A Project ReportOn

“ROLE OF MUTUAL FUND’S IN INDIAN ECONOMY”

SUBMITTED TO

IAEER’sPUNE INSTITUTE OF BUSINESS MANAGEMENT

BY

AKSHAY D. BUGGEWAR

Roll No: 674/08, FM 034

IN PARTIAL FULFILLMENT OF POST GRADUATE PROGRAMME(PGPBM+MBA)

2008-2010

IAEER’s PUNE INSTITUTE OF BUSINESS MANAGEMENT(PIBM), PUNE

PROJECT GUIDE: Prof. PRASAD V. BHAT

COMPANY GUIDE: Mr. AMBUJ MISHRA

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DECLARATION

I, Mr. /Ms. Akshay D. Buggewar Hereby declare that this project report is the record of authentic work carried out by me during the period from 4th May 2009 to 2nd July 2009 and has not been submitted earlier to any university or institute for the award of any degree/diploma etc.

Name of the Student: Akshay D. Buggewar

Date:

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Company Letter Head

Certificate

This is to certify that the organizational study project is a bonafide and sincere work of Mr. /Ms Akshay D. Buggewar is original and has been made under my supervision in partial fulfillment of requirement for the award of PG Programme for the period from 4th May 2009 to 2nd July 2009. I am pleased to say that his/her performance during this period was: Poor/ Satisfactory/ Good/ Excellent).

_________________

Mr. Ambuj Mishra

Company Guide

Date:

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PUNE INSTITUTE OF BUSINESS MANAGEMENT

Institute Letter Head

Certificate

This is to Certify that Mr. /Ms. Akshay D. Buggewar of IAEER’s Pune Institute of Business Management has successfully completed the project work titled in partial fulfillment of requirement for the completion of PG course as prescribed by PIBM.

This project report is the record of authentic work carried out by him/her during the period from 4th May 2009 to 2nd July 2009 in which He/She has worked under my guidance.

________________ ____________________

Prof. Prasad V. Bhat Prof. Jagdish Khadilkar

Project Guide: Director Academics:

Date:

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ACKNOWLEDGEMENT

With regard to my Project “Role of mutual funds in Indian Economy” with IDFC

Mutual Fund I would like to thank each and every one who offered help, guideline and

support whenever required. First and foremost I would like to express gratitude to

Regional manager Mr. Ambuj Mishra IDFC MF AMC Nagpur, and other staffs for their

support and guidance in the Project work.. I am extremely grateful to my college director

and inspiration for me Mr. Ramanprit sir and my internal guide, Prof. Prasad Bhat for

their valuable guidance and timely suggestions. I would like to thank all faculty members

of Pune Institute Of Business Management for the valuable guidance& support.

I would also like to extend my thanks to my members and friends for their

support. And lastly, I would like to express my gratefulness to the parent’s for seeing me

through it all.

Akshay D. Buggewar

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TABLE OF CONTENTS

Sr.No.Topics Page No.

1. Objectives And Scope Of The Project.

2. Background Introduction / Synopsis Of The Project.

a) Company profile,b) Basic introduction of the project,c) Organizational hierarchy,d) Department.

3.

Methodology Used for the studya) Methods & Tools adopted for study,b) Data collection,c) Analysis of Datad) Pictorial / Graphic / pie charts, presentation

of data.

4.

Observations / Findings.

5. Limitations.

6.

Conclusion.

7.

Suggestions / Recommendations

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8.

Bibliography

Chapter: - 1

SCOPE AND OBJECTIVE

SCOPE:-

India is a one of the fastest developing country. It’s growth rate is increasing year by

year, after Liberalization and Globalization there is a exponential growth in Indian GDP

Indian GDP rate is second highest after china due to foreign direct investments and

foreign institutional investments but some extent due to our spending and conversion of

saving of Indian public into Investment so that the companies utilize those funds for the

productive purpose and hence growth in GDP. As we know that most of the Indian

citizen still likes to keep their savings in a unproductive forms there is a huge scope for

growth in Indian economy. Mutual Funds are the good instruments for mobilize the

funds.

Percentage change in GDP of Asia, India and China during 1990-2005

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Brief introduction of Mutual Funds:-

Mutual fund is a trust that pools the savings of a number of investors who share a common

financial goal. This pool of money is invested in accordance with a stated objective. The

joint ownership of the fund is thus “Mutual”, i.e. the fund belongs to all investors. The

money thus collected is then invested in capital market instruments such as shares,

debentures and other securities. The income earned through these investments and the

capital appreciations realized are shared by its unit holders in proportion the number of

units owned by them. Thus a Mutual Fund is the most suitable investment for the common

man as it offers an opportunity to invest in a diversified, professionally managed basket of

securities at a relatively low cost. A Mutual Fund is an investment tool that allows small

investors access to a well-diversified portfolio of equities, bonds and other securities. Each

shareholder participates in the gain or loss of the fund. Units are issued and can be

redeemed as needed. The funds Net Asset value (NAV) is determined each day.

  Investments in securities are spread across a wide cross-section of industries and

sectors and thus the risk is reduced. Diversification reduces the risk because all stocks

may not move in the same direction in the same proportion at the same time. Mutual

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fund issues units to the investors in accordance with quantum of money invested by

them. Investors of mutual funds are known as unit holders.

Some facts for the growth of mutual funds in India

1. 100% growth in the last 6 years.

2. Numbers of foreign AMC’s are in the queue to enter the Indian markets like

Fidelity Investments, US based, with over US$1trillion assets under management

worldwide.

3. Our saving rate is over 23%, highest in the world. Only channelizing these

savings in mutual funds sector is required.

4. We have approximately 29 mutual funds which is much less than US having more

than 800. There is a big scope for expansion.

5. 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are

concentrating on the 'A' class cities. Soon they will find scope in the growing

cities.

6. Mutual fund can penetrate rural like the Indian insurance industry with simple and

limited products.

7. SEBI allowing the MF's to launch commodity mutual funds.

8. Emphasis on better corporate governance.

9. Trying to curb the late trading practices.

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10. Introduction of Financial Planners who can provide need based advice.

OBJECTIVES:-

My objective of making this project to create awareness of mutual funds and what is happening in

mutual funds. How they can use resources for a development of country and individuals. Many

areas are not yet been covered by Indian mutual fund industry for that objectives are following.

Creating awareness of mutual funds among people.

Guiding them for better investment option.

Creating awareness about how mutual funds can contribute to Indian economy.

How mutual funds can use to achieve individual financial goals.

How mutual funds are beneficial for common people.

Studying mutual funds in detail.

Different Individual Financial Advisors, National Distributors and Bank’s

response towards IDFC Mutual Fund.

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Chapter: - 2

Background Introduction / Synopsis Of The Project.

A) Company profile:-

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OVERVIEV

IDFC is a parent company of IDFC Mutual Fund. IDFC Mutual Fund took over the

Standard Chartered Mutual Fund in 2006 and then it is known as IDFC MF and the

current AUM is over 22708.77 cr.

\

IDFC is a leading private sector diversified financial institution established by a

consortium of strong global and local institutions with the support and sponsorship of the

Government of India.

A majority of IDFC’s shareholding (67% as of March 31, 2008) is held by reputed global

stalwarts that include respectable names like Government of India, International Finance

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Corporation (IFC) - a member of the World Bank Group, Government of Singapore,

AIG, Morgan Stanley, Goldman Sachs, Citigroup, JP Morgan among others. The best

Indian financial institutions such as HDFC, LIC, SBI, and IDBI are owners in IDFC,

making it an institution of high repute and standing.

Mutual Fund IDFC Mutual FundSetup Date Mar-13-2000Incorporation Date Dec-20-1999Sponsor Infrastructure Development Finance Company Limited (IDFC) Trustee IDFC AMC Trustee Company Private LimitedChairman Dr. Rajiv LallCEO / MD Mr. Naval Bir Kumar – PresidentCIO Mr. Kenneth AndradeCompliance Officer Ms. Jyothi KrishnanInvestor Service OfficerMr. Praveen BhattAssets Managed Rs. 22708.77 crore (Jul-31-2009)

Auditors B. S. R. & Co. Chartered AccountantsCustodians Deutsche Bank Limited AG.Registrars Computer Age Management Services Pvt. Ltd.Address One India Bulls Centre, 841, Jupiter Mills Compound, S. B.

Marg, Elphinstone Road (W), Mum. - 400013Telephone Nos. 022-2266289999Fax Nos. 022-24215052

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E-mail investor@idfcmf.com

SPONSORS

IDFC Mutual Fund is sponsored by Infrastructure Development Finance Company

Limited (IDFC). The sponsor is the settler of the Mutual Fund Trust. The sponsor has

entrusted a sum of Rs. 30,000 to the Trustees as its contribution towards the corpus of the

Mutual Fund.

IDFC is a leading diversified financial institution providing a wide range of financing

products and fee-based services with infrastructure as its focus area. IDFC’s key

businesses include project finance, investment banking, asset management, principal

investments and advisory services. IDFC also works closely with government entities and

regulators in India to advise and assist in formulating policy and regulatory frameworks

that support private investment and public-private partnerships in infrastructure

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development. IDFC was established in 1997 as a private sector enterprise by a

consortium of public and private investors and operates as a professionally managed

commercial entity.

IDFC listed its equity shares in India pursuant to an initial public offering in August

2005. As at December 31, 2007, IDFC’s shareholders included the Government of India -

20%, foreign investors (including Khazanah National, IFC, CDC, Morgan Stanley,

Goldman Sachs and Citigroup among others) - 49% and public / others 31%. As on

December 31, 2007 IDFC had an asset base of over USD 6.5 billion, net worth of USD

1.4 billion and a market capitalization of USD 7.5 billion.

Financial Performance of the Sponsor (past three years)  (in Rs. crores):

Particulars 31.03.08 31.03.07 31.03.06

Net Worth 5454.38 2882.03 2544.19

Total Income 2532.42 1505.74 1002.36

Profit after tax 669.17 462.87 375.64

Assets Under Management

( under its private equity business)

2545 2671 2551

 

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ASSET MANAGEMENT

IDFC determined to construct a comprehensive asset management business that consists

of:

(i) private equity investments through IDFC Private Equity Company Limited

(ii) project equity through IDFC Project Equity Company Limited, and

(iii) public markets investment advisory services through IDFC Investment Advisors

Limited.

IDFC Private Equity manages a corpus of US$ 630 million and is India’s largest and

most active private equity fund focused on infrastructure. The two funds under

management are India Development Fund (IDF) and IDFC Private Equity Fund II.

IDFC, along with Citigroup and India Infrastructure Finance Company Limited (IIFCL)

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launched a landmark US$ 5 billion initiative for financing infrastructure projects in India.

The equity fund will be solely managed by IDFC.

IDFC plans to raise approximately $1.7 billion in private and project equity funds

focused on infrastructure. The objective is to build a large asset management platform

focused on private investments and public markets through a variety of domestic and

offshore products.

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AMC DIRECTOR’S

Name Age/Qualification

Dr. Rajiv Lall 51 Years /

B.A.(Hons) with Politics, Philosophy, Economics from Oxford

University, UK. Ph. D. with Economics from University of Columbia,

USA.

Dr. R H. Patil 71 Years / M.A, Ph. D. (Economics)

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Mr. Pradip

Madhavji

72 Years / B.A, B.Com, LLB

Mrs. Bakul

Patel

70 Years / B.Sc. (Microbiology & Chemistry), Master of Social Work,

(Tata Institute of Social Sciences, Bombay), Chartered Secretary,

Chartered Institute of Companies Secretary, U.K.  

AWARDS

IDFC MF RECEIVED SEVEN STAR RATING FOR ITS “PREMIER EQUITY FUND” FROM ICRA IN 2006, 2007

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IDFC MF RECEIVED FIVE STAR RATING FOR ITS “IMPERIAL EQUITY FUND” FROM ICRA IN 2007

FINANCIAL POWERHOUSE

On March 31st, 2008, IDFC’s balance sheet was Rs. 27921 Crores, net profit Rs. 742 Crores, net worth Rs. 5593 Crores and market capitalization Rs. 19500 Crores.

Project Finance IDFC MF core business is debt financing for infrastructure projects

Principal Investment IDFC MF add value as Principal investors in strategic, treasury and infrastructure related opportunities

Financial Markets and Investment Banking IDFC MF have expertise in debt and equity capital markets, structured finance, investment banking and Institutional broking and research through IDFC-SSKI.

Advisory services Corporate and Government advisory, Public-Private partnership and Policy Advisory.

Asset Management

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The asset management business manages third party funds and comprises:

(i) Private equity investments through IDFC Private Equity Company Limited.

(ii) Project level equity investments through IDFC Project Equity Company Limited.

(iii) Public markets investment advisory services through IDFC Investment Advisors Limited.

Schemes of IDFC Mutual Fund

The sponsor is the settler of the Mutual Fund Trust. The sponsor has entrusted a sum of

Rs.30,000 to the Trustees as its contribution towards the corpus of the Mutual Fund. The

Schemes launched (and existing) by the Mutual Fund comprised of 16 Open Ended

schemes and 19 Close-Ended schemes as on March 31, 2009. During the year

under review, thirty four Close Ended schemes were launched.

Another Category of Mutual Fund Scheme

1) PMS (Portfolio Management Services):-

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PMS is a scheme started for the high net worth individuals. Earlier the minimum amount

for investment was one crore rupees. But due to the economic slowdown the minimum

amount was reduced to Ten Lakh rupees.

The total amount to be collected under scheme is Rs.500 cr. Out of which 50 cr is

contributed by the AMC and rest is collected by the investors. 75% of the amount is

invested in upcoming industries (unlisted) having high growth potentials and 25% in the

existing industries (listed).

Amount from the investors is collected in two instalments.50% of the amount is

deposited at the time of submitting the application, where as remaining amount can be

called at any time in next two and half years. Investor is given 21 days notice for calling

the remaining amount. In the case of failure to submit the 2nd installment the first

installment will be forfeited by the AMC.

Advantage Of PMS

Due to the investment in the establishing industries the investors get the stocks of those companies at the face value at the time of IPOs. Hence, there is a great chance of higher returns as compared to other funds. But higher returns are always followed by higher risks. So, the risk element is always higher in PMS.

2) Pension Fund

Recently Government of India has announced a pension fund in which the investors can invest from the age of 25 years . The investors will have to invest the amount at regular intervals for a definite period of time, say till he retires. After retirement he will get a lump sum payment of whatever has been accrued till then.The minimum investment in this scheme is Rs.6000 per year. The mode of investment can be monthly , half yearly or yearly. More frequent the mode of payment is, the more service charge is to be paid. Hence it is advisable to invest half yearly or yearly.There are only six fund managers who have been allowed to collect the funds from the general public for this scheme, they are:1) ICICI Prudential pension funds management2) IDFC Pension fund3) Kotak Mahindra Pension fund4) Reliance Capital pension fund5) SBI pension funds6) UTI retirement solutions

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Premier Equity Fund (Mid Cap Fund)

IDFC Premier Equity Fund is a Mid Cap Fund started on 28th September 2005.

The fund size is Rs. 576.06 crore managed by Mr. Kenneth Andrade having more than 15 years of experience in fund management.

The fund is invested in the mid cap companies having high growth potential and tend to give high returns to the investors:-

Indian Overseas Bank Jindal Steel and Power Ltd Blue Dart Express ltd Pantaloon Retail (India) Ltd Bata India Ltd

In 2008, the fund was ranked 35th among the existing funds in the world.

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In this period of Recession when others disappointed, this 5 star rated Fund (By ICRA) has given absolute 25% & 57% returns in the last 3 & 6 months respectively.

The minimum investment in this fund is Rs.25000 & Rs.2000 for SIP. It can be monthly/quarterly or Daily. (with min requirement of 6 installments in monthly and 30 installments in daily)

Last dividend declared was 15% on 28th April 2009.

The beta (β) is 0.93 that means the portfolio risk is less than the market risk. The fall in NAV is always less than the fall in the Market.

As Standard deviation is 9.84% the NAV doesn’t deviate much at the time of fluctuation. It gives consistent returns.

Asset allocation: Equity : 85.38% Debt : 14.44% Cash : 0.18%

Options like Growth, Dividend, Reinvestment facility is available under this scheme.

B) Basic introduction of the project :-

In few years Mutual Fund has emerged as a tool for ensuring one’s financial well being.

Mutual Funds have not only contributed to the India growth story but have also helped

families tap into the success of Indian Industry. Now Indian companies really wants good

infrastructure to grow as fast as possible and Mutual Funds are designing a special funds

to infuse money in Infrastructure. As information and awareness is rising more and more

people are enjoying the benefits of investing in mutual funds. The main reason the

number of retail mutual fund investors remains small is that nine in ten people with

incomes in India do not know that mutual funds exist. But once people are aware of

mutual fund investments opportunities, the number who decide to invest in mutual funds

increases to as many as one in five people. The trick for converting a person with no

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knowledge of mutual funds to a new Mutual Fund customer is to understand which of the

potential investors are more likely to buy mutual funds and to use the right arguments in

the sales process that customers will accept as important and relevant to their decision.

This Project gave me a great learning experience and at the same time it gave me enough

scope to implement my analytical ability. This report will help you to understand what

the role of mutual funds is in Indian economy and resource mobilization.

VARIOUS ASPECT AND MECHANISM OF MUTUAL FUND.

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When an investor subscribes for the units of a mutual fund, he becomes part owner of

the assets of the fund in the same proportion as his contribution amount put up with

the corpus (the total amount of the fund). Mutual Fund investor is also known as a

mutual fund shareholder or a unit holder.

Any change in the value of the investments made into capital market instruments (such

as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme.

NAV is defined as the market value of the Mutual Fund scheme's assets net of its

liabilities. NAV of a scheme is calculated by dividing the market value of scheme's

assets by the total number of units issued to the investors.

ADVANTAGES OF MUTUAL FUND

Portfolio Diversification

Professional management

Reduction / Diversification of Risk

Liquidity

Flexibility & Convenience

Reduction in Transaction cost

Safety of regulated environment

Choice of schemes

Transparency

DISADVANTAGE OF MUTUAL FUND

No control over Cost in the Hands of an Investor

No tailor-made Portfolios

Managing a Portfolio Funds

Difficulty in selecting a Suitable Fund Scheme

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The history of mutual fund industry

The mutual fund industry in India started in 1963 with the formation of Unit Trust of

India, at the initiative of the Government of India and Reserve Bank. Though the

growth was slow, but it accelerated from the year 1987 when non-UTI players entered

the Industry.

In the past decade, Indian mutual fund industry had seen a dramatic improvement, both

qualities wise as well as quantity wise. Before, the monopoly of the market had seen an

ending phase; the Assets Under Management (AUM) was Rs67 billion. The private

sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till

April 2004; it reached the height if Rs. 1540 billion.

The Mutual Fund Industry is obviously growing at a tremendous space with the mutual

fund industry can be broadly put into four phases according to the development of the

sector. Each phase is briefly described as under.

 First Phase – 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the

Reserve Bank of India and functioned under the Regulatory and administrative control

of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the

Industrial Development Bank of India (IDBI) took over the regulatory and

administrative control in place of RBI. The first scheme launched by UTI was Unit

Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management.

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Second Phase – 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector

banks and Life Insurance Corporation of India (LIC) and General Insurance

Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund

established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National

Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun

90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June

1989 while GIC had set up its mutual fund in December 1990.At the end of 1993, the

mutual fund industry had assets under management of Rs.47,004 crores.

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Phase III. - 1993-96 (Emergence of Private Sector Funds)

The permission given to private sector funds including

foreign fund   management  companies (most of them entering through joint ventures with

Indian promoters) to enter the mutual fund industry in 1993, provided a wide range of

choice to investors and more competition in the industry. Private funds introduced

innovative products, investment techniques and investor-servicing technology. By 1994-

95, about 11 private sector funds had launched their schemes. 

Phase IV. - 1996-2004 (Growth and SEBI Regulation)

The mutual fund industry witnessed robust growth and stricter regulation from the SEBI

after the year 1996. The mobilization of funds and the number of players operating in

the industry reached new heights as investors started showing more interest in mutual

funds. 

Investors' interests were safeguarded by SEBI and the Government

offered tax   benefits  to the investors in order to encourage them. SEBI (Mutual Funds)

Regulations, 1996 was introduced by SEBI that set uniform standards for all mutual

funds in India. The Union Budget in 1999 exempted all dividend incomes in the hands

of investors from income tax. Various Investor Awareness Programmes were launched

during this phase, both by SEBI and AMFI, with an objective to educate investors and

make them informed about the mutual fund industry. In February 2003, the UTI Act was

repealed and UTI was stripped of its Special legal status as a trust formed by an Act of

Parliament. The primary objective behind this was to bring all mutal fund players on the

same level.

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UTI was re-organized into two part:

1. The Specified Undertaking,

2. The UTI Mutual Fund 

Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past schemes (like US-64, Assured Return Schemes) are being gradually wound up. However, UTI Mutual Fund is still the largest player in the industry. In 1999, there was a significant growth in mobilization of funds from investors and assets under management.

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Phase V. 2004 Onwards (Growth and Consolidation):-

The industry has also witnessed several mergers and acquisitions recently, examples of

which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C

Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more

international mutual fund players have entered India like Fidelity, Franklin Templeton

Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing

phase of growth of the industry through consolidation and entry of new international

and private sector players. 

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CATEGORIES OF MUTUAL FUND:

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Mutual funds can be classified as follow:

Based on their structure:

Open-ended funds: Investors can buy and sell the units from the fund, at any point of

time.

Close-ended funds: These funds raise money from investors only once. Therefore, after

the offer period, fresh investments can not be made into the fund. If the fund is listed on a

stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund).

Recently, most of the New Fund Offers of close-ended funds provided liquidity window

on a periodic basis such as monthly or weekly. Redemption of units can be made during

specified intervals. Therefore, such funds have relatively low liquidity.

Based on their investment objective:

Equity funds: These funds invest in equities and equity related instruments. With

fluctuating share prices, such funds show volatile performance, even losses. However,

short term fluctuations in the market, generally smoothens out in the long term, thereby

offering higher returns at relatively lower volatility. At the same time, such funds can

yield great capital appreciation as, historically, equities have outperformed all asset

classes in the long term. Hence, investment in equity funds should be considered for a

period of at least 3-5 years. It can be further classified as:

i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is

tracked. Their portfolio mirrors the benchmark index both in terms of composition and

individual stock weightages.

ii) Equity diversified funds- 100% of the capital is invested in equities spreading across

different sectors and stocks.

iii|) Dividend yield funds- it is similar to the equity diversified funds except that they

invest in companies offering high dividend yields.

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iv) Thematic funds- Invest 100% of the assets in sectors which are related through

some theme.

e.g. -An infrastructure fund invests in power, construction, cements sectors etc.

v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector

fund will invest in banking stocks.

vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.

Balanced fund: Their investment portfolio includes both debt and equity. As a result, on

the risk-return ladder, they fall between equity and debt funds. Balanced funds are the

ideal mutual funds vehicle for investors who prefer spreading their risk across various

instruments. Following are balanced funds classes:

i) Debt-oriented funds -Investment below 65% in equities.

ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

Debt fund: They invest only in debt instruments, and are a good option for investors

averse to idea of taking risk associated with equities. Therefore, they invest exclusively in

fixed-income instruments like bonds, debentures, Government of India securities; and

money market instruments such as certificates of deposit (CD), commercial paper (CP)

and call money. Put your money into any of these debt funds depending on your

investment horizon and needs.

i) Liquid funds- These funds invest 100% in money market instruments, a large portion

being invested in call money market.

ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and T-

bills.

iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt

instruments which have variable coupon rate.

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iv) Arbitrage fund- They generate income through arbitrage opportunities due to mis-pricing between cash market and derivatives market. Funds are allocated to equities, derivatives and money markets. Higher proportion (around 75%) is put in money markets, in the absence of arbitrage opportunities.

v) Gilt funds LT- They invest 100% of their portfolio in long-term government securities.

vi) Income funds LT- Typically; such funds invest a major portion of the portfolio in long-term debt papers.

vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities.

viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that of the fund.

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INVESTMENT STRATEGIES

1. Systematic Investment Plan: under this a fixed sum is invested each month on a

fixed date of a month. Payment is made through post dated cheques or direct debit

facilities. The investor gets fewer units when the NAV is high and more units when the

NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA)

2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and

give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the

same mutual fund.

3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund

then he can withdraw a fixed amount each month.

RISK V/S. RETURN:

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MUTUAL FUND: A RESOURCE MOBILIZER IN FINANCIAL MARKET

The success story of any economy can only be scripted on the basis of sound

financial system of the country. Economic reform process of 1991 had a great impact on

the financial system of the country leading to the overall development of the Indian

economy. Today, India’s financial system is considered to be sound and stable as

compared to many other Asian countries where the financial market is facing many

crises. During last one decade or so, role of Indian mutual funds industry as a significant

financial service in financial market has really been noteworthy. In fact, Mutual funds

have emerged as an important segment of financial market of India, especially as a result

of the initiatives taken by the Govt. of India for resolving problems relating to UTI’s US-

64 and to liberalize tax liabilities on the incomes earned by the mutual funds. They now

play a very significant role in channelizing the saving of millions of individuals into the

investment in equity and debt instruments.

Introduction

The economic and financial scenario of India prior to 1991 was somehow not optimistic.

Indian economy at that time was suffering from low savings, low GDP, high inflation,

high unemployment, high rates of interest, low forex reserve, etc.. When India

approached IMF for financial assistance in 1991, we were imposed certain conditions on

the basis of which the financial assistance was sanctioned to India. These restrictions

which we accepted under the pressure from IMF were actually the starting point of

economic reforms popularly known as LPG process. The result of the LPG process of

1991 is more clearly visible now. India is now being ranked as one of the fastest growing

economy of the world. As the eleventh five year planning is about to start, we are already

targeting a GDP growth of 9%. The saving of the country is now around 29%. Foreign

investors are finding Indian market with high potential. India’s forex reserve is around

$175 billion. Inflation is also at 5% which is considered good for developing economies.

So, Indian economy is really booming today

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DEVELOPMENT OF THE CONCEPTUAL FRAMEWORK OF

ORGANIZATIONAL CLIMATE:

AUM as a percentage of household financials assets start to increase. At present, India

has a GDP of around $3,000 on a per capita basis and the AUM as a percentage of

household financial assets is under 4%. This is undoubtedly very low as compared to

other countries. As India’s GDP is expected to maintain its growth rate, households will

surely be holding more assets through mutual fund than ever before. The tremendous

growth of Indian Mutual Funds industry is an indicator of the efficient financial market

we are currently having and the trust which investors have on the regulatory environment.

Mutual Funds are essentially investment vehicles where people with similar investment

objective come together to pool their money and then invest accordingly. Each unit of

any scheme represents the proportion of pool owned by the unit holder (investor).

Appreciation or reduction in value of investments is reflected in net asset value (NAV) of

the concerned scheme, which is declared by the fund from time to time. Mutual fund

schemes are managed by respective Asset Management Companies (AMC). Different

business groups / financial institutions / banks have sponsored these AMCs, either alone

or in collaboration with reputed international firms. Several international funds like

Alliance and Templeton are also operating independently in India. Many more

international Mutual Fund giants are expected to come into Indian markets in the near

future. Mutual Funds invest according to the underlying investment objective as specified

at the time of launching a scheme. So, we have equity funds, debt funds, gilt

funds and many others that cater to the different needs of the investor. The availability of

these options makes them a good option. While equity funds can be as risky as the stock

markets themselves, debt funds offer the kind of security that is aimed for at the time of

making investments. Money market funds offer the liquidity that is desired by big

investors who wish to park surplus funds for very short-term periods. Balance Funds

cater to the need of investors having an appetite for risk greater than that of the debt

funds but less than the equity funds. The only pertinent factor here is that the fund has to

be selected keeping the risk profile of the investor in mind because the products listed

above have different risks associated with them. So, while equity funds are a good bet for

42

a long term, they may not find favour with corporates or High Net-worth Individuals

(HNIs) who have short-term needs.

Mutual Fund for Retail investors

Pure equity new fund offerings (NFOs) collected a whopping Rs 32,309 crore in 2006,

almost 33% more than the money raised by Indian corporates through initial and follow-

on issues. This is a clear indication that retail investors are increasingly tapping the stock

market through the mutual fund route. The mutual fund (MF), as a capital market

intermediary, has emerged as new avenue for capital resources. It bridges the gap

between retail investors and capital markets. According to Value Research data, the top

five equity NFOs were Reliance Equity (Rs. 5,790 crore), SBI Bluechip (Rs. 2,850

crore), Reliance Long Term Equity (Rs. 2,100 crore), UTI Leadership Equity (Rs. 2,080

crore) and Templeton India Equity Income (Rs. 2,030 crore). Close to 40 NFOs were

made in 2006 with average collections of Rs. 950 crore. The top five IPOs of 2006 were.

made by the following companies — Cairn India (Rs. 5,260 crore), Reliance Petroleum

(Rs. 2,700 crore), Bank of Baroda (Rs. 1,633 crore), Parsvnath Developers (Rs. 1,089

crore) and Lanco Infratech (Rs. 1,067 crore). So, it is clearly evident that MF is providing

more opportunities for the corporates to raise more funds. It is offering several options in

structured forms. The industry is going to play a major role model in the capital markets.

According to a study conducted by the Associated Chambers of Commerce and Industry

of India, the size of the Mutual Funds industry is expected to be worth Rs. 4 lakh crores

by 2010. Mutual Funds would be one of the major instruments of wealth creation and

wealth saving in the years to come, giving positive results. The consistency in the

performance of mutual funds has been a major factor that has attracted

many retail investors. The Indian Mutual Funds industry has been growing at a healthy

pace of 16.68 per cent for the past eight years and the trend will move further. According

a study, it has been found out that almost 54 % of people invests for security and

certainty while 38 % of the people invests for current spending. Some 53 % of the people

prefer long term investment whereas 23% people each prefer medium term and small

term investment. All these studies relate to retail investors. Actually, it is the consistence

performance of mutual funds which is attracting retail investors towards it. Today, MF

equity portfolio is worth around $32 billion, while individual investors own $88 billion.

43

It is the retail investors who have been heavily investing in equities through MFs over the

past couple of years. This observation can be made from the fact that close to $17 billion

of NFO collections made in the last four years from equity funds. Eventually, money

collected on these have made their way to equity market. On an average, MF net

investments into equity markets remained at around 50% of that by FIIs in the past three

to four years. As retail investor’s investments are typically long-term oriented, they are

therefore important for maintaining stability in any equity market. Another very

significant development for retail investors in the field of mutual funds is the entry of

mutual funds in real estates. For the last three years the real estate sector has been

growing at a fast pace of 30-40 %, especially in the metros. But for retail investors,

participating in this growth was not easy. By opening the real estate investment for

mutual funds, retail investors, who cannot invest directly in real estates (which needs

huge investments to start with), are actually allowed to investment in real estates through

mutual funds. Retail investors are expected to account for 60% of the industry’s AUM.

But this can be possible only if mutual funds in the country manage to enter into

nonurban cities. This becomes more important because this is where savings deposits

account for 49% of the total assets. These small towns account for only 30% of their

holdings in mutual funds. So, one thing can be said for sure that retail investors are going

to participate more and more in mutual funds in the times to come and thereby a lot of

financial resources are going to be mobilized to financial market of India.

Money Market Mutual Fund

A money market fund is a mutual fund that invests solely in money market instruments.

Money market instruments are forms of debt that mature in less than one year and are

very liquid. Treasury bills make up the bulk of the money market instruments. Securities

in the money market are relatively risk-free Money market funds.

The goal of a money-market fund is to preserve principal while yielding a modest return.

Money market mutual fund is similar to a high-yield bank account but can not be said to

be entirely risk free. When investing in a money-market fund, one should be more

attentive to the interest rate that is being offered. Money market mutual funds are very

significant financial resource mobilizer for short term period.

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No Longer Mutual for the   Middleman

SEBI’s ruling on mutual funds will bring in new models of distribution and

eventually make the industry stronger

From August 2009, the Indian mutual fund industry will change its distribution model

under an order from the Securities and Exchange Board of India. The regulator has done

away with entry load for schemes. This will cause a lot of turmoil for all three parties

involved: Mutual fund companies, investors and the distributors who handle 90 percent

of the transactions.

How will the industry change?

SEBI wants the industry to follow the model practiced by UK, US and other European

countries. This means the investor can decide the amount of advisory fees that

distributors receive. So, the distributors will not get the 2.25 percent on every transaction

that they now put through. This means there is no incentive for distributors to sell mutual

fund products, unless the investor agrees to pay them separately. Many distributors say

that if the commission is removed, they will switch over to selling insurance products

where the commission system is intact. In order to survive, they will have to scale up and

become advisors. They will be in direct competition with banks to sell mutual funds.

Banks hold an advantage since they know the financial status of customers. “This is a

transformative change for the industry in India. Now distributors will have to become a

complete finance advisor and help investors in giving financial solutions,” says Sourab

Tripathi of the Boston Consulting Group.

Why are tier III towns so important?

Until now the top eight cities accounted for 80 percent of the mutual fund markets.

Distributors never tapped tier III cities. But, as the market shifts from a fund-based

module to a fee-based module, they will have to re-think their strategy. Distributors will

now offer annual plans and charge fees accordingly and to increase their business they

will be forced to get more investors under their fold than concentrate on the funds of the

same investors. In spite of all the initial problems that will be created by this move, over

the longer term, it will only benefit the industry.

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What models will emerge in the future?

Mutual funds will be sold through four different channels. There will be a basic discount

broker model or a courier boy model. Here, the distributor will simply act as the postman.

People with knowledge of mutual funds will use them but pay only a very small fee. A

further extension of this model will be a “Do it yourself” model through the Net which

could charge around one percent on the total invested amount. The other two models will

be slightly at the higher end, offering advisory services. These could be the next door

independent financial advisor who could charge the investor around 1-1.5 percent while

the top-end model will belong to banks which will charge closer to 2 percent. Even banks

will not be able to charge high fees as the banking customer will become savvy.

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C) Organizational hierarchy :-

IDFC MF is a combination of three companies and I work under IDFC MF Asset

Management Company.

Organizational hierarchy

Structure of Mutual Funds In India

Like other countries, India has a legal framework within which mutual funds must be

constituted. In India, open and closed-end funds operate under the same regulatory

47

structure, i.e. in India; all mutual funds are constituted along one unique structure-as unit

trust. A mutual fund in India is allowed to issue open-end and close end schemes under a

common legal structure. Therefore, a mutual fund may have different schemes (open and

closed-end) under it i.e. under one unit trust, at any point of time. The structure, which is

required to be followed by mutual funds in India, laid down under SEBI (Mutual Fund)

Regulations, 1996.

The Fund Sponsor

'Sponsor" is defined under SEBI regulations as any person who, acting Alone or in combination with another body corporate, establishes a, mutual fund. The sponsor of a fund is akin to the promoter of companies he gets the fund registered with SEBI. The sponsor will form a Trust and appoint a board of Trustees. The sponsor will also generally appoint an Asset management Company (AMC) as fund managers. The sponsor ill also appoint a Custodian to hold the fund assets. All these appointment are made in accordance with the SEBI regulations. Per the existing SEBI regulations, for a person to qualify as a sponsor, must contribute at least 40% of the net worth of the AMC and issues a sound financial track over five years prior to registration.

Mutual Funds as Trusts

Mutual fund in India is constituted in the form of a Public Trust under the Indian Trusts Act 1882.The fund invites investors. Contribute their money in the common pool by subscribing to units Issued by various schemes established by the trust as evidence of their beneficial interest in the fund.The trust or fund has no legal capacity itself rather it is the Trustee(s) who have legal capacity and therefore the trustees take all acts in relation to the trust on its behalf.

Trustees

A board of trustees - a body of individuals, or a Trust company - a corporate body, may manage the Trust. Board of Trustees manages most of the funds in India.4, The Board or the Trustee Company (body of individuals, corporate body, for managing the portfolio, appoints an Asset Management Company. The Trust is created through a document called the Trust Deed that is executed by the Fund Sponsor in favors of the trustees. They are the primary guardian of the unit holder's funds and assets. They ensure that AMC's operations are along professional lines.

48

Asset Management Company

The role of an Asset Management Company (AMC) is to act as the investment manager of the trust under the Board supervision.

Transfer Agents

Transfer agents are responsible for issuing and redeeming units of the mutual fund and provide other related services such as preparation of transfer documents updating investors' records. A fund may choose to out this activity in-house or by an outside transfer agent.

Distributors

AMC’s usually appoint Distributors or Brokers, who sell units on behalf bf the fund. Some funds require that all transactions to be routed through such brokers.In India, besides brokers, independent individuals are appointed as agents for the purpose of selling the fund scheme to the investors. While individual constitute the largest segment in the category of mutual fund distributors, other distributors include banks, NBFCs and corporate.

49

D) Department :-

I work under IDFC Asset Management Company where there are three departments

AMC, Sales and relationship building and operations. That all departments in one office

so I work for all three. AMC works under PAN India concept where in 23 braches are in

all over India and I worked at Nagpur Branch.

Mainly I work with sales and relationship building department where we went to ARN

holders for empanelment and making awareness of IDFC Mutual Funds various schemes

and we also went for the same purpose to various Banks and National Distributors.

We also work for Operations for collecting application and send them to CAM for

further processes.

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Chapter: - 3

METHODOLOGY USED FOR THE STUDY

a) Methods & Tools adopted for study:-

Measurement of risk

Beta Coefficient Measure of Risk:

Beta relates a fund’s return with a market index. It basically measures the

sensitivity of funds return to changes in market index.

If Beta = 1, Fund moves with the market i.e. Passive fund

If Beta < 1, Fund is less volatile than the market i. e Defensive Fund

If Beta > 1, Funds will give higher returns when market rises & higher losses

when market falls i.e. Aggressive Fund

Ex –Marks or R-squared Measure of Risk

Marks represent co relation with markets. Higher the Ex-marks lower the risk of the

fund because a fund with higher Ex-marks is better diversified than a fund with lower Ex-

marks.

Standard Deviation Measure of Risk: It is a statistical concept, which measures volatility. It measures the fluctuations of

fund’s returns around a mean level. Basically it gives you an idea of how volatile your

earnings are. It is broader concept than BETA. It also helps in measuring total risk and

not just the market risk of the portfolio.

51

B) Data Collection:-

I have used primary as well as secondary data collection technique for data collection for primary data collection I have used Unstructured Direct Interview technique and I have used secondary data collection from various web sites, journals and newspapers.

Personal Visit:-

The second way of collecting data is Personal Visits to the corporate personally by fixing

an appointment. Personal Visit gives a clear picture of the conclusion drawn in

Questionnaire It gives a clear view of the client Awareness about the product. We also

take the appointment from various ARN holders for empanelment and awareness of

IDFC MF. Some of the difficulties in making Personal Visits are:-

To take a time or appointment from the corporate.

To convenes investor to invest in a particular product.

The Banks & other National Distributors where we visited during these two months

are:

1) India Infoline

2) Sharekhan

3) Reliance Money

4) Dena bank

5) IDBI bank

6) Centrum

7) Yes Bank

8) Union bank of India

9) Religare securities

10) Blue chip

11) ICICI bank

12) Anagram Securities

13) Shriram Fortune

14) UAE Exchange

15) Bajaj Capital

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16) Kotak Bank

17) Tata Securities

18) Angel Broking

19) Standard Chartered wealth Management

20) Axis Bank

21) Bajaj Capital

22) Anand Rathi

23) HDFC Securities

24) Birla Sunlife

25) NJ Fundz

25) Prudent

26) Karvy Finapolis

27) DBS Cholamandalam

28) Stock holding

29) Mahindra finance

TELEPHONIC INFORMATION:-

The further source of collecting data is telephonic information with the existing customer

and the prospective investors. It is very difficult to reveal the data of investors from the

company itself because it has been kept as a secret document. After getting a data some

problems too come in the way. Some are:-

People are not ready to listen.

People ask question like from where did you get the number?

From this source not much of the Information is drawn.

Few respondents where not happy with the level of customer services endured

by MF’s.

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C) Analysis of Data:-

Imperial Equity Fund (Large Cap Fund)

IDFC Imperial Equity Fund is a Large Cap Fund .The fund size is Rs.189.07 crore .. Last dividend declared was 15% on 14th May 2008. The beta (β) is 0.85 that means the portfolio risk is less than the market risk. The fall in NAV is always less than the fall in the market. As Standard deviation is 8.77% the NAV doesn’t deviate much at the time of fluctuation. It gives consistent returns. Asset allocation :Equity: 73.32%, Debt : 21.40%, Cash : 5.28%.

Premier Equity Fund (Mid Cap Fund)

IDFC Premier Equity Fund is a Mid Cap Fund. The fund size is Rs. 576.06 crore , the fund was ranked 35th among the existing funds in the world. In this period of Recession, this 5 star rated Fund (By ICRA) has given absolute 25% & 57% returns in the last 3 & 6 months respectively. . Last dividend declared was 15% on 28th April 2009. The beta (β) is 0.93 that means the portfolio risk is less than the market risk. The fall in NAV is always less than the fall in the Market.As Standard deviation is 9.84% the NAV doesn’t deviate much at the time of fluctuation. It gives consistent returns.Asset allocation: equity : 85.38%, Debt : 14.44%, Cash : 0.18%

.

NET RESOURCES MOBILISED BY BANK-SPONSORED AND FI-SPONSORED MUTUAL FUNDS

(Rupees crore)Year Bank-Sponsored FI-Sponsored  

 SBI MF

Canara Robeco

MF

PNB MF

Baroda Pioneer

MFGIC MF LIC MF Total

2003-04 1927 495 1841 263 -147 934 53132004-05 1024 -11 - -307 -33 -3351 -26772005-06 5280 56 - 29 - 2112 74772006-07 3208 -96 - -79 - 4226 72582007-08 7339 295 - 152 - 2178 99652008-09 2617 1317 - 556 - 5954 10443

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NET RESOURCES MOBILISED BY MUTUAL FUNDS(Rupees crore)

YearUnit Trust of

IndiaBank-sponsored Mutual Funds

Financial Institution-

sponsored Mutual Funds

Private Sector Mutual Funds

Total

2003-04 1050 4526 787 41510 47873

2004-05 -2467 706 -3384 7933 2788

2005-06 3424 5365 2112 41581 52482

2006-07 7326 3033 4226 79477 94063

2007-08 10678 7786 2178 163356 183998

2008-09 -4112 4489 5954 -28685 -22355

MARKET CAPITALISATION - BSE

(Rupees crore)Year/ Month(End-

period) 1st quarter 2nd quarter 3rd quarter 4th quarter

2003-04 1967897 2614276 3339708 3604282

2004-05 3325734 3661474 4562774 5090900

2005-06 5269364 6365449 6878063 8333928

2006-07 8819293 6179460 10572341 10813997

2007-08 12071161 14270733 19887553 16822541

2008-09 15598194 13676798 8960994 8946210

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D) Pictorial / Graphic / pie charts, presentation of data.

Total Number National Level Distributors in Vidharbha: 41Out of which 29 are present in Nagpur.18 are retail point of sale 4 are bank (wholesale point of sale)

Non-Banking institutions in

Nagpur, 25, 61%

Banks in Nagpur, 4, 10%

NLD in Other Cities, 12, 29%

Non-Banking institutions inNagpur

Banks in Nagpur

NLD in Other Cities

City wise distribution of empanelled IFAs in Vidharbha region.

11 12 8

204

34

269

0

50

100

150

200

250

300

IFAs inAkola

IFAs inAmravati

IFAs inChandrapur

IFAs inNagpur

IFAs inother Cities

Toatal IFAs

Series1

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Called to non-empanelled IFAs for empanelment.Total number of ARN (AMFI Registration Number) holders in Nagpur : 792Empanelled ARN holders are: 269Non-empanelled ARN holders: 502ARN holder who submitted the forms for empanelment: 21

Empanelled ARN holders , 269, 34%

Non-empanelled ARN holders, 502,

63%

ARN holder who submitted the forms for empanellment,

21, 3%Empanelled ARN holders

Non-empanelled ARN holders

ARN holder who submitted theforms for empanellment

Chapter: - 4

57

Observations / Findings:-

1) In Nagpur there are more than 100 National distributors & banks for distribution of

IDFC Mutual funds

2) More than 700 ARN holders in Nagpur region

3) There are more than 500 IFAs who are not empanelled with IDFC

4) The majority of people in Nagpur are not aware of IDFC Mutual fund

5) Two funds of IDFC, Premier equity fund & Imperial equity fund are among the best

performers.

6) Most of the people still believe in fixed deposits and Savings a/c instead of Mutual

funds.

7) Among the people who invest in Mutual funds most of them prefer equity, the

second most preferred was balanced (mixture of both debt & equity) and last

preferred was debt fund

8) The maximum number of investors prefer Growth option, then dividend payout and

last preferred is dividend reinvestment

9) Most investors prefer high return in investment and next preferred is less risk and

low liquidity.

10) Most of the investors lost faith in Mutual funds at the time of recession & it’s

difficult to regain their faith.

11) At the time any NFO, IFAs & other distributors usually advice the prospects to

invest in an NFO.

12) The new guidelines of SEBI to ban the entry load will have great implications.

13) Now the IFAs will give them correct advice to invest in a good scheme.

14) According to the new guidelines of SEBI the exit load is to be charged only if the

withdrawal is within a year of investment.

Chapter: - 5

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Limitations:-

1. Many people don’t know what is mutual fund; it is difficult to explain them,

especially less literate and illiterate people.

2. Many people are not ready to invest and not even to listen because market has

fallen from 200000 points to 8000points

3. Because of recession many people want to keep their money in liquid form or want

to invest in gold because they are afraid that they may loose their job in recession

therefore they may need money very soon.

4. Many people want to invest more but there funds are already blocked in

market.

5. People generally are in hurry in bank they want to finish their work as early as

possible hence they don’t give proper time for explaining the product.

6. Many people still don’t have pan card especially farmers or low earning employees

hence they cannot invest in market even though they are interested.

7. Difficult to take an appointment with professional people.

8. Difficult to get the documents required for formalities from investors

9. Difficult to overcome an impassionate person who wants return in less time.

10. Difficult to follow up the people whose names are being stored in a data.

11. Difficult to remove the fear of risk from the minds of investors

Chapter: -6

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CONCLUSION:-

Running a successful Mutual Fund requires complete understanding of the peculiarities of the Indian Stock Market and also the psyche of the small investors. This study has made an attempt to understand the financial behavior of Mutual Fund investors in connection with the preferences of Brand (AMC), Products, Channels etc. I observed that many of people have fear of Mutual Fund. They think their money will not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its related terms. Many of people do not have invested in mutual fund due to lack of awareness although they have money to invest. As the awareness and income is growing the number of mutual fund investors are also growing.

“Brand” plays important role for the investment. People invest in those Companies where they have faith or they are well known with them. There are many AMCs in Nagpur but only some are performing well due to Brand awareness. Some AMCs are not performing well although some of the schemes of them are giving good return because of not awareness about Brand. Reliance, UTI, SBIMF, ICICI Prudential etc. they are well known Brand, they are performing well and their Assets Under Management is larger than others whose Brand name are not well known like Principle, Sunderam, etc.

Distribution channels are also important for the investment in mutual fund. Financial Advisors are the most preferred channel for the investment in mutual fund. They can change investors’ mind from one investment option to others. Many of investors directly invest their money through AMC because they do not have to pay entry load. Only those people invest directly who know well about mutual fund and its operations and those have time.

CHAPTER: - 7

SUGGESTION / RECOMMEDATION:-

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1. The most vital problem spotted is of ignorance. Investors should be made aware of

the benefits. Investors should be made to realize that ignorance is no longer bliss and

what they are losing by not investing.

2. Mutual funds offer a lot of benefit which no other single option could offer. But

most of the people are not even aware of what actually a mutual fund is? They only

see it as just another investment option. So the advisors should try to change their

mindsets. The advisors should target for more and more young investors. Young

investors as well as persons at the height of their career would like to go for advisors

due to lack of expertise and time.

3. Mutual Fund Company needs to give the training of the Individual Financial

Advisors about the Fund/Scheme and its objective, because they are the main source

to influence the investors.

4. Before making any investment Financial Advisors should first enquire about the risk

tolerance of the investors/customers, their need and time (how long they want to

invest). By considering these three things they can take the customers into

consideration.

5. Younger people aged under 35 will be a key new customer group into the future, so

making greater efforts with younger customers who show some interest in investing

should pay off.

6. Customers with graduate level education are easier to sell to and there is a large

untapped market there. To succeed however, advisors must provide sound advice

and high quality.

7. Systematic Investment Plan (SIP) is one the innovative products launched by Assets

Management companies very recently in the industry. SIP is easy for monthly

salaried person as it provides the facility of do the investment in EMI. Though most

of the prospects and potential investors are not aware about the SIP. There is a large

scope for the companies to tap the salaried persons.

Chapter: -8

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BIBLIOGRAPHY:-

FACT SHEET AND STATEMENT

NEWS PAPERS

I. M. PANDEY

www.idfcmf.com

www.amfiindia.com

www.google.com

www. mutualfundsindia.com

www.moneycontrol.com

www.value research.com

http//rbi.org.in

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