Marketing of Mutual Funds & Survey of Awareness about investment instruments among young investors At N.J.

India Invest Pvt. Ltd.

Submitted in partial fulfillment of the requirements of PGDM program (2008-10) at FORE School of Management, New Delhi

By Soumitra Kandpal Roll No. (081116) FMG XVII (2008-10)

FORE School of Management, New Delhi

CERTIFICATE
This is to certify that Mr. Soumitra Kandpal Roll No. 081116 has completed his summer internship at N.J. India Invest Pvt. Ltd and has submitted this project report entitled Marketing of Mutual Funds & Survey of Awareness about investment instruments among young investors towards partial fulfillment of the requirements for the award of the Post Graduate in Management (FMG-XVII) 2008-2010.

This Report is the result of his own work and to the best of my knowledge no part of it has earlier comprised any other report, monograph, dissertation or book. This project was carried out under my overall supervision.

Date: Place: ----------------------------------Sanghamitra Buddhhapriya Internal Faculty Guide

Table of Contents
S.No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Acknowledgement Executive Summary Chapter 1 Introduction 1.1 Marketing of Mutual Funds 1.2 Awareness about investment opportunities 1.3 Objectives of the study 1.4 N.J. India Invest Chapter 2 Literature Review Chapter 3 Mutual Funds 3.1 Structure of Mutual Funds 3.2 Classification of Funds 3.3 Structure 3.4 Investment Objective 3.5 Scheme Wise Chapter 4 Marketing of Mutual Funds 4.1 Market Structure 4.2 Segmentation 4.3 Targeting 4.4 Positioning 4.5 4 Ps of Marketing 4.6 Product 4.7 Price 4.8 Place 4.9 Promotion Chapter 5 Research Methodology 5.1 Statement of Problem 5.2 Type of study 5.3 Information Needed 5.4 Data Collection 5.4.1 Secondary Sources 5.4.2 Primary Sources Content Page i ii 1 2 3 3 3 7 10 10 12 12 13 14 16 16 16 18 18 19 19 20 20 21 23 23 23 23 24 24 24

32 33 34 35 36 37 38 39 40 41 42 43 44 45

5.5 Questionnaire Design 5.6 Sampling 5.6.1 Population Definition 5.6.2 Data Collection 5.6.3 Sampling Frame 5.6.4 Sampling Method 5.6.5 Sample Size Chapter 6 Data Analysis Chapter 7 Findings Chapter 8 Recommendations References Bibliography Appendix A Questionnaire Appendix B Income wise cross tabulation for awareness level of various instruments

25 26 27 27 27 27 27 28 59 61 62 63 64 66

Table of figures
S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 3.1 Working of Mutual Funds 3.2 Structure of Mutual Funds 3.3 Types of Mutual Funds 6.1 Male Female ratio of the respondents 6.2 Dot plot of Age 6.3 Income distribution of the respondents 6.4 Level of awareness of shares 6.5 Relationship between Income Level and Awareness for Shares 6.6 Level of Awareness of Mutual Funds 6.7 Relationship between Income Level and Awareness for Mutual Funds 6.8 Level of awareness about Insurance 6.9 Level of awareness for Savings Bank Account 6.10 Level of awareness of Fixed deposits 6.11 Level of awareness of Gold and other commodities 6.12 Level of awareness of Real estate 6.13 Level of awareness of Govt. securities 6.14 Level of awareness of Corporate bonds 6.15 Risk and returns as factors for choosing instrument 6.16 Is past performance an indicator of future results 6.17 Information sources used before investing 6.18 Expected Level of returns 6.19 Market level for investment 6.20 Time to start investment 6.21 Income wise breakup of time to start investment Figure Page 10 10 12 28 28 29 30 32 33 34 36 38 39 40 41 42 43 44 46 47 48 49 50 51

25 26 27 28 29 30 31

6.22 Duration of investment 6.23 Choice of portfolio 6.24 Choice of investment amount 6.25 Awareness of various schemes 6.26 Minimum amount to start an SIP 6.27 Can one save tax through Mutual Funds 6.28 Benefits of investment in Mutual Funds

52 53 54 55 56 57 57

Table of tables
S.No 1 2 3 4 5 6 7 8 9 10 11 12 Table 4.1 SEC Classification of Indian Consumer Market 6.1 Cross tabulation between income and awareness level of shares 6.2 Cross tabulation between income and awareness level of insurance B1 Income wise cross tabulation of awareness of shares B2 Income wise cross tabulation of awareness of Mutual Fund B3 Income wise cross tabulation of awareness of Insurance B4 Income wise cross tabulation of awareness of Savings Bank B5 Income wise cross tabulation of awareness of Fixed Deposits B6 Income wise cross tabulation of awareness of Gold B7 Income wise cross tabulation of awareness of Real estate B8 Income wise cross tabulation of awareness of Govt. securities B9 Income wise cross tabulation of awareness of Corporate Bonds Page 17 31 36 66 66 66 66 67 67 67 67 68

Acknowledgement

I would like to acknowledge a deep sense of gratitude to Mr. Chahat Miyan Khan, Branch Head N.J. India Invest Pvt. Ltd. Janakpuri, New Delhi, Mr. Durbadal Mukharjee, Relationship Executive N.J. India Invest Pvt. Ltd. Janakpuri, New Delhi and Mr. Dharamveer Arya, partner N.J. India Invest Pvt. Ltd. Janakpuri, New Delhi for imparting me with knowledge about Mutual Funds and the art of marketing financial products. I would also like to thank my project guide, Dr. Sanghamitra Buddhapriya whose guidance and support in terms of key inputs formed the basis of the work undertaken.

Soumitra Kandpal

Executive Summary
Investing is an activity of putting money in an instrument for the purpose of getting a good return on the investment and for the growth of the principle amount. There are a large number of investment instruments available to the investors like mutual funds, insurance, shares, govt. securities and corporate bonds, gold, real estate etc. investors invest the money in these instruments for getting good returns and the money invested in turn helps in the growth of the economy. During the present global economic crisis it is essential for the people to invest their money so that the global economy may recover. The investors will invest the money only when they have awareness about the different investment options that are available to them. The aim of the study is to find out the Awareness about investment instruments among young investors. The objectives were to check the level of awareness for various investment options, finding out what factors do the investors consider before investing the money, what are the expectations of the investors and are they aware of the various benefits of investing in Mutual Funds. The author conducted the study as part of the summer training at N.J. India Invest Pvt. Ltd. which is a Mutual Fund distribution house. Its headquarters are in Surat and it has 135 branches all over the country. It provides a wide variety of services like marketing and sales support, technical support etc to its 13000 agents who sell Mutual fund products of 39 AMCs in India. Mutual fund is a professionally managed collective investment scheme where a number of investors pool their money and this money is turn invested in different instruments including equity, government bonds, commodities, debt market etc. Mutual Funds have a tiered structure with a sponsor, who is the promoter of the fund, on top. Under the sponsor is the trust which holds the unit holders money. Under the trust is the AMC or Asset Management Company which manages the fund of the investors, the registrar which processes the applications and the custodian who is the guardian of the funds and assets of the investors. Mutual funds can be classified based on structure, investment objectives and the types of schemes. They may be classified as open ended or close ended, equity funds, debt funds, balanced funds or money market funds, or based on schemes as ELSS, Fixed Term Plan or SIP etc.

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For the marketing of Mutual Funds we can segment the market based on the Socio Economic Classification and the age of the investors. We can target the A, B and C segment of people based on the various schemes. The targeting on age basis will be based on the investment objective of a particular fund. Mutual fund can be positioned as a wealth creation and tax saving product. If we consider the 4Ps of marketing then Mutual Fund is a financial product. The price of the product is the minimum investment amount in a particular scheme and the entry/exit loads of the scheme. It is marketed in variety of places like offices and homes of the investors and the internet. The promotion of Mutual Funds takes place in various media and through agents and distributors who tell about the product to the customer. The research was an exploratory study. It was carried out by distributing a questionnaire among the respondents who were selected via convenient sampling from among the students of FORE School of Management and the clients of N.J. India Invest. The data collected from the study was analysed by the author. The primary findings of the study were that the level of awareness among the respondents for various investment instruments was not very high with an average of 40% of the people having a good knowledge of the various investment instruments. It was found that the level of knowledge increased with the increase in the income of the respondent. The respondent preferred to look at both risk and return of the instrument as well as the past performance while selecting an investment option. The respondents preferred to invest small amounts regularly as compared to a large amount at a single time. They were knowledgeable about the various benefits of investing in Mutual Funds. The author also recommended some steps for increasing the awareness level of the young people specially the college students and the young professionals who are a very good potential market for investment companies. It was felt that increasing awareness is the first step in increased market penetration for the investment instruments.

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Chapter 1 Introduction
An investment is the choice by the individual, after thorough analysis, to place or lend money in a vehicle (e.g. property, stock securities, bonds etc.) that has sufficiently low risk and provides the possibility of generating returns over a period of time. Investing is the active redirection of resources: from being consumed today, to creating benefits in the future; the use of assets to earn income or profit.1 As stated earlier the main motive of investment is to earn profit which is also known as the return of investment. There are a large number of investment instruments available to the investors. These investment instruments perform different tasks. The insurance is mainly used to provide risk cover to the individuals; property investments are usually for long term gains; bank FDs and government securities are used mainly for secure returns on investments while equity investment and Mutual Funds are used for wealth creation as they give very high returns. Though they give very good returns to the investors the risk associated with these instruments is also higher. As a result it is likely that the investors also lose their money while investing in these instruments. Recently the stock markets all over the world had crashed. The investors had lost thousands of crores of rupees as the value of the stocks in their portfolio fell sharply. The world is facing a grave economic crisis. The financial markets the world over are in a downturn and this has resulted in a drop of investor confidence. This has led to a vicious cycle. The banks and the financial institutions are not lending money to the public and the industry fearing a slowdown. As the industries are not getting the money their profits are being reduced. These reduced profits directly affect the share prices of the company. The fall in the share prices leads to a loss for the investors who do not want to invest their money. This leads to further loss for the companies as they dont get money and this cycle continues Now the world economy is showing signs of a recovery. The central banks of the various countries as well as the governments are taking steps to pump in more money into the economy so that the economy revives and the investors confidence is restored. The stock markets are slowly climbing up towards their peak level because of the measures that have been taken. The investors are slowly recovering from their losses.

It is being increasingly clear that the recovery will be started from the markets of the developing nations like India and China. The government of India is being praised all over the world for its regulatory framework which enabled it to withstand the global financial crisis relatively unscathed. The general elections held recently have given a majority to Dr. Manmohan Singh led U.P.A. government and the stock markets have reacted very positively to this development. The investor confidence has been restored due the possibility of a stable government under the leadership of the great economics who is the architect of the economic reforms in the country. This confidence is reflected in the stock markets which broke the upper circuit the day after the announcements of the results. The present scenario is a good time to study what the investors are expecting from their investments and how aware they are about the different modes of investments that are available to them. With the recovery of the stock markets the investors are also looking to get back to investing. The time is very good for marketing of various investment instruments as the investors want to put their idle money to some productive use. The author did his summer internship in N.J. India Invest Pvt. Ltd. which is a Mutual Fund Distribution House. As part of the summer internship he was given two main tasks. Firstly he had to market Mutual Fund products mainly SIP or Systematic Investment Plans to the various clients. Apart from marketing the Mutual Fund products he had to conduct a research about Awareness about investment instruments among young investors 1.1 Marketing of Mutual Funds The main business of N.J. India Invest is the distribution of Mutual Fund Products. As part of his summer training the author was assigned to a partner of N.J India Invest Mr. Dharamveer Singh. He had to market various Mutual Fund products to the clients of his partner. Among the various products available he had to focus mainly on SIP or Systematic Investment Plan wherein the investor invests a fixed amount monthly. The author had to go to the various clients of his partner and give them a presentation about the benefits of investing in mutual funds. He had to analyse their financial need and then give them a product which best suited their needs. He had to convince them that even in a market scenario which is not good overall it would be a good decision to invest their money in the Mutual Funds as they were the best instruments available for the purpose of wealth creation.

1.2 Awareness about investment opportunities During the summer internship the author also conducted a research about Awareness about investment instruments among young investors This was an important research for the company as it would give them some idea about how much needs to be done to spread awareness among the people about the various investment avenues. Checking the existing level of awareness amongst the individuals is the first step in spreading the awareness. India is a country with a very young demographic and the young professionals are the major target for investment firms. It is generally seen that many people are not aware about the diverse modes of investments available and it is necessary to spread this awareness before marketing the various products to the people. The purpose of the research was to find the gaps which could subsequently be filled by awareness programs. 1.3 Objectives of the study The following were the objectives of the study 1. Check the level of awareness about investment instruments like shares, mutual funds, gold, real estate, insurance etc among the people below the age of 35 2. Which factors are considered by the people before they invest the money in any instrument 3. What are the expectations of the of the people when they invest the money 4. Checking the level of awareness of the benefits in investing in Mutual Fund schemes. 1.4 N.J. India Invest2 N.J. India Invest is a Mutual Fund distribution house. It was

established in the year 1994 by Mr. Neeraj Chowksi and Mr. Jignesh Desai at Surat. N.J. has 15 years of experience in the field of Financial Products and Services. They are the leading advisors and distributors of financial services in India. They have over 135 branches in 21 states this year they are also planning to go abroad and open their branch in Dubai. N.J. India Invest has a network of over 13000 advisors who provide financial planning services to various clients. These advisors receive support services from N.J. India Invest and provide their clients variety of financial services and investment advice. N.J. India Invest is the largest Mutual Fund Distribution house with total Assets Under Management (AUM) of over Rs. 5500 crore.

N.J India Invest distributes the products of 39 AMCs or Asset Management Companies in India. All the existing and new schemes of the various AMCs are made available to the various partners of N.J. India Invest so that they can offer these mutual funds to their respective clients. N.J. India Invest has also started a new subsidiary N.J. Realty which enables the partners of N.J. to give their clients service in the real estate sector also. The clients can specify their preferences and through a centralized system the partners can access the details about the projects of the various developers across India. N.J. India Invest provides a number of services to its partners and clients. They have a unique 360 Platform which gives all the services necessary for the client to grow and prosper in the business of mutual funds. The various services which are offered to the client are Technology Support The clients are given complete web based support system. They have an online Partners desk where they can view and manage all their clients different investments at a centralized location. They are given support to build their own websites so that the clients can easily interact with them. Additionally they can also have an online account for their clients who can monitor their portfolio sitting at home without having to log on the various websites of the different Mutual Funds. Sales Support The sales support provided by N.J. India Inven.st is one of the best in the business. The clients are given the forms, brochures and other materials of all the Mutual Funds. The officers from N.J. India Invest and various AMCs can go with the partners on joint calls where a large number of people are explained about mutual funds. The partners are also encouraged to bring their clients to N.J. offices if they have some doubts or queries regarding the Mutual Funds. Marketing Support N.J. provides complete marketing support to the partners. They can get printed handbills posters banners etc to distribute among their clients. Additionally they can also order canopies if they want to set up their stalls in public places like metro stations, office complexes etc. they are also given promotional materials of the various AMCs for displaying in their offices. They can get booklets giving details about various schemes. These can be personalized with their contact details. All these are available through N.J. Print Shop which is a subsidiary of N.J. India Invest
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Research Support There is a dedicated research team which conducts research about the various funds available in the market. The partners are given copies of Fundz Watch and Performance Watch which are periodicals giving details about the performance indexes of various funds so that the partners can suggest the nest funds to their clients and give them the best returns of the investments. Training Support The partners are given training for clearing of the AMFI exam which is essential for entering in the mutual fund business. Apart from AMFI training they are given training about various funds and NFOs in the market. These trainings are provided under the aegis of N.J. Gurukul which is a subsidiary of N.J. India Invest. Apart from the trainers from N.J. officers from the various AMCs also provide the training. Self Development The partners are given support for development of their business. They are given contact details of the potential customers near their offices so that the partners can contact them to sell the mutual funds. They are also made aware about the various courses which may help them in enhancing their selling skills. Customer Support A toll free number is given to the partners where they can ask any query. They can also get the statements about any of their clients portfolios and check how much brokerage they have earned. HR Consultancy When the business of the partners expands and they want to hire additional workers N.J. India helps the partners. They also help them in viewing the performance of the various employees at a single place in their partners desk. Thus it is seen that N.J. provides its partners immense support in growing their business. It is committed to see that the partners grow and develop in their mutual fund business. This is reflected in the vision and mission of the company

Vision: To be the leader in our field of business through, Total Customer Satisfaction Commitment to Excellence Determination to Succeed with strict adherence to compliance Successful Wealth Creation of our Customers Mission: Ensure creation of the desired value for our customers, employees and associates, through constant improvement, innovation and commitment to service & quality. To provide solutions which meet expectations and maintain high professional & ethical standards along with the adherence to the service commitments. N.J. India Invest is considered to be a premier Mutual Fund distribution House by both the ACs and the partners who are given exemplary services by the company.

Chapter 2 Literature Review

Any research builds on the research carried out previously on the given subject. The purpose of the literature review is to review what has previously been done on the subject and analyse it in the present context so that an effective understanding can be established. Before conducting this project I have consulted some work which has been done previously on the subject of the awareness about and preference of the investment opportunities among the investors. This has helped me greatly in building up a framework for my own project. A review of the work is presented below. Consumer behaviour during investment gold purchase in comparison to other investment instruments3 This is a study carried out by Janna Lisette Lutter of Tallin University. The goal is to study consumer behaviour regarding investment decisions, compare physical investment gold purchasing to other instruments, and to suggest suitable marketing steps for investment gold promotion. The author tried to study investment from the consumers perspective and understand the steps that the consumers go through before making their investment decision.

The author conducted empirical research both through questionnaires as well as in-depth interviews. The respondents for the research were people from Estonia where the author was based. There were a total of 159 respondents.

Research showed that the main motive to investing comes from the factor that more money is left over from other expenses and one wants to preserve its worth for the future in the situation where inflation is growing. Investors go through a very long and thorough information search and evaluation period before making the investment decision.

Research showed that gold is already known and valued by the people for its stable nature and long tradition. It came out also that often gold is not regarded as serious investment, but rather something with emotional value or exclusive gift.

To better promote gold, author suggests publishing easily understandable honest information on investment gold. One sector of the information could be oriented to general education on gold as an investment. The other should target the latest developments.
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Comparison between direct investment in equity and investment through Mutual Funds4 This study was carried out by Anurag. The goal of the study was to compare direct equity investment to Mutual Funds and find out which was preferred by the investors. The research also tried to study select Mutual Funds schemes with the point of attractiveness to investors.

The author conducted empirical research by distributing a questionnaire among 50 respondents in Delhi. The target population was administered with a questionnaire which had both structured as well as unstructured questions. The research showed the average returns for the equity diversified funds were 19.84% while the average return after investing in individual stocks was 21.87%. On the other hand, the average risk for individual stocks is much higher than the equity diversified funds and market standard deviation as well. This indicates that investing in direct equity is far more risky than equity diversified funds. According to survey people prefer to invest into Mutual Funds than investing directly into stocks. 46% of the respondents feel that mutual funds reduce their risk in investing in the market as it gives diversification to their portfolio. 17% respondents said that it give them the benefit of professional management. Just 14% said it give them liquidity irrespective of market conditions. And also lack of time was cited as the reason by 23% of the respondents. Out of those who said that they prefer to directly invest in stock market, majority gave high weightage to high risk and high returns game. 33% said that they want to be their own fund managers. Also, over 48% agreed that they prefer to book profit as they reach their profit target. They do believe in churning and enjoy making higher returns. Neilson Life 2008 survey5 The Neilson Life 2008 survey was conducted by Neilson a well known market research company. The goal of the study was to study the investment scenario in India and find out which investment instruments were popular with the Indian public. This subject has a close correlation with the research subject of the present project.

The survey was conducted by distributing questionnaires and interviewing people from all over the country. Working men and women from SEC A, B, and C in the age group 22-50 years were interviewed. The study involved 12,760 respondents. The survey indicated that for Indian investors insurance was the most popular form of investment with 44% people investing in it. Bank Fixed Deposits which has 35 percent votes. Gold (33%) and Property (23%) are the other favourites among locals. The current financial turmoil makes it a tough case for equity markets. Life Insurance topped the list of future investment instruments with 30 percent respondents agreeing to consider it as a future investment option, followed by Bank Fixed Deposits (11%), Gold and Property (both 7%), and Life Insurance Child Plans (6%). This was attributed to the fact that due to the financial crisis the people were increasingly looking forward to safer investment options. The survey also studied the marketing of the investment options and found that Agents are the main source of information on insurance policies. Friends/ peer group emerge as a significant source of information (58%). Media also plays an important role in spreading awareness about various insurance policies, which includes Television Advertisements (55%), Newspapers (35%), and Outdoor Hoardings (33%). These three surveys formed the basis of conducting this research and helped in formulating a direction for this research. The basics about Mutual Funds and their marketing as well as research methodology are explained in the subsequent chapters.

Chapter 3 Mutual Funds

Mutual fund is a professionally managed collective investment scheme where a number of investors pool their money and this money is turn invested in different instruments including equity, government bonds, commodities, debt market etc. The investors invest the money in various types of schemes brought by the AMCs or Asset Management Companies who in turn invest this money in various instrument to give the best possible returns of investment to the investors.

Fig 3.1 Working of Mutual Funds source www.mutualfundsindia.com 3.1 Structure of Mutual Funds6 In India the mutual funds are regulated by the guidelines of SEBI or Securities and Exchange Board of India. AMFI or Association of Mutual Funds in India also sets some rules governing the mutual fund companies in India. The structure of mutual fund is as shown below.

Sponsor

Trust

Custodian

AMC
Fig 3.2 Structure of Mutual Fund

Registrar

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A. Sponsor Sponsor of the Mutual Fund is the promoter of the Mutual Fund. It establishes the Mutual Fund and registers the same with SEBI. The sponsor can be a bank like SBI, PNB ICICI etc., a financial institution like Fidelity, Franklin Templeton etc. or a corporate like Reliance, Tata, Birla etc. According to SEBI regulation the sponsor must have a 5 year experience in the financial services market and should have been profitable for at least 3 years. This is done to ensure that the fund is promoted by an experienced entity with which the public will have faith in handling their money. The sponsor appoints the AMC, trustees and the custodians with prior approval of SEBI. It also contributes at least 40% of the net worth of the AMC. B. Trust According to SEBI regulation the Mutual Funds in India is a trust established under the Indian Trust Act 1982. The trust is managed by a board of trustees or by a trustee company. There are at least 4 members in the board of trustees and 2/3rd of the board is independent. The trustees hold the unit holders money in a fiduciary capacity. The trustees also appoint the AMC in consultation with the sponsor and according to the SEBI regulation. C. AMCs The Asset Management companies are the public face of the Mutual Fund. They are appointed by the sponsors and the trust under the guidelines of SEBI. The AMC should have the net worth of minimum Rs. 10 Crore. Half of the members of the board of the AMC should be independent. The main job of the AMC is to manage the funds of the investors. It researches the best investment options to put the money in so that the investors get the maximum return on their investment. There is a fund manager and his team which carries out the research. The AMC floats a number of schemes for the investors to invest their money based on their investment objectives and risk appetite. These varied schemes help attract the public to the company. Some of the AMCs in India are reliance Mutual Fund, HDFC Bank Mutual Fund, ICICI Prudential Mutual Fund etc. D. Registrar The registrar processes the applications and records the details of the investors. They process the dividend payouts to the investors and send information to them. Thus they maintain the backend operations of the Mutual Fund E. Custodian it is the guardian of the funds and the assets of the investor. It is appointed by the board of trustees and is responsible for the securities held in the Mutual Funds portfolio. It is also regulated by the SEBI.

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3.2 Classification of Funds Mutual Funds can be classified in a variety of ways. In this report the classification of Mutual fund on basis of structure, investment objectives and scheme wise classification will be discussed. The types of mutual funds can be as depicted in figure 3.3

Types of Mutual Funds

Structure
Open ended Close Ended

Investment
Equity Debt

Scheme Wise
ELSS Fixed Term Plan SIP

Balanced Money Market

Fig 3.3 Types of Mutual Funds

3.3 Structure The most basic classification of the Mutual Funds is on the structure of the fund. This classification is based on the premise whether the Fund is an Open Ended or a Close Ended Fund A. Open Ended Fund An open ended Mutual Fund is a Fund where in the investor can invest at any point of time and for any duration that he or she wants. The investors can buy or sell the units of the fund at NAV related prices at any point of time directly from the fund. The open ended fund is not traded at the stock market and is redeemed at the NAV. The number of outstanding units of the fund changes everyday based on the NAV of the fund on the particular day. The minimum subscription amount for the fund is Rs. 50 Crore. The

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amount subscribed is redeemed if the minimum subscription amount is not reached by the fund. The corpus of the Open Ended scheme changes every day and the unit capital is not fixed. B. Close Ended Fund A Close Ended Fund is a fund wherein an investor can invest only during a fixed period of time. This investment is for a fixed duration as specified in the offer document of the fund. The close ended funds are listed in the stock exchange. If an investor wishes to invest in the fund after the time period of the fund he will have to buy the units of the fund from the stock market. The prices at which the units are sold or redeemed depends on the market prices which are linked to the NAV. The number of units of the fund and the unit capital remains unchanged in case of a Close Ended Fund. The minimum subscription amount of the fund is Rs. 20 Crore. The amount subscribed is redeemed if the minimum subscription amount is not reached by the fund. 3.4 Investment Objective A Mutual fund can also be classified based on the investment objectives of the fund. These investment objectives are based on the risk appetite of the investors and the returns that they expect from the funds. The classification based on the investment objectives of the fund is whether the fund invests in Equity Market, Debt Market or the Money Market. A Equity Funds The Equity Funds are those funds which invest primarily in the Equity Market. The money of the investors is invested in the shares of the various companies. These companies are chosen based on the objectives of the fund as stated in the offer documents. Thus they can be large-cap or mid-cap companies or they can be companies in a particular sector of the economy like infrastructure or power. Some funds which are index funds may invest in companies which form the part of the index the fund considers as a base for example the B.S.E. 30 or Nifty 50 etc. The equity funds usually have growth and dividend options. In growth option the customer is not given any dividend but in the dividend option the customer has the choice of either getting the dividend or reinvesting it in the shares of the companies. The equity funds are characterized by high risk and high returns. Over a period of 5-7 years equity funds give a CAGR of more than 18-20% and they generally outperform the share market. These returns are one of the highest returns generated by the various investment instruments. Equity based Mutual Funds outperform the stock market mainly because the fund managers not only invest in the stocks of major companies in the stock market but also in the stocks of smaller companies also which are likely to give good returns.
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B Debt Funds The debt funds are those funds that invest primarily in the debt market. These funds invest in the government securities and corporate bonds. Within debt funds there are a lot of type of funds depending on which instruments they invest in. Some of the funds invest in AAA and AA commercial papers. Others like Gilt funds invest only in the government securities. The level of risk and returns in the case of Debt Funds depend on the instruments that the funds have invested in but are overall less risky than equity based funs. At the same time these funds cant match the level of returns that are generated by the equity based funds. These are recommended for people with no fixed level of earnings and a low risk appetite like retirees who want a source of investment for their savings but dont want to involve in the vagaries of the stock market. C Balanced Funds These funds are a combination of Equity Funds and Debt funds with some portion of the fund invested in the share market while other is invested in the government securities and corporate bonds. They offer the best of both Equity and Debt funds as they have manageable amount of risks and also give good returns. Some funds like the ICICI Prudential Target Returns Fund invest initially in the Equity market and then after getting the profit invest the same in the Debt Market thus giving the investors best of both worlds. D Money Market The Money Market or Liquid Funds are those funds which are invested in the short term or money market. These are invested in the instruments with maturity period of less than 1 year like treasury bills, commercial papers, certificates of debt etc. The investment portfolio is very liquid and enables the investors to hold their investments for very short horizons of a day or more. These funds have zero risk and they also give good returns to their investors. They are mainly offered to people who have excess money to invest over a short period of time only. 3.5 Scheme Wise Mutual Funds can also be classified based on the various types of the schemes that are offered to the public. These schemes help the public in managing their investments based on the investment objectives of the different investors. The flexibility of investing in different types of schemes is a highly attractive feature of Mutual Funds. Some of the major types of schemes available to the investors are described below. A ELSS The ELSS or Equity Linked Saving Scheme is a very popular scheme of Mutual Funds for the purpose of tax saving. As the name suggest the Mutual Fund under ELSS invests at least 90% of the fund in the stock market. The fund usually has a 3 year lock in
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period. It can be an open ended or a close ended fund. Investments made under ELSS are used to save tax. Under the section 80C of income tax investment of up to Rs 1 Lac in ELSS is tax deductible. The dividends earned under this scheme are also tax free. The investors also benefit in terms of the long term capital gain taxation. Thus financial planners strongly advise their clients to invest in this fund during tax planning. B Fixed Term Plan FTP or Fixed Term Plan schemes are special schemes of Mutual Funds. These are short term close ended schemes. The AMCs issue a fixed number of units for each series only once and then the issue is closed after the initial offering period. These units are not listed in the stock market. FTPs are generally offered in money market funds. They can be considered as an alternative to investing in the corporate deposits or bank deposits as they give a higher rate of return. C SIP One of the best schemes of Mutual Funds is considered to be SIP or Systematic Investment Plan. The basic funda of SIP is to encourage the people to invest a small amount on a regular basis. Under SIP one can invest as little as Rs 100 per month in mutual funds. This regular investment over a large period of time gives fantastic returns to the individuals. The major reason for high returns of SIP investments as compared to others is the concept of Rupee Cost Averaging. When the market is booming the value of the units bought by the investors have increased while in the bearish market when the NAV of the funds fall then the number of units allotted is more. The value of these higher numbers of units increases when the Bull Run begins again. Thus the investors set to gain both when the market is up or down. This coupled with the small amount needed to invest has led to SIP being one of the most popular Mutual Fund schemes.

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Chapter 4 Marketing of Mutual Funds

One of the primary job as a trainee in N.J. India Invest was to market the various schemes of Mutual Funds to various clients. N.J. India Invest is a distribution house which distributes Mutual Funds to the general public via its network of agents and partners. The trainees are assigned to a partner and they have to pitch the schemes of Mutual funds to the clients of the partners. Details about mutual Funds and the various schemes available have been discussed in the previous chapter and this chapter will focus on the marketing aspect of Mutual Funds. 4.1 Market structure Before marketing of any product we must study the structure of the market. This structure will determine where we should market the product so that it gets the best response from the public. To study the market structure we must first divide the market into different segments then choose our target segment. This is because no product can be pitched to every person in the population. We have to then position the product so that the public is attracted to it. Thus Segmentation Targeting and Positioning are extremely important before the marketing of the product. 4.2 Segmentation The purpose of segmentation is to divide the whole market into smaller segments so as to better understand the market and pitch your product to the right segment of the population. There is no product which can be marketed to the entire population and if one tries to market it to the entire population then it is a waste of the resources. To ensure the optimum utilization of the resources we have to divide the market into smaller segments and concentrate on the segment which will be most receptive of the product. Mutual Funds are a financial product and so it is imperative that one of the basis of segmentation will be income. For mutual funds first we will use the Socio Economic Classification or SEC to segment the market. SEC is a system that combines social and economic factors through intelligent use of the demographics of occupation and education. 7 It is considered to be an alternate to pure income based classification. The SEC classification is as shown in the table below.

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Occupation

Education Less 5-9 than 4 School Some PostIlliterate yrs of Graduate yrs in certificate college graduate school school

Skilled Unskilled Shop owner Petty trader Employer ofAbove 10 persons Below 10 persons None Clerk Supervisor Professional Senior executive Junior executive

E2 E2 D E2

E1 E2 D D

D E1 C D

C D B2 C

C D B2 C

B2 D A2 B2

B2 D A2 B2

B1 C D D D D B1 C

B1 B2 C D D D B1 C

A2 B2 B2 D C D B1 C

A2 B1 B1 C C B2 B1 B2

A1 A2 A2 B2 B2 B1 A2 B1

A1 A1 A1 B1 B1 A2 A1 A2

A1 A1 A1 B1 A2 A1 A1 A

Table 4.1 SEC Classification of the Indian Consumer Market Source www.naukrihub.com Another criterion for segmentation of the market in case of mutual Funds can be the age of the potential investors. This is because the risk appetite of the investors varies with age. At the start of the career the investor has higher propensity to take the risk as they have stable income source. As the age advances the risk taking ability reduces. After retirement when there is no stable source of income and so the risk taking ability is reduced. As per the age criterion we can define the segment of the market as being below 35, 35 60 and more than 60.

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4.3 Targeting After the market segments have been decided we have to look at which particular segment of the market are we going to target. This is because no product can be marketed to all the segments of the society. In case of Mutual Funds we have to target the segments based on the different types of Mutual Fund schemes. Using the SEC segmentation as a substitute for income based segmentation we can target the A, B and C segments of the market. These are the segments which have a good source of income to be able to invest in the mutual Funds. They are also educated and as a result can easily understand the benefits of investing the money. Among the A, B, C segments we can offer the C segment only SIP schemes. They dont have that high a disposable income to be able to invest a large amount at one time but can invest a small amount regularly. Many Mutual Fund companies have brought out various schemes targeting this particular segment. For example Reliance Mutual Funds has SIP schemes wherein the investors can start an SIP of only Rs. 100 a month. The ELSS schemes can be marketed to A segment of the people because they are the taxpayers and the schemes which help them in tax planning are going to be attractive to them. As discussed earlier the risk appetite of the investors changes with age. So we can market equity based funds to the people below the age of 35. These people have high risk appetite and so a fund which gives high risk and high returns will be considered to be a good investment option. For people between the ages of 35 to 60 we can offer a Balanced Fund which gives the best of Equity and Income Schemes and has an acceptable level of risk while giving a good return on the investment. In case of people over the age of 60 who have retired and so dont have a steady income source we can offer Income Funds and Money Market Funds to them as they have less risk and give guaranteed returns. Thus it is seen that targeting the different schemes of the funds to different segments based on the income and age is very helpful as one is able to identify the financial requirements of the investor and guide him or her in a very effective manner. 4.4 Positioning Apart from segmenting a market and targeting a particular segment it is also essential to position your product in a correct manner so that the customers receive it successfully. Mutual Fund is basically a wealth creation product unlike insurance which is to be used for Risk Cover. Many people have the belief that as they already have insurance they

18

have invested in a good product. The need is to tell the people that undoubtedly a great product but it cant be used as a substitute for wealth creation. Apart from positioning Mutual Funds as a wealth creation product we have to position the various schemes of the Mutual Fund based on their function. Thus the SIP should be positioned as a low cost investment option which even a person with low income can avail of while ELSS should be positioned as a scheme that gives the investors tax benefits. The Income Funds and Money Market funds should be positioned as low risk investment opportunities. Good positioning of a product makes it more attractive to the potential consumer and he is able to make an informed choice about the product. 4.5 4 Ps of Marketing in marketing management there is a concept of 4 Ps of marketing. It is essential to understand the 4 Ps of marketing which are Product, Price Place and promotion before trying to market any product or service. The knowledge of the 4 Ps of marketing will help us in understanding the product and in successfully convincing the customers to buy the product. The 4 Ps of marketing in case of Mutual Fund can be described as follows. 4.6 Product The product that we are trying to market to the consumers is Mutual Fund which is a financial product created for the purpose of investment and wealth creation. We must be able to explain the product to the customers. We should tell them that how they can invest the money in mutual funds and get a good return on their investment. We should explain the advantages of investment in the Mutual Funds. In times of slowdown as being witnessed recently the investor confidence is very low. We have to convince the investors that though the stock market has crashed and many investors have lost their money the markets are now on an upswing and the prospects of a stable government in the centre will give a further boost to the markets. Thus this is the best time to invest in Mutual Funds as an investment product. We have to explain to the investors that though there are always risks associated with the Mutual Fund investment these risks are negligible in the long run where it is seen that the investments give good returns which even beat the stock market. We have to sit with the investors and analyse carefully what are their requirements and do a detailed financial planning session with them. This allows us to select the best schemes from

19

the basket of schemes available to get the investors the best possible return on their investments. Thus it is seen that we must have the thorough knowledge of the product while at the same time we must be able to convey this to the customers so that they are interested in buying our product. 4.7 Price One of the major factors in the marketing of any product is its price. The customers want to know what price they are paying for the product or service and whether the price is justified and the product or service is Value for Money. In case of Mutual Funds there are two components of the price. The first is the minimum amount that can be invested in a particular scheme. This amount sets the base price for the scheme. The investor if he or she so chooses can invest a higher amount than the minimum depending on his own income and financial position. There is generally no upper limit in the amount to be invested. The next component is the Entry/Exit load that the AMCs charge for various schemes. These are generally 2-3% of the amount that has been invested but they differ from scheme to scheme. Some schemes may have no entry/exit load for investment. The financial planner must explain the prices of investing in the fund to the investor so that he is kept knowledgeable about how his investments are going to work. In the highly competitive Mutual fund industry the AMCs generally keep the price low so that the investors are attracted to invest in their schemes. It is seen that the minimum amount to be invested is lower in case of SIPs as compared to other schemes because the investors have to invest that amount on a regular basis. This is also done to attract the small investors for whom the main source of investment is the saving bank account. Reliance Mutual Fund has revolutionized low cost SIPs by allowing investors to start SIPs for as low as Rs. 100 per month. 4.8 Place The place where we sell the product also plays an important role in the marketing of the product or service. The place is usually decided by the nature of the product or service that is being marketed. In case of Mutual Funds the place of marketing is very important. The AMCs have enabled the investors to directly buy the Mutual Funds from their own offices in the cities or through their websites. They also have setup a wide network of distribution houses and agents to bring their products to the investors.
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Many of the agents and financial planners have their own offices either at a market place or at home. It is cheaper to have your offices at home as the rent is lower and you can easily connect to many potential clients who live in your neighbourhood. Selling of Mutual Funds does not need an elaborate office setup and only needs a computer with net connection. Many people do not like to go to a market place to do their investments and generally prefer to go to the offices in their neighbourhood. A large number of people dont have the time or inclination to go to any office. The Mutual fund agents contact them directly via telephone and set up the appointments either at the offices or homes of the potential investors. The agents also prefer this because this gives them a chance to attract other potential investors to the product and explain the benefits of investing in Mutual Funds. Thus we can see that the place for selling the Mutual Fund ranges from the websites and offices of the AMCs to the homes and offices of the investors and the agents. Thus the basic idea is to bring the Mutual Funds as close to the investors as possible. 4.9 Promotion Marketing of a product or service is incomplete without an effective promotional strategy. Without promotion the general public will not know about the product or service in question and thus will not buy it. Thus promotion is essential to spread the word about the product or service. In case of Mutual Funds the AMCs spend a lot of money in promoting the various schemes. They take out advertisements in various media like newspapers, television internet etc. When a new scheme is launched the different agents are invited to attend seminars where the details about the product are presented. This is because the agents are the people who come in direct contact with the public and promote the products. The agents are also given promotional materials like brochures posters mailers etc to be displayed in the offices or sent out to potential clients. The distribution houses like N.J. India Invest also give a lot of promotional materials to the agents who are associated with them. Apart from the materials the employees of the distribution houses and AMCs also go with the agents on joint calls where a large number of potential investors are addressed at the same time.

21

Cold calling and emailing are also promotional tools which are extensively used and the agents hire telecallers to give calls to potential clients to set up appointments and sell the various services. Some agents also make use of canopies which are put up in public places to attract the customers to invest in the various schemes.

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Chapter 5 Research Methodology

The summer internship at N.J. India Invest had a component of market research. The trainees had to conduct research about a given topic and present the conclusions and their recommendations to the management. This chapter describes the market research that was done during the summer internship. 5.1 Statement of problem The research topic for the summer internship that the author had chosen was Awareness about investment instruments among young investors. This was an important research for the company as it would give them some idea about how much needs to be done to spread awareness among the people about the various investment avenues. Checking the existing level of awareness amongst the individuals is the first step in spreading the awareness. The rationale behind undertaking this project is to understand the awareness and acceptance of various investment alternatives and to make a comparative study as which modes of investments are preferred by individuals. 5.2 Type of study The study was an exploratory study. The main objective was to check the level of awareness amongst the individuals. The results of such a study could help the company in identifying the problem and the areas where the awareness is low. The company could then study what could be done to increase the awareness and how should the resources of the company be deployed. Thus the study was used to test the climate and identify the problem. 5.3 Information needed At the start of every study the researcher has to know what all information will be needed by him to get answers to the questions posed in the objectives of the study. This information will help the researcher get the conclusion and give the recommendations to the management. In case of this research the information needed is mainly how much the people know about the various investment instruments that are available in the market. We also need to know what factors are considered by the people before investing. This research has got a special focus on the Mutual Funds so information is also needed about whether the people are aware about the different schemes of the Mutual Funds.

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The level of awareness about the investment instruments has to also be taken along with the income level of the respondents. This is important because the place where people invest their money is dependent on their income levels. Thus the knowledge of income levels of the respondents is also important. The research focuses on the young people so the age level of the respondents is also important to make the conclusion. 5.4 Data Collection For any research to be completed one has to collect the data regarding the research. The data can be collected both from the primary sources and the secondary sources. The process data collection has been described below. 5.4.1 Secondary Sources secondary sources of data are the sources which already exist in the public domain and you yourself do not collect that data. These sources may include the research on a similar subject conducted by some other researcher, information available on the internet and various books or data supplied by the company itself. In this case the author has used mainly two secondary data sources. The first is a research conducted by Mr. Anurag, an MBA student in Delhi, on the preference of investors for direct investment in equity or the investment through Mutual Funds. This research was carried out by the researcher in Delhi. The objectives were similar to the present research and the data was collected via a questionnaire with around 50 respondents The second source of data used by the author is a report by Neilson titled Neilson Life 2008 which gives the preference of the Indian investors regarding the different investment opportunities that they have at present. This survey was conducted on an all India basis by Neilsons in 2008. 5.4.2 Primary Sources The primary sources of data are those data which has been collected by the researcher himself for the purpose of conducting a particular research. This data may be collected via questionnaires interviews observation etc. In case of this research the primary source of data was a questionnaire that was used to study the respondents. This study was carried out by distributing the questionnaires to the respondents. The questionnaires tested the level of awareness of the respondents by asking them a series of questions about different aspects of investing. There were 91 respondents mainly from Delhi who were given questionnaires about this research. The questionnaires were distributed via
24

emails as well as by personally giving copies of the questionnaire to some of the respondents. The answers to the questionnaire formed the primary source of data for the study Thus it is seen that the study used both primary and secondary sources of data. Initially secondary sources of data were tapped to build a background of the study and know what type of response had been obtained in previous studies. The data collected from the secondary sources was supplemented by the data collected from the primary sources to reach a conclusion. 5.5 Questionnaire Design8 Before conducting a research it is essential to design a questionnaire which will be used to conduct the research. A questionnaire is needed to standardize the process of data collection and to achieve speed and accuracy in collection and recording. A questionnaire has to go through many steps before it is finalized. First the researcher has to be clear about the survey objectives that he is trying to achieve with the help of the questionnaire. He has to decide the data collection method that will be used and tailor the questionnaire accordingly. The contents of what the questionnaire wants to know should then be decided. He should also decide what types of questions are to be there in the questionnaire. Will they be open ended or close ended questions, will the questions be multiple choice, likert scale fill in the blanks etc. The wordings of the questions and their order should be decided so that there is no confusion in the minds of the respondents. He should pre test the questionnaire revise and implement it. In case of this research the objective of the survey were to mainly check the level of awareness among the people about the various investment instruments available in the market with a special emphasis on Mutual Funds. The data collection method used was mainly emails as it was very cost effective way of reaching out to a large number of people. Apart from emails the data was also collected by distributing the copies of the questionnaire to people. The contents of the questions were decided based on the objectives of the research. It was decided to have mostly close ended questions as they are easy for the respondents to answer. It was decided to use a mixture of likert scale and multiple choice questions. There was just one open ended question. After making the questionnaire it was pre tested on a small sample and then sent to other respondents.

25

Question 1 was a likert scale based question which was used to test the level of awareness about various investment options Questions 2 and 3 were used to judge which factors the investors considered before making an investment Question 4 asked about the source of information the investors used to make a decision about the investment this would enable the company to know the sources through which the awareness can be spread. Question 5 checked the expectation of the investors from their investments. Questions 6, 7 and 8 were related to the timing of investments. Questions 9 and 10 checked about the kind of portfolio and investment desired by the investors. Questions 11 and 12 checked the knowledge of the investors about the various mutual Fund schemes available. Questions 13 and 14 were about the benefits of investing in Mutual Funds. The 14th question was an open ended question. A copy of the questionnaire is given in the appendix. 5.6 Sampling9 The process of estimating the characteristics of a larger population by studying that of a smaller subgroup of the population is known as sampling. Sampling is necessary because it is difficult and very expensive to collect the data for the entire population. There are many steps in sampling. First a population is defined from which we have to choose the samples. This population is based upon our objectives of the study. We have to specify the characteristics of the members of the population. After defining the population we must select the method of data collection. After this we have to select the sampling frame. A sampling frame is the list of elements or members from which we select the units to be sampled. After having selected the sampling frame we must select a method of sampling. The chosen method will depend on the objectives of the study, the financial resources available with us, the time limitations and the nature of the problem. These factors will also limit the

26

sample size that we can get. We have to develop the procedure for sampling and then put it in operation. 5.6.1 Population Definition The population definition used in this research is the young people of India. By young we mean people of age less than 35 years. The samples were chosen from this population and then the behaviour of the population was analysed using these samples. 5.6.2 Data Collection As explained earlier the method of data collection was by distributing questionnaires to the people. These questionnaires were emailed as well as administered personally to the respondents. 5.6.3 Sampling Frame The sampling frame chosen for the research was the students of FORE School of Management and the various clients of N.J. India Invest. 5.6.4 Sampling Method Due to time and financial constraints the sampling method used was convenient sampling. 5.6.5 Sample Size The sample size of the study was 91 respondents.

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Chapter 6 Data Analysis

During the survey a data of 91 respondents was collected. An analysis of the data is shown below. Demographic Analysis The data of 91 respondents included 66 males and 25 females. This is shown in the pie chart below.

25 Males Females 66

Fig 6.1 Male - Female ratio of the respondents The objective of the study was to find out the investment awareness among the youth of the country. Youth can be defined as the people below the age of 35 years. The age group of the respondents ranged from 18 to 31 years. The age profile of the respondents is shown in the dot plot below.
Dotplot of Age

18

20

22

24 A ge

26

28

30

Fig 6.2 Dot plot of Age of respondents

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As is clear from the dot plot maximum number of respondents were between the ages of 22 to 25 years. This is an age just before one starts to work. Many people start their investments once they start working. Thus it is very beneficial to know the awareness level of the people who are more likely to start their investment in the next few years. This is the segment that is entering into the market and the investment companies are busy targeting this segment. Thus this survey will be very helpful for the companies and their future plans. The investment awareness and investment instruments used by an individual are closely related to the income of the individual. The researcher did a survey of the incomes of the respondents. The incomes were divided into three levels: - Rs. 0 to 200,000; Rs. 200,000 to 500,000 and more than Rs. 500,000. The distribution of the respondents based on the income levels is as shown below.

20

0 - 200,000 200,000 - 500,000

> 500,000
62

Fig 6.3 Income distribution of the respondents This data also shows that most of the respondents are those who are just starting their career and thus will soon start investing. There is a great need to tap this market and increase the awareness level of this segment.

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Level of awareness of different investment instruments The researcher asked the respondents to indicate the level of awareness they have about various investment instruments. The respondents were asked to rate their level of awareness on 5 levels: - Not Aware, Have heard of it, Somewhat Aware, Good Knowledge and Expert. The results of this are indicated below, Shares The level of awareness among the people for shares as an investment instrument is shown in the graph below.

Fig 6.4 Level of Awareness for Shares Many people relate investment with share markets. There are a lot of small investors who invest a part of the money directly in shares. Many people are not expert in the share market and feel that the big players control the market in ways that the small retail investors are not able to understand. This is clearly reflected in the graph where most people said that they were somewhat aware or had good knowledge of the share market but were not experts. As stated earlier the level of income of an individual also affects his level of awareness. The researcher collected the data about the level of income and cross tabulated that data with the level of awareness to find any relation between the two. This is as shown in the table below.

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Not Aware Have Heard Of It Somewhat Aware Good Knowledge Expert

0-200,000 200,000-500,000 >500,000 0 1 0 11 2 1 23 26 2 9 8 0 3 4 1

Table 6.1 Cross tabulation between Income and Awareness Level for Shares

Rs. 0-200,000

Rs. 200,000 500,000

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Rs. >500,000 Fig 6.5 Relationship between Income Level and Awareness for Shares As can be seen from the table and the pie charts the awareness for an instrument increases as the income level is increased. This is because more people start investing when their incomes increase and this leads to increased awareness. Higher proportion of people with incomes greater than 500,000 have a good knowledge or are expert in the share market. Thus it can be said that there is a correlation between the income level and the level of awareness amongst the people.

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Mutual Funds The Mutual funds are another highly popular investment instruments used by the people. The awareness level of Mutual Funds among the respondents is as shown in the graph below.
40 35 38 33

30
25 20 15 10 7 2 Not Aware Have Heard Of It Somewhat Aware Good Knowledge Expert 11

5
0

Fig 6.6 Level of Awareness of Mutual Funds The graph shows that most of the people are only somewhat aware about Mutual Funds. Only 38% of the people claim to have good knowledge or expertise in the field of Mutual Fund. This shows that we need to spread the awareness level more. The people need to know that investing their money in mutual Funds is a good investment both for themselves as well as for the economy. The people can get good returns on their investments and many companies in the economy will benefit because Mutual Funds will in turn invest the peoples money in these companies which may not be conventionally called as Blue Chip An income wise awareness level for Mutual funds is shown below.

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Rs. 0-200,000

Rs. 200,000 500,000

Rs. >500,000 Fig 6.7 Relationship between Income Level and Awareness for Mutual Funds

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As is clear from the figure as the income level increases the awareness level also increases. This is shown in the increase in percentage of people who have good knowledge or expertise in Mutual Fund with increase in income level. This also shows that the Mutual Fund Companies have to focus on the segment just entering employment so as to further spread awareness about their product which will result in greater sales of Mutual Funds.

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Insurance Insurance is a popular mode of investing for the purpose of risk cover for the individuals. In India many people associate insurance especially life insurance with LIC or Life Insurance Corporation of India, a government owned insurance company. The awareness among the people regarding insurance is largely due to the efforts of LIC which remains the primary insurance company of India though many private players like Tata AIG life, Reliance, ING Vaisya etc. are also now active. The awareness of the people regarding insurance is as shown in the graph below.

Fig 6.8 Level of awareness about Insurance As shown in the graph most people (about 45%) claim to have a good knowledge or expertise about insurance as an investment option. This is mainly because of the sustained marketing efforts and awareness campaigns of the insurance companies led by LIC. A cross tabulation of the awareness of the respondents with the levels of income is as shown in the table 6.2
0-200,000 Not Aware Have Heard Of It Somewhat Aware Good Knowledge Expert 200,000-500,000 >500,000 4 0 1 11 1 1 22 22 3 9 8 2 1 5 1

Table 6.2 Cross tabulation between Income and Awareness Level for Insurance

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As can be seen from the table with increase in income level the awareness of the products increases. For the people with income more than Rs. 500,000 more than 55% of the people claim to have a good knowledge about insurance. This is mainly because they have invested in various products of insurance like life insurance, general insurance, vehicular insurance etc. As more and more people invest in a product their awareness level increases and in turn they invest more in the product. This is a cycle which can be exploited by the companies dealing with investment products.

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Savings Bank a/c The savings bank account is one of the first modes of investment used by the people. It is not a good investment instrument in terms of the returns which are lower than others but it is popular because of the liquidity and the hassle free handling of cash that it offers. The level of awareness for savings bank account among the users is as shown below.

Fig 6.9 Level of awareness for Savings Bank Account As can be seen in the figure most people have a good knowledge about savings bank account. This level of awareness is due to the reason that people deposit their money primarily in the saving bank and the operations of this are not very difficult. The savings banks in India are busy in attracting the customers towards themselves by offering better services to the customers. The customers in turn trust the savings bank accounts to handle their money. For income wise cross tabulation of the level of awareness please refer to Table B4 in appendix.

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Fixed Deposits If people have some excess cash which they dont require immediately then they can deposit the same as a fixed deposit in a bank. The banks pay a return of 8-10% depending on the period of deposits. The level of awareness among the respondents for fixed deposits is as shown in the graph below.

Fig 6.10 Level of awareness for Fixed Deposits As can be seen from the graph the people generally have good knowledge of the Fixed Deposits. 40% of the respondents claimed that they have a good knowledge of Fixed Deposits while 35% were somewhat aware. For income wise cross tabulation of the level of awareness please refer to Table B5 in appendix.

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Gold and other commodities The level of awareness for investment in gold and other commodities is as shown in the graph below.

Fig 6.11 Level of awareness for Gold and other commodities As can be seen most of the respondents (42%) say that they are only somewhat aware of investments in the gold and other commodities. From ancient times gold has been used as a standard for money but the mechanism for investing in Gold is not familiar to many people. Commodity exchanges like MCDEX are new in India and the awareness for these products is bound to grow in the future. For income wise cross tabulation of the level of awareness please refer to Table B6 in appendix.

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Real Estate The investment in real estate is the investment in land or properties. This investment is of a large amount and is generally for a long time. The level of awareness of the respondents in case of real estate is shown below.

Fig 6.12 Level of awareness for real estate 42% of the respondents have said that they are somewhat aware of the investment in real estate. This may be because this investment costs a lot of money and many people would not have invested into the sector themselves. As a result their knowledge about the sector is limited. For income wise cross tabulation of the level of awareness please refer to Table B7 in appendix.

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Government Securities The centre and the state governments have to execute many projects for the benefit of the people. The money for these projects comes through taxes or in form of loans. The government issue securities to get the loans from the people to execute the projects. These securities are also considered a very safe form of investment. The level of awareness of the respondents for government securities is as shown below.

Fig 6.13 Level of awareness for government securities As can be seen from the graph many respondents (almost 40%) are not aware or have only heard of government securities. This may be due to the lack of awareness campaigns for the people to acquaint them about the investment opportunities in government securities and bonds. Another reason could be the lack of easy accessibility to invest in these instruments. Unlike instruments like Mutual Funds and Insurance which have a lot of agents to explain to the people about the instruments there is a lack of network for dedicated agents for government securities. It is also easier and convenient to invest the money in other instruments due to the large number of offices and agents but the distribution network of government securities is mainly post offices and banks where also they are not marketed very well. This increases the lack of awareness about the product. For income wise cross tabulation of the level of awareness please refer to Table B8 in appendix.

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Corporate Bonds Like government securities corporate bonds are also debt instruments. These are issued by industries who would like to expand their operations. The level of awareness about corporate bonds among the respondents is as shown in the figure.

Fig 6.14 Level of awareness for corporate bonds As can be seen from the graph there is very low level of awareness about corporate bonds among the respondents. 23% of the people say that they are not aware of corporate bonds while 25% say that they have only heard of them. This lack of awareness is not good. The main reasons for this may be the lack of marketing of these bonds to the general public. The major investors in these bonds are banks and financial institutions and so the general public is not very aware of corporate bonds as an investment instrument. For income wise cross tabulation of the level of awareness please refer to Table B9 in appendix.

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Selecting an Investment Instrument the respondents were asked about the various factors that they consider before selecting an investment instrument. The factors which were studied included whether the investors considered returns of investment or the risk associated with the investment, did they consider the past performance of the instrument, their sources of information regarding investment and the level of returns they expected their investments to generate. Risk and Return In every investment decision one has to take into account both the returns that the investment is likely to generate and the risks associated with the investment. The amount of returns that the investment is likely to generate is calculated in form of CAGR or Compounded Annual growth Rate of the principle amount. The risk associated with the investment is calculated in form of Beta. The primary purpose of investing in any instrument is to make your money grow. For many people the ability of the instrument to do that is the primary factor in selecting the investment option. The return of the instrument is not free from the risk element. The risk element gives the probability of generating the level of return. Generally instruments are high risk high return or low risk low return. Some people look at the risk associated with the investment while doing the investment. Some people look at both risks and returns. During the survey the author asked the respondents about the factor they consider before choosing the investment. The results are as shown below.

15 16% Return 16 18% 60 66% Risk Risk and Return

Fig 6.15 Risk and Return as factors for choosing instrument

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As can be seen in the graph a majority, 60 of the 91 respondents (66%) look at both Risk and Return of the instrument before investing. This maybe because the people realise that considering risk or return independently may not give the true picture. For example the returns in the stock market are generally very high but they also carry a high risk of losses. Similarly if we look at government securities which are considered risk free then we should also be content with a low return on our investment. . The people who look at only risks or only returns are evenly distributed and are in a minority. This shows that the people give serious consideration to risks and returns before investing in any instrument. Investment is a high involvement product and people dont do it at spur of a moment.

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Past performance as an indicator of the future results The people have access to the past performance of an instrument. The past performance tells the people what were the level of the returns that the instrument has generated and what were the possible risk factors associated with the instrument. The author asked the respondents whether they felt that the past performance of an instrument is a credible indicator of the future results given by the instrument. The results can be shown in the graph below.

30 33% Yes 53 58% 8 9% No Cant say

Fig 6.16 Is past performance an indicator of future results As shown in the figure a majority (58%) of the people felt that the past performance of the instrument was a good indicator of the future result from that instrument. This indicated that the people studied what kind of results did the instrument gave in the past before investing their money in the instrument. If the people found the past performance of the instrument satisfactory then only they invested the money. About 33% of the respondents did not think that the past performance could predict the future results. This maybe because many instruments that gave high returns in the past had given very high losses due to the recent market meltdown and the people were vary of investing in these instruments only on basis of their past high performance due to the highly volatile situation in the stock markets.

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Sources of information about an investment instrument Investment is a high involvement product and people do a lot of research before investing in any instrument. A study of the sources of information that the people use before investing will help a company in defining how to best spread the awareness about the product. The author asked the respondents to name the sources of information that they use to gather the information before investing. The results are as shown below.

(A) Media (Newspaper, Magazines, Internet) (B) Friends and Family (C) Investment Advisors/ Financial Planners (D) Brochures of Various Companies Other

47 (51%) 41 (45%) 39 (42%) 18 (20%) 1 (1%)

People may select more than one checkbox, so percentages may add up to more than 100%.

Fig 6.17 Information sources used before investing As seen from the results people use multiple sources of information before investing in any instrument. Media (Newspapers Magazines and Internet) are the most popular sources of information. With the advent of the internet all the information required by the people is available at the click of a mouse. The people can look at past trends, and compare the various options before investing. Friends and Family as well as investment advisors are also very popular sources of information. The people want to know about the past experience of other investors before investing their own money. This is the reason that they consult their friends and family before making any decision. The investment advisors and financial planners are looked upon as people who have knowledge and experience and so people consult them.

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Expectations of returns The primary purpose of investment is to get a good return on the investment leading to the growth of money. The expectation of what is a good return on investment differs from person to person and from time to time. The author asked the respondents what they would consider a good return on their investment. This gives an idea about which instruments they would opt for as well as what is their current market outlook. The results are as shown in the graph below.
30
25 25 20 15 10 5 0 8-10% 10-12% 12-15% 15-20% >20% 9 25

17 15

Fig 6.18 Expected level of returns As can be seen from the figure most people expect returns between 12-15% and 15-20% with 25 respondents each indicating the above choices. This indicates that the people are still a bit vary about the markets and are not having very high expectations. They prefer to be a bit conservative in their expectations. If the market would have been in the peak levels then it is possible that the expectations of the people could have been higher. The prospect of a new stable government at the centre under the leadership of Dr. Manmohan Singh who is well known as a reformist may give a boost to the market and consequently the expectations of returns may also rise.

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Timing and Duration of Investment Before making an investment it is important to know when you will make the investment and for how long? The answers to these questions reveal how the investors view the investments and the market climate. The author asked the respondents some questions regarding the timing of the investment Market level for investments The expected returns from an investment depends strongly on the economic climate at the time of making the investment. One barometer for the economic climate can be the Sensex. The respondents were asked at which Sensex level they would prefer to start their investment. The results are as shown below.

8 9%

9 10% Market at peak level Market at low level Invest regularly Cant say 48 53%

26 28%

Fig 6.19 Market level for investment As can be seen from the chart 53% of the respondents feel that the best time to invest is when the market is at a low level. This maybe because from a low level the market is expected to rise and as such the value of the investment will also rise giving a good return on the investment. 28% of the respondents feel that one should not time the market but just invest regularly in the market. This can also be a good strategy because many people do not consider themselves expert in the market and as such will find it difficult to determine when the market is at the highest or the lowest. They may feel safe to just invest regularly. It may lead to some losses on the short term but over a long term they will gain.

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Time to start investment The respondents were asked how soon they could start investments. This was asked to determine how much trust they had for getting good returns by investing quickly. The results were as shown below.

8 9% As Soon as possible 43 47% 40 44% After earning sufficient money Cant say

Fig 6.20 Time to start the investment As can be seen from the data respondents were almost equally divided on starting the investments as soon as possible (47%) and waiting till they have earned sufficient amount of money (44%) An income wise breakup of the respondents for this question is as shown below.

Rs 0-200,000

50

Rs 200,000 500,000

>Rs 500,000 Fig 6.21 Income wise breakup of time to start the investment As can be seen from the above figure as the income level increases the proportion of response of starting investment after earning sufficient amount of money decreases. This shows that with increase in income many people start their investment.

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Duration of investment The respondents were asked the duration for which they would like to invest the money. The result is as shown in the figure below.
35
30 30 25 20 15 10 10 5 0 <1 year 1-3 years 3-5 years >5years 19

32

Fig 6.22 Duration of the investment The data shows that most of the respondents were interested in long term investments of more than 5 years. This was closely followed by those who felt that the investment should be only for 1-3 years. The results indicate that there is a lack of clarity for the ideal period of investment. It is generally seen that investments made over a longer period of time yield better returns than for a short period of 1-3 years. Thus there is a need to spread the awareness about the benefits of long term investments.

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Form of investment There is a wide variety of options for investments available in the market. The investors may choose to have a large diversified portfolio of investments or to have a small portfolio which is easily managed. They may choose to invest a large amount at a single time or invest small amounts in a regular basis. Thus there is a complete flexibility for the investors in terms of managing their investments The study also looked at which were the best options liked by the respondents from the options available in the market. Type of Portfolio The portfolio refers to the different number of investment instruments that an investor has invested in. The author had asked the respondents about their choice of the portfolio. The results are as follows.
50 45 40 35 30 25 20 15 10 5 0 Large Diversified Small Concentrated Cant say 13 34 44

Fig 6.23 Choice of portfolio As can be seen from the graph 48% of the respondents preferred a large diversified portfolio as compared to 37% who preferred a smaller concentrated one. This may be because the large diversified portfolio offers a hedging of the risks. If one set of investments show a loss that loss may be recovered by the gains in the other instruments. In case of a small portfolio there is a chance of a large loss because of a slowdown in a particular sector. Thus it is advisable to have a larger diversified portfolio as compared to a smaller concentrated one.

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Amount of investment The investors have a choice of investing a large amount at one time or investing small amounts regularly. In case of shares they can buy a large number of shares at once or buy small number of shares at a regular interval. For investing in mutual funds the investors have an option of investing a large amount as a one-time investment or investing in S.I.P. wherein a fixed amount is debited from the bank account on a regular basis for the purpose of investments. The respondents were asked their preference for the investment purpose. The results are as follows.
60 50 40 30 21 20 13 10 0 Small amount regularly Large amount one time Dont know 57

Fig 6.24 Choice of investment amount The data clearly shows that majority of the respondents (63%) feel that it is better to invest a small amount regularly than a large amount at one time. This is because when one invests a small amount regularly one can get the benefit of rupee cost averaging. Over a period of time by making small investments we tend to overcome any short term losses and so get a better return on our investments.

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Awareness about different schemes and their benefits As stated earlier there are a wide variety of schemes available for the investors to choose from. These schemes give different benefits to the investors. The investors must choose the best scheme that fits their need. The author asked the respondents some questions regarding the awareness about various schemes and their benefits Awareness about special schemes The investment firms have launched a variety of schemes for the benefits of the customers. These include among others ELSS or Equity linked Saving Scheme, ULIP or Unit Linked Insurance Plan and SIP or Systematic Investment Plan. The author asked the respondents about which schemes among the above they are aware of. The results are as shown below. Equity Linked Saving Scheme (ELSS) Unit Linked Insurance Plan (ULIP) Systematic Investment Plan (SIP) Not Aware of any schemes Other 2932% 4549% 5155% 1314% 2 2%

People may select more than one checkbox, so percentages may add up to more than 100%.

Fig 6.25 Awareness of various schemes As can be seen from the figure many people are aware of Systematic Investment Plans. The next in the level of awareness are Unit Linked Insurance Plans. This may be due to the efforts made by the mutual fund and insurance agents in spreading the awareness. Though people have some awareness there is always a scope for further improvement and more people can be made aware of the schemes. This will benefit both the customers and the investment companies.

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Awareness about S.I.P. N.J. India Invest is a Mutual Fund distribution house. Among the various schemes of Mutual Funds that are available in the market its main focus is on S.I.P. or Systematic Investment Plan wherein the investors invest a fixed amount monthly or quarterly. This is a good form of investment for people with low level of income as they can start an S.I.P. with an amount as low as Rs. 100 per month under some funds of Reliance AMC. The respondents were asked whether they knew what the minimum amount to start an S.I.P. was. The results are as follows.
30 25 20 16 15 10 5 0 Rs. 100 Rs. 500 Rs. 1,000 Rs. 5,000 Dont know 8 24 18 25

Fig 6.26 Minimum amount to start S.I.P. As can be seen from the results most respondents claimed that they did not know what the minimum amount to start an S.I.P. was. Of those respondents who gave an answer only 24 got it right. This clearly showed that though the respondents may have heard about S.I.P. they dont have full knowledge of the product. If the awareness is spread then people with low level of income may also start benefitting from the scheme and start their investment.

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Benefits of Mutual Funds The respondents were asked what they felt were the benefits of investing in mutual Funds. Firstly they were asked whether one could save tax by investing in Mutual Funds. The results were as follows.
70 60 50 40 30 20 18

63

10
10 0 Yes No Dont know

Fig 6.27 Can one save tax through Mutual Funds? As is clear from the graph 70% of the respondents felt that they could save tax through Mutual Funds. This is a very good sign of awareness of the people. The respondents were also asked to list some of the benefits of Mutual Funds. The following were the benefits listed by the respondents.
16 14 12 10 8 6 4 2 0 14 9 5 3 15 10 13

Fig 6.28 Benefits of investment in Mutual Funds

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As can be seen from the graph the major benefits the people feel in investing in Mutual Funds are the professional management of mutual funds, less risks in investing in the funds and the high returns. Other benefits listed by the respondents include diversification of investment, less requirement of monitoring tax saving and less amount required to start the investment. This shows that people have some awareness about the benefits of Mutual Funds.

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Chapter 7 Findings
The data that has been collected during the research has been analysed in the previous chapter. The main findings of the study are given below. The study had tried to find the level of awareness of the investors regarding various investment instruments. It was found that 41% of respondents had good knowledge of shares. In case of mutual funds 41% were somewhat aware of Mutual Funds. About 45% of the respondents claimed to have good knowledge or expertise of insurance as an investment option. 44% of the respondents had good knowledge for savings bank account. 40% of the respondents claimed that they have a good knowledge of Fixed Deposits while 35% were somewhat aware. Most of the respondents (42%) say that they are only somewhat aware of investments in the gold and other commodities. 42% of the respondents have said that they are somewhat aware of the investment in real estate. Almost 40% are not aware or have only heard of government securities. In case of corporate bonds this rises to 48%. It was also seen that with increase in the income level the awareness level also increases. For selecting an investment option 66% of the respondents said that they look at both Risk and Return of the instrument before investing. A majority (58%) of the people felt that the past performance was a good indicator of the future result from an investment instrument. The people consult various sources of information before investing. Media, friends and family and investment advisors were the top sources of information. Most people expect returns between 12-15% and 15-20% with 27% respondents each indicating the above choices. The respondents were asked about the timing and duration of the investments. 53% of the respondents feel that the best time to invest is when the market is at a low level. Overall the respondents were almost equally divided on starting the investments as soon as possible (47%) and waiting till they have earned sufficient amount of money (44%). But if one looked at an income wise breakup then it was seen that as the income level increases the proportion of response of starting investment after earning sufficient amount of money decreases. 35% of the respondents were interested in long term investments of more than 5 years.

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The respondents were asked about the type of investment they would like to make. 48% of the respondents preferred a large diversified portfolio as compared to 37% who preferred a smaller concentrated one. Majority of the respondents (63%) feel that it is better to invest a small amount regularly than a large amount at one time. The people were asked about the awareness about different schemes. 55% of the people said that they were aware about S.I.P. but when asked about the minimum amount for starting S.I.P. most of the people said that they dont know and only 26% knew the right answer of Rs. 100. On asking about the benefits of investment in Mutual Funds 70% of the respondents felt that they could save tax through Mutual Funds. Other benefits listed by the people included professional management of mutual funds, less risks in investing in the funds, high returns, diversification of investment, less requirement of monitoring tax saving and less amount required to start the investment. Overall people were aware of the benefits of mutual funds. Limitations of the study The major limitations of the study were 1. Use of convenient sampling because of lack of resources. 2. The sample size of the study is small to be able to give an adequate representation of the whole population. 3. Some of the respondents data may not be fully correct.

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Chapter 8 Recommendations
After analysing the data and presenting the findings of the study the author would like to give the some recommendations. The purpose of the study was to see the awareness about different investment instruments among the young people. As is clear from the findings of the study there is some level of awareness among the people but it is not very high. More awareness needs to be spread among the people. The following steps can be taken to spread the awareness among the investors. Awareness among College Students The college students are the people who will soon be entering in the workforce and start earning money. Thus it is important to spread the awareness about the investment among the college students. To do this the company can organize seminars and presentations in the college campuses where the representatives of the company can give information and answer the queries of the college students regarding all the aspects of the investment. This may also get good returns for the company as many students may approach the company for investing their money. Awareness among the Young Professionals There are many industries like call centres where the bulk of employees are young. These people have recently entered the workforce and have started earning. The level of awareness among these people regarding investment is less and the company must make efforts to spread the awareness among these professionals. This can be done by means of posters pasted within the campus of these organizations. The companies can also set up canopies in places like canteens where the people come frequently. The company can offer various investment products to the people via these canopies. Awareness among General Public The general public can be made aware about investment opportunities by use of canopies set up in public places like malls, metro stations marketplaces etc. Conclusion In conclusion the author would like to state that there is a very high need for the spread of awareness among the people for various investment products. When people are aware of these products then only they will invest their money. The money that is invested will ultimately go towards nation building and the development of the country.
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References
1 http://en.wikipedia.org/wiki/Investment 2 www.njindiainvest.com 3 Lutter, J.L (2008) Consumer behaviour during investment gold purchase in comparison to other investment instruments 4 Anurag (2007) Comparison between direct investment in equity and investment through Mutual Funds 5 Neilson (2008) Neilson Life 2008 survey 6 N.J. Gurukul (2007) AMFI Presentation 7 Bijapurkar, R (2007) We are like that only (pg 130) 8 Dey, A.K. (2007) Data Collection and Questionnaire Construction presentation 9 Dey, A.K. (2007) Sampling presentation

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Bibliography
Horne, J.C.V.; Wachowicz, J.M.; Bhaduri, S.N. Fundamentals of Financial Management, 12th edition, Pearson Education Kotler, P.; Keller, K.L.; Koshy, A.; Jha, M. Marketing Management, 13th edition, Pearson Education N.J. Gurukul AMFI Preparation Kit, 2nd edition www.mutualfundsindia.com

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Appendix A Questionnaire
Please fill the following questionnaire regarding the awareness about different investment instruments
1 Which of the following investment options are you aware of? Please indicate level of awareness for each (A) Shares ( ) Not Aware ( ) Have heard of it ( ) Somewhat aware ( ) Good Knowledge ( ) Expert (B) Mutual Funds ( ) Not Aware ( ) Have heard of it ( ) Somewhat aware ( ) Good Knowledge ( ) Expert (C) Insurance ( ) Not Aware ( ) Have heard of it ( ) Somewhat aware ( ) Good Knowledge ( ) Expert (D) Savings bank A/c ( ) Not Aware ( ) Have heard of it ( ) Somewhat aware ( ) Good Knowledge ( ) Expert (E) Fixed Deposits ( ) Not Aware ( ) Have heard of it ( ) Somewhat aware ( ) Good Knowledge ( ) Expert (F) Gold and other commodities ( ) Not Aware ( ) Have heard of it ( ) Somewhat aware ( ) Good Knowledge ( ) Expert (G) Real estate ( ) Not Aware ( ) Have heard of it ( ) Somewhat aware ( ) Good Knowledge ( ) Expert (H) Government Securities ( ) Not Aware ( ) Have heard of it ( ) Somewhat aware ( ) Good Knowledge ( ) Expert (I) Corporate Bonds ( ) Not Aware ( ) Have heard of it ( ) Somewhat aware ( ) Good Knowledge ( ) Expert (J) Others ____________________ (Please Specify) 2 What will you consider more important before investing in any instrument? (A) Return of the investment (B) Risk associated (C) Both risk and return

3 Do you feel that past performance of an instrument is a good indicator of the possible future performance? (A) Yes (B) No (C) Cant Say

4 From which of the following sources you take Information/Suggestion before investing? (A) Media (Newspaper, Magazines, Internet) (B)Friends and Family (C) Investment Advisors/ Financial Planners (D) Brochures of Various Companies (E) Others ____________________ (Please Specify) 5 What is the level of returns that you will expect your investment to generate? (A) 8-10% (B) 10-12% (C) 12-15% (D)15-20% (E) >20%

6 When do you feel is the best time to invest? (A) When the market (Sensex) is at a peak level (B) When the market is at a low level (C) One must invest regularly irrespective of the market level (D) Cant say

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7 When is the best time to start an investment? (A) As soon as possible (B) Investment should start after earning sufficient amount of money (C) Cant Say 8 According to you for how long should one invest the money? (A) < 1 year (B)1-3 years (C)3-5 years (D)> 5 years

9 According to you what is better form of portfolio? (A) Large diversified portfolio (B) Small concentrated portfolio (C) Cant Say

10 According to you which is a better form of investment (A) Investing a small amount regularly (B) Investing a big amount at one time (C) Dont Know 11 Which of the following schemes are you aware of? (A) Equity Linked Saving Scheme (ELSS) (B) Unit Linked Insurance Plan (ULIP) (C) Systematic Investment Plan (SIP) (D) Others __________________ (Please Specify) (E) Not aware of any schemes 12 What do you think is the minimum amount possible for starting an SIP? (A) Rs. 100 (B)Rs. 500 (C) Rs. 1000 (D) Rs. 5000 (E) Dont Know

13 Can one save tax by investing in Mutual Funds? (A) Yes (B) No (C) Dont Know

14 What are the benefits of investing in mutual funds? ----------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------------------------------------------------------------Name __________________ Age ____ Gender ____________ Annual Income (A) 0 200,000 (B) 200,000 500,000 (C) > 500,000

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Appendix B Income wise cross tabulation for awareness level of various instruments
0-200,000 Not Aware Have Heard Of It Somewhat Aware Good Knowledge Expert 0 11 23 26 2 200,000-500,000 >500,000 1 0 2 1 9 8 0 3 4 1

Table B1 Income Wise Cross tabulation of awareness of Shares

0-200,000 200,000-500,000 >500,000 6 0 1 5 4 2 29 21 1 8 7 1 1 5 0

Not Aware Have Heard Of It Somewhat Aware Good Knowledge Expert

Table B2 Income Wise Cross tabulation of awareness of Mutual Fund

0-200,000 200,000-500,000 >500,000 4 0 1 11 1 1 22 22 3 9 8 2 1 5 1

Not Aware Have Heard Of It Somewhat Aware Good Knowledge Expert

Table B3 Income Wise Cross tabulation of awareness of Insurance

0-200,000 200,000-500,000 >500,000 1 0 0 8 4 1 18 29 6 7 8 1 4 3 1

Not Aware Have Heard Of It Somewhat Aware Good Knowledge Expert

Table B4 Income Wise Cross tabulation of awareness of Savings Bank

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Not Aware Have Heard Of It Somewhat Aware Good Knowledge Expert

0-200,000 200,000-500,000 >500,000 1 0 0 8 4 3 20 29 4 11 3 2 1 5 0

Table B5 Income Wise Cross tabulation of awareness of Fixed Deposit

0-200,000 200,000-500,000 >500,000 7 0 0 17 10 4 30 7 1 6 4 0 3 2 0

Not Aware Have Heard Of It Somewhat Aware Good Knowledge Expert

Table B6 Income Wise Cross tabulation of awareness of Gold

0-200,000 200,000-500,000 >500,000 2 0 0 13 5 3 29 17 1 8 4 2 2 5 0

Not Aware Have Heard Of It Somewhat Aware Good Knowledge Expert

Table B7 Income Wise Cross tabulation of awareness of Real Estate

0-200,000 200,000-500,000 >500,000 12 2 2 15 6 0 26 9 0 9 2 1 4 3 0

Not Aware Have Heard Of It Somewhat Aware Good Knowledge Expert

Table B8 Income Wise Cross tabulation of awareness of Govt. Securities

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Not Aware Have Heard Of It Somewhat Aware Good Knowledge Expert

0-200,000 200,000-500,000 >500,000 15 5 1 15 5 3 25 6 1 7 1 2 4 1 0

Table B9 Income Wise Cross tabulation of awareness of Corporate Bonds

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69