Submitted By

ANANDA B
USN 1SB10MBA03

MASTER OF BUSINESS ADMINISTRATON

SYNOPSIS ON

INVESTORS PREFERENCE TOWARDS INVESTING IN MUTUAL FUNDS AND SCHEME SUGGESTION

Submitted To Mrs.Revathy Vishal HOD MBA Department SSEC ANEKAL

INTRODUCTION

The entry of private players with their foreign partners into the mutual fund business has revolutionized the industry. They brought professional competence and their aggressive marketing has made mutual funds an important part of any individual portfolios in India. As of the recent findings there are about 1457 schemes offered 31 mutual funds. The good performance of the economy and the stock markets in last couple of years contributed to the growth of the mutual funds. Low interest rates on bank deposits and tax concessions on some of the schemes also contributed to the growth. But the penetration of the mutual funds in the retail investor segment is still low compared to the developed world. In India, the size of the industry is just 6% of the GDP, while it is 70% in the US. World over it is around 37%. The contribution from the retail investors to the funds is very low compared to institutions and high net worth individuals. For the growth of industry, active participation of the retail investors is necessary

A mutual fund is a pool of money, collected from the investors, and is invested according to certain investment objectives. A mutual fund is created when investors put their money together. it is therefore a pool of the investors funds. The most important characteristic of a mutual fund is that the contributors and the beneficiaries of the fund are the same class of people, namely investors. The term mutual fund means that investors contribute to the pool, and also benefit from the pool. There are no other claimants to the funds. The pool of funds held mutually by investors is the mutual funds. A mutual funds business is to invest the funds thus collected, according to the wishes of the investors who created the pool.

Meaning of Mutual Fund

Mutual Funds are investment products that operate on the principles of Strength in Numbers. They collect money from a large group of investors, pool it together, and invest it in various securities in line with their objective. They are an alternative to investing directly. A more convenient alternative yet no less rewarding. Take stocks, trading into the market by yourself would mean knowing at the very least, how to analyze and track companies, the way of the market and the intermediaries who will help you buy and sell shares. A mutual fund that invests in stocks relieves you of all such hassles, while giving you the same investment option for individuals handicapped by a lack of investing acumen or time, or generally disciplined to take charge of their personal finances.

There are different types of mutual fund schemes: Equity funds Debt fund/ income funds Balanced funds Monthly income plants Sectoral funds Money market schemes Index funds

NEED OF THE STUDY

Mutual fund is one of the most important types of financial products in existence in the market today. The other major types of financial product offering are insurance, various banks and institutional deposits etc.When it comes to a financial product like a mutual fund, emphasis has be paid not only on its financial aspects like investment outlay and the resulting return cash flow stream but also on how the product is offered to customers, who in this case present the investors. Thus we can say that the investors response to a mutual fund is not determined only on the basis of its financial aspects (which although are important) but also on how the product is positioned and offered to the investor, The starting point for any successful marketing is to know the Preferences of the customers for the industry. This provides insights into the customers behavior and his expectation from the industry players. A proper understanding of the Preferences would definitely benefit the players This survey attempts to know the mutual fund investors better. It examines some interesting choices of the retail investor including the reasons behind investing in mutual fund and the risk tolerance levels of investors. The investors knowledge about mutual funds and what according to him are the best mutual funds is also analyzed. It is hoped that this survey in India would go a long way in benefiting the mutual fund players. In Descriptive Research is all kind of surveys, including

STATEMENT OF THE PROBLEM

To determine the PREFERENCE towards investing in mutual funds and to review the performance of various mutual fund schemes across specific study periods. As in India the mutual fund percentage is very low which is 2% approximately, while in the Countries like US, UK etc the mutual fund investment percent is more than 80%. Customers dont want to take risk because they dont have proper knowledge about the investments in mutual funds. To identify the factors affecting the investment decision of investors, and also identification of the main reasons behind most of the investments.

OBJECTIVE OF THE STUDY

To identify the objective of the investor for investing in a mutual fund. To identify the investment patterns of investors. To find out the risk tolerance factors of the investors. To study consumer PREFERENCE about time horizon and tax sensitivity aspect of investing in mutual funds. To identify the objective of the investor for investing in a mutual fund. To identify the investment patterns of investors. To find out the risk tolerance factors of the investors.

Questions that have been addressed include: The investors objective behind investing in a mutual fund. The risk tolerance factor for investing in a mutual fund. The underlying tax factor for investing in a mutual fund. The time horizon preferred by the investors for investing in a mutual fund.

SCOPE OF STUDY
A mutual fund is a pool of money, collected from the investors, and is invested according to certain investment objectives. A mutual fund is created when investors put their money together. it is therefore a pool of the investors funds. The most important characteristic of a mutual fund is that the contributors and the beneficiaries of the fund are the same class of people, namely investors. The term mutual fund means that investors contribute to the pool, and also benefit from the pool. There are no other claimants to the funds. The pool of funds held mutually by investors is the mutual funds. A mutual funds business is to invest the funds thus collected, according to the wishes of the investors who created the pool.

The main scope of this study was to understand the customer needs and requirements for banks. The study helps the bank to increase the sales of mutual fund according to customer needs. The study helps the bank to arranging the mutual fund scheme according to customer preference.

METHODOLOGY OF RESERCH

To determine investor Preference towards investing in mutual funds

In order to determine investor Preference towards investing in mutual funds. The method of sampling design adopted was convenience sampling. However to ensure that the sample members were selected from visitors at various leading banks and mutual fund offices. The specific individuals were selected at convenience.

The method of interviewing the respondents was personal interview. The research instrument was a questionnaire. This was done to ensure comprehensiveness, standardization and ease of the interviews.

SOURCES OF DATA Sources of secondary data for the research 1. Companys brochures and catalogues 2. Companys website. 3. Reports of the company.

Sources of primary data The sources of primary data was the descriptive research conducted using the Questionnaire

SAMPLING DESIGN

Nature of Sampling

The basic idea of sampling is that by selecting some of the elements in a population, we may draw conclusions about the entire population. A population element is the subject on which the measurement is being taken. It is the unity of study. While an element may be a person, it can just as easily be something else.

A population is the total collection of elements about which we wish to make some inferences.

There are several compelling reasons for sampling, including: (1) Lower cost, (2) Greater accuracy of results (3) Greater speed of data collection and (4) Availability of population elements.

SAMPLING METHOD Sampling technique used in here is convenience sampling. A sample of 50 customers is interviewed.

TOOLS AND TECHNIQUES OF DATA COLLECTION

There are two ways through which the data has been collected.

Primary data Secondary data

PRIMARY DATA Primary data collected is the data collected through

Questionnaire Personal interview Survey method Report of the company

SECONDARY DATA

The source of secondary data were published Journals, magazines, like investime and web sites,

QUESTIONNAIRE

1. Do you hold an investment in any kind of mutual fund scheme today? Yes No

2. Please tick your gender Male Female

3. Please mark your age segment 20-29 30-39 40-49 50-59 Abov6e 60

4. Please tick the correct category of your education qualification Under Graduate Graduate Post Graduate Others

5. Please tell us about your annual family income Less than 1, 00,000 3, 00,0005, 00,000 1, 00,0002, 00,000 Above 5, 00,000 2, 00,0003, 00,000

6. On an average you save in a month Up to Rs. 2000 5001-10000 10001-20000 Above 20001

7. Please tell the main decision behind most of the investment decision made by you till date. Tick as many applicable Safety of investment Capital gains Generate regular income availing tax benefits

Have a secured future

others, please specify

8. Apart form the reasons stated above which of the following would influence your investment decision.

Future outlook

Brand value

risk factors involved tax incentives

return on the investment

Current economic or political scenario

9. Which of these following investment avenues have you invested in or intend to do so in the future? Mutual funds Government securities Gold banking products Equity shares Real estate

Insurance products

Corporate debentures

10. When you are investing in a mutual fund or intend to do so which of the following would influence your investment decision? Economic scenario Fund managers image Mutual fund company image Tax incentive Fund performance in the past

11. How important is the tax incentive factor to you when you are making an investment in a mutual fund Very important Some what important Neutral Some what unimportant

Not at all important

12. How do you rate your understanding about the concept and working of mutual fund? Very good Good Average Poor Very poor

13. In your opinion which of the following advertising media would have the highest influence on the mutual fund investment decision of an individual

Print media

Electronic media

Pamphlets

Hoardings and billboards

14. When making an investment in mutual fund you would be influenced by the advice of :( (Tick the option with highest influence)

Fund manager

your friends and relatives

Your financial advisors / chartered accountant None but depends on your own personal analysis

15. Please tick amongst those companies listed below for whose mutual fund scheme you are aware of ICICI HSBC Others (please specify) Franklin Templeton HDFC UTI Reliance Capital

16. An established fact in any investment exercise is that greater returns come with greater risk. In light of this truism please identify your risk return disposition a. You are willing to undertake High risk Moderate risk Low risk Nil

b. Your return expectations are: 5% - !0% 11% - 19% 20% - 29% Greater than 30%. Cant say

17. When comparing risk return characteristics of mutual fund vs. direct investment in stock markets, in your opinion: a. Mutual fund and direct investment in stock market offer the same risk return relationship. b. Mutual funds provide a means to reduce risk for the same return whecomparedtodirect c.Investment in stock market. d. Direct investment in stock market will result in lower risk or higher return than investing in mutual funds.

18.

What is the time horizon for which you generally keep your investment in case of Between 1 3 years

mutual fund and stocks? Up to a year Between 3 -5 years

Greater than 5 year