Seminar ii


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Seminar ii

  1. 1. “A STUDY ON INVESTOR PERCEPTION TOWARDS MUTUAL FUNDS” A Project Report submitted in partial fulfillment of the requirement For the award of the degree of MASTER OF BUSINESS ADMINISTRATION BY SANJEET KUMAR SAH SRM UNIVERSITY SCHOOL OF MANAGEMENT
  2. 2. MUTUAL FUND TABLE OF CONTENTCHAPTER NO. CONTENT PAGE No. 1. INTRODUCTION:- a. Introduction of mutual fund b. Opportunity & challenges. c. Mutual fund industry in india d. Types of mutual fundCHAPTER:-1 e. Advantages of mutual fund f. Basis of selection g. Constituent of mutual fund h. Marketing strategy i. Market segment j. Marketing of funds & challenges. k. SEBI guidelines 2.1 Company profile Product profile 2.2 Objective of study 2.3 Scope of studyCHAPTER:-2 2.4 Limitation of study 2.5 Research methodology 2.6 Literature reviewCHAPTER:-3 3.3 Data Analysis 4.1 FindingsCHAPTER:-4 4.2 Suggestion 4.3 ConclusionCHAPTER:-5 BibliographyCHAPTER:-6 QUESTIONNIRESRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  3. 3. MUTUAL FUND LIST OF TABLES Table no. Table name Page no. I Occupation wise classification II Income wise classification III Savings IV Awareness of mutual fund V Investment choice VI Choice to invest VII Reason to invest VIII Investment amount IX Preferred fund in mutual fund X Awareness of STANDARD CHARTERED mutual fund XI Investment in STANDARD CHARTERED mf XII Reason to select STANDARD CHARTERED mutual fund XIII Attracting attributes of STANDARD CHARTERED mf XIV No’s of schemes invested by respondents XV Investment in other mf scheme XVI Choice other than STANDARD CHARTERED MF XVII Suggestion to others XVIII Suggested benefitsSRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  4. 4. MUTUAL FUND LIST OF FIGURES & CHARTSSerial FIGURES & CHARTS NAME Page nono1 Flow chart of working of mutual fund2 Concept of mutual fund3 Classification of mutual fund4 Advantage of mutual fund5 Mutual fund constituents6 Occupation wise classification7 Income wise classification8 Savings9 Awareness of mutual fund10 Investment choice11 Choice to invest12 Reason to invest13 Investment amount14 Preferred fund in mutual fund15 Awareness of STANDARD CHARTERED mutual fund16 Investment in STANDARD CHARTERED mf17 Reason to select STANDARD CHARTERED mutual fund18 Attracting attributes of STANDARD CHARTERED mf19 No’s of schemes invested by respondents20 Investment in other mf scheme21 Choice other than STANDARD CHARTERED MF22 Suggestion to others23 Suggested benefitsSRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  5. 5. MUTUAL FUND INTRODUCTION a) MUTUAL FUNDMutual Funds refer to funds which collect money from investors and put this money instocks, bonds and other securities to gain financial profit. Persons whose money is used bythe Mutual Fund Manager to buy stocks, bonds and other securities, get a percentage of theProfit earned by the mutual fund in return of their Investments. In this way, the mutual fundoffers benefit to both parties.A Mutual Fund is a trust that pools the savings of a number of investors who share a commonfinancial goal. The money thus collected is then invested in capital market instruments suchas shares, debentures and other securities. The income earned through these investments andthe capital appreciation realized is shared by its unit holders in proportion to the number ofunits owned by them. Thus a Mutual Fund is the most suitable investment for the commonman as it offers an opportunity to invest in a diversified, professionally managed basket ofsecurities at a relatively low cost. The flow chart below describes broadly the working of amutual fund.Fig:-1A mutual fund is a professionally managed type of collective investment scheme that poolsmoney from many investors and invests it in stocks, bonds, short-term money marketinstruments, and/or other securities. The mutual fund will have a fund manager that trades thepooled money on a regular basis. Currently, the worldwide value of all mutual funds totalsmore than $26 trillionThe mutual fund organization earns profit by using peoples money for investment and thepersons who invest in mutual fund acquire financial Profit without going into intensiveSRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  6. 6. MUTUAL FUNDanalysis and research on bonds and stocks. The work of stock and bond Market Analysis,Market Research and Market Speculation is done by the mutual fund managers.The people who invest in Mutual Funds are generally exposed to much lower Risk comparedto those who directly invest in bonds and stocks. Mutual Fund Investment involves lowerRisk as the investment is diversified in to different bonds and stocks. So, if at any timeMarket Value of one particular bond or value of the stocks of any particular company drops,then the loss incurred by the mutual fund can be offset by the Market Gain of any other bondor stocks.Fig:-2SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  7. 7. MUTUAL FUND b) OPPORTUNITY OF MUTUAL FUND:-Opportunities of Mutual Funds are tremendous especially when investment is concerned. Forany individual who intends to allocate his assets into proper forms of investment and want todiversify his Investment Portfolio as well as the risks, Mutual Funds can be proved as thebiggest opportunity.Investors get a lot of advantages with the Mutual Fund Investment. Firstly, they are notrequired to carry on intensive research and detailed analysis on Stock Market and BondMarket. This work is done by the Fund Mangers of the Investment Management Company onbehalf of the investors. In fact, the professional Fund Managers who handle the mutual fundsof any particular company are able to speculate the market trend more correctly than anycommon individual. Good Speculation about the trends of stock prices and bond prices leadsto right allocation of funds in the right stocks and bonds resulting in good Rate of Returns.Investors also get the advantage of high Liquidity of the mutual funds. This means theinvestors can enjoy easy access to the funds invested in the mutual funds whenever theyrequire the money. When the investors invest in any mutual fund, they are given some equityposition in that fund. The investors can any time sell their mutual fund shares to get back themoney invested in mutual funds. The only thing is that the Rate of Return that they will getmay not be favorable as the return depends on the present market condition.The greatest opportunity that the mutual funds offer is the opportunity of diversifying theirinvestments. Investment Diversification actually diversifies the Risk associated withinvestment. This is because, if at a time, if prices of some stocks are declining, deceasing theValue of Investment, prices of some other stocks and bonds may tend to rise and in this waythe loss of the mutual fund is offset by the strength of the stocks whose prices are rising. Asall the mutual funds diversify their investments in various common stocks, preferred stocksand different bonds, the risk to be borne by the investors are well diversified and in otherterms lowered.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  8. 8. MUTUAL FUND CHALLENGES FACING MUTUAL FUND:- People find mutual fund investment so much interesting because they think they can gain high rate of return by diversifying their investment and risk. But, in reality this scope of high rate of returns is just one side of the coin. On the other side, there is the harsh reality of highly Fluctuating Rate of Returns. Though there are other disadvantages also, this concern of fluctuating returns is most possibly the greatest challenge faced by the mutual fund. The Issue of Fluctuating Returns In spite of being a diversified investment solution, mutual funds investment in no way guarantees any return. If the market prices of major shares and bonds fall, then the value of mutual fund shares are sure to go down, no matter how diversified the mutual fund portfolio be. It can be said that mutual fund investment is somewhat lower risky than Direct Investment in stocks. But, every time a person invests in mutual fund, he unavoidably carries the risk of losing money. Diversification or Over Diversification- In order to diversify the investment, many times the mutual fund companies get involved in Over Diversification. The risk of holding a single financial security is removed by diversification. But, in case of over diversification, investors diversify so much that many time they end up with investing in funds that are highly related and thus the benefit of risk diversification is ruled out.  Taxes-Every year, most of the mutual funds sell substantial amount of their holdings. If they earn profit by this sell, then the investors receive the Profit Income. For most of the mutual funds, the investors are bound to pay taxes on these incomes, even if they reinvest the income.  Costs- Most of the mutual funds charge Shareholder Fees and Fund Operating Fees from the investors. In the year, in which mutual fund fails to make profit and the investors get no return, these fees only blow up the losses. SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  9. 9. MUTUAL FUND c) MUTUAL FUNDS Vs OTHER STOCK:- Mutual Funds Vs Individual Stocks has always been a debatable issue. While some like to play safe with mutual fund investment, some others prefer investment in individual stocks. When any investor invests in any mutual fund all that he is required to do is pay the Shareholder Fees and Fund Operating Fees. The whole work of managing funds, starting from Market Research and analysis of stock and bond price and recent market trends up to final Allocation of Funds or assets in various stocks and bonds is completely done by the Professional Fund Managers employed by the Investment Management Company. In this case, the fund management remains in the hands of the fund managers of the mutual fund company. But, in case of Direct Investment in individual stocks, the total control remains in the hands of the individual investors. But, most of the people agree about the fact, that mutual funds hold some important benefits over and above Individual Stocks. So, to get the actual depiction of Mutual Funds Vs Individual Stocks, we will discuss the advantages put forwarded by Mutual Funds. Diversification. The core concept of mutual funds is to Diversify Investment in order to lower the risk of investing. As the mutual funds allocate their funds into stocks of different companies and in different bonds, the risk is diversified. If at a time, market price of some particular stocks fall, the loss of the mutual fund may be offset by the rise in price of some other stocks held by that particular mutual fund. But, individual stocks do not hold this advantage of diversification. If the prices of the stocks go down in the market, the investor is sure to lose money. Professional management & efficiency As mutual funds are managed by the professional fund managers who are specialized in their field, they carry out the research and analysis work much more efficiently and naturally speculate more correctly about the market trends of stock prices and bond prices. In the other case, Individual Stock investment is done directly by the investors who are in most cases common men who dont have much knowledge about the stock and bond market. Other than this as the mutual funds get a lot of money from people to invest in, they can reap the benefit of Economies of Scale with the large sum of invested money.The origin of mutual fund industry in India is with the introduction of the concept of mutual SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  10. 10. MUTUAL FUND 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 market.In the past decade, Indian mutual fund industry had seen dramatic improvements,both quality wise as well as quantity wise. Before, the monopoly of the market had seenan ending phase; the Assets under Management (AUM) were Rs. 67bn. The privatesector entry to the fund family raised the AUM to Rs. 470 by in March 1993 and tillApril 2009; it reached the height 2000 bn.Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is lessthan the deposits of SBI alone, constitute less than 11% of the total deposits held by theIndian banking industry.The main reason of its poor growth is that the mutual fund industry in India is new in thecountry. Large sections of Indian investors are yet to be intellectualed with the concept.Hence, it is the prime responsibility of all mutual fund companies, to market the productcorrectly abreast of selling.The mutual fund industry can be broadly put into four phases according to the developmentof the sector. Each phase is briefly described as under.First Phase - 1964-87Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up bythe Reserve Bank of India and functioned under the Regulatory and administrative control ofthe Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the IndustrialDevelopment Bank of India (IDBI) took over the regulatory and administrative control inplace of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988UTI had Rs.6, 700 crores of assets under management.Second Phase - 1987-1993 (Entry of Public Sector Funds)Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Canbank MutualFund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund(Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC in 1989 andGIC in 1990. The end of 1993 marked Rs.47, 004 as assets under management.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  11. 11. MUTUAL FUNDThird Phase - 1993-2003 (Entry of Private Sector Funds)With the entry of private sector funds in 1993, a new era started in the Indian mutual fundindustry, giving the Indian investors a wider choice of fund families. Also, 1993 was the yearin which the first Mutual Fund Regulations came into being, under which all mutual funds,except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now mergedwith Franklin Templeton) was the first private sector mutual fund registered in July 1993.The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive andrevised Mutual Fund Regulations in 1996. The industry now functions under the SEBI(Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing,with many foreign mutual funds setting up funds in India and also the industry has witnessedseveral mergers and acquisitions. As at the end of January 2003, there were 33 mutual fundswith total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44, 541 crores ofassets under management was way ahead of other mutual funds.Fourth Phase – since February 2003In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI wasbifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust ofIndia with assets under management of Rs.29, 835 crores as at the end of January 2003,representing broadly, the assets of US 64 scheme, assured return and certain other schemes.The Specified Undertaking of Unit Trust of India, functioning under an administrator andunder the rules framed by Government of India and does not come under the purview of theMutual Fund Regulations.The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It isregistered with SEBI and functions under the Mutual Fund Regulations. With the bifurcationof the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of assets undermanagement and with the setting up of a UTI Mutual Fund, conforming to the SEBI MutualFund Regulations, and with recent mergers taking place among different private sector funds,the mutual fund industry has entered its current phase of consolidation and growth. As at theend of September 2004, there were 29 funds, which manage assets of Rs.153108 crores under421 schemes.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  12. 12. MUTUAL FUNDd) Types of Schemes CLASSIFICATION OF MUTUAL FUND SCHEMES:-Fig:-3Any mutual fund has an objective of earning income for the investors’ and/ or gettingincreased value of their investments. To achieve these objectives mutual funds adoptdifferent strategies and accordingly offer different schemes of investments. On these basesthe simplest way to categorize schemes would be to group these into two broadclassifications:Operational Classification and Portfolio Classification.Operational classification: - Operational classification highlights the two main types ofschemes, i.e., open-ended and close-ended which are offered by the mutual funds.Portfolio classification:- Portfolio classification projects the combination of investmentinstruments and investment avenues available to mutual funds to manage their funds. Anyportfolio scheme can be either open ended or close ended.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  13. 13. MUTUAL FUNDOperational ClassificationOpen Ended Schemes:As the name implies the size of the scheme (Fund) is open i.e., not specified or pre-determined. Entry to the fund is always open to the investor who can subscribe at any time.Such fund stands ready to buy or sell its securities at any time. It implies that thecapitalization of the fund is constantly changing as investors sell or buy their shares.Further, the shares or units are normally not traded on the stock exchange but arerepurchased by the fund at announced rates. Open-ended schemes have comparatively betterliquidity despite the fact that these are not listed. The reason is that investors can any timeapproach mutual fund for sale of such units. No intermediaries are required. Moreover, therealizable amount is certain since repurchase is at a price based on declared net asset value(NAV). No minute-to-minute fluctuations in rates haunt the investors. The portfolio mix ofsuch schemes has to be investments, which are actively traded in the market. Otherwise, itwill not be possible to calculate NAV. This is the reason that generally open-ended schemesare equity based.Close Ended Schemes:Such schemes have a definite period after which their shares/ units are redeemed. Unlikeopen-ended funds, these funds have fixed capitalization, i.e., their corpus normally does notchange throughout its life period. Close ended fund units trade among the investors in thesecondary market since these are to be quoted on the stock exchanges. Their price isdetermined on the basis of demand and supply in the Market. Their liquidity depends on theefficiency and understanding of the engaged broker. Their price is free to deviate fromNAV, i.e., there is every possibility that the market price may be above or below its NAV. Ifone takes into account the issue expenses, conceptually close ended fund units cannot betraded at a premium or over NAV because the price of a package of investments, i.e., cannotexceed the sum of the prices of the investments constituting the package. Whateverpremium exists that may exist only on account of speculative activities. In India as per SEBI(MF) Regulations every mutual fund is free to launch any or both types of schemes.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  14. 14. MUTUAL FUNDPortfolio Classification of Funds:Following are the portfolio classification of funds, which may be offered. This classificationmay be on the basis of (a) Return, (b) Investment Pattern, (c) Specialized sector ofinvestment, (d) Leverage and (e) Others.(a) Return based classification:-To meet the diversified needs of the investors, the mutual fund schemes are made to enjoy agood return. Returns expected are in form of regular dividends or capital appreciation or acombination of these two.I. Income Funds: - For investors who are more curious for returns, Income funds arefloated. Their objective is to maximize current income. Such funds distribute periodicallythe income earned by them. These funds can further be splitted up into categories: those thatstress constant income at relatively low risk and those that attempt to achieve maximumincome possible, even with the use of leverage. Obviously, the higher the expected returns,the higher the potential risk of the investment.ii. Growth Funds: - Such funds aim to achieve increase in the value of the underlyinginvestments through capital appreciation. Such funds invest in growth-oriented securities,which can appreciate through the expansion production facilities in long run. An investorwho selects such funds should be able to assume a higher than normal degree of risk.iii. Conservative Funds: - The fund with a philosophy of all things to issue offersdocument-announcing objectives as: (I) To provide a reasonable rate of return, (ii) Toprotect the value of investment and, (iii) To achieve capital appreciation consistent with thefulfillment of the first two objectives. Such funds which offer a blend of immediate averagereturn and reasonable capital appreciation are known as middle of the road funds. Suchfunds divide their portfolio in common stocks and bonds in a way to achieve the desiredobjectives. Such funds have been most popular and appeal to the investors who want bothgrowth and income.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  15. 15. MUTUAL FUND(b) Investment Based Classification:- Mutual funds may also be classified on the basis of securities in which they invest.Basically, it is renaming the subcategories of return based classification.I. Equity Fund: - Such funds, as the name implies, invest most of their investible shares inequity shares of companies and undertake the risk associated with the investment in equityshares. Such funds are clearly expected to outdo other funds in rising market, because thesehave almost all their capital in equity. Equity funds again can be of different categoriesvarying from those that invest exclusively in high quality blue-chip companies to those thatinvest solely in the new, unestablished companies. The strength of these funds is theexpected capital appreciation. Naturally, they have a higher degree of risk. Equity Oriented Schemesii. Bond Funds:-Such funds have their portfolio consisted of bonds, debentures, etc. this type of fund isexpected to be very secure with a steady income and little or no chance of capitalappreciation. Obviously risk is low in such funds. In this category we may come across thefunds called Liquid Funds, which specialize in investing short-term money marketinstruments. The emphasis is on liquidity and is associated with lower risks and low returns.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  16. 16. MUTUAL FUND Debt Based Scheme iii. Balanced Fund:- The funds, which have in their portfolio a reasonable mix of equity and bonds, are known as balanced funds. Such funds will put more emphasis on equity share investments when the outlook is bright and will tend to switch to debentures when the future is expected to be poor for shares.(c). Sector based classification: - There are number of funds that invest in a specified sector of economy. While such funds do have the disadvantage of low diversification by putting all their all eggs in one basket, the policy of specializing has the advantage of developing in the fund managers an intensive knowledge of the specific sector in which they are investing. Sector based funds are aggressive growth funds which make investments on the basis of assessed bright future for a particular sector. These funds are characterized by high viability, hence more risky.  Real Estate  Infrastructure  IT Sector  Auto Sector SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  17. 17. MUTUAL FUND Advantages of Investing into a Mutual Fund: - Fig:-4Flexibility - Mutual Fund investments also offers a lot of flexibility with features such assystematic investment plans, systematic withdrawal plans & dividend reinvestment.Affordability - They are available in units so this makes it very affordable. Because of thelarge corpus, even a small investor can benefit from its investment strategy.Liquidity - In open-ended schemes, there is an option of withdrawing or redeeming money.Diversification - Risk is lowered with Mutual Funds as they invest across different industries& stocks.Professional Management - Expert Fund Managers of the Mutual Fund analyze all optionsbased on experience & research.Potential of return -The fund managers who take care of Mutual Fund have access toinformation and statistics from leading economists and analysts around the world. Because ofthis, they are in a better position than individual investors to identify opportunities forinvestments to flourish. Low Costs – The benefits of scale in brokerage, custodial and other fees translate into lowercosts for investors.Regulated for investor protection - The Mutual Funds sector is regulated to safeguard theinvestors interests.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  18. 18. MUTUAL FUNDAdvantages of Mutual Funds:- Professional Management – The primary advantage of funds (at least theoretically) is theprofessional management of money. Investors purchase funds because they do not have thetime or the expertise to manage their own portfolio. A mutual fund is a relatively inexpensiveway for a small investor to get a full-time manager to make and monitor investments. Diversification –By owning shares in a mutual fund instead of owning individual stocks orbonds, risk is spread out. The idea behind diversification is to invest in a large number ofassets so that a loss in any particular investment is minimized by gains in others. In otherwords, the more stocks and bonds an individual own, the less any one of them can hurt. Economies of Scale: – Because a mutual fund buys and sells large amounts of securities at atime, its transaction costs are lower than as an individual would pay. Liquidity – Just like an individual stock, a mutual fund allows in converting shares into cashat any time.Simplicity – Buying a mutual fund is easy. When an investor invest in the mutual fund thenthey need to take form, fill it according to required instructions given and give the demanddraft or cheque of amount whatever they want to invest.Reduced risk: - As mutual funds invests in large number of companies and are managedprofessionally, the risk factor of the investor is reduced. A small investor, on the other hand,may not be in position to minimize the such risk.Tax advantage: - There are certain schemes of mutual fund which provide tax advantageunder income tax act. Thus tax liability of investor also reduced when he invest in mutualfund schemes.Low operating cost: - Mutual fund has large number of investible funds at their disposaland thus can avail the large scale of economies. This reduces their operating cost by way ofbrokerage, fees, commission etc. Thus, an investor can also gets the benefits of large scale ofeconomies and low operating cost.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  19. 19. MUTUAL FUNDDisadvantages of Mutual Funds:-Professional Management – Many investors debate over whether or not the so-calledprofessionals are any better than an individual or others at picking stocks. Management is byno means infallible, and, even if the fund loses money, the manager still takes his/her cut.Costs – The mutual fund industry is masterful at burying costs under layers of jargon. Thesecosts are so complicated that in this tutorial we have devoted an entire section to the subject.Dilution – Because funds have smallholdings in so many different companies, high returnsfrom a few investments. Often dont make much difference on the overall return. Dilution isalso the result of a successful fund getting too big. When money pours into funds that havehad strong success, the manager often has trouble finding a good investment for all the newmoney.Taxes – When making decisions about an individual’s money, fund managers dont considerabout personal tax situation. For example, when a fund manager sells a security, a capital-gain tax is triggered, which affects how profitable the individual is from the sale. It mighthave been more advantageous for the individual to defer the capital gains liability.F) BASIS FOR SELECTION:-Investors are selecting the mutual funds on the basis of following aspects of investment:-  Net assets  Portfolio composition  Income composition  Gross income as percentage of net assets  Expenses ratio  Realized gain per unit  Unrealized appreciation per unitSRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  20. 20. MUTUAL FUNDg) MUTUAL FUND CONSTITUENTS:-Fig:-5All mutual funds comprise four constituents – Sponsors, Trustees, Asset ManagementCompany (AMC) and Custodians.Sponsors:The sponsors initiate the idea to set up a mutual fund. It could be a registered company,scheduled bank or financial institution. A sponsor has to satisfy certain conditions, such ascapital, record (at least five years’ operation in financial services), and de-fault free dealingsand general reputation of fairness. The sponsors appoint the Trustee, AMC and Custodian.Once the AMC is formed, the sponsor is just a stakeholder.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  21. 21. MUTUAL FUNDTrust/ Board of Trustees:Trustees hold a fiduciary responsibility towards unit holders by protecting their interests.Trustees float and market schemes, and secure necessary approvals. They check if theAMC’s investments are within well-defined limits, whether the fund’s assets are protected,and also ensure that unit holders get their due returns. They also review any due diligenceby the AMC. For major decisions concerning the fund, they have to take the unit holdersconsent. They submit reports every six months toSEBI:Investors get an annual report. Trustees are paid annually out of the fund’s assets – 0.5percent of the weekly net asset value.Fund Managers/ AMC:They are the ones who manage money of the investors. An AMC takes decisions,compensates investors through dividends, maintains proper accounting and information forpricing of units, calculates the NAV, and provides information on listed schemes. It alsoexercises due diligence on investments, and submits quarterly reports to the trustees. Afund’s AMC can neither act for any other fund nor undertake any business other than assetmanagement. Its net worth should not fall below Rs. 10 crore. And, its fee should not exceed1.25 percent if collections are below Rs. 100 crore and 1 percent if collections are above Rs.100 crore. SEBI can pull up an AMC if it deviates from its prescribed role.Custodian:Often an independent organization, it takes custody of securities and other assets of mutualfund. Its responsibilities include receipt and delivery of securities, collecting income-distributing dividends, safekeeping of the units and segregating assets and settlementsbetween schemes. Their charges range between 0.15-0.2 percent of the net value of theholding. Custodians can service more than one fund.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  22. 22. MUTUAL FUNDh) MARKETING STRATEGIES ADOPTED BY THE MUTUAL FUNDSThe present marketing strategies of mutual funds can be divided into three main headings:A. Direct marketingB. Selling through intermediaries.C. Joint CallsDirect Marketing:This constitutes 20 percent of the total sales of mutual funds. Some of the important toolsused in this type of selling are:Personal Selling: In this case the customer support officer or Relationship Manager of thefund at a particular branch takes appointment from the potential prospect. Once theappointment is fixed, the branch officer also called Business Development Associate (BDA)in some funds then meets the prospect and gives him all details about the various schemesbeing offered by his fund. The conversion rate in this mode of selling is in between 30% -40%.Telemarketing: In this case the emphasis is to inform the people about the fund. The namesand phone numbers of the people are picked at random from telephone directory. Some fundhouses have their database of investors and they cross sell their other products. Sometimespeople belonging to a particular profession are also contacted through phone and are theninformed about the fund. Generally the conversion rate in this form of marketing is 15% -20%.Direct mail: This one of the most common method followed by all mutual funds. Addressesof people are picked at random from telephone directory, business directory, professionaldirectory etc. The customer support officer (CSO) then mails the literature of the schemesoffered by the fund. The follow up starts after 3 to 4 days of mailing the literature. The CSOcalls on the people to whom the literature was mailed. Answers their queries and is generallysuccessful in taking appointments with those people. It is then the job of BDA to try his bestto convert that prospect into a customer.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  23. 23. MUTUAL FUNDAdvertisements in newspapers and magazines: The funds regularly advertise in businessnewspapers and magazines besides in leading national dailies. The purpose to keep investorsaware about the schemes offered by the fund and their performance in recent past.Advertisement in TV/FM Channel: The funds are aggressively giving their advertisements inTV and FM Channels to promote their funds.Hoardings and Banners: In this case the hoardings and banners of the fund are put atimportant locations of the city where the movement of the people is very high. The hoardingand banner generally contains information either about one particular scheme or briefinformation about all schemes of fund.Selling through intermediaries:Intermediaries contribute towards 80% of the total sales of mutual funds. These are thepeople/ distributors who are in direct touch with the investors. They perform an importantrole in attracting new customers. Most of these intermediaries are also involved in sellingshares and other investment instruments. They do a commendable job in convincing investorsto invest in mutual funds. A lot depends on the after sale services offered by the intermediaryto the customer.Customers prefer to work with those intermediaries who give them right information aboutthe fund and keep them abreast with the latest changes taking place in the market especially ifthey have any bearing on the fund in which they have invested.Regular Meetings with distributors:Most of the funds conduct monthly/bi-monthly meetings with their distributors. The objectiveis to hear their complaints regarding service aspects from funds side and other queries relatedto the market situation. Sometimes, special training programmes are also conducted for thenew agents/ distributors.Training involves giving details about the products of the fund, their present performance inthe market, what the competitors are doing and what they can do to increase the sales of thefund.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  24. 24. MUTUAL FUNDJoint Calls:This is generally done when the prospect seems to be a high net worth investor. The BDAand the agent (who is located close to the residence or area of operation) together visit theprospect and brief him about the fund. The conversion rate is very high in this situation,generally, around 60%. Both the fund and the agent provide even after sale services in thisparticular case.The most important trend in the mutual fund industry is the aggressive explosion of theforeign owned mutual funds companies and the decline of the companies floated bynationalized banks and small private sector players.Many nationalized banks got into the mutual funds business in the early nineties and got of toa good start due to the stock market boom prevailing then. These banks did not reallyunderstand the mutual funds business and they viewed it as another kind of banking activity.Few hired specialized staff and generally chose to transfer staff from parent organizations.The performance of most of the schemes floated by these organizations was not good. Someschemes had offered guaranteed returns and there parent organizations had to bail out theseAMC by paying large amount of money as the difference between the guaranteed and actualreturns. The service levels were also very bad. Most of these AMC have not been able toretain staff, float new schemes etc. And it is doubtful whether, barring a few exceptions, theyhave serious plans of continuing the activity in a major way.The experience of some of the AMC floated by the private sector Indian companies was alsovery similar. They quickly realized that the AMC business is a business, which makes moneyin the long term and requires deep- pocketed support in the intermediate years. Some havesold out to foreign owned companies, some have merged with others and there is a generalrestructuring going on.The foreign owned companies have deep pockets and have come here with the expectationsof a long haul. They can be credited with the introduction of many new practices such as newproduct innovation, sharp improvement in the service standards and disclosure, usage oftechnology, broker education and support etc. In fact, they have forced the industry toupgrade itself and its service level of organization.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  25. 25. MUTUAL FUNDJ) MARKETING OF FUNDS AND ITS CHALLENGES:-When we consider marketing, we have to see the issues in totality, because we cannot judgean elephant by its trunk or by its tail but we have to see it in its totality. When we saymarketing of mutual funds, it means, includes and encompasses the following aspects:  Assessing of investors needs and market research;  Responding to investors needs;  Product designing;  Studying the macro environment;  Timing of the launch of the product;  Choosing the distribution network;  Finalizing strategies for publicity and advertisement;  Preparing offer documents and other literature;  Getting feedback about sales;  Studying performance indicators about fund performance like NAV;  Sending certificates in time and other after sales activities;  Honoring the commitments made for redemptions and repurchase;  Paying dividends and other entitlements;  Creating positive image about the fund and changing the nature of the market itself.  Widening, Broadening and Deepening the MarketsThe above are the aspects of marketing of mutual funds, in totality. Even if there is a singleweak-link among the factors which are mentioned above, no mutual fund can successfullymarket its funds.PRODUCT INNOVATION AND VARIETYA. Investor PreferencesThe challenge for the mutual funds is in the tailoring the right products that will helpmobilizing savings by targeting investors needs. It is necessary that the common investorunderstands very clearly and loudly the salient features of funds, and distinguishes one fundfrom another. The funds that are being launched today are more or less look-alikes, or plainvanilla funds, and not necessarily designed to take into account the investors varying needs.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  26. 26. MUTUAL FUNDThe Indian investor is essentially risk averse and is more passive than active. He is notinterested in frequently changing his portfolio, but is satisfied with safety and reasonablereturns. Importantly, he understands more by emotions and sentiments rather than aquantitative comparison of funds performance with respect to an index. Mere growthprospects, in an uncertain market, are not attractive to him. He prefers one bird in the hand totwo in bush, and is happy if assured a rate of reasonable return that he will get on hisinvestment. The expectations of a typical investor, in order of preference are the safety offunds, reasonable return and liquidity.The investor is ready to invest his money over long periods, provided there is a purposeattached to it which is linked to his social needs and therefore appeals to his sentiments andemotions. That purpose may be his child education and career development, medicalexpenses, health care after retirement, or the need for steady and sure income after retirement.In a country where social security and social insurance are conspicuous more by theirabsence, mutual funds can pool their resources together and try to mobilize funds to meetsome of the social needs of the society.B. Product InnovationsWith the debt market now getting developed, mutual funds are tapping the investors whorequire steady income with safety, by floating funds that are designed to primarily have debtinstruments in their portfolio. The other area where mutual funds are concentrating is themoney market mutual funds, sect oral funds, index funds, gilt funds besides equity funds.The industry can also design separate funds to attract semi-urban and rural investors, keepingtheir seasonal requirements in mind for harvest seasons, festival seasons, sowing seasons, etc.i) MARKET SEGMENTS OF MUTUAL FUND:-Market Segmentation: Different segments of the market have different risk-return criteria,on the basis of which they take investment decisions. Not only that, in a particular segmentalso there could be different sub-segments asking for yet different risk-return attributes, anddifferential preference for various investments attributes of financial product.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  27. 27. MUTUAL FUNDDifferent investment attributes an investor expects in a financial product are:  Liquidity,  Capital appreciation,  Safety of principal,  Tax treatment,  Dividend or interest income,  Regulatory restrictions,  Time period for investment, etc.On the basis of these attributes the mutual fund market may be broadly segmented into fivemain segments as under.1) Retail SegmentThis segment characterizes large number of participants but low individual volumes. Itconsists of individuals, Hindu Undivided Families, and firms. It may be further sub-dividedinto:i. Salaried class people;ii. Retired people;iii. Businessmen and firms having occasional surpluses;iv. HUF for long term investment purpose.These may be further classified on the basis of their income levels. It has been observed thatprospects in different classes of income levels have different patterns of preferences ofinvestment. Similarly, the investment preferences for urban and rural prospects would differand therefore the strategies for tapping this segment would differ on the basis of differentiallife style, value and ethics, social environment, media habits, and nature of work. Broadly,this class requires security of the principal, liquidity, and regular income more than capitalappreciation. It lacks specialized investment skills in financial markets and highly susceptibleto mob behavior. The marketing strategy involving indirect selling through agency networkand creating awareness through appropriate media would be more effective in this segment.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  28. 28. MUTUAL FUND2) Institutional Segment :---This segment characterizes less number of participants, andlarge individual volumes. It consists of banks, public sector units, financial institutions,foreign institutional investors, insurance corporations, provident and pension funds. Thisclass normally looks for more specialized professional investment skills of the fund managersand expects a structured product than a ready-made product. The tax features and regulatoryrestrictions are the vital considerations in their investment decisions. Each class ofparticipants, such as banks, provides a niche to the fund managers in this segment. It requiresmore of a personalized and direct marketing to sustain and increase volumes.3) Trusts :---This is a highly regulated, high volumes segment. It consists of various types oftrusts, namely, charitable trusts, religious trust, educational trust, family trust, social trust, etc.each with different objectives. Its basic investment need would be safety of the principal,regular income and hedge against inflation rather than liquidity and capital appreciation. Thisclass offers vast potential to the fund managers, if the regulators relax guidelines and allowthe trusts to invest freely in mutual funds.4) Non-Resident Indians :---This segment consists of very risk sensitive participants, attimes referred as fair weather friends. They need the highest cover against political andexchange risk. They normally prefer easy exit with repatriation of income and principal. Theyalso hold a strategic importance as they bring in crucial foreign exchange a crucial input fordeveloping country like ours. Marketing to this segment requires special kind of products forgroups of foreign countries depending upon the provisions of tax treaties. The range ofsuitable products are required to design to divert the funds flowing into bank accounts. Thelatest flavor in the mutual fund industry is exclusive schemes for non-resident Indians (NRI.)5) Corporate :---Generally, the investment need of this segment is to park their occasionalsurplus funds that earn return more than what they have to pay on account of holding them.Alternatively, they also get surplus fund due to the seasonality of the business, whichtypically become due for the payment within a year or quarter or even a month. They needshort term parking place for their fund, this segment offers a vast potential to specializedmoney market managers. Given the relaxation in the regulatory guidelines, fund managers areexpected design products to this segment. Thus, each segment and sub-segment has their ownrisk return preferences forming niches in the market. Mutual funds managers have to analyzein detail the intrinsic needs of the prospects and design a variety of suitable products forSRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  29. 29. MUTUAL FUNDthem. Not only is that, the products also required to be marketed through appropriatelydifferent marketing strategies.The Atheists are turning believers. Mutual funds, private sector ones in particular, who hadwritten off advertising as the A ultimate waste of money have nearly tripled their press mediaspend .What interesting is that in this period the share of the private sector mutual funds inthe category total media spending has surged from 20 percent to 52 percent. This can beattributed to private sector funds (given the data available with the Association of MutualFunds of India) seeing an increase share of net inflows relative to the bank-sponsoredcounterparts in the public sector.Clearly advertising types have something to cheer about. But what caused this suddenattitudinal shift towards advertising? According to experts, funds are being pushed intoadvertising more by intermediaries like banks who are reluctant to sell a product whose nameis unfamiliar to investor. Besides, since more open-ended schemes are now available, someform of ongoing support to keep sales booming has been deemed necessary by the funds. Theindustry has discovered that advertising in the changed climate today, when investors aremost receptive to mutual funds, can perk up sales by anywhere between 20-40 percent. MFhas rationale for stepping up marketing spends because the brand is an important part of theconsumer decision to invest in a category that is not yet clearly understood by people.According to the mutual fund marketers, advertising helps bring recall when consumers arelooking at investment opportunities. Advertising backed by an integrated marketing andcommunication campaign designed to attract investors with long term prospective has helpedthe fund post a redemption-to-sales ratio of just about five percent as compared to 20-30percent for the industry on an average.Direct mail is another medium, which some funds have successfully used. But rather thansending out mailers to all and sundry, there is a need for appropriate targeting.Educational seminars are the final leg in the marketing and communication process. In these,investors conditioned by advertising and hooked by an interesting mailer can have lingeringdoubts clarified. Attractive point of purchase (POP) material can also help.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  30. 30. MUTUAL FUNDAnother very successful media niche, which has been exploited to the hilt by funds, isintermediary magazines and newsletters. Besides the low costs of advertising in thesenewsletters, these publications circulate to those who are looking for investment opportunitiesand thus represent an extremely lucrative target segment. Advertising content by most of thefunds too has undergone a marked change from concept-selling ads dispelling myths, toselling specific schemes that meet defined objectives/ goals.k) SEBI GUIDELINES The SEBI issued a set of regulations and code of conduct of 20 January. 1993 for the smooth conduct and regulation of Mutual fund. The silent features of these guidelines are a s follows:  Mutual Fund cannot deal in Option trading, short selling or carrying forward transactions in securities.  Mutual fund should be formed as trusts and managed by AMC  Restriction to ensure those investments under all schemes do not Exceed 15% of the funds in the shares and debentures of a single company.  SEBI will grant registration to only those Mutual Funds, which can prove an efficient and orderly conduct of business.  The Mutual fund should have a custodian, not associated in any way with the AMC and registered with the board.  The minimum amount to be raised with each closed ended scheme should be Rs. 20 crore and for the open-ended scheme Rs. 50 crore.  The Mutual Fund is obliged to maintain books of account.  The minimum net worth of AMC is Rs. 5 crore of which the minimum contribution of the sponsor should be 40%.  The Mutual Fund should ensure adequate disclosures to the investors  SEBI can impose suspension of registration in case of violation of the provision of the SEBI act 1992, to the regulations.  Restrictions to ensure the investments under an individual scheme donot exceed 5% of the corpus of any companies’ shares and investments under all schemes do not exceed 10% of the funds in the shares, debentures or securities of a single company.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  31. 31. MUTUAL FUND CHAPTER:-22.1) COMPANY PROFILE:-The Standard Chartered Group was formed in 1869 through a merger of two banks: TheStandard Bank of British South Africa founded in 1863, and the Chartered Bank of India,Australia and China, founded in 1853. Both companies were keen to capitalize on the hugeexpansion of trade and to earn the handsome profits to be made from financing the movementof goods from Europe to the East and to Africa.The Chartered Bank  Founded by James Wilson following the grant of a Royal Charter by Queen Victoria in 1853  Chartered opened its first branches in Mumbai (Bombay), Calcutta and Shanghai in 1858, followed by Hong Kong and Singapore in 1859  Traditional business was in cotton from Mumbai (Bombay), indigo and tea from Calcutta, rice in Burma, sugar from Java, tobacco from Sumatra, hemp in Manila and silk from Yokohama  Played a major role in the development of trade with the East which followed the opening of the Suez Canal in 1869, and the extension of the telegraph to China in 1871  In 1957 Chartered Bank bought the Eastern Bank together with the Ionian Bank’s Cyprus Branches. This established a presence in the GulfSRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  32. 32. MUTUAL FUNDThe Standard Bank  Founded in the Cape Province of South Africa in 1862 by John Paterson. Commenced business in Port Elizabeth, South Africa, in January 1863  Was prominent in financing the development of the diamond fields of Kimberley from 1867 and later extended its network further north to the new town of Johannesburg when gold was discovered there in 1885  Expanded in Southern, Central and Eastern Africa and by 1953 had 600 Offices  In 1965, it merged with the Bank of West Africa expanding its Operations into Cameroon, Gambia, Ghana, Nigeria and Sierra LeoneIn 1969, the decision was made by Chartered and by Standard to undergo a Friendly merger.All was going well until 1986, when a hostile takeover bid was made for the Group by LloydsBank of the United Kingdom. When the bid was defeated, Standard Chartered entered aperiod of change. Provisions had to be made against third world debt exposure and loans tocorporations and entrepreneurs who could not meet their commitments. Standard Charteredbegan a series of divestments notably in the United States and South Africa, and also enteredinto a number of asset sales. From the early 90s, Standard Chartered has focused ondeveloping its strong franchises in Asia, the Middle East and Africa using its operations inthe United Kingdom and North America to provide customers with a bridge between thesemarkets. Secondly, it would focus on consumer, corporate and institutional banking, and onthe provision of treasury services? areas in which the Group had particular strength andexpertise. In the new millennium we acquiredGrindlays Bank from the ANZ Group and the Chase Consumer Banking operations in HongKong in 2000.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  33. 33. MUTUAL FUNDEstablishment of Standard Chartered Bank around the worldCountry Year Established Country Year EstablishedUnited Kingdom 1853 Australia 1964China, India, Sri 1858 Mexico, Oman 1968LankaHong Kong, 1859 Peru 1973SingaporeIndonesia, Pakistan 1863 Jersey 1978Philippines 1872 Brazil 1979Malaysia 1875 Venezuela 1980 Falkland Islands,Japan 1880 1983 MacauZimbabwe 1892 Taiwan 1985The Gambia, Sierra 1894 Cameroon 1986Leone, ThailandGhana 1896 Nepal 1987Botswana 1897 Vietnam 1990 Cambodia, SouthUSA 1902 1992 AfricaBangladesh 1905 Iran 1993Zambia 1906 Colombia 1995Kenya 1911 Laos, Argentina 1996Uganda 1912 Nigeria 1999Tanzania 1917 Lebanon 2000Bahrain 1920 CotedIvoire 2001Jordan 1925 Mauritius 2002Korea 1929 Turkey 2003Qatar 1950 Afghanistan 2004Brunei, UAE 1958SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  34. 34. MUTUAL FUNDRecent strategic alliances and acquisitionsThe year 2005 and 2006 were historic years for us as we achieved several milestones with anumber of strategic alliances and acquisitions that will extend our customer or geographicreach and broaden our product range.  We completed, rebranded and successfully integrated SC First Bank in Korea, which to date is the biggest acquisition in our history.  We completed full integration between Standard Chartered Bank ,Thailand and Standard Chartered Nakornthon Bank in October.  We formed strategic alliances with Fleming Family & Partners to expand private wealth management in Asia and the Middle East.  We acquired stakes in ACB Vietnam and Travelex.  We acquired the business operations of American Express Bank in Bangladesh.  We acquired a stake in Bohai Bank in Tianjin, China, making us the first foreign bank to be allowed a stake in a local bank in China.  We acquired a 25% stake in First Africa Group Holdings in June 2006.  We acquired an additional 26% stake in Permata Bank through our consortium with PT Astra International, thus giving the consortium a total stake of 89%.  We acquired Union Bank in Pakistan in September 2006 and we have successfully re branded all branches.  We launched a tender offer in the end of 2006 for 100% in Hsinchu International Bank, TaiwanSRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  35. 35. MUTUAL FUND PRODUCT PROFILEEQUITY SCHEMEImperial Equity FundThe Standard Chartered Premier Equity Fund, an innovative open –ended equity fund thatattempts to generate wealth over the long term through a potent combination of well definedinvestment strategy and a robust investment management structure. At Standard CharteredMutual Fund we believe that wealth creation is a patient process that involves a good blend ofmyriad themes like the identification of a basket of growth ideas, investing in them at anearly stage and the conviction to hold on for the longer term. For opportunities then willabound.Over the past decade, Indian companies have converted their competitive advantage tomarket dominance and in the process have created serious wealth for investors over a 5-yearperiod. If the software and the telephony sectors like the insurance, aviation to name a couplewhere we envisage such growth. The Premier Equity Fund will indulge wholeheartedly inthis endeavor to create wealth creation process and thus seek to provide long - term investorswith an option to generate wealth.Enterprise Equity FundA 3 year close-ended equity fund that will invest in IPOs that are slated for launch in the nextthree years. It helps you take advantage of the increasing number of IPOs and benefit fromthe potential premium on listing of IPOs. So no more applying, waiting for allotment orrefund cheques. Don’t lose out on IPOs.Equity Arbitrage FundThe Standard Chartered Arbitrage Fund makes the most the difference across markets byinvesting in the cash and futures market. And with up to 35% allocation to debt and moneymarket instruments, the product suits a low-risk profile perfetcly. You dont have to alwaysmake a choice, but you can make the most from the options. And The Standard CharteredArbitrage Fund does exactly that.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  36. 36. MUTUAL FUNDTax Saver (ELSS) FundStandard Chartered has also introduced its Tax saver ELSS fund Specifically in order toprovide income tax benefit to the IT payers Under section 80C of Income Tax Act.DEBT SCHEMEStandard Chartered all session bond FundInvestment Objective:-To generate optimal returns with high liquidity by active management of the portfolio, byinvesting predominantly in debt oriented mutual fund schemes and money marketinstruments.There can be no assurance that the investment objective of the  Scheme will be realized.  Ideal investment horizonThe scheme is designed for investors seeking stable returns over a relatively. Longer tenorperiod of investment of more than a year.2.2 OBJECTIVE OF STUDYPrimary objective:-  The primary objective of the study is to understand the mutual fund and understand the different aspects of mutual funds and their functioning in market.  To understand the investment pattern of mutual fund in different type of schemes and how these schemes are able to serve the needs of the customer.  To understand how a customer looks at the scheme and what kind of benefit they want from any scheme.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  37. 37. MUTUAL FUND  To understand the difference between the direct investment in stocks and in mutual fund and evaluate that which investment is beneficial.Secondary objective:-  To understand the customer perception towards making investment in any kind of stock and in mutual fund.  How the mutual funds where issued to customer.  Where these mutual funds are traded.2.3) SCOPE OF STUDY:-  This study will help in understanding the growing mutual fund market in India and this will also help us to understand the fast changes in nature of mutual fund.  This study is quite helpful in understanding the functioning of any mutual fund company in recent loomy market condition.  This study will help in understanding the investment pattern of the mutual fund and help the customer to choose a particular pattern.  The study will help to understand the organization to understand the changing needs of the customer and that will the organization to track the customer in future.  The study is done in Patna, where standard chartered mutual fund doesn’t have more branches that will the organization to expand their firm in Patna by understanding customer through this study.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  38. 38. MUTUAL FUND2.4) LIMITATION OF THE STUDY:-  The study was limited to specific area of the PATNA city.  This study was limited to sample size of 150.  The time has constraint of 1 month.  The customer was not providing right information to us.  Non-availability of past data, Balance Sheet etc.  Non-availability of Fund Manager to discuss on fund strategies and growth projections due to geographical location.  This study has been limited by time and cost factors.  This study has been made from the information given by STANDARD CHARTERD MF office. Accuracy of the findings is dependent on the quality of their Responses.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  39. 39. MUTUAL FUND2.5) RESEARCH METHODOLOGY:-Research methodology define as the systematic plan, design, collection, analysis andreporting of data and findings relevant to a specific marketing situation facing the company.RESEARCH DESIGN:-The research requires developing the most efficient plan for gathering the neededinformation. this involves decision on the data sources, research approaches, researchinstrument, sampling plan and contact method.There are three types of research design as follows:-EXPLARATORY RESEARCH:-Explaratory research is conducted when researcher does not know how and why certainphenomenon occurs. The prime goal for this research is to know unknown, this research isunstructured.DESCRIPTIVE RESEARCH:-Descriptive research is carried out to describe the phenomenon or market characteristics. Thisstudy is done to understand buyer behavior and describe characteristics of the target market.This study is done for evaluation of the customer preference.CAUSATIVE RESEARCH:-Causative research is done to establish the cause and effect relationship.I use the descriptive research for my study.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  40. 40. MUTUAL FUNDDATA SOURCES:-PRIMARY DATA:-Primary data are collected by a study specifically to fulfill the data needs of the problem athand. such data are original in character and are generated in large number of surveysconducted mostly by government and also by individual, institution, and research bodies.METHODS OF COLLECTING PRIMARY DATA:-  Direct personal interviews.  Indirect oral interviews.  Information from correspondence.  Mail questionnaire method.SECONDARY DATA:-Data which are not originally collected but rather obtained from published and unpublishedsources are known as secondary data.SOURCES OF SECONDARY DATA:-  Published sources  Unpublished sourcesSAMPLE:-When secondary data are not available for the problem under study, a decision may be madeto collect primary data by different methods for information. The information may becollected by either the census method or sample method.The sample is a portion of universe.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  41. 41. MUTUAL FUND SAMPLING METHODS:- 1. Non probability sampling method. 2. Probability sampling method.Non probability sampling method:-  Judgment sampling:- In this method of sampling the choice of sample items depends on judgment of the investigator. In other words, the investigator exercises his judgment in the choice and includes those items in sample which he thinks are most typical of universe with regard to characteristics under investigation.  Quota sampling:- In a quota sample, quotas are set up according to some specified characteristics such as so many in each of several income groups, so many in each age group etc.  Convenience sampling:- A convenient sampling is obtained by convenient population. This is also called as chunk.Probability sampling method:-  Sampling or unrestricted random samples:-simple or restricted random sampling technique refers to that sampling in which each and every unit of the population has an equal opportunity of being selected in the sample.  Restricted random sampling:- o Stratified sampling:- Stratified random sampling or simply stratified sampling is one of the random methods which, by using the available information concerning the population, attempt to design a more efficient sample than obtained by the simple random procedure.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  42. 42. MUTUAL FUND o Systematic sampling:- A systematic sample is formed by selecting one unit at random and then selecting additional unit at evenly spaced intervals until the samples has been formed. o Multi stage or cluster sampling:- Under this method, the random selection is made of primary, intermediate and final (the ultimate) units given from a given population or stratum.SAMPLE SIZE:- 150MATHEMATICAL & STATICAL TOOLS USED FOR DATA ANALYSIS  Percentage method  Average method2.6) LITERATURE REVIEW:-The Indian mutual funds industry is witnessing a rapid growth as a result of infrastructuraldevelopment, increase in personal financial assets, and rise in foreign participation. With thegrowing risk appetite, rising income, and increasing awareness, mutual funds in India arebecoming a preferred investment option compared to other investment vehicles like FixedDeposits (FDs) and postal savings that are considered safe but give comparatively lowreturns, according to “Indian Mutual Fund Industry”.This report provides a detailed analysis along with current and future outlook of the Indianmutual fund industry and explores the market development and potential. The forecasts andestimations given in this report are not based on a complex economic model, but are intendedas a rough guide to the direction in which the industry is likely to move.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  43. 43. MUTUAL FUNDKey FindingsThe Indian mutual funds retail market, growing at a CAGR of about 30%, is forecasted toreach US$ 300 Billion by 2015.- At about 84% (as on May 31, 2009), private sector Asset Management Companies accountfor majority of mutual fund sales in India.- Individual investors make up for 96.86% of the total number of investor accounts andcontribute 36.9% of the net assets under management.Key Issues & Facts Analyzed in the Report- What are the key factors fueling growth into the Indian mutual fund market?- Which are the fastest growing products?- What are the key growth prospects?- What are the key challenges for the market?- How the market is likely to move in future?Key PlayersThis section provides business analysis of key players in the Indian mutual fund market,including Reliance Capital, BOB and HDFC,Standard chartered.Research Methodology UsedInformation sources:-Information for this report has been sourced from books, newspapers, trade journals, whitepapers, industry portals, government agencies, trade associations, monitoring industry newsand developments, and through access to more than 3000 paid databases.Analysis method:-The analysis methods used in this report include ratio analysis, historical trend analysis,linear regression analysis using software tools, judgmental forecasting, and cause and effectanalysis.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  44. 44. MUTUAL FUND CHAPTER:-3 DATA ANALYSIS & INTREPRETATION:-TABLE:-11.Occupation wise classification:-Occupation No. of respondents PercentageProfessional 15 10%Business man 99 66%Employee 12 8%Govt.employees 18 12%Student 06 4%Total 150 100%Figure:-6 Occupation wise classification 160 140 120 100 80 Occupation 60 No. of respondents 40 percentage 20 0 1 2 3 4 5 6 Categories of occupationInference:-  66% of respondent were belonging to businessman category.  4% of respondent were belonging to students category.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  45. 45. MUTUAL FUNDTABLE NO.-2Income wise classification:-Income level NO. of respondents Percentage5000-10000 18 12%10000-15000 45 30%15000-20000 63 42%More than 20000 24 16%Total 150 100%Fig:-7 Income wise classification 160 No.of repondents 140 120 100 NO. of respondents 80 60 Percentage 40 20 0 5000- 10000- 15000- More Total 10000 15000 20000 than 20000 Income levelsInference:-  42% of respondent are having income of 15000-20000  12% of respondents are having income of 5000-10000SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  46. 46. MUTUAL FUNDTABLE NO.-3Savings:-Saving No. of respondents Percentage1000-4000 27 18%4000-7000 23 15%7000-10000 72 48%More than 10000 28 19%Total 150 100%Fig:-8 Monthly saving 160 140 No. of respondents 120 100 percentage 80 No. of respondents 60 40 20 0 1000-4000 4000-7000 7000-10000 More than Total 10000 savingInference:-  48% of respondent are saving 7000-10000  15% of respondents are saving 4000-7000SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  47. 47. MUTUAL FUNDTABLE NO.-4Awareness of mutual fund among General mass:-Attributes No. of respondent PercentageYes 135 9o%No 15 10%Total 150 100%Figure:-9 135 9o%Inference:-  90% of respondents was aware of mutual fund  10% was not aware of mutual fundSRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  48. 48. MUTUAL FUNDTABLE NO.-5Where do you want to invest most:- Investment alternatives No. of respondents Percentage Bank deposits 51 34% Stock market 14 9.5% Insurance 38 25.5% Mutual fund 29 19.5% Debenture 5 3.5% Derivatives 13 9% Total 150 100%Fig:-10 Investment pattern 350 No.of respondents 300 250 200 Percentage 150 No. of respondents 100 50 0 es d e l e ta its t un ur ke nc iv To s nt at ar lf ra po be ua riv m su de de De ut k In oc nk M St Ba Invstment alternativesInference:-  34% of respondents liked to invest in bank deposit.  3.5% liked to invest in debenture.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  49. 49. MUTUAL FUNDTABLE NO.-6Do you want to invest? Attributes No. of respondents Percentage Yes 120 80% No 30 20% Total 150 100%Fig:-11 Yes NoInference:-  80% of respondents want to invest.  20 % don’t want to investSRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  50. 50. MUTUAL FUNDTABLE NO.-7Reason to invest in mutual fund:- Reason No. of respondents Percentage More return 36 24% Safety 25 16.5% Limited risk 27 18% Capital appreciation 39 26% Systematic investment 23 15.5% Total 150 100%Fig:-12 reason to select MF 160 No.of respondents 140 120 100 Series1 80 60 Series2 40 20 0 Safety More return appreciation investment Limited risk Systematic Total Capital Benefits of MFInference:-  26% of respondent would like to invest in mutual fund because of capital appreciation.  15.5% of respondents would like to invest in mutual fund for systematic investment.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  51. 51. MUTUAL FUNDTABLE NO.-8Investment amount in Mutual fund:- Amount No. of respondents Percentage 1000-4000 10 6.7% 4000-7000 18 12% 7000-10000 75 50% More than 10000 47 31.3% Total 150 100%Fig:-13 investment amount in MF 160 140 120 100 80 No. of respondents 60 Percentage 40 20 0 1000- 4000- 7000- More than Total 4000 7000 10000 10000 AmountInference:-  50% of respondents wants to invest 7000-10000  6.7% respondents wants to invest 1000-4000SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  52. 52. MUTUAL FUNDTABLE NO.-9PREFERRED FUND IN MF S.NO. FUND NO. OF PERCENTAGE RESPONDENTS 1 EQUITY FUND 51 34% 2 DEBT. FUND 24 16% 3 BALANCED FUND 44 29% 4 ELSS SCHEME 41 21% TOTAL 150 100% Source : PRIMARY DATAFig:-14Inference:-  34% of respondents prefer equity scheme of mutual fund.  16% of respondents prefer debt scheme of mutual fund.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  53. 53. MUTUAL FUNDTABLE NO.-10Do you know about STANDARD CHARTERD Mutual fund:- Attribute Respondents Percentage Yes 129 86% No 21 14% Total 150 100%Fig:-15 AWARENESS of STANDARD CHARTERD MF Yes NoInference:-  86% of respondents know about the STANDARD CHARTERD mutual fund.  14% of respondents don’t knows the name of STANDARD CHARTERD Mutual fund.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  54. 54. MUTUAL FUNDTABLE NO.-11Have you invested in STANDARD CHARTERD Mutual fund?Attribute No. of respondents PercentageYes 120 80%No 30 20%Total 150 100%Fig:-16 1 2Inference:-  80% 0f respondents have invested in STANDARD CHARTERD mutual fund  20% of respondents haven’t invested in mutual fund.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  55. 55. MUTUAL FUNDTABLE NO.-12Reason for investing in STANDARD CHARTERD mutual fund:- Reason Respondents Percentage For better return 33 27.5% For minimum risk 39 32.5 For tax benefit 18 15% For Capital appreciation 30 25% Total 120 100%Fig:-17 Benefits of investment in STANDARD CHARTERD MF 120 100 80 60 40 Respondents 20 percentage 0 For better For tax Total return benefit BenefitsInference:-  32.5% of respondents have invested in STANDARD CHARTERD Mutual fund for minimum risk.  15% for tax benefit.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  56. 56. MUTUAL FUNDTABLE NO.-13Attracting elements of STANDARD CHARTERD Mutual fund:- Reasons Respondents Percentage Systematic investment 18 15% plan(SIP) Limited investment 51 42.5% Proficiency 27 32.5% Better fund allocation 18 15%Diversification of Your fund 6 4% Total 120 100%Fig:-18 investment types 120 Systematic investment plan(SIP) 100 Limited investment 80 60 Proficiency 40 Better fund allocation 20 Diversification of Your fund 0 Respondents Percentage Total benefitsInference:-  42.5% of respondents said the limited investment in STANDARD CHARTERD MF was most attracting.  6% said its diversification is most attractive.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  57. 57. MUTUAL FUNDTABLE NO.-14In how many schemes of STANDARD CHARTERD Mutual fund would you like toinvest? No. of schemes No. of respondent Percentage 1 72 60% 2 15 12.5% 3 16 13.25% More than 3 17 14.25%Fig:-19 Customer interest in STANDARD CHARTERD Mutual fund 80 70 60 50 1 40 2 30 3 20 More than 3 10 0 No. of respondent Percentage No of respondentInference:-  60% of respondents would like to invest in 1 scheme of STANDARD CHARTERD Mutual fund.  12.5% would like to invest in 2 schemes of STANDARD CHARTERD mutual fund.SRM UNIVERSITY [SCHOOL OF MANAGEMENT]
  58. 58. MUTUAL FUNDTABLE NO.-15Have you invested in any other mutual fund? Attributes No. of respondents Percentage Yes 18 15% No 102 85% Total 120 100%Fig:-20 Yes 1 2Inference;-  85% of respondents haven’t invested in other mutual fund.  15% of respondents have invested in other mutual fundSRM UNIVERSITY [SCHOOL OF MANAGEMENT]