Dissertation Report on

A study on consumers preference and selection of various mutual fund

schemes

SubmittedinpartialfulfilmentoftherequirementsfortheawardoftheDegreeof
MASTER OF BUSINESS ADMINISTRATION
UNDER THE GUIDANCE OF:
DR. MATLOOB ULLAH
KHAN

Submitted By:
Syed Isabat Hussain
Rizvi

Objectives of Research

To study and analyze various mutual fund scheme and consumers preference
towards them

To identify the most preferred scheme and the reason behind it

To identify the factors that affect in selection process of various mutual fund
schemes

SOURCES OF DATA:
Primary data: This data has been collected from the analysis of questionnaire
LIMITATIONS:

The study is limited to the mutual Fund.

It studies about its relationship and tax savings.

The duration of the study is limited.

History of the Indian Mutual

Fund Industry

First Phase 1964-87 (UTI MONOPOLY)

Second Phase 1987-1993 (Entry of Public Sector Funds)

Third Phase 1993-2003 (Entry of Private Sector Funds)

Fourth Phase Since February 2003

Introduction !

The mutual fund industry in India began with the setting up of the Unit Trust of India (UTI) in 1963 by the
Government of India. Till the year 2000, UTI has grown to be a dominant player in the industry with the
assets of over Rs. 76,547 crores as of March 31, 2000. The UTI is governed by a special legislation, the
Unit Trust of India Act, 1963. In 1987 public sector banks and insurance companies were permitted to set
up mutual funds. Also the two insurance companies LIC and GIC established mutual funds. Securities
Exchange Board of India (SEBI) formulated the Mutual Fund (Regulation) 1993, which for the first time
established a comprehensive regulatory framework for the mutual fund industry. Since then several
mutual funds have been set up by the private and the joint sectors.

Growth of Mutual Funds

The Indian Mutual Fund has passed through three phases. The first phase was between 1964 and 1987 and
the only player was the Unit Trust of India, which had a total assets of Rs. 6700 crores at the end of 1988.
The second phase is between 1987 and 1993 in which period 8 funds were established (6 by banks and one
each by LIC and GIC). The total assets under management had grown to Rs. 61028 crores at the end of
1994 and the number of schemes were 167.
The third phase began with the entry of private and foreign sectors in the Mutual Fund industry in 1993.
Kothari Pioneer Mutual Fund was the first fund to be established the private sector in association with a
foreign fund. At the end of financial year 2000 (31 st March) funds were functioning with Rs. 113005 crores
as total assets under management. As on August end 2000 there were 33 funds with 391 schemes and
assets under management with Rs. 102849 crores.

ADVANTAGES OF MUTUAL
FUND:

PROFESSIONAL MANAGEMENT:

DIVERSIFICATION:

CONVENIENT ADMINISTRATION:

RETURN POTENTIAL:

LOW COST:

LIQUIDITY:

FLEXIBILITY:

CHOICE OF SCHEME:

WELL REGULATED:

TRANSPARANCY:

ANALYSIS OF MUTUAL FUND

Broadly the analysis categories in 3 types:

Fundamental analysis- The analysis of such fundamental factor

general business conditions, industry outlook, earnings,
dividends, quality of management etc.

Technical analysis An analysis of market based factors such as

Stock price movements, charts etc.

Beta/Modern portfolio theory (MPT) - Analysis the responsiveness

of the price of a particular company stock to change in the value
some market average.

TYPES OF MUTUAL FUND

SCHEMES

Mutual Fund broadly classified into TWO categories:

Open Ended Scheme funds- The concept of these funds is that the investors are free to enter or exit
the scheme at any point of time during the fund period. The investors can purchase/ sale units of mutual
fund through mutual fund trust.

Some Examples of Open Ended scheme funds are:

Templeton India Growth Fund.

PruICICI Discovery Fund.

Kotak Opportunities

Principal Dividend Yield Fund.

Reliance Growth Fund.

Closed Ended Scheme funds - In the care of close ended fund, the investors have to look their
funds with the trust for particular periods of time as a specified y the terms of the offer. The main
problem for the investor is that they cannot move in out of the fund freely. In the case of Closed
Ended schemes the prices of the units are calculated in the same manner as in the case of Open
Ended schemes.

DOS AND DONTS WHILE

SELECTING A MUTUAL FUND:

DOS:

Checkthetrackrecordoftheassetmanagementcompany.

Seewhatisofferedintermsofafter-salesservice.

Optforanincomeorgrowthschemeonthebasisofincomerequirements.

Consideryourliquidityneedstochoosebetweenanopen-or-close-endedfunds.

Examineredemptionandre-purchasefacilities.

DONTS:

Neverjudgeamutualfundbythenameofthegroupthatisfloatingit.

Dontinvestinamutualfundwhenthemarketisonanupswing.

DonotoptforafundwheretheNAVindependentlyontheSensex.

DonotviewNAVindependentlyoftheSensex.

NeverbutwhentheunitisquotedatapremiumtoNAV.

value chain for a typical mutual

fund

The first activity is the investment selection.

The next activity is trading and execution.

The third item in the chain is customer record keeping and

reporting

The fourth activity, marketing and distribution

The final activity in our value chain is investor liquidity

services.

RISK FACTORS IN MUTUAL

FUND

Market Risk:

Scheme Risks:

Investment Risks:

Business Risk:

Political Risk:

CONCLUSION & SUGGESTIONS

By this study we conclude that the government employees and

professionals are more interested in investing in tax saving funds
than any other equity funds.

In this study the null Hypothesis was accepted which suggested

the convincing relationship between government employees or
professionals and their attitude towards investment in equity.

According to the ratings from external agencies such as CRISIL

and ICRA, there exists a relationship between them in particular
investment scheme.

The third hypothesis was accepted because the value of

significance (0.23) and Pearson correlation suggested a strong
relationship between duration of investment in mutual funds
scheme and percentage of savings spent on mutual funds scheme.

Thank you