A SUMMER TRAINING REPORT ON SYSTEMATIC INVESTMENT PLAN

By SUNDARAM BNP FINANCE Submitted to

Under the guidance of

DECLARATION

I, the under signed Miss. DHARA R. KOTECHA hereby declare that the research work presented in this summer internship project is my own contribution and has been carried out under the supervision of Dr. CHINNAM REDDY, Dean and Faculty of Management, Marwadi Education Foundation s Group of Institutions, Rajkot.

This is an original contribution in every respect and has not been previously submitted to any university for any degree.

Date:

Place: Rajkot

(DHARA R. KOTECHA)

PREFACE

MBA is a stepping-stone to the management carrier and to develop good manager. It is necessary that the theoretical must be supplemented with exposure to the real environment. Theoretical knowledge just provides the base and its not sufficient to produce a good manager thats why practical knowledge is needed. Therefore the research product is an essential requirement for the student of MBA. This research project not only helps the student to utilize his skills properly learn field realities but also provides a chance to the organization to find out talent among the budding managers in the very beginning. Investing money where the risk is less has always been risky to decide. The first factor, which an investor would like to see before investing, is risk factor. Diversification of risk gave birth to the phenomenon called Mutual Fund. The Mutual Fund Industry is in the growing stage in India, which is evident from the flood of mutual funds offered by the Banks, Financial Institutes & Private Financial Companies. In accordance with the requirement of MBA course I have summer training Research project on the topic SYSTAMATIC INVESTMENT PLAN For conducting the research project sample size of 120 customers of Mutual Funds were selected. The information regarding the project research was collected through the questionnaire formed by me which was filled by the investors of Mutual Funds.

ACKNOWLEDGEMENT
Expression of feelings by words makes them less significant when it comes to make statement of gratitude I take this opportunity to express my gratitude to all the people who have guided and helped me directly or indirectly in the course of completion of my project. I feel immense pleasure to express a deep sense of gratitude to my Dean Dr. S Chinnam Reddy who has given me an opportunity to do my internship in Reliance Mutual Fund. I would also thankful to my Faculty Guide Dr. S Chinnam Reddy for his constant support and guidance. His valuable suggestions and helping hands has helped me to complete my project successfully. I am also very thankful to Mr. Rohan Dhruv, Relationship Manager, Reliance Mutual -Fund, for his cooperation in providing me all the necessary information for doing this project.

Date:

Place: Rajkot

(DHARA R. KOTECHA)

CONTENTS
CHAPTER S Description 1 Introduction Research Methodology Objectives Limitations of the study Page No.

2 3 4 5 6

Industry profile company profile Theoretical Frame Work Analysis and Interpretation of Collected Data Findings & Recommendation Suggestions Bibliography Annexure

INTRO DUCTION SYSTEMATIC INVESTMENT PLAN

Systematic Investment Plan is an approach to investing within managed investments which involves investing a set of amount at regular intervals rather than investing a larger lump sum amount in one shot. By investing this way you are not attempting to capture the highs and lows of the market but rather the cost of your investment is averaged over a period of time. The essence of SIPs is that when the markets fall investors automatically acquire more units. Likewise they acquire lesser units when the market rises. This means that you buy less when the price is high whereas you buy more the price is low. Hence the average cost per unit drops down over a period of time. Systematic Investment Plan (SIP) is a convenient way to accumulate wealth in a disciplined manner over a long-term period. It helps you to invest regularly in small installments and thereby build wealth over a period of time. SIP is a method of investing in a mutual funds scheme. Mutual fund schemes are offered by the Asset Management companies (AMC) to customers through a distributor. The Bank acts as a distributor of Mutual Fund products for the AMC to the customers. A customer wanting to invest in a mutual fund scheme can avail of the Systematic Investment Plan.

The Systematic Investment Plan (SIP) is a simple and time honored investment
strategy for accumulation of wealth in a disciplined manner over long term period. The plan aims at a better future for its investors as an SIP investor gets good rate of returns compared to a one time investor. A Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help you save regularly. It is just like a recurring deposit with the post office or bank where you put in a small amount every month. The difference here is that the amount is invested in a mutual fund. The minimum amount to be invested can be as small as Rs 100 and the frequency of investment is usually monthly or quarterly.
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What is Systematic Investment Plan

y y y y y

A specific amount should be invested for a continuous period at regular intervals under this plan. SIP is similar to a regular saving scheme like a recurring deposit. It is a method of investing a fixed sum regularly in a mutual fund. SIP allows the investor to buy units on a given date every month. The investor decides the amount and also the mutual fund scheme. While the investor's investment remains the same, more number of units can be bought in a declining market and less number of units in a rising market. The investor automatically participates in the market swings once the option for SIP is made.

SIP ensures averaging of rupee cost as consistent investment ensures that average cost per unit fits in the lower range of average market price. An investor can either give post dated cheques or ECS instruction and the investment will be made regularly in the mutual fund desired for the required amount. SIP generally starts at minimum amounts of Rs.1000/- per month and upper limit for using an ECS is Rs.25000/- per instruction. For instance, if one wishes to invest Rs.1, 00,000/ - per month, then they need to do it on four different dates.

How to invest in SIP?

Step 1: Select a mutual fund scheme of your choice with the payment option as SIP Step 2: Decide the Investment periodicity (frequency of making payments). You can choose to make your investment on a monthly or quarterly basis. Step 3: Select the minimum investment amount. For instance, if you choose to invest Rs 12,000 every year with a monthly SIP Option. Therefore you would be investing Rs 1,000 every month in your fund. By the end of a year, you would have invested Rs 12,000 in your fund. Step 4: The amount gets converted into units, depending on the Net Asset Value (NAV). NAV is the market value per unit of a fund. If the NAV in the first month is Rs 20, you will get 50 units. Similarly in the next month if the NAV is Rs 25, you wi ll get 40 units. The following month if the NAV is Rs 18, then you will get 55.56 units. So, after three months, you would have 145.56 units. On an average, you would have paid around Rs 21 per unit. Step 5: The units get accumulated over a period of time. You can stay invested till the time you wish and redeem your units when you wish to exit from the scheme. The units are redeemed at the market value (NAV) and you get back your money with returns.

WHY INVEST IN SIP S RIGHT NOW?

y y y y y The current scenario in equity market is dominated by negative sentiment, which has led to fundamentals being ignored. This scenario has created volatility in the markets and uncertainty of future outlook. The prudent way to invest in this scenario is to benefit from the volatility and this can be done by investing through SIP s A monthly SIP helps in averaging out the cost of purchase and benefit from power of compounding. It also helps in creating wealth over a longer time period.

ADVANTAGES OF SIP
Power of Compounding - The longer the period of your investment, the more wealth you accumulate because of the power of compounding. That s why it makes sense to start investing early. Simply put, the incremental returns that you earned on your principal plus the accrued gains is compounding.

Rupee Cost Averaging - Most investors want to buy stocks when the prices are low and sell them when the prices are high. But timing the market is time consuming and risky. A more successful investment strategy is to adopt this method called Rupee Cost Averaging. By investing in an SIP you end up buying more units when the price is low and fewer when the price is high.
Convenience and Regularity - SIP gives you the convenience to pay through Axis Bank Electronic clearance service (ECS) or Auto Debit. You can decide the amount and the mutual fund scheme. A fixed amount will automatically get debited from your account on a date specified by you. Disciplined approach towards investment - Since you invest regularly, it makes you disciplined in your savings, which leads to wealth accumulation. Disciplined investing is vital to earning good returns over a longer time frame.

DISADVANTAGES OF SIP
Tax planning: Yes, setting up a SIP in a tax planning mutual fund will help you reduce taxes, but if you invest the same amount at one go in the same mutual fund you will get the same tax benefit. Tax benefit is not something exclusive to a SIP. SIP lead to building wealth: Good saving and investing habits are more likely to help you accumulate wealth in the long run, but there is no guarantee that you will end up doing so. Especially, if you invest in equity mutual funds.

HOW AN SIP WORKS

An SIP allows you to take part in the stock market without trying to secondguess its movements. An SIP means you commit yourself to investing a fixed amount every month. Let's say it is Rs 1,000. When the Market price of shares fall, the investor benefits by purchasing more units; and is protected by purchasing less when the price rises. Thus the average cost of units is always closer to the lower end. { NAV : Net Asset Value , or the price of one unit of a fund. Can be computed as follows : NAV = [ market value of all the investments in the fund + current assets + deposits - liabilities ] divided by the number of units outstanding.} Date NAV Approx number of units you will get at Rs. 1000 Jan 1 10 100 Feb 1 10.5 95.23 Mar 1 11 90.90 Apr 1 9.5 105.26 May 1 9 111.11 Jun 1 11.5 86.95 Within six months, you would have 5,89.45 units by investing just Rs 1,000 every month. Over the long run, you make money Let's say you invested in Prudential ICICI Technology Fund during the dotcom and tech boom. Say you began with Rs 1,000 and kept investing Rs 1,000 every month. This would be the result: Investment period
y

Mar 2000 to Mar 2005

Monthly investment
y

Rs 1,000

Total amount invested

y

Rs 61,000

Value of investment of Mar 7, 2005

y

Rs 1,09,315

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Return on investment
y

23.87%

Had you bought the units on March 13, 2000 at Rs 10.88 per unit (that was the NAV then), you would have lost because the NAV was just 7.04 on March 7, 2005. But because you spaced out your investment, you won.

HOW AN SIP SCORES

It makes you disciplined in your savings. Every month you are forced to keep aside a fixed amount. This could either be debited directly from your account or you could give the mutual fund post -dated cheques. As you see above, it helps you make money over the long term. Since you get more units when the NAV drops and fewer when it rises, the cost averages out over time. So you tide over all the ups and downs of the market without any drastic losses. Also, a number of mutual funds do not charge an entry load if you opt for an SIP. This fee is a percentage of the amount you are investing. And if you do not exit (sell your units) within a year of buying the units, you do not h ave to pay an exit load (same as an entry load, except this is charged when you sell your units). If, however, you do sell your units within a year, you would be charged an exit load. So it pays to stay invested for the long -run. The best way to enter a mutual fund is via an SIP. But to get the benefit of an SIP, think of at least a three-year time frame when you won't touch your money. Of course you would lose money if your units lost value over time. What most SIP Mutual funds don't tell you is that they recover their fees as monthly charges by selling your units, so while you are buying more units when the market is down, more of your units are also being sold to fund the monthly charges of the Mutual fund. Also the Bid and Offer of the Mutual Fund is aro und 7% and this is the front load or expense you pay for buying the units each month. Also sometimes the Mutual fund will have annual fee charges. In spite of the above drawbacks the retail investors' benefit in the long term horizon of 5-8 years is enormous. Only make sure that you can switch your funds from stock market to money market at short notice when the markets are really in a correction phase to safeguard the profits which you have made when the market was in a booming phase.

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Consider the following example of two rational people who each invest the same amount of money into a managed fund over a period of time. Investor A decides to invest Rs. Investor B decides to invest by way of an SIP - Rs. 1000 each month. 10000 now.

Month 1 2 3 4 5 6 7 8 9 10 Total Investment

Investor A Units (In Rs.) Purchased 10000 0 0 0 0 0 0 0 0 0 Rs.10000 1000 0 0 0 0 0 0 0 0 0 1000

Investor B Units (In Rs.) Purchased 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 Rs. 10000 Rs. 11988 100.0 105.3 114.3 115.6 118.3 125.0 117.6 107.5 95.2 90.9 1089.8

Unit Price 10.0 9.5 8.8 8.7 8.5 8.0 8.5 9.3 10.5 11.0

Total Value Rs.11000

The table shows that Investor B is in a better position by investing through a Systematic Investment. It shows that at the end of the investment period of 10 months Investor A who made an Lump sump investment has 1000 units in his portfolio has a market value of Rs. 11000. Whereas, Investor B who made investments through an SIP has 1090 units in his portfolio which has a market value of Rs. 11988.

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ABOUT MUTUAL FUND

A Mutual fund is the ideal investment vehicle for today's complex and modem financial scenario. Markets for equity shares, bonds and other fixed income instruments, real estate, derivatives and other assets have become mature and information driven. Price changes in these assets are driven by global events occurring in faraway places. A typical individual is unlikely to have the knowledge, skills, inclination and time to keep track of events, understand their implications and act speedily. An individual also finds it difficult to keep track of ownership of his assets, investments, brokerage dues and bank transaction etc. CHARECTERISTIC:  A mutual fund actually belongs to the investors who have pooled their funds.  A mutual fund is managed by investment professionals and other service providers, who earn a fee for their services, from the fund  The pool of funds is invested m a portfolio of marketable investments. The value of the portfolio is updated every day  The investor's share m the fund is denominated by 'units'. The value of the units changes with change m the portfolio's value, every day. The value of one unit of investment is called the Net Asset Value or NAV.

WHY MUTUAL FUND?

One can avail of the benefits of better returns with added benefits of anytime liquidity by investing in open-ended debt funds at lower risk. Many people have burnt their fingers by investing in fixed deposits of companies who were assuring high returns but have gone bust in course of time leading to distraught investors as well as pending cases in company law board. This risk of default by any company that one has chosen to invest in, can be minimized by investing in mutual funds as the fund managers analyze the companies financials more minutely than an individual can do as they have the expertise to do so. Capital markets interest people, albeit not all for there are several problems associated. First issue is that of expertise. While investing directly into capital market one has to be analytical enough to judge the valuation of the stock and understand the complex undertones of the stock. One needs to judge the right valuation for exiting the stock too. It is very difficult for a small investor to keep track of the movements of the market. Entrusting the job to experts, who watch the trends of the market and analyze the valuations of the stocks will solve this problem for an investor. Mutual funds specialize in identification of stocks through dedicated experts in the field and this enables them to pick stocks at the right moment. Sector funds provide an edge and generate good returns if the particular sectors is doing well.

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Next problem is that of funds/money. A single person cant invest in multiple high-priced stocks for the sole reason that his pockets are not likely to be deep enough. This limits him from diversifying his portfolio as well as benefiting from multiple investments. Here again, investing through MF route enables an investor to invest in many good stocks and reap benefits even through a small investment. This not only diversifies the portfolio and helps in generating returns from a number of sectors but reduces the risk as well. Though identification of the right fund might not be an easy task, availability of good investment consultants and counselors will help investors take informed decision.

WHAT IS MUTUAL FUND?

RETURNS
Generates

INVESTORS
Mutual Fund Pool their money with

Operation Flow

SECURITIES

Chart FUND MANAGER

Invest in

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund.

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HOW MUTUAL FUND IS ST UCTURED?

Structure Consists:

The st t e of mutual funds m India is governed by the SEBI Regulations, 1996. These regulations make it mandatory for mutual funds to have a 3tier structure of Sponsors-Trustee-AMC (Asset Management Company). The Sponsor is the promoter of mutual fund, and appoints the Trustee. The Trustees are responsible to the investors m the mutual funds, and appoint the AMC for managing theinvestment portfolio. The AMC is the business face of the mutual funds, as it manages all the affairs of mutual funds. The mutual funds and AMC have to be registered by the SEBI.

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Sponsor Sponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net worth of the Investment Managed and meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund Trust The Mutual Fund is constituted as a trust m accordance with the provisions of the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908 Trustee Trustees are like internal regulators in a mutual fund, and their job is to protect the interests of the unit holders. Trustees are appointed by the sponsors, and can be either individuals or corporate bodies. In order to ensure they are impartial and fair, SEBI rules mandate that at least two-thirds of the trustees be independent, i.e., not have any association with the sponsor Asset Management Company An AMC is the legal entity formed by the sponsor to run a mutual fund. The AMC is usually a private limited company in which the sponsors and their associates or joint venture partners are the shareholders. The people in the AMC who should matter the most to you are those who take investment decisions. There is the head of the fund house, generally referred to as the Chief Executive Officer (CEO). Under him comes the Chief Invest ment Officer (CIO), who shapes the funds investment philosophy, and fund managers, who manages its schemes. They are assisted by a team of analysts, who track markets, sectors and companies. Only SEBI registered AMC can be appointed as investment managers of mutual funds. AMC must have a minimum net worth of Rs. 10 crores at all times. AMCs cannot indulge in any other business, other than that of asset Management. At least half of the members of the Board of an AMC have to be independent. Registrar and Transfer Agent The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund. The Registrar processes the application form, redemption requests and dispatches account statements to the unit holders

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Some fund houses handle such functions in-house. Others outsource it to the Registrars; Karvy and CAMS are the more popular ones. It doesnt really matter which model your mutual fund opt for, as long as it is prompt and efficient in servicing you. Most mutual funds, in addition to registrars, also have investors service centers of their own in some cities.  Some of the investor related services are:b Processing investor applications b Recording details of the investors b Sending information to the investors b Processing dividend payout b Incorporating changes in the investor information b Keeping investor information up to date

Custodian A custodian handles the investment back office of a mutual fund. Its responsibilities include receipt and delivery of securities, collection of income, distribution of dividends, and segregation of assets between schemes. The sponsor of a mutual fund cannot act as a custodian to the fund. For example, Deutsche Bank is a custodian, but it cannot service Deutsche Mutual Fund, its mutual fund arm Distributors Distributors appoint agents and other mechanisms to mobilize funds from the investors. Banks and post offices also act as distributors The commission received by the distributors is split into initial commission which is paid on mobilization of funds and trail commission which is paid depending on the time the investor stays with the fund.

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es of Mutual Funds Scheme in India

Subject to the SEBI regulations, a Mutual Fund is free to design its scheme to suit the needs of the various types of investors. The Mutual Fund in India, from the point of view of schemes, can be categori ed into: 1. Constitution 2. Investment objective

1. AS PER CONSTITUTION The Mutual Fund as per the structure basis can be divided into: Open-ended schemes It is a scheme in which an investor can buy and sell units on a daily basis. Such scheme has a perpetual existence and a flexible and ever changing corpus. The investor under such scheme is free to buy and sell any number of units, at a point of time, as there is no ny boundation on to limited period or has no fixed maturity period. The scheme permits the investors to withdraw their funds on to a continuing basis as it gives to the investor almost instant li uidity. Such schemes as are not listed on to the stock market can be bought and sold only from, and to, the Mutual Fund. Close- ended schemes It is a scheme in which the subscription period for the Mutual fund kept open only for a limited period, called the redemption period. Such s chemes do not allow investors to withdraw their funds as when they like as it has a fix maturity period (ranging from 2 to 15 years). These schemes are generally traded at discount to NAV; but closer to maturity, the

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discount narrows. The close-ended schemes are listed on to the stock exchanges for dealing in the secondary markets. Interval schemes These combine the features of open-ended and close-ended schemes. They may be traded on the stock exchange or may be open for sale or redemption during predetermined intervals at NAV related prices. 2. AS PER INVESTMENT OBJECTIVE The Mutual Funds according to investment objectives comprises of: Equity oriented schemes These schemes also commonly called Growth Schemes, seek to invest a majority of their funds in equities and a small portion in money market instruments. Such schemes have the potential to deliver superior returns over the long term. However, because they invest in equities these schemes are exposed to fluctuations in value especially in the short term. Equity schemes are hence not suitable for investors seeking regular income or investors who have a long term investment horizon. General purpose The investment objectives of general purpose equity schemes do not restrict them to invest in specific industries or sectors. They thus have a diversified portfolio of companies across a large spectrum of industries. While they are exposed to equity price risks, diversified general purpose equity funds seek to reduce the sector or stock specific risks through diversification. They mainly have market risk exposure. HDFC Growth Fund is a general purpose equity schemes. Sector Specific The schemes restrict their investing to one or more pre-defined sectors. E.G. technology sector. Since they depend upon the performance of select sectors only, these schemes are inherently more risky than general purpose schemes. They are suited for informed investors who wish to take a view and risk on the concerned sector. Special schemes; Index schemes The primary purpose of an index is to serve as a measure of the performance of the market as a whole, or a specific sector of the market. An index also serves as a relevant benchmark to evaluate the performance of mutual funds. Some investors are interested in investing in the market in general rather than investing in any specific fund. Such investors are happy to receive the returns posted by the market. As it is not practical to invest in each and every stock in the market in proportion to its size, these investors are comfortable investing in a fund that they believe is a good representative of the entire market. Index funds are launched and managed for such investors.

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Tax Saving Schemes These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds, provided the capital asset has been sold prior to April 1, 2000 and the amount is invested before September 30, 2000. Real Estate Fund Specialized real estate funds would invest in real estate directly, or may fund real estate developers or lend to them directly or buy shares of housing of finance companies or may even buy their securitized assets. DEBT BASED SCHEMES These schemes are commonly called Income schemes, Invest in debt securities such as corporate bonds, debentures and Govt. securities. The prices of these schemes tend to be more stable compared with the equity schemes and most of the returns to the investors are generated through dividend or steady capital appreciation. These schemes are ideal for conservative investors or those not in a position to take higher equity risks, such as retired individuals. However, as compared to the money market schemes they do have a higher price fluctuation risk and compared to a Gift fund they have a higher credit risk. Income schemes A pure income scheme aims at generating and distributing regular income to the investors. These schemes generally invest a substantial portion (70% to 80%) of the corpus in the fixed income securities such as bonds and corporate debentures. Declaration of regular dividends is the main objective of such schemes. Liquid income schemes Similar to the Income schemes but with a shorter maturity than Income schemes. Money Market Schemes The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods. Gilt fund This scheme primarily invests in Govt. Debt. Hence the investor usually does not have to worry about the credit risk since Govt. Debt is generally credit risk free.

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HYBRID SCHEMES These schemes are commonly known as balanced schemes. These schemes invest in both Equity as well as Debt. By investing in a mix of this nature, balanced schemes seek to attain the objective of income and moderate capital appreciation and are ideal for investors with a conservative.

BENEFITS OF MUTUAL FUND INVESTMENT

Mutual Funds offer several benefits to an investor that are unmatched by the other investment options. Last six years have been the most turbulent as well as exiting ones for the industry. New players have come in, while others have decided to close shop b either y selling off or merging with others. Product innovation is now pass6 with the game shifting to performance delivery in fund management as well as service. Those directly associated with the fund management industry like distributors, registrars and transfer agents, and even the regulators have become more mature and responsible.

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DISADVANTAGES OF MUTUAL FUND INVESTMENT

No control over cost

No tailor- ade portfolio

Delay in redemption

Managing portfolio of funds

Non availability of funds

RISK INVOLVED IN MUTUAL FUND:

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LEGAL & REGULATORY FRAMEWORK OF MF

In the year 1992, securities and exchange Broad of India (SEBI) Act was passed. The objectives of SEBI are to protect the interest of investors in securities and to protect the development of and to regulate the securities market. SEBI formulates policies and regulates the mutual funds to protect the interest of the investors . Following are the regulators of Mutual Fund in India  AMFI ( Association Of Mutual Fund In INDIA) It is Association of Mutual Fund in India. It promotes Mutual Fund among the mass and give recommendations in order to uphold the interest of investors. This Association conducts AMFI exam. Initially the Association gave rights of conducting the exam to Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Then rights were also given to the UTI (Unit Trust of India). Corporate distributors are also given rights to conduct exam. It is compulsory for a person to clear AMFI exam in order to become advisor in Mutual Fund.  SEBI (Securities and Exchange Board of INDIA) Securities and Exchange Board of India (SEBI), the capital market regulator has clearly defined rules which govern mutual funds. These rules relate to the formation, administration, and management of mutual funds and also prescribe disclosure and accounting requirements. Such a high level of regulation seeks to protect the interest of investors. All Mutual Fund schemes are registered with SEBI and they follow the rules and regulation as prescribed by SEBI. It registers every mutual fund scheme in order to protect the interest of investors.  RBI (Reserve Bank of INDIA) Reserve Bank of India was the regulator of Mutual Fund before SEBI. It regulated mutual fund initially and there were only few schemes in the market. But now with coming of SEBI, it has now become the main regulator of the Mutual Fund. RBI now only governs the Bank Sponsored Mutual Fund.

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FREQUENTLY USED TERMS

  Corpus: Entry/Exit load :

The total amount of money invested in a scheme by all the investors. Entry load is the load on purchase or switch-out of units Exit load is load on redemptions Dividend switch out of units.  NET ASSET VALUE: A mutual fund is a common investment vehicle where the assets of the fund belong directly to the investors. Investors subscriptions are accounted for by the fund not as liabilities or deposits but as Unit Capital. On the other hand, the investments made on behalf of the investors are reflected on the assets side and are the main constituent of the balance sheet. There are, however, liabilities of a strictly short- term nature that may be part of the balance sheet. The funds Net Assets are therefore defined as the assets minus the liabilities. As there are many investors in a fund, it is common practice for mutual funds to compute the share of each investor on the basis of the value of Net Assets Per Share/Unit, commonly known as the Net Asset Value (NAV). The following are the regulatory requirements and accounting definitions laid down by SEBI. NAV = Market/ fair value of schemes investments + receivables + accrued income + other assets accrued expenses payables other liabilities Number of units outstanding

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HISTORY AND ORGANIZATION OF MUTUAL FUNDS IN INDIA

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four distinct phases. First Phase-1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 Crores of assets under management. Second Phase-1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 Crores. Third Phase-1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 Crores. The Unit Trust of India with Rs.44,541 Crores of assets under management was way ahead of other mutual funds.

26

Fourth Phase- since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 Crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place a mong different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 Crores under 421 schemes. The net asset value (NAV) of mutual funds in India declined when stock prices started falling in the year 1992. Those days, the market regulations did not allowportfolio shifts into alternative investments. There was rather no choice apart from holding the cash or to further continue investing in shares. One more thing to be noted, since only closed-end funds were floated in the market, the investors disinvested by selling at a loss in the secondary market. The performance of mutual funds in India suffered qualitatively. The 1992 stock market scandal, the losses by disinvestments and of course the lack of transparentrules in the whereabouts rocked confidence a mong the investor. The graph indicates the growth of assets over the years. Graph 1: The graph showing Growth in assets under management through Mutual Funds

27

MUTUAL FUND(PLAYERS)SOLD BY COMPANY

The Indian mutual fund industry is mainly divided into three kinds of categories. These categories include public sector players, nationali ed banks and private sector and foreign players. UTI Mutual Fund was one of the leading Mutual Fund companies in India till May 2006 with a corpus of more than Rs. 3 1, 000 Crore and it is the public sector mutual fund. Bank of Baroda, Punjab National Bank, Can Bank and SBI are the major nationali ed banks mutual fund. At present mutual fund industry is mainly dominated by private and foreign sector players which include major players like Prudential ICICI Mutual Fund, HDFC Mutual Fund, Sundaram mutual fund etc. are private sector mutual funds players while Franklin Templeton etc. are major foreign mutual fund players. At present there are more than 33 players operating in Indian. The brief introduction of major players is given as follows Alliance Capital Mutual Fund Birla Mutual Fund Cholamandalam Mutual Fund

DSP Merrill Lynch Mutual Fund

Fidelity E uity Fund

Franklin Templeton Mutual Fund HDFC Mutual Fund HSBC Mutual Fund IDBI Principal IL & FS Mutual Fund ING Savings Trust

28

JM Mutual Fund Prudential ICICI Mutual Fund Reliance Capital SBI Mutual

Sundaram Mutual Fund

Tata Mutual Unit Trust Of India

29

30

THEORETICAL FRAME WOREK

Mutual funds are as much about marketing as investing in the 1990s, which is why the hoary clich Mutual funds are sold, not bought is as true as ever. As Glorianne Stromberg once told Canadian Business magazine, the fund business may have started out in the portfolio management business, but somewhere along the line, the marketers got hold of it, and the advisory function has been almost superseded by the sales function.

Jonathan Chevreau, the Wealthy Boomer Successful fund marketing creates value for Fund companies, dealers and unit holders so that each is satisfied. The definition goes much deeper than simply "selling something to somebody". Fund marketeers must understand both the "Needs & Wants" side of the equation and the "Product, Ideas, & Services" side of the equation. Not only must marketing fully understand both sides of the equation, but it must also effectively communicate the details of each in order to successfully bridge the gap between the two. Every facet of modern marketing has been effectively employed to dramatically grow the Indian mutual fund industry.

An Analysis of Investors Risk Perception towards Mutual Funds Services Nidhi Walia, Ravi Kiran Financial markets are constantly becoming more efficient by providing more promising solutions to the investors. Being a part of financial markets although mutual funds industry is responding very fast by understanding the dynamics of investors perception towards rewards, still they are continuously following this race in their endeavor to differentiate their products responding to sudden changes in the economy. Thus, it is high time to understand and analyze investors perception and expectations, and unveil some extremely valuable information to support financial decision making of mutual funds. Financial markets are becoming more exhaustive with financial products seeking new innovations and to some extent innovations are also visible in designing mutual funds portfolio but these changes need alignment in accordance with investors expectations. Thus, it has become imperative to study mutual funds from a different angle, i.e, to focus on investors expectations and uncover the unidentified parameters that account for their dissatisfaction. Present research proposes to identify critical gaps in the existing framework for mutual funds and further extend it to understand realizing the need of redesigning existing mutual fund services by acknowledging Investor Oriented Service Quality Arrangements (IOSQA) in order to comprehend investors behavior while introducing any financial innovations.

31

RESEARCH METHODOLOGY
I decided to do the project in two parts. The first part of the project is comprised of the study of Mutual Funds as a whole and the second part deals with the investors perception regarding their investment preferences about investment in Mutual Funds. The first part of the project i.e. descriptive study is comprising an overall study of Mutual funds as what it is, why to invest and where to invest, risk factor associated with it i.e. an overview of whole Mutual fund industry. The second part of the project that is related to investors perception about investment in Mutual funds available in market. Indian Stock market has undergone tremendous changes over the years. Investment in Mutual Funds has become a major alternative among Investors. The project has been carried out to understand investors perception about Mutual Funds in the context of their trading preference and explore investors risk perception . The first part of the project relating the study of Mutual funds is collected through secondary data obtained from internet & books whereas the second part relating the Investors perception about investment in Mutual Funds is covered using primary data.

32

RESEARCH METHODOLOGY
The Marke following stages:

Data Evaluation

Research Process adopted by me in the present study consists of the

Flow chart of Marketing Research Process

Preparing Thesis

Identifying the Problem

Planning the Research Design

Data Collection

Selecting a Research Method Selecting a Sampling Procedure

33

Identifying & Defining Problem: The study undertaken by me is a study on investors perception about mutual fund of Sundaram mutual fund in Rajkot city. The main objective behind this particular study is to know about investors preference about mutual fund. The study is based on Exploratory Research. It is undertaken in the initial stage of the research process.

Planning the Research Design : Once the problem is identified, the process of research design begins. This is the crucial stage in research methodology as planning plays very important role in further proceeding of the study. As the study has to be carried out in Rajkot City, a detailed knowledge had to be acquiring to gather the information regarding my Project Title. I had successfully gathered the information which was directly affecting my study i.e., the major players prevailing in Rajkot City other than Sundaram mutual fund total population, knowledge prevailing in the minds of people, their desire for Mutual Fund. Here I needed to frame information regarding:  From where to get information  Time allotted for getting information  Budget allotted for getting information  Measurement techniques  Cost involved in conducting it  Availability of data sources After gathering the above information, I had framed a design through which I got sufficient information about my Project Title. But as there was a time constraint, the sample size was not too large.

34

Selecting the Research Method : The research design method is chosen based on thee objectives of the study, the cost involved in conducting the study, the availability of the data and finally the importance & urgency of the decisions. There are four main research methods:  Secondary Data studies  Surveys  Experiments  Observations I have chosen mainly the Survey Method for my research work as the information can only be gathered with the help of Questionnaire. I have conducted survey to get primary data regarding the services of different Mutual Fund service providers. I got the data gathered first hand to answer the research question being investigated. I have prepared a questionnaire related to my study & had circulated to the walk in customers at different Banks in Rajkot City. The questionnaire contained many important questions. I have also taken help of Secondary Data Studies in completion of my Project as it is concerned with the analysis of already existing data that is related to the research topic.

Selecting Sampling Procedure : Sampling is generally a part of the research design but it is considered separately in the research process. Sampling is a process that uses a small number of items or a small portion of population to draw conclusion regarding the whole population. Alternatively, a sample can be considered as a subset of a larger set called POPULATION. In the present study, PROBABILITY SAMPLING has used and to be more precise, SIMPLE RANDOM SAMPLING Method has used. I have taken the sample size of 100 walk in customers randomly from different Mutual Fund service Providers in Rajkot City.
35

Data Collection : After the research design, research method and Sampling procedure is decided, the next main step is Collection of Data for related study with the help of Research Method decided. In this study, the research method decided by me is Survey Method and Secondary Data Collection Method. Survey Method provides primary Data i.e., first hand information by filling-up the Questionnaires. The Questionnaires have filled-up from walk in customers at Mutual Fund service Providers in Rajkot City. Secondary Data collected from different Brochures, books and internet. different

SAMPLE PLAN  Population Walk in customers of bank in Rajkot City.  Sample Frame customers of different banks in Rajkot City.  Sampling Method Simple Random Sampling  Sample Size 120 people ( Due to time constraint )

LIMITATIONS Though the present study aimed to achieve the above-mentioned objectives in full earnest and accuracy, it was hampered due to certain limitation. Some of the limitations of this study undertaken are as follows :  Sample of 120 customers was only taken randomly due to time constraint for the preparation of project. A large sample size would have given an opportunity to get more accurate over-all feedback from actual and prospective customers.  The research was limited to only bank in Rajkot City.  During my survey in Rajkot City, some people were having very reserved nature. They were not so open. They avoid sharing their responses under the testing condition.

36

CHANCE OF RESPONSE ERROR There are many respondents who have filled up questions. Chance of response error might be possible. There might have been tendencies among the respondents to amplify or filer their response under the testing condition. In various banks some customers are regularly transactions in huge amount, so that they can get extra facilities from it. There might be possibility that they make favor about other option which actually not as satisfactory as his opinion for all customers.

37

38

SUNDARAM FINANCE LTD

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STRONG VALUES
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39

IN RECOGNITION OF SERVICE TO INVESTORS

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41

Sundaram BNP PAM- Joint Venture

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42

Sundaram BNP Paribas Asset Management Company Ltd

ABOUT THE COMPANY

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43

Philosophy o o o o o o o o o l W k B ti i N A k t t lw t f l i t i t tt t i t i fi ti lit ,t it t i t k t l t k t t ti t k t , t -i t i li i ll titi fw k ti t t ff ti l ti

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44

45

(1)Occupation of Investors. Respondents in Particulars Business Service Other Total Number 56 45 19 120 Percentage 47% 38% 15% 100%

Occupation
47% 0% 0% 0% 0% 0% 15%

From the above chart suggests that out of 120 respondents 47% respondents invests their money in mutual fund this shows that investor choose mutual fund because they want to earn good return with some safety. Ratio of respondents wh are from business 47% and service o 37% is more than ratio of respondents who are from other 16%t had choose mutual fund as their investment tools.

46

 

0%

37%

Business
ervice

ther

(2)Age Group

Respondents in Particulars 18-22 22-30 30-40 More than 40 Total Number 14 35 42 29 120 Percentage 12% 29% 35% 24% 100%

Age Group
12%

24%

29%

Out of these 120 people, 12% lie in the age group of 18-22 years, 29% in the age group of 2230 years, 35% in the age of 30-40 and 24% above 40 years of age. The age groups were selected in this manner because a considerable change in the knowledge and investment pattern was seen in these break-ups.

47

    

1 -22

 

22-

-4

re than 4

(3) Income level of Investors

Respondents in Particulars Less than 2 lakh 2-3 lakh More than 3 lakh Total Number 52 55 13 120 Percentage 43% 46% 11% 100%

Income group
11%

43%

less than 2 lakh

2- 3 lakh more than 3 lakh

46%

Here the highest group of people (46%) is earning annual income of Rs. 2 to 3 lakh. While the people having annual income of Rs. less than 2 lakh (43%) the people are mostly professionals and businesspersons. We found that the annual incomes of more thanRs. 3 lakh are of business class and are 11%.

48

(4) Do you invest in mutual fund ? Respondents in Particulars Yes No Total Number 92 28 120 Percentage 77% 23% 100%

Inve
77% 80% 60% 40% 20% 0% Yes

ent n

tua und

23%

No

From the above chart suggests that out of 100 respondents 77% respondentsinvests their money in mutual fund this shows that investor choose mutual fund because they want to earn good return with some safety. And 23% respondents are not interested in investing in mutual fund.

49

(5) If No Then,

WHAT IS THE MOST IMPORTANT REASON FOR NOT INVESTING IN MUTUAL FUNDS?
Respondents in Particulars Lack of knowledge about MF Enjoys investing in other options Its benefits are not enough to drive for investment No trust over fund managers Total 19 120 16% 100% Number 17 61 23 Percentage 14% 51% 19%

Reasons for not investing in MF

16% 14%

Lack of knowledge about mutual funds njoys investing in other options

51%

No trust over the fund managers

23 out of 120 total respondents say they are not investing their money in mutual fund the main reason behind it they enjoys investing in other options except this investors didnt have trust over the fund manager of the AMC companies . And very few respondents says they have lack of knowledge about mutual funds.

50

19%

ts benefits are not enough to drive you for investment

(6) Please rank the following investment instruments according to your preference. (On the basis of risk and return concept) Respondents in Particulars Fi ed Deposit Mutual Fund E uity Bonds ULIP Govt. Securities LIC Post office Total Number 36 17 10 5 7 6 20 19 120 Percentage 30% 14% 9% 4% 6% 5% 17% 16% 100%

Repondents pre erence to ards var ous ntsru ent

30% 30 25 20 14% 15 9% 10 4% 5 0 6% 5% 17% 15% F

Mutual Fund Equity B nds UL L

People are habitual to invest and they have many investment options. But from our survey we find that because of safety reasons people mostly invest in Fixed Deposits (30%).People are also investing in LIC(17%) as they found it the safer one. Post office and Mutual Fund are also popular as an investment tool as share of both 15% and 14%. While Govt.Securities and bonds is 5% & 4% and in equity there is 9% in the total survey.

51

# ' ') 3( # 2# '0 )1( '

tS s t ffic

'&#% $# "!

s it

uritit s

(7) What is your Average investment period? Respondents in Particulars Less than 6 months 6 to 12 months 1 to 3 years More than 3 years Total Number 34 39 28 19 120 Percentage 28% 33% 24% 15% 100%

Average investment period

15% 28%

24%

33%

The above graph reflects the average investment period for all the 120 respondents. 6 12 months is the most chosen option among all the other options because of the current market condition people are not interested in investing their money for short time like less than 6 months because return will be very less in short time period .If they want to earn more return they need to invest their money at least more than 6 months or more than one year.

52

56

ess than 6 m nths

6 t 12 m nths

1 t 3 years

re than 3 years

(8)How do you normally get information about Mutual Fund? Respondents in Particulars Television Internet Newspaper Financial Advisors Friends/Relatives Others Total Number 12 14 19 28 36 11 120 Percentage 10% 11% 14% 30% 26% 9% 100%

Sources o n or ation
30% 30 25 20 15 10 5 0 26% Televisi n Internet 14% 10% 11% 9% Newspaper Financial Advis rs Friends/Relatives Others

The main source of information for people is the financial advisors with 30% because they directly approach to the customers. Friends/relatives who made investment and get benefit also recommend others so their ratio is 26%. Now a day the Internet users are increasing day by day and therefore 14% people are getting information through Internet. The respondents prefer to get the routine special information like daily NAV, dividend, bonus, changein asset mix etc., through Internet. While 11% people get knowledge from Newspaper .

53

7 7 7 7 7 7 7

(9) Which are the main reasons for investing into MF? Respondents in Particulars Tax benefit High return Saving Number 13 38 24 Percentage 12% 32% 20% 12% 7% 12% 3% 2% 100%

Tax benefit & high return 13 Tax benefit & saving High return & saving All of above Others Total 10 13 5 4 120

Reasons for investing in MF

Tax benefit High return Saving

Tax benefit & High return ll of above

12%

Tax benefit & Saving other 3% 2%

12%

High return & Saving

12%

From the above graph we can analyze that 32% people want high returns in return of their investment while 12% people invest for the purpose of tax benefits. People preferring both tax benefit as well as high return are 22% whereas people with tax benefit as well as saving are 12%.

7%

32%

20%

54

(10) Do you get influenced by the name of Company promoting Mutualfunds? Respondents in Particulars Yes No Total Number 94 26 120 Percentage 78% 22% 100%

Promotion influence
22%

Yes

No

78%

Above graph suggests that AMC companies promoting their product well because 78% of the total respondents are influenced by their promotional activities and very few are not influenced.

55

(11) Which company influence you the most. Respondents in Particulars Reliance MF SBI MF Birla Sun Life MF Principal PNB UTI MF HDFC MF ICICI Prudential Franklin Templeton Total Number 25 6 14 4 14 21 17 19 120 Percentage 20% 5% 11% 3% 12% 18% 16% 15% 100%

Investment preference to ards various companies

20% 18% 16% 11% 12% 15% Reliance mutual fund SBI mutual fund Birla sun life mutual fund Principal PNB UTI mutual fund 5% 3% H F mutual fund ICICI prudential Franklin Templet n 20 15 10 5 0

Sundaram mutual fund is having the 1st position among the 8 mutual fund companies. HDFC
th and ICICI are on 2nd and 3rd position respectively while Franklin Templeton is on the 4

position with 15%. SBI, Birla sun and PNB has 5% ,11% and 3% share respectively. As Reliance has a good image in the mind of people who have faith in Reliance. So when
st Reliance entered in Mutual Fund people invest more and it results in 1 rank among the all

MF Companies. Where HDFC MF is known for the its professionalism and for this reason CRISIL has given the 1st rank to HDFC MF. HDFC is assumed to be a bit conservative for short-term investments. Thats why people prefer Reliance over HDFC because of its aggressiveness.

56

BA

@ @ @ @ @

(12) Where do you find yourself as a mutual fund investor? Respondents in Particulars Total ignorant Partial knowledge of MF Aware only of any specific scheme in which you invested Fully aware Total 12 120 10% 100% Number 6 72 30 Percentage 5%% 60% 25%

Knowledge about mutual fund

0% 5%

25%

Above graph suggests that most of the respondents have partial knowledge about mutual fund followed by some of the customer who are aware only of any specifics scheme in which they have invested. Only 10% of the respondents are full ware and only 5% of the total respondent doesnt have any knowledge about mutual fund.

Totally ignorant Partial knowledge of mutual funds

60%

Aware only of any specific scheme in which you invested Fully aware

57

(13)From where do you purchase mutual funds? Respondents in Particulars Directly from AMCs Brokers only Sub-brokers Other sources Total Number 28 49 25 18 120 Percentage 23% 41% 20% 16% 100%

Where do they purchase?

16% 24%
irectly from AMC's

20%

Brokers only Sub-brokers 40%

Other sources

Brokers are very important role in the distribution channel of AMCS most of the respondents buys their investment produts from brokers. This shows the impo rtance of brokers and they also want to earn money so they gave good service to their investors a in the return they nd gets good business. Only few of the investors knows that they can buy directly for AMCS.

58

(14)According to you which is the most suitable stage to invest in mutual funds? Respondents in Particulars Young unmarried stage Young married with children Married with older children stage Pre-retirement stage Total Number 28 46 34 12 120 Percentage 23% 38% 28% 11% 100%

Most suita le age or in estment

40% 35% 30% 25% 20% 15% 10% 5% 0% 11% 2 % Young Married with children stage Married with older children stage Pre-retirement stage 28% Young unmarried stage 8%

As above graph reflects that whatever may be the profession but respondents think that young married age is the perfect age for investment when they dont have much responsibilities and they have some extra amount for investment. It is general observation that young people are willing to take some risk and specially when they dont have any social responsibilities, And at the age of retirement people need fixed income because they are le interested in taking ast risk as they have some fix amount which they got to use after retirement.

59

(15) Feature of the mutual funds that attracts the most. Respondents in Particulars Diversification Professional management Reduction in risk and transaction cost Helps in achieving long term goals Total Number 43 30 21 26 120 Percentage 36% 25% 18% 21% 100%

Preference towards features of MF

36% 40% 30% 20% 10% 0% Diversification

Above graph reflects that respondents need diversification because through this they can reduce their risk and enjoy investing in other options. As graph shows that the ratio is 36 respondents choose it as their first priority option for investment. Mutual fund companies invest the money but they charge for that so its not fact if they invest in mutual fund they can rd save their cost and above graph reflects the same thing that they gave 3 preference to reduction in risk and cost because after all mutual fund are subject to market risk. And for long term goals ratio is 21%.

HF

IH

GF

Professional management Reduction in risk and transaction cost Helps in achieving long term goals

60

(16) How much return do you expect from your Investments? Respondents in Particulars 5-10% 10-15% 15-25% 25-35% More than 35% Total Number 14 21 65 12 8 120 Percentage 12% 18% 53% 10% 7% 100%

et rn e
60% 50% 40%

ecte in ercenta e

30% 15-25% 20% 12% 10% 0% 18% 25-35%

If any person invested their money in any option which are available in the market they obviously look for good return but if they want to earn high return than high risk is also associated with it as above graph suggests that most of the respondents choose the return between 15% to 25% because they knows that the current market condition its good return they can get and very few respondents choose more than 35% return which is actually very difficult to get.

61

3% 5-10% 10-15%

10%

(17) Which type of Mutual funds do you prefer?

Respondents in Particulars Open ended schemes Close ended schemes Total Number 79 41 120 Percentage 66% 34% 100%

Types of MF sc emes preferred by respondents

34%

Open ended schemes Cl se ended schemes

66%

H0: Most of the investors invest in Open-Ended Schemes of Mutual Funds. H1: Most of the investors do not invest in Open-Ended Schemes of Mutual Funds.
Above graph shows that no matter in which profession they are but they choose open ended schemes. In open ended schemes they can enter at any time or they can exit at any time. And as they knows they with current market conditions no one wants to continue their investment if they wont get good return of negative return. Ratio of close ended schemes is very low. So we can say that H0 is accepted.

62

(18) What is your preference in Mutual Funds?

Respondents in Particulars E uity Money market fund Balanced fund Income funds ELSS (tax saver) SIP Total Number 9 11 58 3 25 14 120 Percentage 8% 9% 48% 2% 20% 13% 100%

Preference in mutual fund

50% 40% 30%

8% 10% 0%

Above graph reflects that the respondents who are from job or they have their own profession choose equity fund more than other options available. And the respondents have their own business they choose SIP more as their investment product compare to two other groups because SIP is more safe and convinent option for investment. ELSS (Tax Saver) is also choose by some respondents because they can get the tax saving benefit if they invests their money in it.

20%

% %

63

VU

8% Equity Money market fund Balanced fund % 3% Income funds ELSS(tax saver) SIP

64

TEST OF HYPOTHESIS

HYPOTHESIS: A hypothesis is a statement about population parameter. Hypothesis testing/significance. Testing is procedure that helps us to decide whether the hypnotized population parameter value is accepted or rejected by making use of the information obtained from the sample. Null hypothesis: A statistical hypothesis which is stated for the purpose of possible acceptance is called null hypothesis. It is usually denoted by H0, the null hypothesis may be expressed symbolically. Null hypothesis is the hypothesis which is tested for possible rejection under the assumption that it is true. Alternative hypothesis: Any hypothesis which is complementary to null hypothesis to the null The following questions are taken to test the hypothesis using chi-square test.

CHI SQUARE TEST

 Please rank the following investment instruments according preference.(On the basis of risk and return concept)  Which are the main reasons for investing into MF?  Which company influence you the most.  From where do you purchase mutual funds?  According to you which is the most suitable stage to invest in mutual funds?  Rank the following feature of the mutual funds that attracts you most.  What is your preference in Mutual Funds? to your

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 Please rank the following investment instruments preference.(On the basis of risk and return concept)

according

to

your

In India, the investment instrument other than mutual fund are still more popular than MF Null hypothesis (Ho): Alternative hypothesis(Ha): All investment instrument are equally popular. Other investment instruments are more popular than MF. 8 1/8 =15(120*1/8)

Total investment instrument covered under the survey Equally population mean Expected frequency(E = N * probability)

Investment instrument

Observed frequency

Expected frequency 15 15 15 15 15 15 15 15

O-E

(O-E)2/E

Fixed Deposit Mutual Fund Equity Bonds ULIP Govt. Securities LIC Post office Total Degree of freedom = 8-1 = 7 Level of significance = 1% Critical value = 18.475 X2 cal > X2 critical Therefore, Ho is rejected

36 17 10 5 7 6 20 19 120

21 2 -5 -10 -8 -9 5 4

29.40 0.26 1.67 6.67 4.26 5.40 1.67 1.06 50.39

Conclusion: Other investment instrument are more popular than MF.

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 Which are the main reasons for investing into MF? Null hypothesis (Ho): Alternative hypothesis(Ha): Investors invest in MF equally for various reasons like tax benefit, high return n others Investors invest for high return and saving 8 1/8 =15(120*1/8)

Total investment instrument covered under the survey Equally population mean Expected frequency(E = N * probability)

Various reasons

Observed

Expected

O-E

(O-E)2/E

frequency frequency Tax benefit High return Saving 13 38 24 15 15 15 -2 23 9 0.27 35.27 5.40

Tax benefit & high return Tax benefit & saving High return & saving All of above Others Total

13 10 13 5 4 120

15 15 15 15 15

-2 -5 -2 -10 -11

0.27 1.66 0.27 6.67 8.07 57.88

Degree of freedom = 8-1 = 7 Level of significance = 1% Critical value = 18.475 X2 cal > X2 critical Therefore, Ho is rejected Conclusion: Therefore, Investors invest for high return and saving.

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 Which company influence you the most. Reliance MF is most popular MF Null hypothesis (Ho): Alternative hypothesis(Ha): All MF are equally popular Reliance MF is more popular than other MF

Total investment instrument covered under the survey Equally population mean Expected frequency(E = N * probability)

8 1/8 =15(120*1/8)

Particulars

Observed frequency

Expected frequency 15 15 15 15 15 15 15 15

O-E

(O-E)2/E

Reliance MF SBI MF Birla Sun Life MF Principal PNB UTI MF HDFC MF ICICI Prudential Franklin Templeton Total

25 6 14 4 14 21 17 19 120

10 -9 -1 -11 -1 6 2 4

6.67 5.4 0.06 8.07 0.06 2.4 0.27 1.06 23.99

Degree of freedom = 8-1 = 7 Level of significance = 1% Critical value = 18.475 X2 cal > X2 critical Therefore, Ho is rejected Conclusion: Therefore, Reliance MF is more popular than other MF.

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 From where do you purchase mutual funds? Investors purchase MF equally from all sources. Investors purchase MFs mostly from broker.

Null hypothesis (Ho): Alternative hypothesis(Ha):

Total investment instrument covered under the survey Equally population mean Expected frequency(E = N * probability)

4 1/4 =30(120*1/4)

Sources

Observed frequency

Expected frequency 30

O-E

(O-E)2/E

Directly from AMCs Brokers only Sub-brokers Other sources Total

28

-2

0.13

49 25 18 120

30 30 30

19 -5 -12

12.03 0.83 4.8 17.79

Degree of freedom = 4-1 = 3 Level of significance = 1% Critical value = 11.345 X2 cal > X2 critical Therefore, Ho is rejected Conclusion: Therefore, Investors purchase MFs mostly from broker.

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 According to you which is the most suitable stage to invest in mutual funds? Null hypothesis (Ho): Alternative hypothesis(Ha): Investors do not believe in any specific stage of life suitable to invest in MF. Most investors believe that Young married with children stage of life is most suitable to invest in MF.

Total investment instrument covered under the survey Equally population mean Expected frequency(E = N * probability)

8 1/8 =15(120*1/8)

Stages of life

Observed frequency

Expected frequency 30 30

O-E

(O-E)2/E

Young unmarried stage Young married with children Married with older children stage Pre-retirement stage Total Degree of freedom = 4-1 = 3 Level of significance = 1% Critical value = 11.345 X2 cal > X2 critical Therefore, Ho is rejected

28 46

-2 16

0.13 8.53

34

30

0.53

12 120

30

-18

10.8 19.99

Conclusion: Therefore, Most investors believe that Young married with children stage of life is most suitable to invest in MF.

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 Rank the following feature of the mutual funds that attracts you most. Null hypothesis (Ho): Alternative hypothesis(Ha): All features are equally attracts to investors. Diversification is the most popular feature of MF which attracts to investors.

Total investment instrument covered under the survey Equally population mean Expected frequency(E = N * probability)

4 1/4 =30(120*1/4)

Features

Observed frequency

Expected frequency 30 30 30

O-E

(O-E)2/E

Diversification Professional management Reduction in risk and transaction cost Helps in achieving long term goals Total

43 30 21

13 0 -9

5.63 0 2.7

26

30

-4

0.53

120

8.86

Degree of freedom = 4-1 = 3 Level of significance = 1% Critical value = 11.345 X2 cal < X2 critical Therefore, Ho is Accepted Conclusion: Therefore, all features are also equally attracts to investors.

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 What is your preference in Mutual Funds?

Null hypothesis (Ho): Alternative hypothesis(Ha):

All type of MF schemes out of below are equally popular. Balanced fund are more popular than other. 6 1/6 =20(120*1/6)

Total investment instrument covered under the survey Equally population mean Expected frequency(E = N * probability)

Particulars

Observed frequency

Expected frequency 20 20 20 20 20 20

O-E

(O-E)2/E

Equity Money market fund Balanced fund Income funds ELSS (tax saver) SIP Total

9 11 58 3 25 14 120

-11 -9 38 -17 5 -6

6.05 4.05 72.2 14.45 1.25 1.8 99.8

Degree of freedom = 6-1 = 5 Level of significance = 1% Critical value = 15.086 X2 cal > X2 critical Therefore, Ho is rejected Conclusion: Therefore, balanced fund are more popular than other.

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SUNDARM FINANCE BALANCE SHEET 31 -3-2011 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08

Mar ' 07

Sources of funds wner's fund Equity share capital Share application money Preference share capital Reserves & surplus oan funds Secured loans Unsecured loans Total Uses of funds Fixed assets Gross block ess revaluation reserve ess accumulated depreciation Net block apital work-in-progress Investments Net current assets

Total net current assets Miscellaneous expenses not written Total Notes Book value of unquoted investments Market value of quoted investments ontingent liabilities Number of equity sharesoutstanding ( acs)

` Y ` Y

` Y a

X a a Y

55.55 55.55 27.78 27.78 0.23 1,260.5 1,097.1 1,015.1 7 2 5 1,473.79 850.1 5,884.1 7 2,609.6 1 9,810.1 4 4,180.2 1 2,095.5 6 7,428.4 4 4,317.1 7 1,763.8 0 7,123.8 9 3,722.7 8 2,013.3 8 6,614.0 5

55.55 0.55

7,486.10 2,463.29 11,479.2 9

520.39 246.18 274.21 946 10,948.5 4 689.46 10,259.0 8 11,479.2 9 779.24 276.48 79.48 555.52 -

466.28 233.9 232.38 160.06 537.45 9,559.7 2 679.47 8,880.2 5 9,810.1 4 381.38 237.86 82.77 555.52

507.89 -

480.89 -

541.06 378.41 162.64 226.27 449.54 6,184.1 1 408.52 5,775.5 9 6,614.0 5 362.13 228.97 84.71 277.76

305.48 308.24 202.41 172.64 107.15 511.89 456.46 7,191.7 8 584.79 6,606.9 9 7,428.4 4 396.16 150.95 42.94 555.52 7,123.8 9 359.24 193.82 40.52 277.76 7,127.6 1 632.82 6,494.7 9

urrent assets, loans & advances ess current liabilities & provisions

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Profit loss account Mar ' 11 Income Operating income Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses Administrative expenses Expenses capitalized Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Nonrecurring items Other non cash adjustments Reported net profit Earnigs before appropriation Equity dividend Preference dividend Dividend tax Retained earnings 1,354.46 112.67 130.09 242.76 1,111.70 79.63 1,191.34 707.82 54.69 428.83 135.14 293.69 1.54 295.23 356.25 77.77 4.45 274.03 Mar ' 10 1,196.69 100.11 2.05 119.66 Mar ' 09 1,082.78 94.08 2.69 105.76 88.22 3.31 80.54 Mar ' 08 890.36 61.35 3.34 52.77 Mar ' 07 631.58

221.83 202.53 172.07 117.46 974.86 880.24 718.29 514.12 41.13 31.66 121.16 30.88 1,015.99 911.9 839.45 545 633.8 645.44 497 374.66 44.82 37.76 30.12 21.57 337.38 228.7 312.34 148.76 96.73 68.98 90.35 42.97 240.65 159.72 221.98 105.79 -13.9 -8.99 -9.44 -5.32 226.75 150.73 212.54 100.47 268.72 197.88 242.25 129.25 55.55 36.11 41.66 29.16 7.74 4.88 5.84 4.26 205.42 156.89 194.75 95.83

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CHAPTER -6 Findings & Recommendation

After

pleting

y research I find that sundaram mutual fund are perf rming quite well in

the market as compared to other companies. In spite of not ha ing rand name only on the asis of its performance sundaram mutual fund is gi ing tough competition to the top companies of mutual fund

ome schemes of sundaram mutual fund like    undaram select madcap undaram select focus undaram India leadership fund are gi ing est and high return to their customers in spite of downfall in the market when almost all the mutual fund goes negati sundaram mid cap was gi ing the positi e and good return to the customers. e

Recommendation:
Sundaram A C Ltd. can ecome a good rand name in the market on the asis of its

performance the need is to gi e emphasize on the following point o o Sufficient product material should e a ailable in the office. Proper and effecti e marketing should be done to spread awareness n the market o arketing material should be pro ided for advertise the brand name of the company.

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Conclusion

76

Conclusion

utual funds are emerging as an important financial intermediary for the investing public in India. Conceptually and operationally they are different. he investors need to understand the working of a mutual fund and the increasingly diverse and complex in vestment options brought to them by a large number of mutual funds. he mutual fund industry in India started in 1963 with the formation of Unit rust of India, at the initiative of the Government of India and Reserve Bank the.

Sundaram

utual has asset s under management helps investors to reach their

financial goals by delivering consistent performance through judicious investment practices. It is clear through competitive analysis that in spite of not having brand name sundarams funds are performing q uite well in the market and the need is of brand awareness only.

Limitations
Project was entirely based on secondary informa tion. ime restraint is another factor which limit my study Limited resources were available to conduct this study.

y y y

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Refrences

Book- portfolio management and mutual fund Puplication ICFAI /august 2004 http://www.valueresearch.com http:www.amfiindia.com http://www.moneycontrol.com http://www.sundarambnpparibas.in http://www.google.com

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Thankyou

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