INVESTOR’S ATTITUDE TOWARDS UTI MUTUAL FUNDS(With Special Reference to UTI MUTUAL FUNDS Ltd., COONOOR) A MAJOR PROJECT REPORTINVESTOR’S ATTITUDE TOWARDS UTI MUTUAL FUNDS(With Special Reference to UTI MUTUAL FUNDS Ltd., COONOOR)
SYNOPSIS Mutual funds are seemingly the easiest and the least stressful way to invest in thestock market. Quiet a large amount of money has been invested in mutual funds duringthe past few years. Any investor would like to invest in a reputed Mutual Fundorganization. UTI is one such organization that provides a better overview of the MutualFund industry. Understanding the attitude of investors on their investment would help thecompany to increase their profits. In UTI they believe that the investors attitude wouldresult in profits. The research was done on the topic “Investors Attitude towards UTI MutualFunds”. The study aims at analysing the attitude of the investors towards UTI MutualFunds. The data was collected with the help of a questionnaire. The sample sizeconsidered for the study was 100 wherein all the samples were investors of UTI MutualFunds in Coonoor. The tools used for the analysis include Percentage Analysis and Mean ScoreValues. The analysis was divided into 2 phases which are Personal Factors andInvestment Factors. The study revealed that the investors have a positive attitude towardstheir investments in UTI Mutual Funds. The investors mainly look into the returns earnedfrom the investment. It was found that the awareness towards the risk related to theinvestment was relatively low. Based on the analysis Suggestions for improvement areprovided.
CONTENTSCHAPTER NO. PARTICULARS P.NO List of Tables List of Charts I Introduction 1.1 Mutual Fund Industry 1 1.2 UTI Mutual Funds 8 1.3 Attitude towards UTI Mutual Fund 23 1.4 Scope of the study 28 1.5 Objectives of the study 29 1.6 Limitations of the study 30 II Review of Literature 31 III Research Methodology 45 IV Analysis and Interpretation 49 V Summary 5.1 Findings 105 5.2 Suggestions 107 5.3 Conclusion 108 Bibliography Annexure
LIST OF TABLESTABLE CONTENTS PAGE NO. NO. 4.1 AGE DISTRIBUTION OF INVESTORS IN 50 UTI MUTUAL FUNDS 4.2 GENDER DISTRIBUTION OF INVESTORS 52 4.3 INCOME OF THE INVESTORS 54 4.4 AMOUNT OF MONEY INVESTED IN 56 MUTUAL FUNDS
4.5 QUALIFICATION STANDARD OF 58 INVESTORS4.6 INVESTORS HAVING AN INSURANCE 60 POLICY4.7 REASONS OF PREFERENCE TOWARDS 62 MUTUAL FUNDS4.8 PREFERENCE TOWARDS INVESTING IN 64 MUTUAL FUND IN COMPARISON TO SHARES4.9 NUMBER OF PLANS INVESTORS HAVE 66 INVEST IN MUTUAL FUNDS4.10 MEDIAS THROUGH WHICH INVESTOR’S 68 KNOW ABOUT UTI MUTUAL FUNDS.4.11 INVESTMENT IN DIFFERENT TYPES OF 70 FUNDS4.12 TYPE OF SCHEMES SELECTED BY 72 INVESTORS4.13 REASONS FOR SELECTION OF SCHEMES 744.14 INVESTMENT AND PORTFOLIO 76 ANALYSIS4.15 AWARENESS TOWARDS THE RISK 78 RELATED TO THE SCHEME4.16 RETURNS EXPECTED BY INVESTORS 804.17 PREFERRED OPTIONS BY INVESTORS 82 FOR THEIR INVESTMENTS4.18 FREQUENCY OF INVESTORS 84 MONITORING THE PERFORMANCE OF THEIR INVESTMENT4.19 PREFERENCE OF INVESTORS TOWARDS 86 SIP4.20 AGREEMENT TOWARDS THE 88 STATEMENT “WHEN RETURN IS MORE RISK IS MORE”4.21 RISKS ATTACHED TO THE INVESTMENT 904.22 PAYMENT OPTIONS PROVIDED TO 92
INVESTORS 4.23 RANKING THE OBJECTIVES OF THE 94 SCHEMES 4.24 LEVEL OF SATISFACTION 96 4.25 RELEVENCE OF ANNUAL REPORTS 99 4.26 RELEVENCE OF PUBLICATIONS 101 4.27 INVESTORS PERCEPTION TOWARDS UTI 103 MUTUAL FUNDS LIST OF CHARTSCHART CONTENTS PAGE NO. NO. 4.1 AGE DISTRIBUTION OF INVESTORS IN 51 UTI MUTUAL FUNDS 4.2 GENDER DISTRIBUTION OF INVESTORS 53 4.3 INCOME OF THE INVESTORS 55 4.4 AMOUNT OF MONEY INVESTED IN 57 MUTUAL FUNDS 4.5 QUALIFICATION STANDARD OF 59 INVESTORS 4.6 INVESTORS HAVING AN INSURANCE 61 POLICY 4.7 REASONS OF PREFERENCE TOWARDS 63 MUTUAL FUNDS 4.8 PREFERENCE TOWARDS INVESTING IN 65 MUTUAL FUND IN COMPARISON TO SHARES
4.9 NUMBER OF PLANS INVESTORS HAVE 67 INVEST IN MUTUAL FUNDS4.10 MEDIAS THROUGH WHICH INVESTOR’S 69 KNOW ABOUT UTI MUTUAL FUNDS.4.11 INVESTMENT IN DIFFERENT TYPES OF 71 FUNDS4.12 TYPE OF SCHEMES SELECTED BY 73 INVESTORS4.13 REASONS FOR SELECTION OF SCHEMES 754.14 INVESTMENT AND PORTFOLIO 77 ANALYSIS4.15 AWARENESS TOWARDS THE RISK 79 RELATED TO THE SCHEME4.16 RETURNS EXPECTED BY INVESTORS 814.17 PREFERRED OPTIONS BY INVESTORS 83 FOR THEIR INVESTMENTS4.18 FREQUENCY OF INVESTORS 85 MONITORING THE PERFORMANCE OF THEIR INVESTMENT4.19 PREFERENCE OF INVESTORS TOWARDS 87 SIP4.20 AGREEMENT TOWARDS THE 89 STATEMENT “WHEN RETURN IS MORE RISK IS MORE”4.21 RISKS ATTACHED TO THE INVESTMENT 914.22 PAYMENT OPTIONS PROVIDED TO 93 INVESTORS4.23 RANKING THE OBJECTIVES OF THE 95 SCHEMES4.24 LEVEL OF SATISFACTION 984.25 RELEVENCE OF ANNUAL REPORTS 1004.26 RELEVENCE OF PUBLICATIONS 1024.27 INVESTORS PERCEPTION TOWARDS UTI 104 MUTUAL FUNDS
CHAPTER I INTRODUCTION 1.1 INTRODUCTION TO THE INDUSTRYMUTUAL FUNDS INDUSTRY IN INDIA The origin of mutual fund industry in India is with the introduction of the conceptof mutual fund by UTI in the year 1963. Though the growth was slow, but it acceleratedfrom the year 1987 when non-UTI players entered the industry.In the past decade, Indianmutual fund industry had seen a dramatic improvement, both qualitywise as well asquantitywise. Before, the monopoly of the market had seen an ending phase, the AssetsUnder Management (AUM) was Rs. 67bn. The private sector entry to the fund familyrose the AUM to Rs. 470 bn in March 1993 and till April 2004, it reached the height of1,540 bn. Putting the AUM of the Indian Mutual Funds Industry into comparison, the totalof it is less than the deposits of SBI alone, constitute less than 11% of the total depositsheld by the Indian banking industry. The mutual fund industry is a lot like the film star of the finance business. Thoughit is perhaps the smallest segment of the industry, it is also the most glamorous – in that itis a young industry where there are changes in the rules of the game everyday, and thereare constant shifts and upheavals. The mutual fund is structured around a fairly simpleconcept, the mitigation of risk through the spreading of investments across multipleentities, which is achieved by the pooling of a number of small investments into a largebucket. Yet it has been the subject of perhaps the most elaborate and prolongedregulatory effort in the history of the country.
The main reason of its poor growth is that the mutual fund industry in India isnew in the country. Large sections of Indian investors are yet to be intellectuated with theconcept. Hence, it is the prime responsibility of all mutual fund companies, to market theproduct correctly abreast of selling. Mutual funds are an excellent way to invest in stocks, bonds and other securities.They are a good choice of investment because: • They are managed by professional money managers, so most of the investment research is done for you. (Most investors don’t have the time or know-how to do all the necessary research.) • You diversify your investment risk by owning shares in a mutual fund, instead of buying individual stocks or bonds directly. • Transaction costs are often lower than what you would pay if you invested in individual securities (the mutual fund buys and sells large amounts of securities at a time). For those who are not adept at understanding the stock market, the task of generatingsuperior returns at similar levels of risk is arduous to say the least. This is where MutualFunds come into picture. Mutual Funds are essentially investment vehicles where people with similarinvestment objective come together to pool their money and then invest accordingly.Each unit of any scheme represents the proportion of pool owned by the unit holder(investor). Appreciation or reduction in value of investments is reflected in net assetvalue (NAV) of the concerned scheme, which is declared by the fund from time to time.Mutual fund schemes are managed by respective Asset Management Companies (AMC).Different business groups/ financial institutions/ banks have sponsored these AMCs,either alone or in collaboration with reputed international firms. Several internationalfunds like Alliance and Templeton are also operating independently in India. Many more
international Mutual Fund giants are expected to come into Indian markets in the nearfuture.The Evolution The formation of Unit Trust of India marked the evolution of the Indian mutual fundindustry in the year 1963. The primary objective at that time was to attract the smallinvestors and it was made possible through the collective efforts of the Government ofIndia and the Reserve Bank of India. The history of mutual fund industry in India can bebetter 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 year1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and itcontinued to operate under the regulatory control of the RBI until the two were de-linkedin 1978 and the entire control was transferred in the hands of Industrial DevelopmentBank of India (IDBI). UTI launched its first scheme in 1964, named as Unit Scheme1964 (US-64), which attracted the largest number of investors in any single investmentscheme over the years. UTI launched more innovative schemes in 1970s and 80s to suit the needs of differentinvestors. It launched ULIP in 1971, six more schemes between 1981-84, Childrens GiftGrowth Fund and India Fund (Indias first offshore fund) in 1986, Mastershare (Inidas
first equity diversified scheme) in 1987 and Monthly Income Schemes (offering assuredreturns) during 1990s. By the end of 1987, UTIs assets under management grew tentimes to Rs 6700 crores.Phase II. Entry of Public Sector Funds - 1987-1993 The Indian mutual fund industry witnessed a number of public sector players enteringthe market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank ofIndia became the first non-UTI mutual fund in India. SBI Mutual Fund was laterfollowed by Canbank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bankof India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assetsunder management of the industry increased seven times to Rs. 47,004 crores. However,UTI remained to be the leader with about 80% market share. Mobilisation Amount Assets Under as % of gross 1992-93 Mobilised Management Domestic Savings UTI 11,057 38,247 5.2% Public 1,964 8,757 0.9% Sector Total 13,021 47,004 6.1%
Phase III. Emergence of Private Secor Funds - 1993-96 The permission given to private sector funds including foreign fund managementcompanies (most of them entering through joint ventures with Indian promoters) to enterthe mutal fund industry in 1993, provided a wide range of choice to investors and morecompetition in the industry. Private funds introduced innovative products, investmenttechniques and investor-servicing technology. By 1994-95, about 11 private sector fundshad launched their schemes.Phase IV. Growth and SEBI Regulation - 1996-2004 The mutual fund industry witnessed robust growth and stricter regulation from theSEBI after the year 1996. The mobilisation of funds and the number of players operatingin the industry reached new heights as investors started showing more interest in mutualfunds. Investors interests were safeguarded by SEBI and the Government offered taxbenefits 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 fromincome tax. Various Investor Awareness Programmes were launched during this phase,both by SEBI and AMFI, with an objective to educate investors and make them informedabout the mutual fund industry. In February 2003, the UTI Act was repealed and UTI was stripped of its Special legalstatus as a trust formed by an Act of Parliament. The primary objective behind this was tobring 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 itspast schemes (like US-64, Assured Return Schemes) are being gradually wound up.However, UTI Mutual Fund is still the largest player in the industry. In 1999, there was a significant growth in mobilisation of funds from investorsand assets under management which is supported by the following data: GROSS FUND MOBILISATION (RS. CRORES) PUB PRIV LIC ATE FROM TO UTI TOTAL SEC SECT TOR OR 31- 11,6 01-April-98 March 1,732 7,966 21,377 79 -99 31- 13,5 01-April-99 March 4,039 42,173 59,748 36 -00 31- 12,4 01-April-00 March 6,192 74,352 92,957 13 -01
31- 4,64 13,61 1,46,201-April-01 March 1,64,523 3 3 67 -02 31- 5,50 22,92 2,20,501-April-02 2,48,979 Jan-03 5 3 51 31- 7,25901-Feb.-03 March * 58,435 65,694 * -03 31- 68,55 5,21,601-April-03 March - 5,90,190 8 32 -04 31- 1,03, 7,36,401-April-04 March - 8,39,662 246 16 -05 31- 1,83, 9,14,7 10,98,1501-April-05 March - 446 12 8 -06 ASSETS UNDER MANAGEMENT (RS. CRORES) PUB PRIV U TO LIC ATE AS ON T TA SEC SECT I L TOR OR 31- 53,32 8,29 68, March- 6,860 0 2 472 99 GROWTH IN ASSETS UNDER MANAGEMENT
Phase V. Growth and Consolidation - 2004 Onwards The industry has also witnessed several mergers and acquisitions recently, examplesof which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, SunF&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously,more international mutual fund players have entered India like Fidelity, FranklinTempleton Mutual Fund etc. There were 29 funds as at the end of March 2006. This is acontinuing phase of growth of the industry through consolidation and entry of newinternational and private sector players. Indian mutual fund industry reached Rs 1,50,537 crore by March 2004. It is estimatedthat by 2010 March-end, the total assets of all scheduled commercial banks should be Rs40,90,000 crore. The annual composite rate of growth is expected 13.4% during the restof the decade. In the last 5 years there is an annual growth rate of 9%. According to thecurrent growth rate, by year 2010, Mutual fund India assets will be double
1.2 INTRODUCTION TO THE COMPANYUTI MUTUAL FUNDSVision To be the most Preferred Mutual Fund.Our mission is to make UTI Mutual Fund: • The most trusted brand, admired by all stakeholders • The largest and most efficient money manager with global presence • The best in class customer service provider • The most preferred employer • The most innovative and best wealth creator • A socially responsible organisation known for best corporate governanceGenesis Jan 14, 2003 is when UTI Mutual Fund started to pave its path following thevision of UTI Asset Management Company Limited, who has been appointed by the UTITrustee Company Limited for managing the schemes of UTI Mutual Fund and theschemes transferred/migrated from the erstwhile Unit Trust of India. The UTI Asset Management Company provides professionally managed backoffice support for all business services of UTI Mutual Fund (excluding fundmanagement) in accordance with the provisions of the Investment ManagementAgreement, the Trust Deed, the SEBI (Mutual Funds) Regulations and the objectives ofthe schemes. State-of-the-art systems and communications are in place to ensure aseamless flow across the various activities undertaken by UTIMF.
UTI AMC is a registered portfolio manager under the SEBI (Portfolio Managers)Regulations, 1993 on 3rd February 2004, for undertaking portfolio management servicesand also acts as the manager and marketer to offshore funds through its 100 % subsidiary,UTI International Limited, registered in Guernsey, Channel Islands.Assets under Management UTI Asset Management Company presently manages a corpus of over Rs. 56,854Crores as on 31st Dec 2007 (source: www.amfiindia.com) . UTI Mutual Fund has a trackrecord of managing a variety of schemes catering to the needs of every class of citizenry.It has a nationwide network consisting 79 UTI Financial Centres (UFCs) and UTIInternational offices in London, Dubai and Bahrain. With a view to reach to commoninvestors at district level, 3 satellite offices have also been opened in select towns anddistricts. They have well-qualified, professional fund management teams, who have beenhighly empowered to manage funds with greater efficiency and accountability in the soleinterest of unit holders. The fund managers are also ably supported with a strong in-housesecurities research department. To ensure better management of funds, a riskmanagement department is also in operation.ReliabilityUTIMF has consistently reset and upgraded transparency standards. All the branches,UFCs and registrar offices are connected on a robust IT network to ensure cost-effectivequick and efficient service. All these have evolved UTI Mutual Fund to position as adynamic, responsive, restructured, efficient and transparent SEBI compliant entity.
Work culture : We believe in providing an environment that encourages employees to achieve andfulfil personal goals and that of the company. When the combined force of both, theemployees and the company flow in one direction, there is ample amount of possibilities,opportunities and growth. The work culture at UTI Mutual Fund is simple – work ispriority and the rest follows. Our relationship with our employees works both ways, theygive their best and we give them the best, we strike the right balance at work.Employee Benefits • Competitive salaries • Comfortable work environment • Career opportunities • Insurance benefits • Recreational amenities UTI Asset Management Company Ltd. (UTI AMC) has been promoted by StateBank of India, Life Insurance Corporation of India, Punjab National Bank and Bank ofBaroda, each holding 25% of the paid up capital. UTI AMC is the investment manager tothe schemes of UTI Mutual Fund. It also manages offshore funds and provides support tothe Specified Undertaking of the Unit Trust of India. It is the holding company for UTI Venture Funds Management Company whichmanages venture funds and UTI International Ltd., which markets offshore funds tooverseas investors. UTI AMC is a SEBI registered Portfolio Manager bearingregistration number INP 000000860 and offers Discretionary, Non-Discretionary andAdvisory services to High Net Worth clients, Corporate and Institution Unit Trust of India was created by the UTI Act passed by the Parliament in1963.For more than two decades it remained the sole vehicle for investment in the capital
market by the Indian citizens. In mid- 1980s public sector banks were allowed to openmutual funds. The real vibrancy and competition in the MF industry came with thesetting up of the Regulator SEBI and its laying down the MF Regulations in 1993.UTImaintained its pre-eminent place till 2001, when a massive decline in the market indicesand negative investor sentiments after Ketan Parekh scam created doubts about thecapacity of UTI to meet its obligations to the investors. This was further compounded bytwo factors; namely, its flagship and largest scheme US 64 was sold and re-purchased notat intrinsic NAV but at artificial price and its Assured Return Schemes had promisedreturns as high as 18% over a period going up to two decades..!! Fearing a run on the institution and possible impact on the whole marketGovernment came out with a rescue package and change of management in2001.Subsequently, the UTI Act was repealed and the institution was bifurcated into twoparts .UTI Mutual Fund was created as a SEBI registered fund like any other mutualfund. The assets and liabilities of schemes where Government had to come out with abail-out package were taken over directly by the Government in a new entity calledSpecified Undertaking of UTI, SUUTI. SUUTI holds over 27% stake Axis Bank. In orderto distance Government from running a mutual fund the ownership was transferred tofour institutions; namely SBI, LIC, BOB and PNB, each owning 25%. Certain reformslike improving the salary from PSU levels and effecting a VRS were carried out UTI lostits market dominance rapidly and by end of 2005,when the new share-holders actuallypaid the consideration money to Government its market share had come down to close to10%! A new board was constituted and a new management inducted. Systematic studyof its problems role and functions was carried out with the help of a reputed internationalconsultant. Fresh talent was recruited from the private market; organizational structurewas changed to focus on newly emerging investor and distributor groups and massivechanges in investor services and funds management carried out. Once again UTI hasemerged as a serious player in the industry. Some of the funds have won famous awards,including the Best Infra Fund globally from Lipper. UTI has been able to benchmark its
employee compensation to the best in the market, has introduced Performance RelatedPayouts and ESOPs. The UTI Asset Management Company has its registered office at: UTI Tower, GnBlock, Bandra - Kurla Complex, Bandra (East), Mumbai - 400051.It has over 70 schemesin domestic MF space and has the largest investor base of over 9 million in the wholeindustry. It is present in over 450 districts of the country and has 100 branches called UTIFinancial Centers or UFCs. About 50% of the total IFAs in the industry work for UTI indistributing its products! India Posts, PSU Banks and all the large Private and ForeignBanks have started distributing UTI products. The total average Assets UnderManagement (AUM) for the month of June 2008 was Rs. 530 billion and it ranked fourth.In terms of equity AUM it ranked second and in terms of Equity and Balanced SchemesAUM put together it ranked FIRST in the industry. This measure indicates its revenue-earning capacity and its financial strength. Besides running domestic MF Schemes UTI AMC is also a registered portfoliomanager under the SEBI (Portfolio Managers) Regulations. It runs different portfolios foris HNI and Institutional clients. It is also running a Sharia Compliant portfolio for itsOffshore clients. UTI tied up with Shinsei Bank of Japan to run a large size India-centricportfolio for Japanese investors. For its international operations UTI has set up its 100% subsidiary, UTIInternational Limited, registered in Guernsey, Channel Islands. It has branches inLondon, Dubai and Bahrain. It has set up a Joint Venture with Shinsei Bank in Singapore.The JV has got its license and has started its operations. In the area of alternate assets, UTI has a 100% subsidiary called UTI Ventures atBangalore This company runs two successful funds with large international investorsbeing active participants. UTI has also launched a Private Equity Infrastructure Fundalong with HSH Nord Bank of Germany and Shinsei Bank of Japan.
PRODUCTS AVAILABLEUTI Mutual Fund UTI Asset Management Company Ltd. manages the activities of UTI MutualFund in India. The mutual funds organization offers a variety of schemes to Indiancustomers. UTI Mutual Fund has several offices located across the country of India. Thecorporate head office of UTI Mutual Fund is situated in Mumbai.Subsidiaries:UTI Mutual Fund has 2 subsidiaries: UTI Venture Funds and UTI International Ltd.UTI Venture Funds: UTI Venture Funds is a private equity organization in India. The main focus areaof UTI Venture Funds is growth capital. Many of the Indian entrepreneurs have benefitedfrom their dealings with UTI Venture Funds.UTI International Ltd: UTI International Ltd. has significant presence in international locations like London,Dubai and Bahrain. UTI has plans to further develop its offshore mutual funds unit.Awards:Some of the important awards won by UTI Mutual Fund have been listed below. • Lipper Fund Awards- 2008
• ICRA Mutual Funds Award- 2007 • Several ICRA 5 Star and 7 Star AwardsUTI Mutual Fund Sponsors:Some of the biggest names in the financial and banking sector in India continue tosponsor UTI Mutual Fund. The sponsors of UTI Mutual Fund have been listed below. • State Bank of India • Bank of Baroda • Punjab National Bank • Life Insurance Corporation of IndiaUTI Mutual Fund Schemes: UTI Mutual Fund offers a number of useful schemes to its customers. Some of thepopular products launched by the mutual fund organization have been listed below. • UTI Asset Fund • UTI Index Funds • UTI Balanced Fund • UTI Contra Fund
SOME OF THE FUNDS OF UTI WITH THEIR OBJECTIVESUTI Master Share An equity fund aiming to provide benefit of capital appreciation and incomedistribution through investing in equity.UTI Master Plus (Equity) Capital appreciation through investments in Equities and equity relatedinstruments, convertible debentures, derivatives in India and also in overseas markets.UTI Equity Fund UTI equity fund is opened-ended equity scheme with an objective of investing atleast 80% of its funds in equity and equity related instrument with medium to high riskprofile and up to 20% in debt and money market instrument with low to medium riskprofile.UTI Contra Fund To provide long-term capital appreciation / dividend distribution throughinvestments in listed equities and equity relayed instruments. The fund offers anopportunity to benefit from the impact of non rational investors behavior by focusing onstocks that are currently under valued because of emotional and behavioral patternspresent in the stock market
UTI Wealth Builder To achieve long term capital appreciation by investing predominantly in adiversified portfolio of equity and equity related instruments.UTI Infrastructure Fund An open-ended equity fund with the objective to provide capital appreciationthrough investing in the stocks of the companies engaged in the sectors like Metals,Building materials, oil and gas, power, chemicals, engineering etc. The fund will invest inthe stocks of the companies which form part of infrastructure industries.UTI Dividend fund An open-ended equity scheme which aims to provide medium to long term capitalgains and/or dividend distribution by investing in equity or equity related instruments,which offer high dividend yield.UTI Services Industries Fund An open-ended equity scheme which invests in the equities of the Services Sectorcompanies in the country. One of the growth sector funds aiming to provide growth ofcapital over a period of time as well as to make income distribution by investing thefunds in stocks of companies engaged in service sectors.UTI Market Value Fund An open-ended equity fund investing in stocks which are currently under valuedto the future earning potential and carry medium risk profile to provide ‘CapitalAppreciation’
UTI mid Cap Fund An open-ended equity scheme which aims to provide ‘Capital appreciation’ byinvesting in mid cap stocks.UTI MNC Fund The investments of funds under the scheme will be predominantly in stocks ofMNCs and other Liquid stocks.UTI Banking Sector Fund An open-ended equity fund with the objective to provide capital appreciationthrough investments in the stocks of the companies/institutions engaged in the bankingand financial services activities.UTI Energy Fund To provide capital appreciation through investments in the stocks of thecompanies/institutions engaged in the banking and energy providing sectors.UTI Pharma & Healthcare Fund An open-ended fund which exclusively invests in the equities of the Pharma &Healthcare sector companies.UTI Transportation & Logistics Fund An open-ended equity fund with the objective to provide capital appreciationthrough investments in the stocks of the companies/institutions engaged in theTransportation and Logistics Sector.
UTI Equity Tax saving Plan It aims at enabling members to avail tax rebate and also to participate in thebenefits of growth through investments in equity and equity related instruments.UTI Master Equity Plan Unit Scheme The scheme aims at securing for the investors capital appreciation by investingthe funds of the scheme in equity shares of companies with good growth prospects.UTI Nifty Index Fund (Equity Index) MIF is a passively managed fund with the objective to invest in securities ofcompanies comprising the S&P CNX Nifty in the same weightage as that of S&P CNXNifty with the intention of minimizing the performance difference between the S&P Niftyand the fund and keep tracking error to the minimum.UTI Index Select Fund It invests in select stock of the BSE Sensex and the S&P CNX Nifty. The funddoes not replicate any of the indices but aims to attain performance of the indices.UTI Sunder Provide returns that closely correspond to the performance & yield of S&P CNXNifty index.UTI Balanced Fund An open ended balanced fund investing between 40% to 75% in equity/equity
related securities and the balance in debt with a view to generate regular income withcapital appreciation.UTI Children’s Career Balanced Plan To invest in the name of the children up to the age of 15 years so as to providethem, after they attend the age of 18 years, a means to receive scholarship to meet thecost of higher education and/or to help them in setting up a profession, practice orbusiness or enabling them to set up a home or finance the cost of other social obligations.UTI Retirement Benefit Pension Fund To provide pension to investors particularly self employed persons.UTI G-Sec Fund Debt Invests only in Central government securities including call money, treasury billsand repos of varying maturities with a view to generate credit risk free returnUTI Gilt Advantage Fund To generate credit risk-free return through investment in sovereign securitiesissued the Central and / or a State Government.UTI Bond Fund (Debt)Open – end pure debt scheme, which invests in rated corporate Debt papers andgovernment securities with relatively low risk and easy liquidity.
UTI Liquid Fund Cash PlanThe objective of the scheme is to generate reasonable returns with low risk and highliquidity from a portfolio of money market securities and high quality of debt instrumentFUND PERFORMANCE Fund Performance is an exclusive section wherein the data quoted represents pastperformance of the various funds offered by UTI Mutual Funds. The data is collated and representedright from the inception of the fund to the funds previous 3 and 2 years performance hence. Theperformance figures are represented by the percent of the investment returns the funds havegenerated.
Fund performance Since launch Last 3 yrs Last 1 yr 18.61% 32.91% 35.49%UTI Mastershare1UTI Master Plus (Equity) 16.83% 38.16% 25.11%UTI Equity Fund 12.45% 30.85% 24.16%UTI Contra Fund 8.19% - 17.21%UTI Wealth Builder 34.29% - 34.74%UTI India Lifestyle Fund 0.7% - -UTI Infrastructure Fund 47.49% 52.21% 37.51%UTI Dividend Yield Fund 31.97% - 31.07%UTI Services Industries Fund 34.1% 34.99% 21.5%UTI Master Value Fund 27.31% 26.4% 27.61%UTI Mid Cap Fund 32.65% 28.65% 13.35%UTI Leadership Equity Fund 26.29% - 25.87%UTI Mastergrowth (Equity) 17.18% 32.84% 29.11%UTI MNC Fund 17.71% 21.67% 6.09%UTI Opportunities Fund 32.51% - 41.44%UTI Software Fund 11.57% 16.01% -33.02%UTI Banking Sector Fund 36.68% 39.34% 53.11%UTI Pharma & Healthcare Fund 12.19% 7.84% -9.16%UTI Auto Sector Fund 13.28% 10.35% -18.02%UTI Equity Tax Saving Plan 25.2% 30.29% 25.95%UTI Long Term Advantage Fund 28.37% - -UTI Master Equity Plan Unit Scheme 44.76% 35.15% 21.85%UTI Spread Fund 8.64% - 9.44%UTI Master Index Fund (Equity-Index) 19.47% 39.32% 24.62%1
UTI Nifty Index Fund (Equity Index) 16.05% 35.8% 24.62%UTI Index Select Fund 20.31% 35.46% 23.18%UTI Sunder 43.98% 36.16% 26.69%UTI Variable Investment Scheme 15.91% 12.95% 7.88%UTI Balanced Fund (Balanced) 21.2% 23.79% 19.83%UTI Childrens Career Plan (Balanced) 12.77% 15.14% 11.53%UTI Mahila Unit Scheme 18.32% 24.29% 15.59%UTI CRTS 15.46% 19.19% 18.53%UTI ULIP 11.31% 18.03% 20.76%UTI Retirement Benefit Pension Fund 13.09% 15.67% 15.87%UTI G-Sec Fund (Debt) (IP) 8.92% 5.48% 8.01%UTI G-Sec Fund (Debt) (STP) 5.22% 5.92% 6.54%UTI GILT Advantage Fund 8.69% 6.65% 8.27%UTI Bond Fund (Debt) 9.21% 7.74% 9.24%UTI Liquid Plus Fund 8.62% 5.9% 8.09%UTI Childrens Career Plan (Bond) 4.24% 5.87% 6.79%UTI Monthly Income Scheme 8.36% 9.57% 11.07%UTI MIS Advantage Plan 12.3% 14.23% 13.17%UTI Floating Rate Fund 5.83% 6.3% 6.36%UTI Money Market Fund (Liquid) 7.75% 6.67% 7.65%UTI Liquid Fund Cash Plan 6.8% 6.82% 7.88%UTI Short Term Income Fund 6.2% 6.98% 8.65%
1.3 INTRODUCTION TO THE PROJECTConcept Mutual Fund is a trust that pools the savings of a number of investors who share acommon financial goal. The money thus collected is then invested in capital marketinstruments such as shares, debentures and other securities. The income earned throughthese investments and the capital appreciation realised are shared by its unit holders inproportion to the number of units owned by them. Thus a Mutual Fund is the mostsuitable investment for the common man as it offers an opportunity to invest in adiversified, professionally managed basket of securities at a relatively low cost. The flowchart below describes broadly the working of a mutual fund: Mutual Fund Operation Flow Chart The simplest mutual funds definition is that they are an investment group set upby professional investors and headed by an investment manager. Individuals are then ableto invest small amounts of money into the fund for making a reasonable profit. There arean incredibly large number of mutual funds. While some mutual funds aim to produceshort term, high yield profits, others look for the long term profit.
Mutual funds are seemingly the easiest and least stressful way to invest in the stock market. Quite a large amount of new money has been put into mutual fundsduring the past few years. Briefly put, a mutual fund is a pool of money contributed to by individual investors, companies, and other organizations. There will be a fund manager hired toinvest this cash with a primary goal that depends upon the type of fund. The manger usually diversifies in a manner such that the net average earning is expected to beconsiderably positive. S/he may be a fixed-income fund manager. In that case s/he would work hard to provide the highest return at the lowest risk. On the other hand a long-termgrowth manager should try at least to beat the Dow Jones Industrial Average or the S&P 500 in a given fiscal year. But that is what any successful investor attempts to do, and anyone with a similar approach can be expected to make the same earnings. The benefits on offer are many with good post-tax returns and reasonable safety beingthe hallmark that we normally associate with them. Some of the other major benefits ofinvesting in them are:Number of available options Mutual funds invest according to the underlying investment objective as specifiedat the time of launching a scheme. So, we have equity funds, debt funds, gilt funds andmany others that cater to the different needs of the investor. The availability of theseoptions makes them a good option. While equity funds can be as risky as the stockmarkets themselves, debt funds offer the kind of security that is aimed for at the time ofmaking investments. Money market funds offer the liquidity that is desired by biginvestors who wish to park surplus funds for very short-term periods. Balance Fundscater to the investors having an appetite for risk greater than the debt funds but less thanthe equity funds. The only pertinent factor here is that the fund has to be selected keeping the riskprofile of the investor in mind because the products listed above have different risksassociated with them. So, while equity funds are a good bet for a long term, they may not find favourwith corporates or High Net worth Individuals (HNIs) who have short-term needs.
Diversification Investments are spread across a wide cross-section of industries and sectors andso the risk is reduced. Diversification reduces the risk because all stocks don’t move inthe same direction at the same time. One can achieve this diversification through aMutual Fund with far less money than one can on his own.Professional Management Mutual Funds employ the services of skilled professionals who have years ofexperience to back them up. They use intensive research techniques to analyze eachinvestment option for the potential of returns along with their risk levels to come up withthe figures for performance that determine the suitability of any potential investment.Potential of Returns Returns in the mutual funds are generally better than any other option in any otheravenue over a reasonable period of time. People can pick their investment horizon andstay put in the chosen fund for the duration. Equity funds can outperform most otherinvestments over long periods by placing long-term calls on fundamentally good stocks.The debt funds too will outperform other options such as banks. Though they are affectedby the interest rate risk in general, the returns generated are more as they pick securitieswith different duration that have different yields and so are able to increase the overallreturns from the portfolio.Liquidity Fixed deposits with companies or in banks are usually not withdrawn prematurebecause there is a penal clause attached to it. The investors can withdraw or redeemmoney at the Net Asset Value related prices in the open-end schemes. In closed-endschemes, the units can be transacted at the prevailing market price on a stock exchange.Mutual funds also provide the facility of direct repurchase at NAV related prices.
The market prices of these schemes are dependent on the NAVs of funds and maytrade at more than NAV (known as Premium) or less than NAV (known as Discount)depending on the expected future trend of NAV which in turn is linked to general marketconditions. Bullish market may result in schemes trading at Premium while in bearishmarkets the funds usually trade at Discount. This means that the money can be withdrawnanytime, without much reduction in yield. Some mutual funds however, charge exit loadsfor withdrawal within a period linked toWell Regulated Unlike the company fixed deposits, where there is little control with theinvestment being considered as unsecured debt from the legal point of view, the MutualFund industry is very well regulated. All investments have to be accounted for, decisionsjudiciously taken. SEBI acts as a true watchdog in this case and can impose penalties onthe AMCs at fault. The regulations, designed to protect the investors’ interests are alsoimplemented effectively.Transparency Being under a regulatory framework, mutual funds have to disclose theirholdings, investment pattern and all the information that can be considered as material,before all investors. This means that the investment strategy, outlooks of the market andscheme related details are disclosed with reasonable frequency to ensure thattransparency exists in the system. This is unlike any other investment option in Indiawhere the investor knows nothing as nothing is disclosed.Flexible, Affordable and a Low Cost affair Mutual Funds offer a relatively less expensive way to invest when compared toother avenues such as capital market operations. The fee in terms of brokerages, custodial
fees and other management fees are substantially lower than other options and aredirectly linked to the performance of the scheme. Investment in mutual funds also offers a lot of flexibility with features such asregular investment plans, regular withdrawal plans and dividend reinvestment plansenabling systematic investment or withdrawal of funds. Even the investors, who couldotherwise not enter stock markets with low investible funds, can benefit from a portfoliocomprising of high-priced stocks because they are purchased from pooled funds. It all depends really on the overall investment climate and the sectors in which funds are flowing in. Diversification is definitely a good approach when it comes tosuccessful investing by a reasonable investor. But with mutual funds, there is that the controllers may over-diversify. Diversification minimizes the inherent risks of stock trading by spreading out the capital over many stocks. But over-diversification is again a bad thing. Volatility is a measurement of the change in price (fluctuations) over a given timeperiod. It is usually expressed as a percentage and computed as the annualized standarddeviation of the percentage change in daily price. The more volatile a stock or market, the more money an investor can gain (orlose!) in a short time. In referring to mutual funds, volatility (Standard Deviation) is themeasure of the degree to which a funds return varies on a day-to-day or month-to-monthbasis. The researcher has made a study of the attitude of the investors in UTI MutualFunds and has also analysed their satisfaction level from the investors point of view andhas analysed the relevance of different publications and information provided toinvestors. The research was conducted with 100 samples and was restricted to the townCoonoor and the villages surrounding it, which is in the Nilgiris District. 1.4 SCOPE OF THE STUDY The research study undertaken does not probe too much about whether therespondents have a very fine insight into mutual funds. The research involves only ageneral study related to the investment attitude of investors towards UTI mutual funds.
The research would reveal results regarding the investment attitude of various investorsabout UTI mutual funds and thus in turn helps the organization to identify the attitude ofvarious investors and to improve the marketing of mutual funds. The study has helped the researcher to gain real time experience by interactingwith the investors and has helped to analyse “The attitude of the investors towards UTIMutual Funds”. The study will help the concern to work on the areas of importance for furtherplanning. The study has been done with a motive to change the attitude of the investors andhelp them gain more knowledge on their investment. 1.5 OBJECTIVES OF THE STUDY PRIMARY OBJECTIVES: Find out the attitude of customers towards UTI Mutual Funds.
Find out the proportion of various schemes invested in UTI Mutual Funds. Find out the main usage of UTI Mutual Funds.SECONDARY OBJECTIVE: Measure the level of Customer satisfaction in UTI Mutual Funds. 1.6 LIMITATIONS OF THE STUDY The project done is restricted to UTI Mutual funds in Coonoor and its 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. Chapter II REVIEW OF LITERATURE
A Literature review is a body of text that aims to review the critical points of current knowledge on a particular topic. Most often associated with science-oriented literature, such as a thesis, the literature review usually precedes a research proposal, methodology and results section. Its ultimate goal is to bring the reader up to date with current literature on a topic and forms the basis for another goal, such as the justification for future research in the area. A good literature review is characterized by: a logical flow of ideas; current and relevant references with consistent, appropriate referencing style; proper use of terminology; and an unbiased and comprehensive view of the previous research on the topic. Here we discuss on different reviews related to the following:2.1 Investors and Investment2.2 Mutual funds 2.2.1 Systematic Investment Plan2.3 NAV2.4 Investors Attitude towards Mutual Funds.2.1 Investors and Investments
Investors in emerging markets say that they look at market volatility as a goodopportunity to increase the level of risk in their portfolio. On the other hand those in thedeveloped markets say that volatility would make them go for an increased allocation incash and exercise increased caution with regard to investment. “Investors increasingallocation of cash is not because their ability to bear that risk has been impacted”, saysBansal.  JOHN C. BOGLE  the former CEO of Vangaurd Group Of Mutual Funds, in hisarticle “Six Lessons for Investors - Be diversified and dont assume past performance willcontinue” on Jan 08, 2009 says, There is almost no limit to the ability of investors toignore the lessons of the past. This cost them dearly last year. Here are six of the mostimportant of these lessons: 1) Beware of market forecasts, even by experts. 2) Never underrate the importance of asset allocation. 3) Mutual funds with superior performance records often falter. 4) Owning the market remains the strategy of choice. 5) Look before you leap into alternative asset classes. 6) Beware of financial innovation. Investment is the employment of funds with the aim of achieving additionalincome or growth in value. The essential quality of an investment is that it involves‘waiting’ for a reward. The term investment does not appear to be simple as it has beendefined. Investment is the allocation of monetary resources to assets that are expected toyield or positive return over a given period of time says Preeti Singh. 
2.2 Mutual Funds Mutual Fund schemes are witnessing an increasing amount of innovation as fundstry to ensure that their offerings caver a wide variety of options. This translates into anincreasing array of schemes on offer for investors. However a large choice often meansmore confusion for investors.  Mutual Funds are perhaps the only segment in the financial services businesseswhere the private sector has grown to dominate. Several innovations, efficiencies andtechnological improvements can be attributed to the incentives these players had, todifferentiate themselves.  Mutual Funds disclose the entire portfolio, a practice not followed in manymarkets. Fund managers would ideally like to build up their positions, before letting theworld know what they are buying. In terms of transparency and disclosure the mutualfund industry has indeed taken a big leap in the last 10 years.  “Mutual Funds have been gaining lot of importance in the Indian Capital Marketarena from the time of launch. The growth envisioned in the Mutual Fund Industry hasmade the Central Government keep a close watch on the issues pertaining to the mutualfund industry. In this process the various governments have brought in regulations asregard to Mutual Funds in the Budgets” says Pradeep Kumar S and Murugavel A.  Indias mutual fund industry is one of the brightest spots in an already fast-growing domestic financial sector.Assets under management have swollen in the pastyear by almost 60 per cent to more than Rs5,379bn ($137bn) as the countrys once-conservative retail investors have been attracted to equities by new highs on the stockmarket says Joe Leahy, Andrew Hill and Paul Betts.  Mutual Funds are increasingly gaining popularity among the Indian investors andhave become the much sought after investment option, a latest Nielsen survey says.According to a survey conducted by global media and information company Nielsen, as
much as 90 per cent of investors parked their funds in mutual funds last year, raising theshare of MF investments in the overall portfolios to 40 per cent from 34 per centpreviously. Interestingly, the profile of investors in mutual funds has been falling into ayounger category with males in their mid-30s investing more in them, compared to thosein their 40s, the Nielsen Mutual Fund Brand Health Monitor 4 survey stated. "Themarketing efforts of Mutual Fund AMCs (Asset Management Companies), coupled withthe media coverage the sector has enjoyed, have contributed to their increasing popularityas an investment option," The Nielsen Company Associate Director CustomizedResearch Kalyan Karmakar said. The high returns and ease of operating in the equitymarket take precedence over tax benefits as the key reasons for investing in a mutualfund. Even with the drop in Sensex, equity funds at 53 per cent have the highest share offuture mutual fund investments, the survey revealed. "We are now seeing a change inmindset, where investors previously regarded Mutual Funds as a tax saving option but arenow buying them in the hope of greater financial return as a result of the whopping rise inSensex bringing greater profit to many investors last year," Karmarkar added.  We note that there is a common tendency amongst insurance companies to notjust protect clients from risks to their lives, health, and assets, but also to manage clients’investments. Insurers do this through unit-linked insurance plans (ULIPs). Insurers’profitability today depends largely on attracting investments in the garb of life cover.ULIPs turn out very expensive for investors, especially for terms shorter than 10 years.ULIPs when compared with mutual funds differ on liquidity, tax efficiency, andexpenses. Broadly speaking, we can say that mutual funds offer better advantages interms of investment says Mr. Sameer Kamdar the Country Head, Mutual Funds, MataSecurities in his article Mutual Funds offer investors more flexibility.  Mutual Funds invest in a number of companies across a broad cross-section ofindustries and sectors. This diversification reduces the risk because all the stocks do notdecline at the same time and in the same proportion. This diversification through an MFis achieved with far less money than one can be on his own. Top-performing MF schemeshave produced good returns, which a naive investor rarely achieves in course of directstock-market trading. Not everyone has the skill, knowledge and time to plan his/her
investments. The easier way out is to select the right MF and transfer the entireresponsibility of managing the money to the fund manager. Thus they can avail ofservices of experienced and skilled professionals who are backed by a dedicatedinvestment research team. Today, Mutual Funds provide an attractive and simple way oftapping the potential of various investment options like equity, debt and money marketinstruments. If you are unsure about the equity markets this year, you can simply move toa debt fund or an MIP.Indian markets have the potential over the long run, while it mightnot be a good bet for the short term. There are chances of continued volatility agues thePark Financial Advisors. It is advisable to spread out the investments rather than lump-sum ones. Hereagain, the MF proves to be beneficial since they provide features like systematicinvestment/transfer plans. Investment at regular intervals helps to average out the cost ofpurchase.  The mutual fund industry is a lot like the film star of the finance business. Thoughit is perhaps the smallest segment of the industry, it is also the most glamorous – in that itis a young industry where there are changes in the rules of the game everyday, and thereare constant shifts and upheavals. The mutual fund is structured around a fairly simpleconcept, the mitigation of risk through the spreading of investments across multipleentities, which is achieved by the pooling of a number of small investments into a largebucket. Yet it has been the subject of perhaps the most elaborate and prolongedregulatory effort in the history of the country.  According to the Global Asset Management 2006 Report form Boston ConsultingGroup, India-managed assets will exceed more than $1 trillion by 2015. This means anannual growth rate of 21% for the next nine years. The Indian mutual funds industry hasbeen growing at a healthy pace of 16.68 per cent for the past eight years and the trendwill move further as has been emphasized by the report. With the entrance of new fundhouses and the introduction of new funds into the market, investors are now beingpresented with a broad array of Mutual Fund choices. The total asset under managementof Mutual Fund industry rose by 9.45% from Rs.309953.04 crores to 339232.46 crores inNovember, 2006 as published by AMFI. In 1987, its size was Rs.1,000 crores, which
went up to Rs. 4,100 crores in 1991 and subsequently touched a figure of Rs.72,000crores in 1998. Since then this figure has been increasing tremendously and thusrevealing the efficiency of growth in the mutual fund industry.  UTI Dividend Yield is a pure equity fund that aims at capital appreciation saysSwati Kulkarni manager of UTI Equity Funds in her article “Investing across themes issafest bet”. Hence, investors can expect returns similar to any diversified-equity fund.The returns are expected to be consistent and less volatile compared with funds tat followan aggressive investment style. Allocating one’s equity portfolio across diverseinvestment styles and themes ensures sustainable return across market cycles. Thus everyinvestor should build a basket of funds across large cap, middle cap, infrastructure anddividend yield themes to ensure that the basket outperforms irrespective of the marketconditions during different time periods. 2.2.1 SIP (Systematic Investment Plan) SIP is a good Habit. SIP is a smart way to create wealth. It doesn’t demand lumpsum investments. Just a little, every month will do. With SIP, one need not time themarket. And over a long period, ones investment averages out the market highs and lows.Hence one buys more units when the market is low and less when the market is high. SIPis truly small on savings and big on benefits says the CEO of Kotak Mutual Funds.  By Systematic Investment Plan one can invest a pre-determined amount of money in chosen schemes at theapplicable NAV based Sale Price on each transaction date. Eachtransaction will fetch some additional units that will be added tothe investment account. Rupee cost averaging: With UTI SIP one can invest auniform amount regularly and average out the cost of acquisition
of units. This average cost per unit will determine your overallreturn on your investments. Power of compounding: By extending the investment period one can earn profit,and accumulate more wealth.  When one buys the units of a fund, they may do so when the NAV is really high.For instance, lets say if they bought the units of a fund when the bull run was at its peak,leading to a high NAV. If the market dips after then, the value of the investments fallsand he/she may have to wait for a long while to make a return on their investment. But, ifone invest via a SIP, they dont commit the error of buying units when the market is at itspeak. Since they are buying small amounts continuously, their investment will averageout over a period of time. They will end up buying some units at a high cost and someunits a lower price. Over time, their chances of making a profit are much higher whencompared to an one-time investment says Rachana.  Kairav Shah in his article “Investing in Mutual Funds” says SIPor Systematic Investment Plan is a great way to discipline oneself as it purchases mutualfund units every month at a predetermined date and amount. One can invest as low as Rs500 through post-dated cheques or by instructing their bank for an ECS. Here are some ofthe benefits of SIP: • No need to time the market: It is a very difficult task to judge the right time to pump in their money in the market. And that’s where SIP helps. SIP is for those who fear to invest in equities at the right time. SIP helps your fund grow by the power of compounding. • Rupee-cost averaging: Since the investments are evenly spread, one’s money buys lesser units when the market is high and more units when the market is low. This helps bring down the average cost per unit and helps investors benefit from market volatility. • Low cost of investment: With the monthly contribution being as low as Rs 1,000, investors can easily start saving and investing without altering their present
budget in a big way. Theyll be able to earn a substantial corpus on a small monthly investment in the short-term or on a medium-term basis. • Liquidity: The liquidity of SIPs adds to its beauty. One can easily get their money in a short timeframe. The trade cycle of equity related SIPs is T+3 days and that of debt and liquid related SIPs is T+1 day.  SIP is a way of investing specifically designed for those who are interested inbuilding wealth over a long-term and plan out a better future for themselves and theirfamily. It is useful for those who want to get their investments going, but dont have alarge sum of money to invest. Sharma aptly sums it up, "In developing economies like India, where securitiesmarkets (equities and fixed income instruments) can be volatile and it is rarely possible totime the markets and predict the future. We can seldom accurately predict when aparticular stock will move up or where the interest rates are headed." He says,"Systematic Investment Plan makes the volatility of the securities markets work in yourfavor. Since the amount invested per month is a constant, the investor ends up buyingmore units when the price is low and fewer units when the price is high. Therefore, theaverage unit cost will always be less than the average sale price per unit, irrespective ofthe market rising, falling, or fluctuating. This concept is called Rupee Cost Averaging(RCA)."  SIP is an investment option that is presently available only with mutual funds.The other investment option comparable to SIPs is the recurring deposit schemes fromPost office and banks. Basically, under an SIP option an investor commits making aregular (monthly) investment in a particular mutual fund/deposit. Investing in SIPs is alsoknown as Rupee cost averaging. The advantage of rupee cost averaging is that the Netasset value (NAV) is averaged out, as the investor will be entering the fund at differentNAVs, which may be higher or lower depending on the market condition. An investorwho is not having a lump-sum amount to invest and also does not want to take much riskon his investment should always select a ‘Systematic Investment Plan’ option. This willenable him to invest regularly i.e. improve investing discipline. Also, the investor stands
to benefit from rupee cost averaging. 2.3 NAV NAV is the single most widely talked about figure or indicator when reviewingmutual funds. At one level a simple ratio, it can, however, conceal as much as it reveals.In order to calculate the NAV of a scheme, each asset and liability of the scheme needs tobe valued. Nav = value of all assets minus value of liabilities other than to unit-holders. It can also be calculated as: Unit capital plus reserves. There is a significantelement of subjectivity in the valuation of assets. SEBI, through its valuation norms, hasbeen trying to ensure some degree of standardization in the manner in which differentAMCs handle this subjectivity. 2.4 ATTITUDES TOWARD MUTUAL FUNDS A strong majority of current fund owners have positive attitudes toward funds,even though they realize owning funds carries risks and may not always be profitable. Incontrast, those who either owned funds in the past but do not now or who indicate they donot ever expect to own funds have far less positive attitudes toward funds. In particular,they are far less likely to view funds as safe or profitable. Those who do not own fundsbut expect to do so in the future have attitudes toward funds that are neither as positive asthose of current owners nor as negative as those of other non-owners. This part tries to review the literature available on the mutual fundsscheme in India and abroad. The existing studies on “Investment patterns ofinvestors” are very few and very little information is available about investor
perceptions, preferences, attitudes and behavior. As far as the mutual funds areconcerned, there are hardly few studies undertaken earlier. All efforts in thisdirection are fragmented. In spite of this limitation, a few of the parallel andrelated studies are reviewed here under. De Bond and Thaler (1985) while investigating the possible psychological basisfor investor behavior, argue that mean reversion in stock prices is an evidence of investorover reaction where investors over emphasize recent firm performance in forming futureexpectations of the investment.  Nalini and Sasikumar studied about the mutual funds in India. The mainobjectives of the study were to analyze how the mutual fund schemes help to mobilizesavings from the household sector. Mutual funds have now made their presence felt inIndian financial market by mobilizing the savings of household and corporate sectors anddeploying the same in the market. The period of study was 1987 – 91. During this period,the share of mutual funds in the household financial savings rose from 2.3%to 3.5% andestimates showed that more than 5.6% of the total financial savings of the Indian publicwere invested in mutual funds.  Gupta (1994) made a household investor survey with the objective to provide dataon the investor preferences on MF’s and other financial assets. The findings of the studywere more appropriate, at that time, to the policy makers and mutual funds to design thefinancial products for the future.  Madhusudhan Vs Jambodekar (1996) conducted a study to assess the awarenessof MFs among investors, to identify the information sources influencing the buyingdecision and the factors influencing the choice of a particular fund. The study revealsamong other things that Income Schemes and Open Ended Schemes are more preferredthan Growth Schemes and Close Ended Schemes during the then prevalent marketconditions. Investors look for safety of Principal, Liquidity and Capital appreciation inthe order of importance; Newspapers and Magazines are the first source of information
through which investors get to know about MFs/Schemes and investor service is a majordifferentiating factor in the selection of Mutual Fund Schemes.  Syama Sunder (1998) conducted a survey to get an insight into the mutual fundoperations of private institutions with special reference to Kothari Pioneer. The surveyrevealed that awareness about Mutual Fund concept was poor during that time in smallcities. Agents play a vital role in spreading the Mutual Fund culture; open-end schemeswere much preferred then; age and income are the two important determinants in theselection of the fund/scheme; brand image and return are the prime considerations whileinvesting in any Mutual Fund.  Ippolito (1992) says that fund/scheme selection by investors is based on pastperformance of the funds and money flows into winning funds more rapidlythan they flow out of losing funds.  Shanmugham (2000) conducted a survey of 201 individual investors to study theinformation sourcing by investors, their perceptions of various investment strategydimensions and the factors motivating share investment decisions, and reports that amongthe various factors, psychological and sociological factors dominated the economicfactors in share investment decisions.  In India, one of the earliest attempts was made by NCAER in 1964 when a surveyof households was undertaken to understand the attitude towards and motivation forsaving of individuals. Another NCAER study in 1996 analysed the structure of the capitalmarket and presented the views and attitudes of individual shareholders. SEBI – NCAERSurvey (2000) was carried out to estimate the number of households and the populationof individual investors, their economic and demographic profile, portfolio size,investment preference for equity as well as other savings instruments. This is a uniqueand comprehensive study of Indian Investors, for, data was collected from 3,00,0000geographically dispersed rural and urban households. Some of the relevant findings of thestudy are : Households preference for instruments match their risk perception; Bank
Deposit has an appeal across all income class; 43% of the non-investor householdsequivalent to around 60 million households (estimated) apparently lack awareness aboutstock markets; and, compared with low income groups, the higher income groups havehigher share of investments in Mutual Funds (MFs) signifying that MFs have still notbecome truly the investment vehicle for small investors. Nevertheless, the study predictsthat in the next two years (i.e., 2000 hence) the investment of households in MutualFunds is likely to increase. We have to wait and watch the investors’ reaction to the July2nd 2001, great fall of the Big Brother, UTI. (Note: Behavior is a reaction to a situation.So as situation changes, behavior gets modified. Hence, findings and predictions ofbehavior studies should be viewed accordingly).  Goetzman (1997) states that there is evidence that investor psychology affectFund/scheme selection and switching.  Anjan Chakarabarti and Harsh Rungta (2000) stressed the importance of brandeffect in determining the competitive position of the AMCs. Their study reveals thatbrand image factor, though cannot be easily captured by computable performancemeasures, influences the investor’s perception and hence his fund/scheme selection.  Shankar (1996) points out that the Indian investors do view Mutual Funds ascommodity products and AMCs, to capture the market should follow the consumerproduct distribution model. Since 1986, a number of articles and brief essays have beenpublished in financial dailies, periodicals, professional and research journals, explainingthe basic concept of Mutual Funds and highlight their importance in the Indian capitalmarket environment. They touch upon varied aspects like Regulation of Mutual Funds,Investor expectations, Investor protection, Trend in growth of Mutual Funds and someare critical views on the performance and functioning of Mutual Funds. A few amongthem are Vidyashankar (1990), Sarkar (1991), Agarwal (1992), Sadhak (1991), Sharma
C. Lall (1991), Samir K. Barua (1991), Sandeep Bamzai (2001), Atmaramani (1995),Atmaramani (1996), Subramanyam (1999), Krishnan (1999), Ajay Srinivsasn (1999).Segmentation of investors on the basis of their characteristics was highlighted by RajaRajan (1997). Investor’s characteristics on the basis of their investment size Raja Rajan(1997), and the relationship between stage in life cycle of the investors and theirinvestment pattern was studied by Raja Rajan (1998).  Akhilesh Mishra(2008) has done a study on the topic “Mutual Fund as a BetterInvestment Plan” and states that many of the people have the fear of Mutual Funds.“They think their money will not be secure in Mutual funds,” says Mishra. He also saysthat the investors need the knowledge of Mutual Funds and its related terms. Many of thepeople have not invested in Mutual funds due to lack of Awareness although they havemoney to invest, he adds. Mishra also points out that “Brand” plays an important role forthe investment. Only people who invest directly know well about the Mutual fund and itsoperations, he adds.  From the above review it can be inferred that Mutual Fund as an investmentvehicle is capturing the attention of various segments of the society, like academicians,industrialists, financial intermediaries, investors and regulators for varied reasons anddeserves an in depth study. REFERENCES 1. Anagh Pal,Cashing in on turmoil, Outlook Money, Oct 8,2008, Pp6 2. Preeti Singh, Investment Management Security Analysis and Portfolio Management, Himalaya Publishing House, Eleventh Edition, 2003, Pp1 3. http://online.wsj.com/article/SB123137479520962869.html? mod=googlenews_wsj 4. The A to Z of Mutual Funds-The Guide to investments, SBI Mutual Funds, Pp2
5. Birenshah, Outlook Money, 30th July 2008, P 30, 566. Pradeep Kumar S. and Murugavel A., Karvy the finapolis, Volume2, Issue 3, March 2008, Pp117. SIP Plan,Kotak Mutual Fund, Mutual Fund Insight, 15th October-14th November, Volume VI, Number 2, Pp 139.8. http://economictimes.indiatimes.com/Personal_Finance/Mutual_Funds/Analysis/ MFs_offer_investors_more_flexibility/articleshow/msid-3095105,curpg-2.cms9. http://economictimes.indiatimes.com/articleshow/3013728.cms10. http://www.bseindia.com/downloads/MutualFunds.pdf11. http://vidyasagar.ac.in/Journal/Commerce/vol12/10th%20Article.pdf12. http://www.utimf.com/product_services/value_added_services/sip_next.aspx13. http://www.rediff.com/money/2007/dec/14mf.htm14. http://www.rediff.com/getahead/2005/nov/09sip.htm15. http://www.window2india.com/cms/admin/article.jsp?aid=835216. http://www.moneycontrol.com/mccode/news/article/news_article.php? autono=160578 (SIP: Why is it good for you? Published on Thu, Jan 27, 2005 at 11:27, Updated at Tue, Feb 01, 2005 at 11:21 Source: Moneycontrol.com)17. http://www.personalfn.com/detail.asp?date=10/1/2001&story=318. http://sify.com/finance/fullstory.php?id=1352501119. Swati Kulkarni, DNA, UTI Fund Watch, Investing across themes is safest bet, October 2008.20. http://www.consumerfed.org/pdfs/mutual_fund_survey_report.pdf21. http://www.utiicm.com/Cmc/PDFs/2001/rajeswari.pdf22. Akhilesh Mishra, Mutual funds is the better investment plan, 2008, http://www.scribd.com/doc/13246827/PROJECT-ON-MUTUAL-FUND- AKHILESH-MISHRA23. http://www.indiastudychannel.com/projects/666-A-STUDY-ON-MUTUAL- FUNDS-IN-INDIA.aspx
CHAPTER III RESEARCH METHODOLOGY Research is an original contribution to the existing stock of knowledgemaking for its advancement. It is the pursuit of truth with the help of study, observation,comparison and experiment. In short, the search for knowledge through objective andsystematic method of finding solution to a problem is research.
A research method refers to the methods the researchers use in performingresearch operations. Research Methodology is a way to systematically solve the researchproblem. By research methodology not only the research methods are considered but alsothe logic behind the methods used in the context of the research study and explanationsare given on why a particular technique is used. The researcher has discussed the following:3.1 Research Design3.2 Sampling Design 3.2.1 Population 3.2.2 Sampling Technique 3.2.3 Sampling Size 3.2.4 Sample Unit 3.2.5 Sources Of Data 22.214.171.124 Primary Data 126.96.36.199 Secondary Data 3.2.6 Statistical Tools3.1 RESEARCH DESIGN The research design that is adopted in this study is descriptive design.Descriptive research is used to obtain information concerning the current statusof the phenomena to describe, "What exists" with respect to variables orconditions in a situation. The focus of this study was on self-reported decisions madeby various investors regarding the investment patterns in mutual funds. Thus it involvesStatement of the problem, Identification of information needed to solve the problem,
Selection or development of instruments for gathering the information, Identification oftarget population and determination of sampling procedure, Design of procedure forinformation collection, Collection of information, Analysis of information,Generalizations and/or predictions.3.2 SAMPLING DESIGN3.2.1 POPULATION: The population for this study is investors of UTI mutual funds in Coonoor city,The Nilgiris.3.2.2 SAMPLING TECHNIQUE: The sampling technique used is simple random sampling. Simple randomsampling is also known as “probability sampling” or “chance sampling”. Under thissampling design, every item of the universe has an equal chance of inclusion in thesample. The sample frame for this study is the company’s database of Coonoor city(finite universe). From the obtained database cheque number was selected as the primarykey. Then primary key is compared with random numbers and if the primary key andrandom numbers are matching those numbers are picked up. Such picked up randomnumbers were the sample respondents from whom the questionnaires were collected.3.2.3 SAMPLE SIZE: The sample size for this study is 100 investors of UTI mutual funds inCoonoor city out of entire population 2000 which consists of 5% of the population.Random numbers were generated and using random number tables 100 investors wereselected.
3.2.4 SAMPLE UNIT: Individuals, families, corporates, partnership firms and sole proprietors were thetarget respondent groups from which the data were collected.3.2.5 SOURCES OF DATA: Data were collected through both primary and secondary data sources. Primarydata was collected through questionnaires. The research was done in the form of directpersonal interviews and through telephone interviews.188.8.131.52 PRIMARY DATA A primary data is a data, which is collected afresh and for the first time, and thushappen to be original in character. The primary data with the help of questionnaire werecollected from various investors.184.108.40.206.1 QUESTIONNAIRE DESIGN Proper care has been taken to ensure that the information needed match theobjectives, which in turn match the data collected through the questionnaire. The basiccardinal rules of Questionnaire design like using simple and clear words, the logical andsequential arrangement of questions has been taken care of.220.127.116.11 SECONDARY DATA Secondary data consist of information that already exists somewhere, have beencollected. Secondary data is collected from company websites, other websites, companyfact sheets, magazines and brochures.
3.2.6 STATISTICAL TOOLS The statistical tools used for this analysis are: Simple Percentage analysis: Percentages are calculated and in certain cases percentages alongwith cross tabulation has been calculated. Mean Score Values: Mean score values has been calculated for the different scalesused to find the perception and satisfaction level of investors. CHAPTER IV ANALYSIS AND INTERPRETATION The term analysis refers to the computation of certain measures along withsearching for patterns of relationship that exist among data groups. Thus, “in the processof analysis, relationships or differences supporting or conflicting with original or new
hypotheses should be subjected to statistical tests of significance to determine with whatvalidity data can be said to indicate any conclusions.” Interpretation refers to the task of drawing inferences from the collected factsafter an analytical and /or experimental study. The factors are analyzed under the following broad phases:PHASE I : Personal FactorsPHASE II: Investment FactorsPHASE I Personal Factors: This phase includes the personal details of the investors. The factors consideredare age, gender, qualification and work status.PHASE II Investment Factors: In this particular phase the responses for the various investment related factorsthat have been considered in the questionnaire have been analysed. The investors’attitude and satisfaction related factors have been analysed in this phase. PHASE I: PERSONAL FACTORSAGE OF THE INVESTORS The age of individual indirectly represents the amount of service the individual
possesses. Normally individuals who are aged tend to be more mature in their thoughtsand try to be committed in whatever work they do. As they have the experience they willbe in a position to adjudge how the investment would help in the future. TABLE 4.1 Age distribution of investors in UTI Mutual Funds Age No of investors Percentage 20-30 12 12 31-40 20 20 >41 68 68 From the table it is found that almost 68% of the investors of UTI Mutual Fundsare above the age of 41 years, 20% of the investors belong to the age group of 31-40years and only 12% belong to the age group of 20-30 years. Thus, there are more ofabove middle-aged investors who can easily follow the investment and the marketmovements.CHART 4.1
Age Distribution of investors 80 60 Percentage 40 no of investors 20 0 20-30 30-40 >40 Age in yearsGENDER A gender is defined as a set of perceived behavioral norms associated particularlywith males or females, in a given social group or system. It is a focus of analysis in the
social sciences and humanities. Gender role refers to the attitudes and behaviors that classa person’s stereotypical identity. Gender has an influence on the mentality towardsinvesting in Mutual funds as mutual funds involve risk. TABLE 4.2 GENDER DISTRIBUTION OF INVESTORS Gender No of Investors Percentage Male 77 77 Female 23 23 There are about 77% of male investors, whereas only 23% of female investorsinvest in UTI Mutual Funds.CHART 4.2
The income level of investors is an important factor for investment, when aninvestor has sufficient income he will like to invest in many plans, as a measure to earnfrom the investment. Table 4.3 INCOME OF THE INVESTORS Income per month No of investors Percentage <5000 6 6 5000-10000 32 32 10000-20000 33 33 >20000 29 29 33% of investor’s have a income between Rs 10001 – 20000 per month, 32% ofinvestor’s have a income between Rs. 5001- 10000 per month, 29% have a income ofabove 20000 per month. There are 6% of investor’s who have an income less thanRs.5000 per monthCHART 4.3
Income of investors >20000 29 Amount in Rs. 10000-20000 33 5000-10000 32 <5000 6 0 10 20 30 40 No. of InvestorsAMOUNT INVESTED IN MUTUAL FUNDS
Investor’s will like to invest certain sum of money for future benefits. Suchamount may be a small sum or a large sum according to the interest of the investor’s. Table 4.4 AMOUNT OF MONEY INVESTED IN MUTUAL FUNDS Amount Invested No of investors Percentage <100000 69 69 >100000 31 31 Total 100 100 69% investors have invested less than Rs.100000 in Mutual funds whereas 31%have invested more than Rs.100000 in Mutual funds.
CHART 4.4 Am ount invested in Mutual Funds >100000 24% <100000 >100000 <100000 76%
QUALIFICATION OF INVESTORS The Qualification of investors is an important aspect related to Investments inMutual Funds. Table 4.5 QUALIFICATION STANDARD OF INVESTORS Qualification No. of investors Percentage Pre-schooling 32 32 Under graduate 45 45 Post graduate 12 12 Professional degree 11 11 Total 100 100 Nearly 45% of the investor’s are under graduates whereas 12% of the investor’sare post graduates, 11% are professional degree holders and 32% have completed theirschooling.
CHART 4.5 Qalification of Investors 50 45 40 No. of Investors 35 30 25 No.of investors 20 15 10 5 0 e te ng e at ua re oli du eg ad ho ra ld gr sc rg na e- st de Po sio Pr Un es of Pr Qualification
INVESTORS HAVING AN INSURANCE POLICY “Insurance” is yet another investment avenue where people can invest, in order tosecure their life’s (Life Insurance) and their properties (General Insurance). Insurance hashelped many investors’ from various disasters. TABLE 4.6 INVESTORS HAVING AN INSURANCE POLICY Insurance policy No. of investors Percentage Yes 79 79 No 21 21 Total 100 100 The above table shows that 79% of investors have an insurance policy in additionto their investment while 21% of investors do not have such policies.
CHART 4.6 Investors having Insurance Policy 21% Yes No 79%
REASONS FOR PREFERENCE OF MUTUAL FUNDS Mutual funds are preferred for various reasons. The benefits derived from mutualfund investment acts as a reason for preferring mutual funds. In case of mutual fund itsdistinctive features also act as a reason for investor’s to invest in it. TABLE 4.7 REASONS FOR PREFERENCE OF MUTUAL FUNDS Preference of Mutual Funds No. of investors Percentage Savings 28 28 Returns 41 41 Diversification 8 8 Risk tolerance 23 23 Total 100 100 Returns has been the main reason for preferring mutual funds as 41% of therespondents have opted for it, while saving is the reason for 28% of investor’s, risktolerance for 23% and diversification for 8% of the respondents
Chart 4.7 Reasons for preference of Mutual funds 45 40 No. of investors 35 30 25 20 15 10 5 0 n gs s e rn io nc vin at tu re fic Sa Re le si to er k v s Di Ri Factors/Reasons No.of investors