SUMMER INTERNSHIP PROJECT REPORT

ON COMPARATIVE STUDY OF MAJOR COMPANIES MUTUAL FUNDS & ULIP PLANS WITH SPECIAL REFERENCE TO BAJAJ CAPITAL BHUBANESWAR (ORISSA)

Submitted in partial fulfillment of requirements for the degree of Master of Business Administration (2010 2012) affiliated to Biju Pattnaik University of Technology, Rourkela (Orissa) UNDER THE ESTEEMED GUIDENCE OF :SUBMITTED BY :Mr. Sanat Kumar Pattnaik Nabadip Saikia Lecturer 1006283061 Marketing MBA

RAJDHANI COLLEGE OF ENGG & MANAGEMENT BHUBANESWAR, ORISSA

CERTIFICATE FROM THE GUIDE

This is to certify that the Summer Internship project work titled COMPARATIVE STUDY OF MAJOR COMPANIES MUTUAL FUND & ULIP PLANS WITH SPECIAL REFERENCE TO BAJAJ CAPITAL BHUBANESWAR, (ORISSA) is a bonafide work of Nabadip Saikia, University Roll No- 1006283061 is carried out in partial fulfillment for the award of M.B.A. From RAJDHANI COLLEGE OF ENGG. & MANAGEMENT IS affiliated to Biju Pattnaik University of Technology, Rourkela (Orissa) under my guidance. This project has not been submitted earlier for the award of any degree/diploma of any other Institution/University.

NAME OF THE GUIDE: Mr. Sanat Kumar Pattnaik DESIGNATION OF THE GUIDE: LECTURER IN MARKETING

SIGNATURE OF THE GUIDE: ACE: UBANESWAR RISSA) TE: PTEMBER, 2011 PL BH (O DA SE

DECLARATION BY THE STUDENT

I hereby declare that this project report entitled COMPARATIVE STUDY OF MAJOR COMPANIES MUTUAL FUNDS & ULIPS PLANS WITH SPECIAL REFERENCE TO BAJAJ CAPITAL, BHUBANESWAR (ORISSA) Has been written and prepared by me under the guidance and supervision of Mr. Sanat Kumar Pattnaik in requirement for the fulfillment of Master of business administration. I also declare that this project is the result of my own efforts and Had not been presented to any other university or institution for the award of any degree or diploma.

DATE:SEPTEMBER 2011 NABADIP SAIKIA PLACE:BHUBANESWAR, (ORISSA)

ACKNOWLEDGEMENT
No work is considered complete unless due indebtedness is expressed to all those, who made the work successful. Concentration, dedication, hard work & application are essential but not the only factors to achieve the desired goal. There must be supplemented by guidance, assistance and co-operation of people to make it a success. Every complete successful assignment is the result of many hands joined together. A formal statement of acknowledgement is hardly sufficient to express my gratitude towards the personalities who have helped me to undertake this training.

I am highly indebted to Mr.Sambit Mohanty, (area manager) Mr.Rabindra Nath Das (Asst Manager), Mr.Kalandi Das & cooperative staff of BAJAJ CAPITAL, BHUBANESWAR who gave me weighty guidance in the study. It was really nice experience to work in their guidance and helping me in knowing practical things, which was my main objective, before entering the corporate world. They have provided me an Unconditional support during the project work. I am highly thankful to Mr.Sanat Kumar Pattnaik for his Guidance. He had been a constant source of inspiration and his critical evaluations during our course in the college have helped me to complete this project properly. Through this acknowledgement, I would like to grab the opportunity to thank all those who helped me from the start of my training, to its end. It is warmth and efforts of my teachers, friends and wishers who have been a source of strength confidence for me in the end devour. Finally, importantly, we would like to thank almighty blessing me to do and complete this project. NABADIP SAIKIA well and yet for

PREFACE
The present era is undoubtedly a management era. Management is an important function in any organization. A management is one of the most important fields which are widely used in every stage of

life. The effective management can be achieved only by effective management training and developing skill to understand the organizational level this project work is a part of the course of MBA and was done at Bajaj Capital. This project is prepared on the basis of awareness of Bajaj Capital in market and understanding the requirement of financial planning advisor by the customer. Bajaj Capital is world class financial service providing company who provides financial solution to customer. It consists of an integrated team consisting of highly qualified, versatile and experienced financ e professiona ls. This project helps me to better understanding of market and financial products and their benefits. Now I am feeling the great pleasure in delivering this project because of a better skill of handling the situation and customer understanding.

CONTENTS
INTRODUCTION

(a) Bajaj Capital La Premiers Wealth Management Services. (b) Bajaj Capitals 4-step Advisory Process. (c) Services of Bajaj Capital.

COMPANY PROFILE

(a) Four decades of excellence. (b) Wide range of services. (c) The History of Bajaj Capital. (d) Mission, Aims & Objectives. (e) The Significance of Logo. (f) Bajaj Capitals Vale Added Services. (g) Management Team.

OBJECTIVES OF THE STUDY. COMPARATIVE STUDY OF MAJOR COMPANIES

(a) MUTUAL (b) ULIPS

FUNDS &

RESEARCH METHODOLGY DATA ANALYSIS AND INTERPRATIONS RESULTS & FINDINGS LIMITATIONS CONCLUSION RECOMMENDATION BIBLIOGRAPHY ANNEXURE

INTRODUCTION

INTRODUCTION
Bajaj Capital is one of Indias leading Financial Services companies offering Free Advice on Investments,

Insurance, Tax Saving, Retirement Planning, Financial Planning, Childrens Future Planning and other services. They are also SEBI-approved Category I Merchant Bankers. Today, Bajaj Capital is a one of the largest financial planning and investment advisory companies in India, with a strong presence all over the country. They offer a comprehensive range of services including financial planning and investment advice, and the entire gamut of financial instruments and investment products of almost all major companies, both public and private. In addition, they also provide investment assistance by helping clients complete all the formalities, and help them keep regular track of their investments. They offer personalized Investment Advisory and Financial Planning services to individual investors, corporate houses, institutional investors, Non- Resident Indians (NRIs) and High Net worth Clients, among others. As one of Indias largest distributors of financial products, they offer a wide range of investment products such as mutual funds, life and general insurance, bonds, post office schemes, etc. offered by reputed public and private and government organizations.

Bajaj Capital La Premiers Wealth Management Services

Bajaj Capital La Premier was created to cater to the needs of High Net worth Individuals. It is a specialized group comprising handpicked professionals that provides exclusive and world-class wealth management services to a select group of clients. Essentially, the Wealth Management Services aim to help clients preserve, enhance and grow their wealth by implementing the well-accepted principles and global best practices on wealth management. To cater to the elite segment of High Net worth Clients, La Premier offers an exclusive range of value-added service, including: Personalized attention through a dedicated Relationship Manager Market information sharing through quality in-house research reports, Periodic portfolio review and regular update on portfolio valuation Pro-active advice on market events and triggers

 Immediate alerts on new products and New Fund Offers Need-based interactions with Fund Managers Independent, unbiased advice

Bajaj Capitals 4-step Advisory Process

Investment consultancy is a complex business, requiring an intimate understanding of several financial parameters and human factors, including the clients requirements and the market subtleties. Being a process-driven organization, they have perfected a four-step advisory procedure, which includes: Need Analysis Asset Allocation Portfolio Construction Ongoing Review

Bajaj Capital was one of the first companies in the organized sector to offer investment advisory and financial planning services along with a wide spectrum of financial products and services, all under one roof.

SERVICES OF BAJAJ CAPITAL

They are SEBI approved merchant banker, investment advisory and financial planer. They have a track record of ethical dealing for last, 40 years and have had the honors of helping millions of investor achieve their lifes financial goal. Bajaj capital is acting like a super market of financial products. They offer a comprehensive range of services, which will help in achieving lifes goal, all under one roof. Bajaj capital offers a variety of services to their clients like:

 INSURANCE INVESTMENT MUTUAL FUND FINANCIAL ADVISORY SYSTAMATIC INVESTMENT PLANNING (SIP) FINANCIAL PLANING COMPANY FIX DEPOSITS BOND PENSION SCHEMES POST OFFICE SCHEMES HOUSING LOANS INITIAL PUBLIK OFFER (IPO)

COMPANY PROFILE

COMPANY PROFILE
Bajaj Capital is one of Indias leading Financial Services companies offering Free Advice on Investments, Insurance, Tax Saving, Retirement Planning, Financial Planning, Childrens Future Planning and other services. We also have a wide range of products and services for

Corporate, High Net worth Individuals, and NRIs all under than one roof. At Bajaj Capital, we believe in dreaming big. Dreams inspire us to excel. They ignite hope and kindle in us the passion to stretch our limits. We also believe that nothing can or should stop us from realizing our dreams and financial constraints should be the last thing to stop anyone.

FOUR DECADES OF EXCELLENCE

For over four decades, we have been helping people realize their aspirations by helping them to make their wealth grow, and plan their financial lives. Today, we are a one of the largest financial planning and investment advisory companies in India, with a strong presence all over the country. We take pride in serving our customers both individual and institutional and are known for our strong professionalism and work ethics.

WIDE RANGE OF SERVICES

We offer a comprehensive range of services including financial planning and investment advice, and the entire gamut of financial instruments and investment

products of almost all major companies, both public and private. In addition, we also provide investment assistance by helping you complete all the formalities, and help you keep regular track of your investments. These services and products are delivered through our network of 109 Bajaj Capital Investment Centers located all over the country. We are also a SEBI-approved Category I Merchant Banker. We raise resources for over 1,000 top institutions and corporate houses every year, and offer specialized services to Non-Resident Indian (NRIs) and High Net worth Clients.

WHAT YOU CAN EXPECT FROM BAJAJ CAPITAL

(A) Sound, research-based advice. (B) Unbiased, independent and need-based advice. (C) Prompt, courteous service. (D) Honest, ethical dealings.

HISTORY OF BAJAJ CAPITAL

Bajaj Capital has contributed to the growth of the Indian Capital Market at every step. In 1965, we were the first to innovate the Companies Fixed Deposit. Today, we are playing an active role in the growth of the Indian Mutual Fund industry. We are also working closely with private insurance companies to deepen India's insurance market.

Here is a brief gist of Bajaj Capitals journey through the years

1964 Bajaj Capital sets up its first Investment Centre in New Delhi to Guide individual investors on where, when and how to invest. India's first Mutual Fund, Unit Trust of India (UTI) is incorporated in the same year. 1965 Bajaj Capital is incorporated as a Company. In the same year, the Company introduces an innovative financial instrument the Company Fixed Deposit. EIL Ltd. (Oberoi Hotels, then known as Associated Hotels of India Ltd.) becomes the first company to raise resources through Company Fixed Deposits.

1966 Bajaj Capital expands its product range to include all UTI schemes and Government saving schemes in addition to Company Fixed Deposits.1969 Bajaj Capital manages its first Equity issue (through an associate company) of & Wells India Ltd.; right from drafting the prospectus to marketing the issue.

Contd 1975 Bajaj Capital starts offering 'need-based' investment advice to investors, which would later be known as 'Financial Planning' in the investment world. 1981 SAIL becomes the first government company to accept deposits, Followed by IOC, BHEL, BPCL, HPCL and others; thus opening the floodgates for growth of retail investment market in India. Bajaj Capital plays an active role in all the schemes as 'Principal Brokers' 1986 Public Sector Undertakings (PSUs) begin making public issues of bonds MTNL, NHPC, IRFC offer a series of Bond Issues. Bajaj Capital is among the top ranks of resource mobilizes. 1987 SBI leads the launch of Public Sector Mutual Funds in India. Bajaj Capital plays a significant role in fund mobilization for all these players. 1991 SBI issues India Development Bonds for NRIs. Bajaj Capital becomes

the top mobilize with collections of over US $20 million. 1993 The first private sector Mutual Fund Kothari Pioneer is launched, followed by Birla and Alliance in the following years. Bajaj Capital plays an active role and is ranked among the top mobilizes for all these schemes. 1995 IDBI and ICICI begin issuing their series of Bonds for retail investors. Bajaj Capital is the co-manager in all these offerings and consistently ranks among the top five mobilizers on an all-India basis. 1997 Private sector players lead the revival of Mutual Funds in India through Open-ended Debt schemes. Bajaj Capital consolidates its position as India's largest retail distributor of Mutual Funds.

Contd 1999 Bajaj Capital begins marketing Life and General Insurance products of LIC and GIC (through associate firms) in anticipation of opening up of the Insurance Sector. Bajaj Capital achieves the milestone of becoming the top 'Pension Scheme' seller in India and launches marketing of GIC's Health Insurance schemes. 2000 Bajaj Capital implements its vision of being a 'One-stop Financial Supermarket.' The Company offers all kinds of financial products, including the entire range of investment and insurance products through its Investment Centers. Bajaj Capital offers 'full-service merchant banking' including structuring, management and marketing of

Capital issues. Bajaj Capital reinvents 'Financial Planning' in its international sense and upgrades its entire team of Investment Experts into Financial Planners. 2002 The Company focuses on creating investor awareness for Financial Planning and need-based investing. To achieve this goal, the company introduced the International College of Financial Planning. The graduates of this institute become Certified Financial Planners (CFPs), a coveted professional qualification. 2004 Bajaj Capital obtains the All India Insurance Broking License. Simultaneously, a series of wealth creation seminars are launched all over the country, making Bajaj Capital a household name. 2005 Bajaj Capital launches 360 Financial Planning, a software-based Programme aimed at encouraging scientific and holistic investing. 2007 Bajaj Capital launches Stock Broking and Depository (Demit) Services. 2008 Bajaj Capital launches Just Trade, an online Platform for investing in Equities, Mutual Funds and IPOs.

MISSION ,AIM & OBJECTIVES

Bajaj Capital's Mission Statement :-

The focus of our organization is to be the most useful, reliable and efficient provider of Financial Services. It is our continuous Endeavour to be a trustworthy advisor to our clients, helping them achieve their financial goals. Aim :To serve our clients with utmost dedication and integrity so that we exceed their expectations and build enduring relationships. OBJECTIVES : To offer unparalleled quality of service through complete knowledge of products, constant innovation in services and use of the latest technology.

To always give honest and unbiased financial advice and earn our clients' everlasting trust. To serve the community by educating individuals on the merits of Financial Planning and in turn help shape a financially strong society.

To create value for all stake holders by ensuring profitable growth.

To build an amicable environment that accords respect to every individual and permits their personal growth.

To utilize the power of teamwork to function as a family and build a seamless organization.

WHY INVEST THROUGH BAJAJ CAPITAL

Wide range of products and services. 41 years experience as Investment Advisors and Financial Planners. More than seven lakhs satisfied clients all over India. Countrywide network of 109 branches. Over 12,000 NRI clients across the globe. Personalized wealth management advice. 24 x 7 online accessibility through www.bajajcapital.com. Strong team of qualified and experienced professionals including CAs,MBAs, MBEs, CFPs, CSs, Insurance experts, Legal experts and, SEBI-Approved Category I Merchant Bankers.

THE SIGNIFICANCE OF LOGO

Our logo depicts Lord Ganesha who is the source of all our values and ethics in business. The large ears of Lord Ganesha remind us to hear more. We listen carefully to our clients to understand their needs. The weight of the trunk on the mouth symbolizes silence. We work silently, without blowing our own trumpet. The long trunk symbolizes continuous exploration. We explore all avenues to provide the best investment opportunities for our clients. The heavy posture of Ganesha symbolizes stability. We help our clients to attain financial stability through wise investments. Lord Ganesha is known as the remover of obstacles and bestower of prosperity. We emulate His example and try our best to help our clients attain prosperity by proper financial planning. Our logo has a yellow background. Yellow is the color of gold, which

symbolizes wealth. According to Vedic lore, it is also the color associated with Brihaspati, the guru and counselor of the Gods. We offer our clients sage counsel to make their wealth grow. The letters are in red. Red is the color rajas symbolizing power and incessant activity. It symbolizes our aggressive quest for your well-being and happiness. The white streak represents the trunk of Lord Ganesha. White is the color of satva guna, and implies our selfless commitment to your life-long happiness.

Contd By your side whenever you need us As your true partner, we promise to use our knowledge for your benefit. Be it advice on the right insurance products or looking after your rights and interests in case of a claim, well be by your side... whenever you need us. Risks are unavoidable in personal life and in business, but can be managed by proper planning. That's exactly where we at Bajaj Capital Insurance Broking Ltd. step in. At BCIBL, an IRDA licensed direct broker (bearing license number DB 042/02), we call it Risk Management. We help you to identify the potential risks and pass some of them on to insurance companies. We are your partners, who help you to identify and understand various risks, prioritize them and eventually manage them. As a broker, we do not offer you just a single option but multiple options available, and help

you select the most appropriate one.

BAJAJ CAPITAL WITH THEIR CIENTS

Bajaj capital is achieving great success in order to provide reliable, useful, efficient financial services. It IS THEIR CONTINIOUS ENDEAVOUR TO BE A TRUST WORTHY ADVISOR TO THEIR CLIENTS, HELPING THEM TO ACHIEVE THEIR FINANCIAL GOALS.

Bajaj capital provides services to their clients with utmost dedication and integrity so that they exceed their expectations and build enduring relationships.

 Bajaj capital offer unparallel quality of services through complete knowledge of products, constant innovation in services and use of the latest technology. Bajaj capital always gives honest and unbiased financial advice. One of its aims is to serve the community by educating individuals on the merits of financial planning and in turn help in shaping a financially strong society. Bajaj capital ensures profitable growth for all stockholders.

BAJAJ CAPITALS VALUE ADDED SERVICES

Bajaj capital offers comprehensive range of services including financial planning and invests mint advice, and entire gamut of financial instruments and investment products of almost all major companies, both public and private. In

addition, we also provide investment assistance by helping you complete all the formalities, and help you keep regular track of your investments.

REGULAR INFORMATION UPDATE

They keep us updated on the latest opportunities in the world of investments. NEED BASED ADVICE Their advice is all need based. They give customized advice only after understanding ones financial goals, risk tolerance and other priorities in life. RESEARCH BASED ADVICE Their professional research team will help one with advice that is thoroughly based on analysis of market dynamics, government policies and close monitoring of global developments. FREE! INVESTMENT HEALTH CHECK They help one to achieve his financial goals by assessing his risk tolerance level and recommending to him a suitable asset allocation model for his investments. Con td DOOR-TO-DOOR SERVICE They have vast network of branches all over India, helping one to get services at his door step.

 REGULAR INFORMATION Through their in houses publications like Bajaj capital investors India, Investors outlook,

investment, s select list and others, they keep one updated on the latest opportunities in the world of investments.
ACCESSIBILITY

They has branches spread nation wide, covering all-important Indian cities almost every nook and corner of the country.
TAILOR MADE SOLUTIONS

One gets easy transactions and tailor-made solutions through their, investment centers even at the tinkle of phone.
SPECILISATION IN ALL CLIENT SEGMENTS

They offer financial planning for housewives, celebrities, players, doctors, architects, professionals, army officers and the likes.
24 HOURS AVILABILITY

Bajaj capital is available to one, 24 hours a day on their website, WWW.Bajajcapital.com

MANAGEMENT TEAM OF BAJAJ CAPITAL

Mr. K K Bajaj Deep Bajaj

CHAIRMAN MANAGING DIRECTOR

Mr. Rajiv
VICE CHAIRMAN &

Mr.Sanjiv Mr.Anil Chopra

MANAGING DIRECTOR CEO & DIRECTOR

Bajaj
GROUP

MUTUAL FUNDS

What are Mutual Funds?

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 appreciations 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. Today, the mutual fund industry in the country manages around Rs 100,000 crore of assets, a large part of which comes from retail investors. 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 transactions etc. A mutual fund is the answer to all these situations. It appointed professionally qualified and experienced staff that manages each of these functions on a full time bas

The history of the mutual fund in India can be divided into 5 important phases:

1963-1987: The Unit Trust of India was the sole player in the industry. Created by an Act of Parliament in 1964, which is even today the single largest mutual fund scheme. UTI created a number of schemes such as monthly income plans, childrens plan, equity oriented schemes and offshore funds during this period. UTI managed assets worth Rs. 6700 core at the end of this phase. 1987-1993: In 1987 public sector banks and financial institutions entered the mutual fund industry. SBI mutual fund was the first non-UTI fund to be set up in 1987. Significant shift of investors from deposits to mutual fund industry happened during this phase. Most funds were growth oriented close-ended funds. By the end of this period, assets under UTIs management grew to Rs. 38,247 crore and public sector funds managed Rs. 8750 crore. 1993-1996: In 1993, the mutual fund industry was open to private players, both Indian and foreign. SEBIs first set of regulations for the industry were formulated in 1993, and substantially revised in 1996. Significant innovations in servicing, product design and information disclosure happened in this phase, mostly initiated by private sector players. 1996-1999: The implementation of the new SEBI regulations and the restructuring of the mutual fund industry led to rapid asset growth. Bank mutual funds were re-cast according to SEBI recommended structure, and UTI came under voluntary SEBI supervision. 1999-2002: This phase was marked by very rapid growth in the industry, and significant increase in the market share of private sector players. Assets crossed Rs. 1, 00,000 crore. The tax break offer to mutual funds in 1999 created arbitrage opportunities for a number of institutional players. Bond funds and liquid funds registered the highest growth in this period,

accounting for nearly 60% of the assets. UTIs share of the industry dropped to nearly 50%.

HOW IS A MUTUAL FUND SET UP?

A mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset Management Company (AMC) and custodian. The trust is established by a sponsor/s that is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is also registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund. SEBI Regulations require that at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are required to be registered with SEBI before they launch any scheme. There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund:

Net asset value (NAV) of a scheme

Net asset value denotes the performance of a particular scheme of a mutual fund. Mutual funds invest the money collected from the investors in securities markets. In simple terms, NAV is the market value of the securities held by the scheme. Since market value of securities changes every day, NAV of a scheme also varies on a day-to-day basis. The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. For example, if the market value of securities of a mutual fund scheme is Rs 200 lakes and the mutual fund has issued 10 lakh units of Rs 10 each to the investors, then the NAV per unit of the fund is Rs 20. NAV is required to be disclosed by the mutual funds on a regular basis - daily or weekly - depending on the type of scheme.

By Structure
Openended funds: Investors can buy and sell units of openended funds at NAV-related price every day. Open-end funds do not have a fixed maturity and it is available for subscription every day of the year. Open-end funds also offer liquidity to investments, as one can sell units whenever there is a need for money. Close-ended funds: These funds have a stipulated maturity period, which may vary from three to 15 years. They are open for subscription only during a specified period. Investors have the option of investing in the scheme during initial public offer period or buy or sell units of the scheme on the stock exchanges. Some close-ended funds repurchase the units at NAV-related prices periodically to provide an exit route to the investors. Interval Funds: These funds combine the features of both open and close-ended funds. They are open for sale and repurchase at a predetermined period.

By Investment objective
Growth funds: They normally invest most of their corpus in equities, as their objective is to provide capital appreciation over the medium-to-long term. Growth schemes are ideal for investors with risk appetite.

Income funds: As the name suggests, the aim of these funds is to provide regular and steady income to investors. They generally invest their corpus in fixed income securities like bonds, corporate debentures, and government securities. Income funds are ideal for those looking for capital stability and regular income. Balanced funds: The objective of balanced funds is to provide growth along with regular income. They invest their corpus in both equities and fixed income securities as indicated in the offer documents. Balanced funds are ideal for those looking for income and moderate growth. Money market funds: These funds strive to provide easy liquidity, preservation of capital and modest income. MMFs generally invest the corpus in safer short-term instruments like treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes hinges on the interest rates prevailing in the market. MMFs are ideal for corporate and individual investors looking to park funds for short periods.

Other schemes
Tax saving schemes: Tax saving schemes or equity-linked savings schemes offer tax rebates to investors under section 88 of the Income Tax Act. They generally have a lock-in period of three years. They are ideal for investors looking to exploit tax rebates as well as growth in investments.

Special schemes: These schemes invest only in the industries specified in the offer document. Examples are InfoTech funds, FMCG funds, pharma funds, etc. These schemes are meant for aggressive and well-informed investors. Index funds: Index Funds invest their corpus on the specified index such as BSE Sensex, NSE index, etc. as mentioned in the offer document. They try to mimic the composition of the index in their portfolio. Not only the shares, even their weightage is replicated. Index funds are a passive investment strategy and the fund manager has a limited role to play here. The NAVs of these funds move along with the index they are trying to mimic save for a few points here and there. This difference is called tracking error. Sector specific schemes: These funds invest only specified sectors like an industry or a group of industries or various segments like A Group shares or initial public offerings.

Measuring Performance of Mutual Funds

Benchmark Method Under this method a comparison is made between the returns given by a market index and the fund over a given period of time. If the returns generated by the fund as measured by changes in NAV over that given period of time are greater than those generated by the benchmark then the fund is deemed to have outperformed the market portfolio.

Sharps Ratio This measure uses standard deviation as a measure to evaluate a funds risk-adjusted returns. Mathematically, it is arrived at by deducting the risk free returns from the returns generated by the fund and dividing the residual figure by the standard deviation of the fund's returns. One thing that has to be kept in mind while using this measure is that the ratio is not an absolute figure. Its real utility lies in inter scheme comparison. S = RP Rf / p where, S = Sharpe's Index rp = average monthly return of fund rf = risk free return The sharp ratio is the return generated over the risk free return, per unit of risk. Risk in this case is to taken as funds standard deviation. As standard deviation represents the total risk experienced by the fund, the sharps ratio generate the return generated by undertaking the all possible risks. A higher sharps ratio is better as it represent the higher return generated per unit of risk.

BETA-A measure is of the volatility or systematic risk of a

security or a portfolio in comparison to the market as a whole. A beta of 1 indicates that the securitys price will move with the market. A beta of less than then 1 means that the security will be less volatile than the market. A beta of greater than 1indicates that the security price will be more volatile than the market. For example, if a stock beta is 1.2, its theoretically 20% more volatile than the market. Beta is ascertained mathematically by finding the covariance of the returns of the scrip to those of the market and then dividing it by the variance of the market returns. As a market professional one is aware of his or her investment objective and how much risk he or she can assume and can best descried whether to use monthly, weekly or daily pricing information for the calculation of beta.

Covariance (Portfolios NAV, market index) BETA()= Variance (Market Index)

ALPA-To analyze the performance of the investment manager you must not look only the overall return of the portfolio , but also the risk of that portfolio For example they are two mutual funds both are having the return of 12%, a rational investor will want the fund which is less risky. Jensens method is one of the way which help us in determining if a portfolio is earning proper return for its level of risk. If the value is positive then the portfolio is earning excess return.

R- Squared-R- Squares value ranges from 0 to 1. An r-square of 1 means that all the movement of the securities is completely explained by the movement in the index. A high R-square between (0.85 and 1) indicates the funds performance patterns have been in the line with the index. A fund with the low Rsquare (.70 or less) doesnt act much like index.

P/B Ratio-This ratio is used to compare stocks market value with its book value. It is calculated by dividing the current closing price of the stock by the latest quarters book value per share. A low P/B ratio means that the stock is undervalued. However it could be means that something is fundamentally wrong with the company.
Stock Price P/B Ratio= Total asset Intangible asset and liability

P/E Ratio-A valuation ratio of a companys current share price compared to its pre-earning share.
Market value per share P/E Ratio= Earning per share

ADVANTAGES OF INVESTING IN MUTUAL FUNDS

Diversification: A single mutual fund can hold securities from hundreds or even thousands of issuers, far more than most investors could afford on their own. This diversification sharply reduces the risk of a serious loss due to problems in a particular company or industry. Professional management: Few investors have the time or expertise to manage their personal investments every day, to efficiently reinvest interest or dividend income, or to investigate the thousands of securities available in the financial markets. They prefer to rely on a mutual fund's investment adviser. With access to extensive research, market information, and skilled securities traders, the adviser decides which securities to buy and sell for the fund. Liquidity: Shares in a mutual fund can be bought and sold any business day, so investors have easy access to their money. While many individual securities can also be bought and sold readily, others aren't widely traded. In those situations, it could take several days or even longer to build or sell a position. Convenience: Mutual funds offer services that make investing easier. Fund shares can be bought or sold by mail, telephone, or the Internet, so you can easily move your money from one fund to another as your financial needs change. You can even schedule automatic investments into a fund from your bank account, or you can arrange automatic transfers from a fund to your bank account to meet expenses. Most major fund

companies offer extensive recordkeeping services to help you track your transactions, complete your tax returns, and follow your funds' performance.

DISADVANTAGES FUNDS:

OF

INVESTING

IN

MUTUAL

No Guarantees: No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money. Fees and commissions: All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund. Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made.

Management risk: When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers.

WHAT IS ENTRY AND EXIT LOAD?

Some Asset Management Companies (AMCs) have sales charges, or loads, on their funds (entry load and/or exit load) to compensate for distribution costs. Funds that can be purchased without a sales charge are called no-load funds. Entry load is charged at the time an investor purchases the units of a scheme. The entry load percentage is added to the prevailing NAV at the time of allotment of units. Exit load is charged at the time of redeeming (or transferring an investment between schemes). The exit load percentage is deducted from the NAV at the time of redemption (or transfer between schemes). This amount goes to the Asset Management Company and not into the pool of funds of the scheme. OPTIONS FOR STRUCTURING RETURNS TO AN INVESTOR DIVIDEND OPTION-Investors, who choose a dividend option on their investments, will receive dividends from the mutual funds, as and when such dividends are declared. Dividends are paid in the form of warrants, or are directly credited to the investors bank accounts. There are further choices in the distribution of

dividend. In a normal dividend plan, periodicity of dividend is left to the fund managers, who may pay annual and/or an interim dividend. Though investors know that they would earn a dividend income from their further investment, the timing of the payout is decided by the fund managers. The variants to the normal dividend plan are pre-specified distributions schedules. Mutual funds provide investors the option of receiving dividends at pre-determined frequencies, which can vary from daily, weekly, monthly, quarterly, half-yearly and annually. Investors can choose the frequency of dividend distribution that suits their requirements. Not all mutual funds provide all of these frequencies as choices, though. Investors can choose an income distribution frequency from the choices available in a particular mutual fund product. GROWTH OPTION-Investors who do not require periodic income distributions can choose the growth option, where the income earned are retained in the investment portfolio, and allowed to grow, rather than being distributed to the investors. Investors with longer-term horizons, and limited requirements for income, chosen this option. The return to the investor who chooses a growth option is the rate at which initial investment has grown over the period for which he was invested in the fund. The NAV of the investor choosing this option will vary with the value of the investment portfolio, while the number of units held will remain constant. RE- INVESTMENT OPTION-Mutual funds also provide another option to investors in the form of re-investment. Investors reinvest the dividends that are declared by the mutual fund, back

into the fund itself, at NAV that is prevalent at the time of reinvestment. In this option, the number of units held by the investor will change with every re-investment. The value of the units will be similar to that under the dividend option.

ULIPS

Introduction to ULIPS
Unit-linked insurance plans, popularly known as Ulips are life insurance policies which offer a mix of investment and insurance similar to traditional life insurance policies such as endowment, money-back and whole-life, but with one major difference. Unlike traditional policies, in Ulips investment risk lies with the insured (i.e., policy holder) and not with the insurance company. Put another way, in case of adverse market conditions, you can even lose your capital invested. The returns in a ULIP depend upon the performance of the fund in the capital market. ULIP respondents have the option of investing across various schemes, i.e, diversified equity funds, balanced funds, debt funds etc. It is important to remember that in a ULIP, the investment risk is generally borne by the investor. In a ULIP, respondents have the choice of investing in a lump sum (single premium) or making premium payments on an annual, half-yearly, quarterly or monthly basis. Respondents also have the flexibility to alter the premium amounts during the policy's tenure. For example, if an individual has surplus

funds, he can enhance the contribution in ULIP. Conversely an individual faced with a liquidity crunch has the option of paying a lower amount (the difference being adjusted in the accumulated value of his ULIP). ULIP respondents can shift their investments across various plans/asset classes (diversified equity funds, balanced funds, debt funds) either at a nominal or no cost.

Brief History of Insurance

The insurance sector in India dates back to 1818, when Oriental Life Insurance Company like Bombay life Assurance Company, in 1823 and Tritons Insurance Company, for General Insuran.. ce, in 1850 were incorporated. Insurance ACT was passed in 1928 but it was subsequently reviewed and comprehensive legislation was enacted in 1938 the nationalization of life insu rance business took place in 1956 when 245 Indian and Foreign insurance societies were first merged and then nationalized. It paved the way towards the establishment of life insurance Corporation (LIC) and since then it has enjoyed a monopoly over the life insurance business in India. General Insurance business. Subsequently nationalized in and 1973, the ACT, non-life General 1972 insurance Insurance was business was The

Business

(Nationalization)

promulgated.

General Insurance Corporation (GIC) in its present form was incorporated in 1972 and maintains a very strong hold over the non-life insurance business in India. Due to concerns of relatively low spread of insurance in the country. The efficient and quality functioning of the Public Sector Insurance Companies. The untapped potential for mobilizing long-term contractual savings funds for infrastructure. The (Congress) government set up Insurance set u an Insurance Reforms committee in April 1993. The committee submitted its report in January 1994, recommended a phased program of liberalization, and called for private sector entry and restructuring of the LIC and GIC.

TRADITIONAL LIFE AN OVERVIEW

The as basic and widely used form of design his is known

Traditional into

Life Platform. It is based on the concept of contribution the common large fund is managed by

sharing. Each of the policy holder contributes (premium) the company on behalf of the policy holders. Administration everybody of that common fund in

the

interest

of

was entrusted to the insurance company .It was the

responsibility of the company to administer schemes for benefit

of the policyholders. Policyholders played a very passive roll. In the course of time, the same concept of sharing and a common fund was extended to different areas like saving, investment etc. Structure of ULIPs ULIPs offered by different insurers have varying charge structures. However the insurers have the right to revise or cancel the fees and charges over a period of time Broadly the different types of fees and charges are given below: 1. Premium Allocation Charge: This is a percentage of the premium appropriated towards charges from the premium received. The balance known as allocation rate constitutes that part of premium which is utilized to purchase (investment) units for the policy. The percentage shall be explicitly stated and could vary interalia by the policy year in which the premium is paid, the premium size, premium payment frequency and the premium type (regular, single or top-up premium). This is a charge levied at the time of receipt of premium. This charge may also include an initial management charge, which is levied on the units created from the first years premium, for a specified period. Example: If premium = Rs.1000 & Premium Allocation Charge: 10% of the premium; then the charge is: Rs.100 and Balance amount of premium is Rs.900 and is utilized to purchase units. 2. Fund Management Charge (FMC): This is a charge levied as a percentage of the value of assets and shall be appropriated by

adjusting the Net Asset Value This is a charge levied at the time of computation of NAV, which is usually done on daily basis. Example: If Fund Management charge (FMC) is 1% p.a. payable annually; Fund as at 31.3.2004 before FMC is Rs.100/- and Fund after this charge is Rs.99/-.

3. Policy Administration Charge: This charge shall represent the expenses other than those covered by premium allocation charges and the fund management expenses. This is a charge which may be expressed as a fixed amount or a percentage of the premium or a percentage of sum assured. This is a charge levied at the beginning of each policy month from the policy fund by canceling units for equivalent amount. This charge could be flat throughout the policy term or vary at a predetermined rate. Example: Rs.40/- per month increased by 2% p.a. on every policy anniversary. 4 Surrender Charge: This is a charge levied on the unit fund at the time of surrender of the contract. This charge is usually expressed either as a percentage of the fund or as a percentage of the annualized premiums (for regular premium contracts).

5. Switching Charge: This a charge levied on switching of money from one fund to another available within the product.

Example: Rs.100 per switch. 6. Mortality charge: This is the cost of life insurance cover. It is exclusive of any expense loadings levied either by cancellation of units or by debiting the premium but not both. This charge may be levied at the beginning of each policy month from the fund. The method of computation shall be explicitly specified in the policy document. The mortality charge table shall invariably form part of the policy document. 7. Rider premium charge: This is the premium exclusive of expense loadings levied separately to cover the cost of rider cover levied either by cancellation of units or by debiting the premium but not both. This charge is levied at the beginning of each policy month from the fund. 8. Partial withdrawal charge: This is a charge levied on the unit fund at the time of part withdrawal of the fund during the contract period. 9. Miscellaneous charge: This is a charge levied for any alterations within the contract, such as, increase in sum assured, premium redirection, change in policy term etc. The charge is expressed as a flat amount levied by cancellation of units. This charge is levied only at the time of alteration. Example: Rs.100/- for any alteration such as increase in sum assured, change in premium mode etc.

Table 1.1 ULIPS Vs. Traditional Life Insurance Plans:-

S. No 1 2

Features Premium Return

ULIPS Invested by Policy Holder. Depends Upon Market moments

Traditional Plan Invested by Insurers. Fixed

3 4

Loans Bonus

Not Provided No bonuses, except loyalty addition in some cases. Likely Variable Gains likely depending on market movements 100% investment in Debt or Equity acc. to wish.

Provided Bonuses are payable

5 6 7

Loss Benefits Gains

Unlikely Pre- Determined Gains unlikely except through bonuses At least 85% investment in debt which result low return Not known where money is to be invested. No Flexibility provided to customer. No option to choose coverage No exit option

Potential for better returns

Greater transparency

Here we know were over money is invested. Flexibility provided to customer. Option to choose coverage & to increase risk cover Exit option available.

10

Flexibility in investment

11

Flexibility in insurance coverage Higher Liquidity

12

Types of Funds under ULIPs Most insurers offer a wide range of funds to suit ones investment objectives, risk profile and time horizons. Different funds have different risk profiles. The potential for returns also varies from fund to fund. The following are some of the common types of funds available along with an indication of their risk characteristics. Table 1.2: Types of fund under ULIPs
General Description Nature of Investments Primarily invested in Equity Funds company stocks with the general aim of capital appreciation Income, Fixed Interest and Bond Funds Invested in corporate bonds, govt. securities and other fixed income instruments Sometimes known as Money Market Funds Cash Funds invested in cash, bank Low deposits and money market instruments Combining equity Balanced Funds investment with fixed interest instruments Medium Medium Medium to High Risk Category

A Unit Link Insurance Policy (ULIP) is one in which the customer is provided with a life insurance cover and the premium paid is invested in either debt or equity products or a combination of the two. In other words, it enables the buyer to secure some protection for his family in the event of his untimely death and at the same time provides him an opportunity to earn a return on his premium paid. In the event of the insured person's untimely death, his nominees would normally receive an amount that is the higher of the sum assured or the value of the units (investments). To put it simply, ULIP attempts to fulfill investment needs of an investor with protection/insurance seeker. It saves needs of an insurance the investor/insurance-seeker the hassles of

managing and tracking a portfolio or products. More importantly ULIPs offer investors the opportunity to select a product which matches their risk profile. Unit Linked Insurance Plans came into play in the 1960s and became very popular In India The first known into a as ULIP group in unit Western Europe and Americas. linked Insurance Plan , popularly Insurance Plan in India was with LIC o provide

Unit Linked

brought out by Unit Trust Of India in the year 1971 by entering insurance arrangement

for life cover to the investors was taking care of investing

, while UTI , as a mutual the unit holders money in the

capital market and giving them a fair return . Subsequently in the year 1989 , another Unit Linked Product

was launched by the LIC Mutual Fund called by the name of DHANARAKSHA which was more or less on the line of ULIP of UTI . Thereafter LIC itself came out with a Unit Linked Insurance Product known 02 . Presently a number of private life insurance companies have launched Unit Linked Insurance Products with a variety of new features by name BIMA PLUS in the year 2001-

TYPES OF ULIP
There are various unit linked insurance plans available in the market However, the key ones are pension, children, group and capital guarantee Plans. The pension plans come with two variations with and without life cover and are meant for people who want to generate returns for their sunset years The children plans, on the other hand, are aimed at taking care of their educational and other needs. Apart from unit-linked plans for individuals, group unit linked plans are also available in the market. The Group linked plans are basically designed for employers who want to offer certain

benefits for their employees such as gratuity, superannuation and leave encashment. The other important category of ULIPs is capital guarantee plans. The plan promises the policyholder that at least the premium paid will be returned at maturity. But the guaranteed amount is payable only when the policy's maturity value is below the total premium paid by the individual till maturity However, the guarantee is not provided on the actual premium paid but only on that portion of the premium that is net of expenses (mortality, sales and marketing, administration). Type I vs Type II ULIPs There are basically two types of ULIP plans. Type-I plans pays the higher of the sum assured and fund value to the nominees upon the death of life assured whereas in case of Type II plans both the sum assured and fund value are paid. It is always preferable to opt for Type 2 policies which are more protection (the core aim of insurance) oriented -- although a bit expensive then Type-I policies due to high mortality charges -because in case of Type-I policies risk exposure/sum at risk (sum assured minus fund value) keeps on decreasing in the later years as your fund value increases which amounts to having inadequate insurance coverage

How ULIPs work

ULIPs work on the lines of mutual funds. The premium paid by

the client (less any charge) is used to buy units in various funds (aggressive, balanced or conservative) floated by the insurance companies. Units are bought according to the plan chosen by the policyholder. On every additional premium, more units are allotted to his fund. The policyholder can also switch among the funds as and when he desires. While some companies allow any number of free switches to the policyholder, some restrict the number to just three or four. If the number is exceeded, a certain charge is levied. Individuals can also make additional investments (besides premium) from time to time to increase the savings component in their plan. This facility is termed "top-up". The money parked in a ULIP plan is returned either on the insured's death or in the event of maturity of the policy. In case of the insured person's untimely death, the amount that the beneficiary is paid is the higher of the sum assured (insurance cover) or the value of the units (investments) However, some schemes pay the sum assured plus the prevailing value of the investments.

ULIP - KEY FEATURES

Premiums paid can be single, regular or variable. The payment period too can be regular or variable. The risk cover can be increased or decreased.

As in all insurance policies, the risk charge (mortality rate) varies with Age The maturity benefit is not typically a fixed amount and the maturity period can be advanced or extended. Investments can be made in gilt funds, balanced funds, money market funds, growth funds or bonds. policyholder can switch between schemes, for

The

instance, balanced to debt or gilt to equity, etc The maturity benefit is the net asset value of the units. The life costs in ULIP are higher because there is a insurance component in it as well, in addition to the

investment component. Insurance companies have the discretion to decide on their investment portfolios. Being transparent the policyholder gets the entire episode on the performance of his fund. ULIP products are exempted from tax and they provide life insurance. Provides capital appreciation. Investor gets an option to choose among debt, balanced and equity funds.

USP of ULIPS

Insurance cover plus savings-ULIPs serve the purpose of providing life insurance combined with savings at market-linked returns. To that extent, ULIPS can be termed as a two-in-one plan in terms of giving an individual the twin benefits of life insurance plus savings. Multiple investment options-ULIPS offer a lot more variety than traditional life insurance plans. So there are multiple options at the individuals disposal. ULIPS generally come in three broad variants. Aggressive ULIPS (which can typically invest 80%-100% equities, balance in debt) Balanced ULIPS (can typically invest around 40%-60% in equities) Conservative ULIPS (can typically invest up to 20% in equities) Although designed, this is how the the ULIP options are generally exact debt/equity allocations may vary across in

insurance companies. Individuals can opt for a variant based on their risk profile. Flexibility- The flexibility with which individuals can switch between the ULIP from variants other to capitalize on Some They or investment insurance can shift opportunities across the equity and debt markets is what distinguishes it instruments. front. companies allow a certain number of free switches. Switching also helps individuals on another from ULIP an Aggressive to a Balanced a Conservative

as they approach retirement. This is a reflection of the

change in their risk appetite as they grow older. Works like an SIP- Rupee cost-averaging is another important benefit associated with ULIPS. With an SIP, individuals invest their monies regularly over time intervals of a month/quarter and dont have to worry about timing the stock markets Fund Switching Option-There is nil or negligible cost involved. Besides, there is no tax involved. And most of all, it is hassle free. The day mutual funds also start providing this fund switching facility, the only real edge Ulips have over mutual funds will be lost.

HURDLES OF ULIP
No standardization- All the costs are levied in ways that do not lend to standardization. If one company calculates levies a flat rate. If administration cost by a formula, another

one company allows a range of the sum assured (SA), another allows only a multiple of the premium. There was also the problem of a varying cost structure with age. Lack of Flexibility in Life cover-ULIP is known to be more flexible in nature than the traditional plans and, on most counts, they are. However, some insurance companies do not allow the individual to fix the life cover that he needs. These rely on a multiplier that is fixed by the insurer. Overstating the Yield-Insurance companies work on illustrations.

They are allowed to show you how much your annual premium will be worth if it grew at 10 per cent per annum But there are costs, so each company also gives a post-cost return at the 10 per cent illustration, calling it the yield. some companies were not including the mortality cost while calculating the yield. This amounts to overstating the yield. Internally made Sales Illustration-During collecting information, it was found Authority the that (Irda) process the of

sales in

benefit illustration shown was not conforming to the Insurance Regulatory and Development many locations30 per rampant. Not all Show the Benchmark Return-To talk about returns without pegging them to a benchmark is misleading the customer. Though most companies use Sensex, BSE 100 or the Nifty as the benchmark, all. Early exit Options-The Ulip product works over the long term. The earlier the exit, the worse off is the investor since he ends up redeeming a high-front-load product and is then encouraged to move into another higher cost product at that stage. An early exit also takes away the benefit of compounding from insured. Creeping Costs-Since the investors are now more aware than or the measuring rod of performance, some companies are not using any benchmark at format. cent return illustrations are still

before and have begun to ask for

costs,

some

companies

have found a way to answer that without disclosing too much. People are now asking how much of the premium will go to work. There are plans that are able to say 92 per cent will be invested, that is, will have a front load of just 8 per cent. What they do not say is the much higher policy administration cost that is tucked away inside (adjusted from the fund value). While most insurance companies charge an annual fee of about Rs 600 as administration costs, that stay fixed over time, there are plans that charge this amount, but it grows by as much as 5 per The Insurance Players HDFC Standard Life Insurance Company Limited Birla Sun Life Insurance Company Limited TATA AIG Life Insurance Company Limited Max New York Life Insurance Company Limited Kotak Mahindra Old Mutual Life Insurance Limited SBI Cardiff Life Insurance Company Limited ING Vysya Life Insurance Company Limited Bajaj Allianz Life Insurance Company Limited ICICI Prudential Life Insurance Company Limited MetLife Life Insurance Company Limited Aviva Life Insurance Company Limited Reliance Life Insurance Company Limited Sahara India Life Insurance Limited Comparison between ULIPS and Mutual fund

Unit Linked Insurance Policies (ULIPs) as an investment avenue

are closest to mutual funds in terms of their structure and functioning. As is the case with mutual funds, investors in ULIPs are allotted units by the insurance company and a net asset value (NAV) is declared for the same on a daily basis. Similarly ULIP investors have the option of investing across various schemes similar to the ones found in the mutual funds domain, i.e. diversified equity funds, balanced funds and debt funds to name a few. Generally speaking, ULIPs can be termed as mutual fund schemes with an insurance component. However it should not be construed that barring the insurance element there is nothing differentiating mutual funds from ULIPs. Points of difference between the two: 1. Mode of investment/ investment amounts-Mutual fund investors plan (SIP) have the option of either making lump sum investments or investing using the systematic investment route which entails commitments over longer time horizons. The minimum investment amounts are laid out by the fund house ULIP lump investors also sum have the choice of investing in a (single premium) or using the conventional route, payments on an annual, half-yearly,

i.e. making premium

quarterly or monthly basis. In ULIPs, determining the premium paid is often the starting point for the investment activity. This is in stark contrast to conventional insurance plans where the sum assured is the starting point and premiums to be paid are determined thereafter.

ULIP investors also have the flexibility to alter the premium amounts during the policy's tenure. For example an individual with access to surplus funds can thereby has the being ensuring that his enhance surplus the contribution are gainfully funds

invested; conversely an individual faced with a liquidity crunch option of paying adjusted a lower amount (the difference convenience their mutual in the accumulated value of his ULIP). The investors an edge over

freedom to modify premium payments at one's clearly gives ULIP fund counterpart 2. Expenses-In for various

mutual fund investments, expenses charged like fund management, sales and pre-

activities

marketing, administration among others are subject to determined upper Exchange Board of India.

limits as prescribed by the Securities and

For example equity-oriented funds can charge their investors a maximum of 2.5% per annum on a recurring basis for all their expenses; any expense above the prescribed limit is borne by the fund house and not the investors Similarly funds also charge their investors entry and exit loads (in most cases, either is applicable). timing of making Entry loads are charged at the an investment while the exit load is

charged at the time of sale. Insurance companies have a free hand in levying expenses on their ULIP products by the with no i.e. upper limits being at prescribed times regulator, the Insurance Regulatory on ULIP offerings.

and Development Authority. This explains the complex and 'unwieldy' expense structures

The only restraint placed is that insurers are required to notify the regulator of all the expenses that will be charged on their ULIP offerings. Expenses can have far-reaching consequences on investors since higher expenses translate into lower amounts being invested and a smaller corpus being accumulated. ULIPrelated expenses have been dealt with in detail in the article "Understanding ULIP expenses. 3. Portfolio disclosure-Mutual to statutorily declare their fund houses are required

portfolios on a quarterly basis,

albeit most fund houses do so on a monthly basis. Investors get the opportunity to see where their monies are being invested and how they have been managed by studying the portfolio. There is lack of consensus on whether disclose their portfolios. leading issue. While one school of thought believes that disclosing portfolios on a quarterly basis is mandatory, the other believes that there is no legal obligation to do so and that insurers are required to disclose their portfolios only on demand. Some insurance companies do declare their monthly/quarterly basis. in ULIP investments However the could be portfolios on a concern longlack of transparency a cause for insurers we During came our ULIPs are required to interactions with

across divergent views on this

considering that the amount invested in insurance policies is essentially meant to provide for contingencies and for

term needs like retirement; the other hand can investment decisions.

regular

portfolio

disclosures

on

enable investors to make timely

4. Flexibility in altering the asset allocation-As was stated earlier, offerings in both the mutual funds segment and ULIPs segment are largely comparable. For example plans that (balanced invest their entire corpus in equities (diversified equity funds), a 60:40 allotment in equity and debt instruments funds) and those investing only in debtinstruments (debt funds) can be found in both ULIPs and mutual funds. If a mutual fund investor in a diversified equity fund wishes to shift his corpus into a debt from the same fund house, he could have to bear an exit load and/or entry load. On the other hand most insurance companies permit their ULIP inventors to shift investments across various plans/asset classes either at a nominal or no cost (usually, a couple of switches are allowed free of charge every year and a cost has to be borne for additional switches). Effectively the ULIP investor is given the option to invest across asset classes as per his convenience in a cost-effective manner. This can prove to be very useful for investors, for example in a bull market when the ULIP investor's equity component has appreciated, he can book profits by simply transferring the requisite amount to a debt-oriented plan. 5. Tax benefits-ULIP investments qualify for deductions under Section 80C of the Income Tax Act. This holds good,

irrespective of the nature investments in tax-saving equity-linked benefits. savings

of the plan chosen funds (also referred

by the to as

investor. On the other hand in the mutual funds domain, only schemes) are eligible for Section 80C

Maturity proceeds from ULIPs are tax free. In case of equityoriented funds held for a period over 12 months, the gains are tax free; conversely investments sold within a 12month period attract short-term capital gains tax @ 10%. Similarly, debt-oriented funds attract a long-term capital gains tax @ 10%, while a short-term capital gain is taxed at the investor's marginal tax rate. Despite mutual the funds seemingly similar structures evidently both and ULIPs have their unique set of advantages

to offer. As always, it is vital for investors to be aware of the nuances in both offerings and make informed decisions Mutual funds

Primary objective investment Cost even costs through the term Investment duration: works out for medium term, longterm investor. Risky for short term Investors. Flexibility: very flexible. Plenty of scope to correct your mistake in MFs. if you made any wrong Investment decision. You can easily shuffle your portfolio

Liquidity: very liquidity. You can sell your MFs units any time (except ELSS or specified Lock in period scheme) Investment objective: MFs can be used as your vehicle

for investment to achieve different objectives. (E.g. buying a car three years from now, down payment for a home five years from now. Childrens marriage 15 years from now. Retirement planning 25 years from now

Tax implication: all investment in MFs does not qualify for section 80c. Only investment in ELSS qualifies for section 80c. MFs returns on equity MFs are exempt from long-term capital gains tax. Unless tax laws change in the future.

Strings attached: nothing too substantial. At most pay a small exit load if any.

ULIPS

Primary objective: Protection + investment Costs: upfront costs over the first few years high, but over the policy term, ULIPs are comparing better. Investment duration: work out only for long-term investor. Flexibility: flexibility is limited to moving across the different funds offered with your policy. Correcting mistakes can turn out to be expensive. Moving funds from ULIP of a different fund house can be expensive.

Liquidity: limited liquidity. Need to stay invested for the minimum number of years specified before you can redeem.

Investment objective: ULIPs can ideally be used for achieving only long term goals (childrens marriage, education, retirement planning) as the charges are usually

higher in the initial years and it is more of a longer term product.

Tax implication: ULIPs provides tax benefit under section 80c. We are moving from EEE to EET. No clarity if ULIPs will be taxed under EET.

Strings attached; some strings attached for your policy to be in effect. Minimum number of premiums needs to be paid.

In case of MFs there r only 3 types of charges applicable 1. Entry Load - It can be avoided if u invest directly to ur MF bypassing ur MF agent. 2. Exit Load - It can also be avoided by remaining invested for certain time period in that particular plan. 3. Fund Management Charge - It`s charged as a %age of total assets under the plan. Normally it varies from 0.25% to 2.5% depending upon type of funds (Debt to Eq.) as well as expertise of fund co. for a same set of MF plans, lower FMC Plan is always advisable for investment. In case of ULIP following 4 types of charges r applicable. 1. Prem. allocation Charge - It may vary from as low as 1% to as high as 65-70% of ur first year prem. & reduced year after year or may remain same at a constant level say 4% or 5%. 2. Mortality Charges - It`s the basic cost of insurance & again it varies among Ins. cos. 3. Policy admin charges - Some ULIPs charge as low as 20 Rs.

per month where as some charge as high as 200-300 Rs. per month. Again not constant among Ins. cos. 4. Fund Management Need of study As we now that there was a big controversy between SEBI and IRDA whether ulips is insurance product or not. Finally this controversy is solved and ulips is an insurance product. So it is very important to determine the difference between ulips and mutual fund and preference of investors regarding this investment option. 1) This study has been conducted to find out the difference between ulips and mutual fund because all the AMC are targeting the same customers for both ulips & mutual fund 2) The requirement of this research is to know the behavior of investors who have invested in ulips & mutual fund 3) This study tries to know their Current scenario for these two investment options charges - From 0.5% to 2.5% depending upon the type of Fund (debt to Equity).

OBJECTIVES OF THE STUDY

Objectives of the study 1. To know the customers awareness about Ulips and Mutual Fund. 2. To compare the investment in ULIPS plan with the Mutual fund.

3. To study the degree of risk involved in both. 4. To analyze the future prospective of these investment option.

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

Research can be defined as systematic investigation to establish facts. Research methodology is defined as a highly intellectual human activity used in the investigation of nature and matter and deals specifically with the manner in which the data is collected, analyzed and interpreted.

CONCEPTUAL FRAMEWORK
The main theme of the research has been conceptualized within a framework to avoid disorder & ambiguity in the process of conducting the present study. The aim of the research project is to compare the Investment Portfolio of business and service class investors and to know their current portfolio with their risk bearing capability. The study is conducted with the help of a Non-Disguised structures Questionnaire. The study made use of various factors like Demographic factors, Financial Attributes, risk tolerance level & preference for Investment products.

RESEARCH DESIGN
Research design is a blueprint for any kind of research. Research design provides the glue that holds the research project together. A design is used to structure the research, to show how all of the major parts of the research project- the samples or groups, measures, treatments or programs, and methods of assignment-

work together to try to address the central research questions. A research design lays the foundation for conducting the project.

TYPES OF RESEARCH DESIGN

1)Exploratory Design. 2)Descriptive Design. 3)Causal Design.

EXPLORATORY DESI
As its name implies, the objective of exploratory research is to explore or search through a problem or situation to provide insights and understanding. Exploratory research is characterized by flexibility and versatility with respect to the methods because formal procedures are not employed. This design can be used for following purposes: Formulate a problem or define a problem more precisely. Identify alternative course of action. Develop hypothesis. Isolate key variables and relationships for further examinations. Gain insights for developing an approach to the problem. For exploratory research these methods can be used: Experience Survey

 Pilot Study Statistical Data Literature From above given methods PILOT STUDY is done to know the expectations of the market and is undertaken by the company before launch of a product.

CAUSAL DESIGN
Causal design is used to obtain evidence of cause and effect relationships. This kind of research is done in a controlled environment where one variable remains constant or fixed and it is tested against other variables. This design is basically used to know the degree of relationship between different variables. Causal research is appropriate for the following: To understand which variables are the causes and which are the effects of a phenomenon. To determine the nature of the relationship between the causal variables and the effect to be predicted.

DESCRIPTIVE RESEARCH DESIGN

Descriptive research also known as statistical research, describes data and characteristics about the population or phenomenon being studied. It basically deals with

everything that can be counted and studied. Descriptive research is pre planned and structured. A descriptive design requires clear specification of the WHO, WHAT, WHEN, WHERE, WHY and WAY (the six Ws) of the research. The objective is to know the Percentage (%) of phenomenon in population. All perceptual studies are come under Descriptive study. Where Comparison between two variables is done that is descriptive research. In this design the variables are being predicted. In conducting this research study the Descriptive research design has been used.

DATA COLLECTION
There are two types of data collection methods which are as following:1)Primary Research 2)Secondary Research

PRIMARY RESEARCH
Primary Research (also called Field Research) involves the collection of data that does not already exist. This can be through numerous forms, including Questionnaires & Telephone Interviews amongst others.

SECONDARY RESEARCH
Secondary research (also called desk research) involves the summary, collation and/or synthesis of existing research rather than primary research, where data is collected from, for example, research subjects or experiments. In doing this research the both methods are being used. The Questionnaires are being prepared and filled by the people who are investing in ulips & mutual fund The Secondary data is being collected from different magazines, newspaper & Journals. For the Literature of review certain online journals has also been collected.

In doing this research the Questionnaire is used to collect the data.

SAMPLE
A subgroup of the elements of the population selected for participation in the study.

SAMPLING UNIT
It is a basic unit containing the elements of the population to be sampled. The sampling unit in this research is all the people of Ludhiana who invest in ulips or mutual fund

SAMPLE SIZE
It refers to the number of elements to be studied in a study/research. The Sample Size for this study is 100.

SAMPLING TECHNIQUES
In doing this research Convenience Sampling Technique is used. A Convenience Sampling refers to a technique that attempts to obtain a sample of convenient elements. The selection of sampling units is left primarily to the Interviewer. So, in doing this research the walking clients & the investors who comes to BAJAJ CAPITAL are used for Convenience Sampling Technique.

DATA ANALYSIS & INTERPRETATION

Table 4.1 Percentage of people who have invested in ULIPS, in Mutual fund and both.

Investment option ULIPS Mutual Fund Both Total

No. of respondents 30 51 19 100

Percentage (%) 30 51 19

Fig 4.1 Percentage of people who have invested in ULIPS, in Mutual fund and both

Analysis- It is clear from the above table that 30% of the respondents invest in ULIPs, 51% in mutual fund & 19% in both. Interpretation- Mutual funds are more preferred investment avenue comparative to ULIPS because more number of people prefer mutual fund comparative to ULIPs and there are only few people who are investing in both ULIPs and Mutual fund.

Table 4.2:- Annual income of the investors. ULIPS Annual income Below- 2 lac Rs 2 lac- 4 lac Rs 4 lac- 6 lac Above 6 lac Total No. of Percentage Responses 5 6 12 7 30 Mutual fund No. of Percentage Responses 7 8 19 17 51 Both No. of Percentage Responses 1 2 5 11 19

17% 20% 40% 23%

14% 16% 37% 33%

5% 11% 26% 58%

Fig 4.2:- Annual income of the investors Analysis:Among the people who invest only in ULIPs 17% belongs to

income group of below 2 lacs, 20% belongs to the income group of 2 lacs -4 lacs, 40% belongs to income grpup of 4lac- 6 lacs & 23% above 6 lacs. In the case of mutual fund 14% belongs to the income group of below 2 lacs, 16% to the income group of 2 lacs- 4 lacs, 37% to the income group 4 lacs- 6lacs & 33% to the income group of above 6 lacs. People who invest in both ulips and mutual fund 5% belongs to the income group of below 2 lacs, 11% to the income group of 2 lacs- 6 lacs, 26% to the income group of 4 lacs- 6 lacs & 58% to the income group of above 6 lacs. Interpretation- Income vise investment is almost same in both ULIPS and Mutual Fund people with high income group are more likely to invest their

money comparative to the low income group. But it is clear from the graph that people who are investing in both ULIPS and Mutual fund are having income above than 6 lakhs.

Table 4.3:- Factors consider by investors before investing in ULIPS and Mutual fund. Factors Safety of Principal High Return Maturity Period Terms and Conditions Total No. of Responses 39 42 12 7 100 Percentage 39% 42% 12% 7%

Fig 4.3:-Factors consider by investors before investing in ULIPS and Mutual fund AnalysisAs seen in the above table among the various factors

considered by investors before investing their money in ULIPs and Mutual fund 42% people feel that high return is more important, 39% of the respondents consider safety of principal, 12% to the maturity period & 7% to the terms and condition.

Interpretation- The most important factor which is highly considered by Sources Journals Reference Group Television Brokers Newspaper Total No. of responses 5 21 5 66 3 100 Percentage 5% 21% 5% 66% 3%

the investors before investing their money in ULIPS or Mutual fund is the return earned by them and after return the second factor is the safety of the principal. So we can say that people wants their investment to get the good return along with the safety of principal.

Table 4.4:- Information Sources helpful to the investor in making investment decision.

Fig 4.4:- Information Sources helpful to the investor in making investment decision

Analysis- 66% people feel that their investment decision are made with the help of brokers, 21% people feel that reference group plays an important role while making their investment decision, 5% gets the information from the journals, 5% from the television & 3% of the respondents feel that they get the information from the news paper. Interpretation- People feel that brokers plays an important role while making their investment decision and after broker people think that their investment decision are made with the help of reference groups. The reason for this may be that there is mostly push selling in case of Ulips & in case of mutual fund broker may provide better information regarding various schemes.

Table 4.5:- Preference of investor regarding different types of funds. Types of fund Equity based fund Debt based fund Balanced fund Open ended fund Close ended funds Total No. of responses 45 24 56 64 20 209 Mean 0.215 0.115 0.268 0.306 0.096

Fig 4.5:- Preference of investor regarding different types of mutual funds Analysis- As clear from the above table the mean score of the open ended fund is very high comparative to other types of mutual fund and the mean sore of equity & balanced based fund is also good, but it is very less for debt based & close ended funds. Interpretation- Open ended funds are more popular among the investors the reason for this may be that the Open-end funds do not have a fixed maturity and it is available for subscription every day of the year. Openend funds also offer liquidity to investments, as one can sell units whenever there is a need for money.

Table 4.6:-The reasons for investing in ULIPS. Reason Strongly Agree (2)
4

Agree (1)
3

Neutral (0)
11

Disagree (-1)
7

Strongly Disagre e (-2)

2

Tota l 118 133 96 12

Mea n 1.1 8 1.3 3 .96 .12

Tax Rebate 98 Life Insurance 106 Capital Growth 76 Investme nt of excess money 44

31
5 3

0
8

-7
3

-4
2

34
3 8 2 2

0
3 4 2 3 14

-3
9

-4
5

34 23

0
13

-9
29

-5
13

-29

-26

Fig 4.6:- The reasons for investing in ULIPS AnalysisAmong the various reasons of investing in ULIPs respondents

agree that capital growth is the important reason for investing in ULIPs ,but tax benefit and life insurance are the most important reason for investing in ulips because its mean lies between strongly agree & agree. People are neutral for the reason investment of excess money. Interpretation- It is clear from the above graph that most of the people invest in ULIPS to get the insurance facility and the second important reason is get the benefit of tax rebate. All the plans of ulips provide tax rebate therefore it is one of the important reason of investing in ulips.

Table 4.7:- The reason for investment in Mutual Fund.

Reasons

Strongl y Agree (2)

Agree (1)

Neutr al (0)

Disagree Strongl y (-1) Disagre e (-2)

21 16

Total

Mean

Tax Rebate 58 Capital Growth 96 Investme nt of excess money

29

31 125 50

.31 1.25 .50

26
48

0
3 9 2 5

-21
6

-32
2

39
32

0
7

-6
24

-4
9

64

28

-24

-18

Fig 4.7:- The reason for investment in Mutual Fund. Analysis- The mean of capital growth lies between strongly agree & agree. So it the most important reason of investing in mutual fund. Tax rebate lies between neutral & agree. Respondents are neutral for the reason investment of excess money because its mean is 0.5. Interpretation- It can be easily interpretated that people invest in mutual fund for the appreciation of the capital invested by them and after this the second important reason is investment of excess money which is kept with them only few people think that they invest in mutual fund to get the

advantage of tax rebate the reason may be that all the mutual fund does not provide tax deduction. Table 4.8:- Preference of ULIPS or mutual fund on the basis of following factors. Advantages ULIPS Mutual fund

Diversification Professional Management Low cost Liquidity Flexibility

38 40 34 17 12

62 60 66 83 88

Fig 4.8:- Preference of ULIPS or mutual fund on the basis of following factors.

Analysis- From the above table it is clear that for the advantage of diversification 38% people go for ULIPs & 62% for mutual fund. For professional management 40% for ulips & 60% for mutual fund, for the advantage of low cost 34% for ulips and 66% for mutual fund, for liquidity

17% for ulips & 83% for mutual fund, for flexibility 12% of respondents prefer ulips & 88% prefer mutual fund. Interpretation- Mutual fund are preferred investment option comparative to ulips the most important reason for this is flexibility and Liquidity provided by the mutual fund plans. Investors feel that mutual funds are more liquid and flexible comparative to ulips.

Table 4.9:- Investment in ULIPS and Mutual fund by risk profile.

Risk profile

Ulips No of responses Percentage 16 10 4 30

Mutual fund No. of responses Percentage 6 31 14 51

Low risk Moderate risk High risk Total

53% 33% 14%

12% 61% 27%

. Fig 4.9:- Investment in ULIPS and Mutual fund by risk profile.

Analysis- Among 30 respondents who invest in ULIPs 53% of respondents feel that they take low risk profile, 33% feel that they take moderate risk & 14 % fe l that they take moderate risk. From the 51 people who invest in mutual fund 12% invest in low risk profile, 61% in moderate risk & 26% in high risk profile. Interpretation- It is clear from the above graph that if the risk taking capability of an individual is low than he will prefer to invest in Ulips may be because he is getting insurance plus investment facility, if the risk taking capability is moderate or high than people prefer mutual fund.

Table 4.10:- Expected annual Return from both ULIPS and Mutual funds. Annual Return Less than 10% 11-15% 15-20% Above 20% Total ULIPS No. of responses Percentage (%) 2 11 14 3 30 Mutual fund No. of responses Percentage (%) 1 5 18 27 51

7 36 47 10

2 10 35 53

Fig 4.10:- Expected annual Return from both ULIPS and Mutual fund Analysis- From the 30 people who invest in ULIPs 7% expect the return of less then 7%, 36% of the respondents expect the return of 11-15%, 47% of the people expect the return of 15-20% & only 10% expect the return of 20-25%. Among the 51 respondents who invest in only mutual fund 2% expect the annual return of less then 10%, 10% of the people are having the expected return 0f 11-15%, 35% people expect the annual return of 15-20% & 53% expect 20-25% annual return. Interpretation- It is clear from the graph that people who invest in mutual fund are expecting high return than those who invest in ulips. So we can say that the basic reason of investing in mutual fund is to generate good return from the investment.

Table 4.11:- Preferred tenure of investment for ULIPS and Mutual Fund. Duration ULIPS No. of responses Percentage (%) 2 7 21 30 Mutual fund No. of responses Percentage (%) 6 19 26 51

Short term Mid term Long term Total

7 23 70

12 37 51

Fig 4.11:- Preferred tenure of investment for ULIPS and Mutual Fund Analysis- Among the 30 respondents who invest in only ULIPs 7% of the respondents invest for short term, 23% for mid- term & 70% for the long term. From the 51 repondents who invest in only mutual fund 12% invest for short term, 37% for mid-term & 51% for the long term. Interpretation- The tenure of investment preferred by investors is almost same in both ulips and mutual fund that is long term but, still the difference is that for tenure of short term and midterm mutual fund are preferred comparative to ulips.

Table 4.12:- Awareness among peoples regarding the controversy of ULIPS. Opinion Yes No Total No of Responses 59 41 100 Percentage 59% 41%

Fig 4.12:- Awareness among peoples regarding the controversy of ULIPS Analysis- 59% of people are aware regarding the controversy of ulips and among this 59% of people 65% of investors think that this controversy of ulips will going to affect their investment decision. Interpretation-As we can see that many people are aware regarding the controversy of the of the ulips and among the people who are aware regarding this controversy most of them feel that this is going to effect their investment decision as from this controversy many people came to know that negative points or about the lop holes of the Ulips.

Table 4.13:- Preferred investment option for investing their money in future .

Investment option Mutual fund ULIPS Total

No. of Responses 69 31 100

Percentage 69% 31%

Fig 4.13:- Preferred investment option for investing their money in future Analysis-69% of people will like to reinvest their money in mutual fund and only 31% people will invest their money in ulips. Interpretation- So in coming years also mutual fund will preferred investment option comparative to ulips. Future is good for mutual funds comparative to ULIPs.

RESULTS & FINDINGS

FINDINGS

People are aware regarding

ulips &Mutual fund but, the

awareness regarding mutual fund is high comparative to ulips. People with high income group are more likely to invest their money but, people who invest in both ulips and mutual fund mostly belongs to the income group of more than 6 lacs. Broker and reference group plays an important role while making an investment decision of an investor. Open ended funds & closed funds are more popular among investors of Bhubaneswar.

Insurance and tax rebate is the most important reason for investing in ulips & people are investing in mutual fund for the appreciation of the capital invested by them .among the various advantages liquidity & flexibility plays the most important role for the preference of mutual fund over ulips.

Low risk is taken in case of ulips & moderate risk in case of mutual funds. The expected annual return is high for mutual fund comparative to ulips. The preferred tenure of investment is same for both ulips & mutual fund. The recent controversy related to ulips will going to affect its future demand &in future also more number of investors will like to invest their money in mutual fund. So future is bright for mutual funds.

CONCLUSION
A mutual fund is the ideal investment vehicle for todays complex and modern financial scenario. Markets for equity shares, bonds and other fixes income instruments, real estate, derivatives and other assets have become mature and information driven. Today each and every person is fully aware of every kind of investment proposal everybody wants to invest money, which entitled of low risk, high returns and easy redemption. In my opinion before investing in mutual funds, one should be fully aware of each and everything.

At the same time Ulips as an investment avenue is good for people who has interest in staying for a longer period of time, that is around 10 years and above. Also in the coming times, Ulips will grow faster. Ulips are actually being publicized more and also the other traditional endowment becoming unattractive because as their of policies are lower interest rate. It is earn them a

good for people who were investing in ULIP policies of insurance companies investments better return than the other policies.

RECOMMENDATIONS
The performance of the mutual fund depends on the previous years Net Asset Value of the fund. All schemes are doing well. But the future is uncertain. So, the AMC (Asset under Management Companies) should take the following steps: -

1. The people do not want to take risk. The AMC should launch more diversified funds so that the risk becomes minimize. This will lure more and more people to invest in mutual funds and ulips. 2. The expectation of the people from the mutual funds is high. So, the portfolio of the fund should be prepared taking into consideration the expectations of the people. 3. Try to reduce fund charges, administration charges and other charges which help to invest more funds in the security market and earn good returns. 4. Different campaigns should be launched to educate people especially regarding SIP. 5. Companies should give regular dividends as it depicts

profitability. 6. Companies should give handsome brokerage to brokers so that they get attracted towards distribution of the funds.
7.

ULIPs are good for those who prefer investment plus insurance.

Limitations of the Study

The

study

based

on

survey

through

pre-designed

questionnaires suffers from the basic limitations of the possibility of difference between what is recorded and what is the truth, no matter how carefully the questionnaire has been designed and field investigation has been conducted. This is because the persons may not deliberately report their true responses and even if they want to do so, they are bound to be differences process. In owing to problems there are in the some communication addition,

limitations, which are as below:

 Data collection error may be there due to wrong response from respondents as some time they are not the right person who takes actual decisions. Some of the respondents can hide the real information. Some time people did not have time to fulfill

questionnaire, so they give only few information. A sample size cannot always represent the whole

population

BIBLIOGRAPHY

Bibliography

Prabhakar Sinha (2010) Govt's ULIP ruling to hit MFs hard Times of India, June 22

Subramanian (2010) NFOs make hay after Sebi bars insurers from launching Ulips Economic times. May,12

Aggarwal Ashish(2010) Back to the real issue: misselling Business standard

Shankaran Sanjiv & Mathew Liz(2010) Finance ministry to call the shots on turf wars Times of India

Rosita IRDA regulates ULIPS a relief for investors 2009 Economic Times

Kumar (2009),Do Investors behave rationally in Stock Market: A Behavioral Finance Perspective, Investors India, Oct.2009, Pg.16-20.

www.amfiindia.com www.bajajcapital.com www.sebi.com www.economictimes.com www.investorsguide.com

http://www.irda.gov.in

ANNEXURE

QUESTIONNAIRE
Name:Contact No:Occupation:1. In which of following plan you have invested? a) ULIPS b) Mutual Fund c) Both 2. Income Group a) Below- 2 lac c) Rs 4 lac- 6 lac b) Rs 2 lac- 4 lac d) Above 6 lac

3. What factors do you consider before investing in ULIPS and Mutual fund? a) Safety of Principal c) Maturity period Condition b) High return d)Terms and

4. Which of the following source helps you in making your investment decision? a) Journals c) Television e) Newspaper 5. In which type of fund you would like to invest in? (You can select more than one option) a) Equity based Fund c) Balanced Fund e) Closed ended Fund b) Debt based Fund d) Open ended Fund b) Reference Group d) Brokers

6. What are the reasons that will initiate you to invest in ulips? a) Tax rebate

Strongly Disagree Disagree Agree Highly Agree

Neutral

b) Life Insurance

Strongly Disagree Disagree Agree Highly Agree c) Capital Growth Rate

Neutral

Strongly Disagree Agree Highly Agree

Disagree

Neutral

d) Investment of Excess Money

Strongly Disagree Highly Agree

Disagree

Neutral

Agree

7. What are the reasons that will initiate you to invest in mutual fund? a) Tax Rebate

Strongly Disagree Disagree Highly Agree

Neutral

Agree

b) Capital Growth

Strongly Disagree Disagree Highly Agree c)Investment of excess

Neutral

Agree

Strongly Disagree Highly Agree

Disagree

Neutral

Agree

8. On the basis of following factors tick your preference between ULIPS and Mutual fund? ULIPS Mutual fund a) Diversification b) Professional Management c) Low cost d) Liquidity e) Flexibility 9. What is your risk taking capability? a) High

b) Moderate c). Low 10. What is the expected annual return according to you? a) Less than 10% c)15-20% 11. b) 11-15% d)Above 20%

What is your preferred tenure of investment?

a) Short term b) Mid term c) Long term 12.Are you aware of the controversy regarding ULIPS? a) Yes b) No

If Yes then will it affect your investment decision?

13. Where would you like to invest your money in future? a) ULIPS Why? b) Mutual Fund