EXECUTIVE SUMMARY

Mutual funds have been one of the most preferred investment instruments. They are
looked upon by individual investors as financial intermediaries/ portfolio managers who process
information, identify investment opportunities, formulate investment strategies, invest funds and
monitor progress at a very low cost. Thus the success of mutual funds is essentially the result of
the combined efforts of competent fund managers and alert investors. A competent fund manager
should analyze investor behavior and understand their needs and expectations, to gear up the
performance in order to meet investors’ requirements. The project “Mutual fund investors –
expectations & strategies in changing scenario” is to understand the changing sentiments,
expectations & strategies of the investor.

The volatility of stock market has affected the mutual funds sales. There has been a plunge in the
sales of mutual funds. The expectations & strategies of the investors have changed. This has
become a challenge for fund houses. Investors’ preference has changed. Now they are not sure
about what the investors want. This project aims at understanding their behavior & thus giving
recommendations to SCB for meeting these challenges. Thus, to analyze the difference between
investors’ expectations & investment managers’ approach.

The project will seek to cover all the fundamental aspects related to mutual funds & investment
in mutual funds. The project will also cover the various problems of the global scenario that has
affected the Indian market. Then it will analyze the behavior of investors in changing scenario.

There will also be a comparative analysis of some of the star ranked mutual funds as per the
expectations of the investors, so as to understand whether the star ranked mutual funds are
catering to the requirements & expectations of the investors or not.

Basically, the project is to understand the investors, behavior. This project also covers that what
are the opportunities for such investment products.
IMPORTANCE OF THE STUDY

Various investment options are having significant importance in human general and professional
life. This era can safely be attributed as technology resolution. The many options of investment
has imbibed into the lives of millions of people. Rapid investment advancement has introduced
major changes in the worldwide economic and business atmosphere. Research on customer
attitude and adoption showed there are several factors predetermining the consumer’s attitude
towards mutual funds investment such as person’s demography, motivation and behavior
towards different investment options. It has been found that consumer’s attitudes towards mutual
funds are influenced by the prior experience of savings and new investment options. The
adaptation of mutual funds forced consumers to consider concerns about savings, tax benefits,
and other sources of income options and the protection of future. Mutual funds requires perhaps
the most consumer involvement as it require the consumer to maintain and interact with
additional new investment options. Consumer who invest in mutual funds invest it on ongoing
basis and need to acquire a certain comfort level with the various mutual funds schemes.
In this study consumer attitude or intention to investment is evaluated by perceived
investment, perceived risk and investment pattern by frequency and duration of mutual funds’
investments.
NATURE AND FORM OF RESULTS
All result will be depicted through:-
 Graphs : Bar diagram
 Pie-charts
 Tables

RESEARCH DESIGNS:-
The research group will use the descriptive research design where the main contact technique
will be the survey method. This method will use because it will help us to get the required
responses from the individual based on various parameters such as age, gender, occupation, etc.

SAMPLE SIZE:-
The sampling unit of our study will include males and females (age group 25 to Above 55 years)
from middle and upper middle class, professionals and non-professionals. The sample size will
consist of approximately sampling units.
The sample size for the survey is 30.
RESEARCH OBJECTIVE:-

 To study the impact of perceived investments in Mutual Funds.

 To understand the effect of the changing conditions on the mutual funds.

HYPOTHESIS:-

Set 1
Ho: - Perceived investment has a positive impact on Mutual Funds
H1:- Perceived investment has a negative impact on Mutual Funds.

Set 2
Ho: - Changing condition in mutual funds investment has positive effect on mutual funds.
H1:- Changing condition in mutual funds investment has negative effect on mutual funds.
DATA COLLECTION:-
 We will use both the primary as well as the secondary form of data collection. The primary
data will be collected by the survey method wherein working adults will be interviewed.
 We will refer to secondary data which is available in the form of published articles in
books, newspapers and internet websites.
 So the research will use the Descriptive research design wherein the main tool used would
be the survey method.
 ORIGIN OF MUTUAL FUND IN INDIA

The history of mutual funds dates backs to 19th century when it was introduced in
Europe, in particular, Great Britain. Robert Fleming set up in 1968 the first investment trust
called foreign and colonial investment trust which promised to manage the finance of the
moneyed classes of Scotland by spreading the investment over a number of different stocks.
This investments trust and other investment trusts which were subsequently set up in Brittan
and the U.S, resembled today’s close ended mutual funds. The first mutual in the U.S.,
Massachusetts investor’s trust, was set up in March 1924. This was the open ended mutual
fund.
The stock market crash in 1929, the Great Depression, and the outbreak of the
Second World War slackened the pace of mutual fund industry, innovations in products and
services increased the popularity of mutual funds in the 1990 and 1960. The first
international stock mutual fund was introduced in the U.S. in 1940. In 1976, the first tax
exempt municipal bond funds emerged and in 1979, the first money market mutual funds
were created. The latest additions are the international bond fund in 1986 and arm funds in
1990. This industry witnessed substantial growth in the eighties and nineties increase in the
number of mutual funds, schemes, assets and shareholders. In the US, the mutual fund
industry registered a tenfold growth the eighties. Since 1996, mutual fund assets have
exceeded bank deposits. The mutual fund industry virtually rival each other in size.
 GROWTH OF MUTUAL FUND IN INDIA

By the year 1970, the industry had 361 funds with combined total assets of 47.6 billion
dollars in 10.7 million shareholder’s account. However, from 1970 and on wards rising interest
rates, stock market stagnation, inflation and investor some other reservations about the
profitability of mutual funds, adversely affected the growth of mutual funds. Hence mutual funds
realized the need to introduce new types of mutual funds, which were in true with changing
requirements and interests of the investors. The 1970’s saw a new kind of funds innovation;
funds with no sales commissions called “no load funds”. The largest and most successful no load
family of funds is the is the vanguard funds, created by John Boggle in 1977.
In the series of new product, the first money market mutual fund (MMMF) was started in
November 1971. This new concept signaled a dramatic chance in mutual fund industry. Most
importantly, it attracted new small and individual investors to mutual fund concept and sparked a
surge of creativity in the industry.
 MUTUAL FUNDS
CONCEPT:-
A mutual fund is a pool of money, collected from investors, and is invested according to
certain investment objectives. A mutual fund is created when investors put their money together.
It is therefore a pool of the investors’ funds. The most important characteristic of mutual fund is
that the contribution and the beneficiaries of the fund are the same class of people, namely the
investors. The term mutual means that investors contribute to the pool, and also benefit from the
pool. There are no other claimants to the funds. The pool of funds held mutually by investors is
the mutual fund.
A mutual fund’s business is to invest the funds thus collected, according to the wishes of
the investors who created the pool. In many market these wishes are articulated as “investment
mandates”. Usually, the investors appoint professional investment managers, to manage their
funds. The same objectives achieved when professional investment managers create a product
and offer it for investment to the investors. This product represents a share in the pool and pre-
states investment objectives.
 CHARACTERISTICS OF MUTUAL FUNDS

 A mutual fund actually belongs to the investors who have pooled their funds. The
ownership of the mutual fund is in the hands of the investors.

 A mutual fund is managed by the investment professionals and other service providers,
who earn a fee for their services, from the fund.

 The pool of funds is invested in a portfolio of marketable investments. The value of the
portfolio is updated every day.

 The investor’s share in the fund is denominated by “units” the value of the units change
with the change in the portfolio’s value, every day. The value of one unit of investment is
called the Net Assets Value or NAV.

 The investment portfolio of the mutual fund is created according to the stated investment
objective of the fund.
 ADVANTAGES

 Portfolio Diversification: -
By offering readymade diversified portfolios, mutual funds
enable investors to hold diversified portfolio. Though investors can create their own
diversified portfolios, the costs of creating and monitoring such portfolios can be high,
apart from the fact that investors may lack the professional expertise to manage such a
portfolio.

 Professional Management: -
Mutual fund are managed by investment managers who are
appointed by trustees and bound by the investment management agreement, on the how
and why of their investment management functions.

 Reduction in Risk: -
Mutual funds invest in a portfolio of securities. This means that all the
funds are not invested in the same investment avenue. It is well known that risk and return of
various investment options do not move uniformly or in sympathy with one another. Therefore,
holding a portfolio that is diversified across investment avenues is a wise way to manage risk.
When such a portfolio is liquid and marked to market, it enables investors to continuously
evaluate the portfolio and manage their risks more efficiently.

 Reduce Transaction Cost: -

Mutual funds provide the investors the benefit of economies
of scale, by virtue of their size. Though the individual investor’s contribution may be
small, the mutual fund is large enough to be able to reduce costs. These benefits are
passed on to the investors.

 Liquidity: -
Most of the funds being sold today are open-ended. That is, investors can sell
their existing units, or buy new units, at any point of time, at prices that are related to the
NPV of the fund on the date of the transaction. This enables investors to enjoy a high
level of liquidity on their investment.
 DISADVANTAGES

 No control over cost:-

Since investors do not directly monitor the fund’s operations they
cannot control the costs effectively. Regulators therefore usually limit the expenses of
mutual funds.

 No tailor-made portfolio:-
Mutual fund portfolios are created and marketed by AMCs,
into which investors invest. They cannot create tailor made portfolios.

 Managing a portfolio of funds:-

As the number of mutual fund increase, in order to tailor
a portfolio for himself, an investor may be holding a portfolio of funds, with the costs of
monitoring them & using them, being incurred by him.
 TYPES OF MUTUAL FUNDS

BY BY
STRUCTUR INVESTMENT BY NATURE
E OBJECTIVE

OPEN GROWTH
ENDED EQUITY DEBT BALANCE
OPTION FUNDS FUNDS D FUNDS
SCHEMES

CLOSE SIMPLE GILT

INCOME EQUITY FUNDS
ENDED OPTION
SCHEMES FUNDS

PRIMARY INCOME
INTERVAL MARKET FUNDS
BALANCE FUNDS
SCHEMES D
SCHEMES

SECTOR
SPECIFIC MIPs
FUNDS
MONEY
MARKET
SCHEMES
TAX
SAVING SHORT
FUNDS TERM
(ELSS) PLANS(SIP)

INDEX
FUNDS LIQUID
FUNDS

OTHER
FUNDS
 TYPES OF MUTUAL FUNDS
There are various types of mutual fund schemes available in the market. Currently there are 5373
mutual funds schemes available in the Indian market. Broadly the various types of mutual funds are
differentiated on the basis of:
On the basis of STRUCTURE, mutual funds can be divided into 3 types:

 Open Ended Schemes:-

It is the pool of fund which is open for sales & repurchases. An open-end
fund is one that is available for subscription all through the year. These do not have a fixed maturity.
Investors can conveniently buy and sell units at NAV related prices. Therefore both the amount of funds
that the mutual fund manages & the number of units vary every day. The key feature of open-end
schemes is liquidity.
Open-ended funds have to balance the interests of investors who come in, investors who go out &
investors who stay invested. Open-ended funds are offered for sale at a pre-specified price, in the initial
offer period. After a pre-specified period, the fund is declared open for further sales & repurchases.
These transactions happen at the computed NAV related price.

 Closed Ended Schemes:-

A closed-end fund has a stipulated maturity period which generally
ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors
can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units
of the scheme on the stock exchanges where they are listed. Therefore new investors buy from the
existing investors, & existing investors can liquidate their units by selling them to other willing buyers.
In a closed end funds, thus, the pool of funds can technically be kept constant.
The price at which units can be sold or redeemed depends on the market prices, which is fundamentally
linked to the NAV.
In order to provide an exit route to the investors, some close-ended funds give an option of selling back
the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations
stipulate that at least one of the two exit routes is provided to the investor.

 Interval schemes:-
Interval Schemes are that scheme, which combines the features of open-ended
and close-ended schemes. The units may be traded on the stock exchange or may be open for sale or
redemption during pre-determined intervals at NAV related prices.
On the basis of INVESTMENT OBJECTIVE, mutual funds can be divided into 4 types:

 Growth Option:-
Growth Schemes are also known as equity schemes. The aim of these schemes is to
provide capital appreciation over medium to long term. These schemes normally invest a major part
of their fund in equities and are willing to bear short-term decline in value for possible future
appreciation.
In it incomes earned are retained in the investment portfolio, & allowed to grow, rather than being
distributed to the investors.
The return to the investors is at the rate at which his initial investment has grown over the period for
which he was invested in fund. The NAV will vary with the value of the investment portfolio while
the number of unit held will remain constant.

 Income Scheme:-
Income Schemes are also known as debt schemes. The aim of these schemes is to
provide regular and steady income to investors. These schemes generally invest in fixed income
securities such as bonds and corporate debentures. Capital appreciation in such schemes may be
limited.

 Balanced Funds:-
Funds that invest both in debt & equity markets are called balanced funds.
Balanced Schemes aim to provide both growth and income by periodically distributing a part of the
income and capital gains they earn. A typical balanced fund would be almost equally invested in
both the markets. A balanced fund also tends to provide investors exposure to both equity & debt
markets in one product. Therefore the benefits of diversification get further enhanced, as equity &
debt markets have different risk and return profiles.

 Money Market Schemes:-

Money Market Schemes aim to provide easy liquidity, preservation of
capital and moderate income .These debt funds invest only in instruments with a maturity less than a
year. The investment portfolio is very liquid, & enables investors to hold their investments for very
short horizons of a day or more. These schemes generally invest in safer, short-term instruments,
such as treasury bills, certificates of deposit, commercial paper and inter-bank call money.
On the basis of NATURE, mutual funds can be of 3 types:

a) Equity Funds:-
These funds invest a maximum part of their corpus into equities holdings. The
structure of the fund may vary different for different schemes and the fund manager’s outlook on
different stocks. Equity funds can be further divided into 4 types:

 Simple equity funds:-

These funds invest a pre-dominant portion of the funds mobilized in equity
& equity related products. In most cases about 80-90% of their investments are in equity shares.
These funds have the freedom to invest both in primary & secondary markets for equity.

 Sector Specific funds:-

These funds choose to invest in one or more chosen sectors of the equity
markets. These sectors could vary depending on the investor preference & the return-risk
attributes of the sector. Sector specific funds are not as well diversified as simple equity funds, as
they tend to focus on fewer sectors in the equity funds, as they tend to focus on fewer sectors in
the equity markets. They can exhibit very volatile returns.

 Tax Saving Funds(ELSS):-

One variation of the simple equity fund is the ELSS (Equity Linked
Saving Schemes). These funds, named variously in the mutual fund industry, are equity funds
formed under a special scheme notified by the Government of India in 1990. According to the
provisions of this notification, investment in a specially formed mutual fund product, that invest
at least 90% of its funds in equity & equity-linked investments is eligible for a tax rebate, up to a
maximum investment of Rs. 10,000, under section88 of the Income Tax Act. Investors have to
hold their units for a minimum lock-in period of 3 years, in order to avail of the tax rebate.

 Primary market funds:-

These funds invest in equity shares, but do so only when a primary
market offering is available. The focus is on capturing the opportunity to buy those companies
which issue their equity in primary markets, either through a public offer or through private
placements.
  Index funds:-
It is an alternative approach to creating an equity portfolio for investors, is to avoid
taking views on the performance of companies, & instead focus on creating a diversified
portfolio, that simply replicates an existing market index. In order to track the return
performance of markets, market indices of a sub-set of trading stocks is created.
This strategy is also called passive fund management. The costs of this strategy are lower, & the
fund performance virtually tracks the market index. An index fund provides an ideal exposure to
equity markets, without the investors having to bear the risks & costs arising from the market
views that a fund manager may take.

 Other equity funds:-

Equity funds can also be created to invest in equity shares of companies
with specific attributes. For Example, there are small stock funds, which invest only in equity
shares of small companies; there are PSU funds which specialize in investing only in PSU
stocks; there is a top 200 fund, which invests in companies within the universe of the top 200
equity stocks; there is a select equity fund, which invests from the universe of stocks comprising
the A group companies of the Bombay Stock Exchange; & there is a 30-stock fund that limits the
number of stocks in its portfolio to 30 stocks. All these products try to define a subset of the
equity market, in terms of size &other attributes, & tend to focus on that segment.

b) Debt Funds:-
Debt funds are those that pre-dominantly invest in debt securities. Since most debt
securities pay periodic interest to investors, these funds are also known as income funds. However,
investing in debt products can also offer a growth option to their investors. The universe of debt
securities comprises of long term instruments such as bond issues by central & state governments,
public sector organizations, public financial institutions & private sector companies; and short term
instruments such as call money lending, commercial papers, certificates of deposit; & treasury bills.
Debt funds tend to create a variety of options for investors by choosing one or more of these
segments of the debt markets in their investment portfolio. Debt funds can be further divided into 5
types:

 Gilt Funds:-
A gilt fund invests only in securities that are issued by the government, & therefore
does not carry any credit risk. These funds invest in short & long-term securities issued by the
government. These funds are preferred by institutional investors who have to invest only in
government paper. These funds also enable retail investors to participate in the market for
government securities, which is otherwise a large-ticket wholesale market.
  Income Funds:-
These funds invest a major portion into various debt instruments such as bonds,
corporate debentures and Government securities

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

 Short Term Plans(STPs):-

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

 Liquid funds:-
These funds are also known as Money Market Schemes, These funds provide easy
liquidity and preservation of capital. These schemes invest in short-term instruments like
Treasury Bills, inter-bank call money market, CPs and CDs. These funds are meant for short-
term cash management of corporate houses and are meant for an investment horizon of 1day to 3
months. These schemes rank low on risk-return matrix and are considered to be the safest
amongst all categories of mutual funds.

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

The structure of mutual funds in India is governed by the SEBI (mutual fund) Regulations,
1996. These regulations make it mandatory for mutual funds to have a three-tier structure of
Sponsor-Trustee-Asset Management Company (AMC). The sponsor is the promoter of the
mutual fund, & appoints the Trustees. The trustees are responsible to the investors in the mutual
fund, & appoint the AMC for managing the investment portfolio. The AMC is the business face
of the mutual fund, as it manages all the affairs of the mutual fund. The mutual fund & the AMC
have to be registered with SEBI.
SEBI regulations also provide for who can be a sponsor, trustee & AMC, & specify the format
of agreements between these entities. These agreements provide for the rights, duties &
obligations of these three entities. These agreements provide for the rights, duties & obligations
of these three entities.
  Sponsor:-
The sponsor is the promoter of the mutual fund. The sponsor establishes the mutual fund &
registers the same with SEBI.
 Sponsor appoints the trustees, custodians & the AMC with prior approval of SEBI, & in
accordance with SEBI Regulations.
 Sponsor must have at least 5-year track record of business interest in the financial markets.
 Sponsor must have been profit making in at least 3 of the above 5 years.
 Sponsor must contribute at least 40% of the capital of the AMC.

 Trustee:-
The mutual fund, which is a trust, is managed either by a Trust company or a board of Trustees. It
is the responsibility of the trustees to protect the interest of investors, whose fund is managed by the
AMC. The AMC & other functionaries are functionally accountable to the trustees.

 Asset Management Company (AMC):-

The mutual fund is operated by a separately established asset management company (AMC). It
manages the funds of the various schemes. It is entrusted with the specific task of mobilizing funds
under the scheme.
The trustee, on the advice of the sponsor, usually appoints the AMC. The trust deed authorizes the
trustee to appoint the AMC. The AMC is usually a private limited company, in which the sponsors &
their associates or joint venture partners are shareholders. The AMC has to be SBI registered entity, &
should have a minimum net worth of Rs. 10 cores.
Following are the various types of AMCs we have in India
 AMCs owned by banks
 AMCs owned by financial institutions
 AMCs owned by the Indian private sector company
 AMCs owned by foreign institutional investors
 AMCs owned jointly by Indian & foreign sponsors.
  Custodian:-
Custodians are responsible for the securities held in mutual fund’s portfolio. They discharge an
important back-office function, by ensuring that securities that are bought, delivered & transferred to the
books of the mutual funds, & those funds are paid out when a mutual fund buys securities. They keep
the investment account of the mutual fund, & also collect the dividends and interest payments due on the
mutual fund investments. Custodians also track corporate actions like bonus issues, right offers, offer for
sale, buy back & open offers for acquisition.

 Registrars & Transfer Agents (R & T Agents):-

The R & T agents are responsible for the investor servicing functions, as they maintain the
records of investors in mutual funds.
 They process investor applications.
 Record details provided by the investors on application forms.
 Send out to investor details regarding their investments in mutual fund.
 Send out periodical information on the performance of mutual funds.
 Process dividend payout to investors
 Incorporate changes in information as communicated by investors.
 Keep the investment record up to date, by recording new investors & removing investors who have
withdrawn their money.
 NET ASSETS VALUE

NAV represents the actual value of per unit of a fund. It is calculated as:-

(Market value of all investments + Income + Profit – Loss - Expenses)

Number of units in the mutual fund

The above components stand for:

 Market value of all the investments:-

Every security in the fund’s portfolio has a market value. The value
of the entire portfolio is calculated to reach this figure. It is here that any capital appreciation or
depreciation of the portfolio is reflected.

 Income:-
This is the interest income earned by debt securities or dividend income earned by stocks in the
portfolio.

 Profit:-
This is the capital gain realized by selling a security (debt or equity) at a price higher than its
purchase price.

 Loss:-
This is the capital loss suffered by selling a security (debt or Equity) at a lower price than its
purchase price.

 Expenses:-
This is the actual expenses incurred by the fund. For example, fees paid to AMC, custodians,
registrars etc., SEBI restricts the expenses that can be paid by the fund.

2 facts emerge from the above:-

 All the income, expenses , profits & losses of a mutual fund are reflected in one single number – its
value, i.e. its NAV
 “Market Value of investments” is a major determinant of NAV. Thus, a mutual fund will reflect
market conditions.
 NATURE OF INCOME DISTRIBUTED TO INVESTORS

Mutual fund offers a variety of options to investors, in the manner in which the returns
from their investments are structured. At a broad level, the investors have 3 options which are:

 Dividend Option:-
Investors, who choose a dividend option on their investments, will
receive dividends from the mutual funds, as & when dividends are declared. Dividends
are paid in the form of warrants, or are directly credited to investors’ bank account. .

 Growth option:-
Investors who do not require periodic income distributions can choose the
growth option, where the income earned are retained in the investment portfolio, &
allowed to grow, rather than being distributed to the investors. Investors with longer-term
investment horizons, & limited requirements for income, choose this option. The return
to the investors is at the rate at which his initial investment has grown over the period for
which he was invested in the fund. The NAV of the investor choosing this option will
vary with the value of the investment portfolio, while the number of units held will
remain constant.

 Re-investment Option:-
Investors re-invest the dividends that are declared by the mutual
fund, back into the fund itself, at NAV that is prevalent at the time of re-investment. In
this option, the number of units held by the investor will change with every re-
investment. The value of the units will be similar to that under the dividend option.
 TAX PLANNING AND MUTUAL FUNDS

Investors in India opt for the tax saving mutual fund schemes for the simple reason
that it helps them to save money. The tax savings mutual funds or the equity linked savings
schemes receive certain tax exemptions under section 88 of the Income Tax Act. That is one
of the reasons why the investors in India add the tax savings mutual fund schemes to their
portfolio. The tax saving mutual fund schemes are one of the important types of mutual
funds in India that investors can option for their money to save. There are several companies
in India that offer-tax-saving mutual fund in the country.

RECENT TREND OF MUTUAL FUNDS

India is at the first stage of a revolution that has already peaked in the U.S. The U.S.
boasts of an assets base that is much higher than its bank deposits. In India, mutual fund assets
are not even 10% of the bank deposits, but this trend is beginning to change. Recent figures
indicate that in the first quarter of the current fiscal year mutual fund assets went up by 115%
whereas bank deposits rose by only 17%. This is forcing a large number of banks to adopt the
concept of narrow banking wherein the deposits are kept in gilt and some other assets which
improves liquidity and reduces risk. The basic fact lies that banks cannot be ignored and they
will not close down completely. Their role as intermediaries cannot be ignored. It is just that
mutual funds are going to change the way banks do business in the future.
 COMPARISON OF INVESTMENT IN BANK V/S MUTUAL FUNDS

PARTICULARS BANKS MUTUAL FUNDS

Returns Low Better
Administrative exp. High Low
Risk Low Moderate
Investment options Less More
Network High penetration Low but improving
Liquidity At a cost Better
Quality of assets Not transparent Transparent
Interest calculation Minimum balance Everyday
between 10th & 30th of
every month.
Guarantee Maximum Rs.1 lakh on None
deposits
FACTORS TO CONSIDER
 Degree of risk: -
All funds carry some level of risk. You may lose some or of the money
you invest your principal because the securities held by a fund go up and down in value.
Dividend or interest payments may also fluctuate as market conditions change. Before
you invest, be sure to read a fund’s prospectus and the potential risks. Funds with higher
rates of return may take risks that are beyond your comfort level and are inconsistent with
your financial goals.

 Fees and expenses: -

As with any business, running a mutual fund involves costs including
shareholder transaction cost, investment advisory fees, and marketing and distribution
expenses. Funds pass along these costs to investors by important fees and expenses. It is
important that you understand these charges because they lower your return.
Some funds impose “shareholders fees” directly on investors whenever they buy
or sell shares. In addition, every fund has regular, recurring fund-wide “operating
expenses”. Funds typically pay their operating expenses out of fund assets which means
that investors indirectly pay these costs.

 Classes of funds: -
Many mutual funds offer more than one class of shares. For example,
you may have seen a fund that offers “Class A” AND “Class B” shares. Each class will
invest in their same “pool” of securities and will have the same investment objectives and
policies. But each class will have different shareholders services and distribution
arrangements with different fees and expenses. As a result, each class will likely have
different performance results.
 MUTUAL FUNDS
QUESTIONNAIRE

1. Name :-
2. Age :-
3. Gender :- Male
Female

4. Qualification :- H.S.C. And Below

Graduate
Post graduate
Professional

5. Occupation :- Business Person

Private firm employee
Professional
Government employee

6. Total Annual Income :- Below 5,00,000

6,00,000 to 15,00,000
16,00,000 to 25,00,000
Above 26,00,000

7. Are you interested in mutual funds investment?

Yes
No

8. Do you invest in mutual funds?

Yes
No

9. What percentage of your investment is invested in mutual funds?

Less than 25%
25% to 50%
51% to 75%
More than 75%
10. You have invested in which type of mutual funds scheme?
Equity funds
Debt funds
Hybrid funds

11. From how long would you like to hold equity funds investment?
1 to 3 years
3 to 7 years
7 to 9 years

12. From how long would you like to hold debt funds investment?
3 to 6 years
6 to 9 years

13. If equity funds then in which category?

Diversified equity funds
Mid-cap funds
Sector specific funds
Tax savings funds

14. If debt funds then in which category?

Gilt Funds
Income Funds
Short Term Plans
Liquidity Funds
15. While investing your money which factor you prefermost?
Low Risk , Low Return
Mid Risk , Mid Return
High Risk , High Return

16. Where do you gather information about the performance of different mutual funds
schemes?
Financial Institutions
Brokers
T.V Channels
Internet

17. What will be the future of equity mutual funds in India as per you?
Bullish
Bearish
Can’t say
1. Age :-

Age

Above 55 25-35
13% 20%

25-35
45-55
27% 35-45

35-45 45-55
40% Above 55

20% of our respondents are from 25 to 35 age group.

40% of our respondents are from 35 to 45 age group.
27% of our respondents are from 45 to 55 age group.
13% of our respondents are from Above 55 age group.
 2. Gender :- Male
Female

Gender

Female
40%
Male Male
60%
Female

Out of the total survey, 60% of our respondents are male.

Out of the total survey, 40% of our respondents are female.
 3. Qualification :- H.S.C And Below

Graduate
Post Graduate
Professional

Qualification
8

4
7
3 6
5
2 4
3
1 2 2
1
0
H.S.C And Below Graduate Post Graduate Professional

Male Female

Out of the total survey, 7% respondent are H.S.C And Below.

Out of the total survey, 33% respondent are a Graduate.

Out of the total survey, 40% respondent are a Post Graduate.

Out of the total survey, 20% respondent are a professionals.

 4. Occupation :- Business Person
Private employee
Professional
Government employee

Occupation
8
Male Female
7

4
7
3 6

2 4 4
3 3
1 2
1
0
Business Person Private employee Professional Government employee

Out of the total male survey, majority of them are worked in private sector companies.
Out of the total female survey, majority of them are worked in government service.
 5. Total Annual Income :- Below 5,00,000
6,00,000 to 15,00,000
16,00,000 to 25,00,000
Above 26,00,000

Annual Income

7%

27% 36%
Below 5,00,000
6,00,000 to 15,00,000
16,00,000 to 25,00,000
30% Above 26,00,000

Majority of respondent has a annual income below 5,00,000.

30% of respondent has a annual income of 6,00,000 to 15,00,000.
 6. Are you interested in mutual funds investments?
Yes
No

Interest

10%

Yes
No
90%

Out of the total survey, most of the males are interested in mutual funds investment.
Out of the total survey, 96% respondent are interested in the mutual funds investment.
Out of the total survey, only 4% respondent are not interested in mutual funds investment.
 7. Do you invest in mutual funds?
Yes
No

Investment

No
10%

Yes
No
Yes
90%

According to the survey, 96% respondent are invested in the mutual funds.
According to the survey, only 4% respondent are not invested in mutual funds.
 8. What percentage of your investment is invested in mutual funds?
Less than 25%
25% to 50%
51% to 75%
More than 75%

Percenate of investment

15% 22%

Less than 25%

26% 25% to 50%
50% to 75%
37%
More than 75%

Out of the total income most of the respondent are invest in mutual funds.
37% respondent are invest 25% to 50% of their part of income.
26% respondent are invest 50 to 75 of their part of income.
 9. You have invest in which type of mutual fund scheme?
Equity Funds
Debt Funds
Hybrid Funds

Type of scheme
12
11
10
10

4
3

2
1 1 1

0
Equity funds Debt funds Hybrid funds

Male Female

According to the survey, Most of the respondent are invest in equity funds and debt funds
schemes.
Male respondent are more invested in equity funds.
Very few female respondent are invested in mutual funds.
 10. From how long would you like to hold equity funds investment?
1 to 3 years
3 to 7 years
7 to 9 years

Equity funds investment

7 to 9 years
7% 1 to 3 years
29%

3 to 7 years
64%

1 to 3 years 3 to 7 years 7 to 9 years

Out of the total survey, 29% respondent are invest for 1 to 3 years.
Out of the total survey, 64% respondent are invest for 3 to 7 years.
Out of the total survey, Only 7% respondent are invest for 7 to 9 years.
 11. From how long would you like to hold debt funds investment?
1 to 3 years
3 to 6 years
6 to 9 years

Debt funds investment

9%

18%
1 to 3 years
3 to 6 years
73%
6 to 9 years

Out of the total survey, 73% respondent are invest for 1 to 63years.
Out of the total survey, 18% respondent are invest for 3 to 6 years.
Out of the total survey, 9% respondents are invest for 6 to 9 years.
 12. If equity funds then in which category?
Diversified equity funds
Mid-cap funds
Sector specified funds
Tax savings funds

Equity funds category

6

0
Diversified equity funds Mid-cap funds Sector specific funds Tax savings funds

Male Female

27% respondent are invest in diversified equity funds.

9% respondent are invest in mid-cap funds.
18% respondent are invest in sector specific funds.
Most of the people are invest in equity funds only for tax benefit.
46% respondent are invest in tax saving funds.
 13. If debt funds then in which category?
Gilt Funds
Income Funds
Short Term Plans
Liquidity Funds

Debt funds Category

Liquidity Funds Gilt Funds
9% 9%

Short Term Plans

27%

Income Funds
55%

Gilt Funds Income Funds Short Term Plans Liquidity Funds

Majority of people are invest in income funds as a second source of income.

55% respondent are invest in income funds.

27% respondent are invest in short term plans.
 14. While investing your money which factor you prefer most?
Low Risk, Low Return
Mid Risk, Mid Return
High Risk, High Return

Factor to prefer

14%

54% Low Risk,Low Return

32%
Mid Risk, Mid Return
High Risk, High Return

Most of the people take high risk and high return option for investment.
54% respondent are take a higher risk.

32% respondents are take a mid risk.

14% respondents are take a low risk.

 15. Where do you gather information about the performance of different mutual funds
schemes?
Financial Institutions
Brokers
T.V Channels
Internet

Information gather

4%
29% 26%
Financial Institutions
Brokers
T.V channels
41% Internet

Many people are get an information from a T.V channels.

41% respondent are get information from a T.V channels.

29% respondent are get information from internet.

26% respondent are get information from Brokers.

4% respondent are get information from financial institutions.

 16. What will be the future of equity mutual funds in India as per you?
Bullish
Bearish
Can’t say

Can't say
26%

Bullish Bullish
56%
Bearish Bearish
18% Can't say

Out of the total survey, 56% respondent are said future of equity mutual funds is a bullish.
Out of the total survey, 18% respondent are said a future of the equity mutual funds is bearish.
Out of the total survey, 26% respondent are said a future of equity mutual funds is can’t say.
 FINDINGS:-

 96% people are interested in mutual funds investment and also they are invested in
mutual funds.

 37% people are invest 25% to 50% of their total annual income in mutual funds.

 Majority of people are invest in equity and debt funds schemes.

 Many people are invest for 3 to 7 years in equity funds.

 In debt funds 70% people are invest for 1 to 3 years.

 46% people are invest in tax saving funds in equity funds category.

 55% people are invest in income funds in debt funds category as a second source of
income.

 54% people are take a higher risk, and higher return while investing their money.

 41% people are get an information from the source of T.V Channels.

 56% people are said an equity mutual fund market is a bullish in nature.

 ANALYSIS:-
 According to the research the study has positive effect, to perceived investment in
mutual funds.

 According to the research the study has positive effect, to understand the effect of the
changing condition on the mutual funds.
 CONCLUSION:-
Perceived investment in mutual funds is an important factor for investing money in the
various schemes.

Perceived investment in the various schemes are also very important factor. Mutual fund
bring together a group of people and invest their money in stocks, bonds, and other
securities.

Perceived risk is the biggest reason why people still don’t invest in mutual funds.

The advantages of mutual funds are professional management, economies of scale,

simplicity and liquidity.

The disadvantages of mutual funds are high cost, over-diversification, possible tax
consequences and the inability of management to guarantee a superior return.

Mutual funds have lots of costs. Cost can be broken down into ongoing fees and
transaction fees.

Mutual funds are easy to buy and sell. We can either buy them directly from the fund
company or through a third party.

The integration of Mutual funds in the India will take a sometime it’s not going to happens
in the future.
 BIBILOGRAPHY
 https://www.mutualfundindia.com
 https:/www.fundsindia.com
 https://www.amfiindia.com
 https://em.m.wikipedia.org
 https://investeasy.reliance mutual.com
 https://www.nseindia.com
 https://www.investopedia.com
 https://www.moneycontrol.com
 https://www.bseindia.com
 The Economics Times
 Jeffery Lawrence, (2005), “Leading the Way”
 ICFAI Press, “Mutual Funds”, (2004)
 “Mutual Funds Handbook”, (2004), Invest India Economic Foundation Private
Limited.
 Sundar Sankaran, “Indian Mutual Funds Handbook”, Vision Books