small investors to invest their money into the top listed companies and shot term in nature and providing high liquidity to the customers. This project would give the understanding whole picture of the Mutual Fund industry and the financial services provided by Mutual Fund Companies and what is the customer preference towards risk and return of the Mutual fund and to understand what are the various steps taking in order to reduce the risk and maximize the return and who are the customers and how can they be retained for attaining the organizational goals.

OBJECTIVES
To study the Operations of Mutual Funds companies in the vizag market. To study the Investors Preference towards the Risk & Returns involved in different Funds in mutual fund companies. To analyze the Risk profile and performance of mutual funds.

 To find what are the different ways by which organizations are managing and retaining the customers by providing information about the benefits of the mutual fund investment. To find out the Investment plans/options & Services provided by mutual fund companies.

MEHTODOLOGY

Collection of Data: The data is collected by my for easy understanding of questionnaire form which is prepared basing on my opinion on IL&FS INVESTSMART SECURITIES LTD Company.i myself visited wide section of people for the survey to collect the information which is required to my study. I have considered both primary and secondary dada

Primary Data: To have the first hand information researcher approaches directly to the sources of information. Primary data is collected by administering a questionnaire.the collected data is presented with the help of various statistical tools likt pie chart,bar graph etc

Seconary Data: Seconadary data is the readily available information or collected directly some other people for some purpose.various sources of secondary dada are

Internet The Company old records Brouchers

Research Methodology: The Data has been collected from 250 people based on sampling People responded to the questionnaire and all they are approached directly and individually and are requested to fill the application personally.

Formulation of questionnaire: Questionnaire is prepared well for the survey consists of 17 questions which covers wide variety of aspects like Their awareness about mutual fund Customer preferences on different mutual fund schemes Their openion on different types of investments Their awareness on IL&FS INVESTSMART SECURITIES LTD Company Which AMC is giving better returns

Sample Size Sample Method Sample Unit Sampling Tools

: : : :

250 Customers of Mutual Funds. Random convenience sampling. Mutual Fund investors. Statistical Tools are like bar and Colum Charts, Pie charts

LIMITATIONS

This Study may not be comprehensive as the project is only for the period of two months This project is limited to only one geographical location that is Visakhapatnam which may lead to less accuracy. Considering few customers perception we cant give the justification to the project.

INDUSTRY PROFILE
Mutual fund is a mechanism for pooling the resources by issuing units to the public and investing funds in securities in accordance with objectives as disclosed in the offer document. The industry has steadily grown over the decade. The mutual fund collects money directly or throughs brokers from investors. The money is invested in various instruments depending on the objective of the scheme. In a Mutual Fund, many investors contribute to form a common pool of money. This pool of money is invested in accordance with a stated objective. The ownership of the fund is thus joint or MUTUAL. The fund belongs to all investors. A single investors ownership of the fund is in the same proportion as the amount of the contribution made by him bears to the total amount of the fund. All mutual funds use the money collected from investors to buy those assets which are specifically permitted by its stated investment objective. The concept of mutual funds was introduced in India with the formation of Unit Trust of India in 1963. Today, 32 mutual funds collectively manage. Rs 6713575.19 crore under hundreds of schemes. The industry has steadily grown over the decade. The mutual fund collects money directly or through brokers from investors. The money is invested in various instruments depending on the objective of the scheme. The term unit-holder includes investors in both the open-end and the closed-end schemes. The flow chart below describes broadly the working of a mutual fund:

The Growth Phases in Mutual Fund Industry

COMPANY PROFILE
IL&FS Investsmart Limited

IL&FS Investsmart (IIL) which stands for Infrastructure Leasing and Financial Services is known for its innovative and pioneering initiatives in the areas of Infrastructure, Corporate and Investment Banking. IIL was incorporated as Investsmart India Limited on September 01, 1997. It has received certificate of commencement of business on October 07, 1997. IIL has owned subsidiary IL&FS to carry on share and stock broking activities. GROWTH and Corporate Events:IIL has started broking activity in NSE on February 1998 and in BSE in August 1999.Orix corporation, Japan became share holder of IIL in January 2002. IL&FS Merchant Banking Services Limited (IMBSL) and Debt on net India Limited (DIL)merged with IIL. Name of the company was changed from Investsmart India Limited to IL&FS InvestSMART in March 2003. The company is now held by HSBC, one of the world's largest banking and financial services organizations. HSBC holds 93%of share. In India, The HSBC Group offers a range of financial services including corporate, commercial, retail and private banking, insurance, asset management, investment banking, equities and capital markets, institutional brokerage, custodial services. It also provides software development expertise and global services facilities for the HSBC Group's operations worldwide. IL&FS Investsmart is one of India's leading financial services organizations providing varied range of Financial Services for corporates and individuals. Investsmart has a strong presence across wide range of products and operates in the areas of Investment Management and Advisory Services, Broking Services, Merchant Banking, Project Syndication, Equity and Debt Broking, Commodity Broking and Distribution of Financial Products.

IL&FS Investsmart Ltd has an all India presence through its network of branches and franchisees over 126 cities. Following a successful Initial Public Offer IPO), IIL has been listed on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). IIL is geared towards understanding and achieving the financial goals of all its customers, through its specialists in the aforesaid areas. IL&FS Investsmart group engages nearly 2000 professionals across various areas of financial services and corporate functions. Our team is spread over 300 offices in India and overseas. It actively seeks a diverse range of professionals to deliver specialized services to its clients across the globe. What it look for are personal values, dynamism, skill, customer centricity and high-energy to continuously nurture an enjoyable professional culture.

Work culture :Friendly & formal work culture founded on principles of mutual respect, co-operation, trust & human values. An opportunity to satisfy economic needs consistent with the prevalent business environment .A performance driven work culture and open to new ideas and suggestions from all Team Members.

Its products:1. Retail offerings 2. Institutional offerings 3. Online products.

I.

RETAIL OFFERINGS:-

A. Advisory products B. Trading products

A.ADVISORY PRODUCTS:I. Mutual fund advisory services-

IIL team of experts across India helps customers in selecting the right scheme from over 500 offerings, matching their needs, goals and risks. In addition to this IIL also help customers constantly monitor their MF portfolio, making changes according to their changing needs as per the market scenario, in order to make customer money work for them. This is precisely the reason why IIL has been recognized as Best Performing Financial Advisor by CNBC TV 18 for two years in a row 200506 and 2006-07.

II.

Portfolio Management Services (PMS):-

Financial markets today offer enormous growth potential. But managing investors own investments can be an extremely challenging task. Anticipating market trends, assessing the impact of socio-economic changes on investor investments, keeping abreast of latest corporate

developments and financial analysis all adds up. Managing ones investments has become nearly a full-time affair that requires considerable time and expertise. At IL&FS Investsmart, we offer you just the solution that allows you to relax as we put your money to work through the IIL-PMS, a Discretionary Portfolio Management Service.

III.

IPO Advisory & Distribution Services:-

IL&FS Investsmart (IIL) is one of India's leading companies engaged in the activity IPO Advisory and Distribution. Our primary markets division does a comprehensive research before recommending issues to clients. Our pan India reach helps us in mobilizing large number of applications across India during public offerings, this has ensured that we constantly figure amongst the top ranking performers in the primary market distribution space. As a part of our online offering, customers can invest in IPO's not only through our branches but also through our website, which also provides you with regular updates on the IPO scenario, Open IPO's as well as all the forthcoming IPO's at any given point of time.

IV.

Insurance Advisory Services:-

We are a composite insurance broker providing comprehensive risk

management solutions, both for corporates as well as individuals. Our solutions include identification, measurement and assessment of the risk and handling of the risk, of which insurance is an integral part. We deal into both life insurance and general insurance products for all insurance companies across India.

Our key service features include the following:

Risk management solutions for all Comprehensive research for all policies available on a regular basis Recommendations on a comprehensive insurance cover based on clients needs Maintain proper records of client policies Continuous monitoring of client account

B.TRADING PRODUCTS:Equities & Derivatives:- IL&FS Investsmart is a full service broking house offering services across both the Cash and F&O segments. Our experienced team of Research Analysts and Advisory Managers guide you with appropriate solutions, backed by in-depth research, knowledge and expertise on a regular basis. We would constantly help you with strategies for investments in equities, recommendations for trading on futures & options, hedging with Nifty and other product and opportunities of riskless arbitrage between various segments. 2. INSTITUTIONAL OFFERINGS:A. Investment Banking Service IL&FS Investsmart (IIL) offers you extensive range of Investment Banking Services for equity related products and instruments. Our team advises

you on transactions like business structuring and capital raising opportunities based on your corporate needs and state of capital markets. Services we specialize in include Management of:

Initial Public Offering (IPOs) Follow-on Offerings Qualified Institutional Placements (QIPs) Buyback of Equities Open Offers Mergers & Acquisitions Private Equity Placements .ESOPs B. Institutional Equity Broking Services:-

Our efficient execution, quality research, top quality human resources and complete compliance with stock exchange regulations, as well as business standard ethics lend towards our exemplary services to investors, through IPOs, equities, derivatives and mutual funds. We also focus on identifying undiscovered value stocks to investors. Through its gamut of services, this division is well-suited to corporate investors, banks, financial institutions, insurance companies and FIIs. Our Institutional Equity Business (IEB) is well positioned to offer support for a complete range of investment banking service to corporates.

C. Institutional Debt Broking Services:Our institutional debt broking division includes secondary market broking, primary market debt placement & distribution and provident fund advisory services. Secondary debt broking is the principle service provided by this division. The clients mainly comprise of institutional debt players, such as banks, primary dealers, mutual funds, large provident funds and in some cases corporate treasuries.

The primary market services cover placement of debt paper issued by corporates, with institutional segments covering banks, mutual funds etc.

Pre marketing the placement / issuance Selling / placing the issuance Assisting in any related documentation for the issuance Assisting in all other steps to complete the issuance for draw down funds

3. On line products:

A. SmartSTART:- SmartStart is a powerful browser based trading system

for those who are relatively new to online investing. A unique integrated account, which integrates your banking, broking, and demat accounts. A comprehensive trading service, which allows you to invest in equities and derivatives. SmartStart trading platform allows you the flexibility of trading on any internet capable system, with access to both the NSE and BSE.

B. SmartINVEST:- SmartInvest is a browser-based system designed for customers who transact occasionally. It is ideal for investors who believe in the Buy and Hold approach towards investment in equities. SmartInvest capability as a browser-based trading platform gives you the benefit of real-time streaming data with the flexibility of trading on any Internet capable system. With access to both the NSE & BSE, you are in the driver's seat when routing your order to the best price on either of the exchanges. SmartInvest sophisticated yet easy to use point and click order entry interface allows you to react more quickly to the markets and make better decisions.

C.SmartTRADE:- SmartTrade is an EXE based desktop software designed for active traders who transact frequently to capture favorable short-term price movements. The platform offers active traders the tools they need to make critical decisions with confidence. SmartTrade is designed and built from the ground up to address the needs of active traders. SmartTrade makes the most of state-of the-art technology to deliver power, speed and reliability. Through an easy-to-use interface, users are provided with the same tools and advantages that the professionals enjoy. IIL Subsidiary companies:IL&FS Investsmart Securities Limited (IISL):- It is the wholly owned subsidiary of the IIL and is engaged in Equity market through its memberships on National Stock Exchange (NSE) & Bombay Stock Exchange (BSE) IISL offers Equity & Derivatives Broking, PMS, IPO Mobilisation, Mutual Funds Distribution and other Investment Advisory Services to both retail as well as institutional clients through a network of branches and franchisees across India. IISL also, has a quality team of researchers that advise the clients across industries on a regular basis.

IL&FS Investsmart Insurance & Risk Management Services Ltd (IIIRMSL) IIRMSL is a wholly owned subsidiary of IIL and offers Insurance Broking services for individuals, groups as well as corporate clients. As a broker, we also provide advisory services for all insurance products offered by various insurance companies.The current set up are spread across 11 locations involving dedicated teams doing retail distribution of insurance products. Within a short span of less than 1 year, IIRMSL has managed be become one of the top 10 insurance broking companies in India

IL&FS Academy for Insurance & Finance Ltd (IAIFL) IAIFL is a wholly owned subsidiary of IIL and is one of the first and the largest Insurance Training Institution licensed by the IRDA and has established a first mover advantage in this business. It is the largest training institution in the pre-licensing segment having a national footprint in 30 cities. IAIFL has till date trained about 40,000 advisors across all the private insurance companies at various parts of the company. It has implemented a structured framework for delivery of the 100 hours Agents Training programs, which includes faculty resources, institutionalised mechanisms for program evaluation, feedback reports to the clients and ongoing program up-gradation to ensure quality and uniformity of approach across multiple locations in the country.

IL&FS Investsmart Asia Pacific Private Limited (IIAPPL) IL&FS Investsmart Asia Pacific Private Limited (IIAPPL) is the wholly owned subsidiary of the IIL and is based out of Singapore. IIAPPL is involved in servicing NRI's and FII's from the Asia Pacific region to access the Indian capital markets. IIAPPL works in close association with both the Retail as Institutional Business Divisions in India

IL&FS Investment Financial Services Limited IL&FS Investsmart Financial Services Limited (IIFSL) (Formerly known as Tajir Investment & Properties Limited) is a Non-Banking Finance company registered with Reserve Bank of India. IIFSL has been recently acquired by IL&FS Investsmart Limited (IIL) as a wholly owned subsidiary. IIFSL was engaged in hire purchase activity and sale of properties till June 30, 2006. However, in view of the buoyancy observed in Indian financial sector and

its outlook for the coming years, management decided to diversify into financial sector by offering new products. After reviewing various options, the management of the company decided to take up securities financing related activities from July 1, 2006 and the Company is currently offering financing products such as Margin Trade Financing, Loan Against Shares, IPO Financing and ESOP Financing.

TYPES OF MUTUAL FUND SCHEMES By Structure, the Mutual Funds can be divided into 3 types Open - Ended Schemes Close - Ended Schemes Interval Scheme

Openended funds: Investors can buy and sell units of open-ended funds at NAV-related price every day Close-ended funds: These funds have a stipulated maturity period, which may vary from three to 15 years. Interval Funds: These funds combine the features of both open and close-ended funds. By Investment Objective, the Schemes can be divided as following: Growth Schemes Income Schemes Balanced Schemes Money Market Schemes

Growth funds: Growth schemes are ideal for investors with risk appetite. Income funds: They generally invest their corpus in fixed income securities like bonds, corporate debentures, and government securities. Balanced funds: The objective of balanced funds is to provide growth along with regular income. Money market funds: These funds strive to provide easy liquidity, preservation of capital and modest income. Other Schemes are as following:

Index funds: Index Funds invest their corpus on the specified index such as BSE Sensex, NSE index, etc

Sector specific schemes: These funds invest only specified sectors like an industry or a group of industries Tax saving schemes: Tax saving schemes or equity-linked savings schemes offer tax rebates to investors under section 88 of the Income Tax Act. Special schemes: These schemes invest only in the industries specified in the offer document. As a part of research Study Some of the schemes can be explained with the following details through reference books, related websites, journals and magazines: Money market/Liquid Funds: Liquid funds invest in debt securities of a short-term nature, which generally means securities of less than one-year maturity. The typical, short term, interest-bearing instruments these funds invest in include Treasury Bills issued by governments, Certificates of Deposit issued by bank and Commercial paper issued by companies. Debt Funds: Debt funds are largely considered as Income funds as they invest primarily in fixed income generating debt instruments. They do not target capital appreciation but look for current income, and therefore distribute a substantial part of their surplus to investor. Income funds that target high returns can face more risks. In Debt Funds there are different types of funds. Equity Funds: Equity Funds are high risk appetite. Equity Funds are generally considered at the higher end of the risk among all funds available in the market. Equities can appreciate in value in line with the issuers earnings potential, these offers the greatest potential for growth in capital. According to various levels of risk there are different types of equity funds available. Indian households started allocating more of their savings to the capital markets with investments flowing into equity and debt instruments, besides the conventional mode of bank deposits.

REASONS FOR INVESTING

Affordability: Mutual funds allow you to start with small investments. Convenience: Mutual funds offer tailor-made solutions like systematic investment plans and systematic withdrawal plans to investors. Cost effectiveness: A small investor will find that a mutual fund route is a cost effective method. AMC fee is normally 2.5%. Professional management: The major advantage of investing in a mutual fund is that you get a professional money manager for a small fee. Diversification: A mutual fund can effectively diversify its portfolio because of the large corpus Liquidity: You can liquidate your investments anytime you want. Transparency: Mutual funds offer daily NAVs of schemes, which help you to monitor your investments on a regular basis.

A brief introduction about the organization of mutual fund

SPONSER

TRUST/TRUSTEES

AMC

MUTUAL FUND

TRANSTFER AGENT

CUSTODIAN

The largest categories of Mutual Funds are the ones floated by the private sector and by Foreign Asset Management Companies. The largest of these are Prudential ICICI AMC and Birla Sun Life AMC. The aggregate corpus of assets managed by this category of AMCs is in excess of Rs.350 bn. Earlier the Indian Mutual Fund industry was dominated by the Unit Trust of India which has a total corpus of Rs.700 bn collected from more than 20 million investors. The UTI has many funds/schemes in all categories i.e. equity, balanced, income etc. with some being open-ended and some being closed-ended. The Unit Scheme 1964 commonly referred to as US 64, which is a balanced fund, is the biggest

Scheme with a corpus of about Rs.200 bn. UTI was floated by financial institutions and is governed by a special Act of Parliament.

Most of its investors believe that the UTI is government owned and controlled, which, while legally incorrect, is true for all practical purposes. The second largest categories of mutual funds are the ones floated by nationalized banks. Canbank Asset Management floated by Canara Bank and SBI Funds Management floated by the State Bank of India are the largest of these. GIC AMC floated by the General Insurance Corporation and Jeevan Bima Sahayog AMC floated by the LIC are some of the other prominent ones. The aggregate corpus of funds managed by this category of AMCs is about Rs.200 bn. There are so many players in Mutual Fund Industry. They are as follows: ABN AMRO Mutual Fund AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund. Birla Sun Life Mutual Fund Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial. Sun Life Financial is a global organization evolved in 1871 and is being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment. Recently it crossed AUM of Rs. 10,000Crores. Bank of Baroda Mutual Fund (BOB Mutual Fund) Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the AMC of BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank AG is the custodian.

HSBC Mutual Fund HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital Markets (India) Private Limited as the sponsor. The Board of Trustees, HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund. ING Vysya Mutual Fund ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING Investment Management (India) Pvt. Ltd. was incorporated on April 6, 1998. Prudential ICICI Mutual Fund It is a joint venture with Prudential Plc. of America, Prudential ICICI Mutual Fund was setup on 13th of October, 1993 with two sponsors, Prudential Plc. and ICICI Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset Management Company Limited incorporated on 22nd of June, 1993. Sahara Mutual Fund Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial Corporation Ltd. Sahara Asset Management Company Private Limited incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid-up capital of the AMC stands at Rs 25.8 cr.

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

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

Tata Mutual Fund Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd ., and Tata Investment Corporation Ltd. The investment manager is Tata Asset Management Limited and its Tata Trustee Company Pvt. Limited. Tata Asset Management Limited is one of the fastest in the country with more than Rs. 7,703 Crores (as on April 30, 2005) of AUM.

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

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

Reliance Mutual Fund Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which was changed on March 11, 2004. Reliance Mutual Fund was formed for launching of various

schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities. Standard Chartered Mutual Fund Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated with SEBI on December 20,1999. Franklin Templeton India Mutual Fund The group, Franklin Templeton Investments is a California (USA) based company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest financial services groups in the world. Investors can buy or sell the Mutual Fund through their financial advisor or through mail or through their website. They have Open end Diversified Equity schemes, Open end Sector Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes, Open end Income and Liquid schemes, Closed end Income schemes and Open end Fund of Funds schemes to offer. Morgan Stanley Mutual Fund India Morgan Stanley is a worldwide financial services company and its leading in the market in securities, investment management and credit services. Morgan Stanley Investment Management (MISM) was established in the year 1975. It provides customized asset management services and products to governments, corporations, pension funds and nonprofit organizations. Its services are also extended to high net worth individuals and retail investors.

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

Alliance Capital Mutual Fund Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital Management Corp. of Delaware (USA) as sponsorer. The Trustee is ACAM Trust Company Pvt. Ltd. and AMC, the ACAM(Pvt.) Ltd. with the corporate office in Mumbai. Benchmark Mutual Fund Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt. Ltd. as the sponsor and Benchmark Trustee Company Pvt. Ltd. as the Trustee Company. Incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark Asset Management Company Pvt. Ltd. is the AMC. Can bank Mutual Fund Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the sponsor. Canbank Investment Management Services Ltd. incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC is in Mumbai. Chola Mutual Fund Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC Limited. LIC Mutual Fund Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. . The Company started its business on 29th April 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the Investment Managers for LIC Mutual Fund.

REVIEW OF LITERATURE
SEBI INVESTOR EDUCATION PROGRAM (1994) 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 should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions.
ANDREWS AND PLOBERGER (1994) Despite the wide acceptance of return-based style

analysis, the method has several limitations. One important drawback is the assumption that style exposures are time invariant. Apply results on break tests. Strong evidence against the hypothesis of constant time exposures in time in daily return data of European equity funds. All funds exhibit at least one break, while 60% of the funds exhibit even more than one break. We investigate the importance of (i) conditional investment strategies based on predictive information variables and volatility estimates and (ii) variables related to the organization of mutual funds. We conclude that the principal economic rationale behind (the majority of) style breaks is the reliance of mutual fund managers on conditional investment strategies. SUJIT SIKIDAR AND AMRIT PAL SINGH (1996) carried out a survey with an objective to understand the behavioral aspects of the investors of the North Eastern region towards equity and mutual funds investment portfolio. The survey revealed that the salaried and self employed formed the major investors in mutual fund primarily due to tax concessions. ANJAN CHAKARABARTI AND HARSH RUNGTA (2000) stressed the importance of brand effect in determining the competitive position of the AMCs. Their study reveals that brand image factor, though cannot be easily captured by computable performance measures, influences the investors perception and hence his Fund/scheme selection. EMIL BOASSON, VIGDIS BOASSON AND JOSEPH CHENG (2001) focused on the importance of investment principles to be followed by the asset management companies and the ways in which the investors are to be guided. Another important factor is the brand image of the company which plays a very important role.

DE BONDT AND THALER (1985) while investigating the possible psychological basis for investor behavior, argue that mean reversion in stock prices is an evidence of investor over reaction where investors over emphasize recent firm performance in forming future expectations. In India, one of the earliest attempts was made by NCAER in 1964 when a survey of households was undertaken to understand the attitude towards and motivation for saving of individuals. Another NCAER study in 1996 analyzed the structure of the capital market and presented the views and attitudes of individual shareholders. SEBI NCAER SURVEY (2000) was carried out to estimate the number of households and the population of individual investors, their economic and demographic profile, portfolio size, and investment preference for equity as well as other savings instruments. This is a unique and comprehensive study of Indian Investors, for; data was collected from 3,00,0000 geographically dispersed rural and urban households. Some of the relevant findings of the study are: Households preference for instruments match their risk perception; Bank Deposit has an appeal across all income class; 43% of the non-investor households equivalent to around 60 million households (estimated) apparently lack awareness about stock markets; and, compared with low income groups, the higher income groups have higher share of investments in Mutual Funds (MFs) signifying that MFs have still not become truly the investment vehicle for small investors. Nevertheless, the study predicts that in the next two years (i.e., 2000 hence) the investment of households in MFs is likely to increase. We have to wait and watch the investors reaction to the July 2nd 2001, great fall of the Big Brother, UTI. SHARPE Return-based style analysis (RBSA hereafter) has become a popular tool in analyzing mutual fund returns and investment objectives. The method was introduced by Sharpe (1988; 1992) as a tool to determine the effective asset mix of a mutual fund. The principal goal of RBSA is to find the best mimicking strategy that is in accordance with the investment style of the mutual fund. RBSA has become a widely accepted analytic tool, both by academics and practitioners. Besides problems related to misclassification, RBSA has been employed to address issues concerning performance evaluation and object gaming of mutual funds,

construction of diversified portfolios or efficient portfolios of mutual funds with specified factor loadings, short-term risk assessment of a mutual fund manager.

ANALYSIS
AGE OF THE INVESTORS IN RELIANCE MUTUAL FUNDS:
TABLE: Age No. of Persons Percentage 18-30 yrs 46 18% 31-50 yrs 134 54% 51-75 yrs 54 22% 75 yrs & above 16 6% Total 250 100

GRAPH:

Inference: From the above graph inferred that out of 250 investors 54% of the investors have the age
between 31-50 yrs, 22% of the investors have the age between 51-75yrs, 18% of the investors have the age between 18-30years and the remaining 6% of the investors have the age above 75years.

INCOME LEVELS OF THE INVESTORS

TABLE: Income Levels < 1 lakh 1-3 lakh 3-5 lakh 5 lakh & above Total

(Rs. per annum) No. of persons Percentage 31 12 97 39 84 34 38 15 250 100

GRAPH:

Inference: It can be inferred that out of 250 investors 39% of the investors have income of 1-3 lakh
rupees per annum, 34% of the investors have 3-5 lakh p.a, and 15% of the investors have 5 lakh and above p.a and 12% of the investors have less than 1 lakh p.a.

INVESTORS APPROACH TO MAKE FINANCIAL DECISION

TABLE: Different approaches No. of persons Percentage a) Random decision 53 21 b) Friendly Advice 74 30 c) An educated guess 59 24 d) Various options 64 26 250 100 Total

GRAPH:

Inference: It can be inferred that out of 250 investors 30% of the investors were following their friends advice, 26% of investors are taking the financial decision through their analyzed various options, 24% were taking the financial decision through an educated guess and 21% were taking random decision while making financial decision. Whereas given different options are like random decision, friendly advice, an educated guess and analyzing the various options.

THE FACTORS CONSIDERED BY THE INVESTORS, WHILE INVESTING IN MUTUAL FUNDS

TABLE: Factors No. of persons Percentage Safety & liquidity 115 46 Returns 63 25 Risk 14 6 Tax benefits 58 23 Total 250 100

GRAPH:

Inference: It can be inferred that out of 250 investors 46% of investors considered safety and liquidity, 25% of investors considered Returns, 23% of investors considered tax benefits and 6% of investors considered Risk while investing in mutual funds.

SATISFACTION WITH CURRENT RATE OF RETURN

TABLE
Satisfied return No of persons Percetage 100 40% 150 60% 250 rate of a)Yes b)No Total

GRAPH

160 140 120 100 80 60 40 20 0 1 2 3 4 a)Yes b)No

INVESTMENT OBJECTIVES OF THE INVESTORS

TABLE: Investment objectives No. of persons Percentage a) Near time high priority goals 95 38 b) Low priority goals 36 14 c) Long term goals 87 35 d) Wealth maximization 32 13 250 100 Total

GRAPAH:

Inference: It can be inferred that out of 250 investors 38% of the investors are looking for Near-time
High Priority goals (Ex. New house, vehicles and so on), 35% of the investors opted for long term goals, 14% of the investors opted for low priority goals option and remaining 13% of the investors opted for wealth maximization where in according to their investment objectives

AVERAGE TIME FRAME OF INVESTORS FOR THEIR FUTURE FINANCIAL COMMITMENTS AND NEEDS

TABLE: Time frame No. of persons Percentage <3 years 103 41 3-5years 97 39 5-10 years 29 12 10 yrs & above 21 8 Total 250 100

GRAPH:

Inference: It can be inferred that out of 250 investors 41% of the investors have a time frame of less
than 3 years, 39% of the investors have time frame of 3-5 years, 12% of the investors have 5-10years and 8% of the investors have above 10 years time frame to commit their financial needs.

INVESTORS MOST PREFERABLE FUNSDS IN MUTUAL FUNDS

TABLE: Types of funds No. of persons Percentage 21 28 37 14 100 Equity Funds 52 Balanced Funds 70 Income Funds 93 Money Market Mutual funds 35 250 Total

GRAPH:

Inference: It can be inferred that out of 250 investors 37% of the investors preferred Income funds,
28% of the investors preferred balanced funds, 21% of the investors preferred Equity funds and 14% of the investors preferred Money market mutual funds.

INVESTORS PREFERABLE SCHEMES IN MUTUAL FUNDS

TABLE: Types of Schemes No. of persons Percentage a) Open-ended 133 53 b) Close-ended 117 47 Total 250 100

GRAPH:

Inference: It can be inferred that out of 250 investors 53% of the investors preferred open-ended
scheme and 47% of the investors preferred Close-ended scheme.

RISK TOLEREANCE LEVEL OF THE INVESTORS

TABLE: Risk Levels No. of Persons Percentage Low Risk 96 38 Moderate/medium 127 51 High Risk 28 11 Total 250 100

GRAPH:

Inference: It can be inferred that out of 250 investors 51% of investors are considering medium risk,
38% of the investors are considering the low risk and remaining 11% of the investors are considering High Risk level while making investments in Mutual Funds

REPEAT INVESTMENTS OF INVESTORS IN MUTUAL FUNDS

TABLE: Options No. of respondents Percentage Yes 183 73 No 67 27 Total 250 100

GRAPH:

Inference: It can be inferred that out of 250 investors 73% of the investors are opted for yes and
27% of the investors were opted No. The most of the mutual fund customers were invested repeat Investments.

FACTORS INFLUENCING THE INVESTORS TO MAKE REPEAT INVESTMENTS IN MUTUAL FUNDS

TABLE: Factors No. of persons Percentage Better returns 136 54 Services 37 15 Brand 77 31 Others 0 0 Total 250 100

GRAPH:

Inference: It can be inferred that out of 250 investors 54% of investors considered better returns,
15% of the investors considered services, 31% of the investors considered Brand while making repeat investments.

THE INVESTORS MOST PREFERRED INVESTMENT PLANS IN MUTUAL FUND

TABLE: Investments plans No. of Persons Percentage 23 9 107 43 86 34 34 14 250 100 a) STP b) SIP c) ARP d) SWP Total

GRAPH:

Inference: It can be inferred that out of 250 investors 43% of investors were preferred SIP
(Systematic Investment Plan), 34% of investors were preferred to ARP (Automatic Reinvestment Plan), 14% of investors were preferred to SWP (Systematic Withdrawal Plan ) and 9% of investors were preferred to STP (Systematic Transfer Plan).

RATE OF RETURNS EXPECTED BY THE INVESTORS

TABLE: Expected returns No. of persons Percentage a)<10% 55 22 b)10-20% 97 39 c)20-30% 81 32 D)>30% 17 7 Total 250 100

GRAPH:

Inference: It can be inferred that the majority out of 250 investors 39% of investors were expecting
10-20% of rate of returns, 32% of the investors were expecting 20-30% of rate of returns, and 22% of investors are expecting less than 10% and 7% of investors expecting more than 30% returns.

EXISTING CUSTOMERS PERCEPTION TOWARDS MUTUAL FUNDS

TABLE:

Perception of the investors No. of persons Percentage

a)Less risky investment 132 53

b) fixed returns 20 8

c)various plans 81 32

d)others

Total

17 7

250 100

GRAPH:

Inference: It can be inferred that out of 250 investors 53% of majority perceived investing in mutual funds is less Risky investments compare with author asset management companies, 32% of the investors perceived there are various plans to invest in mutual funds.

FINDINGS
54% of the investors are in between 31-50 years. 39% of investors are having income levels of 1-3 lakh rupees. 30% of investors rely on friends advice while taking a financial decision. 40% of the investors have disposable income between Rs.80, 000 & above. 46% of investors are looking for safety and liquidity while making investment. 38% of the investors are looking for Near-time High Priority goals for Ex. New house, vehicles and so on. 41% of the investors were having 3-5 years time frame to commit their financial needs. 37% of the investors give preference to Income funds in a Mutual fund. 53% of the investors give preference to Open-ended schemes. 51% of investors consider medium risk while making investments. 73% of investors make repeated investments. 54% of investors were opted better returns was the one of the best reason for repeat investments of Investors. 43% of Investors prefer mostly SIP plans. 39% of investors expect 10-20% of rate of returns from their investments. 53%of investors perceive investing in mutual funds is less risky when compared with other investment options.

SUGGESTIONS
As most of the people are looking for near time high priority goals the mutual fund people can focus on this particular segment of people by suggesting the funds which fulfill their investment objectives.

Mainly people are interested to invest in income funds so the companies can concentrate on these funds in order to minimize the risk perception in the minds of the investors.

Next to SIP, people are willing to invest in ARP schemes so the company can suggest ARP scheme prior to SIP so that the customers can increase their fund units and also the company will get more funds to construct much better portfolios rather than earlier.

Mutual Fund companies are mostly concentrating on urban areas if they enter in to Semi-Urban and rural areas definitely they will have the good market share from the rural market.

CONCLUSION

Most of its existing customers who are having the capacity to take medium risk with the respective expected returns from their investments which were done in a time frame of respected years to reach their individual investment objectives. Customers are ready to appetite risk levels at medium because their risk can be diversified through their individual constructed portfolios. To reach their investment objectives the mutual fund investment is providing various investments plans/ options in particular schemes. Past performance also making the investors to invest more money in mutual fund without considering the risk levels rather than expected returns. So finally customers are prefer to the mutual fund investment to reach their financial objectives.

ANNEXURES

Name:
1

Occupation:

1) Age: 18-30 31-50 51-75 75 & above

2) Income levels (Per Annum) <1 lakh Rs. 3-5lakhs 1-3 lakhs 5 and above

3) What is your approach to making a financial decision? take a random decision take an educated guess seek friendly advice analyze the various options.

4) Excluding your house expenses, your savings income lies at <30,000 Rs. 60,000-70,000 Rs. 5)Are you satisfied with current rate of return? Yes No 40,000-50,000Rs. Above 80,000 Rs.

6Which one of the following factors you will consider most, before investing? Safety & liquidity Risk Returns Tax benefits

7) Which of the following will you most considered for your investment objective? Near-time High priority goals Long-term High priority goals Low priority goals Only for wealth maximization

8) What is your Average period to meet all your future financial commitments and needs?

Less than 3 years 5-10 years

3-5 years 10 years and above

9) According to you, which one of the following is the most preferable in Mutual Funds? Equity Income Funds 10) which type of Mutual funds do you most prefer? Open Ended Schemes Closed Ended Schemes Balanced Funds Money Market Fund

11) What is your risk tolerance level of capacity? Low risk Moderate or medium risk High risk

12) Did you repeat your investments after your initial investment? Yes No

13) If you made any repeat investments, then what made you to invest more? Better returns Brand Services Others

14) In how many different investments schemes you have made in Reliance money? 1 2 3 More than 3

15) Given the following, which investment plan would you prefer the most? a) STP (Systematic Transfer Plan) c) ARP (Automatic Reinvestment Plan) b) SIP (Systematic Investment Plan) d) SWP (Systemic Withdrawal Plan)

16) How much return do you expect from your investment(s)? 5-10% 20-30% 10-20% 30% & above

17) Which one of the following perceptions do you have, while investing in Reliance Money? a) Less risky investments b) Fixed returns c) various investment options d) others.

REFERENCES
How to Create and Manage a Mutual Fund or Exchange-Traded Fund: A Professional's Guide (Wiley Finance) by Melinda Gerber (Hardcover - Feb 25, 2008) The New Commonsense Guide to Mutual Funds by Mary Rowland (Paperback Jan 1, 1998) Morningstar Guide to Mutual Funds: Five-Star Strategies for Success by Christine Benz (Paperback - Oct 26, 2007) Nightly Business Report: How to Invest in Mutual Funds / How to Wall Street Works / the Nbr Guide to Stick Market Strategies (3-vhs Boxset) (VHS Tape 1992) How to Invest in Mutual Funds, Nightly Business Report (dvd - 2005)

www.amfiindia.com
Intelligent stock market investing, author NJ Yasaswy. (pg.no.225-241)

Portfolio Organizer journals.

GLOSSARY Net Asset Value: Net Asset Value is the market value of the assets of the scheme minus its
liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date.

Sale Price: Is the price you pay when you invest in a scheme. It is also called Offer Price. It
may include a sales load.

Repurchase Price Is the price at which a close-ended scheme repurchases its units and it
may include a back-end load. This is also called Bid Price.

Redemption Price is the price at which open-ended schemes repurchase their units and
close-ended schemes redeem their units on maturity. Such prices are NAV related.

Sales Load Is a charge collected by a scheme when it sells the units. Also called Front-end
load. Schemes that do not charge a load are called No Load schemes.

Repurchase or Back-end Load Is a charge collected by a scheme when it buys back

the units from the unit-holders.

Portfolio: A combination of Assets. Dividend: It is the portion of the companys profit that is distributed to the shareholders. Growth fund: A mutual fund which invests only in securities which have scope of good
capital growth, rather than current income.

Growth rate: The growth rate is measured by the increased earning of a company over
previous achievement, expressed in percentage and determines the price of a share.

its

Income fund: A mutual fund with investments mostly in debentures, bonds and high
dividend shares. This type of funds attracts investors interested in income rather than growth of their investment.

Market capitalization: Total market value at the current prices of the total number of
equity shares issued by a company.

ABBREVIATIONS
AMC AMFI EPS FIs GOI IDBI IPOs MFs MMMF MNCs NAV SEBI SEC TM UTI T-BILL VSAT BSE NSE SENSEX Asset Management Company Association of Mutual Funds in India Earnings Per Share Financial Institutions Government of India Industrial Development Bank of India Initial Public Offers Mutual Funds Money Market Mutual Fund Multi National Companies Net Asset Value Securities and Exchange Board of India Securities Exchange Commission Trading Member Unit Trust of India Treasury Bill Very Small Aperture Terminal Bombay Stock Exchange National Stock Exchange Sensitivity Index

The projects objective is to do an analysis ., A Study on Investors Preference on Mutual Fund Investment and Its Impact on Increase in Sales W.R.T Vizag Market VISAKHAPATNAM and also study the different strategies applying to gain the customer attention. Once the clear objectives were framed the study is intended to carry out in three phases.