A Study of Mutual Funds in India- Report

A Study on the Growth of Mutual Funds in India
A REPORT
ON
A STUDY ON THE GROWTH OF MUTUAL
FUNDS IN INDIA
By
Mundakathil Syril Thomas
(Enrollment Number: 16BSPHH01C0578)
IBS Hyderabad
At
Stock Holding Corporation of India Limited.

A FINAL REPORT
On
A STUDY ON THE GROWTH OF MUTUAL FUNDS IN
INDIA
By
Mundakathil Syril Thomas
(Enrollment Number: 16BSPHH01C0578)
IBS Hyderabad
At
Stock Holding Corporation of India Limited
A report submitted in partial fulfillment of the requirements of MBA
Program of IBS Hyderabad
SUBMITTED TO
FACULTY GUIDE COMPANY GUIDE
Prof. Vasundhara T Mrs. Snehal Kale
DATE OF SUBMISSION
3rd
MAY 2017

AUTHORIZATION
This is to certify that the report on “A Study on the Growth of Mutual Funds in India” is
an original work carried out by Mr. Syril Thomas for the completion of the Summer Internship
Program at Stock Holding Corporation of India Limited. Under the guidance of Mrs. Snehal
Kale (Branch Manager, SHCIL-Mylapore).
The report is submitted in partial fulfilment of the requirement of MBA Program (2016-2018)
of IBS Hyderabad.
FACULTY GUIDE COMPANY GUIDE
Prof. Vasundhara T Mrs. Snehal Kale

ACKNOWLEDGMENT
I would like to take this opportunity to thank all those who have made working on this project
feasible for me. I would first like to thank Mrs. S Srinithya, Area Manager of Stock Holding
Corporation of India Limited (SHCIL), Chennai for providing me with the opportunity to work
with SHCIL and giving me my first taste of the real corporate and professional world. It gave
me an opportunity to understand the real life situations and implement all those things which I
had earlier only come across in textbooks as part of my course.
I would also like to extend my sincere thanks and gratitude to my Project guide, Mrs. Snehal
Kale, Branch Manager, SCHIL-Mylapore for allowing me to work under her able guidance.
Without her guidance, help and support this project would not have been possible. Especially
her crucial inputs for my study related to the study of Mutual Funds will go a long way in
shaping my future.
I also express my sincere thanks to Mr. Venugopalan C.H, Mr. Bala Subramanian and
Mr. V Pushparaj for his invaluable suggestions and support.
I would like to sincerely thank my Faculty guide, Prof. Vasundhara T for providing guidance
and support for my project.
I also thank all the other employees of Stock Holding Corporation of India Limited (SHCIL),
Mylapore Branch and Regional Office Chennai for their co-operation and support.
Date: 3rd
May 2017 (Mundakathil Syril Thomas)
Place: Chennai, Tamil Nadu.

TABLES OF CONTENTS
Authorization
Acknowledgment
Synopsis
Abstract
List of Illustration
1. Introduction 1
1.1 About Mutual Funds 1
1.2 Advantages of Mutual Funds 2
1.3 Limitations of Mutual Funds 2
1.4 Objective of the Report 3
1.5 Scope of the Report 3
1.6 Limitations 3
1.7 Methodology 3
2. Company Details: Stock Holding Corporation of India Limited 4
2.1 Introduction 4
2.2 Products and Services 4
2.3 Institutional Segment 4
2.4 Retail Segment 5
2.4.1 Demat Service 5
2.4.2 Sub-broking Services 5
2.4.3 Distribution of Investment Products 5
2.4.4 National Pension System 6
2.4.5 The Auxiliary Services 6
2.4.6 E-Stamping 7
2.5 Information Technology 7
2.6 SHCIL Services Ltd. (SSL) 7
2.6.1 Products and Services 7
2.6.1.1 Broking 7
2.6.1.2 Mutual Funds 7
2.6.1.3 Sub-broking 8
2.6.1.4 IPO & NCD Bidding 8
2.7 Future Outlook 8

3. History of Mutual Funds 9
4. Industry Analysis- SWOT 13
5. Classification of Mutual Funds 14
5.1 Based on their structure 14
5.2 Based on their investment objective 14
6. Investment Strategies 17
7. Classification of Mutual Fund Schemes 18
7.1 Operational Classification 18
7.2 Portfolio Classification 19
8. Mutual Funds for Whom? 21
9. Why Mutual Funds? 21
10. Marketing of Funds: Challenges and Opportunities 23
11. Product Innovation and Variety 24
11.1 Investor Preference 24
11.2 Product Innovation 24
12. Distribution Network 24
13. Quality of Service 25
14. Market Research 25
14.1 Retail Segment 26
14.2 Institutional Segment 26
14.3 Trusts 26
14.4 Non Residential Indians 27
14.5 Corporates 27
15. Overview of Various Mutual Fund Schemes 28
16. Details of Various Mutual Fund Schemes 30
16.1 Balanced Fund 30
16.2 Large Cap Fund 30
16.3 Mid Cap Fund 30
16.4 Small Cap Fund 31
16.5 Multi Cap Fund 31
16.6 Multi Cap Diversified Fund 31
16.7 Infrastructural Fund 31
16.8 Tax Saving (ELSS) Fund 31

17. Indicators of Growth of Mutual Funds 32
17.1 Annualized Returns 32
17.2 Understanding Beta 32
17.3 Understanding Standard Deviation 32
17.4 Growth of Asset Under Management (AUM) 32
17.5 Shift from traditional investment methods to Mutual Funds 33
18. Research Methodology 34
18.1 List of information required 34
18.2 Method used in collection of data 34
18.3 Advantages and Disadvantages 34
18.4 Type of sampling used 35
19. Analysis of Survey 36
20. Findings of Survey 41
21. Conclusions 47
22. Recommendations 48
References 49
Glossary 50
General Terms 50
Business Specific 52
Annexure I 56
Questionnaire
Annexure II 60
Expense Ratio

SYNOPSIS
Mutual funds are financial intermediaries, which collect the savings of investors and invest
them in a large and well-diversified portfolio of securities such as money market instruments,
corporate and government bonds and equity shares of joint stock companies. A mutual fund
is a pool of common funds invested by different investors, who have no contact with each
other. Mutual funds are conceived as institutions for providing small investors with avenues
of investments in the capital market. Since small investors generally do not have adequate time,
knowledge, experience and resources for directly accessing the capital market, they have to
rely on an intermediary, which undertakes informed investment decisions and provides
consequential benefits of professional expertise. The raison d’être of mutual funds is their
ability to bring down the transaction costs. The advantages for the investors are reduction in
risk, expert professional management, diversified portfolios, and liquidity of investment and
tax benefits. By pooling their assets through mutual funds, investors achieve economies of
scale.
Over the past 10 years, Mutual Funds have grown and ever since the changing behavioral
patterns of customers, it is very ambiguous to figure out what would be the future of Mutual
Funds in India. The report tries to give a holistic view about how different variables like
income, age, occupation and gender has any impact on the interest of a customer in investing
and especially in mutual funds. The cluster of these variables along their risk taking ability will
help the current organization to fabricate the schemes which will have potential investors who
are willing to invest.
The report also helps organization to analyze the indicators which can showcase the growth of
Mutual Funds in India and what would the probable future of Mutual Funds. An exploratory
research methodology is used to collect the consumer preferences while making investments.
The outcome of the project can help various financial service organization to plan accordingly
their target investors and also the AMC to device a structured scheme for customers while
investing in Mutual Funds.

ABSTRACT
In few years Mutual Fund has emerged as a tool for ensuring one’s financial wellbeing. Mutual
Funds have not only contributed to the India growth story but have also helped families tap
into the success of Indian Industry. As information and awareness is rising more and more
people are enjoying the benefits of investing in mutual funds. The main reason the number of
retail mutual fund investors remains small is that nine in ten people with incomes in India do
not know that mutual funds exist. But once people are aware of mutual fund investment
opportunities, the number who decide to invest in mutual funds increases to as many as one in
five people. The trick for converting a person with no knowledge of mutual funds to a new
Mutual Fund customer is to understand which of the potential investors are more likely to buy
mutual funds and to use the right arguments in the sales process that customers will accept as
important and relevant to their decision.
Investment in SIP (Systematic Investment Planning) has helped people to reap a lot of benefits
over the period unlike short term where people are not aware of how to plan their investments
in the best possible way.
The analysis and advice presented in this Project Report is based on survey research on the
saving and investment practices of the common man and preferences of the investors for
investment in Mutual Funds. This report will help to know about the investors’ preferences in
investment and know their interest for Mutual Funds.
One can have a brief knowledge about Mutual Fund and its basics through the report. It also
helps you to learn the indicators which would lead to the growth of Mutual Funds in India and
what is the future of Mutual Funds, which holds the primary objective of the report.
The second objective of the report consists of data and its analysis collected through survey
done on nearly 220 people. The data collected has been well organized and presented which
will help the financial service institution to plan accordingly. An exploratory research
methodology has been adapted to carry out the survey titled “Preference On Consumers While
Investing”
The report gives a holistic view of “Growth of Mutual Funds in India” with an added
information on consumer preferences.

LIST OF ILLUSTRATIONS
INDEX NO. INDEX NAME SOURCE PG. NO.
FIGURES
Fig 1.1 Flow Chart of Mutual Fund MutualFundsIndia.com 1
Fig 2.1 Products of SHCIL StockHolding.com 8
Fig 3.1 Growth of Asset Under Management www.amfiindia.com 10
Fig 3.2 MF Industry- AUM Growth-
Mar’07-Aug’16
www.amfiindia.com 12
Fig 5.1 Mutual Fund Cycle www.shcilservices.com 16
Fig 6.1 Risk Vs Return: MF Industry Investopedia.com 17
Fig 7.1 Riskometer of MF Reliancecapital.com 18
Fig 19.2 Pie Chart of Gender Classification Survey Results- Annexure I 37
Fig 19.4 Age Group (Bar Graph) Survey Results- Annexure I 38
Fig 19.6 Bar graph on comparative investments
count with income and age
Survey Results- Annexure I 39
Fig 19.8 Graphical representation of
Occupation and Income (Current
Investment)
Fig 20.2 Bar Graph of Risk Taking Ability Survey Results- Annexure I 42
Fig 20.4 Bar Graph of Expected Return Survey Results- Annexure I 43
Fig 20.6 Bar Graph of Gender Based Period of
Investment
Fig 20.8 Bar Graph of Classification of Current
Investment
Fig 20.10 Bar Graph of predictive analysis of
mutual funds as an investments

TABLES
Tab 15.1 Mutual Funds Schemes (Part 1) Compiled by Venugopalan
C.H, Manager (Corporate
Marketing), SHCIL- Chennai
28
Tab 15.2 Mutual Funds Schemes (Part 2) Compiled by Venugopalan
C.H, Manager (Corporate
Marketing), SHCIL- Chennai
29
Tab 19.1 Gender Analysis Survey Results- Annexure I 36
Tab 19.3 Age Group Analysis Survey Results- Annexure I 37
Tab 19.5 Classification on basis of Age and
Income (Current Investment)
Tab 19.7 Classification on Occupation and
Income (Current Investments)
Tab 20.1 Risk Taking Ability Survey Results- Annexure I 41
Tab 20.3 Expected Return Survey Results- Annexure I 42
Tab 20.5 Gender Based Period of Investment Survey Results- Annexure I 43
Tab 20.7 Classification of Current Investment Survey Results- Annexure I 44
Tab 20.9 Pivot Table of Investment in Mutual
Fund
Tab A2.1 Expense Ratio Variation Intranet, StockHolding.com 61
Tab A2.2 Expense Ratio- Investment Plan Intranet, StockHolding.com 61

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1. INTRODUCTION
1.1 ABOUT MUTUAL FUNDS
Mutual fund is a trust that pools the savings of a number of investors who share a common
financial goal. This pool of money is invested in accordance with a stated objective. The joint
ownership of the fund is thus “Mutual”, i.e. the fund belongs to all investors. The money thus
collected is then invested in capital market instruments such as shares, debentures and other
securities. The income earned through these investments and the capital appreciations realized
are shared by its unit holders in proportion the number of units owned by them. Thus a Mutual
Fund is the most suitable investment for the common man as it offers an opportunity to invest
in a diversified, professionally managed basket of securities at a relatively low cost. A Mutual
Fund is an investment tool that allows small investors access to a well-diversified portfolio of
equities, bonds and other securities. Each shareholder participates in the gain or loss of the
fund. Units are issued and can be redeemed as needed. The fund’s Net Asset value (NAV) is
determined each day.
Investments in securities are spread across a wide cross-section of industries and sectors and
thus the risk is reduced. Diversification reduces the risk because all stocks may not move in
the same direction in the same proportion at the same time. Mutual fund issues units to the
investors in accordance with quantum of money invested by them. Investors of mutual funds
are known as unit holders.
Fig: 1.1 Flow Chart of Mutual Funds
(Source: MutualFundsIndia.com)

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When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets
of the fund in the same proportion as his contribution amount put up with the corpus (the total
amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a
unit holder.
Any change in the value of the investments made into capital market instruments (such as
shares, debentures etc.) is reflected in the Net Asset Value (NAV) of the scheme. NAV is
defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a
scheme is calculated by dividing the market value of scheme's assets by the total number of
units issued to the investors.
1.2 ADVANTAGES OF MUTUAL FUND
• Portfolio Diversification
• Professional management
• Reduction / Diversification of Risk
• Liquidity
• Flexibility & Convenience
• Reduction in Transaction cost
• Safety of regulated environment
• Choice of schemes
• Transparency
• Tax advantages.
1.3 LIMITATIONS OF MUTUAL FUND
• No control over Cost in the Hands of an Investor
• No tailor-made Portfolios
• Managing a Portfolio Funds
• Difficulty in selecting a Suitable Fund Scheme
• Entry load and Exit Load Charges.

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1.4 OBJECTIVES
The objectives of this internship report are as follows-
a) To Study the customer preference while investing.
b) To analyze the future of mutual funds in India.
1.5 SCOPE
The report helps us to understand the perception of the customers and helps to know in details
about what factors will lead to the growth of Mutual Funds in India. It can help a lot of
Financial Institutions and Asset Management Company (AMC) to design the Mutual Fund
schemes according to their target audiences’ requirements.
1.6 LIMITATIONS
 The study is based on exploratory research methodology and can have sample bias.
 The behavioral attitude of the customers might have effect on the preferences of the
customers towards Mutual Funds and can deviate the results slightly from actual
results.
 Research is confined to only Indian Sub-continent and might vary as we move towards
the west, due to investment and saving patterns
1.7 METHODOLOGY
Research Design : Exploratory Research
Research Instrument : Structured, Un-disguised
Sample Method : Non-Probability Sampling
Sample Size : 220
Sampling Design : Convenience Sampling
Sources of Data
 Primary Data : Structured Non-Disguised Questionnaire
 Secondary Data : Not available.
The whole study is based upon primary data.

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2. COMPANY DETAILS
STOCKHOLDING CORPORATION OF INDIA LTD.
2.1 Introduction:
Stock Holding Corporation of India Ltd. (StockHolding) was promoted by the public financial
institutions and incorporated as a limited company on July 28, 1986. StockHolding provides
post trading and custodial services to institutional investors, mutual funds, banks and insurance
companies.
With the introduction of the depository system in the country. StockHolding commenced
offering depository related services to the retail segment and over the past few years, it has
come to acquire the stature of being one of the largest Depository Participant, besides being
the country’s largest and premier custodian. StockHolding also provides Professional Clearing
Member services to trading members in the Futures & Options Segment.
StockHolding has continued to build tie-ups with several agencies for offering various third
party financial products to clients. StockHolding acts as Point of Presence (POP) for National
Pension System. StockHolding also provides sub-broking services through its wholly owned
subsidiary, SHCIL Services Ltd. StockHolding acts as a Central Record Keeping Agency for
collection and payment of stamp duty in various States and Union Territories of India.
StockHolding has about 190 offices across the country.
StockHolding has been consistently earning profit and declaring dividends right from its
inception. With a share capital of Rs. 211 million, StockHolding’s tangible net worth stands at
Rs. 6071 million as on March 31, 2016.
2.2 Product and Services:
The focus of StockHolding has always been to direct its product and services for all round
benefit of its investors. StockHolding provides a wide range of financial services under one
roof, which has always been a priority while safety and investor friendliness have been the
hallmark of StockHolding’s products and services.
2.3 Institutional Segment:
StockHolding is India’s Largest Custodian by assets under custody. StockHolding services an
aggregate asset of over Rs. 32 lakh crores with a market share of over 22%. The services and
products offerings of StockHolding includes custodial services for all securities, valuation and
fund Accounting, securities lending and borrowing services, clearing services for derivatives
(equity, interest rate, currency), Custodial services for goal, custodial services to Indian
investors for their investments outside India, securities escrow services. As a Designated
Depository Participant (DDP), StockHolding provides registration and custodial services for
Foreign Portfolio Investors. StockHolding is the only non-bank Custodian to hold a ‘No
ActionLetter’ under SEC 17 of US (SEC) regulations enabling it to offer custody services to
the US based funds.

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In 2016, StockHolding was rated by the UK based internationally acclaimed ‘Global
Custodian’ as a ‘Market Outperformer’ as well as ‘Category Outperformer’ for the India
Domestic Survey 2016. StockHolding was also awarded the BSE SKOCH award 2016 for
‘Best Custodian- Business Excellence’. StockHolding’s ling and diverse clientele includes
Insurance Companies, Mutual Funds, Pension Funds, Banks. Foreign Direct Investors,
Alternate Investment Funds, Public Sector Undertakings & High Networth Individuals.
StockHolding in its endeavor to offer a wider basket of services as custodian, has added
international securities services for investing in securities of countries outside India. This
service would be of use of investors such as Mutual Funds, Corporate, Family Offices, High
Net worth investors and Foreign Investors etc.
2.4 Retail Segment: StockHolding offers Depository Participant (DP) services, sub-broking
services, distribution of financial products and auxiliary services to its clients in the Retail
Segment.
2.4.1 Demat Services: Since 1998, StockHolding has been extending DP services to its
clients in the Retail Segment. The services offered include account opening,
dematerialization and rematerialization of securities, transaction processing and
creative/closure of pledge. StockHolding is also empaneled as a Comtrack
Participant with National Commodity and Derivatives Exchange (NCDEX) to hold
commodities in dematerialized form. StockHolding was successively awarded as
star performer in the category of Highest Asset Value and Top Performer in active
accounts by NSDL.
2.4.2 Sub-broking Services: StockHolding offers sub-broking services through its
wholly owned subsidiary, SHCIL Services Ltd. (SSL) which is operational in Cash
and F&O segment of NSE & BSE and Currency Derivatives Segment of NSE. SSL
provides speedy, safe, reliable and affordable broking services to retail, HNI and
corporate clients, through StockHolding’s wide network of branches spread across
the country. Broking services include Internet Based Trading, Margin Trading
Facility, Mobile Trading, trading of mutual funds through BSE StAR MF platform,
SIP in securities, IPO/NCD bidding etc. SSL also appoints Sub-brokers/ Authorized
Persons & Remisiers at attractive terms and conditions.
2.4.4 Distribution of Investment Products & Loans: StockHolding distributes Mutual
Funds, Fixed Deposits, Government of India Bonds, Capital Gain Bonds, Tax Free
Bonds, NCDs and IPOs. StockHolding provides its investors AMFI-MFU’s
Common Account Number (CAN) to hold Mutual Fund investments across fund
houses in different schemes, within a single account. StockHolding, also provides
an online platform “e-MF” to facilitate investments in Mutual Funds and to carry
out subsequent transactions like STPs, SWPs and Redemptions. StockHolding has
tied up with leading Banks and NBFCs to offer Loan against Securities, Home Loan,
Education Loan, Auto Loan, Personal Loan, Business Loan and Loan against
Properties to retail clients and corporates.

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StockHolding has tied up with MMTC Pamp India Pvt Ltd, India’s Largest refinery
for distribution of gold and silver coins of assured purity. Gold Accumulation Plan
of StockHolding is a product which enables client to purchase purest quality gold
with minimum investment of Rs. 1000. StockHolding offers bullion vault/ locker
services at Zaveri Bazar, Mumbai to retail and institutional clients.
StockHolding has been awarded ‘The Brand Leadership Award’ at the My FM stars
of the Industry Awards for Excellence in Finance, Banking, Insurance and Financial
Services.
2.4.3 National Pension System: National Pension System (NPS) introduced by
Government of India is regulated under Pension Fund Regulatory and Development
Authority (PFRDA). StockHolding is a Point of Presence (POP) and the only
Custodian in the architecture of NPS. All the branches are registered as Point of
Presence Service Provider (POP-SE) to provide service in NPS. StockHolding
received three awards from PFRDA in recognition of its efforts in business
development, improvement in service parameters and brand building. StockHolding
was awarded prizes in best Point of Presence (POP)- All Citizen award, Best POP
NPS Corporate and Best POP NPS Private Sector.
Individuals in Unorganized Sector, Corporate Employees and NRIs can avail full
spectrum of services in NPS through Stocking. Government employees who have
joined the service prior to 1st
January 2014 can also joint NPS through StockHolding.
The subscribers of NPS including the subscribers who have opened NPS account
with other than StockHolding can use Online System of StockHolding to pay their
contribution.
Eligible Entities can joint NPS Corporate Module through StockHolding and
Corporate who want to distribute and promote NPS business can joint StockHolding
as Point of Presence-Sub Entity (POP-SE) as per the provision of PFRDA.
2.4.5 The Auxiliary Services: The auxiliary services provided by StockHolding include
Professional Clearing Member (PCM) services in Futures and Option (F&O)
segment of NSE and BSE, constituent SGL account services and PF accounting
services. StockHolding also provides PCM services in both segments of Currency
Derivatives and Interest Rate Futures (IRF) in NSE and BSE respectively.
StockHolding is one of the largest Professional Clearing Members of the country.
StockHolding has been appointed as a custodian by NSCCL (The National
Securities Clearing Corporation Ltd. of NSE), NCDEX (National Commodity and
Derivatives Exchange), MCX (Multi Commodity Exchange of India Ltd.) and
MCX-SX for providing valuation of equities and commodities which serve as
collateral margin provided by clearing members with the Stock Exchanges.

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2.4.6 e-stamping: StockHolding has been authorized by the Ministry of Finance,
Government of India to act as a Central Record-keeping Agency (CRA) to design
and implement an electronic method of stamp duty collection. e-stamping is a web-
based solution for payment and collection of non-judicial stamp duty. StockHolding
is the sole CRA for e-Stamping in India.
2.5 Information Technology:
StockHolding works in a highly computerized environment. StockHolding has in-house
capability to address all information Technology (IT) requirement in terms of software
development and maintenance, back office processing, database administration and
networking requirements. IT requirements. IT being the key to success of our operations,
StockHolding has made significant investments in State of the Art technologies to
facilitate the business and to minimize the risk from automated operations. StockHolding
has a Tier III + Data Center with contemporary and latest technology.
2.6 SHCIL Services Ltd. (SSL):
SSL is wholly subsidiary of StockHolding and is a SEBI registered corporate stock
broking providing safe and reliable services to all its retail and institutional clients across
length and breadth of the country. SSL offers services in Cash and F&O segment of NSE
& BSE and currency Derivatives Segment of NSE.
2.6.1 Product and Services:
2.6.1.1 Broking:
 Retail and Institutional Broking in
Cash & F&O Segment
Currency Derivatives Segment
 Offer for Sale
 Offer to Buy
 Margin Trading Facility for Retail Clients
 Systematic Investment Plan (SIP) in Securities for Retail Clients
 Intraday Short Selling Facility for Retail Clients
 Online Trading
 Mobile Trading
2.6.1.2 Mutual Funds:
Allotment and Redemption of Mutual Funds units through-
 BSE StAR MF
 NSE MFSS

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2.6.1.3 Sub-broking:
Attractive terms and conditions offered for appointment of Sub-brokers.
Authorized Persona and Remisiers.
2.6.1.4 IPO & NCD Bidding:
Client can apply for IPO, NCD, Tax free Bonds through SSL
2.7 Future Outlook:
StockHolding played a major role when the physical securities were in vogue. With the
introduction of the depository system in the country. StockHolding made a foray into the retail
segment. It emerged as the premier custodian and one of the largest depository participant in
the country. StockHolding also diversified into other service area such as broking, third party
distribution of financial products, digitization and storage of documents, E-stamping, selling
of bullion coins’ bullion vaults business, Gold Accumulation plan (GAP), etc. StockHolding
is committed to provide quality and personalized services to all its customers with a moto
“Service with a Smile”.
Fig: 2.1 Products of SHCIL
(Source: StockHoldings.com)

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3. HISTORY OF THE 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. Though the growth was slow, but
it accelerated from the year 1987 when non-UTI players entered the Industry.
In the past decade, Indian mutual fund industry had seen a dramatic improvement, both
qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending
phase; the Assets Under Management (AUM) was Rs67 billion. The private sector entry to the
fund family raised the AUM to Rs. 470 billion in March 1993 and till April 2004; it reached
the height if Rs. 1540 billion.
The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund
industry can be broadly put into four phases according to the development of the sector. Each
phase is briefly described as under.
First Phase – 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament 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 crores
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 Canbank 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)
1993 was 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. As at the end of January 2003, there were 33 mutual funds with total
assets of Rs. 1,21,805 crores.

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Fourth Phase –2003-2014
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 second is the UTI Mutual Fund, 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 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.
The graph indicates the growth of assets over the years.
Following the global melt-down in the year 2009, securities markets all over the world had
tanked and so was the case in India. Most investors who had entered the capital market during
the peak, had lost money and their faith in MF products was shaken greatly. The abolition of
Entry Load by SEBI, coupled with the after-effects of the global financial crisis, deepened the
adverse impact on the Indian MF Industry, which struggled to recover and remodel itself for
over two years, in an attempt to maintain its economic viability which is evident from the
sluggish growth in MF Industry AUM between 2010 to 2013.
Fig: 3.1 Growth in Asset Under Management
(Source: www.amfiindia.com)

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Fifth Phase (Current) – Since May 2014
Taking cognizance of the lack of penetration of MFs, especially in tier II and tier III cities, and
the need for greater alignment of the interest of various stakeholders, SEBI introduced several
progressive measures in September 2012 to "re-energize" the Indian Mutual Fund industry and
increase MFs’ penetration.
In due course, the measures did succeed in reversing the negative trend that had set in after the
global melt-down and improved significantly after the new Government was formed at the
Center.
Since May 2014, the Industry has witnessed steady inflows and increase in the AUM as well
as the number of investor folios (accounts).
The Industry’s AUM crossed the milestone of ₹10 Trillion (₹10 Lakh Crore) for the first time
as on 31st May 2014 and in a short span of two years the AUM size has crossed ₹15 lakh crore
in July 2016.
The overall size of the Indian MF Industry has grown from ₹ 3.26 trillion as on 31st March
2007 to ₹ 15.63 trillion as on 31st August 2016, the highest AUM ever and a five-fold increase
in a span of less than 10 years!!
In fact, the MF Industry has more doubled its AUM in the last 4 years from ₹ 5.87 trillion as
on 31st March, 2012 to ₹ 12.33 trillion as on 31st March, 2016 and further grown to ₹ 15.63
trillion as on 31st August 2016.
The no. of investor folios has gone up from 3.95 crore folios as on 31-03-2014 to 4.98 crore as
on 31-08-2016.
On an average 3.38 lakh new folios are added every month in the last 2 years since Jun 2014.
The growth in the size of the Industry has been possible due to the twin effects of the regulatory
measures taken by SEBI in re-energizing the MF Industry in September 2012 and the support
from mutual fund distributors in expanding the retail base.
MF Distributors have been providing the much needed last mile connect with investors,
particularly in smaller towns and this is not limited to just enabling investors to invest in
appropriate schemes, but also in helping investors stay on course through bouts of market
volatility and thus experience the benefit of investing in mutual funds.
In fact, even though FY 2015-16 was not a very good year for the Indian securities market, the
MF Industry witnessed steady positive net inflows month after month, even when the FIIs were
pulling out in a big way. This was largely because of the ‘hand-holding’ of the investors by the
MF distributors and convincing them to stay invested and/or invest at lower NAVs when the
market had fallen.
MF distributors have also had a major role in popularizing Systematic Investment Plans (SIP)
over the years. In April 2016, the no. of SIP accounts has crossed 1 crore mark and currently
each month retail investors contribute around ₹3,500 crores via SIPs.

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The graph indicates the growth of MF over the last 10 years.
Fig: 3.2 MF Industry- AUM Growth- Mar’07-Aug’16
(Source: www.amfiindia.com)

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4. INDUSTRY ANALYSIS- S.W.O.T
Industry analysis is a tool that facilitates a company's understanding of its position relative
to other companies that produce similar products or services. Understanding the forces at
work in the overall industry is an important component of effective strategic planning. The
SWOT Analysis can help us know the clear picture of the Mutual Fund Industry.
STRENGTH
The most critical strength for a mutual fund is its performance. If a fund is outperforming
the market, and particularly if it is at the top of its benchmark, that is a big selling point. If
the fund is part of a well-established company with a track record of success and a family
of high-performing products, that brand name and historical record may also be a strength.
A best-in-class research department or methodology that has a track record of picking
winners is a huge asset as well. Different financial metrics may be key depending on your
investment style and the fund involved: dividend yield may be the key for one investor, total
return over a 10-year period for another.
WEAKNESS
One weakness to look at are your fund’s fees. A high expense ratio is a weakness even if it
pays for an active management currently beating the market with its returns. Even in good
times, expenses are a drag on investor return, and they will be more difficult to accept if the
performance declines. Size can be a weakness as well, since bigger isn’t always better. As
a small-cap fund gets bigger, for example, it will have a hard time finding growth
opportunities for all of its assets and may have to close or expand outside of its stated
objective. Risk may be a weakness for some investors looking for a smaller beta or standard
deviation.
OPPORTUNITIES
It's not enough to look at the current numbers when evaluating prospective mutual funds.
You also need to look at the overall market and consider whether the fund is best positioned
to take advantage of trends. A lagging fund may offer the best opportunity for growth if the
combination of a management change and economic trends prove beneficial. A change in
the government regulatory environment not only affects different industries, but the funds
that concentrate in those sectors as well.
THREATS
To some extent, many funds move along with general economic news. Some types of funds
do better in a recession while others track well in boom times -- those funds are particularly
threatened by a sudden change in the unemployment rate that undermines consumer
confidence or a stimulus plan that gets people spending again. In addition, if a fund is
dependent on a superstar manager, make sure you have a plan in place if that manager
suddenly decides to leave.

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5. MUTUAL FUNDS- CLASSIFICATION
5.1 Based on their structure:
 Open-ended funds: Investors can buy and sell the units from the fund, at any
point of time.
 Close-ended funds: These funds raise money from investors only once.
Therefore, after the offer period, fresh investments cannot be made into the
fund. If the fund is listed on a stocks exchange the units can be traded like
stocks (E.g., Morgan Stanley Growth Fund). Recently, most of the New Fund
Offers of close-ended funds provided liquidity window on a periodic basis
such as monthly or weekly. Redemption of units can be made during specified
intervals. Therefore, such funds have relatively low liquidity.
5.2 Based on their investment objective:
 Equity funds: These funds invest in equities and equity related instruments.
With fluctuating share prices, such funds show volatile performance, even
losses. However, short term fluctuations in the market, generally smoothens
out in the long term, thereby offering higher returns at relatively lower
volatility. At the same time, such funds can yield great capital appreciation as,
historically, equities have outperformed all asset classes in the long term.
Hence, investment in equity funds should be considered for a period of at least
3-5 years.
It can be further classified as:
i) Index funds-
In this case a key stock market index, like BSE Sensex or Nifty is
tracked. Their portfolio mirrors the benchmark index both in terms
of composition and individual stock weightages.
ii) Equity diversified funds-
100% of the capital is invested in equities spreading across different
sectors and stocks.
iii) Dividend yield funds-
It is similar to the equity diversified funds except that they invest in
companies offering high dividend yields.
iv) Thematic funds-
Invest 100% of the assets in sectors which are related through some
theme.
e.g. An infrastructure fund invests in power, construction, cements
sectors etc.

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v) Sector funds-
Invest 100% of the capital in a specific sector. e.g. - A banking sector
fund will invest in banking stocks.
v) ELSS-
Equity Linked Saving Scheme provides tax benefit to the investors.
 Balanced fund: Their investment portfolio includes both debt and equity. As
a result, on the risk-return ladder, they fall between equity and debt funds.
Balanced funds are the ideal mutual funds vehicle for investors who prefer
spreading their risk across various instruments.
Following are balanced funds classes:
i) Debt-oriented funds -Investment below 65% in equities.
ii) Equity-oriented funds -Invest at least 65% in equities, remaining
in debt
 Debt fund: They invest only in debt instruments, and are a good option for
investors averse to idea of taking risk associated with equities. Therefore, they
invest exclusively in fixed-income instruments like bonds, debentures,
Government of India securities; and money market instruments such as
certificates of deposit (CD), commercial paper (CP) and call money. Put your
money into any of these debt funds depending on your investment horizon and
needs.
i) Liquid funds- These funds invest 100% in money market
instruments, a large portion being invested in call money market.
ii) Gilt funds ST- They invest 100% of their portfolio in government
securities of and T-bills.
iii) Floating rate funds - Invest in short-term debt papers. Floaters
invest in debt instruments which have variable coupon rate.
iv) Arbitrage fund- They generate income through arbitrage
opportunities due to mis-pricing between cash market and derivatives
market. Funds are allocated to equities, derivatives and money
markets. Higher proportion (around 75%) is put in money markets,
in the absence of arbitrage opportunities.
v) Gilt funds LT- They invest 100% of their portfolio in long-term
government securities.

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vi) Income funds LT- Typically, such funds invest a major portion of
the portfolio in long-term debt papers.
vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt
and an exposure of 10%-30% to equities.
viii) FMPs- fixed monthly plans invest in debt papers whose maturity is
in line with that of the fund.
Fig: 5.1 Mutual Fund Cycle
(Source: www.shcilservices.com)

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6. INVESTMENT STRATEGIES
1. Systematic Investment Plan: Under this a fixed sum is invested each month on a fixed
date of a month. Payment is made through postdated cheques or direct debit facilities.
The investor gets fewer units when the NAV is high and more units when the NAV is
low. This is called as the benefit of Rupee Cost Averaging (RCA)
2. Systematic Transfer Plan: Under this an investor invest in debt oriented fund and give
instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same
mutual fund.
3. Systematic Withdrawal Plan: If someone wishes to withdraw from a mutual fund then
he can withdraw a fixed amount each month.
RISK V/S. RETURN:
Fig: 6.1 Risk Vs Return: MF Industry
(Source: investopedia.com)

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7. CLASSIFICATION OF MUTUAL FUND SCHEMES
Any mutual fund has an objective of earning income for the investors and/ or getting increased
value of their investments. To achieve these objectives mutual funds, adopt different strategies
and accordingly offer different schemes of investments. On this basis the simplest way to
categorize schemes would be to group these into two broad classifications:
7.1 OPERATIONAL CLASSIFICATION
7.2 PORTFOLIO CLASSIFICATION.
A. Operational classification highlights the two main types of schemes, i.e., open-ended
and close-ended which are offered by the mutual funds.
B. Portfolio classification projects the combination of investment instruments and
investment avenues available to mutual funds to manage their funds. Any portfolio
scheme can be either open ended or close ended.
A. Operational Classification:
a) Open 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 the capitalization 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 are repurchased by the fund at announced rates. Open-ended
schemes have comparatively better liquidity despite the fact that these are not listed.
The reason is that investors can any time approach mutual fund for sale of such units.
No intermediaries are required.
Moreover, the realizable 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 of such schemes has to be investments, which are actively
traded in the market. Otherwise, it will not be possible to calculate NAV. This is the
reason that generally open-ended schemes are equity based. Moreover, desiring
frequently traded securities, open-ended schemes hardly have in their portfolio shares
of comparatively new and smaller companies since these are not generally traded. In
such funds, option to reinvest its dividend is also available. Since there is always a
possibility of withdrawals, the management of such funds becomes more tedious as
managers have to work from crisis to crisis. Crisis may be on two fronts, one is, that
unexpected withdrawals require funds to maintain a high level of cash available every
time implying thereby idle cash. Fund managers have to face questions like ‘what to
sell’. He could very well have to sell his most liquid assets. Second, by virtue of this
situation such funds may fail to grab favorable opportunities. Further, to match quick
cash payments, funds cannot have matching realization from their portfolio due to
intricacies of the stock market. Thus, success of the open-ended schemes to a great
extent depends on the efficiency of the capital market and the selection and quality of
the portfolio.

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b) Close Ended Schemes: Such schemes have a definite period after which their shares/
units are redeemed. Unlike open-ended funds, these funds have fixed capitalization,
i.e., their corpus normally does not change throughout its life period. Close ended fund
units’ trade among the investors in the secondary market since these are to be quoted
on the stock exchanges. Their price is determined on the basis of demand and supply
in the market. Their liquidity depends on the efficiency and understanding of the
engaged broker. Their price is free to deviate from NAV, i.e., there is every possibility
that the market price may be above or below its NAV.
If one takes into account the issue expenses, conceptually close ended fund units
cannot be traded at a premium or over NAV because the price of a package of
investments, i.e., cannot exceed the sum of the prices of the investments constituting
the package. Whatever premium 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.
B. Portfolio Classification:
Following are the portfolio classification of funds, which may be offered.
This classification may be on the basis of (a) Return, (b) Investment Pattern,
(c) Specialized sector of investment, (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 a good return. Returns expected are in form of regular dividends or capital
appreciation or a combination of these two.
i. Income Funds: For investors who are more curious for returns, Income funds
are floated. Their objective is to maximize current income. Such funds distribute
periodically the income earned by them. These funds can further be split up into
categories: those that stress constant income at relatively low risk and those that
attempt to achieve maximum income 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
underlying investments through capital appreciation. Such funds invest in
growth oriented securities which can appreciate through the expansion
production facilities in long run. An investor who 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 all” issue
offer document announcing objectives as: (i) To provide a reasonable rate of
return, (ii) To protect the value of investment and, (iii) To achieve capital
appreciation consistent with the fulfillment of the first two objectives. Such
funds which offer a blend of immediate average return and reasonable capital
appreciation are known as “middle of the road” funds. Such funds divide their
portfolio in common stocks and bonds in a way to achieve the desired objectives.
Such funds have been most popular and appeal to the investors who want both
growth and income.

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(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 in equity shares of companies and undertake the risk associated with the
investment in equity shares. Such funds are clearly expected to outdo other
funds in rising market, because these have almost all their capital in equity.
Equity funds again can be of different categories varying from those that invest
exclusively in high quality ‘blue chip companies to those that invest solely in
the new, unestablished companies. The strength of these funds is the expected
capital appreciation. Naturally, they have a higher degree of risk.
ii. Bond Funds: such funds have their portfolio consisted of bonds, debentures,
etc. this type of fund is expected to be very secure with a steady income and
little or no chance of capital appreciation. Obviously risk is low in such funds.
In this category we may come across the funds called ‘Liquid Funds’ which
specialize in investing short-term money market instruments. The emphasis is
on liquidity and is associated with lower risks and low returns.
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 Funds:
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 riskier.
Fig: 7.1 Riskometer of MF
(Source: reliancecapital.com)

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8. MUTUAL FUNDS FOR WHOM?
These funds can survive and thrive only if they can live up to the hopes and trusts of their
individual members. These hopes and trusts echo the peculiarities which support the
emergence and growth of such insecurity of such investors who come to the rescue of such
investors who face following constraints while making direct investments:
a. Limited resources in the hands of investors quite often take them away from
stock market transactions.
b. Lack of funds forbids investors to have a balanced and diversified portfolio.
c. Lack of professional knowledge associated with investment business unable
investors to operate gainfully in the market. Small investors can hardly afford
to have ex-pensive investment consultations.
d. To buy shares, investors have to engage share brokers who are the members of
stock exchange and have to pay their brokerage.
e. They hardly have access to price sensitive information in time.
f. It is difficult for them to know the development taking place in share market
and corporate sector.
g. Firm allotments are not possible for small investors on when there is a trend of
over subscription to public issues.
9. WHY MUTUAL FUNDS?
Mutual Funds are becoming a very popular form of investment characterized by many
advantages that they share with other forms of investments and what they possess uniquely
themselves. The primary objectives of an investment proposal would fit into one or
combination of the two broad categories, i.e., Income and Capital gains. How mutual fund is
expected to be over and above an individual in achieving the two said objectives, is what
attracts investors to opt for mutual funds. Mutual fund route offers several important
advantages.
Diversification: A proven principle of sound investment is that of diversification, which is
the idea of not putting all your eggs in one basket. By investing in many companies the mutual
funds can protect themselves from unexpected drop in values of some shares. The small
investors can achieve wide diversification on his own because of many reasons, mainly funds
at his disposal. Mutual funds on the other hand, pool funds of lakhs of investors and thus can
participate in a large basket of shares of many different companies. Majority of people consider
diversification as the major strength of mutual funds.
Expertise Supervision: Making investments is not a full time assignment of investors. So
they hardly have a professional attitude towards their investment. When investors buy mutual
fund scheme, an essential benefit one acquires is expert management of the money he puts in
the fund.

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The professional fund managers who supervise fund’s portfolio take desirable decisions viz.,
what scrip’s are to be bought, what investments are to be sold and more appropriate decision
as to timings of such buy and sell. They have extensive research facilities at their disposal, can
spend full time to investigate and can give the fund a constant supervision. The performance
of mutual fund schemes, of course, depends on the quality of fund managers employed.
A. Liquidity of Investment: A distinct advantage of a mutual fund over other investments
is that there is always a market for its unit/ shares. Moreover, Securities and Exchange
Board of India (SEBI) requires the mutual funds in India have to ensure liquidity.
Mutual funds units can either be sold in the share market as SEBI has made it obligatory
for closed-ended schemes to list themselves on stock exchanges. For open-ended
schemes investors can always approach the fund for repurchase at net asset value
(NAV) of the scheme. Such repurchase price and NAV is advertised in newspaper for
the convenience of investors.
B. Reduced risks: Risk in investment is as to recovery of the principal amount and as to
return on it. Mutual fund investments on both fronts provide a comfortable situation
for investors. The expert supervision, diversification and liquidity of units ensured in
mutual funds reduces the risks. Investors are no longer expected to come to grief by
falling prey to misleading and motivating ‘headline’ leads and tips, if they invest in
mutual funds.
C. Safety of Investment: Besides depending on the expert supervision of fund managers,
the legislation in a country (like SEBI in India) also provides for the safety of
investments. Mutual funds have to broadly follow the laid down provisions for the
regulations, SEBI acts as a watchdog and attempts whole heatedly to safeguard
investor’s interests.
D. Tax Shelter: Depending on the scheme of mutual funds, tax shelter is also available.
As per the Union Budget-2016, income earned through dividends from mutual funds is
100% tax-free at the hands of the investors.
E. Minimize Operating Costs: Mutual funds having large invisible funds at their
disposal avail economies of scale. The brokerage fee or trading commission may be
reduced substantially. The reduced operating costs obviously increase the income
available for investors.
Investing in securities through mutual funds has many advantages like – option to reinvest
dividends, strong possibility of capital appreciation, regular returns, etc. Mutual funds are also
relevant in national interest. The test of their economic efficiency as financial intermediary lies
in the extent to which they are able to mobilize additional savings and channeling to more
productive sectors of the economy.

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10.MARKETING OF FUNDS: CHALLENGES AND
OPPORTUNITIES
When we consider marketing, we have to see the issues in totality, because we cannot judge
an elephant by its trunk or by its tail but we have to see it in its totality. When we say marketing
of mutual funds, it means, includes and encompasses the following aspects:
 Assessing of investors needs and market research
 Responding to investor’s 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
The above are the aspects of marketing of mutual funds, in totality. Even if there is a single
weak-link among the factors which are mentioned above, no mutual fund can successfully
market its funds.

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11.PRODUCT INNOVATION AND VARIETY
11.1 Investor Preferences
The challenge for the mutual funds is in the tailoring the right products that will help
mobilizing savings by targeting investors’ needs. It is necessary that the common investor
understands very clearly and loudly the salient features of funds, and distinguishes one fund
from another. The funds that are being launched today are more or less look-alikes, or plain
vanilla funds, and not necessarily designed to take into account the investors’ varying needs.
The Indian investor is essentially risk averse and is more passive than active. He is not
interested in frequently changing his portfolio, but is satisfied with safety and reasonable
returns. Importantly, he understands more by emotions and sentiments rather than a
quantitative comparison of funds’ performance with respect to an index. Mere growth
prospects, in an uncertain market, are not attractive to him. He prefers one bird in the hand to
two in bush, and is happy if assured a rate of reasonable return that he will get on his
investment. The expectations of a typical investor, in order of preference are the safety of
funds, reasonable return and liquidity.
The investor is ready to invest his money over a long period, provided there is a purpose
attached to it which is linked to his social needs and therefore appeals to his sentiments and
emotions. That purpose may be his child’s education and career development, medical
expenses, 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 their absence,
mutual funds can pool their resources together and try to mobilize funds to meet some of the
social needs of the society.
11.2 Product Innovations
With the debt market now getting developed, mutual funds are tapping the investors who
require steady income with safety, by floating funds that are designed to primarily have debt
instruments in their portfolio. The other area where mutual funds are concentrating is the
money market mutual funds, sectoral funds, index funds, gilt funds besides equity funds. The
industry can also design separate funds to attract semi-urban and rural investors, keeping their
seasonal requirements in mind for harvest seasons, festival seasons, sowing seasons, etc.
12. DISTRIBUTION NETWORK
Among the competitors to the mutual fund industry, Life Insurance Corporation with its
dedicated sales force is offering insurance products; banks with their friendly neighborhood
presence offer the advantage of extensive network; finance companies with their hefty upfront
incentives offer higher returns; shares – provided the market is moving favorably – also attract
direct investments from retail investors. It is against this background that the merits and
demerits of the alternative methods of distribution have to be studied.

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13. QUALITY OF SERVICE
This industry primarily sells quality of services, given that the performance cannot be
promised. It is with this attribute along with procedural simplicity, that the fund gradually
builds its brand and its class of loyal investors. The quality of services is broadly categorized
as:
 Timely services after the sale of the units; and
 Continuous reporting of investment performance.
Mutual fund managers must give due attention and evaluate their performance on each front.
They may also consider an option of conducting a service audit for controlling and improving
the quality of service.
14. MARKET RESEARCH
Investment in mutual fund is not a one-time activity. It is a continuous activity. The same
investor, if satisfied, will come to the fund again and again. When the investor sends his
application, it is not only an application, but it also contains vital information. Most of this
information if tabulated and analyzed would provide important insights into investor needs,
preferences and behavior and enables us to target customers need more accurately, to achieve
better penetration, deeper loyalty and reduced costs. It is in this context that direct marketing
will assume increased importance. Knowing the customer thoroughly is of utmost importance.
Unlike the consumer goods industry, it is not possible for mutual fund industry to test market
and have pilot projects before launch. At the same time, focusing and concentrating on a
particular geographic area where the fund has a strong presence and proven marketing network,
can help reduce network, can help reduce issue expenses and ultimately translate into higher
returns for the investor. Very little research on investor preference is available, but the industry
can collectively have a data bank, and share the information for appropriate use.
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 segment also
there could be different sub-segments asking for yet different risk-return attributes, and
differential preference for various investments attributes of financial product.
Different 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.

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On the basis of these attributes the mutual fund market may be broadly segmented into five
main segments as under.
14.1 Retail Segment
This segment characterizes large number of participants but low individual volumes. It
consists of individuals, Hindu Undivided Families, and firms. It may be further sub-
divided into:
i. Salaried class people;
ii. Retired people;
iii. Businessmen and firms having occasional surpluses;
iv. HUF’s for long term investment purpose.
These may be further classified on the basis of their income levels. It has been observed
that prospects in different classes of income levels have different patterns of preferences
of investment. Similarly, the investment preferences for urban and rural prospects would
differ and therefore the strategies for tapping this segment would differ on the basis of
differential life 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 capital appreciation. It lacks specialized investment skills in financial markets
and highly susceptible to mob behavior. The marketing strategy involving indirect selling
through agency network and creating awareness through appropriate media would be
more effective in this segment.
14.2 Institutional Segment
This segment characterizes less number of participants, and large individual volumes. It
consists of banks, public sector units, financial institutions, foreign institutional
investors, insurance corporations, provident and pension funds. This class normally looks
for more specialized professional investment skills of the fund managers and expects a
structured product than a ready-made product. The tax features and regulatory
restrictions are the vital considerations in their investment decisions.
Each class of participants, such as banks, provides a niche to the fund managers in this
segment. It requires more of a personalized and direct marketing to sustain and increase
volumes.
14.3 Trusts
This is a highly regulated, high volumes segment. It consists of various types of trusts,
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.
This class offers vast potential to the fund managers, if the regulators relax guidelines
and allow the trusts to invest freely in mutual funds.

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14.4 Non-Resident Indians
This segment consists of very risk sensitive participants, at times referred as ‘fair weather
friends.’ They need the highest cover against political and exchange risk. They normally
prefer easy exit with repatriation of income and principal. They also hold a strategic
importance as they bring in crucial foreign exchange – a crucial input for developing
country like ours. Marketing to this segment requires special kind of products for groups
of foreign countries depending upon the provisions of tax treaties. The range of suitable
products is required to design to divert the funds flowing into bank accounts. The latest
flavor in the mutual fund industry is exclusive schemes for non-resident Indians (NRI’s).
SBI MF has already launched an exclusive scheme for NRI’s. ICICI Prudential and JM
Mutual are in process of finalizing details and some more funds have also confirmed that
they are planning such schemes.
The MF industry is also looking to tap the vast NRI funds of about $5 billion that were
transferred to the local banks as FCNR and NRE deposits on the redemption of the
Resurgent India Bonds in October, 2003. HDFC was one of the first to launch a fixed
maturity plan to NRI’s after the RIB redemption. The scheme had collected Rs.16-17
crores. Sundaram and HDFC MF are currently in the process of strengthening
distribution net-works overseas, especially in the Middle East.
Sanjay Santhanam, Vice President Marketing & Sales of Sundaram MF says, “We are
intensifying our efforts at tapping NRI money. To begin with, we are looking at a
representative office and a distribution network in Dubai. Then we will work out
specialized products and asset allocation models. NRI are used to seeing low interest
rates so their return expectations are different from domestic investors. The large South
Indian population in the Middle East will surely connect with the Sundaram brand.”
14.5 Corporates
Generally, the investment need of this segment is to park their occasional surplus funds
that earn returns 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, which
typically become due for the payment within a year or quarter or even a month. They
need short term parking place for their fund. This segment offers a vast potential to
specialized money market managers. Given the relaxation in the regulatory guidelines,
fund managers are expected design products to this segment. Thus, each segment and
sub-segment has their own risk return preferences forming niches in the market.
Mutual funds managers have to analyze in detail the intrinsic needs of the prospects and
design a variety of suitable products for them. Not only those, the products are also
required to be marketed through appropriately different marketing strategies.

28 | P a g e
15. OVERVIEW OF VARIOUS MUTUAL FUND SCHEMES
Tab 15.1 Mutual Funds Schemes (Part 1)
Source: Compiled by Venugopalan C.H, Manager (Corporate Marketing), SHCIL- Chennai

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Tab 15.2 Mutual Funds Schemes (Part 2)
Source: Compiled by Venugopalan C.H, Manager (Corporate Marketing), SHCIL- Chennai

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16. DETAILS OF VARIOUS MUTUAL FUND SCHEMES
Mutual fund schemes can be broadly classified into Balanced Fund (Equity oriented, no long
term capital gain tax), Large Cap Fund, Mid-Cap Fund, Small Cap Fund, Multi-Cap Fund,
Multi Cap diversified Fund, Infrastructure Fund, Tax Saving (ELSS) Fund.
16.1 BALANCED FUND
Balanced funds (or hybrid funds) invest their portfolio in a mix of debt and equity. They
can be equity-oriented or debt-oriented, depending on their exposure to equity. If a fund
invests minimum 65 per cent in equities, it is called equity-oriented balanced fund. If a
fund invests less than 65 percent in equities, it is called debt-oriented balanced fund. This
category is clearly segregated in our funds list.
Equity oriented balanced funds, if held for more than 12 months are exempt from long
term capital gains tax. For periods less than that, short term capital gains tax is applicable
at 15 percent.
For debt oriented balanced funds, long-term capital gains tax is applicable if the fund is
held for 36 months or more. This is at 10 percent without indexation benefits or 20
percent with indexation benefits. Short-term capital gains tax on debt funds is as per your
tax bracket.
16.2 LARGE CAP FUND
Large cap (sometimes "big cap") refers to a company with a market capitalization value
of more than $10 billion. Large cap is a shortened version of the term "large market
capitalization." Market capitalization is calculated by multiplying the number of a
company's shares outstanding by its stock price per share. The dollar amounts used for
the classifications "large cap," mid cap" or "small cap" are only approximations that
change over time.
Investors like to diversify their portfolios by investing in companies in different
industries and at varying levels of assets, revenue and market size. A company's share
price tells you little about how big it is. A company with a market price of $100 can be
much smaller than a company with a market price of $10 depending on the number of
shares it has outstanding in the market.
16.3 MID-CAP FUND
A mid-cap fund is a type of stock fund that invests in mid-sized companies. A company's
size is determined by its market capitalization, with mid-sized firms generally ranging
from $2 billion to $10 billion in market cap.
Most stocks held in a mid-cap fund are firms with established businesses that are still
considered developing companies. These funds tend to offer more growth than large-cap
stocks and less volatility than the small-cap segment. The size restrictions for a mid-cap
stock fluctuates between funds. The range of $2 billion to $10 billion is only an
approximation, and it can change over time.

31 | P a g e
16.4 SMALL CAP FUND
The primary investment objective of the scheme is to generate long term capital
appreciation by investing predominantly in equity and equity related instruments of small
cap companies and the secondary objective is to generate consistent returns by investing
in debt and money market securities.
These funds can touch soaring heights when the markets are favorable while can also
wipe out fortunes when the tide reverses.
16.5 MULTI-CAP FUND
These are diversified mutual funds which can invest in stocks across market
capitalization. In other words, they are market capitalization agnostic. These funds resort
to portfolio gyrations commensurate with the market condition.
These funds invest in stocks across market capitalization. That is, their portfolio
comprises of large cap, midcap and small cap stocks. They are relatively less risky
compared to a pure mid cap or a small cap fund and are suitable for not-so-aggressive
investors.
16.6 MULTI-CAP DIVERSIFIED FUND
Multi Cap Equity Funds or Diversified Equity Funds invests in stocks of companies
across the stock market regardless of size and sector. These funds provide the benefit of
diversification by investing in companies spread across sectors and market capitalization.
They are generally meant for investors who seek exposure across the market and do not
want to be restricted to any particular sector. They invest in companies across different
market caps and hence reduce the amount of risk in the fund. Diversification helps
prevent events that could affect a single sector for affecting the fund, and hence reduce
risk.
16.7 INFRASTRUCTURAL FUND
Infrastructure funds provide the opportunity to invest in essential public assets, such as
toll roads, airports and rail facilities. They are often attractive to investors looking for
predictable returns, as infrastructure projects are typically characterized by low levels of
competition and high barriers to entry.
16.8 TAX SAVING (ELSS) FUND
ELSS stands for Equity Linked Savings Scheme. These are tax-saving mutual funds that
you can use to save income tax of up to Rs 1.5 lakh under Section 80C. ELSS funds have
a lock-in period of 3 years and invest a majority of their portfolio in the stock market.
Investments of up to Rs 1.5 lakh in ELSS funds earn a tax rebate under Section 80C every
year. The returns generated on the investments are also tax--free in the hands of the
investor after completion of the 3- year lock-in period. In case of SIP investments,
redemptions can be done on a first-in-first-out basis since each individual SIP has a
lock-in of 3 years.

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17. INDICATORS OF GROWTH OF MUTUAL FUNDS
There has been a significant growth of mutual funds in India since last decade. There is an
expected rise in the mutual funds industry over the next 5 years which can be clearly recognized
using the following indicators-
17.1 ANNUALISED RETURNS
A Compound Annual Growth Rate (CAGR) measures the rate of return over an investment
period. It is a smoothened rate because it measures the growth of an investment as if it had
grown at a steady rate, on an annually compounded basis.
CAGR = [(Current Value / Beginning Value) ^ (1/No. of Years)] - 1
17.2 UNDERSTANDING BETA
Beta measures the volatility of a security relative to something, usually a benchmark index. A
beta greater than one means the fund or stock is more volatile than the benchmark index, while
a beta of less than one means the security is less volatile than the index.
If the market goes up by 10%, a fund with a beta of 1.0 should go up 10% and vice versa.
While standard deviation determines the volatility of a fund according to the disparity of its
returns over a period of time, beta, determines the volatility, or risk, of a fund in comparison
to that of its index or benchmark.
Beta is based on the capital assets pricing model which states that there are two kinds of risk
in investing in equities- systematic risk and non-systematic risk. Systematic risk is integral to
investing in the market and cannot be avoided. E.g. risk arising out of inflation and interest
rates. Non-systematic risk is unique to a company - can be minimized by diversification across
companies. Since non-systematic risk can be diversified, investors need to be compensated for
systematic risk which is measured by Beta.
17.3 UNDERSTANDING STANDARD DEVIATION
It basically serves as a measure of uncertainty. Volatile securities that have a higher standard
deviation are also considered a higher risk because their performance may change quickly, in
either direction and at any moment.
So the standard deviation of a fund measures this risk by measuring the degree to which the
fund fluctuates in relation to its mean return i.e. the average return of a fund over a period.
For example, a fund that has a consistent four year return of 3%, would have a mean, or average
of 3%. The standard deviation for this fund would then be zero because the fund's return in any
given year does not differ from its four year mean of 3%.
17.4 GROWTH OF AUM (ASSET UNDER MANAGEMENT)
Assets under management describes how much of investor’s money an investment company
controls. Investments are held in a mutual fund or hedge fund and are managed by a venture
capital company, brokerage company or portfolio manager.

33 | P a g e
AUM indicates the size of the fund and may refer to the total amount of assets managed for all
clients or the total assets managed for a specific client. It includes the funds the manager can
use to make transactions. For example, if an investor has $50,000 in an investment portfolio,
the fund manager can buy and sell shares using the investor's funds without obtaining the
investor’s permission.
Fluctuating daily, AUM depends on the flow of investor money in and out of a particular fund
and asset performance. It also fluctuates based on changes in the company investments or the
value of a fund.
Several investment companies charge management fees that are a fixed percentage of assets
under management. Investment companies use assets under management as a marketing tool
to attract investors. It helps investors get an indication of the size of the company's operations
relative to its competitors. However, it is only one aspect in evaluating a company and does
not offer full details about the investment potential of the company.
17.5 SHIFT FROM TRADITIONAL METHOD TO MUTUAL FUNDS
There has been a clear shift from the unorganized sector of investment like chit funds etc. to
the modern and more organized way of investment, i.e. investment in mutual funds. Due to
various restriction by SEBI the shift has been a boost in the growth of Mutual Fund Sector in
India.

34 | P a g e
18. RESEARCH METHODOLOGY
The whole study is based upon primary data. Therefore, information has been collected from
interacting with different customers and from various magazines, journals, websites, and
bulletins.
18.1 LIST OF INFORMATION REQUIRED
Primary Data: Primary data are generated when a particular problem and hand is investigated
by the researcher employing mail questionnaire or telephone survey or personal interviews etc.
The report is exclusively based on online survey.
18.2 METHOD USED IN COLLECTION OF DATA
Online Survey: Online survey is conducted by sending the survey link on various social
networking sites like- Whatsapp, Facebook, LinkedIn etc. and even emailing the survey to
various customers and potential investors and non –investor clients who have shown interest
in investing in such instrument.
18.3 ADVANTAGES AND DISADVANTAGES
ADVANTAGES
a. It requires shorter period of time to complete.
b. Researcher can procure many different types of information.
c. The amount of information procured on each aspects is larger.
d. The results can be projected to the relevant universe with a greater accuracy.
e. The cost per completion is relatively very less compared to other survey.
DISADVANTAGES
a. Behavior bias can be one of the error encountered in this type of survey.
b. People may not accurately fill some data and can cause minor error.

35 | P a g e
18.4 TYPE OF SAMPLING USED
The type of sampling used is 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
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 dealing
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 more than 220. The area selected is citizen with
Indian origin or Current NRI who have been living in India at least 1-year back
Convenience sampling method was used in this study because of the constraints like cost and
time.

36 | P a g e
19. ANALYSIS OF SURVEY
The analysis of the survey using the questionnaire given in ANNEXURE I of the report, a
questionnaire was sent to nearly 250 people and 220 positively responded to the survey to
know their investment preferences and behavior while investing.
The basic analysis consists of sorting and filtering the responses into the ones which can be
taken for analysis and which can be eliminated. The respondents who have shown complete
disinterest in investing and behavioral investments in Mutual Funds have been eliminated.
These respondents have been filtered and further analysis has been conducted.
It involves identifying the age groups responded, Gender based classification and have they
positively shown interest in investments. It also involves the occupation they do which makes
them invest. Furthermore, it can also help to understand the change in investment patterns
according the annual income bracket.
The purpose of advanced analysis is to do a real time analysis using pivot charts, and pivot
table to know whether the combination of these variables can have a substantial impact on the
behavior in investment. Can change of one variable lead to the systematic change in investment
in Mutual funds. We also can learn the significance of fixed variable like- gender, age, income,
occupation on the deterministic variables like risk taking ability, investment arena, possibility
of them investing or reinvesting etc.
The advanced survey analysis has been conducted closely with a “Financial Analyst” of a
financial institution so that the analysis is conducted in the most accurate manner.
Basic analysis of the survey involves the following analysis parameters-
19.1 Classification of the survey on basis of their “Gender”
A sample of 220 respondents have been collected and the gender based classification
can be tabulated as follows:
GENDER ANALYSIS
Gender Total Number Total Percentage
Male 136 61.82
Female 84 38.18
Total 220 100.00
Tab 19.1 Gender Analysis
(Source: Survey Results- Annexure I)

37 | P a g e
Fig 19.2 Pie Chart of Gender Classification
From the collected data we can infer that nearly 61.8% of the respondents are male and 38.2%
were females from various parts if India. The results in the interim report might be biased
towards the behavior of Males than Females.
19.2 Classification of the survey on basis of their “Age Groups”
The survey results can be further more classified on the bases of the age groups who have
responded to the given questionnaire.
AGE GROUP ANALYSIS
Age Number
18 or younger 2
19-24 156
25-34 49
35-44 3
45-54 5
55-65 3
65 or older 2
Total 220
Tab 19.3 Age Group Analysis
62%
38%
Gender
Male Female

38 | P a g e
Fig 19.4 Age Group (Bar Graph)
The survey result shows that nearly 156 respondents lie in the age bracket of 19-24 years which
gives an opportunity for the institution and the surveyor to tap this particular population and
know their consumer preferences while investing, as well as to know which combination of
variables will boost this population to invest in Mutual Funds which would be further analyzed
in the “Advanced Survey” using pivot chart and pivot tables in excel.
2
156
49
3 5 3 2
0
20
40
60
80
100
120
140
160
180
18 or
younger
19-24 25-34 35-44 45-54 55-65 65 or older
Countofrespondents
Age Group
Age Group

39 | P a g e
19.3 Understanding relation of Age Groups and Income Brackets with Investments
An investment pattern depends on a lot of variable, here we have simultaneously taken age
groups responded to the survey and income brackets of the particular age group and understand
if they have current investment.
This will help us to know which income group should be mostly tapped for investments in
general so that they are likely to invest in financial products like mutual funds.
The following graph shows the count of investments with respect to the income and age group
brackets-
AGE Vs INCOME
(CLASSIFICATION)
Age Above 5
lakh
Between
1.5 to 3
lakh
Between 3 to 5 lakh I prefer
not to
answer
Less
than
1.5 lakh
Grand
Total
18 or younger 1 1 2
19 - 24 28 7 7 77 37 156
25 - 34 11 4 11 14 9 49
35 - 44 1 2 3
45 - 54 4 1 5
55 - 64 1 2 3
65 or older 1 1 2
Grand Total 46 14 18 95 47 220
Tab 19.5 Classification on Basis of Age and Income (Current Investments)
Fig 19.6 Bar graph on comparative investments count with income and age
0
10
20
30
40
50
60
70
80
90
18 or
younger
19 - 24 25 - 34 35 - 44 45 - 54 55 - 64 65 or
older
CountofInvestment
Age Groups
Age Vs Income
Above 5 lakh
Between 1.5 to 3 lakh
Between 3 to 5 lakh
I prefer not to answer
Less than 1.5 lakh

40 | P a g e
The analysis is done to know how investment count differs when there is a combination of
variable. It is used to identify whether the given person of a particular age bracket with a
particular income has done investment before. It helps to scale down our target audience.
19.4 Understanding relation of Occupation and Income Brackets with Investments
There is a good relation between people having different occupation with different income
patterns tending to invest in various financial products. The bar graph of the combination of
various investment products with respect to income and occupation helps us to identify which
age group and income should be targeted.
Count of
Interested in
Investment
Occupation
Annual Income Businessmen Government
Employee
I prefer
not to
answer
Private
Employee
Retired Student Grand
Total
Above 5 lakh 11 1 2 26 6 46
Between 1.5 to 3
lakh
3 1 5 3 2 14
Between 3 to 5
lakh
1 1 15 1 18
I prefer not to
answer
1 5 8 1 80 95
Less than 1.5 lakh 3 1 3 40 47
Grand Total 19 3 8 57 4 129 220
Tab 19.7 Classification on Occupation and Income (Current Investments)
Fig 19.8 Graphical representation of Occupation and Income (Current Investments)
0 20 40 60 80 100
Above 5 lakh
Between 1.5 to 3 lakh
Between 3 to 5 lakh
Less than 1.5 lakh
Count of Investment
IncomeBrackets
Occupation Vs Income
Student
Retired
Private Employee
Government Employee
Businessmen

41 | P a g e
23. FINDINGS
Advanced analysis of the responses of the survey are the findings got from the data which are
filtered and binned to eliminate the outliers of the data. The total survey of 220 respondents
have been binned to 185 responses which find importance in the advanced analysis conducted.
The Advanced analysis consists of knowing the risk taking ability of the customers, what are
their expected returns, what investment period do they prefer etc. It was gives you a real time
analysis of binned data to show hoe combination of two or three input variables like Gender,
Age, Occupation and Annual Income has a significant impact on investing in mutual funds,
will change in any variables have an effect on their risk taking ability.
The Advanced Analysis using the binned data are as follows-
20.1 Risk Taking Ability based on their Age Groups
Risk has been a very important factor in determining whether a person would invest in mutual
fund. The further analysis shows how different age group can affect the risk taking ability. A
7-scale Likert scale is used which varies from risk taking ability of very low to very high and
the number of people are tabulated below to understand from the dataset, number of people
who can take a particular risk.
Age
Group
Very
Low Low
Moderately
Low Moderate
Moderately
High High
Very
High
19 - 24 6 6 17 59 28 7 9
25 - 34 4 1 6 13 9 3 2
35 - 44 0 0 0 2 0 0 0
45 - 54 1 2 0 1 1 0 0
55 - 64 0 1 1 1 0 0 0
65 or
older 0 0 0 0 0 0 1
Tab 20.1 Risk Taking Ability

42 | P a g e
Fig 20.2 Bar Graph of Risk Taking Ability (Source: Results of Annexure I)
20.2 Expected Return of customer based on their Occupation
The idea of mutual funds is to get maximum return but with the greed of maximum return
comes risk so this analysis gives an idea that with different occupation what are the expectation
of a particular customer when it comes to any investment.
Occupation Less than 10% Between 10% to 30% Above 30%
Businessmen 0 9 4
Student 12 77 28
Private Employee 1 37 8
Retired 0 3 0
Government Employee 1 2 0
I prefer not to answer 0 3 3
Tab 20.3 Expected Return
0
20
40
60
80
100
120
140
19 - 24 25 - 34 35 - 44 45 - 54 55 - 64 65 or older
Numberofrespondent
Age Groups
Risk Taking Ability
Very Low Low Moderately Low Moderate Moderately High High Very High

43 | P a g e
Fig 20.4 Bar Graph of Expected Return
20.3 Gender based analysis of period of investment
Investment period has been a key influencer for mutual funds or any investment. According to
the gender, the classification of investment period by a customer is been taken and further
analysis has been done.
Count of
Period Period
Gender 2-3 Years 3-5 Years
Less than 1
Year
More than 5
Years
Grand
Total
Female 30 10 15 19 74
Male 31 21 22 37 111
Grand Total 61 31 37 56 185
Tab 20.5 Gender Based Period of Investment
0
10
20
30
40
50
60
70
80
90
Businessmen Student Private
Employee
Retired Government
Employee
I prefer not to
answer
Numberofrespondent
Employee Type
Expected Return
Less than 10% Between 10% to 30% Above 30%

44 | P a g e
Fig 20.6 Bar Graph of Gender Based Period of Investment
20.4 Analysis of Current Investments
It has been seen that the customers have the current investments in various investment tools
like capital markets, mutual funds, fixed deposits etc. This analysis shows the count of
respondents in particular to their current investment.
Current Investments Count of Current Investments
Capital Markets (Shares) 31
Fixed Deposit 61
Insurance 23
Mutual Funds 43
No Investment 10
Property 17
Grand Total 185
Tab 20.7 Classification of Current Investment
0
20
40
60
80
100
120
Female Male
No.ofRespondent
Gender
Gender Based Investment Period
More than 5 Years
Less than 1 Year
3-5 Years
2-3 Years

45 | P a g e
Fig 20.8 Bar Graph of Classification of Current Investment
20.5 Predictive Analysis of investment in Mutual Funds (Sample)
Age 19 - 24
Gender Female
Investments-
Mutual Funds Occupation
Annual Income Businessmen
I prefer not to
answer
Private
Employee Student
Grand
Total
Above 5 lakh 2 3 5
Between 1.5 to 3
lakh 1 1
Between 3 to 5
lakh 1 1 2
I prefer not to
answer 29 29
Less than 1.5 lakh 1 1 16 18
Grand Total 2 1 3 49 55
Tab 20.9 Pivot Table of Investment in Mutual Fund
0
10
20
30
40
50
60
70
Capital Markets
(Shares)
Fixed Deposit Insurance Mutual Funds No Investment Property
No.ofrespondents
Type of Investment
Current Investment
Total

46 | P a g e
Fig 20.10 Bar Graph of predictive analysis of mutual funds as an investment
0
5
10
15
20
25
30
35
Above 5 lakh Between 1.5 to
3 lakh
Between 3 to 5
lakh
I prefer not to
answer
Less than 1.5
lakh
Countofpeople
Income Bracket
Mutual Funds- Predictive Analysis
Businessmen
Private Employee
Student

47 | P a g e
24. CONCLUSION
The end of millennium marks 54 years of existence of mutual funds in this country. The ride
through these 54 years is not been smooth. Investors opinion is still divided. while some are
for the mutual funds others are against it.
Mutual Funds (MF) have become one of the most attractive ways for the average person to
invest his money. It is said that Bank investment is the first priority of people to invest their
savings and the second place is for investment in Mutual Funds and other avenues. A Mutual
Fund pools resources from thousands of investors and then diversifies its investment into many
different holdings such as stocks, bonds, or Government securities in order to provide high
relative safety and returns. Also generate leads of the prospective investors in Mutual Funds
for the Asset Management Company (AMC)
We can also infer that the growth in Mutual Fund industry has been quite prominent and has
helped in boost in the financial sector. The various indicators help us to identify how things
have been in favor of the growth of Mutual Funds in India.
There are many improvements pending in the field and it has to happen as soon as possible so
as to call the MF industry as a more Organized and well-developed sector.

48 | P a g e
25.RECOMMENDATIONS
The recommendations which can be made after understanding the industry which can benefit
clients associated with Stock Holding Corporation of India Ltd. range from modifying the
services and information given to the clients.
 As per the survey we clearly know that which audience should be connected well with
delivering mutual funds.
 StockHolding can give recommendations to the clients based on their risk taking ability
which can be analyzed from similar surveys conducted over large population.
 Many educational fair can be arranged wherein information of such products can be
reached out to masses.
 Educational programs should be organized in sub-urban and rural areas so that they are
aware of such financial products.
 Different attacking methods of getting the target customers can be implemented so that
the right customers interested in Mutual Funds can be focused upon.
The major limitation of lack of information and the fear that of market risk disclaimer has led
to the non- penetration of such products in these regions. The company can take up such village
or town level activities and encourage people to invest by taking moderate amount of risk.
Being a broking institution the company can also be informing and timely update the clients
with AMC dividend payouts, giving then after services with respect to recommending when to
come out of the scheme, etc. This will build a trust among the clients with respect to the
company image and the client base can be increased in Mutual Funds.

49 | P a g e
REFERENCES
KEVIN S., 2006. Security Analysis and Portfolio Management. New Delhi: PHI Learning
Private Limited
DONALD E. FISCHER, RONALD J. JORDAN, 1995. Security Analysis and Portfolio
Management 6 Edition. New Delhi: Pearson India
MATTHEW P. FINK, 2011. The Rise of Mutual Funds: An Insider's View [online], 2nd ed.:
Oxford University Press.
ROBERT POZEN; THERESA HAMACHER, 2015. The Fund Industry: How Your Money is
Managed [online], 2nd ed. Hoboken, NJ: Wiley Finance.
RAMOLA K.S., Mutual Fund and the Indian Capital Market’ Yojana [online], Vol. 36, No.11
SATYAJIT, DHAR, 1994. Mutual Funds in India- a Close Look [online], Finance India, Vol.
VIII pp. 675-679.
GAURI PRABHU, VECHALEKAR N.M, Perception of Indian Investor towards investment
in mutual funds, Pune: IOSR Journal of Economics and Finance pp. 66-74
Available from: http://www.iosrjournals.org/iosr-jef/papers/icsc/volume-1/8.pdf [Accessed
on 10 March 2017]
StockHolding Corporation of India Limited, viewed on 27 February 2017,
<http://www.StockHolding.co.in>
SHCIL Services Ltd, viewed on 1 March 2017, <www.shcilservices.com>
Association of Mutual Funds of India, viewed on 12 March 2017,
<www.amfiindia.com>
Mutual Funds India, viewed on 23 March 2017
<www.mutualfundindia.com>
Securities and Exchange Board of India, viewed on 26 March 2017,
< www.sebi.gov.in>
Moneycontrol, viewed on 1 April 2017 <www.moneycontrol.com>
Value Research: The Complete Guide to Mutual Funds, viewed on 3 April 2017
<https://www.valueresearchonline.com>

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