Study of Mutual Fund Investment

A PROJECT REPORT
ON
“STUDY OF MUTUAL FUND INVESTMENT”
SUBMITTED TO
MAAER’S MIT SCHOOL OF BUSINESS
BY
JAYDEEP N. SONGRA
ROLL NO.:- 312514
BATCH NO.:- 31ST BATCH
IN PARTIAL FULFILLMENT OF
POST GRADUATE DIPLOMA IN MANAGEMENT (PGDM)
– FINANCE
2013-15
MAAER’S MIT SCHOOL OF BUSINESS
PUNE

2 | MI T S C H O O L O F B U S I N E S S
Table of Contents
Declaration ............................................................................................................ 4
Certificate form the Company .............................................................................. 5
Certificate form Guide .......................................................................................... 6
Acknowledgement ................................................................................................ 7
Executive summary ............................................................................................... 8
I. Introduction ................................................................................................... 9
1. Company Profile: ................................................................................... 10
2. Objective of the study ............................................................................. 13
3. Limitation of the study ........................................................................... 13
II. Study of Mutual Fund ................................................................................. 14
1. Mutual Fund ........................................................................................... 14
2. History of the Mutual Fund industry in the India .................................. 15
3. Structure of the Mutual Fund ................................................................. 17
4. Scope of the Mutual Fund ...................................................................... 27
5. Types of Mutual Fund ............................................................................ 28
6. Risks involve in Mutual Fund ................................................................ 32
7. Portfolio Management ............................................................................ 33
8. Advantages and disadvantages of the Mutual Fund ............................... 38
9. Net assets value ...................................................................................... 41
10. Concepts of different loads .................................................................... 42
11. Factor are affecting to the Mutual Fund ................................................. 43
12. Role of Security Exchange Board of India ............................................ 43
13. Role of Association Mutual Fund in India ............................................. 44

14. Tax planning and Mutual Fund .............................................................. 45
15. Recent trend of Mutual Fund ................................................................. 45
III. Research Methodology .............................................................................. 48
IV. Data Processing and Analysis ................................................................... 51
V. Management lessons ................................................................................... 57
VI. Findings ..................................................................................................... 61
VII. Recommendation .................................................................................... 62
VIII. Conclusions ............................................................................................ 64

Declaration
I, Mr. JAYDEEP NARSHIBHAI SONGRA Hereby declare that this project report is the record of authentic Work carried out by me during the period from 1st April, 2014 to 31st may, 2014 and has not been submitted to any other University or Institute for the award of any degree / diploma etc.
Signature Jaydeep Songra
Date

Certificate form the Company

Certificate form Guide

Acknowledgement
The last two months with NJ INDIA INVEST PVT.LTD. Has been full of learning and sense of contribution toward the organization. I would like to thank NJ INDIA INVEST for giving me an opportunity of learning and contributing through this project. I would like to thanks all the people who knowingly and unknowingly supported me in my endeavour.
As a student of MIT SCHOOL OF BUSINESS, I would first of all like to express my gratitude to Prof. Kshitija Soman for assigning me such a topic STUDY OF MUTUAL FUND INVESTMENT to work upon in NJ INDIA INVEST PVT.LTD.
During the actual project work, Prof. Kshitija Soman (Project Guide) has been a source of inspiration through her constant guidance; personal interest; encouragement and help. I convey my sincere thanks to her in project. I am also grateful to her for responding Confidence in my abilities end giving me the freedom to work on my project.
The project couldn’t have been completed without timely and vital help of Mr. Ravindra Pansara (branch manager) other office staff. Special thanks to Mr. Kanji Parmar and Mr.Vipul Tivedi for their invaluable guidance, keen interest, co- operation, inspiration and of course moral support through my project session.

Executive summary
The project titled “Study of Mutual Fund Investment” being carried out for NJ INDIA INVESTS PVT. LTD. Today an investor is interested in tracking the value of his investments, whether he invests directly in the market or indirectly through Mutual Funds. This dynamic change has taken place because of a number of reasons. With globalization and the growing competition in the investments opportunity available he would have to make guided and rational decisions on whether he gets an acceptable return on his investments in the funds selected by him, or if he needs to switch to another fund.
So this project is carried to understand the science of portfolio management that Mutual Fund apply in order to trade off with risk and maximize return.
For understand the pattern of investment I filled questionnaire from the transfer agent (financial adviser) of NJ and from the survey I found every Agent has at least 50 clients. They have different portfolio according to their perception, and risk profile investors. Sometimes investors may switches one assets class to another that time adviser play important roll to hold in such assets class because switching the underlying asset class affects returns.
This project is undertaken to help the investors in tracking the performance of their investments in Mutual Funds and has been carried out with the objective of giving performance analysis of Mutual Fund, which gives maximum possible return.
The methodology for carrying out the project was very simple that is through secondary data obtained through various mediums like fact sheet of the funds, the Internet, Business magazines, Newspaper, etc. the analysis of Mutual Funds has been done with respect to its various parameters.

I. Introduction
The financial system of India is based on mainly four components like Financial Market, Financial Institutions, Financial Service, and Financial Instruments. All are very essential for smooth exercise for the exchange of the funds and allocation of the funds. The main motive of the Indian financial system is that providing the efficiently services to the capital market. The Indian capital market has been increasing tremendously during the second generation reforms. The first generation reforms started in 1991 the concept of LPG. (Liberalization, privatization, Globalization)
Then after second generation reforms come into existence in the 1997 and still it’s going on, in this reforms various things are include like fiscal policy, export- import policy, reforms of industrial investment, reforms of public sector, reforms of financial sector, reforms of foreign investment through the institutional investors, reforms banking sectors. Over the last two decades have been huge expansion in the geographical coverage and the financial spread of our financial system.
The banking system is playing major role in promoting financial intermediation of the economy and in the growth of financial saving and progressive liberalisation of economic policies , there has been speedily growth in the capital market , money market and financial services industry including merchant banking, leasing and venture capital, leasing, hire purchasing. For the constant growth of financial sector, it is need for the second generation to fruition of financial sector. It’s also require efficient service to the investor mostly for the small investor (minimum ₹ 1000 each month in some scheme ) in that point of view the Mutual Fund play vital for better service to the small investors.

1. Company Profile:
An evolving, emerging & enterprising group with its roots in the financial services sector and today expanding into newer horizons with great passion.
The vision of the group is to be pioneers in organizations determined by client fulfilment, responsibility to excellence and passion for proceeded with value creation for all stakeholders. This vision has helped us develop and construct the trust of our clients and associate which is at the foundation of all that we do. Trust is additionally at the heart of our prosperity and the driver for passion for our success.
NJ Group is a leading player in the Indian financial service industry known for its strong distribution abilities. The journey of NJ started in 1994 with the establishment of NJ India Invest Pvt. Ltd., the leader organization, to cater to investors’ needs in the financial service industry. Today, the NJ Wealth Distributor Network, prior known as the NJ Fundz Network, began in 2003 is among the biggest network of financial products distributor in India.
Throughout the years, NJ Group has diversified into different businesses and today has the presence in businesses ranging from financial products distributor network, asset management, real-estate, insurance broking, training and development and innovation. Our rich experience in financial service, consolidated with executional abilities and solid methodology & framework orientation, has empowered us to shape a climbing development trajectory in our businesses.
NJ Group is based out of Surat in Gujarat (India) and has vicinity in 97* areas in India and has in excess of 1,100+* representatives.

1. Vision and Mission of the company
 Vision:
To be the leader in our field of business through,
 Total Customer Satisfaction
 Commitment to Excellence
 Determination to Succeed with strict adherence to compliance
 Successful Wealth Creation of our Customers
 Mission:
Ensure creation of the desired value for our customers, employees and associates, through constant improvement, innovation and commitment to service & quality. To provide solutions which meet expectations and maintain high professional & ethical standards along with the adherence to the service commitments
 Services Philosophy:
Our primary measure of success is customer satisfaction …
We are committed to provide our customers with continuous, long-term improvements and value-additions to meet the needs in an exceptional way. In our efforts to consistently deliver the best service possible to our customers, all employees of NJ will make every effort to:
 Think of the customer first, take responsibility, and make prompt service to the customer a priority.
 deliver upon the commitments & promises made on time

 Anticipate, visualize, understand, meet, exceed our customer’s needs.
 Bring energy, passion & excellence in everything we do
 be honest and ethical, in action & attitude, and keep the customer’s interest supreme
 strengthen customer relationships by providing service in a thoughtful & proactive manner and meet the expectations, effectively
 Investing Philosophy:
We aim to provide Need-based solutions for long-term wealth creation
We aim to provide all customers of NJ, directly or indirectly, with true, unbiased, need-based solutions and advice that best meets their stated & un-stated needs. In our efforts to provide quality financial & investment advice, we believe that …
 Clients want need-based solutions, which fits them
 Long-term wealth creation is simple and straight
 Asset-Allocation is the ideal & the best way for long-term wealth creation
 Educating and disclosing all the important facets which the customer needs to be aware of, is important
 The solutions must be unbiased, feasible, practical, executable, measurable and flexible
 Constant monitoring and proper after-sales service is critical to complete the on-going process
At NJ our aim is to earn the trust and respect of the employees, customers, partners, regulators, industry members and the community at large by following our service and investing philosophy with commitment and without exceptions.

2. Objective of the study
 To study the Mutual Fund industry.
 To learn about the Mutual Fund investment patterns of investors.
 To understand the role of financial (Mutual Fund) adviser in managing their portfolio.
3. Limitation of the study
Every work has its own limitation. Limitations are extent to which the process should not exceed. Limitations of this project are:-
 Duration of project was not enough to make a conclusion on such a vast subject time. Constraint has become a big limitation.
 The analysis is based on historical data and thus indicates the past performance, which may not always be indicative of the future performance.
 Different schemes consider different market indices as their benchmarks, but for purpose of uniformity in the study all schemes have to be compared against same benchmark index.
 Weekly NAV‟S have been considered for the study. Daily NAV‟s would have given more precise result for the study.

II. Study of Mutual Fund
In a Mutual Fund, many investors contribute to form a common pool of money. This pool of money is invested in accordance with an objective. The ownership of the fund is thus joint of “mutual”; the fund belongs to all investors. A single investor’s ownership of the fund is in the same proportion as the amount of the contribution made by him bears to the total amount of the fund.
A Mutual Fund uses the money collected from investors to buy those assets which are specifically permitted by its stated investment objective. Thus, a growth fund would buy mainly equity assets – ordinary shares, preference, warrants, etc. An income fund would mainly buy debt instruments such as debentures and bonds. The fund’s assets are owned of the fund. Only then would he be in a position to judge correctly whether his fund is performing well or not, and make the right decision.
1. Mutual Fund
Mutual Funds are a vehicle for retail and institutional investors to benefit from the capital markets. They offer different kinds of schemes to cater to various types of investors, retail, companies and institutions. Mutual Fund schemes are offered to investors for the first time through a New Fund Offering (NFO). Thereafter, close-ended schemes stop receiving money from investors, though these can be bought on the stock exchange(s) where they are listed. Open-ended schemes sell and re-purchase their units on an ongoing basis.
In the Mutual Fund industry KYC (know your client) process is centralized. Therefore, investor have to complete formalities only for the one time with designated service provider. The purpose of the Mutual Funds is small investor as well as common people also can invest, therefore feature of the Mutual Fund scheme is very low minimum investment amount. The expense ratio (which is not more than 2.5% in many schemes, specially liquid and index funds and goes

below 0.05% in some schemes)being low also helps in making Mutual Funds a good instrument for building wealth over the long term.
Mutual Funds are regulated by SEBI (Securities & Exchange Board of India) under the applicable regulation is the SEBI (Mutual Fund) regulations, 1996. Under this regulation, the Board of Trustees play vital role for the protecting of interest of the investors in the Mutual Fund schemes. And another protective keep on checking in the Mutual Fund system, while the asset management company cater the investment management activities, investor records mainly maintained registrar and transfer agent (RTA’s), who approaches their services to the multiple Mutual Funds in the some cases.
2. History of the Mutual Fund industry in the India
The Mutual Fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank of India. The history of Mutual Funds in India can be broadly divided into four distinct phases
1. First Phase - 1964-1987
Unit Trust of India (UTI) was established in 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs. 6,700 crores of assets under management.
2. Second Phase - 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non-UTI, public sector Mutual Funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General

Insurance Corporation of India (GIC). SBI Mutual Fund was the first non-UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its Mutual Fund in June 1989 while GIC had set up its Mutual Fund in December 1990.
At the end of 1993, the Mutual Fund industry had assets under management of Rs. 47,004 crores.
3. Third Phase - 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian Mutual Fund industry, giving the Indian investors a wider choice of fund families. 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.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.
The number of Mutual Fund houses went on increasing, with many foreign Mutual Funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 Mutual Funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs. 44,541 crores of assets under management was way ahead of other Mutual Funds.

4. Fourth Phase - Since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. 29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs. 76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the Mutual Fund industry has entered its current phase of consolidation and growth.
3. Structure of the Mutual Fund
The Mutual Funds in India are regulated by SEBI MF Regulations, 1996. Under the regulations Mutual Fund is formed as a Public Trust under the Indian Trusts Act, 1882. These regulations stipulate a three tiered structure of entities – sponsor (creation), trustees, and Asset Management Company (fund management) – for carrying out different functions of a Mutual Fund, but place the primary responsibility on the trustees.
A typical Mutual Fund structure in India can be graphically represent as follow:

1. SEBI MF Regulations 1996
Securities and Exchange Board of India (SEBI) was formed in 1992 and was given the regulatory responsibility of Capital markets and Mutual Funds. SEBI formed Mutual Funds regulations in 1993 which were later replaced by new regulations in 1996. SEBI guidelines provide for the trustees to maintain an arm’s length relationship with the AMCs and do all those things that would secure the right of investors.
Important steps taken by SEBI for the regulation of Mutual Funds:

1. Formation
Certain structural changes have also been made in the Mutual Fund industry, as part of which Mutual Funds are required to set up asset management companies with fifty percent independent directors, separate board of trustee companies, consisting of a minimum fifty percent of independent trustees and to appoint independent custodians
2. Registration
In January 1993, SEBI prescribed registration of Mutual Funds taking into account track record of a sponsor, integrity in business transactions and financial soundness while granting permission.
3. Document
The offer documents of schemes launched by Mutual Funds and the scheme particulars are required to be vetted by SEBI. A standard format for Mutual Fund prospectuses is being formulated.
4. Code of advertisement
Mutual Funds have been required to adhere to a code of advertisement. That’s way we see the sentence “ Mutual Funds are subject to market risk please read all document carefully before investing” in any Mutual Fund’s advertisement.
5. Assurance on returns
SEBI has introduced a change in the Securities Control and Regulations Act governing the Mutual Funds. Now the Mutual Funds were prevented from giving any assurance on the land of returns they would be providing. However, under pressure from the Mutual Funds, SEBI revised the guidelines allowing assurances on return subject to certain conditions.

6. Minimum corpus
The current SEBI guidelines on Mutual Funds prescribe a minimum start- up corpus of Rs.50 crore for an open-ended scheme, and Rs.20 crore corpus for closed-ended scheme, failing which application money has to be refunded. In fact, the Association of Mutual Funds in India (AMFI) has repeatedly appealed to the regulatory authorities for scrapping the minimum corpus requirements.
7. Institutionalisation
The efforts of SEBI have, in the last few years, been to institutionalise the market by introducing proportionate allotment and increasing the minimum deposit amount to Rs.5000 etc. These efforts are to channel the investment of individual investors into the Mutual Funds.
8. Investment of funds mobilised
In November 1992, SEBI increased the time limit from six months to nine months within which the Mutual Funds have to invest resources raised from the latest tax saving schemes. The guideline was issued to protect the Mutual Funds from the disadvantage of investing funds in the bullish market at very high prices and suffering from poor NAV thereafter.
9. Investment in money market
SEBI guidelines say that Mutual Funds can invest a maximum of 25 per cent of resources mobilised into money-market instruments in the first six months after closing the funds and a maximum of 15 per cent of the corpus after six months to meet short term liquidity requirements.
10. Valuation of investment
The transparent and well understood declaration or Net Asset Values (NAVs) of Mutual Fund schemes is an important issue in providing investors with information as to the performance of the fund. SEBI has warned some Mutual Funds earlier of unhealthy market.

11. Inspection
SEBI inspect Mutual Funds every year. A full SEBI inspection of all the 27 Mutual Funds was proposed to be done by the March 1996 to streamline their operations and protect the investor’s interests. Mutual Funds are monitored and inspected by SEBI to ensure compliance with the regulations.
12. Underwriting
In July 1994, SEBI permitted Mutual Funds to take up underwriting of primary issues as a part of their investment activity. This step may assist the Mutual Funds in diversifying their business.
13. Conduct
In September 1994, it was clarified by SEBI that Mutual Funds shall not offer buy back schemes or assured returns to corporate investors. The Regulations governing Mutual Funds and Portfolio Managers ensure transparency in their functioning.
14. Voting right
In September 1993, Mutual Funds were allowed to exercise their voting rights. Department of Company Affairs has reportedly granted Mutual Funds the right to vote as full-fledged shareholders in companies where they have equity investments.
2. Trustee
The trust is created through a document called the trust deed which is executed by the fund sponsor in favour of the trustees. Trustees manage the trust and are responsible to the investors in the Mutual Funds. They are the primary guardians of the unit-holders funds and assets. Trustees can be formed in either of the following two ways -Board of Trustees, or a Trustee Company. The provisions of Indian Trust Act, 1882, govern board of trustees or the Trustee Company. A trustee company is also subject to provisions of Companies Act, 1956.

1. Obligation of Trustees
 To ensure that the activities of the Mutual Fund are accordance with SEBI (MF) regulation, 1996.
 To check that the AMC has proper systems and procedures in place.
 To make sure that all the other fund constituents are appointed and that proper due diligence is exercised by the AMC in the appointment of constituents and business associates.
 All schemes floated by the AMC have to be approved by the trustees.
 To review and ensure that the net worth of the AMC is as per the regulatory norms.
 To require to furnish to SEBI, on a half-yearly basis, a report on the activities of AMC.
2. Regulation regarding appointment of Trustees
Sponsor with prior approval of SEBI appoints trustees. There should be at least four members in the board of trustees with at least 2/3rd independent. A trustee of one Mutual Fund cannot be trustee of another Mutual Fund, unless he is an independent trustee in both cases and has the approval of both the boards. The trustees are appointed by executing and registering a trust deed under the provisions of Indian registration Act. This trust deed is also registered with SEBI.
3. Responsibilities of Trustees
The Trustees are required to fulfil several duties and obligations in accordance with SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed constituting the Mutual Fund. These include
 The Trustee and the Asset Management Company enter into an Investment Management Agreement (IMA) with the approval from SEBI.

 The Investment Management Agreement shall contain such clauses as are mentioned in the Fourth Schedule of the SEBI (MFs) Regulations, 1996 and other such clauses as are necessary for making investments.
 The Trustees shall have a right to obtain from the Asset Management Company such information as is considered necessary by the Trustees.
 The Trustee shall ensure before the launch of any scheme that the Asset Management Company possesses/has done the following:
(a.) Systems in place for its back office, dealing room and accounting; (b.) Appointed all key personnel including fund manager(s) for the Scheme(s) and submitted their bio-data which shall contain the educational qualifications, past experience in the securities market to SEBI, within 15 days of their appointment;
(c.) Appointed Auditors to audit its accounts;
(d.) Appointed a Compliance Officer to comply with regulatory requirement and to redress investor grievances;
(e.) Appointed Registrars and laid down parameters for their supervision;
(f.) Prepared a compliance manual and designed internal control mechanisms including internal audit systems; and g. Specified norms for empanelment of brokers and marketing agents
3. Assets Management Company
The Asset Management Company (AMC) is the investment Manager of the Trust. The sponsor, or the trustees is so authorized by the trust deed, appoints the AMC as the “Investment Manager” of the trust (Mutual Fund) via an agreement called as ‘Investment Management Agreement’. An asset management company is a company registered under the Companies Act, 1956. Sponsor creates the asset management company and this is the entity, which manages the funds of the Mutual Fund (trust). The Mutual Fund pays a small fee to the AMC for

management of its fund. The AMC acts under the supervision of Trustees and is subject to the regulations of SEBI too.
 Role of AMC :
The AMC is an operational arm of the Mutual Fund .AMC is responsible for all carrying out all functions related to management of the assets of the trust. The AMC structures various schemes, launches the scheme and mobilizes initial amount, manages the funds and give services to the investors .In fact, AMC is the first major constituent appointed .Later on AMC solicits the services of other constituents like Registrar, Bankers, Brokers, Auditors, Lawyers etc. and works in close co-ordination with them.
 Restrictions on business activities of the Asset Management Company:
In India, regulator has ensured that an AMC focuses just on its core business and that the activities of AMC’s are not in conflict of each other. These are ensured through the following restrictions on the business activities of an AMC.
 An AMC shall not undertake any business activity except in the nature of portfolio management services, management and advisory services to offshore funds etc., provided these activities are not in conflict with the activities of the Mutual Fund.
 An AMC cannot invest in any of its own schemes unless full disclosure of its intention to invest has been made in the offer document.
 An AMC shall not act as a trustee of any Mutual Fund.
 The Chairman of the AMC is not a trustee of any Mutual Fund

4. Custodian and Depository
The fund management includes buying and selling of securities in large volumes. Therefore, keeping a track of such transactions is a specialist function. The custodian is appointed by trustees for safekeeping of physical securities while dematerialised securities holdings are held in a depository through a depository participant. The custodian and depositories work under the instructions of the AMC, although under the overall direction of trustees.
The most important asset of any Mutual Fund is its portfolio (cash and investments). It is very important to ensure safety of the cash and investments. This responsibility of safe keeping the securities lies with the custodian. Securities, which are in material form, are kept in safe custody of a custodian and securities, which are in “De- Materialized” form, are kept with a Depository participant, who acts on the advice of custodian.
Custodian performs a very important back office operation. They ensure that delivery has been taken of the securities, which are bought, and that they are transferred in the name of the Mutual Fund. They also ensure that funds are paid out when securities are bought. They keep the investment account of the Mutual Fund. They collect and account for the dividends and interest receivables on Mutual Fund investments. They also keep track of various corporate actions like
CUSTODIAN AND DEPOSITORY

bonus issue, rights issue, and stock split; buy back offers, open offer etc. and act on these as per instructions of the Investment manager.
The Custodian normally charge portfolio fee, transaction fee and out-of –pocket expenses in accordance with the terms of the Custody Agreement and as per any modification made thereof from time to time.
5. Registrar and Transfer Agents
The registrar and transfer agents are appointed by AMC. And AMC pay commission to these agent for their service. They are carry out following functions.
 Receiving and processing the application forms of investors.
 Issuing unit certificates.
 Sending refund orders.
 Giving approval for all transfer of units and maintaining records.
 Repurchasing the units and redemption of units.
 Issuing dividend or income warrants.
REGISTRAR AND TRANSFER AGENTS

6. Schemes
Under the Mutual Fund Regulations, a Mutual Fund is allowed to float different schemes. Each scheme has to be approved by the trustees and the offer document is required to be filed with the SEBI. The offer document should contain disclosures which are adequate enough to enable the investors to make informed investment decision, including the disclosure on maximum investments proposed to be made by the scheme in the listed securities of the group companies of the sponsor. If the SEBI does not comment on the contents of the offering documents within 21 days from the date of filing, the AMC would be free to issue the offer documents to public.
4. Scope of the Mutual Fund
Scope of Mutual Funds has grown enormously over the years. In the first age of Mutual Funds, when the investment management companies started to offer Mutual Funds, choices were few. Even though people invested their money in Mutual Funds as these funds offered them diversified investment option for the first time. By investing in these funds they were able to diversify their investment in common stocks, preferred stocks, bonds and other financial securities. At the same time they also enjoyed the advantage of liquidity. With Mutual Funds, they got the scope of easy access to their invested funds on requirement.
But, in today’s world, Scope of Mutual Funds has become so wide, that people sometimes take long time to decide the Mutual Fund type, they are going to invest in. Several Investment Management Companies have emerged over the years who offer various types of Mutual Funds, each type carrying unique characteristics and different beneficial features.
To understand the broad scope of Mutual Funds we need to discuss the main types of Mutual Funds that are normally offered by the Mutual Companies.

5. Types of Mutual Fund
1. By Constitution
1. Open Ended
This scheme is freely allows investor to buy or sell units at any point of time and there will not be any maturity time for the scheme. Such investment schemes are open to subscription at any time of the year and come with no maturity date. Units can be purchased daily based on the NAV (Net Asset Value) determined by the fund houses. Investors can exit from such a scheme anytime by redeeming the Mutual Fund units based on the NAV and exit conditions, upon which the redeemed amount is paid to the investor. In open ended schemes, the money is invested in stock market, securities etc. based on the investment objectives.
2. Closed Ended

Since such investment schemes come with maturity date, they are not open to subscription anytime. Close ended schemes are of two types:
a) Fixed Maturity Plans – Fixed Maturity Plans or FMPs are Mutual Fund schemes that come with a fixed maturity date and cannot be redeemed within that period. Alternatively, the units can be sold to a buyer in stock exchange. b) Capital Protection Plans – As the name suggests, the sole purpose of such Mutual Funds is to offer capital protection. Being low risk plans, they offer lower returns.
2. By an Investment Objective
A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows:
1. Equity Funds
The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The Mutual Funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

2. Diversified Funds
An investment fund that contains a wide array of securities to reduce the amount of risk in the fund. Actively maintaining diversification prevents events that affect one sector from affecting an entire portfolio, make large losses less likely.
 Tax Saving Funds
Tax Saving Funds in India are also known as equity-linked savings schemes. Tax Saving Funds in India provide tax rebates under Section 88 of the Income Tax Act. They are beneficial for those investors who want to benefit from the rebates that are given in taxes.
Tax Saving Funds in India are suitable for those investors who want to increase their investments and also want to benefit from the rebates in taxes. The advantage of Tax Saving Funds in India is that they grant the investors an opportunity to make investments in an avenue that is market- linked and at the same time claim benefits in taxes.
 Index Finds
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in the securities in the same weightage comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the Mutual Fund scheme. There are also exchange traded index funds launched by the Mutual Funds which are traded on the stock exchanges.

 Sectorial Fund
Mutual Funds which invest in a particular sector or industry are said to be sector-specific funds. Since the portfolio of such Mutual Funds consists mainly of investment in one particular type of sector, like real estate, service sector, automobile, steel sector etc., they offer less amount of diversification and are considered to be risky.
3. Debt Funds
The aim of debt funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice- versa. However, long term investors may not bother about these fluctuations.
4. Balance/Hybrid Funds
The aim of balanced funds is to provide both growth and regular income funds because such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds
5. Money Market Funds
These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates

of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods.
6. Gilt funds
These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes.
6. Risks involve in Mutual Fund
Some of the risks that are associated with the Mutual Funds are listed below.
1. Call risk – this is one of the types of the risks that is involved with the Mutual Funds. When the rate of interest falls the person who has issued bonds will redeem or otherwise known as go for the call option. The issuer has the right to redeem it before the maturity rate. So when the interest rate is low they will redeem at the best value.
2. Country risk – this is another risk which rises because of the political events like war or change in the government leading to change in policies,, natural disasters like earthquake or floods or financial issue like issues due to inflation. All these will definitely reduce the investments as well as the value of the investments.
3. Credit Risk – there is small possibility that the person who has issued the bond might not return the interest or the capital as well.
4. Currency Risk – there can be fluctuations in the market because of the fluctuations in the currency.
5. Income Risk – when there is a fall in the interest rate there are chances the dividend income from the fixed income funds may reduce.

6. Industry risk – when there is a development in the industry there are chances that the value of the stock that is associated with that industry will reduce.
7. Inflation risk – when the cost of living increases then the funds that have returns after the inflation adjustment is done will face a lot of risks.
8. Interest rate risk – when the rate of interest increases then the value of the bond will reduce. This again is a risk which is associated with the funds.
9. Manager Risk – there are some chances that the person who is managing the funds might not invest it wisely. This is a very big risk so choosing an advisor has to be done carefully.
10. Principal risk – there are remote chances that of losing the principal.
7. Portfolio Management
You open up a newspaper, you get to know ICICI Prudential Focused Blue-chip is a good Mutual Fund. After a few hours, you switch on your television, you find HDFC Top 200 is a good fund and there is a big list of other Mutual Funds which you are unable to recognize and remind. But how many Mutual Funds should you have in your portfolio and what type of Mutual Funds should you have. This is a not a single word answer. Rather the asset allocation strategies should depend upon various factors and depends upon the risk profile of the investor. According to the risk profile of an investor one can categorize an investor into 3 types:
1. Asset allocation strategy for Aggressive Risk Investor
An investor with an aggressive approach to investing is comfortable accepting high volatility in their capital value, with the risk of short to medium-term periods of negative returns. They are generally willing to trade higher risk for greater long-term returns and typically will be having a longer investment horizon. The investment portfolio will consist of a larger proportion of shares and with little

fixed interest or defensive assets exposure. It is typically suited to an investor seeking long-term capital appreciation and who is comfortable with short term fluctuations in his capital value. A typical investment portfolio will contain 5 % in income funds, 5 % in liquid funds, 15 % in gold Mutual Funds and 75% in equity Mutual Funds
Logic: The logic behind this asset allocation is to generate an average return in the range of 15 % to 18% over an investment horizon of 5 to 10 years. For generating this type of return higher risk and ability to digest losses is required and in reality very few investors have the courage to sail through losses
2. Asset allocation model for Moderate Risk Investor
An investor with a moderate approach to investing is usually seeking a diversified investment portfolio with exposure to a broad range of investment sectors. Investments will include a diversified mix of balanced, equity, debt, gold and MIP funds.
Investors need to accept some short-term fluctuations in their capital value in return for higher returns which are anticipated to be higher than a conservative investor. A moderate portfolio is typically suited to an investor who either seeks to diversify risk with reasonable returns or who has a medium-term investment horizon (minimum of 3 to 5 years). A typical investment portfolio for a moderate investor will contain 20% in income funds, 5 % in liquid funds 10% in gold Mutual Funds and 65% in equity Mutual Funds
Logic: The logic behind this asset allocation strategy is to generate an average return in the range of 11 % to 13% p.a. over an investment horizon of 3 to 5 years

3. Investment portfolio strategy for Conservative Risk Investor
An investor with a conservative approach to investing is generally seeking to preserve capital and is usually prepared to accept lower investment returns. The main emphasis is on defensive assets because he cannot tolerate any erosion of capital. A conservative portfolio is typically suited to an investor who prefers reliable consistent returns or who has a short-term investment horizon. People who are in the retirement phase would generally be looking to invest in income Mutual Funds which invest primarily in the debt market. There should be a limited exposure to equity Mutual Funds since equity Mutual Funds returns are subject to stock market risks and volatility. A typical investment portfolio or asset allocation model for a conservative investor will contain 75 % in income funds/debt funds/fixed deposits, 10% in liquid funds, 5 % in gold Mutual Funds and in 10% in equity Mutual Funds. It is not necessary that only senior citizens prefer such an asset allocation. Youngsters who don’t wish to take risk also prefer such an asset allocation.
Logic: The logic behind this strategic asset allocation is to generate an average return in the range of 9 % to 10% P.A. over an investment horizon of 1 to 3 years.
4. How many Mutual Funds should you have in your portfolio
On an average an investor should be contented with around 8 Mutual Fund schemes in his portfolio
These 10 schemes can be selected from the various earlier discussed categories of Income, Liquid, Gold, and Equity
In equity the client can choose a combination of large cap and midcap funds
Increasing the number of schemes does not solve any purpose beyond this limit and it becomes difficult to manage the Mutual Fund portfolio

I have seen several clients having portfolio’s containing 30 to 50 schemes. Managing and keeping a watch over the schemes becomes difficult for the client as well as the Investment Advisor. As long as a client is invested in the consistent best performing schemes across different categories the objective is served. An investor may not get the best returns in the Mutual Fund schemes wherein he is invested, since the scheme’s rank shall keep on fluctuating across different time frames calculated on a weekly, monthly, quarterly, six monthly, half yearly, yearly basis etc.
What’s important is that the chosen scheme continues to be an above average performer in the particular Mutual Fund category.
Hence a client should not be running behind the top performing schemes in each category since the rank is momentary. What’s important is the consistency of average performance by the scheme. Some of the best performing Mutual Funds can be:
5. Performance of Schemes

Review of your Mutual Fund portfolio: A monthly or a quarterly portfolio review meeting with your Investment Advisor is essential to ensure that the chosen schemes in your Mutual Fund portfolio are delivering good returns in the chosen category.
I recommend aggressive category investors to review their Mutual Fund portfolio every month whereas conservative category investors would be fine with a quarterly portfolio review.
A review ensures that you stay invested in the best performing Mutual Fund schemes at all given times throughout the year

8. Advantages and disadvantages of the Mutual Fund
 Advantages of the Mutual Fund
Mutual Funds are designed for the provide maximum benefits to the investors, and in order to achieve objective of the Mutual Fund scheme fund manager have research team , their work to keep on checking update and invest accordingly. Asset Management Company has various type of industrial funds, which need to clear planning for the strategic investment and to achieve targeted market return. And following are the advantages of the Mutual Fund
1. Portfolio Diversification
The main advantage of the Mutual Fund is diversification of the portfolio, Mutual Funds investment diversified in the various securities
2. Choice of Schemes
Mutual Funds investment gives lots of schemes to investor with various type of objective of investment. And investor can correlate their financial goal and investment objective with the scheme. Further investor can set their map for the financial goal, that’s where he actually want to go.
3. Transparency
Funds provide to the investor update information about the market and scheme and all material facts are shows to investor as needed by the regulator. Therefore Mutual Funds facilitates transparency to the investor.
4. Liquidity
An investor may not be able to trade some shares held by him very easily and speedily but Mutual Fund are more liquid. Investor can buy or sell share easily and quickly.
5. Low Transaction Costs
In Mutual Funds investment due to economies of scale.it pay lesser transaction costs. And these benefits are distributed in investors.

6. Less Risk
Investors purchase diversified portfolio of securities and even also in small investment in the Mutual Fund.
7. Flexibility
As per the convenience of investor, he can switch their scheme from to another scheme easily at any point of time.
8. Safety
A lessened portfolio danger is accomplished through the utilization of expansion, as most Mutual Fund will invest into anyplace from 50 to 200 separate securities - relying upon their focus. A few record stock Mutual Fund possess 1,000 or more individual stock positions.
9. Dividend reinvestment
As profits and other premium salary is proclaimed for the trust, it might be utilized to buy extra share in the Mutual Fund, consequently helping your speculation develop.
10. Portfolio management
You pay an administration expense as a major aspect of your cost proportion, which is utilized to contract an expert portfolio chief who purchases and offers stocks, bonds, and so forth. This is a moderately little cost to pay for help in the administration of a venture portfolio.
 Disadvantages of Mutual Funds
1. High Expense Ratios and Sales Charges
In case you're not giving careful consideration to Mutual Fund cost degrees and deals charges, they can escape hand. Be extremely wary when putting resources into funds with cost degrees higher than 1.20%, as they will be considered on the higher expense end. Be tired of 12b-1 publicizing charges

and deals charges as a rule. There are a few great fund organizations out there that have no deals charges. Charges diminish general financing returns.
2. Management Abuses
Beating, turnover and window dressing may happen if your director is mishandling his or her power. This incorporates unnecessary exchanging, extreme substitution and offering the failures preceding quarter-end to alter the books.
3. Charge Inefficiency
Like it or not, investor don't have a decision regarding capital addition pay- outs in Mutual Funds. Because of the turnover, redemption, gain and losses in security property all through the year, investor commonly accept circulations from the fund that are a wild assessment occasion.
4. Poor Trade Execution
In the event that you put your Mutual Fund exchange at whatever time before the cut-off time for same-day NAV, you'll get the same shutting cost NAV for your purchase or offer on the Mutual Fund. For investors searching for speedier execution times, possibly as a result of short financing skylines, day exchanging, or timing the market, Mutual Funds give a weak execution methodology.

9. Net assets value
Net Asset Value, or NAV, is the sum total of the market value of all the shares held in the portfolio including cash, less the liabilities, divided by the total number of units outstanding. Thus, NAV of a Mutual Fund unit is nothing but the 'book value.
NAV vs Price of an equity share
In case of companies, the price of its share is 'as quoted on the stock exchange,' which apart from the fundamentals, is also dependent on the perception of the company's future performance and the demand-supply scenario. And hence the market price is generally different from its book value.
There is no concept as market value for the MF unit. Therefore, when we buy MF units at NAV, we are buying at book value. And since we are buying at book value, we are paying the right price of the assets whether it be Rs 10 or Rs.100. There is no such thing as a higher or lower price.
NAV and its impact on the returns
We feel that a MF with lower NAV will give better returns. This again is due to the wrong perception about NAV. An example will make it clear that returns are independent of the NAV.
Say, you have ₹ 10,000 to invest. You have two options, wherein the funds are same as far as the portfolio is concerned. But say one Fund X has an NAV of ₹ 10 and another Fund Y has NAV of ₹ 50. You will get 1000 units of Fund X or 200 units of Fund Y.
After one year, both funds would have grown equally as their portfolio is same, say by 25%. Then NAV after one year would be ₹ 12.50 for Fund X and ₹ 62.50

for Fund Y. The value of your investment would be 1000*12.50 = ₹ 12,500 for Fund X and 200*62.5 = ₹ 12,500 for Fund Y. Thus your returns would be same irrespective of the NAV.
It is quality of fund, which would make a difference to your returns. In fact for equity shares also broadly this logic would apply.
An IT company share at, say, ₹ 1,000 may give a better return than say a jute company share at ₹ 50, since IT sector would show a much higher growth rate than jute industry (of course ₹ 1000 may 'fundamentally' be over or under priced, which will not be the case with MF NAV).
Misconception about NAV
This situation arises from the perception that a fund at ₹ 10 is cheaper than say ₹ 15 or ₹ 100. However, this perception is totally wrong and investors would be much better off once they appreciate this fact.
Two funds with same portfolio are same, no matter what their NAV is. NAV is immaterial.
Why people carry this perception is because they assume that the NAV of a MF is similar to the market price of an equity share. This, however, is not true. That would be more specify by NAV’s formula. 푁퐴푉= (퐴푠푠푒푡푠 푣푎푙푢푒 표푓 푓푢푛푑−퐿푖푎푏푖푙푖푡푖푒푠 표푓 푓푢푛푑) 푛푢푚푏푒푟 표푓 표푢푡푠푡푎푛푖푛푔 푢푛푖푡푠 표푓 푡ℎ푒 푓푢푛푑
10. Concepts of different loads
Entry Load
The load charged at the time of investment that load called as Entry Load. It’s mean to cover cost that Assets Management Company spends in processing acquiring subscriber’s commission payable to brokers for the different cost like advertisements, register fees etc. This charge will recover by selling NAV at higher price.

Exit Load
Some company may not charge entry load but all company charge exit load it might be around 1 % on redemption.
11. Factor are affecting to the Mutual Fund
Mutual Fund performance can be affected by many different factors, including the individual investments that are chosen by the Mutual Fund manager. The asset allocation of the fund also plays a big role in Mutual Fund performance. While it is generally not quoted as part of the performance, the fees that are charged by the Mutual Fund Company also can affect the true performance of the fund.
12. Role of Security Exchange Board of India
An index fund scheme’ means a Mutual Fund scheme that invests in securities in the same proportion as an index of securities;” A Mutual Fund may lend and borrow securities in accordance with the framework relating to short selling and securities lending and borrowing specified by the Board. “A Mutual Fund may enter into short selling transactions on a recognized stock exchange, subject to the framework relating to short selling and securities lending and borrowing specified by the Board.” “Provided that in case of an index 13
Fund scheme, the investment and advisory fees shall not exceed three fourths of one percent (0.75%) of the weekly average net assets. “

“Provided further that in case of an index fund scheme, the total expenses of the scheme including the investment and advisory fees shall not exceed one and one half percent (1.5%) of the weekly average net assets.” Every Mutual Fund shall buy and sell securities on the basis of deliveries and shall in all cases of purchases, take delivery of relevant securities and in all cases of sale, deliver the securities: Provided that a Mutual Fund may engage in short selling of securities in accordance with the framework relating to short selling and securities lending and borrowing specified by the Board: Provided further that a Mutual Fund may enter into derivatives transactions in a recognized stock exchange, subject to the framework specified by the Board.”
13. Role of Association Mutual Fund in India
The Association of Mutual Funds in India (AMFI) is dedicated to developing the Indian Mutual Fund Industry on professional, healthy and ethical lines and to enhance and maintain standards in all areas with a view to protecting and promoting the interests of Mutual Funds and their unit holders.
AMFI working group on Best Practices for sales and marketing of Mutual Funds under the Chairmanship of Shri B. G. Daga, Former Executive Director of Unit Trust of India with Shri Vivek Reddy of Pioneer ITI, Shri Alok Vajpeyi of DSP Merrill Lynch, Shri Nikhil Khattau of Sun F & C and Shri Chandrasekhar Sathe, Formerly of Kotak Mahindra Mutual Fund has suggested formulation of guidelines and code of conduct for intermediaries and this work has been ably done by a sub-group consisting of Shri B. G. Daga and Shri Vivek Reddy.

14. Tax planning and Mutual Fund
Investors in India opt for the tax-saving Mutual Fund schemes for the simple reason that it helps them to save money. The tax-saving Mutual Funds or the equity-linked savings schemes (ELSS) receive certain tax exemptions under Section 88 of the Income Tax Act. That is one of the reasons why the investors in India add the tax-saving Mutual Fund schemes to their portfolio. The tax- saving Mutual Fund schemes are one of the important types of Mutual Funds in India that investors can option for. There are several companies in India that offer – tax – saving Mutual Fund schemes in the country.
15. Recent trend of Mutual Fund
India is at the first stage of a revolution that has already peaked in the U.S. The U.S. boasts of an Asset base that is much higher than its bank deposits. In India, Mutual Fund assets are not even 10% of the bank deposits, but this trend is beginning to change. Recent figures indicate that in the first quarter of the current fiscal year Mutual Fund assets went up by 115% whereas bank deposits rose by only 17%. (Source: Think-tank, the Financial Express September, 99) This is forcing a large number of banks to adopt the concept of narrow banking wherein the deposits are kept in Gilts and some other assets which improves liquidity and reduces risk. The basic fact lies that banks cannot be ignored and they will not close down completely. Their role as intermediaries cannot be ignored.
Improved market sentiments helped mutual funds' assets under management (AUM) soar by over Rs 1.5 lakh crore to touch Rs 8.2 lakh crore in 2012-13.
Excluding the domestic Fund of Funds, wherein a mutual fund scheme invests in various funds, HDFC MF retained its top slot with AUM of Rs 1, 01,720 crore, followed by Reliance Mutual Fund (Rs 94,580 crore), ICICI Prudential Mutual Fund (Rs 87,835 crore), Birla Sun Life Mutual Fund (Rs 77,046 crore) and UTI Mutual Fund (Rs 69,450 crore) in the top five list

Comparison of investment in Banks V/S Mutual Funds
Particular
Banks
Mutual Funds
Return
Low
Better
Administered Expenses
High
Low
Risk
Low
Moderate
Investment Option
Less
More
Network
High penetration
Low but improving
Liquidity
At a cost
Better
Quality of assets
Not transparent
Transparent
Calculation of interest
Minimum balance between 10th and 30th of every month
Everyday
Guarantee
Maximum ₹ 1 lakh on deposits
None

III. Research Methodology
“A research is a careful investigation or enquiry, especially through search for new facts in any branch of knowledge. It is a systemized effort to gain more knowledge.”
“Research Methodology is a way to systematically solve the research problem. It includes not only the research methods, but also the logic behind using the methods.”
The methods of research used in this project were as follows:-
1. Analytical Research
In analytical research the researcher has to use the facts already available, and analyse these to make the critical evaluation of the material.
In this project I have used many raw data from the various sources and analysed it for underlying trends.
2. Applied Research
Applied Research aims at finding a solution for an immediate problem. Research aimed at certain conclusions (say a solution) facing a concrete social or business problem is an example of applied research. Thus the central aim of applied research is to find a solution for some pressing practical problem.
I. Research Problem
 To know the investor’s behaviour about Mutual Fund as an investment avenue.
II. Objectives of Research
1. Primary objective: To know the investor’s behaviour about Mutual Fund as an investment avenue.
2. Secondary objectives
 To study the objectives of the investors for investing in Mutual Fund.

 To know investment patterns of investors.
 To find out which scheme would be better for the investor according their need, perception about investment and their nature (whether they aggressive or conservative).
III. Research Plan
1. Data source
I have used primary data source to collect the date regarding investor’s behaviour about Mutual Fund investment. The survey was conducted through NJ’s Agents (financial adviser) across Jamnagar. From the Mutual Fund adviser of NJ, I got general idea about Mutual Fund investment.
2. Survey approach
Survey approach was under taken for the study of Mutual Fund investment form the financial adviser of Mutual Fund rather than directly to investor for the purpose of find out overall investment of Mutual Fund.
3. Research instrument
Questionnaire was the instrument of getting data.
IV. Sampling Plan
1. Sample unit: all investors are occasionally and regularly invest in financial assets or non-financial assets.
2. Sample size: survey population includes businessmen, professionals and individual investors were approx. 50 per financial adviser and I have randomly selected 30 financial adviser.
3. Sampling method
In this study as suggested by company’s branch manager sample of this agent (Mutual Fund adviser) was selected and it was as non-probabilistic method. Because all these people could not interviewed as per our requirement but we can randomly select them in monthly agent meet.

4. Contact method
The total sample size for survey was 30 agent (Mutual Fund adviser) by personal interview.

IV. Data Processing and Analysis
Q1. Gender
There are 7 female and 23 male respondents.
Q2. What is your age?
Age group
No of Agent
18 to 25
12
25 to 40
14
40 to 65
3
Above 65
1
Grand Total
30
From the above table we can say that amount of young MF adviser are more because 12 are between 18 to 25 years and 14 are 25 to 40 year out of 30.that mean level of enthusiasm in field of selling financial product is more in young generation and this benefits to the client to not need to change the financial adviser and young people have more enthusiasm to get more money so, they are provide good service to the client.
Q3. What is your monthly Income?
Monthly Income
No of Agents
Below ₹ 20,000
2
₹ 20,000 to ₹ 40,000
16
₹ 40,000 to ₹ 60,000
9
Above ₹ 60,000
3
Grand Total
30
7
23
Gender of Repondents
Female
Male

From the above table we can see the income or total commission of the financial adviser. Therefore here we can see that 16 are getting between ₹ 20000 to ₹40000 monthly. That quit good amount but we can indirectly analyse here investment from the client because commission are calculated on total investment amount from the agent. Therefore if we assuming maximum 3% (trial0.5 and upfront 2.5) then amount of investment form the one agent will be 10, 00,000((average of 20000 and 400000) (30000*100/3)) in the case of 20000 to 40000 income level.
Q4. How long have you been with NJ?
Particular
No of Agents
1 Years
4
2 Years
3
3 Years
9
4 Years
5
5 Years
5
6 Years
4
Grand Total
30
From the above table we can know about awareness of NJ and Mutual Fund in the market.
Q5. What made you join NJ India invest Pvt. Ltd.?
Particular
No of Agents
Good Commission
1
Good Service
3
Good Service, Good Commission
4
Good Service, Transparency , One door-Multiple Solution, Good Commission
1
One door-Multiple Solution
11
Other
1
Transparency
1
Transparency , One door-Multiple Solution, Good Commission
7
Transparency , Other
1
Grand Total
30

Form the above table we can see that more number of agents have chosen one door multiple solution. Therefore it also help to investor for any kind of service like switch one scheme to another AMC’ scheme they can switch from the single platform. They need not to go one AMC to other.
Q6. Which insurance company do you belong to?
Particular
No of Agents
BIRLA SUN LIFE
1
HDFC STANDARD LIFE INSUARANCE CO.LTD
2
ICICI LIFE INSURANCE
7
LIFE INSURANCE CORPORATION
13
OTHER
4
RELIENCE LIFE INSURANCE.
3
Grand Total
30
Form the above table we can see that more number of agents are from LIC.
Q7. Do you believe Insurance companies gives higher commission than Mutual Fund companies?
Particular
No of Agents
No
10
Yes
20
Grand Total
30
Form the above table we can see that 20 people said that Mutual Fund gives high commission than insurance company. In Mutual Fund agents get two type of commission upfront and trial these are lower rate but in the long term the amount of commission will be higher than insurance because the effect of compounding.

Q8. How many clients do you have at present?
Particular
No of Agents
100 to 200
8
200 to 400
5
50 to 100
6
500 to 1000
7
And above 1000
1
Below -50
3
Grand Total
30
Form the above table we can see that only 3 agents have less than 50 clients and rest of has more than 100 clients
Q9. From your total client base, how many have invested in Mutual Fund approximately (%)?
Particular
No of Agents
0 to 25 %
9
25 to 50 %
21
Grand Total
30
From the above table we can see that 21 agents say 25% to 50% are invest in Mutual Fund. That means rest of 50 % people are not invest in Mutual Fund reasons may be not proper knowledge or they are not want to take any type of risk or not aware properly.
Q10. Please select the bifurcation of your total investments.
Bifurcation in %
SIP
DEBT
EQUITY
BALANCE
LIQUID
0 to 25 %
14
7
19
8
12
25 to 50 %
8
10
5
12
11
50 to 75%
8
13
4
8
6
75 to 100%
0
0
2
2
1
Total
30
30
30
30
30

Form the above graph we can see that investors are diversified their portfolio according to their nature or perception about investment. Investors can be classified in to three with respect risk:
1. Aggressive Risk Investors:
Aggressive risk investors invest in equity fund with large portion of their portfolio.
2. Moderate Risk Investors:
They invests in equity but invest in fixed income security at the same time.
3. Conservative Risk Investors:
This type of investor are does not want to take any risk. They just want earn fixed return.
From the responses from the agent. It show that investment in SIP is more. The reason behind is SIP is such type of investment which small investor also can afford.
0
2
4
6
8
10
12
14
16
SIP
DEBT
EQUITY
BALANCE
LIQUID
NO Of AGENTS
ASSETS CLASS
BIFURCATION OF INVESTMENT
0%to 25%
25% to 50 %
50%to 75%
75% to 100%

If we look at debt fund the number of agents are more whose have 50 % to 75% investors are invest in Debt fund. That means most of investors are conservative risk nature and also possible Indian economy was in regression “between” 2008- 2013.
If we see the Equity Fund number of agents are more whose have 20% to 50% investors are invest in equity fund. That means 25 % to 50% investors aggressive risk nature.
12 agents have such type investors. 25% to 50% those have invested balance fund that means they are come under category of moderate risk investors.
Q11. How many clients actually invest in Mutual Funds, per 10 clients?
Particular
No of Agents
2
3
3
5
4
6
5
8
6
4
7
2
8
2
9
0
Grand Total
30
From the above table we can show that average 8 agents convince 5 out 10 clients to invest in Mutual Fund that means 50 % people ready to invest in almost every trial.

V. Management lessons
The Management Lessons that I learned and inherited while working at NJ India Invest Pvt. Ltd.
1. I got to learn this from Mr. Ravindra Pansara (Branch Manager) NJ India Invest Pvt. Ltd. He started his life as an executive at NJ He said if you want to achieve something big in life, don’t hesitate to start small if it is of your interest.
2. I got to learn that we should always help others. My external guide. He always used to help others to learn things. He always used to call me and other interns to teach us. Even he was always ready to help others working there. Because of this everyone used to respect him and ready to work for him.
3. I observed in the office that those who get involved in different discussion and sociable get much better response than those who do not. Involvements in various activities also help us to know people around us better and help in learning many things.
4. Sharing of knowledge is very important. If you share your knowledge and views with other people, other will get benefit from that and you will also learn it better when other gives their point of view. Two ways communication process will help us to improve our knowledge and understanding
5. I felt while working that it is always good to ask when you are in doubt because it gives clear indication to other that what he has communicated has not received by you correctly. Hence you should never hesitate to ask queries.

.
6. Always try to be a good speaker. But a good speaker is not sufficient. In order to manage properly you have to listen to the people around you. It gives a sense of belongingness to the other person when you listen to him. Maybe you are correct but always listen and respect the views of others. They will always respect your views.
7. During internship I learned that those people who respect their seniors always get respect from seniors. I have seen that many a times a senior is wrong and a junior is right then also junior says nothing in front of senior or tries to explain things in sophisticated manner
8. Don’t be afraid of your boss. Always be friendly with him. He will like it. Being friendly does not mean that you should talk loudly or arrogantly to him. It means you should not hesitate in speaking to him.
9. I felt that people who motivate others get motivated themselves. Sir used to motivate us by giving us treat when we did a good job. This motivates other also to do their job properly.
10. I felt in office that those who were dressed well used to give other some kind of positive energy to others. I myself felt that when you are dressed well it gives you a kind of confidence and energy to do your job.
11. Customer is the boss of your business. Therefore always be honest to him. If you have made a mistake, tell him before he get to know from others so that he always trust you. Losing one customer can lead to loss of 5 more and gaining one customer can lead to gain of 5 more.

12. Always be polite while talking. It gives a positive sign to others that you are capable of managing things correctly. Moreover in stress you can work more efficiently when you stay calm.
13. Commitment toward your work is the need of the hour because when you are committed to work, there are more chances of doing it right.
14. You cannot push a truck alone but with team yes you can. There are some tasks which cannot be performed alone as it takes more time and is prone to more errors. Working with others needs different qualities than working alone. A good team player can always be a good manager.
15. Always give your 100% to whatever you do. It helps you to achieve more in your life. Maybe there is a situation where you gave your 100% but still not able to achieve the goal. In this case your boss will always appreciate and motivate you because he has seen your efforts.
16. I have seen people in office who has very much knowledge but are not able to express it or when they express other person may not be able to interpret it well. This is because of poor communication skills. Knowledge is useful when others can gain from it.
17. Always plan what you have to do on daily basis. It gives you better direction to achieve your planned goals. Planning gives us the right direction from where we have to start our work. Planning saves almost 30% of the time in doing work.

18. Proper control is necessary in order to see that things are going in right direction or not. If not proper measures needs to be adopted in order to improve that.
19. Taking and giving feedback is very important. It help us to know how our juniors are working and helps to give them suggestion or direction if needed. Moreover taking and giving feedback helps to maintain free flow of information through different levels of hierarchy

VI. Findings
1. Broadly Mutual Fund scheme are divided in to:( refer page no: 39)
SIP gives return between 15%- 25%
Equity which gives expected return 15%- 20%,
Debt which gives expected return 7%- 12%
Balance (Debt+ Equity (60% to 80%)) which gives expected return 8%- 15%.
Liquid fund gives return 6%-8%.
Money market Mutual Fund which gives return between Repo rate and Reverse Repo rate.
2. Franklin India Blue-chip Fund (launched in December 1993) and Birla Sun Life Frontline Equity Fund scheme, which have given 22% a year return over the last five years.
3. HDFC Equity Fund (launched in Jan 01, 1995) and HDFC Top 200 Fund (launched in Sep-1996) benchmark with S&P BSE 200and benchmark with CNX 500.The fund delivered around 23 % return over 5 years.
4. ICICI Prudential Value Discovery Fund (launched in august 16, 2004) benchmark with CNX Midcap which delivered 32.83% return over 5 years. And it is closed ended scheme 1% Exit load if redemption within 365 days.
5. UTI Opportunities Fund (launched in Jul 20, 2005) benchmark with S&P BSE 100 and it has delivered 23.07 % return over 5 years.
6. Canara Robeco Equity Diversified Fund The average equity exposure of portfolio in last one year has been around 94.26% and 5.74% in cash and equivalents. In the current month however it had 89.58% of assets in equity and 10.42% in cash and equivalent segments. The scheme has a corpus of Rs. 469.8094 crores (Aug 2007), which is not among the best in the industry but its growth from Rs. 68.63 crores as on November 2004

definitely points towards the rising investor confidence in this scheme. In last six months the corpus has grown over.
7. Age of agents and client base they have are correlated. For example young agent are aggressive for service well.
8. Income from the commission of agent is depended on investment i.e. from the commission we can find how much particular agent’s investment.
9. Form the study I found professional adviser( agents, Financial adviser) are consider to be more reliable source of Mutual Fund information that we can show form the responses from the agents e.g. every agent has at least 50 clients which is quite good number.
10. Financial adviser playing a key role in Mutual Fund investment.
11. From the responses from the agent. It show that investment in SIP is more.
12. 50 % to 75% investors are invested in Debt fund.
13. 20% to 50% investors are invest in equity fund.
14. 25% to 50% those have invested balance fund.
15. The total AUM( Assets under Management) rose by Rs 1.51 lakh crore or an increase of 23 per cent during 2012-13 from Rs 6,64,792 crore in the preceding fiscal
16. The country's 44 fund houses together had an average AUM (Asset Under Management) of Rs 8,16,400 crore at the end of fiscal year ended March 31, 2013.
VII. Recommendation
1. The AMC (Asset Management Company) should create awareness among the individuals about the benefits of Mutual Funds & the returns from the Mutual Fund market.

2. This can be done by arranging at the household level or by conducing external program at a public place to educate people about the nature, benefits & importance of Mutual Funds.
3. As on many people are not aware about Mutual Fund & other financial products, industry should conduct surveys to gauge the preferences of the investors as many people do not invest their savings due to lack of knowledge & because of high risk.
4. The prospective investors should diversify their monthly income by preparing the Monthly Budget and they can generate savings out of their regular income to invest in the monthly plan of Mutual Funds.
5. It is found that minimum investment in case of HSBC Equity Fund is Rs. 10,000 which is double than HDFC‟s, hence it is suggested to reduce it so that more number of investors can invest.
6. Investors who want to gain consistent profit but in a long time duration can invest in these companies. The net asset value of the funds under consideration had proved to be bullish and bearish in a very short period. But if we see the trend these schemes shows bullish nature on an average.
7. Dividend acts as a good promotion tool to investors. In all AMC taken above only UTI equity fund has given dividend, so other AMC can go for dividend.
8. For the long term investment it always advisable to invest in equity. If investment for the short term purpose that debt fund would be better.
9. Financial adviser should provide need base solution to investors.
10. Financial adviser should recommendation SIP for the investment to the investors because SIP small amount investment and it generate good return over s long time and adviser can make good commission over a long time that’s why it is better for both investors and adviser.

11. Financial adviser should manage portfolio according to the risk profile of investor. Sometime adviser manage such that he make good commission out of that. That would useful when market is good but if market falls than investors may lose confidence e.g. generally above 60 age investors wants fixed income securities.
VIII. Conclusions
 Out of all the avenues considered, it was found that most of the investor prefers investing in Debt fund and bank FD because of the low risk associated with them.
 Future security and child’s carrier is main objective of investor while investing in the various financial instruments. Therefore role of financial adviser (agent) is to provide and set portfolio according to investors need, and long term prospective.
 Most of the people are investing for the period of 1-5 years, which means that people are looking for investing in short term and medium term to get returns.
 As the age increases, the risk taking appetite decreases therefore financial adviser (agents) can recommend to the investors to set investment objective for the future e.g. retirement plan, educational plan.
 Young age groups are found to have high risk taking appetite.

Bibliography
 http://www.njgroup.in/aboutus.php
 http://www.valueresearchonline.com
 http://www.nishithdesai.com/fileadmin/user_upload/Mutual_Funds_in_India.pdf
 http://www.yourarticlelibrary.com/economics/14-important-steps-taken- by-sebi-for-regulating-mutual-funds-in-india
 http://abcoffinance.wordpress.com/2009/04/17/structure-of-mutual-funds- in-india
 http://aboutmf.com/who-is-a-custodian/
 http://www.pwc.in/en_IN/in/assets/pdfs/publications/2013/indian-mutual- fund-industry-fv.pdf
 http://www.nirmalbang.com/mutual-funds/mutual-fund-home.aspx
 http://www.amfiindia.com/research-information/mf-history
 http://www.utimf.com/learningcentre/Pages/Types-of-Funds.aspx

Study of Mutual Fund Investment

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