The document provides information about a project report submitted by Manthan Soni and Rushabh Patel to Gujarat Technological University on their summer internship at IDFC AMC ltd. The report includes an abstract, table of contents, introduction to the mutual fund industry in India, company profile of IDFC, and details about the primary study conducted including objectives, methodology, data analysis, findings and conclusion. The document aims to understand investors' perception and investment patterns in mutual funds at IDFC.
Comparative analysis on investment in mutual fundvaibhav belkhude
Over a long term horizon, equity investments have given returns which far exceed those from the debt based instruments. They are probably the only investment option, which can build large wealth. In short term, equities exhibit very sharp volatilities, which many of us find difficult to stomach. Investment in equities requires one to be in constant touch with the market and a lot of research.
Buying good scripts require one to invest fairly large amounts. Systematic Investing in a Mutual Fund is the answer to preventing the pitfalls of equity investment and still enjoying the high returns. And it makes all the more sense today when the stock markets are booming.
Management of the fund by the professionals or experts is one of the key advantages of investing through a mutual fund. They regularly carry out extensive research - on the company, the industry and the economy – thus ensuring informed investment. Secondly, they regularly track the market.
Thus for many of us who do not have the desired expertise and are too busy with our vocation to devote sufficient time and effort to investing in equity, Mutual Funds offer an attractive alternative.
Another advantage of investing through mutual funds is that even with small amounts we are able to enjoy the benefits of diversification. Huge amounts would be required for an individual to achieve the
desired diversification, which would not be possible for many of us. Diversification reduces the overall impact on the returns from a portfolio, on account of a loss in a particular company/sector.
The Mutual Funds industry is well regulated both by SEBI and AMFI. They have, over the years, introduced regulations, which ensure smooth and transparent functioning of the mutual funds industry. This makes it safer and convenient for investors to invest through Mutual Funds.
One of the biggest difficulties in equity investing is WHEN to invest, apart from the other big question WHERE to invest. While, investing in a mutual fund solves the issue of ‘where’ to invest, SIP helps us to overcome the problem of ‘when’. SIP is a disciplined investing irrespective of the state of the market. It thus makes the market timing totally irrelevant.
Mutual fund Simplified- To study the Perception Towards Mutual Fund Services ...Shubham Tandan
cahpter 1: Executive Summary
chapter 2: Introduction to Mutual Fund
2.1 history
2.2 what is mutual fund
2.3 Characteristics of Mutual Funds
2.4 Benefits of Investing in a Mutual Fund
2.5 Disadvantages of Mutual Fund
2.6 ROLE OF MUTUAL FUNDS
2.6.1 Mutual Funds & Financial Market
2.6.2 Mutual Fund & Capital Market
2.7 KEY INVESTMENT CONSIDERATION BY THE INVESTORS
2.8 TYPES OF MUTUAL FUNDS
2.9 TAXATION BENEFITS INVESTING IN MUTUAL FUNDS
2.10 More about Mutual Fund
2.10.1 Net Asset Value (NAV)
2.10.2 Entry/ Exit Load
2.10.3 Sale or Repurchase/Redemption price
2.10.4 Risk involved in investing in Mutual Funds:
chapter 3: OBJECTIVES OF THE STUDY
chapter 4: PROFILE OF COMPANY
chapter 5:LITERATURE REVIEW
chapter 6: RESEARCH METHODOLOGY
chapter 7 : DATA ANALYSIS by SPSS
7.1 Factor Analysis
7.2 Chi-square
7.3 T-test
7.4 Annova
chapter 8: Findings
Chapter 9: CONCLUSION
chapter 10: SUGGESTIONS
chapter 11: ANNEXURE
chapter 12: BIBLIOGRAPHY
I have found all primary data and secondary data for this project by my own efforts and the all data are 100% true according to my summer internship experience..Thanks
Comparative analysis on investment in mutual fundvaibhav belkhude
Over a long term horizon, equity investments have given returns which far exceed those from the debt based instruments. They are probably the only investment option, which can build large wealth. In short term, equities exhibit very sharp volatilities, which many of us find difficult to stomach. Investment in equities requires one to be in constant touch with the market and a lot of research.
Buying good scripts require one to invest fairly large amounts. Systematic Investing in a Mutual Fund is the answer to preventing the pitfalls of equity investment and still enjoying the high returns. And it makes all the more sense today when the stock markets are booming.
Management of the fund by the professionals or experts is one of the key advantages of investing through a mutual fund. They regularly carry out extensive research - on the company, the industry and the economy – thus ensuring informed investment. Secondly, they regularly track the market.
Thus for many of us who do not have the desired expertise and are too busy with our vocation to devote sufficient time and effort to investing in equity, Mutual Funds offer an attractive alternative.
Another advantage of investing through mutual funds is that even with small amounts we are able to enjoy the benefits of diversification. Huge amounts would be required for an individual to achieve the
desired diversification, which would not be possible for many of us. Diversification reduces the overall impact on the returns from a portfolio, on account of a loss in a particular company/sector.
The Mutual Funds industry is well regulated both by SEBI and AMFI. They have, over the years, introduced regulations, which ensure smooth and transparent functioning of the mutual funds industry. This makes it safer and convenient for investors to invest through Mutual Funds.
One of the biggest difficulties in equity investing is WHEN to invest, apart from the other big question WHERE to invest. While, investing in a mutual fund solves the issue of ‘where’ to invest, SIP helps us to overcome the problem of ‘when’. SIP is a disciplined investing irrespective of the state of the market. It thus makes the market timing totally irrelevant.
Mutual fund Simplified- To study the Perception Towards Mutual Fund Services ...Shubham Tandan
cahpter 1: Executive Summary
chapter 2: Introduction to Mutual Fund
2.1 history
2.2 what is mutual fund
2.3 Characteristics of Mutual Funds
2.4 Benefits of Investing in a Mutual Fund
2.5 Disadvantages of Mutual Fund
2.6 ROLE OF MUTUAL FUNDS
2.6.1 Mutual Funds & Financial Market
2.6.2 Mutual Fund & Capital Market
2.7 KEY INVESTMENT CONSIDERATION BY THE INVESTORS
2.8 TYPES OF MUTUAL FUNDS
2.9 TAXATION BENEFITS INVESTING IN MUTUAL FUNDS
2.10 More about Mutual Fund
2.10.1 Net Asset Value (NAV)
2.10.2 Entry/ Exit Load
2.10.3 Sale or Repurchase/Redemption price
2.10.4 Risk involved in investing in Mutual Funds:
chapter 3: OBJECTIVES OF THE STUDY
chapter 4: PROFILE OF COMPANY
chapter 5:LITERATURE REVIEW
chapter 6: RESEARCH METHODOLOGY
chapter 7 : DATA ANALYSIS by SPSS
7.1 Factor Analysis
7.2 Chi-square
7.3 T-test
7.4 Annova
chapter 8: Findings
Chapter 9: CONCLUSION
chapter 10: SUGGESTIONS
chapter 11: ANNEXURE
chapter 12: BIBLIOGRAPHY
I have found all primary data and secondary data for this project by my own efforts and the all data are 100% true according to my summer internship experience..Thanks
A Study on Investors' Perception Towards Mutual Funds and its Scopes in Indiaijtsrd
This study on Investors perception towards and recent development and progress of Mutual Fund investments. The mutual fund investors behaviors also the researcher concentrates only the urban investors. The rural investor`s views are completely excluded from the study. The mutual fund investments in relation to investors behavior. Investors opinion and perception has been studied relating to various issues like type of mutual fund scheme, investors opinion relating to factors that attract them to invest in mutual funds. Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Like all other investments, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. M. Rangeela | Dr. G. Balamurugan"A Study on Investors Perception Towards Mutual Funds and its Scopes in India" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-2 | Issue-3 , April 2018, URL: http://www.ijtsrd.com/papers/ijtsrd10950.pdf http://www.ijtsrd.com/management/accounting-and-finance/10950/a-study-on-investors-perception-towards-mutual-funds-and-its-scopes-in-india/m-rangeela
A STUDY ON AWARENESS OF INVESTORS ABOUT THE MUTUAL FUND INVESTMENTS IN MUSIRI...IAEME Publication
Mutual Fund is a vehicle that attracts small and medium investors, thus strengthen the capital market. There are many reasons to invest in mutual funds such as dividend declarations, tax benefits, lesser risk, and value of assets, cost etc. The mutual fund industry in india has undergone a most successful phase in the last 10 years. The AUM has shown a tremendous growth since inception from Rs.25 crore in 1965 to Rs.701443 crore in March 2013. The growth in number of schemes offered by Indian mutual funds from 403 schemes in 2002-03 to 1294 schemes in 2011-12 has shown the inclination of investors towards mutual fund. The resources mobilized by public sector funds is Rs. 314706 crore in 2002-03 and reached to a high of Rs.10, 019,023 crore in 2009-10 of which the share of public sector mutual fund is around 80 percent of the total fund mobilized.
A Study on Investors' Perception Towards Mutual Funds and its Scopes in Indiaijtsrd
This study on Investors perception towards and recent development and progress of Mutual Fund investments. The mutual fund investors behaviors also the researcher concentrates only the urban investors. The rural investor`s views are completely excluded from the study. The mutual fund investments in relation to investors behavior. Investors opinion and perception has been studied relating to various issues like type of mutual fund scheme, investors opinion relating to factors that attract them to invest in mutual funds. Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Like all other investments, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. M. Rangeela | Dr. G. Balamurugan"A Study on Investors Perception Towards Mutual Funds and its Scopes in India" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-2 | Issue-3 , April 2018, URL: http://www.ijtsrd.com/papers/ijtsrd10950.pdf http://www.ijtsrd.com/management/accounting-and-finance/10950/a-study-on-investors-perception-towards-mutual-funds-and-its-scopes-in-india/m-rangeela
A STUDY ON AWARENESS OF INVESTORS ABOUT THE MUTUAL FUND INVESTMENTS IN MUSIRI...IAEME Publication
Mutual Fund is a vehicle that attracts small and medium investors, thus strengthen the capital market. There are many reasons to invest in mutual funds such as dividend declarations, tax benefits, lesser risk, and value of assets, cost etc. The mutual fund industry in india has undergone a most successful phase in the last 10 years. The AUM has shown a tremendous growth since inception from Rs.25 crore in 1965 to Rs.701443 crore in March 2013. The growth in number of schemes offered by Indian mutual funds from 403 schemes in 2002-03 to 1294 schemes in 2011-12 has shown the inclination of investors towards mutual fund. The resources mobilized by public sector funds is Rs. 314706 crore in 2002-03 and reached to a high of Rs.10, 019,023 crore in 2009-10 of which the share of public sector mutual fund is around 80 percent of the total fund mobilized.
This Project is about Mutual Fund investment in different financial assets classes.This project will help you to take investment desion accoding the profile of investor.
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Study about investors perception and investment pettern in mutual fund at idfc amc ltd
1. 1
A
Project Study Report On
Training Undertaken at
IDFC AMC ltd, Ahmadabad
“STUDY ABOUT INVESTORS PERCEPTION AND
INVESTMENT PETTERN IN MUTUAL FUND AT IDFC
AMC ltd”
Submitted by: - MANTHAN SONI
(Enr. No: - 137690592115)
RUSHABH PATEL
(Enr. No:- 137690592102)
MBA PROGRAMME 2013-2015
In partial fulfillment of the requirements for Summer Internship Programme for the award
of the degree of
MASTER OF BUSINESS ADMINISTRATION
SHRI JAIRAMBHAI PATEL INSTITUTE OF BUSINESS MANAGEMENT AND COMPUTER
APPLICATIONS (NICM-MBA)
Submitted to:-
GUJARAT TECHNOLOGICAL UNIVERSITY,
AHMEDABAD
2. 2
PREFACE
With the growth of rapid industrialization the need of management is felt every where. A
research report provides the most natural condition under which a student can learn and got
success in implementing the theoretically learned in to the practical and current
environment of daily practices done by the people (investor) it helps a student to learn, to
improve, to improvise, to experiment, to find knowledge in all possible ways and to
translate that knowledge into action.
MBA is a foundation stone to the management career. The classroom learning needs to
practical exposure. To develop concrete managerial and administrative skills of potential
manager, it is important that the interaction to the real environment be there.
The project is a real life venture for me. It is a great privilege that you have spread your for
reading this. In forthcoming pages, an attempt has been made to present the different aspect
of my project.
Date: Manthan soni
Place: Gandhinagar (GTU’s Enrollment No: - 137690592115)
Rushabh patel
(GTU’s Enrollment No: - 137690592102)
3. 3
Declaration
This project report entitled “Understanding Study of Investors perception and
investment pattern in mutual fund at IDFC” has been submitted to Gujarat
Technological University, Ahmadabad in partial fulfillment for the award of degree of
Master of Business Administration. I, the undersigned hereby declare that this report has
been completed by me under the guidance of Mr.Pankil thakker (Assistant Vise President)
and Prof.Rashesh Patel (Faculty Member, ShriJairambhai Patel Institute of Business
Management & Computer Applications, Gandhinagar.)
The report is entirely the result of my own efforts and has not been submitted either in part
or whole to any other institute or university for any degree.
Manthan soni
(GTU’s Enrollment No: - 137690592115)
Rushabh patel
(GTU’s Enrollment No: - 137690592102)
Date:
Place: Gandhinagar
4. 4
ACKNOWLEDGEMENT
“Chain of mistakes leads towards failures, chain of failures leads to experience &
chain of experience leads to success.” That’s what a life’s path is.
I express my heartfelt thanks to Dr. S.O. Junare, Director of NICM for providing me an
opportunity for carrying out this study.
My special thanks to Prof. Rashesh Patel, Assistant Professor, NICM, who had been a
mentor and had supported me by his vast knowledge, experience and wisdom. He had been
a constant support me throughout the completion of the study
I take the opportunity to thank Mr. Hardik, Senior vise president, IDFC, who has
motivated us to achieve new heights and work creatively.
I would also like to thank my guide Mr. Pankil Thakker, Assistant Vise President,
IDFC. Who have immensely guided, supported and helped me in the process of completion
of my Organizational Study through his constant encouragement and suggestions.
I take the opportunity to thank Mrs.Rekha nair, Sales manager, IDFC. Who had been a
constant support throughout the completion of the study?
My sincere and humble thanks to all my faculty members, my beloved parents, my dear
friends and each and everyone who have been never ending source of knowledge,
inspiration and support to me.
Signature of the Student
Manthan soni
(GTU’s Enrollment No: - 137690592115)
Rushabh patel
(GTU’s Enrollment No: - 137690592102)
5. 5
Shri Jairambhai Patel Institute of Business
Management and Computer Applications
(Formerly known as National Institute of Cooperative Management),
Approved by AICTE, New Delhi and Affiliated with Gujarat Technological University
Opposite Amusement Park, Indroda Circle, Gandhinagar - 382 007
Phone: 079 – 23213043, 37 - 38 - 39 Fax : 079 – 23213036
Web: www.nicm.coop E mail: director_mbanicm@yahoo.com
CERTIFICATE
This is to certify that Manthan soni & Rushabh patel, student of MBA
(2012-2014 batch) at Post Graduate Centre of Gujarat Technological University – MBA,
SJPI has prepared a Summer Internship Project Report on “ STUDY ABOUT
INVESTORS PERCEPTION AND INVESTMENT PETTERN IN MUTUAL FUND AT
IDFC AMC ltd ” in partial fulfillment of two years full-time MBA Programme of Gujarat
Technological University, Ahmedabad. This project work has been undertaken under my
supervision and found satisfactory.
Date : ----------------- Prof. Rashesh patel
Place: Gandhinagar Core Faculty – MBA Dept.
& Project Guide
Dr. S O JunareDirector – Technical Campus
6. 6
ABSTRACT
Being such a hot and much talked about financial product in the recent times, we take it as a
great opportunity to study and analyze the Indian mutual fund Industry and give my
observation on it. It will not only help building my career but it will also help Mahindra
finance in certain aspect.
The Indian Mutual Funds Industry has witnessed a sea change since UTI was first established in
1963. From a single player the number of players has increased to more than 30 and the number of
schemes has spiraled to more than 3500. The last decade has been a period of rapid growth for the
MF industry. The industry is in nascent stage at present. It has come a long way and still has lots of
potential for growth.
My project in IDFC mainly deals with to Understanding Investors perception and investment pattern
in mutual fund at IDFC and also selling through several financial channels available in the market.
And my main aim is to attain profit for the company and give them good business. Fist part of study,
we undertake the research study survey through questionnaire fill up on investment pattern in
mutual fund by Investors. And after that I visited the list of bank given to me Kotak, HDFC, Axis
Bank etc. And Meet with Relationship manager and try to give them knowledge about the product
and then try to sale the product to their client and Understanding of Investors perception and
investment pattern in mutual fund.
And in these project my main aim to see which schemes are giving better returns and at a reasonable
risk. But risk itself is a very subjective terms that depend on person to person. And also how asset
management companies are performing and how their ranking in investment terms is.And during the
course of the project we have not only learnt about mutual fund industry but also try to
Understanding of Investors perception and investment pattern in mutual fund at IDFC the company.
7. 7
Table of Content
Chapter No. Particulars Page No.
Part:1 General information
1 1.1 About The Mutual fund Industry 9
1.2 Mutual fund Industry in India 9
1.3 Conceptual Framework of Mutual Fund 13
1.4 Concept of Mutual fund 15
1.5 How To Invest in Mutual fund 28
2 2.1 Company Profile 36
2.2 SWOT Analysis of Company and Its Competitors 43
2.3 Scheme of IDFC 44
Part :2 Primary Study
3 3.1 Introduction of the study 53
3.2 Literature Review 53
3.3 Background of study 56
3.4 Problem Statement 60
3.5 Objectives Of the study 61
3.6 Hypothesis
5 Research Methodology 62
4.1 Research Design 62
4.2 Source of Data 62
8. 8
4.3 Sampling Method 63
4.4 Sampling Size 63
4.5 Data Collection Instrument 63
4.6 Statistical Tools Used 63
5 Analysis & Data interpretation 64
6 Hypothesis testing 89
7 Suggestions 91
8 Limitations of the study 93
9 Findings 93
10 Conclusion 94
11 Bibliography 95
12 Annexure 96
9. 9
1.1 About The Mutual fund Industry
The one investment vehicle that has truly come of age in India in the past decade is mutual
funds. Today, the mutual fund industry in the country manages around Rs 329,162 crore
(As of Dec, 2006) of assets, a large part of which comes from retail investors. And this
amount is invested not just in equities, but also in the entire gamut of debt instruments.
Mutual funds have emerged as a proxy for investing in avenues that are out of reach of
most retail investors, particularly government securities and money market instruments.
Specialization is the order of the day, be it with regard to a scheme’s investment objective
or its targeted investment universe. Given the plethora of options on hand and the hard-sell
adopted by mutual funds vying for a piece of your savings, finding the right scheme can
sometimes seem a bit daunting. Mind you, it’s not just about going with the fund that gives
you the highest returns. It’s also about managing risk–finding funds that suit your risk
appetite and investment needs.
So, how can you, the retail investor, create wealth for yourself by investing through mutual
funds? To answer that, we need to get down to brass tacks–what exactly is a mutual
fund?Very simply, a mutual fund is an investment vehicle that pools in the monies of
several investors, and collectively invests this amount in either the equity market or the
debt market, or both, depending upon the fund’s objective. This means you can access
either the equity or the debt market, or both, without investing directly in equity or debt.
1.2 MUTUAL FUND INDUSTRY IN INDIA
The end of millennium marks 36 years of existence of mutual funds in this country. The
ride through these 36 years is not been smooth. Investors opinion is still divided. While
some are for mutual funds others are against it.
UTI commenced its operation fom july 1964. The impetus
for establishing a formal institution came from the desire to increase the propensity of the
middle and lower groups to save and to invest. UTI came into existence during a period
10. 10
marked by great political and economic uncertainity in India. With was on the borders and
economic turmoil that depressed the financial market, entrepreneurs were hesitant to enter
capital market. Though the growth was slow, But it accelerated from the year 1987, when
non- UTI players entered the industry.
In the past decade, Indian mutual fund industry had seen a
dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly
of the market had seen an ending phase: the Assent under Management(AUM) was
Rs.67bn. The private sector entry to the fund family raised the AUM to Rs.470bn in March
1993 and till April 2004; it reached the height of 1,540bn.
Putting the AUM of the Indian Mutual Funds Industry into
comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of
the total depostits held by the Indian banking industry.
The main reason of its poor growth is theat the mutual fund industry in India is new in the
country. Large sections of Indian investrors are yet to be intellect wih the concept. Hence,
it is the prime responsibility of all mutual fund companies, to market the product correctly
abreast of selling.
The mutual fund industry can be broadly put into four phases according to the development
of the sector, Each phase is briefly described as under.
First Phase-1964-87
Unit Trust of India(UTI) was established on 1963 by Act of Parliament. It was set up by the
Reserve Bank of India and functioned uned the Regulatory and admisnistrative control of
the Reserve Bank f India. In 1978 UTI was de-linked from RBI and the Industrial
Development Bank of India(IDBI) took ove the regulatory and admistrative control in
11. 11
place of RBI. The first scheme launched bye UTI was Unit Scheme 1964. At te end of 1988
UTI had Rs.6,700 crores of assets under management.
Second phase 1987-1993(entry of public sector funds)
The period 1986-1993 can be termed as the period of public sector mutual funds (PMSs).
From one player in 1985 the number increased to 8 in 1993. Entry of non-UTI mutual
funds. SBI mutual fund was the first followed Canbank Mutual Fund (Dec 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Oct 90), Bank of
Baroda Mutual fund (oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.
47,000 as assets under management. The industry was one-entity show till 1986 when the
UTI monopoly was broken when SBI and BOI, LIC, GIC etc. sponsored by public sector
banks. Starting with an asset base of Rs. 0.25bn in 1964 the industry has grown at a
compounded average growth rate of 26.34% to its current size of Rs. 1130bn.
Third phase 1990-2003 (entry of private sector funds)
When the private sector made its debut in 1993-94, the stock market was booming. Also,
1993 was the year in which the first Mutual fund Regulations came into being, under which
all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari
Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund
registered in july 1993. Other Private sector mutual funds are Morgan Sanley, Jardine
Fleming, JP Morgan, George Soros and Capital International along with the host of
domestic players join the party. The 1993 SEBI (Mutual Fund)
Regulations substituted by a more comprehensive and revised Mutual Find regulations
1996. But for the equity funds, the period of 1994-96 was one of the worst in the history of
Indian Mutual Funds, But the year 1999 saw immense future potential and developments
in this sector. This year signaled the year of resurgence of mutual funds and the regaining
of investor confidence in these MF’s. As at the end of January 2003, There were 33 mutual
12. 12
fund with total assets of Rs.1,21,805 crores. The Unit Trust of India with Rs. 44,541 crores
of assets under management was way ahead of other mutual funds.
Fourth Phase – Since February 2003
This phase had bitter experience for UTI. It was bifurcated into two separate entities. One
is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as
on January 2003). The specified undertaking of Unit Trust of India, functioning under an
adminisratior and unde the rules framed by Government of India and Does not come under
the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC, It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs. 76,000 crores
of AUM and with the setting up of a UTI mutual fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private
sector funds, the mutual fund industry has entered its current phase of consolidation
and growth. As at the end of September 2004, There were 29 fund, Which manage
assets of Rs. 153108 crores under 421 Structure of Mutual Funds in India. At the end
of year 2006 the AUM crossed 2,50,000 crores.
GROWTH IN ASSETS UNDER MANAGEMENT
13. 13
The essential features of the mutual funds distinguishing from other of the
investments are:-
The mutual fund is a trust into which many relatively small investors invest their
money to form a large pool of cash which is then invested in securities by the manager of
the trust.
The price at which units can be bought and sold is governed solely by the value of
the underlying securities held by the MF and dealing in units are on the basis of net market
value of the investment per unit.
The managers of MF are obliged to redeem any units in issue on demand or certain
specified period.
All dividend income that the MF receives on its investments is paid out to unit
holders.
Since the unit held by investor evidences the ownership of the fund’s assets, the
value of an investors part ownership is determined by the NAV of the number of units held.
1.3 Conceptual Framework of Mutual Fund
A mutual fund is constituted as a public trust created under the Indian Trust Act, 1882.
SEBI (mutual fund) regulations, 1996 regulate the structure of the mutual funds in India.
As per these regulations should have the following three-tier structure:
i) Sponsor
ii) Trust/trustee
iii) Asset Management Company
Apart from this mutual fund consist of
14. 14
Sponsor
Sponsor is the person who acting alone or in combination with another body corporate
establishes a mutual fund. The sponsor establishes the mutual fund and registers the same
with SEBI. Sponsor appoints the Trustees, custodians and the AMC with prior approval of
SEBI and in accordance with SEBI Regulations. Sponsor must have a 5-year track record
of business interest in the financial markets. Sponsor must have been profit making in at
least 3 of the above 5 years. Sponsor must contribute at least 40% of the net worth of the
Investment Managed and meet the eligibility criteria prescribed under the Securities and
Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor is not responsible
or liable for any loss or shortfall resulting from the operation of the Schemes beyond the
initial contribution made by it towards setting up of the Mutual Fund.
Trust
The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian
Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration
Act, 1908.
Trustee
15. 15
Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals).
The main responsibility of the Trustee is to safeguard the interest of the unit holders and
inter alia ensure that the AMC functions in the interest of investors and in accordance with
the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the
provisions of the Trust Deed and the Offer Documents of the respective Schemes. At least
2/3rd directors of the Trustee are independent directors who are not associated with the
Sponsor in any manner.
Asset Management Company (AMC)
The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The
AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to
act as an asset management company of the Mutual Fund. At least 50% of the directors of
the AMC are independent directors who are not associated with the Sponsor in any manner.
The AMC must have a net worth of at least 10 crore at all times.
Registrar and Transfer Agent
The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to
the Mutual Fund. The Registrar processes the application form, redemption requests and
dispatches account statements to the unit holders. The Registrar and Transfer agent also
handles communications with investors and updates investor records.
Custodian
A custodian is an agent, bank, trust company, or other organization which holds and
safeguards an individual's, mutual funds, or investment company's assets for them.
2.1 Concept of a 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 then invested in capital market
instruments such as shares, debentures and other securities. The income earned through
16. 16
these investments and the capital appreciation realized is shared by its unit holders in
proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable
investment for the common man as it offers an opportunity to invest in a diversified,
professionally managed basket of securities at a relatively low cost. The flow chart below
describes broadly the working of a mutual fund:-
Savings form an important part of the economy of any nation. With savings invested in
various options available to the people, the money acts as the driver for growth of the
country. Indian financial scene too presents multiple avenues to the investors. Though
certainly not the best or deepest of markets in the world, it has ignited the growth rate in
mutual fund industry to provide reasonable options for an ordinary man to invest his
savings.
Investment goals vary from person to person. While somebody wants security, others might
give more weightage to returns alone. Somebody else might want to plan for his child’s
education while somebody might be saving for the proverbial rainy day or even life after
retirement. With objectives defying any range, it is obvious that the products required will
vary as well.
Investors earn from a Mutual Fund in three ways:
1. Income is earned from dividends declared by mutual fund schemes from time to
time.
17. 17
2. If the fund sells securities that have increased in price, the fund has a capital gain.
This is reflected in the price of each unit. When investors sell these units at prices
higher than their purchase price, they stand to make a gain.
3. If fund holdings increase in price but are not sold by the fund manager, the fund's
unit price increases. You can then sell your mutual fund units for a profit. This is
tantamount to a valuation gain.
Though still at a nascent stage, Indian MF industry offers a plethora of schemes and serves
broadly all type of investors. The range of products includes equity funds, debt, liquid, gilt
and balanced funds. There are also funds meant exclusively for young and old, small and
large investors. Moreover, the setup of a legal structure, which has enough teeth to
safeguard investors’ interest, ensures that the investors are not cheated out of their hard-
earned money. All in all, benefits provided by them cut across the boundaries of investor
category and thus create for them, a universal appeal.
Investors of all categories could choose to invest on their own in multiple options but opt
for mutual funds for the sole reason that all benefits come in a package.
Advantages of Mutual Funds
1. 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. This
risk of default by any company that one has chosen to invest in, can be minimized by
investing in mutual funds as the fund managers analyze the companies’ financials more
minutely than an individual can do as they have the expertise to do so. They can manage
the maturity of their portfolio by investing in instruments of varied maturity profiles.
2. Diversification
18. 18
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.
3. ConvenientAdministration
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.
4. ReturnPotential
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. Apart from liquidity, these funds
have also provided very good post-tax returns on year to year basis. Even historically, we
find that some of the debt funds have generated superior returns at relatively low level of
risks. On an average debt funds have posted returns over 10 percent over one-year horizon.
The best performing funds have given returns of around 14 percent in the last one-year
period. In nutshell we can say that these funds have delivered more than what one expects
of debt avenues such as post office schemes or bank fixed deposits. Though they are
charged with a dividend distribution tax on dividend payout at 12.5 percent (plus a
surcharge of 10 percent), the net income received is still tax free in the hands of investor
and is generally much more than all other avenues, on a post-tax basis.
5. LowCosts
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.
6. Liquidity
19. 19
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. Since there is no penalty on pre-
mature withdrawal, as in the cases of fixed deposits, debt funds provide enough liquidity.
Moreover, mutual funds are better placed to absorb the fluctuations in the prices of the
securities as a result of interest rate variation and one can benefits from any such price
movement.
7. Transparency
Investors 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.
8. 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.
9. Affordability
A single person cannot invest in multiple high-priced stocks for the sole reason that his
pockets are not likely to be deep enough. This limits him from diversifying his portfolio as
well as benefiting from multiple investments. Here again, investing through MF route
enables an investor to invest in many good stocks and reap benefits even through a small
investment. 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.
10.ChoiceofSchemes
Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
20. 20
11.WellRegulated
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.
12.Tax Benefits
Last but not the least, mutual funds offer significant tax advantages. Dividends distributed
by them are tax-free in the hands of the investor. They also give you the advantages of
capital gains taxation. If you hold units beyond one year, you get the benefits of indexation.
Simply put, indexation benefits increase your purchase cost by a certain portion, depending
upon the yearly cost-inflation index (which is calculated to account for rising inflation),
thereby reducing the gap between your actual purchase cost and selling price. This reduces
your tax liability. What’s more, tax-saving schemes and pension schemes give you the
added advantage of benefits under Section 88. You can avail of a 20 per cent tax exemption
on an investment of up to Rs 10,000 in the scheme in a year.
Indian Equity
Income from
dividends-(investor-
free & DDT-NIL)
Iincome from
capital gains-(short
term-15% & long
term- free)
Others
Income from
dividends-(investor-
free & DDT-individual
& HUL-14.025 &
others-22.440
Income from capital
gains-(short term-
as per tax slab &
long term-10% or
20% with indexation
21. 21
Disadvantages of mutual funds
Mutual funds are good investment vehicles to navigate the complex and unpredictable
world of investments. However, even mutual funds have some inherent drawbacks.
Understand these before you commit your money to a mutual fund.
1. No assured returns and no protection of capital
If you are planning to go with a mutual fund, this must be your mantra: mutual funds do not
offer assured returns and carry risk. For instance, unlike bank deposits, your investment in
a mutual fund can fall in value. In addition, mutual funds are not insured or guaranteed by
any government body (unlike a bank deposit, where up to Rs 1 lakh per bank is insured by
the Deposit and Credit Insurance Corporation, a subsidiary of the Reserve Bank of India).
There are strict norms for any fund that assures returns and it is now compulsory for funds
to establish that they have resources to back such assurances. This is because most closed-
end funds that assured returns in the early-nineties failed to stick to their assurances made
at the time of launch, resulting in losses to investors. A scheme cannot make any guarantee
of return, without stating the name of the guarantor, and disclosing the net worth of the
guarantor. The past performance of the assured return schemes should also be given.
2. Restrictive gains
Diversification helps, if risk minimization is your objective. However, the lack of
investment focus also means you gain less than if you had invested directly in a single
security. Assume, Reliance appreciated 50 per cent. A direct investment in the stock would
appreciate by 50 per cent. But your investment in the mutual fund, which had invested 10
per cent of its corpus in Reliance, will see only a 5 per cent appreciation.
3. Taxes
During a typical year, most actively managed mutual funds sell anywhere from 20 to 70
percent of the securities in their portfolios. If your fund makes a profit on its sales, you will
pay taxes on the income you receive, even if you reinvest the money you made.
22. 22
4. Management risk
When you invest in a mutual fund, you depend on the fund's manager to make the right
decisions regarding the fund's portfolio. If the manager does not perform as well as you had
hoped, you might not make as much money on your investment as you expected. Of
course, if you invest in Index Funds, you forego management risk, because these funds do
not employ managers.
TYPES OF MUTUAL FUND SCHEMES
There are a wide variety of Mutual Fund schemes that cater to your needs, whatever your
age, financialposition, risk tolerance and return expectations. Whether as the foundation of
your investmentprogramme or as a supplement, Mutual Fund schemes can help you meet
your financial goals.
TYPES OF MUTUAL FUND SCHEME
By structure
By Investment
Objectives
Other Schemes
Open-ended
Schemes
Sector specific fund
Tax saving fund
Equity SchemesDebt Schemes
Close Ended
Schemes
23. 23
Figure 3
(AI) By Structure
Open-Ended Schemes
These do not have a fixed maturity. You deal directly with the Mutual Fund for your
investments and redemptions. The key feature is liquidity. You can conveniently buy and
sell your units at Net Asset Value ("NAV") related prices.
Close-Ended Schemes
Schemes that have a stipulated maturity period (ranging from 2 to 15 years) are called
close-ended schemes. You can invest directly in the scheme at the time of the initial issue
and thereafter you can buy or sell the units of the scheme on the stock exchanges where
they are listed. The market price at the stock exchange could vary from the scheme's NAV
on account of demand and supply situation, Unit holders' expectations and other market
factors.
One of the characteristics of the close-ended schemes is that they are generally traded at a
discount to NAV but closer to maturity, the discount narrows. Some close-ended schemes
give you an additional option of selling your units directly to the Mutual Fund through
periodic repurchase at NAV related prices. SEBI Regulations ensure that at least one of the
two exit routes are provided to the investor.
Interval Schemes
These combine the features of open-ended and close-ended schemes. They may be traded
on the stock exchange or may be open for sale or redemption during predetermined
intervals at NAV related prices.
Interval Schemes Index Schemes
Small cap fund
MM Mutual
fund
Other Debt
Schemes
FMP
Any Other
Equity Fund
Mid cap Fund
Large cap fund
24. 24
(B) By Investment Objective
Growth Schemes
Aim to provide capital appreciation over the medium to long term. These schemes
normally invest amajority of their funds in equities and are willing to bear short-term
decline in value for possible futureappreciation. These schemes are not for investors
seeking regular income or needing their money backin the short term.
Income Schemes
Aim to provide regular and steady income to investors. These schemes generally invest in
fixed income securities such as bonds and corporate debentures. Capital appreciation in
such schemes may be limited.
Ideal for
Retired people and others with a need for capital Stability and regular income
Investor who need some income to supplement their earnings.
Balanced Schemes
Aim to provide both growth and income by periodically distributing a part of the income
and capital gains they earn. They invest in both shares and fixed income securities in the
proportion indicated in their offer documents. In a rising stock market the NAV of these
schemes may not normally keep pace, or fall equally when the market falls.
Ideal for:
Investors looking for a combination of income and moderate growth.
25. 25
Money Market/Liquid Schemes
Aim to provide easy liquidity, preservation of capital and moderate income. These schemes
generally invest in safer, short-term instruments such as treasury bills, certificates of
deposit, commercial paper and inter-bank call money. Returns on these schemes may
fluctuate, depending upon the interest rates prevailing in the market.
Ideal for:
Corporate and individual investors as a means to park their surplus funds
for short periods or awaiting a more favorable investment alternative.
Other Schemes
Tax Saving Schemes
These schemes offer tax rebates to the investors under tax laws as prescribed from time to
time. This is made possible because the Government offers tax incentives for investment in
specified avenues. For example, Equity Linked Savings Schemes (ELSS) and Pension
Schemes. The details of such tax saving schemes are provided in the relevant offer
documents.
Ideal for:
Investors seeking tax rebates.
Special Schemes
This category includes index schemes that attempt to replicate the performance of a
particular index such as the BSE Sensex or the NSE 50, or industry specific schemes
(which invest in specific industries) or sectorial schemes (which invest exclusively in
segments such as A Group shares or initial public offerings)
26. 26
Different Modes of Receiving the Income
Earned From Mutual Fund Investments
Mutual funds offer three methods of receiving income:
Growth Plan:
In this plan, dividend is neither declared nor paid out to the investors but it is built
into the value of the NAV. In the other words, the NAV increases over time due to
such incomes and the investor realizes only the capital appreciation on redemption
of his investment.
Income plan or Dividend Payout Plan:
In this plan, dividends are paid-out to the investors. In other words, the NAV only
reflects the capital appreciation or depreciation in the market price of the underlying
portfolio.
Dividend Reinvestment Plan:
In this plan, dividend is declared but not paid out to the investors. Instead, it is
reinvested back in to the scheme at the then prevailing NAV. In other words, the
27. 27
RISK
TYPE OF FUND
Money
Market Fund
Debt Fund
Gilt Fund
Hybrid Fund
Equity Fund
Aggressive
Growth Fund
Flexible Asset
Allocation Fund
Growth Funds
High Yield
Debt Funds
Diversified Equity
Fund
Index Fund
Value Funds
Money Market
Funds
Equity Income
Funds
Focused
Debt Funds
Diversified
Debt Fund
Balanced FundsGilt Funds
RISK HIERARCHY OF MUTUAL FUNDS
Growth and
Income Funds
28. 28
Mutual Fund Investment Strategies
Systematic Investment Plan (SIP):
SIPs entail an investor to invest a fixed sum of money at regular intervals in MF scheme
the investor has chosen. This may help you gain from any appreciation in the event of
upside or alternatively, average your cost during downside.
Seeing the present volatility in the market SIP is the best option available to the investor
due to regular entry into the market which causes rupee cost averaging and hence covers
the volatility.
Systematic Withdrawal Plan (SWPs):
These plans are best suited for people nearing retirement. In these plans investor invest in a
mutual fund scheme and is allowed to withdraw a fixed sum of money at regular intervals
to take care of expenses.
Systematic Transfer Plan (STP):
They allow the investor to transfer on a periodic basis a specified amount from one scheme
to another with in the same fund family meaning two schemes belonging to the same
mutual fund. A transfer will be treated as redemption of units from the scheme from which
the transfer is made.
2.2 HOW TO INVEST IN MUTUAL FUNDS.
Step One- Identify your investment needs. Your financial goals will vary, based on your
age, lifestyle, financial independence, family commitments, level of income and expenses
among many other factors. Therefore, the first step is to assess your needs.
29. 29
Step Two- Choose the right Mutual Fund. Once you have a clear strategy in mind, you
now have to choose which Mutual Fund and scheme you want to invest in. The offer
document of the scheme tells you its objectives and provides supplementary details like the
track record of other schemes managed by the same Fund Manager. Some factors to
evaluate before choosing a particular Mutual Fund are:
The track record of performance over the last few years in relation to the
appropriate yardstick and similar funds in the same category.
How well the Mutual Fund is organized to provide efficient, prompt and
personalized service.
Degree of transparency as reflected in frequency and quality of their
communications.
Step Three- Select the ideal mix of Schemes.
Investing in just one Mutual Fund scheme may not meet all your investment needs. You
may consider investing in a combination of schemes to achieve your specific goals.
The following charts could prove useful in selecting a combination of schemes that
satisfy your needs.
Figure 4
This plan may suit
Investor seeking Income & moderate growth.
Investor looking for growth & stability with moderate risk
Aggressive Plan
Growth Scheme
Income Scheme
Money market Scheme
Balanced Scheme
30. 30
Figure 5
Step Four - Invest regularly.
Step Five- Keep your taxes in mind
Step Six- Start early It is desirable to start investing early and stick to a regular investment
plan. If you start now, you will make more than if you wait and invest later. The power of
compounding lets you earn income on income and your money multiplies at a compounded
rate of return.
Step Seven-The final step all you need to do now is to get in touch with a Mutual Fund or
yourAgent/broker and start investing. Reap the rewards in the years to come. Mutual Funds
are suitable for every kind of investor-whether starting a career or retiring, conservative or
risk taking, growth oriented or income seeking.
What fees and commissions will you pay when you invest in mutual
funds?
The fees and commissions you may be charged can vary widely from one fund, and one
dealer, to the next. Some of the charges may be negotiable, but you should make sure that
you understand all of the costs before you invest. There are two main costs to consider –
themanagement and operating expenses that are charged tothe fund each year, and the
sales charges (or loads) that you pay when you buy or sellthe fund.
Conservative Plan
Growth Scheme
Income Scheme
Money Scheme
Balanced Scheme
31. 31
Management and Operating Expenses are expenses paid each year by the fund and
include such things as the manager’s fees, legal and accounting fees, custodial fees and
bookkeeping costs. The Management Expense Ratio (MER) is the percentage of the
fund’s average net assets that these expenses represent. For example, if a $100 million fund
has $2 million in costs for the year its MER will be 2%. MERs can range from under 1%
per year for some money market funds to almost 3% for some equity funds. The higher the
MER, the greater the impact on the fund’s performance and the return to its investors
because these expenses are removed before the value is reported.
Sales Charges (Loads) are the commissions that you may have to pay when you buy or
redeem units of a fund. Sales charges may be applied when you buy units of the fund
(Afront-end load), when you redeem your units (a back-end load), or there may be no
sales charges at all (no-load).Where front-end loads are charged, the rate can vary
fromdealer to dealer and may be negotiable. Shop around, andremember that every dollar
you pay up-front in commissionis a dollar that does not go to work for you in the
fund.Many funds are sold on a back-end load basis, meaninggenerally that the sales charges
are applied only when youredeem the fund. Back-end load fees are paid by the
fundmanagement company to your mutual fund salesperson – youdo not pay this fee. You
do, however, pay a ‘redemption fee’ ifyou redeem your units in the fund before a certain
time period,typically 7 years. Redemption fees decline each year thatyou hold the
investment.
For example, you might have to paya 6% fee if you redeem the fund after one year, 4% if
youredeem after three years, and no commission if you redeemafter seven years.An
increasing number of funds are being sold on a no-loadbasis, in which investors pay no
sales charges, but beforeyou decide that a no-load fund is right for you, consider thefund’s
performance, its management expense ratio and thelevel of service and advice you will
receive.
32. 32
Different Avenues of investment
OPTIONS RETURN RISK LIQUIDITY
Savings account Very low Very low High
Fixed Deposits Low Low Low
Direct Equity Very high return Very high High
Insurance Medium Low Low
Company fixed deposits Low High Very low
Debentures Low Medium Medium
Bonds Low Low Low
Mutual funds High Medium High
Post office schemes Low Low Low
Government securities Low Low Low
Real estate High High Low
Currency High High High
Bullion Medium High Medium
RISKS OF INVESTING IN MUTUAL FUNDS
Market / Interest Risk
Volatility of prices leading to “floating” returns
Largely mitigated with a holding period of over 6 months
Credit Risk
Potential default of bonds on the portfolio
Equity Risk
Possibility of the fund manager not able to meet redemptions
33. 33
IMPACT OF TECHNOLOGY
Mutual fund, during the last one decade brought out several innovations in their products
and is offering value added services to their investors. Some of the value added services
that are being offered are:
• Electronic fund transfer facility.
• Investment and re-purchase facility through internet.
• Added features like accident insurance cover, med claim etc.
• Holding the investment in electronic form, doing away with the traditional form of
unitcertificates.
• Cheque writing facilities.
• Systematic withdrawal and deposit facility.
ONLINE MUTUAL FUND TRADING
The innovation the industry saw was in the field of distribution to make it more easily
accessible to an ever increasing number of investors across the country. For the first time in
India the mutual fund start using the automated trading, clearing and settlement system of
stock exchanges for sale and repurchase of open-ended de-materialized mutual fund units.
Systematic Investment Plan (SIP) and Systematic Withdrawal Plan (SWP) were options
introduced which have come in very handy for the investor to maximize their returns from
their investments. SIP ensures that there is a regular investment that the investor makes on
specified dates making his purchases to spread out reducing the effect of the short term
volatility of markets. SWP was designed to ensure that investors who wanted a regular
income or cash flow from their investments were able to do so with a pre-defined
automated form. Today the SW facility has come in handy for the investors to reduce their
taxes.
36. 36
2.1 COMPANY PROFILE-
IDFC have been an integral part of the country's development story since 1997, when our
company was formed with the specific mandate to build the nation.
Since 2005, we have built on our vision to be the 'one firm' that looks after the diverse needs
of infrastructure development. Whether it is financial intermediation for infrastructure
projects and services, adding value through innovative products to the infrastructure value
chain or asset maintenance of existing infrastructure projects, we focus on supporting
companies to get the best return on investments.
Our growth has been driven by the substantial investment requirements of the infrastructure
sector in India combined with the growth in the Indian economy over the last several years.
Our ability to tap global as well as Indian financial resources makes us the acknowledged
experts in infrastructure finance. This, coupled with a strong synergy between the company
management and key shareholders, and a dedicated team of over 550 people makes us an
organization that is committed to improving the face of India's infrastructure sector.
At IDFC, our commitment to building India's infrastructure goes beyond business. We work
closely with government entities and regulators to advise and assist them in formulating
policy and regulatory frameworks that support private investment and public-private
partnerships in infrastructure development.
Mission
“To be the leading knowledge-driven financial services company, creating enduring
value, promoting infrastructure and nation building”
Values
Integrity
We engage in honest and straight forward communication with all stakeholders and adhere
to the highest ethical standards in everything we do. Our reputation is paramount. We will
act in the best interests of our clients but without compromising our values and principles.
Nurturing Humility
37. 37
We are modest enough to know that we can be wrong and smart enough to learn from our
mistakes. We treat everyone as an equal— no task is beneath us.
Stewardship
We act as custodians of our firm and accept the charge of passing on a better business than
the one we inherited. Our actions will be guided by rules and ethical principles creating long
term value with due care for society and environment.
Partnership
We emphasize a ONE FIRM culture. We foster mutual respect and proactively collaborate
with each other, with clients, and with partners keeping just one thing in mind – to be the
best at what we do.
Initiative
We encourage new ideas and independent action within a culture that fosters sharing
knowledge and information, critical debate and constructive dissent.
Responsibility
We take complete ownership for our actions, emphasizing a results-oriented and problem-
solving approach to business. We are personally accountable to the communities that we
serve.
Excellence
We constantly strive to raise industry standards, be the employer of choice, and work to be
the best rather than the biggest. Dedication to excellence results in superior execution and
generates creative, imaginative and innovative outcomes.
Board Committees
Audit
Committee
: Mr. S. H. Khan
Chairman
Dr. Omkar Goswami
Mr. Gautam Kaji
Ms. Marianne Økland
Ms. Snehlata
Shrivastava
Nomination &
Remuneration
Committee
: Dr. Omkar Goswami
Chairman
Dr. Rajiv B. Lall
Mr. Gautam Kaji
Mr. Donald Peck
Stakeholders'
Relationship
Committee
: Mr. S. H. Khan
Chairman
Dr. Rajiv B. Lall
Mr. Vikram Limaye
38. 38
Corporate
Social
Responsibility
Committee
: Dr. Rajiv B. Lall
Chairman
Dr. Omkar Goswami
Mr. Vikram Limaye
Executive
Committee
: Dr. Rajiv B. Lall
Chairman
Mr. S. S. Kohli
Mr. S. H. Khan
Dr. Omkar Goswami
Mr. Donald Peck
Mr. Vikram Limaye
Risk
Committee
: Mr. Gautam Kaji
Chairman
Mr. S. H. Khan
Dr. Rajiv B. Lall
Ms. Marianne Økland
Mr. Vikram Limaye
History & Timelines
Our Group was born out of the need for a specialized financial intermediary for
infrastructure. Incorporated on January 30, 1997 in Chennai, our company was set up on the
recommendations of the 'Expert Group on Commercialisation of Infrastructure Projects'
under the Chairmanship of Dr. Rakesh Mohan.
Since then, we have been a leading catalyst for providing private sector infrastructure
development in India. We focus on developing and leveraging our knowledge base in the
infrastructure space to devise and provide appropriate financing solutions to our customers.
Our strong capitalization reflects the crucial role that we play in infrastructure development.
1997
IDFC is founded on the recommendations of the 'Expert Group on Commercialization of
Infrastructure Projects' under the Chairmanship of Dr. Rakesh Mohan. The group is
conceptualized to channel private capital into commercially viable projects.
1999
Is notified as a Public Financial Institution under Section 4A of the Companies Act.
2000
Gets registered with SEBI as a merchant banker.
39. 39
2001
Gets registered with SEBI as a debenture trustee.
Sets up Infrastructure Development Corporation (Karnataka) Limited (iDeCK)
2002
Sets up IDFC Private Equity as an investment manager for private equity funds.
Sets up Uttaranchal Infrastructure Development Company Limited (UDEC).
2003
Successfully raises $200 million for the India Development Fund, the first infrastructure-
focused private equity fund.
2005
Becomes a public company after listing its shares on NSE and BSE.
2006
Successfully raises $450 million for its second infrastructure - focused private equity fund.
2007
Raises Rs. 2,100 crore through QIP.
Sets up IDFC Project Equity Company Limited as a specialized project finance entity
focused on developing Indian infrastructure projects.
Establishes IDFC Projects to develop, implement, own and operate projects in the
infrastructure space.
2008
Successfully raises $930 million through the India Infrastructure Fund to invest equity
capital in infrastructure projects and $700 million in its third private equity fund.
Enters into asset management by acquiring the AMC business of Standard Chartered Bank
in India.
Incorporates IDFC Capital (Singapore) Pte Limited, for an emerging markets private equity
fund-of-funds business.
2009
The company's loan book crosses Rs. 20,000 crore with more than 200 infrastructure
projects funded.
40. 40
Establishes IDFC Foundation to focus on capacity building, policy advisory and
sustainability initiatives.
Becomes part of Nifty 50.
2010
Raises additional capital of Rs. 26,542 million through a Qualified Institution Placement at
Rs.168.25 per share and CCPS at a conversion price of Rs.176 per share. Government
shareholding reduces to 18%.
Classified as an Infrastructure Finance Company (IFC).
Raises Rs. 480 crores in the first tranche of its Long Term Infrastructure Bonds.
2011
Certified as India's first "Green Data Centre".
IDFC opens an office in US.
Sets up IDFC Foundation as a Section 25 Company for all its developmental work.
IDFC & Natixis Global Asset Management enter into a strategic partnership.
Raise USD 310 million of ECB's.
Starts "Partners Program".
2012
IDFC Completes 15 years with over 1.5 million investors.
Launches "In Our Hands" an youth engagement initiative, to socialize the policy advocacy
work being done under the aegis of the India Infrastructure Report (IIR).
Releases a handbook titled "EVOLVING PERSPECTIVES IN THE DEVELOPMENT OF
INDIAN INFRASTRUCTURE", encompassing the policy work done in the last 15 years.
IDFC business
Corporate Investment
Banking
Project Finance
Financial Markets Group
Securities
Alternative Asset
Management
Private Equity
Infrastructure
Real Estate
Public Market
Asset Management
Mutual Fund
Foundation
Government Advisory Services
Policy Advocacy
Capacity Building Initiatives
42. 42
Structure of the organization
Company’s structure
Structure of the company consists of following entities:-
Country head
State head distribution channel
Cluster heads of investments
Individual brokers
Back office operation
Sales team
State head looks after all the operation in Karnataka region like Bellary, Mysore and other cities of Karnataka
and coordinates with asset management companies i.e. AMCs and reports to country head, and cluster heads
of investments are responsible for sales team and report to state head distribution channel and sales people
who directly interact with investors for the investments report to cluster head investment. Sales team is
supported by back office operations, like role of back office operation
43. 43
2.2 SWOT analysis of the company and its competitor
STRENGTH
BRANDNAME
KNOWN TO BE ETHICAL
PRESENCE IN ALL OVER INDIA
EXPERIENCED PEOPLE IN THE
COMPANY
UNBIASNESS
WEAKNESS
BRANCHASE OF COMPANY IS LESS
ONLY 27 IN INDIA.
LACK OF MANPOWER
NOT HAVING NECESSARY
INFRASTRUCTURE
OPPORTUNITY
ZERO BASE
LACK OF PROPER SERVICES
AVAILABLE IN THE MARKET
ABSENCE OF LEADER IN THE
MARKET, IN DISTRIBUTION (
MUTUAL FUNDS)
HUGE POTENTIAL OF MUTUAL
FUND MARKET
GROWTH OF MUTUAL FUND
MARKET
INCREASE IN INCOME LEVEL OF
PEOPLE
THREATS
INDIVIDUAL BROKERS
ITS COMPETITOR’S
PROMOTIOAL ACTIVITIES
ITS COMPETITOR’NEW BUSINESS
PLANS
ATTRITION
LACK OF MANPOWER
NOT HAVING NECESSARY
INFRASTRUCTURE
44. 44
Average Assets under Management
Assets under management (AUM) is a financial term denoting the market value of all the
funds being managed by a financial institution (a mutual fund, hedge fund, private equity
firm, venture capital firm, or brokerage house) on behalf of its clients, investors, partners,
depositors, etc.
The average Assets under management of all Mutual funds in India for the quarter Jul-13 to
Sep-13 (in INR billion) is given below:
Sr No Mutual Fund Name Average AUM %
1 HDFC Mutual Fund 1,034.42 12.70%
2 Reliance Mutual Fund 952.28 11.69%
3 ICICI Prudential Mutual Fund 853.03 10.48%
4 Birla Sun Life Mutual Fund 773.44 9.50%
5 UTI Mutual Fund 700.57 8.60%
6 SBI Mutual Fund 595.58 7.31%
7 Franklin Templeton Mutual Fund 448.12 5.50%
8 IDFC Mutual Fund 396.65 4.87%
9 Kotak Mahindra Mutual Fund 352.99 4.34%
10 DSP BlackRock Mutual Fund 304.86 3.74%
11 Tata Mutual Fund 179.66 2.21%
12 Deutsche Mutual Fund 170.59 2.10%
13 L&T Mutual Fund 150.79 1.85%
14 Sundaram Mutual Fund 139.47 1.71%
15 JPMorgan Mutual Fund 132.57 1.63%
16 Religare Invesco Mutual Fund 125.12 1.54%
17 Axis Mutual Fund 123.18 1.51%
18 LIC NOMURA Mutual Fund 79.76 0.98%
19 Canara Robeco Mutual Fund 76.16 0.94%
20 HSBC Mutual Fund 67.18 0.83%
21 JM Financial Mutual Fund 62.44 0.77%
22 Baroda Pioneer Mutual Fund 52.63 0.65%
23 IDBI Mutual Fund 47.71 0.59%
24 PRINCIPAL Mutual Fund 43.00 0.53%
25 Goldman Sachs Mutual Fund 41.49 0.51%
45. 45
Sr No Mutual Fund Name Average AUM %
26 BNP Paribas Mutual Fund 35.38 0.43%
27 Morgan Stanley Mutual Fund 32.90 0.40%
28 Peerless Mutual Fund 28.35 0.35%
29 Taurus Mutual Fund 27.32 0.34%
30 Pramerica Mutual Fund 21.66 0.27%
31 Union KBC Mutual Fund 19.80 0.24%
32 Indiabulls Mutual Fund 16.06 0.20%
33 ING Mutual Fund 11.05 0.14%
34 PineBridge Mutual Fund 11.03 0.14%
35 BOI AXA Mutual Fund 10.82 0.13%
36 Mirae Asset Mutual Fund 5.08 0.06%
37 Motilal Oswal Mutual Fund 4.37 0.05%
38 Quantum Mutual Fund 3.15 0.04%
39 PPFAS Mutual Fund 2.67 0.03%
40 Escorts Mutual Fund 2.52 0.03%
41 Sahara Mutual Fund 2.33 0.03%
42 IIFL Mutual Fund 2.07 0.03%
43 Edelweiss Mutual Fund 1.94 0.02%
44 Daiwa Mutual Fund 0.51 0.01%
45 IL&FS Mutual Fund (IDF) - 0.00%
46 Shriram Mutual Fund - 0.00%
47 SREI Mutual Fund (IDF) - 0.00%
Grand Total 8,142.68
100.0%
46. 46
CHRONICLE ORDER OF COMPANIES GIVING MOST RETURN.
Fund Category 5 Yr
Return
DSPML T.I.G.E.R. Fund Equity: Diversified 45.45
Tata Infrastructure Equity: Diversified 44.92
Magnum Contra Equity: Diversified 44.81
Kodak Opportunities Equity: Diversified 44.57
UTI Infrastructure Equity: Diversified 43.14
Reliance Growth Equity: Diversified 42.88
Magnum Multiplier Plus Equity: Diversified 42.76
Sundaram BNP Paribas Select Midcap Equity: Diversified 40.64
47. 47
HDFC Top 200 Equity: Diversified 39.29
BoB Growth Equity: Diversified 38.57
Principal Child Benefit Hybrid: Equity-oriented 36.79
Magnum Balanced Hybrid: Equity-oriented 31.24
HDFC Prudence Hybrid: Equity-oriented 29.68
Birla Sun Life Income Debt: Medium-term 8.29
ABN AMRO Flexi Debt Plan Debt: Medium-term 7.78
ICICI Prudential Long-term Debt: Medium-term 7.55
Birla Dynamic Bond Retail Debt: Medium-term 7.51
Kotak Flexi Debt Debt: Medium-term 7.47
Sundaram BNP Paribas S... Equity: Diversified 43.35
ICICI Prudential Dynamic Equity: Diversified 43.26
DWS Investment Opportunity Equity: Diversified 43.07
DSPML Equity Fund Equity: Diversified 42.89
DSPML Top 100 Equity Reg Equity: Diversified 41.96
Kotak 30 Equity: Diversified 41.33
IDFC Premier Equity fund Equity-oriented 29.67
RANKING OF THE COMPANY
By looking at this table we can rank various asset management companies on the basis of asset under
management. They are as follows:
48. 48
1) Reliance mutual fund
2) ICICI prudential mutual fund
3) UTI mutual fund
4) BIRLA sun life mutual fund
5) SBI mutual fund
By looking at this rank we can say that in India people prefer to invest in
reliance scheme and they are having great faith on Reliance Company.
SCHEMES OF IDFC
Scheme: IDFC Advantage Fund
Type Open ended growth scheme
Investment 70% in equity & 30% in Debt
pattern
Fund Objective Long term growth of capital
Investment Min of one year
horizon
Scheme: IDFC Dividend Yield plus
Type Open ended Growth Scheme
Investment 100% in equity
pattern
Fund objective Capital growth & income
Investment Min of one year
horizon
Scheme: IDFC Equity plan
49. 49
Type Open ended equity linked savings schemes
Investment 80% in equity & 20% in short term, money market &
liquid instruments
Fund objective Long term growth of capital along with income tax
relief for investment
Investment Minimum of 3years
horizon
Scheme: IDFC Index Fund
Type Open ended index Linked Scheme
Investment 100% in Securities
pattern
Fund Objective Generate Returns
Investment Min of one Year
Horizon
Scheme: IDFC opportunities Fund
Type Open ended growth scheme
Investment 70-100% in equity, 30% in cash & money market
pattern instruments
Fund objective Long term growth of capital
Investment Minimum of one year
horizon
Scheme: IDFC Mid Cap Fund
Type Open ended growth scheme
Investment 65-100% in equity related companies with market
pattern capitalization of Rs.150 crores to Rs.1,500 crores
35% in equity related companies with a market
capitalization.
Fund Objective Long term growth of capital
Investment Minimum of 1 year
horizon
50. 50
Scheme: IDFC Balance Fund
Type Open ended balanced scheme
Investment 50 to 75% in equity 25-50% in debt
pattern
Fund object To balance income requirements with long term growth
of capital
Investment Minimum of one year
horizon
Scheme: IDFC Asset Allocation Fund
Type Open ended fund of funds
Investment Aggressive plan 70-80% in equity 20-25% indebt
pattern Moderate plan 40-60% in equity 40-60% indebt
Conservative plan 20-25% in equity 75-80% indebt
Fund objective Income & capital Application with diversification in
equity & debt schemes in line with risk profile of
investor
Investment Minimum of one year
horizon
Scheme: IDFC Gilt Plus
Type Open ended governments securities schemes
Investment 100% in securities permitted by RBI
pattern
Fund objective To generate in income & capital appreciation through
investments in government securities.
Investment Least 6 months to 1 year
horizon
Scheme: IDFC Dynamic Bond Fund
Type Open ended income scheme
Investment 50-65% in Government securities, 25-35% in corporate
pattern bonds, 0-25% in cash liquid instruments.
51. 51
Fund objective To generate optimal returns with high liquidity
Investment Minimum of one year
horizon
Scheme: IDFC Income Plus
Type Open ended income scheme
Investment 100% in debt & money market
pattern
Fund objective To generate consistent income
Investment Minimum of 1 year
horizon
53. 53
3.1 Introduction to Study
• To study various investment alternatives and in particular investors preference
towards mutual funds.
• To study the preference of investors in today’s scenario (less risk and more return).
• To assess the risk of investors with reference to diversifiable risk & non-
diversifiable risk.
• To study market potentiality of mutual fund among investors.
• To study whether the investors are considering IDFC a better option or not.
3.2 LITERATURE REVIEW
Literature on mutual fund performance evaluation is enormous. A few research studies that
haveinfluenced the preparation of this paper substantially are discussed in this section.
Sharpe, William F. (1966) suggested a measure for the evaluation of portfolio performance.
Drawing onresults obtained in the field of portfolio analysis, economist Jack L. Treynor has
suggested a newpredictor of mutual fund performance, one that differs from virtually all
those used previously byincorporating the volatility of a fund's return in a simple yet
meaningful manner.
Michael C. Jensen (1967) derived a risk-adjusted measure of portfolio performance
(Jensen’s alpha) that estimates how much a manager’s forecasting ability contributes to
fund’s returns.
As indicated by Statman (2000), the e SDAR of a fund portfolio is the excess return of the
portfolio overthe return of the benchmark index, where the portfolio is leveraged to have the
benchmark index’sstandard deviation.
NarayanRao,ET. al., evaluated performance of Indian mutual funds in a bearmarket through
relative performance index, risk-return analysis, Treynor’s ratio, Sharpe’s ratio,
Sharpe’smeasure , Jensen’s measure, and Fama’s measure. The study used 269 open-ended
54. 54
schemes (out of totalschemes of 433) for computing relative performance index. Then after
excluding funds whose returns areless than risk-free returns, 58 schemes are finally used for
further analysis. The results of performancemeasures suggest that most of mutual fund
schemes in the sample of 58 were able to satisfy investor’sexpectations by giving excess
returns over expected returns based on both premiums for systematic riskand total risk.
Bijan Roy, ET. al., conducted an empirical study on conditional performance of
Indianmutual funds. This paper uses a technique called conditional performance evaluation
on a sample ofeighty-nine Indian mutual fund schemes .This paper measures the
performance of various mutual fundswith both unconditional and conditional form of
CAPM, Treynor- Mazuy model and Henriksson-Mertonmodel. The effect of incorporating
lagged information variables into the evaluation of mutual fundmanagers’ performance is
examined in the Indian context. The results suggest that the use ofconditioning lagged
information variables improves the performance of mutual fund schemes, causingalphas to
shift towards right and reducing the number of negative timing coefficients.
Mishra, et al., (2002) measured mutual fund performance using lower partial moment. Inthis
paper, measures of evaluating portfolio performance based on lower partial moment are
developed.
Risk from the lower partial moment is measured by taking into account only those states in
which returnis below a pre-specified “target rate” like risk-free rate. Kshama Fernandes
(2003) evaluated index fundimplementation in India. In this paper, tracking error of index
funds in India is measured .Theconsistency and level of tracking errors obtained by some
well-run index fund suggests that it is possibleto attain low levels of tracking error under
Indian conditions. At the same time, there do seem to beperiods where certain index funds
appear to depart from the discipline of indexation. K. Pendaraki et al.studied construction of
mutual fund portfolios, developed a multi-criteria methodology and applied it tothe Greek
market of equity mutual funds. The methodology is based on the combination of discrete
andcontinuous multi-criteria decision aid methods for mutual fund selection and
composition. UTADISmulti-criteria decision aid method is employed in order to develop
mutual fund’s performance models.
55. 55
Goal programming model is employed to determine proportion of selected mutual funds in
the finalportfolios.
Zakri Y.Bello (2005) matched a sample of socially responsible stock mutual funds
matchedto randomly select conventional funds of similar net assets to investigate
differences in characteristicsof assets held, degree of portfolio diversification and variable
effects of diversification on investmentperformance. The study found that socially
responsible funds do not differ significantly fromconventional funds in terms of any of
these attributes. Moreover, the effect of diversification oninvestment performance is not
different between the two groups. Both groups underperformed theDomini 400 Social Index
and S & P 500 during the study period.
Michael C. Jensen (1967) derived a risk-adjusted measure of portfolio performance
(Jensen’s alpha) that estimates how much a manager’s forecasting ability contributes to
fund’s returns.
As indicated by Statman (2000), the e SDAR of a fund portfolio is the excess return of the
portfolio over the return of the benchmark index, where the portfolio is leveraged to have
the benchmark index’s standard deviation. S.Narayan Rao,ET. al., evaluated performance of
Indian mutual funds in a bear market through relative performance index, risk-return
analysis, Treynor’s ratio, Sharpe’s ratio, Sharpe’s measure , Jensen’s measure, and Fama’s
measure. The study used 269 open-ended schemes (out of total schemes of 433) for
computing relative performance index. Then after excluding funds whose returns are less
than risk-free returns, 58 schemes are finally used for further analysis. The results of
performance measures suggest that most of mutual fund schemes in the sample of 58 were
able to satisfy investor’s expectations by giving excess returns over expected returns based
on both premiums for systematic risk and total risk.
56. 56
3.3 Background Information
How to Calculate the value of a Mutual Fund:
The investor’s funds are deployed in a portfolio of securities by the fund manager. The
value of these investments keeps changing as the market price of the securities change.
Since investors are free to enter and exit the fund at any time, it is essential that the market
value of their investments is used to determine the price at which such entry and exit will
take place. The net assets represent the market value of assets, which belong to the
investors, on a given date.
Net Asset Value or NAV of a mutual fund is the value of one unit of investment in the fund,
in net asset terms.
NAV= Net Asset of the scheme / Number of Units Outstanding
Where Net Assets are calculated as:-
(Market value of investment + current assets and other assets + Accrued income – current
liabilities and other liabilities – less accrued expenses) / No. of Units Outstanding as at the
NAV date.
NAV of all schemes must be calculated and published at least weekly for closed – end
schemes and daily for open- end schemes.
The major factors affecting the NAV of a fund are :
Sale and purchase of securities
Sale and repurchase of units
Valuation of assets
Accrual of income and expenses
57. 57
. NAV-:
Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit NAV
is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date.
How is NAV calculated?
The value of all the securities in the portfolio in calculated daily. From this, all expenses are deducted
and the resultant value divided by the number of units in the fund is the fund’s NAV.
Expense Ratio
AMCs charge an annual fee, or expense ratio that covers administrative expenses, salaries,
advertising expenses, brokerage fee, etc. A 1.5% expense ratio means the AMC charges Rs1.50 for every
Rs100 in assets under management.
A fund's expense ratio is typically to the size of the funds under management and not to the returns
earned. Normally, the costs of running a fund grow slower than the growth in the fund size - so, the more
assets in the fund, the lower should be its expense.
Entry load and an exit load
Some Asset Management Companies (AMCs) have sales charges, or loads, on their funds (entry
load and/or exit load) to compensate for distribution costs. Funds that can be purchased without a sales charge
are called no-load funds. Entry load is charged at the time an investor purchases the units of a scheme. The
entry load percentage is added to the prevailing NAV at the time of allotment of units. Exit load is charged at
the time of redeeming (or transferring an investment between schemes). The exit load percentage is deducted
from the NAV at the time of redemption (or transfer between schemes). This amount goes to the Asset
Management Company and not into the pool of funds of the scheme.
58. 58
How does "entry load" affect the investment returns?
A 2.25% entry load sounds small. But it still bites a chunk off the returns over a long period of time.
For instance, Rs 1 lakh invested directly in the no-load option of an equity fund that grows at a rate of
15% over a period of 20 years yields around Rs 16.36 lakh against Rs 15.99 lakh that a load fund
would return—a difference of Rs 36,820. This is because even a small sum of 2.25% gets
compounded over the years.
The pinch remains the same even in a systematic investment plan (SIP). As SIPs entail investments on
a regular basis, say every month, you end up paying entry loads on all your investment installments.
Assume you had invested Rs 5,000 in Reliance Vision Fund (RVF) on January 1, 2003 through a
monthly SIP. If you had withdrawn your entire investment after five years, on December 31, 2007,
you would have got back Rs 11.52 lakh in the no-load option and Rs 11.25 lakh in a load option, a
difference of a cool Rs 25,914.
Are investments in mutual fund units risk-free or safe?
This depends on the underlying instrument that a mutual fund invests in, based on its investment
objectives. Mutual funds that invest in stock market-related instruments cannot be termed “risk-free
or safe” as investment in shares are inherently risky by nature, whereas funds that invest in fixed-
income instruments are relatively safe and those that invest only in government securities are the
safest.
Why Mutual Funds are an investment option?
Firstly, we are not all investment professionals. We go to a doctor when we need medical advice or a
lawyer for legal guidance, similarly mutual funds are investment vehicles managed by professional
fund managers. And unless you rate highly on the Investment IQ Quiz, we recommend you use this
option for investing. Mutual funds are like professional money managers, however a key factor in
their favor is that they are more regulated and hence offer investors the ability to analyze and
evaluate their track record.
59. 59
Secondly, investing is becoming more complex. There was a time when things were quite simple -
the market went up with the arrival of the first monsoon showers and every year around Diwali.
Since India started integrating with the world (with the start of the liberalization process), complex
factors such as an increase in short-term US interest rates, the collapse of the Brazilian currency or
default on its debt by the Russian government, have started having an impact on the Indian stock
market. Although it is possible for an individual investor to understand Indian companies (and
investing) in such an environment, the process can become fairly time consuming. Mutual funds
(whose fund managers are paid to understand these issues and whose asset management company
invests in research) provide an option of investing without getting lost in the complexities.
Lastly, and most importantly, mutual funds provide risk diversification: Diversification of a portfolio
is amongst the primary tenets of portfolio structuring (see The Need to Diversify). And a necessary
one to reduce the level of risk assumed by the portfolio holder. Most of us are not necessarily well
qualified to apply the theories of portfolio structuring to our holdings and hence would be better off
leaving that to a professional. Mutual funds represent one such option.
How to select a mutual fund scheme?
What's strategy got to do with selecting a mutual fund? Shouldn't you just go and invest in the best
performing fund? The answer is no. Mutual fund investing requires as much strategic input as any
other investment option. But the advantage is that the strategy here is a natural extension of your
asset allocation plan (use our Asset Allocator to understand what your optimum asset allocation plan
should be, based on your personal risk profile). The following processes are important to select a
mutual fund scheme.
Identify funds whose investment objectives match your asset allocation needs
Just as you would buy a computer that fits your needs and budget, you should choose a mutual fund
that meets your risk tolerance (need) and your risk capacity (budget) levels (i.e. has similar
investment objectives as your own). Typical investment objectives of mutual funds include fixed
income or equity, general equity or sector-focused, high risk or low risk, blue-chips or turnarounds,
long-term or short-term liquidity focus. The investment objectives match yours are
Evaluate past performance, look for consistency. Although past performance is no guarantee of
future performance, it is a useful way of assessing how well or badly a fund has performed in
comparison to its stated objectives and peer group. A good way to do this would be to identify the
60. 60
five best performing funds (within your selected investment objectives) over various periods, say 3
months, 6 months, one year, two years and three years. Shortlist funds that appear in the top 5 in
each of these time horizons as they would have thus demonstrated their ability to be not only good
but also, consistent performers. .
Are investments in mutual fund units risk-free or safe?
This depends on the instrument mutual fund invests in, based on its investment objectives. Mutual
funds that invest in stock market-related instruments cannot be termed “risk-free or safe” as
investment in shares are inherently risky by nature, whereas funds that invest in fixed-income
instruments are relatively safe and those that invest only in government securities are the safest.
Role of a Fund Manager:
Fund managers are responsible for implementing a consistent investment strategy that reflects the
goals and objectives of the fund. Normally, fund managers monitor market and economic trends and
analyze securities in order to make informed investment decisions.
How are mutual funds regulated?
All Asset Management Companies (AMCs) are regulated by SEBI and or the RBI (in case the AMC
is promoted by a bank). In addition, every mutual fund has a board of directors that represents the
unit holders’ interests in the mutual fund.
3.4 STATEMENT OF PROBLEM
Mutual Funds are Financial intermediaries concern with the mobilizing savings of surplus
income & channelisation of these savings in those avenues where there is demand of funds.
The main purpose behind this study of investment preferences in Mutual Funds is to see that
how the investors are employing their resources in a manner to afford, combine benefits to
low risks, steady or consistent returns, high liquidity & capital appreciation through
61. 61
diversification & Expert Management.
Therefore the activities of mutual funds have both short & long term impact on the savings
& capital market & the national economy. Mutual Funds, thus, assist the process of
financial depending & intermediation.
3.5 Objectives of the Study
• To study various investment alternatives and in particular investors preference
towards mutual funds.
• To study the preference of investors in today’s scenario (less risk and more return).
• To assess the risk of investors with reference to diversifiable risk & non-
diversifiable risk.
• To study market potentiality of mutual fund among investors.
• To study whether the investors are considering IDFC a better option or not.
62. 62
Chapter: - 4
Research Methodology
4.1 Research Design
Research Methodology is a systematic method of discovering new facts or verifying old
facts, their sequence, inter-relationship, casual explanation and the natural laws which
governs them. In it we study the various steps that are generally adopted by a researcher in
the studying his research problem along with the logic behind them.
Different stages involved in research consists of enacting the problem, formulating a
hypothesis, collecting the facts or data, analyzing the facts and reaching certain conclusion
either in the form of solution towards the concerned problem or in generalization for some
theoretical formulation.
Type of Sample Design: Judgment Sampling
4.2 Data Collection
The Data is divided in two parts:
a) Primary Data.
b) Secondary Data.
Primary Data is the data, which is collected directly by direct personal interview,
Interview, indirect oral investigation, Information received through local agents, Drafting a
schedule, drafting a questionnaire.
Secondary Data is the data, which is collected from:
Various books.
Magazine and material.
Internet
Fact sheets of various MFs
The data which is stored in the organization and provide by the FINANCE people are also
secondary data. The various information is taken out regarding that subject as well other
63. 63
subject from various sources and stored. The last years data stored can also be secondary
data. This data is kept for the internal use of the organization.
The FINANCE manual is for the internal use of the organization they are secondary data
which help people to gain information. In this report the data plays a very crucial role. For
this report the data was provided to me by FINANCE department and other departmental
head in the organization.
4.3 Sampling Method
The sampling method so as to obtain a representative sample is the Non- Probability
Sampling methods. Under non-probability sampling, we selected the respondents to the
survey on the basis of Judgment sampling with Convenience taken into account.
4.4 Sample Size: 200
4.5 Data collection instument
Research instrument
The research instrument used for this survey is a structured questionnaire. The questionnaire
contains both open-ended and close ended questions. The questionnaire provides a
provision with respect to rating scales.
4.6 Statistical Tools Used
We have chosen ANOVA and CHI-SQURE as Statistical Tools for Testing Hypothesis.
64. 64
CHAPTER :- 5 Data Analysis and Interpritation.
TABLE -1:
AGE WISE CLASSIFICATION OF RESPONDENTS
AGE NO. OF RESPONDENTS PERCENTAGE
BELOW 20 NIL NIL
20-29 69 34.5
30-39 13 6.5
40-49 34 17
50-59 35 17.5
ABOVE 60 49 24.5
TOTAL 200 100
A G E W I S E N O O F R E S P O N D E N T S
4 9 2 0 - 2 9
6 9 3 0 - 3 9
4 0 - 4 9
3 5
1 3
5 0 - 5 9
A B O V E 6 0
3 4
Interpretation:
According to the survey the respondents were of different age groups. There are
no respondents of age below 20 are in no number. The investors of age 20-29 are 69 in
number with 34.5%. The investors of age 30-39 are 13 with 6.5%, 40-49 there are 34
65. 65
investors with 17% and in between 50-59 there are 35 investors with 17.5% and above 60
there are 49 investors with 24.5%.
TABLE-2:
GENDER OF THE RESPONDENTS
GENDER NO. OF RESPONDENTS PERCENTAGE
MALE 158 79
FEMALE 42 21
TOTAL 200 100
GENDER OF THE RESPONDENTS
/
180
OFRESPONDENTS
160
PERCENTAGE
140
120 NO. OF
100 RESPONDENTS
80 PERCENTAGE
60
40
NO.
20
0
MALE FEMALE
GENDER
Interpretation:In the survey number of male respondents are more in number that
is about 79% & the next position has been occupied by female respondents they are
about 21% of the sample so, mainly men are preferring to go for investments.
66. 66
TABLE-3:
OCCUPATION OF THE RESPONDENTS
OCCUPATION NO. OF RESPONDENTS PERCENTAGE
HOUSE HOLD 9 4.5
BUSINESS 46 23
SERVICE 84 42
PROFESSIONAL 30 15
RETIRED 15 7.5
STUDENT 16 8
TOTAL 200 100
OCCUPATION OF THE RESPONDENTS
16 9
HOUSE HOLD
15
46 BUSINESS
30 SERVICE
PROFESSIONAL
RETIRED
84
STUDENT
Interpretation:
According to the survey the respondents were of different occupations. Most of
respondents are from service sector is about 42% of the sample. Respondents from the
67. 67
business are occupying 23%, then comes professional with 15%, students occupy 8%,
retired people occupy 7.5%, with house hold occupying 4.5%.
68. 68
TABLE-4:
ANNUAL INCOME OF THE RESPONDENTS
ANNUAL NO. OF RESPONDENTS PERCENTAGE
< 1,00,000 53 26.5
1-2 LAKHS 84 42
2-3 LAKHS 48 24
ABOVE 3 LAKHS 15 7.5
TOTAL 200 100
OFRESPONDENTS/
PERCENTAGE
NO.
ANNUAL INCOME OF THE RESPONDENTS
90
80
70
NO. OF60
RESPONDENTS50
40 PERCENTAGE
30
20
10
0
0 S S
HS
00
H H
LAK LAK
K
1,0
0, A
<
2 3 3L
- -
VE1 2
AB
O
ANNUAL
INCOME
69. 69
Interpretation:
According to the survey, the respondents of the income group of less than 1 lack are
of 26.5%. They were about 42% of the respondents are of the income group between 1-2
lack. 24% of the respondents were of the income group 2-3 lacks. 7.5% respondents were of
the income group more than 3 lacks.
TABLE-5:
DO THE RESPONDENTS INVEST THEIR MONEY
INVESTMENTS NO.OF RESPONDENTS PERCENTAGE
YES 200 100
NO NIL NIL
TOTAL 200 100
RESPONDENTS INVESTING THEIR MONEY
OFRESPONDENTS/
PERCENTAGE
NO.
250
200
150
NO. OF
RESPONDENTS
100 PERCENTAGE
50
0
YES NO
INVESTMENTS
70. 70
Interpretation:
All the respondents considered in the sample, do invest their savings.
Out of the total sample the respondents going for investments are total in numbers with all
the two hundred respondents considered in sample are going for complete investments with
100%.
TABLE-6:
What percent of your income do you keep aside for different investment
options?
OPTIONS NO. OF RESPONDENTS PERCENTAGE
0% to 5% 24 12
5% to 10% 38 19
10% to 15% 60 30
15% to 20% 34 17
20% to 30% 24 12
Above 30% 20 10
TOTAL 200 100
0
10
20
30
40
50
60
70
0% to
5%
5% to
10%
10% to
15%
15% to
20%
20% to
30%
Above
30%
income keep aside
NO. OF RESPONDENTS
71. 71
TABLE-7
Important factors to you consider before choosing an investment?
OPTIONS
NO. OF
RESPONDENTS PERCENTAGE
Safety of investment
principle 70 35
Opportunity for
growth 82 41
Liquidity 48 24
TOTAL 200 100
Interpritation:- from the table we can see that 41% of respondent are
consider the fector Opportunity for growth before choosing an investment
0
10
20
30
40
50
60
70
80
90
Safety of
investment
principle
Opportunity for
growth
Liquidity
Important factors
NO. OF RESPONDENTS
72. 72
TABLE-8:
INVESTORS PREFERENCE FOR VARIOUS INVESTMENTS
OBJECIVES
OPTIONS
RANK SCORE
SECURITY 1 55
YEILD 2 47
MATURITY 4 35
TAX BENEFITS 5 22
LIQUIDITY 3 40
INVESTMENT OBJECTIVE OF THE INVESTOR
SECURITY
LIQUIDITY 7%
20%
YEILD
SECURITY
13%
YEILD
MATURITY
MATURITY
TAX BENEFITS
LIQUIDITY
TAX BENEFITS 27%
33%
Interpretation:
Different types of investors look forward to different investment objectives. Most of the
investors ranked 1st
to security, 2nd
rank to yield, 3rd
rank has been given to liquidity, 4th
& 5th
ranks for maturity & tax benefits.
73. 73
INVESTOR PREFERENCE FOR VARIOUS INVESTMENTS
OBJECTIVES
ATTRIBUTES I II III IV V WEIGHTED RANK
AVERAGE
SECURITY 88 64 32 9 7 55 I
YEILD 63 44 46 24 23 47 II
MATURITY 19 24 45 85 27 35 IV
TAX BENEFIT 8 25 5 42 120 22 V
LIQUIDITY 22 43 72 40 23 40 III
MODEL CALCULATION:
= 88*5 + 64*4 + 32*3 + 9*2 + 7*1 / 1 + 2 + 3 + 4 + 5
= 440 + 256 + 96 +18 + 7 / 15
= 817/15
= 55.
74. 74
TABLE-9:
AWARENESS OF MUTUAL FUNDS
OPTIONS NO. OF RESPONDENTS PERCENTAGE
YES 200 100
NO 00 00
TOTAL 200 100
Interpretation:
According to the survey, most investors are aware of mutual funds. It can be
observed from the above table that 100% of respondents are aware of Mutual
TABLE-10:
AWARENESS OF MUTUAL FUNDS IS THROUGH
0
50
100
150
200
250
YES NO
AWARENESS OF MUTUAL FUNDS
NO. OF RESPONDENTS
75. 75
OPTION NO. OF RESPONDENTS PERCENTAGE
ADVERTISEMENT 52 26
FRIENDS 37 19
FAMILY MEMBERS 19 10
FINANCIAL ADVISORS 66 32
RELATIVES 26 13
TOTAL 200 100
INFLUENCE OF INVESTMENT DECISION IS
THROUGH
ADVERTISEME
RELATIVES NT ADVERTISEMENT13% 26%
FRIENDS
FINANCIAL FAMILY MEMBERS
ADVISORS FRIENDS FINANCIAL ADVISORS
32% FAMILY 19% RELATIVES
MEMBERS
10%
Interpretation:
According to the survey, the respondents are more aware of mutual funds through
Financial Advisors who occupy 32%, followed by Advertisements 26%, Friends 19%,
Relatives 13% & Family Members 10%
76. 76
TABLE 11:
MUTUAL FUND IS A GOOD INVESTMENT OPTION.
OPTIONS NO. OF RESPONDENTS PERCENTAGE
YES 159 79.5
NO 41 20.5
TOTAL 200 100
MUTUAL FUND IS A GOOD INVESTMENT OPTION
/
180
OFRESPONDENTS
160
PERCENTAGE
140
120 NO. OF
100 RESPONDENTS
80 PERCENTAGE
60
40
NO.
20
0
YES NO
OPTIONS
Interpretation:
Many of the individuals are of the view that mutual fund is a good investment
option. Of the total sample survey around 79.5% of the respondents feel that mutual fund is
a good investment option & 20.5% of the respondents feel that it is not a good investment
option.
77. 77
TABLE 12:
What is your return expectation on your investment in mutual fund?
OPTION
NO. OF
RESPONDENTS PERCENTAGE
Up to
8% 52 26
Betwee
n 8% to 18% 80 40
Above
18% 68 34
TOTAL 200 100
In
0
10
20
30
40
50
60
70
80
90
Up to 8% Between 8% to
18%
Above 18%
return expectation
NO. OF RESPONDENTS
78. 78
Interpretation:- more no of respondent expecting 8% to 18% of return on
their investment
TABLE 13
How long are you planning to stay invest in mutual fund?
OPTION NO. OF RESPONDENTS PERCENTAGE
< 1 year 46 23
1 to 3 year 75 37.5
3 to 5 year 50 25
> 5 year 29 15.5
TOTAL 200 100
Interpritation:- from the table 75 respondent are planning to stay invest in
mutual fund for the period of 1-3 year.and only 29 75 respondent are planning
to stay invest in mutual fund for the period of >5 year.
TABLE-14:
RESPONDENTS PREFFERING IDFC AS A
DISTRIBUTOR OF MUTUAL FUNDS
0
10
20
30
40
50
60
70
80
< 1 year 1 to 3 year 3 to 5 year > 5 year
NO. OF RESPONDENTS
NO. OF RESPONDENTS
79. 79
OPTION NO. OF RESPONDENTS PERCENTAGE
IDFC 138 69
OTHERS 62 31
TOTAL 200 100
IDFC AS A DISTRIBUTOR OF
MUTUAL FUNDS
/
160
OF
RESPONDENTS
PERCENTAGE
140
120
NO. OF
100
RESPONDENTS
80
PERCENTAGE
60
40
20
N
O
.
0
IDFC OTHERS
OPTIONS
Interpretation:
According to the survey, 69% of the respondents are aware of idfc as a
distributor of mutual funds & these 69% of the investors would like to invest in idfc
mutual fund option. The rest 31% of the respondents would like to prefer others.
TABLE-15:
TYPE OF FUNDS RESPONDENTS PREFER TO
80. 80
OPTION NO.OF RESPONDENTS PERCENTAGE
DEBT FUND 42 30.5
EQUITY FUND 78 56.5
HYBRID FUND 18 13
TOTAL 138 100
TYPE OF FUNDS RESPONDENTS PREFER TO
/
90
OF
RESPONDENTS
80
PERCENTAGE
70
60 NO. OF
50 RESPONDENTS
40 PERCENTAGE
30
20
N
O
.
10
0
DEBT FUND EQUITY FUND HYBRID
FUND
OPTIONS
Interpretation:
From the survey conducted the respondents prefer Equity funds more in number
they occupy 56.5%, followed by Debt funds with 30.5% and a very few respondents
prefer to hybrid funds with 13%.
TABLE-16:
TYPE OF SCHEME PREFERED BY RESPONDENT IN DEBT FUNDS
81. 81
OPTION NO. OF RESPONDENTS PERCENTAGE
LIQUID FUND 2 5
FLOATE RATE 4 10
GILT FUND 5 12
DYNAMIC BOND FUND 15 35
INCOME PLUS 7 17
BOND INDEX FUND 9 21
TOTAL 42 100
TYPE OF SCHEME PREFERED BY RESPONDENT IN
DEBT FUNDS
5%
LIQUID FUND
21% 10% FLOATE RATE
12% GILT FUND
DYNAMIC BOND FUND
17% INCOME PLUS
35% BOND INDEX FUND
Interpretation:
Based on the survey, it is found that the respondents prefer dynamic bond fund
which occupies 35%, then follows is the bond Index Fund with 21%, thirdly Income Plus
is seen with more percentage with 17, followed by Gilt Fund, Floating Rate Fund, &
Liquid Fund with 12, 10, 5.
82. 82
TABLE-17:
TYPE OF SCHEME PREFERED IN EQUITY FUNDS
OPTION NO. OF RESPONDENTS PERCENTAGE
ADVANTAGE FUND 26 33
MID CAP 6 8
EQUITY PLAN 4 5
MNC FUND 5 6
INDEX FUND 3 4
DIVIDEND YEILD PLUS 32 41
INDIA OPPURTUNITIES FUND 2 3
TOTAL 78 100
TYPE OF SCHEME PREFFERED IN EQUITY
FUNDS ADVANTAGE FUND
MID CAP
3%
EQUITY PLAN
33%
MNC FUND
41%
INDEX FUND
4% 6% 5%
8%
DIVIDEND YEILD PLUS
INDIA OPPURTUNITIES
FUND
Interpretation:
83. 83
Based on the survey, that out of 78 sample size, most of the investors choose
dividend yield plus which occupies 41%, followed by Advantage Fund with 33%, then
MNC fund with 6%, mid cap 8%, Equity plan 5%, India opportunities fund 3%.
TABLE-18:
TYPE OF SCHEME PREFERRED IN HYBRID FUND
OPTION NO. OF RESPONDENTS PERCENTAGE
MIP I 3 16.7
MIP II 4 22.2
BALANCED FUND 11 61.1
TOTAL 18 100
TYPE OF SCHEME PREFERRED IN HYBRID
FUND
/
OF
RESPONDENTS
70
PERCENTAGE
60
50 NO. OF
40 RESPONDENTS
30 PERCENTAGE
20
10
N
O
.
0
MIP I MIP II BALANCED
FUND
OPTIONS
Interpretation:
Based on the survey, it is found that the respondents prefer to choose balanced
fund with 61.1% of sample, followed by MIP I & MIP II schemes in the Hybrid Fund
Type with 22.2% & 16.7%.
84. 84
TABLE 19:
RESPONDENTS PREFFERING OTHER BRANDS OF MUTUAL
FUNDS
OPTION NO.OF RESPONDENTS PERCENTAGE
HDFC 12 19
FRANKLIN TEMPLETON 18 29
HSBC 6 10
KOTAK MAHINDRA 11 18
DSP MERYLLICH 5 8
UTI 10 16
TOTAL 62 100
RESPONDENTS PREFFERING OTHER BRANDS
OF MUTUAL FUNDS
HDFC
FRANKLIN
16% 19% TEMPELTON
8% HSBC
KOTAK
MAHINDRA
18% 29%
10% DSP MERYILCH
UTI
Interpretation:
Based on the survey, it is found that the respondents would definitely prefer other
85. 85
brands of Mutual Funds with Franklin Templeton in the lead with 29%, then HDFC with
18%, UTI in the fourth place with 16%, Kotak Mahindra with 18%, HSBC with 10% &
DSP merllich with 8%.
86. 86
.
TABLE 20:
RESPONDENT RECOMMENDING IDFC MUTUAL FUND AS A
BETTER INVESTMENT OPPURTUNITY
OPTIONS NO. OF RESPONDENTS PERCENTAGE
YES 156 78
NO 44 22
TOTAL 200 100
IS IDFC A BETTER INVESTMENT
/
180
OFRESPONDENTS
160
PERCENTAGE
140
120 NO. OF
100 RESPONDENTS
80 PERCENTAGE
60
40
NO.
20
0
YES NO
OPTIONS
Interpretation:
87. 87
According to the survey the respondents recommending IDFC Mutual Fund as a
better investment opportunity is of 78%. & the respondents who do not recommend idfc
as a better investment opportunity are 22%.
TABLE 21:
Tick & Rate IDFC mutual fund as compare to other mutual fund company. (1=
very good & 5= very bad)
1 2 3 4 5
OPTIONS NO. OF RESPONDENTS PERCENTAGE
1 120 60
2 32 16
3 24 12
4 16 8
5 8 4
TOTAL 200 100
Interpritation:- higher no. of responders are very satisfied and least no of
respondent are says its very bad.
OPTIONS
0
20
40
60
80
100
120
1 2 3 4 5
OPTIONS
NO. OF RESPONDENTS
88. 88
TABLE 22:
Express your Experience to invest in mutual fund.
_____________________________________________________________
______________________
_____________________________________________________________
______________________
89. 89
CHAPTER:-6 HYPOTESIS TESTING
H0: There is no Significant Relationship between Income of Respondent and Preferred Scheme of
Mutual fund. (Null Hypothesis)
H1: There is Significant Relationship between Income of Respondent and Preferred Scheme of
Mutual fund. (Alternate hypothesis)
Case Processing Summary
Cases
Valid Missing Total
N Percent N Percent N Percent
ANNUAL INCOME * TYPE
OF FUNDS RESPONDENTS
PREFER TO
200 100.0% 0 .0% 200 100.0%
ANNUAL INCOME * TYPE OF FUNDS RESPONDENTS PREFER TO Crosstabulation
Count
TYPE OF FUNDS RESPONDENTS PREFER TO
TotalDEBT FUND EQUITY FUND HYBRID FUND
ANNUAL INCOME < 1,00,000 7 12 0 19
1-2 LAKHS 6 23 13 42
2-3 LAKHS 21 33 13 67
ABOVE 3 LAKHS 26 33 13 72
Total 60 101 39 200
Chi-Square Tests
90. 90
Value df
Asymp. Sig. (2-
sided)
Pearson Chi-Square 12.382a
6 .054
Likelihood Ratio 16.382 6 .012
Linear-by-Linear Association .507 1 .476
N of Valid Cases 200
a. 1 cells (8.3%) have expected count less than 5. The minimum
expected count is 3.71.
Interpritation:- Ther is a very strong Evidence of relationship between Income of Investor and
Scheme Preferred by them.
Tabulated value is 0.05 and calculated value is 0.054(>.05)
So don’t Reject H0( null hypothisis)
ANOVA
ANNUAL INCOME
Sum of Squares Df Mean Square F Sig.
Between Groups 2.221 2 1.110 1.167 .314
Within Groups 187.459 197 .952
Total 189.680 199
Interpritation:- Ther is a very strong Evidence of relationship between Income of Investor and
Scheme Preferred by them.
Tabulated value is 0.314 and calculated value is 1.167(>.0314)
So don’t Reject H0( null hypothesis)
91. 91
CHAPTER :-7 SUGGESTION
Company should show its presence in the market by its strong marketing strategies which are as follows
1. Bill boards and hoardings
2. Ads in print and electronic Media
3. Corporate tie-ups
4. Road shows
5. Pamphlets
6. Contests
Company should provide consistent customer service by time
1. submission of application forms in prescribed time
2. proper follow-up
3. transparency in the process
4. Providing every possible information about the product
5. Company can also work service recovery process if any of this kind of problem occurs
Failure in Services delivery
In general, services delivery system failures consist of three types of failures
1. Unavailable service
2. Unreasonable slow services
92. 92
3. Other core service failures
Service recovery is concerned with the process of addressing the failure of the services here question comes how
that can be done or how Mahindra finance has done , for that there should be complain from investors side or it
should reflect in the research done by company
Bell and Zemke has proposed five ingredients for recovery which company can use for its
recovery.
Apology - a first person apology rather than a corporate apology
Urgent reinstatement – speed of action coupled with a gallant attempt to put things right even if it is not
possible to correct the situation
Empathy- a sincere expression of feeling for the customer’s plight
Symbolic atonement- a form of compensation that might include not charging for the service or offering
future service free or discounted
Follow up- an after recovery call to ascertain that the consumer is satisfied with the recovery process
A successful recovery include following four key elements
1. acknowledgement of the problem
2. explanation of the problem
3. apology where appropriate
4. compensation as required
93. 93
CHAPTER :- 8 LIMITATION OF STUDY
LIMITATIONS OF THE STUDY
1) Sometime stock market are not performing well so people are not interested to invest
2) Sometime because of negative sentiments in the market people are not ready to invest for e.g. the
subprime crisis in US affected the stock market in India.
3) Many people have good knowledge of the equity market by themselves so they don’t want to invest in
mutual fund
4) Many are looking for the short term benefits for which sometime mutual fund is not the best option
5) Many people who want to have high risk high return are not suitable for mutual fund
6) Some people are not ready to invest in mutual fund because of the lack of knowledge about the
product
7) Most of the time people are busy in their schedule and so they don’t want to listen to anything on the
telephone calls.
8) In small towns people are not willing to purchase mutual fund because of lack of knowledge they
rather prefer to invest in real state
9) It is also difficult to measure economic factor associated with time constrain
10) Time constrain
CHAPTER :- 9 FINDINGS
Final findings and observations
From the comparison of various mutual fund schemes, it is understand that the equity
diversified scheme is providing a good return for a longer period of investment. But the return is wholly
depending on the market. So the risk is higher compare to any other schemes. On the other hand the Gilt fund is
investing in Government securities, treasury bills, bonds, debentures etc. But in this case the return is low. But risk
94. 94
is very low comparable to an equity diversified scheme. In the ELSS scheme, there is a locking period of 3 years.
Still most of the tax schemes give a good return through dividends also. But the MIP scheme is not giving a good
return. As this scheme is also investing in bonds and debentures, it gives a continuous return to the investors.
CHAPTER :- 10 CONCLUSION
From the comparison of various mutual fund schemes, it is understand that the equity
diversified scheme is providing a good return for a longer period of investment. But the return is wholly
depending on the market. So the risk is higher compare to any other schemes. On the other hand the Gilt fund is
investing in Government securities, treasury bills, bonds, debentures etc. But in this case the return is low. But risk
is very low comparable to an equity diversified scheme. In the ELSS scheme, there is a locking period of 3 years.
Still most of the tax schemes give a good return through dividends also. But the MIP scheme is not giving a good
return. As this scheme is also investing in bonds and debentures, it gives a continuous return to the investors.
So if one has to decide what factors to be considered while giving services, following points to be considered
Ease of availability, value added services Reduction of risk , transaction cost Variety of funds and Cost involved
in the fund because a company should know its core business ,strengths and weakness here company’s core
business is providing value based services to their customer ,which can be the inferred from the research ,
marketing and promotional activities are need of the hour to make full-fledged market presence and target
market specific marketing is required for giving service effectively for example people in software company do
not have enough time to go for research decide upon investment option so company can provide information
and solution online with personalize service secondly if target customer is required some text in local language
we should provide the same.
Company has good chances to be no.1 in mutual fund distribution house provided what services is been
provided by the company , I think company in services sector cannot afford to have unhappy customer because
95. 95
success of services sector company depends on word of mouth publicity of the people and one happy customer
will bring ten more customer and one unhappy customer will stop ten prospective customer , in case if there has
been the cases of service failure, company should take appropriate action while fixing the problem .
CHAPTER :- 11 BIBLIOGRAPHY
BIBILOGRAPHY
Marketing management by “ Philip Kotler ”
Sales Management By Still, Cundiff and Govoni
Business Policy And Strategic Management by Azhar kazmi
Research Methodology by Pannerselvam
Study material at IDFC finance
AMFI Booklet
Broachers of various fund houses
Fund fact sheet of various fund houses
CRISIL report
WEBILOGRAPHY
www.mutualfundsIndia.com
www.moneycontrol.com
www.mahindrafinance.com
www.amfiindia.com
www.valueresearch.com
www.IDFC.com
www.bseindia.com
www.crisil.com