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STUDY ON MUTUAL FUNDS A FINANCIAL PLANNING TOOL
Report submitted to Avagmah Business School in partial fulfillment of the requirements for the award of
Post Graduate Program in Management
Submitted by
Amith Bansal
Register No.: 10JAPG1005
Under the guidance of
Balaji rao
Professor
SBM Jain College
Bangalore
NJ India Invest Ltd.
Bangalore
2011
DECLARATION
I hereby declare that the research entitled “MUTUAL FUNDS
A FINANCIAL PALLANING TOOL” submitted to Avagmah
Business School in partial fulfillment of the requirements for
the award of PGPM, is a record of independent work carried
out by me under the supervision and guidance of Balaji Rao,
Professor, SBM Jain College, Bangalore. This work has not
formed the basis for the award of any Degree and has not
been submitted previously to any other College/University.
Bangalore
August __, 2011 Amith Bansal
Balaji RaoProfessorSBM Jain CollegeBangalore
CERTIFICATE
I certify that this project entitled “MUTUAL FUNDS A
FINANCIAL PLANNING TOOL” submitted to Avagmah Business
School in partial fulfillment of the requirements for the award
of PGPM, is a record of independent work carried out by Mr.
Amith Bansal under my supervision and guidance. This work
has not formed the basis for the award of any Degree and
has not been submitted previously to any other
College/University.
Bangalore Balaji Rao
August __, 2011 Mentor
ACKNOWLEDGEMENT
I write this page to sincerely thank all those people who helped me in
completing this project work successfully.
First and foremost, I express my respect and sincere gratitude to my parents,
for supporting me through every step. I thank God Almighty, for his blessings
and care.
I would like to express my deep sense of gratitude SBMJC Bengaluru, for
providing the best of opportunities.
I bestow my sincere gratitude to Mr.Balaji Rao my research guide for the
guidance and encouragement given to me.
I am deeply indebted to Mr. Pramod K Padaki, Branch Manager, NJ India
Invest PVT Ltd, Bangalore under whose guidance the project was carried out,
for his valuable support, motivation and assistance which served as the
forces that helped me to bring this project to its present shape.
I thank all other department heads and managers and the whole team of the
NJ India Invest Pvt Ltd, Bangalore for giving me support during my study in
the company. Their support was inevitable for the completion.
Last but not the least; I thank my friends of SBMJC who helped me whenever I
needed help.
Amith Bansal
Table of Contents
1. MUTUAL FUND INDUSTRY IN INDIA
1.1.Evolution of mutual funds in India1.2.Concept of mutual fund1.3.Role of SEBI and AMFI in mutual fund industry1.4.The characteristics of mutual funds1.5.Types of mutual fund schemes1.6.Benefits of investing in mutual funds1.7.Disadvantages of mutual funds1.8.Risk involved in mutual fund
2. COMPANY PROFILE2.1. Vision & mission of NJ India invest2.2. Philosophy2.3. Management2.4. Service standards2.5. Products2.6. Recognitions
3. MUTUAL FUND FINANCIAL PLANNING TOOL3.1. Need of financial planning3.2. Meaning of financial planning3.3. Will financial planning help you?3.4. Meaning of mutual fund3.5. Difference b/w savings and investments3.6. Investment in mutual funds makes money
4. RESEARCH METHODOLOGY4.1.Research designs4.2.Sampling design4.3.Questionnaire design4.4.Objective of study4.5.Scope of study4.6.Limitations of study
5. FINDINGS SUGGESTIONS CONCLUSIONS BIBILOGRAPHY QUESTIONNAIRE APPENDIX
Executive Summary
The project talks about “the various factors considered by the customers
while going for investment in mutual fund”. The first few pages talk about the
introduction and evolution on mutual funds in India. This is followed by
company profile of NJ INDIA INVEST PVT LTD., and study objectives that how
do the mutual funds help investor in financial planning.
The present economy is highly influenced undertakings in the country. The
major chunk of our GDP comes from financial sector which is very important
for a developing country like India. Due to uncertainty in the market and low
return it is necessary for investors to find the answer and way of capital
growth with better return.
All investment involves risk in varying degrees and hence it is necessary to
understand risk and know it can affect your investment. There are also risks
that are not in our control like inflation risk, Risk pertaining to political
environment for instance.
Mutual fund is indeed of great benefit in this respect. They provide the
services of experienced and skilled professionals who determine this risk and
monitor them on ongoing basis. They are also backed by thorough research.
When investors are confronted with an outstanding range of products from
traditional bank deposits to money multiple schemes, it has to be judged on
yardsticks of Returns, Liquidity, Safety and Tax efficiency. The target
audience was from random population where the basic objective of the study
is to find the objective of the investors for investing in a mutual fund<
identify the investment patterns of investors.
CHAPTER – 1MUTUAL FUNDS INDUSTRY IN INDIA
CHAPTER – 1
MUTUAL FUND INDUSTRY IN INDIA
The origin of mutual fund industry in India is with the
introduction of the concept of mutual fund by UTI in the year 1963.
Though the growth was slow, but it accelerated from the year 1987
when non-UTI players entered the industry. In the past decade, Indian
mutual fund industry had seen a dramatic improvement, both quality
wise as well as quantity wise. Before, the monopoly of the market had
seen an ending phase; the Assets under Management (AUM) was Rs.
67bn. The private sector entry to the fund family raised the AUM to Rs.
470 bn in March 1993 and till April 2004, it reached the height of 1,540
bn.
Putting the AUM of the Indian Mutual Funds Industry into
comparison, the total of it is less than the deposits of SBI alone,
constitute less than 11% of the total deposits held by the Indian
banking industry.
The mutual fund industry is a lot like the film star of the finance
business. Though it is perhaps the smallest segment of the industry, it
is also the most glamorous – in that it is a young industry where there
are changes in the rules of the game every day, and there are constant
shifts and upheavals. The mutual fund is structured around a fairly
simple concept, the mitigation of risk through the spreading of
investments across multiple entities, which is achieved by the pooling
of a number of small investments into a large bucket. Yet it has been
the subject of perhaps the most elaborate and prolonged regulatory
effort in the history of the country
1.1 EVOLUTION OF MUTUAL FUNDS IN INDIA
The formation of Unit Trust of India marked the evolution of the
Indian mutual fund industry in the year 1963. The primary objective at
that time was to attract the small investors and it was made possible
through the collective efforts of the Government of India and the
Reserve Bank of India. The history of mutual fund industry in India can
be better understood divided into following phases:
Phase 1. Establishment and Growth of Unit Trust of India - 1964-87
Unit Trust of India enjoyed complete monopoly when it was
established in the year 1963 by an act of Parliament. UTI was set up by
the Reserve Bank of India and it continued to operate under the
regulatory control of the RBI until the two were de-linked in 1978 and
the entire control was transferred in the hands of Industrial
Development Bank of India (IDBI). UTI launched its first scheme in
1964, named as Unit Scheme 1964 (US-64), which attracted the largest
number of investors in any single investment scheme over the years.
UTI launched more innovative schemes in 1970s and 80s to suit
the needs of different investors. It launched ULIP in 1971, six more
schemes between 1981-84, Children's Gift Growth Fund and India Fund
(India's first offshore fund) in 1986, Master share (India’s first equity
diversified scheme) in 1987 and Monthly Income Schemes (offering
assured returns) during 1990s. By the end of 1987, UTI's assets under
management grew ten times to Rs 6700 cr’s.
Phase II. Entry of Public Sector Funds - 1987-1993
The Indian mutual fund industry witnessed a number of public
sector players entering the market in the year 1987. In November
1987, SBI Mutual Fund from the State Bank of India became the first
non-UTI mutual fund in India. SBI Mutual Fund was later followed by
Canbank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank
of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993,
the assets under management of the industry increased seven times to
Rs. 47,004 crores. However, UTI remained to be the leader with about
80% market share.
1992-
93
Amount
Mobilised
Assets Under
Management
Mobilisation
as % of gross
Domestic
Savings
UTI 11,057 38,247 5.2%
Public
Sector1,964 8,757 0.9%
Total 13,021 47,004 6.1%
Phase III. Emergence of Private Sector Funds - 1993-96
The permission given to private sector funds including foreign fund
management companies (most of them entering through joint ventures
with Indian promoters) to enter the mutal fund industry in 1993,
provided a wide range of choice to investors and more competition in
the industry. Private funds introduced innovative products, investment
techniques and investor-servicing technology. By 1994-95, about 11
private sector funds had launched their schemes.
Phase IV. Growth and SEBI Regulation - 1996-2004
The mutual fund industry witnessed robust growth and stricter
regulation from the SEBI after the year 1996. The mobilization of funds
and the number of players operating in the industry reached new
heights as investors started showing more interest in mutual funds.
Investors' interests were safeguarded by SEBI and the Government
offered tax benefits to the investors in order to encourage them. SEBI
(Mutual Funds) Regulations, 1996 was introduced by SEBI that set
uniform standards for all mutual funds in India. The Union Budget in
1999 exempted all dividend incomes in the hands of investors from
income tax. Various Investor Awareness Programmes were launched
during this phase, both by SEBI and AMFI, with an objective to educate
investors and make them informed about the mutual fund industry.
In February 2003, the UTI Act was repealed and UTI was stripped of
its Special legal status as a trust formed by an Act of Parliament. The
primary objective behind this was to bring all mutual fund players on
the same level.
UTI was re-organised into two parts:
1. The Specified Undertaking,
2. The UTI Mutual Fund
Presently Unit Trust of India operates under the name of UTI
Mutual Fund and its past schemes (like US-64, Assured Return
Schemes) are being gradually wound up. However, UTI Mutual Fund is
still the largest player in the industry.
Phase V. Growth and Consolidation - 2004 Onwards
The industry has also witnessed several mergers and acquisitions
recently, examples of which are acquisition of schemes of Alliance
Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund and PNB Mutual
Fund by Principal Mutual Fund. Simultaneously, more international
mutual fund players have entered India like Fidelity, Franklin
Templeton Mutual Fund etc. There were 29 funds as at the end of
March 2006. This is a continuing phase of growth of the industry
through consolidation and entry of new international and private sector
players.
It is estimated that by 2013 March-end, the total assets of all
scheduled commercial banks should be Rs 70,90,000 corer. The
annual composite rate of growth is expected 15.4% during the rest of
the decade. In the last 5 years there is an annual growth rate of 12%.
According to the current growth rate, by year 2015, Mutual fund India
assets will be double
1.2 CONCEPTMutual Fund is a trust that pools the savings of a number of
investors who share a common financial goal. The money thus
collected is then invested in capital market instruments such as
shares, debentures and other securities. The income earned through
these investments and the capital appreciation realized are shared by
its unit holders in proportion to the number of units owned by them.
Thus a Mutual Fund is the most suitable investment for the common
man as it offers an opportunity to invest in a diversified, professionally
managed basket of securities at a relatively low cost. The flow chart
below describes broadly the working of a mutual fund:
Mutual Fund Operation Flow ChartThe simplest mutual funds definition is that they are an
investment group set up by professional investors and headed by an
investment manager. Individuals are then able to invest small amounts
of money into the fund for making a reasonable profit. There are an
incredibly large number of mutual funds. While some mutual funds aim
to produce short term, high yield profits, others look for the long term
profit.
1.3 Role of SEBI and AMFI in Mutual Fund Industry:SEBI formulates policies and regulates the mutual funds to project the
interest of the investors .SEBI notified regulations for the mutual funds in
1993. Thereafter, mutual funds sponsored by private sector entitles were
allowed to enter the capital market
SEBI plays an important role in forming policies and regulates the
mutual funds to protect the interest of the investors. The regulations
for mutual funds was notified by SEBI in 1993 which later paved the
way for private sector entities in the capital market.
As far as mutual funds are concerned, SEBI formulates policies and
regulates the mutual funds to protect the interest of the investors.
SEBI notified regulations for the mutual funds in 1993. Thereafter,
mutual funds sponsored by private sector entities were allowed to
enter the capital market. The regulations were fully revised in 1996
and have been amended thereafter from time to time. SEBI has also
issued guidelines to the mutual funds from time to time to protect the
interests of investors.
SEBI Regulations stipulate that at least one of the two exit routes is
provided to the investor i.e. either repurchase facility or through listing
on stock exchanges.
1.4 THE CHARACTERISTICS OF MUTUAL FUNDS Below are some of the common characteristics/features of
Mutual Funds.
The ownership is in the hands of the investors who have pooled
in there funds
It is managed by team of investment professionals and other
service providers
The pool of funds in invested in a portfolio of marketable
investments
Brokers are to be paid charges for getting transactions of buying
or selling of shares matured.
Rare in time access to price sensitive information related to
shares
Limited resources do not allow them to have a well balanced
portfolio
Poor knowledge about investment business does not make stock
investment a gainful proposition for them as compared to
professional expertise of fund managers.
Small investors cannot Ancash the opportunity of firm allotment
in case of over subscription of share issue.
Equity Mutual Funds: Predominantly investing in Equity & Equity
related instruments (Diversified)
Sector Funds: Technically called thematic funds, investing in
particular sectors
Index Funds: Investing in BSE listed stocks, managing the funds
passively
Fund of funds: Investing in the best performing Mutual Funds
1.5 TYPES OF MUTUAL FUND SCHEMES
Schemes according to Maturity Period:
A mutual fund scheme can be classified into open-ended scheme
or close-ended scheme depending on its maturity period.
Open-ended Fund/ Scheme
An open-ended fund or scheme is one that is available for
subscription and repurchase on a continuous basis. These schemes do
not have a fixed maturity period. Investors can conveniently buy and
sell units at Net Asset Value (NAV) related prices which are declared on
a daily basis. The key feature of open-end schemes is liquidity.
Close-ended Fund/ Scheme
A close-ended fund or scheme has a stipulated maturity period
e.g. 5-7 years. The fund is open for subscription only during a specified
period at the time of launch of the scheme. Investors can invest in the
scheme at the time of the initial public issue and thereafter they can
buy or sell the units of the scheme on the stock exchanges where the
units are listed. In order to provide an exit route to the investors, some
close-ended funds give an option of selling back the units to the
mutual fund through periodic repurchase at NAV related prices. SEBI
Regulations stipulate that at least one of the two exit routes is
provided to the investor i.e. either repurchase facility or through listing
on stock exchanges. These mutual funds schemes disclose NAV
generally on weekly basis.
Schemes according to Investment Objective:
A scheme can also be classified as growth scheme, income
scheme, or balanced scheme considering its investment objective.
Such schemes may be open-ended or close-ended schemes as
described earlier. Such schemes may be classified mainly as follows:
Growth / Equity Oriented Scheme
The aim of growth funds is to provide capital appreciation over
the medium to long- term. Such schemes normally invest a major part
of their corpus in equities. Such funds have comparatively high risks.
These schemes provide different options to the investors like dividend
option, capital appreciation, etc. and the investors may choose an
option depending on their preferences. The investors must indicate the
option in the application form. The mutual funds also allow the
investors to change the options at a later date. Growth schemes are
good for investors having a long-term outlook seeking appreciation
over a period of time.
Income / Debt Oriented Scheme
The aim of income funds is to provide regular and steady income
to investors. Such schemes generally invest in fixed income securities
such as bonds, corporate debentures, Government securities and
money market instruments. Such funds are less risky compared to
equity schemes. These funds are not affected because of fluctuations
in equity markets. However, opportunities of capital appreciation are
also limited in such funds. The NAVs of such funds are affected
because of change in interest rates in the country. If the interest rates
fall, NAVs of such funds are likely to increase in the short run and vice
versa. However, long term investors may not bother about these
fluctuations.
Balanced Fund
The aim of balanced funds is to provide both growth and regular
income as such schemes invest both in equities and fixed income
securities in the proportion indicated in their offer documents. These are
appropriate for investors looking for moderate growth. They generally
invest 40-60% in equity and debt instruments. These funds are also
affected because of fluctuations in share prices in the stock markets.
However, NAVs of such funds are likely to be less volatile compared to
pure equity funds.
Money Market or Liquid Fund
These funds are also income funds and their aim is to provide easy
liquidity, preservation of capital and moderate income. These schemes
invest exclusively in safer short-term instruments such as treasury bills,
certificates of deposit, commercial paper and inter-bank call money,
government securities, etc. Returns on these schemes fluctuate much less
compared to other funds. These funds are appropriate for corporate and
individual investors as a means to park their surplus funds for short
periods.
Gilt Fund
These funds invest exclusively in government securities.
Government securities have no default risk. NAVs of these schemes also
fluctuate due to change in interest rates and other economic factors as is
the case with income or debt oriented schemes.
Index Funds
Index Funds replicate the portfolio of a particular index such as the
BSE Sensitive index, S&P NSE 50 index (Nifty), etc These schemes invest
in the securities in the same weight age comprising of an index. NAVs of
such schemes would rise or fall in accordance with the rise or fall in the
index, though not exactly by the same percentage due to some factors
known as "tracking error" in technical terms. Necessary disclosures in this
regard are made in the offer document of the mutual fund scheme.
There are also exchange traded index funds launched by the mutual
funds which are traded on the stock exchanges
1.6 Benefits of investing in mutual funds:.
Figure showing various advantages of investing in Mutual Funds
PRROFESSIONAL MANAGEMENT:Mutual funds provide the services of experienced and skilled
professionals, backed by a dedicated investment research team that
analyses the performance and prospects of the companies and selects
suitable investments to achieve the objectives of the scheme.
DIVESIFICATION:Mutual funds invest in a anumber of companies across a broad
cross-section of industries and sectors. This diversification reduces the
risk because seldom do all stocks decline at the same time and in the
same proportions. You achieve this diversification through a Mutual
funds with far less money than you can do on your own.
CONVENIENT ADMINISTRATIONInvesting in a mutual fund reduces paperwork and helps you
avoid many problems such as bad deliveries, delayed payments and
follow up with brokers and companies. Mutual funds save your time
and make investing easy and convenient.
RETURN POTENTIALOver a medium to long term, mutual funds have the potential to
provide higher returns as they invest in a diversified basket of selected
securities.
LOW COSTSMutual funds are a relatively less expensive way to invest
compared to directly investing the capital markets because the
benefits of scale in brokerage, custodial and other fees translate into
lower costs for investors.
LIQUIDITY:In open-end schemes, the investor gets the money back
promptly at net asset value related prices from the mutual funds. In
closed-end schemes, the units can be sold o a stock exchange at the
prevailing market price or the investor can avail of the facility of direct
repurchase at NAV related prices by the mutual fund.
TRANSPARENCY:You get regular information on the value of your investment in
addition to disclosure on the specific investments made by your
scheme, the proportion invested in each class of assets and the fund
manager’s investment strategy and outlook
FLEXIBILITY:Through features such as regular investment plans, regular
withdrawal plans and dividend reinvestment plans, you can
systematically invest or withdraw funds according to your needs and
convenience.
AFFORDABILITY:Investors individually may lack sufficient funds to invest in high
grade stocks. A mutual fund because of its large corpus allows even a
small investors to take the benefits of its investment strategy.
CHOICE OF SCHEMES:Mutual funds offer a family of schemes to suit your varying needs
over a lifetime.
WELL REGULATED:All mutual funds are registered with SEBI and they are function
within the provisions of strict regulations designed to protect the
interest of investors. The operations of mutual funds are regularly
monitored by SEBI.
1.7 DISADVANTAGES OF MUTUAL FUNDS
NO CONTROL OVER COSTS:An investor in a mutual fund has no control over the overall cost
of investing. He pays investment management fees as long as he
remains with the fund, albeit in return for the professional
management and research.
NO TAILOR-MADE PORTFOLIOS:Investing through funds means he delegates this decision to the
fund managers. High net worth individuals or large corporate investors
may find this to be a constraint in achieving other objective.
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.
MANAGING A PORTFOLIO OF FUNDS: As the number of funds increase, in order to tailor a portfolio for
himself, an investor may be holding portfolio funds, with the costs of
monitoring them and using hem, being incurred by him.
DELAY IN REDEMPTION: The redemption of the funds though has liquidity in 24-hours
to 3 days takes formal application as well as needs time for
redemption. This becomes cumbersome for the investors.
NON-AVAILABILITY OF LOANS: Mutual funds are not accepted as security against loan. The
investor cannot deposit the mutual funds against taking any kind of
bank loans though they may be his assets.
1.8 RISK INVOLVED IN MUTUAL FUND
MARKET RISK
Sometimes prices and yields of all securities rise and fa ll. Broad
outside influences affecting the market in general lead to this. This is
true, may it be big corporations or smaller mid-sized companies. This is
known as Market Risk.
CREDIT RISK:
The debt servicing ability (may it be interest payments or
repayment of principal) of a company through its cash flows
determines the Credit Risk faced by you. This credit risk is measured
by independent rating agencies like CRISIL who rate companies and
their paper. An „AAA‟ rating is considered the safest whereas a „D‟
rating is considered poor credit quality. A well-diversified portfolio
might help mitigate this risk.
INFLATION RISK:
Inflation is the loss of purchasing power over time. A lot of times
people make conservative investment decisions to protect their capital
but end up with a sum of money that can buy less than what the
principal could at the time of the investment. This happens when
inflation grows faster than the return on your investment. A well-
diversified portfolio with some investment in equities might help
mitigate this risk.
INTEREST RATE RISK:
In a free market economy interest rates are difficult if not
impossible to predict. Changes in interest rates affect the prices of
bonds as well as equities. If interest rates raise the prices of bonds fall
and vice versa. Equity might be negatively affected as well in a rising
interest rate environment. A well-diversified portfolio might help
mitigate this risk.
POLITICAL/GOVERNMENT POLICY RISK:
Changes in government policy and political decision can change
the investment environment. They can create a favorable environment
for investment or vice versa.
LIQUIDITY RISK:
Liquidity risk arises when it becomes difficult to sell the securities
that one has purchased. Liquidity Risk can be partly mitigated by
diversification, staggering of maturities as well as internal risk controls
that lean towards purchase of liquid securities.
CHAPTER 2COMPANY PROFILE
CHAPTER 2
COMPANY PROFILE
NJ India Invest Pvt. Ltd. is one of the leading advisors and
distributors of financial products and services in India. In year 1994, NJ
India Invest Pvt. Ltd was established by Mr. Neeraj Chokse and Mr.
Jignesh Desai in Surat. NJ has over a decade of rich exposure in
financial investments space and portfolio advisory services. From a
humble beginning, NJ over the years has evolved out to be a
professionally managed, quality conscious and customer focused
financial investment advisory & distribution firm.
NJ prides in being a professionally managed, quality focused and
customer centric organization. The strength of NJ lies in the strong
domain knowledge in investment consultancy and the delivery of
sustainable value to clients with support from cutting-edge technology
platform, developed in- house by NJ.
At NJ we believe in …
Having single window, multiple solutions that are
integrated for simplicity and sapience
Making innovations, accessions, value-additions, a
constant process
Providing customers with solutions for tomorrow
which will keep them above the curve, today
NJ has over INR 30 billion* of mutual fund assets under advice
with a wide presence in over 60 locations* in 15 states* in India. The
numbers are reflections of the trust, commitment and value that NJ
shares with its clients.
NJ Wealth Advisors, a division of NJ, focuses on providing
financial planning and portfolio advisory services to premium clients of
high net-worth. At NJ Wealth Advisors, we have developed processes
that focus on providing the best in terms of the advice and the ongoing
management of your portfolio and financial plans.
At NJ, our experience, knowledge and understanding enables us
to provide you with the expected value, in an enhanced way. As a
leading player in the industry, we continue to successfully meet the
expectations of our clients, through meaningful and comprehensive
solutions offered by NJ Wealth Advisors
2.1 VISION & MISSION OF NJ India invest
Vision
To be the leader in our field of business through,
Total Customer Satisfaction
Commitment to Excellence
Determination to Succeed with strict adherence to
compliance
Successful Wealth Creation of our Customers
Mission
Ensure creation of the desired value for our customers,
employees and associates, through constant improvement,
innovation and commitment to service & quality. To provide
solutions which meet expectations and maintain high
professional & ethical standards along with the adherence to the
service commitments.
2.2 PHILOSOPHY:
At NJ our Service and Investing philosophy inspire and
shape the thoughts, beliefs, attitude, actions and decisions of
our employees. If NJ would resemble a body, our philosophy
would be our spirit which drives our body.
Service Philosophy:
Our primary measure of success is customer satisfaction
…
We are committed to provide our customers with
continuous, long-term improvements and value-additions to
meet the needs in an exceptional way. In our efforts to
consistently deliver the best service possible to our customers,
all employees of NJ will make every effort to:
Think of the customer first, take responsibility, and make prompt
service to the customer a priority
Deliver upon the commitments & promises made on time
Anticipate, visualize, understand, meet, exceed our customer’s
needs
Bring energy, passion & excellence in everything we do
Be honest and ethical, in action & attitude, and keep the
customer’s interest
Strengthen customer relationships by providing service in a
thoughtful &
Proactive manner and meet the expectations, effectively
Investing Philosophy:
We aim to provide Need-based solutions for long-term wealth
creation and also to provide all customers of NJ, directly or indirectly,
with true, unbiased, need-based solutions and advice that best meets
their stated & un-stated needs. In our efforts to provide quality
financial & investment advice, we believe that Clients want need-based
solutions, which fits them
Long-term wealth creation is simple and straight Asset-Allocation
is the ideal & the best way for long-term wealth creation Educating and
disclosing all the important facets which the customer needs to be
aware of.
The solutions must be unbiased, feasible, practical, executable,
measurable and flexible constant monitoring and proper after-sales
service is critical to complete the on-going process
At NJ our aim is to earn the trust and respect of the employees,
customers, partners, regulators, industry members and the community
at large by following our service and investing philosophy with
commitment and without exceptions.
2.3 MANAGEMENTThe management at NJ brings together a team of people with
wide experience and knowledge in the financial services domain. The
management provides direction and guidance to the whole
organization. The management has strong visions for NJ as a globally
respected company providing comprehensive services in financial
sector.
The Customer First‟ philosophy in deeply ingrained in the
management at NJ. The aim of the management is to bring the best to
the customers in terms of Range of products and services offered
Quality Customer Service
All the key members of the organization put in great focus on the
processes & systems under the diverse functions of business. The
management also focuses o n utilizing technology as the key enabler
for all the activities and to leverage the technology for enhancing
overall customer experience.
2.4 SERVICE STANDARDS:
Service in words, service in action
Service is the key to unlocking customer satisfaction, which
again is key for sustainability of any business. At NJ we understand this
very well. NJ has set strict processes in place to deliver quality services
to customers. At NJ strict quality service standards are set and a well-
defined process is established and followed religiously by our quality
customer service teams. Performance is evaluated on a frequent basis
and glitches are ironed out.But quality service also involves quality
people in addition to processes. NJ gives significant focus to the proper
training and development of the people involved in the service delivery
chain
Further we,
Have well-defined "Privacy Policy" to keep clients‟ information
confidential internal audits done on the same at regular intervals
Receive various statistics which are analyzed on an ongoing basis to
improve the service standards
We are committed to improve and enhance our services and
undertake new service initiatives. Such and Other services
differentiate us with other service providers in the industry.
Our Service Commitments
The service commitments are to guide the actions of the people
at NJ. Clearly stated, customers can freely communicate any such
actions/events wherein they feel that any of the following
commitments have been breached / compromised. At NJ we desire to
honor our commitments at all points of time and to all our customers
without any bias.
To provide customer- focused need-based valued services
To provide reliable, accurate and timely information.
To maintain all records in privacy.
To optimize services/benefits at least justifiable cost.
To develop and grow the customers‟ business.
To provide constructive after sales service.
To honor our service commitments.
2.5 PRODUCTS:
Mutual funds
Reality
Insurance
Fixed Deposits
PMS
Mutual funds:
A mutual fund is an investment that pools money from many
individuals and invests it according to the fund's stated objectives.
Professional money managers make investment decisions on behalf of
fund investors, buying and selling investments such as money market
investments, bonds and stocks.
Reality Desk:The growth is the result of the structural changes taking place in
the economy supported by the strong fundamentals and a favorable
demographic profile. The developments in the Real Estate sector
symbolize this changing face of India. . The changing landscape offers
a miscellany of great opportunities and greater challenges. Riding past
the obscurity with sense and executing functions with efficiency, will
be he key to turning your realty aspirations into a reality. At NJ India
Realty, we understand the challenges in shaping reality from your
realty aspirations. With our fully integrated end-to-end service model
we offer solutions that would enable you to meet the challenges of
development, fortify your own transformation and exploit the
opportunities available in the Indian realty sector. At NJ India Realty,
we have made backward & forward integration of value-added services
to the core-realty services which lie at the heart of the business. NJ
India Realty has a rich experience and a vast repertoire in project
planning & execution in the realty domain. The strong processes and
systems in place ensure the effective & timely execution of the
projects. High- quality assurance forms the under-current in the entire
value-chain of service delivery.
Insurance:Life insurance offers a way to replace the loss of income that
occurs when someone dies. Life insurance is insurance for you and
your family’s peace of mind. With a life insurance policy in place you
can:
Provide security to your family
Protect your home mortgage, loans, credit card borrowings etc.
Provide finance to your loved ones to achieve their goals in your
absence
Ensure that your family is able to maintain their lifestyle, no
matter what happens
Take care of your estate planning needs
Look at other retirement saving/investment vehicles
Fixed Deposits:
Company fixed deposits is a fixed deposit scheme offers by a
company. It works similar to a bank deposit where you earn interest income.
Company FD’s offer much higher returns than bank FD’s. Since they entail
higher risks. The higher the risk, the higher is the interest rate offered.
Furthermore, company fixed deposits are unsecured. This means, you have
to lien on the assets of company, in case it goes into financial difficulties and
is wound up. Hence it is of utmost importance to obtain professional financial
advice with regards to company Fixed Deposits.
Portfolio Management Services (PMS):
Portfolio Management Services (PMS) is a sophisticated
investment vehicle that offers a customized investing into stocks, fixed
income products, cash, other structured products and mutual funds
units etc. to meet specific investment objectives. Though, PMS is
managed by a professional managers, it has potential to address the
personal preferences tailored into the investment portfolio giving the
freedom and flexibility required for achieving the financial goals.
NJ’s main focus is though on mutual funds advisory and
distribution. At NJ, we believe that mutual funds, as an asset class, can
be looked at for almost all of the financial needs
Recognitions:
Some of the awards and recognitions that company have received in
past.
Year 2000For outstanding performance presented by Chairman, Prudential
Plc, at London.
Year 2002:For outstanding performance presented by group Chief
Executive,
Prudential Plc,. At London.
Year 2003 For outstanding performance presented by group chief
executive, prudential Plc. At London.
Year 2004Among most valued business associates presented by HDFC
standard Live at Edinburgh, Scotland
Year 2004For outstanding performance by Deputy CEO, Prudential
Singapore at Malaysia.
Year 2006Award for mobilizing the Highest Number of SIP’s at National
Level by Fidelity Mutual Fund Plc at Mumbai
CHAPTER- 3MUTUAL FUNDS A FINANCIAL PLANNING TOOL
CHAPTER -3
MUTUAL FUNDS A FINANCIAL PLANNING TOOL
Life is a roller coaster ride full of ups and downs. In theory,
everybody knows what we have to save for. Retirement, child’s
education, children’s marriage, medical emergencies, family
obligations and many more such responsibilities that life brings with it.
But no matter how much you save, the truth is it’s never enough.
That’s probably why, we need a plan. A plan with a purpose to not
only save and eventually help create a lifelong corpus. We bring to you
some simple financial planning tools to help you take your first steps in
creating this corpus:
Financial Planning is based on the premise that every individual has
certain basic financial needs that are expressed at various stages of
life (getting married, buying assets like homes, vehicles, or providing
for your child's education and wedding and retiring finally). With the
help of Financial Planning, you can prepare yourself well in time for all
these goals.
Financial Planning is an approach to building long term relationships
with clients. It is also a need for large sections of investors. This unit
introduces the concept of financial planning
3.1 Need Financial PlanningYou may have many dreams, needs and desires. For example, you
could be dreaming of:
Owning a new car
Buying a dream house
Providing your children with the best education
Planning a grand wedding for your children
Having a great time after your retirement
3.2 Financial Planning:Everyone has needs and aspirations. Most needs and aspirations
call for a financial commitment. Providing for this commitment
becomes a financial goal. Fulfilling the financial goal sets people on the
path towards realizing their needs and aspirations. People experience
happiness, when their needs and aspirations are realized within an
identified time frame. For example, a father wants his son, who has
just passed his 10th standard Board examinations, to become a doctor.
This is an aspiration. In order to realize this, formal education
expenses, coaching class expenses, hostel expenses and various other
expenses need to be incurred over a number of years. The estimated
financial commitments towards these expenses become financial
goals. These financial goals need to be met, so that the son can
become a doctor. Financial planning is a planned and systematic
approach to provide for the financial goals that will help people realize
their needs and aspirations, and be happy.
Meaning of financial planning
Identifying your current financial status
Listing and prioritizing your goals
Creating a sound investment plan to achieve them
Monitoring the plan to facilitate swift corrective action
Assessment of Financial Goals:The financial goals related to
Owning a new car
Buying a dream house
Providing your children with the best education
Planning a grand wedding for your children
Having a great time after your retirement
3.3 Will Financial Planning help youInstead of investing in an ad-hoc manner, Financial Planning helps
you take a holistic, all-round view. Briefly, Financial Planning
comprises:
Investment Planning: To make your wealth grow
Cash Flow Planning: To provide for assets and meet the periodic
cash requirements
Tax Planning: To save on taxes and increase your income
Insurance Planning: To protect yourself, your family and your
assets
Children's Future Planning: To give your children a financially
secure future
Retirement Planning: Because retirement is a time to relax, not
to get worried
3.4 Meaning of Mutual Fund? A Mutual Fund is a trust that pools the savings of a number of
investors who share a common financial goal. The corpus of the fund is
then deployed in investment alternatives (these could be equities,
debentures / bonds or money market instruments.) that help to meet
predefined investment objectives. The income earned through these
investments are shared by its unit holders in proportion to the number
of units they own.
Does a Mutual Fund appreciate your investment?The mutual fund manager invests money into various stocks of
various companies and different sectors. You own part of this fund
based on amount you invest. The beauty is that you can benefit with
returns which are as high as equity markets or if you want have a safe
investment like that of debt instruments. It is not an alternative option
to stocks and bonds; in fact, it invests into stock, bond, money market
and such other securities.
Concept of Mutual FundMutual fund is a mechanism by means of which a lot many
investors chip in their savings to form a common pool of money. Now,
this is invested in line with some pre decided objectives. Ownership of
fund is “Mutual” and it belongs to everyone who invested in the same
proportion of the amount contributed by them to the fund.
Need to invest in a Mutual Fund:Investor who doesn’t have the time to study and monitor the
market constantly, or the deep understanding of the financial market,
a Mutual Fund offers an opportunity to invest in a diversified,
professionally managed basket of securities at a relatively low cost.
Benefits of investing in a mutual fundThere are many benefits of investing in mutual funds, below are
some of the main benefits which will help you understand mutual funds
and it benefits better.
Professional Management: Your money is managed by experienced fund managers using
who are experts in their field, after much solid research and in-depth
study.
Constant monitoring:
Your investments are monitored on an ongoing basis for best
returns.
Research:
A thorough study is made before investing. Market conditions,
global trends, industry growth predictions, sector future, Company
profile, financials, growth potential … everything is considered.
Liquidity: Open-ended mutual funds are priced daily and are always willing
to buy back units from investors. This means that investors can sell
their investments in mutual fund anytime without worrying about
finding a buyer at the right price.
Diversification:
Mutual funds aim to minimize risk through diversification by
investing in a number of companies across a broad section of
industries and sectors. Through Mutual Funds, you can achieve
diversification that would have otherwise not been possible.
Tax Efficiency:
The dividends are tax-free in the hands of the investor. . Also
Investments for over 12 months qualify for long-term capital gains,
which are currently exempt from tax. For Resident Indians there is no
TDS on redemption of the units under the Indian IncomeTaxAct1961.
Transparency:
Prices of open ended mutual funds are declared daily. Regular
updates on the value of your investment are available.
Regulated industry:
Mutual funds are registered with SEBI and they function under
strict regulations designed to protect the interests of investors.
The different options that mutual funds offer:Investors have varying investment needs. To meet this, Mutual
Funds offer various investment plans like.
Growth Option
Dividend is not paid-out under a Growth Plan and the investor
realises only the capital appreciation on the investment.
Dividend Payout OptionDividends are paid-out to investors under a Dividend Payout
Option. However, the NAV of the mutual fund scheme falls to the
extent of the dividend payout.
Dividend Re-investment Plan
The dividend accrued on mutual funds is automatically re-
invested in purchasing additional units in open-ended funds.
Insurance Plan
These schemes offer insurance cover as part of the investment
toinvestors.
Systematic Investment Plan (SIP)
Investors are given the option of giving post-dated cheques (or a
direct debit of the bank account) in favor of the fund. The investor is
allotted units on a pre-determined date specified in the Offer
Document at the applicable NAV.
Systematic Encashment Plan (SEP)
The Systematic Encashment Plan allows the investor the facility
to withdraw a pre-determined amount / units from his fund at a pre-
determined interval. The investor's units will be redeemed at the
applicable NAV as on that day.
The Tax Saving Options: An investor can save on taxes by investing under the following sections of the Income Tax Act, 1961
Section 80C (Investment avenues are discussed below in detail)
Section 80D (Health Insurance premium etc.)
Section 80E (Educational loan)
Section 80G (Donation to specified institutions)
Section 80U (deduction for handicapped person)
Section 24 (Housing loan interest)
Under Section 80C for tax deduction an individual could invest up to a maximum limit of Rs 100000 in one or more of the following options put together:
(a) PPF (Public Provident Fund) - under this scheme the maximum investment permissible in a financial year is Rs 70,000(b) EPF ( Employees Provident Fund)(c) Life Insurance Premium (d) Pension Plan premium (under Sec 80CCC)(e) ULIP(f) ELSS (Equity Linked Saving Scheme) - offered by Mutual Funds(g) NSC (National Savings Certificate)(h) 5 yrs Bank Fixed Deposit(i) 5 yrs Post Office Time Deposit(j) Infrastructure Bonds / NABARD Rural Bonds(k) NPS - New Pension Scheme (under Sec 80CCD)
How is the ELSS offered by MFs? How is the return in the ELSS
compared to other schemes like PPF and NSC?
The Equity Linked Savings Scheme (ELSS) could be open-ended
or close-ended in nature. Majority of the ELSS schemes are open-
ended. This means that they are open for subscription on all business
days. As the name suggests, the scheme primarily invests in equity
market by buying equity stocks of companies listed on the stock
exchanges. The units of the scheme are offered at the NAV (net asset
value). The NAV is announced for all business days and keeps changing
primarily depending upon the movement in the prices of stocks held in
the portfolio of the scheme.
Equity as an asset class has given a higher return over the long
term. ELSS has the potential to give substantially higher returns as
compared to that from PPF or NSC over the long-term. The returns
from PPF or NSC are in the range of 8% and at times may not beat the
inflation. Returns from ELSS could fluctuate depending upon the
performance of the equity market and also the stock selection criteria
of the particular fund manager. Returns from ELSS could even be
negative in the short to medium term. As on 31st December, 2009, the
average compounded annualized growth rate (CAGR) over 3 and 5
years period by the ELSS category of Funds was 8.2% & 20.1%
respectively. Taurus Tax Shield is the best performing ELSS over 3
years period. It has given a CAGR of 23.6% and 18.3% over 3 & 5 years
respectively.
ELSS also scores over other tax saving schemes since it offers
tax free return (long-term capital gains and dividends are totally tax
free as per the current tax structure). Only PPF offers tax free return
but it has a maturity period of 15 years.
Net Asset Value (NAV) ? Net Asset Value is the market value of the assets of the scheme
minus its liabilities. The per unit NAV is the net asset value of the
scheme divided by the number of units outstanding on the Valuation
Date.
Are returns from mutual funds guaranteed? Mutual Funds do not offer guaranteed returns to investors. While
SEBI regulations allow Mutual Funds to offer guaranteed returns
subject to the Fund meeting certain conditions, most Funds do not
offer such guarantees. In case of a guaranteed return scheme, the
sponsor or the AMC, guarantees a minimum level of return and makes
good the difference if the actual returns are less than the guaranteed
minimum.
3.5 The Difference between Saving and Investing:Even though the words "saving" and "investing" are often used
interchangeably, there are differences between the two.
Saving provides funds for emergencies and for making specific
purchases in the relatively near future (usually three years or less).
Safety of the principal and liquidity of the funds (ease of converting to
cash) are important aspects of savings Rupeess. Because of these
characteristics, savings Rupeess generally yield a low rate of return
and do not maintain purchasing power.
Investing, on the other hand, focuses on increasing net worth
and achieving long-term financial goals. Investing involves risk (of loss
of principal) and is to be considered only after you have adequate
savings.
Savings vs. Investment
Savings Rs. Investment Rs.
Safe Involve risk
Easily accessible Volatile in short time periods
Low return Offer potential appreciation
Used for short-term goals For mid- & long-term goals
3.6 Investment in a Mutual Fund Makes Money
The fund earns income on its investments, and distributes it to you in the form of dividends.
The fund produces capital gains by selling securities at a profit, and distributes those gains to you.
You sell your shares of the fund at a higher price than you paid for them.
Mutual fund is for all Reasons and Seasons
Offering wide range of services/options/plans. Benefits of professional management at lower cost. Offers liquidity because of daily pricing. Compounding interest within a period. Strategic asset allocation.
The mutual funds are one of the best options for the individual small investor; there are many mutual funds already available for the investor to choose from. It must be realized that the performance of different funds varies from time to time. The Indian investors have moved over to mutual funds in a gradual process. But, there is little doubt that mutual funds will increasingly attract the small investors as compared to other intermediaries such as banks and insurance companies.
CHAPTER - 4RESEARCH METHODOLOGY
CHAPTER - 4
RESEARCH METHODOLOGY
4.1 RESEARCH DESIGNThe research design that is adopted in this study is descriptive
design. Descriptive research is used to obtain information concerning the
current status of the phenomena to describe, "What exists" with respect
to variables or conditions in a situation. The focus of this study was on
self-reported decisions made by various investors regarding the
investment patterns in mutual funds. Thus it involves Statement of the
problem, Identification of information needed to solve the problem,
Selection or development of instruments for gathering the information,
Identification of target population and determination of sampling
procedure, Design of procedure for information collection, Collection of
information, Analysis of information, Generalizations and/or predictions.
4.2 SAMPLING DESIGN
SAMPLING TECHNIQUE:The sampling technique used is simple random sampling. Simple
random sampling is also known as “probability sampling” or “chance
sampling”. Under this sampling design, every item of the universe has an
equal chance of inclusion in the sample.
SAMPLE SIZE:The sample size for this study is 100 investors, consisting of volatile
investors in different investments residing in Bangalore.
SAMPLE UNIT:Individuals, families, corporate, firms and sole proprietors were the
target respondent groups from which the data were collected.
SOURCES OF DATA:Data were collected through both primary and secondary data
sources. Primary data was collected through questionnaires. The research
was done in the form of direct personal interviews and through telephone
interviews.
PRIMARY DATAA primary data is a data, which is collected afresh and for the first
time, and thus happen to be original in character. The primary data with
the help of questionnaire were collected from various investors.
4.3 QUESTIONNAIRE DESIGNProper care has been taken to ensure that the information needed
match the objectives, which in turn match the data collected through the
questionnaire. The basic cardinal rules of Questionnaire design like using
simple and clear words, the logical and sequential arrangement of
questions has been taken care of.
SECONDARY DATASecondary data consist of information that already exists
somewhere, have been collected. Secondary data is collected from
company websites, other websites, company fact sheets, magazines and
brochures.
STATISTICAL TOOLSThe statistical tools used for this analysis are:
Simple Percentage analysis:Percentages are calculated and in certain cases percentages along
with cross tabulation has been calculated.
4.4 OBJECTIVES OF THE STUDY
PRIMARY OBJECTIVES:
Find out the attitude of investors towards Mutual Funds.
Find out the proportion of various investments.
Find out the main usage of Mutual Funds.
SECONDARY OBJECTIVES:
To analyze the perception about mutual funds of Non-investors
4.5 SCOPE OF THE STUDY
The research study undertaken does not probe too much about
whether the respondents have a very fine insight into mutual funds.
The research involves only a general study related to the
investment attitude of investors towards UTI mutual funds. The
research would reveal results regarding the investment attitude of
various investors about UTI mutual funds and thus in turn helps the
organization to identify the attitude of various investors and to
improve the marketing of mutual funds.
The study has helped the researcher to gain real time experience
by interacting with the investors and has helped to analyze “The
attitude of the investors towards UTI Mutual Funds”.
The study will help the concern to work on the areas of importance
for further planning.
The study has been done with a motive to change the attitude of
the investors and help them gain more knowledge on their
investment
4.6 LIMITATIONS OF THE STUDY
The project done is restricted to UTI Mutual funds in surroundings
only.
As the survey was pertaining to investment attitude of investors,
biased information may restrict validity of inference possible.
The study was constrained by limitations of time.
The raw data was collected with the help of structured
questionnaire technique. Therefore study is bounded by the
limitation of this technique.
Questionnaire used for market survey1) Age Profile.
20-30 30-40 40-50 50-above
2) Educational qualification:
Graduate Postgraduate Others
3) How much is your monthly income?
Below 20000 10000-30000 Above 50000
4) What is your occupation?
Professional Government sector
Business Others
5) Do you have any investment till now?
Yes No
6) Which are all the investment products do you know?
FD MF
Postal Schemes Bonds
Stocks Real estate
7) Do you invest in mutual fund? If yes, go to Q No 8.
Yes No
If No,
a) Reasons for not investing in mutual funds?
Not aware of MF’s High Risk
Not any specific reason conservative nature
b) Risk perception about mutual funds.
High risky Moderate
Low risky No idea
c) If not mutual fund where else you would like to invest?
Stocks Banks
Insurance Real estate
Gold Others if any _____
d) Whom you refer most in making investment decision?
ScalesPartially Dependent Independent
Fully Dependent
Financial Advisor
Broker
Friends or Relatives
Internet or Magazines
Co's website
AMFI website
e) Would you like to invest in future?
Yes No
If Yes,
8) How do you come to know the product?
Newspaper InternetFinancial Advisor Banks Existing Investor Others
9) Whom you refer while investing in mutual fund schemes?
ScalesPartially Dependent
Independent
Fully Dependent
Financial Advisor
Broker
Friends or Relatives
Internet or Magazines
Co's website
AMFI website
10) Your investment consists in mutual funds consist of ,
Debt Equity
Gold Debt& Equity
Others
11) While investing in Mutual fund which factor you consider most?
ScalesImportant
Neutral
Unimportant
Liquidity
Risk
Return
Company Reputation
Tax savings
Safety 12) How do you monitor your portfolio?
Scales Monthly quarterlyHalf yearly Yearly
Risk factor NAV Portfolio of securities Profile of fund manager
13) How would you like to receive the returns every year?
Dividend payout Dividend re-investment
Growth in NAV
14) When you invest in Mutual Funds which mode of investment will you prefer?
One Time Investment Systematic Investment Plan
(SIP)
15) Which of these provide information relevant to analyze the performance of your investment?
ScalesImportant
Neutral
Unimportant
Regular updates
Family
Friends Mutual Fund Company
AMFI website
16) Objective for investing in mutual fund?
Scales Rank1 Rank2Rank3 Rank4 Rank5 Rank6
Liquidity
Risk Return/ Long term wealth creation
Company Reputation Tax savings
Safety
Chapter -5
FINDINGS, SUGGESTION AND CONCLUSION
Chapter 5
Analysis and Interpretations
1) Age Profile.
20-30 30-40 40-50 50-above
Out of sample size of 100 people, the percentage variation
was as follows,
9%67%22%2%
From the figure it is found that almost 67% of the investors of Mutual
Funds are of the age 30-40 years, 20% of the investors belong to the
age group of 40-50 years , 10% belong to the age group of 20-30
years and only 2% belongs to age group of above 50. Thus, there are
more of above middle-aged investors who can easily follow the
investment and the market movements.
2) Educational qualification:
Graduate Postgraduate Others
36%49%15%
From the figure we can say the educational qualifications of
respondents was , there were 36% of graduates, 49% of
postgraduates, and only 15% of others.
3) How much is your monthly income?
Below 20000 20000-50000 Above 50000
<20k 20k-50k >50k0
10
20
30
40
50
60
18% of investor’s have a income between Rs below 20000 per
month, 30% of investor’s have a income between Rs. 20000- 50000 per
month, 52% have a income of above 50000 per month.
4) What is your occupation?
Professional Government sector
Business Others
ProfessinalGovt, sector
BusinessOthers
0
5
10
15
20
25
30
35
40
45
From above figure we can say that occupational distribution of
investors is professional 43%, where as Government Sector, Business
Men and Other Sectors are having 15%, 27%, and 15% respectively.
5) Do you have any investment till now?
Yes No
89 11
Out of 100 respondents 89% of them were having investment in
different things like gold, real estate, FD’s, mutual funds, postal
deposits etc, and rest 11% did not had any investment till now.
6) Which are the entire investment products do you know?
FD MF
Postal Schemes Bonds
Stocks Real estate
20182114225
Out of 100 respondents 20 % were for fixed deposits, 18% for Mutual
Funds,
21% for postal deposits, 14% for bonds, 22% for stocks, and only 5%
for real estate.
7) Do you invest in mutual fund? If yes, go to Q No 8.
Yes No
3466
Out of 100, 36% of respondents are already investing in mutual funds,
and 66% of respondents do not invest in mutual funds.
If No,
a) Reasons for not investing in mutual funds?
Not aware of MF’s High Risk
Not any specific reason Conservative nature
0
10
20
30
40
50
60
15
59
3
16
1559316
Out of 100 respondents 15 responded as they were not aware of
mutual funds,59 said it was very risky to invest in mutual funds,10 of
them denied by telling there is not any specific reason to not invest in
mutual funds, and 16 of them said it s because of there conservative
nature.
b) Risk perception about mutual funds.
High risky Moderate
Low risky No idea
High risk Moderate risk Low risk No idea0
10
20
30
40
50
60
59%16%5%20%
Many of non investors perception about mutual funds was recorded as
follows 59% of them said that it s of high risk, 16% said is moderate ,
5% said it s low risky, and 20% said that they have no idea about risk
factor in mutual funds.
c) If not mutual fund where else you would like to invest?
Stocks Banks
Insurance Real estate
Gold Others if any
Stocks Banks Insurance Real estate Glod Others
0
5
10
15
20
25
30
35
19%35%20%15%9%2%
Non mutual fund investors were investing in other investments like mentioned above, 35% of them insisted to put there money in Banks in form of FD’s, followed by 20% said they like to invest in insurance, 19% in stocks, 15% in real estate, 9% in gold, and rest 2 % in other investments.
d) Whom you refer most in making investment decision?
Scales Not Important Important More important
Financial Advisor 25% 55% 20%
Broker 15% 60% 25%
Friends or Relatives 45% 35% 20%
Internet or Magazines 80% 20% 0%
Finan
cial A
dvisor
Broke
r
Frien
ds/Rela
tive
Internet/
Magazi
nes0%
10%20%30%40%50%60%70%80%90%
100%
Fully dependentIndependentPartially dependent
Many investors gave importance to financial advisor i.e., 55% of
them refer advisor when they consider any investment to be
made, 60% refer brokers, 35% said they refer their friends and
relatives, only 20 % consider and refer internet and magazines.
By this we can say that advisors and brokers are most referred
while making any investment.
e) Would you like to invest in future?
Yes No May be
49%31%20%
From above questions we can interprate that 49% of the non mutual
fund investors are willing to invest in future, 31 % are still not willing to
invest in mutual funds because of many reasons, and there were 20%
of respondents who were not sure they opted for may be in future.
If Yes,
8) How do you come to know the product?
Newspaper InternetFinancial Advisor Banks Existing Investor Others
25
20
45
7
1
Mutual fund investors were asked that which media provided more information about the product from listed Medias above, out of which 25% respondents selected newspapers, 20% internet followed by 45% was financial advisors, 2% said banks, 7% reported as existing investors, and only 1 % selected other sources.
9) Whom you refer while investing in mutual fund schemes?
ScalesPartially Dependent
Independent
Fully Dependent
Financial Advisor 28% 32% 40%
Friends or Relatives 68% 18% 22%
Internet or Magazines 15% 85% 0%
Co's website 27% 53% 20%
AMFI website 00% 22% 78%
Financial Advisor
Friends/Relatives
Internet/magazines
Co's website
AMFI website
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
most importantimportantnot important
85%of investors of mutual funds opted the role of internet/magazines important followed by 53% said company website is also important, 32% selected financial advisors, 22% opted AMFI website . out of all this 78% of the respondents think that AMFI website is most important source of information about all mutual funds.
10) Your investment consists in mutual funds consist of ,
Debt Equity
Gold Debt& Equity
Others
Debt Equity Gold D&E Others0
10
20
30
40
50
60
70
80
90
632188924
Many of the mutual fund investors portfolio consist of both debt and equity i.e. 89%, 63% said they have only debt, 21% have only equity, 8% have gold, and 24% had in others.
11) While investing in Mutual fund which factor you consider most?
ScalesImportant
Neutral
Unimportant
Liquidity 56% 25% 19%
Risk 12% 39% 49%
Return 85% 15% 0%
Company Reputation 8% 74% 18%
Tax savings 49% 29% 22%
Safety 22% 78% 0%
LiquidityRiskReturnAMCTax savingsSafety
Here in this question the investors have ranked the factors on the basis of their objectives that for what reason they had invested in that particular scheme. 85% of investors had given returns more importance because every investor want benefits for the risk they had taken by investing in that scheme, 56% of investors had given importance to liquidity because they can withdraw their investment at any time in open-ended scheme. 49% of investors has given importance to tax savings while investing in some particular scheme their amount invested is appreciated as well as they get the tax benefit, 22% has given importance to safety.
12) How do you monitor your portfolio?
Scales Monthly quarterlyHalf yearly Annually
Risk factor 21% 36% 29% 14%NAV 36% 0% 54% 10%Portfolio of securities 0% 15% 39% 46%
Risk factor NAV Portfolio of securities0
10
20
30
40
50
60
MonthlyQuaretlyHalf-yearlyAnnually
Investors considered different factors to monitor their investment, according to risk factor 36% of them consider to monitor quarterly, depending on NAV 54% opted for half yearly, 46% selected annually for portfolio of securities.
13) How would you like to receive the returns every year?
Dividend payout Dividend re-investment
Growth in NAV
34%43%23%
In matters of returns investors response was volatile depending on their occupations, 23% selected dividend payout option, followed by 43% selected dividend re-investment option and 43% a major portions selected growth in NAV.
14) When you invest in Mutual Funds which mode of investment will you prefer?
One Time Investment Systematic Investment Plan (SIP)
46%54%
Mutual fund investors preferred SIP(systematic investment plan) over one time investment, 54% of respondents selected for SIP over lump sum payments , and only 46 % opted for one time investment, any how it depends on their own factors of consideration like income, age, savings, etc.,
15) Which of these provide information relevant to analyze the performance of your investment?
ScalesImportant
Neutral
Unimportant
Regular updates 40% 60% 4%
Mutual Fund Company 60% 40% 0%
AMFI website 65% 35% 0%
Regular updates AMC's AMFI website0
10
20
30
40
50
60
70
ImportantNeutralUnimportant
65% of investors opted AMFI website as good source of information about their investments performance, 60% Investors in mutual funds assume that mutual fund company itself provide information relevant to analyze the performance of their investments.
Whereas 60% of investors were neutral about the updates on their investments, other 40 % preferred regular updates on their portfolios.
16) Objective for investing in mutual fund?
Scales Rank1 Rank2Rank3 Rank4 Rank5 Rank6
Savings
Risk tolerance
Objective for investing in mutual fund
05
1015202530354045
Saving
s
Retur
ns
Divers
ificat
ion
Risk to
leran
ce
Factors/Reasons
No. of investors
NO of investors
Return/ Long term wealth creation
Diversification
Returns has been the main reason for preferring mutual funds as 41% of
the respondents have opted for it, while saving is the reason for 28% of
investor’s, risk tolerance for 23% and diversification for 8% of the
respondents
Findings:
Majority of the investors are above 41 years. Returns earned on
Mutual Funds are the cause for many investors to invest in mutual
funds.
Mutual Funds Friends and Agents are the knowledge providers for
most of the investments for mutual funds.
All the investors agree, “High Risk involves High returns.”
Most of the respondents ranked equity as first; this is clear out
indication that equity is the best alternative to invest.
Majority of respondents feel better returns, tax benefits and safety
are the influencing factor to invest in mutual funds.
Suggestion:
The investors should be given the option of attending investor’s
education programmers’ once in a month.
The information about the products should be revealed exactly to
the investors, and they should be advised on the risks attached to
them.
Programmers creating awareness towards the various products of
Mutual Funds should be conducted especially in the Villages.
Portfolio of the securities should be kept under check so as to
increase the growth of funds, which in turn will increase the
satisfaction of the investors.
Providing proper reports revealing all the information related to the
investment have to be sent to the investors regularly and this can
change the general attitude towards mutual funds.
Conclusions:
In any Mutual Fund Industry investors awareness plays an important
role. With the increasing number of Mutual Fund organizations, there is a
need for every company to educate investors and the general public on
various aspects concerned with the mutual fund investments which in turn
reveals their attitude towards such investments. The Mutual fund industry
is growing at a tremendous pace. A large number of plans have come up
from different financial resources. With the Stock markets soaring the
investors are attracted towards these schemes. Only a small segment of
the investors still invest in Mutual funds and the main sources of
information still are the financial advisors followed by advertisements in
different media.
From the comparative analysis provided in report, it emerges that
each investment alternative has its strengths and weakness. Some
options seek to achieve superior returns, but with correspondingly higher
risk. Other provides safety at the expense of liquidity and growth. Options
such as bank deposits offer safety and liquidity, but at the cost of return.
Mutual funds seek to combine the advantages of investing in each of
these alternatives while dispensing with the shortcoming. Clearly it is in
the investor’s interest to focus his investment on mutual funds.
However, a note of caution is in order. While the mutual funds are
one of the best options for the individual small investors, there are many
mutual funds already available for the investor to choose from. It must be
realized that the performance of different funds varies from time to time.
Also, the Indian mutual fund sector has been in an evolving phase over
the past five years during which time several investors have encountered
some poorly performing funds, while others have been fortunate to be
with good performers.
Bibliography
NEWSPAPERS – ECONOMIC TIMES, BUSINESS LINE, TIMES OF INDIA
MAGAZINE- BUSINESS WORLD
http://www.sebi.gov.in/mf
http://www.taurusmutualfund.com
http://valueresearch.com
http://www.njfundz.com
http://www.AMFI.com