market research on customer awarness of bank

MARKET RESEACH ON CUSTOMER AWARENESS OF MUTUAL FUND IN NORTH GUJARAT
1.1 INTRODUCTION TO THE PROJECT
This project is developed after visiting and interviewing at the different cities
in the North Gujarat and after collecting the data of different places through different
sources, the over all scenario of the market is looked into, In doing this there was also
find best cities to get highest business and awareness levels about mutual fund in
different cities in North Gujarat.
After looking at the north Gujarat market it was found that the source of the
money which flows into different investment avenues is generally from the rural
areas nearby the main centers that have been visited. Also one more source of the
money In the Investment avenues is from the people who have shifted from that
particular rural area and settled in a different urban area. But since their origin is in
that particular rural area they have been investing. Other source is from the NRI’s
who have moved out from that particular city.
Now the question arise why should people invest. The general perspective of
this is to get returns as common but if we look in a broader perspective, we can see
that the investment is done for the following reasons:
· To create assets
· To meet Certain Expenses
· For Retirement Planning or for better future
· To generate regular income
· For Tax benefits
S.K. PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES 1

Generally, when investors actually invest they invest because of the above-specified
reasons now the question comes where to invest? In addition, the question
arises that what are the investments avenues. The answer to these questions could be
that are generally three avenues under which the investment could be made they are:
· Investing in Debt or Fixed income investments.
· Investing in Equity Market or Related Instruments.
· Investing in Assets
These are the avenues where an individual can invest; now we should look
into different investment avenues and what all contributes in making the above given
avenues. Now when investing is done in Debt or Fixed Income Investments it means
that the investment is done in Bonds, Debentures, Government Securities, RBI
Bonds, T- bills Post Office Instruments, etc. Nevertheless, there are certain problems
in investing this type of avenues. The major problem is that these types of the
instruments are Low Returns, Risk of Repayment or Credit Risk and Non-transparency.
These types of instruments yield very low returns so you get lower
interest rates for the period you have invested it. There is also a Credit Risk involved
in investing in the Debt Instruments.
As far as investing in equity markets or related instruments are concerned the
investment is concerned the investment is done in shares and stocks, index futures
and forwards. Investing in equity also has its drawbacks. The major drawback that is
involved in this avenue is that it is highly risky and volatile market, operative
expenses are too high because of investment of lot of intermediates. The equity
instruments do not have access to technical and fundamental reports.
Investing in assets deals with investments made into Real Estates and Bullion.
For any type of investment, there are certain key considerations that should be made
and understood before investing.

The key considerations that should be made in investing are Safety, Liquidity,
Tax Benefits, Returns and Convenience. When safety is looked into it mainly is
concerned with the safety of the money invested in a particular investment avenue.
The consideration made for safety is that the money invested will be received back or
not. Liquidity means that getting your money back when you are in need of it the
most. Thus, before investing, a proper care should be taken of the time factor and the
investment should be made accordingly. Before investing, an investor should give a
look at what he is left with after tax. From an individual’s viewpoint what he is left
with all his deductions in tax should be considered and then and only then the
investment should be made. Convenience, yes of course a major concern for
Convenience is always looked into before investing. It should be seen how easy it is
to invest in a specific investment avenue, how convenient is it to disinvest in a
specific investment avenue and how does your investment adjust to your needs.
If we look at the overall options available to investors, it can be summarized
as follows:
· Mutual Funds
· Bond & deposits
o Bank Deposits
o Company Deposits
o Bonds
o RBI Bonds
· Small savings Schemes
o National Savings Certificate
o Monthly Saving Scheme
o Public Provident Funds
· Life Insurance
· Equity Instruments
o Equities (Stocks)
o Commodities trading
o Portfolio management service

Thus the investors in India have the above-specified option for investment.
Now looking at the different option s in details.
1.2 INVESTMENT OPTIONS IN DETAILS
Mutual Funds
Instead of investing on
your own, for a small
fee, a set of experts does
it for you through
Mutual fund schemes.
You can choose the risk
profile and asset mix.
Liquid for low Return
instant liquidity, Debt/
income for fixed income
assets and a host of
equity funds for high –
risk high – reward
investing.
Bonds & Deposits
RBI bonds for supreme
safety with sovereign
guarantee. ICICI/IDBI
bonds will save tax if you
are not in high-income
bracket. Capital gains
bonds, a cool way to escape
long-term capital gain tax
on property etc. Company
fixed deposits were earlier a
popular investment option

which are now losing their
charm owing to taxable
interest income coupled
with questionable credit
worthiness of some
companies.
Small
Savings
Schemes
Administered through
post Offices, these are
ideal for small investors
looking for fixed return
with high safety. A
number of schemes with
varying tax treatment,
monthly income option,
and carrot of bonus too.
‘No TDS’ is the
tempting sweetener.
Life
Insurance
Schemes
Insure your life, plan for
a financially secure
future for your family
and get attractive tax
breaks along the way.
All this is possible with a
single class of products,
Life Insurance. Get
adequate life cover

coupled with total peace
of mind.
Equities
Over longer term,
equities have yielded
highest returns, provided
you have ability to pick
up good stocks and hold
term for a longer term.
The India Infoline team
will help you with their
research, advisory
support.

Commodities
Trading
A better alternative to
share trading since
valuation of shares in
India is more event-driven
making it difficult
to anticipate. On the
other hand, laws of
demand and supply
rather than sentiment
rule the commodities
markets. Trade in
commodities with
5paisa.com, which has
memberships in both the
leading exchanges, MCX
and NCDEX.

Portfolio
Management
Service
When it comes to
managing your hard-earned
money, leave it to
the experts. With a little
help from us, your
portfolio can
consistently earn market
–beating returns. Choose
from growth and
momentum schemes.

1.3 WHAT IS MUTUAL FUND?
Mutual Fund is a collective vehicle of investment. It is a common pool of
money into which investor place their contributions that are to be invested in accordance
with stated objective. By structure it is trust registered under Indian Trust Act and
sponsored by promoters and is highly registered by SEBI. To find out the potential of
mutual funds we should have the knowledge of, how mutual fund differs from the other
investment avenues taking into account the considerations like the safety, Returns, Tax
benefits convenience and liquidity. The comparison is being made on the basis of
considerations given above which should be taken care of before investing.
Comparison With Other Products:
COMPANY FIXED DEPOSITS VERSUS MUTUAL FUNDS:
Fixed deposits are unsecured borrowings by the company accepting the
deposit. Credit rating of the fixed deposit program is an indication of the inherent default
risk in the investment. The moneys of investors in a mutual fund scheme are invested by
the AMC in specific investments under that scheme. These investments are held and
managed in trust for the benefit of the scheme’s investors. On the other hand there is no
such direct correlation between company’s fixed deposit mobilization, and the avenues
where it deploys these resources.
A corollary of such linkages between mobilization and investment is that
the gains and losses form the mutual fund scheme entirely flows through to the investors.
Therefore there can be no certainty of yield, unless a named guarantor assures a return or
to a lesser extent if the investment is in a serial gilt scheme. On the other hand, the return
under a fixed deposit is certain, subject only to the default risk of the borrower.

Both fixed deposit and mutual fund offer liquidity offers liquidity, but subject to
some differences:
· The provider of liquidity in the case of fixed deposits is the borrowing
company. In mutual funds, the liquidity provider is the scheme itself for open –
ended schemes, or the market in the case of closed – ended schemes.
· The basic value at which fixed deposits are excusable is not subject to market
risk. However the value at which units of scheme are redeemed entirely
depends on the market. If securities have gained in value during the period,
then the investor can even earn a return that is higher than what he anticipated,
when he invested. Conversely, he could end up making loss.
BANK FIXED DEPOSITS VERSUS MUTUAL FUNDS
Bank deposits are similar to company fixed deposits. The major
difference is that banks are more stringently regulated than are companies. They even
operate under stricter requirements regarding Statutory Liquidity Ratio and Cash
Reserve Ratio mandated by RBI.
While the above are causes for comfort, bank deposits too are subject to
default risk. However, given the political and economic impact of bank defaults, the
government as well as RBI tries to ensure that banks do not fail.
BONDS AND DEBENTURES VERSUS MUTUAL FUNDS
As in the case of fixed deposits credit rating of a bond or debenture is an
indication of the inherent default risk in the investment. However unlike fixed deposits
bonds and debentures transferable securities.

While an investor may have an early encashment option form the issuer,
liquidity is generally through a listing in the market. Implications of this are:
· If the security is not traded in the market, then the liquidity remains on paper. In
this respect, an open – ended scheme offering continuous sale/ re – purchase
option is superior.
· The value that the investor would realize in an early exit is subject to market risk.
The investor could have a capital gain or capital loss. This aspect is similar to
mutual fund schemes.
EQUITY VERSUS MUTUAL FUNDS
Investment in both equity and mutual funds are subject to market risk. An
investor holding an equity security that is not traded in the market place has a problem in
realizing value from it. But investment in an open – ended mutual fund eliminates this
direct risk of not being able to sell the investments in markets. An indirect risk remains
because the scheme has to realize its investments to pay investors. Another benefit of
equity mutual fund schemes is that they give investors the benefit of portfolio
diversification through a small investment.
LIFE INSURANCE VERSUS MUTUAL FUNDS
Life Insurance is a hedge against risk and not only the investment option.
So it would be wrong to compare life insurance against any other financial product.
Occasionally on account of market inefficiencies or mis – pricing of
products in India. Life insurance products have offered a return that is higher than a
comparable safe fixed return security – thus, you are effectively paid for getting insured.
Such opportunities are not sustainable in the end.

The below given chart Will given a more clear picture as it shows the comparison
between Mutual funds and other investment avenues specified above.
Investment
Avenues
Return Safety Liquidity Tax
Benefit
Convenience
Bank Deposits Low High High No High
Equity
High Low High or
Instruments
Low
No Moderate
Debentures Moderate Moderate Low No Low
Fixed Deposits Moderate Low Low No Moderate
Bonds Moderate Moderate Moderate Yes Moderate
Life Insurance Moderate High Low Yes Moderate
Mutual Funds
Moderate Moderate High No High
(Open ended)
Mutual Funds
(close ended)
Moderate Moderate High Yes High
RBI Relief
Bonds
Moderate High Low Yes Moderate
PPF Moderate High Low Yes Moderate
National
Savings
Certificate
Monthly
Income Scheme
TABLE 1: - Comparison of mutual funds with other investment options
Source:- www.amfiindia .com

1.4 ORGANIZATION OF MUTUAL FUND
chart-1 Organization of mutual fund-1
 The Fund Sponsor:
Any person or corporate body that establishes the fund and registers it wills
SEBI.
From a trust and appoint a Board of Trustees.
Appoints Custodian and Asset management Company either directly of through
Trust, in accordance with SEBI regulations.
SEBI regulations also define that a sponsor must contribute at least 40% to the
net worth of the asset management company.

 Trustees:
Created through a document called the Trust Dead that is executed by the fund
Sponsor registered with SEBI.
A Board of Trustee -a body of individuals or a Company-a corporate body may
manage the Trust- the Mutual fund.
Protector of unit holders' interests.
2/3rd of the trustees shall be independent persons and shall not be associated with
the sponsors.
 Asset Management company:
Acts as an invest manager of The Trust under the Board Supervision, and
direction of the Trustees.
Has to be approved and registered with SEBI.
Will float and manage the different investment schemes in the name of the trust
and in accordance with SEBI regulations.
Acts in interest of unit-holders and reports to the trustees.
At least 50% of directors on the Board are independent of the sponsor or the
trustees.
 Custodian:
Has the responsibility of physical handling and safe keeping of the
securities.
Should be independent of the sponsors and registered with SEBI.

2.1 ARTICLES FROM THE ECONOMICS TIMES
AS ON 6TH JULY.
Big NFO slice for small investor
MFs WIIL BE FORCED TO WOO RETAIL INVESTORS AS
EXPOSURE OF CORPORATES MAY BE CAPPED
The retail inventor is likely to get a far bigger piece of the mutual fund
pie. The regulation is considering a cap on the total exposure of the corporate sector in
the new fund offers (NFOs) made by mutual funds.
The plan would replicate the quota system of the equity public offers, which has
caps for different categories of investors such as retail, high net worth or FII. The object
is to spur greater investment by smaller players as there would be upper limit for the
retail investors in this proposal for mutual funds.
The subject is likely to be discussed by the securities and exchange Board of
India at its next board meeting. At present, there is no cap on how much the corporate
sector in aggregate can invest in a fund offering. There is, however, a cap of 20% on
investment by any one entity in the total size of a mutual fund scheme.
Unlike a public offer for equities, an NFO does not have a fixed corpus, the issue
of determining the cap could be tricky.
The government has been struggling with the question of how to make the mutual
fund industry become the preferred investment choice for retail investors.
According to industry estimates more than 50% of the total assets under
management of the mutual fund industry, at 2,76,000 crore, as on may 31,2006 is held
by institutional investors, including new entrants such as provident fund. Against this , in
the US, for instance, households hold 77% of mutual fund assets.

In 2004-05, only 1.4% of household saving got allocated to the capital market
including mutual funds, said prithvi haldea, chief of prime database, a capital market
think tank. He says the reason for this low figure lies in the “corporatisation of the funds
industry”.
The government has already ruled out tax incentives to promote this class of
investment, as has been urged by the association of mutual funds in India.
So a cap on aggregate corporate sector exposure would ensure that mutual funds
reach out to more number of small investors. This may also spur them to set up shop in
small towns and other investment centers. Very few of the 28 fund houses have any
outlets beyond the large cities, the exception being some of the public sector entities like
UTI-MF.

3. RESEARCH METHODOLOGY
(1) Objectives Of The Study:
Main Objective: -
 To study the customer awareness of mutual funds in the north Gujarat
market.
Sub Objective: -
 To analyze the Response of three new NFO’s in North Gujarat.
1. Fidelity India special situation fund
2. Tata equity management fund.
3. Template India equity income fund
(2) Scope Of The Study:
The primary learning objective of my project is to study the customer awareness
of mutual funds in the north Gujarat. By the virtue of its size investment field is so large
that an in depth study is not possible.
So we have taken an overview of different investment avenues by Interviewing
different people involved and who have been in the field for a period of time. The survey
conducted to study the customer awareness of mutual funds is restricted to the
geographic area of specific cities in the north Gujarat such as Mehsana, Visnagar, Unjha,
Palanpur, Deesa, and Patan.
(3) Sampling Design:

1) Sample Type:
According to the target population the sample type is a non-probability - Quota
Sampling Because On element basis the samples are selected individually from the list of
customers who are the best information providers so it is in the form of Quota Sampling.
By representation it will be random so Simple Random Sampling.
2) Sample Population:
It is the total collection of the elements about which I wish to make the
inferences, i.e. all major customers that are doing investment through India Infoline
Distribution. Co.Ltd in different cities in North Gujarat.
3) Sample Frame:
The sample frame will be the cities visited in the north Gujarat.
4) Sample Unit:
Customers of the India Infoline Distribution. Co.Ltd
5) Sample Size:
350 Respondents would be surveyed which are divided as follows: -
City Sample Size
1.Mehsana 100 Respondents
2.Visanagar 50 Respondents
3.Unjha 50 Respondents
4.Palanpur 50 Respondents
5.Deesa 50 Respondents
6.Patan 50 Respondents
6) Sample Scope:

Scope of the sample is within the north Gujarat.
(4) Data Collection Sources:
1) Primary Data Collection:
The primary data was collected through two research instruments.
1.1) Personal Interview:
Interviewing past, current and new customer of India Infoline.
1.2) Questionnaire:
Another tool used for data collection was questionnaire. The preparation of
questionnaire was such that it could give an over all market of savings being done in the
north Gujarat. The questionnaire also provided a percentage wise distribution of the total
savings in that particular market as per the viewpoint of the respondent.
2) Secondary Data Collection:
 Web sites.
 News Papers.
(5) Analysis of Data: -
 Each question would be tabulated shown in graphical form and interpreted
and analyzed.
(6) Limitation of the study: -
 The study was based only on North Gujarat so the Research & finding about
awareness of Mutual fund my be biased.
 The study was done two months only thus the time constrains my give-biased
results.
4.1 INDUSTRY AT A GLANCE

The mutual fund industry in India has seen phenomenal growth since its
inception in 1965 and particularly in the post reform period after 1993. The asset
managed by the industry shot up from Rs. 25 crore in 1965 to Rs. 1, 13,005 crore in
2000 to Rs. in 2004. Until 1986, UTI was the only mutual fund. That year bank
sponsored funds made an entry; the first one being SBI and Can bank mutual funds. In
1993, the country saw the first private sector mutual fund, Morgan Stanley.
Today there are 35 mutual funds run by asset management companies and the
total number of schemes has shot up to as in March. Among them, there are 8
bank/financial institution sponsored funds and 26 private sector funds. Of these private
sector funds, 14 are joint ventures between Indian companies and foreign mutual funds.
The industry has been growing at a compounded annual growth rate (CAGR) over 1989-
2000 at 21.4% and over 1964-2000 at 25.6%.
The oldest fund, Unit Trust of India, with total assets of Rs. 57,684 crore leads
pack followed by Prudential ICICI Mutual Fund with assets worth 5000 crore marks.
Equity funds roughly comprise 18% of the industry, whereas income funds constitute
49%. There are 30 sector-specific schemes in the industry.
Introduction of Mutual Fund
A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is invested by the fund
manager in different types of securities depending upon the objective of the scheme.
These could range from shares to debentures to money market instruments. The incorne
earned through these investments and the capital appreciation realized by the scheme are
shared by its unit holders in proportion to the number of units owned by them (pro rata).
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 portfolio at a relatively
low cost Anybody with an investible surplus of as little as a few thousand rupees can
invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective
and strategy.

A mutual fund is the ideal investment vehicle for today's complex and modem
financial scenario. Markets for equity shares, bonds and other fixed income instruments,
real estate, derivatives and other assets have become mature and information driven,
Price changes in these assets are driven by global events occurring in faraway places. A
typical individual is unlikely to have the knowledge, skills, inclination and time to keep
track of events, understand their implications and act speedily. An individual also finds it
difficult to keep track of ownership of his assets, investments, brokerage dues and bank
transactions etc.
A mutual fund is the answer to all these situations. It appoints professionally
qualified and experienced staff that manages each of these functions on a full time basis.
The large pool of money collected in the fund allows it to hire such staff at a very low
cost to each investor. In effect, the mutual fund vehicle exploits economies of scale in all
three areas - research, investments and transaction processing. While the concept of
individuals coming together to invest money collectively is not new, the mutual fund in
its present form is a 20th century phenomenon. In fact, mutual funds gained popularity
only after the Second World War. Globally, there are thousands of firms offering tens of
thousands of mutual funds with different Investment objectives. Today, mutual funds
collectively manage almost as much as or more money as compared to banks.
A draft offer document is to be prepared at the time of launching the fund.
Typically, it pre specifies the investment objectives of the fund, the risk associated, the
costs involved in the process and the broad rules for entry into and exit from the fund
and other areas of operation. In India, as in most countries, these sponsors need.
Approval from a regulator, SEBI (Securities exchange Board of India) in our ease. SEBI
looks at track records of the sponsor and its financial strength in granting approval to the
Fund for commencing operations.
A sponsor then hires an asset management company to invest the funds according
to the investment objective. It also hires another entity to be the custodian of the assets of

the fund and perhaps a third one to handle registry work for the unit holders (subscribers)
of me fund.
Chart Showing Operation Of Mutual Funds
chart-4 Operation of mutual fund
4.2 TYPES OF MUTUAL FUNDS IN INDIA

Mutual funds are investment portfolios that invest in financial markets
instruments. Pooling investor contributions, usually denominated in units, creates these
portfolios. There are varieties of ways in which mutual funds are created, to cater the
varied risk and return requirements of investors. Depending on the investment portfolio
that is created, and the segments of the various markets in which funds are invested,
there is a choice of funds to investors. Mutual fund schemes may be classified based on
its structure and its investment objectives.
BY SCHEME TYPE
A mutual fund scheme can be classified into Open – ended scheme or Close –
ended scheme depending on its maturity period.
OPEN – ENDED FUNDS
An open – ended fund is one that is available for subscription all throughout the
year. These do not have a fixed maturity. Investors can conveniently buy and sell units at
Net Asset Value (“NAV”) related prices which are declared on daily basis . The key
feature of open-ended schemes is liquidity.
CLOSED – ENDED FUNDS
A closed – ended fund has a stipulated maturity period which generally ranging
from 5 to 7 years. The fund is open for the subscription only during a specified period at
the time of launch of the scheme. Investors can invest in the scheme at the time of the
initial public issue and thereafter they can buy or sell the units of the scheme on the stock
exchanges where they are listed. In order to provide an exit route to the investors, some
close – ended funds give an option of selling back the units to the Mutual Fund through
periodic repurchase at NAV related prices.

SEBI regulations stipulate that at least one either of the two exit routes is
provided to the investor i.e. repurchase facility or through listing on stock exchanges.
These mutual fund schemes disclose NAV related prices generally on weekly basis.
BY INVESTMENT OBJECTIVE
A scheme can also be classified as growth scheme, income scheme, or balanced
scheme considering the investment objective. Such schemes may be open – ended or
close – ended schemes as described earlier. Such schemes can be classified as follows:
GROWTH FUNDS
The aim of the growth funds is to provide capital appreciation over the medium
to long – term. Such schemes normally invest a majority of their corpus in equities. Such
funds have comparatively high risk. These schemes provide different options to the
investors like dividend option capital appreciation etc. and the investors may choose an
option depending on their preference. The investors must indicate the option in the
application form. Mutual Funds also allow investors to change the options at a later date.
Growth schemes are good investors having a long – term outlook seeking appreciation
over a longer period. It has been proven that returns from stocks, have outperformed
most other kind of investments held over the long term. Growth schemes are ideal for
investors having a long – term outlook seeking growth over a period.
INCOME FUNDS
The aim of income funds is to provide regular and steady income to investors.
Such schemes generally invest in fixed income securities such as bonds, corporate
debentures, government securities, and money market instruments. Such funds are less
risky compared to equity schemes. These funds are not affected because of fluctuations
in equity markets. However, opportunities of capital appreciation are also limited in
these types of schemes.

The NAVs of such schemes are affected because of a change in the interest rates
of the country. If the interest rats fall, the NAVs of such schemes are likely to increase in
the short run and vice – versa. However long – term investors may not bother about these
fluctuations. Income funds are ideal for capital stability and regular income.
BALANCED FUNDS
The aim of balanced funds is to provide both growth and regular income. Such
schemes periodically distribute a part of their earning, invest both in equities, and fixed
income securities in the proportion indicated in their offer documents. These are
appropriate for the investors who are looking for moderate growth. They generally invest
40 – 60% in equity and debt instruments. These funds are also affected because of
fluctuations in share prices in the stock market. However, the NAVs of such schemes are
likely to be less volatile compared to pure equity funds. In a rising stock market, the
NAV of these schemes may not normally keep pace, or fall equally when the market
falls. These are ideal for the investor s looking for a combination of income and
moderate growth.
MONEY MARKET FUNDS
The aim of money market fund is to provide easy liquidity, preservation of
capital and moderate income. These schemes invest exclusively in safer short – term
instruments such as treasury bills, certificates of deposits, commercial papers and inter –
bank call money and government securities. Returns on these schemes may fluctuate
depending upon the interest rates prevailing in the market; they also fluctuate much less
compared to other funds. These are ideal for Corporate and individual investors as a
means to park their surplus funds for short periods.

TAX SAVING SCHEMES
These schemes offer tax rebates to the investors under specific provisions of the
Indian Income Tax laws as the Government offers tax incentives for investment in
specified avenues. Investments made in Equity Linked Saving Schemes (ELSS) and
Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act
also provides opportunities to investors to save capital gains u/s 54EA and 54EB by
investing in Mutual Funds, provided the capital asset has been sold prior to April 1 2000
and the amount is invested before September 30 2000.
GUILT FUNDS
These funds invest exclusively into government securities. Government securities
have no default risk. NAVs of these schemes also fluctuate due to changes in the interest
rates and other economic factors, as is the case with income or debt – oriented schemes.
SPECIALIZED SCHEMES
These include Sectoral funds that invest in a particular industry like
Pharmaceuticals, InfoTech, Petrochemicals, etc. There are some special funds targeted at
a particular class of investors like women and children.
LOAD OR NO – LOAD FUNDS
A load fund is one that charges a percentage of NAV for entry or exit. That is,
each time one buys or sells units of the fund, a charge will be payable. This charge is
used by the mutual fund for marketing and distribution of expenses. Suppose the NAV
per unit is RS. 10. If the entry as well as exit load charged is 1%, then the investors who

buy would be required to pay RS. 10.10. And those who offer their units for repurchase
to the mutual funds will get only RS. 9.90 per unit.
The investor should consider the loads while making investments as these affects
their yields/returns. However, the investors should al so take into consideration the
record of accomplishment and service standard of the mutual fund, which are more
important. Efficient funds may give higher returns in spite of loads. A no – load fund is
that does no charge for entry or exit. It means the investors can enter the fund/scheme at
NAV and no additional charges are payable on sale or purchase of funds.
SYSTEMATIC INVESTMENT PLAN
Here the investor is given the option of preparing the predetermined number of
post-dated cheques in favour of the fund. He will get the unit on the date of the cheques
at the existing NAV. For instance, if on March 25 he has given the cheques of June 25
then he will get the units on June 25 on the existing NAV.
SYSTEMATIC WITHDRAWAL PLAN
As opposed to the Systematic Investment Plan, the Systemic Withdrawal Plan
allows the investor the facility to withdraw the pre – determined amount/units from his
fund at the pre – determined interval. The investor’s units will be redeemed at the
existing NAV as on that day.
RETIREMENT PENSION PLAN
Some schemes are linked with retirement pension. Individuals participate in these
plans for themselves and corporate for their employees.
INSURANCE PLANS
UTI and LIC offer insurance cover to investors launches some schemes.

TYPES OF SCHEMES BY POSITION PHILOSOPHY
HEDGE FUNDS/ LEVERAGED FUNDS
While the name hedge funds give a psychological comfort of a fund being on a
low on risk, nothing can be further away from the truth.
Hedge funds are leveraged funds where the fund manager invests a mix of funds
belonging to investors and funds from lenders. A leveraging of two would mean that for
every Re. 1 of the unit capital, an additional Rs. 2 is borrowed, thus investing Rs. 3 in the
market.
Borrowed funds have interest and repayment obligations that are independent of
how the market performs. Thus, in bad market conditions, a non – leveraged fund only
needs to bear a loss, a leveraged fund would also need to generate additional resources to
meet the interest and repayment obligations on its borrowed funds.
Hedged funds are, therefore extremely risky funds the level of risk being a
function of the extent of leveraging.
INDEX FUNDS
Index Funds replicate the portfolio of a particular index such as the BSE sensitive
index, S&P NSE 50 index etc. These schemes invest in the securities in the same
weightage comprising an index. NAVs of such schemes would rise and fall in
accordance with the rise of fall in the index though not exactly by the same percentage
due to some factors known as ‘tracking error’ in technical terms. Necessary disclosures
in this regard are made in offer document of the mutual fund scheme

There are also exchange traded index funds launched by the mutual funds, which
are traded on the stock exchanges.
EXCHANGE TRADED FUNDS
Exchange traded funds are open – ended funds that trade on the exchange. Like
index funds, ETFs, are benchmarked to a stock exchange index.
TYPES OF FUNDS BY GEOGRAPHY
COUNTRY OR REGION FUNDS
Countries funds invest in securities form a specific country or region. The
underlying belief is that the chosen country or region is expected to demonstrate superior
performance, which, in turn would be favorable for the securities of that country.
OFFSHORE FUNDS
Offshore funds mobilize moneys from investors for investment outside their
country. Indian mutual funds have been permitted to invest in foreign debt securities in
countries with convertible currencies.

4.3 KEY DRIVERS OF MUTUAL FUNDS
The mutual fund industry has been growing annually at the rate of 9% for the
past 5 years and is expected to double the current AUM by the march 2010. Further, the
annual composite growth rate of the industry is expected to be around 13% in the next 10
years. The industry, which in 1993 had less than 10 schemes today, has 460 schemes
offered by mutual funds. The schemes are more diverse and offer a wide array of choices
to investors. The following factors have contributed to the sprout growth of the mutual
funds in the recent times.
BUOYANT STOCK MARKET
If there is one major, reason for the industry to grow at such level it is the
booming stock market over the last three years. The buoyant stock market, which has
gained 18% in the last one year and 90% in the last three years has really proved boon to
the mutual fund industry as not only it has attracted the investors to it but also has
spread its popularity among the Indian people who are always averse to invest into the
stock market.
PRODUCT INNOVATION
The innovative schemes launched by the mutual fund house have given
the investors the option to choose funds, which suit his investment needs. Introduction of
the innovative schemes like hybrid funds, children funds or fixed maturity plans and new
schemes such as exchange traded funds and commodity – traded funds have helped
galvanized the industry growth. The innovations have changed the once unattractive
offerings to a menu consisting a tailor made schemes for investors.

INCREASED COMPETITION
The entry of new players both foreign as well as local has helped the
industry to expand further. This has been ably supported by a slew of new schemes from
existing player as well. Further, the consolidation in the industry has just started. Many
big mutual fund houses like Fidelity and Vanguard have entered the market. These fund
houses’ individual assets are more than the size of the entire Indian mutual fund
industry; this certainly will help improve the growth levels of the industry.
TECHNOLOGY
The technology waves which has transformed many industries in how
they operated and survive has also come to the aid of the mutual fund industry to widen
its reach, offer flexibility and convenience to investors. The advantages include lower
distribution costs through online online transactions, more customized approach and
personal advice and reaching out to the growing young and net – savvy population of
India.
DEEPER PENETRATION INTO THE COUNTRY
Though India has good savings rate the savings is channelzed more into
insurance and banking schemes, which carry lesser risk. Mutual fund players are now
realizing the potential of the B class and C class cities of India, many of which are seeing
good growth in income levels as major player from diversified industries such as IT,
Services, Banking, Retailing and Petroleum are setting up their base in these cities.
Increased penetration in these cities has increased to help its assets under management.
The potential will be huge for the Indian mutual fund industry as the present markets are
still dominated by corporate and investors from the A class cities.
TAX INCENTIVES
Tax benefits extended to the mutual fund investors investing in equity
mutual fund schemes too have acted as a catalyst for the growth of the industry. As of

now, the dividend is tax – free in the hands of investors. Also the, removal of the long –
term capital gain tax is the main catalyst.
4.4 RISKS INVOLVED IN INVESTING IN
MUTUAL FUNDS
All investments in Mutual Funds and Securities are subject to market risks and
the NAV of the Schemes may go up or down, depending upon the factors and forces
affecting the securities market. There cannot be any assurance that the Schemes’
Investment Objectives can be achieved. The past performance of the AMC, Mutual
Fund, the Sponsor or its Group affiliation is not indicative of the future performance of
the Schemes. ¨ The Sponsor is not responsible or liable for any loss resulting from the
operations of the Schemes beyond the initial contribution of Rs. 1 lakh made by them
towards setting of the Mutual Fund. Chola Midcap Fund, Chola Triple Ace and Chola
Liquid are only the name of the Schemes and do not in any manner indicate the quality
of the Schemes, its future prospects or returns. The rating of CRISIL is not an opinion of
the AMC’s willingness or ability to make timely payment. The rating is also not an
opinion on the stability of the NAV of the fund, which may vary substantially with the
movements in the capital markets. Investors are requested to study the Offer Document
of the Schemes carefully before making any investment ¨ The Scheme do not guarantee
any assured returns to the investors.
MARKET RISK
If the overall stock or bond market falls because of macroeconomic factors, the
value of the stock or bond holdings in the fund’s portfolio can drop thereby affecting the
NAV.
NON – MARKET RISK
Bad news about an individual company can pull down its stock price, which can
affect, negatively, funds holding a large quantity of that stock. Having a diversified

portfolio that consist a wide variety of stocks drawn from different industries can reduce
this risk.
INTEREST RATE RISK
Bond prices and interest rates move in opposite directions. When interest rate
rise, bond prices fall and this decline in underlying securities affects the NAV
negatively. The extent of the negative effect is dependent on factors such as maturity
profile, liquidity etc.
CREDIT RISK
Bonds are debt obligations. So, when funds invested in corporate bonds, they run
the risk of the corporate defaulting on their interest payment and the principal payment
obligations and when that risk crystallizes, it leads to fall in the value of the bond
causing the NAV of the bond to take the beating.

4.5 HISTORY OF MUTUAL FUNDS INDUSTRY
IN INDIA
The Indian mutual fund industry has come a long way since the inception
of UTI in 1963. According to AMFI, the evolution of the industry can be broadly divided
into four phases, which mark its transition from a period when UTI dominated to a
period of completion and increased awareness among investors.
INDIAN MUTUAL FUND INDUSTRY
The history of Indian mutual fund industry can be distinctly divided into two
phases - the period before liberalization when only public sector players existed with one
dominant player Unit Trust of India and the post-liberalization era where the industry
was opened up to private players.
Unit trust of India (UTI) was established in 1963 and launched its legendary first
scheme 'US-64' in 1964. UTI witnessed a slow and steady growth over seventies and
eighties and by end of 1988; it had an AUM of Rs. 67,000 million. From 1987, non-UTI,
public sector mutual funds were allowed and public sector banks and financial
institutions set up a series of mutual fund companies. At the end of 1993, the overall
AUM of mutual fund industry was Rs. 470,004 million.
The mutual fund industry was opened up for private participation 1993 and a new
era was ushered in, paving the way for an unprecedented choice of products and services
to Indian investors. Detailed guidelines were established and the mutual fund industry
(except UTI) came under the regulation of Securities Exchange Board of India (SEBI).
Many reputed foreign mutual funds such as Templeton, Alliance, Prudential group etc.
set up operations in India. As at the end of January 2003, there were 33 mutual funds
with total assets of Rs. 1,218,050 million.

In February 2003, the Unit Trust of India Act 1963 was repealed and UTI
was broken into two separate entities. One is the Specified Undertaking of the Unit Trust
of India, still under the control of Government of India with AUM of Rs. 298,350
million as at the end of January 2003. The second is the UTI Mutual Fund Ltd,
sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under
the Mutual Fund Regulations. As at the end of October 31, 2003, there were totally 31
funds in India, with assets under management of about Rs. 1,267,260 million.
The industry passed through different phases of growth:
FIRST PHASE (1964 – 87)
This phase began with the inception of the Unit Trust of India. It remained the
only mutual fund player in the country till 1987.UTI started its operations in July 1964 ;
with a view to ‘ENCOURAGE SAVINGS AND INVESTMENT AND
PARTICIPATION IN THE INCOME, PROFITS AND GAINS ACCURING TO THE
CORPORATION FROM THE ACQUITION, HOLDING, MANAGEMENT AND
DISPOSAL OF SECUTITIS’. In short, the Indian Government with a view to augment
small savings to the capital markets set it up. UTI witnessed a slow and steady growth
and by the end of 1988 it had an AUM of Rs. 67 bn. It continues to be the largest player
in the domestic mutual funds industry with the AUM of Rs. 23500 crore as on March
2005.
SECOND PHASE (1987 – 1993)
Public sector mutual funds set up by public sector banks, Life Insurance
Corporation of India and the General Insurance of India entered into the market in 1987
The first non – UTI mutual fund was the SBI mutual fund established in June 1987,
followed by the Can bank mutual fund in December 1987, Bank of Baroda in October
1992. LIC set up its mutual fund in June 1989, while GIC established its mutual funds in
December 1990. During this period the total AUM of the industry, grow to about RS.
610 bn with the total number of the schemes increasing to about 167 by the end of 1994.

THIRD PHASE (1993-2003)
This phase marked the entry of private sector funds. The phase also signaled the
intensification of the competition. Both domestic and foreign players entered the market,
offering wide range of schemes to investors. Kothari Pioneer Mutual Fund was the first
private mutual fund to be established in association with a foreign fund. The opening up
of the market to the private players saw international players like Morgan Stanley,
George Soros, and Capital International entering into the market. The total AUM by the
end of January 31 2005 increased up to $ 34,927 mn from $ 23,260 mn in March 1995.
FOURTH PHASE (SINCE FEBRUARY 2003)
In February 2003, the Unit Trust of India Act 1963 was repealed and UTI was
bifurcated into two separate entities: Specified Undertaking of the Unit Trust of India,
which is still under the Government of India and the UTI Mutual Fund Limited. This
was done in the wake of the severe payment crisis that UTI suffered because of its
assured return in the adverse impact on the Indian capital markets. US 64 were the first
scheme launched by UTI with a significant equity exposure and the returns of which
were not linked to the market. However, the industry has overcome that shock and is
hoped to have learnt its lesson.

4.6 BENEFITS OF INVESTING IN MUTUAL
FUNDS
PROFESSIONAL MANAGEMENT
Mutual Funds provide the services of experienced and skilled professionals,
backed by a dedicated investment research team that analyses the performance and
prospects of companies and selects suitable investments to achieve the objectives of the
scheme.
DIVERSIFICATION
Mutual Funds invest in a number of companies across a broad cross-section of
industries and sectors. This diversification reduces the risk because seldom do all stocks
decline at the same time and in the same proportion. You achieve this diversification
through a Mutual Fund with far less money than you can do on your own.
CONVENIENT ADMINISTRATION
Investing in a Mutual Fund reduces paperwork and helps you avoid many
problems such as bad deliveries, delayed payments and follow up with brokers and
companies. Mutual Funds save your time and make investing easy and convenient.
RETURN POTENTIAL
Over a medium to long-term, Mutual Funds have the potential to provide a higher
return as they invest in a diversified basket of selected securities.
LOW COSTS
Mutual Funds are a relatively less expensive way to invest compared to directly
investing in the capital markets because the benefits of scale in brokerage, custodial and
other fees translate into lower costs for investors.

LIQUIDITY
In open-end schemes, the investor gets the money back promptly at net asset
value related prices from the Mutual Fund. In closed-end schemes, the units can be sold
on a stock exchange at the prevailing market price or the investor can avail of the facility
of direct repurchase at NAV related prices by the Mutual Fund.
TRANSPARENCY
You get regular information on the value of your investment in addition to
disclosure on the specific investments made by your scheme, the proportion invested in
each class of assets and the fund manager's investment strategy and outlook.
FLEXIBILITY
Through features such as regular investment plans, regular withdrawal plans and
dividend reinvestment plans, you can systematically invest or withdraw funds according
to your needs and convenience.
INVESTMENT IN SMALL SUMS:
Investors individually may lack sufficient funds to invest in high-grade stocks. A
mutual fund because of its large corpus allows even a small investor to take the benefit
of its investment strategy.
CHOICE OF SCHEMES
Mutual Funds offer a family of schemes to suit your varying needs over a
lifetime.

WELL REGULATED
All Mutual Funds are registered with SEBI and they function within the
provisions of strict regulations designed to protect the interests of investors. The
operations of Mutual Funds are regularly monitored by SEBI. The net asset value of the
fund is the cumulative market value of the assets fund net of its liabilities. In other
words, if the fund is dissolved or liquidated, by selling off all the assets in the fund, the
shareholders would collectively own this amount. This gives rise to the concept of net
asset value per unit, which is the value, represented by the ownership of one unit in the
fund. It is calculated simply by dividing the net asset value of the fund by the number of
units. However, most people refer loosely to the NAV per unit as NAV, ignoring the
"per unit". We also abide by the same convention.

4.7 KEY CHALLENGES OF MUTUAL FUNDS
Though India enjoys a good savings rate, the mutual fund industry gets very little
out of this. If this money gets channelized into mutual funds it will help India match
other well – developed markets like the US, CANADA etc. An other issue facing the
industry is that till now the Indian mutual fund industry have focused on A class cities
and haven’t made much impact into the B and C class of cities and the rural areas, which
have also seen marked increased in the income level and spending power. Following are
the major challenges that Indian mutual fund is facing.
The Mutual Funds has been positioning itself as a growth and sunrise industry,
they have been set up with the purpose of mobilising savings of the households and
invest the proceeds in stock markets. Their performance on both these accounts has not
been encouraging as the total assets under management for the past few years have
remained stagnant and they have not been major players in stock.
The industry has seen shifting of assets from one asset class to another and one
fund house to another without any significant growth in aggregate assets.
Mutual funds in their present state are focused only in major metros and mini
metros, thus a large section of potential investors remains outside the reach of the
industry. Though attempts have been made to expand the reach, for e.g. Indian Post and
IDBI- principle launched a scheme for distribution through select post offices.
Apart from reach, mutual fund products are perceived to complex by investors,
though various awareness programmes are being carried out to educate the investors.
Recently, various investor awareness programs have been conducted by the MFs. Also,
to foster professional standards in the operations of MFs, AMFI in association with the
NSE has developed a self-study and testing/certification programme for the employees
and distributors of MFs.

Further, AMFI in consultation with the SEBI has made it mandatory to all
existing personnel of MFs/AMCs, who are engaged in sales, marketing and employees to
complete the certification process. Despite these efforts, their reach is limited and
awareness among the investors is still low.
The biggest problem with Mutual Funds is that they have failed to demonstrate
effectiveness of their investment process for generating sustainable investment return
with a few exceptions. As a result, MFs are seen as momentum chasers rather than
professional investment managers. Hence the assets have been garnered based on
performance of the MF rather than confidence of the investors. This is reflected in the
pattern of flow of funds whereby the last quarter performance is the biggest driver for
attracting money. The MF needs to demonstrate robustness of their investment
management process rather than last quarter return to ensure investor participation
through the ups and downs of the market. Investors need to choose the fund based on its
process rather than the end result. This has forced the MFs to be short-termism and
thereby hampered the growth of the MF industry. In the developed countries, MF
mobilise amounts at par with banks, but in India they are nowhere near the deposits
mobilized by the banks.
POOR REACH
Lack of deeper distribution networks and channels is hurting the growth of the
industry. This is an area of concern for the mutual fund industry, which has not been able
to penetrate deeper into the country and has been limited to the metros and a class cities.
If the mutual fund industry comes up with the better distribution network models and
increases its reach it could help in tapping the huge potential investor markets of the
rural and other Band C class of cities.

BANKS STILL DOMINATE
The biggest hindrance to the mutual fund industry lies in its inability to attract the
savings of the public, which constitute the major investment sources in other developed
mutual fund markets. A large pool of money in savings in India is still with the state –
run and private banks.
IMPACT OF GLOBAL DEVELOPMENTS
Though the economic reforms have brought India on the global investment map,
this also exposes Indian financial markets, including Indian mutual fund industry, to the
volatility in international markets. Fluctuations in the global markets and financial
systems will now be evident as the Indian markets get linked to other foreign markets.
Managing risks in such a scenario will be a key challenge of the Indian mutual fund
industry.
OPERATIONAL HASSLES
Operational inefficiencies are still hampering the growth prospects of the
industry. Lengthy transaction cycles and old – fashioned returns distribution models like
cheques – based returns are preventing the industry to grow at good rates. Investments in
good technology take up huge capital and are pretty risky for the mutual fund companies
to invest in. The rapid obsolescence of technology and huge upfront investment costs are
also getting in the way of the mutual funds from embracing the technology wave.
LACK OF INVESTMENT ADVISORS
The lack of investment advisors, especially to give personalized investment
advice to the investors is creating roadblocks for the growth in mutual funds. Further, the
awareness levels in India about the mutual fund industry are largely restricted to the
high-income investors and the investors of A class cities. These rules out the potentially
huge B, C class cities and rural areas, which have the strong growth potential. Lack of
awareness, distribution models and advisors in these areas have blocked out a large pool
of potential investors for the industry.

MAJOR PLAYERS
 Fidelity Mutual Fund
 Tata Mutual Fund
 Franklin Templeton Mutual Fund
 HDFC Mutual Fund
 HSBC Mutual Fund
 Reliance Mutual Fund
 SBI Mutual Fund
 Prudential Mutual Fund
 Birla Sunlife Mutual Fund
 Chola Mandela Mutual Fund
 Kotak Mahindra Mutual Fund
 DSP Merill Lynch Mutual Fund
 Standard Chartered Mutual Fund
 Principal Mutual Fund
 JM Mutual Fund

4.8 CURRENT SCENARIO OF MUTUAL FUNDS
IN INDIA
Since private players were allowed in 1993, the Indian Mutual fund industry has
witnessed a sea change in the way it operates, in the regulatory and investor attitude
towards Mutual fund products. From a single player in 1987 today there are 29 mutual
funds offering as many as 477 schemes. The total assets under management have risen to
Rs 195784 crores. However, the accolades regarding the growth of the MF industry
should be reserved until this growth is analyzed taking the MF industry in other
developed countries in consideration. Here are certain statistics that reflect that Indian
Mutual fund industry still has a long way to go when compared to global standards:
AUM AS A PERCENTAGE OF GDP :
In most of the developed countries the total assets under management ranges
from 30% -60% of the GDP. Total assets under management are only 8% of the GDP in
case of India.
PENETRATION OF MUTUAL FUNDS:
In India it is estimated that 6.7% of the households hold mutual funds. This
figure is close to 50% in case of the US and 17% in case of UK. Mutual funds account
for only 0.73% of total financial assets in India (11% of bank deposits). AUM for Mutual
funds had exceeded the bank deposits in US in as early as 1998. These are only some of
the statistics that show that the Indian mutual funds industry is still in its infancy. It is
important to study the present industry scenario to gain a better understanding of the
impediments to the growth of the industry:

LACK OF INVESTOR AWARENESS:
Retail investors had wrong notions about the mutual funds as an investment
avenue. The benefits of risk diversification, professional management and ease of
administration involved while investing in mutual funds are not closely understood.
Knowledge of financial while investing in mutual funds are not clearly understood.
Knowledge of financial products is ingrained in school and college curriculum in
countries like UK, France and US.
INVESTOR RISK APPETITE:
Equity funds account for 30% of the total AUM in India. This figure is more than
50% in most developed countries. Frequent stock market scams and the bust of tech
sector specific MFs have contributed to this apprehension. The growth in mutual funds
has come through the growth in investments in short term instrument like Money Market
Mutual Funds, which account for 40% of AUM.
HIGHER RETURNS OF ALTERNATIVE DEBT INSTRUMENTS:
Government guaranteed schemes provide risk free returns at competitive rates of
returns. This is why mutual funds have difficulty competing retail business.
CONCENTRATION OF CORPORATE INVESTORS:
Mutual funds have become overly attractive to corporate investors because of
higher returns than bank deposits and ability to distribute capital gains tax. Corporate
investors account for 57% of the AUM (by value). Though the turnover rates have
increased, the average fund in management has grown by only 25% in the past 4 years. It
is clear that the lack of growth in funds under management in India is because of the
absence of long-term investors. Corporate investors take profits frequently resulting in
destruction in the compound growth in funds under management.

Distributors are forced to pass on more commissions to companies, while fund
companies are compelled to offer funds with wafer thin margins. Retail investors lose
out in the sense that they continue to pay higher expenses.
DISTRIBUTION:
One of the major factors affecting the growth of mutual fund industry is the
absence of any regulation in distribution of mutual funds. Mutual fund investors need
distributors who are able to inform them about the efficacy of distribution product for a
particular risk profile and stage in life cycle. Lack of distributor awareness and the
absence of any disclosures from distributors make mis selling of MF products
commonplace. Also penetration in rural areas is a problem. Only 3% of rural households
own mutual funds. For mutual funds to set up a distribution network in these centers can
be very expensive. In many countries, mutual fund industry sees a point of inflection, a
point after which the AUM increases spectacularly after a period of sluggish growth.
This happened in case of US after 1992-93 when the AUM increased from $1 trillion to
$7.3 trillion in 2004. Many studies have revealed that this period of growth corresponds
to following factors:
• Explosive growth in capital markets
• A sound system of regulation
• Increase in investor awareness
BSE has witnessed a phenomenal rise in the last 2 years (market cap has more
than doubled in the past 2 years), a question thus arises: Has India reached its point of
inflection after which the mutual fund industry will witness a phenomenal growth? What
are the improvements in mutual fund industry (regulation, investor awareness, depth,
distribution etc) required to stimulate such rapid growth?

In February 2003, following the repeal of the Unit Trust of India Act 1963, UTI was
bifurcated into two separate entities: the Specified Undertaking of Unit Trust of India
and the UTI Mutual Fund. The Specified Undertaking of the Unit Trust of India as at
the end of January 2003 had Rs.29, 835 crore assets under management, which
included assets of US 64 scheme, assured return and certain other schemes. The UTI
mutual fund limited sponsored by SBI, PNB, BOB and LIC, is registered with Sebi
and therefore functions under the regulation of sebi. As at the end of March 2005,
there were 30 funds, managing assets worth Rs.1, 49,600 crores, under 452 schemes.

4.9 FUTURE EXPECTATIONS FROM INDIAN
MUTUAL FUND INDUSTRY
Taking into consideration the above comparison and the current situation
prevailing in the capital markets, the alisticxpectations from the Indian Mutual fund
Industry could be:
INCREASED PENETRATION :
With the proposed opening up of pension funds to the private sector we
can expect the penetration levels of MFs to increase in the next few years. Because of
their experience in managing MFs the AMCs will play an important role in the
management of pension funds.
INCREASED EMPHASIS ON RETAIL INVESTORS THROUGH
SUPPLY CHAIN INNOVATIONS:
Retail investments less than Rs 10,000 are unprofitable for AMCs.
However, certain supply chain innovations and investments in retail infrastructure would
lead to increased emphasis on retail investors. Some of the possible innovations can be
the use of “straight-through processing," an industry buzz phrase for automating mutual
fund transactions so that the entire process-from placing a trade to final settlement-is
fast, relatively seamless and less subject to manipulation. Straightforward concept,
straight-through processing requires substantial integration and cooperation among
members of the mutual fund supply chain. Using IT, members of the mutual fund supply
chain can improve efficiency, manage risk and improve regulatory compliance-all
critical moves for maintaining investor confidence in mutual funds. As urban markets
reach a peak mutual funds would target second rung cities and smaller towns to increase
their investor base.
DIVERSE RANGE OF PRODUCTS:

In order to make MFs more acceptable to the retail investor mutual fund
industry has to mature to offering comprehensive life cycle financial planning and not
products alone. These would include products catering to specific life cycle needs like
buying a house, funding college admission etc. With increase in investor awareness
many new products would be introduced. Some of them are listed here: derivative based
MFs (though a cap on derivative exposure for a sponsor currently exists), commodities
and real estate MFs, feeder funds, funds of funds, capital protected funds, etc.
INCREASE IN THE NEED FOR FINANCIAL ADVICE:
As the affluence of Indians increases and the range of financial products
available to meet people’s needs expand – mortgages, deposits, life products, defined
contribution pensions, mutual funds, etc – the need for financial advice will increase.
Mutual fund distribution will become geared towards providing sound financial advice
according to investor’s risk profile and stage in life cycle.
RECOMMENDATIONS
With penetration levels at close to 6% great scope exists for the growth of
mutual funds in India. Mutual funds have to compete with bank deposits and government
securities for a share of consumer savings. This requires the regulator and the AMC to
increase the credibility of MFs and develop a trust among the average retail investors. I
recommend the following steps on part of SEBI and AMCs:
STEPS TO BE TAKEN BY SEBI
· Give the board of trustees the right to choose a fund manager of their own
choice. This will make them more accountable and aware as to what the AMC is
doing.
· Benchmark the performance of funds with peers as well as with specific indices
Restriction on who can be appointed as sub-brokers.

· Implementation of international accounting principles across the mutual fund
industry will help promote fairness and stability of the sector.
· AMFI will work towards increasing investor awareness through the publication
of documents, organizing seminars etc.
· In addition, AMFI serve as a regulator of distributors because mutual funds
complain of poor distributor regulation as the biggest challenge to the industry.
REGULATING CORPORATE INVESTMENTS.
Regulatory requirements that require mutual funds to segregate large and
small investors. This would enable retail investors to pay expenses that are relevant to
their investments and turnover rates.
INVESTOR EDUCATION PROGRAMS
As the principal regulator of financial services in the country, SEBI
should invest in programs that give investor knowledge about financial products in the
country. Investors should be able to make informed decisions after knowing how MFs
can be used for financial planning. This could be done in conjunction with AMCs, AMFI
and other participants in the financial sector.
STEPS TO BE TAKEN BY AMCS
· Make mutual fund offer documents more comprehensible by aking
disclosures more simple and relevant, and fund structure more distinctive
to the common people.
· Make disclosures regarding the MF expenses more transparent especially
distributor expenses, which form a major chunk of entry, loads.
· Make fund managers accountable to unit holders. Organizing Annual
General Meetings of unit holders where performance of the fund would
be reviewed can do this.

CONCLUSION
The comparison of the Indian MF industry with respect to global
standards showed that India has a lot of catching up to do in terms of penetration, the
diversity of products, and the risk mitigation techniques used. However, the attitude of
the regulator towards investor protection and governance of mutual funds was found to
be very close to global standards. The Indian MF industry is possibly at a point of
inflection on the verge of explosive growth. The factors that point towards this are the
existence of robust capital markets and the presence of an impartial regulator. In order to
reap the benefits of this growth, the mutual fund industry has to introduce changes at the
rate of knots. These changes include introduction of newer products, improvements in
Mutual Funds distribution and better governance of mutual funds. The MF regulator
(SEBI) should increase the accountability of all major players including the AMCs,
distributors and brokers to build trust among retail investors.
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The quality of our services is unmatched, for the following reasons
· High quality, reliable information and advisory support
· Network of in-house Financial Advisors to cater to tailor made requirements of
investors
· Investor Points all over the country for personalized service.
· State of the art technology to ensure security and confidentiality.
· Housekeeping support, like portfolio tracking and online accounts statements.

Strengths That Set Us Apart
· We have been in information services for the last seven years and have
assiduously built the data and skill sets necessary for the business.
· We have leveraged our content to create the India Infoline brand, which is
synonymous with high quality and credible information on business and finance.
· Our top management team represents a skill set, which is mutually exclusive but
collectively exhaustive.
· The strength of the organization has been to continuously innovate and reinvent
itself.
We as a team are continuously learning and are in sync with a rapidly changing
environment. Without this approach we would never have killed our earlier business
model, and gone into Internet space. We would not have opened up Investor Points when
people were still counting eyeballs and page views.
We would not have offered services that were till then the preserve of large
corporate houses and we would not have offered brokerage rates that are now the delight
of investors. With us you can be sure that tomorrow will not be just another day.
Services
We offer E-broking services and door-to-door service to investors for a gamut of
products ranging from Mutual Funds, GoI Securities to Fixed Deposits and Insurance.
While our strong base of offline customers gives us a head start, we continue to pioneer
online offerings of these services. We were the first company in India to sell.
Investor Points - A Human Touch

We have a well-entrenched physical network of 75 Investor Points. At these
customers can see our human face and get service unparalleled in India. The Investor
Points also help educate investors and aid financial transactions in smaller towns with
the use of computers and the Internet. We also provide clients with financial planning
and taxation advisory services to ensure that they get the maximum out of their hard-earned
money. Apart from our acclaimed research capabilities, we have a group of
trained and professionally qualified Financial Advisors to cater to the requirements of
our clients.
Unique E-Broking Service
It was launched for online trading in mid-2000. Stock market investors in India
have never had it so good - low brokerage rates and some of the best research, thanks to
Internet technology and E-broking. This is a unique model, which combines the rates of
a discount brokerage and service of a boutique house. We ensure independence and
integrity as we do not trade on our account, and all employees have to adhere to strict
compliance guidelines. Besides high quality investment advice from an experienced
research team, the site offers real time stock quotes, market news and multiple tools for
technical analysis.
We have implemented world-class security systems to prevent any possibility of
misuse, fraud or data pilferage. We have successfully emerged as one of the leading
providers of E-broking services in India.
Getting Started
India Infoline Ltd
India Infoline Ltd is listed on both the leading stock exchanges in India, viz. the
Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). The India

Infoline group, comprising the holding company, India Infoline Ltd and its subsidiaries,
straddles the entire financial services space with offerings ranging from Equity research,
Equities and derivatives trading, Commodities trading, Portfolio Management Services,
Mutual Funds, Life Insurance, Fixed deposits, GoI bonds and other small savings
instruments to loan products and Investment banking. India Infoline also owns and
manages the websites, www.indiainfoline.com and www.5paisa.com .
For the nine months ended December 31, 2005, India Infoline Ltd had a total
income of Rs 1323.40 Mn up 179% for the same period for the previous year with a PAT
of Rs 324.00 Mn, which is a growth of 146% for the same period for the previous year.
India Infoline Ltd, being a listed entity, is regulated by SEBI (Securities and
Exchange Board of India). It undertakes equities research which is acknowledged by
none other than Forbes as 'Best of the Web' and '…a must read for investors in Asia'.
India Infoline's research is available not just over the Internet but also on international
wire services like Bloomberg (Code: IILL), Thomson First Call and Internet Securities
where it is amongst the most read Indian brokers.
Its various subsidiaries are in different lines of business and hence are governed
by different regulators. The subsidiaries of India Infoline Ltd are:
India Infoline Securities Pvt Ltd
India Infoline Securities Pvt Ltd is a 100% subsidiary of India Infoline Ltd,
which is engaged in the businesses of Equities broking and Portfolio Management
Services. It holds memberships of both the leading stock exchanges of India viz. the
Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). It offers
broking services in the Cash and Derivatives segments of the NSE as well as the Cash
segment of the BSE.

A SEBI authorized Portfolio Manager it offers Portfolio Management Services to
clients. These services are offered to clients as different schemes, which are based on
differing investment strategies made to reflect the varied risk-return preferences of
clients.
India Infoline Commodities Pvt Ltd
India Infoline Commodities Pvt Ltd is a 100% subsidiary of India Infoline Ltd,
which is engaged in the business of commodities broking. It holds memberships of both
the leading Commodity exchanges in India viz. the Multi-Commodities Exchange
(MCX) and the National Commodity and Derivatives Exchange, India (NCDEX)
India Infoline.Com Distribution Co Ltd
India Infoline.com Distribution Co Ltd is a 100% subsidiary of India Infoline Ltd
and is engaged in the business of distribution of Mutual Funds, IPOs, Fixed Deposits and
other small savings products. It is one of the largest 'vendor-independent' distribution
houses and has a wide pan-India footprint of over 150 branches coupled with a huge
number of 'feet-on-street', which help source and service customers across the length and
breadth of India.
Its unique value proposition of free doorstep expert advice coupled with free
pick-up and delivery of cheques has been met with an enthusiastic response from
customers and fund houses alike.
India Infoline Insurance Services Ltd
India Infoline Insurance Services Ltd is also a 100% subsidiary of India Infoline
Ltd and is a registered Corporate Agent with the Insurance Regulatory and Development
Authority (IRDA). It is the largest Corporate Agent for ICICI Prudential Life Insurance
Co Ltd, which is India's largest private Life Insurance Company.
India Infoline Insurance Brokers Ltd

India Infoline Insurance Brokers Ltd is a 100% subsidiary of India Infoline Ltd
and is a newly formed subsidiary which will carry out the business of Insurance broking.
We have applied to IRDA for the insurance broking license and the clearance for the
same is awaited.
India Infoline Investment Services Ltd
India Infoline Investment Service Ltd is also a 100% subsidiary of India Infoline
Ltd. It has an NBFC license from the Reserve Bank of India (RBI) and offers margin-funding
facility to the broking customers.
Marchmont Capital Advisors Pvt Ltd
Marchmont Capital Advisors Pvt Ltd is a 100% subsidiary of India Infoline Ltd.
It is engaged in the business of Investment banking and advisory. We have applied to
SEBI for our Merchant Banking license and are awaiting an approval on the same from
SEBI. We plans to leverage upon our research capabilities, corporate relationship,
distribution network of over 150 branches and our network with small and mid size
corporates as well as capabilities to execute cross border deals to build the investment
banking business. We expect significant numbers of small and medium- sized companies
to be turning to the capital markets and becoming involved in mergers and acquisitions.
Investment banking targeted at this segment is a logical extension of the
company's existing services. The leading investment banks are targeting the large
companies and the 'small and medium-sized companies' bracket is a good untapped
growth opportunity.
Moneytree Consultancy Services Pvt Ltd
Moneytree Consultancy Services Pvt Ltd is a company in which India Infoline
Ltd has a 75% stake. It is engaged in the business of loan products, distributing home

loans and personal loans in two major cities of India. We have plans to ramp up the scale
of operations and take the business to a pan-India level.
Across its 155 branches spread across India, around 3,500 people work with
India Infoline Ltd. We are driven by the philosophy of 'Owner mindset' and each of our
employee carries out his/ her duties as if the owner. This philosophy is not just an
esoteric value and has been given an actual form by way of an active ESOPs scheme.
6.1 PORTER'S FIVE FORCES MODEL
The model of pure competition implies that risk-adjusted rates of return
should be constant across firms and industries. However, numerous economic studies
have affirmed that different industries can sustain different levels of profitability; part of
this difference is explained by industry structure. Michael Porter provided a framework
that models an industry as being influenced by five forces. The strategic business
manager seeking to develop an edge over rival firms can use this model to better
understand the industry context in which the firm operates.

CHART-6 PORTER’S FIVE FORCES MODEL
RIVALRY
In the traditional economic model, competition among rival firms drives profits
to zero. But competition is not perfect and firms are not unsophisticated passive price
takers. Rather, firms strive for a competitive advantage over their rivals. The intensity of
rivalry among firms varies across industries, and strategic analysts are interested in these
differences.
If rivalry among firms in an industry is low, the industry is considered to be
disciplined. This discipline may result from the industry's history of competition, the role
of a leading firm, or informal compliance with a generally understood code of conduct.

Explicit collusion generally is illegal and not an option; in low-rivalry industries
competitive moves must be constrained informally. However, a maverick firm seeking a
competitive advantage can displace the otherwise disciplined market.
In pursuing an advantage over its rivals, a firm can choose from several
competitive moves:
· Changing prices - raising or lowering prices to gain a temporary advantage.
· Improving product differentiation - improving features, implementing
innovations in the manufacturing process and in the product itself.
· Creatively using channels of distribution - using vertical integration or using a
distribution channel that is novel to the industry.
· Exploiting relationships with suppliers.
The intensity of rivalry is influenced by the following industry
characteristics:
· A Larger Number Of Firms increases rivalry because more firms must
compete for the same customers and resources.
· Slow Market Growth causes firms to fight for market share. In a growing
market, firms are able to improve revenues simply because of the expanding
market.

· High Fixed Costs result in an economy of scale effect that increases
rivalry.
· High Storage Costs Or Highly Perishable Products cause a producer
to sell goods as soon as possible. If other producers are attempting to unload
at the same time, competition for customers intensifies.
· Low Switching Costs increases rivalry.
· Low Levels Of Product Differentiation is associated with higher levels
of rivalry.
· High Exit Barriers place a high cost on abandoning the product. The firm
must compete. High exit barriers cause a firm to remain in an industry, even
when the venture is not profitable.
THREAT OF SUBSTITUTES
In Porter's model, substitute products refer to products in other industries. To the
economist, a threat of substitutes exists when a product's demand is affected by the price
change of a substitute product. Substitute products affect a product’s price elasticity - as
more substitutes become available, the demand becomes more elastic since customers
have more alternatives. A close substitute product constrains the ability of firms in an
industry to raise prices.
The competition engendered by a Threat of Substitute comes from products
outside the industry. The price of aluminium beverage cans is constrained by the price of
glass bottles, steel cans, and plastic containers. These containers are substitutes yet they
are not rivals in the aluminium can industry.
While the treat of substitutes typically impacts an industry through price
competition, there can be other concerns in assessing the threat of substitutes. Consider
the substitutability of different types of TV transmission: local station transmission to
home TV antennas via the airways versus transmission via cable, satellite, and telephone

lines. The new technologies available and the changing structure of the entertainment
media are contributing to competition among these substitute means of connecting the
home to entertainment. Except in remote areas it is unlikely that cable TV could compete
with free TV from an aerial without the greater diversity of entertainment that it affords
the customer.
BUYER POWER
The power of buyers is the impact that customers have on a producing industry.
In general, when buyer power is strong, the relationship to the producing industry is near
to what an economist terms a monophony - a market in which there are many suppliers
and one buyer. Under such market conditions, the buyer sets the price. In reality, few
pure monopolies exist, but frequently there is some asymmetry between a producing
industry and buyers. The following tables outline some factors that determine buyer
power.
BUYERS ARE POWERFUL IF:
· Buyers are concentrated - there are a few buyers with significant market
share.
· Buyers purchase a significant proportion of output - distribution of purchases
or if the product is standardized
· Buyers possess a credible backward integration threat - can threaten to buy
producing firm or rival
BUYERS ARE WEAK IF:
· Producers threaten forward integration - producer can take over own
distribution/retailing
· Significant buyer switching costs - products not standardized and buyer
cannot easily switch to another product

· Buyers are fragmented (many, different) - no buyer has any particular
influence on product or price
· Producers supply critical portions of buyers' input - distribution of purchases
SUPPLIER POWER
A producing industry requires raw materials - labor, components, and other
supplies. This requirement leads to buyer-supplier relationships between the industry and
the firms that provide it the raw materials used to create products. Suppliers, if powerful,
can exert an influence on the producing industry, such as selling raw materials at a high
price to capture some of the industry's profits. The following tables outline some factors
that determine supplier power.
SUPPLIERS ARE POWERFUL IF:
· Credible forward integration threat by suppliers
· Suppliers concentrated
· Significant cost to switch suppliers
· Customers Powerful
SUPPLIERS ARE WEAK IF:
· Many competitive suppliers - product is standardized
· Purchase commodity products

· Credible backward integration threat by purchasers
· Concentrated purchasers
· Customers Weak
BARRIERS TO ENTRY / THREAT OF ENTRY
It is not only incumbent rivals that pose a threat to firms in an industry; the
possibility that new firms may enter the industry also affects competition. In theory, any
firm should be able to enter and exit a market, and if free entry and exit exists, then
profits always should be nominal. In reality, however, industries possess characteristics
that protect the high profit levels of firms in the market and inhibit additional rivals from
entering the market. These are barriers to entry. Barriers to entry are more than the
normal equilibrium adjustments that markets typically make.. Firms also may be
reluctant to enter markets that are extremely uncertain, especially if entering involves
expensive start-up costs. These are normal accommodations to market conditions.
However, if firms individually (collective action would be illegal collusion) keep prices
artificially low as a strategy to prevent potential entrants from entering the market, such
entry-deterring pricing establishes a barrier.
Barriers to entry arise from several sources:
· Government creates barriers. Although the principal role of the government in
a market is to preserve competition through anti-trust actions, government also
restricts competition through the granting of monopolies and through regulation.
· Patents and proprietary knowledge serve to restrict entry into an industry.
· Asset specificity inhibits entry into an industry. Asset specificity is the extent
to which the firm's assets can be utilized to produce a different product.
· Organizational (Internal) Economies of Scale. The most cost efficient level of
· Production is termed Minimum Efficient Scale (MES).

Table-2: - Summrisation of industry’s entry & exit barriers
Easy to Enter if there is:
· Common technology
· Little brand franchise
· Access to distribution channels
· Low scale threshold
Difficult to Enter if there is:
· Patented or proprietary know-how
· Difficulty in brand switching
· Restricted distribution channels
· High scale threshold
Easy to Exit if there are:
· Saleable assets
· Low exit costs
· Independent businesses
Difficult to Exit if there are:
· Specialized assets
· High exit costs
· Interrelated businesses
7.1 MUTUAL FUND INTERPRETATION USING
PORTER’S FIVE FORCES MODEL
The Porter’s Five Forces Model of the Mutual Fund Industry is as follows:

THREAT FROM NEW ENTRANTS
With the opening up of the MF sector there has been invasion from many
foreign players and even national players. Still now more and more new player are
coming into this sector and trying to make a market share for them. So, there is a
constant threat from new players who are coming up with innovative schemes and
trying to bite the market share of the existing players.
THREAT FROM EXISTING PLAYERS
The competition is heating up. With this all the existing competitor want to
increase their investor base and are willing to capture more and more market share. Even
these players are coming up with more and more customized schemes to suit specific
investors. Now as a result there is consolidation among the existing players.
THREAT OF SUBSTITUTES
The substitutes of mutual fund are Bank deposit, Post office, Saving schemes,
Securities, Bonds etc. So there is a considerable threat from these substitutes. The main
threat is that of regarding the return that these substitutes offer vis-à-vis that of the
mutual fund.
BARGAINING POWER OF CUSTOMERS
The customers of mutual fund are individual investors and corporate investor.
The bargaining power of these customers is very high because they influence the
working of mutual funds. In order to exert pressure on the mutual funds the investors
always demand for some new customized schemes.

BARGAINING POWER OF SUPPLIERS
The supplier of the mutual fund is the sponsor. The sponsor can also exert
considerable amount of power to the mutual funds. They can either raise their investment
limit of reduce it.
7.2. DATA ANALYSIS
Q-1 do you invest regularly?
Response Yes No
Per (%) Frequency Per (%) Frequency

Mehsana 82 82 18 18
Visnagar 56 28 44 22
Unja 74 37 26 13
Palanpur 66 33 34 17
Deesa 48 24 52 26
Patan 76 38 24 12
82
48 52
18
56
44
74
26
66
34
76
24
90
80
70
60
50
40
30
20
10
0
yes no
percentage
Mehsana
visnagar
Unja
Palanpur
Deesa
patan
If no then ask Q-5.
Q-2 what is the frequency of investment?
Respons
e
Monthly Quarterly Half yearly Yearly Enough
money
Per
(%)
Freq Per
(%)
Freq Per
(%)
Freq Per
(%)
Freq Per
(%)
Freq
Mehsana 40 33 10 8 20 16 25 21 5 4
Visnagar 25 57 10 3 10 3 50 14 5 1
Unja 30 11 11 4 16 6 32 12 11 4
Palanpur 27 9 9 3 15 5 37 12 12 4

Deesa 17 4 12 3 13 3 46 11 12 3
Patan 26 10 16 6 13 5 40 15 5 2
40
10
20
25
5
25
10 10
50
5
30
11
16
32
11
27
9
15
37
12
17
12 13
46
12
26
16 13
40
5
60
50
40
30
20
10
0
monthly quarterly half yearly yearly enough
money
percentage
Mehsana
visnagar
Unja
Palanpur
Deesa
patan
Q-3 who takes investment decision?
Respons
e
CA Tax consultants Finance
managers
Own
Per
(%)
Freq Per
(%)
Freq Per
(%)
Freq Per
(%)
Freq
Mehsana 3 2 12 10 0 0 85 70
Visnagar 0 0 14 4 0 0 86 24
Unja 5 2 14 5 0 0 81 30
Palanpur 3 1 9 3 0 0 88 29

Deesa 0 0 0 0 0 0 100 24
Patan 8 3 18 7 0 0 74 28
3
12
0
85
0
14
0
86
5
14
0
81
3 9
0
88
0 0 0
100
8
18
0
74
120
100
80
60
40
20
0
CA tax
consultants
finance
managers
own
percentage
Mehsana
visnagar
Unja
Palanpur
Deesa
patan
Q-4 which are the various instruments used for investment?
Response Equity
Instruments
Bond &
deposit
Mutual
Fund
Small
saving
schemes
Life
Insurance
Any other
Per
(%)
Freq Per
(%)
Freq Per
(%)
Freq Per
(%)
Freq Per
(%)
Freq Per
(%)
Freq
Mehsana 27 22 11 9 5 4 39 32 17 14 1 1
Visnagar 36 10 18 5 7 2 36 10 3 1 0 0
Unja 46 17 16 6 8 3 14 5 11 4 5 2
Palanpur 33 11 18 6 3 1 40 13 6 2 0 0
Deesa 42 10 17 4 0 0 33 8 4 1 4 1

Patan 47 18 16 6 5 2 21 8 8 3 3 1
27
11
5
39
17
1
36
18
7
36
3 0
46
16
8
14 11
5
33
18
3
40
6
0
42
17
0
33
4 4
47
16
5
21
8
3
50
45
40
35
30
25
20
15
10
0 5
equity
Instruments
bond &
deposite
Mutual Fund
Small
saving
schemes
Insurance
Life
any other
percentage
Mehsana
visnagar
Unja
Palanpur
Deesa
patan
Q-5 has you ever heard about mutual fund?
Response Yes No
Mehsana 72 72 28 28
Unja 64 32 36 18
Deesa 20 10 80 40
Patan 62 31 38 19

72
28
44
56
64
36
60
40
20
80
62
38
90
80
70
60
50
40
30
20
10
0
yes no
percentage
Mehsana
visnagar
Unja
Palanpur
Deesa
patan
Q-6 from which source you have heard?
Response Friends News papers Television Agents Any other
Per
(%)
Freq Per
(%)
Freq Per
(%)
Freq Per
(%)
Freq Per
(%)
Freq
Mehsana 11 8 21 15 28 20 24 17 16 12
Visnagar 5 1 36 8 28 6 18 4 13 3
Unja 12 4 15 5 25 8 32 10 16 5
Palanpur 6 2 27 8 33 10 27 8 61 2
Deesa 0 0 40 4 20 2 10 1 30 3
Patan 10 3 19 6 32 10 23 7 16 5

11
21
28
24
16
5
36
28
32
18
25
16
12 15 13
6
27
33
27
61
0
40
20
10
30
10
19
32
23
16
70
60
50
40
30
20
10
0
friends news papers television agents any other
percentage
Mehsana
visnagar
Unja
Palanpur
Deesa
patan
Q-7 do you know how mutual fund works?
Response Yes No
Mehsana 33 24 67 48
Visnagar 36 8 64 14
Unja 37 12 63 20
Deesa 20 2 80 8
Patan 45 14 55 17

33
67
36
64
37
63
34
66
20
80
45
55
90
80
70
60
50
40
30
20
10
0
yes no
percentage
Mehsana
visnagar
Unja
Palanpur
Deesa
patan
Q-8 Are you aware about of different type of Mutual fund schemes?
Response All scheme Most of
scheme
Some of
scheme
None
Per
(%)
Freq Per
(%)
Freq Per
(%)
Freq Per
(%)
Freq
Mehsana 11 8 16 12 23 16 50 36
Visnagar 5 1 14 3 45 10 36 8
Unja 19 6 25 8 22 7 34 11
Palanpur 14 4 20 6 40 12 26 8
Deesa 0 0 20 2 40 4 40 4
Patan 22 7 29 9 32 10 17 5

11
16
23
50
5
14
45
36
19
25 22
34
14
20
40
26
0
20
40 40
22
29 32
17
60
50
40
30
20
10
0
all scheme most of scheme some of scheme none
percentage
Mehsana
visnagar
Unja
Palanpur
Deesa
patan
Q-9 have you invest in Mutual Fund?
Response Yes No
Mehsana 44 32 56 40
Visnagar 36 8 64 14
Unja 54 17 46 15
Deesa 40 4 60 6
Patan 36 11 64 20

44
56
36
64
54
46
34
66
40
60
36
64
70
60
50
40
30
20
10
0
yes no
percentage
Mehsana
visnagar
Unja
Palanpur
Deesa
patan
Q-10 why do you invest in Mutual Funds?
Respons
e
Return on
investments.
Investment
in small
sums
Diversificatio
n
Transparency Liquidity Well
regulated
Per
(%)
Freq Per
(%)
Fre
q
Per
(%)
Freq Per
(%)
Freq Per
(%)
Freq Per
(%)
Freq
Mehsana 37 12 6 2 12 4 13 4 16 5 16 5
Visnagar 50 4 0 0 12 1 13 1 0 0 25 2
Unja 58 10 6 1 12 2 18 3 6 1 0 0
Palanpur 60 6 0 0 10 1 20 2 10 1 0 0
Deesa 75 3 0 0 0 0 25 1 0 0 0 0
Patan 64 7 0 0 0 0 9 1 9 1 18 2

37
6 12 13 16 16
50
0
12 13
0
25
58
6 12 18
6 0
60
0
10
2
10
0
75
0 0
25
0 0
64
0 0
9 9
18
80
70
60
50
40
30
20
10
0
Return on
investments.
investment in
small sums
diversification
Transperency
Liquidity
well regulated
percentage
Mehsana visnagar Unja Palanpur Deesa patan
Q-11 In which Mutual fund Asset management companies are you
invested?
· people invest in different asset management company in mutual fund.
Q-12 are you satisfied with the performance of your Mutual Fund?
Response Yes No
Mehsana 56 18 44 14
Visnagar 38 3 62 5
Unja 59 10 41 7
Palanpur 40 4 60 6
Deesa 10 1 90 3
Patan 46 5 64 6

56
44
38
59 62
40 41
60
10
90
46
64
100
90
80
70
60
50
40
30
20
10
0
yes no
percentage
Mehsana
visnagar
Unja
Palanpur
Deesa
patan
Q-13 After the Recent debacles in the stock Market’s Volatility do you
have confidence in Mutual Funds?
Response Yes No
Mehsana 69 22 31 10
Visnagar 50 4 50 4
Unja 71 12 29 5
Palanpur 70 7 30 3
Deesa 10 1 90 3
Patan 64 7 46 4

69
50 50
31
71
29
70
30
10
90
64
46
100
90
80
70
60
50
40
30
20
10
0
yes no
percentage
Mehsana
visnagar
Unja
Palanpur
Deesa
patan
Q-14 would you like to know more about Mutual Fund?
Response Yes No
Mehsana 92 92 8 8
Unja 88 44 12 6
Deesa 52 26 48 24
Patan 86 43 14 7

92
52 48
8
64
36
88
12
70
30
86
14
100
80
60
40
20
0
yes no
percentage
Mehsana
visnagar
Unja
Palanpur
Deesa
patan
7.3 Overall comparison
Q-1 do you invest regularly?
Response Yes No Base
Frequency 242 108 350
Per 67 33 100

67%
33%
yes
no
Interpretation: During survey conducted it was found that 67% people invest
their money regularly & 33% people are not investing as in some regular bases.
Q-2 what is the frequency of investment?
Response Monthly Quarterly Half
yearly
Yearly Enough
money
Base
Frequency 124 27 38 85 18 292
Per 26 12 14 39 9 100

26%
12%
14%
39%
9% monthly
quarterly
half yearly
yearly
enough money
Interpretation: survey of finding frequency of investment nearly base 39% so
it is the highest frequency at investment and remaining are different.
Q-3 who takes investment decision?
Response CA Tax
consultants
Finance
managers
Own Base
Frequency 8 29 0 205 242
Per 3 11 0 86 100

3% 11%0%
86%
CA
tax consultants
finance managers
own
Interpretation: answer about investment decision most of the people say that their
investment decision taken by their own its 86%.
Q-4 which are the various instruments, used for investment?
Response Equity
Instruments
Bond
&
deposit
Mutual
Fund
Small
saving
schemes
Life
Insurance
Any
other
Base
Frequenc
y
88 36 12 76 25 5 242
Per 38 16 4 30 9 3 100

38%
4% 16%
30%
9% 3%
equity
Instruments
bond & deposite
Mutual Fund
Small saving
schemes
Life Insurance
any other
Interpretation: answer of using investment instrument 30% invests in small saving
schemes (post office). 38% invest in equity instruments (stock market). 4% invest in
mutual fund.
Q-5 have you ever heard about mutual fund?
Per 54 46 100

46% yes
54%
no
Interpretation: during the survey in north Gujarat cities 54% people are heard
about mutual fund & 46% people are not heard the word of “ mutual fund” because
of poor marketing of mutual fund in north Gujarat.
Q-6 from which source you have heard?
Response Friend
s
News papers Television Agents Any other Base
Frequenc
y
18 46 56 47 30 197
Per 5 25 25 20 25 100

25% 5%
friends
25%
20% 25%
news papers
television
agents
any other
Interpretation: Answer of the question which source you have heard about
mutual fund. 25% people answer in paper % same as television, 20% people heard
from the agent.
Q-7 do you know how mutual fund works?
Per 34 66 100

market research on customer awarness of bank

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