Customer Perception toward Mutual funa

4,579 views

Published on

This is a summer training report which is base on mutual fund overview and customer perception regarding to mutual fund.

Published in: Economy & Finance, Business
0 Comments
10 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
4,579
On SlideShare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
384
Comments
0
Likes
10
Embeds 0
No embeds

No notes for slide

Customer Perception toward Mutual funa

  1. 1. SUMMER TRAINING PROGRAMME 2012 Indian Mutual Fund Industry Company: “UTI Assets Management Company Ltd.”
  2. 2. A Project OnPage | 2 Customer Perception toward the Mutual Fund Unit Trust of India Mutual Fund Submitted to Advent Institute of management studies, Udaipur In partial fulfilment of Master of Business Administration (MBA) Submitted by: Under Guidance of: Pushpendra Kumar Amit Sharma 2|Page
  3. 3. Student, AIMS CM, UTI MF, AjmerPage | 3 Contents Acknowledgement……………………………………………………. Declaration…………………………………………………………… Preface………………………………………………………………… Objective of study………………………………………………………….. 1. Introduction 2. Evolution of Indian Mutual Fund Industry 3. Mutual Fund Terminology 4. Risk Involved In Investing In Mutual Fund 5. Types of Mutual Funds 6. Benefits of Mutual Funds 7. Customer relationship management 8. Product life cycle of mutual fund 9. Similarity with Various Assets Classes 10. Regulatory Framework for Working of Mutual 11. Company profile 12. Research Design 13. Data collection method 14. Finding 3|Page
  4. 4. AcknowledgementPage | 4 “Life is Journey; it’s not the years in your life that count. It’s the life in your years. But Life can’t be completed without the support of many people Any accomplishment requires the efforts of many people and this work is not different. I would like take this opportunity to thanks UTI Mutual Fund for giving me an opportunity to be a part of their esteem organization and enhance my knowledge by granting permission to do summer training project. I am very grateful to Mr. Amit Sharma, Chief Manager, UTI AMC LTD. Ajmer, for being to give me some of his valuable time and able guidance. Without his guidance, support and encouragement. It would not have been possible to complete this project successfully. I am highly indebted to Mr. Akhilesh Gupta, Relationship Manager, UTI AMC LTD. Ajmer, who has provided me with the necessary information and his valuable Suggestions and comments on bringing out this report in the best possible way. PUSHPENDRA KUMAR 4|Page
  5. 5. DeclarationPage | 5 I Mr. Pushpendra kumar hereby declare that this Project Report entitled “Customer perception towards Mutual Fund” submitted in the partial fulfilment of the requirement of Master of Business Administration (MBA) of ADVENT INSTITUTE OF MANAGEMENT STUDIES, UDAIPUR is based on primary & secondary research. Used data founded & Collected by me in various newspapers, books, Magazines and websites under guidance of my project guide Mr Amit Sharma. DATE: 15 July 2012 Pushpendra Kumar Student AIMS, Udaipur 5|Page
  6. 6. PrefacePage | 6 “Give a man a fish, he will eat it. Train a man to fish, he will feed his family.” The above saying highlights the importance of practical knowledge. Practical training is an important part of the theoretical studies. It is of an immense important in the field of management. It offers the student to explore the valuable treasure of experience and an exposure to real work culture followed by the industries and thereby helping the student to bridge gap between the theories explained in the book and their practical implementation. Research project an important role in future building of an individual so that he/she can better understand the word in which he has to work in future. The theory greatly enhances our knowledge and provides opportunity to blend theoretical with the practical knowledge. I complete the research project on “customer perception towards the mutual funds”. I have tried to cover each and every aspect related to the topic with best of my capability. (PUSHPENDRA KUMAR) 6|Page
  7. 7. Page | 7 Objective of study The study aims at analyzing the following major issues: To enhance our knowledge about mutual fund The objective of this study is to measuring satisfaction level of Customers regarding MF. To study the consumer awareness regarding mutual fund To analyze the perception of existing investors about UTI Mutual Fund. Evaluate perception towards risk involved in mutual fund in comparison to avenues To study the diversification of mutual fund. To know the different attitudes of people regarding Risk, Rate of Return, period of investment etc. To Measure the Awareness of different services of UTI MUTUAL FUND in Existing Investors. Like their Online & Offline after sale Services To study the marketing of mutual fund in india 7|Page
  8. 8. Page | 8 Introduction A Mutual is a pool of money, which is collected from many investors and is invested by an asset management company to achieve some objective of the investors. Thus, a mutual fund is a collective investment process. An Asset management Company(AMC) collects many investor money. It invest this in various securities to generate return for the investor. Investor get returns after deducting the related expenses. If there is any loss, it would be borne by the investors. An Asset management company manage the pool of money; therefore, it is also an “indirect form of investment” for investors. INVESTOR E INVEST POOL OF 5000 A MONEY E 100 CR INVESTOR A INVEST 5000 B D INVESTOR B C INVESTOR INVEST D INVEST 5000 5000 INVESTOR C INVEST 6000 8|Page
  9. 9. It is necessary that every pool of investor should have one common investment objective because the investment objective decides where the investment is made. If the commonPage | 9 objective is “to take risk for higher returns in medium to long term “then investment will be made in equity. If the objective is lower returns in medium to long term” then investment will be made in equity. If the objective is lower return with safety of principal then investment is done in debt instrument. The pool of money witch is contributed mutually by all investors are the benefits will be shared mutually by all investor is the mutual fund. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. Mutual Fund Operation Fund Chart: Investor Returns Fund manager Securities 9|Page
  10. 10. Page | 10 Evolution of Indian Mutual Fund Industry The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank. The history of mutual funds in India can be broadly divided into four distinct phases First Phase – 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 corers of assets under management. Second Phase – 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canara bank Mutual Fund (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 established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores. Third Phase – 1993-2003 (Entry of Private Sector Funds) 10 | P a g e
  11. 11. With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 wasPage | 11 the year in 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 merged with 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 and revised 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 witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds. Fourth Phase – since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India 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 and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of 11 | P a g e
  12. 12. assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund 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 the end of September, 2004, there were 29 funds, whichPage | 12 manage assets of Rs.153108 crores under 421 schemes. Mutual Fund Terminology NET ASSET VALUE (NAV): (NAV) represents a funds per share market value. This is the price at which investors buy fund shares from a fund company and sell them to a fund company. It is derived by dividing the total value of all the cash and securities in a funds portfolio, less any liabilities, by the number of shares outstanding. An NAV computation is undertaken once at the end of each trading day based on the closing market prices of the portfolios securities. For example, if a fund has assets of $50 million and liabilities of $10 million, it would have a NAV of $40 million. The net asset value more popularly known as the NAV is the most important thing for the investor in a mutual fund because all purchases and sales that they make are related to this figure. The NAV will determine the gains or losses that they will make on the investment. Consider the NAV as being similar to the price of a share as both of them play the same role of determining the value of the investment. There is however big differences between the NAV and the price of an equity share. The first one is that the NAV depends upon the value of the assets being held by the scheme. 12 | P a g e
  13. 13. Thus the value of the NAV can rise only when the value of the underlying holdings go up. In this case mere demand and supply can have no impact on the NAV of the scheme. The price of a share on the other hand can be affected by demand and supply even when other fundamental factors are constant. Thus one might see a sharp spike in the price ofPage | 13 a share even when there is no other movement all around. This will not happen in a NAV and hence investor who mistakes a mutual fund for a share will learn it the hard way that NAV does not just double or triple based on demand for the fund. However if there is large scale churning by short term investors then this can work to the detriment of long term investors not because NAV will suddenly become half but because the long term investors end up bearing a larger part of the cost. The NAV is the value of all the investments in the scheme plus the current assets of the scheme less the current liabilities of the scheme. This entire figure is then divided by the number of units outstanding in the scheme to get the NAV per unit. This shows the value of each unit of the scheme and it is used for the purpose of buying and selling units by the fund An important thing is the value of the NAV at a particular point of time does not matter. All that matters is the future growth potential in the scheme, which is based on the change in the value of the assets held by the scheme. Thus for example an Rs 10 NAV if it rises by 20% will go to Rs 12 while the same portfolio held by a scheme with a NAV of Rs 30 will go to Rs 36. In that sense if there is a decision regarding the purchase of a unit in either of the schemes then the actual NAV does not matter but only the growth there does. The NAV of the scheme is usually calculated as follows NAV (Rs) = Market or fair value of schemes Investments + Current assets - Current Liabilities and provisions Number of units outstanding under the scheme 13 | P a g e
  14. 14. LOADS: Loads are an extra charge that investors pay to the mutual fund. This is an additional expense for the investor. Loads are of two kinds - entry loads and exit loads. MutualPage | 14 funds can charge either of these loads or even both of these loads so one has to check about the features of a particular scheme as the type of loads as well as the amount of load differs from scheme to scheme. A load is usually calculated as a percentage of the NAV. An entry load is the load that is paid by the investor when they buy units in a mutual fund. The cost for the investor will rise to the extent of the load and they will get a lower number of units than what would have been available had there been no entry load. For example if there is an entry load of 2% in a scheme then an investors who goes out to buy units of the fund when the NAV is Rs 10 will get it at a cost of Rs 10.2. An exit load is the load that is charged to investors when they withdraw money from a scheme. Here the investors get a price lower than the NAV applicable on the particular date. For example when investors goes to sell units in a scheme with an exit load of 2% when the NAV is Rs 20 then the investor will get a sale value of Rs 19.6 per unit. In both the cases these represent an extra charge that is paid by the investors when they make a buy or sell decision in the units of the fund. In this entire process two more terms come into the picture. The first is the repurchase price which is the price paid by the fund to the investor when it buys units from them. The other term is the sale price, which is the price at which the fund sells the units to the investor. SCHEME OPTIONS: After selecting a particular mutual fund and a specific scheme there is still some more work to be done by the investor because they have to select the options available to them within a scheme. There are three such options available and these are the dividend payout, dividend reinvestment and the growth option In the dividend payout option the dividend declared by the scheme is paid out in cash to the investor. Investors have to be careful and select this as the option when they want the actual payment to be received in cash. One has to note that the dividend declaration 14 | P a g e
  15. 15. is always on the face value of the units and not on the current value. Thus if the NAV of a scheme is Rs 55 and the fund declared a 60% dividend then the dividend declared is Rs 6 per unit because the percentage figure is considered on the face value of Rs 10 and not the current NAV of the scheme.Page | 15 The dividend reinvestment option is one where the dividend declared by the scheme is then poured down back into the scheme at the applicable NAV. In reality what happens is that the investor first receives the dividend on paper and then the same figure is converted into additional units. An investor might earn Rs 6.000 as dividend but that is not received in cash but will be converted into additional units. Many investors select the dividend option but tick the dividend reinvestment part resulting in no payout coming to them. The growth option is one where the gains of the scheme are added on to the NAV of the scheme and no payout is received. This means that the value of the NAV keeps on increasing without any intervention from the fund. If there is a scheme that has grown consistently over the years then it will be witnessed that the NAV has also gone quite high while in the dividend option this will keep reducing as and when the dividend is paid. EXPENSE RATIO: There are various expenses that are incurred by the mutual fund in respect to its operations. There are two expense ratios that one will read about. The first is the initial issue expense ratio which is the expense incurred at the time of a new fund offering. The other is the expense ratio that is witnessed during the normal operation of the scheme. There are limits prescribed for various expenses. According to the regulations issued by the Securities and Exchange Board of India (SEBI) the total initial expenses shall not exceed 6% of the initial resources raised under a close ended scheme and any excess over this figure will have to be borne by the asset management company (AMC). There has been a recent change to the provisions of the charging of the initial issue expenses for an open ended scheme and there cannot be any initial issue expenses over and above the entry load on the scheme. The initial issue expenses will include advertising 15 | P a g e
  16. 16. expenses, agent commission, registrar expenses, marketing expenses, banker’s fees, legal fees, printing and distribution expenses etc.Page | 16 There is a bit of calculation involved in terms of the maximum recurring expenses permitted by SEBI as it depends upon the assets under management. The list of such expenses include investment management and advisory fees, trustee fees, custodian fees, marketing and selling expenses, registrar and transfer agent fees, audit fees, communication costs, cost of providing account statements, dividend, redemption warrants, cost of statutory advertisement and other expenses. Investors need to watch this final figure as this will be the one that will affect them because their earnings, which are linked to the NAV will be the net figure after the scheme has charged off the expense made. While a better performing scheme might have some higher expense one has to look carefully at the total expense figure and how they shape up over a period of time. NEW FUND OFFER (NFO): A new fund offer is a new scheme launched by a mutual fund. It is called a NFO to differentiate it from the IPO of a stock because there was large confusion among investors who were being sold new units of mutual fund schemes like a new share offering. As can be seen by the meaning of the NAV of the scheme there is no way that a NFO will open at double or triple the value of the offer price because the assets of the scheme will have not grown in value by the same extent during the period from which the new offer closed and the scheme then reopened for investment. There is a difference also within the way in which a new offering has to be evaluated because there cannot be under pricing or overpricing of the issue which can be the case with a share offering and hence one has to be careful in the way in which one is able to evaluate these offerings that are available for the investor. In such offers unlike other 16 | P a g e
  17. 17. mutual fund schemes there is also no track record to measure the past performance of the scheme.Page | 17 SYSTEMETIC INVESTMENT PLAN (SIP): Systematic Investment Plan is often called SIP and this is a method of investing used by mutual fund investors. In this method there is an investment of a fixed sum on the same day of each month for a period of say 6 months or 1 year by an investor. This ensures that there is a regular investment each month and the idea is to ensure that the highs and lows are averaged out so that the investor is able to get an average price for the units. The way a SIP plan works is that the investor has to decide on two factors when the decision is made. The first is the amount of investment that one would like to make and this could be something as low as Rs 1,000 or even higher like Rs 10,000 as this can be selected depending upon the profile of the investment and the extent of funds that are to be invested. The next things to decide is the period of the investment and this will be 6 months or a year, which will enable the actual benefits for the investor to flow in. The benefit for the investor is that when the prices are high there are a few units that are allotted to him but when the prices drop the same amount of money will ensure that there is automatically a higher allocation of units. This ensures that the investor is able to gain in terms of higher allocation when the price is low. This will also ensure that the investor does not face the risk of the onetime investment that would be present had the entire investment be made in a lump sum at a single time point. SYSTEMATIC TRANSFER PLAN (STP): Systematic transfer plan is a variant of the SIP that has been explained above. In a SIP the investor makes a direct investment into a scheme on a regular basis. On the other hand 17 | P a g e
  18. 18. in STP there is a regular transfer of money into a particular scheme but this is a transfer from an existing scheme by an investor. This is useful for any investor who has funds at his disposal and they still do not want to invest the whole amount at one go. What can be done in such a situation is that the fundsPage | 18 are first transferred to a debt oriented scheme and from that scheme there is a movement each month amounting to a specific sum into an equity oriented scheme. This will ensure that two objectives of the investor are met. The first is that the funds of the investor are not lying vacant and earning a low rate of return but they will be earning a slightly higher figure in the debt scheme and at the same time there is the benefit of the systematic investment that is available because the money is transferred each month Risk Involved In Investing In Mutual Fund Mutual Funds do not provide assured returns. Their returns are linked to their performance. They invest in shares, debentures, bonds etc. All these investments involve an element of risk. The unit value may vary depending upon the performance of the company and if a company defaults in payment of interest/principal on their debentures/bonds, the performance of the fund may get affected. Besides in case there is a sudden downturn in an industry or the government comes up with new a regulation, which affects a particular industry or company the fund can again be adversely affected. All these factors influence the performance of Mutual Funds. Some of the Risk to which Mutual Funds are exposed to is given below:  Market risk -If the overall stock or bond markets fall because of overall economic factors, the value of stock or bond holdings in the funds portfolio can drop, thereby affecting the fund performance 18 | P a g e
  19. 19.  Non-market risk - Bad news about an individual company can pull down its stock price, which can negatively affect fund holdings. This risk can be reduced by having a diversified portfolio that consists of a wide variety of stocks drawn fromPage | 19 different industries.  Interest rate risk - Bond prices and interest rates move in opposite directions. When interest rates rise, bond prices fall and this decline in underlying securities affects the fund negatively.  Credit risk - Bonds are debt obligations. So when the funds invest in corporate bonds, they run the risk of the corporate defaulting on their interest and principal payment obligations and when that risk crystallizes, it leads to a fall in the value of the bond causing the NAV of the fund to take a beating. Types of Mutual Funds Mutual Funds can be classified on the basis of nature of schemes and the nature of investments. The way in which the features of the schemes are also considered will also impact their classification. On the basis of nature of Schemes: On the basis of nature of schemes, Mutual Funds can be divided into three types. The classification is as follows- Open Ended Funds: Open ended Mutual Funds have an infinite life which means that there is no ending date of the scheme. This scheme can continue to go on forever and due to this factor 19 | P a g e
  20. 20. the scheme allows investors to come in and go out of the fund when they wish subject to some specific conditions for a few funds. For example, a large number of schemesPage | 20 in the Indian market are open ended schemes that invest in equities where they can continue to operate for years on end. The real benefit of these schemes is that an investor can put additional money into the scheme or take their money out When they feel like it rather than this being decided as a specific date by the fund or some other entity. Close Ended Schemes: A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis. Interval Fund: There is another category of funds whose characteristics fall between open ended and close ended funds and these are known as Interval Funds. These funds are not completely close ended or completely open ended in the sense that they are not of a Fixed duration and they do allow investors to make purchases once the initial offer period is over but they will not be available for purchase and sale every day. There will be a specific time period like a few days every three months or every six months 20 | P a g e
  21. 21. when investors can buy and/or sell these units back to the funds. Thus they provide liquidity without compromising on the restricted nature of the fund.Page | 21 On the Basis of Nature of Investment: On the basis of nature of investments, Mutual Funds can be divided into thirteen types. The classification is as follows- Equity Schemes: Equity schemes invest the amounts that they collect from investors into stocks of various companies listed on the stock exchanges as well as those that are unlisted. These schemes are also called growth schemes because the idea behind such investments is to earn a high return through the rise in the value of the investment. The wide range of stocks available in the market and the different nature of styles of management of the schemes will result in a different profile for various schemes within this area. For example a scheme which invests in large cap stocks will be different from a scheme that will invest its funds into mid cap companies. In addition there are schemes, which are diversified across various sectors without any bias towards market cap of the stocks it holds. In terms of other styles one can see funds that select stocks based on their dividend yield and these are called dividend yield funds. There is a chance of a high gain in such schemes and in the last three years the returns on many schemes have even crossed more than 100% in a single year. Many investors however forget that there is a downside to the whole investment as a fall in the equity market can result in a fall in the value of the scheme leading to a capital loss for the investors. Sectoral Schemes: These are a variant of equity oriented schemes where the risk for the investor is higher than the diversified equity schemes. The funds of such schemes are 21 | P a g e
  22. 22. invested into the shares of a particular sector only or it could be in companies that comply with a particular theme only. Good examples of such schemes are those which invest in the shares of information technology companies or companies from the fast moving consumerPage | 22 goods (FMCG) sector. There is a possibility of a higher return from such schemes because even if the whole market is not doing well a particular sector might be on the growth path. At the same time this has a higher risk because it is possible that nothing happens to a particular sector while the overall market is rising or it could be that just a specific sector is doing badly due to specific reasons. Further with other investment options closed the entire portfolio of the scheme will be subject to a similar kind of risk leading to very little diversification in the portfolio. Equity Linked Savings Scheme: Equity linked savings schemes are also known as ELSS or tax savings schemes. These are like diversified equity schemes in terms of their portfolio composition but they give investors a tax benefit that other schemes do not. Investment up to Rs 1 lacks into these schemes qualifies for a deduction under Section aoc of the Income Tax Act along with several other specified investment options. Investors who put money into such schemes are looking at earning higher returns on their investments and at the same time save on the tax. Unlike normal equity schemes there is also a three year lock in for such schemes. Index Funds: Index funds are known as passive schemes because here the fund manager does not have to take active investment decisions regarding selection of companies for investment. The corpus of these schemes is invested in such a manner that it mimics an index that is being tracked by the fund. Thus for example a scheme Tracking the Sensex will have its portfolio in the exact proportion that the 30 sensex scrip’s are in and hence the performance should mirror the behavior of the index being tracked. At regular periods of time the portfolio is rebalanced so that 22 | P a g e
  23. 23. any deviation is corrected. These are meant for investors who would like to ensure that their returns match that of a specified index. Income Schemes:Page | 23 Income schemes invest their assets into debt instruments that are either of medium to long term in duration. This means that the scheme will invest the money into debt instruments that mature after a few years and these can stretch to several years. In terms of the choice available for the fund manager there are bonds, debentures, government securities and other debt instruments. Typically most of these schemes hold a mixture of bonds, debentures, gilts and even short term securities in their portfolio and they keep changing the mix depending upon the fund manager’s outlook for the future. These schemes are steady in the growth that they witness and hence one should expect returns aligned to the performance of the debt market, which means that under steady conditions it should give reasonable returns and the risk to capital is accordingly lower. However the returns of the scheme turn negative when rates rise and positive when t he rates fall in line with the behavior of the debt instruments. Liquid Funds: Liquid schemes are meant for very short term investors where the investor horizon ranges from a couple of days to around a week or slightly more. The liquid schemes invest the money into overnight call money market and extremely short term options so that there is very risk for investors in terms of a capital loss in these schemes. Ideally when the investment is made in this manner liquid scheme should not show any fall in their value but the returns will vary depending upon the rates prevalent during the time period of investment. Thus liquid schemes are meant to be the safest type of schemes where the risk for the investor is minimum and returns are consequently lower. Short term Schemes: 23 | P a g e
  24. 24. Short term schemes are debt oriented schemes and are meant for investors who want to park their money for a few months. Thus these are meant for those who do not want to invest for a just a few days and neither for a very long period amounting to a few years. Thus it is for middle of the road investors who do notPage | 24 fall into either the very short or the long term category. The portfolio of short term schemes consists of short term securities including gilts, certificates of deposits and in several cases even bank deposits The returns from such schemes is not very high but similarly the risk is also considerably lower and this is useful for several investors who would like to put their money away for a short period of time and earn high returns during this period. Floating Rate Funds: One of the basic features of debt schemes is that the value of the debt holdings will fall in value as the interest rates rise in the economy and they will rise when the rates fall. This makes investors in debt schemes susceptible to losses when conditions are adverse in the bond market. Floating rate funds are those schemes which invest their corpus into floating rate securities which means that the interest rate on these funds are reset at regular intervals. This makes them better positioned to tackle tough times in the debt market as their earnings and rates will change depending upon the resetting of the rates for the securities held. Again these schemes can be either short term or long term schemes. Gilt schemes: Gilt schemes are those schemes that invest their assets into only government securities. The gilt schemes can be short term or long term schemes depending upon the composition of the portfolio of the scheme. These schemes have no credit risk, which means that there is no possibility of the investments of the scheme turning out to be worthless because the issuer has gone bankrupt as in this case the issuing authority is the government itself. This does not mean that there is no risk for the investor in such schemes because there is interest rate risk which means that in case interest rate rises there will be 24 | P a g e
  25. 25. a fall in the value of the holdings and a consequent fall in NAV for the investors because the value of the holdings will depend upon the conditions in the debt markets and the movements therein.Page | 25 Monthly Income Schemes: Monthly income schemes are debt oriented schemes with a small dose of equity holdings. These schemes invest a large part of their corpus ranging from around 80 to 95% in debt while the remaining 5 to 20% is in equities. There are a large number of such schemes in the market with different levels of equity. The average level of equity holdings of these schemes is around 10% but in the last few years several variations with a higher level of equity have entered the market. Investors should know that the higher level of equity can raise the earnings of the scheme above that witnessed in pure debt schemes but it will also raise the risk level whereby even the higher debt constituent will not be able to dictate the overall performance of the scheme. Balanced Schemes: Balanced schemes are a mixture of equity and income schemes whereby they hold both equities and debt in their portfolio. Recently there was a change whereby in order to qualify for tax benefits in terms of exemption from dividend distribution tax balanced schemes need to hold an average 65% of assets as equity. Due to this one will find the average equity holdings of balanced schemes rising above this level in the last few months. These schemes are meant for those who want to earn some returns on their investment but would like a small element of stability built into the scheme but with the new norms this will be slightly skewed in favor of equity. Fixed Maturity Plans: Fixed maturity plans known as FMP are plans that are in operation for a short period of time but they act like a quasi fixed deposit for the investors. This is because the fund manager selects the securities in the portfolio in such a manner that it matures on the same date as that of the scheme. This results in the 25 | P a g e
  26. 26. situation where the investor will get a return near the yield of the investments when they were purchased because of reduced risk in the investment. There is a reduced risk in this kind of an investment because of the fact that when the debt instruments in the scheme are held till maturity the interveningPage | 26 movement of interest rates in the market will not impact the investor in terms of the final returns because of the fact that the price of the debt instrument will converge to its face value at the time of maturity. Fund of Funds: Fund of funds is another type of scheme available in the market. This scheme invests its funds into another mutual fund scheme and is hence known as fund of funds. The target objective of the scheme is met through the selection of several other schemes in the portfolio with the desired weights. Several funds invest their corpus into schemes of their own fund house while another variety of fund of fund schemes invest the amount into schemes from other fund houses too. RISK V/S. RETURN R Sectoral Fund E T Equity Fund U Index Fund R N Balanced Fund Debt Fund Liquid Fund RISK 26 | P a g e
  27. 27. Benefits of Mutual FundsPage | 27 Small investors can enjoy several advantages when they invest through the mutual fund route. Not all mutual fund schemes or investors can boast to give all these benefits to the investors but each one gives you one benefit or the other. Small Amounts: The biggest benefit for small investors is that they can invest using very small amounts of money. In the absence of mutual funds many of these investments would not have been possible at all. For example one can invest regularly each month into a mutual fund scheme with a sum as low as Rs 500 or Rs 1000 each month. A similar amount would have got the investor precious little in terms of actual holdings in the debt market. In case of a bond issue where the face is value is Rs 10,000 they would not even be able to procure 1 bond. If an investor has say Rs 1,000 with him then quite a few stocks would be out of reach because their values are more than the sum available for investment. On the other hand they can use the same sum to buy the available number of mutual fund units The use of the small amounts for investment is not restricted to just the initial investment but is applicable at all points of time, This means that at any point of time if there is some amount lying in the account then this can be put to use whereby it will earn a higher amount of return than what would have been the case had it just remained in the savings account. In fact the money here can do things which would not be possible otherwise. This means that the amounts can be utilized as pert he need both in terms of investing and withdrawal 27 | P a g e
  28. 28. The use of the money in terms of withdrawing it from the scheme does not receive as much attention as the investment part but its role is no less important. Being able to get some of your money back when you need it without disturbing the other part of your entire investment is a greater benefit for investors becausePage | 28 it ensures that their entire investment plan does not go for a toss due to some small decision on the side. Diversification: Even if an investor is able to buy a few assets with the amounts available with them there is little scope for diversification, which results in an increase in risk. Diversification in simple words is nothing but holding a large number of stocks or securities so that the entire holding is not influenced in the same way due to a certain event in the market. An investment in a mutual fund can provide one with the necessary diversification even with the small amounts that one may have. For example, with a sum of Rs 5,000 an investor might be able to get just 1 share of Infosys,1 share of Bajaj Auto and 1 share of Tata Steel at July 2006 price levels. On the other hand the same amount invested in a mutual fund which is diversified in nature would help the investor get around 20-25 shares which would reduce the risk as compared to the small holdings in an individual capacity. There are different levels of diversification that investors can make use of. The most common one is to ensure that in a particular holding in an asset class all the investments do not bear the same functions or features so that they will not move in a single direction based upon the happening of certain events. However taken further the real benefit of diversification is to ensure that your entire investment portfolio is such that there is adequate breadth as well as variety in it. An individual can diversify across various asset classes when their portfolio increases. This is possible with the help of a mutual fund whereby the money can be moved to different types of schemes both in the equity as well as the debt side. Similarly one can now also ensure that the money is diversified between 28 | P a g e
  29. 29. investments in various countries as there are international funds where one will hold equities or debt instruments of foreign countries. This gives the investor a benefit of really ensuring that his money is working well.Page | 29 Professional fund manager: The basic advantage of funds is that, they are professional managed, by well qualified professional. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. A mutual fund is considered to be relatively less expensive way to make and monitor their investments. Economies scale: Mutual fund buy and sell large amounts of securities at a time, thus help to reducing transaction costs, and help to bring down the average cost of the unit for their investors.. Liquidity: There is adequate liquidity for mutual fund investors when they want the necessary funds. This means that the fund will be available to the investor when they require it would go through large amounts of paperwork. This might not be the case with regular investments where it might take several days for one to liquidate the necessary amounts. Using the right combination one can create the required liquidity in the mutual fund portfolio. One of the best cases of liquidity is with respect to equity oriented schemes. In several cases with respect to various shares it is very much possible that an investor will be unable to sell the shares on particular days the volumes in the scrip have dried up. On the other hand when an investor puts through a sale transaction on a mutual fund then this has to be executed at the prevailing net asset value at the end of the day 29 | P a g e
  30. 30. and the investor will receive his money. There are some restrictions on this which is mentioned in the line print of the offer document wherein in case there is a major Crisis the fund can restrict the redemptions however in normal market conditions there is little to worry for the investor.Page | 30 In addition the funds have developed a high quality service delivery whereby the funds are available to the investor in the shortest possible time. In case of several liquid schemes the investors also have the option of using instruments like direct cheques and even ATM cards. Tax Benefit: There are a host of tax benefits that an investor can earn with the help of mutual funds. First dividends are tax free in respect of all mutual funds while in case of equity oriented funds even the long term capital gains earned will be tax free in the hands of the investor. This means that the investment can be quite tax Efficient with quite a bit of the payout free from the tax clutches of the investors. In case of equity oriented schemes there is no dividend distribution tax and hence the investors benefit indirectly too and this is another tax benefit for them. While direct investments into assets would also qualify for several of these benefits mutual funds are not worse off than elsewhere. Product life cycle of mutual fund Product sales 30 | P a g e
  31. 31. Introduction Growth Maturity DeclinePage | 31 Similarity with Various Assets Classes A mutual fund holds assets as part of its portfolio and this determines the performance of the scheme. The question that most people ask is how a mutual fund is different or similar to assets that it holds. One basic factor that investors have to consider is that the performance of the asset and the mutual fund investing in the asset will move in a similar direction. Thus if there is a bond fund and the prices of bonds fall then the value of the bond fund will also decline. Similar is the case with equity shares and equity oriented funds. This means that a mutual fund cannot be divorced from the overall movement in the asset class into which it is invested. Thus one should not expect miracles from mutual funds but the better performing mutual fund will be one which rises faster when the market is going up and at the same time falls slower than the fall in the market. This is the way in which the performance of the fund will have to be considered rather than just look at the absolute figure. One should look only at asset classes that are of the similar type rather than looking at different asset classes. This means that if you are holding a debt oriented mutual fund then you cannot compare its performance to that of equities because here you will end up comparing two entirely different things. Once this difference is realized one can comfortably look at the various mutual funds and how they have performed. 31 | P a g e
  32. 32. While one would expect similar movement between a fund and its underlying assets there will be some difference in t he way the movement takes place. For example in case of equities the price may shoot up 20% in a day while in case of a mutual fund this willPage | 32 not happen unless the value of the entire assets of the fund rise by a similar percent. Similarly in case of a daily purchase of shares by an invest to these are made in the market and here the shares are bought from another investor however in case of a mutual fund the units in an open ended scheme are bought and sold to the fund itself and hence the total units outstanding will keep changing every day. In that sense the most important thing to consider in case of a mutual fund is its NAV rather than several other figures that one would normally look at. Regulatory Framework for Working of Mutual Funds Every action of the mutual fund is governed by the various regulations laid down by SEBI and there is a need for mutual funds to follow these guidelines so that investors get the best services along with a fair treatment with respect to their investments. All of the regulations are not relevant for the lay investor and here we shall look at some of them that would be relevant and useful for them in their daily investment process. It is also to be noted that these can change anytime and one has to be alert for some of the changes are taking place on a regular basis. Formation: One of the main regulations relate to the formation of a mutual fund. There are three entities present as far as the functioning of the mutual fund is concerned. The first link in the entire mutual fund setup is the presence of a sponsor. The sponsor is expected to have a sound track record along with a general reputation of fairness and integrity in all business transactions. This includes the requirement of carrying on business in financial 32 | P a g e
  33. 33. services for a specified period of time. In addition there are also financial parameters relating to the net worth of the sponsor and its profits that are calculated after various adjustments as suggested by the guidelines. The whole idea behind the entire exercise both in terms of business reputation as well as financial parameters is that the sponsorPage | 33 should be sound enough so the mutual fund is backed by the right kind of people. As one goes down to the other conditions of the setting up of the mutual fund there is the actual mutual fund, which has to be in the form of a trust with a trust deed. Thus there has to be a board of trustees who will acts as trustees of the mutual fund. The instrument of trust shall be in the form of a trust deed, duly registered under the provisions of the Indian Registration Act. The trustees who have been appointed for the mutual fund have to be people of standing, ability as well as integrity. Similarly there is a condition that an asset management company or its officers or employees will not be eligible to act as the trustees of the mutual fund. There is also a requirement for certain proportion of the trustees to be independent persons and who are not associated with the sponsors in many manner. The reason behind such a move is to ensure that there is a clear separation between the management and the administration of the mutual fund. After this is the process of management of the funds and for this there will be an asset management company and the trustees and the asset management company will enter into an investment management agreement. The asset management company has to manage the mutual fund schemes independently and take several other steps to ensure that the interest of the investors of one of the scheme is not being compromised in any manner whatsoever. It is the responsibility of the trustees to keep a check on the various activities of the asset management company and to see that everything is in order and is being carried out in accordance with the guidelines for mutual funds. The asset management companies to have the requirement of having a sound track record, general reputation and fairness in transactions along with right qualities for the directors and key personnel of the company 33 | P a g e
  34. 34. Expense Limits: There is also the issue of recurring expenses of a mutual fund. The limits that arePage | 34 prescribed for the fund to charge various expenses state that for the first Rs 100 crore of the average weekly net assets the expense is 2.5%, for the next Rs 300 crore it is 2.25%, for the next Rs 300 crore it is 2% and for the figure over that amount (Rs 700 crore) it is 1.75%. In case of a scheme investing in bonds the limit shall be lesser by at least 0.25% of the weekly average net assets. Any expense over and above the prescribed ceiling will be borne by the asset management company. Change in Features: There is also a condition that no change in the fundamental attributes of any scheme or the trust or even fees and expenses or some other change which would modify the scheme and affects the interest of unit holders will be carried out without a written communication being sent to each unit holder. In addition an advertisement has to be given in one English daily newspaper having nationwide circulation and in a newspaper published in the language of the region where the head office of the mutual fund is situated. The unit holders also have to be given an option to exit the scheme at this stage without paying any exit load. Investor Services: Whenever there is an application by an investor for units in a mutual fund scheme then the asset management company shall issue to the applicant unit certificates or a statement of accounts specifying the number of units allotted to the applicant as soon as possible but this cannot be later than six weeks from the date of closure of the initial subscription list or the date of receipt of the request from an investor in an open ended scheme. While calculating the prices of the units the mutual fund shall ensure that the repurchase price is not lower than 93% of the net asset value and the sale price is not higher than 107% of the net asset value. However the total difference between the repurchase price and the sale price of the units shall not exceed 7% calculated on the sale price. In case of 34 | P a g e
  35. 35. a close ended scheme the repurchase price cannot be lower than 95% of the net asset value. There has to be a dispatch to the unit holders of the dividend warrants within 30 days of the declaration of dividend in the scheme. In case of redemption proceeds this has to bePage | 35 within 10 working days from the date of redemption or repurchase. Investments: In terms of investments no mutual fund shall invest more than 10% of its NAV in the equity shares or equity related instruments of any company. This limit of 10% will not be applicable for index funds and sector or industry specific schemes. A mutual fund shall also not invest more than 5% of the NAV in the unlisted equity shares of an open ended scheme and 10% of its NAV in case of a close ended scheme. No mutual fund shall under all its schemes own more than 10% of any company’s paid up capital carrying voting rights. A mutual fund shall not invest more than 15% of its NAV in debt instruments issued by a single issuer, which are rated not below investment grade by a credit rating agency. This can be extended to 20% with the prior approval of the Board of Trustees and the board of the asset management company. These limits are not applicable to government securities and money market instruments. A mutual fund shall not invest more than 10% of its NAV in unrated debt instruments issued by a single issuer and the total investments in such instruments should not exceed 25% of the NAV of the scheme. All such investments have to be made with the prior approval of the Board of Trustees and the board of the asset management company. In case a company has invested more than 5 % of the net asset value of a scheme, the investment made by that scheme or any other scheme of the mutual fund in that company or its subsidiaries shall be brought to the notice of the trustees by the asset management company and disclosed in the half yearly and annual accounts of the scheme with justification for such investments. 35 | P a g e
  36. 36. Page | 36 Rights for a Mutual Fund Holder in India As per SEBI Regulations on Mutual Funds, an investor is entitled to:  Receive Unit certificates or statements of accounts confirming your title within 6 weeks from the date your request for a unit certificate is received by the Mutual Fund.  Receive information about the investment policies, investment objectives, financial position and general affairs of the scheme.  Receive dividend within 42 days of their declaration and receive the redemption or repurchase proceeds within 10 days from the date of redemption or repurchase.  The trustees shall be bound to make such disclosures to the unit holders as are essential in order to keep them informed about any information, which may have an adverse bearing on their investments.  75% of the unit holders with the prior approval of SEBI can terminate the AMC of the fund.  75% of the unit holders can pass a resolution to wind-up the scheme. 36 | P a g e
  37. 37.  An investor can send complaints to SEBI, who will take up the matter with the Concerned Mutual Funds and follow up with them till they are resolved.Page | 37 Marketing strategies of mutual fund The present marketing strategies of mutual fund can be divided into two main heading: Direct marketing Selling though intermediaries Direct marketing This constitutes 20 percent of the total sales of mutual funds. Some of the important tools used in this type of selling are: Personal Selling: In this case the customer support officer or Relationship Manager of the fund at a particular branch takes appointment from the potential prospect. Once the appointment 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 schemes being 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 names and phone numbers of the people are picked at random from telephone directory. Some fund houses have their database of investors and they cross sell their other products. Sometimes people belonging to a particular profession are also contacted through phone and are then informed about the fund. Generally the conversion rate in this form of marketing is 15% - 20%. 37 | P a g e
  38. 38. Direct mail: This one of the most common method followed by all mutual funds. Addresses of people are picked at random from telephone directory, business directory, professional directory etc. The customer support officer (CSO) then mails the literature of the schemes offered by the fund. The follow up starts after 3 – 4 days of mailing thePage | 38 literature. The CSO calls on the people to whom the literature was mailed. Answers their queries and is generally successful in taking appointments with those people. It is then the job of BDA to try his best to convert that prospect into a customer. Advertisements in newspapers and magazines: The funds regularly advertise in business newspapers and magazines besides in leading national dailies. The purpose to keep investors aware 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 in TV and FM Channels to promote their funds. Hoardings and Banners: In this case the hoardings and banners of the fund are put at important locations of the city where the movement of the people is very high. The hoarding and banner generally contains information either about one particular scheme or brief information about all schemes of fund. Selling though intermediaries Intermediaries contribute towards 80% of the total sales of mutual funds. These are the people/ distributors who are in direct touch with the investors. They perform an important role in attracting new customers. Most of these intermediaries are also involved in selling shares and other investment instruments. They do a commendable job in convincing investors to invest in Mutual funds. A lot depends on the after sale services offered by the intermediary to the customer. Customers prefer to work with those intermediaries who give them right information about the fund and keep them abreast with the latest changes taking place in the market especially if they 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 objective is to hear their complaints regarding 38 | P a g e
  39. 39. service aspects from funds side and other queries related to the market situation. Sometimes, special training programmers are also conducted for the new agents/ distributors. Training involves giving details about the products of the fund, their present performance in the market, what the competitors are doing and what they canPage | 39 do to increase the sales of the fund. COMPANY PROFILE UTI MUTUAL FUND UTI AMC is a company incorporated under companies act 1956.In UTI AMC the investment agreement is executed between UTI Trustee company Ltd and UTI AMC on December 9 2002 UTI AMC was registered by SEBI to act as Asset Management Company for UTI Mutual Fund vide its letter of January 2003. The paid up capital of UTI AMC has been subscribed equally by four sponsors: State Bank of India, Life Insurance Corporation of India, Bank of Baroda and Punjab National Bank. UTIAMC, apart from managing the schemes of UTI Mutual Fund, also manages the schemes transferred/migrated from the erstwhile Unit Trust of India, in accordance with the provisions of the Investment Management Agreement, the Trust Deed, and the SEBI (Mutual Funds) Regulations. HISTORY Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs. 6, 700 crore of assets under management. 39 | P a g e
  40. 40. Despite being the trendsetter in the segment, the UTI mutual fund could not sustain the initial tempo and was on the verge of a collapse in 2001, before the government bailed it The funds sponsors are public sector financial giants like Life Insurance Corporation, SBI, Bank of Baroda and Punjab National Bank. The sponsors hold equal stakes in thePage | 40 asset management company, UTI Asset Management Company Private Limited. UTI Mutual Fund remains the largest fund in the country with assets of over Rs.35, 028 crore under management as of Aug 2006. In 2003, UTI was divided into two parts, UTI Mutual Fund (UTI MF) and a specified undertaking of UTI or UTI-I. UTI MF was brought under SEBI regulations while UTI-I was kept under direct government control since its schemes offered guaranteed returns. VISION: To be the most Preferred Mutual Fund. MISSION:  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 governance Sponsors of Company: State Bank of India Life Insurance Corporation of India Bank of Baroda Punjab National Bank 40 | P a g e
  41. 41. HERE IS A LIST OF MUTUAL FUND OF UTI EQUITY FUNDS CATEGORY:Page | 41 Diversified Funds:  UTI MASTER SHARE UNIT SCHEME  UTI MASTER PLUS UNIT SCHEME  UTI EQUITY FUND  UTI CONTRA FUND  UTI WEALTH BUILDER FUND  UTI TOP 100 FUND Speciality/ Theme Based Funds:  UTI MNC FUND  UTI MASTER VALUE FUND  UTI SERVICE INDUSTRIES FUND  UTI INFRASTRUCTURE FUND  UTI MIDCAP FUND  UTI DIVIDEND YIELD FUND  UTI OPPORTUNITIES FUND  UTI LEADERSHIP EQUITY FUND  UTI INDIA LIFESTYLE FUND  UTI WEALTH BUILDER FUND SER.- 2 Sector Funds:  UTI PHARMA & HEALTHCARE FUND  UTI BANKING SECTOR FUND  UTI ENERGY FUND 41 | P a g e
  42. 42.  UTI TRANSPORTATION & LOGISTICS FUND Tax Planning Funds:Page | 42  UTI EQUITY TAX SAVING PLAN  UTI MEPUS  UTI LONGTERM ADVANTAGE FUND- SER. 1  UTI LONGTERM ADVANTAGE FUND- SER. 2 Arbitrage Fund:  UTI SPREAD FUND INDEX FUNDS CATEGORY: Pure Index Funds:  UTI MASTER INDEX FUND  UTI NIFTY INDEX FUND Exchange Index Fund:  UTI SUNDER BALANCED FUNDS CTAEGORY: Pure Balanced Funds:  UTI BALANCED FUND Segment Focused Funds:  UTI UNIT LINKED INSURANCE PLAN  UTI CHARITABLE & RELIGIOUS TRUST & REISTERED SOCEITY  UTI CHILDREN’S CAREER BALANCED PLAN  UTI RETIRMENT BENEFIT PENSION FUND  UTI MAHILA UNIT SCHEME 42 | P a g e
  43. 43.  UTI CCP ADVANTAGE FUND Monthly Income Schemes:  UTI MONTHLY INCOME SCHEMEPage | 43  UTI MIS ADVANTAGE PLAN INCOME FUNDS CTAEGORY: Segment Focused Funds:  UTI BOND FUND  UTI TREASURY ADVANTAGE FUND  UTI G-SEC FUND-INVESTMENT PLAN  UTI GILT ADVANTAGE FUND- LTP  UTI SHORT TERM INCOME FUND  UTI FLOATING RATE FUND  UTI G-SEC FUND- SHORT TERM PLAN  UTI DYNAMIC BOND FUND LIQUID FUNDS CATEGORY:  UTI MONEY MARKET FUND  UTI LIQUID FUND-CASH PLAN Sponsors of Company: State Bank of India 43 | P a g e
  44. 44. Life Insurance Corporation of IndiaPage | 44 Bank of Baroda Punjab National Bank Subsidiaries: UTI Venture Funds UTI International Ltd. UTI Retirement Solutions 44 | P a g e
  45. 45. Page | 45 Registered and Corporate Office: UTI Tower, ‘GN Block, Bandra Kurla Complex, Bandra (E), Mumbai-400051. Tel: 66786666 (Broad), Fax: 26524921 Registrar of UTI MF: M/s Karvy Computershare Pvt. Ltd. No 1-90/2/10/E, Narayani Mansion, Vittal Rao Nagar, Madhapur, Hyderabad-500081 Research Design Research can be defined as systemized effort to gain new knowledge. A research is Carried out by different methodologies which have their own pros and cons. Research Methodology is a way to solve research in studying and solving research problem along With logic behind them are defined through research methodology. Thus while talking About research methodology we are not only talking of research methods but also Considered the logic behind the methods. We are in context of our research studies and Explain why it is being used a particular method or technique and why the others are Not used. So that research result is capable of being evaluated either by researcher Himself or by others. The study at reliance mutual fund is a combination of analytical &practical study. It is a based on secondary data collected from records of the company as Well as other published sources beside the primary data collected from the investors. The study was covered over a period of 2 months . 45 | P a g e
  46. 46. Data collection methodPage | 46 There are two types of source for collection of data: 1. Primary Data: Primary data are collected through personal and telephonic interviews with the help of a structured questionnaire. 2. Secondary Data: These data are collected from company sources, internet, magazines, newspapers and reference books 46 | P a g e
  47. 47. Page | 47 TYPE OF SAMPLING USED We used non-probability type of sampling. In non-probability sampling, the chance of any particular unit in the population being selected is unknown. Since randomness is not involved in the selection process, an estimate of the sampling error cannot be made. But this does not mean that the findings obtained from non-probability sampling are of questionable value. If properly conducted their findings can be as accurate as those obtained from probability sampling. Convenience Sampling As the name implies, a convenience sample is one chosen purely for expedience (e.g., items are selected because they are easy or cheap to find and measure. While few analysts would find credibility in conclusions from such extreme cases, the inappropriateness of using convenience sampling to estimate universe values is not widely 47 | P a g e
  48. 48. recognized. The major problem with this (and other non-probability method) is that one is unable to draw objective inference about a rigorously defined universe. In practice, it is often found that the response given by "convenient" items in a universe differ significantly from the responses given by universe items that are less accessible. As a result, unless one is dealingPage | 48 with a known highly homogeneous universe (virtually all items responding alike), convenience sampling should not be used to estimate universe values. Sample Size The sample size taken in the project work is 50. The area selected is Dehradun and its surrounding area. Convenience sampling method was used in this study because of the constraints like cost and ftime. FINDING OCCUPATION OF PERSONS 6% Government employee Private 24% employee 50% Businessmen Retired 20% FINDINGS: - There are 76% people who are investing & in this 76% there are 50% people in government service, 20% in private job & 24% people are businessmen & 6% are retired. 48 | P a g e
  49. 49. AGE GROUP 6%Page | 49 46% 48% 20-40 year 40-60 year Above 60 years FINDINGS: - There are 48% people in age group 40-60 years and 46% of people in 20-40 years and rest 6% are Above 60 years. INTEREST IN INVESTMENT 24% 76% Interested Not Interested FINDINGS: - When I have analyze the project then I found that in out of total people 24% people are not investing & 76% people are investing. 49 | P a g e
  50. 50. AREA OF INVESTMENT 7%Page | 50 Fixed 32% 23% deposit Property 7% Mutual Funds 31% FINDINGS: - In area of investment 32% people interest in fixed deposit and 31% people interested in property & 7% in share and same in Mutual funds & 23% investing in insurance in this finding some people interested in two area of investment. SATISFIED WITH INVESTMENT 8% 92% Satisfied with investment Not satisfied with investment FINDINGS: - In survey 92% of people are satisfied with investment and 8% are not satisfied with our investment. 50 | P a g e
  51. 51. MUTUAL FUND INVESTMENTPage | 51 12% 7% 16% 19% 46% UTI Reliance mutual fund SBI mutual fund ICICI prudential mutual fund Other FINDINGS: - In this survey 46% people are interest to buy SBI mutual fund and 19% people to invest in reliance, 16% in ICICI mutual fund and 7% in UTI and 12% interested in investing in different mutual funds. EXPECTED RETURN 10% 18% 72% less than 10% Between 10% to 30% Above 30% FINDINGS: - In investment 72% people expected return between 10% to 30% and 18% people expect less than 10% return and remain 10% people expected above 30% return. 51 | P a g e
  52. 52. RISK FACTORPage | 52 8% 16% 76% Minimum risk Moderate risk High risk FINDINGS: - In risk factor 76% people take minimum risk in investment and 16% people take moderate risk only 8% people take high risk for more return on investment. MONEY INVESTED 10% 26% 5000 64% 5000-25000 Above 25000 FINDINGS: - In Survey 64% of people invested between Rs 5000 to 25000 and 26% people invested above Rs 25000 only 10% people invested only Rs 5000. 52 | P a g e
  53. 53. HOW LONG INVESTEDPage | 53 8% 42% 50% Less than 1 year Between 1 to 3 year More than 3 year FINDINGS: - In Survey 50% investors are interest in 1 to 3 years of investment and 42% are interested in more than 3 years of investment only 8% investors are interested in short term investment. Is investment in mutual fund safe? 25% Yes 75% No 53 | P a g e
  54. 54. FINDINGS: - In Survey 75% investors think that investment is safe and 25% think that it is not safe.Page | 54 Mutual fund can give higher return? 11% Yes No 89% FINDINGS:- In Survey 89% investors think that mutual fund can give higher return and 11% think that mutual fund cannot give higher return it can give only normally 15- 20% return. 54 | P a g e
  55. 55. Future of mutual fundPage | 55 19% Good 81% Not good FINDINGS:- In Survey 81% investor think that future of mutual fund will be good and 19% think that future of mutual fund will not be as such good as it is. Analysis & Interpretation PEOPLE CONSIDERS VARIOUS FACTORS WHILE INVESTING IN MUTUAL FUND 55 | P a g e
  56. 56. Options Responses Percentages (%) Returns 49 49Page | 56 Tax saving 26 26 Liquidity 16 16 Risk free 9 9 People consider various factor while investing in mutual fund 60 50 40 % of response 30 Series1 20 10 0 1 2 3 4 5 options PEOPLE CONSIDER VARIOUS BASES FOR INVESTING IN ANY PARTICULAR FUND OPTIONS RESPONSES RESPONSES IN % Past performance of fund 64 64 Portfolio of fund 36 36 56 | P a g e
  57. 57. people consider various bases while investing in any particular fund 64Page | 57 36 Series1 1 responses in % 2 options PREFERENCE OF VARIOUS MUTUAL FUNDS OF DIFFERENT PEOPLES Options Responses Responses in % Franklin Templeton 17 17 HDFC 19 19 Reliance 11 11 ICICI 18 18 SBI 29 29 Any other 8 8 57 | P a g e

×