Report Fiib

REPORT
ON
Consumer Behavior Towards Mutual Fund
PRESENTED BY:-
SANDEEP KESARWANI (327)
K.R.MANGALAM INSTITUTE OF MANAGEMENT

N-Block, Greater Kailash Part I
New Delhi Pin-110048
ACKNOWLEDGEMENT
KGIM, New Delhi

At the outset, I would like to express my sincere thanks to Mr. Manish Tandon, Branch
Manager HDFC Bank Allahabad, who provided me his valuable guidance and support. It
was a memorable and enchanting experience to work in the light of his experience.
My sincere thanks to all the employees of the HDFC Bank who supported me a lot in
gathering information for this project and for giving guidance in completion of this
project in time.
I would like to pay sincere thanks to Mr. Kunal and Ms Anjana Kalsi who gave me
guidance and Mr. Deepak Trivedi Placement Officer, FIIB, New Delhi for giving me an
opportunity to do my summer project in HDFC Bank.
Last but not the least, I take this platform to convey my heartful gratitude to everyone
whose cooperation, suggestion and support helped me to accomplish the project work,
successfully.
CONTENT
Serial No. Topic Page(s) No.
KGIM, New Delhi

1. Executive Summary I
2. Methodology II
3. Literature Review III
4. Chapter 1 - Introduction 1–3
5. Chapter 2 - About HDFC 4–5
Bank
6. Chapter 3 – Mutual Funds 6
7. Origin of Mutual Funds 7–9
8. Understanding Mutual 9 – 11
Funds
9. Current scenario of Mutual 11
Funds
10. Types of Mutual Funds 12 – 15
11. Chapter 4 – Analysis of 16 – 33
questionnaire
12. Benefits of Mutual Fund 28 – 29
13. Disadvantages of Mutual 29
Funds
14. Conclusion 30
15. Major Findings 31
16. Recommendations 32
17. Bibliography 33
18. Annexure 1 A1 – A5
19. Annexure 2 A6 – A20
Executive Summary
KGIM, New Delhi

There are many different sources of customer value in each industry. Price seems the
most significant factor to influence the buying behavior of a person. As many economists
believe that price can affect human behavior most. According to H.Oh, price has been
found to be an important source of customer value that influences humans purchasing
decision. ‘The analysis of whether or not customers react differently to perceived gains
compared to perceived losses is mixed, but is supportive of asymmetric reference price
effects’. Nevertheless, some scholars also doubts that price may not be the most
important factor to affect buying behavior. Customers are willing to pay high price if
they perceive significant value. Value also has to do with the perceived benefits of
purchasing from a specific store or buying a specific product. Benefits may include the
reputation of the company, the brand name, extra services and reliability of the product
and so on. The quality of product also is a main factor-affecting people’s buying
behavior.
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. It is good for those who want to
invest in the growing markets, but do not have time and knowledge to invest. Mutual
funds give some exclusive benefits like Professional management of portfolio,
diversification etc.
Here I have done my project in HDFC Bank on the consumers behavior towards mutual
fund and there I came to know about different types of mutual funds in which it deals
and how it work. I also prepared questionnaire to get into close contact with the
customers and analyse their preferences regarding the various financial instruments.
After analyzing the different aspects of the mutual funds and other financial instruments
I found that consumer behaviour in financial product is very complicated. Different
characteristics of people would have different options; moreover different periods of
time also have different results.Therefore it is really very difficult for me to exactly
conclude about the consumers behaviour regarding the mutual funds taking into
consideration the up’s and downs which are prevailing in the market.
KGIM, New Delhi

METHODOLOGY
Objective
To offer investors a suitable portfolio of financial instruments and studying the investors’
perception towards them.
.
Scope
The scope of this project would be mainly extended to the aspects of usage of various
financial instruments by customers of HDFC bank in the city of Allahabad. It would
cover:-
• Basic understanding of various financial instruments.
• Use of mutual funds.
• Customer perception towards mutual funds.
Research Method
The research done during this project would be primary in nature. A questionnaire was
formulated by me a copy of which is attached in annexures. The research carried out will
be quantitative in nature with a database of 76 respondents.
Limitations of the study
The study is only limited to Allahabad so the conclusion drawn from the analysis may
not be applicable to other parts of the country. Some of the limitations are as follows:
• The respondent base is very small.
• The time required to study this project effectively was pretty less
which may have affected the quality of this project.
• The data required from the companies was not forthcoming easily.
Assumptions:
• Investors are rational i.e. they always take informed decisions.
• Information is easily available.
• There is a trade-off between risk and return.
• People want maximization of their wealth.
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• People invest as per their needs and requirements.
Literature Review
The significant outcome of the government policy of liberalization in industrial and

financial sector has been the development of new financial instruments. These new
instruments are expected to impart greater competitiveness, flexibility and efficiency to
the financial sector. Growth and development of various mutual fund products in Indian
capital market has proved to be one of the most catalytic instruments in generating
momentous investment growth in the capital market. There is a substantial growth in the
mutual fund market due to a high level of precision in the design and marketing of
variety
of mutual fund products by banks and other financial institution providing growth,
liquidity and return.
In this context, prioritization, preference building and close monitoring of
mutual funds are essentials for fund managers to make this the strongest and most
preferred instrument in Indian capital market for the coming years. With the decline in
the bank interest rates, frequent fluctuations in the secondary market and the inherent
attitude of Indian small investors to avoid risk, it is important on the part of fund
managers and mutual fund product designers to combine various elements of liquidity,
return and security in making mutual fund products the best possible alternative for the
small investors in Indian market.
Researchers have attempted to study various need expectations of small investors
from different types of mutual funds available in Indian market and identify the risk
return perception with the purchase of mutual funds. Various sophisticated multivariate
techniques are applied to identify important characteristics being considered by the
Indian investors in the purchase decision The paper also suggests a product design of an
optimum mutual fund and track the positioning gap available in Indian mutual fund
market.
The main findings were:
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People keep money with bank deposits, PPF and post office savings because of the
increased interest.
Mostly investment is done for tax saving purpose.
They wish both growth and safety at the same time.
INTRODUCTION
Investment is a function of saving and in India saving is a part of life. Unlike in western
countries where people live for today and believe in spending, the Indian people always
kept a very good balance between their consumption and saving. Indian culture and
traditions always promoted this habit since way back e.g. saving for the marriage of their
daughter, education of children etc. In the ancient time moneylenders dominated Indian
monetary system and were the monopolists in the field. At that time people looked only
for the safety of their wealth. Thanks to the advent of banking system in India, people
started to think from another point of view i.e. return. Exactly 201 years back, India got
its first modern bank, the bank of Calcutta, which was meant to cater to the business
interests of the company that slowly took over India, the English East India Company.
Three years later in 1809 it was renamed the Bank of Bengal and this started the formal
banking system in India. Then the need for protection from some unforeseen events
aroused which Life Insurance Corporation of India capitalized and protection of
Government of India has done a good favour. After the independence, Income tax act
came into existence in 1961 and sooner or later public realized the importance of Tax
planning. Today investments is done keeping in mind return as well as tax benefits.
After the opening up of Indian economy in 1991 Indian stock market
started showing good results. In 1993 Mutual Fund industry was opened for private
players. Kothari Pioneer was the first private mutual fund player industry that was
merged with Franklin Templeton India a US based AMC. At present there are 28 AMC’s
working in India with 2116 different scheme across different categories. The same
happened with insurance sector that was opened in 1998 for private players. This was the
KGIM, New Delhi

end of the monopoly of LIC. Today, there are 13 other players from private sector in the
industry and slowly but steadily they are getting hold onto the market.
Today market is filled with so many financial instruments that the
general public find it very difficult to design a suitable portfolio. The varied
demographic structure of India has made this task difficult even for financial planners.
India the second most populous country of the world has a very low level participation in
many investment options like insurance, mutual funds, stock etc. Thanks to ups and
downs in stock market which upto a certain extent has received attraction of Indian retail
investors but this has taken its toll in another form. It has reduced the charm of other
investment plans like NSC, PPF, etc. Another thing is that in the search of higher returns
Indian people has ignored the need and importance of Insurance policies.
Even today major part of investment in financial instruments is done
for future growth, safety and tax planning purpose..
The thumb rule of investment is “Do not pull all your eggs in a single basket”. Therefore
under these circumstances this is the responsibility of the financial advisor to design a
suitable portfolio for an investor taking his/her needs, responsibilities, future
requirements, financial strengths, inflation, tax planning etc. under consideration.
One person should invest keeping following objectives in mind:

• To earn return on your resources,
• To generate attain specified sum of money for a specified goal in life,
• To make a provision for an uncertain future.
One of the important reasons why one needs to invest wisely is to meet the cost of
inflation. Inflation is the rate at which the cost of living increases. The cost of living is
simply what it costs to buy the goods and services you need to live. Inflation causes
money to lose value because it will not buy the same amount of a good or a service in the
future as it does now or did in the past. Remember to look at an investment’s ‘real’
rate of return, which is the return after inflation. The aim of investments should be to
provide a return above the inflation rate to ensure that the investment does not decrease
in value. For example, if the annual inflation rate is 6%, then the investment will need to
KGIM, New Delhi

earn more than 6% to ensure it increases in value. If the after-tax return on one’s
investment is less than the inflation rate, then his/her assets have actually decreased in
value; that is , one wont buy as much today as they did last year.
Past result is not the guarantee of future performance. Therefore this is supreme
beneficial to the investors to take informed decisions at the time of making investments.
If necessary they must sought the help of financial consultants or advisors in order to
reduce their risk and for a superior returns. There is no dearth of quality financial
instruments in the market. Coupled with rising per capita income and growing
confidence in Indian economy and Indian market is bringing floodgates of opportunities
for financial service providers and advisors.
There is a need to grow up investors’ confidence with care and educate them to
participate in different financial instruments.
CHAPTER - 2
HDFC BANK
Housing Development Finance Corporation Limited (HDFC Bank) is one amongst

the firsts of the new generation, commercial banks of India, was incorporated in August
1994, after the Reserve Bank of India allowed setting up of Banks in the private sector.
The Bank was promoted by the Housing Development Finance Corporation Limited, a
premier housing finance company (set up in 1977) of India. The Housing Development
Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle'
approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as
part of the RBI's liberalisation of the Indian Banking Industry in 1994. The bank was
incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered
office in Mumbai, India. HDFC Bank commenced operations as a Scheduled
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Commercial Bank in January 1995. Currently HDFC Bank has 758 branches, 1,716
ATMs, in 325 cities in India, and all branches of the bank are linked on an online real-
time basis. HDFC currently has a client base of over 10,00,000 borrowers,14,00,000
depositors, 95,000 shareholders and 54,000 deposit agents. The bank provides financial
assistance to individuals, corporate and developers for the purchase or construction of
residential housing. It also provides property related services (e.g. property
identification, sales services and valuation), training and consultancy. Of these activities,
housing finance remains the dominant activity. The bank offers many innovative
products & services to individuals, corporate, trusts, governments, partnerships, financial
institutions, mutual funds, insurance companies. HDFC raises funds from international
agencies such as World Bank, IFC (Washington), domestic term loans from banks and
insurance companies, bonds and deposits. HDFC Standard Life Insurance Company
Limited, promoted by HDFC was the first life insurance company in the private sector to
be granted a certificate of Registration (on October 23, 2000) by Insurance Regulatory
and development Authority to transact life insurance business in India. In 2007 HDFC
Bank acquired Centurion Bank of Punjab taking its total branches to more than 1,000.
Net Profit for the year ended March 31, 2006 was Rs. 1,141 crores. Results of the latest
quarter ended June 2007, indicate that the bank continues to grow in a steady manner
Mission
Our mission is to be “a World Class Indian Bank”, benchmarking ourselves against
international standards and best practices in terms of product offerings, technology,
service levels, risk management and audit & compliance. The objective is to build sound
customer franchises across distinct businesses so as to be a preferred provider of banking
services for target retail and wholesale customer segments, and to achieve a healthy
growth in profitability, consistent with the Bank’s risk appetite. We are committed to do
this while ensuring the highest levels of ethical standards, professional integrity,
corporate governance and regulatory compliance.
Mutual Fund schemes of HDFC Bank:
KGIM, New Delhi

HDFC bank deals in lots and lots of mutual fund scheme, It is not possible to name all of
them but below are the few schemes of the bank:-
• HDFC Growth Fund (Growth Scheme)
• HDFC Growth Fund (Dividend Scheme)
• HDFC Tax saver Fund (Dividend Plan)
• HDFC Tax saver Fund (Growth Plan)
• HDFC Index Fund Sensex Plan (Growth Plan)
• HDFC Equity Fund (Dividend Option)
• HDFC Monthly Income Plan Short Term Plan (Growth Option)
• HDFC Income Fund (Dividend Option) etc.
HDFC Asset Management Company

HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies
Act, 1956, on December 10, 1999, and was approved to act as an Asset Management
Company for the HDFC Mutual Fund by SEBI vide its letter dated June 30, 2000. In
terms of the Investment Management Agreement, the Trustee has appointed the HDFC
Asset Management Company Limited to manage the Mutual Fund. The paid up capital
of the AMC is Rs. 25.161 crore.
CHAPTER - 3
Mutual Funds
Mutual Fund is a common pool of money into which investors with common investment
objective place their contributions that are to be invested in accordance with the stated
investment objective of the scheme. The investment manager would invest the money
collected from the investor into assets that are defined/permitted by the stated objective
of the scheme. It is 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.
KGIM, New Delhi

For example: An equity fund would invest an equity and equity related instruments and
debt fund would invest in bonds, debentures etc.
The income earned through these investments and the capital appreciation thus realized,
are shared by its unit holders in proportion to the number of units owned by them. Thus,
a mutual fund is the most suitable investment for the common person as it offers an
opportunity to invest in a diversified, professionally-managed basket of securities at a
relatively low cost.
Chart -1
Source – www.amfiindia.com
Origin of Mutual Fund industry in India:-
The origin of mutual fund industry in India is with the introduction of the concept of
mutual fund by UTI in the year 1963. 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 dramatic improvements, both
quality wise as well as quantity wise. Before, the monopoly of the market had seen an
ending phase, the Assets Under Management (AUM) was Rs. 67bn. The private sector
entry to the fund family rose the AUM to Rs. 470 bn in March 1993 and till April 2004,
KGIM, New Delhi

it reached the height of 1,540 bn. Putting the AUM of the Indian Mutual Funds Industry
into comparison, the total of it is less than the deposits of SBI alone, constitute less than
11% of the total deposits held by the Indian banking industry.
The main reason of its poor growth is that the mutual fund industry in India is new in the
country. Large sections of Indian investors are yet to be intellectuated with the concept.
Hence, it is the prime responsibility of all mutual fund companies, to market the product
correctly abreast of selling.
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. It was set up
by the Reserve Bank of India and functioned under the Regulatory and administrative
control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the
Industrial Development Bank of India (IDBI) took over the regulatory and administrative
control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At
the end of 1988 UTI had Rs.6,700 crores of assets under management.
Second Phase -1987-1993 (Entry of Public Sector Funds)

Entry of non-UTI mutual funds. SBI Mutual Fund was the first 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 in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets under
management.
Third Phase 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian mutual
fund industry, giving the Indian investors a wider choice of fund families. Also, 1993
was the year in which the first Mutual Fund Regulations came into being, under which
all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari
KGIM, New Delhi

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.
The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and
acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets
of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under
management was way ahead of other mutual funds.
Fourth Phase since February 2003
This phase had bitter experience for UTI. It was bifurcated into two separate entities.
One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835
crores (as on January 2003). The Specified Undertaking of Unit Trust of India,
functioning under an administrator and under the rules framed by Government of India
and does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of
AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector
funds, the mutual fund industry has entered its current phase of consolidation and
growth. As at the end of September, 2004, there were 29 funds, which manage assets of
Rs.153108 crores under 421 schemes.
Understanding Mutual Funds :
KGIM, New Delhi

Mutual fund is a trust that pools money from a group of investors (sharing common
financial goals) and invest the money thus collected into asset classes that match the
stated investment objectives of the scheme. Since the stated investment objectives of a
mutual fund scheme generally forms the basis for an investor's decision to contribute
money to the pool, a mutual fund can not deviate from its stated objectives at any point
of time.
Every Mutual Fund is managed by a fund manager, who using his investment
management skills and necessary research works ensures much better return than what
an investor can manage on his own. The capital appreciation and other incomes earned
from these investments are passed on to the investors (also known as unit holders) in
proportion of the number of units they own.
Chart 2
Source: appuonline.com
KGIM, New Delhi

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.
For example:
A. If the market value of the assets of a fund is Rs. 100,000
B. The total number of units issued to the investors is equal to 10,000.
C. Then the NAV of this scheme = (A)/(B), i.e. 100,000/10,000 or 10.00
D. Now if an investor 'X' owns 5 units of this scheme
E. Then his total contribution to the fund is Rs. 50 (i.e. Number of units held
multiplied by the NAV of the scheme)
Net Asset Value(NAV’s):- A mutual fund’s share price, computed by subtracting total
liabilities from total assets and dividing by the number of shares outstanding.
Systematic Investment Plan (SIP):- HDFC MF SIP is similar to a Recurring Deposit.

Every month on a specified date an amount you choose is invested in a mutual fund
scheme of your choice. The dates currently available for SIPs are the 1st, 5th, 10th,
15th, 20th and the 25th of a month.
Current scenario of Mutual Funds
The Indian mutual industry has seen the launch of various new and innovative schemes
over the last few years. There were 400 plus new fund offers (NFO’s) in financial year
2006-2007 as against previous year. Funds worth Rs. 1.4 trillion were raised through
NFOs, as against Rs. 705.83 bn in the previous financial year. Investments in equity
KGIM, New Delhi

schemes shot up by 47%, reflecting the buoyancy in the Indian stock markets. Retail
penetration increased and investor base is now expected to be over 2.5 crores. MFs
attracted people in the upper income range with 40% of such investors earning between
Rs. 2 lakhs to Rs. 5 lakhs annually. 77% of investments in MFs come from super metros
& class 1 towns. Middle class income group invest more in MFs as compared to higher
income and low income group.
TYPES OF MUTUAL FUND SCHEMES

On the basis of Structure:-
1) Open-ended funds
Funds that can sell and purchase units at any point in time are classified as Open-end
Funds. The fund size (corpus) of an open-end fund is variable (keeps changing) because
of continuous selling (to investors) and repurchases (from the investors) by the fund. An
open-end fund is not required to keep selling new units to the investors at all times but is
required to always repurchase, when an investor wants to sell his units. The NAV of an
open-end fund is calculated every day.
2) Closed-end Funds
Funds that can sell a fixed number of units only during the New Fund Offer (NFO)
period are known as Closed-end Funds. The corpus of a Closed-end Fund remains
unchanged at all times. After the closure of the offer, buying and redemption of units by
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the investors directly from the Funds is not allowed. However, to protect the interests of
the investors, SEBI provides investors with two avenues to liquidate their positions:
1. Closed-end Funds are listed on the stock exchanges where investors can buy/sell
units from/to each other. The trading is generally done at a discount to the NAV of
the scheme. The NAV of a closed-end fund is computed on a weekly basis (updated
every Thursday).
2. Closed-end Funds may also offer "buy-back of units" to the unit holders. In this case,
the corpus of the Fund and its outstanding units do get changed.
On the basis of Investment:-
1) Equity Funds
Equity funds are considered to be the more risky funds as compared to other fund types,
but they also provide higher returns than other funds. It is advisable that an investor
looking to invest in an equity fund should invest for long term i.e. for 3 years or more.
There are different types of equity funds each falling into different risk bracket. In the
order of decreasing risk level, there are some of those types of equity funds:
a) Growth Funds - Growth Funds also invest for capital appreciation (with time horizon
of 3 to 5 years) but they are different from Aggressive Growth Funds in the sense that
they invest in companies that are expected to outperform the market in the future.
Without entirely adopting speculative strategies, Growth Funds invest in those
companies that are expected to post above average earnings in the future.
b) Equity Income or Dividend Yield Funds - The objective of Equity Income or

Dividend Yield Equity Funds is to generate high recurring income and steady capital
appreciation for investors by investing in those companies which issue high dividends
(such as Power or Utility companies whose share prices fluctuate comparatively lesser
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than other companies' share prices). Equity Income or Dividend Yield Equity Funds are
generally exposed to the lowest risk level as compared to other equity funds.
2) Debt / Income Funds
Funds that invest in medium to long-term debt instruments issued by private companies,
banks, financial institutions, governments and other entities belonging to various sectors
(like infrastructure companies etc.) are known as Debt / Income Funds. Debt funds are
low risk profile funds that seek to generate fixed current income (and not capital
appreciation) to investors. In order to ensure regular income to investors, debt (or
income) funds distribute large fraction of their surplus to investors. Although debt
securities are generally less risky than equities, they are subject to credit risk (risk of
default) by the issuer at the time of interest or principal payment. To minimize the risk of
default, debt funds usually invest in securities from issuers who are rated by credit rating
agencies and are considered to be of "Investment Grade". Debt funds that target high
returns are more risky. Based on different investment objectives, there can be following
types of debt funds:
a) Diversified Debt Funds - Debt funds that invest in all securities issued by entities
belonging to all sectors of the market are known as diversified debt funds. The best
feature of diversified debt funds is that investments are properly diversified into all
sectors which results in risk reduction. Any loss incurred, on account of default by a debt
issuer, is shared by all investors which further reduces risk for an individual investor.
b) High Yield Debt funds - As we now understand that risk of default is present in all
debt funds, and therefore, debt funds generally try to minimize the risk of default by
investing in securities issued by only those borrowers who are considered to be of
"investment grade". But, High Yield Debt Funds adopt a different strategy and prefer
securities issued by those issuers who are considered to be of "below investment grade".
The motive behind adopting this sort of risky strategy is to earn higher interest returns
from these issuers. These funds are more volatile and bear higher default risk, although
they may earn at times higher returns for investors.
KGIM, New Delhi

c) Fixed Term Plan Series - Fixed Term Plan Series usually are closed-end schemes
having short term maturity period (of less than one year) that offer a series of plans and
issue units to investors at regular intervals. Unlike closed-end funds, fixed term plans are
not listed on the exchanges. Fixed term plan series usually invest in debt / income
schemes and target short-term investors. The objective of fixed term plan schemes is to
gratify investors by generating some expected returns in a short period.
3) Money Market / Liquid Funds
Money market / liquid funds invest in short-term (maturing within one year) interest
bearing debt instruments. These securities are highly liquid and provide safety of
investment, thus making money market / liquid funds the safest investment option when
compared with other mutual fund types. However, even money market / liquid funds are
exposed to the interest rate risk. The typical investment options for liquid funds include
Treasury Bills (issued by governments), Commercial papers (issued by companies) and
Certificates of Deposit (issued by banks).
On the basis of Schemes:-
1) Commodity Funds
Those funds that focus on investing in different commodities (like metals, food
grains, crude oil etc.) or commodity companies or commodity futures contracts are
termed as Commodity Funds. A commodity fund that invests in a single commodity
or a group of commodities is a specialized commodity fund and a commodity fund
that invests in all available commodities is a diversified commodity fund and bears
less risk than a specialized commodity fund. "Precious Metals Fund" and Gold Funds
(that invest in gold, gold futures or shares of gold mines) are common examples of
commodity funds.
2) Real Estate Funds
Funds that invest directly in real estate or lend to real estate developers or invest in
shares/securitized assets of housing finance companies, are known as Specialized
KGIM, New Delhi

Real Estate Funds. The objective of these funds may be to generate regular income
for investors or capital appreciation.
CHAPTER – 4
Analysis of Questionnaire
Now after the introduction of the mutual funds and the HDFC Bank below is the analysis
of the responses which I get from the customers of the HDFC Bank about the mutual
funds and different other financial instruments.
Analysis of the responses of the consumers:-
Investm ent in Mutual fund
No
13%
Yes
87%
Fig. 1(refer to annexure 2 table 1)
KGIM, New Delhi

According to the survey which I did taking 76 people as the sample size approximately
86% of people have invested in mutual fund and only 13% did not ever invested in
mutual funds.
continuing investm ent in m utual fund
22%
No
Yes
78%
As far as continuation of the investment in mutual fund is concerned around 78% people
continued investing in mutual funds and the rest 22% people did not showed any kind of
interest in mutual funds.
Awareness of various financial instruments
78
76
size of people
74
72
70
68
66
64
62
60
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ut
R
fi c
C
M
Eq
Ba
of
st
Po
instrum ents nam e
Fig. 3(refer to annexure 2 table 3 to 13)
KGIM, New Delhi

As far as the awareness of various financial commodities is concerned more or less
people knew about all the instrument which I took but there were 3 instruments which all
the people know were the bank deposits, insurance and gold and silver. The least known
commodities were mutual funds, derivatives and commodities.
Instruments in which people invest
80
70
Size of people
60
50
40
30
20
10
0
Shares Bonds Post NSC Bank fixed Public Any other
office deposits provident
savings fund
Financial Instrum ents
If we talk about the various financial instruments in which people like to invest the most
popular is the bank deposits and then post office savings , provident funds and NSC and
shares. Very less people like to invest in any kind of bonds beside there are also some
other kind of instruments like gold/silver and real estate in which people like to invest.
Annual saving for Investment
16%
38% <50000
17%
50000-100000
zzz 100001-200000
>200000
29%
KGIM, New Delhi

If we look at the savings of the people for further investment about 16% -17% of the
people save less than 50000 annually or upto 1 lakh. On the other hand around 29%
people save upto 2 lakh Rs. Annually for further investment in other instruments and the
maximum people who invest in financial instruments save above Rs 2 lakh.
Savings tow ards Mutual Funds
61%-80%
41%-60% 7%
13%
<25%
48%
26%-40%
32%
As far as the consumers behavior towards mutual funds is concerned out of the 78%
people who like to invest in mutual funds out of the total sample around 48% people say
that they save less than 25% of their saving towards mutual funds and 32% people save
between 26%-40%. Very less percent of people are there who believe in investing
maximum of their saving towards mutual funds.
KGIM, New Delhi

Preference of Funds
60
Size of people
50
40
30
20
10
0
Balanced Grow th Debt fund Tax saving Sectoral Income Any other
fund fund fund fund fund
Funds nam e
Now, if look at the preference of people towards various funds, most of the people like to
invest in the tax-saving fund and after that second preference is given to the growth
funds. Only few people like to invest in balanced fund and any other fund.
Motive of Investm ent
Regular interest
Grow th
20%
28%
Tax benefits
17%
Lucrative Safety
Return 21%
14%
As far as the motive of the people behind the investment in Mutual Funds is concerned
about 50% of people invest in these because of the future growth and investment, 20%
people invest because of the regular interest which is very popular among the retired
people. Around 17% people are interested because of the tax benefit in their income and
the 14% for lucrative return they get with less risk.
KGIM, New Delhi

Source of Inform ation
70
60
Size of people 50
40
30
20
10
0
Business paper New s channel Experts advice Relatives advice Others
Sources
The information regarding how much and in which mutual fund to invest is made mostly
by taking the experts advice and after that most of the investments are done by collecting
right information from business paper and the news channel. Very less people invest by
the opinion of their relatives and other sources.
Monitor the performance
35
30
Size of people
25
20
15
10
5
0
<1 month 1-3 times a once a w eek 2-3 times a 4-5 times a Daily
month w eek w eek
Period
Most of the people watch the performance of their fund mostly 1 to 3 times a month or
once in a month. Around 25% of people watch the performance weekly or daily.
KGIM, New Delhi

Preference to Mutual fund as Investm ent
Most preferred
41%
Least preferred
59%

As far as the preference to mutual fund is considered for making investments only 41 %
of people like to invest in mutual funds and rest 59% like to invest in other financial
instruments or have discontinued investment in mutual funds. This shows that mutual
fund is not very popular among the public.
Open-ended MF are very liquid
Disagreed
29%
Agreed
Neither agreed
63%
nor disagreed
8%
Fig .12(refer to annexure 2 table 41)

We all know that there are 2 types of mutual fund open ended and closed ended funds.
As far as the liquidity of the open ended mutual funds are concerned about 63% of the
KGIM, New Delhi

people are agreed that open ended mutual funds are more liquid than closed ended, 29 %
of people disagree with this statement and 8% people are unable to say anything.
Mutual funds are safer than investing in equity.
Disagreed
29%
Agreed
62% Neither agreed
nor disagreed
9%

Maximum number of people are agreed with the statement that mutual funds are safer
than that of investing in equity funds is as 62% of people supported this statement and
0nly 29% people disagree with this statement and around 9% people say that they are not
clear about this.
Tax savings mutual funds give higher return than other

instruments like PPF, NSC etc
Disagreed
42%
Agreed
50%
Neither agreed nor

disagreed
8%

As far as tax-saving mutual funds are concerned about 50% people agree that the tax
saving mutual funds give higher return than that of other financial instruments like public
KGIM, New Delhi

provident fund and NSC but 42% are also against this statement and 8% people are not
in the position to say anything.
Performance of mutual funds depends upon the capability of

fund manager
Disagreed
20%
Agreed Neither agreed

56% nor disagreed
24%

When people invest in the mutual funds there is a mediator who is known as the fund
manager who manages the funds and 56% people agree that his capability is very much
required in the performance of the mutual funds. 20% of people do not agree with this
and 24% of people even don’t know about the fund managers role for their funds.
Some of the people discontinued investing in mutual funds due to various reasons.
Below are the few reasons behind their disinvestment.
Objectives of the funds are not understood properly
Agreed
28%
Disagreed
54%
Neither agreed
nor disagreed
18%
KGIM, New Delhi

Around 28% of the people say that they are unable to understand the objective of the
mutual funds and how it is worked by the manager but 54 % of the people are against
this and their reason behind disinvestment was other than this.
Real estate giving better return at low risk
Disagreed
26%
Neither agreed
Agreed nor disagreed
66% 8%

Around 66% of the people are of the opinion that real estate is providing them much
better return than the mutual funds and though at the lesser risk and that is why they
prefer to make their maximum investment in that sector only. On the other hand 26%
people are not in favor of this and this is not the reason behind their disinvestment.
Around 8% people neither agreed nor disagreed regarding this cause.
KGIM, New Delhi

Returns from m utual fund not up to the satisfaction
Disagreed
11%
Neither agreed
nor disagreed
16%
Agreed
73%

Around 73% people say that they are not satisfied with the return they get on mutual
funds and there are other things which provide them higher return than mutual funds.
11% people do not take this reason as the cause of their disinvestment and 16% are not in
the position to say anything.
Personal needs m ade m e w ithdraw from the fund
Agreed
26%
Neither agreed
Disagreed
nor disagreed
65%
9%

Around 26% people say that their personal reasons made them withdraw from the mutual
funds but 65% peoples have different reasons behind their disinvestment and 9% people
can’t say anything.
KGIM, New Delhi

The analysis of the expert on m utual fund on TV and other
m edia made m e w ithdraw from the fund
Agreed
37%
Disagreed
63%
Some people give reason that the analysis of the expert on mutual fund on TV and other
media made them withdraw from the mutual fund but maximum number of people
disagree with this statement.
The stock market burst made us feel insecure
Disagreed
29%
Agreed
Neither agreed nor
60%
disagreed
11%

Large number of people say that mutual funds deal in stock market and its burst made
me feel insecure therefore they tried other options for the investment of their money.
KGIM, New Delhi

Around half of them give other reasons and 11% people are not aware of its impact on
their funds.
Increase in the interest rate on fix deposits by bank

and other equally safe instrum ents
Disagreed
29%
Agreed Neither agreed

62% nor disagreed
9%

About 62% of the people give the reason that the increase in the interest rate on the fix
deposits by the bank drew their attention as they are more safer options with good return
but 29% people give different reason and 9% people are not aware of the reason behind
their decision.
Transferred the m oney from the mutual fund to the rising

equity m arket
Disagreed
Agreed
42%
47%
Neither agreed
nor disagreed
11%
KGIM, New Delhi

Around 47% of people say that they invested their amount on equity shares as they
provide more return than the mutual funds but 42% people say that this is not the reason
behind their disinvestment and 11% people can’t say anything about this.
I applied factor analysis to know the reason behind why people discontinued the
investment in mutual fund and found that the people were not satisfied with the return,
fluctuation in the stock market ,good return in real estate and increased interest rate in
bank deposit are the main factors.
Benefits of the Mutual Funds

1) Professional Management:- Mutual Funds are those investment which provides the
professional management of the funds invested by the person. The thing which is very
good about mutual funds is that the when you invest in a good mutual fund you get the
advantage of skilled professionals who make it properly taking into consideration the
risk and return factor.
2) Diversification:- One of the best protections against risk which mutual funds provide
is the diversification. This is because mutual funds are invested by the companies in
different securities and with this the risk reduces because it rarely happens that the price
of all the securities fall at the same time and in that proportion only. As against to other
investments this feature of the mutual fund makes it less risky.
KGIM, New Delhi

3) Convenience:- Most mutual fund companies go out of their way to make it easy to do
business with them. Mutual funds are very convenient to deal with as it reduces the paper
work to the people and the tension of where and how much to invest also it is managed
by the professional experts who handle it more efficiently than one himself can. You can
usually buy mutual fund shares by mail, phone, or over the Internet
4) Quick and Easy of Money. Generally, fund shares can be bought or sold on any
regular business day. Of course, some funds may have redemption fees and other
provisions but their transactions are very easy. In some cases (i.e., money in certain
retirement plans, when gains have been realized, etc.) there may be taxes and/or penalties
imposed.
5) Low Minimum Investments: The investment in Mutual funds does not cost much
because of the less brokerage cost and other fees which the investor has to pay. The
investor does not have to pay much including all kind of fees to be given.
6) Choice of schemes:- Mutual funds provide investors with various schemes with
different investment objectives. Investors have the option of investing in a scheme
having a correlation between its investment objectives and their own financial goals.
These schemes further have different plans/options
7) Transparency:- Funds provide investors with updated information pertaining to the

markets and the schemes. All material facts are disclosed to investors as required by the
regulator.
8) Liquidity:- It's easy to get your money out of a mutual fund. Write a check, make a
call, and you've got the cash.
Disadvantages of Mutual Funds

1) Cost control not in the hands of the investor:- Investor has to pay investment
management fees and fund distribution costs as a percentage of the value of his
investments (as long as he holds the units), irrespective of the performance of the fund.
KGIM, New Delhi

2) No customized portfolios:- The portfolio of securities in which a fund invests is a
decision taken by the fund manager. Investors have no right to interfere in the decision
making process of a fund manager, which some investors find as a constraint in
achieving their financial objectives.
3) Difficulty in selecting a suitable fund scheme:- Many investors find it difficult to

select one option from the plethora of funds/schemes/plans available. For this, they may
have to take advice from financial planners in order to invest in the right fund to achieve
their objectives.
Conclusion
It can be concluded from the above discussion that the retail investors are hardly
conscious of MF investments leaving the scope to conclude that to some extent a good
number of retail investors have not preferred, but rather were induced to invest in MFs. If
at all the investors' decision was a preferred choice it was without complete awareness to
the investor about the MF as an investment instrument and its relative features like risk,
return, and load. Important inducing factors are aggressive marketing of AMCs,
abnormal returns in the recent times, misperception of MF as an equal substitute with
more returns, tax benefits, and liquidity of the investment.
Growth of bank deposits could not equate the pace of increase in demand for credit as
the retail investor's savings are attracted by MFs. With this transformation, the MF
industry is growing steadily and reaching new heights from year to year. Though an
increase in AUM is a good sign, the retail investors have to be very cautious as most of
the AMCs are not transparent. Before investing in MFs, which is a non-conventional
investment source, the retail investor should invest in himself by putting efforts on
KGIM, New Delhi

educating himself making his investments translucent and more productive, following
the prerequisites and investment principles before investing in MFs thereby making
qualitative investment leading to wealth accumulation.
While regulating AMCs to bring more transparency, it is the responsibility of Sebi to

create awareness about MFs to the retail investor and safeguard their interest. With the
launch of new funds like derivative funds, real estate fund, etc., the future of MFs in
India is looking bright and may still continue to divert the flow of savings to MFs and
grow further in terms of AUM. In order to grow and attain market leadership, it is also
the responsibility of the MF companies to understand the investor's needs or objectives
and reach him effectively with more transparency making MF investment a preferred
choice. With the structural liberalization policies no doubt Indian economy is likely to
return to a high grow path in few years. Hence mutual fund organizations are needed to
upgrade their skills and technology.
Major Findings
My findings regarding the consumers behavior towards mutual funds on the basis of my
survey in HDFC bank was that :
• Around 70% of people know about the mutual funds among the various financial
instruments but only 40% people like to invest in it.
• Maximum people like to invest in bank deposits, PPF and post office savings and
the basic reason behind this fact is the growth, safety and the tax benefit which
the people get on these instruments.
• The basic source of information to the people for these funds is the experts advice
and the advertisements through business papers and news channels.
• As far as those people are concerned who invest in mutual funds according
tothem mutual funds are more safer than investing in equity. Only 50% agree
with this that tax saving mutual funds give higher return than other instruments
like PPF, NSC etc. and the performance of mutual fund depends on the funds
managers capability.
KGIM, New Delhi

• Some people discontinued the investment in mutual funds because they mostly
prefer to invest in real estate, many also say that they are not satisfied with the
returns in mutual funds, large proportion of people also agree that increase in
bank deposits rate and moreover their safety and the stock market burst made
them to invest in other financial instruments and discontinued investment in
mutual funds.
Recommendations
As mutual fund has entered into the Indian Capital market, growing profitable enough to
attract competitors into this cherished territory encouraging competition among all the
mutual fund operators, there is need to take some strategy to bring more confidence
among investors for which mutual fund would be able to project the image successfully.
The followings are some of the suggestions:
• As there is no comprehensive law to regulate the mutual fund in India, uniform
coordinated regulations by a single agency would be formed which would
provide the shelter to the investors.
• As the investors are not willing to invest in mutual fund unless a minimum return
is assured, it is very essential to create in the mind of the investors that mutual
funds are market instruments and associated with market risk hence mutual fund
could not offer guaranteed income.
KGIM, New Delhi

• Most of the mutual funds are operated in the public sector hence private sector
may be allowed to float mutual funds, intensifying competition in this industry.
• As there is no distinction between trustees, sponsors and fund managers, it is
necessary to regulate frame work for a clear demarcation between the role of
constituents, such as shelter, trustee and fund manager to protect the interest of
the small investors.
• Steps should be taken for funds to make fair and truthful disclosures of
information to the investors, so that subscribers know what risk they are taking
by investing in fund.
BIBLIOGRAPHY
•
http://finance.indiamart.com/india_business_information/mutual_funds_indus
try.html
• http://www.personalfn.com/detail.asp?date=9/11/2006&story=1
• http://www.finweb.com/investing/the-basics-of-mutual-funds-pt2.html
• http://www.fundsavvy.com/mutual_funds_articles/mutual-funds.htm
• http://moneycontrol.com/india/mutualfunds/mfinfo/08/33/amcsnap/HD
• http://www.personalfn.com/research-it/mutual-funds/fundarena/amcreport.asp?
hcode=00037
• http://www.iloveindia.com/finance/indian-mutual-funds/hdfc.html
• http://www.domain-b.com/industry/housing_finance/20071009_increases.html
KGIM, New Delhi

• http://www.nodebtnosweat.com/benefits_of_mutual_funds.htm
• http://business.mapsofindia.com/investment-industry/benefits-of-mutual-
funds.html
• http://www.metlife.com/Applications/Corporate/WPS/CDA/PageGenerator/0,413
2,P379,00.html
• http://finance.indiamart.com/india_business_information/types_of_schemes_mut
ual_funds.html
• http://www.appuonline.com/mf/knowledge/concept.html
• http://www.wealthpositive.com/hdfc_mutual_fund_schemes.shtml
Annexure 1
1. QUESTIONNAIRE ON SURVEY OF MUTUAL FUNDS IN INDIA
Kindly tick (√)/ cross (X)/ darken the relevant option in the questions that
follow
1. Have you ever invested in mutual fund?
a) Yes
b) No
2. Are you continuing investment in mutual fund presently?
a) Yes
KGIM, New Delhi

b) No
3. Are you aware of the following investment tools?
Scheme Name Awareness

a) Bank deposits
b) Post office savings
c) N.S.C
d) Govt.
bonds/debentures
e) Equity shares/IPO’s
f) Mutual funds
g) Insurance
h) Derivatives
i) Commodities
j) Gold/Silver
k) Real estate
4. Besides mutual funds, in which of the following instruments do you invest? Select as
many as applicable.
a) Shares
b) Bonds
c) Post-office
savings
d) NSC
e) Bank fixed
deposits
f) Public
provident fund
g) Any other, pl.

specify
5. How much is your annual saving?
a) Less than
Rs.50,000
b) Rs.50,001 to
Rs.1,00,000
KGIM, New Delhi

c) Rs.1,00,001 to
Rs.2,00,000
d) Above
Rs.2,00,000
6. How much of your saving goes in for investment in mutual funds?
a) Less than 25%
b) 26% to 40%
c) 41% to 60%
d) 61% to 80%
e) Above 80%
7. List out two most important funds which are preferred by you?
a) Balanced fund
b) Growth funds
c) Debt funds
d) Tax saving funds
e) Sectoral funds
f) Income fund
g) Any other (pl. specify)
8. What are the motives for investment in mutual funds?
a) Growth
b) Safety
c) Lucrative Return
d) Tax benefits
e) Regular interest
9. What is your source of information for the purchase of mutual funds?

a) Business paper
b) News channel
c) Experts advice
KGIM, New Delhi

d) Recommendation of friends and family members
e) Others
10. How often do you monitor the performance of your mutual fund?
a. Less than once a month
b. One to three times a

month
c. Once a week
d. Two to three times a

week
e. Four to five times a

week
f. Daily
11. Please indicate in the box below the degree of preference (1-11) you assign to mutual
funds as a means of investment.
1 2 3 4 5 6 7 8 9 10 11
Least Most
Preferred Preferred
12. Please indicate your degree of agreement/disagreement for the following statements on a
7-point scale as indicated below.
SD = Strongly disagree,
D = Disagree,
SWD = Somewhat disagree,
NDNA = Neither disagree nor agree,
SWA = Somewhat agree
A = Agree, &
SA = Strongly Agree
KGIM, New Delhi

SW ND SW
No. Statement SD D A SA
D NA A
Returns on mutual funds are
higher than safe instruments like
a. bank deposits, PPF, government
securities etc.
b. Open-ended MF are very liquid.
Mutual funds are safer than
c. investing in equity.
Tax savings mutual funds give
d. higher return than other
instruments like PPF, NSC etc.
Performance of mutual funds
e. depends upon the capability of
fund manager.
(To be filled up by those investors who were earlier investing in mutual

funds but have now discontinued.)
13. Please indicate your degree of agreement/disagreement for the following statements on a
7-point scale as indicated below.
SD = Strongly disagree,
D = Disagree,
SWD = Somewhat disagree,
NDNA = Neither disagree nor agree,
SWA = Somewhat agree
A = Agree, &
SA = Strongly Agree
ND-
No. Statement SD D SWD SWA A SA
NA
a Objectives of the funds are not
)B understood properly
b Real estate giving better return at

) low risk
C
c Returns from mutual fund not up

)d to the satisfaction
d Personal needs made me withdraw

)e from the fund
KGIM, New Delhi

The analysis of the expert on
e
mutual fund on TV and other
)f
media made me withdraw from the
fund.
f The stock market burst made us
)g feel insecure
g Increase in the interest rate on fix

)h deposits by bank and other equally
safe instruments
h Transferred the money from the
) mutual fund to the rising equity
i market
Demographic:
Name:
Age
Less than 25 years
25 to 35 years
36 to 50 years
More than 50 years
Sex
Male
Female
KGIM, New Delhi

Annexure 2
Table 1
Invested
Cumulative
Frequency Percent Valid Percent Percent
Valid no 10 13.2 13.2 13.2
yes 66 86.8 86.8 100.0
Total 76 100.0 100.0
Table 2
Continuing investment
Cumulative
Valid no 17 22.4 22.4 22.4
yes 59 77.6 77.6 100.0
Total 76 100.0 100.0
Table 3
Bank deposits
Cumulative
Valid yes 76 100.0 100.0 100.0
Table 4
Post office savings
Cumulative
Valid no 3 3.9 3.9 3.9
yes 73 96.1 96.1 100.0
Total 76 100.0 100.0
Table 5
NSC
Cumulative
Valid no 4 5.3 5.3 5.3
KGIM, New Delhi

yes 72 94.7 94.7 100.0
Total 76 100.0 100.0
Table 6
Govt bonds
Cumulative
Valid no 4 5.3 5.3 5.3
yes 72 94.7 94.7 100.0
Total 76 100.0 100.0
Table 7
Equity shares
Cumulative
Valid no 5 6.6 6.6 6.6
yes 71 93.4 93.4 100.0
Total 76 100.0 100.0
Table 8
Mutual fund
Cumulative
Valid no 9 11.8 11.8 11.8
yes 67 88.2 88.2 100.0
Total 76 100.0 100.0
Table 9
Insurance
Cumulative
Valid yes 76 100.0 100.0 100.0
Table 10
Derivatives
Cumulative
Valid no 10 13.2 13.2 13.2
yes 66 86.8 86.8 100.0
Total 76 100.0 100.0
KGIM, New Delhi

Table 11
commodities
Cumulative
Valid no 10 13.2 13.2 13.2
yes 66 86.8 86.8 100.0
Total 76 100.0 100.0
Table 12
Gold/silver
Cumulative
Valid yes 76 100.0 100.0 100.0
Table 13
Real estate
Cumulative
Valid no 2 2.6 2.6 2.6
yes 74 97.4 97.4 100.0
Total 76 100.0 100.0
Table 14
Shares
Cumulative
Valid no 14 18.4 18.4 18.4
yes 62 81.6 81.6 100.0
Total 76 100.0 100.0
Table 15
Bonds
Cumulative
Valid no 36 47.4 47.4 47.4
yes 40 52.6 52.6 100.0
Total 76 100.0 100.0
KGIM, New Delhi

Table 16
Post office savings
Cumulative
Valid no 14 18.4 18.4 18.4
yes 62 81.6 81.6 100.0
Total 76 100.0 100.0
Table 17
NSC
Cumulative
Valid no 14 18.4 18.4 18.4
yes 62 81.6 81.6 100.0
Total 76 100.0 100.0
Table 18
Bank deposits
Cumulative
Valid no 7 9.2 9.2 9.2
yes 69 90.8 90.8 100.0
Total 76 100.0 100.0
Table 19
PPF
Cumulative
Valid no 11 14.5 14.5 14.5
yes 65 85.5 85.5 100.0
Total 76 100.0 100.0
Table 20
Annual Saving
Cumulative
Valid <50000 12 15.8 15.8 15.8
50000 to
13 17.1 17.1 32.9
100000
100001 to 22 28.9 28.9 61.8
KGIM, New Delhi

200000
above
29 38.2 38.2 100.0
200000
Total 76 100.0 100.0
Table 21
Savings for mutual fund
Cumulative
Valid <25% 37 48.7 48.7 48.7
26% to
24 31.6 31.6 80.3
40%
41% to
10 13.2 13.2 93.4
60%
61% to
5 6.6 6.6 100.0
80%
Total 76 100.0 100.0
Table 22
Balance fund
Cumulative
Valid no 51 67.1 67.1 67.1
yes 25 32.9 32.9 100.0
Total 76 100.0 100.0
Table 23
Growth fund
Cumulative
Valid no 28 36.8 36.8 36.8
yes 48 63.2 63.2 100.0
Total 76 100.0 100.0
Table 24
Debt fund
Cumulative
Valid no 69 90.8 90.8 90.8
yes 7 9.2 9.2 100.0
Total 76 100.0 100.0
KGIM, New Delhi

Table 25
Tax saving fund
Cumulative
Valid no 24 31.6 31.6 31.6
yes 52 68.4 68.4 100.0
Total 76 100.0 100.0
Table 26
Sectoral fund
Cumulative
Valid no 66 86.8 86.8 86.8
yes 10 13.2 13.2 100.0
Total 76 100.0 100.0
Table 27
Income fund
Cumulative
Valid no 67 88.2 88.2 88.2
yes 9 11.8 11.8 100.0
Total 76 100.0 100.0
Table 28
Any other
Cumulative
Valid no 76 100.0 100.0 100.0
Table 29
Growth
Cumulative
Valid no 14 18.4 18.4 18.4
yes 62 81.6 81.6 100.0
Total 76 100.0 100.0
KGIM, New Delhi

Table 30
Safety
Cumulative
Valid no 31 40.8 40.8 40.8
yes 45 59.2 59.2 100.0
Total 76 100.0 100.0
Table 31
lucrative return
Cumulative
Valid no 45 59.2 59.2 59.2
yes 31 40.8 40.8 100.0
Total 76 100.0 100.0
Table 32
Tax benefits
Cumulative
Valid no 39 51.3 51.3 51.3
yes 37 48.7 48.7 100.0
Total 76 100.0 100.0
Table 33
Regular interest
Cumulative
Valid no 33 43.4 43.4 43.4
yes 43 56.6 56.6 100.0
Total 76 100.0 100.0
Table 34
Business paper
Cumulative
Valid no 28 36.8 36.8 36.8
yes 48 63.2 63.2 100.0
KGIM, New Delhi

Total 76 100.0 100.0
Table 35
News channel
Cumulative
Valid no 27 35.5 35.5 35.5
yes 49 64.5 64.5 100.0
Total 76 100.0 100.0
Table 36
Experts advice
Cumulative
Valid no 18 23.7 23.7 23.7
yes 58 76.3 76.3 100.0
Total 76 100.0 100.0
Table 37
Recommendation of friends
Cumulative
Valid no 56 73.7 73.7 73.7
yes 20 26.3 26.3 100.0
Total 76 100.0 100.0
Table 38
Ohers
Cumulative
Valid no 65 85.5 85.5 85.5
yes 11 14.5 14.5 100.0
Total 76 100.0 100.0
Table 39
Table monitor the performance
Cumulative
Valid <1 month 13 17.1 17.1 17.1
KGIM, New Delhi

1 to 3 times a
30 39.5 39.5 56.6
month
once a week 11 14.5 14.5 71.1
2 to 3 times a
6 7.9 7.9 78.9
week
4 to 5 times a
12 15.8 15.8 94.7
week
daily 4 5.3 5.3 100.0
Total 76 100.0 100.0
Table 40
Degree of preference
Cumulative
Valid 3 10 13.2 13.2 13.2
4 7 9.2 9.2 22.4
5 28 36.8 36.8 59.2
6 6 7.9 7.9 67.1
7 18 23.7 23.7 90.8
9 7 9.2 9.2 100.0
Total 76 100.0 100.0
Table 41
Open ended funds are more liquid
Cumulative
Valid disagree 10 13.2 13.2 13.2
somewhat
12 15.8 15.8 28.9
disagree
neither
disagree nor 6 7.9 7.9 36.8
agree
somewhat
15 19.7 19.7 56.6
agree
agree 19 25.0 25.0 81.6
strongly agree 14 18.4 18.4 100.0
Total 76 100.0 100.0
Table 42
Mutual funds are safer than equity
Cumulative
Valid strongly 4 5.3 5.3 5.3
disagree
KGIM, New Delhi

disagree 6 7.9 7.9 13.2
somewhat
12 15.8 15.8 28.9
disagree
neither
agree
somewhat
13 17.1 17.1 55.3
agree
agree 13 17.1 17.1 72.4
strongly agree 21 27.6 27.6 100.0
Total 76 100.0 100.0
Table 43
Tax saving funds give more return
Cumulative
Valid strongly
9 11.8 11.8 11.8
disagree
disagree 8 10.5 10.5 22.4
somewhat
15 19.7 19.7 42.1
disagree
neither
agree
somewhat
9 11.8 11.8 61.8
agree
agree 17 22.4 22.4 84.2
strongly agree 12 15.8 15.8 100.0
Total 76 100.0 100.0
Table 44
Performance of fund depends on managers capability
Cumulative
Valid strongly
6 7.9 7.9 7.9
disagree
disagree 9 11.8 11.8 19.7
neither
disagree nor 18 23.7 23.7 43.4
agree
somewhat
16 21.1 21.1 64.5
agree
agree 8 10.5 10.5 75.0
strongly
19 25.0 25.0 100.0
agree
Total 76 100.0 100.0
KGIM, New Delhi

Table 45
Objectives not understood
Cumulative
somewhat
14 18.4 18.4 53.9
disagree
neither
disagree nor 14 18.4 18.4 72.4
agree
agree 9 11.8 11.8 84.2
strongly agree 12 15.8 15.8 100.0
Total 76 100.0 100.0
Table 46
Real estate giving better return
Cumulative
somewhat
13 17.1 17.1 26.3
disagree
neither
agree
somewhat
25 32.9 32.9 67.1
agree
agree 10 13.2 13.2 80.3
strongly agree 15 19.7 19.7 100.0
Total 76 100.0 100.0
Table 47
Returns not satisfactory
Cumulative
Valid somewhat
8 10.5 10.5 10.5
disagree
neither
disagree nor 12 15.8 15.8 26.3
agree
somewhat
11 14.5 14.5 40.8
agree
agree 29 38.2 38.2 78.9
strongly agree 16 21.1 21.1 100.0
Total 76 100.0 100.0
KGIM, New Delhi

Table 48
Personal needs made me withdraw
Cumulative
Valid strongly
19 25.0 25.0 25.0
disagree
disagree 22 28.9 28.9 53.9
somewhat
8 10.5 10.5 64.5
disagree
neither
agree
somewhat
11 14.5 14.5 88.2
agree
agree 9 11.8 11.8 100.0
Total 76 100.0 100.0
Table 49
Analysis of expert made me withdraw
Cumulative
Valid strongly
9 11.8 11.8 11.8
disagree
disagree 27 35.5 35.5 47.4
somewhat
12 15.8 15.8 63.2
disagree
somewhat
13 17.1 17.1 80.3
agree
agree 11 14.5 14.5 94.7
strongly agree 4 5.3 5.3 100.0
Total 76 100.0 100.0
Table 50
Stock market burst made me insecure
Cumulative
somewhat
14 18.4 18.4 28.9
disagree
neither
disagree nor 8 10.5 10.5 39.5
agree
somewhat
15 19.7 19.7 59.2
agree
agree 18 23.7 23.7 82.9
KGIM, New Delhi

strongly agree 13 17.1 17.1 100.0
Total 76 100.0 100.0
Table 51
Increased interest rate on deposits
Cumulative
somewhat
11 14.5 14.5 28.9
disagree
neither
agree
somewhat
14 18.4 18.4 56.6
agree
agree 21 27.6 27.6 84.2
strongly agree 12 15.8 15.8 100.0
Total 76 100.0 100.0
Table 52
Transferred the funds to equity
Cumulative
Valid strongly
12 15.8 15.8 15.8
disagree
disagree 9 11.8 11.8 27.6
somewhat
11 14.5 14.5 42.1
disagree
neither
disagree nor 8 10.5 10.5 52.6
agree
somewhat
10 13.2 13.2 65.8
agree
agree 18 23.7 23.7 89.5
strongly agree 8 10.5 10.5 100.0
Total 76 100.0 100.0
Factor Analysis
Table 53
Communalities
KGIM, New Delhi

Initial Extraction
handling mutual funds is
not upto the mark 1.000 .866
objectives not understood 1.000 .752
real estate giving better
return 1.000 .923
returns not satisfactory 1.000 .808
personal needs made me
withdraw 1.000 .851
analysis of expert made me
withdraw 1.000 .443
stock market burst made
me insecure 1.000 .905
increased interest rate on
deposits 1.000 .666
transferred the funds to
equity 1.000 .829
Extraction Method: Principal Component Analysis.
Table 54
Total Variance Explained
Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Su

Component Total % of Variance Cumulative % Total % of Variance Cumulative % Total %
1 3.573 39.703 39.703 3.573 39.703 39.703 3.116
2 1.908 21.197 60.900 1.908 21.197 60.900 2.068
3 1.562 17.361 78.261 1.562 17.361 78.261 1.859
4 .941 10.454 88.715
5 .359 3.989 92.704
6 .325 3.614 96.318
7 .150 1.667 97.985
8 .114 1.271 99.256
9 .067 .744 100.000
Table 55
Component Matrix(a)
Component
1 2 3
objectives not understood -.551 .410 .529
return .438 .750 -.411
returns not satisfactory .689 .101 .568
withdraw -.349 .530 .669
KGIM, New Delhi

withdraw -.631 .207 -.044
me insecure .921 .124 -.206
deposits .672 .429 .173
equity .854 -.085 .306

a 3 components extracted.
Table 56
Rotated Component Matrix(a)
Component
1 2 3
objectives not understood -.190 .846 .003
return .281 -.118 .911
returns not satisfactory .881 .153 -.094
withdraw .067 .918 .065
withdraw -.550 .360 .104
me insecure .727 -.506 .347
deposits .721 .039 .380
equity .881 -.208 -.097
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.
a Rotation converged in 4 iterations.
Table 57
Component Transformation Matrix
Component 1 2 3
1 .878 -.455 .150
2 .117 .508 .853
3 .465 .731 -.499
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.
KGIM, New Delhi

KGIM, New Delhi

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K.R.MANGALAM INSTITUTE OF MANAGEMENT

KGIM, New Delhi

KGIM, New Delhi

KGIM, New Delhi

KGIM, New Delhi

KGIM, New Delhi

The significant outcome of the government policy of liberalization in industrial and

KGIM, New Delhi

KGIM, New Delhi

One person should invest keeping following objectives in mind:

KGIM, New Delhi

Housing Development Finance Corporation Limited (HDFC Bank) is one amongst

KGIM, New Delhi

Mutual Fund schemes of HDFC Bank:

KGIM, New Delhi

HDFC Asset Management Company

KGIM, New Delhi

Origin of Mutual Fund industry in India:-

KGIM, New Delhi

First Phase 1964-87

Second Phase -1987-1993 (Entry of Public Sector Funds)

Third Phase 1993-2003 (Entry of Private Sector Funds)

KGIM, New Delhi

Fourth Phase since February 2003

Understanding Mutual Funds :

KGIM, New Delhi

KGIM, New Delhi

A. If the market value of the assets of a fund is Rs. 100,000

B. The total number of units issued to the investors is equal to 10,000.

C. Then the NAV of this scheme = (A)/(B), i.e. 100,000/10,000 or 10.00

D. Now if an investor 'X' owns 5 units of this scheme

Systematic Investment Plan (SIP):- HDFC MF SIP is similar to a Recurring Deposit.

Current scenario of Mutual Funds

KGIM, New Delhi

TYPES OF MUTUAL FUND SCHEMES

KGIM, New Delhi

On the basis of Investment:-

b) Equity Income or Dividend Yield Funds - The objective of Equity Income or

KGIM, New Delhi

2) Debt / Income Funds

KGIM, New Delhi

On the basis of Schemes:-

2) Real Estate Funds

KGIM, New Delhi

Investm ent in Mutual fund

Fig. 1(refer to annexure 2 table 1)

KGIM, New Delhi

continuing investm ent in m utual fund

Fig. 2(refer to annexure 2 table 2)

Awareness of various financial instruments

instrum ents nam e

Fig. 3(refer to annexure 2 table 3 to 13)

KGIM, New Delhi

Instruments in which people invest

Fig. 4(refer to annexure 2 table 14 to 19)

Annual saving for Investment

KGIM, New Delhi

Savings tow ards Mutual Funds

Fig. 6(refer to annexure 2 table 21)

KGIM, New Delhi

Fig. 7(refer to annexure 2 table 22 to 28)

Motive of Investm ent