A STUDY ON INVESTOR PERCEPTION OF THE FINANCIAL ADVISORY SERVICES OF PRUDENT CAS LTD. FOR MUTUAL FUNDS, A STUDY ON INVESTOR PERCEPTION OF THE FINANCIAL ADVISORY SERVICES FOR MUTUAL FUNDS..

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SUMMER TRAINING PROJECT
REPORT
ON
“A STUDY ON INVESTOR
PERCEPTION OF THE
FINANCIAL ADVISORY
SERVICES OF PRUDENT CAS
LTD. FOR MUTUAL FUNDS”
PRUDENT CORPORATE
ADVISORY SERVICES LTD.
BY
Anamika Tiwari

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PREFACE
For the students of Masters of Business Administration, only coaching classrooms and
theoretical studies are not enough to understand different aspects and various critical
principles of business.
As a student of M.B.A, SEM-III, preparation of the summer internship project report
of any company is an important part of practical study. For this I have done the
summer internship of 6 weeks in PRUDENT C.A.S. LTD. and gained a lot of
knowledge about different financial products and also experienced how market of
these financial products works.
I have studied the different department of HR, finance and marketing by observation
and interaction with department’s personnel.
I have found out the perception about the mutual fund in the investor’s mind
throughout our survey.
I had prepared the questionnaires for the (survey on investor perception with respect to
different investment avenues). This tool of data collection has provided me the different view
for investing in the mutual fund that the people have no more time to spend in the
stock market. If people want to invest their money without spending much time, then
the mutual fund is the bestoption for them.

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TABLE OF CONTENTS
SERIAL
NO.
PARTICULARS PAGE
NO.
1. Preface
Chapter-1 Introduction 1-32
Chapter-2 Company Profile 33-68
Chapter-3 Objective of study 69-70
Chapter-4 Research methodology 71-74
Chapter-5 Data analysis and interpretation 75-90
Chapter-6 Findings 91-93
Chapter-7 Suggestions and recommendations 94-96
Chapter-8 Conclusion 97-98
Chapter-9 Limitation of study 99-101
Chapter-
10
Bibliography
Chapter-
11
Annexure

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Chapter-1
INTRODUCTION

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INTRODUCTION
A Mutual Fund is a trust that pools together the savings of a number of investors
who share a common financial goal. The money collected is then invested in
capital market instruments such as shares, debentures and other securities based on
their objective. The income earned through these investments and the capital
appreciation realized are shared by its unit holders in proportion to the number of
units owned by the investors.
According to the above definition, a mutual fund in India can raise resources
through sale of units to the public. It can be setup in the form of a Trust under the
Indian Trust Act. The definition has been further extended by allowing mutual
funds to diversify their activities in the following areas:
· Portfolio management services
· Management of offshore funds
· Providing advice to offshore funds
· Management of pension or provident funds
· Management of venture capital funds
· Management of money market funds
· Management of real estate funds
Mutual Funds pool money from many small investors with similar (one could
say mutual) objectives, to achieve Economies of Scale and Diversification in the
investment of these funds. This can result in higher returns at lower risk. Each
mutual fund schemes has a defined investment objective and strategy. The
Project is related to the field of Mutual Fund in which comparative
analysis of the various debt schemes in mutual fund. In the project, all

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the points are explained like -what is mutual fund, types of mutual fund and
which fund is better. Mutual Fund industry has grown in many folds over the
period of last two decades. There has been an upsurge in the Mutual
Fund industry in 90’s. During this period a large number of
private sector companies have started their mutual funds. The growth in
the number of distributors of mutual funds. Many private companies were
established which took up the job of selling mutual funds not only
to the common man but also to the corporate. Mutual Fund
provides better return as compared to the traditional investment opportunities like
Fixed Deposit and Saving Accounts etc.
Mutual Fund present an ideal solution to the investment needs of the corporate,
which are looking for returns from their surplus funds. The Mutual Fund
gives them a chance to gain more profits over a short period. The Mutual fund
is the most suitable investment for corporate as it offers an opportunity to
invest in a diversified, professionally managed portfolio at a low cost.
Prudent CAS (Corporate Advisory Services) ltd. gives advices to its
clientsregardingF i n a nc ia l P la nni n g. The s t r o ng a nd e ffic i e nt
r e s e a r c h t e a m w hic h s up p o r t s t he investments advisors. The
research team provides the desk to the necessary information regarding
the different mutual fund schemes and other investments options like Insurance etc.
The company sells its financial products through both direct and direct force.
Prudent Channel since its inceptio n has a strong hold in the
market through its Direct Force. It also has strong hold on t h e
corporate channel also now wants to have a greater reach to its clients which it
has already developed through its 150 certified brokers just the

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beginning of the force that will grow in leaps and bounds. The
company also has a strong and efficient research team that is currently working
from Gujarat which publishes the data that helps the clients in assessing their funds
performance. Thus through the comparative analysis of the these three
schemes it has been studied which of the scheme is best in terms performance, in
comparison to the schemes of other mutual funds in the debt mutual
funds category.
Benefits of Mutual Funds
An investor can invest directly in individual securities or indirectly through a
financial intermediary. Globally, mutual funds have established themselves as the
means of investment for the retail investor.
1. Professional management: An average investor lacks the knowledge of capital
market operations and does not have large resources to reap the benefits of
investment. Hence, he requires the help of an expert. It, is not only expensive to
‘hire the services’ of an expert but it is more difficult to identify a real expert.
Mutual funds are managed by professional managers who have the requisite skills
and experience to analyze the performance and prospects of companies. They make
possible an organized investment strategy, which is hardly possible for an
individual investor.
2. Portfolio diversification: An investor undertakes risk if he invests all his funds
in a single scrip. Mutual funds invest in a number of companies across various
industries and sectors. This diversification reduces the riskiness of the investments.
3. Reduction in transaction costs: Compared to direct investing in the capital
market, investing through the funds is relatively less expensive as the benefit of

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economies of scale is passed on to the investors.
4. Liquidity: Often, investors cannot sell the securities held easily, while in case of
mutual funds, they can easily cash their investment by selling their units to the fund
if it is an open-ended scheme or selling them on a stock exchange if it is a close-
ended scheme.
5. Convenience: Investing in mutual fund reduces paperwork, saves time and
makes investment easy.
6. Flexibility: Mutual funds offer a family of schemes, and investors have the
option of transferring their holdings from one scheme to the other.
7. Tax benefits: Mutual fund investors now enjoy income-tax benefits. Dividends
received from mutual funds’ debt schemes are tax exempt to the overall limit of Rs
9,000 allowed under section 80L of the Income Tax Act.
8. Transparency: Mutual funds transparently declare their portfolio every month.
Thus an investor knows where his/her money is being deployed and in case they
are not happy with the portfolio they can withdraw at a short notice.
9. Stability to the stock market: Mutual funds have a large amount of funds
which provide them economies of scale by which they can absorb any losses in the
stock market and continue investing in the stock market. In addition, mutual funds
increase liquidity in the money and capital market.
10. Equity research: Mutual funds can afford information and data required for
investments as they have large amount of funds and equity research teams
available with them.

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Mutual Fund Operation Flow Chart
All mutual funds comprise of four constituents- Sponsors, Trustees, Asset
Management Company(AMC) and Custodians.
a) Sponsors:
A ‘sponsor’ is any person who, acting alone or in combination with another
body corporate, establishes a MF. The sponsor of a fund is similar to the
promoter of a company.
In accordance with SEBI Regulations, the sponsor forms a trust and appoints a
Board of Trustees, and also generally appoints an AMC as fund manager. In
addition, the sponsor also appoints a custodian to hold the fund assets. The
sponsor must contribute at least 40% of the net worth of the AMC and possess

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a sound financial track record over five years prior to registration.
b) Trust/Board of Trustees:
The MF or trust can either be managed by the Board of Trustees, which is a body
of individuals, or by a Trust Company, which is a corporate body. Most of the
funds in India are managed by Board of Trustees.
The trustees being the primary guardians of the unit holder’s funds and assets, a
trustee has to be a person of high repute and integrity. The trustees, however, do
not directly manage the portfolio of securities. The portfolio is managed by the
AMC as per the defined objectives, in accordance with Trust Deed and SEBI
(Mutual Funds) Regulations.
c) Fund Managers/ AMC:
The AMC, which is appointed by the sponsor or the trustees and approved by
SEBI, acts like the investment manager of the trust. The AMC functions under
the supervision of its own Board of Directors, and also under the direction of the
trustees and SEBI.
AMC, in the name of the trust, floats and manages the different investment
‘schemes’ as per the SEBI Regulations and as per the Investment Management
Agreement signed with the Trustees.
d) Custodians:
The mutual fund should appoint a custodian to carry out the custodial services for
the schemes of the fund and sent intimation of the same to the Board within

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fifteen days of the appointment of the custodian. No custodian in which the
sponsor or its associates hold 50% or more of the voting rights of the share
capital of the custodian or where 50% or more of the directors of the custodian
represent the interest of the sponsor or its associates should act as custodian for a
mutual fund constituted by the same sponsor or any of its associate or subsidiary
company.
STURUCTURE OF ASSET MANAGEMENT COMPANY (AMC)
MUTUAL FUND STRUCTURE

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 HISTORY OF INDIAN MUTUAL FUND INDUSTRY
The Indian mutual fund industry has evolved over distinct stages. The growth of
the mutual fund industry in India can be divided into four phases: Phase I (1964-
87), Phase II (1987-92), Phase III (1992-97), and Phase IV (beyond 1997).
Phase I: The mutual fund concept was introduced in India with the setting up of
UTI in 1963. The Unit Trust of India(UTI) was the first mutual fund set up under
the UTI Act, 1963, a special act of the Parliament. It became operational in
1964 with a major objective of mobilizing savings through the sale of units and
investing them in corporate securities for maximizing yield and capital
appreciation. This phase commenced with the launch of Unit Scheme 1964 (US-
64) the first open-ended and the most popular scheme. UTI’s investible funds, at
market value (and including the book value of fixed assets) grew from Rs 49 crore
in1965 to Rs 219 crore in 1970-71 to Rs 1,126 crore in 1980-81 and further to Rs
5,068 crore by June 1987. Its investor base had also grown to about 2 million
investors. It launched innovative schemes during this phase. Its fund family
included five income-oriented, open-ended schemes, which were sold largely
through its agent network built up over the years. Master share, the equity growth
fund launched in 1986, proved to be a grand marketing success. Master share was
the first real close-ended scheme floated by UTI. It launched India Fund in 1986-
the first Indian offshore fund for overseas investors, which was listed on the
London Stock Exchange (LSE). UTI maintained its monopoly and experienced a
consistent growth till 1987.
Phase II: The second phase witnessed the entry of mutual fund companies
sponsored by nationalized banks and insurance companies. In 1987, SBI Mutual

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Fund and Can bank Mutual Fund were set up as trusts under the Indian Trust Act,
1882. In1988, UTI floated another offshore fund, namely, The India Growth Fund
which was listed on the New York Stock Exchange (NYSB). By 1990, the two
nationalized insurance giants, LIC and GIC, and nationalized banks, namely,
Indian Bank, Bank of India, and Punjab National Bank had started operations of
wholly owned mutual fund subsidiaries. The assured return type of schemes floated
by the mutual funds during this phase were perceived to be another banking
product offered by the arms of sponsor banks. In October 1989, the first regulatory
guidelines were issued by the Reserve Bank of India, but they were applicable only
to the mutual funds sponsored by FIIs. Subsequently, the Government of India
issued comprehensive guidelines in June 1990 covering all ‘mutual funds. These
guidelines emphasized compulsory registration with SEBI and an arms length
relationship be maintained between the sponsor and asset management company
(AMC). With the entry of public sector funds, there was a tremendous growth in
the size of the mutual fund industry with investible funds, at market value,
increasing to Rs 53,462 crore and the number of investors increasing to over 23
million. The buoyant equity markets in 1991-92 and tax benefits under equity-
linked savings schemes enhanced the attractiveness of equity funds.
Phase III: The year 1993 marked a turning point in the history of mutual funds in
India. Tile Securities and Exchange Board of India (SEBI) issued the Mutual Fund
Regulations in January 1993. SEBI notified regulations bringing all mutual funds
except UTI under a common regulatory framework. Private domestic and foreign
players were allowed entry in the mutual fund industry. Kothari group of
companies, in joint venture with Pioneer, a US fund company, set up the first
private mutual fund the Kothari Pioneer Mutual Fund, in 1993. Kothari Pioneer

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introduced the first open-ended fund Prima in 1993. Several other private sector
mutual funds were set up during this phase. UTI launched a new scheme, Master-
gain, in May 1992, which was a phenomenal success with a subscription of Rs
4,700 crore from 631akh applicants. The industry’s investible funds at market
value increased to Rs 78,655 crore and the number of investor accounts increased
to 50 million.
However, the year 1995 was the beginning of the sluggish phase of the mutual fund
industry. During 1995 and 1996, unit holders saw an erosion in the value of their
investments due to a decline in the NA V s of the equity funds. Moreover, the
service quality of mutual funds declined due to a rapid growth in the number of
investor accounts, and the inadequacy of service infrastructure. A lack of
performance of the public sector funds and miserable failure of foreign funds like
Morgan Stanley eroded the confidence of investors in fund managers.
Investors perception about mutual funds, gradually turned negative. Mutual funds
found it increasingly difficult to raise money. The average annual sales declined
from about Rs 13,000. crore in 1991-94 to about Rs 9,000 crore in 1995 and 1996.
Phase IV: During this phase, the flow of funds into the kitty of mutual funds
sharply increased. This significant growth was aided by a more positive sentiment
in the capital market, significant tax benefits, and improvement in the quality of
investor service. Investible funds, at market value, of the industry rose by June
2000 to over Rs 1,10,000 crore with UTI having 68% of the market share. During
1999-2000 sales mobilization reached a record level of Rs 73,000 crore as against
Rs 31,420 crore in the preceding year. This trend was, however, sharply reversed in
2000-01. The UTI dropped a bombshell on the investing public by disclosing the
NAV of US-64-its flagship scheme as on December 28,2000, just at Rs 5.81 as

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against the face value of Rs 10 and the last sale price of Rs 14.50. The disclosure of
NAV of the country’s largest mutual fund scheme was the biggest shock of the
year to investors. Crumbling global equity markets, a sluggish economy coupled
with bad investment decisions made life tough for big funds across the world in
2001-02. The effect of these problems was felt strongly in India also. Pioneer m, JP
Morgan and Newton Investment Management pulled out from the Indian market.
Bank of India MF liquidated all its schemes in 2002. The Indian mutual fund
industry has stagnated at around Rs 1,00,000 crore assets since 2000-01. This
stagnation is partly a result of stagnated equity markets and the indifferent
performance by players. As against this, the aggregate deposits of Scheduled
Commercial Banks (SCBs) as on May 3, 2002, stood at Rs 11,86,468 crore. Mutual
funds assets under management (AUM) form just around 10% of deposits of SCBs.
The Unit Trust of India is losing out to other private sector players. While there has
been an increase in AUM by around 11% during the year 2002, UTI on the
contrary has lost more than 11% in AUM. The private sector mutual funds have
benefited the most from the debacle ofUS-64 of UTI. The AUM of this sector grew
by around- 60% for the year ending March 2002.
 ADVANTAGES OF MUTUAL FUNDS
Mutual funds are currently the most popular investment vehicle and provide
several advantages to investors, including the following:
1. Advanced Portfolio Management
You pay a management fee as part of your expense ratio, which is used to hire a
professional portfolio manager who buys and sells stocks, bonds, etc. This is a
relatively small price to pay for help in the management of an investment portfolio.

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2. Dividend Reinvestment
As dividends and other interest income is declared for the fund, it can be used to
purchase additional shares in the mutual fund, thus helping your investment grow.
3. Risk Reduction (Safety)
A reduced portfolio risk is achieved through the use of diversification, as most
mutual funds will invest in anywhere from 50 to 200 different securities -
depending on their focus. Several index stock mutual funds own 1,000 or more
individual stock positions.
4. Convenience and Fair Pricing
Mutual funds are common and easy to buy. They typically have low minimum
investments (some around $2,500) and they are traded only once per day at the
closing net asset value (NAV). This eliminates price fluctuation throughout the day
and various arbitrage opportunities that day traders practice.
 DISADVANTAGES OF MUTUAL FUNDS-
However, there are also disadvantages of mutual funds, such as the following:
1. High Expense Ratios and Sales Charges
If you're not paying attention to mutual fund expense ratios and sales charges, they
can get out of hand. Be very cautious when investing in funds with expense ratios
higher than 1.20%, as they will be considered on the higher cost end. Be wary of
12b-1 advertising fees and sales charges in general. There are several good fund
companies out there that have no sales charges. Fees reduce overall investment
returns.

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2. Management Abuses
Churning, turnover and window dressing may happen if your manager is abusing
his or her authority. This includes unnecessary trading, excessive replacement and
selling the losers prior to quarter-end to fix the books.
3. Tax Inefficiency
Like it or not, investors do not have a choice when it comes to capital gain payouts
in mutual funds. Due to the turnover, redemptions, gains and losses in security
holdings throughout the year, investors typically receive distributions from the
fund that are an uncontrollable tax event.
4. Poor Trade Execution
If you place your mutual fund trade anytime before the cut-off time for same-day
NAV, you'll receive the same closing price NAV for your buy or sell on the mutual
fund. For investors looking for faster execution times, maybe because of short
investment horizons, day trading, or timing the market, mutual funds provide a
weak execution strategy.

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 TYPES OF MUTUAL FUNDS
Fig:1 Types of Mutual Funds
 Schemes according to Maturity Period
A mutual fund scheme can be classified into open-ended scheme or close-ended
scheme depending on its maturity period.
Open-end fund (or open-ended fund)-
Open-end fund is a collective investment scheme which can issue and redeem shares
at any time. An investor will generally purchase shares in the fund directly from the
fund itself rather than from the existing shareholders. It contrasts with a closed-end

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fund, which typically issues all the shares it will issue at the outset, with such shares
usually being tradable between investors thereafter.
Open-ended funds are available in most developed countries, though terminology and
operating rules vary. U.S. mutual funds, UK unit trusts and OEICs,
European SICAVs, and hedge funds are all examples of open-ended funds.
The price at which shares in an open-ended fund are issued or can be redeemed will
vary in proportion to the net asset value of the fund, and therefore directly reflects the
fund's performance.
Features:
 Fees
 Active management
 Net asset value
 Hedge funds
Fees
There may be a percentage charge levied on the purchase of shares or units. Some of
these fees are called an initial charge (UK) or 'front-end load' (US). Some fees are
charged by a fund on the sale of these units, called a 'close-end load,' that may be
waived after several years of owning the fund. Some of the fees cover the cost of
distributing the fund by paying commission to the adviser or broker that arranged the
purchase. These fees are commonly referred to as 12b-1 fees in US.
Not all fund have initial charges; if there are no such charges levied, the fund is "no-
load" (US).
These charges may represent profit for the fund manager or go back into the fund.

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Active management
Most open-end funds are actively managed, meaning that a portfolio manager picks
the securities to buy, although index funds are now growing in popularity. Index
funds are open-end funds that attempt to replicate an index, such as the S&P 500, and
therefore do not allow the manager to actively choose securities to buy.
Net asset value
The price per share, or NAV (net asset value), is calculated by dividing the fund's
assets minus liabilities by the number of shares outstanding. This is usually calculated
at the end of every trading day.
Hedge funds
Hedge funds are typically open-ended and actively managed. However, investors can
typically redeem shares only monthly or less frequently (e.g., quarterly or semi-
annually)
Closed-end fund (CEF) or closed-ended fund-
Closed-end fund is a collective investment model based on issuing a fixed number of
shares which are not redeemable from the fund. Unlike open-end funds, new shares in
a closed-end fund are not created by managers to meet demand from investors.
Instead, the shares can be purchased and sold only in the market. This is the original
design of the mutual fund which predates open-end mutual funds but offers the same
actively managed pooled investments. In the United States, closed-end funds sold
publicly must be registered under both the Securities Act of 1933 and the Investment
Company Act of 1940.

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Closed-end funds are usually listed on a recognized stock exchange and can be bought
and sold on that exchange. The price per share is determined by the market and is
usually different from the underlying value or net asset value (NAV) per share of the
investments held by the fund. The price is said to be at a discount or premium to the
NAV when it is below or above the NAV, respectively.
A premium might be due to the market's confidence in the investment managers'
ability or the underlying securities to produce above-market returns. A discount might
reflect the charges to be deducted from the fund in future by the managers,
uncertainty due to high amounts of leverage, concerns related to liquidity or lack of
investor confidence in the underlying securities.
Features:
 Availability
 Distinguishing features
 Initial offering
 Exchange-traded
 Discounts and premiums
 Comparison with open-ended funds
Availability
Closed end funds are typically traded on the major global stock exchanges. In the
United States the New York Stock Exchange is dominant although
the NASDAQ is in competition; in the United Kingdom the London Stock
Exchange's main market is home to the mainstream funds although AIM supports

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many small funds especially the venture capital trusts; in Canada, the Toronto
Stock Exchange lists many closed-end funds.
Like their better-known open-ended cousins, closed-end funds are usually
sponsored by a fund management company which will control how the fund is
invested. They begin by soliciting money from investors in an initial offering,
which may be public or limited. The investors are given shares corresponding to
their initial investment. The fund managers pool the money and purchase securities
or other assets. What exactly the fund manager can invest in depends on the fund's
charter, prospectus and the applicable government regulations. Some funds invest
in stocks, others in bonds, and some in very specific things (for instance, tax-
exempt bonds issued by the state of Florida in the USA).
Distinguishing features
A closed-end fund differs from an open-end mutual fund in that:
 It is closed to new capital after it begins operating.
 Its shares (typically) trade on stock exchanges rather than being redeemed directly
by the fund.
 Its shares can therefore be traded at any time during market opening hours. An
open-end fund can usually be traded only at a time of day specified by the
managers, and the dealing price will usually not be known in advance.
 It usually trades at a premium or discount to its net asset value. An open-end fund
trades at its net asset value (to which sales charges may be added; and adjustments
may be made for e.g. the frictional costs of purchasing or selling the underlying
investments).

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 In the United States, a closed-end company can own unlisted securities.
Another distinguishing feature of a closed-end fund is the common use
of leverage (gearing). In doing so, the fund manager hopes to earn a higher return
with this additional invested capital. This additional capital can be raised by issuing
auction rate securities, preferred stock, long-term debt, or reverse-repurchase
agreements.
A fund raises its initial equity through the sale of common stock. The amount of
equity that belongs to a share of common stock is known as its net asset value
(NAV). As the fund operates, NAV increases with investment gains and decreases
with losses. These gains or losses are amplified when the fund employs leverage.
The amount of leverage a fund uses is expressed as a percent of total fund assets
(e.g. if it has a 25% leverage ratio, that means that for each $100 of total assets
under management, $75 is equity and $25 is debt).
Leverage affects both fund income, and capital gains and losses. The additional
investments bought with the leverage increases gross income proportionally to the
leverage used, but net income is reduced by the interest rate paid to lenders or
preferred shareholders. However, capital gains or losses flow directly to the NAV
of the common stock. This increases the volatility of the NAV of a leveraged fund,
compared with its un-leveraged peer. For example, if an un-leveraged fund had a
10% gain or loss, its 25% leveraged peer would have an about 13.3% gain or loss.
If instead, the fund had a 40% leverage ratio, the gain or loss would be about
16.7%.

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In some cases, fund managers charge management fees based on the total managed
assets of the fund, which includes leverage. This further reduces the income benefit
of leverage to the common shareholder, while retaining the additional volatility.
Leveraged funds can seem to have higher expense ratios—a common way that
investors compare funds—than their non-leveraged peers. Some investment
analysts advocate that expenses attributable to the use of leverage should be
considered a reduction of investment income rather than an expense, and publish
adjusted ratios.
Long-term debt arrangements and reverse repurchase agreements are two
additional ways to raise additional capital for the fund. Funds may use a
combination of leveraging tactics or each individually. However, it is more
common for the fund to use only one leveraging technique.
Since stock in closed-end funds is traded like other stock, an investor trading them
will pay a brokerage commission similar to that paid when trading other stocks (as
opposed to commissions on open-ended mutual funds, where the commission will
vary based on the share class chosen and the method of purchasing the fund). In
other words, closed-end funds typically do not have sales-based share classes with
different commission rates and annual fees. The main exception is loan-
participation funds.
Initial offering
Like a company going public, a closed-end fund will have an initial public offering
of its shares at which it will sell, say, 10 million shares for $10 each. That will raise
$100 million for the fund manager to invest. At that point, the fund's 10 million
shares will begin to trade on a secondary market, typically the NYSE or

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the AMEX for American closed-end funds. Any investor who subsequently wishes
to buy or sell fund shares will do so on the secondary market. In normal
circumstances, closed-end funds do not redeem their own shares. Nor, typically, do
they sell more shares after the IPO (although they may issue preferred stock, in
essence taking out a loan secured by the portfolio). In general, closed-end funds
cannot issue securities for services or property other than cash or securities.
Exchange-traded
Closed-end fund shares are traded throughout market opening hours at whatever
price the market will support. It may be possible to deal using advanced types of
orders such as limit orders and stop orders. This is in contrast to some open-end
funds which are only available for buying and selling at the close of business each
day, at the calculated NAV, and for which orders must be placed in advance,
before the NAV is known, and by simple buy or sell orders. Some funds require
that orders be placed hours or days in advance, in order to simplify their
administration, make it easier to match buyers with sellers, and eliminate the
possibility of arbitrage (for example if the fund holds investments which are traded
in other time zones).
Closed-end funds are traded on exchanges and in that respect they are
like exchange-traded funds (ETFs), but there are important differences between
these two kinds of security. The price of a closed-end fund is completely
determined by the valuation of the market, and this price often diverges
substantially from the NAV of the fund assets.
In contrast, the market price of an ETF trades in a narrow range very close to its
net asset value, because the structure of ETFs allows major market participants to

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redeem shares of an ETF for a "basket" of the fund's underlying assets.[5] This
feature could in theory lead to potential arbitrage profits if the market price of the
ETF were to diverge substantially from its NAV.
The market prices of closed-end funds are often 10% to 20% higher or lower than
their NAV, while the market price of an ETF is typically within 1% of its NAV.
Since the market downturn of late 2008 a number of fixed income ETFs have
traded at premiums of roughly 2% to 3% above their NAV.
Discounts and premiums
As they are exchange-traded, the price of CEFs will be different from the NAV -
an effect known as the closed-end fund puzzle. In particular, fund shares often
trade at what look to be irrational prices because secondary market prices are often
very much out of line with underlying portfolio values. A CEF can trade at a
premium at some times, and a discount at other times.
Comparison with open-ended funds
With open-end funds, the value is precisely equal to the NAV. So investing $1000
into the fund means buying shares that lay claim to $1000 worth of underlying
assets (apart from sales charges and the fund's investment costs). But buying a
closed-end fund trading at a premium might mean buying $900 worth of assets for
$1000.
Some advantages of closed-end funds over their open-ended cousins are financial.
CEFs do not have to deal with the expense of creating and redeeming shares, they
tend to keep less cash in their portfolio, and they need not worry about market
fluctuations to maintain their "performance record". So if a stock drops irrationally,

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the closed-end fund may snap up a bargain, while open-ended funds might sell too
early.
Also, if there is a market panic, investors may sell a particular stock or segment of
stocks en masse. Faced with a wave of sell orders and needing to raise money for
redemptions, the manager of an open-ended fund may be forced to sell stocks he
would rather keep, and keep stocks he would rather sell, because of liquidity
concerns (selling too much of any one stock causes the price to drop
disproportionately). Thus it may become overweight in the shares of lower
perceived quality or underperforming companies for which there is little demand.
But an investor pulling out of a closed-end fund must sell it on the market to
another buyer, so the manager need not sell any of the underlying stock. The CEF's
price will likely drop more than the market does (severely punishing those who sell
during the panic), but it is more likely to make a recovery when/if the stock(s)
rebound.
Because a closed-end fund is listed on the market, it must obey certain rules, such
as filing reports with the listing authority and holding annual stockholder meetings
 Fund according to Investment Objective
A scheme can also be classified as growth fund, income fund, or balanced fund
considering its investment objective.
Equity Funds
Funds that invest in stocks represent the largest category of mutual funds.
Generally, the investment objective of this class of funds is long-term capital
growth with some income. There are, however, many different types of equity

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funds because there are many different types of equities. A great way to understand
the universe of equity funds is to use a style box, an example of which is below.
The idea is to classify funds based on both the size of the companies invested in
and the investment style of the manager. The term value refers to a style of
investing that looks for high quality companies that are out of favor with the
market. These companies are characterized by low P/E and price-to-book
ratios and high dividend yields. The opposite of value is growth, which refers to
companies that have had (and are expected to continue to have) strong growth in
earnings, sales and cash flow. A compromise between value and growth is blend,
which simply refers to companies that are neither value nor growth stocks and are
classified as being somewhere in the middle.
For example, a mutual fund that invests in large-cap companies that are in strong
financial shape but have recently seen their share prices fall would be placed in the
upper left quadrant of the style box (large and value). The opposite of this would
be a fund that invests in startup technology companies with excellent growth

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prospects. Such a mutual fund would reside in the bottom right quadrant (small and
growth).
Bond/Income Funds
Income funds are named appropriately: their purpose is to provide current income
on a steady basis. When referring to mutual funds, the terms "fixed-income,"
"bond," and "income" are synonymous. These terms denote funds that invest
primarily in government and corporate debt. While fund holdings may appreciate
in value, the primary objective of these funds is to provide a steady cashflow to
investors. As such, the audience for these funds consists of conservative investors
and retirees.
Bond funds are likely to pay higher returns than certificates of deposit and money
market investments, but bond funds aren't without risk. Because there are many
different types of bonds, bond funds can vary dramatically depending on where
they invest. For example, a fund specializing in high-yield junk bonds is much
more risky than a fund that invests in government securities. Furthermore, nearly
all bond funds are subject to interest rate risk, which means that if rates go up the
value of the fund goes down.
Balanced Funds
The objective of these funds is to provide a balanced mixture of safety, income
and capital appreciation. The strategy of balanced funds is to invest in a
combination of fixed income and equities. A typical balanced fund might have a
weighting of 60% equity and 40% fixed income. The weighting might also be
restricted to a specified maximum or minimum for each asset class.

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A similar type of fund is known as an asset allocation fund. Objectives are similar
to those of a balanced fund, but these kinds of funds typically do not have to hold a
specified percentage of any asset class. The portfolio manager is therefore given
freedom to switch the ratio of asset classes as the economy moves through
the business cycle.
Money Market
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, commercial paper and
government securities, etc. These funds are appropriate for corporate and
individual investors as a means to park their surplus funds for short periods
Gilt fund
These funds invest exclusively in government securities. Government securities
have no default risk.
Index Funds
The last but certainly not the least important are index funds. This type of mutual
fund replicates the performance of a broad market index such as the S&P
500 or Dow Jones Industrial Average (DJIA). An investor in an index fund figures
that most managers can't beat the market. An index fund merely replicates the
market return and benefits investors in the form of low fees.

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 SELECTION PATTERN FOR MUTUAL FUNDS
1. Performance Ranking
Performance Ranking More than the recent or long term performance of any
scheme its ranking among peers should be looked at. To find out the ranking
you need to check out the quartile ranking which will show how the fund has
performed quarter on quarter among its peer group. In quartile ranking each
quartile comprises of 25 percent of peer group schemes. So one may select the
scheme which has remained in top quartile most of the time. If at all you find
your scheme going below 3rd quartile in a couple of consecutive quarters it
hints that time has come to exit the scheme. You can find these rankings from
the factsheets of various AMCs and also on some mutual funds research
websites.
2. Ratio analysis
Risk and return ratios like standard deviation, Sharpe ratio etc. I have discussed in
my earlier article on Measuring Mutual funds risk. Along with those ratios, one
also should check out the ALPHA of the fund. Alpha tells us what extra or less
the fund manager has generated out of a given portfolio in comparison to
benchmark. In other words alpha is the performance ranking of the fund manager.
You may check how often the fund manager has generated positive alpha in last
few quarters and also keep a watch on its consistency going forward.

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3. Total expense ratio
Expense ratio is very important parameter to be looked at while selecting any
mutual fund scheme. All fund management and distribution related expenses
are borne by the scheme. This means high expense ratio will affect the fund’s
returns. Though mutual fund’s total expense ratio has been capped by SEBI,
still lower the better unless we get some extraordinary return by paying higher
expenses for fund management.
4. Fund manager tenure and experience
Fund manager plays a very important role in the fund’s performance. Though it
is a process oriented approach but still fund manager is the ultimate decision
maker and his experience and view point counts a lot. You should know who is
the fund manager of the scheme and what is his past track record. You should
also look at the performance of other funds which he is managing. If the fund
manager of the scheme has recently been changed, don’t panic. Just keep a
watch on his performance by looking at alpha and quarter to quarter
performance. If you find that due to change in the fund manager there is
considerable effect on the fund’s performance which does not suit your risk
appetite then you may make a decision to exit.
5. Scheme asset size
This parameter is different for debt and equity schemes. In equity the
comfortable asset size in hundreds of crores, in debt it should be in thousands
of crores as the investment value per investor is higher in debt funds. 90
percent of total assets under management (AUM) of the mutual fund industry

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are invested in debt funds, so your selected scheme assets should also have a
considerable AUM. Less AUM in any scheme is very risky as you don’t know
who the investors are and what quantum of investments they have in this
particular scheme. Exit of any big investor out of any mutual fund may impact
its overall performance very badly and the remaining investors in a scheme
will have to bear the impact. In schemes with larger AUMs this risk gets
minimized.
RISK IN MUTUAL FUND SCHEMES
Like most investments, mutual funds have risk — you could lose money on your
investment. The value of most mutual funds will change as the value of their
investments goes up and down.
The level of risk in a mutual fund depends on what it invests in. Usually, the higher
the potential returns, the higher the risk will be. For example, stocks are generally
riskier than bonds, so an equity fund tends to be riskier than a fixed income fund.
Some specialty mutual funds focus on certain kinds of investments, such as emerging
markets, to try to earn a higher return. These kinds of funds also tend to have a greater
risk of a larger drop in value
6 common types of risk:
Type of risk Type of investment
affected
How the fund could lose money
1. Market
risk
All types The value of its investments decline
because of unavoidable risks that affect
the entire market
2. Liquidity
risk
All types The fund can’t sell an investment that’s
declining in value because there are no
buyers.
3. Credit risk Fixed income securities If a bond issuer can’t repay a bond, it
may end up being a worthless

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investment.
4. Interest
rate risk
Fixed income securities The value of fixed income securities
generally falls when interest rates rise.
5. Country
risk
Foreign investments The value of a foreign investment
declines because of political changes or
instability in the country where the
investment was issued.
6. Currency
risk
Investments denominated
in a currency other than
the Canadian dollar
If the other currency declines against the
Canadian dollar, the investment will lose
value.
 OTHER INVESTMENT PLANS AND SERVICES IN MUTUAL FUNDS
1) SYSTEMATIC INVESTMENT PLAN
A Systematic Investment Plan (SIP) is a simple method of investing, used across
the world as a means to accumulate wealth. It works the same way as a recurring
deposit account. SIP involves investing a fixed sum of money in a specific
investment scheme, on a regular basis, for a pre-determined number of periods.
How do SIP’s work?
A SIP is a flexible and easy investment plan. Your money is auto-debited from
your bank account and invested into a specific mutual fund scheme. You are
allocated certain number of units based on the ongoing market rate (called NAV or
net asset value) for the day.
Every time you invest money, additional units of the scheme are purchased at the
market rate and added to your account. Hence, units are bought at different rates
and investors benefit from Rupee-Cost Averaging and the Power of Compounding.
Rupee-Cost averaging
With volatile markets, most investors remain skeptical about the best time to invest
and try to 'time' their entry into the market. Rupee-cost averaging allows you to opt

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out of the guessing game. Since you are a regular investor, your money fetches
more units when the price is low and lesserwhen the price is high. During
volatile period, it may allow you to achieve a lower average cost per unit.
Power of Compounding
Albert Einstein once said, "Compound interest is the eighth wonder of the world.
He, who understands it, earns it... he who doesn't... pays it." The rule for
compounding is simple - the sooner you start investing, the more time your money
has to grow.
2) SYSTEMATIC WITHDRAWAL PLAN
SWP refers to Systematic Withdrawal Plan which allows an investor to withdraw a
fixed or variable amount from his mutual fund scheme on a preset date every month,
quarterly, semi annually or annually as per his needs.
An investor can customize the cash flows as desired; he can either withdraw a fixed
amount or just the capital gains on his investments. SWP provides the investor with a
regular income and returns on the money that is still invested in the scheme.
3) SYSTEMATIC TRANSFER PLAN
Under STP, you invest a lump sum amount in one scheme and regularly transfer a
pre-defined amount into another scheme, on a specified date. The mutual fund will
reduce the number of units equal to the amount you have specified from the
scheme you intend to transfer money. At the same time, the amount that is
transferred will be utilized to buy the units of the scheme you intend to transfer
money into, at the applicable net asset value (NAV). You can get into a weekly,
monthly or a quarterly transfer plans as per you needs..

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CHAPTER-2
COMPANY PROFILE

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PRUDENT C.A.S. LTD.
 Nature of the Organization
Prudent CAS (Corporate Advisory Services) Ltd, originally established as Prudent
Fund Manager in 2000, is a registered investment company.
They offer specialized services in the areas of Personal and Corporate Investment
Planning through Mutual Funds, Equities, Derivatives, Third Party Products, Fixed
Income Products and Life/General Insurance.
It focus on each client, build investment strategies tailored to specific client needs,
and regularly review those strategies to increase the likelihood of success. It would
like to know the client’s goals and aspirations. So that it can determine an investing
strategy that helps you achieve your full potential.
Prudent CAS (Corporate Advisory Services) ltd. gives advices to its clients
regarding Financial Planning. The research team provides the desk to the necessary
information regarding the different mutual fund schemes and other investments
options like Insurance etc.
The company sells its financial products through both direct and indirect force.
Prudent Channel since its inception has a strong hold in the market through its
Direct Force. It also has strong hold on the corporate channel also now wants to
have a greater reach to its clients which it has already developed through its 150
certified brokers just the beginning of the force that will grow in leaps and bounds.
The company also has a strong and efficient research team that is currently
working from Gujarat which publishes the data that helps the clients in assessing
their funds performance.

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Prudent believes in understanding the customer needs and offering the product that
can match his requirement (marketing) as against just selling what product is
already available. Owing to the inherent professional expertise we first study and
understand the investment requirements and circumstances. Our experts assess the
investors' need and their risk profile. Once the entire comparative analysis is done
then the best possible option is advised to the investors. The best possible option
provides the proper asset allocation to various asset classes and also the estimated
risk involved. This helps us to provide our clients an optional basket of funds rather
than selling the typical available funds. This approach lets us set our focus on the
quality work rather than the just the quantity.
Prudent is a service based distribution company mainly operates in functional
areas of finance, marketing & sales for financial products. Company is in the
business of distribution of and marketing research of financial products like mutual
funds, insurance, wealth management, stock broking, real estate.
 Company’s vision and mission
Vision : Providing Professional services in area of Personal and Corporate
Investment keeping in view the requirements of the client.
Mission : To help Investor in their Wealth Creation by advising them to invest in
the best products.
 Product Range of the Company
Prudent CAS Ltd plans the financial needs in customized way. It analyses market
trend and investment buckets in turn to have maximum returns. Prudent CAS Ltd
serves with array of financial planning.
Spectrum of Products in which Prudent has an expertise:
1) Mutual Funds.

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2) Investment Consultancy.
3) Equity and Derivatives broking.
4) RBI Relief funds and Infrastructure Bonds.
5) Life and general Insurance.
6) Fixed Deposits (fixed income products)
7) Real Estate
8) Third party products
Mutual funds
A mutual fund is just the connecting bridge or a financial intermediary that allows
a group of investors to pool their money together with a predetermined investment
objective. The mutual fund will have a fund manager who is responsible for
investing the gathered money into specific securities (stocks or bonds). When you
invest in a mutual fund, you are buying units or portions of the mutual fund and
thus on investing becomes a shareholder or unit holder of the fund.
Investment consultancy
Managing your money and planning your financial security are no easy tasks. Time
constraints, tax laws that are constantly changing and a confusing assortment of
investment options - all present road blocks for most people seeking to manage their
finances in a profitable way. As an experienced private investment advisor, we are
able to offer high - performance financial products that help you take right financial
decisions. Our experts analyze your basic financial goals - elements such as needs and
desires, your status in life and your current net worth and then advise an optimal

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solution.
Equity and derivative broking
Incorporated in 2004, Prudent Broking Services Pvt. Ltd is a Stock Broking and
Depository Participant service provider. Company is a member with Bombay Stock
Exchange (BSE) and it applied for membership of National Stock exchange (NSE)
& Central depository services (India) Limited (CDSL). Company is in the process
of creating its national presence by opening offices in various parts of the country.
A broker's function is to arrange contracts for property in which he or she has no
personal interest, possession, or concern. The broker is an intermediary or
negotiator in the contracting of any type of bargain, acting as an agent for parties
who wish to buy or sell stocks, bonds, real or Personal Property, commodities, or
services. Rules applicable to agency are generally relevant to most transactions
involving brokers. The client is considered the principal and the broker acts as the
client's agent. An agent's powers generally extend beyond those of a broker. A
distinguishing feature between an agent and a broker is that a broker acts as a
middleperson. When a broker arranges a sale, he or she is an agent of both parties.
Infrastructure bonds
Bonds issued to help fund infrastructure projects such as those for land or air
transport, electricity generation and transmission or distribution of water supply.
The bonds carry tax advantages which enable funding at lower interest rates.
Bonds can be issued in secured or unsecured form. Normally bonds issued in the
form of debentures are secured. Bond issued by Financial Institutions offer

41. 41 | P a g e
attractive returns. Interest under the scheme is paid monthly, quarterly, half yearly,
annually and on maturity. Most of the bonds provide flexibility, liquidity and
Safety. The flexibility can be seen from the range of options provided (i.e.)
frequency of return/tenure/tax benefits etc. Bonds provide good liquidity, option to
withdraw on pre-specified dates, listing on major stock exchanges, avail loans from
banks by pledging bonds/securities.
Life insurance and general insurance
Life insurance is a contract under which the insurer (Insurance Company) in
consideration of a premium paid undertakes to pay a fixed sum of money on the
death of the insured or on the expiry of a specified period of time whichever is
earlier.
In case of life insurance, the payment for life insurance policy is certain. The event
insured against is sure to happen only the time of its happening is not known.
So life insurance is known as ‘Life Assurance’. The subject matter of insurance is
life of human being. Life insurance provides risk coverage to the life of a person.
On death of the person insurance offers protection against loss of income and
compensate the titleholders of the policy.
General insurance or non-life insurance policies, including automobile and
homeowners policies, provide payments depending on the loss from a particular
financial event. General insurance typically comprises any insurance that is not
determined to be life insurance.
Looking at the immense growth potential of the insurance sector in India, Prudent
Insurance Services Pvt. Ltd. was incorporated in 2008.

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Fixed Deposits
Bank Fixed Deposits are also known as Term Deposits. In a Fixed Deposit
Account, a certain sum of money is deposited in the bank for a specified time
period with a fixed rate of interest. The rate of interest for Bank Fixed Deposits
depends on the maturity period. It is higher in case of longer maturity period. There
is great flexibility in maturity period and it ranges from 15days to 5 years. The
interest can be compounded quarterly, half-yearly or annually and varies from bank
to bank. Minimum deposit amount is Rs 1000/- and there is no upper limit. Loan /
overdraft facility is available against bank fixed deposits. Premature withdrawal is
permissible but it involves loss of interest.
Fixed deposits with the banks are nearly 100% safe as all the banks operating in the
country, irrespective of whether they are nationalized, private, or foreign, are
governed by the RBI's rules and regulations, and give due weight age to the interest
of the investor. Till recently, all bank deposits were insured under the Deposit
Insurance & Credit Guarantee Scheme of India, which has now been made
optional. Nonetheless, bank deposits are among the safest modes of investment.
One can get loans up to 75- 90% of the deposit amount from banks against fixed
deposit receipts. Though the interest charged will be slightly more than the interest
earned by the deposit.
Real estate
Real estate has emerged as an important asset class in recent years in India. Greater
transparency, emergence of large national players and entry of organized finance
have worked together to make real estate an avenue retail investors can think as an
asset class. Real estate offers valuable diversification to an investment portfolio. In

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most cases it is a dividend paying asset with good appreciation potential. Hence it
offers income as well as growth as an asset. Also if chosen carefully, the price risk
associated with real estate tends to be lower than that for equity. The downside to a
real estate investment is larger investment size, greater transaction cost, lower
liquidity and greater information asymmetry.
The Indian real estate sector plays a significant role in the country's economy. The
real estate sector is second only to agriculture in terms of employment generation
and contributes heavily towards the gross domestic product (GDP). Almost five per
cent of the country's GDP is contributed to by the housing sector. In the next five
years, this contribution to the GDP is expected to rise to 6 per cent.
Almost 80 per cent of real estate developed in India is residential space, the rest
comprising of offices, shopping malls, hotels and hospitals. According to the Tenth
Five-Year-Plan, there is a shortage of 22.4 million dwelling units. Thus, over the
next 10 to 15 years, 80 to 90 million housing dwelling units will have to be
constructed with a majority of them catering to middle- and lower-income groups.
 Size in terms of manpower & turnover of organization
Manpower: - Prudent presently has a manpower pool of 400 employees.
Turnover: - Prudent has a sales turnover of Rs 600-700 crores out of which profit
turnover is around 50 crores and the company is having over Rs 3,000 crores of
AUM (Asset under Management).

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 Organization structure of the company
Fig2(a): Organizational structure of the company
 Market share and position of the company in the industry
Market share:- The total market share of the industry is 5 lac crores and Prudent
CAS ltd. is now capturing 3000 crores as its AUM (asset under management).
Market position:- It captures 6% of the market share just after Bajaj capital which
is leading the race.
 Services Provided to Prudent Valueable Clients
1. Weekly report send by e-mail.
2. Inform about each and every new N.F.O.
3. Any information related with Indian Investment World.

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 Company’s Achievements
1. Have gained a dominant place in the Indian mutual funds distribution business.
2. Certified by the Association of Mutual Funds as AMFI registered Mutual Funds
advisors.
3. Won the best broker award twice in the year 2004 and 2005 for outstanding
performance in the schemes of Birla Sun Life and State Bank Of India’s Mutual
Fund.
4. Won many awards and certificates for outstanding performance in various
Mutual Funds schemes.
5. It has acquired about 25 to 29% share of the total Mutual Fund business of
Gujarat.
6. Assets under Management (AMU) more than 1700 crores.
7. Prudent C.A.S. Ltd. has tie up almost 30 AMC out of 36 operating in Mutual
Fund industry.
 FINANCIAL PLANNING OF PRUDENT CAS LTD.
Financial planning
Financial planning is the process of developing a personal roadmap for the financial
well being. The inputs to the financial planning process are:
1. the finances, i.e., the income, assets, and liabilities,
2. the goals, i.e., current and future financial needs and
3. the appetite for risk.

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The output of the financial planning process is a personal financial plan that tells how
to use the money to achieve goals, keeping in mind inflation, real returns, and taxes.
In short, financial planning is the process of systematically planning finances towards
achieving your short-term and long-term life goals. Life Goals most people nurture
dreams of owning a bigger house or car, exploring the world, giving their children the
best possible education, a blissful retirement, etc. Basically, these dreams are life
goals. Consider this example: Mr and Mrs Khanna, 35 and 32 respectively, have a
three year old son. Both work in private sector companies. Mr Khanna plans to retire
when he’s 50. From their current one bedroom rented suburban Mumbai apartment,
the Khannas hope to move to their own two bedroom apartment costing around Rs 25
lakh within the next five years. They own a small car, for which they have availed of
a loan. Mr Khanna reckons that he will need Rs 15 lakh for his son’s higher education
15 years later. He also wants to build a corpus of Rs 75 lakh for his retirement. While
distinguishing short term goals from long term goals, you must keep in mind that, as a
general rule, any life goal that needs to be met within five years can be considered as
short term. Beyond that, any other goal can be classified as long term. By this
classification, the Khannas’ goals can be classified as follows:
Using a similar yardstick, you may classify your own life goals. Each of them needs
financing. How you plan your finances, to have the right amount at your disposal at
the right time, is what financial planning is about.Importance of financial planning.
Can you manage without financial planning? Many people do, but they may find—
often when it’s too late—that they don’t have the means to achieve their life

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goals. For example, people today realize the importance of living life to the fullest.
Consequently, many opt for early retirement from full time jobs, as compared to a few
decades ago, when most people worked until the maximum retirement age of 58-60
years. The average person can, today, expect to live a healthy life well into his or her
seventies or eighties, which means that retirement life is almost as long as working
life. Financially, it implies that savings (after taking into account inflation) should be
enough, not just to maintain the same lifestyle for almost 25-30 years, with no new
income, but also to take care of medical expenses, which are usually high the older a
person gets. Planning for all this is a tall order for anyone. That’s why it’s critical for
everyone to plan their finances from an early age. So, what do you need to know
about yourself when thinking about a Financial Plan? Financial plan entirely depends
upon how much effort one is willing to put in. This means not just having a good
handle on the details of your income and expenses, assets and liabilities, but more
importantly on the following items:
1. Time Horizon and Goals
2. Risk Tolerance
3. Liquidity Needs
4. Inflation
5. Needfor Growth or Income
No doubt there are other factors that are important as well, but we believe that the
above five require a more detailed study on the part.
Time Horizon and Goals: It is important to understand what the goals are, and over
what time period you want to achieve the goals. Some goals are short term goals those

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that you want to achieve within the year. For such goals its important to be
conservative in one’s approach and not take on too much risk. For long term goals,
however, one can afford to take on more risk and use time to one’s advantage.
Risk Tolerance: Every individual should know what their capacity to take risk is.
Some investments can be more risky than others. These will not be suitable for
someone of a low risk profile, or for goals that require you to be conservative.
Crucially, one’s risk profile will change across life’s stages. As a young person with
no dependants or financial liabilities, one might be able to take on lots of risk.
However, if this young person gets married and has a child, he/she will have
dependants and higher fiscal responsibilities. His/her approach to risk and finances
cannot be the same as it was when he/she was single.
Liquidity Needs: When the money is needed to meet the goal and how quickly can
you access this money. If investment is in an asset to and expect to sell the asset to
supply you funds to meet a goal, then please understand how easily you can sell the
asset. Usually, money market and stock market related assets are easy to liquidate. On
the other hand, something like real estate might take you a long time to sell.
Inflation: Inflation is a fact of our economic life in India. The bottle of cold drink that
you buy today is almost double the price of what you paid for ten years ago. At
inflation or slightly above 4% per annum, a packet of biscuits that costs you Rs 20
today will cost you Rs. 30 in ten years time. Just imagine what the cost of buying a
car or buying a home might be in ten years time! The purchasing power of your

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money is going down every year. Therefore, the cost of achieving your goals need to
be seen in what the inflated price will be in the future.
Needfor Growth or Income: As you make investments, think about whether you
are looking for capital appreciation or income. Not all investments satisfy both
requirements. Many people are buying apartments, but are not renting them out even
after they take possession. So, this asset is generating no income for them and they are
probably expecting only capital appreciation from this. A young person should
usually consider investing for capital appreciation to take advantage of their young
age. An older person however might be more interested in generating income for
themselves. Benefits of financial planning Here’s a list of the benefits that a well
chalked out financial plan can bring about:
 Helps monitor cash flows and reduces unnecessary expenditure.
 Enables maintenance of an optimum balance between income and
expenses.
 Helps boost savings and create wealth.
 Helps reduce tax liability.
 Maximizes returns from investments.
 Creates wealth and ensures better wealth management to achieve life
goals.
 Financially secures retirement life.
 Reviews insurance needs and therefore also ensures that dependents are
financially secure in the unfortunate event of death or disability.
 Lastly, it also ensures that a will is made.

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The financial planning process-
This section examines each of these steps in detail.
Step 1: Identify the current financial situation
Sit down with all the earning members of your family and gather all information about
your sources of income, debts, assets, liabilities, etc. This gives you a picture of your
current financial situation.
Step 2: Identify the goals
Ask each member to list what they think are current and future family goals. Prioritize
each goal by establishing consensus and put a time period against each, i.e., when will you
need the finances to achieve that goal. If possible, quantify each goal. This exercise
enables recognition of short term and long term goals, and how much money you need for
each.
Step 3: Identify financial gaps
Once you know where you stand financially, and where you want to be, i.e., how much
you have or can expect regular sources of income to generate, and how much you need to
fulfill various goals.
A simple calculation gives you an idea of the shortfall. This is important, because,
identifying the right investments to cover the shortfall depends on you quantifying the
income from investments.

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Step 4: Prepare the personal financial plan
Now review various investment options such as stocks, mutual funds, debt instruments
such as PPF, bonds, fixed deposits, gilt funds, etc. and identify which instrument(s) or a
combination thereof best suits your needs. The time frame for your investment must
correspond with the time period for your goals.
Step 5: Implement the financial plan
It’s now time to put things into action. Gather necessary documents, open necessary bank,
demat, trading accounts, liaise with brokers and get started.
Most importantly, start investing and stick to your plan.
Step 6: Periodically review the plan
Financial planning is not a one-time activity. A successful plan needs serious commitment
and periodical review (once in six months, or at a major event such as birth, death,
inheritance). You should be prepared to make minor or major revisions to your current
financial situation, goals and investment time frame based on a review of the performance
of your investments.
Financially challenged individuals who feel this is just beyond them, can of course always
consult professional financial planners, who takes one through the whole process. Being a
long term commitment, financial planning goes on until one meets his last goal. It is also a
personal decision, which implies that a person must select someone who he is comfortable
with, and can build a long term relationship that is mutually beneficial.
Tips for making the most of the financial planning process
1. Start now. Even if you are in your mid thirties or forties, it’s better to start now

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than dawdle for another five years. Every day counts.
2. Be honest with yourself. Seek help when needed.
3. Set sensible, measurable goals for yourself. Be realistic in your expectations of the
results of financial planning.
4. Review your plan and financial situation periodically and adjust as needed.
5. Always review the performance of your investments; pull out if needed and
reinvest the money elsewhere.
6. Be hands-on. It’s your money and no one else will do your work for you.
Features of a good financial plan
How do you evaluate the quality and effectiveness of your financial plan? Well, here’s a
checklist we can use.
 Does it indicate your current financial situation?
 Does it list out all your goals in measurable terms?
If professional help is sought, your financial planner will ensure that your financial plan
also contains the following:
 List of possible risks and a risk management plan.
 Expected returns from each investment.
 A mapping between the investments and goals, i.e., how each investment helps
you
 Details of one time and recurring fees charged by him.

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The building blocks of financial planning-
Let us have a look at these blocks, what they are and how to go about their planning:
1.Retirement planning
2. Investment planning
3. Insurance planning
4. Contingency planning
Let us start with the foundation and the first of the two levels in risk management.
 Retirement Planning :
The longest of journeys start with a single step. We are not sure who said that, but
being in the financial planning space, we think it most aptly describes what retirement
planning is all about. Planning for retirement is one long journey but a resolute and
systematic step-by-step approach makes it a lot less laborious.
1. Start early
A well-prepared approach towards any goal is usually the result of an early
start. Retirement planning is no different. We hear financial planners say that
it’s never too early to start saving for retirement, they are right. Make no
mistake that an early start helps and you will be surprised at just how much it
helps. Your friend or colleague who started saving for retirement even five
years earlier than you with the same quantum of investments is likely to save
twice as much as you at retirement. Even if you don’t have the requisite

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amount of money required to start, the key lies in starting with what you have
and making up for the deficit at a later stage. However the opportunity to
make an early start should not be compromised with.
2. Seek the assistance of a financial planner
Planning for retirement can be fairly uncomplicated. You need to have a good
idea of where you want to be 30 years from now in financial terms and what
kind of a lifestyle you would like to maintain. However, putting the financial
plan in place (which has a lot to do with math, an unpopular subject with a lot
of us at school) can be quite complicated. This is where an investment advisor
steps in. He can give a concrete shape to your retirement plan by coming up
with ‘the all-important figure’, based on your inputs and chart out a plausible
investment strategy for the long term.
3. Implementing the plan
Having an investment plan in place sets the ball rolling for you and your
investment advisor. He will now implement the plan by making investments
in stocks, mutual funds, bonds, small savings schemes and fixed deposits
among other investment avenues. Your risk profile is the most important
reference point for the investment plan. The objective is to invest in avenues
that lower risk and maximize returns and do so in line with your risk profile.
Asset allocation i.e. investing across assets in varying degrees will play a vital
role over the long run. This is where the investment advisor’s expert advice
will play a crucial role. Typically a retirement portfolio should be well-
diversified across pension plans, mutual funds, equities, EPF/PPF and fixed

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deposits.
4. Tracking/reviewing the plan
Your investment plan must be monitored regularly to make sure that you are
on course to meeting your objectives over different market cycles without
compromising on the risk. Again, your investment advisor has an important
role to guide you in this regard. For instance, with the robust performance of
equity markets over the last couple of years, you are probably over-invested in
equities and have therefore taken on more risk than usual. You will have to
liquidate some of your equity investments to bring it in line with your risk
profile. With passage of time as your risk profile changes, the same will be
reflected in your investments as well. The portion of investments in market-
linked products like equities and mutual funds is likely to reduce; instead
greater allocations could be made in assured return avenues like fixed
deposits.
5. Don’t dip into the retirement savings
Since retirement money is sacred it is important that you treat it as such. Your
carefully drafted investment plan need not go for a toss every time you
witness a cash crunch. Avoid dipping into your retirement monies, unless it’s
urgent. A one-time sum of Rs 5,000 invested over 30 years (at 10%
compounded growth) will swell to Rs 100,000. That is what long-term
investing can do for you, so money needs to go into your retirement savings
kitty and not come out of it.

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 Investment planning
Why do we invest?
Of course to save money and earn returns! For what?
Your obvious answer would be: for my and my family's future. If asked to elaborate, I
am sure you will find it difficult to list down five things for which you are saving
money. But if the investments or the money you are saving is not invested in right
investment avenues then in the hour of crisis you either have invested in a locked-in
financial product or their value has become half or in a product which rates very low
in liquidity (like real estate). So the right type of investment product is very important
to help your money grow and in achieving your goals.
So this is where investment planning comes in place. Investments of your hard earned
money should always be done considering your goals and the time frame in which
you want to achieve your goals. The next question is how to go about it. First you
need to start with charting, that is, writing down your goals and the time frame in
which you would like to achieve them. This forms the base of your investments. To
make the task simpler, you can break down your goals into three different sections:
 Responsibilities: Providing for your dependent parents; funding for your
children's education and marriage; funding for marriage of your siblings, etc
 Needs: Buying a house, saving for retirement, buying office space and any
other needs you may have
 Dreams: Finally, your dreams or your aspirations which can range anywhere

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from buying a solitaire for your wife to going on a world tour to buying a
sports car
We live only once and so no dream is too big or far-fetched. The next step is the time
frame in which you would like to achieve it. Let me explain the importance of this via
an example.
Let us say you want to save for a down payment for the dream car, which you are
planning to buy after a year and a half. You start saving by investing regularly in
equity mutual funds. After a year, just nearing the time frame you have set for
yourself, you decide to redeem the investment and the market crashes. Forget the
profit, your initial investments too has halved in value.
Equities are good investments but only when you have the time frame of more than
eight years. Then you can be rest assured that your investments will earn on an
average 13 per cent to 15 per cent return.
 Insurance planning
It is the planning for an adequate amount of insurance. And it definitely does not end
with life insurance alone. One needs to also plan for health insurance, disability
insurance, and property insurance. These insurances are very important and everyone
should try to incorporate them in their insurance planning. First and foremost, it is
very important to know one very important fact. Insurance is not investment and vice
versa. Never try to mix the two. Insurance is for risk management and investments are
for goal achievements. This golden rule should form the crux of your decision-
making when buying insurance polices. Never buy insurance just because someone

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advises you to buy. Try and understand the product, correlate it with your needs and
requirements and only then go for it. So how much is adequate? A number of
components go into the calculations in finding the adequate amount of insurance.
These are:
 Your current age
 Inflation adjusted returns
 Number of dependent in the house
 One time cost (which includes any existing loans that you may have taken,
(exclude the home loan which is already insured against declining term
insurance) and any other expenses such as last rites expenditure)
 Your current cost of living (only include the fixed and variable mandatory
expenses. Exclude any mandatory expenses related to you since these
expenses will cease to exist after your demise)
 The amount needed to pay off responsibilities like your child's education and
marriage
 Exiting investments
 Any existing life insurance
All these factors help in finding the adequate amount of life insurance. Hence if you
have any existing insurance then you only need to buy the additional amount. NOTE:
If you are no more an earning member of the family, that is, if you have retired, then
you should not take any life insurance.

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Health insurance
A must again with the increasing amount of stress that the younger generation is
facing, we would not be surprised if you have already started running huge amounts
of medical bills at a young age. A minimum amount of Rs 2 lakh is a must. If
affordable increase the amount. Also, if possible try to take individual policies as
against family floater plans.
This is because if you have a floater health policy worth Rs 3 lakh, and you fall sick
and use up an amount of say, Rs one lakh worth of health insurance, only Rs 2 lakhs
will be available for the rest of the year for you and your entire family.
In fact now individuals have an option to go for a top-up, that is, if you have an
existing policy with your employer or you have bought it one yourself then you can
top it up to Rs 10 lakh. The premium amount works much cheaper. For example, say
you have Rs 5 lakh of health insurance (this is the maximum offered by most health
insurers today) and you would like to be insured for more than that then you could
buy a top-up plan for another Rs 5 lakh.
So if you have a medical bill of Rs 7 lakh then the first Rs 5 lakh are covered by your
existing policy and the balance Rs 2 lakh by the top-up policy. NOTE: It is very
important to pay your insurance premium on time and see that it does not lapse
especially for individuals who are nearing 60 as after this age very few insurance
companies offer health insurance and to get a new one is very difficult. Also, for
people who are working and have not taken any other mediclaim policy besides the

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one their company offers them, remember that once you leave the job and find a new
one, you might no longer be covered by that policy.
Disability insurance
Again an important insurance policy, especially, for individuals who travel
frequently. Accidents can happen anytime and if it leads to any disability then well
let's not even think about it. This policy is not an expensive one though. There is also
an option for individuals to take this insurance as a rider along with their life
insurance.
Compare the premium amounts of a standalone policy and the premium if it is taken
as a rider and then decide which one is better.
Property insurance
Your hard earned money has gone in setting up your house. If something were to
happen to it, or maybe something is stolen then it is difficult to replace. So it is
always advisable to have your property insured. The premium amount is low and
hence this amount will not pinch your pockets.
The only hitch is that in India, property insurance is for the market value and not for
the replacement value of the property. But this should not be an excuse for not taking
property insurance.
Professional indemnity insurance
This insurance policy is a must for all professionals to protect them from any claim

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arising during the course of their business.
I know it sounds like too many insurances at one time will leave you with no money
for other investment planning but the ones mentioned here are amongst the most
commonly needed ones. The most important are the life insurance and health
insurance and for individuals who are nearing their retirement age or are retired for
them health insurance a must. Once these two are in place you can buy the others
eventually. Once we are assured that your risk is managed, we do not have to worry
about it anymore. Now we can safely move towards investing and planning to achieve
your goals.
 Contingency planning
Also known as emergency planning. It has been emphasised time and again that a
contingency plan or an emergency plan has to be in place before starting to plan for
other goals. Why? Emergencies can come anytime or anyplace especially when we
least expect it. We cannot predict it or even prevent it but what we can do is buffer
ourselves against it so that our life does not go for a toss due to the emergency. It is
basically saving for a rainy day. So once that you have planned for any untoward or
unpredicted eventualities, you can safely move ahead to the next level of the financial
plan.
How to calculate?
All your mandatory monthly expenses which you have to meet by hook or by crook
have to be taken into account. A list of all mandatory expenses have been given
below:

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Fixed mandatory expenses (which are fixed every month) include:
 Mortgage installment
 Car loan installment
 Other loan installments
 Life insurance premium
 Health insurance premium
And variable mandatory expenses (which are mandatory but vary every month)
include:
 Food
 Utilities
 Grocery
 Transportation
 Miscellaneous (unavoidable) expenses
The above expenses have to be calculated on a yearly basis and then divided by 12
months so as to arrive at an average monthly figure.
How much to set aside?
At least three months of your average monthly expenses have to be kept aside in the
form of emergency funds since it is generally observed that three months worth of
funds are enough to meet most emergencies and come back on track. People nearing
retirement should try and keep aside at least five to six months of mandatory monthly
expenses as contingency fund.

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Let us take an example: Say your yearly mandatory expense is Rs 350,000.00.
Hence your monthly average expenses will come to Rs 29,167 (3,50,000/12)
(rounded off). You need to keep aside Rs 87,500 (29,167*3) that is your three
months' average monthly expenses as contingency funds to meet any eventualities.
It is not necessary to keep the entire amount in cash. You can keep aside Rs 20,000 in
cash and the balance you can split between savings account, fixed deposit, or liquid
funds. Why? Because all of the above mentioned products have liquidity, their
biggest advantage, which is a very important feature in case of any emergencies.
Also, remember that in case of usage of these funds always remember to replenish it.
 PORTOLIO OF PRUDENT CAS LTD.
Investment related reports
 Portfolio Valuation Report – Detailed
 Portfolio Valuation Report – Summary
 Capital Gain/Loss Report
 Dividend Income Report
 Transaction Report
 AUM Report
 Customer Profiling Report
SIP related reports

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 SIP Transaction Report
 SIP Reminder Report
 SIP Reconciliation Report
 SIP Termination/Closed Report
 SIP Account report
 SIP Calculator
Administration
 Shift Sub Group
 Create Sub Group
Other Reports and Utilities
 Insurance Pending Policy and Premium Report
 Change Password

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Working Theory Of Prudent C.A.S. Ltd.
To provide reliable information

To honor our service commitments

To maintain all records in privacy

To preserve client capital

To provide appropriate feedback

To guide their future investment

To restructure investment plan on demand

Finally to provide complete solution & peace of mind on the investment plan

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SWOT ANALYSIS OF THE COMPANY
Strengths of the Company
 Prudent CAS ltd. is a national distributor.
 Company has harnessed the potential of information technology for excellent
research and portfolio management through specialized software which works on
real-time market information and generates error-free reports.
 For IT-savvy investors, Company possesses a secured user-friendly website that
contains excellent research and portfolio management tools to help client to access
their portfolios round the clock.
 The research team and the website are backed by a team of veteran IT
professionals, developers, designers, programmers and high-end Servers. The
entire focus is on security of information, integrity of data, and accuracy of real-
time reports.
 Company constantly endeavors to achieve optimum client & partner satisfaction
and confidence building by providing various tailor-made reports according to
client needs. Company possess dedicated qualified team that research and analyze
the various financial products available in the marketplace.
 Company has created in-house capabilities of analyzing funds on various
parameters before suggesting them to clients.
 4000 plus distributors are associated with the company.
 Company is having 6% share in the market with having Rs. 3000 crore plus assets.
 Fulltime Dedicated of Team RM & CRO for client support & Assistance.

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 Regular Meeting with Partners on business and market Updates.
 Company provides an Online 24X7 query module to its clients and associate.
 Company deals in various kinds of financial products which helps the client in
planning their financial management better.
 Wide Branch Network.
 Training at Regular Interval.
Weaknesses of the company
 Company is having fewer branches in north India.
 Company deals in limited products.
 Opportunities and Threats of the Company
Opportunities of the Company
 Company can grow and expand their services & support through sales and
marketing, technology, operations, back- office support, training & consultation.
 Prudent Group expanded its horizon by offering specialized services in the areas
of Personal and Corporate Investment Planning through Mutual Funds, Equities,
Derivatives, Third Party Products, Fixed Income Products, Life/General Insurance
and Real Estate which can help the company become a global player.
 Besides having a large pool of their own clients, the company also has the
potential to manage its geographically-spread business operations through a
unique platform for independent financial advisors (IFA).
 Company is in the process of creating its national presence by opening offices in
various parts of the country.

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 Company is a member with Bombay Stock Exchange (BSE) and it applied for
membership of National Stock exchange (NSE) & Central depository services
(India) Limited (CDSL).
 It also has strong hold on the corporate channel - it now wants to have a greater
reach to its clients which it has already developed through its 2000+ certified
brokers just the beginning of the force that will grow in leaps and bounds.
Threats of the Company
 Company faces competition from various companies in the market.
 Due to few branches of the company in the north India it could affect the company
in the competition geographically
 Company deals in limited products in turn competitor can lead the competition by
dealing in those products in which company does not deal.
Best practices and Unique Selling Proposition (USP) of the Company
 Company provides the online platform to its clients. Company’s 90% dealing is
web based and it provides an online 24 X 7 portfolio and query module that helps
a customer to see their money growing.
 Online Valuation report for all Mutual Fund investments.
 Unbiased advice across the product basket.
 The Variations / Deviations in practices followed by the company
 Prudent CAS ltd. has only one strategy i.e. ‘Distribution’; it can be direct or
indirect. Instead of spending money on normal marketing channels like

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advertisements etc., they focus is on getting the Consumer to use the products and
services of the Company and then asking them to recommend the Company’s
services to his friends, relatives and peers. On achieving a certain turnover or
numbers the person recommending the company is paid certain incentives and
rewards.
 Prudent CAS ltd. believes in sales through investing in different AMCs, not in
advertising their services. Advertising concept is not the part of Prudent CAS ltd.,
though this concept has been taught to us in the classroom.
 The diversity among the work force is not as creative as required as the major
difference between workforces is the age factor.
 Effective strategies are not developed to achieve the company’s goal in concern
with its policies.
 Synergy in team work is seen but there was resistance in different departments.
 Moreover strategies taught in class to handle lower level people were different
 Recruitment process also made a major difference as stages taught in room

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CHAPTER-3
OBJECTIVES OF
STUDY

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 Objectives
1. To study the investment pattern of Investors of Prudent CAS.
2. To find out the awareness level of investors regarding mutual funds.
3. To find the type of schemes of mutual fund preferred by investors.
4. To find out the importance of factors like liquidity, higher return, company
reputation and other factors that influence investment decision of mutual fund
holder.

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CHAPTER-4
RESEARCH
METHODOLOGY

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RESEARCH METHODOLOGY
The study aims to delineate the methodology, employed to undertake this study.
Research is a common parlance, which refers to a search for knowledge. One can
define research as a scientific and systematic search for pertinent.
Research is of great importance to find out the nature, extent and cause of the
research issue under study.
Research methodology is a process in which various steps that are generally
adopted by a research are outlined.
The various steps provide useful guidelines regarding the research process
are:
1. Preparation of the research design.
2. Source of data.
3. Technique of research.
4. Sampling design.
 Preparation of the research Design:
A research design is the arrangement of conditions for collection and analysis of
data. Actually, it is the blueprint of research project.
The research design used for this project is Exploratory Researchand Analytical
Research.
 Sources of Data:
Sound marketing research depends upon the existence of facts or directly related to
problem studied. To fulfill a foresaid objective of study, the information was
gathered from primary as well as secondary sources.

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A. Primary Source Information-
I. Method of obtaining data: Questionnaire.
II. Communication method: Personal meeting.
B. Secondary Source Information-
I. Internal: Company internal information.
II. External: Books, Magazine and Journal’s.
In my study I used secondary as well as primary data. For this research purpose all
primary and secondary data were collected.
 ResearchTechnique:
The following research techniques were used for data collection:
(A) Questionnaire-
Questionnaire was structured to get it filled by investors .
(B) Collection of Information-
The respondents were personally approached to explain the objective of survey.
During the meeting the questionnaire was filled by the respondents.
 Sample Design:
Sample Design refers to the technique as the procedure that a researcher would
adopt in selective item for the sample.
(A) Target Population or Sampling Unit-
The universe of the study is investors of Prudent CAS Ltd.

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(B) Sample Size-
The sample size taken for the study is 100 respondents. The respondents were the
investors of Prudent CAS Ltd. They hold the mutual funds of Prudent CAS Ltd.
(C) Sampling Method-
The agents and investors had been selected on the basis of Random Sampling. The
study is sample survey consisting of small sized sample of agents who had not
much awareness of Mutual Funds and AMFI examination.

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CHAPTER-5
DATA ANALYSIS &
INTERPRETATION

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Ques.1. What is your investment priority?
Interpretation-
28% investors prefer FD, 21% investors prefer Insurance, 10% investors prefer
MF, 15% investor prefers Gold, 18% investor prefers Real Estate and 8% prefer
other options for investing.
28%
18%
21%
10%
15%
8%
No.of respondents
FD
Real estate
Insurance
MF
Gold
Kind of Investment No. of respondents
Fixed Deposits 28
Real Estate 18
Insurance 21
Mutual Fund 10
Gold 15
Other 8

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Ques.2. Which factor influence you to invest?
Factors No. of respondents
Liquidity 20
Low risk 30
High return 32
Trust 18
Interpretation-
32% investors prefer because of High return, 30% prefer because of Low risk,
20% prefer because of Liquidity and 18% investors prefer because of Trust.
20%
30%32%
18%
No. of respondent
Liquidity
Low risk
High return
Trust

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Ques.3. From where did you get information about Prudent CAS Ltd.?
Source of Information No. of Respondents
Advertisement 18
Financial Advisor 46
Bank 22
Peer Group 14
Interpretation-
18%of the customers said that they get the information about MF from
Advertisement, 14% from Peer Group, 22% from Bank and 46% get information
from financial advisors.
18%
14%
22%
46%
No. of respondent
Advertisement
Peer Group
Bank
Financial Advisor

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Ques.4- Which reason prompts you to make an investment in mutual funds?
Reasons for Investment No. of People (in Percent)
Returns 21
Wealth Creation 23
Tax Saving 35
Brand Name Equity 7
Liquidity 14
Interpretation-
23% invest to create their wealth. 21% invest to get returns 35% invest to save tax
this is generally for the people whose most of the part goes in tax. 14% invest
because of liquidity reason. 7% invest on a basis to earn Brand name Equity.
No. of People (in Percent)
Returns
Wealth Creation
Tax Saving
Brand Name Equity
Liquidity
14%
35%
7%
21%
23%

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Ques.5- Which channel do you prefer for MF investment?
Channels No. Of respondent
Financial advisors 60
Banks 15
AMCs 25
Interpretation-
60% of investors prefer financial advisors, 15% of investors prefer bank and 25%
of investors prefer AMC channel.
60%15%
25%
No. of respondent
Financial advisor
Bank
AMC

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Ques- 6- What are your objectives for making investments?
Interpretation:-
25% invest to generate regular income, 35% investors seek tax saving as their main
motive behind investments, 15% investors invest with the objective of planning of
their child’s future,10% prefer as retirement planning and 15% prefer other
options as their objective for investment.
41%
29%
18%
12% 0% Objectives behind investment
Tax saving
Regular
Income
Child's future
Particulars Response
Tax Saving 35
Regular Income 25
Child`s future 15
Retirement plan 10
Other 15
Total 100

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Ques.7- Which fund do you prefer while investing in Mutual Funds?
Interpretation:-
Among the 10% investors of mutual funds, 20%prefer Balanced Fund, 15% prefer
Debt fund, 50% prefer equity, 10% prefer Gold and 5% prefer other available
funds for investing.
21%
16%
53%
10% 0%
Choice of fund
Balanced
Debt fund
Equity Fund
Gold Fund
Other
Particulars Response
Balanced 20
Debt fund 15
Equity fund 50
Gold fund 10
Other 5
Total 100

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Ques.8- Which type of schemes do you prefer to invest in MF?
Interpretation:-
Also, 81% of the investors believed in open-ended schemes and 19% of the
investors believed in close ended.
Particulars Percentage (%)
Close ended 19
Open ended 81
Total 100

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Ques.9- For how long do you prefer to invest ?
Interpretation-
25% investors prefer more than 6-12 months investment period, 31% prefer more
than 2year period, 40% prefer 12 months-2 year and 4% prefer less than 6 months
for an investment period.
4%
40%
25%
31%
Horizon of investment
Less than 6 months
6 - 12 months
12 - 2 year
more than 2year
Period No. of respondents
Less than 6 months 4
6 – 12 months 25
12 – 2 year 40
More than 2 year 31

86. 85 | P a g e
Ques.10. Which mode of investment is preferred by you?
MODE RESPONSE (%)
One time investment 35
Systematic Investment Plan (SIP) 65
Interpretation-
65% investors replied that they prefer one time investment mode and 35% prefer
SIP mode for investment.
35%
65%
MODE OF INVESTMENT
One time
investment
SIP

87. 86 | P a g e
Ques.11- Which is the most preferable option for earning high returns?
Interpretation-
71% investors prefer growth in NAV opinion, 21% prefer dividend reinvestment
and 8% prefer dividend payout as a opinion for getting return.
21%
8%
71%
No.of respondents
Dividend
Payout
Dividend
reinvestment
Growth in NAV
Opinion No. of respondents
Dividend Pay-out 21
Dividend Reinvestment 8
Growth in NAV 71

88. 87 | P a g e
Ques.12- Do you get influenced by past returns provided or by the current
NAV of a fund?
Interpretation-
41% says that they get influenced by NAV, 34% because of returns and 25% says
that they get influenced by both NAV and Returns.
41%
34%
25%
Influencingfactors of returns
By NAV
By return
By both
Return No. of respondent
By current NAV 41
By past returns 34
By both 25